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
June 30, 2020
Commercial business	$	824,818	$	(6,127	)	$	818,691
Commercial mortgage		1,142,359		(2,033	)		1,140,326
Residential real estate loans		572,562		12,473			585,035
Residential real estate lines		94,285		3,142			97,427
Consumer indirect		801,434		26,671			828,105
Other consumer		16,071		166			16,237
Total	$	3,451,529	$	34,292			3,485,821
Allowance for credit losses - loans							(46,316	)
Total loans, net						$	3,439,505
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 $6.7 million and $4.2 million as of June 30, 2020 and December 31, 2019, respectively.

The CARES Act was passed by Congress and signed into law on March 27, 2020. The CARES Act established the PPP, an expansion of the SBA’s 7(a) loan program and the EIDL, administered directly by the SBA. The Company had $268.5 million of PPP loans (included in Commercial business above) as of June 30, 2020. In addition, the CARES Act provides that a financial institution may elect to suspend (1) the application of GAAP for certain loan modifications related to COVID-19 that would otherwise be categorized as a TDR and (2) any determination that such loan modifications would be considered a TDR, including the related impairment for accounting purposes. Accordingly, the Company had $522.2 million of loans with modifications related to COVID-19 as of June 30, 2020.

The Company elected to exclude AIR from the amortized cost basis of loans disclosed throughout this footnote. As of June 30, 2020 and December 31, 2019, AIR for loans totaled $10.3 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
June 30, 2020
Commercial business	$	398	$	28	$	—	$	426	$	4,918	$	819,474	$	824,818	$	3,647
Commercial mortgage		115		69		—		184		4,140		1,138,035		1,142,359		4,140
Residential real estate loans		786		27		—		813		2,992		568,757		572,562		2,992
Residential real estate lines		74		35		—		109		177		93,999		94,285		177
Consumer indirect		1,571		424		—		1,995		868		798,571		801,434		868
Other consumer		100		48		57		205		30		15,836		16,071		30
Total loans, gross	$	3,044	$	631	$	57	$	3,732	$	13,125	$	3,434,672	$	3,451,529	$	11,854
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 June 30, 2020 and December 31, 2019. There were $57 thousand and $6 thousand in consumer overdrafts which were past due greater than 90 days as of June 30, 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 six months ended June 30, 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 and six months ended June 30, 2020 and 2019:

	Quarter-to-Date						Year-to-Date
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
June 30, 2020
Commercial business		—	$	—	$	—		1	$	11,898	$	11,898
Total		—	$	—	$	—		1	$	11,898	$	11,898

June 30, 2019
Commercial business		—	$	—	$	—		—	$	—	$	—
Total		—	$	—	$	—		—	$	—	$	—

The loan restructured during the six months ended June 30, 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 six months ended June 30, 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 June 30, 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
June 30, 2020
Commercial Business
Uncriticized	$	315,256	$	113,442	$	94,313	$	54,704	$	14,210	$	23,713	$	186,745	$	—	$	802,383
Special mention		—		24		279		1,526		241		92		2,667		—		4,829
Substandard		29		629		1,150		819		202		3,467		5,183		—		11,479
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	315,285	$	114,095	$	95,742	$	57,049	$	14,653	$	27,272	$	194,595	$	—	$	818,691
Commercial Mortgage
Uncriticized	$	138,718	$	272,620	$	212,339	$	197,891	$	97,668	$	212,453	$	485	$	—	$	1,132,174
Special mention		—		—		132		146		57		356		—		—		691
Substandard		—		2,446		128		1,619		158		2,911		199		—		7,461
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	138,718	$	275,066	$	212,599	$	199,656	$	97,883	$	215,720	$	684	$	—	$	1,140,326

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 performance 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
June 30, 2020
Residential Real Estate Loans
Performing	$	65,156	$	104,978	$	99,825	$	78,953	$	74,386	$	158,745	$	—	$	—	$	582,043
Nonperforming		—		108		943		730		176		1,035		—		—		2,992
Total	$	65,156	$	105,086	$	100,768	$	79,683	$	74,562	$	159,780	$	—	$	—	$	585,035
Residential Real Estate Lines
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	86,521	$	10,729	$	97,250
Nonperforming		—		—		—		—		—		—		46		131		177
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	86,567	$	10,860	$	97,427
Consumer Indirect
Performing	$	131,503	$	240,429	$	208,797	$	148,267	$	68,837	$	29,404	$	—	$	—	$	827,237
Nonperforming		48		123		309		179		178		31		—		—		868
Total	$	131,551	$	240,552	$	209,106	$	148,446	$	69,015	$	29,435	$	—	$	—	$	828,105
Other Consumer
Performing	$	4,515	$	4,230	$	2,448	$	1,308	$	588	$	563	$	2,555	$	—	$	16,207
Nonperforming		—		16		8		5		—		—		1		—		30
Total	$	4,515	$	4,246	$	2,456	$	1,313	$	588	$	563	$	2,556	$	—	$	16,237

The following table sets forth the changes in the allowance for credit losses - loans for the three- and six-month periods ended June 30, 2020 (in thousands):

	Commercial Business			Commercial Mortgage			Residential Real Estate Loans			Residential Real Estate Lines		Consumer Indirect			Other Consumer			Total
Three months ended June 30, 2020
Beginning balance	$	10,223		$	15,154		$	6,170		$	899	$	10,645		$	265		$	43,356
Charge-offs		(25	)		(1,072	)		(2	)		—		(2,554	)		(70	)		(3,723	)
Recoveries		1,483			—			8			—		1,379			67			2,937
Provision (credit)		718			1,584			(407	)		40		1,752			59			3,746
Ending balance	$	12,399		$	15,666		$	5,769		$	939	$	11,222		$	321		$	46,316
Six months ended June 30, 2020
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		(8,266	)		(1,072	)		(100	)		—		(5,978	)		(339	)		(15,755	)
Recoveries		1,541			—			18			3		3,047			217			4,826
Provision		8,012			3,747			1,502			211		3,535			162			17,169
Ending balance	$	12,399		$	15,666		$	5,769		$	939	$	11,222		$	321		$	46,316

The following table sets forth the changes in the allowance for credit losses - loans for the three- and six-month periods ended June 30, 2019 (in thousands):

	Commercial Business			Commercial Mortgage			Residential Real Estate Loans			Residential Real Estate Lines			Consumer Indirect			Other Consumer			Total
Three months ended June 30, 2019
Beginning balance	$	12,167		$	6,316		$	1,265		$	173		$	13,025		$	381		$	33,327
Charge-offs		(138	)		(3	)		(87	)		(2	)		(2,700	)		(243	)		(3,173	)
Recoveries		128			—			11			3			1,678			106			1,926
Provision (credit)		(440	)		2,477			28			(29	)		154			164			2,354
Ending balance	$	11,717		$	8,790		$	1,217		$	145		$	12,157		$	408		$	34,434
Six months ended June 30, 2019
Beginning balance	$	14,312		$	5,219		$	1,112		$	210		$	12,572		$	489		$	33,914
Charge-offs		(268	)		(3	)		(118	)		(2	)		(5,682	)		(552	)		(6,625	)
Recoveries		231			17			17			5			3,102			226			3,598
Provision (credit)		(2,558	)		3,557			206			(68	)		2,165			245			3,547
Ending balance	$	11,717		$	8,790		$	1,217		$	145		$	12,157		$	408		$	34,434

Loans and the related allowance for credit losses - loans are presented below as of the dates indicated (in thousands):

	Commercial Business		Commercial Mortgage		Residential Real Estate Loans		Residential Real Estate Lines		Consumer Indirect		Other Consumer		Total
June 30, 2019
Loans:
Ending balance	$	594,121	$	1,011,925	$	535,873	$	104,937	$	846,829	$	16,379	$	3,110,064
Evaluated for impairment:
Individually	$	768	$	7,274	$	—	$	—	$	—	$	—	$	8,042
Collectively	$	593,353	$	1,004,651	$	535,873	$	104,937	$	846,829	$	16,379	$	3,102,022
Allowance for loan losses:
Ending balance	$	11,717	$	8,790	$	1,217	$	145	$	12,157	$	408	$	34,434
Evaluated for impairment:
Individually	$	110	$	2,997	$	—	$	—	$	—	$	—	$	3,107
Collectively	$	11,607	$	5,793	$	1,217	$	145	$	12,157	$	408	$	31,327

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.