Loans | Loans The following table shows the composition of the Company's loan portfolio as of September 30, 2018 and 2017 and at December 31, 2017 : September 30, 2018 December 31, 2017 September 30, 2017 Commercial Real estate $ 366,390,000 29.5 % $ 323,809,000 27.8 % $ 301,227,000 26.9 % Construction 23,889,000 1.9 % 38,056,000 3.3 % 32,893,000 2.9 % Other 188,128,000 15.1 % 181,528,000 15.6 % 172,986,000 15.4 % Municipal 56,704,000 4.6 % 33,391,000 2.9 % 33,311,000 3.0 % Residential Term 459,449,000 36.8 % 432,661,000 37.1 % 429,572,000 38.3 % Construction 18,166,000 1.5 % 17,868,000 1.5 % 15,495,000 1.4 % Home equity line of credit 105,213,000 8.5 % 111,302,000 9.6 % 110,178,000 9.8 % Consumer 25,619,000 2.1 % 25,524,000 2.2 % 25,424,000 2.3 % Total $ 1,243,558,000 100.0 % $ 1,164,139,000 100.0 % $ 1,121,086,000 100.0 % Loan balances include net deferred loan costs of $6,428,000 as of September 30, 2018 , $5,748,000 as of December 31, 2017 , and $5,560,000 as of September 30, 2017 . Pursuant to collateral agreements, qualifying first mortgage loans and commercial real estate loans, which totaled $311,152,000 at September 30, 2018 , were used to collateralize borrowings from the FHLB. This compares to qualifying first mortgages loans which totaled $239,805,000 at December 31, 2017 , and $245,000,000 at September 30, 2017 . In addition, commercial, construction and home equity loans totaling $229,769,000 at September 30, 2018 , $290,247,000 at December 31, 2017 , and $297,712,000 at September 30, 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 September 30, 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 $ 305,000 $ — $ 503,000 $ 808,000 $ 365,582,000 $ 366,390,000 $ — Construction — — — — 23,889,000 23,889,000 — Other 440,000 526,000 416,000 1,382,000 186,746,000 188,128,000 — Municipal — — — — 56,704,000 56,704,000 — Residential Term 838,000 2,701,000 1,566,000 5,105,000 454,344,000 459,449,000 199,000 Construction — — — — 18,166,000 18,166,000 — Home equity line of credit 1,883,000 403,000 565,000 2,851,000 102,362,000 105,213,000 — Consumer 161,000 14,000 52,000 227,000 25,392,000 25,619,000 50,000 Total $ 3,627,000 $ 3,644,000 $ 3,102,000 $ 10,373,000 $ 1,233,185,000 $ 1,243,558,000 $ 249,000 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 September 30, 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 $ 415,000 $ 169,000 $ 1,387,000 $ 1,971,000 $ 299,256,000 $ 301,227,000 $ — Construction — — — — 32,893,000 32,893,000 — Other 345,000 265,000 567,000 1,177,000 171,809,000 172,986,000 — Municipal — — — — 33,311,000 33,311,000 — Residential Term 295,000 3,668,000 1,941,000 5,904,000 423,668,000 429,572,000 344,000 Construction — — — — 15,495,000 15,495,000 — Home equity line of credit 645,000 130,000 986,000 1,761,000 108,417,000 110,178,000 167,000 Consumer 195,000 6,000 18,000 219,000 25,205,000 25,424,000 — Total $ 1,895,000 $ 4,238,000 $ 4,899,000 $ 11,032,000 $ 1,110,054,000 $ 1,121,086,000 $ 511,000 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 September 30, 2018 and 2017 and at December 31, 2017 is presented in the following table: September 30, 2018 December 31, 2017 September 30, 2017 Commercial Real estate $ 964,000 $ 752,000 $ 1,929,000 Construction — — — Other 9,330,000 9,357,000 9,520,000 Municipal — — — Residential Term 3,042,000 3,778,000 3,875,000 Construction — — — Home equity line of credit 834,000 833,000 1,001,000 Consumer 2,000 16,000 51,000 Total $ 14,172,000 $ 14,736,000 $ 16,376,000 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 September 30, 2018 is presented in the following table: For the nine months ended September 30, 2018 For the quarter ended September 30, 2018 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 $ 5,954,000 $ 6,275,000 $ — $ 5,099,000 $ 194,000 $ 5,966,000 $ 84,000 Construction 741,000 741,000 — 773,000 32,000 741,000 11,000 Other 1,926,000 2,044,000 — 2,146,000 25,000 1,865,000 8,000 Municipal — — — — — — — Residential Term 9,019,000 10,201,000 — 9,515,000 222,000 9,200,000 71,000 Construction — — — — — — — Home equity line of credit 1,068,000 1,128,000 — 1,014,000 15,000 1,033,000 6,000 Consumer — — — 14,000 — 10,000 — $ 18,708,000 $ 20,389,000 $ — $ 18,561,000 $ 488,000 $ 18,815,000 $ 180,000 With an Allowance Recorded Commercial Real estate $ 3,456,000 $ 3,474,000 $ 265,000 $ 3,700,000 $ 97,000 $ 3,461,000 $ 30,000 Construction — — — — — — — Other 7,923,000 8,231,000 1,890,000 7,345,000 — 7,682,000 — Municipal — — — — — — — Residential Term 1,909,000 2,085,000 238,000 2,054,000 70,000 2,108,000 22,000 Construction — — — — — — — Home equity line of credit 100,000 100,000 7,000 92,000 — 100,000 — Consumer 2,000 15,000 2,000 — — 1,000 — $ 13,390,000 $ 13,905,000 $ 2,402,000 $ 13,191,000 $ 167,000 $ 13,352,000 $ 52,000 Total Commercial Real estate $ 9,410,000 $ 9,749,000 $ 265,000 $ 8,799,000 $ 291,000 $ 9,427,000 $ 114,000 Construction 741,000 741,000 — 773,000 32,000 741,000 11,000 Other 9,849,000 10,275,000 1,890,000 9,491,000 25,000 9,547,000 8,000 Municipal — — — — — — — Residential Term 10,928,000 12,286,000 238,000 11,569,000 292,000 11,308,000 93,000 Construction — — — — — — — Home equity line of credit 1,168,000 1,228,000 7,000 1,106,000 15,000 1,133,000 6,000 Consumer 2,000 15,000 2,000 14,000 — 11,000 — $ 32,098,000 $ 34,294,000 $ 2,402,000 $ 31,752,000 $ 655,000 $ 32,167,000 $ 232,000 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 September 30, 2017 is presented in the following table: For the nine months ended September 30, 2017 For the quarter ended September 30, 2017 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 $ 5,281,000 $ 5,634,000 $ — $ 5,418,000 $ 149,000 $ 5,398,000 $ 55,000 Construction — — — — — — — Other 2,862,000 2,955,000 — 1,631,000 37,000 1,879,000 12,000 Municipal — — — — — — — Residential Term 10,133,000 11,358,000 — 11,110,000 236,000 10,645,000 75,000 Construction — — — — — — — Home equity line of credit 1,495,000 1,807,000 — 1,417,000 18,000 1,479,000 4,000 Consumer 51,000 102,000 — 8,000 — 23,000 — $ 19,822,000 $ 21,856,000 $ — $ 19,584,000 $ 440,000 $ 19,424,000 $ 146,000 With an Allowance Recorded Commercial Real estate $ 4,555,000 $ 4,891,000 $ 347,000 $ 4,549,000 $ 125,000 $ 4,360,000 $ 40,000 Construction 763,000 763,000 108,000 763,000 28,000 763,000 10,000 Other 7,388,000 7,392,000 1,130,000 991,000 — 2,618,000 — Municipal — — — — — — — Residential Term 2,508,000 2,726,000 307,000 2,078,000 66,000 2,293,000 25,000 Construction — — — — — — — Home equity line of credit 24,000 27,000 24,000 25,000 — 25,000 — Consumer — — — — — — — $ 15,238,000 $ 15,799,000 $ 1,916,000 $ 8,406,000 $ 219,000 $ 10,059,000 $ 75,000 Total Commercial Real estate $ 9,836,000 $ 10,525,000 $ 347,000 $ 9,967,000 $ 274,000 $ 9,758,000 $ 95,000 Construction 763,000 763,000 108,000 763,000 28,000 763,000 10,000 Other 10,250,000 10,347,000 1,130,000 2,622,000 37,000 4,497,000 12,000 Municipal — — — — — — — Residential Term 12,641,000 14,084,000 307,000 13,188,000 302,000 12,938,000 100,000 Construction — — — — — — — Home equity line of credit 1,519,000 1,834,000 24,000 1,442,000 18,000 1,504,000 4,000 Consumer 51,000 102,000 — 8,000 — 23,000 — $ 35,060,000 $ 37,655,000 $ 1,916,000 $ 27,990,000 $ 659,000 $ 29,483,000 $ 221,000 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 September 30, 2018 , the Company had 71 loans with a balance of $25,661,000 that have been classified as TDRs. This compares to 62 loans with a balance of $17,801,000 and 67 loans with a balance of $19,760,000 classified as TDRs as of December 31, 2017 and September 30, 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 September 30, 2018 : Number of Loans Balance Specific Reserves Commercial Real estate 16 $ 8,542,000 $ 138,000 Construction 1 741,000 — Other 5 7,007,000 1,100,000 Municipal — — — Residential Term 46 8,869,000 238,000 Construction — — — Home equity line of credit 3 502,000 — Consumer — — — 71 $ 25,661,000 $ 1,476,000 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 September 30, 2017 : Number of Loans Balance Specific Reserves Commercial Real estate 9 $ 7,908,000 $ 65,000 Construction 1 763,000 108,000 Other 5 730,000 — Municipal — — — Residential Term 49 9,842,000 283,000 Construction — — — Home equity line of credit 3 517,000 — Consumer — — — 67 $ 19,760,000 $ 456,000 As of September 30, 2018 , 10 of the loans classified as TDRs with a total balance of $1,271,000 were more than 30 days past due. Of these loans, one 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 September 30, 2018 : Number of Loans Balance Specific Reserves Commercial Real estate — $ — $ — Construction — — — Other 1 138,000 — Municipal — — — Residential Term 8 966,000 5,000 Construction — — — Home equity line of credit 1 167,000 — Consumer — — — 10 $ 1,271,000 $ 5,000 As of September 30, 2017 , 14 of the loans classified as TDRs with a total balance of $1,849,000 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 September 30, 2017 : Number of Loans Balance Specific Reserves Commercial Real estate — $ — $ — Construction — — — Other 1 6,000 — Municipal — — — Residential Term 12 1,676,000 65,000 Construction — — — Home equity line of credit 1 167,000 — Consumer — — — 14 $ 1,849,000 $ 65,000 For the nine months ended September 30, 2018 , 11 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 September 30, 2018 : Number of Loans Pre-Modification Post-Modification Outstanding Specific Reserves Commercial Real estate 8 $ 1,608,000 $ 1,606,000 $ 42,000 Construction — — — — Other 1 6,727,000 6,487,000 1,100,000 Municipal — — — — Residential Term 2 441,000 436,000 26,000 Construction — — — — Home equity line of credit — — — — Consumer — — — — 11 $ 8,776,000 $ 8,529,000 $ 1,168,000 For the quarter ended September 30, 2018 , one loan was 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 September 30, 2018 : Number of Loans Pre-Modification Post-Modification Outstanding Specific Reserves Commercial Real estate 1 $ 552,000 $ 552,000 $ — Construction — — — — Other — — — — Municipal — — — — Residential Term — — — — Construction — — — — Home equity line of credit — — — — Consumer — — — — 1 $ 552,000 $ 552,000 $ — For the nine months and quarter ended September 30, 2017, no loans were placed on TDR status. As of September 30, 2018 , Management is aware of four loans classified as TDRs that are involved in bankruptcy with an outstanding balance of $676,000 . There were also twelve loans with an outstanding balance of $7,735,000 that were classified as TDRs and on non-accrual status, of which four loans with an outstanding balance of $504,000 were in the process of foreclosure. Residential Mortgage Loans in Process of Foreclosure As of September 30, 2018 , there were 14 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $ 1,337,000 . This compares to 14 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,861,000 as of September 30, 2017 |