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. 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. 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 Massachusetts, southern Vermont, northeastern New York, New Jersey 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 Commerce Bank and Trust Company, 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. Acquired loans that are refinanced are transferred to business activity loans. Business activity and acquired loans are serviced, managed, and accounted for under the Company's same control environment. The following is a summary of total loans:



	March 31, 2018						December 31, 2017
(In thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities Loans		Acquired Loans		Total
Commercial real estate:
Construction	$	255,835	$	91,468	$	347,303	$	269,206	$	84,965	$	354,171
Single and multi-family	345,180		197,040		542,220		217,083		206,082		423,165
Other commercial real estate	1,680,488		696,726		2,377,214		1,731,418		755,988		2,487,406
Total commercial real estate	2,281,503		985,234		3,266,737		2,217,707		1,047,035		3,264,742

Commercial and industrial loans:	1,195,642		623,332		1,818,974		1,182,569		621,370		1,803,939

Total commercial loans	3,477,145		1,608,566		5,085,711		3,400,276		1,668,405		5,068,681

Residential mortgages:
1-4 family	1,900,592		274,890		2,175,482		1,808,024		289,373		2,097,397
Construction	6,121		204		6,325		5,177		233		5,410
Total residential mortgages	1,906,713		275,094		2,181,807		1,813,201		289,606		2,102,807

Consumer loans:
Home equity	291,094		109,019		400,113		294,954		115,227		410,181
Auto and other	607,726		101,060		708,786		603,767		113,902		717,669
Total consumer loans	898,820		210,079		1,108,899		898,721		229,129		1,127,850

Total loans	$	6,282,678	$	2,093,739	$	8,376,417	$	6,112,198	$	2,187,140	$	8,299,338

The carrying amount of the acquired loans at March 31, 2018 totaled $2.1 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 $93.6 million (and a note balance of $202.8 million). These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Loans considered not credit-impaired at acquisition date had a carrying amount of $2.0 billion.

At December 31, 2017, acquired loans maintained a carrying value of $2.2 billion and purchased credit-impaired loans totaled $97.3 million (note balance of $208.7 million). Loans considered not credit-impaired at acquisition date had a carrying amount of $2.1 billion.

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:



	Three Months Ended March 31,
(In thousands)	2018			2017
Balance at beginning of period	$	11,561		$	8,738
Reclassification from nonaccretable difference for loans with improved cash flows	1,742			418
Change in cash flows that do not affect nonaccretable difference	(188		)	(747		)
Accretion	(2,723		)	(1,046		)
Balance at end of period	$	10,392		$	7,363

The following is a summary of past due loans at March 31, 2018 and December 31, 2017:

Business Activities Loans



(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
March 31, 2018
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	255,835	$	255,835	$	—
Single and multi-family	—		—		443		443		344,737		345,180		10
Other commercial real estate	1,673		15,305		5,580		22,558		1,657,930		1,680,488		64
Total	1,673		15,305		6,023		23,001		2,258,502		2,281,503		74
Commercial and industrial loans:
Total	1,492		1,275		5,876		8,643		1,186,999		1,195,642		4
Residential mortgages:
1-4 family	861		543		2,465		3,869		1,896,723		1,900,592		425
Construction	—		—		—		—		6,121		6,121		—
Total	861		543		2,465		3,869		1,902,844		1,906,713		425
Consumer loans:
Home equity	161		99		2,695		2,955		288,139		291,094		97
Auto and other	2,174		695		1,774		4,643		603,083		607,726		112
Total	2,335		794		4,469		7,598		891,222		898,820		209
Total	$	6,361	$	17,917	$	18,833	$	43,111	$	6,239,567	$	6,282,678	$	712

Business Activities Loans



(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
December 31, 2017
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	269,206	$	269,206	$	—
Single and multi-family	—		—		451		451		216,632		217,083		—
Other commercial real estate	1,925		48		5,023		6,996		1,724,422		1,731,418		457
Total	1,925		48		5,474		7,447		2,210,260		2,217,707		457
Commercial and industrial loans:
Total	4,031		1,912		6,023		11,966		1,170,603		1,182,569		128
Residential mortgages:
1-4 family	2,412		242		2,186		4,840		1,803,184		1,808,024		520
Construction	—		—		—		—		5,177		5,177		—
Total	2,412		242		2,186		4,840		1,808,361		1,813,201		520
Consumer loans:
Home equity	444		1,235		1,747		3,426		291,528		294,954		120
Auto and other	3,389		599		1,597		5,585		598,182		603,767		143
Total	3,833		1,834		3,344		9,011		889,710		898,721		263
Total	$	12,201	$	4,036	$	17,027	$	33,264	$	6,078,934	$	6,112,198	$	1,368

Acquired Loans



(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
March 31, 2018
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	7,651	$	91,468	$	—
Single and multi-family	185		—		228		413		2,530		197,040		—
Other commercial real estate	225		—		4,958		5,183		37,704		696,726		1,050
Total	410		—		5,186		5,596		47,885		985,234		1,050
Commercial and industrial loans:
Total	822		107		1,906		2,835		36,461		623,332		348
Residential mortgages:
1-4 family	434		396		3,736		4,566		6,903		274,890		—
Construction	—		—		—		—		—		204		—
Total	434		396		3,736		4,566		6,903		275,094		—
Consumer loans:
Home equity	216		81		1,251		1,548		1,965		109,019		—
Auto and other	277		57		500		834		431		101,060		15
Total	493		138		1,751		2,382		2,396		210,079		15
Total	$	2,159	$	641	$	12,579	$	15,379	$	93,645	$	2,093,739	$	1,413

Acquired Loans



(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
December 31, 2017
Commercial real estate:							—
Construction	$	—	$	—	$	—	$	—	$	7,655	$	84,965	$	—
Single and multi-family	671		—		203		874		2,846		206,082		—
Other commercial real estate	816		1,875		2,156		4,847		42,801		755,988		109
Total	1,487		1,875		2,359		5,721		53,302		1,047,035		109
Commercial and industrial loans:
Total	1,252		268		1,439		2,959		34,629		621,370		23
Residential mortgages:
1-4 family	957		2,581		1,247		4,785		6,974		289,373		30
Construction	—		—		—		—		—		233		—
Total	957		2,581		1,247		4,785		6,974		289,606		30
Consumer loans:
Home equity	286		40		1,965		2,291		1,956		115,227		—
Auto and other	346		135		430		911		483		113,902		38
Total	632		175		2,395		3,202		2,439		229,129		38
Total	$	4,328	$	4,899	$	7,440	$	16,667	$	97,344	$	2,187,140	$	200

The following is summary information pertaining to non-accrual loans at March 31, 2018 and December 31, 2017:



	March 31, 2018						December 31, 2017
(In thousands)	Business Activities Loans		Acquired Loans (1)		Total		Business Activities Loans		Acquired Loans (2)		Total
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	—	$	—
Single and multi-family	433		228		661		451		203		654
Other commercial real estate	5,516		3,908		9,424		4,566		2,047		6,613
Total	5,949		4,136		10,085		5,017		2,250		7,267

Commercial and industrial loans:
Total	5,872		1,558		7,430		5,895		1,333		7,228

Residential mortgages:
1-4 family	2,040		3,736		5,776		1,666		1,217		2,883
Construction	—		—		—		—		—		—
Total	2,040		3,736		5,776		1,666		1,217		2,883

Consumer loans:
Home equity	2,598		1,251		3,849		1,627		1,965		3,592
Auto and other	1,662		485		2,147		1,454		392		1,846
Total	4,260		1,736		5,996		3,081		2,357		5,438
Total non-accrual loans	$	18,121	$	11,166	$	29,287	$	15,659	$	7,157	$	22,816

_______________________________________

(1) At quarter end March 31, 2018, there were no acquired credit impaired loans greater than 90 days past due.

(2) At December 31, 2017, acquired credit impaired loans accounted for $83 thousand of loans greater than 90 days past due that are not presented in the above table.

Loans evaluated for impairment as of March 31, 2018 and December 31, 2017 were as follows:

Business Activities Loans



(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
March 31, 2018
Loans receivable:
Balance at end of period
Individually evaluated for impairment	$	33,094	$	6,913	$	2,466	$	1,845	$	44,318
Collectively evaluated for impairment	2,248,409		1,188,729		1,904,247		896,975		6,238,360
Total	$	2,281,503	$	1,195,642	$	1,906,713	$	898,820	$	6,282,678

Business Activities Loans



(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
December 31, 2017
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	33,732	$	5,761	$	3,872	$	—	$	43,365
Collectively evaluated for impairment	2,183,975		1,176,808		1,809,329		898,721		6,068,833
Total	$	2,217,707	$	1,182,569	$	1,813,201	$	898,721	$	6,112,198

Acquired Loans



(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
March 31, 2018
Loans receivable:
Balance at end of Period
Individually evaluated for impairment	$	5,424	$	745	$	2,695	$	1,094	$	9,958
Purchased credit-impaired loans	47,885		36,461		6,903		2,396		93,645
Collectively evaluated for impairment	931,925		586,126		265,496		206,589		1,990,136
Total	$	985,234	$	623,332	$	275,094	$	210,079	$	2,093,739

Acquired Loans



(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
December 31, 2017
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	4,244	$	421	$	2,617	$	27	$	7,309
Purchased credit-impaired loans	53,302		34,629		6,974		2,439		97,344
Collectively evaluated for impairment	989,489		586,320		280,015		226,663		2,082,487
Total	$	1,047,035	$	621,370	$	289,606	$	229,129	$	2,187,140

The following is a summary of impaired loans at March 31, 2018 and December 31, 2017:

Business Activities Loans



	March 31, 2018
(In thousands)	Recorded Investment (1)		Unpaid Principal Balance (2)		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	—	$	—	$	—
Other commercial real estate loans	20,286		23,042		—
Commercial and industrial loans	3,091		3,846		—
Residential mortgages - 1-4 family	1,011		1,433		—
Consumer - home equity	1,784		2,415		—
Consumer - other	—		—		—

With an allowance recorded:
Commercial real estate - single and multifamily	$	309	$	323	$	1
Other commercial real estate loans	12,835		15,762		173
Commercial and industrial loans	3,915		4,494		296
Residential mortgages - 1-4 family	1,478		1,580		137
Consumer - home equity	45		53		1
Consumer - other	16		16		1

Total
Commercial real estate	$	33,430	$	39,127	$	174
Commercial and industrial loans	7,006		8,340		296
Residential mortgages	2,489		3,013		137
Consumer	1,845		2,484		2
Total impaired loans	$	44,770	$	52,964	$	609

(1) The Recorded Investment represents the face amount of the loan increased or decreased by applicable accrued interest, net deferred loan fees and costs, and unamortized premium or discount, and reflects direct charge-offs. This amount is a component of total loans on the Consolidated Balance Sheet.

(2) The Unpaid Principal Balance represents the customer's legal obligation to the Company.

Business Activities Loans



	December 31, 2017
(In thousands)	Recorded Investment (1)		Unpaid Principal Balance (2)		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	1,077	$	3,607	$	—
Other commercial real estate loans	18,285		18,611		—
Commercial and industrial loans	2,060		2,629		—
Residential mortgages - 1-4 family	660		1,075		—
Consumer - home equity	867		1,504		—

With an allowance recorded:
Commercial real estate - construction	$	159	$	159	$	1
Commercial real estate - single and multifamily	159		171		1
Other commercial real estate loans	14,321		15,235		227
Commercial and industrial loans	3,716		4,249		66
Residential mortgages - 1-4 family	1,344		1,446		130
Consumer - home equity	1,014		999		34
Consumer - other	17		17		1

Total
Commercial real estate	$	34,001	$	37,783	$	229
Commercial and industrial loans	5,776		6,878		66
Residential mortgages	2,004		2,521		130
Consumer	1,898		2,520		35
Total impaired loans	$	43,679	$	49,702	$	460

(2) The Unpaid Principal Balance represents the customer's legal obligation to the Company.

Acquired Loans



	March 31, 2018
(In thousands)	Recorded Investment (1)		Unpaid Principal Balance (2)		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	185	$	276	$	—
Other commercial real estate loans	2,400		5,192		—
Commercial and industrial loans	574		1,618		—
Residential mortgages - 1-4 family	697		709		—
Consumer - home equity	754		1,303		—
Consumer - other	17		18		—

With an allowance recorded:
Commercial real estate - single and multifamily	$	766	$	763	$	12
Other commercial real estate loans	2,082		2,093		29
Commercial and industrial loans	178		176		3
Residential mortgages - 1-4 family	2,004		2,385		506
Consumer - home equity	323		362		30

Total					x
Commercial real estate	$	5,433	$	8,324	$	41
Commercial and industrial loans	752		1,794		3
Residential mortgages	2,701		3,094		506
Consumer	1,094		1,683		30
Total impaired loans	$	9,980	$	14,895	$	580

(2) The Unpaid Principal Balance represents the customer's legal obligation to the Company.

Acquired Loans



	December 31, 2017
(In thousands)	Recorded Investment (1)		Unpaid Principal Balance (2)		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	204	$	290	$	—
Other commercial real estate loans	1,123		2,794		—
Other commercial and industrial loans	255		310		—
Residential mortgages - 1-4 family	658		671		—
Consumer - home equity	1,374		1,654		—
Consumer - other	27		27		—

With an allowance recorded:
Commercial real estate - single and multifamily	$	887	$	880	$	18
Other commercial real estate loans	2,043		1,661		38
Commercial and industrial loans	165		166		1
Residential mortgages - 1-4 family	166		185		9
Consumer - home equity	433		540		45

Total
Commercial real estate	$	4,257	$	5,625	$	56
Commercial and industrial loans	420		476		1
Residential mortgages	824		856		9
Consumer	1,834		2,221		45
Total impaired loans	$	7,335	$	9,178	$	111

(2) The Unpaid Principal Balance represents the customer's legal obligation to the Company.

The following is a summary of the average recorded investment and interest income recognized on impaired loans as of March 31, 2018 and 2017:

Business Activities Loans



	Three Months Ended March 31, 2018				Three Months Ended March 31, 2017
(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 - single and multifamily	$	—	$	—	$	153	$	—
Other commercial real estate loans	20,272		91		20,756		217
Commercial and industrial loans	2,625		62		1,350		5
Residential mortgages - 1-4 family	807		14		2,025		18
Consumer - home equity	1,730		2		1,574		19
Consumer - other	—		—		—		—

With an allowance recorded:
Commercial real estate - single and multifamily	$	311	$	2	$	181	$	—
Other commercial real estate loans	12,887		167		7,011		71
Commercial and industrial loans	3,933		64		5,876		143
Residential mortgages - 1-4 family	1,484		17		939		14
Consumer - home equity	46		1		1,149		8
Consumer - other	17		—		—		—

Total
Commercial real estate	$	33,470	$	260	$	28,101	$	288
Commercial and industrial loans	6,558		126		7,226		148
Residential mortgages	2,291		31		2,964		32
Consumer loans	1,793		3		2,723		27
Total impaired loans	$	44,112	$	420	$	41,014	$	495

Acquired Loans



	Three Months Ended March 31, 2018				Three Months Ended March 31, 2017
(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 - single and multifamily	$	191	$	5	$	721	$	31
Other commercial real estate loans	2,157		41		1,272		21
Commercial and industrial loans	425		9		403		—
Residential mortgages - 1-4 family	700		4		409		6
Consumer - home equity	953		—		—		—
Consumer - other	19		1		—		—

With an allowance recorded:
Commercial real estate - single and multifamily	$	769	$	10	$	915	$	12
Other commercial real estate loans	2,107		27		1,494		19
Commercial and industrial loans	61		2		362		13
Residential mortgages - 1-4 family	1,520		1		98		1
Consumer - home equity	324		4		743		4
Consumer - other	—		—		—		—

Total
Other commercial real estate loans	$	5,224	$	83	$	4,402	$	83
Commercial and industrial loans	486		11		765		13
Residential mortgages	2,220		5		507		7
Consumer loans	1,296		5		743		4
Total impaired loans	$	9,226	$	104	$	6,417	$	107

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 identified during the three months ended March 31, 2018 and March 31, 2017. The table includes 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 three months ended March 31, 2018 and 2017 were attributable to interest rate concessions, principal concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity.



	Three Months Ended March 31, 2018
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial and industrial	4	$	1,995	$	1,924
Residential - 1-4 Family	1	118		118
Consumer - Home Equity	—	—		—
Total	5	$	2,113	$	2,042



	Three Months Ended March 31, 2017
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Other	6	$	2,832	$	2,333
Commercial and industrial - Other	1	24		24
Residential - 1-4 Family	2	205		188
Consumer Home Equity	1	53		53
Total	10	$	3,114	$	2,598

The following table discloses the recorded investments and numbers of modifications for TDRs where a concession has been made within the previous 12 months, that then defaulted in the respective reporting period. For the three months ended March 31, 2018, there were no loans that were restructured that had subsequently defaulted during the period. For the three months ended March 31, 2017, there were two loans that were restructured that had subsequently defaulted during the period.



	Modifications that Subsequently Defaulted
	Three Months Ended March 31, 2017
(Dollars in thousands)	Number of Contracts	Recorded Investment
Troubled Debt Restructurings
Commercial - Other	1	$	113
Commercial and industrial	1	$	101

The following table presents the Company’s TDR activity for the three months ended March 31, 2018 and 2017:



	Three Months Ended March 31,
(In thousands)	2018			2017
Balance at beginning of the period	$	41,990		$	33,829
Principal payments	(639		)	(888		)
TDR status change (1)	—			—
Other reductions/increases (2)	(288		)	(840		)
Newly identified TDRs	2,042			2,598
Balance at end of the period	$	43,105		$	34,699

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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 and charge-offs and advances to loans.

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

As of March 31, 2018, the Company maintained no foreclosed residential real estate property. Additionally, residential mortgage loans collateralized by real estate property that are in the process of foreclosure as of March 31, 2018 and December 31, 2017 totaled $7.2 million and $4.9 million, respectively.