Loans | Loans The following table shows the composition of the Company's loan portfolio as of June 30, 2019 and 2018 and at December 31, 2018 : June 30, 2019 December 31, 2018 June 30, 2018 Commercial Real estate $ 359,581,000 28.8 % $ 353,243,000 28.5 % $ 350,114,000 28.6 % Construction 32,785,000 2.6 % 27,304,000 2.2 % 40,308,000 3.3 % Other 205,910,000 16.5 % 196,391,000 15.9 % 184,718,000 15.1 % Municipal 36,113,000 2.9 % 51,128,000 4.1 % 48,717,000 4.0 % Residential Term 481,349,000 38.5 % 469,145,000 37.9 % 453,588,000 37.0 % Construction 13,239,000 1.1 % 17,743,000 1.4 % 14,583,000 1.2 % Home equity line of credit 94,763,000 7.6 % 98,469,000 8.0 % 107,666,000 8.8 % Consumer 25,392,000 2.0 % 24,860,000 2.0 % 24,746,000 2.0 % Total $ 1,249,132,000 100.0 % $ 1,238,283,000 100.0 % $ 1,224,440,000 100.0 % Loan balances include net deferred loan costs of $7,124,000 as of June 30, 2019 , $6,615,000 as of December 31, 2018 , and $6,307,000 as of June 30, 2018 . Pursuant to collateral agreements, qualifying first mortgage loans and commercial real estate loans, which totaled $312,568,000 at June 30, 2019 , were used to collateralize borrowings from the FHLB. This compares to qualifying loans which totaled $290,138,000 at December 31, 2018 , and $317,053,000 at June 30, 2018 . In addition, commercial, construction and home equity loans totaling $239,481,000 at June 30, 2019 , $237,152,000 at December 31, 2018 , and $227,084,000 at June 30, 2018 , 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, 2019 , 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 $ 240,000 $ — $ 828,000 $ 1,068,000 $ 358,513,000 $ 359,581,000 $ — Construction 15,000 — — 15,000 32,770,000 32,785,000 — Other 2,031,000 — 264,000 2,295,000 203,615,000 205,910,000 — Municipal — — — — 36,113,000 36,113,000 — Residential Term 1,079,000 2,302,000 3,898,000 7,279,000 474,070,000 481,349,000 664,000 Construction — — — — 13,239,000 13,239,000 — Home equity line of credit 698,000 197,000 347,000 1,242,000 93,521,000 94,763,000 — Consumer 336,000 30,000 9,000 375,000 25,017,000 25,392,000 8,000 Total $ 4,399,000 $ 2,529,000 $ 5,346,000 $ 12,274,000 $ 1,236,858,000 $ 1,249,132,000 $ 672,000 Information on the past-due status of loans by class of financing receivable 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 by class of financing receivable as of June 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 $ 137,000 $ 75,000 $ 503,000 $ 715,000 $ 349,399,000 $ 350,114,000 $ — Construction — — — — 40,308,000 40,308,000 — Other 459,000 42,000 294,000 795,000 183,923,000 184,718,000 — Municipal — — — — 48,717,000 48,717,000 — Residential Term 531,000 2,014,000 1,730,000 4,275,000 449,313,000 453,588,000 — Construction — — — — 14,583,000 14,583,000 — Home equity line of credit 915,000 38,000 575,000 1,528,000 106,138,000 107,666,000 — Consumer 70,000 37,000 18,000 125,000 24,621,000 24,746,000 3,000 Total $ 2,112,000 $ 2,206,000 $ 3,120,000 $ 7,438,000 $ 1,217,002,000 $ 1,224,440,000 $ 3,000 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, 2019 and 2018 and at December 31, 2018 is presented in the following table: June 30, 2019 December 31, 2018 June 30, 2018 Commercial Real estate $ 1,532,000 $ 1,226,000 $ 981,000 Construction 261,000 — 286,000 Other 7,014,000 8,664,000 8,900,000 Municipal — — — Residential Term 5,892,000 4,062,000 3,509,000 Construction — — — Home equity line of credit 694,000 760,000 689,000 Consumer — 15,000 16,000 Total $ 15,393,000 $ 14,727,000 $ 14,381,000 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 June 30, 2019 is presented in the following table: For the six months ended June 30, 2019 For the quarter ended June 30, 2019 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 $ 7,230,000 $ 7,510,000 $ — $ 8,273,000 $ 183,000 $ 7,805,000 $ 93,000 Construction 982,000 990,000 — 903,000 23,000 990,000 11,000 Other 949,000 978,000 — 1,034,000 14,000 862,000 8,000 Municipal — — — — — — Residential Term 10,004,000 11,689,000 — 9,571,000 139,000 10,136,000 71,000 Construction — — — — — — — Home equity line of credit 1,000,000 1,065,000 — 989,000 10,000 1,002,000 5,000 Consumer — — — — — — — $ 20,165,000 $ 22,232,000 $ — $ 20,770,000 $ 369,000 $ 20,795,000 $ 188,000 With an Allowance Recorded Commercial Real estate $ 1,731,000 $ 1,742,000 $ 196,000 $ 1,446,000 $ 49,000 $ 1,677,000 $ 23,000 Construction — — — — — — — Other 6,633,000 7,022,000 1,320,000 7,144,000 — 6,778,000 — Municipal — — — — — — — Residential Term 2,632,000 2,813,000 305,000 2,031,000 36,000 2,217,000 19,000 Construction — — — — — — — Home equity line of credit 19,000 24,000 9,000 24,000 — 20,000 — Consumer — — — 1,000 — 1,000 — $ 11,015,000 $ 11,601,000 $ 1,830,000 $ 10,646,000 $ 85,000 $ 10,693,000 $ 42,000 Total Commercial Real estate $ 8,961,000 $ 9,252,000 $ 196,000 $ 9,719,000 $ 232,000 $ 9,482,000 $ 116,000 Construction 982,000 990,000 — 903,000 23,000 990,000 11,000 Other 7,582,000 8,000,000 1,320,000 8,178,000 14,000 7,640,000 8,000 Municipal — — — — — — — Residential Term 12,636,000 14,502,000 305,000 11,602,000 175,000 12,353,000 90,000 Construction — — — — — — — Home equity line of credit 1,019,000 1,089,000 9,000 1,013,000 10,000 1,022,000 5,000 Consumer — — — 1,000 — 1,000 — $ 31,180,000 $ 33,833,000 $ 1,830,000 $ 31,416,000 $ 454,000 $ 31,488,000 $ 230,000 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, 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 A breakdown of impaired loans by class of financing receivable as of and for the period ended June 30, 2018 is presented in the following table: For the six months ended June 30, 2018 For the quarter ended June 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 $ 5,438,000 $ 5,749,000 $ — $ 4,666,000 $ 110,000 $ 5,169,000 $ 56,000 Construction 1,027,000 1,027,000 — 789,000 21,000 837,000 11,000 Other 2,265,000 2,349,000 — 2,287,000 17,000 2,272,000 11,000 Municipal — — — — — — — Residential Term 9,613,000 10,808,000 — 9,671,000 151,000 9,642,000 80,000 Construction — — — — — — — Home equity line of credit 928,000 1,021,000 — 1,004,000 9,000 918,000 4,000 Consumer 16,000 29,000 — 16,000 — 16,000 — $ 19,287,000 $ 20,983,000 $ — $ 18,433,000 $ 308,000 $ 18,854,000 $ 162,000 With an Allowance Recorded Commercial Real estate $ 3,470,000 $ 3,488,000 $ 270,000 $ 3,819,000 $ 67,000 $ 3,749,000 $ 28,000 Construction — — — — — — — Other 7,174,000 7,388,000 1,647,000 7,176,000 — 7,170,000 — Municipal — — — — — — — Residential Term 2,161,000 2,378,000 286,000 2,027,000 48,000 2,086,000 24,000 Construction — — — — — — — Home equity line of credit 100,000 100,000 2,000 88,000 — 107,000 — Consumer — — — — — — — $ 12,905,000 $ 13,354,000 $ 2,205,000 $ 13,110,000 $ 115,000 $ 13,112,000 $ 52,000 Total Commercial Real estate $ 8,908,000 $ 9,237,000 $ 270,000 $ 8,485,000 $ 177,000 $ 8,918,000 $ 84,000 Construction 1,027,000 1,027,000 — 789,000 21,000 837,000 11,000 Other 9,439,000 9,737,000 1,647,000 9,463,000 17,000 9,442,000 11,000 Municipal — — — — — — — Residential Term 11,774,000 13,186,000 286,000 11,698,000 199,000 11,728,000 104,000 Construction — — — — — — — Home equity line of credit 1,028,000 1,121,000 2,000 1,092,000 9,000 1,025,000 4,000 Consumer 16,000 29,000 — 16,000 — 16,000 — $ 32,192,000 $ 34,337,000 $ 2,205,000 $ 31,543,000 $ 423,000 $ 31,966,000 $ 214,000 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 June 30, 2019 , the Company had 83 loans with a balance of $24,454,000 that have been classified as TDRs. This compares to 76 loans with a balance of $25,222,000 and 72 loans with a balance of $25,606,000 classified as TDRs as of December 31, 2018 and June 30, 2018 , 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, 2019 : Number of Loans Balance Specific Reserves Commercial Real estate 19 $ 7,624,000 $ 192,000 Construction 1 721,000 — Other 9 7,185,000 1,275,000 Municipal — — — Residential Term 51 8,433,000 224,000 Construction — — — Home equity line of credit 3 491,000 — Consumer — — — 83 $ 24,454,000 $ 1,691,000 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 June 30, 2018 : Number of Loans Balance Specific Reserves Commercial Real estate 15 $ 8,026,000 $ 143,000 Construction 1 741,000 — Other 5 7,071,000 1,100,000 Municipal — — — Residential Term 48 9,263,000 287,000 Construction — — — Home equity line of credit 3 505,000 — Consumer — — — 72 $ 25,606,000 $ 1,530,000 As of June 30, 2019 , 15 of the loans classified as TDRs with a total balance of $1,681,000 were more than 30 days past due. Of these loans, three 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, 2019 : Number of Loans Balance Specific Reserves Commercial Real estate — $ — $ — Construction — — — Other 4 392,000 134,000 Municipal — — — Residential Term 9 1,094,000 39,000 Construction — — — Home equity line of credit 2 195,000 — Consumer — — — 15 $ 1,681,000 $ 173,000 As of June 30, 2018 , eight of the loans classified as TDRs with a total balance of $893,000 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 June 30, 2018 : Number of Loans Balance Specific Reserves Commercial Real estate — $ — $ — Construction — — — Other — — — Municipal — — — Residential Term 7 726,000 33,000 Construction — — — Home equity line of credit 1 167,000 — Consumer — — — 8 $ 893,000 $ 33,000 For the six months ended June 30, 2019 , nine 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 June 30, 2019 : Number of Loans Pre-Modification Post-Modification Outstanding Specific Reserves Commercial Real estate 2 $ 111,000 $ 100,000 $ 100,000 Construction — — — — Other — — — — Municipal — — — — Residential Term 7 805,000 710,000 74,000 Construction — — — — Home equity line of credit — — — — Consumer — — — — 9 $ 916,000 $ 810,000 $ 174,000 For the six months ended June 30, 2018 , 10 loans were placed on TDR status. The following table shows these TDRs by class and associated specific reserves included in the allowance for loan losses as of June 30, 2018 . Number of Loans Pre-Modification Post-Modification Outstanding Specific Reserves Commercial Real estate 7 $ 1,056,000 $ 1,056,000 $ 42,000 Construction — — — — Other 1 6,727,000 6,532,000 1,100,000 Municipal — — — — Residential Term 2 441,000 436,000 26,000 Construction — — — — Home equity line of credit — — — — Consumer — — — — 10 $ 8,224,000 $ 8,024,000 $ 1,168,000 For the quarter ended June 30, 2019 , four 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 June 30, 2019 : Number of Loans Pre-Modification Post-Modification Outstanding Specific Reserves Commercial Real estate 2 $ 111,000 $ 100,000 $ 100,000 Construction — — — — Other — — — — Municipal — — — — Residential Term 2 234,000 161,000 — Construction — — — — Home equity line of credit — — — — Consumer — — — — 4 $ 345,000 $ 261,000 $ 100,000 For the quarter ended June 30, 2018 , three 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 June 30, 2018 : Number of Loans Pre-Modification Post-Modification Outstanding Specific Reserves Commercial Real estate — $ — $ — $ — Construction — — — — Other 1 6,727,000 6,532,000 1,100,000 Municipal — — — — Residential Term 2 441,000 436,000 26,000 Construction — — — — Home equity line of credit — — — — Consumer — — — — 3 $ 7,168,000 $ 6,968,000 $ 1,126,000 As of June 30, 2019 , Management is aware of nine loans classified as TDRs that are involved in bankruptcy with an outstanding balance of $1,025,000 . There were also 23 loans with an outstanding balance of $8,666,000 that were classified as TDRs and on non-accrual status, of which three loans with an outstanding balance of $398,000 were in the process of foreclosure. Residential Mortgage Loans in Process of Foreclosure As of June 30, 2019 , there were 11 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $ 1,231,000 . This compares to 14 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,524,000 as of June 30, 2018 . |