Loans | Loans The following table shows the composition of the Company's loan portfolio as of September 30, 2019 and 2018 and at December 31, 2018 : September 30, 2019 December 31, 2018 September 30, 2018 Commercial Real estate $ 368,165,000 29.1 % $ 353,243,000 28.5 % $ 366,390,000 29.5 % Construction 37,242,000 2.9 % 27,304,000 2.2 % 23,889,000 1.9 % Other 201,859,000 16.0 % 196,391,000 15.9 % 188,128,000 15.1 % Municipal 36,522,000 2.9 % 51,128,000 4.1 % 56,704,000 4.6 % Residential Term 485,490,000 38.4 % 469,145,000 37.9 % 459,449,000 36.8 % Construction 14,118,000 1.1 % 17,743,000 1.4 % 18,166,000 1.5 % Home equity line of credit 94,144,000 7.5 % 98,469,000 8.0 % 105,213,000 8.5 % Consumer 25,919,000 2.1 % 24,860,000 2.0 % 25,619,000 2.1 % Total $ 1,263,459,000 100.0 % $ 1,238,283,000 100.0 % $ 1,243,558,000 100.0 % Loan balances include net deferred loan costs of $7,181,000 as of September 30, 2019 , $6,615,000 as of December 31, 2018 , and $6,428,000 as of September 30, 2018 . Pursuant to collateral agreements, qualifying first mortgage loans and commercial real estate loans, which totaled $308,163,000 at September 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 $311,152,000 at September 30, 2018 . In addition, commercial, construction and home equity loans totaling $254,076,000 at September 30, 2019 , $237,152,000 at December 31, 2018 , and $229,769,000 at September 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 September 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 $ 305,000 $ 233,000 $ 661,000 $ 1,199,000 $ 366,966,000 $ 368,165,000 $ — Construction 14,000 279,000 — 293,000 36,949,000 37,242,000 — Other 35,000 289,000 339,000 663,000 201,196,000 201,859,000 — Municipal — — — — 36,522,000 36,522,000 — Residential Term 650,000 767,000 3,806,000 5,223,000 480,267,000 485,490,000 — Construction — — — — 14,118,000 14,118,000 — Home equity line of credit 693,000 306,000 868,000 1,867,000 92,277,000 94,144,000 — Consumer 234,000 317,000 18,000 569,000 25,350,000 25,919,000 18,000 Total $ 1,931,000 $ 2,191,000 $ 5,692,000 $ 9,814,000 $ 1,253,645,000 $ 1,263,459,000 $ 18,000 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 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 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, 2019 and 2018 and at December 31, 2018 is presented in the following table: September 30, 2019 December 31, 2018 September 30, 2018 Commercial Real estate $ 1,807,000 $ 1,226,000 $ 964,000 Construction 256,000 — — Other 6,871,000 8,664,000 9,330,000 Municipal — — — Residential Term 6,840,000 4,062,000 3,042,000 Construction — — — Home equity line of credit 1,078,000 760,000 834,000 Consumer 6,000 15,000 2,000 Total $ 16,858,000 $ 14,727,000 $ 14,172,000 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, 2019 is presented in the following table: For the nine months ended September 30, 2019 For the quarter ended September 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 $ 7,332,000 $ 7,630,000 $ — $ 7,929,000 $ 266,000 $ 7,242,000 $ 83,000 Construction 978,000 990,000 — 929,000 35,000 980,000 12,000 Other 892,000 930,000 — 997,000 22,000 921,000 8,000 Municipal — — — — — — — Residential Term 10,664,000 12,305,000 — 9,877,000 202,000 10,487,000 63,000 Construction — — — — — — — Home equity line of credit 827,000 883,000 — 965,000 16,000 917,000 6,000 Consumer — — — — — — — $ 20,693,000 $ 22,738,000 $ — $ 20,697,000 $ 541,000 $ 20,547,000 $ 172,000 With an Allowance Recorded Commercial Real estate $ 1,717,000 $ 1,732,000 $ 258,000 $ 1,538,000 $ 72,000 $ 1,721,000 $ 23,000 Construction — — — — — — — Other 6,440,000 6,949,000 1,275,000 6,918,000 1,000 6,465,000 1,000 Municipal — — — — — — — Residential Term 2,782,000 3,121,000 337,000 2,306,000 61,000 2,858,000 25,000 Construction — — — — — — — Home equity line of credit 571,000 590,000 184,000 99,000 — 248,000 — Consumer 6,000 6,000 6,000 1,000 — 2,000 — $ 11,516,000 $ 12,398,000 $ 2,060,000 $ 10,862,000 $ 134,000 $ 11,294,000 $ 49,000 Total Commercial Real estate $ 9,049,000 $ 9,362,000 $ 258,000 $ 9,467,000 $ 338,000 $ 8,963,000 $ 106,000 Construction 978,000 990,000 — 929,000 35,000 980,000 12,000 Other 7,332,000 7,879,000 1,275,000 7,915,000 23,000 7,386,000 9,000 Municipal — — — — — — — Residential Term 13,446,000 15,426,000 337,000 12,183,000 263,000 13,345,000 88,000 Construction — — — — — — — Home equity line of credit 1,398,000 1,473,000 184,000 1,064,000 16,000 1,165,000 6,000 Consumer 6,000 6,000 6,000 1,000 — 2,000 — $ 32,209,000 $ 35,136,000 $ 2,060,000 $ 31,559,000 $ 675,000 $ 31,841,000 $ 221,000 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 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 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, 2019 , the Company had 82 loans with a balance of $24,281,000 that have been classified as TDRs. This compares to 76 loans with a balance of $25,222,000 and 71 loans with a balance of $25,661,000 classified as TDRs as of December 31, 2018 and September 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 September 30, 2019 : Number of Loans Balance Specific Reserves Commercial Real estate 19 $ 7,559,000 $ 249,000 Construction 1 721,000 — Other 7 6,951,000 1,232,000 Municipal — — — Residential Term 52 8,563,000 202,000 Construction — — — Home equity line of credit 3 487,000 — Consumer — — — 82 $ 24,281,000 $ 1,683,000 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 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 As of September 30, 2019 , nine of the loans classified as TDRs with a total balance of $1,084,000 were more than 30 days past due. Of these loans, four 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, 2019 : Number of Loans Balance Specific Reserves Commercial Real estate — $ — $ — Construction — — — Other 3 251,000 131,000 Municipal — — — Residential Term 5 666,000 11,000 Construction — — — Home equity line of credit 1 167,000 — Consumer — — — 9 $ 1,084,000 $ 142,000 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 For the nine months ended September 30, 2019 , 10 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, 2019 : Number of Loans Pre-Modification Post-Modification Outstanding Specific Reserves Commercial Real estate 2 $ 110,000 $ 95,000 $ 95,000 Construction — — — — Other — — — — Municipal — — — — Residential Term 8 998,000 882,000 73,000 Construction — — — — Home equity line of credit — — — — Consumer — — — — 10 $ 1,108,000 $ 977,000 $ 168,000 For the nine months ended September 30, 2018 , 11 loans were placed on TDR status. The following table shows these TDRs by class and 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, 2019 , two 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, 2019 : Number of Loans Pre-Modification Post-Modification Outstanding Specific Reserves Commercial Real estate — $ — $ — $ — Construction — — — — Other — — — — Municipal — — — — Residential Term 2 317,000 276,000 — Construction — — — — Home equity line of credit — — — — Consumer — — — — 2 $ 317,000 $ 276,000 $ — 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 $ — As of September 30, 2019 , Management is aware of nine loans classified as TDRs that are involved in bankruptcy with an outstanding balance of $1,004,000 . There were also 26 loans with an outstanding balance of $8,932,000 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 September 30, 2019 , there were 15 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $ 1,649,000 . This compares to 14 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,337,000 as of September 30, 2018 . |