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Loans

3 Months Ended

Mar. 31, 2020

Loans and Leases Receivable Disclosure [Abstract]

The following table shows the composition of the Company's loan portfolio as of March 31, 2020 and 2019 and at December 31, 2019:



	March 31, 2020				December 31, 2019				March 31, 2019
Commercial
Real estate	$	382,753,000	28.5	%	$	372,810,000	28.7	%	$	357,760,000	28.3	%
Construction	43,913,000		3.3	%	38,084,000		3.0	%	34,231,000		2.7	%
Other	237,896,000		17.7	%	218,773,000		16.9	%	205,462,000		16.2	%
Municipal	43,537,000		3.2	%	41,288,000		3.2	%	54,246,000		4.3	%
Residential
Term	500,971,000		37.3	%	492,455,000		37.9	%	474,241,000		37.5	%
Construction	15,202,000		1.1	%	14,813,000		1.2	%	18,450,000		1.5	%
Home equity line of credit	90,674,000		6.7	%	92,349,000		7.1	%	95,692,000		7.6	%
Consumer	29,262,000		2.2	%	26,503,000		2.0	%	24,557,000		1.9	%
Total	$	1,344,208,000	100.0	%	$	1,297,075,000	100.0	%	$	1,264,639,000	100.0	%

Loan balances include net deferred loan costs of $7,551,000 as of March 31, 2020, $7,419,000 as of December 31, 2019, and $6,878,000 as of March 31, 2019. Pursuant to collateral agreements, qualifying first mortgage loans and commercial real estate loans, which totaled $401,555,000 at March 31, 2020, were used to collateralize borrowings from the FHLB. This compares to qualifying loans which totaled $296,871,000 at December 31, 2019, and $321,290,000 at March 31, 2019. In addition, commercial, construction and home equity loans totaling $260,703,000 at March 31, 2020, $240,133,000 at December 31, 2019, and $251,591,000 at March 31, 2019, 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 March 31, 2020, 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	$	2,935,000	$	2,000	$	1,297,000	$	4,234,000	$	378,519,000	$	382,753,000	$	22,000
Construction	59,000		—		246,000		305,000		43,608,000		43,913,000		—
Other	1,678,000		295,000		3,895,000		5,868,000		232,028,000		237,896,000		3,536,000
Municipal	—		—		—		—		43,537,000		43,537,000		—
Residential
Term	4,270,000		171,000		3,320,000		7,761,000		493,210,000		500,971,000		192,000
Construction	—		—		—		—		15,202,000		15,202,000		—
Home equity line of credit	1,566,000		264,000		1,481,000		3,311,000		87,363,000		90,674,000		—
Consumer	250,000		18,000		82,000		350,000		28,912,000		29,262,000		20,000
Total	$	10,758,000	$	750,000	$	10,321,000	$	21,829,000	$	1,322,379,000	$	1,344,208,000	$	3,770,000

Information on the past-due status of loans by class of financing receivable as of December 31, 2019, 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	$	786,000	$	377,000	$	611,000	$	1,774,000	$	371,036,000	$	372,810,000	$	—
Construction	—		14,000		257,000		271,000		37,813,000		38,084,000		—
Other	2,764,000		465,000		1,799,000		5,028,000		213,745,000		218,773,000		1,464,000
Municipal	—		—		—		—		41,288,000		41,288,000		—
Residential
Term	1,129,000		1,132,000		2,379,000		4,640,000		487,815,000		492,455,000		86,000
Construction	—		—		—		—		14,813,000		14,813,000		—
Home equity line of credit	1,169,000		58,000		1,730,000		2,957,000		89,392,000		92,349,000		—
Consumer	291,000		46,000		10,000		347,000		26,156,000		26,503,000		10,000
Total	$	6,139,000	$	2,092,000	$	6,786,000	$	15,017,000	$	1,282,058,000	$	1,297,075,000	$	1,560,000

Information on the past-due status of loans by class of financing receivable as of March 31, 2019, 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	$	282,000	$	825,000	$	621,000	$	1,728,000	$	356,032,000	$	357,760,000	$	—
Construction	47,000		—		286,000		333,000		33,898,000		34,231,000		—
Other	664,000		63,000		303,000		1,030,000		204,432,000		205,462,000		—
Municipal	—		—		—		—		54,246,000		54,246,000		—
Residential
Term	2,659,000		1,153,000		1,434,000		5,246,000		468,995,000		474,241,000		—
Construction	—		—		—		—		18,450,000		18,450,000		—
Home equity line of credit	1,985,000		11,000		369,000		2,365,000		93,327,000		95,692,000		—
Consumer	411,000		163,000		4,000		578,000		23,979,000		24,557,000		4,000
Total	$	6,048,000	$	2,215,000	$	3,017,000	$	11,280,000	$	1,253,359,000	$	1,264,639,000	$	4,000

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 March 31, 2020 and 2019 and at December 31, 2019 is presented in the following table:



	March 31, 2020		December 31, 2019		March 31, 2019
Commercial
Real estate	$	1,748,000	$	1,784,000	$	1,468,000
Construction	246,000		256,000		286,000
Other	457,000		6,534,000		7,067,000
Municipal	—		—		—
Residential
Term	5,615,000		5,899,000		4,211,000
Construction	—		—		—
Home equity line of credit	1,916,000		2,171,000		702,000
Consumer	66,000		5,000		2,000
Total	$	10,048,000	$	16,649,000	$	13,736,000

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 March 31, 2020 is presented in the following table:



							For the three months ended March 31, 2020
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Recognized Interest Income
With No Related Allowance
Commercial
Real estate	$	5,162,000	$	5,421,000	$	—	$	5,157,000	$	47,000
Construction	246,000		265,000		—		717,000		—
Other	818,000		848,000		—		793,000		3,000
Municipal	—		—		—		—		—
Residential
Term	10,378,000		12,135,000		—		10,015,000		67,000
Construction	—		—		—		—		—
Home equity line of credit	1,232,000		1,306,000		—		1,185,000		4,000
Consumer	—		—		—		—		—
	$	17,836,000	$	19,975,000	$	—	$	17,867,000	$	121,000
With an Allowance Recorded
Commercial
Real estate	$	1,061,000	$	1,082,000	$	230,000	$	1,064,000	$	8,000
Construction	701,000		701,000		3,000		234,000		10,000
Other	172,000		194,000		172,000		4,269,000		—
Municipal	—		—		—		—		—
Residential
Term	1,660,000		1,755,000		233,000		1,999,000		13,000
Construction	—		—		—		—		—
Home equity line of credit	996,000		1,002,000		296,000		1,124,000		—
Consumer	67,000		67,000		58,000		26,000		—
	$	4,657,000	$	4,801,000	$	992,000	$	8,716,000	$	31,000
Total
Commercial
Real estate	$	6,223,000	$	6,503,000	$	230,000	$	6,221,000	$	55,000
Construction	947,000		966,000		3,000		951,000		10,000
Other	990,000		1,042,000		172,000		5,062,000		3,000
Municipal	—		—		—		—		—
Residential
Term	12,038,000		13,890,000		233,000		12,014,000		80,000
Construction	—		—		—		—		—
Home equity line of credit	2,228,000		2,308,000		296,000		2,309,000		4,000
Consumer	67,000		67,000		58,000		26,000		—
	$	22,493,000	$	24,776,000	$	992,000	$	26,583,000	$	152,000

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, 2019 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	$	5,235,000	$	5,492,000	$	—	$	7,611,000	$	228,000
Construction	958,000		970,000		—		936,000		47,000
Other	756,000		786,000		—		965,000		29,000
Municipal	—		—		—		—		—
Residential
Term	10,176,000		11,931,000		—		10,033,000		269,000
Construction	—		—		—		—		—
Home equity line of credit	1,087,000		1,151,000		—		997,000		20,000
Consumer	—		—		—		—		—
	$	18,212,000	$	20,330,000	$	—	$	20,542,000	$	593,000
With an Allowance Recorded
Commercial
Real estate	$	1,074,000	$	1,093,000	$	251,000	$	1,528,000	$	60,000
Construction	—		—		—		—		—
Other	6,319,000		6,925,000		1,273,000		6,778,000		—
Municipal	—		—		—		—		—
Residential
Term	2,263,000		2,412,000		237,000		2,424,000		82,000
Construction	—		—		—		—		—
Home equity line of credit	1,401,000		1,412,000		447,000		283,000		—
Consumer	5,000		6,000		5,000		2,000		—
	$	11,062,000	$	11,848,000	$	2,213,000	$	11,015,000	$	142,000
Total
Commercial
Real estate	$	6,309,000	$	6,585,000	$	251,000	$	9,139,000	$	288,000
Construction	958,000		970,000		—		936,000		47,000
Other	7,075,000		7,711,000		1,273,000		7,743,000		29,000
Municipal	—		—		—		—		—
Residential
Term	12,439,000		14,343,000		237,000		12,457,000		351,000
Construction	—		—		—		—		—
Home equity line of credit	2,488,000		2,563,000		447,000		1,280,000		20,000
Consumer	5,000		6,000		5,000		2,000		—
	$	29,274,000	$	32,178,000	$	2,213,000	$	31,557,000	$	735,000

A breakdown of impaired loans by class of financing receivable as of and for the period ended March 31, 2019 is presented in the following table:



							For the three months ended March 31, 2019
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Recognized Interest Income
With No Related Allowance
Commercial
Real estate	$	8,391,000	$	8,779,000	$	—	$	8,741,000	$	90,000
Construction	1,007,000		1,007,000		—		817,000		12,000
Other	709,000		734,000		—		1,207,000		6,000
Municipal	—		—		—		—		—
Residential
Term	8,926,000		10,345,000		—		9,007,000		68,000
Construction	—		—		—		—		—
Home equity line of credit	1,009,000		1,071,000		—		976,000		5,000
Consumer	—		—		—		—		—
	$	20,042,000	$	21,936,000	$	—	$	20,748,000	$	181,000
With an Allowance Recorded
Commercial
Real estate	$	1,566,000	$	1,583,000	$	233,000	$	1,215,000	$	26,000
Construction	—		—		—		—		—
Other	6,944,000		7,315,000		1,485,000		7,511,000		—
Municipal	—		—		—		—		—
Residential
Term	1,993,000		2,131,000		348,000		1,845,000		17,000
Construction	—		—		—		—		—
Home equity line of credit	21,000		25,000		7,000		29,000		—
Consumer	2,000		2,000		2,000		1,000		—
	$	10,526,000	$	11,056,000	$	2,075,000	$	10,601,000	$	43,000
Total
Commercial
Real estate	$	9,957,000	$	10,362,000	$	233,000	$	9,956,000	$	116,000
Construction	1,007,000		1,007,000		—		817,000		12,000
Other	7,653,000		8,049,000		1,485,000		8,718,000		6,000
Municipal	—		—		—		—		—
Residential
Term	10,919,000		12,476,000		348,000		10,852,000		85,000
Construction	—		—		—		—		—
Home equity line of credit	1,030,000		1,096,000		7,000		1,005,000		5,000
Consumer	2,000		2,000		2,000		1,000		—
	$	30,568,000	$	32,992,000	$	2,075,000	$	31,349,000	$	224,000

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 March 31, 2020, the Company had 81 loans with a balance of $14,968,000 that have been classified as TDRs. This compares to 81 loans with a balance of $21,424,000 and 80 loans with a balance of $25,386,000 classified as TDRs as of December 31, 2019 and March 31, 2019, 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 March 31, 2020:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	16	$	4,688,000	$	225,000
Construction	1	701,000		3,000
Other	7	779,000		131,000
Municipal	—	—		—
Residential
Term	54	8,321,000		197,000
Construction	—	—		—
Home equity line of credit	3	479,000		—
Consumer	—	—		—
	81	$	14,968,000	$	556,000

The following table shows TDRs by class and the specific reserve as of December 31, 2019:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	17	$	4,836,000	$	246,000
Construction	1	701,000		—
Other	8	6,932,000		1,231,000
Municipal	—	—		—
Residential
Term	52	8,472,000		200,000
Construction	—	—		—
Home equity line of credit	3	483,000		—
Consumer	—	—		—
	81	$	21,424,000	$	1,677,000

The following table shows TDRs by class and the specific reserve as of March 31, 2019:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	17	$	8,583,000	$	107,000
Construction	1	721,000		—
Other	10	7,257,000		1,275,000
Municipal	—	—		—
Residential
Term	49	8,331,000		225,000
Construction	—	—		—
Home equity line of credit	3	494,000		—
Consumer	—	—		—
	80	$	25,386,000	$	1,607,000

As of March 31, 2020, 22 of the loans classified as TDRs with a total balance of $3,622,000 were more than 30 days past due. Of these loans, one 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 March 31, 2020:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	2	$	618,000	$	—
Construction	—	—		—
Other	4	540,000		131,000
Municipal	—	—		—
Residential
Term	15	2,297,000		24,000
Construction	—	—		—
Home equity line of credit	1	167,000		—
Consumer	—	—		—
	22	$	3,622,000	$	155,000

As of March 31, 2019, 10 of the loans classified as TDRs with a total balance of $1,129,000 were more than 30 days past due. Of these loans, three 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 March 31, 2019:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	—	$	—	$	—
Construction	—	—		—
Other	4	261,000		134,000
Municipal	—	—		—
Residential
Term	5	701,000		36,000
Construction	—	—		—
Home equity line of credit	1	167,000		—
Consumer	—	—		—
	10	$	1,129,000	$	170,000

For the three months ended March 31, 2020, two loans were placed on TDR status. The following table shows these TDRs by class and the associated specific reserves included in the allowance for loan losses as of March 31, 2020:



	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	—	$	—	$	—	$	—
Construction	—	—		—		—
Other	—	—		—		—
Municipal	—	—		—		—
Residential
Term	2	235,000		190,000		—
Construction	—	—		—		—
Home equity line of credit	—	—		—		—
Consumer	—	—		—		—
	2	$	235,000	$	190,000	$	—

For the three months ended March 31, 2019, five loans were placed on TDR status. The following table shows these TDRs by class and associated specific reserves included in the allowance for loan losses as of March 31, 2019:



	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	—	$	—	$	—	$	—
Construction	—	—		—		—
Other	—	—		—		—
Municipal	—	—		—		—
Residential
Term	5	573,000		554,000		74,000
Construction	—	—		—		—
Home equity line of credit	—	—		—		—
Consumer	—	—		—		—
	5	$	573,000	$	554,000	$	74,000

As of March 31, 2020, Management is aware of nine loans classified as TDRs that are involved in bankruptcy with an outstanding balance of $978,000. There were also 24 loans with an outstanding balance of $2,525,000 that were classified as TDRs and on non-accrual status, of which two loans with an outstanding balance of $350,000 were in the process of foreclosure.

Residential Mortgage Loans in Process of Foreclosure

As of March 31, 2020, there were 15 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $2,284,000. This compares to 10 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,101,000 as of March 31, 2019.