Loans | Loans The following table shows the composition of the Company's loan portfolio as of March 31, 2018 and 2017 and at December 31, 2017 : March 31, 2018 December 31, 2017 March 31, 2017 Commercial Real estate $ 339,306,000 28.6 % $ 323,809,000 27.8 % $ 304,663,000 28.0 % Construction 43,813,000 3.7 % 38,056,000 3.3 % 28,775,000 2.6 % Other 177,783,000 15.0 % 181,528,000 15.6 % 158,507,000 14.4 % Municipal 35,463,000 3.0 % 33,391,000 2.9 % 28,327,000 2.6 % Residential Term 439,984,000 37.0 % 432,661,000 37.1 % 421,202,000 38.7 % Construction 15,847,000 1.3 % 17,868,000 1.5 % 13,717,000 1.3 % Home equity line of credit 110,298,000 9.3 % 111,302,000 9.6 % 110,016,000 10.1 % Consumer 25,508,000 2.1 % 25,524,000 2.2 % 24,528,000 2.3 % Total $ 1,188,002,000 100.0 % $ 1,164,139,000 100.0 % $ 1,089,735,000 100.0 % Loan balances include net deferred loan costs of $5,990,000 as of March 31, 2018 , $5,748,000 as of December 31, 2017 , and $5,167,000 as of March 31, 2017 . Pursuant to collateral agreements, qualifying first mortgage loans, which totaled $237,239,000 at March 31, 2018 , $239,805,000 at December 31, 2017 , and $254,512,000 at March 31, 2017 , were used to collateralize borrowings from the FHLB. In addition, commercial, construction and home equity loans totaling $255,020,000 at March 31, 2018 , $290,247,000 at December 31, 2017 , and $285,464,000 at March 31, 2017 , 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 March 31, 2018 , 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 $ 963,000 $ 17,000 $ 202,000 $ 1,182,000 $ 338,124,000 $ 339,306,000 $ — Construction 347,000 — — 347,000 43,466,000 43,813,000 — Other 6,887,000 52,000 294,000 7,233,000 170,550,000 177,783,000 — Municipal — — — — 35,463,000 35,463,000 — Residential Term 3,175,000 345,000 1,880,000 5,400,000 434,584,000 439,984,000 — Construction — — — — 15,847,000 15,847,000 — Home equity line of credit 449,000 438,000 664,000 1,551,000 108,747,000 110,298,000 126,000 Consumer 119,000 8,000 27,000 154,000 25,354,000 25,508,000 11,000 Total $ 11,940,000 $ 860,000 $ 3,067,000 $ 15,867,000 $ 1,172,135,000 $ 1,188,002,000 $ 137,000 Information on the past-due status of loans by class of financing receivable as of December 31, 2017 , 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 $ 574,000 $ 80,000 $ 220,000 $ 874,000 $ 322,935,000 $ 323,809,000 $ — Construction — — — — 38,056,000 38,056,000 — Other 542,000 6,663,000 574,000 7,779,000 173,749,000 181,528,000 — Municipal — — — — 33,391,000 33,391,000 — Residential Term 1,031,000 4,372,000 2,256,000 7,659,000 425,002,000 432,661,000 436,000 Construction 101,000 370,000 — 471,000 17,397,000 17,868,000 — Home equity line of credit 537,000 445,000 725,000 1,707,000 109,595,000 111,302,000 — Consumer 159,000 18,000 9,000 186,000 25,338,000 25,524,000 9,000 Total $ 2,944,000 $ 11,948,000 $ 3,784,000 $ 18,676,000 $ 1,145,463,000 $ 1,164,139,000 $ 445,000 Information on the past-due status of loans by class of financing receivable as of March 31, 2017 , 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 $ 142,000 $ 772,000 $ 1,823,000 $ 2,737,000 $ 301,926,000 $ 304,663,000 $ — Construction 20,000 — — 20,000 28,755,000 28,775,000 — Other 199,000 154,000 439,000 792,000 157,715,000 158,507,000 — Municipal — — — — 28,327,000 28,327,000 — Residential Term 3,555,000 — 1,603,000 5,158,000 416,044,000 421,202,000 — Construction — — — — 13,717,000 13,717,000 — Home equity line of credit 392,000 167,000 773,000 1,332,000 108,684,000 110,016,000 — Consumer 328,000 34,000 11,000 373,000 24,155,000 24,528,000 11,000 Total $ 4,636,000 $ 1,127,000 $ 4,649,000 $ 10,412,000 $ 1,079,323,000 $ 1,089,735,000 $ 11,000 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 March 31, 2018 and 2017 and at December 31, 2017 is presented in the following table: March 31, 2018 December 31, 2017 March 31, 2017 Commercial Real estate $ 1,021,000 $ 752,000 $ 2,625,000 Construction — — — Other 8,895,000 9,357,000 938,000 Municipal — — — Residential Term 3,654,000 3,778,000 4,028,000 Construction — — — Home equity line of credit 697,000 833,000 909,000 Consumer 16,000 16,000 — Total $ 14,283,000 $ 14,736,000 $ 8,500,000 Impaired loans include troubled debt restructured ("TDR") 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 March 31, 2018 is presented in the following table: For the three months ended March 31, 2018 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Recognized Interest Income With No Related Allowance Commercial Real estate $ 5,054,000 $ 5,269,000 $ — $ 4,163,000 $ 54,000 Construction 741,000 741,000 — 741,000 10,000 Other 2,281,000 2,360,000 — 2,302,000 6,000 Municipal — — — — — Residential Term 9,594,000 10,733,000 — 9,700,000 71,000 Construction — — — — — Home equity line of credit 917,000 1,008,000 — 1,090,000 5,000 Consumer 16,000 29,000 — 16,000 — $ 18,603,000 $ 20,140,000 $ — $ 18,012,000 $ 146,000 With an Allowance Recorded Commercial Real estate $ 3,897,000 $ 4,002,000 $ 254,000 $ 3,889,000 $ 39,000 Construction — — — — — Other 7,159,000 7,324,000 1,664,000 7,182,000 — Municipal — — — — — Residential Term 1,934,000 2,146,000 272,000 1,968,000 24,000 Construction — — — — — Home equity line of credit 122,000 125,000 16,000 70,000 — Consumer — — — — — $ 13,112,000 $ 13,597,000 $ 2,206,000 $ 13,109,000 $ 63,000 Total Commercial Real estate $ 8,951,000 $ 9,271,000 $ 254,000 $ 8,052,000 $ 93,000 Construction 741,000 741,000 — 741,000 10,000 Other 9,440,000 9,684,000 1,664,000 9,484,000 6,000 Municipal — — — — — Residential Term 11,528,000 12,879,000 272,000 11,668,000 95,000 Construction — — — — — Home equity line of credit 1,039,000 1,133,000 16,000 1,160,000 5,000 Consumer 16,000 29,000 — 16,000 — $ 31,715,000 $ 33,737,000 $ 2,206,000 $ 31,121,000 $ 209,000 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, 2017 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 $ 3,791,000 $ 3,996,000 $ — $ 5,124,000 $ 164,000 Construction 741,000 741,000 — 62,000 38,000 Other 2,591,000 2,671,000 — 1,908,000 36,000 Municipal — — — — — Residential Term 9,769,000 10,909,000 — 10,770,000 297,000 Construction — — — — — Home equity line of credit 1,115,000 1,429,000 — 1,351,000 18,000 Consumer 16,000 29,000 — 12,000 — $ 18,023,000 $ 19,775,000 $ — $ 19,227,000 $ 553,000 With an Allowance Recorded Commercial Real estate $ 3,999,000 $ 4,116,000 $ 224,000 $ 4,460,000 $ 152,000 Construction — — — 699,000 — Other 7,327,000 7,371,000 1,309,000 2,584,000 — Municipal — — — — — Residential Term 1,979,000 2,144,000 255,000 2,106,000 79,000 Construction — — — — — Home equity line of credit 64,000 67,000 24,000 32,000 — Consumer — — — — — $ 13,369,000 $ 13,698,000 $ 1,812,000 $ 9,881,000 $ 231,000 Total Commercial Real estate $ 7,790,000 $ 8,112,000 $ 224,000 $ 9,584,000 $ 316,000 Construction 741,000 741,000 — 761,000 38,000 Other 9,918,000 10,042,000 1,309,000 4,492,000 36,000 Municipal — — — — — Residential Term 11,748,000 13,053,000 255,000 12,876,000 376,000 Construction — — — — — Home equity line of credit 1,179,000 1,496,000 24,000 1,383,000 18,000 Consumer 16,000 29,000 — 12,000 — $ 31,392,000 $ 33,473,000 $ 1,812,000 $ 29,108,000 $ 784,000 A breakdown of impaired loans by class of financing receivable as of and for the period ended March 31, 2017 is presented in the following table: For the three months ended March 31, 2017 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Recognized Interest Income With No Related Allowance Commercial Real estate $ 5,949,000 $ 6,450,000 $ — $ 5,444,000 $ 51,000 Construction — — — — — Other 1,476,000 1,636,000 — 1,595,000 22,000 Municipal — — — — — Residential Term 11,388,000 12,470,000 — 11,402,000 129,000 Construction — — — — — Home equity line of credit 1,422,000 1,752,000 — 1,376,000 9,000 Consumer — — — — — $ 20,235,000 $ 22,308,000 $ — $ 19,817,000 $ 211,000 With an Allowance Recorded Commercial Real estate $ 4,722,000 $ 4,908,000 $ 351,000 $ 4,741,000 $ 46,000 Construction 763,000 763,000 101,000 763,000 9,000 Other 234,000 272,000 39,000 125,000 4,000 Municipal — — — — — Residential Term 1,872,000 2,020,000 251,000 2,077,000 23,000 Construction — — — — — Home equity line of credit 26,000 27,000 26,000 26,000 — Consumer — — — — — $ 7,617,000 $ 7,990,000 $ 768,000 $ 7,732,000 $ 82,000 Total Commercial Real estate $ 10,671,000 $ 11,358,000 $ 351,000 $ 10,185,000 $ 97,000 Construction 763,000 763,000 101,000 763,000 9,000 Other 1,710,000 1,908,000 39,000 1,720,000 26,000 Municipal — — — — — Residential Term 13,260,000 14,490,000 251,000 13,479,000 152,000 Construction — — — — — Home equity line of credit 1,448,000 1,779,000 26,000 1,402,000 9,000 Consumer — — — — — $ 27,852,000 $ 30,298,000 $ 768,000 $ 27,549,000 $ 293,000 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. As of March 31, 2018 , the Company had 69 loans with a balance of $18,709,000 that have been classified as TDRs. This compares to 62 loans with a balance of $17,801,000 and 70 loans with a balance of $21,121,000 classified as TDRs as of December 31, 2017 and March 31, 2017 , 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 March 31, 2018 : Number of Loans Balance Specific Reserves Commercial Real estate 15 $ 8,030,000 $ 132,000 Construction 1 741,000 — Other 4 546,000 — Municipal — — — Residential Term 46 8,883,000 271,000 Construction — — — Home equity line of credit 3 509,000 — Consumer — — — 69 $ 18,709,000 $ 403,000 The following table shows TDRs by class and the specific reserve as of December 31, 2017 : Number of Loans Balance Specific Reserves Commercial Real estate 8 $ 7,038,000 $ 90,000 Construction 1 741,000 — Other 4 561,000 — Municipal — — — Residential Term 46 8,948,000 233,000 Construction — — — Home equity line of credit 3 513,000 — Consumer — — — 62 $ 17,801,000 $ 323,000 The following table shows TDRs by class and the specific reserve as of March 31, 2017 : Number of Loans Balance Specific Reserves Commercial Real estate 10 $ 8,703,000 $ 82,000 Construction 1 763,000 101,000 Other 5 772,000 2,000 Municipal — — — Residential Term 51 10,344,000 201,000 Construction — — — Home equity line of credit 3 539,000 — Consumer — — — 70 $ 21,121,000 $ 386,000 As of March 31, 2018 , seven of the loans classified as TDRs with a total balance of $810,000 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 March 31, 2018 : Number of Loans Balance Specific Reserves Commercial Real estate — $ — $ — Construction — — — Other — — — Municipal — — — Residential Term 6 643,000 45,000 Construction — — — Home equity line of credit 1 167,000 — Consumer — — — 7 $ 810,000 $ 45,000 As of March 31, 2017 , nine of the loans classified as TDRs with a total balance of $1,651,000 were more than 30 days past due. Of these loans, none 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 March 31, 2017 : Number of Loans Balance Specific Reserves Commercial Real estate 1 $ 658,000 $ — Construction — — — Other — — — Municipal — — — Residential Term 7 826,000 — Construction — — — Home equity line of credit 1 167,000 — Consumer — — — 9 $ 1,651,000 $ — For the three months ended March 31, 2018 , seven loans were placed on TDR status. The following table shows these TDRs by class and the associated specific reserves included in the allowance for loan losses as of March 31, 2018 : For the quarter ended March 31, 2018 Number of Loans Pre-Modification Post-Modification Outstanding Specific Reserves Commercial Real estate 7 $ 1,056,000 $ 1,056,000 $ 36,000 Construction — — — — Other — — — — Municipal — — — — Residential Term — — — — Construction — — — — Home equity line of credit — — — — Consumer — — — — 7 $ 1,056,000 $ 1,056,000 $ 36,000 For the three months ended March 31, 2017 , no loans were placed on TDR status. As of March 31, 2018 , Management is aware of four loans classified as TDRs that are involved in bankruptcy with an outstanding balance of $684,000 . There were also 11 loans with an outstanding balance of $1,276,000 that were classified as TDRs and on non-accrual status, of which three loans with an outstanding balance of $456,000 were in the process of foreclosure. Residential Mortgage Loans in Process of Foreclosure As of March 31, 2018 , there were 13 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $ 1,388,000 . This compares to 12 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,773,000 as of March 31, 2017 . |