Financing Receivables [Text Block] | Loan Portfolio and Credit Quality The Bank’s lending activities are conducted principally in the regions of New England, the San Francisco Bay Area, and Southern California. The Bank originates single and multi-family residential loans, commercial real estate loans, commercial and industrial loans, commercial tax-exempt loans, construction and land loans, and home equity and other consumer loans. Most loans are secured by borrowers’ personal or business assets. The ability of the Bank’s single family residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic conditions within the Bank’s lending areas. Commercial, construction, and land borrowers’ ability to repay is generally dependent upon the health of the economy and real estate values, including, in particular, the performance of the construction sector. Accordingly, the ultimate collectability of a substantial portion of the Bank’s loan portfolio is susceptible to changing conditions in the New England, the San Francisco Bay Area, and Southern California economies and real estate markets. The following table presents a summary of the loan portfolio based on the portfolio segment as of the dates indicated: June 30, 2018 December 31, 2017 (In thousands) Commercial and industrial $ 583,193 $ 520,992 Commercial tax-exempt 438,882 418,698 Total commercial and industrial 1,022,075 939,690 Commercial real estate 2,504,521 2,440,220 Construction and land 172,024 164,990 Residential 2,808,206 2,682,533 Home equity 91,801 99,958 Consumer and other 168,496 177,637 Total $ 6,767,123 $ 6,505,028 The following table presents nonaccrual loans receivable by class of receivable as of the dates indicated: June 30, 2018 December 31, 2017 (In thousands) Commercial and industrial $ 1,412 $ 748 Commercial tax-exempt — — Total commercial and industrial 1,412 748 Commercial real estate 1,838 1,985 Construction and land — 110 Residential 9,610 8,470 Home equity 2,789 2,840 Consumer and other 2 142 Total $ 15,651 $ 14,295 The Bank’s policy is to discontinue the accrual of interest on a loan when the collectability of principal or interest is in doubt. In certain instances, although infrequent, loans that have become 90 days or more past due may remain on accrual status if the value of the collateral securing the loan is sufficient to cover principal and interest and the loan is in the process of collection. There were no loans 90 days or more past due, but still accruing as of both June 30, 2018 and December 31, 2017 . The Bank’s policy for returning a loan to accrual status requires the loan to be brought current and for the client to show a history of making timely payments (generally six consecutive months). For troubled debt restructured loans (“TDRs”), a return to accrual status generally requires timely payments for a period of six months in accordance with the restructured loan terms, along with meeting other criteria. The following tables show the payment status of loans receivable by class of receivable as of the dates indicated: June 30, 2018 Accruing Past Due Nonaccrual Loans 30-59 Days Past Due 60-89 Days Past Due Total Accruing Past Due Current 30-89 Days Past Due 90 Days or Greater Past Due Total Non-Accrual Loans Current Accruing Loans Total Loans Receivable (In thousands) Commercial and industrial $ 521 $ — $ 521 $ 367 $ 203 $ 842 $ 1,412 $ 581,260 $ 583,193 Commercial tax-exempt — — — — — — — 438,882 438,882 Commercial real estate — — — — — 1,838 1,838 2,502,683 2,504,521 Construction and land — — — — — — — 172,024 172,024 Residential — 3,641 3,641 2,603 800 6,207 9,610 2,794,955 2,808,206 Home equity 473 339 812 — 65 2,724 2,789 88,200 91,801 Consumer and other — 3 3 — — 2 2 168,491 168,496 Total $ 994 $ 3,983 $ 4,977 $ 2,970 $ 1,068 $ 11,613 $ 15,651 $ 6,746,495 $ 6,767,123 December 31, 2017 Accruing Past Due Nonaccrual Loans 30-59 Days Past Due 60-89 Days Past Due Total Accruing Past Due Current 30-89 Days Past Due 90 Days or Greater Past Due Total Non-Accrual Loans Current Accruing Loans Total Loans Receivable (In thousands) Commercial and industrial $ 10,903 $ 849 $ 11,752 $ 355 $ — $ 393 $ 748 $ 508,492 $ 520,992 Commercial tax-exempt — — — — — — — 418,698 418,698 Commercial real estate 4,043 — 4,043 163 — 1,822 1,985 2,434,192 2,440,220 Construction and land — — — — — 110 110 164,880 164,990 Residential 7,239 1,635 8,874 805 3,172 4,493 8,470 2,665,189 2,682,533 Home equity 355 — 355 — 71 2,769 2,840 96,763 99,958 Consumer and other 24 — 24 17 125 — 142 177,471 177,637 Total $ 22,564 $ 2,484 $ 25,048 $ 1,340 $ 3,368 $ 9,587 $ 14,295 $ 6,465,685 $ 6,505,028 Nonaccrual and delinquent loans are affected by many factors, such as economic and business conditions, interest rates, unemployment levels, and real estate collateral values, among others. In periods of prolonged economic decline, borrowers may become more severely affected over time as liquidity levels decline and the borrower’s ability to continue to make payments deteriorates. With respect to real estate collateral values, the declines from the peak, as well as the value of the real estate at the time of origination versus the current value, can impact the level of problem loans. For instance, if the loan to value ratio at the time of renewal has increased due to the decline in the real estate value since origination, the loan may no longer meet the Bank’s underwriting standards and may be considered for classification as a problem loan dependent upon a review of risk factors. Generally when a collateral dependent loan becomes impaired, an updated appraisal of the collateral, if appropriate, is obtained. If the impaired loan has not been upgraded to a performing status within a reasonable amount of time, the Bank will continue to obtain updated appraisals as deemed necessary, especially during periods of declining property values. The past due status of a loan is determined in accordance with its contractual repayment terms. All loan types are reported past due when one scheduled payment is due and unpaid for 30 days or more. Credit Quality Indicators The Bank uses a risk rating system to monitor the credit quality of its loan portfolio. Loan classifications are assessments made by the Bank of the status of the loans based on the facts and circumstances known to the Bank, including management’s judgment, at the time of assessment. Some or all of these classifications may change in the future if there are unexpected changes in the financial condition of the borrower, including but not limited to, changes resulting from continuing deterioration in general economic conditions on a national basis or in the local markets in which the Bank operates adversely affecting, among other things, real estate values. Such conditions, as well as other factors which adversely affect borrowers’ ability to service or repay loans, typically result in changes in loan default and charge-off rates, and increased provisions for loan losses, which would adversely affect the Company’s financial performance and financial condition. These circumstances are not entirely foreseeable and, as a result, it may not be possible to accurately reflect them in the Company’s analysis of credit risk. Generally, only commercial loans, including commercial real estate, other commercial and industrial loans, commercial tax-exempt loans, and construction and land loans, are given a numerical grade. A summary of the rating system used by the Bank, repeated here from Part II. Item 8. “Financial Statements and Supplementary Data - Note 1: Basis of Presentation and Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, follows: Pass - All loans graded as pass are considered acceptable credit quality by the Bank and are grouped for purposes of calculating the allowance for loan losses. For residential, home equity and consumer loans, the Bank classifies loans as pass unless there is known information such as delinquency or client requests for modifications which, due to financial difficulty, would then generally result in a risk rating such as special mention or more severe depending on the factors. Special Mention - Loans rated in this category are defined as having potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the credit or the Bank’s credit position. These loans are currently protected but have the potential to deteriorate to a substandard rating. For commercial loans, the borrower’s financial performance may be inconsistent or below forecast, creating the possibility of liquidity problems and shrinking debt service coverage. In loans having this rating, the primary source of repayment is still good, but there is increasing reliance on collateral or guarantor support. Collectability of the loan is not yet in jeopardy. In particular, loans in this category are considered more variable than other categories, since they will typically migrate through categories more quickly. Substandard - Loans rated in this category are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. A substandard credit has a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Substandard loans may be either still accruing or nonaccruing depending upon the severity of the risk and other factors such as the value of the collateral, if any, and past due status. Doubtful - Loans rated in this category indicate that collection or liquidation in full on the basis of currently existing facts, conditions, and values, is highly questionable and improbable. Loans in this category are usually on nonaccrual and classified as impaired. The following tables present the loan portfolio’s credit risk profile by internally assigned grade and class of receivable as of the dates indicated: June 30, 2018 By Loan Grade or Nonaccrual Status Pass Special Mention Accruing Classified (1) Nonaccrual Loans Total (In thousands) Commercial and industrial $ 567,334 $ 6,845 $ 7,602 $ 1,412 $ 583,193 Commercial tax-exempt 438,882 — — — 438,882 Commercial real estate 2,426,821 46,603 29,259 1,838 2,504,521 Construction and land 164,760 — 7,264 — 172,024 Residential 2,797,270 — 1,326 9,610 2,808,206 Home equity 89,012 — — 2,789 91,801 Consumer and other 168,492 — 2 2 168,496 Total $ 6,652,571 $ 53,448 $ 45,453 $ 15,651 $ 6,767,123 December 31, 2017 By Loan Grade or Nonaccrual Status Pass Special Accruing Nonaccrual Total (In thousands) Commercial and industrial $ 496,395 $ 12,898 $ 10,951 $ 748 $ 520,992 Commercial tax-exempt 413,139 5,559 — — 418,698 Commercial real estate 2,346,833 56,947 34,455 1,985 2,440,220 Construction and land 146,514 11,770 6,596 110 164,990 Residential 2,672,714 — 1,349 8,470 2,682,533 Home equity 97,118 — — 2,840 99,958 Consumer and other 177,494 — 1 142 177,637 Total $ 6,350,207 $ 87,174 $ 53,352 $ 14,295 $ 6,505,028 ______________________ (1) Accruing Classified includes both Substandard and Doubtful classifications. The following tables present, by class of receivable, the balance of impaired loans with and without a related allowance, the associated allowance for those impaired loans with a related allowance, and the total unpaid principal on impaired loans: As of and for the three and six months ended June 30, 2018 Recorded Investment (1) Unpaid Principal Balance Related Allowance QTD Average Recorded Investment YTD Average Recorded Investment QTD Interest Income Recognized while Impaired YTD Interest Income Recognized while Impaired (In thousands) With no related allowance recorded: Commercial and industrial $ 2,015 $ 2,954 n/a $ 2,048 $ 1,835 $ 14 $ 22 Commercial tax-exempt — — n/a — — — — Commercial real estate 2,932 4,695 n/a 2,939 2,460 25 50 Construction and land — — n/a 82 94 16 16 Residential 10,455 10,815 n/a 10,587 10,009 87 189 Home equity — — n/a 1,311 1,509 15 24 Consumer and other — — n/a — — — — Subtotal 15,402 18,464 n/a 16,967 15,907 157 301 With an allowance recorded: Commercial and industrial 303 403 $ 134 76 147 — 2 Commercial tax-exempt — — — — — — — Commercial real estate 5,426 5,855 187 5,467 6,055 72 228 Construction and land — — — — — — — Residential 816 816 82 818 821 6 12 Home equity 1,769 1,769 597 469 284 — — Consumer and other — — — — 18 — 3 Subtotal 8,314 8,843 1,000 6,830 7,325 78 245 Total: Commercial and industrial 2,318 3,357 134 2,124 1,982 14 24 Commercial tax-exempt — — — — — — — Commercial real estate 8,358 10,550 187 8,406 8,515 97 278 Construction and land — — — 82 94 16 16 Residential 11,271 11,631 82 11,405 10,830 93 201 Home equity 1,769 1,769 597 1,780 1,793 15 24 Consumer and other — — — — 18 — 3 Total $ 23,716 $ 27,307 $ 1,000 $ 23,797 $ 23,232 $ 235 $ 546 _____________________ (1) Recorded investment represents the client loan balance net of historical charge-offs and historical nonaccrual interest paid, if applicable, which was applied to principal. As of and for the three and six months ended June 30, 2017 Recorded Investment (1) Unpaid Principal Balance Related Allowance QTD Average Recorded Investment YTD Average Recorded Investment QTD Interest Income Recognized while Impaired YTD Interest Income Recognized while Impaired (In thousands) With no related allowance recorded: Commercial and industrial $ 1,771 $ 2,377 n/a $ 1,667 $ 1,703 $ 12 $ 25 Commercial tax-exempt — — n/a 1,084 1,859 80 80 Commercial real estate 2,879 6,429 n/a 3,358 3,824 724 970 Construction and land 232 568 n/a 190 181 — — Residential 9,600 9,971 n/a 9,561 8,958 78 179 Home equity — — n/a — — — — Consumer and other — — n/a — — — — Subtotal 14,482 19,345 n/a 15,860 16,525 894 1,254 With an allowance recorded: Commercial and industrial — — $ — — — — — Commercial tax-exempt — — — — — — — Commercial real estate 6,996 7,425 453 7,011 7,042 96 171 Construction and land — — — — — — — Residential 2,503 2,503 507 2,613 3,312 23 62 Home equity 36 36 21 37 37 — — Consumer and other — — — — — — — Subtotal 9,535 9,964 981 9,661 10,391 119 233 Total: Commercial and industrial 1,771 2,377 — 1,667 1,703 12 25 Commercial tax-exempt — — — 1,084 1,859 80 80 Commercial real estate 9,875 13,854 453 10,369 10,866 820 1,141 Construction and land 232 568 — 190 181 — — Residential 12,103 12,474 507 12,174 12,270 101 241 Home equity 36 36 21 37 37 — — Consumer and other — — — — — — — Total $ 24,017 $ 29,309 $ 981 $ 25,521 $ 26,916 $ 1,013 $ 1,487 _____________________ (1) Recorded investment represents the client loan balance net of historical charge-offs and historical nonaccrual interest paid, if applicable, which was applied to principal. As of and for the year ended December 31, 2017 Recorded Investment (1) Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized while Impaired (In thousands) With no related allowance recorded: Commercial and industrial $ 1,434 $ 2,238 n/a $ 1,594 $ 50 Commercial tax-exempt — — n/a 1,001 80 Commercial real estate 1,832 3,453 n/a 3,098 1,546 Construction and land 109 109 n/a 172 — Residential 9,337 9,709 n/a 9,033 360 Home equity 1,779 1,779 n/a 413 — Consumer and other — — n/a — — Subtotal 14,491 17,288 n/a 15,311 2,036 With an allowance recorded: Commercial and industrial 242 242 $ 58 156 4 Commercial tax-exempt — — — — — Commercial real estate 6,855 7,284 362 6,980 322 Construction and land — — — — — Residential 828 828 89 2,469 89 Home equity 36 36 20 36 1 Consumer and other 125 250 125 10 — Subtotal 8,086 8,640 654 9,651 416 Total: Commercial and industrial 1,676 2,480 58 1,750 54 Commercial tax-exempt — — — 1,001 80 Commercial real estate 8,687 10,737 362 10,078 1,868 Construction and land 109 109 — 172 — Residential 10,165 10,537 89 11,502 449 Home equity 1,815 1,815 20 449 1 Consumer and other 125 250 125 10 — Total $ 22,577 $ 25,928 $ 654 $ 24,962 $ 2,452 _____________________ (1) Recorded investment represents the client loan balance net of historical charge-offs and historical nonaccrual interest paid, if applicable, which was applied to principal. When management determines that it is probable that the Bank will not collect all principal and interest on a loan in accordance with the original loan terms, the loan is designated as impaired. Loans that are designated as impaired require an analysis to determine the amount of impairment, if any. Impairment would be indicated as a result of the carrying value of the loan exceeding the estimated collateral value, less costs to sell, for collateral dependent loans or the net present value of the projected cash flow, discounted at the loan’s contractual effective interest rate, for loans not considered to be collateral dependent. Generally, shortfalls in the analysis on collateral dependent loans would result in the impairment amount being charged-off to the allowance for loan losses. Shortfalls on cash flow dependent loans may be carried as specific allocations to the general reserve unless a known loss is determined to have occurred, in which case such known loss is charged-off. Loans in the held for sale category are carried at the lower of amortized cost or estimated fair value in the aggregate and are excluded from the allowance for loan losses analysis. The Bank may, under certain circumstances, restructure loans as a concession to borrowers who are experiencing financial difficulty. Such loans are classified as TDRs and are included in impaired loans. TDRs typically result from the Bank’s loss mitigation activities which, among other things, could include rate reductions, payment extensions, and/or principal forgiveness. As of June 30, 2018 and December 31, 2017 , TDRs totaled $12.9 million and $13.6 million , respectively. As of June 30, 2018 , $10.7 million of the $12.9 million in TDRs were on accrual status. As of December 31, 2017 , $11.1 million of the $13.6 million in TDRs were on accrual status. Since all TDR loans are considered impaired loans, they are individually evaluated for impairment. The resulting impairment, if any, would have an impact on the allowance for loan losses as a specific reserve or charge-off. If, prior to the classification as a TDR, the loan was not impaired, there would have been a general or allocated reserve on the particular loan. Therefore, depending upon the result of the impairment analysis, there could be an increase or decrease in the related allowance for loan losses. Many loans initially categorized as TDRs are already on nonaccrual status and are already considered impaired. Therefore, there is generally not a material change to the allowance for loan losses when a nonaccruing loan is categorized as a TDR. As of and for the three and six months ended June 30, 2018 Restructured Current Quarter TDRs that defaulted in the Current Quarter that were restructured in prior twelve months # of Loans Pre- modification recorded investment Post- modification recorded investment # of Loans Post- modification recorded investment (Dollars in thousands) Commercial and industrial (1) 1 $ 100 $ 100 — $ — Commercial real estate — — — — — Construction and land — — — — — Residential — — — — — Home equity — — — — — Consumer and other — — — — — Total 1 $ 100 $ 100 — $ — ______________________ (1) Represents the following type of concession: extension of term. There were no TDR loans that were restructured or defaulted during the three and six months ended June 30, 2017. Loan participations serviced for others and loans serviced for others are not included in the Company’s total loans. The following table presents a summary of the loan participations serviced for others and loans serviced for others based on class of receivable as of the dates indicated: June 30, 2018 December 31, 2017 (In thousands) Commercial and industrial $ 8,313 $ 8,484 Commercial tax-exempt 19,464 19,805 Commercial real estate 49,200 49,783 Construction and land 32,229 37,840 Total loan participations serviced for others $ 109,206 $ 115,912 Residential $ 38,217 $ 41,440 Total loans serviced for others $ 38,217 $ 41,440 Total loans include deferred loan origination (fees)/ costs, net, of $7.8 million and $6.9 million as of June 30, 2018 and December 31, 2017 , respectively. |