XML 27 R11.htm IDEA: XBRL DOCUMENT

Loans and Allowance for Credit Losses on Loans

12 Months Ended

Dec. 31, 2021

Loans and Allowance for Credit Losses on Loans

LOANS AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

The composition of the Company’s loan portfolio, excluding residential loans held for sale, was as follows for the dates indicated:


	December 31,
(In thousands)	2021		2020
Commercial Loans:
Commercial real estate - non-owner-occupied	$	1,178,185	$	1,097,975
Commercial real estate - owner-occupied	317,275		271,495
Commercial	363,695		381,494
SBA PPP	35,953		135,095

Total commercial loans	1,895,108		1,886,059
Retail Loans:
Residential real estate	1,306,447		1,054,798
Home equity	210,403		258,573
Consumer	19,516		20,392
Total retail loans	1,536,366		1,333,763
Total loans	$	3,431,474	$	3,219,822

The loan balances for each portfolio segment presented above are net of their respective net unamortized fair value mark discount on acquired loans and net unamortized loan origination costs for the dates indicated:


	December 31,
(In thousands)	2021		2020
Net unamortized fair value mark discount on acquired loans	$	(593)	$	(1,291)
Net unamortized loan origination costs(1)	3,110		856
Total	$	2,517	$	(435)

(1) Net unamortized loan origination costs includes unrecognized origination fees for SBA PPP loans of $1.2 million and $2.2 million as of December 31, 2021 and 2020, respectively.

The Company's lending activities are primarily conducted in Maine, but also include loan production offices in Massachusetts and New Hampshire. The Company originates single- and multi-family residential loans, commercial real estate loans, business loans, municipal loans and a variety of consumer loans. In addition, the Company makes loans for the construction of residential homes, multi-family properties and commercial real estate properties. The ability and willingness of borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the geographic area and the general economy.

SBA PPP Loans. Beginning in April 2020, the Company originated SBA PPP loans to qualifying businesses as part of the federal stimulus packages issued due to the COVID-19 pandemic. This program provided qualifying businesses a specialized low interest rate loan by the U.S. Treasury Department and was administered by the SBA. The SBA PPP loan provided borrower guarantees for lenders, as well as loan forgiveness incentives for borrowers that utilized the loan proceeds to cover employee compensation-related business operating costs, as well as certain other costs up to pre-established limits. Effective May 31, 2021, the SBA PPP loan program ended and the Company is no longer originating loans under the program.

For the year ended December 31, 2021, the Company originated 1,620 SBA PPP loans totaling $102.2 million to qualifying businesses across our markets in need of financial support due to the COVID-19 pandemic. Of these SBA PPP loans originated during the year ended December 31, 2021, 379 loans totaling $35.6 million remain outstanding as of December 31, 2021.

For the year ended December 31, 2020, the Company originated 3,034 SBA PPP loans totaling $244.8 million. Of these SBA PPP loans originated during the year ended December 31, 2020, 37 loans totaling $319,000 remain outstanding as of December 31, 2021.

Related Party Loans. In the normal course of business, the Company makes loans to certain officers, directors and their associated companies, under terms that are consistent with the Company’s lending policies and regulatory requirements and do not involve more than the normal risk of collectability or present other unfavorable features. At December 31, 2021 and 2020, outstanding loans to certain officers, directors and their associated companies were less than 5% of the Company's shareholders' equity.

ACL on Loans

The Company manages its loan portfolio proactively to effectively identify problem credits and assess trends early, implement effective work-out strategies, and take charge-offs as promptly as practical. In addition, the Company continuously reassesses its underwriting standards in response to credit risk posed by changes in economic conditions. The Company monitors and manages credit risk through the following governance structure:

•The Credit Risk and Special Assets team and the Credit Risk Policy Committee, which is an internal management committee comprised of various executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Credit Risk and Special Assets, Compliance, and Commercial and Retail Banking, oversee the Company's systems and procedures to monitor the credit quality of its loan portfolio, conduct a loan review program, and maintain the integrity of the loan rating system.

•The adequacy of the ACL is overseen by the Management Provision Committee, which is an internal management committee comprised of various Company executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Credit Risk and Special Assets, Compliance, and Commercial and Retail Banking. The Management Provision Committee supports the oversight efforts of the Audit Committee of the Board of Directors.

•The Directors' Credit Committee of the Board of Directors reviews large credit exposures, monitors external loan review reports, reviews the lending authority for individual loan officers when required, and has approval authority and responsibility for all matters regarding the loan policy and other credit-related policies, including reviewing and monitoring asset quality trends, and concentration levels.

•The Audit Committee of the Board of Directors has approval authority and oversight responsibility for the ACL adequacy and methodology.

Segmentation. For purposes of determining the ACL on loans, the Company disaggregates its loans into portfolio segments. Each portfolio segment possesses unique risk characteristics that are considered when determining the appropriate level of allowance. As of December 31, 2021 and 2020, the Company's loan portfolio segments, as determined based on the unique risk characteristics of each, included the following:

Commercial Real Estate - Non-Owner-Occupied. Non-owner occupied commercial real estate loans are, in substance, all commercial real estate loans that are not categorized by the Company as owner-occupied commercial real estate loans. Non owner-occupied commercial estate loans are investment properties in which the primary source for repayment of the loan by the borrower is derived from rental income associated with the property or the proceeds of the sale, refinancing, or permanent refinancing of the property. Non-owner-occupied commercial real estate loans consist of mortgage loans to finance investments in real property that may include, but are not limited to, multi-family residential, commercial/retail office space, industrial/warehouse space, hotels, assisted living facilities and other specific use properties. Also included within the non-owner-occupied commercial real estate loan segment are construction projects until they are completed. Commercial real estate loans are typically written with amortizing payment structures. Collateral values are determined based upon appraisals and evaluations in accordance with established policy guidelines. Maximum loan-to-value ratios at origination are governed by established policy and regulatory guidelines.

Commercial Real Estate - Owner-Occupied. Generally, owner-occupied commercial real estate loans are properties that are owned and operated by the borrower, and the primary source for repayment is the cash flow from the ongoing operations and activities conducted by the borrower's business. Owner-occupied commercial real estate loans consist of mortgage loans to finance investments in real property that may include, but are not limited to, commercial/retail office space, restaurants, educational and medical practice facilities and other specific use properties. Commercial real estate loans are typically written with amortizing payment structures. Collateral values are determined based upon appraisals and evaluations in accordance with established policy guidelines. Maximum loan-to-value ratios at origination are governed by established policy and regulatory guidelines.

Commercial. Commercial loans consist of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to, accounts receivable, inventory, plant and equipment, and/or real estate, if applicable. Commercial loans are primarily paid by the operating cash flow of the borrower. Commercial loans may be secured or unsecured.

SBA PPP. SBA PPP loans are unsecured, fully-guaranteed commercial loans backed by the SBA, issued to qualifying small businesses as part of federal stimulus issued in response to the COVID-19 pandemic. Loans made under the program have terms of two or five years and are to be used by the borrower to offset certain payroll and other operating costs, such as rent and utilities. The loan and accrued interest, or a portion thereof, is eligible for forgiveness by the SBA should the qualifying small business meet certain conditions. These loans were originated under the guidance of the SBA, which has been subject to change. Effective May 31, 2021, the SBA PPP loan program ended and the Company is no longer originating loans under this program.

Residential Real Estate. Residential real estate loans held in the Company's loan portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan-to-value ratios within established policy guidelines. Collateral consists of mortgage liens on one- to four-family residences, including for investment purposes.

Home Equity. Home equity loans and lines of credit are made to qualified individuals and are secured by senior or junior mortgage liens on owner-occupied one- to four-family homes, condominiums, or vacation homes. The home equity loan has a fixed rate and is billed as equal payments comprised of principal and interest. The home equity line of credit has a variable rate and is billed as interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is

billed as a percentage of the principal balance plus all accrued interest. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan-to-value ratios within established policy guidelines.

Consumer. Consumer loan products including personal lines of credit and amortizing loans made to qualified individuals for various purposes such as education, auto loans, debt consolidation, personal expenses or overdraft protection. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines, as applicable. Consumer loans may be secured or unsecured.

ACL on Loans. The following table presents the activity in the ACL on loans, as reported under CECL, for the periods indicated:


	Commercial Real Estate
(In thousands)	Non-Owner-Occupied		Owner- Occupied		Commercial		SBA PPP		Residential Real Estate		Home Equity		Consumer		Total
At or For the Year Ended December 31, 2021
Beginning balance, December 31, 2020	$	21,778	$	2,832	$	6,703	$	69	$	3,474	$	2,616	$	393	$	37,865
Loans charged off	—		—		(799)		—		(92)		(162)		(111)		(1,164)
Recoveries	—		9		220		—		107		4		32		372
(Credit ) provision for loan losses	(2,944)		(302)		(1,941)		(50)		2,644		(989)		(235)		(3,817)
Ending balance, December 31, 2021	$	18,834	$	2,539	$	4,183	$	19	$	6,133	$	1,469	$	79	$	33,256
At or For the Year Ended December 31, 2020
Beginning balance, December 31, 2019	$	10,924	$	1,490	$	3,985	$	—	$	5,842	$	2,423	$	507	$	25,171
Impact of adopting CECL(1)	(668)		(90)		1,548		—		(1,129)		792		(220)		233
Loans charged off	(82)		(21)		(1,130)		—		(121)		(317)		(167)		(1,838)
Recoveries	107		13		572		—		292		33		67		1,084
Provision (credit) for loan losses	11,497		1,440		1,728		69		(1,410)		(315)		206		13,215
Ending balance, December 31, 2020	$	21,778	$	2,832	$	6,703	$	69	$	3,474	$	2,616	$	393	$	37,865

(1) Effective January 1, 2020, the Company adopted ASU 2016-13, commonly referred to as “CECL.” Refer to Note 1 for further details.

In the fourth quarter of 2021, the Company completed its annual reassessment of significant model inputs and assumptions within its discounted cash flow analysis used for estimating its ACL on loans as of December 31, 2021. The significant changes in methodology between periods included:

•As of December 31, 2021, the ACL on loans for the residential real estate, consumer and home equity loan segments was calculated using externally-sourced data for determining the LGD. Previously, internally-sourced data was used to derive the LGD for these segments as of December 31, 2020.

•As of December 31, 2021, the macroeconomic loss drivers used for the commercial real estate – non-owner-occupied segment were Maine Unemployment and the change in Maine GDP, compared to Maine Unemployment and the change in Maine Retail Trade Earnings as of December 31, 2020.

The ACL on loans at December 31, 2021, was $33.3 million, a decrease of $4.6 million, or 12%, since December 31, 2020. As of December 31, 2021 and 2020, the significant model inputs and assumptions used within the discounted cash flow model for purposes of estimating the ACL on loans were:

•Macroeconomic (loss) drivers: As of December 31, 2021, the following loss drivers for each loan segment were used to calculate the expected PD over the forecast and reversion period: (i) commercial real estate – non-owner-occupied used Maine Unemployment and change in Maine GDP; (ii) commercial real estate – owner-occupied used Maine Unemployment and change in Maine GDP, (iii) commercial used Maine Unemployment and change in National GDP; (iv) residential real estate used Maine Unemployment and change in Maine House Price Index, (v) home equity used

Maine Unemployment and change in Maine House Price Index and (vi) consumer used Maine Unemployment and change in National GDP.

As of December 31, 2020, the following loss drivers for each loan segment were used to calculate the expected PD over the forecast and reversion period: (i) commercial real estate – non-owner-occupied used Maine Unemployment and change in Maine Retail Trade Earnings; (ii) commercial real estate – owner-occupied used Maine Unemployment and change in Maine GDP, (iii) commercial used Maine Unemployment and change in National GDP; (iv) residential real estate used Maine Unemployment and change in Maine House Price Index, (v) home equity used Maine Unemployment and change in Maine House Price Index and (vi) consumer used Maine Unemployment and change in National GDP.

Though the SBA PPP loans are fully guaranteed by the SBA, the Company applied an insignificant expected credit loss factor to its SBA PPP loan segment based on its past historical experience with similar loans and guarantees as of December 31, 2021 and 2020.

•Reasonable and Supportable Forecast Period: As of December 31, 2021 and 2020, the ACL on loans estimate used a reasonable and supportable forecast period of one year.

•Reversion Period: As of December 31, 2021 and 2020, the ACL on loans estimate used a reversion period of one year.

•Prepayment Speeds: The estimate of prepayment speed for each loan segment continued to be derived used internally-sourced prepayment data as of December 31, 2021 and 2020.

•Qualitative Factors: As of December 31, 2021 and 2020, the ACL on loans estimate incorporated various qualitative factors into the calculation.

The ACL on loans at December 31, 2021, was $33.3 million, compared to $37.9 million at December 31, 2020. The decrease across each loan segment, with the exception of the residential real estate, was driven by the vast improvement of forecasted economic conditions between periods. The forecast across the Company's macroeconomic loss drivers were bearish as of December 31, 2020 as markets were uncertain of the impact of the COVID-19 pandemic on the broader economy and an elevated risk of credit losses within the Company's portfolio persisted. As the broader economy and markets improved through 2021, the Company's forecasted economic conditions improved and the assumed PD and LGD with its discounted cash flow model decreased, which resulted in a decrease in the required allowance for each segment. The increase in the allowance for the residential real estate loan segment was driven by the aforementioned LGD methodology change for this segment.

The following table presents activity in the allowance for loan losses and select loan information by portfolio segment, under the incurred loss methodology, for the period indicated:


(In thousands)	Commercial Real Estate		Commercial		Residential Real Estate		Home Equity		Consumer		Total
At or For the Year Ended December 31, 2019:
Allowance:
Beginning balance	$	11,654	$	3,957	$	6,071	$	2,796	$	234	$	24,712
Loans charged off	(300)		(1,238)		(462)		(412)		(301)		(2,713)
Recoveries	49		225		16		1		19		310
Provision for loan losses	1,011		1,041		217		38		555		2,862
Ending balance	$	12,414	$	3,985	$	5,842	$	2,423	$	507	$	25,171
Allowance balance attributable loans:
Individually evaluated for impairment	$	30	$	—	$	364	$	69	$	—	$	463
Collectively evaluated for impairment	12,384		3,985		5,478		2,354		507		24,708
Total ending allowance	$	12,414	$	3,985	$	5,842	$	2,423	$	507	$	25,171
Loans:
Individually evaluated for impairment	$	402	$	319	$	3,384	$	373	$	—	$	4,478
Collectively evaluated for impairment	1,242,995		442,382		1,066,990		312,406		25,772		3,090,545
Total loan balances	$	1,243,397	$	442,701	$	1,070,374	$	312,779	$	25,772	$	3,095,023

Credit Concentrations. The Company focuses on maintaining a well-balanced and diversified loan portfolio. Despite such efforts, it is recognized that credit concentrations may occasionally emerge as a result of economic conditions, changes in local demand, natural loan growth and runoff. To identify credit concentrations effectively, all commercial and commercial real

estate loans are assigned Standard Industrial Classification codes, North American Industry Classification System codes, and state and county codes. Shifts in portfolio concentrations are monitored. As of December 31, 2021, the Company's total exposure to the lessors of nonresidential buildings' industry was 14% of total loans and 32% of total commercial real estate loans. There were no other industry concentrations exceeding 10% of the Company's total loan portfolio as of December 31, 2021.

COVID-19 Loan Deferral Program. In response to the COVID-19 pandemic, the Company worked with businesses and consumers through the year ended 2020 to provide temporary debt payment relief that generally provided principal and/or interest payment deferrals for a period of 180 days or less. At December 31, 2021, the Company did not have any loans operating under temporary short-term payment deferral arrangements due to being impacted by the COVID-19 pandemic, compared to $26.5 million at December 31, 2020. The majority of these loans have returned to normal payment status or have since been fully repaid. Of those loans that were previously operating under a short-term deferral arrangement, $1.2 million and $1.0 million were classified as non-accrual and $410,000 and $310,000 were 30-89 days past due as of December 31, 2021 and 2020, respectively.

Credit Quality Indicators. To further identify loans with similar risk profiles, the Company categorizes each portfolio segment into classes by credit risk characteristic and applies a credit quality indicator to each portfolio segment. The indicators for commercial real estate - non-owner-occupied and owner-occupied, commercial and residential real estate portfolio segments are represented by Grades 1 through 10 as outlined below. In general, risk ratings are adjusted periodically throughout the year as updated analysis and review warrants. This process may include, but is not limited to, annual credit and loan reviews, periodic reviews of loan performance metrics, such as delinquency rates, and quarterly reviews of adversely risk rated loans. The Company uses the following definitions when assessing grades for the purpose of evaluating the risk and adequacy of the ACL on loans:

•Grade 1 through 6 — Grades 1 through 6 represent groups of loans that are not subject to adverse criticism as defined in regulatory guidance. Loans in these groups exhibit characteristics that represent low to moderate risks, which is measured using a variety of credit risk criteria, such as cash flow coverage, debt service coverage, balance sheet leverage, liquidity, management experience, industry position, prevailing economic conditions, support from secondary sources of repayment and other credit factors that may be relevant to a specific loan. In general, these loans are supported by properly margined collateral and guarantees of principal parties.

•Grade 7 — Loans with potential weakness (Special Mention). Loans in this category are currently protected based on collateral and repayment capacity and do not constitute undesirable credit risk, but have potential weakness that may result in deterioration of the repayment process at some future date. This classification is used if a negative trend is evident in the obligor’s financial situation. Special mention loans do not sufficiently expose the Company to warrant adverse classification.

•Grade 8 — Loans with definite weakness (Substandard). Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or by collateral pledged. Borrowers experience difficulty in meeting debt repayment requirements. Deterioration is sufficient to cause the Company to look to the sale of collateral.

•Grade 9 — Loans with potential loss (Doubtful). Loans classified as doubtful have all the weaknesses inherent in the substandard grade with the added characteristic that the weaknesses make collection or liquidation of the loan in full highly questionable and improbable. The possibility of some loss is extremely high, but because of specific pending factors that may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined.

•Grade 10 — Loans with definite loss (Loss). Loans classified as loss are considered uncollectible. The loss classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the asset because recovery and collection time may be protracted.

The Company periodically reassesses asset quality indicators to reflect appropriately the risk composition of the Company’s loan portfolio. Home equity and consumer loans are not individually risk rated, but rather analyzed as groups taking into account delinquency rates and other economic conditions which may affect the ability of borrowers to meet debt service requirements, including interest rates and energy costs. Performing loans include loans that are current and loans that are past due less than 90 days. Loans that are past due over 90 days and non-accrual loans, including TDRs, are considered non-performing.

Based on the most recent analysis performed, the risk category of loans by portfolio segment by vintage, reported under the CECL methodology, was as follows as of the periods indicated:


(In thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of December 31, 2021
Commercial real estate - non-owner-occupied
Risk rating
Pass (Grades 1-6)	$	286,428	$	179,565	$	161,695	$	118,196	$	96,169	$	274,731	$	—	$	—	$	1,116,784
Special mention (Grade 7)	171		7,266		286		119		4,294		10,590		—		—		22,726
Substandard (Grade 8)	350		1,518		217		9,942		391		26,257		—		—		38,675
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total commercial real estate - non-owner-occupied	286,949		188,349		162,198		128,257		100,854		311,578		—		—		1,178,185
Commercial real estate - owner-occupied
Risk rating
Pass (Grades 1-6)	91,328		39,082		31,409		43,786		46,466		56,682		—		—		308,753
Special mention (Grade 7)			—		—		3,396		362		1,708		—		—		5,466
Substandard (Grade 8)	—		—		54		—		1,785		1,217		—		—		3,056
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total commercial real estate - owner-occupied	91,328		39,082		31,463		47,182		48,613		59,607		—		—		317,275
Commercial
Risk rating
Pass (Grades 1-6)	91,102		43,757		44,925		23,895		13,818		27,743		80,775		31,586		357,601
Special mention (Grade 7)	145		117		590		115		383		222		967		244		2,783
Substandard (Grade 8)	—		339		320		492		293		1,209		360		298		3,311
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total commercial	91,247		44,213		45,835		24,502		14,494		29,174		82,102		32,128		363,695
SBA PPP
Risk rating
Pass (Grades 1-6)	35,164		319		—		—		—		—		—		—		35,483
Special mention (Grade 7)	470		—		—		—		—		—		—		—		470
Substandard (Grade 8)	—		—		—		—		—		—		—		—		—
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total SBA PPP	35,634		319		—		—		—		—		—		—		35,953
Residential Real Estate
Risk rating
Pass (Grades 1-6)	586,637		281,804		103,228		63,403		46,696		219,983		903		—		1,302,654
Special mention (Grade 7)	—		—		—		—		—		230		—		—		230
Substandard (Grade 8)	—		—		—		—		—		3,563		—		—		3,563
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total residential real estate	586,637		281,804		103,228		63,403		46,696		223,776		903		—		1,306,447
Home equity
Risk rating
Performing	760		554		6,179		10,995		2,464		10,792		165,189		12,295		209,228
Non-performing	—		—		—		41		—		174		847		113		1,175
Total home equity	760		554		6,179		11,036		2,464		10,966		166,036		12,408		210,403
Consumer
Risk rating
Performing	6,860		3,523		3,089		1,051		548		2,014		2,399		—		19,484
Non-performing	—		9		21		—		—		2		—		—		32
Total consumer	6,860		3,532		3,110		1,051		548		2,016		2,399		—		19,516
Total Loans	$	1,099,415	$	557,853	$	352,013	$	275,431	$	213,669	$	637,117	$	251,440	$	44,536	$	3,431,474


(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of December 31, 2020
Commercial real estate - non-owner-occupied
Risk rating
Pass (Grades 1-6)	$	138,010	$	224,148	$	144,552	$	119,409	$	157,588	$	264,253	$	—	$	—	$	1,047,960
Special mention (Grade 7)	5,739		—		—		4,256		3,497		847		—		—		14,339
Substandard (Grade 8)	24		125		2,070		405		1,522		31,530		—		—		35,676
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total commercial real estate - non-owner-occupied	143,773		224,273		146,622		124,070		162,607		296,630		—		—		1,097,975
Commercial real estate - owner-occupied
Risk rating
Pass (Grades 1-6)	35,948		29,217		48,312		47,065		25,507		76,098		—		—		262,147
Special mention (Grade 7)	—		—		4,584		—		—		1,513		—		—		6,097
Substandard (Grade 8)	—		—		891		462		—		1,898		—		—		3,251
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total commercial real estate - owner-occupied	35,948		29,217		53,787		47,527		25,507		79,509		—		—		271,495
Commercial
Risk rating
Pass (Grades 1-6)	53,966		72,863		40,688		25,478		15,788		51,869		72,425		37,026		370,103
Special mention (Grade 7)	—		22		313		4,924		117		400		—		867		6,643
Substandard (Grade 8)	187		1,012		211		51		42		2,081		65		1,099		4,748
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total commercial	54,153		73,897		41,212		30,453		15,947		54,350		72,490		38,992		381,494
SBA PPP
Risk rating
Pass (Grades 1-6)	135,095		—		—		—		—		—		—		—		135,095
Special mention (Grade 7)	—		—		—		—		—		—		—		—		—
Substandard (Grade 8)	—		—		—		—		—		—		—		—		—
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total SBA PPP	135,095		—		—		—		—		—		—		—		135,095
Residential Real Estate
Risk rating
Pass (Grades 1-6)	339,834		183,877		119,426		79,159		57,269		266,324		3,028		—		1,048,917
Special mention (Grade 7)	—		—		—		—		—		398		—		—		398
Substandard (Grade 8)	—		—		176		487		—		4,820		—		—		5,483
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total residential real estate	339,834		183,877		119,602		79,646		57,269		271,542		3,028		—		1,054,798
Home equity
Risk rating
Performing	855		9,415		17,281		3,478		1,339		17,664		194,065		12,480		256,577
Non-performing	—		—		—		—		—		207		1,241		548		1,996
Total home equity	855		9,415		17,281		3,478		1,339		17,871		195,306		13,028		258,573
Consumer
Risk rating
Performing	6,572		6,525		3,096		1,359		378		1,780		678		—		20,388
Non-performing	—		—		—		—		4		—		—		—		4
Total consumer	6,572		6,525		3,096		1,359		382		1,780		678		—		20,392
Total Loans	$	716,230	$	527,204	$	381,600	$	286,533	$	263,051	$	721,682	$	271,502	$	52,020	$	3,219,822

Past Due and Non-Accrual Loans. The Company closely monitors the performance of its loan portfolio. A loan is placed on non-accrual status when the financial condition of the borrower is deteriorating, payment in full of both principal and interest is not expected as scheduled or principal or interest has been in default for 90 days or more. Exceptions may be made if the asset is secured by collateral sufficient to satisfy both the principal and accrued interest in full and collection is reasonably assured. When one loan to a borrower is placed on non-accrual status, all other loans to the borrower are re-evaluated to determine if they should also be placed on non-accrual status. All previously accrued and unpaid interest is reversed at this time. A loan will return to accrual status when collection of principal and interest is assured and the borrower has demonstrated timely payments of principal and interest for a reasonable period, generally at least six months. Unsecured loans, however, are not normally placed on non-accrual status because they are charged-off once their collectability is in doubt.

All loans that were granted temporary payment relief during the years end December 31, 2021 and 2020 due to the COVID-19 pandemic were current with payments in accordance with the terms of the CARES Act (or Consolidated Appropriations Act of 2021) and bank regulatory guidance at the time of initial relief. As of December 31, 2021, all loans that were granted temporary debt relief and had outstanding principal balances have returned to regular payment status. As of December 31, 2020, the payment status for loans that continued to operate under a payment deferral arrangement were reported based on payment status at the time the deferral was granted to the borrower.

The following is a loan aging analysis by portfolio segment (including loans past due over 90 days and non-accrual loans) and loans past due over 90 days and accruing as of the following dates:


(In thousands)	30 – 59 Days Past Due		60 – 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans Outstanding		Loans > 90 Days Past Due and Accruing
December 31, 2021:
Commercial real estate - non-owner-occupied	$	—	$	—	$	51	$	51	$	1,178,134	$	1,178,185	$	—
Commercial real estate - owner-occupied	47		—		133		180		$	317,095	317,275		—
Commercial	282		174		787		1,243		$	362,452	363,695		—
SBA PPP	—		68		—		68		$	35,885	35,953		—
Residential real estate	379		475		1,210		2,064		$	1,304,383	1,306,447		—
Home equity	456		50		445		951		$	209,452	210,403		—
Consumer	95		1		32		128		19,388		19,516		—
Total	$	1,259	$	768	$	2,658	$	4,685	$	3,426,789	$	3,431,474	$	—
December 31, 2020:
Commercial real estate - non-owner-occupied	$	—	$	50	$	173	$	223	$	1,097,752	$	1,097,975	$	—
Commercial real estate - owner-occupied	99		—		47		146		271,349		271,495		—
Commercial	430		—		857		1,287		380,207		381,494		—
SBA PPP	—		—		—		—		135,095		135,095		—
Residential real estate	1,406		1,103		2,535		5,044		1,049,754		1,054,798		—
Home equity	335		173		1,416		1,924		256,649		258,573		—
Consumer	92		67		4		163		20,229		20,392		—
Total	$	2,362	$	1,393	$	5,032	$	8,787	$	3,211,035	$	3,219,822	$	—

The following table presents the amortized cost basis of loans on non-accrual status (including non-accruing TDRs) by portfolio segment as of the dates indicated:


	December 31,
	2021						2020
(In thousands)	Non-Accrual Loans With an Allowance		Non-Accrual Loans Without an Allowance		Total Non-Accrual Loans		Non-Accrual Loans With an Allowance		Non-Accrual Loans Without an Allowance		Total Non-Accrual Loans
Commercial real estate - non-owner-occupied	$	38	$	13	$	51	$	351	$	15	$	366
Commercial real estate - owner-occupied	86		47		133		99		47		146
Commercial	785		44		829		1,549		58		1,607
Residential real estate	1,780		327		2,107		3,136		341		3,477
Home equity	1,064		111		1,175		1,961		35		1,996
Consumer	32		—		32		4		—		4
Total	$	3,785	$	542	$	4,327	$	7,100	$	496	$	7,596

The following table presents the amortized cost basis of collateral-dependent non-accrual loans (including non-accruing TDRs) by portfolio segment and collateral type, as of the date indicated:


	December 31, 2021						December 31, 2020
	Collateral Type				Total Collateral -Dependent Non-Accrual Loans		Collateral Type				Total Collateral -Dependent Non-Accrual Loans
(In thousands)	Real Estate		General Business Assets				Real Estate		General Business Assets


Commercial	$	—	$	—	$	—	$	—	$	689	$	689
Residential real estate	268		—		268		248		—		248
Home equity	111		—		111		—		—		—
Total	$	379	$	—	$	379	$	248	$	689	$	937

Collateral-dependent loans are loans for which the repayment is expected to be provided substantially by the underlying collateral and there are no other available and reliable sources of repayment.

Interest income that would have been recognized if loans on non-accrual status had been current in accordance with their original terms for the years ended December 31, 2021, 2020, and 2019 is estimated to have been $256,000, $335,000, and $420,000, respectively.

The Company's policy is to reverse previously recorded interest income when a loan is placed on non-accrual, as such, the Company did not record any interest income on its non-accrual for the years ended December 31, 2021 and 2020. An immaterial amount of accrued interest on non-accrual loans was written-off during the years ended December 31, 2021, by reversing interest income. As of December 31, 2021 and 2020, total accrued interest receivable on loans, which has been excluded from reported amortized cost basis on loans, was $7.8 million and $10.2 million, respectively, and reported within other assets on the consolidated statements of condition. An allowance was not carried on the accrued interest receivable at either date.

TDRs. The Company takes a conservative approach with credit risk management and remains focused on community lending and reinvesting. The Company works closely with borrowers experiencing credit problems to assist in loan repayment or term modifications. TDR loans consist of loans where the Company, for economic or legal reasons related to the borrower’s financial difficulties, granted a concession to the borrower that it would not otherwise consider. TDRs, typically, involve term modifications or a reduction of either interest or principal. Once such an obligation has been restructured, it will remain a TDR until paid in full, or until the loan is again restructured at current market rates and no concessions are granted.

The specific reserve allowance was determined by discounting the total expected future cash flows from the borrower at the original loan interest rate or, if the loan is currently collateral-dependent, using net realizable value, which was obtained through

independent appraisals and internal evaluations. The following is a summary of TDRs, by portfolio segment, and the associated specific reserve included within the ACL for the dates indicated:


	Number of Contracts		Recorded Investment				Specific Reserve
(In thousands, except number of contracts)	December 31,		December 31,				December 31,
	2021	2020	2021		2020		2021		2020
Commercial real estate - owner-occupied	1	2	$	118	$	328	$	43	$	37
Commercial	2	2	74		100		—		—
Residential real estate	19	21	2,341		2,638		348		364
Consumer and home equity	3	—	253		—		6		—
Total	25	25	$	2,786	$	3,066	$	397	$	401

At December 31, 2021, the Company had performing and non-performing TDRs with a recorded investment balance of $2.4 million and $394,000, respectively. At December 31, 2020, the Company had performing and non-performing TDRs with a recorded investment balance of $2.8 million and $248,000, respectively.

The following represents loan modifications that qualify as TDRs that occurred during the periods indicated:


	Number of Contracts			Pre-Modification Outstanding Recorded Investment						Post-Modification Outstanding Recorded Investment						Specific Reserve
(In thousands, except number of contracts)	For the Year Ended December 31,			For the Year Ended December 31,						For the Year Ended December 31,						For the Year Ended December 31,
	2021	2020	2019	2021		2020		2019		2021		2020		2019		2021		2020		2019
Home Equity


Interest rate concession and payment deferral	1	—		$	159	$	—			$	170	$	—			$	—	$	—
Maturity concession	2	—	—	187		—		—		187		—		—		6		—		—
Interest rate and maturity concession	—	—	2	—		—		64		—		—		69		—		—		15
Total	3	—	2	$	346	$	—	$	64	$	357	$	—	$	69	$	6	$	—	$	15

As of December 31, 2021, the Company did not have any other commitments to lend additional funds to borrowers with loans classified as TDRs.

For the year ended December 31, 2021, 2020 and 2019, no loans were modified as TDRs within the previous 12 months for which the borrower subsequently defaulted.

In-Process Foreclosure Proceedings

At December 31, 2021 and 2020, the Company had $888,000 and $1.5 million, respectively, of consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings were in process.