The Company’s loan portfolio consisted of the following as of the dates indicated (in thousands):

	Principal Amount Outstanding		Net Deferred Loan (Fees) Costs			Loans, Net
March 31, 2020
Commercial business	$	587,903	$	965		$	588,868
Commercial mortgage		1,109,344		(1,968	)		1,107,376
Residential real estate loans		567,714		12,086			579,800
Residential real estate lines		98,996		3,117			102,113
Consumer indirect		815,969		27,699			843,668
Other consumer		15,249		153			15,402
Total	$	3,195,175	$	42,052			3,237,227
Allowance for credit losses - loans							(43,356	)
Total loans, net						$	3,193,871
December 31, 2019
Commercial business	$	571,222	$	818		$	572,040
Commercial mortgage		1,108,315		(2,032	)		1,106,283
Residential real estate loans		560,717		11,633			572,350
Residential real estate lines		101,048		3,070			104,118
Consumer indirect		822,179		27,873			850,052
Other consumer		15,984		160			16,144
Total	$	3,179,465	$	41,522			3,220,987
Allowance for credit losses - loans							(30,482	)
Total loans, net						$	3,190,505

Loans held for sale (not included above) were comprised entirely of residential real estate mortgages and totaled $3.8 million and $4.2 million as of March 31, 2020 and December 31, 2019, respectively.

The Company elected to exclude AIR from the amortized cost basis of loans disclosed throughout this footnote. As of March 31, 2020 and December 31, 2019, AIR for loans totaled $9.4 million and $9.1 million, respectively, and is included in other assets on the Company’s consolidated statements of financial condition.

The Company’s recorded investment, by loan class, in current and nonaccrual loans, as well as an analysis of accruing delinquent loans is set forth as of the dates indicated (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Nonaccrual		Current		Total Loans		Nonaccrual with no allowance
March 31, 2020
Commercial business	$	234	$	55	$	—	$	289	$	5,507	$	582,107	$	587,903	$	4,531
Commercial mortgage		8,476		—		—		8,476		2,984		1,097,884		1,109,344		824
Residential real estate loans		2,997		1		—		2,998		1,971		562,745		567,714		1,971
Residential real estate lines		233		3		—		236		143		98,617		98,996		143
Consumer indirect		7,127		684		—		7,811		1,777		806,381		815,969		1,777
Other consumer		98		20		2		120		—		15,129		15,249		-
Total loans, gross	$	19,165	$	763	$	2	$	19,930	$	12,382	$	3,162,863	$	3,195,175	$	9,246
December 31, 2019
Commercial business	$	361	$	—	$	—	$	361	$	1,177	$	569,684	$	571,222
Commercial mortgage		531		—		—		531		3,146		1,104,638		1,108,315
Residential real estate loans		929		114		—		1,043		2,484		557,190		560,717
Residential real estate lines		231		37		—		268		102		100,678		101,048
Consumer indirect		3,729		1,019		—		4,748		1,725		815,706		822,179
Other consumer		116		8		6		130		—		15,854		15,984
Total loans, gross	$	5,897	$	1,178	$	6	$	7,081	$	8,634	$	3,163,750	$	3,179,465

There were no loans past due greater than 90 days and still accruing interest as of March 31, 2020 and December 31, 2019. There were $2 thousand and $6 thousand in consumer overdrafts which were past due greater than 90 days as of March 31, 2020 and December 31, 2019, respectively. Consumer overdrafts are overdrawn deposit accounts which have been reclassified as loans but by their terms do not accrue interest.

The Company recognized no interest income on nonaccrual loans during the three months ended March 31, 2020 and 2019.

A modification of a loan constitutes a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession. Commercial loans modified in a TDR may involve temporary interest-only payments, term extensions, reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, collateral concessions, forgiveness of principal, forbearance agreements, or substituting or adding a new borrower or guarantor.

The following presents, by loan class, information related to loans modified in a TDR during the three months ended March 31, 2020 and 2019:

The loan restructured during the three months ended March 31, 2020 was on nonaccrual status at the end of the period, with the modifications primarily related to collateral concessions. Nonaccrual loans that are restructured remain on nonaccrual status, but may move to accrual status after they have performed according to the restructured terms for a period of time. The TDR classifications did not have a material impact on the Company’s determination of the allowance for credit losses – loans because the modified loans were evaluated for a specific reserve both before and after restructuring.

There were no loans modified as a TDR within the previous 12 months that defaulted during the three months ended March 31, 2020 and 2019. For purposes of this disclosure, a loan modified as a TDR is considered to have defaulted when the borrower becomes 90 days past due.

Management has determined that specific commercial loans on nonaccrual status and all loans that have had their terms restructured in a troubled debt restructuring where repayment is expected to be provided substantially through the operation or sale of the collateral to be collateral dependent loans. The following table presents the amortized cost basis of collateral dependent loans by collateral type as of March 31, 2020 (in thousands):

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors such as the fair value of collateral. The Company analyzes commercial business and commercial mortgage loans individually by classifying the loans as to credit risk. Risk ratings are updated any time the situation warrants. The Company uses the following definitions for risk ratings:

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans that do not meet the criteria above that are analyzed individually as part of the process described above are considered “uncriticized” or pass-rated loans and are included in groups of homogeneous loans with similar risk and loss characteristics.

The following table sets forth the Company’s commercial loan portfolio, categorized by internally assigned asset classification, as of the dates indicated (in thousands):

	Term Loans Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
March 31, 2020
Commercial Business
Uncriticized	$	44,451	$	120,112	$	99,167	$	67,821	$	15,277	$	26,344	$	195,088	$	—	$	568,260
Special mention		—		2,706		231		1,688		218		181		4,284		—		9,308
Substandard		—		194		1,173		867		453		4,200		4,407		—		11,294
Doubtful		—		—		—		—		—		—		6		—		6
Total	$	44,451	$	123,012	$	100,571	$	70,376	$	15,948	$	30,725	$	203,785	$	—	$	588,868
Commercial Mortgage
Uncriticized	$	46,283	$	282,360	$	214,637	$	211,456	$	109,525	$	232,204	$	529	$	—	$	1,096,994
Special mention		—		—		35		41		1,013		250		—		—		1,339
Substandard		—		2,446		229		1,625		157		4,387		199		—		9,043
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	46,283	$	284,806	$	214,901	$	213,122	$	110,695	$	236,841	$	728	$	—	$	1,107,376

The Company utilizes payment status as a means of identifying and reporting problem and potential problem retail loans. The Company considers nonaccrual loans and loans past due greater than 90 days and still accruing interest to be non-performing. The following table sets forth the Company’s retail loan portfolio, categorized by payment status, as of the dates indicated (in thousands):

	Term Loans Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
March 31, 2020
Residential Real Estate Loans
Performing	$	28,479	$	112,239	$	105,772	$	83,138	$	79,834	$	168,367	$	—	$	—	$	577,829
Nonperforming		—		109		584		85		178		1,015		—		—		1,971
Total	$	28,479	$	112,348	$	106,356	$	83,223	$	80,012	$	169,382	$	—	$	—	$	579,800
Residential Real Estate Lines
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	91,044	$	10,926	$	101,970
Nonperforming		—		—		—		—		—		—		46		97		143
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	91,090	$	11,023	$	102,113
Consumer Indirect
Performing	$	75,304	$	255,499	$	227,717	$	165,416	$	79,736	$	38,219	$	—	$	—	$	841,891
Nonperforming		25		441		576		366		289		80		—		—		1,777
Total	$	75,329	$	255,940	$	228,293	$	165,782	$	80,025	$	38,299	$	—	$	—	$	843,668
Other Consumer
Performing	$	1,646	$	4,889	$	2,868	$	1,672	$	730	$	690	$	2,907	$	—	$	15,402
Nonperforming		—		—		—		—		—		—		—		—		—
Total	$	1,646	$	4,889	$	2,868	$	1,672	$	730	$	690	$	2,907	$	—	$	15,402

The following table sets forth the changes in the allowance for credit losses - loans for the three-month periods ended as of the dates indicated (in thousands):

	Commercial Business			Commercial Mortgage		Residential Real Estate Loans			Residential Real Estate Lines			Consumer Indirect			Other Consumer			Total
March 31, 2020
Allowance for credit losses - loan:
Beginning balance, prior to adoption of ASC 326	$	11,358		$	5,681	$	1,059		$	118		$	11,852		$	414		$	30,482
Impact of adopting ASC 326		(246	)		7,310		3,290			607			(1,234	)		(133	)		9,594
Beginning balance, after adoption of ASC 326		11,112			12,991		4,349			725			10,618			281			40,076
Charge-offs		(8,241	)		—		(98	)		—			(3,424	)		(269	)		(12,032	)
Recoveries		58			—		10			3			1,668			150			1,889
Provision (credit)		7,294			2,163		1,909			171			1,783			103			13,423
Ending balance	$	10,223		$	15,154	$	6,170		$	899		$	10,645		$	265		$	43,356

March 31, 2019
Allowance for loan losses:
Beginning balance	$	14,312		$	5,219	$	1,112		$	210		$	12,572		$	489		$	33,914
Charge-offs		(130	)		—		(31	)		—			(2,982	)		(309	)		(3,452	)
Recoveries		103			17		6			2			1,424			120			1,672
Provision (credit)		(2,118	)		1,080		178			(39	)		2,011			81			1,193
Ending balance	$	12,167		$	6,316	$	1,265		$	173		$	13,025		$	381		$	33,327
Evaluated for impairment:
Individually	$	181		$	2	$	—		$	—		$	—		$	—		$	183
Collectively	$	11,986		$	6,314	$	1,265		$	173		$	13,025		$	381		$	33,144
Loans:
Ending balance	$	552,834		$	995,183	$	525,036		$	105,592		$	872,410		$	15,941		$	3,066,996
Evaluated for impairment:
Individually	$	725		$	1,352	$	—		$	—		$	—		$	—		$	2,077
Collectively	$	552,109		$	993,831	$	525,036		$	105,592		$	872,410		$	15,941		$	3,064,919

Commercial business loans primarily consist of loans to small to mid-sized businesses in our market area in a diverse range of industries. These loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. Further, the collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value. The credit risk related to commercial loans is largely influenced by general economic conditions, including the impact of the COVID-19 pandemic on small to mid-sized business in our market area, and the resulting impact on a borrower’s operations or on the value of underlying collateral, if any.

Commercial mortgage loans generally have larger balances and involve a greater degree of risk than residential mortgage loans, potentially resulting in higher potential losses on an individual customer basis. Loan repayment is often dependent on the successful operation and management of the properties, as well as on the collateral securing the loan. Economic events, including the impact of the COVID-19 pandemic on the ability of the tenants to pay rent at these properties, or conditions in the real estate market could have an adverse impact on the cash flows generated by properties securing the Company’s commercial real estate loans and on the value of such properties.

Residential real estate loans (comprised of conventional mortgages and home equity loans) and residential real estate lines (comprised of home equity lines) are generally made based on the borrower’s ability to make repayment from his or her employment and other income but are secured by real property whose value tends to be more easily ascertainable. Credit risk for these types of loans is generally influenced by general economic conditions, including the impact of the COVID-19 pandemic on the employment income of these borrowers, the characteristics of individual borrowers, and the nature of the loan collateral.

Consumer indirect and other consumer loans may entail greater credit risk than residential mortgage loans and home equities, particularly in the case of other consumer loans which are unsecured or, in the case of indirect consumer loans, secured by depreciable assets, such as automobiles. In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance. In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances such as job loss, illness or personal bankruptcy, including the heightened risk that such circumstances may arise as a result of the COVID-19 pandemic. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.