Loans | Loans The following table shows the composition of the Company's loan portfolio as of December 31, 2015 and 2014 : December 31, 2015 December 31, 2014 Commercial Real estate $ 269,462,000 27.3 % $ 242,311,000 26.4 % Construction 24,881,000 2.5 % 30,932,000 3.4 % Other 128,341,000 13.0 % 104,531,000 11.4 % Municipal 19,751,000 2.0 % 20,424,000 2.2 % Residential Term 403,030,000 40.7 % 384,032,000 41.9 % Construction 8,451,000 0.9 % 12,160,000 1.3 % Home equity line of credit 110,202,000 11.1 % 103,521,000 11.3 % Consumer 24,520,000 2.5 % 19,653,000 2.1 % Total loans $ 988,638,000 100.0 % $ 917,564,000 100.0 % Loan balances include net deferred loan costs of $3,686,000 in 2015 and $2,729,000 in 2014 . Pursuant to collateral agreements, qualifying first mortgage loans, which were valued at $279,463,000 and $266,716,000 at December 31, 2015 and 2014 , respectively, were used to collateralize borrowings from the Federal Home Loan Bank of Boston. In addition, commercial, construction and home equity loans totaling $243,578,000 at December 31, 2015 and $240,943,000 at December 2014 , were used to collateralize a standby line of credit at the Federal Reserve Bank of Boston that is currently unused. At December 31, 2015 and 2014 , non-accrual loans were $7,372,000 and $10,510,000 , respectively. For the years ended December 31, 2015 , 2014 and 2013 , interest income which would have been recognized on these loans, if interest had been accrued, was $369,000 , $551,000 , and $917,000 , respectively. Loans more than 90 days past due accruing interest totaled $136,000 at December 31, 2015 and $181,000 at December 31, 2014 . The Company continues to accrue interest on these loans because it believes collection of principal and interest is reasonably assured. Loans to directors, officers and employees totaled $31,285,000 at December 31, 2015 and $29,883,000 at December 31, 2014 . A summary of loans to directors and executive officers is as follows: For the years ended December 31, 2015 2014 Balance at beginning of year $ 14,856,000 $ 14,884,000 New loans 7,382,000 8,932,000 Repayments (1,837,000 ) (8,960,000 ) Balance at end of year $ 20,401,000 $ 14,856,000 Information on the past-due status of loans as of December 31, 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 $ 603,000 $ — $ 281,000 $ 884,000 $ 268,578,000 $ 269,462,000 $ — Construction 35,000 — 238,000 273,000 24,608,000 24,881,000 — Other 303,000 — 25,000 328,000 128,013,000 128,341,000 25,000 Municipal — — — — 19,751,000 19,751,000 — Residential Term 450,000 2,098,000 2,639,000 5,187,000 397,843,000 403,030,000 100,000 Construction 368,000 — — 368,000 8,083,000 8,451,000 — Home equity line of credit 261,000 255,000 592,000 1,108,000 109,094,000 110,202,000 — Consumer 102,000 26,000 11,000 139,000 24,381,000 24,520,000 11,000 Total $ 2,122,000 $ 2,379,000 $ 3,786,000 $ 8,287,000 $ 980,351,000 $ 988,638,000 $ 136,000 Information on the past-due status of loans 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 $ 24,000 $ 75,000 $ 761,000 $ 860,000 $ 241,451,000 $ 242,311,000 $ — Construction — 41,000 208,000 249,000 30,683,000 30,932,000 — Other 3,000 — 857,000 860,000 103,671,000 104,531,000 — Municipal — — — — 20,424,000 20,424,000 — Residential Term 856,000 468,000 5,679,000 7,003,000 377,029,000 384,032,000 101,000 Construction — — — — 12,160,000 12,160,000 — Home equity line of credit 622,000 720,000 780,000 2,122,000 101,399,000 103,521,000 — Consumer 637,000 52,000 80,000 769,000 18,884,000 19,653,000 80,000 Total $ 2,142,000 $ 1,356,000 $ 8,365,000 $ 11,863,000 $ 905,701,000 $ 917,564,000 $ 181,000 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. Information on nonaccrual loans as of December 31, 2015 and 2014 is presented in the following table: As of December 31, 2015 2014 Commercial Real estate $ 915,000 $ 2,088,000 Construction 238,000 208,000 Other 66,000 935,000 Municipal — — Residential Term 5,260,000 6,421,000 Construction — — Home equity line of credit 893,000 832,000 Consumer — 26,000 Total $ 7,372,000 $ 10,510,000 Information regarding impaired loans is as follows: For the years ended December 31, 2015 2014 2013 Average investment in impaired loans $ 32,698,000 $ 38,404,000 $ 45,722,000 Interest income recognized on impaired loans, all on cash basis 1,218,000 1,465,000 1,750,000 As of December 31, 2015 2014 Balance of impaired loans $ 29,531,000 $ 35,862,000 Less portion for which no allowance for loan losses is allocated (20,889,000 ) (26,313,000 ) Portion of impaired loan balance for which an allowance for loan losses is allocated $ 8,642,000 $ 9,549,000 Portion of allowance for loan losses allocated to the impaired loan balance $ 754,000 $ 1,803,000 Impaired loans include restructured loans 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 category as of December 31, 2015 , 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 $ 7,173,000 $ 7,496,000 $ — $ 8,990,000 $ 301,000 Construction 30,000 30,000 — 3,000 1,000 Other 1,163,000 1,210,000 — 1,893,000 76,000 Municipal — — — — — Residential Term 11,122,000 12,157,000 — 10,480,000 415,000 Construction — — — — — Home equity line of credit 1,401,000 2,054,000 — 1,400,000 43,000 Consumer — — — 42,000 3,000 $ 20,889,000 $ 22,947,000 $ — $ 22,808,000 $ 839,000 With an Allowance Recorded Commercial Real estate $ 3,544,000 $ 3,627,000 $ 89,000 $ 3,066,000 $ 149,000 Construction 996,000 996,000 302,000 1,153,000 44,000 Other 71,000 77,000 8,000 256,000 5,000 Municipal — — — — — Residential Term 3,966,000 4,193,000 326,000 5,228,000 180,000 Construction — — — — — Home equity line of credit 65,000 66,000 29,000 187,000 3,000 Consumer — — — — — $ 8,642,000 $ 8,959,000 $ 754,000 $ 9,890,000 $ 381,000 Total Commercial Real estate $ 10,717,000 $ 11,123,000 $ 89,000 $ 12,056,000 $ 450,000 Construction 1,026,000 1,026,000 302,000 1,156,000 45,000 Other 1,234,000 1,287,000 8,000 2,149,000 80,000 Municipal — — — — — Residential Term 15,088,000 16,350,000 326,000 15,708,000 595,000 Construction — — — — — Home equity line of credit 1,466,000 2,120,000 29,000 1,587,000 45,000 Consumer — — — 42,000 3,000 $ 29,531,000 $ 31,906,000 $ 754,000 $ 32,698,000 $ 1,218,000 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 category as of 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 category as of December 31, 2013 , 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 $ 11,813,000 $ 12,419,000 $ — $ 11,100,000 $ 495,000 Construction — — — 202,000 — Other 5,617,000 7,309,000 — 4,265,000 322,000 Municipal — — — — — Residential Term 13,432,000 14,600,000 — 14,396,000 511,000 Construction — — — — — Home equity line of credit 1,555,000 1,791,000 — 1,578,000 32,000 Consumer — — — — — $ 32,417,000 $ 36,119,000 $ — $ 31,541,000 $ 1,360,000 With an Allowance Recorded Commercial Real estate $ 3,122,000 $ 3,264,000 $ 890,000 $ 5,673,000 $ 150,000 Construction 1,284,000 1,284,000 272,000 1,795,000 48,000 Other 1,081,000 1,132,000 841,000 1,633,000 28,000 Municipal — — — — — Residential Term 4,354,000 4,516,000 404,000 4,982,000 162,000 Construction — — — — — Home equity line of credit 93,000 93,000 54,000 98,000 2,000 Consumer — — — — — $ 9,934,000 $ 10,289,000 $ 2,461,000 $ 14,181,000 $ 390,000 Total Commercial Real estate $ 14,935,000 $ 15,683,000 $ 890,000 $ 16,773,000 $ 645,000 Construction 1,284,000 1,284,000 272,000 1,997,000 48,000 Other 6,698,000 8,441,000 841,000 5,898,000 350,000 Municipal — — — — — Residential Term 17,786,000 19,116,000 404,000 19,378,000 673,000 Construction — — — — — Home equity line of credit 1,648,000 1,884,000 54,000 1,676,000 34,000 Consumer — — — — — $ 42,351,000 $ 46,408,000 $ 2,461,000 $ 45,722,000 $ 1,750,000 Troubled Debt Restructured A 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. The Company applies the same interest accrual policy to TDRs as it does for all classes of loans. As of December 31, 2015 , the Company had 84 loans with a value of $23,923,000 that have been restructured. This compares to 94 loans with a value of $27,214,000 classified as TDRs as of December 31, 2014 . The impairment carried as a specific reserve in the allowance for loan losses is calculated by present valuing the cashflow modification on the loan, 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 December 31, 2015 : Number of Loans Balance Specific Reserves Commercial Real estate 15 $ 10,350,000 $ 85,000 Construction 1 788,000 94,000 Other 11 1,168,000 1,000 Municipal — — — Residential Term 53 10,875,000 275,000 Construction — — — Home equity line of credit 4 742,000 — Consumer — — — 84 $ 23,923,000 $ 455,000 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 As of December 31, 2015 , eight of the loans classified as TDRs with a total balance of $1,053,000 were more than 30 days past due. Of these loans, zero had been placed on TDR status in the previous 12 months. The following table shows past-due TDRs by class and the associated specific reserves included in the allowance for loan losses as of December 31, 2015 : Number of Loans Balance Specific Reserves Commercial Real estate — $ — $ — Construction — — — Other — — — Municipal — — — Residential Term 8 1,053,000 46,000 Construction — — — Home equity line of credit — — — Consumer — — — 8 $ 1,053,000 $ 46,000 As of December 31, 2014 , 12 of the loans classified as TDRs with a total balance of $1,549,000 were more than 30 days past due. Of these loans, two loans with an outstanding balance of $238,000 had been placed on TDR status in the previous 12 months. The following table shows past-due TDRs by class and the associated specific reserves included in the allowance for loan losses as of December 31, 2014 : Number of Loans Balance Specific Reserves Commercial Real estate 1 $ 321,000 $ 120,000 Construction — — — Other 1 2,000 — Municipal — — — Residential Term 8 1,000,000 36,000 Construction — — — Home equity line of credit 2 226,000 21,000 Consumer — — — 12 $ 1,549,000 $ 177,000 During the year ended December 31, 2015 , two loans were placed on TDR status with a post-modification outstanding balance of $218,000 . 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 during the year ended December 31, 2015 , by class of loan and the associated specific reserve included in the allowance for loan losses as of December 31, 2015 : Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Specific Reserves Commercial Real estate — $ — $ — $ — Construction — — — — Other — — — — Municipal — — — — Residential Term 2 221,000 218,000 — Construction — — — — Home equity line of credit — — — — Consumer — — — — 2 $ 221,000 $ 218,000 $ — During the year ended December 31, 2014 , six loans were placed on TDR status with a post-modification balance of $826,000 . These were considered to be 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 2014 by type of loan and the associated specific reserve included in the allowance for loan losses as of December 31, 2014 : Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Specific Reserves Commercial Real estate 2 $ 302,000 $ 300,000 $ — Construction — — — — Other — — — — Municipal — — — — Residential Term 4 627,000 526,000 12,000 Construction — — — — Home equity line of credit — — — — Consumer — — — — 6 $ 929,000 $ 826,000 $ 12,000 As of December 31, 2015 , Management is aware of six loans classified as TDRs that are involved in bankruptcy with an outstanding balance of $1,079,000 . As of December 31, 2015 , there were 13 loans with an outstanding balance of $1,764,000 that were classified as TDRs and were on non-accrual status, three of which, with an outstanding balance of $262,000 , were in the process of foreclosure. Residential Mortgage Loans in Process of Foreclosure As of December 31, 2015 , there were 16 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,513,000 . |