LOANS | LOANS The Company’s loan portfolio is comprised of the following segments: commercial real estate, commercial and industrial, residential real estate, and consumer loans. Commercial real estate loans include multi-family, commercial construction and land development, and other commercial real estate classes. Commercial and industrial loans include loans to commercial and agricultural businesses and tax exempt entities. Residential real estate loans consist of mortgages for 1-to-4 family housing. Consumer loans include home equity loans, auto and other installment loans. The Company’s lending activities are principally conducted in Maine, New Hampshire, and Vermont. Total loans include business activity loans and acquired loans. Acquired loans are those loans previously acquired from other institutions. The following is a summary of total loans: September 30, 2019 December 31, 2018 (in thousands) Business Activities Loans Acquired Loans Total Business Activities Loans Acquired Loans Total Commercial real estate: Construction and land development $ 28,802 $ 2,064 $ 30,866 $ 23,754 $ 2,890 $ 26,644 Other commercial real estate 672,885 220,022 892,907 555,980 244,075 800,055 Total commercial real estate 701,687 222,086 923,773 579,734 246,965 826,699 Commercial and industrial: Commercial 239,894 40,490 280,384 234,757 52,470 287,227 Agricultural 21,206 — 21,206 22,317 — 22,317 Tax exempt 66,043 35,073 101,116 56,588 38,738 95,326 Total commercial and industrial 327,143 75,563 402,706 313,662 91,208 404,870 Total commercial loans 1,028,830 297,649 1,326,479 893,396 338,173 1,231,569 Residential real estate: Residential mortgages 730,516 412,936 1,143,452 670,189 474,509 1,144,698 Total residential real estate 730,516 412,936 1,143,452 670,189 474,509 1,144,698 Consumer: Home equity 58,556 37,600 96,156 57,898 45,291 103,189 Other consumer 10,234 985 11,219 9,414 1,357 10,771 Total consumer 68,790 38,585 107,375 67,312 46,648 113,960 Total loans $ 1,828,136 $ 749,170 $ 2,577,306 $ 1,630,897 $ 859,330 $ 2,490,227 The carrying amount of the acquired loans at September 30, 2019 totaled $749.2 million . 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 $8.4 million (and total note balances of $11.5 million ). These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Acquired loans considered not impaired at the acquisition date had a carrying amount of $740.8 million as of September 30, 2019 . 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 September 30, (in thousands) 2019 2018 Balance at beginning of period $ 4,195 $ 2,807 Reclassification from non-accretable difference for loans with (decreased) improved cash flows (126 ) 1,985 Accretion (581 ) (315 ) Balance at end of period $ 3,488 $ 4,477 Nine Months Ended September 30, (in thousands) 2019 2018 Balance at beginning of period $ 4,377 $ 3,509 Reclassification from non-accretable difference for loans with improved cash flows 498 2,031 Accretion (1,387 ) (1,063 ) Balance at end of period $ 3,488 $ 4,477 The following is a summary of past due loans at September 30, 2019 and December 31, 2018 : 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 September 30, 2019 Commercial real estate: Construction and land development $ — $ — $ 73 $ 73 $ 28,729 $ 28,802 $ 73 Other commercial real estate 985 56 6,773 7,814 665,071 672,885 — Total commercial real estate 985 56 6,846 7,887 693,800 701,687 73 Commercial and industrial: Commercial 772 64 1,145 1,981 237,913 239,894 — Agricultural 121 72 25 218 20,988 21,206 — Tax exempt — — — — 66,043 66,043 — Total commercial and industrial 893 136 1,170 2,199 324,944 327,143 — Total commercial loans 1,878 192 8,016 10,086 1,018,744 1,028,830 73 Residential real estate: Residential mortgages 399 345 871 1,615 728,901 730,516 71 Total residential real estate 399 345 871 1,615 728,901 730,516 71 Consumer: Home equity 131 65 315 511 58,045 58,556 — Other consumer 2 7 — 9 10,225 10,234 — Total consumer 133 72 315 520 68,270 68,790 — Total loans $ 2,410 $ 609 $ 9,202 $ 12,221 $ 1,815,915 $ 1,828,136 $ 144 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 September 30, 2019 Commercial real estate: Construction and land development $ 12 $ — $ — $ 12 $ 190 $ 2,064 $ — Other commercial real estate 434 — 240 674 4,859 220,022 72 Total commercial real estate 446 — 240 686 5,049 222,086 72 Commercial and industrial: Commercial — 41 750 791 249 40,490 387 Agricultural — — — — — — — Tax exempt — — — — — 35,073 — Total commercial and industrial — 41 750 791 249 75,563 387 Total commercial loans 446 41 990 1,477 5,298 297,649 459 Residential real estate: Residential mortgages 245 519 874 1,638 3,093 412,936 47 Total residential real estate 245 519 874 1,638 3,093 412,936 47 Consumer: Home equity 356 133 180 669 19 37,600 37 Other consumer — — — — — 985 — Total consumer 356 133 180 669 19 38,585 37 Total loans $ 1,047 $ 693 $ 2,044 $ 3,784 $ 8,410 $ 749,170 $ 543 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, 2018 Commercial real estate: Construction and land development $ — $ — $ — $ — $ 23,754 $ 23,754 $ — Other commercial real estate 1,146 — 6,725 7,871 548,109 555,980 — Total commercial real estate 1,146 — 6,725 7,871 571,863 579,734 — Commercial and industrial: Commercial 395 60 402 857 233,900 234,757 50 Agricultural 65 6 25 96 22,221 22,317 — Tax exempt — — — — 56,588 56,588 — Total commercial and industrial 460 66 427 953 312,709 313,662 50 Total commercial loans 1,606 66 7,152 8,824 884,572 893,396 50 Residential real estate: Residential mortgages 3,565 641 1,309 5,515 664,674 670,189 — Total residential real estate 3,565 641 1,309 5,515 664,674 670,189 — Consumer: Home equity 72 — — 72 57,826 57,898 — Other consumer 17 — 11 28 9,386 9,414 — Total consumer 89 — 11 100 67,212 67,312 — Total loans $ 5,260 $ 707 $ 8,472 $ 14,439 $ 1,616,458 $ 1,630,897 $ 50 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, 2018 Commercial real estate: Construction and land development $ — $ — $ — $ — $ 164 $ 2,890 $ — Other commercial real estate 631 99 211 941 6,143 244,075 — Total commercial real estate 631 99 211 941 6,307 246,965 — Commercial and industrial: Commercial 149 26 494 669 679 52,470 — Agricultural — — — — — — — Tax exempt — — — — — 38,738 — Total commercial and industrial 149 26 494 669 679 91,208 — Total commercial loans 780 125 705 1,610 6,986 338,173 — Residential real estate: Residential mortgages 3,419 254 1,792 5,465 3,095 474,509 — Total residential real estate 3,419 254 1,792 5,465 3,095 474,509 — Consumer: Home equity 198 — 66 264 22 45,291 7 Other consumer 17 — — 17 3 1,357 189 Total consumer 215 — 66 281 25 46,648 196 Total loans $ 4,414 $ 379 $ 2,563 $ 7,356 $ 10,106 $ 859,330 $ 196 Non-Accrual Loans The following is summary information pertaining to non-accrual loans at September 30, 2019 and December 31, 2018 : September 30, 2019 December 31, 2018 (in thousands) Business Activities Loans Acquired Loans Total Business Activities Loans Acquired Loans Total Commercial real estate: Construction and land development $ 1 $ — $ 1 $ 1 $ — $ 1 Other commercial real estate 8,172 346 8,518 7,873 282 8,155 Total commercial real estate 8,173 346 8,519 7,874 282 8,156 Commercial and industrial: Commercial 1,268 575 1,843 1,423 643 2,066 Agricultural 234 — 234 265 — 265 Tax exempt — — — — — — Total commercial and industrial 1,502 575 2,077 1,688 643 2,331 Total commercial loans 9,675 921 10,596 9,562 925 10,487 Residential real estate: Residential mortgages 3,277 2,063 5,340 4,213 2,997 7,210 Total residential real estate 3,277 2,063 5,340 4,213 2,997 7,210 Consumer: Home equity 564 154 718 246 201 447 Other consumer 25 — 25 90 1 91 Total consumer 589 154 743 336 202 538 Total loans $ 13,541 $ 3,138 $ 16,679 $ 14,111 $ 4,124 $ 18,235 Loans evaluated for impairment as of September 30, 2019 and December 31, 2018 are, as follows: Business Activities Loans (in thousands) Commercial real estate Commercial and industrial Residential real estate Consumer Total September 30, 2019 Balance at end of period Individually evaluated for impairment $ 8,759 $ 1,323 $ 2,643 $ 13 $ 12,738 Collectively evaluated 692,928 325,820 727,873 68,777 1,815,398 Total $ 701,687 $ 327,143 $ 730,516 $ 68,790 $ 1,828,136 Acquired Loans (in thousands) Commercial Commercial and industrial Residential Consumer Total September 30, 2019 Balance at end of period Individually evaluated for impairment $ 257 $ 414 $ 973 $ — $ 1,644 Purchased credit impaired 5,049 249 3,093 19 8,410 Collectively evaluated 216,780 74,900 408,870 38,566 739,116 Total $ 222,086 $ 75,563 $ 412,936 $ 38,585 $ 749,170 Business Activities Loans (in thousands) Commercial Commercial and industrial Residential Consumer Total December 31, 2018 Balance at end of period Individually evaluated for impairment $ 9,835 $ 1,445 $ 2,562 $ 13 $ 13,855 Collectively evaluated 569,899 312,217 667,627 67,299 1,617,042 Total $ 579,734 $ 313,662 $ 670,189 $ 67,312 $ 1,630,897 Acquired Loans (in thousands) Commercial Commercial and industrial Residential Consumer Total December 31, 2018 Balance at end of period Individually evaluated for impairment $ 188 $ 426 $ 744 $ — $ 1,358 Purchased credit impaired 6,307 679 3,095 25 10,106 Collectively evaluated 240,470 90,103 470,670 46,623 847,866 Total $ 246,965 $ 91,208 $ 474,509 $ 46,648 $ 859,330 The following is a summary of impaired loans at September 30, 2019 and December 31, 2018 : Business Activities Loans September 30, 2019 (in thousands) Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance: Construction and land development $ — $ — $ — Other commercial real estate 5,634 5,675 — Commercial 657 713 — Agricultural — — — Tax exempt loans — — — Residential real estate 2,082 2,236 — Home equity — — — Other consumer — — — With an allowance recorded: Construction and land development $ 1 $ 1 $ 1 Other commercial real estate 3,124 3,262 989 Commercial 666 694 240 Agricultural — — — Tax exempt loans — — — Residential real estate 561 594 66 Home equity 13 13 1 Other consumer — — — Total Commercial real estate $ 8,759 $ 8,938 $ 990 Commercial and industrial 1,323 1,407 240 Residential real estate 2,643 2,830 66 Consumer 13 13 1 Total impaired loans $ 12,738 $ 13,188 $ 1,297 Acquired Loans September 30, 2019 (in thousands) Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance: Construction and land development $ — $ — $ — Other commercial real estate 90 90 — Commercial 414 508 — Agricultural — — — Tax exempt loans — — — Residential real estate 616 852 — Home equity — — — Other consumer — — — With an allowance recorded: Construction and land development $ — $ — $ — Other commercial real estate 167 168 12 Commercial — — — Agricultural — — — Tax exempt loans — — — Residential real estate 357 376 32 Home equity — — — Other consumer — — — Total Commercial real estate $ 257 $ 258 $ 12 Commercial and industrial 414 508 — Residential real estate 973 1,228 32 Consumer — — — Total impaired loans $ 1,644 $ 1,994 $ 44 Business Activities Loans December 31, 2018 (in thousands) Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance: Construction and land development $ — $ — $ — Other commercial real estate 8,209 8,301 — Commercial 649 669 — Agricultural — — — Tax exempt loans — — — Residential real estate 1,671 1,709 — Home equity — — — Other consumer — — — With an allowance recorded: Construction and land development $ 1 $ 1 $ 1 Other commercial real estate 1,625 1,660 421 Commercial 796 855 78 Agricultural — — — Tax exempt loans — — — Residential real estate 891 916 111 Home equity 13 13 — Other consumer — — — Total Commercial real estate $ 9,835 $ 9,962 $ 422 Commercial and industrial 1,445 1,524 78 Residential real estate 2,562 2,625 111 Consumer 13 13 — Total impaired loans $ 13,855 $ 14,124 $ 611 Acquired Loans December 31, 2018 (in thousands) Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance: Construction and land development $ — $ — $ — Other commercial real estate 188 187 — Commercial 426 510 — Agricultural — — — Tax exempt — — — Residential mortgages 375 524 — Home equity — — — Other consumer — — — With an allowance recorded: Construction and land development $ — $ — $ — Other commercial real estate — — — Commercial — — — Agricultural — — — Tax exempt — — — Residential mortgages 369 379 41 Home equity — — — Other consumer — — — Total Commercial real estate $ 188 $ 187 $ — Commercial and industrial 426 510 — Residential real estate 744 903 41 Consumer — — — Total impaired loans $ 1,358 $ 1,600 $ 41 The following is a summary of the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2019 and 2018 : Business Activities Loans Three Months Ended September 30, 2019 Three Months Ended September 30, 2018 (in thousands) Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance: Construction and land development $ — $ — $ — $ — Other commercial real estate 5,528 52 6,639 31 Commercial 747 4 625 2 Agricultural — — — — Tax exempt loans — — — — Residential real estate 2,041 16 3,955 9 Home equity — — 158 — Other consumer — — — — With an allowance recorded: Construction and land development $ 1 $ — $ 1 $ — Other commercial real estate 3,217 — 2,214 — Commercial 654 — 788 — Agricultural — — — — Tax exempt loans — — — — Residential real estate 551 2 888 3 Home equity 12 — 13 — Other consumer — — — — Total Commercial real estate $ 8,746 $ 52 $ 8,854 $ 31 Commercial and industrial 1,401 4 1,413 2 Residential real estate 2,592 18 4,843 12 Consumer 12 — 171 — Total impaired loans $ 12,751 $ 74 $ 15,281 $ 45 Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018 (in thousands) Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance: Construction and land development $ — $ — $ — $ — Other commercial real estate 5,466 56 6,204 46 Commercial 792 7 628 7 Agricultural — — — — Tax exempt loans — — — — Residential real estate 2,089 47 4,027 28 Home equity — — 236 — Other consumer — — — — With an allowance recorded: Construction and land development $ 2 $ — $ 1 $ — Other commercial real estate 2,972 29 1,600 6 Commercial 497 — 716 — Agricultural — — — — Tax exempt loans — — — — Residential real estate 540 7 800 7 Home equity 13 — 13 — Other consumer — — — — Total Commercial real estate $ 8,440 $ 85 $ 7,805 $ 52 Commercial and industrial 1,289 7 1,344 7 Residential real estate 2,629 54 4,827 35 Consumer 13 — 249 — Total impaired loans $ 12,371 $ 146 $ 14,225 $ 94 Acquired Loans Three Months Ended September 30, 2019 Three Months Ended September 30, 2018 (in thousands) Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance: Construction and land development $ — $ — $ — $ — Other commercial real estate 88 — 95 — Commercial 395 — 469 — Agricultural — — — — Tax exempt loans — — — — Residential real estate 702 — 276 — Home equity — — — — Other consumer — — — — With an allowance recorded: Construction and land development $ — $ — $ — $ — Other commercial real estate 165 — — — Commercial — — — — Agricultural — — — — Tax exempt loans — — — — Residential real estate 352 — 181 — Home equity — — — — Other consumer — — — — Total Commercial real estate $ 253 $ — $ 95 $ — Commercial and industrial 395 — 469 — Residential real estate 1,054 — 457 — Consumer — — — — Total impaired loans $ 1,702 $ — $ 1,021 $ — Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018 (in thousands) Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance: Construction and land development $ — $ — $ — $ — Other commercial real estate 89 — 97 1 Commercial 429 — 445 1 Agricultural — — — — Tax exempt loans — — — — Residential real estate 593 — 124 — Home equity — — — — Other consumer — — — — With an allowance recorded: Construction and land development $ — $ — $ — $ — Other commercial real estate 123 — — — Commercial — — — — Agricultural — — — — Tax exempt loans — — — — Residential real estate 361 — 186 — Home equity — — — — Other consumer — — — — Total Commercial real estate $ 212 $ — $ 97 $ 1 Commercial and industrial 429 — 445 1 Residential real estate 954 — 310 — Consumer — — — — Total impaired loans $ 1,595 $ — $ 852 $ 2 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 non-performing 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 nine months ended September 30, 2019 and 2018, 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. Modifications may include adjustments to interest rates, payment amounts, extensions of maturity, court ordered concessions or other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral. Three Months Ended September 30, 2019 (in thousands, except modifications) Number of Modifications Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Troubled Debt Restructurings Other commercial real estate 4 $ 268 $ 267 Agricultural 1 141 141 Residential mortgages 2 399 342 Total 7 $ 808 $ 750 Three Months Ended September 30, 2018 (in thousands, except modifications) Number of Modifications Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Troubled Debt Restructurings Construction and land development 1 $ 2 $ 1 Other commercial real estate 1 72 72 Commercial 5 104 60 Residential mortgages 2 228 225 Total 9 $ 406 $ 358 Nine Months Ended September 30, 2019 (in thousands) Number of Modifications Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Troubled Debt Restructurings Other commercial real estate 9 $ 543 $ 529 Other commercial 4 168 91 Agricultural 1 141 141 Residential mortgages 11 1,133 1,034 Total 25 $ 1,985 $ 1,795 Nine Months Ended September 30, 2018 (in thousands) Number of Modifications Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Troubled Debt Restructurings Construction and land development 1 $ 2 $ 1 Other commercial real estate 9 1,896 1,564 Other commercial 7 556 486 Agricultural 1 167 — Residential mortgages 15 2,752 2,168 Home equity 1 100 100 Other consumer 2 5 4 Total 36 $ 5,478 $ 4,323 The following tables summarize the types of loan concessions made for the periods presented: Three Months Ended September 30, 2019 2018 (in thousands, except modifications) Number of Modifications Post-Modification Outstanding Recorded Investment Number of Modifications Post-Modification Outstanding Recorded Investment Interest only payments 2 $ 90 — $ — Forbearance 1 141 1 115 Forbearance and interest only payments 2 176 3 72 Forbearance and maturity concession — — 4 143 Forbearance, amortization and maturity concession 2 343 — — Maturity concession — — 1 28 Total 7 $ 750 9 $ 358 Nine Months Ended September 30, 2019 2018 (in thousands, except modifications) Number of Modifications Post-Modification Outstanding Recorded Investment Number of Modifications Post-Modification Outstanding Recorded Investment Interest rate and maturity concession — $ — 1 $ 16 Interest only payments 2 90 — — Interest only payments and maturity concession 2 73 — — Amortization and maturity concession 4 273 — — Amortization, interest rate and maturity concession 1 77 — — Forbearance 3 253 3 271 Forbearance and interest only payments 5 331 6 121 Forbearance and maturity concession — — 17 1,774 Forbearance, amortization and maturity concession 7 640 — — Maturity concession — — 2 440 Restructure with maturity concession — — 5 1,419 Other 1 58 2 282 Total 25 $ 1,795 36 $ 4,323 For the three and nine months ended September 30, 2019 , there were no loans that were restructured that had subsequently defaulted during the period. The evaluation of certain loans individually for specific impairment includes loans that were previously classified as TDRs or continue to be classified as TDRs. Foreclosure As of September 30, 2019 and December 31, 2018, the Company maintained bank-owned residential real estate property with a fair value of $2.5 million . Additionally, residential mortgage loans collateralized by real estate property that are in the process of foreclosure as of September 30, 2019 and December 31, 2018 totaled $931 thousand and $1.5 million , respectively. Mortgage Banking Total residential loans included held for sale loans of $4.0 million and $168 thousand at September 30, 2019 and December 31, 2018 , respectively. |