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. 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 Massachusetts, southern Vermont, northeastern New York, New Jersey 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 Commerce Bank and Trust Company, 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. Acquired loans that are refinanced are transferred to business activity loans. 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, 2018 December 31, 2017 (In thousands) Business Acquired Total Business Acquired Total Commercial real estate: Construction $ 255,835 $ 91,468 $ 347,303 $ 269,206 $ 84,965 $ 354,171 Single and multi-family 345,180 197,040 542,220 217,083 206,082 423,165 Other commercial real estate 1,680,488 696,726 2,377,214 1,731,418 755,988 2,487,406 Total commercial real estate 2,281,503 985,234 3,266,737 2,217,707 1,047,035 3,264,742 Commercial and industrial loans: 1,195,642 623,332 1,818,974 1,182,569 621,370 1,803,939 Total commercial loans 3,477,145 1,608,566 5,085,711 3,400,276 1,668,405 5,068,681 Residential mortgages: 1-4 family 1,900,592 274,890 2,175,482 1,808,024 289,373 2,097,397 Construction 6,121 204 6,325 5,177 233 5,410 Total residential mortgages 1,906,713 275,094 2,181,807 1,813,201 289,606 2,102,807 Consumer loans: Home equity 291,094 109,019 400,113 294,954 115,227 410,181 Auto and other 607,726 101,060 708,786 603,767 113,902 717,669 Total consumer loans 898,820 210,079 1,108,899 898,721 229,129 1,127,850 Total loans $ 6,282,678 $ 2,093,739 $ 8,376,417 $ 6,112,198 $ 2,187,140 $ 8,299,338 The carrying amount of the acquired loans at March 31, 2018 totaled $2.1 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 $93.6 million (and a note balance of $202.8 million ). These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Loans considered not credit-impaired at acquisition date had a carrying amount of $2.0 billion . At December 31, 2017, acquired loans maintained a carrying value of $2.2 billion and purchased credit-impaired loans totaled $97.3 million (note balance of $208.7 million). Loans considered not credit-impaired at acquisition date had a carrying amount of $2.1 billion . The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality : Three Months Ended March 31, (In thousands) 2018 2017 Balance at beginning of period $ 11,561 $ 8,738 Reclassification from nonaccretable difference for loans with improved cash flows 1,742 418 Change in cash flows that do not affect nonaccretable difference (188 ) (747 ) Accretion (2,723 ) (1,046 ) Balance at end of period $ 10,392 $ 7,363 The following is a summary of past due loans at March 31, 2018 and December 31, 2017: Business Activities Loans (In thousands) 30-59 Days 60-89 Days 90 Total Past Current Total Loans Past Due > March 31, 2018 Commercial real estate: Construction $ — $ — $ — $ — $ 255,835 $ 255,835 $ — Single and multi-family — — 443 443 344,737 345,180 10 Other commercial real estate 1,673 15,305 5,580 22,558 1,657,930 1,680,488 64 Total 1,673 15,305 6,023 23,001 2,258,502 2,281,503 74 Commercial and industrial loans: Total 1,492 1,275 5,876 8,643 1,186,999 1,195,642 4 Residential mortgages: 1-4 family 861 543 2,465 3,869 1,896,723 1,900,592 425 Construction — — — — 6,121 6,121 — Total 861 543 2,465 3,869 1,902,844 1,906,713 425 Consumer loans: Home equity 161 99 2,695 2,955 288,139 291,094 97 Auto and other 2,174 695 1,774 4,643 603,083 607,726 112 Total 2,335 794 4,469 7,598 891,222 898,820 209 Total $ 6,361 $ 17,917 $ 18,833 $ 43,111 $ 6,239,567 $ 6,282,678 $ 712 Business Activities Loans (In thousands) 30-59 Days 60-89 Days 90 Total Past Current Total Loans Past Due > December 31, 2017 Commercial real estate: Construction $ — $ — $ — $ — $ 269,206 $ 269,206 $ — Single and multi-family — — 451 451 216,632 217,083 — Other commercial real estate 1,925 48 5,023 6,996 1,724,422 1,731,418 457 Total 1,925 48 5,474 7,447 2,210,260 2,217,707 457 Commercial and industrial loans: Total 4,031 1,912 6,023 11,966 1,170,603 1,182,569 128 Residential mortgages: 1-4 family 2,412 242 2,186 4,840 1,803,184 1,808,024 520 Construction — — — — 5,177 5,177 — Total 2,412 242 2,186 4,840 1,808,361 1,813,201 520 Consumer loans: Home equity 444 1,235 1,747 3,426 291,528 294,954 120 Auto and other 3,389 599 1,597 5,585 598,182 603,767 143 Total 3,833 1,834 3,344 9,011 889,710 898,721 263 Total $ 12,201 $ 4,036 $ 17,027 $ 33,264 $ 6,078,934 $ 6,112,198 $ 1,368 Acquired Loans (In thousands) 30-59 Days 60-89 Days 90 Total Past Acquired Total Loans Past Due > March 31, 2018 Commercial real estate: Construction $ — $ — $ — $ — $ 7,651 $ 91,468 $ — Single and multi-family 185 — 228 413 2,530 197,040 — Other commercial real estate 225 — 4,958 5,183 37,704 696,726 1,050 Total 410 — 5,186 5,596 47,885 985,234 1,050 Commercial and industrial loans: Total 822 107 1,906 2,835 36,461 623,332 348 Residential mortgages: 1-4 family 434 396 3,736 4,566 6,903 274,890 — Construction — — — — — 204 — Total 434 396 3,736 4,566 6,903 275,094 — Consumer loans: Home equity 216 81 1,251 1,548 1,965 109,019 — Auto and other 277 57 500 834 431 101,060 15 Total 493 138 1,751 2,382 2,396 210,079 15 Total $ 2,159 $ 641 $ 12,579 $ 15,379 $ 93,645 $ 2,093,739 $ 1,413 Acquired Loans (In thousands) 30-59 Days 60-89 Days 90 Total Past Acquired Total Loans Past Due > December 31, 2017 Commercial real estate: — Construction $ — $ — $ — $ — $ 7,655 $ 84,965 $ — Single and multi-family 671 — 203 874 2,846 206,082 — Other commercial real estate 816 1,875 2,156 4,847 42,801 755,988 109 Total 1,487 1,875 2,359 5,721 53,302 1,047,035 109 Commercial and industrial loans: Total 1,252 268 1,439 2,959 34,629 621,370 23 Residential mortgages: 1-4 family 957 2,581 1,247 4,785 6,974 289,373 30 Construction — — — — — 233 — Total 957 2,581 1,247 4,785 6,974 289,606 30 Consumer loans: Home equity 286 40 1,965 2,291 1,956 115,227 — Auto and other 346 135 430 911 483 113,902 38 Total 632 175 2,395 3,202 2,439 229,129 38 Total $ 4,328 $ 4,899 $ 7,440 $ 16,667 $ 97,344 $ 2,187,140 $ 200 The following is summary information pertaining to non-accrual loans at March 31, 2018 and December 31, 2017: March 31, 2018 December 31, 2017 (In thousands) Business Acquired Total Business Acquired Total Commercial real estate: Construction $ — $ — $ — $ — $ — $ — Single and multi-family 433 228 661 451 203 654 Other commercial real estate 5,516 3,908 9,424 4,566 2,047 6,613 Total 5,949 4,136 10,085 5,017 2,250 7,267 Commercial and industrial loans: Total 5,872 1,558 7,430 5,895 1,333 7,228 Residential mortgages: 1-4 family 2,040 3,736 5,776 1,666 1,217 2,883 Construction — — — — — — Total 2,040 3,736 5,776 1,666 1,217 2,883 Consumer loans: Home equity 2,598 1,251 3,849 1,627 1,965 3,592 Auto and other 1,662 485 2,147 1,454 392 1,846 Total 4,260 1,736 5,996 3,081 2,357 5,438 Total non-accrual loans $ 18,121 $ 11,166 $ 29,287 $ 15,659 $ 7,157 $ 22,816 _______________________________________ (1) At quarter end March 31, 2018 , there were no acquired credit impaired loans greater than 90 days past due. (2) At December 31, 2017, 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, 2018 and December 31, 2017 were as follows: Business Activities Loans (In thousands) Commercial Commercial and Residential Consumer Total March 31, 2018 Loans receivable: Balance at end of period Individually evaluated for impairment $ 33,094 $ 6,913 $ 2,466 $ 1,845 $ 44,318 Collectively evaluated for impairment 2,248,409 1,188,729 1,904,247 896,975 6,238,360 Total $ 2,281,503 $ 1,195,642 $ 1,906,713 $ 898,820 $ 6,282,678 Business Activities Loans (In thousands) Commercial Commercial and Residential Consumer Total December 31, 2017 Loans receivable: Balance at end of year Individually evaluated for impairment $ 33,732 $ 5,761 $ 3,872 $ — $ 43,365 Collectively evaluated for impairment 2,183,975 1,176,808 1,809,329 898,721 6,068,833 Total $ 2,217,707 $ 1,182,569 $ 1,813,201 $ 898,721 $ 6,112,198 Acquired Loans (In thousands) Commercial Commercial and Residential Consumer Total March 31, 2018 Loans receivable: Balance at end of Period Individually evaluated for impairment $ 5,424 $ 745 $ 2,695 $ 1,094 $ 9,958 Purchased credit-impaired loans 47,885 36,461 6,903 2,396 93,645 Collectively evaluated for impairment 931,925 586,126 265,496 206,589 1,990,136 Total $ 985,234 $ 623,332 $ 275,094 $ 210,079 $ 2,093,739 Acquired Loans (In thousands) Commercial Commercial and Residential Consumer Total December 31, 2017 Loans receivable: Balance at end of year Individually evaluated for impairment $ 4,244 $ 421 $ 2,617 $ 27 $ 7,309 Purchased credit-impaired loans 53,302 34,629 6,974 2,439 97,344 Collectively evaluated for impairment 989,489 586,320 280,015 226,663 2,082,487 Total $ 1,047,035 $ 621,370 $ 289,606 $ 229,129 $ 2,187,140 The following is a summary of impaired loans at March 31, 2018 and December 31, 2017: Business Activities Loans March 31, 2018 (In thousands) Recorded Investment (1) Unpaid Principal Related Allowance With no related allowance: Commercial real estate - single and multifamily $ — $ — $ — Other commercial real estate loans 20,286 23,042 — Commercial and industrial loans 3,091 3,846 — Residential mortgages - 1-4 family 1,011 1,433 — Consumer - home equity 1,784 2,415 — Consumer - other — — — With an allowance recorded: Commercial real estate - single and multifamily $ 309 $ 323 $ 1 Other commercial real estate loans 12,835 15,762 173 Commercial and industrial loans 3,915 4,494 296 Residential mortgages - 1-4 family 1,478 1,580 137 Consumer - home equity 45 53 1 Consumer - other 16 16 1 Total Commercial real estate $ 33,430 $ 39,127 $ 174 Commercial and industrial loans 7,006 8,340 296 Residential mortgages 2,489 3,013 137 Consumer 1,845 2,484 2 Total impaired loans $ 44,770 $ 52,964 $ 609 (1) The Recorded Investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs. This amount is a component of total loans on the Consolidated Balance Sheet. (2) The Unpaid Principal Balance represents the customer's legal obligation to the Company. Business Activities Loans December 31, 2017 (In thousands) Recorded Investment (1) Unpaid Principal Related Allowance With no related allowance: Commercial real estate - single and multifamily $ 1,077 $ 3,607 $ — Other commercial real estate loans 18,285 18,611 — Commercial and industrial loans 2,060 2,629 — Residential mortgages - 1-4 family 660 1,075 — Consumer - home equity 867 1,504 — With an allowance recorded: Commercial real estate - construction $ 159 $ 159 $ 1 Commercial real estate - single and multifamily 159 171 1 Other commercial real estate loans 14,321 15,235 227 Commercial and industrial loans 3,716 4,249 66 Residential mortgages - 1-4 family 1,344 1,446 130 Consumer - home equity 1,014 999 34 Consumer - other 17 17 1 Total Commercial real estate $ 34,001 $ 37,783 $ 229 Commercial and industrial loans 5,776 6,878 66 Residential mortgages 2,004 2,521 130 Consumer 1,898 2,520 35 Total impaired loans $ 43,679 $ 49,702 $ 460 (1) The Recorded Investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs. This amount is a component of total loans on the Consolidated Balance Sheet. (2) The Unpaid Principal Balance represents the customer's legal obligation to the Company. Acquired Loans March 31, 2018 (In thousands) Recorded Investment (1) Unpaid Principal Related Allowance With no related allowance: Commercial real estate - single and multifamily $ 185 $ 276 $ — Other commercial real estate loans 2,400 5,192 — Commercial and industrial loans 574 1,618 — Residential mortgages - 1-4 family 697 709 — Consumer - home equity 754 1,303 — Consumer - other 17 18 — With an allowance recorded: Commercial real estate - single and multifamily $ 766 $ 763 $ 12 Other commercial real estate loans 2,082 2,093 29 Commercial and industrial loans 178 176 3 Residential mortgages - 1-4 family 2,004 2,385 506 Consumer - home equity 323 362 30 Total x Commercial real estate $ 5,433 $ 8,324 $ 41 Commercial and industrial loans 752 1,794 3 Residential mortgages 2,701 3,094 506 Consumer 1,094 1,683 30 Total impaired loans $ 9,980 $ 14,895 $ 580 (1) The Recorded Investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs. This amount is a component of total loans on the Consolidated Balance Sheet. (2) The Unpaid Principal Balance represents the customer's legal obligation to the Company. Acquired Loans December 31, 2017 (In thousands) Recorded Investment (1) Unpaid Principal Related Allowance With no related allowance: Commercial real estate - single and multifamily $ 204 $ 290 $ — Other commercial real estate loans 1,123 2,794 — Other commercial and industrial loans 255 310 — Residential mortgages - 1-4 family 658 671 — Consumer - home equity 1,374 1,654 — Consumer - other 27 27 — With an allowance recorded: Commercial real estate - single and multifamily $ 887 $ 880 $ 18 Other commercial real estate loans 2,043 1,661 38 Commercial and industrial loans 165 166 1 Residential mortgages - 1-4 family 166 185 9 Consumer - home equity 433 540 45 Total Commercial real estate $ 4,257 $ 5,625 $ 56 Commercial and industrial loans 420 476 1 Residential mortgages 824 856 9 Consumer 1,834 2,221 45 Total impaired loans $ 7,335 $ 9,178 $ 111 (1) The Recorded Investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs. This amount is a component of total loans on the Consolidated Balance Sheet. (2) The Unpaid Principal Balance represents the customer's legal obligation to the Company. The following is a summary of the average recorded investment and interest income recognized on impaired loans as of March 31, 2018 and 2017: Business Activities Loans Three Months Ended Three Months Ended (In thousands) Average Cash Basis Average Cash Basis With no related allowance: Commercial real estate - single and multifamily $ — $ — $ 153 $ — Other commercial real estate loans 20,272 91 20,756 217 Commercial and industrial loans 2,625 62 1,350 5 Residential mortgages - 1-4 family 807 14 2,025 18 Consumer - home equity 1,730 2 1,574 19 Consumer - other — — — — With an allowance recorded: Commercial real estate - single and multifamily $ 311 $ 2 $ 181 $ — Other commercial real estate loans 12,887 167 7,011 71 Commercial and industrial loans 3,933 64 5,876 143 Residential mortgages - 1-4 family 1,484 17 939 14 Consumer - home equity 46 1 1,149 8 Consumer - other 17 — — — Total Commercial real estate $ 33,470 $ 260 $ 28,101 $ 288 Commercial and industrial loans 6,558 126 7,226 148 Residential mortgages 2,291 31 2,964 32 Consumer loans 1,793 3 2,723 27 Total impaired loans $ 44,112 $ 420 $ 41,014 $ 495 Acquired Loans Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 (In thousands) Average Cash Basis Average Cash Basis With no related allowance: Commercial real estate - single and multifamily $ 191 $ 5 $ 721 $ 31 Other commercial real estate loans 2,157 41 1,272 21 Commercial and industrial loans 425 9 403 — Residential mortgages - 1-4 family 700 4 409 6 Consumer - home equity 953 — — — Consumer - other 19 1 — — With an allowance recorded: Commercial real estate - single and multifamily $ 769 $ 10 $ 915 $ 12 Other commercial real estate loans 2,107 27 1,494 19 Commercial and industrial loans 61 2 362 13 Residential mortgages - 1-4 family 1,520 1 98 1 Consumer - home equity 324 4 743 4 Consumer - other — — — — Total Other commercial real estate loans $ 5,224 $ 83 $ 4,402 $ 83 Commercial and industrial loans 486 11 765 13 Residential mortgages 2,220 5 507 7 Consumer loans 1,296 5 743 4 Total impaired loans $ 9,226 $ 104 $ 6,417 $ 107 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, 2018 and 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, 2018 and 2017 were attributable to interest rate concessions, principal concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity. Three Months Ended March 31, 2018 (Dollars in thousands) Number of Pre-Modification Post-Modification Troubled Debt Restructurings Commercial and industrial 4 $ 1,995 $ 1,924 Residential - 1-4 Family 1 118 118 Consumer - Home Equity — — — Total 5 $ 2,113 $ 2,042 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 The following table discloses the recorded investments and numbers of modifications for TDRs where a concession has been made within the previous 12 months, that then defaulted in the respective reporting period. For the three months ended March 31, 2018, there were no loans that were restructured that had subsequently defaulted during the period. For the three months ended March 31, 2017, there were two 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 1 $ 101 The following table presents the Company’s TDR activity for the three months ended March 31, 2018 and 2017: Three Months Ended March 31, (In thousands) 2018 2017 Balance at beginning of the period $ 41,990 $ 33,829 Principal payments (639 ) (888 ) TDR status change (1) — — Other reductions/increases (2) (288 ) (840 ) Newly identified TDRs 2,042 2,598 Balance at end of the period $ 43,105 $ 34,699 _________________________________ (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, 2018 , the Company maintained no foreclosed residential real estate property. Additionally, residential mortgage loans collateralized by real estate property that are in the process of foreclosure as of March 31, 2018 and December 31, 2017 totaled $7.2 million and $4.9 million , respectively. |