The Company’s allowance for loan losses has three basic components: specific, general, and unallocated. The specific component is used to individually allocate an allowance for larger balance, non-homogeneous loans identified as impaired. The general component is used to estimate the loss on pools of smaller balance, homogeneous loans, including 1-4 family mortgage loans and other consumer loans. The general component is also used for the remaining pool of larger balance, non-homogeneous loans, not identified as impaired. The unallocated component reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted to, among other provisions, provide emergency assistance for individuals, families and businesses affected by COVID-19. A provision in the CARES Act included the creation of the Paycheck Protection Program (“PPP”) through the Small Business Administration (“SBA”). Loans provided by the Bank through the PPP may be forgiven based on the borrowers’ compliance with the terms of the program. The SBA provides a 100% guaranty to the lender of principal and interest, unless the lender violates an obligation under the agreement. As loan losses are expected to be immaterial, if any at all, due to the SBA guaranty, there is no provision allocated for PPP loans within the allowance for loan loss calculation. The Commercial and

Industrial loan portfolio segment in the tables below include 549 PPP loans that totaled $53.1 million at September 30, 2020. There were no loans that were forgiven at September 30, 2020.

The following tables present the total allowance for loan losses by portfolio segment for the periods presented.

	September 30, 2020
(In thousands)	Commercial and Industrial			Commercial Real Estate		Construction and Land		Consumer			Student			Residential Real Estate		Home Equity Lines of Credit			Unallocated		Total
Allowance for Loan Losses
Beginning balance, December 31, 2019	$	296		$	1,788	$	652	$	154		$	65		$	1,596	$	326		$	350	$	5,227
Charge-offs		(148	)		-		-		(21	)		(8	)		-		-			-		(177	)
Recoveries		11			14		-		20			-			-		-			-		45
Provision (recovery)		699			361		294		(18	)		31			263		(24	)		-		1,606
Ending balance, September 30, 2020	$	858		$	2,163	$	946	$	135		$	88		$	1,859	$	302		$	350	$	6,701
Ending balances individually evaluated for impairment	$	20		$	60	$	-	$	-		$	-		$	-	$	-		$	-	$	80
Ending balances collectively evaluated for impairment	$	838		$	2,103	$	946	$	135		$	88		$	1,859	$	302		$	350	$	6,621
Loans
Individually evaluated for impairment	$	509		$	8,369	$	-	$	-		$	-		$	377	$	-				$	9,255
Collectively evaluated for impairment		88,473			191,404		72,465		6,264			7,333			232,147		30,762					628,848
Ending balance, September 30, 2020	$	88,982		$	199,773	$	72,465	$	6,264		$	7,333		$	232,524	$	30,762				$	638,103

	September 30, 2019
(In thousands)	Commercial and Industrial			Commercial Real Estate			Construction and Land		Consumer			Student			Residential Real Estate		Home Equity Lines of Credit			Unallocated		Total
Allowance for Loan Losses
Beginning balance, December 31, 2018	$	483		$	1,738		$	635	$	145		$	68		$	1,311	$	446		$	350	$	5,176
Charge-offs		(93	)		-			-		(24	)		(12	)		-		-			-		(129	)
Recoveries		2			77			-		14			-			-		-			-		93
Provision (recovery)		162			(34	)		15		10			9			137		(44	)		-		255
Ending balance, September 30, 2019	$	554		$	1,781		$	650	$	145		$	65		$	1,448	$	402		$	350	$	5,395

	December 31, 2019
(In thousands)	Commercial and Industrial			Commercial Real Estate			Construction and Land		Consumer			Student			Residential Real Estate		Home Equity Lines of Credit			Unallocated		Total
Allowance for Loan Losses
Beginning balance, December 31, 2018	$	483		$	1,738		$	635	$	145		$	68		$	1,311	$	446		$	350	$	5,176
Charge-offs		(328	)		-			-		(50	)		(13	)		-		-			-		(391	)
Recoveries		2			80			-		14			-			-		-			-		96
Provision (recovery)		139			(30	)		17		45			10			285		(120	)		-		346
Ending balance, December 31, 2019	$	296		$	1,788		$	652	$	154		$	65		$	1,596	$	326		$	350	$	5,227
Ending balances individually evaluated for impairment	$	-		$	229		$	-	$	-		$	-		$	-	$	-		$	-	$	229
Ending balances collectively evaluated for impairment	$	296		$	1,559		$	652	$	154		$	65		$	1,596	$	326		$	350	$	4,998
Loans
Individually evaluated for impairment	$	187		$	2,847		$	233	$	-		$	-		$	379	$	-				$	3,646
Collectively evaluated for impairment		27,217			179,051			64,998		5,958			8,151			224,937		36,268					546,580
Ending balance, December 31, 2019	$	27,404		$	181,898		$	65,231	$	5,958		$	8,151		$	225,316	$	36,268				$	550,226

	September 30, 2020
(In thousands)	Commercial and Industrial		Commercial Real Estate		Construction and Land		Consumer		Student		Residential Real Estate		Home Equity Lines of Credit		Total
Grade:
Pass	$	88,139	$	188,682	$	70,110	$	6,261	$	7,333	$	225,260	$	28,785	$	614,570
Special mention		212		9,291		2,289		3		-		321		127		12,243
Substandard		631		1,800		66		-		-		6,943		1,850		11,290
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	88,982	$	199,773	$	72,465	$	6,264	$	7,333	$	232,524	$	30,762	$	638,103

	December 31, 2019
(In thousands)	Commercial and Industrial		Commercial Real Estate		Construction and Land		Consumer		Student		Residential Real Estate		Home Equity Lines of Credit		Total
Grade:
Pass	$	26,555	$	175,063	$	62,231	$	5,955	$	8,151	$	218,686	$	34,218	$	530,859
Special mention		422		3,487		2,594		3		-		336		127		6,969
Substandard		427		3,348		406		-		-		6,294		1,923		12,398
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	27,404	$	181,898	$	65,231	$	5,958	$	8,151	$	225,316	$	36,268	$	550,226

	September 30, 2020
(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans		90+ Days Past Due and Accruing		Nonaccruals
Commercial and industrial	$	11	$	43	$	640	$	694	$	88,288	$	88,982	$	131	$	509
Commercial real estate		-		-		357		357		199,416		199,773		-		357
Construction and land		318		-		-		318		72,147		72,465		-		-
Consumer		24		-		7		31		6,233		6,264		7		-
Student		311		265		509		1,085		6,248		7,333		509		-
Residential real estate		708		383		379		1,470		231,054		232,524		-		379
Home equity lines of credit		129		-		-		129		30,633		30,762		-		-
Total	$	1,501	$	691	$	1,892	$	4,084	$	634,019	$	638,103	$	647	$	1,245

	December 31, 2019
(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans		90+ Days Past Due and Accruing		Nonaccruals
Commercial and industrial	$	330	$	-	$	34	$	364	$	27,040	$	27,404	$	34	$	-
Commercial real estate		-		-		989		989		180,909		181,898		-		989
Construction and land		5,472		-		-		5,472		59,759		65,231		-		-
Consumer		11		1		-		12		5,946		5,958		-		-
Student		345		220		1,204		1,769		6,382		8,151		1,205		-
Residential real estate		739		109		397		1,245		224,071		225,316		397		-
Home equity lines of credit		389		-		-		389		35,879		36,268		-		-
Total	$	7,286	$	330	$	2,624	$	10,240	$	539,986	$	550,226	$	1,636	$	989

The following table presents information related to impaired loans, by portfolio segment, at the dates presented.

	September 30, 2020
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no specific allowance recorded:
Commercial real estate	$	7,578	$	7,578	$	-	$	7,938	$	242
Residential real estate		377		377		-		378		4
With an allowance recorded:
Commercial and industrial	$	509	$	509	$	20	$	509	$	8
Commercial real estate		791		791		60		801		28
Total:
Commercial and industrial	$	509	$	509	$	20	$	509	$	8
Commercial real estate		8,369		8,369		60		8,739		270
Residential real estate		377		377		-		378		4
Total	$	9,255	$	9,255	$	80	$	9,626	$	282

	December 31, 2019
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no specific allowance recorded:
Commercial and industrial	$	187	$	187	$	-	$	287	$	13
Commercial real estate		1,048		1,048		-		1,213		61
Construction and land		233		233		-		494		25
Residential real estate		379		379		-		384		16
With an allowance recorded:
Commercial real estate		1,799		1,813		229		1,806		38
Total:
Commercial and industrial	$	187	$	187	$	-	$	287	$	13
Commercial real estate		2,847		2,861		229		3,019		99
Construction and land		233		233		-		494		25
Residential real estate		379		379		-		384		16
Total	$	3,646	$	3,660	$	229	$	4,184	$	153

TDRs are those loans for which a concession has been granted to a borrower experiencing financial difficulties. TDRs are identified at the point when the borrower enters into a modification agreement. The following table summarizes a modification that was classified as a TDR during the nine months ended September 30, 2020. There were no loan modifications that were classified as TDRs during the three months ended September 30, 2020 or during the three and nine months ended September 30, 2019.

TDRs are considered impaired loans and are individually evaluated for impairment in the determination of the allowance for loan losses. TDR payment defaults occur when, within 12 months of the original TDR modification, either a full or partial charge-off occurs or the TDR becomes 90 days or more past due. There were no TDR defaults during the three and nine months ended September 30, 2020 and 2019. At September 30, 2020, there were five loans totaling $8.4 million that have

been identified as TDRs, which were current and performing in accordance with the modified terms. At December 31, 2019, there were five loans in the portfolio, totaling $2.5 million, that were identified as TDRs, which were current and performing in accordance with the modified terms.

At September 30, 2020 and 2019, the Company had no foreclosed residential real estate property in its possession or in the process of foreclosure.

In response to COVID-19 and under the provisions of the CARES Act, the Company established a short-term loan modification program, allowing the deferral of scheduled payments for a 90-day period beginning in April 2020. Modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief were not considered TDRs. Borrowers who were considered current were ones whose loans were less than 30 days past due on their contractual payments at the time the modification was entered. The Company modified 194 loans totaling $92.8 million under this initial payment deferral program. As of September 30, 2020, 94% of these deferments have ended and have returned to their normal payment schedules, while subsequent deferments totaling $5.5 million have been granted to 7 borrowers, consisting of 2 commercial and industrial loans, 1 commercial real estate loan, 1 construction and land loan, and 3 residential real estate loans. These additional deferrals remained within the CARES Act and the March 2020 interagency guidance and were not considered TDRs.