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 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 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 previous mergers and acquisitions. Once the full integration of the acquired entity is complete, acquired and business activity loans are serviced, managed, and accounted for under the Company's same control environment. During 2019, the Company reclassified $50 million of aircraft loans, $29 million of homeowners association loans, and $29 million of SBA loans from commercial and industrial to held-for-sale. The aircraft loans and homeowners association loans were sold prior to year-end. The SBA loans reclassified to held-for-sale are not contained in the balances below and are accounted for at the lower of carrying value or fair market value.



	December 31, 2019						December 31, 2018
(In thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities Loans		Acquired Loans		Total
Commercial real estate:
Construction	$	382,014	$	47,792	$	429,806	$	327,792	$	25,220	$	353,012
Other commercial real estate	2,414,942		1,189,521		3,604,463		2,260,919		786,290		3,047,209
Total commercial real estate	2,796,956		1,237,313		4,034,269		2,588,711		811,510		3,400,221

Commercial and industrial loans	1,442,617		397,891		1,840,508		1,513,538		466,508		1,980,046

Total commercial loans	4,239,573		1,635,204		5,874,777		4,102,249		1,278,018		5,380,267

Residential mortgages:
1-4 family	2,143,817		533,536		2,677,353		2,317,716		238,952		2,556,668
Construction	4,641		3,478		8,119		9,582		174		9,756
Total residential mortgages	2,148,458		537,014		2,685,472		2,327,298		239,126		2,566,424

Consumer loans:
Home equity	273,867		106,724		380,591		289,961		86,719		376,680
Auto and other	504,599		56,989		561,588		647,236		72,646		719,882
Total consumer loans	778,466		163,713		942,179		937,197		159,365		1,096,562

Total loans	$	7,166,497	$	2,335,931	$	9,502,428	$	7,366,744	$	1,676,509	$	9,043,253

In 2019, the Company purchased loans aggregating $432 million and sold loans aggregating $310 million. In 2018, the Company purchased loans aggregating $567 million and sold loans aggregating $388 million. Net gains on sales of loans were $12.0 million, $9.3 million, and $11.7 million for the years 2019, 2018, and 2017, respectively. These amounts are included in Loan Related Income on the Consolidated Statements of Income.

Most of the Company’s lending activity occurs within its primary markets in 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 $1.7 billion, or 18.1%, and $1.4 billion, or 15.6% of total loans in 2019 and 2018, respectively. There were no other concentrations of loans related to any single industry in excess of 10% of total loans at year-end 2019 or 2018.

At year-end 2019, the Company had pledged loans totaling $285 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 13 - Borrowed Funds.

At year-end 2019 and 2018, the Company’s commitments outstanding to related parties totaled $1.8 million and $52.9 million, respectively, and the loans outstanding against these commitments totaled $1.0 million and $47.8 million, respectively. Related parties include directors and executive officers of the Company and its subsidiaries, as well as their respective affiliates in which they have a controlling interest and immediate family members. For the years 2019 and 2018, all related party loans were performing.

The carrying amount of the acquired loans at December 31, 2019 totaled $2.3 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 $61.4 million and a note balance of $147 million. These loans are evaluated for impairment through the quarterly reforecasting of expected cash flows. Of the $61.4 million, $23.1 million are commercial real estate, $26.7 million are commercial and industrial loans, $10.8 million are residential mortgages, and $0.8 million are consumer loans.

The carrying amount of the acquired loans at December 31, 2018 totaled $1.7 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 maintained a carrying value of $47.3 million and a note balance of $124 million. Of the $47.3 million, $12.0 million were commercial real estate, $29.5 million were commercial and industrial loans, $4.9 million were residential mortgages, and $0.9 million were consumer loans.



(In thousands)	2019			2018			2017
Balance at beginning of period	$	2,840		$	11,561		$	8,738
Accretion	(9,619		)	(23,109		)	(14,810		)
Additions	4,200			—			10,815
Net reclassification from nonaccretable difference	7,430			17,347			9,198
Payments received, net	(837		)	(2,878		)	(2,380		)
Reclassification to TDR	9			—			—
Disposals	—			(81		)	—
Balance at end of period	$	4,023		$	2,840		$	11,561



(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, 2019
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	382,014	$	382,014	$	—
Commercial real estate	423		89		15,623		16,135		2,398,807		2,414,942		—
Total	423		89		15,623		16,135		2,780,821		2,796,956		—
Commercial and industrial loans
Total	2,841		2,033		10,662		15,536		1,427,081		1,442,617		122
Residential mortgages:
1-4 family	1,669		714		3,350		5,733		2,138,084		2,143,817		800
Construction	—		—		—		—		4,641		4,641		—
Total	1,669		714		3,350		5,733		2,142,725		2,148,458		800
Consumer loans:
Home equity	149		—		1,147		1,296		272,571		273,867		52
Auto and other	4,709		990		2,729		8,428		496,171		504,599		1
Total	4,858		990		3,876		9,724		768,742		778,466		53
Total	$	9,791	$	3,826	$	33,511	$	47,128	$	7,119,369	$	7,166,497	$	975

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, 2018
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	327,792	$	327,792	$	—
Commercial real estate	913		276		18,833		20,022		2,240,897		2,260,919		993
Total	913		276		18,833		20,022		2,568,689		2,588,711		993
Commercial and industrial loans
Total	4,694		975		4,363		10,305		1,503,233		1,513,538		4
Residential mortgages:
1-4 family	1,631		1,619		1,440		4,690		2,313,026		2,317,716		66
Construction	—		—		—		—		9,582		9,582		—
Total	1,631		1,619		1,440		4,690		2,322,608		2,327,298		66
Consumer loans:
Home equity	618		15		933		1,566		288,395		289,961		—
Auto and other	3,543		615		1,699		5,857		641,379		647,236		—
Total	4,161		630		2,632		7,423		929,774		937,197		—
Total	$	11,399	$	3,500	$	27,541	$	42,440	$	7,324,304	$	7,366,744	$	1,063

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, 2019
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	1,396	$	47,792	$	—
Commercial real estate	3,907		245		10,247		14,399		21,639		1,189,521		5,751
Total	3,907		245		10,247		14,399		23,035		1,237,313		5,751
Commercial and industrial loans
Total	888		299		1,275		2,462		26,718		397,891		442
Residential mortgages:
1-4 family	745		491		932		2,168		10,840		533,536		139
Construction	—		—		—		—		—		3,478		—
Total	745		491		932		2,168		10,840		537,014		139
Consumer loans:
Home equity	346		222		789		1,357		540		106,724		72
Auto and other	120		22		265		407		286		56,989		—
Total	466		244		1,054		1,764		826		163,713		72
Total	$	6,006	$	1,279	$	13,508	$	20,793	$	61,419	$	2,335,931	$	6,404

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, 2018
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	—	$	25,220	$	—
Commercial real estate	2,603		1,127		4,183		7,913		11,994		786,290		1,652
Total	2,603		1,127		4,183		7,913		11,994		811,510		1,652
Commercial and industrial loans:
Total	217		147		1,515		1,879		29,539		466,508		144
Residential mortgages:
1-4 family	1,382		144		918		2,444		4,888		238,952		75
Construction	—		—		—		—		—		174		—
Total	1,382		144		918		2,444		4,888		239,126		75
Consumer loans:
Home equity	290		148		751		1,189		553		86,719		—
Auto and other	193		62		547		802		314		72,646		96
Total	483		210		1,298		1,991		867		159,365		96
Total	$	4,685	$	1,628	$	7,914	$	14,227	$	47,288	$	1,676,509	$	1,967



	December 31, 2019						December 31, 2018
(In thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities Loans		Acquired Loans		Total
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	—	$	—
Other commercial real estate	15,623		4,496		20,119		17,840		2,531		20,371
Total	15,623		4,496		20,119		17,840		2,531		20,371
Commercial and industrial loans:
Total	10,540		833		11,373		4,632		1,371		6,003

Residential mortgages:
1-4 family	2,550		793		3,343		1,374		843		2,217
Construction	—		—		—		—		—		—
Total	2,550		793		3,343		1,374		843		2,217
Consumer loans:
Home equity	1,095		717		1,812		933		751		1,684
Auto and other	2,728		265		2,993		1,699		451		2,150
Total	3,823		982		4,805		2,632		1,202		3,834
Total non-accrual loans	$	32,536	$	7,104	$	39,640	$	26,478	$	5,947	$	32,425



(In thousands) 2019	Commercial real estate		Commercial and industrial		Residential mortgages		Consumer		Total
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	19,192	$	9,167	$	3,019	$	630	$	32,008
Collectively evaluated	2,777,764		1,433,450		2,145,439		777,836		7,134,489
Total	$	2,796,956	$	1,442,617	$	2,148,458	$	778,466	$	7,166,497



(In thousands) 2018	Commercial real estate		Commercial and industrial		Residential mortgages		Consumer		Total
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	23,345	$	2,825	$	2,089	$	342	$	28,601
Collectively evaluated	2,565,366		1,510,713		2,325,209		936,855		7,338,143
Total	$	2,588,711	$	1,513,538	$	2,327,298	$	937,197	$	7,366,744



(In thousands) 2019	Commercial real estate		Commercial and industrial		Residential mortgages		Consumer		Total
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	4,241	$	464	$	372	$	575	$	5,652
Purchased credit-impaired loans	23,035		26,718		10,840		826		61,419
Collectively evaluated	1,210,037		370,709		525,802		162,312		2,268,860
Total	$	1,237,313	$	397,891	$	537,014	$	163,713	$	2,335,931



(In thousands) 2018	Commercial real estate		Commercial and industrial		Residential mortgages		Consumer		Total
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	3,980	$	763	$	362	$	646	$	5,751
Purchased credit-impaired loans	11,994		29,539		4,888		867		47,288
Collectively evaluated	795,536		436,206		233,876		157,852		1,623,470
Total	$	811,510	$	466,508	$	239,126	$	159,365	$	1,676,509



	At December 31, 2019
(In thousands)	Recorded Investment (1)		Unpaid Principal Balance (2)		Related Allowance
With no related allowance:
Other commercial real estate	$	18,676	$	37,493	$	—
Other commercial and industrial loans	4,805		10,104		—
Residential mortgages - 1-4 family	433		699		—
Consumer - home equity	32		238		—
With an allowance recorded:
Other commercial real estate	$	550	$	1,411	$	20
Other commercial and industrial loans	4,166		12,136		122
Residential mortgages - 1-4 family	2,615		2,924		109
Consumer - home equity	594		614		42
Consumer - other	8		8		1

Total
Commercial real estate	$	19,226	$	38,904	$	20
Commercial and industrial	8,971		22,240		122
Residential mortgages	3,048		3,623		109
Consumer	634		860		43
Total impaired loans	$	31,879	$	65,627	$	294

(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. These amounts are components of total loans and other assets on the Consolidated Balance Sheets.



	At December 31, 2018
(In thousands)	Recorded Investment (1)		Unpaid Principal Balance (2)		Related Allowance
With no related allowance:
Other commercial real estate	$	22,606	$	31,038	$	—
Other commercial and industrial loans	1,584		2,566		—
Residential mortgages - 1-4 family	443		441		—
Consumer - home equity	230		242		—
With an allowance recorded:
Other commercial real estate	$	666	$	670	$	9
Other commercial and industrial loans	1,251		1,235		49
Residential mortgages - 1-4 family	1,663		1,779		128
Consumer - home equity	100		106		10
Consumer - other	13		13		1

Total
Commercial real estate	$	23,272	$	31,708	$	9
Commercial and industrial	2,835		3,801		49
Residential mortgages	2,106		2,220		128
Consumer	343		361		11
Total impaired loans	$	28,556	$	38,090	$	197



	At December 31, 2019
(In thousands)	Recorded Investment (1)		Unpaid Principal Balance (2)		Related Allowance
With no related allowance:
Other commercial real estate loans	$	3,200	$	6,021	$	—
Other commercial and industrial loans	437		532		—
Residential mortgages - 1-4 family	292		293		—
Consumer - home equity	416		844		—
Consumer - other	—		—		—

With an allowance recorded:
Other commercial real estate loans	$	1,033	$	1,050	$	97
Other commercial and industrial loans	28		30		1
Residential mortgages - 1-4 family	84		110		8
Consumer - home equity	121		123		6
Consumer - other	39		37		6

Total
Commercial real estate	$	4,233	$	7,071	$	97
Commercial and industrial	465		562		1
Residential mortgages	376		403		8
Consumer	576		1,004		12
Total impaired loans	$	5,650	$	9,040	$	118



	December 31, 2018
(In thousands)	Recorded Investment (1)		Unpaid Principal Balance (2)		Related Allowance
With no related allowance:
Other commercial real estate loans	$	3,055	$	5,959	$	—
Other commercial and industrial loans	538		644		—
Residential mortgages - 1-4 family	271		324		—
Consumer - home equity	399		1,053		—
Consumer - other	—		11		—

With an allowance recorded:
Other commercial real estate loans	$	925	$	947	$	9
Other commercial and industrial loans	228		232		4
Residential mortgages - 1-4 family	94		117		36
Consumer - home equity	205		196		41
Consumer - other	43		40		7

Total
Commercial real estate	$	3,980	$	6,906	$	9
Commercial and industrial	766		876		4
Residential mortgages	365		441		36
Consumer	647		1,300		48
Total impaired loans	$	5,758	$	9,523	$	97



	December 31, 2019				December 31, 2018				December 31, 2017
(in thousands)	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
With no related allowance:
Other commercial real estate	$	19,805	$	586	$	24,078	$	373	$	21,208	$	1,337
Other commercial and industrial	3,165		523		914		245		4,437		265
Residential mortgages - 1-4 family	185		17		428		20		1,128		31
Consumer-home equity	148		3		107		10		1,291		30
Consumer-other	—		—		—		—		72		3

With an allowance recorded:
Other commercial real estate	$	374	$	107	$	555	$	30	$	11,541	$	532
Other commercial and industrial	2,533		793		1,259		139		3,251		267
Residential mortgages - 1-4 family	2,427		150		1,407		75		1,289		59
Consumer-home equity	349		32		98		6		1,007		29
Consumer - other	11		1		15		1		4		1

Total
Commercial real estate	$	20,179	$	693	$	24,633	$	403	$	32,790	$	1,872
Commercial and industrial	5,698		1,316		2,173		384		7,688		532
Residential mortgages	2,612		167		1,835		95		2,417		90
Consumer loans	508		36		220		17		2,374		63
Total impaired loans	$	28,997	$	2,212	$	28,861	$	899	$	45,269	$	2,557



	December 31, 2019				December 31, 2018				December 31, 2017
(in thousands)	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
With no related allowance:
Other commercial real estate	$	1,603	$	117	$	3,280	$	263	$	829	$	321
Other commercial and industrial	441		51		428		68		581		43
Residential mortgages - 1-4 family	241		11		290		9		390		28
Consumer - home equity	475		23		635		4		773		22
Consumer - other	—		—		13		1		7		1

With an allowance recorded:
Other commercial real estate	$	1,005	$	59	$	950	$	53	$	2,622	$	138
Other commercial and industrial	29		2		197		41		47		13
Residential mortgages - 1-4 family	88		7		26		9		173		9
Consumer - home equity	68		6		89		12		400		21
Consumer - other	41		2		11		3		—		—

Total
Commercial real estate	$	2,608	$	176	$	4,230	$	316	$	3,451	$	459
Commercial and industrial	470		53		625		109		628		56
Residential mortgages	329		18		316		18		563		37
Consumer loans	584		31		748		20		1,180		44
Total impaired loans	$	3,991	$	278	$	5,919	$	463	$	5,822	$	596

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, 2019, 2018, and 2017 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 years-ended December 31, 2019, 2018, and 2017 were attributable to interest rate concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity.



	Modifications by Class For the twelve months ending December 31, 2019
	Number of Modifications	Pre-Modification Outstanding Recorded Investment (In thousands)		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Other commercial real estate	3	$	420	$	420
Other commercial and industrial loans	6	1,434		1,434
Residential mortgages - 1-4 family	2	98		98
Consumer - home equity	2	111		111
	13	$	2,063	$	2,063



	Modifications by Class For the twelve months ending December 31, 2018
	Number of Modifications	Pre-Modification Outstanding Recorded Investment (In thousands)		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Other commercial real estate	5	$	2,061	$	2,061
Other commercial and industrial loans	1	43		43
Residential mortgages - 1-4 family	4	581		581
Consumer - home equity	—	—		—
	10	$	2,685	$	2,685



	Modifications by Class For the twelve months ending December 31, 2017
	Number of Modifications	Pre-Modification Outstanding Recorded Investment (In thousands)		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Other commercial real estate	16	$	13,680	$	11,953
Other commercial and industrial loans	12	3,507		3,507
Residential mortgages - 1-4 family	4	331		314
Consumer - home equity	3	122		122
	35	$	17,640	$	15,896

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 year ended 2019, there was one loan that was restructured that had subsequently defaulted during the period. For the period ended 2018, there were no loans that were restructured that had subsequently defaulted during the period. For the year ended 2017, there were three loans that were restructured that had subsequently defaulted during the period.



	Modifications that subsequently defaulted for the twelve months ending December 31, 2017
	Number of Contracts	Recorded Investment
Troubled Debt Restructurings
Other commercial real estate	1	$	113
Other commercial and industrial loans	2	492
Residential mortgages - 1-4 family	—	—
	3	$	605



(In thousands)	2019			2018			2017
Balance at beginning of year	$	27,415		$	41,990		$	33,829
Principal payments	(6,086		)	(8,547		)	(3,213		)
TDR status change (1)	—			—			—
Other reductions (2)	(4,076		)	(8,713		)	(4,522		)
Newly identified TDRs	2,063			2,685			15,896
Balance at end of year	$	19,316		$	27,415		$	41,990

(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.

As of December 31, 2019 and 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 December 31, 2019 and December 31, 2018 totaled $6.5 million and $3.2 million, respectively, including sold loans serviced by the Company.