LOANS

The Company’s loan portfolio is segregated into the following segments: commercial real estate, commercial and industrial, residential mortgage, and consumer. Commercial real estate loans include construction, single and multi-family, and other commercial real estate classes. Commercial and industrial loans include asset based lending loans, lease financing, and other commercial business loans. Residential mortgage loans include classes for 1-4 family owner occupied and construction loans. Consumer loans include home equity, direct and indirect auto and other consumer loan classes. These portfolio segments each have unique risk characteristics that are considered when determining the appropriate level for the allowance for loan losses.

A substantial portion of the loan portfolio is secured by real estate in western Massachusetts, southern Vermont, northeastern New York, and in the Bank’s other New England lending areas. The ability of many of the Bank’s borrowers to honor their contracts is dependent, among other things, on the specific economy and real estate markets of these areas.

Total loans include business activity loans and acquired loans. Acquired loans are those loans acquired from First Choice Bank, Parke Bank, Firestone Financial Corp., Hampden Bancorp, Inc., the New York branch acquisition, Beacon Federal Bancorp, Inc., The Connecticut Bank and Trust Company, Legacy Bancorp, Inc., and Rome Bancorp, Inc. The following is a summary of total loans:



	December 31, 2016						December 31, 2015
(In thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities Loans		Acquired Loans		Total
Commercial real estate:
Construction	$	253,302	$	34,207	$	287,509	$	210,196	$	43,474	$	253,670
Single and multi-family	191,819		125,672		317,491		214,823		36,783		251,606
Other commercial real estate	1,481,223		530,215		2,011,438		1,209,008		345,483		1,554,491
Total commercial real estate	1,926,344		690,094		2,616,438		1,634,027		425,740		2,059,767

Commercial and industrial loans:
Asset based lending	321,270		—		321,270		331,253		—		331,253
Other commercial and industrial loans	586,832		153,936		740,768		495,979		221,031		717,010
Total commercial and industrial loans	908,102		153,936		1,062,038		827,232		221,031		1,048,263

Total commercial loans	2,834,446		844,030		3,678,476		2,461,259		646,771		3,108,030

Residential mortgages:
1-4 family	1,583,794		297,355		1,881,149		1,454,233		332,747		1,786,980
Construction	11,178		804		11,982		26,704		1,351		28,055
Total residential mortgages	1,594,972		298,159		1,893,131		1,480,937		334,098		1,815,035

Consumer loans:
Home equity	313,521		80,279		393,800		307,159		53,446		360,605
Auto and other	478,368		106,012		584,380		311,328		130,238		441,566
Total consumer loans	791,889		186,291		978,180		618,487		183,684		802,171

Total loans	$	5,221,307	$	1,328,480	$	6,549,787	$	4,560,683	$	1,164,553	$	5,725,236

Total unamortized net costs and premiums included in the year-end total loans for business activity loans were the following:



(In thousands)	December 31, 2016		December 31, 2015
Unamortized net loan origination costs	$	21,972	$	17,448
Unamortized net premium on purchased loans	4,849		4,694
Total unamortized net costs and premiums	$	26,821	$	22,142

The Company occasionally transfers a portion of its originated commercial loans to participating lending partners. The amounts transferred have been accounted for as sales and are therefore not included in the Company’s accompanying consolidated balance sheets. The Company and its lending partners share proportionally in any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. The Company continues to service the loans, collects cash payments from the borrowers, remits payments (net of servicing fees), and disburses required escrow funds to relevant parties. At year-end 2016 and 2015, the Company was servicing loans for participants totaling $459.3 million and $189.0 million, respectively.

In 2016, the Company purchased loans aggregating $190.8 million and sold loans aggregating $307.7 million. In 2015, the Company purchased loans aggregating $124.4 million and sold loans aggregating $121.0 million. Net gains (losses) on sales of loans were $8 million, $6 million, and $4 million for the years 2016, 2015, and 2014, respectively. These amounts are included in Loan Related Income on the Consolidated Statement of Income.

Most of the Company’s lending activity occurs within its primary markets in Western Massachusetts, Southern Vermont, and Northeastern New York. Most of the loan portfolio is secured by real estate, including residential mortgages, commercial mortgages, and home equity loans. Year-end loans to operators of non-residential buildings totaled $1.1 billion, or 16.8%, and $0.8 billion, or 14.7% of total loans in 2016 and 2015, respectively. There were no other concentrations of loans related to any single industry in excess of 10% of total loans at year-end 2016 or 2015.

At year-end 2016, the Company had pledged loans totaling $100 million to the Federal Reserve Bank of Boston as collateral for certain borrowing arrangements. Also, residential first mortgage loans are subject to a blanket lien for FHLBB advances. See Note 12 - Borrowed Funds.

At year-end 2016 and 2015, the Company’s commitments outstanding to related parties totaled $38.7 million and $3.5 million, respectively, and the loans outstanding against these commitments totaled $25.6 million and $2.1 million, respectively. Related parties include directors and executive officers of the Company and its subsidiaries and their respective affiliates in which they have a controlling interest, and immediate family members. For the years 2016 and 2015, all related party loans were performing.

The carrying amount of the acquired loans at December 31, 2016 totaled $1.3 billion. A subset of these loans was determined to have evidence of credit deterioration at acquisition date, which is accounted for in accordance with ASC 310-30. These purchased credit-impaired loans presently maintain a carrying value of $46.8 million. These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Of the $46.8 million, $34.8 million are Commercial Real Estate, $3.4 million are Commercial and Industrial loans, $7.3 million are Residential Mortgages and $1.3 million are Consumer loans.

The carrying amount of the acquired loans at December 31, 2015 totaled $1.2 billion. A subset of these loans was determined to have evidence of credit deterioration at acquisition date, which is accounted for in accordance with ASC 310-30. These purchased credit-impaired loans presently maintain a carrying value of $21.4 million. These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Of the $21.4 million, $15.8 million are Commercial Real Estate, $2.8 million are Commercial and Industrial loans, $2.6 million are Residential Mortgages, and $249 thousand are Consumer loans.

The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality:



(In thousands)	2016			2015
Balance at beginning of period	$	6,925		$	2,541
Acquisitions	6,125			4,777
Reclassification from nonaccretable difference for loans with improved cash flows	2,488			3,640
Changes in expected cash flows that do not affect nonaccretable difference	(3,018		)	—
Reclassification to TDR	(185		)	—
Accretion	(3,597		)	(4,033		)
Balance at end of period	$	8,738		$	6,925

The following is a summary of past due loans at December 31, 2016 and 2015:

Business Activities Loans



(in thousands)	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
December 31, 2016
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	253,302	$	253,302	$	—
Single and multi-family	618		110		624		1,352		190,467		191,819		155
Commercial real estate	481		2,243		4,212		6,936		1,474,287		1,481,223		—
Total	1,099		2,353		4,836		8,288		1,918,056		1,926,344		155
Commercial and industrial loans
Asset based lending	—		—		—		—		321,270		321,270		—
Other commercial and industrial loans	3,090		1,301		6,290		10,681		576,151		586,832		5
Total	3,090		1,301		6,290		10,681		897,421		908,102		5
Residential mortgages:
1-4 family	1,393		701		4,179		6,273		1,577,521		1,583,794		1,956
Construction	10		—		—		10		11,168		11,178		—
Total	1,403		701		4,179		6,283		1,588,689		1,594,972		1,956
Consumer loans:
Home equity	99		—		2,981		3,080		310,441		313,521		306
Auto and other	2,483		494		968		3,945		474,423		478,368		16
Total	2,582		494		3,949		7,025		784,864		791,889		322
Total	$	8,174	$	4,849	$	19,254	$	32,277	$	5,189,030	$	5,221,307	$	2,438

Business Activities Loans



(in thousands)	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
December 31, 2015
Commercial real estate:
Construction	$	—	$	—	$	58	$	58	$	210,138	$	210,196	$	—
Single and multi-family	65		160		70		295		214,528		214,823		—
Commercial real estate	1,523		831		3,286		5,640		1,203,368		1,209,008		—
Total	1,588		991		3,414		5,993		1,628,034		1,634,027		—
Commercial and industrial loans
Asset based lending	—		—		—		—		331,253		331,253		—
Other commercial and industrial loans	1,202		1,105		7,770		10,077		485,902		495,979		146
Total	1,202		1,105		7,770		10,077		817,155		827,232		146
Residential mortgages:
1-4 family	3,537		857		4,304		8,698		1,445,535		1,454,233		2,006
Construction	—		—		—		—		26,704		26,704		—
Total	3,537		857		4,304		8,698		1,472,239		1,480,937		2,006
Consumer loans:
Home equity	563		20		1,658		2,241		304,918		307,159		61
Auto and other	1,230		132		610		1,972		309,356		311,328		59
Total	1,793		152		2,268		4,213		614,274		618,487		120
Total	$	8,120	$	3,105	$	17,756	$	28,981	$	4,531,702	$	4,560,683	$	2,272

Acquired Loans



(in thousands)	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
December 31, 2016
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	47	$	34,207	$	—
Single and multi-family	2		—		437		439		4,726		125,672		—
Commercial real estate	1,555		—		765		2,320		30,047		530,215		—
Total	1,557		—		1,202		2,759		34,820		690,094		—
Commercial and industrial loans
Asset based lending	—		—		—		—		—		—		—
Other commercial and industrial loans	1,850		15		1,262		3,127		3,369		153,936		24
Total	1,850		15		1,262		3,127		3,369		153,936		24
Residential mortgages:
1-4 family	321		343		2,015		2,679		7,283		297,355		443
Construction	—		—		—		—		—		804		—
Total	321		343		2,015		2,679		7,283		298,159		443
Consumer loans:
Home equity	753		—		870		1,623		957		80,279		353
Auto and other	542		314		1,686		2,542		387		106,012		791
Total	1,295		314		2,556		4,165		1,344		186,291		1,144
Total	$	5,023	$	672	$	7,035	$	12,730	$	46,816	$	1,328,480	$	1,611

Acquired Loans



(in thousands)	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
December 31, 2015
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	1,298	$	43,474	$	—
Single and multi-family	—		176		227		403		1,380		36,783		127
Commercial real estate	547		43		1,368		1,958		13,087		345,483
Total	547		219		1,595		2,361		15,765		425,740		127
Commercial and industrial loans:
Asset based lending	—		—		—		—		—		—		—
Other commercial and industrial loans	1,214		505		1,420		3,139		2,775		221,031		785
Total	1,214		505		1,420		3,139		2,775		221,031		785
Residential mortgages:
1-4 family	2,580		311		1,880		4,771		2,572		332,747		212
Construction	—		—		—		—		—		1,351		—
Total	2,580		311		1,880		4,771		2,572		334,098		212
Consumer loans:
Home equity	82		277		837		1,196		118		53,446		111
Auto and other	1,491		145		1,081		2,717		132		130,238		187
Total	1,573		422		1,918		3,913		250		183,684		298
Total	$	5,914	$	1,457	$	6,813	$	14,184	$	21,362	$	1,164,553	$	1,422

The following is summary information pertaining to non-accrual loans at year-end 2016 and 2015:



	December 31, 2016						December 31, 2015
(In thousands)	Business Activities Loans		Acquired Loans (1)		Total		Business Activities Loans		Acquired Loans (2)		Total
Commercial real estate:
Construction	—		—		—		59		—		59
Single and multi-family	469		437		906		70		100		170
Other commercial real estate	4,212		765		4,977		3,285		1,368		4,653
Total	4,681		1,202		5,883		3,414		1,468		4,882
Commercial and industrial loans:
Asset based lending	—		—		—		—		—		—
Other commercial and industrial loans	6,285		1,155		7,440		7,624		597		8,221
Total	6,285		1,155		7,440		7,624		597		8,221

Residential mortgages:
1-4 family	$	2,223	$	1,572	$	3,795	$	2,298	$	1,668	$	3,966
Construction	—		—		—		—		—		—
Total	2,223		1,572		3,795		2,298		1,668		3,966
Consumer loans:
Home equity	2,675		517		3,192		1,597		727		2,324
Auto and other	952		895		1,847		551		893		1,444
Total	3,627		1,412		5,039		2,148		1,620		3,768

Total non-accrual loans	$	16,816	$	5,341	$	22,157	$	15,484	$	5,353	$	20,837

(1) At year-end 2016, acquired credit impaired loans account for $83 thousand of loans greater than 90 days past due that are not presented in the above table.

(2) At year-end 2015, acquired credit impaired loans account for $39 thousand of loans greater than 90 days past due that are not presented in the above table.

Loans evaluated for impairment as of December 31, 2016 and 2015 were as follows:

Business Activities Loans



(In thousands) 2016	Commercial real estate		Commercial and industrial		Residential mortgages		Consumer		Total
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	25,549	$	5,705	$	2,775	$	2,703	$	36,732
Collectively evaluated	1,900,795		902,397		1,592,197		789,186		5,184,575
Total	$	1,926,344	$	908,102	$	1,594,972	$	791,889	$	5,221,307

Business Activities Loans



(In thousands) 2015	Commercial real estate		Commercial and industrial		Residential mortgages		Consumer		Total
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	11,560	$	7,191	$	2,812	$	1,810	$	23,373
Collectively evaluated	1,622,467		820,041		1,478,125		616,677		4,537,310
Total	$	1,634,027	$	827,232	$	1,480,937	$	618,487	$	4,560,683

Acquired Loans



(In thousands) 2016	Commercial real estate		Commercial and industrial		Residential mortgages		Consumer		Total
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	4,256	$	635	$	308	$	406	$	5,605
Purchased credit-impaired loans	34,820		3,369		7,283		1,344		46,816
Collectively evaluated	651,018		149,932		290,568		184,541		1,276,059
Total	$	690,094	$	153,936	$	298,159	$	186,291	$	1,328,480

Acquired Loans



(In thousands) 2015	Commercial real estate		Commercial and industrial		Residential mortgages		Consumer		Total
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	3,749	$	—	$	570	$	487	$	4,806
Purchased credit-impaired loans	15,765		2,775		2,572		250		21,362
Collectively evaluated	406,226		218,256		330,956		182,947		1,138,385
Total	$	425,740	$	221,031	$	334,098	$	183,684	$	1,164,553

The following is a summary of impaired loans at year-end 2016 and 2015 and for the years then ended:

Business Activities Loans



	At December 31, 2016
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Other commercial real estate	$	18,905	$	18,905	$	—
Other commercial and industrial loans	382		382		—
Residential mortgages - 1-4 family	2,101		2,101		—
Consumer - home equity	1,605		1,605		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	179	$	181	$	2
Other commercial real estate	6,306		6,462		156
Other commercial and industrial loans	5,060		5,324		264
Residential mortgages - 1-4 family	538		674		136
Consumer - home equity	942		1,098		156

Total
Commercial real estate	$	25,390	$	25,548	$	158
Commercial and industrial	5,442		5,706		264
Residential mortgages	2,639		2,775		136
Consumer	2,547		2,703		156
Total impaired loans	$	36,018	$	36,732	$	714

Business Activities Loans



	At December 31, 2015
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - construction	$	2,000	$	2,000	$	—
Other commercial real estate	4,613		4,613		—
Other commercial and industrial loans	5,828		5,828		—
Residential mortgages - 1-4 family	1,181		1,181		—
Consumer - home equity	702		702		—
Consumer - other	1		1		—
With an allowance recorded:
Other commercial real estate	$	4,798	$	4,947	$	149
Other commercial and industrial loans	1,341		1,362		21
Residential mortgages - 1-4 family	1,479		1,632		153
Consumer - home equity	903		999		96
Consumer - other	101		108		7

Total
Commercial real estate	$	11,411	$	11,560	$	149
Commercial and industrial	7,169		7,190		21
Residential mortgages	2,660		2,813		153
Consumer	1,707		1,810		103
Total impaired loans	$	22,947	$	23,373	$	426

Acquired Loans



	At December 31, 2016
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Other commercial real estate loans	$	547	$	547	$	—
Residential mortgages - 1-4 family	208		208		—
Consumer - home equity	—		—		—
Consumer - other	—		—		—

With an allowance recorded:
Commercial real estate - single and multifamily	$	1,250	$	1,358	$	108
Other commercial real estate loans	2,209		2,351		142
Other commercial and industrial loans	576		635		$	59
Residential mortgages - 1-4 family	89		100		$	11
Consumer - home equity	292		406		114

Total
Commercial real estate	$	4,006	$	4,256	$	250
Commercial and industrial	576		635		59
Residential mortgages	297		308		11
Consumer	292		406		114
Total impaired loans	$	5,171	$	5,605	$	434

Acquired Loans



	December 31, 2015
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Other commercial real estate loans	$	1,722	$	1,722	$	—
Residential mortgages - 1-4 family	274		274		—
Consumer - home equity	117		117		—
Consumer - other	177		177		—

With an allowance recorded:
Commercial real estate - single and multifamily	$	638	$	655	$	17
Other commercial real estate loans	1,964		2,032		68
Residential mortgages - 1-4 family	266		296		$	30
Consumer - home equity	167		192		25

Total
Commercial real estate	$	4,324	$	4,409	$	85
Commercial and industrial	—		—		—
Residential mortgages	540		570		30
Consumer	461		486		25
Total impaired loans	$	5,325	$	5,465	$	140

The following is a summary of the average recorded investment and interest income recognized on impaired loans as of December 31, 2016 and 2015:

Business Activities Loans



	December 31, 2016				December 31, 2015
(in thousands)	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
With no related allowance:
Commercial real estate - construction	$	—	$	—	$	2,245	$	92
Commercial real estate - single and multifamily	36		1		60		—
Other commercial real estate	6,463		1,155		12,487		302
Other commercial and industrial	3,349		131		3,870		177
Residential mortgages - 1-4 family	2,403		91		1,353		38
Consumer-home equity	612		5		442		13
Consumer-other	2		—		—		—

With an allowance recorded:
Commercial real estate - single and multifamily	15		6		—		—
Other commercial real estate	7,576		349		3,214		132
Other commercial and industrial	2,002		225		810		37
Residential mortgages - 1-4 family	682		26		1,704		72
Consumer-home equity	999		35		83		—
Consumer - other	103		4		112		4

Total
Commercial real estate	$	14,090	$	1,511	$	18,006	$	526
Commercial and industrial	5,351		356		4,680		214
Residential mortgages	3,085		117		3,057		110
Consumer loans	1,716		44		637		17
Total impaired loans	$	24,242	$	2,028	$	26,380	$	867

Acquired Loans



	December 31, 2016				December 31, 2015
(in thousands)	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
With no related allowance:
Commercial real estate - construction	$	—	$	—	$	445	$	60
Commercial mortgages - single and multifamily	—		—		2,014		57
Other commercial real estate	521		20		1,721		37
Commercial business loans	492		9		—		—
Residential mortgages - 1-4 family	293		12		463		6
Consumer - home equity	—		—		152		5
Consumer - other	105		1		59		5

With an allowance recorded:
Commercial real estate - construction	$	—	$	—	$	—	$	—
Commercial real estate - single and multifamily	1,064		115		623		33
Other commercial real estate	2,618		165		1,384		96
Residential mortgages - 1-4 family	214		25		304		9
Other commercial and industrial	369		17		31		3
Consumer - home equity	—		—		195		7

Total
Commercial real estate	$	4,203	$	300	$	6,187	$	283
Commercial and industrial	861		26		31		3
Residential mortgages	507		37		767		15
Consumer loans	105		1		406		17
Total impaired loans	$	5,676	$	364	$	7,391	$	318

No additional funds are committed to be advanced in connection with impaired loans.

Troubled Debt Restructuring Loans

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring (TDR), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. TDRs are evaluated individually for impairment and may result in a specific allowance amount allocated to an individual loan.

The following tables include the recorded investment and number of modifications for modified loans identified during the years-ended December 31, 2016, 2015, and 2014 respectively. The tables include the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. The modifications for the year-ended December 31, 2016 were attributable to interest rate concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity. The modifications for the year-ended December 31, 2015 were attributable to interest rate concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity. The modifications for the year-ended December 31, 2014 were attributable to interest rate concessions, debt consolidations, and changes to payment terms.



	Modifications by Class For the twelve months ending December 31, 2016
	Number of Modifications	Pre-Modification Outstanding Recorded Investment (In thousands)		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Single and multifamily	5	$	437	$	437
Commercial - Other	5	16,651		16,651
Commercial and industrial - Other	4	555		555
Residential - 1-4 Family	2	5		5
Consumer - Home Equity	1	117		117
	17	$	17,765	$	17,765



	Modifications by Class For the twelve months ending December 31, 2015
	Number of Modifications	Pre-Modification Outstanding Recorded Investment (In thousands)		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Construction	1	$	123	$	123
Commercial - Single and multifamily	2	307		307
Commercial - Other	4	8,577		7,274
Commercial and industrial - Other	6	9,041		8,904
Consumer - Other	1	999		999
	14	$	19,047	$	17,607



	Modifications by Class For the twelve months ending December 31, 2014
	Number of Modifications	Pre-Modification Outstanding Recorded Investment (In thousands)		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Single and multifamily	1	$	623	$	623
Commercial - Other	10	9,190		9,190
Residential - 1-4 Family	5	600		598
Residential - Construction	1	102		102
	17	$	10,515	$	10,513

The following tables disclose the recorded investment and number of modifications for TDRs for the prior years where a concession was made and the borrower subsequently defaulted in the respective reporting period. For the year ended 2016, there were no loans that were restructured that had subsequently defaulted during the period.



	Modifications that subsequently defaulted for the twelve months ending December 31, 2015
	Number of Contracts	Recorded Investment
Troubled Debt Restructurings
Commercial - Single and multifamily	1	$	—
Commercial - Other	1	373
Commercial and industrial - Other	4	6,579
Residential - 1-4 Family	2	169
	8	$	7,121



	Modifications that subsequently defaulted for the twelve months ending December 31, 2014
	Number of Contracts	Recorded Investment
Troubled Debt Restructurings
Commercial and industrial - Other	2	$	101
	2	$	101

The following table presents the Company’s TDR activity in 2016 and 2015:



(In thousands)	2016			2015
Balance at beginning of year	$	22,048		$	16,714
Principal payments	(5,870		)	(5,460		)
TDR status change (1)	2,235			—
Other reductions (2)	(2,348		)	(3,160		)
Newly identified TDRs	17,764			13,954
Balance at end of year	$	33,829		$	22,048

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(1)	TDR status change classification represents TDR loans with a specified interest rate equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk and the loan was on current payment status and not impaired based on the terms specified by the restructuring agreement.

(2) Other reductions classification consists of transfer to other real estate owned, charge-offs to loans, and other loan sale payoffs.

The evaluation of certain loans individually for specific impairment includes loans that were previously classified as TDRs or continue to be classified as TDRs.