LOANS | LOANS The Company’s loan portfolio is segregated into the following segments: commercial real estate, commercial and industrial, residential mortgage, and consumer. Commercial real estate loans include construction, single and multi-family, and other commercial real estate classes. Commercial and industrial loans include asset based lending loans, lease financing and other commercial business loan classes. Residential mortgage loans include classes for 1-4 family owner occupied and construction loans. Consumer loans include home equity, direct and indirect auto, and other. These portfolio segments each have unique risk characteristics that are considered when determining the appropriate level for the allowance for loan losses. A substantial portion of the loan portfolio is secured by real estate in western Massachusetts, southern Vermont, northeastern New York, and in the Bank’s other New England lending areas. The ability of many of the Bank’s borrowers to honor their contracts is dependent, among other things, on the specific economy and real estate markets of these areas. Total loans include business activity loans and acquired loans. Acquired loans are those loans acquired from Firestone Financial Corp., Hampden Bancorp, Inc., the New York branch acquisition, Beacon Federal Bancorp, Inc., The Connecticut Bank and Trust Company, Legacy Bancorp, Inc., and Rome Bancorp, Inc. The following is a summary of total loans: March 31, 2016 December 31, 2015 (In thousands) Business Activities Loans Acquired Loans Total Business Activities Loans Acquired Loans Total Commercial real estate: Construction $ 216,745 $ 39,542 $ 256,287 $ 210,196 $ 43,474 $ 253,670 Single and multi-family 224,741 35,664 260,405 214,823 36,783 251,606 Other commercial real estate 1,251,087 332,288 1,583,375 1,209,008 345,483 1,554,491 Total commercial real estate 1,692,573 407,494 2,100,067 1,634,027 425,740 2,059,767 Commercial and industrial loans: Asset based lending 336,749 — 336,749 331,253 — 331,253 Other commercial and industrial loans 516,742 200,649 717,391 495,979 221,031 717,010 Total commercial and industrial loans 853,491 200,649 1,054,140 827,232 221,031 1,048,263 Total commercial loans 2,546,064 608,143 3,154,207 2,461,259 646,771 3,108,030 Residential mortgages: 1-4 family 1,414,338 317,626 1,731,964 1,454,233 332,747 1,786,980 Construction 20,319 1,339 21,658 26,704 1,351 28,055 Total residential mortgages 1,434,657 318,965 1,753,622 1,480,937 334,098 1,815,035 Consumer loans: Home equity 306,451 51,534 357,985 307,159 53,446 360,605 Auto and other 341,127 119,749 460,876 311,328 130,238 441,566 Total consumer loans 647,578 171,283 818,861 618,487 183,684 802,171 Total loans $ 4,628,299 $ 1,098,391 $ 5,726,690 $ 4,560,683 $ 1,164,553 $ 5,725,236 The carrying amount of the acquired loans at March 31, 2016 totaled $1.1 billion . A subset of these loans was determined to have evidence of credit deterioration at acquisition date, which is accounted for in accordance with ASC 310-30. These purchased credit-impaired loans presently maintain a carrying value of $18.3 million (and a note balance of $33.3 million). These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Loans considered not impaired at acquisition date had a carrying amount of $1.1 billion . At December 31, 2015 , acquired loans maintained a carrying value of $1.2 billion and purchased credit-impaired loans totaled $21.4 million (note balance of $40.2 million). Loans considered not impaired at acquisition date had a carrying amount of $1.1 billion . The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer. Three Months Ended March 31, (In thousands) 2016 2015 Balance at beginning of period $ 6,925 $ 2,541 Acquisitions — — Reclassification from nonaccretable difference for loans with improved cash flows 896 1,330 Reclassification to TDR (185 ) — Accretion (1,172 ) (440 ) Balance at end of period $ 6,464 $ 3,431 The following is a summary of past due loans at March 31, 2016 and December 31, 2015 : Business Activities Loans (in thousands) 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Past Due Current Total Loans Past Due > 90 days and Accruing March 31, 2016 Commercial real estate: Construction $ — $ 2,000 $ 59 $ 2,059 $ 214,686 $ 216,745 $ — Single and multi-family — 121 278 399 224,342 224,741 — Other commercial real estate 800 249 4,077 5,126 1,245,961 1,251,087 441 Total 800 2,370 4,414 7,584 1,684,989 1,692,573 441 Commercial and industrial loans: Asset based lending — — — — 336,749 336,749 — Other commercial and industrial loans 1,385 211 7,231 8,827 507,915 516,742 567 Total 1,385 211 7,231 8,827 844,664 853,491 567 Residential mortgages: 1-4 family 2,216 774 3,424 6,414 1,407,924 1,414,338 670 Construction — 45 — 45 20,274 20,319 — Total 2,216 819 3,424 6,459 1,428,198 1,434,657 670 Consumer loans: Home equity 466 23 1,891 2,380 304,071 306,451 25 Auto and other 805 163 379 1,347 339,780 341,127 — Total 1,271 186 2,270 3,727 643,851 647,578 25 Total $ 5,672 $ 3,586 $ 17,339 $ 26,597 $ 4,601,702 $ 4,628,299 $ 1,703 Business Activities Loans (in thousands) 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Past Due Current Total Loans Past Due > 90 days and Accruing December 31, 2015 Commercial real estate: Construction $ — $ — $ 58 $ 58 $ 210,138 $ 210,196 $ — Single and multi-family 65 160 70 295 214,528 214,823 — Other commercial real estate 1,523 831 3,286 5,640 1,203,368 1,209,008 — Total 1,588 991 3,414 5,993 1,628,034 1,634,027 — Commercial and industrial loans: Asset based lending — — — — 331,253 331,253 — Other commercial and industrial loans 1,202 1,105 7,770 10,077 485,902 495,979 146 Total 1,202 1,105 7,770 10,077 817,155 827,232 146 Residential mortgages: 1-4 family 3,537 857 4,304 8,698 1,445,535 1,454,233 2,006 Construction — — — — 26,704 26,704 — Total 3,537 857 4,304 8,698 1,472,239 1,480,937 2,006 Consumer loans: Home equity 563 20 1,658 2,241 304,918 307,159 61 Auto and other 1,230 132 610 1,972 309,356 311,328 59 Total 1,793 152 2,268 4,213 614,274 618,487 120 Total $ 8,120 $ 3,105 $ 17,756 $ 28,981 $ 4,531,702 $ 4,560,683 $ 2,272 Acquired Loans (in thousands) 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Past Due Acquired Credit Impaired Total Loans Past Due > 90 days and Accruing March 31, 2016 Commercial real estate: Construction $ — $ — $ — $ — $ 1,276 $ 39,542 $ — Single and multi-family — — 396 396 1,380 35,664 300 Other commercial real estate 554 36 1,141 1,731 11,334 332,288 209 Total 554 36 1,537 2,127 13,990 407,494 509 Commercial and industrial loans: Asset based lending — — — — — — — Other commercial and industrial loans 604 72 1,891 2,567 2,445 200,649 1,075 Total 604 72 1,891 2,567 2,445 200,649 1,075 Residential mortgages: 1-4 family 1,051 758 2,105 3,914 1,613 317,626 127 Construction — — — — — 1,339 — Total 1,051 758 2,105 3,914 1,613 318,965 127 Consumer loans: Home equity 67 126 586 779 118 51,534 — Auto and other 482 104 757 1,343 118 119,749 — Total 549 230 1,343 2,122 236 171,283 — Total $ 2,758 $ 1,096 $ 6,876 $ 10,730 $ 18,284 $ 1,098,391 $ 1,711 Acquired Loans (in thousands) 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Past Due Acquired Credit Impaired Total Loans Past Due > 90 days and Accruing December 31, 2015 Commercial real estate: — Construction $ — $ — $ — $ — $ 1,298 $ 43,474 $ — Single and multi-family — 176 227 403 1,380 36,783 127 Other commercial real estate 547 43 1,368 1,958 13,087 345,483 — Total 547 219 1,595 2,361 15,765 425,740 127 Commercial and industrial loans: Asset based lending — — — — — — — Other commercial and industrial loans 1,214 505 1,420 3,139 2,775 221,031 785 Total 1,214 505 1,420 3,139 2,775 221,031 785 Residential mortgages: 1-4 family 2,580 311 1,880 4,771 2,572 332,747 212 Construction — — — — — 1,351 — Total 2,580 311 1,880 4,771 2,572 334,098 212 Consumer loans: Home equity 82 277 837 1,196 118 53,446 111 Auto and other 1,491 145 1,081 2,717 132 130,238 187 Total 1,573 422 1,918 3,913 250 183,684 298 Total $ 5,914 $ 1,457 $ 6,813 $ 14,184 $ 21,362 $ 1,164,553 $ 1,422 The following is summary information pertaining to non-accrual loans at March 31, 2016 and December 31, 2015 March 31, 2016 December 31, 2015 (In thousands) Business Activities Loans Acquired Loans (1) Total Business Activities Loans Acquired Loans (2) Total Commercial real estate: Construction $ 59 $ — $ 59 $ 59 $ — $ 59 Single and multi-family 278 96 374 70 100 170 Other commercial real estate 3,636 932 4,568 3,285 1,368 4,653 Total 3,973 1,028 5,001 3,414 1,468 4,882 Commercial and industrial loans: Other commercial and industrial loans 6,664 692 7,356 7,624 597 8,221 Total 6,664 692 7,356 7,624 597 8,221 Residential mortgages: 1-4 family 2,754 1,978 4,732 2,298 1,668 3,966 Construction — — — — — — Total 2,754 1,978 4,732 2,298 1,668 3,966 Consumer loans: Home equity 1,866 586 2,452 1,597 727 2,324 Auto and other 379 757 1,136 551 893 1,444 Total 2,245 1,343 3,588 2,148 1,620 3,768 Total non-accrual loans $ 15,636 $ 5,041 $ 20,677 $ 15,484 $ 5,353 $ 20,837 _______________________________________ (1) At quarter end March 31, 2016 , acquired credit impaired loans accounted for $124.0 thousand of non-accrual loans that are not presented in the above table. (2) At December 31, 2015 , acquired credit impaired loans accounted for $39.0 thousand of non-accrual loans that are not presented in the above table. Loans evaluated for impairment as of March 31, 2016 and December 31, 2015 were as follows: Business Activities Loans (In thousands) Commercial real estate Commercial and industrial loans Residential mortgages Consumer Total March 31, 2016 Loans receivable: Balance at end of period Individually evaluated for impairment $ 13,005 $ 6,269 $ 3,102 $ 2,032 $ 24,408 Collectively evaluated 1,679,568 847,222 1,431,555 645,546 4,603,891 Total $ 1,692,573 $ 853,491 $ 1,434,657 $ 647,578 $ 4,628,299 Business Activities Loans (In thousands) Commercial real estate Commercial and industrial loans Residential mortgages Consumer Total December 31, 2015 Loans receivable: Balance at end of year Individually evaluated for impairment $ 11,560 $ 7,191 $ 2,812 $ 1,810 $ 23,373 Collectively evaluated for impairment 1,622,467 820,041 1,478,125 616,677 4,537,310 Total $ 1,634,027 $ 827,232 $ 1,480,937 $ 618,487 $ 4,560,683 Acquired Loans (In thousands) Commercial Commercial and Residential Consumer Total March 31, 2016 Loans receivable: Balance at end of Period Individually evaluated for impairment $ 4,069 $ 50 $ 650 $ 460 $ 5,229 Purchased credit-impaired loans 13,990 2,445 1,613 236 18,284 Collectively evaluated 389,435 198,154 316,702 170,587 1,074,878 Total $ 407,494 $ 200,649 $ 318,965 $ 171,283 $ 1,098,391 Acquired Loans (In thousands) Commercial real estate Commercial and industrial loans Residential mortgages Consumer Total December 31, 2015 Loans receivable: Balance at end of year Individually evaluated for impairment $ 3,749 $ — $ 570 $ 487 $ 4,806 Purchased credit-impaired loans 15,765 2,775 2,572 250 21,362 Collectively evaluated for impairment 406,226 218,256 330,956 182,947 1,138,385 Total $ 425,740 $ 221,031 $ 334,098 $ 183,684 $ 1,164,553 The following is a summary of impaired loans at March 31, 2016 and December 31, 2015: Business Activities Loans March 31, 2016 (In thousands) Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance: Commercial real estate - construction $ — $ — $ — Commercial real estate - single and multifamily — — — Other commercial real estate loans 2,495 2,495 — Other commercial and industrial loans 200 200 — Residential mortgages - 1-4 family 1,494 1,494 — Consumer - home equity 729 729 — Consumer - other 1 1 — With an allowance recorded: Commercial real estate - construction $ 1,989 $ 2,000 $ 11 Commercial real estate - single and multifamily 128 144 16 Other commercial real estate loans 8,054 8,366 312 Other commercial and industrial loans 5,939 6,069 130 Residential mortgages - 1-4 family 1,457 1,608 151 Consumer - home equity 1,148 1,197 49 Consumer - other 98 105 7 Total Commercial real estate $ 12,666 $ 13,005 $ 339 Commercial and industrial loans 6,139 6,269 130 Residential mortgages 2,951 3,102 151 Consumer 1,976 2,032 56 Total impaired loans $ 23,732 $ 24,408 $ 676 Business Activities Loans December 31, 2015 (In thousands) Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance: Commercial real estate - construction $ 2,000 $ 2,000 $ — Commercial real estate - single and multifamily — — — Other commercial real estate loans 4,613 4,613 — Other commercial and industrial loans 5,828 5,828 — Residential mortgages - 1-4 family 1,181 1,181 — Consumer - home equity 702 702 — Consumer - other 1 1 — With an allowance recorded: Commercial real estate - construction $ — $ — $ — Commercial real estate - single and multifamily — — — Other commercial real estate loans 4,798 4,947 149 Other commercial and industrial loans 1,341 1,362 21 Residential mortgages - 1-4 family 1,479 1,632 153 Consumer - home equity 903 999 96 Consumer - other 101 108 7 Total Commercial real estate $ 11,411 $ 11,560 $ 149 Commercial and industrial loans 7,169 7,190 21 Residential mortgages 2,660 2,813 153 Consumer 1,707 1,810 103 Total impaired loans $ 22,947 $ 23,373 $ 426 Acquired Loans March 31, 2016 (In thousands) Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance: Commercial real estate - construction $ — $ — $ — Commercial real estate - single and multifamily 125 125 — Other commercial real estate loans 478 478 — Other commercial and industrial loans 315 315 — Residential mortgages - 1-4 family — — — Consumer - home equity — — — Consumer - other 152 152 — With an allowance recorded: Commercial real estate - construction $ — $ — $ — Commercial real estate - single and multifamily 780 823 43 Other commercial real estate loans 2,502 2,641 139 Other commercial and industrial loans 50 52 2 Residential mortgages - 1-4 family 298 335 37 Consumer - home equity 284 308 24 Consumer - other — — — Total Commercial real estate $ 3,885 $ 4,067 $ 182 Commercial and industrial loans 365 367 2 Residential mortgages 298 335 37 Consumer 436 460 24 Total impaired loans $ 4,984 $ 5,229 $ 245 Acquired Loans December 31, 2015 (In thousands) Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance: Other commercial real estate loans $ 1,722 $ 1,722 $ — Residential mortgages - 1-4 family 274 274 — Consumer - home equity 117 117 — Consumer - other 177 177 — With an allowance recorded: Commercial real estate - single and multifamily $ 638 $ 655 $ 17 Other commercial real estate loans 1,964 2,032 68 Residential mortgages - 1-4 family 266 296 30 Consumer - home equity 167 192 25 Total Other commercial real estate loans $ 4,324 $ 4,409 $ 85 Other commercial and industrial loans — — — Residential mortgages 540 570 30 Consumer - home equity 461 486 25 Total impaired loans $ 5,325 $ 5,465 $ 140 The following is a summary of the average recorded investment and interest income recognized on impaired loans as of March 31, 2016 and 2015 : Business Activities Loans Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 (in thousands) Average Recorded Investment Cash Basis Interest Income Recognized Average Recorded Investment Cash Basis Interest Income Recognized With no related allowance: Commercial real estate - construction $ — $ — $ 2,628 $ 1 Commercial real estate - single and multifamily — — 180 — Other commercial real estate loans 3,166 — 15,315 131 Commercial and industrial loans 734 13 578 3 Residential mortgages - 1-4 family 1,520 2 3,108 28 Consumer - home equity 663 4 334 — Consumer - other 1 — 115 1 With an allowance recorded: Commercial real estate - construction $ 2,000 $ 28 $ — $ — Commercial real estate - single and multifamily 97 1 — — Other commercial real estate loans 8,143 81 5,267 — Commercial and industrial loans 5,962 84 — — Residential mortgages - 1-4 family 1,619 19 — — Consumer - home equity 1,197 8 — — Consumer - other 106 1 — — Total Commercial real estate $ 13,406 $ 110 $ 23,390 $ 132 Commercial and industrial loans 6,696 97 578 3 Residential mortgages 3,139 21 3,108 28 Consumer loans 1,967 13 449 1 Total impaired loans $ 25,208 $ 241 $ 27,525 $ 164 Acquired Loans Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 (in thousands) Average Recorded Investment Cash Basis Interest Income Recognized Average Recorded Investment Cash Basis Interest Income Recognized With no related allowance: Commercial real estate - construction $ — $ — $ — $ — Commercial real estate - single and multifamily 126 2 2,892 24 Other commercial real estate loans 760 — 1,662 3 Other commercial and industrial loans 261 — 64 3 Residential mortgages - 1-4 family 12 — 670 3 Consumer - home equity — — 197 2 Consumer - other 169 1 — — With an allowance recorded: Commercial real estate - construction $ — $ — $ 666 $ 44 Commercial real estate - single and multifamily 825 11 397 — Other commercial real estate loans 2,569 44 691 — Other commercial and industrial loans 53 — — — Residential mortgages - 1-4 family 334 3 569 — Consumer - home equity 309 2 349 — Consumer - other — — — — Total Other commercial real estate loans $ 4,280 $ 57 $ 6,308 $ 71 Commercial and industrial loans 314 — 64 3 Residential mortgages 346 3 1,239 3 Consumer loans 478 3 546 2 Total impaired loans $ 5,418 $ 63 $ 8,157 $ 79 Troubled Debt Restructuring Loans The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring (TDR), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months . TDRs are evaluated individually for impairment and may result in a specific allowance amount allocated to an individual loan. The following tables include the recorded investment and number of modifications identified during the three months ended March 31, 2016 and for the three months ended March 31, 2015, respectively. The table includes the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. The modifications for the three months ending March 31, 2016 were attributable to interest rate concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity. The modifications for the three months ending March 31, 2015 were attributable to concessions granted as ordered by bankruptcy court, interest rate concessions and maturity date extensions. Three Months Ended March 31, 2016 (Dollars in thousands) Number of Pre-Modification Post-Modification Troubled Debt Restructurings Commercial - Other 2 1,049 1,049 Commercial and industrial - Other 2 151 151 Total 4 1,200 1,200 Three Months Ended March 31, 2015 (Dollars in thousands) Number of Pre-Modification Post-Modification Troubled Debt Restructurings Commercial - Construction 1 $ 123 $ 123 Commercial - Other 1 2,000 2,000 Commercial and industrial - Other 1 33 33 Total 3 $ 2,156 $ 2,156 The following table discloses the recorded investment and number of modifications for TDRs for the prior year where a concession has been made, that then defaulted in the respective reporting period. For the three months ended March 31, 2016, there were no loans that were restructured that had subsequently defaulted during the period. Modifications that Subsequently Defaulted Three Months Ended March 31, 2015 Number of Contracts Recorded Investment Troubled Debt Restructurings Commercial - Other 1 $ 668 The following table presents the Company’s TDR activity for the three months ended March 31, 2016 and 2015 : Three Months Ended March 31, (In thousands) 2016 2015 Balance at beginning of the period $ 22,048 $ 16,714 Principal payments (342 ) (484 ) TDR status change (1) 2,235 — Other reductions/increases (2) (1,487 ) (1,182 ) Newly identified TDRs 1,200 2,156 Balance at end of the period $ 23,654 $ 17,204 _______________________________________ (1) TDR status change classification represents TDR loans with a specified interest rate equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk and the loan was on current payment status and not impaired based on the terms specified by the restructuring agreement. (2) Other reductions classification consists of transfer to other real estate owned and charge-offs and advances to loans. The evaluation of certain loans individually for specific impairment includes loans that were previously classified as TDRs or continue to be classified as TDRs. As of March 31, 2016 , the Company maintained foreclosed residential real estate property with a fair value of $390 thousand . Additionally, residential mortgage loans collateralized by real estate property that are in the process of foreclosure as of March 31, 2016 and December 31, 2015 totaled $5.5 million and $7.5 million , respectively. As of December 31, 2015 , foreclosed residential real estate property totaled $675 thousand . |