At September 30, 2020 and December 31, 2019, the Company had $1.57 billion and $1.42 billion, respectively, in loans receivable outstanding. Outstanding balances include a total net reduction of $1.2 million at September 30, 2020 and a net increase of $138,000 at December 31, 2019, respectively, for unearned income, net deferred loan fees, and unamortized discounts and premiums. We had $198,000 and $190,000 for loans held for sale at September 30, 2020 and December 31, 2019. Also, at September 30, 2020, our commercial and industrial loan portfolio includes $95.1 million loans to small businesses through Paycheck Protection Program loans ("SBA PPP" loans), which is a loan designed by Federal government to provide a direct incentive for small businesses to keep their workers on the payroll. The portfolios of loans receivable at September 30, 2020 and December 31, 2019, consist of the following:


	September 30, 2020		December 31, 2019
	Amount		Amount
	(Dollars in thousands)
Commercial and Industrial	$	126,508	$	36,777
Construction	263,874		231,095
Real Estate Mortgage:
Commercial – Owner Occupied	136,497		136,753
Commercial – Non-owner Occupied	301,034		298,204
Residential – 1 to 4 Family	650,894		636,891
Residential – Multifamily	84,819		68,258
Consumer	10,985		12,771
Total Loans	$	1,574,611	$	1,420,749


September 30, 2020	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Not Accruing		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
	(Dollars in Thousands)
Commercial and Industrial	$	—	$	—	$	116	$	116	$	126,392	$	126,508	$	—
Construction	—		—		1,365		1,365		262,509		263,874		—
Real Estate Mortgage:
Commercial – Owner Occupied	—		—		5,554		5,554		130,943		136,497		—
Commercial – Non-owner Occupied	—		69		69		138		300,896		301,034		—
Residential – 1 to 4 Family	—		810		2,353		3,163		647,731		650,894		—
Residential – Multifamily	—		—		—		—		84,819		84,819		—
Consumer	—		55		—		55		10,930		10,985		—
Total Loans	$	—	$	934	$	9,457	$	10,391	$	1,564,220	$	1,574,611	$	—


December 31, 2019	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Not Accruing		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
	(Dollars in thousands)
Commercial and Industrial	$	—	$	—	$	286	$	286	$	36,491	$	36,777	$	—
Construction	—		—		1,365		1,365		229,730		231,095		—
Real Estate Mortgage:
Commercial – Owner Occupied	—		1,722		2,702		4,424		132,329		136,753		—
Commercial – Non-owner Occupied	—		—		70		70		298,134		298,204		—
Residential – 1 to 4 Family	—		262		925		1,187		635,704		636,891		—
Residential – Multifamily	—		—		—		—		68,258		68,258		—
Consumer	—		—		—		—		12,771		12,771		—
Total Loans	$	—	$	1,984	$	5,348	$	7,332	$	1,413,417	$	1,420,749	$	—

We maintain the ALLL at a level that we believe to be appropriate to absorb estimated probable credit losses incurred in the loan portfolios as of the balance sheet date. We established our allowance in accordance with guidance provided in Accounting Standard Codification ("ASC") - Contingencies ("ASC 450") and Receivables ("ASC 310").

The allowance for loan and lease losses represents management’s estimate of probable losses inherent in the Company’s lending activities excluding loans accounted for under fair value. The allowance for loan losses is maintained through charges to the provision for loan losses in the Consolidated Statements of Income as losses are estimated to have occurred. Loans or portions thereof that are determined to be uncollectible are charged against the allowance, and subsequent recoveries, if any, are credited to the allowance.

The Company performs periodic reviews of its loan and lease portfolios to identify credit risks and to assess the overall collectability of those portfolios. The Company's allowance for loan losses includes a general component and an asset-specific component. The asset-specific component of the allowance relates to loans considered to be impaired, which includes performing troubled debt restructurings (“TDRs”) as well as nonperforming loans. To determine the asset-specific component of the allowance, the loans are evaluated individually based on the borrower's ability to repay amounts owed, collateral, relative risk grade of the loans, and other factors given current events and conditions. The Company generally measures the asset-specific allowance as the difference between the net realizable value of loan collateral or present value of expected cash flow and the recorded investment of a loan.

The general component of the allowance evaluates the impairments of pools of the loan portfolio collectively. It incorporates a historical valuation allowance and general valuation allowance. The historical loss experience is measured by type of credit and internal risk grade, loss severity, specific homogeneous risk pools. A historical loss ratio and valuation allowance are established for each pool of similar loans and updated periodically based on actual charge-off experience and current events. The general valuation allowance is based on general economic conditions and other qualitative risk factors both internal and external to the Company. It is generally determined by evaluating, among other things: (i) the experience, ability and effectiveness of the Bank's lending management and staff; (ii) the effectiveness of the Bank's lending policies, procedures and internal controls;(iii) volume and severity of loan credit quality; (iv) nature and volume of portfolio and term of loans (v) the composition and concentrations of credit; (vi) the effectiveness of the internal loan review system; and (vii) national and local economic trends and conditions, and industry conditions. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. Each component is determined to have either a high, high-moderate, moderate, low-moderate or low degree of risk. The results are then input into a "general allocation matrix" to determine an appropriate general valuation allowance.


					Real Estate Mortgage
	Commercial and Industrial		Construction		Commercial Owner Occupied		Commercial Non-owner Occupied		Residential 1 to 4 Family		Residential Multifamily		Consumer		Total
Allowance for loan losses	(Dollars in thousands)
Three months ended September 30, 2020
June 30, 2020	$	987	$	3,660	$	2,414	$	6,181	$	10,766	$	1,058	$	162	$	25,228
Charge-offs	—		—		—		—		(54)		—		—		(54)
Recoveries	11		—		1		2		—		—		—		14
Provisions	(385)		1,284		421		648		(65)		511		(14)		2,400
Ending Balance at September 30, 2020	$	613	$	4,944	$	2,836	$	6,831	$	10,647	$	1,569	$	148	$	27,588

Allowance for loan losses
Nine months ended September 30, 2020
December 31, 2019	$	964	$	2,807	$	2,023	$	5,860	$	9,151	$	819	$	187	$	21,811
Charge-offs	—		—		—		—		(54)		—		—		(54)
Recoveries	18		—		9		8		—		—		—		35
Provisions	(369)		2,137		804		963		1,550		750		(39)		5,796
Ending Balance at September 30, 2020	$	613	$	4,944	$	2,836	$	6,831	$	10,647	$	1,569	$	148	$	27,588

Allowance for loan losses
Individually evaluated for impairment	$	78	$	334	$	257	$	377	$	61	$	—	$	—	$	1,107
Collectively evaluated for impairment	535		4,610		2,579		6,454		10,586		1,569		148		26,481
Ending Balance at September 30, 2020	$	613	$	4,944	$	2,836	$	6,831	$	10,647	$	1,569	$	148	$	27,588

Loans
Individually evaluated for impairment	$	116	$	4,990	$	7,447	$	10,187	$	2,855	$	—	$	—	$	25,595
Collectively evaluated for impairment	126,392		258,884		129,050		290,847		648,039		84,819		10,985		1,549,016
Ending Balance at September 30, 2020	$	126,508	$	263,874	$	136,497	$	301,034	$	650,894	$	84,819	$	10,985	$	1,574,611


					Real Estate Mortgage
	Commercial and Industrial		Construction		Commercial Owner Occupied		Commercial Non-owner Occupied		Residential 1 to 4 Family		Residential Multifamily		Consumer		Total
Allowance for loan losses	(Dollars in thousands)
Three months ended September 30, 2019
June 30, 2019	$	693	$	2,527	$	1,746	$	5,904	$	8,480	$	744	$	196	$	20,290
Charge-offs	—		—		—		—		(56)		—		—		(56)
Recoveries	2		—		5		3		2		—		—		12
Provisions	262		220		254		(228)		432		(35)		(5)		900
Ending Balance at September 30, 2019	$	957	$	2,747	$	2,005	$	5,679	$	8,858	$	709	$	191	$	21,146

Allowance for loan losses
Nine months ended September 30, 2019
December 31, 2018	$	718	$	1,694	$	2,062	$	5,853	$	7,917	$	621	$	210	$	19,075
Charge-offs	—		—		—		—		(56)		—		—		(56)
Recoveries	12		6		18		36		5		—		—		77
Provisions	227		1,047		(75)		(210)		992		88		(19)		2,050
Ending Balance at September 30, 2019	$	957	$	2,747	$	2,005	$	5,679	$	8,858	$	709	$	191	$	21,146

Allowance for loan losses
Individually evaluated for impairment	$	307	$	118	$	32	$	178	$	364	$	—	$	—	$	999
Collectively evaluated for impairment	650		2,629		1,973		5,501		8,494		709		191		20,147
Ending Balance at September 30, 2019	$	957	$	2,747	$	2,005	$	5,679	$	8,858	$	709	$	191	$	21,146

Loans
Individually evaluated for impairment	$	307	$	5,229	$	4,886	$	10,508	$	1,871	$	—	$	—	$	22,801
Collectively evaluated for impairment	34,671		223,316		130,349		289,538		603,403		59,080		13,084		1,353,441
Ending Balance at September 30, 2019	$	34,978	$	228,545	$	135,235	$	300,046	$	605,274	$	59,080	$	13,084	$	1,376,242

A loan is considered impaired when, based on the current information and events, it is probable that the Company will be unable to collect the payments of principal and interest as of the date such payments were due. Loans are placed on non-accrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when a loan is 90 days past due, unless the loan is well secured and in the process of collection, as required by regulatory provisions. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

All our impaired loans are assessed for recoverability based on an independent third-party full appraisal to determine the net realizable value (“NRV”) based on the fair value of the underlying collateral, less cost to sell and other costs or the present value of discounted cash flows in the case of certain impaired loans that are not collateral dependent.


September 30, 2020	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded:
Commercial and Industrial	$	38	$	38	$	—
Construction	—		—		—
Real Estate Mortgage:
Commercial – Owner Occupied	2,854		2,854		—
Commercial – Non-owner Occupied	69		69		—
Residential – 1 to 4 Family	1,984		1,984		—
Residential – Multifamily	—		—		—
Consumer	—		—		—
	4,945		4,945		—
With an allowance recorded:
Commercial and Industrial	78		85		78
Construction	4,990		9,480		334
Real Estate Mortgage:
Commercial – Owner Occupied	4,593		4,593		257
Commercial – Non-owner Occupied	10,118		10,118		377
Residential – 1 to 4 Family	871		871		61
Residential – Multifamily	—		—		—
Consumer	—		—		—
	20,650		25,147		1,107
Total:
Commercial and Industrial	116		123		78
Construction	4,990		9,480		334
Real Estate Mortgage:
Commercial – Owner Occupied	7,447		7,447		257
Commercial – Non-owner Occupied	10,187		10,187		377
Residential – 1 to 4 Family	2,855		2,855		61
Residential – Multifamily	—		—		—
Consumer	—		—		—
	$	25,595	$	30,092	$	1,107


	Three Months Ended September 30,
	2020				2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
Commercial and Industrial	$	221	$	1	$	160	$	10
Construction	4,990		40		5,290		43
Real Estate Mortgage:
Commercial – Owner Occupied	7,515		14		5,084		41
Commercial – Non-owner Occupied	10,240		158		11,742		112
Residential – 1 to 4 Family	2,994		33		2,260		13
Residential – Multifamily	—		—		—		—
Consumer	—		—		—		—
Total	$	25,960	$	246	$	24,536	$	219


	Nine Months Ended September 30,
	2020				2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
Commercial and Industrial	$	281	$	13	$	87	$	11
Construction	5,020		119		5,410		132
Real Estate Mortgage:
Commercial – Owner Occupied	6,167		95		3,737		107
Commercial – Non-owner Occupied	10,302		312		11,488		441
Residential – 1 to 4 Family	2,314		87		2,480		26
Residential – Multifamily	—		—		—		—
Consumer	—		—		—		—
Total	$	24,084	$	626	$	23,202	$	717

We reported performing TDR loans (not reported as non-accrual loans) of $16.1 million and $16.8 million, respectively, at September 30, 2020 and December 31, 2019. Nonperforming TDR loans were $275,600 and $281,000 at September 30, 2020 and December 31, 2019, respectively. There were no new loans modified as a TDR and no additional commitments to lend additional funds to debtors whose loans have been modified in TDRs for the three and nine months ended September 30, 2020 and the year ended December 31, 2019, respectively. Under Interagency Statement ("Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised)") issued by Federal banking agencies, financial institutions generally do not need to categorize COVID-19-related modifications as TDRs. As the result, Loans that have been restructured for short term through our loan deferral program for COVID-19 related hardships and meet certain other criteria specified in the Interagency Statement are not categorized as TDRs.

A TDR is a loan the terms of which have been restructured in a manner that grants a concession to a borrower experiencing financial difficulty. TDRs result from our loss mitigation activities that include rate reductions, extension of maturity, or a combination of both, which are intended to minimize economic loss and to avoid foreclosure or repossession of collateral. TDRs are classified as impaired loans and are included in the impaired loan disclosures. TDRs are also evaluated to determine whether they should be placed on non-accrual status. Once a loan becomes a TDR, it will continue to be reported as a TDR until it is repaid in full, foreclosed, sold or it meets the criteria to be removed from TDR status.

TDRs are generally included in nonaccrual loans and may return to performing status after a minimum of six consecutive monthly payments under restructured terms and also meeting other performance indicators. We review the financial performance of the borrower over the past year to be reasonably assured of repayment and performance according to the modified terms. This review consists of an analysis of the borrower’s historical results; the borrower’s projected results over the next four quarters; and current financial information of the borrower and any guarantors. The projected repayment source needs to be reliable, verifiable, quantifiable and sustainable. At the time of restructuring, the amount of the loan principal for which we are not reasonably assured of repayment is charged-off, but not forgiven.

All TDRs are also reviewed quarterly to determine the amount of any impairment. The nature and extent of impairment of TDRs, including those that have experienced a subsequent default, is considered in the determination of an appropriate level of allowance for loan losses. For the TDR loans, we had specific reserves of $557,500 and $607,300 in the allowance at September 30, 2020 and December 31, 2019, respectively. Some loan modifications classified as TDRs may not ultimately result in the full collection of principal and interest, as modified, and result in potential incremental losses. These potential incremental losses have been factored into our overall allowance for loan losses estimate.

Credit Quality Indicators: As part of the on-going monitoring of the credit quality of the Company's loan portfolio, management tracks certain credit quality indicators including trends related to the risk grades of loans, the level of classified loans, net charge-offs, nonperforming loans (see details above) and the general economic conditions in the region.

5.Other Assets Especially Mentioned (OAEM): Financial condition is such that assets in this category have a potential weakness or pose unwarranted financial risk to the Bank even though the asset value is not currently impaired. The asset does not currently warrant adverse classification but if not corrected could weaken and could create future increased risk exposure. Includes loans that require an increased degree of monitoring or servicing as a result of internal or external changes.

6.Substandard: This classification represents more severe cases of #5 (OAEM) characteristics that require increased monitoring. Assets are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Assets are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral. Asset has a well-defined weakness or weaknesses that impairs the ability to repay debt and jeopardizes the timely liquidation or realization of the collateral at the asset’s net book value.


At September 30, 2020	Pass		OAEM		Substandard		Doubtful		Total
	(Dollars in thousands)
Commercial and Industrial	$	126,181	$	211	$	116	$	—	$	126,508
Construction	262,509		—		1,365		—		263,874
Real Estate Mortgage:
Commercial – Owner Occupied	130,943		—		5,554		—		136,497
Commercial – Non-owner Occupied	300,841		—		193		—		301,034
Residential – 1 to 4 Family	647,624		810		2,460		—		650,894
Residential – Multifamily	84,819		—		—		—		84,819
Consumer	10,985		—		—		—		10,985
Total	$	1,563,902	$	1,021	$	9,688	$	—	$	1,574,611


At December 31, 2019	Pass		OAEM		Substandard		Doubtful		Total
	(Dollars in thousands)
Commercial and Industrial	$	36,491	$	—	$	286	$	—	$	36,777
Construction	219,289		4,275		7,531		—		231,095
Real Estate Mortgage:
Commercial – Owner Occupied	134,051		—		2,702		—		136,753
Commercial – Non-owner Occupied	298,006		—		198		—		298,204
Residential – 1 to 4 Family	634,937		920		1,034		—		636,891
Residential – Multifamily	68,258		—		—		—		68,258
Consumer	12,771		—		—		—		12,771
Total	$	1,403,803	$	5,195	$	11,751	$	—	$	1,420,749