Loans | Loans The following table shows the composition of the Company's loan portfolio as of December 31, 2018 and 2017 : December 31, 2018 December 31, 2017 Commercial Real estate $ 353,243,000 28.5 % $ 323,809,000 27.8 % Construction 27,304,000 2.2 % 38,056,000 3.3 % Other 196,391,000 15.9 % 181,528,000 15.6 % Municipal 51,128,000 4.1 % 33,391,000 2.9 % Residential Term 469,145,000 37.9 % 432,661,000 37.1 % Construction 17,743,000 1.4 % 17,868,000 1.5 % Home equity line of credit 98,469,000 8.0 % 111,302,000 9.6 % Consumer 24,860,000 2.0 % 25,524,000 2.2 % Total loans $ 1,238,283,000 100.0 % $ 1,164,139,000 100.0 % Loan balances include net deferred loan costs of $6,615,000 in 2018 and $5,748,000 in 2017 . Pursuant to collateral agreements, qualifying first mortgage loans and commercial real estate, which totaled $290,138,000 and $239,805,000 at December 31, 2018 and 2017 , respectively, were used to collateralize borrowings from the Federal Home Loan Bank of Boston. In addition, commercial, residential construction and home equity loans totaling $237,152,000 at December 31, 2018 and $290,247,000 at December 31, 2017 were used to collateralize a standby line of credit at the Federal Reserve Bank of Boston that is currently unused. At December 31, 2018 and 2017 , non-accrual loans were $14,727,000 and $14,736,000 , respectively. For the years ended December 31, 2018 , 2017 and 2016 , interest income which would have been recognized on these loans, if interest had been accrued, was $811,000 , $496,000 , and $288,000 , respectively. Loans more than 90 days past due accruing interest totaled $351,000 at December 31, 2018 and $445,000 at December 31, 2017 . 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 $34,566,000 at December 31, 2018 and $34,715,000 at December 31, 2017 . A summary of loans to directors and executive officers is as follows: For the years ended December 31, 2018 2017 Balance at beginning of year $ 22,354,000 $ 23,293,000 New loans 1,341,000 867,000 Repayments (1,192,000 ) (1,806,000 ) Retired director (354,000 ) — Balance at end of year $ 22,149,000 $ 22,354,000 Information on the past-due status of loans as of December 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 $ 1,274,000 $ — $ 777,000 $ 2,051,000 $ 351,192,000 $ 353,243,000 $ — Construction — 10,000 — 10,000 27,294,000 27,304,000 — Other 455,000 5,000 120,000 580,000 195,811,000 196,391,000 — Municipal — — — — 51,128,000 51,128,000 — Residential Term 1,097,000 3,518,000 2,023,000 6,638,000 462,507,000 469,145,000 339,000 Construction 76,000 — — 76,000 17,667,000 17,743,000 — Home equity line of credit 2,819,000 419,000 493,000 3,731,000 94,738,000 98,469,000 — Consumer 237,000 25,000 27,000 289,000 24,571,000 24,860,000 12,000 Total $ 5,958,000 $ 3,977,000 $ 3,440,000 $ 13,375,000 $ 1,224,908,000 $ 1,238,283,000 $ 351,000 Information on the past-due status of loans 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 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, 2018 and 2017 is presented in the following table: As of December 31, 2018 2017 Commercial Real estate $ 1,226,000 $ 752,000 Construction — — Other 8,664,000 9,357,000 Municipal — — Residential Term 4,062,000 3,778,000 Construction — — Home equity line of credit 760,000 833,000 Consumer 15,000 16,000 Total $ 14,727,000 $ 14,736,000 Information regarding impaired loans is as follows: For the years ended December 31, 2018 2017 2016 Average investment in impaired loans $ 31,805,000 $ 29,108,000 $ 28,217,000 Interest income recognized on impaired loans, all on cash basis 864,000 784,000 1,104,000 As of December 31, 2018 2017 Balance of impaired loans $ 31,751,000 $ 31,392,000 Less portion for which no allowance for loan losses is allocated (21,030,000 ) (18,023,000 ) Portion of impaired loan balance for which an allowance for loan losses is allocated $ 10,721,000 $ 13,369,000 Portion of allowance for loan losses allocated to the impaired loan balance $ 2,308,000 $ 1,812,000 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, 2018 , 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 $ 8,718,000 $ 9,161,000 $ — $ 5,536,000 $ 380,000 Construction 721,000 721,000 — 762,000 43,000 Other 1,468,000 1,555,000 — 2,037,000 32,000 Municipal — — — — — Residential Term 9,136,000 10,317,000 — 9,427,000 289,000 Construction — — — — — Home equity line of credit 972,000 1,035,000 — 1,001,000 20,000 Consumer 15,000 42,000 — 13,000 — $ 21,030,000 $ 22,831,000 $ — $ 18,776,000 $ 764,000 With an Allowance Recorded Commercial Real estate $ 1,042,000 $ 1,059,000 $ 260,000 $ 3,477,000 $ 42,000 Construction — — — — — Other 7,791,000 8,216,000 1,696,000 7,471,000 5,000 Municipal — — — — — Residential Term 1,768,000 1,998,000 335,000 1,982,000 53,000 Construction — — — — — Home equity line of credit 120,000 124,000 17,000 99,000 — Consumer — — — — — $ 10,721,000 $ 11,397,000 $ 2,308,000 $ 13,029,000 $ 100,000 Total Commercial Real estate $ 9,760,000 $ 10,220,000 $ 260,000 $ 9,013,000 $ 422,000 Construction 721,000 721,000 — 762,000 43,000 Other 9,259,000 9,771,000 1,696,000 9,508,000 37,000 Municipal — — — — — Residential Term 10,904,000 12,315,000 335,000 11,409,000 342,000 Construction — — — — — Home equity line of credit 1,092,000 1,159,000 17,000 1,100,000 20,000 Consumer 15,000 42,000 — 13,000 — $ 31,751,000 $ 34,228,000 $ 2,308,000 $ 31,805,000 $ 864,000 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, 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 category as of December 31, 2016 , 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 $ 5,201,000 $ 5,614,000 $ — $ 6,252,000 $ 220,000 Construction — — — 32,000 — Other 1,671,000 1,852,000 — 1,074,000 86,000 Municipal — — — — — Residential Term 11,483,000 12,654,000 — 11,025,000 442,000 Construction — — — — — Home equity line of credit 1,361,000 1,733,000 — 1,213,000 33,000 Consumer — — — 9,000 — $ 19,716,000 $ 21,853,000 $ — $ 19,605,000 $ 781,000 With an Allowance Recorded Commercial Real estate $ 4,820,000 $ 4,925,000 $ 505,000 $ 4,153,000 $ 186,000 Construction 763,000 763,000 100,000 816,000 36,000 Other 72,000 72,000 39,000 317,000 — Municipal — — — — — Residential Term 2,186,000 2,328,000 304,000 3,209,000 101,000 Construction — — — — — Home equity line of credit 26,000 28,000 26,000 69,000 — Consumer — — — 48,000 — $ 7,867,000 $ 8,116,000 $ 974,000 $ 8,612,000 $ 323,000 Total Commercial Real estate $ 10,021,000 $ 10,539,000 $ 505,000 $ 10,405,000 $ 406,000 Construction 763,000 763,000 100,000 848,000 36,000 Other 1,743,000 1,924,000 39,000 1,391,000 86,000 Municipal — — — — — Residential Term 13,669,000 14,982,000 304,000 14,234,000 543,000 Construction — — — — — Home equity line of credit 1,387,000 1,761,000 26,000 1,282,000 33,000 Consumer — — — 57,000 — $ 27,583,000 $ 29,969,000 $ 974,000 $ 28,217,000 $ 1,104,000 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 December 31, 2018 , the Company had 76 loans with a value of $25,222,000 that have been classified as TDRs. This compares to 62 loans with a value of $17,801,000 classified as TDRs as of December 31, 2017 . 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, 2018 : Number of Loans Balance Specific Reserves Commercial Real estate 17 $ 8,631,000 $ 132,000 Construction 1 721,000 — Other 10 7,298,000 1,276,000 Municipal — — — Residential Term 45 8,074,000 160,000 Construction — — — Home equity line of credit 3 498,000 — Consumer — — — 76 $ 25,222,000 $ 1,568,000 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 As of December 31, 2018 , nine of the loans classified as TDRs with a total balance of $1,013,000 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 past-due TDRs by class and the associated specific reserves included in the allowance for loan losses as of December 31, 2018 : Number of Loans Balance Specific Reserves Commercial Real estate — $ — $ — Construction — — — Other — — — Municipal — — — Residential Term 8 846,000 26,000 Construction — — — Home equity line of credit 1 167,000 — Consumer — — — 9 $ 1,013,000 $ 26,000 As of December 31, 2017 , 12 of the loans classified as TDRs with a total balance of $1,407,000 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 past-due TDRs by class and the associated specific reserves included in the allowance for loan losses as of December 31, 2017 : Number of Loans Balance Specific Reserves Commercial Real estate — $ — $ — Construction — — — Other — — — Municipal — — — Residential Term 11 1,240,000 44,000 Construction — — — Home equity line of credit 1 167,000 — Consumer — — — 12 $ 1,407,000 $ 44,000 For the year ended December 31, 2018 , 18 loans were place 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 December 31, 2018: Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Specific Reserves Commercial Real estate 9 $ 1,729,000 $ 1,727,000 42,000 Construction — — — — Other 6 7,116,000 6,798,000 1,276,000 Municipal — — — — Residential Term 3 520,000 507,000 26,000 Construction — — — — Home equity line of credit — — — — Consumer — — — — 18 $ 9,365,000 $ 9,032,000 1,344,000 No loans were placed in TDR status in 2017. As of December 31, 2018 , Management is aware of seven loans classified as TDRs that are involved in bankruptcy with an outstanding balance of $935,000 . As of December 31, 2018 , there were 17 loans with an outstanding balance of $8,197,000 that were classified as TDRs and were on non-accrual status, three of which, with an outstanding balance of $398,000 , were in the process of foreclosure. Residential Mortgage Loans in Process of Foreclosure As of December 31, 2018 , there were 11 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,131,000 ; this compares to 12 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,777,000 as of December 31, 2017 . |