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
September 30, 2020
Commercial business	$	823,611	$	(5,476	)	$	818,135
Commercial mortgage		1,204,353		(2,307	)		1,202,046
Residential real estate loans		583,963		12,939			596,902
Residential real estate lines		90,899		3,118			94,017
Consumer indirect		813,345		27,234			840,579
Other consumer		16,703		157			16,860
Total	$	3,532,874	$	35,665			3,568,539
Allowance for credit losses - loans							(49,395	)
Total loans, net						$	3,519,144
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 $7.1 million and $4.2 million as of September 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 $270.5 million of PPP loans (included in Commercial business above) as of September 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 $526.7 million of loans with modifications related to COVID-19 as of September 30, 2020.

The Company elected to exclude AIR from the amortized cost basis of loans disclosed throughout this footnote. As of September 30, 2020 and December 31, 2019, AIR for loans totaled $13.7 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
September 30, 2020
Commercial business	$	139	$	2	$	—	$	141	$	2,628	$	820,842	$	823,611	$	894
Commercial mortgage		—		—		—		—		3,372		1,200,981		1,204,353		3,175
Residential real estate loans		389		35		—		424		3,305		580,234		583,963		3,305
Residential real estate lines		288		—		—		288		207		90,404		90,899		207
Consumer indirect		3,520		566		—		4,086		1,244		808,015		813,345		1,244
Other consumer		126		20		141		287		6		16,410		16,703		6
Total loans, gross	$	4,462	$	623	$	141	$	5,226	$	10,762	$	3,516,886	$	3,532,874	$	8,831
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 September 30, 2020 and December 31, 2019. There were $141 thousand and $6 thousand in consumer overdrafts which were past due greater than 90 days as of September 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 nine months ended September 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.

There were no loans modified as a TDR during the nine months ended September 30, 2020 and 2019. During the third quarter of 2020, the Company discovered that the previously reported 2020 TDR was reported in error. This correction had no impact to any other section within our consolidated financial statements and the Company does not consider this correction to be material to any previously issued consolidated financial statement. There were no loans modified as a TDR within the previous 12 months that defaulted during the nine months ended September 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 September 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
September 30, 2020
Commercial Business
Uncriticized	$	356,882	$	111,373	$	90,038	$	32,169	$	12,489	$	19,063	$	183,654	$	—	$	805,668
Special mention		709		108		3		802		40		3		2,088		—		3,753
Substandard		223		486		1,321		757		239		929		4,759		—		8,714
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	357,814	$	111,967	$	91,362	$	33,728	$	12,768	$	19,995	$	190,501	$	—	$	818,135
Commercial Mortgage
Uncriticized	$	213,341	$	278,617	$	186,224	$	189,627	$	96,571	$	199,397	$	430	$	—	$	1,164,207
Special mention		—		2,091		17,133		454		329		1,449		—		—		21,456
Substandard		189		2,448		1,910		1,615		3		10,019		199		—		16,383
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	213,530	$	283,156	$	205,267	$	191,696	$	96,903	$	210,865	$	629	$	—	$	1,202,046

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
September 30, 2020
Residential Real Estate Loans
Performing	$	106,889	$	100,498	$	93,116	$	73,143	$	71,269	$	148,682		$	—	$	—	$	593,597
Nonperforming		—		200		1,209		790		312		794			—		—		3,305
Total	$	106,889	$	100,698	$	94,325	$	73,933	$	71,581	$	149,476		$	—	$	—	$	596,902
Residential Real Estate Lines
Performing	$	—	$	—	$	—	$	—	$	—	$	—		$	83,746	$	10,064	$	93,810
Nonperforming		—		—		—		—		—		—			46		161		207
Total	$	—	$	—	$	—	$	—	$	—	$	—		$	83,792	$	10,225	$	94,017
Consumer Indirect
Performing	$	223,417	$	220,615	$	186,913	$	128,567	$	57,873	$	21,950		$	—	$	—	$	839,335
Nonperforming		97		241		475		273		165		(7	)		—		—		1,244
Total	$	223,514	$	220,856	$	187,388	$	128,840	$	58,038	$	21,943		$	—	$	—	$	840,579
Other Consumer
Performing	$	5,950	$	3,684	$	2,073	$	1,083	$	466	$	688		$	2,910	$	—	$	16,854
Nonperforming		—		—		—		5		—		—			1		—		6
Total	$	5,950	$	3,684	$	2,073	$	1,088	$	466	$	688		$	2,911	$	—	$	16,860

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

	Commercial Business			Commercial Mortgage			Residential Real Estate Loans			Residential Real Estate Lines			Consumer Indirect			Other Consumer			Total
Three months ended September 30, 2020
Beginning balance	$	12,399		$	15,666		$	5,769		$	939		$	11,222		$	321		$	46,316
Charge-offs		(15	)		(640	)		—			—			(1,388	)		(160	)		(2,203	)
Recoveries		103			37			7			—			1,503			65			1,715
Provision (credit)		507			1,417			(1,224	)		(121	)		2,833			155			3,567
Ending balance	$	12,994		$	16,480		$	4,552		$	818		$	14,170		$	381		$	49,395
Nine months ended September 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		(8,281	)		(1,712	)		(100	)		—			(7,366	)		(499	)		(17,958	)
Recoveries		1,644			37			25			3			4,550			282			6,541
Provision		8,519			5,164			278			90			6,368			317			20,736
Ending balance	$	12,994		$	16,480		$	4,552		$	818		$	14,170		$	381		$	49,395

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

	Commercial Business			Commercial Mortgage			Residential Real Estate Loans			Residential Real Estate Lines			Consumer Indirect			Other Consumer			Total
Three months ended September 30, 2019
Beginning balance	$	11,717		$	8,790		$	1,217		$	145		$	12,157		$	408		$	34,434
Charge-offs		(112	)		(2,994	)		(54	)		(8	)		(2,420	)		(315	)		(5,903	)
Recoveries		102			—			14			1			1,103			73			1,293
Provision		448			126			6			8			1,002			254			1,844
Ending balance	$	12,155		$	5,922		$	1,183		$	146		$	11,842		$	420		$	31,668
Nine months ended September 30, 2019
Beginning balance	$	14,312		$	5,219		$	1,112		$	210		$	12,572		$	489		$	33,914
Charge-offs		(380	)		(2,997	)		(172	)		(10	)		(8,102	)		(867	)		(12,528	)
Recoveries		333			17			31			6			4,205			299			4,891
Provision (credit)		(2,110	)		3,683			212			(60	)		3,167			499			5,391
Ending balance	$	12,155		$	5,922		$	1,183		$	146		$	11,842		$	420		$	31,668

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
September 30, 2019
Loans:
Ending balance	$	573,610	$	1,037,304	$	547,839	$	104,545	$	834,968	$	16,467	$	3,114,733
Evaluated for impairment:
Individually	$	3,010	$	3,290	$	—	$	—	$	—	$	—	$	6,300
Collectively	$	570,600	$	1,034,014	$	547,839	$	104,545	$	834,968	$	16,467	$	3,108,433
Allowance for loan losses:
Ending balance	$	12,155	$	5,922	$	1,183	$	146	$	11,842	$	420	$	31,668
Evaluated for impairment:
Individually	$	1,563	$	1	$	—	$	—	$	—	$	—	$	1,564
Collectively	$	10,592	$	5,921	$	1,183	$	146	$	11,842	$	420	$	30,104

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.