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: June 30, 2018 December 31, 2017 (In thousands) Business Acquired Total Business Acquired Total Commercial real estate: Construction $ 345,896 $ 59,268 $ 405,164 $ 269,206 $ 84,965 $ 354,171 Single and multi-family 378,434 195,865 574,299 217,083 206,082 423,165 Other commercial real estate 1,644,666 695,194 2,339,860 1,731,418 755,988 2,487,406 Total commercial real estate 2,368,996 950,327 3,319,323 2,217,707 1,047,035 3,264,742 Commercial and industrial loans: 1,355,864 519,254 1,875,118 1,182,569 621,370 1,803,939 Total commercial loans 3,724,860 1,469,581 5,194,441 3,400,276 1,668,405 5,068,681 Residential mortgages: 1-4 family 2,129,976 259,734 2,389,710 1,808,024 289,373 2,097,397 Construction 7,289 193 7,482 5,177 233 5,410 Total residential mortgages 2,137,265 259,927 2,397,192 1,813,201 289,606 2,102,807 Consumer loans: Home equity 293,450 99,380 392,830 294,954 115,227 410,181 Auto and other 634,804 90,699 725,503 603,767 113,902 717,669 Total consumer loans 928,254 190,079 1,118,333 898,721 229,129 1,127,850 Total loans $ 6,790,379 $ 1,919,587 $ 8,709,966 $ 6,112,198 $ 2,187,140 $ 8,299,338 The carrying amount of the acquired loans at June 30, 2018 totaled $1.9 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 $70.8 million (and a note balance of $171.7 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 $1.8 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 June 30, (In thousands) 2018 2017 Balance at beginning of period $ 10,392 $ 7,363 Accretion (2,195 ) (1,005 ) Net reclassifications from (to) nonaccretable difference (169 ) (85 ) Payments received, net (1,724 ) (506 ) Disposals — — Balance at end of period $ 6,304 $ 5,767 Six Months Ended June 30, (In thousands) 2018 2017 Balance at beginning of period $ 11,561 $ 8,738 Accretion (4,918 ) (2,051 ) Net reclassifications from (to) nonaccretable difference 1,654 333 Payments received, net (1,912 ) (1,253 ) Disposals (81 ) — Balance at end of period $ 6,304 $ 5,767 The following is a summary of past due loans at June 30, 2018 and December 31, 2017: Business Activities Loans (In thousands) 30-59 Days 60-89 Days 90 Total Past Current Total Loans Past Due > June 30, 2018 Commercial real estate: Construction $ — $ — $ — $ — $ 345,896 $ 345,896 $ — Single and multi-family 314 — 433 747 377,687 378,434 9 Other commercial real estate 1,163 262 21,993 23,418 1,621,248 1,644,666 16,706 Total 1,477 262 22,426 24,165 2,344,831 2,368,996 16,715 Commercial and industrial loans: Total 2,272 114 2,528 4,914 1,350,950 1,355,864 42 Residential mortgages: 1-4 family 817 445 2,798 4,060 2,125,916 2,129,976 879 Construction — — — — 7,289 7,289 — Total 817 445 2,798 4,060 2,133,205 2,137,265 879 Consumer loans: Home equity 72 — 2,462 2,534 290,916 293,450 — Auto and other 2,766 478 1,667 4,911 629,893 634,804 49 Total 2,838 478 4,129 7,445 920,809 928,254 49 Total $ 7,404 $ 1,299 $ 31,881 $ 40,584 $ 6,749,795 $ 6,790,379 $ 17,685 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 > June 30, 2018 Commercial real estate: Construction $ — $ — $ — $ — $ 7,633 $ 59,268 $ — Single and multi-family 337 100 270 707 2,074 195,865 — Other commercial real estate 417 1,248 4,680 6,345 21,308 695,194 323 Total 754 1,348 4,950 7,052 31,015 950,327 323 Commercial and industrial loans: Total 446 260 1,543 2,249 32,297 519,254 — Residential mortgages: 1-4 family 1,318 241 1,494 3,053 5,054 259,734 216 Construction — — — — — 193 — Total 1,318 241 1,494 3,053 5,054 259,927 216 Consumer loans: Home equity 183 119 998 1,300 2,004 99,380 81 Auto and other 150 8 483 641 396 90,699 14 Total 333 127 1,481 1,941 2,400 190,079 95 Total $ 2,851 $ 1,976 $ 9,468 $ 14,295 $ 70,766 $ 1,919,587 $ 634 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 June 30, 2018 and December 31, 2017: June 30, 2018 December 31, 2017 (In thousands) Business Acquired Total Business Acquired Total Commercial real estate: Construction $ — $ — $ — $ — $ — $ — Single and multi-family 424 206 630 451 203 654 Other commercial real estate 5,287 3,493 8,780 4,566 2,047 6,613 Total 5,711 3,699 9,410 5,017 2,250 7,267 Commercial and industrial loans: Total 2,486 1,543 4,029 5,895 1,333 7,228 Residential mortgages: 1-4 family 1,919 1,278 3,197 1,666 1,217 2,883 Construction — — — — — — Total 1,919 1,278 3,197 1,666 1,217 2,883 Consumer loans: Home equity 2,462 917 3,379 1,627 1,965 3,592 Auto and other 1,618 469 2,087 1,454 392 1,846 Total 4,080 1,386 5,466 3,081 2,357 5,438 Total non-accrual loans $ 14,196 $ 7,906 $ 22,102 $ 15,659 $ 7,157 $ 22,816 _______________________________________ (1) At quarter end June 30, 2018 , acquired credit impaired loans accounted for $927 thousand of loans greater than 90 days past due that are not presented in the above table. (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 June 30, 2018 and December 31, 2017 were as follows: Business Activities Loans (In thousands) Commercial Commercial and Residential Consumer Total June 30, 2018 Loans receivable: Balance at end of period Individually evaluated for impairment $ 27,806 $ 2,340 $ 2,280 $ 1,835 $ 34,261 Collectively evaluated for impairment 2,341,190 1,353,524 2,134,985 926,419 6,756,118 Total $ 2,368,996 $ 1,355,864 $ 2,137,265 $ 928,254 $ 6,790,379 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 June 30, 2018 Loans receivable: Balance at end of Period Individually evaluated for impairment $ 5,601 $ 864 $ 765 $ 815 $ 8,045 Purchased credit-impaired loans 31,015 32,297 5,054 2,400 70,766 Collectively evaluated for impairment 913,711 486,093 254,108 186,864 1,840,776 Total $ 950,327 $ 519,254 $ 259,927 $ 190,079 $ 1,919,587 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 June 30, 2018 and December 31, 2017: Business Activities Loans June 30, 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 26,609 32,123 — Commercial and industrial loans 908 2,180 — Residential mortgages - 1-4 family 904 1,541 — Consumer - home equity 1,776 2,410 — Consumer - other — — — With an allowance recorded: Commercial real estate - single and multifamily $ 306 $ 323 $ 1 Other commercial real estate loans 1,430 1,423 14 Commercial and industrial loans 1,453 1,434 70 Residential mortgages - 1-4 family 1,395 1,440 109 Consumer - home equity 43 52 — Consumer - other 15 15 1 Total Commercial real estate $ 28,345 $ 33,869 $ 15 Commercial and industrial loans 2,361 3,614 70 Residential mortgages 2,299 2,981 109 Consumer 1,834 2,477 1 Total impaired loans $ 34,839 $ 42,941 $ 195 (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. These amounts are components of total loans and other assets 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 June 30, 2018 (In thousands) Recorded Investment (1) Unpaid Principal Related Allowance With no related allowance: Commercial real estate - single and multifamily $ 167 $ 261 $ — Other commercial real estate loans 2,501 5,556 — Commercial and industrial loans 521 597 — Residential mortgages - 1-4 family 696 707 — Consumer - home equity 501 959 — Consumer - other 13 15 — With an allowance recorded: Commercial real estate - single and multifamily $ 759 $ 756 $ 10 Other commercial real estate loans 2,201 2,211 22 Commercial and industrial loans 348 347 9 Residential mortgages - 1-4 family 76 76 6 Consumer - home equity 301 360 11 Total x Commercial real estate $ 5,628 $ 8,784 $ 32 Commercial and industrial loans 869 944 9 Residential mortgages 772 783 6 Consumer 815 1,334 11 Total impaired loans $ 8,084 $ 11,845 $ 58 (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 June 30, 2018 and 2017: Business Activities Loans Six Months Ended Six Months Ended (In thousands) Average Cash Basis Average Cash Basis With no related allowance: Commercial real estate - single and multifamily $ — $ — $ 99 $ — Other commercial real estate loans 29,092 326 22,362 473 Commercial and industrial loans 4,467 201 1,251 16 Residential mortgages - 1-4 family 942 26 1,870 11 Consumer - home equity 1,754 4 90 — Consumer - other — — — — With an allowance recorded: Commercial real estate - single and multifamily $ 310 $ 8 $ 171 $ 8 Other commercial real estate loans 1,476 39 10,056 119 Commercial and industrial loans 1,279 83 6,902 131 Residential mortgages - 1-4 family 1,409 32 636 7 Consumer - home equity 45 1 2,371 17 Consumer - other 16 — — — Total Commercial real estate $ 30,878 $ 373 $ 32,688 $ 600 Commercial and industrial loans 5,746 284 8,153 147 Residential mortgages 2,351 58 2,506 18 Consumer loans 1,815 5 2,461 17 Total impaired loans $ 40,790 $ 720 $ 45,808 $ 782 Acquired Loans Six Months Ended June 30, 2018 Six Months Ended June 30, 2017 (In thousands) Average Cash Basis Average Cash Basis With no related allowance: Commercial real estate - single and multifamily $ 182 $ 9 $ 396 $ 43 Other commercial real estate loans 2,124 102 269 49 Commercial and industrial loans 349 27 298 1 Residential mortgages - 1-4 family 1,505 6 393 6 Consumer - home equity 760 — 771 — Consumer - other 17 1 — — With an allowance recorded: Commercial real estate - single and multifamily $ 765 $ 20 $ 905 $ 12 Other commercial real estate loans 2,255 69 1,482 19 Commercial and industrial loans 287 17 328 8 Residential mortgages - 1-4 family 77 2 94 1 Consumer - home equity 320 5 390 5 Consumer - other — — — — Total Other commercial real estate loans $ 5,326 $ 200 $ 3,052 $ 123 Commercial and industrial loans 636 44 626 9 Residential mortgages 1,582 8 487 7 Consumer loans 1,097 6 1,161 5 Total impaired loans $ 8,641 $ 258 $ 5,326 $ 144 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 and six months ended June 30, 2018 and June 30, 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. There were no modifications made during the three months ended June 30, 2018. The modifications for the six months ended June 30, 2018 were attributable to interest rate concessions, principal concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity. The modifications for the three and six months ended June 30, 2017 were attributable to interest rate concessions, principal concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity. Three Months Ended June 30, 2018 (Dollars in thousands) Number of Pre-Modification Post-Modification Troubled Debt Restructurings Commercial and industrial — $ — $ — Residential - 1-4 Family — — — Total — $ — $ — Six Months Ended June 30, 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 Total 5 $ 2,113 $ 2,042 Three Months Ended June 30, 2017 (Dollars in thousands) Number of Pre-Modification Post-Modification Troubled Debt Restructurings Commercial - Other 9 $ 10,613 $ 9,385 Commercial and industrial - Other 4 1,793 1,793 Residential - 1-4 Family — — — Consumer Home Equity — — — Total 13 $ 12,406 $ 11,178 Six Months Ended June 30, 2017 (Dollars in thousands) Number of Pre-Modification Post-Modification Troubled Debt Restructurings Commercial - Other 15 $ 13,445 $ 11,718 Commercial and industrial - Other 5 1,817 1,817 Residential - 1-4 Family 2 205 188 Consumer Home Equity 1 53 53 Total 23 $ 15,520 $ 13,776 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 and six months ended June 30, 2018, there were two loans that were restructured that had subsequently defaulted during the period. Modifications that Subsequently Defaulted Three Months Ended June 30, 2018 (Dollars in thousands) Number of Contracts Recorded Investment Troubled Debt Restructurings Commercial - Other 1 $ 5,992 Commercial and industrial - Other 1 $ 1,065 Modifications that Subsequently Defaulted Six Months Ended June 30, 2018 (Dollars in thousands) Number of Contracts Recorded Investment Troubled Debt Restructurings Commercial - Other 1 $ 5,992 Commercial and industrial - Other 1 $ 1,065 Modifications that Subsequently Defaulted Three Months Ended June 30, 2017 (Dollars in thousands) Number of Contracts Recorded Investment Troubled Debt Restructurings Commercial - Other — $ — Commercial and industrial - Other — $ — Modifications that Subsequently Defaulted Six Months Ended June 30, 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 and six months ended June 30, 2018 and 2017: Three Months Ended June 30, (In thousands) 2018 2017 Balance at beginning of the period $ 43,105 $ 34,699 Principal payments (2,511 ) (266 ) TDR status change (1) — — Other reductions/increases (2) (7,088 ) (1,055 ) Newly identified TDRs — 11,178 Balance at end of the period $ 33,506 $ 44,556 Six Months Ended June 30, (In thousands) 2018 2017 Balance at beginning of the period $ 41,990 $ 33,829 Principal payments (3,150 ) (1,154 ) TDR status change (1) — — Other reductions/increases (2) (7,376 ) (1,895 ) Newly identified TDRs 2,042 13,776 Balance at end of the period $ 33,506 $ 44,556 _________________________________ (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 June 30, 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 June 30, 2018 and December 31, 2017 totaled $3.8 million and $4.9 million , respectively. |