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 First Choice Bank, Parke Bank, 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. Business activity and acquired loans are serviced, managed, and accounted for under the Company's same control environment. The following is a summary of total loans: March 31, 2017 December 31, 2016 (in thousands) Business Acquired Total Business Acquired Total Commercial real estate: Construction $ 281,134 $ 24,976 $ 306,110 $ 253,302 $ 34,207 $ 287,509 Single and multi-family 339,259 105,673 444,932 191,819 125,672 317,491 Other commercial real estate 1,405,948 516,373 1,922,321 1,481,223 530,215 2,011,438 Total commercial real estate 2,026,341 647,022 2,673,363 1,926,344 690,094 2,616,438 Commercial and industrial loans: Asset based lending 351,992 — 351,992 321,270 — 321,270 Other commercial and industrial loans 664,783 129,350 794,133 586,832 153,936 740,768 Total commercial and industrial loans 1,016,775 129,350 1,146,125 908,102 153,936 1,062,038 Total commercial loans 3,043,116 776,372 3,819,488 2,834,446 844,030 3,678,476 Residential mortgages: 1-4 family 1,548,762 289,665 1,838,427 1,583,794 297,355 1,881,149 Construction 11,545 712 12,257 11,178 804 11,982 Total residential mortgages 1,560,307 290,377 1,850,684 1,594,972 298,159 1,893,131 Consumer loans: Home equity 312,639 77,308 389,947 313,521 80,279 393,800 Auto and other 497,156 98,658 595,814 478,368 106,012 584,380 Total consumer loans 809,795 175,966 985,761 791,889 186,291 978,180 Total loans $ 5,413,218 $ 1,242,715 $ 6,655,933 $ 5,221,307 $ 1,328,480 $ 6,549,787 The carrying amount of the acquired loans at March 31, 2017 totaled $1.2 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 $44.3 million (and a note balance of $79.3 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 $1.2 billion . At December 31, 2016, acquired loans maintained a carrying value of $1.3 billion and purchased credit-impaired loans totaled $46.8 million (note balance of $86.6 million). Loans considered not impaired at acquisition date had a carrying amount of $1.3 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) 2017 2016 Balance at beginning of period $ 8,738 $ 6,925 Reclassification from nonaccretable difference for loans with improved cash flows 418 896 Change in cash flows that do not affect nonaccretable difference (747 ) — Reclassification to TDR — (185 ) Accretion (1,046 ) (1,172 ) Balance at end of period $ 7,363 $ 6,464 The following is a summary of past due loans at March 31, 2017 and December 31, 2016: Business Activities Loans (in thousands) 30-59 Days 60-89 Days 90 Total Past Current Total Loans Past Due > March 31, 2017 Commercial real estate: Construction $ — $ — $ — $ — $ 281,134 $ 281,134 $ — Single and multi-family 118 — 513 631 338,628 339,259 — Other commercial real estate 2,080 1,136 6,608 9,824 1,396,124 1,405,948 641 Total 2,198 1,136 7,121 10,455 2,015,886 2,026,341 641 Commercial and industrial loans: Asset based lending — — — — 351,992 351,992 — Other commercial and industrial loans 1,583 1,405 7,124 10,112 654,671 664,783 6 Total 1,583 1,405 7,124 10,112 1,006,663 1,016,775 6 Residential mortgages: 1-4 family 2,125 66 3,830 6,021 1,542,741 1,548,762 1,274 Construction — — — — 11,545 11,545 — Total 2,125 66 3,830 6,021 1,554,286 1,560,307 1,274 Consumer loans: Home equity 581 50 2,485 3,116 309,523 312,639 85 Auto and other 1,624 428 1,195 3,247 493,909 497,156 22 Total 2,205 478 3,680 6,363 803,432 809,795 107 Total $ 8,111 $ 3,085 $ 21,755 $ 32,951 $ 5,380,267 $ 5,413,218 $ 2,028 Business Activities Loans (in thousands) 30-59 Days 60-89 Days 90 Total Past Current Total Loans Past Due > December 31, 2016 Commercial real estate: Construction $ — $ — $ — $ — $ 253,302 $ 253,302 $ — Single and multi-family 618 110 624 1,352 190,467 191,819 155 Other commercial real estate 481 2,243 4,212 6,936 1,474,287 1,481,223 — Total 1,099 2,353 4,836 8,288 1,918,056 1,926,344 155 Commercial and industrial loans: Asset based lending — — — — 321,270 321,270 — Other commercial and industrial loans 3,090 1,301 6,290 10,681 576,151 586,832 5 Total 3,090 1,301 6,290 10,681 897,421 908,102 5 Residential mortgages: 1-4 family 1,393 701 4,179 6,273 1,577,521 1,583,794 1,956 Construction 10 — — 10 11,168 11,178 — Total 1,403 701 4,179 6,283 1,588,689 1,594,972 1,956 Consumer loans: Home equity 99 — 2,981 3,080 310,441 313,521 306 Auto and other 2,483 494 968 3,945 474,423 478,368 16 Total 2,582 494 3,949 7,025 784,864 791,889 322 Total $ 8,174 $ 4,849 $ 19,254 $ 32,277 $ 5,189,030 $ 5,221,307 $ 2,438 Acquired Loans (in thousands) 30-59 Days 60-89 Days 90 Total Past Acquired Total Loans Past Due > March 31, 2017 Commercial real estate: Construction $ — $ — $ — $ — $ — $ 24,976 $ — Single and multi-family 81 — 558 639 3,381 105,673 — Other commercial real estate 463 — 782 1,245 27,123 516,373 102 Total 544 — 1,340 1,884 30,504 647,022 102 Commercial and industrial loans: Asset based lending — — — — — — — Other commercial and industrial loans 325 128 1,228 1,681 5,282 129,350 18 Total 325 128 1,228 1,681 5,282 129,350 18 Residential mortgages: 1-4 family 674 84 1,416 2,174 7,269 289,665 — Construction — — — — — 712 — Total 674 84 1,416 2,174 7,269 290,377 — Consumer loans: Home equity 80 396 1,353 1,829 893 77,308 514 Auto and other 431 239 1,464 2,134 383 98,658 767 Total 511 635 2,817 3,963 1,276 175,966 1,281 Total $ 2,054 $ 847 $ 6,801 $ 9,702 $ 44,331 $ 1,242,715 $ 1,401 Acquired Loans (in thousands) 30-59 Days 60-89 Days 90 Total Past Acquired Total Loans Past Due > December 31, 2016 Commercial real estate: — Construction $ — $ — $ — $ — $ 47 $ 34,207 $ — Single and multi-family 2 — 437 439 4,726 125,672 — Other commercial real estate 1,555 — 765 2,320 30,047 530,215 — Total 1,557 — 1,202 2,759 34,820 690,094 — Commercial and industrial loans: Asset based lending — — — — — — — Other commercial and industrial loans 1,850 15 1,262 3,127 3,369 153,936 24 Total 1,850 15 1,262 3,127 3,369 153,936 24 Residential mortgages: 1-4 family 321 343 2,015 2,679 7,283 297,355 443 Construction — — — — — 804 — Total 321 343 2,015 2,679 7,283 298,159 443 Consumer loans: Home equity 753 — 870 1,623 957 80,279 353 Auto and other 542 314 1,686 2,542 387 106,012 791 Total 1,295 314 2,556 4,165 1,344 186,291 1,144 Total $ 5,023 $ 672 $ 7,035 $ 12,730 $ 46,816 $ 1,328,480 $ 1,611 The following is summary information pertaining to non-accrual loans at March 31, 2017 and December 31, 2016: March 31, 2017 December 31, 2016 (in thousands) Business Acquired Total Business Acquired Total Commercial real estate: Construction $ — $ — $ — $ — $ — $ — Single and multi-family 513 521 1,034 469 437 906 Other commercial real estate 5,967 717 6,684 4,212 765 4,977 Total 6,480 1,238 7,718 4,681 1,202 5,883 Commercial and industrial loans: Other commercial and industrial loans 7,118 1,127 8,245 6,285 1,155 7,440 Total 7,118 1,127 8,245 6,285 1,155 7,440 Residential mortgages: 1-4 family 2,556 1,402 3,958 2,223 1,572 3,795 Construction — — — — — — Total 2,556 1,402 3,958 2,223 1,572 3,795 Consumer loans: Home equity 2,400 838 3,238 2,675 517 3,192 Auto and other 1,173 697 1,870 952 895 1,847 Total 3,573 1,535 5,108 3,627 1,412 5,039 Total non-accrual loans $ 19,727 $ 5,302 $ 25,029 $ 16,816 $ 5,341 $ 22,157 _______________________________________ (1) At quarter end March 31, 2017 , acquired credit impaired loans accounted for $98 thousand of loans greater than 90 days past due that are not presented in the above table. (2) At December 31, 2016, acquired credit impaired loans accounted for $83 thousand of loans greater than 90 days past due that are not presented in the above table. Loans evaluated for impairment as of March 31, 2017 and December 31, 2016 were as follows: Business Activities Loans (in thousands) Commercial Commercial and Residential Consumer Total March 31, 2017 Loans receivable: Balance at end of period Individually evaluated for impairment $ 29,208 $ 6,460 $ 2,798 $ 2,380 $ 40,846 Collectively evaluated for impairment 1,997,133 1,010,315 1,557,509 807,415 5,372,372 Total $ 2,026,341 $ 1,016,775 $ 1,560,307 $ 809,795 $ 5,413,218 Business Activities Loans (in thousands) Commercial Commercial and Residential Consumer Total December 31, 2016 Loans receivable: Balance at end of year Individually evaluated for impairment $ 25,549 $ 5,705 $ 2,775 $ 2,703 $ 36,732 Collectively evaluated for impairment 1,900,795 902,397 1,592,197 789,186 5,184,575 Total $ 1,926,344 $ 908,102 $ 1,594,972 $ 791,889 $ 5,221,307 Acquired Loans (in thousands) Commercial Commercial and Residential Consumer Total March 31, 2017 Loans receivable: Balance at end of Period Individually evaluated for impairment $ 3,325 $ 654 $ 494 $ 741 $ 5,214 Purchased credit-impaired loans 30,504 5,282 7,269 1,276 44,331 Collectively evaluated for impairment 613,193 123,414 282,614 173,949 1,193,170 Total $ 647,022 $ 129,350 $ 290,377 $ 175,966 $ 1,242,715 Acquired Loans (in thousands) Commercial Commercial and Residential Consumer Total December 31, 2016 Loans receivable: Balance at end of year Individually evaluated for impairment $ 4,256 $ 635 $ 308 $ 406 $ 5,605 Purchased credit-impaired loans 34,820 3,369 7,283 1,344 46,816 Collectively evaluated for impairment 651,018 149,932 290,568 184,541 1,276,059 Total $ 690,094 $ 153,936 $ 298,159 $ 186,291 $ 1,328,480 The following is a summary of impaired loans at March 31, 2017 and December 31, 2016: Business Activities Loans March 31, 2017 (in thousands) Recorded Investment Unpaid Principal Related Allowance With no related allowance: Commercial real estate - construction $ — $ — $ — Commercial real estate - single and multifamily 151 151 — Other commercial real estate loans 20,710 20,710 — Other commercial and industrial loans 1,051 1,051 — Residential mortgages - 1-4 family 1,797 1,797 — Consumer - home equity 1,232 1,232 — Consumer - other — — — With an allowance recorded: Commercial real estate - construction $ — $ — $ — Commercial real estate - single and multifamily 181 182 1 Other commercial real estate loans 8,085 8,165 80 Other commercial and industrial loans 5,286 5,409 123 Residential mortgages - 1-4 family 865 1,001 136 Consumer - home equity 1,098 1,148 50 Consumer - other — — — Total Commercial real estate $ 29,127 $ 29,208 $ 81 Commercial and industrial loans 6,337 6,460 123 Residential mortgages 2,662 2,798 136 Consumer 2,330 2,380 50 Total impaired loans $ 40,456 $ 40,846 $ 390 Business Activities Loans December 31, 2016 (in thousands) Recorded Investment Unpaid Principal Related Allowance With no related allowance: Commercial real estate - construction $ — $ — $ — Commercial real estate - single and multifamily — — — Other commercial real estate loans 18,905 18,905 — Other commercial and industrial loans 382 382 — Residential mortgages - 1-4 family 2,101 2,101 — Consumer - home equity 1,605 1,605 — Consumer - other — — — With an allowance recorded: Commercial real estate - construction $ — $ — $ — Commercial real estate - single and multifamily 179 181 2 Other commercial real estate loans 6,306 6,462 156 Other commercial and industrial loans 5,060 5,324 264 Residential mortgages - 1-4 family 538 674 136 Consumer - home equity 942 1,098 156 Consumer - other — — — Total Commercial real estate $ 25,390 $ 25,548 $ 158 Commercial and industrial loans 5,442 5,706 264 Residential mortgages 2,639 2,775 136 Consumer 2,547 2,703 156 Total impaired loans $ 36,018 $ 36,732 $ 714 Acquired Loans March 31, 2017 (in thousands) Recorded Investment Unpaid Principal Related Allowance With no related allowance: Commercial real estate - single and multifamily $ 521 $ 521 $ — Other commercial real estate loans 403 403 — Other commercial and industrial loans 298 298 — Residential mortgages - 1-4 family 397 397 — With an allowance recorded: Commercial real estate - single and multifamily $ 883 $ 911 $ 28 Other commercial real estate loans 1,455 1,490 35 Other commercial and industrial loans 350 356 6 Residential mortgages - 1-4 family 93 97 4 Consumer - home equity 672 741 69 Total x Commercial real estate $ 3,262 $ 3,325 $ 63 Commercial and industrial loans 648 654 6 Residential mortgages 490 494 4 Consumer 672 741 69 Total impaired loans $ 5,072 $ 5,214 $ 142 Acquired Loans December 31, 2016 (in thousands) Recorded Investment Unpaid Principal Related Allowance With no related allowance: Commercial real estate - single and multifamily $ — $ — $ — Other commercial real estate loans 547 547 — Other commercial and industrial loans — — — Residential mortgages - 1-4 family 208 208 — With an allowance recorded: Commercial real estate - single and multifamily $ 1,250 $ 1,358 $ 108 Other commercial real estate loans 2,209 2,351 142 Other commercial and industrial loans 576 635 59 Residential mortgages - 1-4 family 89 100 11 Consumer - home equity 292 406 114 Total Commercial real estate $ 4,006 $ 4,256 $ 250 Commercial and industrial loans 576 635 59 Residential mortgages 297 308 11 Consumer 292 406 114 Total impaired loans $ 5,171 $ 5,605 $ 434 The following is a summary of the average recorded investment and interest income recognized on impaired loans as of March 31, 2017 and 2016: Business Activities Loans Three Months Ended March 31, 2017 Three Months Ended March 31, 2016 (in thousands) Average Recorded Cash Basis Interest Average Recorded Cash Basis Interest With no related allowance: Commercial real estate - construction $ — $ — $ — $ — Commercial real estate - single and multifamily 153 — — — Other commercial real estate loans 20,756 217 3,166 — Other commercial and industrial loans 1,350 5 734 13 Residential mortgages - 1-4 family 2,025 18 1,520 2 Consumer - home equity 1,574 19 663 4 Consumer - other — — 1 — With an allowance recorded: Commercial real estate - construction $ — $ — $ 2,000 $ 28 Commercial real estate - single and multifamily 181 — 97 1 Other commercial real estate loans 7,011 71 8,143 81 Other commercial and industrial loans 5,876 143 5,962 84 Residential mortgages - 1-4 family 939 14 1,619 19 Consumer - home equity 1,149 8 1,197 8 Consumer - other — — 106 1 Total Commercial real estate $ 28,101 $ 288 $ 13,406 $ 110 Commercial and industrial loans 7,226 148 6,696 97 Residential mortgages 2,964 32 3,139 21 Consumer loans 2,723 27 1,967 13 Total impaired loans $ 41,014 $ 495 $ 25,208 $ 241 Acquired Loans Three Months Ended March 31, 2017 Three Months Ended March 31, 2016 (in thousands) Average Recorded Cash Basis Interest Average Recorded Cash Basis Interest With no related allowance: Commercial real estate - construction $ — $ — $ — $ — Commercial real estate - single and multifamily 721 31 126 2 Other commercial real estate loans 1,272 21 760 — Other commercial and industrial loans 403 — 261 — Residential mortgages - 1-4 family 409 6 12 — Consumer - home equity — — — — Consumer - other — — 169 1 With an allowance recorded: Commercial real estate - construction $ — $ — $ — $ — Commercial real estate - single and multifamily 915 12 825 11 Other commercial real estate loans 1,494 19 2,569 44 Other commercial and industrial loans 362 13 53 — Residential mortgages - 1-4 family 98 1 334 3 Consumer - home equity 743 4 309 2 Consumer - other — — — — Total Other commercial real estate loans $ 4,402 $ 83 $ 4,280 $ 57 Commercial and industrial loans 765 13 314 — Residential mortgages 507 7 346 3 Consumer loans 743 4 478 3 Total impaired loans $ 6,417 $ 107 $ 5,418 $ 63 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, 2017 . 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 ended March 31, 2017 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, 2016 were attributable to interest rate concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity. Three Months Ended March 31, 2017 (Dollars in thousands) Number of Pre-Modification Post-Modification Troubled Debt Restructurings Commercial - Other 6 $ 2,832 $ 2,333 Commercial and industrial - Other 1 24 24 Residential - 1-4 Family 2 205 188 Consumer - Home Equity 1 53 53 Total 10 $ 3,114 $ 2,598 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 The following table discloses the recorded investments and numbers of modifications for TDRs 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, 2017 (Dollars in thousands) Number of Contracts Recorded Investment Troubled Debt Restructurings Commercial - Other 1 $ 113 Commercial and industrial- Other 1 $ 101 The following table presents the Company’s TDR activity for the three months ended March 31, 2017 and 2016: Three Months Ended March 31, (in thousands) 2017 2016 Balance at beginning of the period $ 33,829 $ 22,048 Principal payments (888 ) (342 ) TDR status change (1) — 2,235 Other reductions/increases (2) (840 ) (1,487 ) Newly identified TDRs 2,598 1,200 Balance at end of the period $ 34,699 $ 23,654 _________________________________ (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, 2017 , the Company maintained foreclosed residential real estate property with a fair value of $71 thousand . Additionally, residential mortgage loans collateralized by real estate property that are in the process of foreclosure as of March 31, 2017 and December 31, 2016 totaled $5.6 million and $4.8 million , respectively. As of December 31, 2016, foreclosed residential real estate property totaled $151 thousand . |