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LOANS AND ALLOWANCE FOR CREDIT LOSSES ON LOANS | 9 Months Ended
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Sep. 30, 2023
Loans and Leases Receivable Disclosure [Abstract] |
LOANS AND ALLOWANCE FOR LOAN LOSSES | LOANS AND ALLOWANCE FOR CREDIT LOSSES ON LOANS Loans The composition of the Company’s loan portfolio, excluding residential loans held for sale, was as follows for the dates indicated:
(In thousands) |  | September 30, 2023 |  | December 31, 2022
Commercial Loans: |  |  |  |
Commercial real estate - non-owner-occupied |  | $ | 1,349,463 |  |  | $ | 1,292,443 |
Commercial real estate - owner-occupied |  | 303,825 |  |  | 332,494 |
Commercial |  | 400,031 |  |  | 430,131 |
Total commercial loans |  | 2,053,319 |  |  | 2,055,068 |
Retail Loans: |  |  |  |
Residential real estate |  | 1,752,401 |  |  | 1,700,266 |
Home equity |  | 233,452 |  |  | 234,428 |
Consumer |  | 19,241 |  |  | 20,591 |
Total retail loans |  | 2,005,094 |  |  | 1,955,285 |
Total loans |  | $ | 4,058,413 |  |  | $ | 4,010,353 |
The loan balances for each portfolio segment presented above are net of their respective unamortized fair value mark discount on acquired loans and net of unamortized loan origination costs for the dates indicated:
(In thousands) |  | September 30, 2023 |  | December 31, 2022
Net unamortized loan origination costs |  | $ | 7,069 |  |  | $ | 6,890 |
Net unamortized fair value mark discount on acquired loans |  | (203) |  |  | (313) |
Total |  | $ | 6,866 |  |  | $ | 6,577 |
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 issued 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. SBA PPP loans 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 ceased originating loans under this program. At September 30, 2023 and December 31, 2022, four loans with a total principal balance of $425,000 and five loans with a total principal balance of $648,000, respectively, remained outstanding and were presented in commercial loans. Related Party Loans. In the normal course of business, the Bank 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 that do not involve more than the normal risk of collectability or present other unfavorable features. At September 30, 2023 and December 31, 2022, outstanding loans to certain officers, directors and their associated companies were less than 5% of the Company's shareholders' equity. Loan Sales For the three months ended September 30, 2023 and 2022, the Company sold $66.2 million and $37.9 million, respectively, of residential mortgage loans on the secondary market, which resulted in gains on the sale of loans (net of costs) of $429,000 and $783,000, respectively. For the nine months ended September 30, 2023 and 2022, the Company sold $137.2 million and $131.6 million, respectively, of residential mortgage loans on the secondary market, which resulted in gains on the sale of loans (net of costs) of $1.2 million and $2.9 million, respectively. At September 30, 2023 and December 31, 2022, the Company had certain residential mortgage loans with a principal balance of $11.3 million and $5.3 million, respectively, designated as held for sale. The Company has elected the fair value option of accounting for its loans held for sale, and at September 30, 2023 and December 31, 2022, recorded an unrealized loss of $112,000 and $62,000, respectively on residential mortgage loans held for sale. For the three months ended September 30, 2023 and 2022, the Company recorded an unrealized gain on residential mortgage loans held for sale recorded within mortgage banking income, net, on the Company's consolidated statements of income of $69,000 and $193,000, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded an unrealized gain on residential mortgage loans held for sale recorded within mortgage banking income, net, on the Company's consolidated statements of income of $49,000 and $262,000, respectively. The Company has forward delivery commitments with a secondary market investor on each of its residential mortgage loans held for sale at September 30, 2023 and December 31, 2022. Refer to Note 8 for further discussion of the Company's forward delivery commitments. 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 September 30, 2023 and December 31, 2022, the Company's loan portfolio segments, as determined based on the unique risk characteristics of each, include 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. Construction projects are also included within the non-owner-occupied commercial real estate loan segment until they are completed. Commercial real estate loans typically are 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 primarily are paid by the operating cash flow of the borrower. Commercial loans may be secured or unsecured. 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. Each home equity loan has a fixed rate and is billed as equal payments comprised of principal and interest. Each 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 include 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. The following table presents the activity in the ACL on loans for the periods indicated:
|  | Commercial Real Estate |  |  |  |  |  |  |  |  |  |
(In thousands) |  | Non-Owner-Occupied |  | Owner- Occupied |  | Commercial |  | Residential Real Estate |  | Home Equity |  | Consumer |  | Total
At or For The Three Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance, June 30, 2023 |  | $ | 16,155 |  |  | $ | 2,351 |  |  | $ | 4,795 |  |  | $ | 10,627 |  |  | $ | 2,397 |  |  | $ | 658 |  |  | $ | 36,983 |
Charge-offs |  | — |  |  | (58) |  |  | (255) |  |  | — |  |  | — |  |  | (32) |  |  | (345) |
Recoveries |  | 17 |  |  | — |  |  | 189 |  |  | 5 |  |  | 1 |  |  | 13 |  |  | 225 |
Provision (credit) for loan losses |  | 607 |  |  | (131) |  |  | (247) |  |  | (590) |  |  | (101) |  |  | 6 |  |  | (456) |
Ending balance, September 30, 2023 |  | $ | 16,779 |  |  | $ | 2,162 |  |  | $ | 4,482 |  |  | $ | 10,042 |  |  | $ | 2,297 |  |  | $ | 645 |  |  | $ | 36,407 |
At or For The Nine Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance, December 31, 2022 |  | $ | 17,296 |  |  | $ | 2,362 |  |  | $ | 5,446 |  |  | $ | 9,089 |  |  | $ | 2,225 |  |  | $ | 504 |  |  | $ | 36,922 |
Charge-offs |  | — |  |  | (58) |  |  | (1,101) |  |  | (18) |  |  | — |  |  | (63) |  |  | (1,240) |
Recoveries |  | 19 |  |  | — |  |  | 352 |  |  | 38 |  |  | 1 |  |  | 27 |  |  | 437 |
(Credit) provision for loan losses |  | (536) |  |  | (142) |  |  | (215) |  |  | 933 |  |  | 71 |  |  | 177 |  |  | 288 |
Ending balance, September 30, 2023 |  | $ | 16,779 |  |  | $ | 2,162 |  |  | $ | 4,482 |  |  | $ | 10,042 |  |  | $ | 2,297 |  |  | $ | 645 |  |  | $ | 36,407 |
At or For The Three Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance, June 30, 2022 |  | $ | 16,210 |  |  | $ | 2,501 |  |  | $ | 5,146 |  |  | $ | 8,438 |  |  | $ | 1,796 |  |  | $ | 153 |  |  | $ | 34,244 |
Charge-offs |  | — |  |  | — |  |  | (183) |  |  | (49) |  |  | — |  |  | (46) |  |  | (278) |
Recoveries |  | 1 |  |  | — |  |  | 61 |  |  | — |  |  | 1 |  |  | — |  |  | 63 |
Provision for loan losses |  | 922 |  |  | 146 |  |  | 192 |  |  | 696 |  |  | 63 |  |  | 494 |  |  | 2,513 |
Ending balance, September 30, 2022 |  | $ | 17,133 |  |  | $ | 2,647 |  |  | $ | 5,216 |  |  | $ | 9,085 |  |  | $ | 1,860 |  |  | $ | 601 |  |  | $ | 36,542 |
At or For The Nine Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance, December 31, 2021 |  | $ | 18,834 |  |  | $ | 2,539 |  |  | $ | 4,202 |  |  | $ | 6,133 |  |  | $ | 1,469 |  |  | $ | 79 |  |  | $ | 33,256 |
Charge-offs |  | — |  |  | — |  |  | (744) |  |  | (65) |  |  | — |  |  | (130) |  |  | (939) |
Recoveries |  | 2 |  |  | 2 |  |  | 341 |  |  | — |  |  | 87 |  |  | 5 |  |  | 437 |
(Credit) provision for loan losses |  | (1,703) |  |  | 106 |  |  | 1,417 |  |  | 3,017 |  |  | 304 |  |  | 647 |  |  | 3,788 |
Ending balance, September 30, 2022 |  | $ | 17,133 |  |  | $ | 2,647 |  |  | $ | 5,216 |  |  | $ | 9,085 |  |  | $ | 1,860 |  |  | $ | 601 |  |  | $ | 36,542 |
At or For The Year Ended December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance, December 31, 2021 |  | $ | 18,834 |  |  | $ | 2,539 |  |  | $ | 4,202 |  |  | $ | 6,133 |  |  | $ | 1,469 |  |  | $ | 79 |  |  | $ | 33,256 |
Charge-offs |  | — |  |  | — |  |  | (1,042) |  |  | (66) |  |  | — |  |  | (134) |  |  | (1,242) |
Recoveries |  | 3 |  |  | 2 |  |  | 379 |  |  | — |  |  | 87 |  |  | 7 |  |  | 478 |
(Credit) provision for loan losses |  | (1,541) |  |  | (179) |  |  | 1,907 |  |  | 3,022 |  |  | 669 |  |  | 552 |  |  | 4,430 |
Ending balance, December 31, 2022 |  | $ | 17,296 |  |  | $ | 2,362 |  |  | $ | 5,446 |  |  | $ | 9,089 |  |  | $ | 2,225 |  |  | $ | 504 |  |  | $ | 36,922 |
The ACL on loans decreased $515,000 during the nine months ended September 30, 2023, to $36.4 million. The net decrease over this period was primarily driven by: •An increase of $954,000 in the ACL on loans for the residential real estate loan portfolio, primarily due to the deterioration in the economic outlook primarily for the Maine unemployment forecast over the Company's forecast period, as compared to December 31, 2022, and 3% loan growth in this loan portfolio during the forecast period; and •A combined $1.5 million decrease in commercial and commercial real estate non-owner occupied ACL on loans, primarily due to the forecasted improvement in U.S. and Maine GDP over the Company's forecast period, as compared to December 31, 2022. Additionally, charge offs for the commercial loans for the first nine months of 2023 decreased the ACL $1.1 million primarily due to a few large commercial relationships charges off that were considered to be isolated and not part of a trend for higher charge offs. 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 September 30, 2023, the Company's total exposure to the lessors of nonresidential buildings' industry and lessors of residential buildings' industry were 13% and 12% of total loans and 33% and 28% of total commercial real estate loans, respectively. There were no other industry exposures exceeding 10% of the Company's total loan portfolio as of September 30, 2023. 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 prior to adoption of ASU 2022-02, are considered non-performing. Based on the most recent analysis performed, the risk category of loans by portfolio segment by vintage was as follows as of and for the dates indicated:
(In thousands) |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans Amortized Cost Basis |  | Revolving Loans Converted to Term |  | Total
As of and for the period ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate - non-owner-occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (Grades 1-6) |  | $ | 60,945 |  |  | $ | 356,211 |  |  | $ | 300,251 |  |  | $ | 149,663 |  |  | $ | 118,273 |  |  | $ | 341,183 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,326,526 |
Special mention (Grade 7) |  | 7,997 |  |  | — |  |  | — |  |  | 352 |  |  | 34 |  |  | 3,629 |  |  | — |  |  | — |  |  | 12,012 |
Substandard (Grade 8) |  | — |  |  | 176 |  |  | 116 |  |  | 2,183 |  |  | 115 |  |  | 8,335 |  |  | — |  |  | — |  |  | 10,925 |
Doubtful (Grade 9) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total commercial real estate - non-owner-occupied |  | $ | 68,942 |  |  | $ | 356,387 |  |  | $ | 300,367 |  |  | $ | 152,198 |  |  | $ | 118,422 |  |  | $ | 353,147 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,349,463 |
Gross charge-offs for the nine months ended |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Commercial real estate - owner-occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (Grades 1-6) |  | $ | 22,527 |  |  | $ | 55,097 |  |  | $ | 77,457 |  |  | $ | 25,120 |  |  | $ | 18,982 |  |  | $ | 95,828 |  |  | $ | — |  |  | $ | — |  |  | $ | 295,011 |
Special mention (Grade 7) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 142 |  |  | — |  |  | — |  |  | 142 |
Substandard (Grade 8) |  | — |  |  | — |  |  | 2,179 |  |  | — |  |  | — |  |  | 6,493 |  |  | — |  |  | — |  |  | 8,672 |
Doubtful (Grade 9) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total commercial real estate - owner occupied |  | $ | 22,527 |  |  | $ | 55,097 |  |  | $ | 79,636 |  |  | $ | 25,120 |  |  | $ | 18,982 |  |  | $ | 102,463 |  |  | $ | — |  |  | $ | — |  |  | $ | 303,825 |
Gross charge-offs for the nine months ended |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 58 |  |  | $ | — |  |  | $ | — |  |  | $ | 58 |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (Grades 1-6) |  | $ | 25,211 |  |  | $ | 57,843 |  |  | $ | 59,490 |  |  | $ | 26,000 |  |  | $ | 27,833 |  |  | $ | 40,535 |  |  | $ | 111,723 |  |  | $ | 41,471 |  |  | $ | 390,106 |
Special mention (Grade 7) |  | 47 |  |  | — |  |  | 166 |  |  | 205 |  |  | 1 |  |  | 105 |  |  | 2,181 |  |  | 871 |  |  | 3,576 |
Substandard (Grade 8) |  | 265 |  |  | 427 |  |  | 310 |  |  | 803 |  |  | 294 |  |  | 1,374 |  |  | 1,380 |  |  | 1,496 |  |  | 6,349 |
Doubtful (Grade 9) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total commercial |  | $ | 25,523 |  |  | $ | 58,270 |  |  | $ | 59,966 |  |  | $ | 27,008 |  |  | $ | 28,128 |  |  | $ | 42,014 |  |  | $ | 115,284 |  |  | $ | 43,838 |  |  | $ | 400,031 |
Gross charge-offs for the nine months ended |  | $ | — |  |  | $ | 68 |  |  | $ | 137 |  |  | $ | 23 |  |  | $ | 20 |  |  | $ | 725 |  |  | $ | 32 |  |  | $ | 96 |  |  | $ | 1,101 |
Residential Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (Grades 1-6) |  | $ | 119,925 |  |  | $ | 542,015 |  |  | $ | 552,802 |  |  | $ | 225,028 |  |  | $ | 73,467 |  |  | $ | 234,661 |  |  | $ | 361 |  |  | $ | 391 |  |  | $ | 1,748,650 |
Special mention (Grade 7) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Substandard (Grade 8) |  | — |  |  | — |  |  | 968 |  |  | — |  |  | 90 |  |  | 2,693 |  |  | — |  |  | — |  |  | 3,751 |
Doubtful (Grade 9) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total residential real estate |  | $ | 119,925 |  |  | $ | 542,015 |  |  | $ | 553,770 |  |  | $ | 225,028 |  |  | $ | 73,557 |  |  | $ | 237,354 |  |  | $ | 361 |  |  | $ | 391 |  |  | $ | 1,752,401 |
Gross charge-offs for the nine months ended |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 18 |  |  | $ | — |  |  | $ | — |  |  | $ | 18 |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 12,311 |  |  | $ | 23,740 |  |  | $ | 553 |  |  | $ | 329 |  |  | $ | 4,197 |  |  | $ | 13,442 |  |  | $ | 165,017 |  |  | $ | 13,230 |  |  | $ | 232,819 |
Non-performing |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 14 |  |  | 373 |  |  | 246 |  |  | 633 |
Total home equity |  | $ | 12,311 |  |  | $ | 23,740 |  |  | $ | 553 |  |  | $ | 329 |  |  | $ | 4,197 |  |  | $ | 13,456 |  |  | $ | 165,390 |  |  | $ | 13,476 |  |  | $ | 233,452 |
Gross charge-offs for the nine months ended |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 4,720 |  |  | $ | 5,671 |  |  | $ | 2,393 |  |  | $ | 986 |  |  | $ | 447 |  |  | $ | 2,433 |  |  | $ | 2,550 |  |  | $ | — |  |  | $ | 19,200 |
Non-performing |  | — |  |  | — |  |  | — |  |  | — |  |  | 7 |  |  | 34 |  |  | — |  |  | — |  |  | 41 |
Total consumer |  | $ | 4,720 |  |  | $ | 5,671 |  |  | $ | 2,393 |  |  | $ | 986 |  |  | $ | 454 |  |  | $ | 2,467 |  |  | $ | 2,550 |  |  | $ | — |  |  | $ | 19,241 |
Gross charge-offs for the nine months ended |  | $ | — |  |  | $ | 19 |  |  | $ | 21 |  |  | $ | 10 |  |  | $ | 2 |  |  | $ | 4 |  |  | $ | 7 |  |  | $ | — |  |  | $ | 63 |
(In thousands) |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | 2018 |  | Prior |  | Revolving Loans Amortized Cost Basis |  | Revolving Loans Converted to Term |  | Total
As of December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate - non-owner-occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (Grades 1-6) |  | $ | 339,171 |  |  | $ | 287,749 |  |  | $ | 160,621 |  |  | $ | 125,029 |  |  | $ | 108,823 |  |  | $ | 242,024 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,263,417 |
Special mention (Grade 7) |  | — |  |  | 167 |  |  | 364 |  |  | 259 |  |  | 75 |  |  | 321 |  |  | — |  |  | — |  |  | 1,186 |
Substandard (Grade 8) |  | — |  |  | 127 |  |  | 1,306 |  |  | 203 |  |  | 7,798 |  |  | 18,406 |  |  | — |  |  | — |  |  | 27,840 |
Doubtful (Grade 9) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total commercial real estate - non-owner-occupied |  | $ | 339,171 |  |  | $ | 288,043 |  |  | $ | 162,291 |  |  | $ | 125,491 |  |  | $ | 116,696 |  |  | $ | 260,751 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,292,443 |
Commercial real estate - owner-occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (Grades 1-6) |  | $ | 60,127 |  |  | $ | 80,781 |  |  | $ | 28,378 |  |  | $ | 23,381 |  |  | $ | 39,554 |  |  | $ | 70,568 |  |  | $ | — |  |  | $ | — |  |  | $ | 302,789 |
Special mention (Grade 7) |  | — |  |  | 2,053 |  |  | — |  |  | 19,992 |  |  | — |  |  | 411 |  |  | — |  |  | — |  |  | 22,456 |
Substandard (Grade 8) |  | 17 |  |  | — |  |  | — |  |  | — |  |  | 3,266 |  |  | 3,966 |  |  | — |  |  | — |  |  | 7,249 |
Doubtful (Grade 9) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total commercial real estate - owner occupied |  | $ | 60,144 |  |  | $ | 82,834 |  |  | $ | 28,378 |  |  | $ | 43,373 |  |  | $ | 42,820 |  |  | $ | 74,945 |  |  | $ | — |  |  | $ | — |  |  | $ | 332,494 |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (Grades 1-6) |  | $ | 73,537 |  |  | $ | 70,110 |  |  | $ | 32,272 |  |  | $ | 33,491 |  |  | $ | 22,271 |  |  | $ | 26,245 |  |  | $ | 135,157 |  |  | $ | 30,191 |  |  | $ | 423,274 |
Special mention (Grade 7) |  | — |  |  | — |  |  | 93 |  |  | 141 |  |  | 70 |  |  | 189 |  |  | 1,196 |  |  | 12 |  |  | 1,701 |
Substandard (Grade 8) |  | 149 |  |  | 52 |  |  | 133 |  |  | 216 |  |  | 846 |  |  | 1,524 |  |  | 50 |  |  | 2,186 |  |  | 5,156 |
Doubtful (Grade 9) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total commercial |  | $ | 73,686 |  |  | $ | 70,162 |  |  | $ | 32,498 |  |  | $ | 33,848 |  |  | $ | 23,187 |  |  | $ | 27,958 |  |  | $ | 136,403 |  |  | $ | 32,389 |  |  | $ | 430,131 |
Residential Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (Grades 1-6) |  | $ | 533,035 |  |  | $ | 579,216 |  |  | $ | 244,691 |  |  | $ | 79,492 |  |  | $ | 50,214 |  |  | $ | 210,262 |  |  | $ | 340 |  |  | $ | — |  |  | $ | 1,697,250 |
Special mention (Grade 7) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 23 |  |  | — |  |  | — |  |  | 23 |
Substandard (Grade 8) |  | — |  |  | — |  |  | — |  |  | — |  |  | 163 |  |  | 2,830 |  |  | — |  |  | — |  |  | 2,993 |
Doubtful (Grade 9) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total residential real estate |  | $ | 533,035 |  |  | $ | 579,216 |  |  | $ | 244,691 |  |  | $ | 79,492 |  |  | $ | 50,377 |  |  | $ | 213,115 |  |  | $ | 340 |  |  | $ | — |  |  | $ | 1,700,266 |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 26,712 |  |  | $ | 693 |  |  | $ | 341 |  |  | $ | 4,842 |  |  | $ | 7,730 |  |  | $ | 8,551 |  |  | $ | 173,338 |  |  | $ | 11,735 |  |  | $ | 233,942 |
Non-performing |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 27 |  |  | 377 |  |  | 82 |  |  | 486 |
Total home equity |  | $ | 26,712 |  |  | $ | 693 |  |  | $ | 341 |  |  | $ | 4,842 |  |  | $ | 7,730 |  |  | $ | 8,578 |  |  | $ | 173,715 |  |  | $ | 11,817 |  |  | $ | 234,428 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 8,009 |  |  | $ | 3,816 |  |  | $ | 1,702 |  |  | $ | 1,188 |  |  | $ | 345 |  |  | $ | 2,462 |  |  | $ | 3,069 |  |  | $ | — |  |  | $ | 20,591 |
Non-performing |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total consumer |  | $ | 8,009 |  |  | $ | 3,816 |  |  | $ | 1,702 |  |  | $ | 1,188 |  |  | $ | 345 |  |  | $ | 2,462 |  |  | $ | 3,069 |  |  | $ | — |  |  | $ | 20,591 |
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 generally charged-off once their collectability is in doubt. 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 |  |
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate - non-owner-occupied |  | $ | 45 |  |  | $ | — |  |  | $ | 92 |  |  | $ | 137 |  |  | $ | 1,349,326 |  |  | $ | 1,349,463 |  |  | $ | — |  |  |
Commercial real estate - owner-occupied |  | — |  |  | 142 |  |  | — |  |  | 142 |  |  | 303,683 |  |  | 303,825 |  |  |  |  |
Commercial |  | 1,975 |  |  | 820 |  |  | 515 |  |  | 3,310 |  |  | 396,721 |  |  | 400,031 |  |  | — |  |  |
Residential real estate |  | 507 |  |  | 527 |  |  | 1,024 |  |  | 2,058 |  |  | 1,750,343 |  |  | 1,752,401 |  |  | — |  |  |
Home equity |  | 585 |  |  | 14 |  |  | 281 |  |  | 880 |  |  | 232,572 |  |  | 233,452 |  |  | — |  |  |
Consumer |  | 30 |  |  | 6 |  |  | 7 |  |  | 43 |  |  | 19,198 |  |  | 19,241 |  |  | — |  |  |
Total |  | $ | 3,142 |  |  | $ | 1,509 |  |  | $ | 1,919 |  |  | $ | 6,570 |  |  | $ | 4,051,843 |  |  | $ | 4,058,413 |  |  | $ | — |  |  |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate - non-owner-occupied |  | $ | 267 |  |  | $ | — |  |  | $ | 11 |  |  | $ | 278 |  |  | $ | 1,292,165 |  |  | $ | 1,292,443 |  |  | $ | — |  |  |
Commercial real estate - owner-occupied |  | 55 |  |  | — |  |  | 47 |  |  | 102 |  |  | 332,392 |  |  | 332,494 |  |  | — |  |  |
Commercial |  | 667 |  |  | 134 |  |  | 640 |  |  | 1,441 |  |  | 428,690 |  |  | 430,131 |  |  | — |  |  |
Residential real estate |  | 852 |  |  | 186 |  |  | 524 |  |  | 1,562 |  |  | 1,698,704 |  |  | 1,700,266 |  |  | — |  |  |
Home equity |  | 357 |  |  | — |  |  | 171 |  |  | 528 |  |  | 233,900 |  |  | 234,428 |  |  | — |  |  |
Consumer |  | 23 |  |  | 11 |  |  | — |  |  | 34 |  |  | 20,557 |  |  | 20,591 |  |  | — |  |  |
Total |  | $ | 2,221 |  |  | $ | 331 |  |  | $ | 1,393 |  |  | $ | 3,945 |  |  | $ | 4,006,408 |  |  | $ | 4,010,353 |  |  | $ | — |  |  |
The following table presents the amortized cost basis of loans on non-accrual status (including non-accruing TDRs prior to adoption of ASU 2022-02) by portfolio segment as of the dates indicated:
|  | September 30, 2023 |  | December 31, 2022
(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 |  | $ | 83 |  |  | $ | 9 |  |  | $ | 92 |  |  | $ | — |  |  | $ | 11 |  |  | $ | 11 |
Commercial real estate - owner-occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | 46 |  |  | 46 |
Commercial |  | 978 |  |  | 105 |  |  | 1,083 |  |  | 415 |  |  | 300 |  |  | 715 |
Residential real estate |  | 1,943 |  |  | 832 |  |  | 2,775 |  |  | 1,314 |  |  | 419 |  |  | 1,733 |
Home equity |  | 570 |  |  | 63 |  |  | 633 |  |  | 421 |  |  | 65 |  |  | 486 |
Consumer |  | 41 |  |  | — |  |  | 41 |  |  | — |  |  | — |  |  | — |
Total |  | $ | 3,615 |  |  | $ | 1,009 |  |  | $ | 4,624 |  |  | $ | 2,150 |  |  | $ | 841 |  |  | $ | 2,991 |
The following table presents the amortized cost basis of collateral-dependent non-accrual loans (including non-accruing TDRs prior to adoption of ASU 2022-02) by portfolio segment and collateral type, as of the dates indicated:
|  | September 30, 2023 |  | December 31, 2022
|  | 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 |
Residential real estate |  | $ | 144 |  |  | $ | — |  |  | $ | 144 |  |  | $ | 387 |  |  | $ | — |  |  | $ | 387 |
Total |  | $ | 144 |  |  | $ | — |  |  | $ | 144 |  |  | $ | 387 |  |  | $ | — |  |  | $ | 387 |
Collateral-dependent loans are loans for which 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 is estimated to have been $34,000 and $30,000 for the three months ended September 30, 2023 and 2022, respectively. For the nine months ended September 30, 2023 and 2022, the interest income that is estimated to have been recognized if loans on non-accrual status had been current in accordance with their original terms was $84,000 and $115,000, respectively. The Company's policy is to reverse previously recorded interest income when a loan is placed on non-accrual. As a result, the Company did not record any interest income on its non-accruals for the three or nine months ended September 30, 2023 and 2022. At September 30, 2023 and December 31, 2022, total accrued interest receivable on loans, which has been excluded from reported amortized cost basis on loans, was $11.6 million and $8.9 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. Loan Modifications for Borrowers Experiencing Financial Difficulty Effective January 1, 2023, the Company adopted prospectively ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"). ASU 2022-02 provided guidance that eliminated the recognition and measurement of TDRs. Following the adoption of this guidance, the Company evaluates all loan modifications made to borrowers experiencing financial difficulty according to the accounting guidance for loan refinancing and restructuring to determine whether such loan modification should be accounted for as a new loan or a continuation of the existing loan. Our loan modifications for borrowers experiencing financial difficulty are generally accounted for as a continuation of the existing loan. The Company offers several types of loans and receivables modification programs to borrowers experiencing financial difficulty, primarily interest rate reductions and term extensions. In such instances, the Company may modify loans and receivables with the intention to minimize future losses and improve collectability, while providing customers with temporary or permanent financial relief. There were no modified loans that required disclosure for the three and nine months ended September 30, 2023. TDR Disclosures Prior to Adoption of ASU 2022-02 Prior to the Company's adoption of ASU 2022-02, which became effective for the Company on January 1, 2023, TDRs consisted 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 involved 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 prior to adoption of ASU 2022-02, by portfolio segment, and the associated specific reserve included within the ACL as of December 31, 2022:
(In thousands, except number of contracts) |  | Number of Contracts |  | Recorded Investment |  | Specific Reserve
Commercial real estate - owner-occupied |  | 1 |  |  | $ | 113 |  |  | $ | 50 |
Commercial |  | — |  |  | — |  |  | — |
Residential real estate |  | 18 |  |  | 2,208 |  |  | 307 |
Consumer and home equity |  | 3 |  |  | 245 |  |  | 9 |
Total |  | 22 |  |  | $ | 2,566 |  |  | $ | 366 |
At December 31, 2022, the Company had performing and non-performing TDRs with a recorded investment balance of $2.1 million and $452,000, respectively. The following represents loan modifications that qualified as TDRs during the year ended December 31, 2022:
(In thousands, except number of contracts) |  | Number of Contracts |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Specific Reserve
Home equity: |  |  |  |  |  |  |  |
Maturity concession |  | 1 |  |  | $ | 69 |  |  | $ | 96 |  |  | $ | — |
Total |  | 1 |  |  | $ | 69 |  |  | $ | 96 |  |  | $ | — |
For the year ended December 31, 2022, no loans were modified as TDRs within the previous 12 months for which the borrower subsequently defaulted. In-Process Foreclosure Proceedings At September 30, 2023 and December 31, 2022, the Company had $135,000 and $481,000, respectively, of consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings were in process. FHLB Advances FHLB advances are those borrowings from the FHLBB greater than 90 days. FHLB advances are collateralized by a blanket lien on qualified collateral consisting primarily of loans with first mortgages secured by one- to four-family properties, certain commercial real estate loans, certain pledged investment securities and other qualified assets. At September 30, 2023 and December 31, 2022, the combined carrying value of residential real estate and commercial loans pledged as collateral was $1.9 billion and $1.8 billion, respectively. Refer to Notes 3 and 6 of the consolidated financial statements for discussion of securities pledged as collateral.

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