Loans | Loans The following table shows the composition of the Company's loan portfolio as of June 30, 2015 and 2014 and at December 31, 2014 : June 30, 2015 December 31, 2014 June 30, 2014 Commercial Real estate $ 249,414,000 25.9 % $ 242,311,000 26.4 % $ 245,660,000 27.5 % Construction 39,504,000 4.1 % 30,932,000 3.4 % 17,084,000 1.9 % Other 128,249,000 13.3 % 104,531,000 11.4 % 104,234,000 11.7 % Municipal 22,821,000 2.4 % 20,424,000 2.2 % 17,893,000 2.0 % Residential Term 378,090,000 39.2 % 384,032,000 41.9 % 379,027,000 42.5 % Construction 14,215,000 1.5 % 12,160,000 1.3 % 13,253,000 1.5 % Home equity line of credit 108,788,000 11.3 % 103,521,000 11.3 % 97,821,000 11.0 % Consumer 22,028,000 2.3 % 19,653,000 2.1 % 16,892,000 1.9 % Total $ 963,109,000 100.0 % $ 917,564,000 100.0 % $ 891,864,000 100.0 % Loan balances include net deferred loan costs of $3,246,000 as of June 30, 2015 , $2,729,000 as of December 31, 2014 , and $2,463,000 as of June 30, 2014 . Pursuant to collateral agreements, qualifying first mortgage loans, which totaled $284,707,000 at June 30, 2015 , $266,716,000 at December 31, 2014 , and $270,701,000 at June 30, 2014 , were used to collateralize borrowings from the FHLB. In addition, commercial, construction and home equity loans totaling $278,235,000 at June 30, 2015 , $240,943,000 at December 31, 2014 , and $233,544,000 at June 30, 2014 , were used to collateralize a standby line of credit at the Federal Reserve Bank of Boston that is currently unused. For all loan classes, loans over 30 days past due are considered delinquent. Information on the past-due status of loans by class of financing receivable as of June 30, 2015 , is presented in the following table: 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due All Past Due Current Total 90+ Days & Accruing Commercial Real estate $ 1,850,000 $ — $ 264,000 $ 2,114,000 $ 247,300,000 $ 249,414,000 $ — Construction — — 208,000 208,000 39,296,000 39,504,000 — Other 124,000 — 138,000 262,000 127,987,000 128,249,000 — Municipal — — — — 22,821,000 22,821,000 — Residential Term 810,000 2,314,000 3,146,000 6,270,000 371,820,000 378,090,000 90,000 Construction 160,000 — — 160,000 14,055,000 14,215,000 — Home equity line of credit 649,000 122,000 838,000 1,609,000 107,179,000 108,788,000 35,000 Consumer 152,000 130,000 111,000 393,000 21,635,000 22,028,000 111,000 Total $ 3,745,000 $ 2,566,000 $ 4,705,000 $ 11,016,000 $ 952,093,000 $ 963,109,000 $ 236,000 Information on the past-due status of loans by class of financing receivable as of December 31, 2014 , is presented in the following table: 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due All Past Due Current Total 90+ Days & Accruing Commercial Real estate $ 346,000 $ 107,000 $ 407,000 $ 860,000 $ 241,451,000 $ 242,311,000 $ — Construction — 41,000 208,000 249,000 30,683,000 30,932,000 — Other 336,000 543,000 314,000 1,193,000 103,338,000 104,531,000 — Municipal — — — — 20,424,000 20,424,000 — Residential Term 1,140,000 2,118,000 3,745,000 7,003,000 377,029,000 384,032,000 101,000 Construction — — — — 12,160,000 12,160,000 — Home equity line of credit 621,000 769,000 732,000 2,122,000 101,399,000 103,521,000 — Consumer 303,000 53,000 80,000 436,000 19,217,000 19,653,000 80,000 Total $ 2,746,000 $ 3,631,000 $ 5,486,000 $ 11,863,000 $ 905,701,000 $ 917,564,000 $ 181,000 Information on the past-due status of loans by class of financing receivable as of June 30, 2014 , is presented in the following table: 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due All Past Due Current Total 90+ Days & Accruing Commercial Real estate $ 925,000 $ — $ 1,157,000 $ 2,082,000 $ 243,578,000 $ 245,660,000 $ — Construction — — 208,000 208,000 16,876,000 17,084,000 — Other 256,000 21,000 599,000 876,000 103,358,000 104,234,000 — Municipal — — — — 17,893,000 17,893,000 — Residential Term 813,000 1,735,000 3,880,000 6,428,000 372,599,000 379,027,000 87,000 Construction — — — — 13,253,000 13,253,000 — Home equity line of credit 471,000 93,000 875,000 1,439,000 96,382,000 97,821,000 — Consumer 131,000 11,000 76,000 218,000 16,674,000 16,892,000 76,000 Total $ 2,596,000 $ 1,860,000 $ 6,795,000 $ 11,251,000 $ 880,613,000 $ 891,864,000 $ 163,000 For all classes, loans are placed on non-accrual status when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement or when principal and interest is 90 days or more past due unless the loan is both well secured and in the process of collection (in which case the loan may continue to accrue interest in spite of its past due status). A loan is "well secured" if it is secured (1) by collateral in the form of liens on or pledges of real or personal property, including securities, that have a realizable value sufficient to discharge the debt (including accrued interest) in full, or (2) by the guarantee of a financially responsible party. A loan is "in the process of collection" if collection of the loan is proceeding in due course either (1) through legal action, including judgment enforcement procedures, or, (2) in appropriate circumstances, through collection efforts not involving legal action which are reasonably expected to result in repayment of the debt or in its restoration to a current status in the near future. Cash payments received on non-accrual loans, which are included in impaired loans, are applied to reduce the loan's principal balance until the remaining principal balance is deemed collectible, after which interest is recognized when collected. As a general rule, a loan may be restored to accrual status when payments are current for a substantial period of time, generally six months, and repayment of the remaining contractual amounts is expected or when it otherwise becomes well secured and in the process of collection. Information on nonaccrual loans as of June 30, 2015 and 2014 and at December 31, 2014 is presented in the following table: June 30, 2015 December 31, 2014 June 30, 2014 Commercial Real estate $ 1,538,000 $ 2,088,000 $ 3,089,000 Construction 208,000 208,000 208,000 Other 429,000 935,000 2,017,000 Municipal — — — Residential Term 5,698,000 6,421,000 6,432,000 Construction — — — Home equity line of credit 964,000 832,000 902,000 Consumer 95,000 26,000 — Total $ 8,932,000 $ 10,510,000 $ 12,648,000 Impaired loans include troubled debt restructured and loans placed on non-accrual. These loans are measured at the present value of expected future cash flows discounted at the loan's effective interest rate or at the fair value of the collateral if the loan is collateral dependent. If the measure of an impaired loan is lower than the recorded investment in the loan and estimated selling costs, a specific reserve is established for the difference, or, in certain situations, if the measure of an impaired loan is lower than the recorded investment in the loan and estimated selling costs, the difference is written off. A breakdown of impaired loans by class of financing receivable as of and for the period ended June 30, 2015 , is presented in the following table: For the six months ended June 30, 2015 For the quarter ended June 30, 2015 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Recognized Interest Income Average Recorded Investment Recognized Interest Income With No Related Allowance Commercial Real estate $ 8,986,000 $ 9,436,000 $ — $ 9,959,000 $ 182,000 $ 9,020,000 $ 93,000 Construction — — — — — — — Other 1,789,000 1,855,000 — 2,267,000 42,000 2,069,000 27,000 Municipal — — — — — — — Residential Term 9,636,000 10,537,000 — 10,797,000 173,000 10,458,000 90,000 Construction — — — — — — — Home equity line of credit 1,504,000 2,140,000 — 1,326,000 15,000 1,371,000 8,000 Consumer 95,000 138,000 — 52,000 3,000 80,000 — $ 22,010,000 $ 24,106,000 $ — $ 24,401,000 $ 415,000 $ 22,998,000 $ 218,000 With an Allowance Recorded Commercial Real estate $ 3,580,000 $ 3,671,000 $ 225,000 $ 2,807,000 $ 71,000 $ 3,618,000 $ 39,000 Construction 989,000 989,000 275,000 1,311,000 25,000 1,249,000 13,000 Other 317,000 331,000 275,000 399,000 4,000 471,000 3,000 Municipal — — — — — — — Residential Term 5,784,000 6,082,000 501,000 5,348,000 120,000 5,463,000 60,000 Construction — — — — — — — Home equity line of credit 68,000 69,000 31,000 307,000 2,000 226,000 — Consumer — — — — — — 2,000 $ 10,738,000 $ 11,142,000 $ 1,307,000 $ 10,172,000 $ 222,000 $ 11,027,000 $ 117,000 Total Commercial Real estate $ 12,566,000 $ 13,107,000 $ 225,000 $ 12,766,000 $ 253,000 $ 12,638,000 $ 132,000 Construction 989,000 989,000 275,000 1,311,000 25,000 1,249,000 13,000 Other 2,106,000 2,186,000 275,000 2,666,000 46,000 2,540,000 30,000 Municipal — — — — — — — Residential Term 15,420,000 16,619,000 501,000 16,145,000 293,000 15,921,000 150,000 Construction — — — — — — — Home equity line of credit 1,572,000 2,209,000 31,000 1,633,000 17,000 1,597,000 8,000 Consumer 95,000 138,000 — 52,000 3,000 80,000 2,000 $ 32,748,000 $ 35,248,000 $ 1,307,000 $ 34,573,000 $ 637,000 $ 34,025,000 $ 335,000 Substantially all interest income recognized on impaired loans for all classes of financing receivables was recognized on a cash basis as received. A breakdown of impaired loans by class of financing receivable as of and for the year ended December 31, 2014 , is presented in the following table: Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Recognized Interest Income With No Related Allowance Commercial Real estate $ 11,687,000 $ 12,423,000 $ — $ 11,080,000 $ 488,000 Construction — — — 30,000 — Other 2,616,000 3,407,000 — 3,853,000 156,000 Municipal — — — — — Residential Term 10,820,000 11,824,000 — 10,505,000 402,000 Construction — — — — — Home equity line of credit 1,164,000 1,395,000 — 1,447,000 29,000 Consumer 26,000 28,000 — 11,000 3,000 $ 26,313,000 $ 29,077,000 $ — $ 26,926,000 $ 1,078,000 With an Allowance Recorded Commercial Real estate $ 1,617,000 $ 1,789,000 $ 346,000 $ 3,040,000 $ 62,000 Construction 1,380,000 1,380,000 413,000 1,279,000 56,000 Other 326,000 338,000 129,000 1,103,000 13,000 Municipal — — — — — Residential Term 5,303,000 5,513,000 519,000 5,738,000 239,000 Construction — — — — — Home equity line of credit 923,000 929,000 396,000 318,000 17,000 Consumer — — — — — $ 9,549,000 $ 9,949,000 $ 1,803,000 $ 11,478,000 $ 387,000 Total Commercial Real estate $ 13,304,000 $ 14,212,000 $ 346,000 $ 14,120,000 $ 550,000 Construction 1,380,000 1,380,000 413,000 1,309,000 56,000 Other 2,942,000 3,745,000 129,000 4,956,000 169,000 Municipal — — — — — Residential Term 16,123,000 17,337,000 519,000 16,243,000 641,000 Construction — — — — — Home equity line of credit 2,087,000 2,324,000 396,000 1,765,000 46,000 Consumer 26,000 28,000 — 11,000 3,000 $ 35,862,000 $ 39,026,000 $ 1,803,000 $ 38,404,000 $ 1,465,000 A breakdown of impaired loans by class of financing receivable as of and for the period ended June 30, 2014 , is presented in the following table: For the six months ended June 30, 2014 For the quarter ended June 30, 2014 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Recognized Interest Income Average Recorded Investment Recognized Interest Income With No Related Allowance Commercial Real estate $ 10,688,000 $ 11,228,000 $ — $ 10,458,000 $ 201,000 $ 9,181,000 $ 112,000 Construction — — — 60,000 — 52,000 — Other 3,271,000 3,549,000 — 4,796,000 56,000 4,443,000 32,000 Municipal — — — — — — — Residential Term 10,271,000 11,082,000 — 10,845,000 183,000 10,364,000 88,000 Construction — — — — — — — Home equity line of credit 1,242,000 1,484,000 — 1,753,000 14,000 1,996,000 7,000 Consumer — — — — — — — $ 25,472,000 $ 27,343,000 $ — $ 27,912,000 $ 454,000 $ 26,036,000 $ 239,000 With an Allowance Recorded Commercial Real estate $ 4,115,000 $ 4,270,000 $ 1,150,000 $ 3,599,000 $ 81,000 $ 3,665,000 $ 42,000 Construction 1,492,000 1,492,000 487,000 1,140,000 28,000 995,000 14,000 Other 1,054,000 1,114,000 830,000 1,364,000 12,000 1,674,000 8,000 Municipal — — — — — — — Residential Term 5,831,000 6,018,000 606,000 5,850,000 128,000 5,883,000 63,000 Construction — — — — — — — Home equity line of credit 291,000 296,000 73,000 261,000 1,000 400,000 1,000 Consumer — — — — — — — $ 12,783,000 $ 13,190,000 $ 3,146,000 $ 12,214,000 $ 250,000 $ 12,617,000 $ 128,000 Total Commercial Real estate $ 14,803,000 $ 15,498,000 $ 1,150,000 $ 14,057,000 $ 282,000 $ 12,846,000 $ 154,000 Construction 1,492,000 1,492,000 487,000 1,200,000 28,000 1,047,000 14,000 Other 4,325,000 4,663,000 830,000 6,160,000 68,000 6,117,000 40,000 Municipal — — — — — — — Residential Term 16,102,000 17,100,000 606,000 16,695,000 311,000 16,247,000 151,000 Construction — — — — — — — Home equity line of credit 1,533,000 1,780,000 73,000 2,014,000 15,000 2,396,000 8,000 Consumer — — — — — — — $ 38,255,000 $ 40,533,000 $ 3,146,000 $ 40,126,000 $ 704,000 $ 38,653,000 $ 367,000 Troubled Debt Restructured A troubled debt restructured ("TDR") constitutes a restructuring of debt if the Company, for economic or legal reasons related to the borrower's financial difficulties, grants a concession to the borrower that it would not otherwise consider. To determine whether or not a loan should be classified as a TDR, Management evaluates a loan based upon the following criteria: • The borrower demonstrates financial difficulty; common indicators include past due status with bank obligations, substandard credit bureau reports, or an inability to refinance with another lender, and • The Company has granted a concession; common concession types include maturity date extension, interest rate adjustments to below market pricing, and deferment of payments. As of June 30, 2015 , the Company had 88 loans with a value of $25,791,000 that have been classified as TDRs. This compares to 94 loans with a value of $27,214,000 and 97 loans with a value of $28,295,000 classified as TDRs as of December 31, 2014 and June 30, 2014 , respectively. The impairment carried as a specific reserve in the allowance for loan losses is calculated by present valuing the expected cash flows on the loan at the original interest rate, or, for collateral-dependent loans, using the fair value of the collateral less costs to sell. The following table shows TDRs by class and the specific reserve as of June 30, 2015 : Number of Loans Balance Specific Reserves Commercial Real estate 17 $ 11,754,000 $ 130,000 Construction 1 781,000 68,000 Other 13 1,675,000 — Municipal — — — Residential Term 52 10,789,000 435,000 Construction — — — Home equity line of credit 5 792,000 — Consumer — — — 88 $ 25,791,000 $ 633,000 The following table shows TDRs by class and the specific reserve as of December 31, 2014 : Number of Loans Balance Specific Reserves Commercial Real estate 19 $ 12,282,000 $ 267,000 Construction 1 1,172,000 207,000 Other 15 2,007,000 — Municipal — — — Residential Term 54 10,932,000 373,000 Construction — — — Home equity line of credit 5 821,000 21,000 Consumer — — — 94 $ 27,214,000 $ 868,000 The following table shows TDRs by class and the specific reserve as of June 30, 2014 : Number of Loans Balance Specific Reserves Commercial Real estate 18 $ 12,702,000 $ 774,000 Construction 1 1,284,000 280,000 Other 18 2,311,000 142,000 Municipal — — — Residential Term 55 11,166,000 383,000 Construction — — — Home equity line of credit 5 832,000 21,000 Consumer — — — 97 $ 28,295,000 $ 1,600,000 As of June 30, 2015 , nine of the loans classified as TDRs with a total balance of $1,455,000 were more than 30 days past due. None of these loans had been placed on TDR status in the previous 12 months. The following table shows these TDRs by class and the associated specific reserves included in the allowance for loan losses as of June 30, 2015 : Number of Loans Balance Specific Reserves Commercial Real estate — $ — $ — Construction — — — Other — — — Municipal — — — Residential Term 8 1,271,000 87,000 Construction — — — Home equity line of credit 1 184,000 — Consumer — — — 9 $ 1,455,000 $ 87,000 As of June 30, 2014 , 12 of the loans classified as TDRs with a total balance of $2,052,000 were more than 30 days past due. Of these loans, two loans with an outstanding balance of $256,000 had been placed on TDR status in the previous 12 months. The following table shows these TDRs by class and the associated specific reserves included in the allowance for loan losses as of June 30, 2014 : Number of Loans Balance Specific Reserves Commercial Real estate 1 $ 518,000 $ 259,000 Construction — — — Other — — — Municipal — — — Residential Term 10 1,333,000 35,000 Construction — — — Home equity line of credit 1 201,000 21,000 Consumer — — — 12 $ 2,052,000 $ 315,000 For the six months ended June 30, 2015 , no loans were placed on TDR status. This compares to three loans placed on TDR status with a post-modification outstanding balance of $291,000 for the six months ended June 30, 2014 . These were considered TDRs because concessions had been granted to borrowers experiencing financial difficulties. Concessions include reductions in interest rates, principal and/or interest forbearance, payment extensions, or combinations thereof. The following table shows loans placed on TDR status in the six months ended June 30, 2014 , by class of loan and the associated specific reserve included in the allowance for loan losses as of June 30, 2014 : For the six months ended June 30, 2014 Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Specific Reserves Commercial Real estate — $ — $ — $ — Construction — — — — Other — — — — Municipal — — — — Residential Term 3 349,000 291,000 17,000 Construction — — — — Home equity line of credit — — — — Consumer — — — — 3 $ 349,000 $ 291,000 $ 17,000 For the quarters ended June 30, 2015 and 2014, no loans were placed on TDR status. As of June 30, 2015 , Management is aware of eight loans classified as TDRs that are involved in bankruptcy with an outstanding balance of $1,161,000 . There were also 14 loans with an outstanding balance of $1,979,000 that were classified as TDRs and on non-accrual status. Four loans with an outstanding balance of $452,000 , that were classified as TDRs, were in the process of foreclosure. Consumer Mortgage Loans in Process of Foreclosure As of June 30, 2015 , there were 17 consumer mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $ 1,881,000 . |