Loans

The following table shows the composition of the Company's loan portfolio as of September 30, 2017 and 2016 and at December 31, 2016:



	September 30, 2017				December 31, 2016				September 30, 2016
Commercial
Real estate	$	301,227,000	26.9	%	$	302,506,000	28.2	%	$	297,808,000	28.9	%
Construction	32,893,000		2.9	%	25,406,000		2.4	%	18,828,000		1.8	%
Other	172,986,000		15.4	%	150,769,000		14.1	%	131,198,000		12.8	%
Municipal	33,311,000		3.0	%	27,056,000		2.5	%	26,153,000		2.5	%
Residential
Term	429,572,000		38.3	%	411,469,000		38.4	%	403,159,000		39.2	%
Construction	15,495,000		1.4	%	18,303,000		1.7	%	14,269,000		1.4	%
Home equity line of credit	110,178,000		9.8	%	110,907,000		10.4	%	111,994,000		10.9	%
Consumer	25,424,000		2.3	%	25,110,000		2.3	%	25,583,000		2.5	%
Total	$	1,121,086,000	100.0	%	$	1,071,526,000	100.0	%	$	1,028,992,000	100.0	%

Loan balances include net deferred loan costs of $5,560,000 as of September 30, 2017, $4,921,000 as of December 31, 2016, and $4,648,000 as of September 30, 2016. Pursuant to collateral agreements, qualifying first mortgage loans, which totaled $245,000,000 at September 30, 2017, $257,122,000 at December 31, 2016, and $262,001,000 at September 30, 2016, were used to collateralize borrowings from the FHLB. In addition, commercial, construction and home equity loans totaling $297,712,000 at September 30, 2017, $261,463,000 at December 31, 2016, and $261,416,000 at September 30, 2016, were used to collateralize a standby line of credit at the Federal Reserve Bank of Boston that is currently unused.

For all loan classes, loans over 30 days past due are considered delinquent. Information on the past-due status of loans by class of financing receivable as of September 30, 2017, is presented in the following table:



	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		All Past Due		Current		Total		90+ Days & Accruing
Commercial
Real estate	$	415,000	$	169,000	$	1,387,000	$	1,971,000	$	299,256,000	$	301,227,000	$	—
Construction	—		—		—		—		32,893,000		32,893,000		—
Other	345,000		265,000		567,000		1,177,000		171,809,000		172,986,000		—
Municipal	—		—		—		—		33,311,000		33,311,000		—
Residential
Term	295,000		3,668,000		1,941,000		5,904,000		423,668,000		429,572,000		344,000
Construction	—		—		—		—		15,495,000		15,495,000		—
Home equity line of credit	645,000		130,000		986,000		1,761,000		108,417,000		110,178,000		167,000
Consumer	195,000		6,000		18,000		219,000		25,205,000		25,424,000		—
Total	$	1,895,000	$	4,238,000	$	4,899,000	$	11,032,000	$	1,110,054,000	$	1,121,086,000	$	511,000

Information on the past-due status of loans by class of financing receivable as of December 31, 2016, is presented in the following table:



	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		All Past Due		Current		Total		90+ Days & Accruing
Commercial
Real estate	$	1,039,000	$	22,000	$	2,415,000	$	3,476,000	$	299,030,000	$	302,506,000	$	753,000
Construction	—		—		—		—		25,406,000		25,406,000		—
Other	202,000		33,000		796,000		1,031,000		149,738,000		150,769,000		20,000
Municipal	—		—		—		—		27,056,000		27,056,000		—
Residential
Term	631,000		3,970,000		1,802,000		6,403,000		405,066,000		411,469,000		—
Construction	—		—		—		—		18,303,000		18,303,000		—
Home equity line of credit	704,000		157,000		703,000		1,564,000		109,343,000		110,907,000		—
Consumer	135,000		45,000		4,000		184,000		24,926,000		25,110,000		4,000
Total	$	2,711,000	$	4,227,000	$	5,720,000	$	12,658,000	$	1,058,868,000	$	1,071,526,000	$	777,000

Information on the past-due status of loans by class of financing receivable as of September 30, 2016, is presented in the following table:



	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		All Past Due		Current		Total		90+ Days & Accruing
Commercial
Real estate	$	—	$	385,000	$	1,101,000	$	1,486,000	$	296,322,000	$	297,808,000	$	—
Construction	—		—		—		—		18,828,000		18,828,000		—
Other	573,000		18,000		53,000		644,000		130,554,000		131,198,000		—
Municipal	—		—		—		—		26,153,000		26,153,000		—
Residential
Term	414,000		3,896,000		1,925,000		6,235,000		396,924,000		403,159,000		—
Construction	—		—		—		—		14,269,000		14,269,000		—
Home equity line of credit	310,000		49,000		708,000		1,067,000		110,927,000		111,994,000		—
Consumer	124,000		124,000		62,000		310,000		25,273,000		25,583,000		7,000
Total	$	1,421,000	$	4,472,000	$	3,849,000	$	9,742,000	$	1,019,250,000	$	1,028,992,000	$	7,000

For all classes, loans are placed on non-accrual status when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement or when principal and interest is 90 days or more past due unless the loan is both well secured and in the process of collection (in which case the loan may continue to accrue interest in spite of its past due status). A loan is "well secured" if it is secured (1) by collateral in the form of liens on or pledges of real or personal property, including securities, that have a realizable value sufficient to discharge the debt (including accrued interest) in full, or (2) by the guarantee of a financially responsible party. A loan is "in the process of collection" if collection of the loan is proceeding in due course either (1) through legal action, including judgment enforcement procedures, or, (2) in appropriate circumstances, through collection efforts not involving legal action which are reasonably expected to result in repayment of the debt or in its restoration to a current status in the near future.

Cash payments received on non-accrual loans, which are included in impaired loans, are applied to reduce the loan's principal balance until the remaining principal balance is deemed collectible, after which interest is recognized when collected. As a general rule, a loan may be restored to accrual status when payments are current for a substantial period of time, generally six months, and repayment of the remaining contractual amounts is expected or when it otherwise becomes well secured and in the process of collection. Information on nonaccrual loans as of September 30, 2017 and 2016 and at December 31, 2016 is presented in the following table:



	September 30, 2017		December 31, 2016		September 30, 2016
Commercial
Real estate	$	1,929,000	$	1,907,000	$	1,222,000
Construction	—		—		—
Other	9,520,000		964,000		412,000
Municipal	—		—		—
Residential
Term	3,875,000		4,060,000		4,475,000
Construction	—		—		—
Home equity line of credit	1,001,000		843,000		851,000
Consumer	51,000		—		170,000
Total	$	16,376,000	$	7,774,000	$	7,130,000

Impaired loans include troubled debt restructured ("TDR") and loans placed on non-accrual. These loans are measured at the present value of expected future cash flows discounted at the loan's effective interest rate or at the fair value of the collateral if the loan is collateral dependent. If the measure of an impaired loan is lower than the recorded investment in the loan and estimated selling costs, a specific reserve is established for the difference, or, in certain situations, if the measure of an impaired loan is lower than the recorded investment in the loan and estimated selling costs, the difference is written off.

A breakdown of impaired loans by class of financing receivable as of and for the period ended September 30, 2017 is presented in the following table:



							For the nine months ended September 30, 2017				For the quarter ended September 30, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
With No Related Allowance
Commercial
Real estate	$	5,281,000	$	5,634,000	$	—	$	5,418,000	$	149,000	$	5,398,000	$	55,000
Construction	—		—		—		—		—		—		—
Other	2,862,000		2,955,000		—		1,631,000		37,000		1,879,000		12,000
Municipal	—		—		—		—		—		—		—
Residential
Term	10,133,000		11,358,000		—		11,110,000		236,000		10,645,000		75,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	1,495,000		1,807,000		—		1,417,000		18,000		1,479,000		4,000
Consumer	51,000		102,000		—		8,000		—		23,000		—
	$	19,822,000	$	21,856,000	$	—	$	19,584,000	$	440,000	$	19,424,000	$	146,000
With an Allowance Recorded
Commercial
Real estate	$	4,555,000	$	4,891,000	$	347,000	$	4,549,000	$	125,000	$	4,360,000	$	40,000
Construction	763,000		763,000		108,000		763,000		28,000		763,000		10,000
Other	7,388,000		7,392,000		1,130,000		991,000		—		2,618,000		—
Municipal	—		—		—		—		—		—		—
Residential
Term	2,508,000		2,726,000		307,000		2,078,000		66,000		2,293,000		25,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	24,000		27,000		24,000		25,000		—		25,000		—
Consumer	—		—		—		—		—		—		—
	$	15,238,000	$	15,799,000	$	1,916,000	$	8,406,000	$	219,000	$	10,059,000	$	75,000
Total
Commercial
Real estate	$	9,836,000	$	10,525,000	$	347,000	$	9,967,000	$	274,000	$	9,758,000	$	95,000
Construction	763,000		763,000		108,000		763,000		28,000		763,000		10,000
Other	10,250,000		10,347,000		1,130,000		2,622,000		37,000		4,497,000		12,000
Municipal	—		—		—		—		—		—		—
Residential
Term	12,641,000		14,084,000		307,000		13,188,000		302,000		12,938,000		100,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	1,519,000		1,834,000		24,000		1,442,000		18,000		1,504,000		4,000
Consumer	51,000		102,000		—		8,000		—		23,000		—
	$	35,060,000	$	37,655,000	$	1,916,000	$	27,990,000	$	659,000	$	29,483,000	$	221,000

Substantially all interest income recognized on impaired loans for all classes of financing receivables was recognized on a cash basis as received.

A breakdown of impaired loans by class of financing receivable as of and for the year ended December 31, 2016 is presented in the following table:



	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Recognized Interest Income
With No Related Allowance
Commercial
Real estate	$	5,201,000	$	5,614,000	$	—	$	6,252,000	$	220,000
Construction	—		—		—		32,000		—
Other	1,671,000		1,852,000		—		1,074,000		86,000
Municipal	—		—		—		—		—
Residential
Term	11,483,000		12,654,000		—		11,025,000		442,000
Construction	—		—		—		—		—
Home equity line of credit	1,361,000		1,733,000		—		1,213,000		33,000
Consumer	—		—		—		9,000		—
	$	19,716,000	$	21,853,000	$	—	$	19,605,000	$	781,000
With an Allowance Recorded
Commercial
Real estate	$	4,820,000	$	4,925,000	$	505,000	$	4,153,000	$	186,000
Construction	763,000		763,000		100,000		816,000		36,000
Other	72,000		72,000		39,000		317,000		—
Municipal	—		—		—		—		—
Residential
Term	2,186,000		2,328,000		304,000		3,209,000		101,000
Construction	—		—		—		—		—
Home equity line of credit	26,000		28,000		26,000		69,000		—
Consumer	—		—		—		48,000		—
	$	7,867,000	$	8,116,000	$	974,000	$	8,612,000	$	323,000
Total
Commercial
Real estate	$	10,021,000	$	10,539,000	$	505,000	$	10,405,000	$	406,000
Construction	763,000		763,000		100,000		848,000		36,000
Other	1,743,000		1,924,000		39,000		1,391,000		86,000
Municipal	—		—		—		—		—
Residential
Term	13,669,000		14,982,000		304,000		14,234,000		543,000
Construction	—		—		—		—		—
Home equity line of credit	1,387,000		1,761,000		26,000		1,282,000		33,000
Consumer	—		—		—		57,000		—
	$	27,583,000	$	29,969,000	$	974,000	$	28,217,000	$	1,104,000

A breakdown of impaired loans by class of financing receivable as of and for the period ended September 30, 2016 is presented in the following table:



							For the nine months ended September 30, 2016				For the quarter ended September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
With No Related Allowance
Commercial
Real estate	$	5,530,000	$	5,601,000	$	—	$	6,559,000	$	186,000	$	5,540,000	$	41,000
Construction	—		—		—		43,000		1,000		10,000		—
Other	754,000		801,000		—		1,016,000		33,000		883,000		12,000
Municipal	—		—		—		—		—		—		—
Residential
Term	11,675,000		12,830,000		—		10,830,000		340,000		11,183,000		131,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	1,334,000		1,705,000		—		1,171,000		26,000		1,080,000		13,000
Consumer	55,000		96,000		—		6,000		3,000		18,000		3,000
	$	19,348,000	$	21,033,000	$	—	$	19,625,000	$	589,000	$	18,714,000	$	200,000
With an Allowance Recorded
Commercial
Real estate	$	4,912,000	$	5,094,000	$	381,000	$	3,940,000	$	130,000	$	4,899,000	$	59,000
Construction	788,000		788,000		99,000		834,000		27,000		788,000		9,000
Other	500,000		503,000		68,000		312,000		21,000		519,000		9,000
Municipal	—		—		—		—		—		—		—
Residential
Term	2,456,000		2,667,000		318,000		3,529,000		79,000		2,929,000		13,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	66,000		68,000		32,000		75,000		1,000		80,000		—
Consumer	115,000		115,000		51,000		51,000		2,000		115,000		2,000
	$	8,837,000	$	9,235,000	$	949,000	$	8,741,000	$	260,000	$	9,330,000	$	92,000
Total
Commercial
Real estate	$	10,442,000	$	10,695,000	$	381,000	$	10,499,000	$	316,000	$	10,439,000	$	100,000
Construction	788,000		788,000		99,000		877,000		28,000		798,000		9,000
Other	1,254,000		1,304,000		68,000		1,328,000		54,000		1,402,000		21,000
Municipal	—		—		—		—		—		—		—
Residential
Term	14,131,000		15,497,000		318,000		14,359,000		419,000		14,112,000		144,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	1,400,000		1,773,000		32,000		1,246,000		27,000		1,160,000		13,000
Consumer	170,000		211,000		51,000		57,000		5,000		133,000		5,000
	$	28,185,000	$	30,268,000	$	949,000	$	28,366,000	$	849,000	$	28,044,000	$	292,000

Troubled Debt Restructured

A "TDR" constitutes a restructuring of debt if the Company, for economic or legal reasons related to the borrower's financial difficulties, grants a concession to the borrower that it would not otherwise consider. To determine whether or not a loan should be classified as a TDR, Management evaluates a loan based upon the following criteria:


•	The borrower demonstrates financial difficulty; common indicators include past due status with bank obligations, substandard credit bureau reports, or an inability to refinance with another lender, and


•	The Company has granted a concession; common concession types include maturity date extension, interest rate adjustments to below market pricing, and deferment of payments.

As of September 30, 2017, the Company had 67 loans with a balance of $19,760,000 that have been classified as TDRs. This compares to 71 loans with a balance of $21,526,000 and 75 loans with a balance of $22,025,000 classified as TDRs as of December 31, 2016 and September 30, 2016, respectively. The impairment carried as a specific reserve in the allowance for loan losses is calculated by present valuing the expected cash flows on the loan at the original interest rate, or, for collateral-dependent loans, using the fair value of the collateral less costs to sell.

The following table shows TDRs by class and the specific reserve as of September 30, 2017:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	9	$	7,908,000	$	65,000
Construction	1	763,000		108,000
Other	5	730,000		—
Municipal	—	—		—
Residential
Term	49	9,842,000		283,000
Construction	—	—		—
Home equity line of credit	3	517,000		—
Consumer	—	—		—
	67	$	19,760,000	$	456,000

The following table shows TDRs by class and the specific reserve as of December 31, 2016:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	10	$	8,937,000	$	375,000
Construction	1	763,000		100,000
Other	5	779,000		—
Municipal	—	—		—
Residential
Term	52	10,503,000		261,000
Construction	—	—		—
Home equity line of credit	3	544,000		—
Consumer	—	—		—
	71	$	21,526,000	$	736,000

The following table shows TDRs by class and the specific reserve as of September 30, 2016:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	11	$	9,221,000	$	116,000
Construction	1	788,000		99,000
Other	7	841,000		5,000
Municipal	—	—		—
Residential
Term	53	10,626,000		272,000
Construction	—	—		—
Home equity line of credit	3	549,000		—
Consumer	—	—		—
	75	$	22,025,000	$	492,000

As of September 30, 2017, 14 of the loans classified as TDRs with a total balance of $1,849,000 were more than 30 days past due. None of these loans had been placed on TDR status in the previous 12 months. The following table shows these TDRs by class and the associated specific reserves included in the allowance for loan losses as of September 30, 2017:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	—	$	—	$	—
Construction	—	—		—
Other	1	6,000		—
Municipal	—	—		—
Residential
Term	12	1,676,000		65,000
Construction	—	—		—
Home equity line of credit	1	167,000		—
Consumer	—	—		—
	14	$	1,849,000	$	65,000

As of September 30, 2016, eight of the loans classified as TDRs with a total balance of $1,060,000 were more than 30 days past due. Of these loans, none had been placed on TDR status in the previous 12 months. The following table shows these TDRs by class and the associated specific reserves included in the allowance for loan losses as of September 30, 2016:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	—	$	—	$	—
Construction	—	—		—
Other	—	—		—
Municipal	—	—		—
Residential
Term	8	1,060,000		78,000
Construction	—	—		—
Home equity line of credit	—	—		—
Consumer	—	—		—
	8	$	1,060,000	$	78,000

For the nine months ended September 30, 2017 and 2016, no loans were placed on TDR status.

As of September 30, 2017, Management is aware of four loans classified as TDRs that are involved in bankruptcy with an outstanding balance of $826,000. There were also eight loans with an outstanding balance of $1,075,000 that were classified as TDRs and on non-accrual status, of which one loan with an outstanding balance of $108,000 was in the process of foreclosure.

Residential Mortgage Loans in Process of Foreclosure

As of September 30, 2017, there were 14 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,861,000, none of which were placed in TDR status in the past 12 months. This compares to 13 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,508,000 as of September 30, 2016.