XML 23 R11.htm IDEA: XBRL DOCUMENT

Loans

9 Months Ended

Sep. 30, 2020

Loans and Leases Receivable Disclosure [Abstract]

The following table shows the composition of the Company's loan portfolio as of September 30, 2020 and 2019 and at December 31, 2019:


	September 30, 2020				December 31, 2019				September 30, 2019
Commercial
Real estate	$	407,128,000	28.3	%	$	372,810,000	28.7	%	$	368,165,000	29.1	%
Construction	52,038,000		3.6	%	38,084,000		3.0	%	37,242,000		2.9	%
Other	309,297,000		21.5	%	218,773,000		16.9	%	201,859,000		16.0	%
Municipal	44,110,000		3.1	%	41,288,000		3.2	%	36,522,000		2.9	%
Residential
Term	497,667,000		34.6	%	492,455,000		37.9	%	485,490,000		38.4	%
Construction	16,101,000		1.2	%	14,813,000		1.2	%	14,118,000		1.1	%
Home equity line of credit	82,982,000		5.8	%	92,349,000		7.1	%	94,144,000		7.5	%
Consumer	27,323,000		1.9	%	26,503,000		2.0	%	25,919,000		2.1	%
Total	$	1,436,646,000	100.0	%	$	1,297,075,000	100.0	%	$	1,263,459,000	100.0	%

Loan balances include net deferred loan costs of $5,323,000 as of September 30, 2020, $7,419,000 as of December 31, 2019, and $7,181,000 as of September 30, 2019. The decrease in net deferred loan costs year-over-year and year-to-date is attributable to PPP loans originated during the second and third quarters of 2020. These loans generated gross origination fee income of $3,797,000 and deferred loan costs of $299,000; year-to-date a net of $788,000 in PPP fees was recognized in interest income. Pursuant to collateral agreements, qualifying first mortgage loans and commercial real estate loans, which totaled $379,387,000 at September 30, 2020, were used to collateralize borrowings from the FHLB. This compares to qualifying loans which totaled $296,871,000 at December 31, 2019, and $308,163,000 at September 30, 2019. In addition, commercial, construction and home equity loans totaling $271,905,000 at September 30, 2020, $240,133,000 at December 31, 2019, and $254,076,000 at September 30, 2019, were used to collateralize a standby line of credit at the Federal Reserve Bank of Boston.

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, 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	$	2,397,000	$	58,000	$	454,000	$	2,909,000	$	404,219,000	$	407,128,000	$	—
Construction	—		—		80,000		80,000		51,958,000		52,038,000		—
Other	547,000		258,000		1,871,000		2,676,000		306,621,000		309,297,000		1,464,000
Municipal	—		—		—		—		44,110,000		44,110,000		—
Residential
Term	2,550,000		357,000		1,602,000		4,509,000		493,158,000		497,667,000		—
Construction	—		—		—		—		16,101,000		16,101,000		—
Home equity line of credit	868,000		65,000		1,392,000		2,325,000		80,657,000		82,982,000		—
Consumer	219,000		28,000		30,000		277,000		27,046,000		27,323,000		30,000
Total	$	6,581,000	$	766,000	$	5,429,000	$	12,776,000	$	1,423,870,000	$	1,436,646,000	$	1,494,000

On March 22, 2020, banking regulators issued an Interagency Statement on Loan Modifications and Reporting in response to the onset of COVID-19; shortly thereafter, on March 30, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed. Both the Interagency Statement and the CARES Act provided an exemption for qualified modifications from Troubled Debt Restructure (TDR) designation. The Company actively worked with borrowers impacted by the COVID-19 outbreak and as of September 30, 2020, a total of 996 loan modification requests for interest-only payments or deferred payments had been completed in conformance with the Interagency Statement or CARES Act, representing $279,700,000 in loan balances, or approximately 20.8% of the loan portfolio excluding PPP balances. One of these modifications of de minimis amount has been classified as a Troubled Debt Restructure since being modified. So long as modified terms are met, loans in an active modification are not included in past due loan totals and continue to accrue interest.

As of September 30, 2020, loans totaling $81.0 million, or 6.0% of all loans, remained in either their original modification or a subsequent modification. Modification statuses by portfolio segment are summarized below:


Commercial/Municipal Loan Modifications
	Units	Percentage		Balance		Percentage
Paid Off	34	6.0	%	$	6,031,000	3.0	%
Subsequent Modification	41	7.0	%	20,443,000		9.0	%
Still in Original Modification	55	9.0	%	30,188,000		13.0	%
Out of Modification	452	78.0	%	171,407,000		75.0	%
Total	582	100.0	%	$	228,069,000	100.0	%

Residential Real Estate Modifications
	Units	Percentage		Balance		Percentage
Paid Off	17	5.0	%	$	3,102,000	6.0	%
Subsequent Modification	97	28.0	%	13,857,000		27.0	%
Still in Original Modification	125	35.0	%	15,565,000		31.0	%
Out of Modification	111	32.0	%	17,949,000		36.0	%
Total	350	100.0	%	$	50,473,000	100.0	%


Consumer Loan Modifications
	Units	Percentage		Balance		Percentage
Paid Off	8	13.0	%	$	95,000	9.0	%
Subsequent Modification	—	—	%	—		—	%
Still in Original Modification	52	81.0	%	967,000		86.0	%
Out of Modification	4	6.0	%	58,000		5.0	%
Total	64	100.0	%	$	1,120,000	100.0	%

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 September 30, 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	$	305,000	$	233,000	$	661,000	$	1,199,000	$	366,966,000	$	368,165,000	$	—
Construction	14,000		279,000		—		293,000		36,949,000		37,242,000		—
Other	35,000		289,000		339,000		663,000		201,196,000		201,859,000		—
Municipal	—		—		—		—		36,522,000		36,522,000		—
Residential
Term	650,000		767,000		3,806,000		5,223,000		480,267,000		485,490,000		—
Construction	—		—		—		—		14,118,000		14,118,000		—
Home equity line of credit	693,000		306,000		868,000		1,867,000		92,277,000		94,144,000		—
Consumer	234,000		317,000		18,000		569,000		25,350,000		25,919,000		18,000
Total	$	1,931,000	$	2,191,000	$	5,692,000	$	9,814,000	$	1,253,645,000	$	1,263,459,000	$	18,000

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


	September 30, 2020		December 31, 2019		September 30, 2019
Commercial
Real estate	$	1,771,000	$	1,784,000	$	1,807,000
Construction	307,000		256,000		256,000
Other	503,000		6,534,000		6,871,000
Municipal	—		—		—
Residential
Term	4,467,000		5,899,000		6,840,000
Construction	—		—		—
Home equity line of credit	2,063,000		2,171,000		1,078,000
Consumer	—		5,000		6,000
Total	$	9,111,000	$	16,649,000	$	16,858,000

Impaired loans include TDR loans 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 periods ended September 30, 2020 is presented in the following table:


							For the nine months ended September 30, 2020				For the quarter ended September 30, 2020
	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	$	3,730,000	$	4,528,000	$	—	$	4,673,000	$	117,000	$	4,068,000	$	33,000
Construction	308,000		337,000		—		402,000		—		256,000		—
Other	862,000		887,000		—		796,000		19,000		814,000		6,000
Municipal	—		—		—		—		—		—		—
Residential
Term	7,783,000		9,058,000		—		9,173,000		123,000		8,024,000		31,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	1,478,000		1,551,000		—		1,284,000		10,000		1,438,000		2,000
Consumer	—		—		—		—		—		—		—
	$	14,161,000	$	16,361,000	$	—	$	16,328,000	$	269,000	$	14,600,000	$	72,000
With an Allowance Recorded
Commercial
Real estate	$	1,023,000	$	1,047,000	$	135,000	$	1,032,000	$	32,000	$	1,027,000	$	11,000
Construction	701,000		701,000		19,000		546,000		25,000		701,000		8,000
Other	161,000		183,000		128,000		1,523,000		—		143,000		—
Municipal	—		—		—		—		—		—		—
Residential
Term	2,399,000		2,466,000		204,000		2,002,000		63,000		2,207,000		27,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	886,000		886,000		403,000		981,000		1,000		870,000		1,000
Consumer	10,000		10,000		1,000		10,000		—		3,000		—
	$	5,180,000	$	5,293,000	$	890,000	$	6,094,000	$	121,000	$	4,951,000	$	47,000
Total
Commercial
Real estate	$	4,753,000	$	5,575,000	$	135,000	$	5,705,000	$	149,000	$	5,095,000	$	44,000
Construction	1,009,000		1,038,000		19,000		948,000		25,000		957,000		8,000
Other	1,023,000		1,070,000		128,000		2,319,000		19,000		957,000		6,000
Municipal	—		—		—		—		—		—		—
Residential
Term	10,182,000		11,524,000		204,000		11,175,000		186,000		10,231,000		58,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	2,364,000		2,437,000		403,000		2,265,000		11,000		2,308,000		3,000
Consumer	10,000		10,000		1,000		10,000		—		3,000		—
	$	19,341,000	$	21,654,000	$	890,000	$	22,422,000	$	390,000	$	19,551,000	$	119,000

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 periods ended September 30, 2019 is presented in the following table:


							For the nine months ended September 30, 2019				For the quarter ended September 30, 2019
	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	$	7,332,000	$	7,630,000	$	—	$	7,929,000	$	266,000	$	7,242,000	$	83,000
Construction	978,000		990,000		—		929,000		35,000		980,000		12,000
Other	892,000		930,000		—		997,000		22,000		921,000		8,000
Municipal	—		—		—		—		—		—		—
Residential
Term	10,664,000		12,305,000		—		9,877,000		202,000		10,487,000		63,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	827,000		883,000		—		965,000		16,000		917,000		6,000
Consumer	—		—		—		—		—		—		—
	$	20,693,000	$	22,738,000	$	—	$	20,697,000	$	541,000	$	20,547,000	$	172,000
With an Allowance Recorded
Commercial
Real estate	$	1,717,000	$	1,732,000	$	258,000	$	1,538,000	$	72,000	$	1,721,000	$	23,000
Construction	—		—		—		—		—		—		—
Other	6,440,000		6,949,000		1,275,000		6,918,000		1,000		6,465,000		1,000
Municipal	—		—		—		—		—		—		—
Residential
Term	2,782,000		3,121,000		337,000		2,306,000		61,000		2,858,000		25,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	571,000		590,000		184,000		99,000		—		248,000		—
Consumer	6,000		6,000		6,000		1,000		—		2,000		—
	$	11,516,000	$	12,398,000	$	2,060,000	$	10,862,000	$	134,000	$	11,294,000	$	49,000
Total
Commercial
Real estate	$	9,049,000	$	9,362,000	$	258,000	$	9,467,000	$	338,000	$	8,963,000	$	106,000
Construction	978,000		990,000		—		929,000		35,000		980,000		12,000
Other	7,332,000		7,879,000		1,275,000		7,915,000		23,000		7,386,000		9,000
Municipal	—		—		—		—		—		—		—
Residential
Term	13,446,000		15,426,000		337,000		12,183,000		263,000		13,345,000		88,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	1,398,000		1,473,000		184,000		1,064,000		16,000		1,165,000		6,000
Consumer	6,000		6,000		6,000		1,000		—		2,000		—
	$	32,209,000	$	35,136,000	$	2,060,000	$	31,559,000	$	675,000	$	31,841,000	$	221,000

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, 2020, the Company had 78 loans with a balance of $13,390,000 that have been classified as TDRs. This compares to 81 loans with a balance of $21,424,000 and 82 loans with a balance of $24,281,000 classified as TDRs as of December 31, 2019 and September 30, 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 September 30, 2020:


	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	16	$	4,054,000	$	130,000
Construction	1	701,000		19,000
Other	6	729,000		92,000
Municipal	—	—		—
Residential
Term	51	7,430,000		153,000
Construction	—	—		—
Home equity line of credit	3	466,000		—
Consumer	1	10,000		1,000
	78	$	13,390,000	$	395,000

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 September 30, 2019:


	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	19	$	7,559,000	$	249,000
Construction	1	721,000		—
Other	7	6,951,000		1,232,000
Municipal	—	—		—
Residential
Term	52	8,563,000		202,000
Construction	—	—		—
Home equity line of credit	3	487,000		—
Consumer	—	—		—
	82	$	24,281,000	$	1,683,000

As of September 30, 2020, 15 of the loans classified as TDRs with a total balance of $2,814,000 were more than 30 days past due. Of these loans, two 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, 2020:


	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	3	$	1,472,000	$	—
Construction	—	—		—
Other	4	424,000		92,000
Municipal	—	—		—
Residential
Term	6	743,000		—
Construction	—	—		—
Home equity line of credit	1	165,000		—
Consumer	1	10,000		1,000
	15	$	2,814,000	$	93,000

As of September 30, 2019, nine of the loans classified as TDRs with a total balance of $1,084,000 were more than 30 days past due. Of these loans, four 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, 2019:


	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	—	$	—	$	—
Construction	—	—		—
Other	3	251,000		131,000
Municipal	—	—		—
Residential
Term	5	666,000		11,000
Construction	—	—		—
Home equity line of credit	1	167,000		—
Consumer	—	—		—
	9	$	1,084,000	$	142,000

For the nine months ended September 30, 2020, three 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 September 30, 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		187,000		23,000
Construction	—	—		—		—
Home equity line of credit	—	—		—		—
Consumer	1	10,000		10,000		1,000
	3	$	245,000	$	197,000	$	24,000

For the nine months ended September 30, 2019, 10 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 September 30, 2019:


	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	2	$	110,000	$	95,000	$	95,000
Construction	—	—		—		—
Other	—	—		—		—
Municipal	—	—		—		—
Residential
Term	8	998,000		882,000		73,000
Construction	—	—		—		—
Home equity line of credit	—	—		—		—
Consumer	—	—		—		—
	10	$	1,108,000	$	977,000	$	168,000

For the quarter ended September 30, 2020, one loan was 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 September 30, 2020:


	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	—	$	—	$	—	$	—
Construction	—	—		—		—
Other	—	—		—		—
Municipal	—	—		—		—
Residential
Term	—	—		—		—
Construction	—	—		—		—
Home equity line of credit	—	—		—		—
Consumer	1	10,000		10,000		1,000
	1	$	10,000	$	10,000	$	1,000

For the quarter ended September 30, 2019, 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 September 30, 2019:


	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	—	$	—	$	—	$	—
Construction	—	—		—		—
Other	—	—		—		—
Municipal	—	—		—		—
Residential
Term	2	317,000		276,000		—
Construction	—	—		—		—
Home equity line of credit	—	—		—		—
Consumer	—	—		—		—
	2	$	317,000	$	276,000	$	—

As of September 30, 2020, Management is aware of eight loans classified as TDRs that are involved in bankruptcy with an outstanding balance of $911,000. There were also 22 loans with an outstanding balance of $3,159,000 that were classified as TDRs and on non-accrual status, of which two loans with an outstanding balance of $430,000 were in the process of foreclosure.

Residential Mortgage Loans in Process of Foreclosure

As of September 30, 2020, there were 17 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $2,083,000. This compares to 15 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,649,000 as of September 30, 2019.