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 and other commercial real estate. 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 previous mergers and acquisitions. 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, 2019 December 31, 2018 (In thousands) Business Acquired Total Business Acquired Total Commercial real estate: Construction $ 302,258 $ 25,515 $ 327,773 $ 327,792 $ 25,220 $ 353,012 Other commercial real estate 2,302,554 757,812 3,060,366 2,260,919 786,290 3,047,209 Total commercial real estate 2,604,812 783,327 3,388,139 2,588,711 811,510 3,400,221 Commercial and industrial loans: 1,540,985 416,354 1,957,339 1,513,538 466,508 1,980,046 Total commercial loans 4,145,797 1,199,681 5,345,478 4,102,249 1,278,018 5,380,267 Residential mortgages: 1-4 family 2,300,406 233,036 2,533,442 2,317,716 238,952 2,556,668 Construction 11,228 154 11,382 9,582 174 9,756 Total residential mortgages 2,311,634 233,190 2,544,824 2,327,298 239,126 2,566,424 Consumer loans: Home equity 281,568 83,760 365,328 289,961 86,719 376,680 Auto and other 627,360 64,505 691,865 647,236 72,646 719,882 Total consumer loans 908,928 148,265 1,057,193 937,197 159,365 1,096,562 Total loans $ 7,366,359 $ 1,581,136 $ 8,947,495 $ 7,366,744 $ 1,676,509 $ 9,043,253 The carrying amount of the acquired loans at March 31, 2019 totaled $1.6 billion . A subset of these loans were 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 $46.1 million (and a note balance of $120.9 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 $1.5 billion . At December 31, 2018, acquired loans maintained a carrying value of $1.7 billion and purchased credit-impaired loans totaled $47.3 million (note balance of $124.0 million). Loans considered not credit-impaired at acquisition date had a carrying amount of $1.6 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) 2019 2018 Balance at beginning of period $ 2,840 $ 11,561 Accretion (1,320 ) (3,433 ) Net reclassifications from (to) nonaccretable difference 665 2,533 Payments received, net (55 ) (188 ) Reclassification to TDR 9 — Disposals — (81 ) Balance at end of period $ 2,139 $ 10,392 The following is a summary of past due loans at March 31, 2019 and December 31, 2018: Business Activities Loans (In thousands) 30-59 Days 60-89 Days 90 Total Past Current Total Loans Past Due > March 31, 2019 Commercial real estate: Construction $ — $ — $ — $ — $ 302,258 $ 302,258 $ — Other commercial real estate 670 749 16,535 17,954 2,284,600 2,302,554 119 Total 670 749 16,535 17,954 2,586,858 2,604,812 119 Commercial and industrial loans: Total 2,458 540 4,586 7,584 1,533,401 1,540,985 56 Residential mortgages: 1-4 family 1,214 531 1,857 3,602 2,296,804 2,300,406 461 Construction — — — — 11,228 11,228 — Total 1,214 531 1,857 3,602 2,308,032 2,311,634 461 Consumer loans: Home equity 161 4 917 1,082 280,486 281,568 — Auto and other 2,310 582 1,962 4,854 622,506 627,360 44 Total 2,471 586 2,879 5,936 902,992 908,928 44 Total $ 6,813 $ 2,406 $ 25,857 $ 35,076 $ 7,331,283 $ 7,366,359 $ 680 Business Activities Loans (In thousands) 30-59 Days 60-89 Days 90 Total Past Current Total Loans Past Due > December 31, 2018 Commercial real estate: Construction $ — $ — $ — $ — $ 327,792 $ 327,792 $ — Other commercial real estate 913 276 18,833 20,022 2,240,897 2,260,919 993 Total 913 276 18,833 20,022 2,568,689 2,588,711 993 Commercial and industrial loans: Total 4,694 975 4,636 10,305 1,503,233 1,513,538 4 Residential mortgages: 1-4 family 1,631 1,619 1,440 4,690 2,313,026 2,317,716 66 Construction — — — — 9,582 9,582 — Total 1,631 1,619 1,440 4,690 2,322,608 2,327,298 66 Consumer loans: Home equity 618 15 933 1,566 288,395 289,961 — Auto and other 3,543 615 1,699 5,857 641,379 647,236 — Total 4,161 630 2,632 7,423 929,774 937,197 — Total $ 11,399 $ 3,500 $ 27,541 $ 42,440 $ 7,324,304 $ 7,366,744 $ 1,063 Acquired Loans (In thousands) 30-59 Days 60-89 Days 90 Total Past Acquired Total Loans Past Due > March 31, 2019 Commercial real estate: Construction $ — $ — $ — $ — $ — $ 25,515 $ — Other commercial real estate 3,935 460 4,110 8,505 10,972 757,812 2,013 Total 3,935 460 4,110 8,505 10,972 783,327 2,013 Commercial and industrial loans: Total 507 33 1,227 1,767 29,394 416,354 144 Residential mortgages: 1-4 family 610 442 1,020 2,072 4,890 233,036 75 Construction — — — — — 154 — Total 610 442 1,020 2,072 4,890 233,190 75 Consumer loans: Home equity 287 — 1,052 1,339 546 83,760 158 Auto and other 193 66 405 664 294 64,505 97 Total 480 66 1,457 2,003 840 148,265 255 Total $ 5,532 $ 1,001 $ 7,814 $ 14,347 $ 46,096 $ 1,581,136 $ 2,487 Acquired Loans (In thousands) 30-59 Days 60-89 Days 90 Total Past Acquired Total Loans Past Due > December 31, 2018 Commercial real estate: — Construction $ — $ — $ — $ — $ — $ 25,220 $ — Other commercial real estate 2,603 1,127 4,183 7,913 11,994 786,290 1,652 Total 2,603 1,127 4,183 7,913 11,994 811,510 1,652 Commercial and industrial loans: Total 217 147 1,515 1,879 29,539 466,508 144 Residential mortgages: 1-4 family 1,382 144 918 2,444 4,888 238,952 75 Construction — — — — — 174 — Total 1,382 144 918 2,444 4,888 239,126 75 Consumer loans: Home equity 290 148 751 1,189 553 86,719 — Auto and other 193 62 547 802 314 72,646 96 Total 483 210 1,298 1,991 867 159,365 96 Total $ 4,685 $ 1,628 $ 7,914 $ 14,227 $ 47,288 $ 1,676,509 $ 1,967 The following is summary information pertaining to non-accrual loans at March 31, 2019 and December 31, 2018: March 31, 2019 December 31, 2018 (In thousands) Business Acquired Total Business Acquired Total Commercial real estate: Construction $ — $ — $ — $ — $ — $ — Other commercial real estate 16,416 2,097 18,513 17,840 2,531 20,371 Total 16,416 2,097 18,513 17,840 2,531 20,371 Commercial and industrial loans: Total 4,530 1,083 5,613 4,632 1,371 6,003 Residential mortgages: 1-4 family 1,396 945 2,341 1,374 843 2,217 Construction — — — — — — Total 1,396 945 2,341 1,374 843 2,217 Consumer loans: Home equity 917 894 1,811 933 751 1,684 Auto and other 1,918 308 2,226 1,699 451 2,150 Total 2,835 1,202 4,037 2,632 1,202 3,834 Total non-accrual loans $ 25,177 $ 5,327 $ 30,504 $ 26,478 $ 5,947 $ 32,425 Loans evaluated for impairment as of March 31, 2019 and December 31, 2018 were as follows: Business Activities Loans (In thousands) Commercial Commercial and Residential Consumer Total March 31, 2019 Loans receivable: Balance at end of period Individually evaluated for impairment $ 21,036 $ 2,989 $ 2,061 $ 335 $ 26,421 Collectively evaluated for impairment 2,583,776 1,537,996 2,309,573 908,593 7,339,938 Total $ 2,604,812 $ 1,540,985 $ 2,311,634 $ 908,928 $ 7,366,359 Business Activities Loans (In thousands) Commercial Commercial and Residential Consumer Total December 31, 2018 Loans receivable: Balance at end of year Individually evaluated for impairment $ 23,345 $ 2,825 $ 2,089 $ 342 $ 28,601 Collectively evaluated for impairment 2,565,366 1,510,713 2,325,209 936,855 7,338,143 Total $ 2,588,711 $ 1,513,538 $ 2,327,298 $ 937,197 $ 7,366,744 Acquired Loans (In thousands) Commercial Commercial and Residential Consumer Total March 31, 2019 Loans receivable: Balance at end of Period Individually evaluated for impairment $ 3,538 $ 686 $ 358 $ 775 $ 5,357 Purchased credit-impaired loans 10,972 29,394 4,890 840 46,096 Collectively evaluated for impairment 768,817 386,274 227,942 146,650 1,529,683 Total $ 783,327 $ 416,354 $ 233,190 $ 148,265 $ 1,581,136 Acquired Loans (In thousands) Commercial Commercial and Residential Consumer Total December 31, 2018 Loans receivable: Balance at end of year Individually evaluated for impairment $ 3,980 $ 763 $ 362 $ 646 $ 5,751 Purchased credit-impaired loans 11,994 29,539 4,888 867 47,288 Collectively evaluated for impairment 795,536 436,206 233,876 157,852 1,623,470 Total $ 811,510 $ 466,508 $ 239,126 $ 159,365 $ 1,676,509 The following is a summary of impaired loans at March 31, 2019 and December 31, 2018: Business Activities Loans March 31, 2019 (In thousands) Recorded Investment (1) Unpaid Principal Related Allowance With no related allowance: Other commercial real estate loans $ 20,446 $ 29,916 $ — Commercial and industrial loans 1,279 2,268 — Residential mortgages - 1-4 family 440 438 — Consumer - home equity 228 241 — Consumer - other — — — With an allowance recorded: Other commercial real estate loans $ 540 $ 548 $ 7 Commercial and industrial loans 1,724 1,718 52 Residential mortgages - 1-4 family 1,637 1,759 120 Consumer - home equity 96 103 8 Consumer - other 12 12 1 Total Commercial real estate $ 20,986 $ 30,464 $ 7 Commercial and industrial loans 3,003 3,986 52 Residential mortgages 2,077 2,197 120 Consumer 336 356 9 Total impaired loans $ 26,402 $ 37,003 $ 188 (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, 2018 (In thousands) Recorded Investment (1) Unpaid Principal Related Allowance With no related allowance: Other commercial real estate loans $ 22,606 $ 31,038 $ — Commercial and industrial loans 1,584 2,566 — Residential mortgages - 1-4 family 443 441 — Consumer - home equity 230 242 — Consumer - other — — — With an allowance recorded: Other commercial real estate loans $ 666 $ 670 $ 9 Commercial and industrial loans 1,251 1,235 49 Residential mortgages - 1-4 family 1,663 1,779 128 Consumer - home equity 100 106 10 Consumer - other 13 13 1 Total Commercial real estate $ 23,272 $ 31,708 $ 9 Commercial and industrial loans 2,835 3,801 49 Residential mortgages 2,106 2,220 128 Consumer 343 361 11 Total impaired loans $ 28,556 $ 38,090 $ 197 (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, 2019 (In thousands) Recorded Investment (1) Unpaid Principal Related Allowance With no related allowance: Other commercial real estate loans $ 2,531 $ 5,694 $ — Commercial and industrial loans 494 612 — Residential mortgages - 1-4 family 270 323 — Consumer - home equity 532 1,326 — Consumer - other — — — With an allowance recorded: Other commercial real estate loans $ 910 $ 916 $ 48 Commercial and industrial loans 195 207 4 Residential mortgages - 1-4 family 91 115 36 Consumer - home equity 202 195 37 Consumer - other 42 39 7 Total x Commercial real estate $ 3,441 $ 6,610 $ 48 Commercial and industrial loans 689 819 4 Residential mortgages 361 438 36 Consumer 776 1,560 44 Total impaired loans $ 5,267 $ 9,427 $ 132 (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, 2018 (In thousands) Recorded Investment (1) Unpaid Principal Related Allowance With no related allowance: Other commercial real estate loans $ 3,055 $ 5,959 $ — Other commercial and industrial loans 538 644 — Residential mortgages - 1-4 family 271 324 — Consumer - home equity 399 1,053 — Consumer - other — 11 — With an allowance recorded: Other commercial real estate loans $ 925 $ 947 $ 9 Commercial and industrial loans 228 232 4 Residential mortgages - 1-4 family 94 117 36 Consumer - home equity 205 196 41 Consumer - other 43 40 7 Total Commercial real estate $ 3,980 $ 6,906 $ 9 Commercial and industrial loans 766 876 4 Residential mortgages 365 441 36 Consumer 647 1,300 48 Total impaired loans $ 5,758 $ 9,523 $ 97 (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, 2019 and 2018: Business Activities Loans Three Months Ended Three Months Ended (In thousands) Average Cash Basis Average Cash Basis With no related allowance: Other commercial real estate loans $ 21,221 $ 64 $ 20,272 $ 91 Commercial and industrial loans 1,389 26 2,625 62 Residential mortgages - 1-4 family 441 6 807 14 Consumer - home equity 228 1 1,730 2 Consumer - other — — — — With an allowance recorded: Other commercial real estate loans $ 616 $ 6 $ 13,198 $ 169 Commercial and industrial loans 1,757 40 3,933 64 Residential mortgages - 1-4 family 1,645 19 1,484 17 Consumer - home equity 97 1 46 1 Consumer - other 12 — 17 — Total Commercial real estate $ 21,837 $ 70 $ 33,470 $ 260 Commercial and industrial loans 3,146 66 6,558 126 Residential mortgages 2,086 25 2,291 31 Consumer loans 337 2 1,793 3 Total impaired loans $ 27,406 $ 163 $ 44,112 $ 420 Acquired Loans Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 (In thousands) Average Cash Basis Average Cash Basis With no related allowance: Other commercial real estate loans $ 2,511 $ 37 $ 2,348 $ 46 Commercial and industrial loans 512 12 425 9 Residential mortgages - 1-4 family 270 2 700 4 Consumer - home equity 601 1 953 — Consumer - other — — 19 1 With an allowance recorded: Other commercial real estate loans $ 917 $ 16 $ 2,876 $ 37 Commercial and industrial loans 221 9 61 2 Residential mortgages - 1-4 family 92 2 1,520 1 Consumer - home equity 203 3 324 4 Consumer - other 43 — — — Total Commercial real estate $ 3,428 $ 53 $ 5,224 $ 83 Commercial and industrial loans 733 21 486 11 Residential mortgages 362 4 2,220 5 Consumer loans 847 4 1,296 5 Total impaired loans $ 5,370 $ 82 $ 9,226 $ 104 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, 2019 and March 31, 2018. 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, 2019 and 2018 were attributable to interest rate concessions, principal concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity. Three Months Ended March 31, 2019 (Dollars in thousands) Number of Pre-Modification Post-Modification Troubled Debt Restructurings Commercial real estate 2 $ 145 $ 145 Commercial and industrial 1 193 193 Residential - 1-4 Family — — — Total 3 $ 338 $ 338 Three Months Ended March 31, 2018 (Dollars in thousands) Number of Pre-Modification Post-Modification Troubled Debt Restructurings Commercial real estate — $ — $ — Commercial and industrial 4 1,995 1,924 Residential - 1-4 Family 1 118 118 Total 5 $ 2,113 $ 2,042 There were no TDRs that defaulted within 12 months of modifications during the three months ended March 31, 2019 and 2018. The following table presents the Company’s TDR activity for the three months ended March 31, 2019 and 2018: Three Months Ended March 31, (In thousands) 2019 2018 Balance at beginning of the period $ 27,415 $ 41,990 Principal payments (1,413 ) (639 ) TDR status change (1) — — Other reductions (2) (1,155 ) (288 ) Newly identified TDRs 338 2,042 Balance at end of the period $ 25,185 $ 43,105 _________________________________ (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, payoffs, 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, 2019 , 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, 2019 and December 31, 2018 totaled $4.0 million and $3.2 million , respectively. |