Allowance for Loan and Lease Losses

The following tables present the changes in the allowance for loan and lease losses and the recorded investment in loans and leases by portfolio segment for the periods indicated:



	Three Months Ended September 30, 2016
	Commercial Real Estate			Commercial			Indirect Automobile			Consumer			Unallocated		Total
	(In Thousands)
Balance at June 30, 2016	$	29,861		$	22,916		$	183		$	4,298		$	—	$	57,258
Charge-offs	(50		)	(545		)	(109		)	(135		)	—		(839		)
Recoveries	—			170			102			47			—		319
(Credit) provision for loan and lease losses	(1,755		)	3,923			(26		)	12			—		2,154
Balance at September 30, 2016	$	28,056		$	26,464		$	150		$	4,222		$	—	$	58,892



	Three Months Ended September 30, 2015
	Commercial Real Estate		Commercial			Indirect Automobile			Consumer			Unallocated			Total
	(In Thousands)
Balance at June 30, 2015	$	29,216	$	20,229		$	381		$	4,012		$	2,560		$	56,398
Charge-offs	—		(1,388		)	(296		)	(247		)	—			(1,931		)
Recoveries	—		112			179			41			—			332
Provision (credit) for loan and lease losses	1,845		2,009			57			322			(2,560		)	1,673
Balance at September 30, 2015	$	31,061	$	20,962		$	321		$	4,128		$	—		$	56,472



	Nine Months Ended September 30, 2016
	Commercial Real Estate			Commercial			Indirect Automobile			Consumer			Unallocated		Total
	(In Thousands)
Balance at December 31, 2015	$	30,151		$	22,018		$	269		$	4,301		$	—	$	56,739
Charge-offs	(1,534		)	(3,250		)	(472		)	(782		)	—		(6,038		)
Recoveries	—			495			467			138			—		1,100
(Credit) provision for loan and lease losses	(561		)	7,201			(114		)	565			—		7,091
Balance at September 30, 2016	$	28,056		$	26,464		$	150		$	4,222		$	—	$	58,892



	Nine Months Ended September 30, 2015
	Commercial Real Estate			Commercial			Indirect Automobile			Consumer			Unallocated			Total
	(In Thousands)
Balance at December 31, 2014	$	29,594		$	15,957		$	2,331		$	3,359		$	2,418		$	53,659
Charge-offs	(550		)	(2,083		)	(1,513		)	(479		)	—			(4,625		)
Recoveries	—			418			1,170			83			—			1,671
Provision (credit) for loan and lease losses	2,017			6,670			(1,667		)	1,165			(2,418		)	5,767
Balance at September 30, 2015	$	31,061		$	20,962		$	321		$	4,128		$	—		$	56,472

The liability for unfunded credit commitments, which is included in other liabilities, was $1.3 million at both September 30, 2016 and December 31, 2015, respectively, and $1.4 million at September 30, 2015. These changes reflect changes in the estimate of loss exposure associated with certain unfunded credit commitments. No credit commitments were charged off against the liability account in the three-month and nine-month periods ended September 30, 2016 and 2015, respectively.

Provision for Credit Losses

The provision for credit losses are set forth below for the periods indicated:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(In Thousands)
Provision (credit) for loan and lease losses:
Commercial real estate	$	(1,755	)	$	1,845		$	(561	)	$	2,017
Commercial	3,923			2,009			7,201			6,670
Indirect automobile	(26		)	57			(114		)	(1,667		)
Consumer	12			322			565			1,165
Unallocated	—			(2,560		)	—			(2,418		)
Total provision for loan and lease losses	2,154			1,673			7,091			5,767
Unfunded credit commitments	61			82			47			164
Total provision for credit losses	$	2,215		$	1,755		$	7,138		$	5,931

Allowance for Loan and Lease Losses Methodology

Management has established a methodology to determine the adequacy of the allowance for loan and lease losses that assesses the risks and losses inherent in the portfolio. Additions to the allowance for loan and lease losses are made by charges to the provision for credit losses. Losses on loans and leases are charged off against the allowance when all or a portion of a loan or lease is considered uncollectible. Subsequent recoveries on loans previously charged off, if any, are credited to the allowance when realized.

Management uses a consistent and systematic process and methodology to evaluate the adequacy of the allowance for loan and lease losses on a quarterly basis. For purposes of determining the allowance for loan and lease losses, the Company has segmented all loans and leases in the portfolio by product type into the following segments: (1) commercial real estate loans, (2) commercial loans and leases, and (3) consumer loans. Portfolio segments are further disaggregated into classes based on the associated risks within the segments. Commercial real estate loans are divided into three classes: commercial real estate loans, multi-family mortgage loans, and construction loans. Commercial loans and leases are divided into three classes: commercial loans, equipment financing, and loans to condominium associations. Consumer loans are divided into four classes: residential mortgage loans, home equity loans, indirect automobile loans, and other consumer loans. A formula-based credit evaluation approach is applied to each group, coupled with an analysis of certain loans for impairment. For each class of loan, management makes significant judgments in selecting the estimation method that fits the credit characteristics of its class and portfolio segment as set forth below.

The general allowance related to loans collectively evaluated for impairment is determined using a formula-based approach utilizing the risk ratings of individual credits and loss factors derived from historic portfolio loss rates, which include estimates of incurred losses over an estimated loss emergence period (“LEP”). The LEP was generated utilizing a charge-off look-back analysis which studied the time from the first indication of elevated risk of repayment (or other early event indicating a problem) to eventual charge-off to support the LEP considered in the allowance calculation. This reserving methodology established the approximate number of months of LEP that represents incurred losses for each portfolio. In addition to quantitative measures, relevant qualitative factors include, but are not limited to: (1) levels and trends in past due and impaired loans, (2) levels and trends in charge-offs, (3) changes in underwriting standards, policy exceptions, and credit policy, (4) experience of lending management and staff, (5) economic trends, (6) industry conditions, (7) effects of changes in credit concentrations, (8) interest rate environment, and (9) regulatory and other changes. The general allowance related to the acquired loans collectively evaluated for impairment is determined based upon the degree, if any, of deterioration in the pooled loans subsequent to acquisition. The qualitative factors used in the determination are the same as those used for originated loans.

During 2015, the Company enhanced and refined its general allowance methodology to provide a more precise quantification of probable losses in the portfolio. Under the enhanced methodology, management combined the historical loss histories of the Banks to generate a single set of ratios. Management believes it is appropriate to aggregate the ratios as the Banks share common environmental factors, operate in similar markets, and utilize common underwriting standards in accordance with the Company's Credit Policy. In prior periods, a historical loss history applicable to each Bank was used.

Management employed a similar analysis for the consolidation of the qualitative factors as it did for the quantitative factors. Again, management believes the realignment of the existing nine qualitative factors used at each of the Banks into a single group of factors for use across the Company is appropriate based on the commonality of environmental factors, markets, and underwriting standards among the Banks. In the periods prior to the three months ended September 30, 2015, each of the Banks utilized a set of qualitative factors applicable to each Bank.

As of September 30, 2016, the Company had a portfolio of approximately $36.0 million in loans secured by taxi medallions issued by the cities of Boston and Cambridge. Application-based mobile ride services, such as Uber and Lyft, have generated increased competition in the transportation sector, resulting in a reduction in taxi utilization and, as a result, a reduction in the collateral value and credit quality of taxi medallion loans. This has increased the likelihood that loans secured by taxi medallions may default, or that the borrowers may be unable to repay these loans at maturity, potentially resulting in an increase in past due loans, troubled debt restructurings, and charge-offs. Therefore, beginning with the three months ended December 31, 2015, the Company’s allowance calculation included a further segmentation of the commercial loans and leases to reflect the increased risk in the Company’s taxi medallion portfolio. This allowance calculation segmentation represents management’s estimations of the risks associated with the portfolio.

As of September 30, 2016, the Company had an allowance for loan and lease losses associated with taxi medallion loans of $6.0 million of which $4.7 million were specific reserves and $1.3 million was a general reserve. As of December 31, 2015, the Company had a general reserve for loan and lease losses associated with taxi medallion loans of $4.3 million. The total troubled debt restructured loans and leases secured by taxi medallions increased by $8.8 million from $1.3 million at December 31, 2015 to $10.1 million at September 30, 2016. The total loans and leases secured by taxi medallions that were placed on nonaccrual increased to $18.0 million at September 30, 2016 from zero at December 31, 2015. However, further declines in demand for taxi services or further deterioration in the value of taxi medallions may result in higher delinquencies and losses beyond that provided for in the allowance for loan and lease losses.

Based on the refinements to the Company’s allowance methodology discussed above, management determined that the potential risks anticipated by the unallocated allowance are now incorporated into the allowance methodology, making the unallocated allowance unnecessary. In the periods prior to the three months ended September 30, 2015, the unallocated allowance was used to recognize the estimated risk associated with the allocated general and specific allowances. It incorporated management’s evaluation of existing conditions that were not included in the allocated allowance determinations and provided for losses that arise outside of the ordinary course of business.

Specific valuation allowances are established for impaired originated loans with book values greater than the discounted present value of expected future cash flows or, in the case of collateral-dependent impaired loans, for any excess of a loan's book balance greater than the fair value of its underlying collateral. Specific valuation allowances are established for acquired loans with deterioration in the discounted present value of expected future cash flows since acquisitions or, in the case of collateral dependent impaired loans, for any increase in the excess of a loan's book balance greater than the fair value of its underlying collateral. A specific valuation allowance for losses on troubled debt restructured loans is determined by comparing the net carrying amount of the troubled debt restructured loan with the restructured loan's cash flows discounted at the original effective rate. Impaired loans are reviewed quarterly with adjustments made to the specific reserve as necessary.

As of September 30, 2016, management believes that the methodology for calculating the allowance is sound and that the allowance provides a reasonable basis for determining and reporting on probable losses in the Company’s loan portfolios.

The general allowance for loan and lease losses was $52.6 million at September 30, 2016, compared to $53.1 million at December 31, 2015. The general portion of the allowance for loan and lease losses decreased by $0.5 million during the nine months ended September 30, 2016, primarily driven by the decrease in historical loss factors applied to commercial real estate and consumer loan portfolios and the improvement of credit risk ratings of loans within the commercial real estate and commercial portfolios, offset by the continued growth in the Company's loan portfolios.

The specific allowance for loan and lease losses was $6.3 million at September 30, 2016, compared to $3.6 million at December 31, 2015. The specific allowance increased $2.7 million during the nine months ended September 30, 2016, primarily due to the restructure of certain taxi medallion loans and changes in the collateral values of taxi medallions.

Credit Quality Assessment

At the time of loan origination, a rating is assigned based on the financial strength of the borrower and the value of assets pledged as collateral. The Company continually monitors the asset quality of the loan portfolio using all available information. The officer responsible for handling each loan is required to initiate changes to risk ratings when changes in facts and circumstances occur that warrant an upgrade or downgrade in a loan rating. Based on this information, loans demonstrating certain payment issues or other weaknesses may be categorized as delinquent, impaired, nonperforming and/or put on nonaccrual status. Additionally, in the course of resolving such loans, the Company may choose to restructure the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition. If a restructured loan meets certain criteria, it may be categorized as a troubled debt restructuring.

The Company reviews numerous credit quality indicators when assessing the risk in its loan portfolio. For the commercial real estate, multi-family mortgage, construction, commercial, equipment financing, condominium association, and other consumer loan and lease classes, the Company utilizes an eight-grade loan rating system, which assigns a risk rating to each borrower based on a number of quantitative and qualitative factors associated with a loan transaction. Factors considered include industry and market conditions, position within the industry, earnings trends, operating cash flow, asset/liability values, debt capacity, guarantor strength, management and controls, financial reporting, collateral, and other considerations. In addition, the Company’s independent loan review group evaluates the credit quality and related risk ratings of the commercial real estate and commercial loan portfolios. The results of these reviews are reported to the Board of Directors. For consumer loans, the Company primarily relies on payment status for monitoring credit risk.

The ratings categories used for assessing credit risk in the commercial real estate, multi-family mortgage, construction, commercial, equipment financing, condominium association and other consumer loan and lease classes are defined as follows:

1-4 Rating — Pass

Loan rating grades “1” through “4” are classified as “Pass,” which indicates borrowers are performing in accordance with the terms of the loan and are less likely to result in losses due to the capacity of the borrowers to pay and the adequacy of the value of assets pledged as collateral.

5 Rating — Other Asset Especially Mentioned (“OAEM”)

Borrowers exhibit potential credit weaknesses or downward trends deserving management’s attention. If not checked or corrected, these trends can weaken the Company’s asset position. While potentially weak, currently these borrowers are marginally acceptable; no loss of principal or interest is envisioned.

6 Rating — Substandard

Borrowers exhibit well-defined weaknesses that jeopardize the orderly liquidation of debt. Substandard loans may be inadequately protected by the current net worth and paying capacity of the obligors or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy. Although no loss of principal is envisioned, there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Collateral coverage may be inadequate to cover the principal obligation.

7 Rating — Doubtful

Borrowers exhibit well-defined weaknesses that jeopardize the orderly liquidation of debt with the added provision that the weaknesses make collection of the debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely.

8 Rating — Definite Loss

Borrowers deemed incapable of repayment. Loans to such borrowers are considered uncollectable and of such little value that continuation as active assets of the Company is not warranted.

Assets rated as “OAEM,” “substandard” or “doubtful” based on criteria established under banking regulations are collectively referred to as “criticized” assets.

Credit Quality Information

The following tables present the recorded investment in loans in each class at September 30, 2016 by credit quality indicator.



	At September 30, 2016
	Commercial Real Estate		Multi- Family Mortgage		Construction		Commercial		Equipment Financing		Condominium Association		Other Consumer
	(In Thousands)
Originated:
Loan rating:
Pass	$	1,874,534	$	671,690	$	140,802	$	604,282	$	750,322	$	53,903	$	12,219
OAEM	1,546		—		188		7,540		1,039		—		—
Substandard	3,457		1,418		—		24,692		5,989		—		35
Doubtful	626		—		—		144		736		—		—
Total originated	1,880,163		673,108		140,990		636,658		758,086		53,903		12,254

Acquired:
Loan rating:
Pass	147,218		29,913		218		11,203		6,553		—		126
OAEM	1,424		404		—		464		—		—		—
Substandard	9,570		318		—		3,018		—		—		—
Doubtful	102		—		—		973		8		—		—
Total acquired	158,314		30,635		218		15,658		6,561		—		126

Total loans	$	2,038,477	$	703,743	$	141,208	$	652,316	$	764,647	$	53,903	$	12,380

At September 30, 2016, there were no loans categorized as definite loss.



	At September 30, 2016
	Indirect Automobile
	($ In Thousands)
Originated:
Credit score:
Over 700	$	3,044	40.0	%
661-700	1,145		15.0	%
660 and below	3,391		44.6	%
Data not available	27		0.4	%
Total loans	$	7,607	100.0	%



	At September 30, 2016
	Residential Mortgage				Home Equity
	($ In Thousands)
Originated:
Loan-to-value ratio:
Less than 50%	$	126,290	20.5	%	$	153,001	44.9	%
50% - 69%	224,791		36.4	%	59,629		17.6	%
70% - 79%	166,363		26.9	%	45,455		13.3	%
80% and over	18,336		3.0	%	23,678		6.9	%
Data not available	4,870		0.8	%	741		0.2	%
Total originated	540,650		87.6	%	282,504		82.9	%

Acquired:
Loan-to-value ratio:
Less than 50%	17,034		2.7	%	36,541		10.7	%
50% - 69%	28,240		4.6	%	15,939		4.7	%
70% - 79%	15,165		2.5	%	3,459		1.0	%
80% and over	11,416		1.9	%	1,116		0.3	%
Data not available	4,560		0.7	%	1,395		0.4	%
Total acquired	76,415		12.4	%	58,450		17.1	%

Total loans and leases	$	617,065	100.0	%	$	340,954	100.0	%

The following tables present the recorded investment in loans in each class at December 31, 2015 by credit quality indicator.



	At December 31, 2015
	Commercial Real Estate		Multi- Family Mortgage		Construction		Commercial		Equipment Financing		Condominium Association		Other Consumer
	(In Thousands)
Originated:
Loan rating:
Pass	$	1,668,891	$	619,786	$	129,534	$	562,615	$	709,381	$	59,875	$	12,017
OAEM	12,781		788		208		9,976		804		—		—
Substandard	780		291		—		1,714		1,414		—		22
Doubtful	2,096		—		—		2,294		1,389		—		—
Total originated	1,684,548		620,865		129,742		576,599		712,988		59,875		12,039

Acquired:
Loan rating:
Pass	182,377		35,785		580		11,959		8,902		—		131
OAEM	1,202		612		—		902		—		—		—
Substandard	7,066		1,218		—		3,071		—		—		—
Doubtful	399		—		—		—		—		—		—
Total acquired	191,044		37,615		580		15,932		8,902		—		131

Total loans and leases	$	1,875,592	$	658,480	$	130,322	$	592,531	$	721,890	$	59,875	$	12,170

At December 31, 2015, there were no loans categorized as definite loss.



	At December 31, 2015
	Indirect Automobile
	($ In Thousands)
Originated:
Credit score:
Over 700	$	5,435	39.7	%
661-700	1,965		14.4	%
660 and below	6,217		45.5	%
Data not available	61		0.4	%
Total loans	$	13,678	100.0	%



	At December 31, 2015
	Residential Mortgage				Home Equity
	($ In Thousands)
Originated:
Loan-to-value ratio:
Less than 50%	$	118,628	19.2	%	$	131,584	41.8	%
50% - 69%	214,390		34.8	%	51,492		16.4	%
70% - 79%	173,774		28.2	%	32,916		10.5	%
80% and over	17,808		2.9	%	18,082		5.7	%
Data not available	3,246		0.5	%	634		0.2	%
Total originated	527,846		85.6	%	234,708		74.6	%

Acquired:
Loan-to-value ratio:
Less than 50%	18,857		3.1	%	48,563		15.4	%
50% - 69%	32,986		5.3	%	20,623		6.6	%
70% - 79%	17,883		2.9	%	7,144		2.3	%
80% and over	14,011		2.3	%	2,650		0.8	%
Data not available	4,866		0.8	%	865		0.3	%
Total acquired	88,603		14.4	%	79,845		25.4	%

Total loans	$	616,449	100.0	%	$	314,553	100.0	%

The following table presents information regarding foreclosed residential real estate property at the dates indicated.



	September 30, 2016		December 31, 2015
	(In Thousands)
Foreclosed residential real estate property held by the creditor	$	—	$	362
Recorded investment in mortgage loans collateralized by residential real estate property that are in the process of foreclosure	1,400		298

Age Analysis of Past Due Loans and Leases

The following tables present an age analysis of the recorded investment in total loans and leases at September 30, 2016 and December 31, 2015.



	At September 30, 2016
	Past Due												Loans and Leases Past
	31-60 Days		61-90 Days		Greater Than 90 Days		Total		Current		Total Loans and Leases		Due Greater Than 90 Days and Accruing		Nonaccrual Loans and Leases
	(In Thousands)
Originated:
Commercial real estate loans:
Commercial real estate	$	2,386	$	139	$	802	$	3,327	$	1,876,836	$	1,880,163	$	—	$	1,530
Multi-family mortgage	—		—		291		291		672,817		673,108		—		1,418
Construction	—		—		—		—		140,990		140,990		—
Total commercial real estate loans	2,386		139		1,093		3,618		2,690,643		2,694,261		—		2,948
Commercial loans and leases:
Commercial	1,998		301		9,476		11,775		624,883		636,658		—		21,950
Equipment financing	1,201		368		5,413		6,982		751,104		758,086		166		6,652
Condominium association	61		—		—		61		53,842		53,903		—		—
Total commercial loans and leases	3,260		669		14,889		18,818		1,429,829		1,448,647		166		28,602
Indirect automobile	501		184		62		747		6,860		7,607		—		179
Consumer loans:
Residential mortgage	1,131		—		178		1,309		539,341		540,650		—		1,533
Home equity	25		256		100		381		282,123		282,504		1		229
Other consumer	13		8		29		50		12,204		12,254		—		35
Total consumer loans	1,169		264		307		1,740		833,668		835,408		1		1,797
Total originated loans and leases	$	7,316	$	1,256	$	16,351	$	24,923	$	4,961,000	$	4,985,923	$	167	$	33,526



	At September 30, 2016
	Past Due												Loans and Leases Past
	31-60 Days		61-90 Days		Greater Than 90 Days		Total		Current		Total Loans and Leases		Due Greater Than 90 Days and Accruing		Nonaccrual Loans and Leases
	(In Thousands)
Acquired:
Commercial real estate loans:
Commercial real estate	$	431	$	148	$	4,047	$	4,626	$	153,688	$	158,314	$	3,974	$	158
Multi-family mortgage	—		—		—		—		30,635		30,635		—		—
Construction	—		—		—		—		218		218		—		—
Total commercial real estate loans	431		148		4,047		4,626		184,541		189,167		3,974		158
Commercial loans and leases:
Commercial	2		310		2,435		2,747		12,911		15,658		334		2,101
Equipment financing	8		—		—		8		6,553		6,561		—		—
Total commercial loans and leases	10		310		2,435		2,755		19,464		22,219		334		2,101
Consumer loans:
Residential mortgage	46		95		3,844		3,985		72,430		76,415		3,628		216
Home equity	864		175		671		1,710		56,740		58,450		172		1,551
Other consumer	—		—		—		—		126		126		—		—
Total consumer loans	910		270		4,515		5,695		129,296		134,991		3,800		1,767
Total acquired loans and leases	$	1,351	$	728	$	10,997	$	13,076	$	333,301	$	346,377	$	8,108	$	4,026

Total loans and leases	$	8,667	$	1,984	$	27,348	$	37,999	$	5,294,301	$	5,332,300	$	8,275	$	37,552



	At December 31, 2015
	Past Due												Loans and Leases Past
	31-60 Days		61-90 Days		Greater Than 90 Days		Total		Current		Total Loans and Leases		Due Greater Than 90 Days and Accruing		Nonaccrual Loans and Leases
	(In Thousands)
Originated:
Commercial real estate loans:
Commercial real estate	$	1,782	$	—	$	2,097	$	3,879	$	1,680,669	$	1,684,548	$	—	$	2,876
Multi-family mortgage	—		—		16		16		620,849		620,865		16		291
Construction	652		—		—		652		129,090		129,742		—		—
Total commercial real estate loans	2,434		—		2,113		4,547		2,430,608		2,435,155		16		3,167
Commercial loans and leases:
Commercial	4,578		1,007		2,368		7,953		568,646		576,599		24		3,586
Equipment financing	1,681		595		2,143		4,419		708,569		712,988		77		2,610
Condominium association	205		124		—		329		59,546		59,875		—		—
Total commercial loans and leases	6,464		1,726		4,511		12,701		1,336,761		1,349,462		101		6,196
Indirect automobile	1,058		335		106		1,499		12,179		13,678		—		675
Consumer loans:
Residential mortgage	1,384		—		229		1,613		526,233		527,846		—		1,873
Home equity	390		237		9		636		234,072		234,708		—		319
Other consumer	19		2		25		46		11,993		12,039		—		29
Total consumer loans	1,793		239		263		2,295		772,298		774,593		—		2,221
Total originated loans and leases	$	11,749	$	2,300	$	6,993	$	21,042	$	4,551,846	$	4,572,888	$	117	$	12,259



	At December 31, 2015
	Past Due												Loans and Leases Past
	31-60 Days		61-90 Days		Greater Than 90 Days		Total		Current		Total Loans and Leases		Due Greater Than 90 Days and Accruing		Nonaccrual Loans and Leases
	(In Thousands)
Acquired:
Commercial real estate loans:
Commercial real estate	$	1,336	$	369	$	7,588	$	9,293	$	181,751	$	191,044	$	4,982	$	2,606
Multi-family mortgage	—		—		1,077		1,077		36,538		37,615		1,077		—
Construction	—		—		—		—		580		580		—		—
Total commercial real estate loans	1,336		369		8,665		10,370		218,869		229,239		6,059		2,606
Commercial loans and leases:
Commercial	351		23		2,967		3,341		12,591		15,932		325		2,678
Equipment financing	—		—		—		—		8,902		8,902		—		—
Total commercial loans and leases	351		23		2,967		3,341		21,493		24,834		325		2,678
Consumer loans:
Residential mortgage	326		216		2,399		2,941		85,662		88,603		2,047		352
Home equity	1,012		386		460		1,858		77,987		79,845		142		1,438
Other consumer	—		—		—		—		131		131		—		—
Total consumer loans	1,338		602		2,859		4,799		163,780		168,579		2,189		1,790
Total acquired loans and leases	$	3,025	$	994	$	14,491	$	18,510	$	404,142	$	422,652	$	8,573	$	7,074

Total loan and leases	$	14,774	$	3,294	$	21,484	$	39,552	$	4,955,988	$	4,995,540	$	8,690	$	19,333

Commercial Real Estate Loans — At September 30, 2016, loans outstanding in the three classes within this segment expressed as a percentage of total loans and leases outstanding were as follows: commercial real estate loans — 38.3%; multi-family mortgage loans — 13.2%; and construction loans — 2.6%.

Loans in this portfolio that are on nonaccrual status and/or risk-rated “substandard” or worse are evaluated on an individual loan basis for impairment. For non-impaired commercial real estate loans, loss factors are applied to outstanding loans by risk rating for each of the three classes in the portfolio. The factors applied are based primarily on historic loan loss experience and an assessment of internal and external factors and other relevant information.

Commercial Loans and Leases — At September 30, 2016, loans and leases outstanding in the three classes within this segment expressed as a percent of total loans and leases outstanding were as follows: commercial loans and leases — 12.2%; equipment financing loans — 14.4%; and loans to condominium associations — 1.0%.

Loans and leases in this portfolio that are on nonaccrual status and/or risk-rated “substandard” or worse are evaluated on an individual basis for impairment. For non-impaired commercial loans and leases, loss factors are applied to outstanding loans by risk rating for the respective class in the portfolio.

Consumer Loans — At September 30, 2016, loans outstanding within the four classes within this segment expressed as a percent of total loans and leases outstanding were as follows: residential mortgage loans — 11.6%; home equity loans — 6.4%; indirect automobile loans — 0.1% , and other consumer loans — 0.2%.

Significant risk characteristics related to the residential mortgage and home equity loan portfolios are the geographic concentration of the properties financed within selected communities in the greater Boston and Providence metropolitan areas. The payment status and loan-to-value ratio are the primary credit quality indicators used for residential mortgage loans and home equity loans. Generally, loans are not made when the loan-to-value ratio exceeds 80% unless private mortgage insurance is obtained and/or there is a financially strong guarantor. Consumer loans that become 90 days or more past due, or are placed on nonaccrual regardless of past due status, are reviewed on an individual basis for impairment by assessing the net realizable value of underlying collateral and the economic condition of the borrower.

Impaired Loans and Leases

A loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due (both interest and principal) according to the contractual terms of the loan agreement. The Company has defined the population of impaired loans to include nonaccrual loans and troubled debt restructured loans.

When the ultimate collectability of the total principal of an impaired loan or lease is in doubt and the loan is on nonaccrual status, all payments are applied to principal, under the cost recovery method. When the ultimate collectability of the total principal of an impaired loan or lease is not in doubt and the loan or lease is on nonaccrual status, contractual interest is credited to interest income when received, under the cash basis method.

The following tables include the recorded investment and unpaid principal balances of impaired loans and leases with the related allowance amount, if applicable, for the originated and acquired loan and lease portfolios at the dates indicated. Also presented are the average recorded investments in the impaired loans and leases and the related amount of interest recognized during the period that the impaired loans were impaired.



	At September 30, 2016						At December 31, 2015
	Recorded Investment ₍₁₎		Unpaid Principal Balance		Related Allowance		Recorded Investment ₍₂₎		Unpaid Principal Balance		Related Allowance
	(In Thousands)
Originated:
With no related allowance recorded:
Commercial real estate	$	6,608	$	6,604	$	—	$	2,758	$	2,756	$	—
Commercial	21,338		21,311		—		14,097		14,074		—
Consumer	3,461		3,456		—		4,582		4,575		—
Total originated with no related allowance recorded	31,407		31,371		—		21,437		21,405		—
With an allowance recorded:
Commercial real estate	4,543		4,542		153		6,150		6,150		2,167
Commercial	14,317		14,298		5,580		2,215		2,213		1,202
Consumer	248		246		98		—		—		—
Total originated with an allowance recorded	19,108		19,086		5,831		8,365		8,363		3,369
Total originated impaired loans and leases	50,515		50,457		5,831		29,802		29,768		3,369

Acquired:
With no related allowance recorded:
Commercial real estate	9,851		9,851		—		7,035		7,035		—
Commercial	3,886		3,886		—		4,053		4,052		—
Consumer	8,422		8,437		—		7,549		7,565		—
Total acquired with no related allowance recorded	22,159		22,174		—		18,637		18,652		—
With an allowance recorded:
Commercial real estate	—		—		—		2,606		2,606		148
Commercial	486		486		410		486		486		112
Consumer	425		425		29		174		174		9
Total acquired with an allowance recorded	911		911		439		3,266		3,266		269
Total acquired impaired loans and leases	23,070		23,085		439		21,903		21,918		269

Total impaired loans and leases	$	73,585	$	73,542	$	6,270	$	51,705	$	51,686	$	3,638

⁽¹⁾Includes originated and acquired nonaccrual loans of $29.7 million and $4.0 million, respectively, at September 30, 2016.

⁽²⁾Includes originated and acquired nonaccrual loans of $9.3 million and $7.1 million, respectively, at December 31, 2015.



	Three Months Ended
	September 30, 2016				September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
Originated:
With no related allowance recorded:
Commercial real estate	$	6,636	$	49	$	3,077	$	21
Commercial	21,474		147		15,112		171
Consumer	3,480		18		4,421		15
Total originated with no related allowance recorded	31,590		214		22,610		207
With an allowance recorded:
Commercial real estate	4,549		48		6,172		49
Commercial	14,390		3		7,700		2
Consumer	248		—		—		—
Total originated with an allowance recorded	19,187		51		13,872		51
Total originated impaired loans and leases	50,777		265		36,482		258

Acquired:
With no related allowance recorded:
Commercial real estate	9,952		67		10,813		39
Commercial	4,127		29		4,113		16
Consumer	8,475		16		8,094		19
Total acquired with no related allowance recorded	22,554		112		23,020		74
With an allowance recorded:
Commercial real estate	—		—		—		—
Commercial	486		—		596		—
Consumer	423		2		93		1
Total acquired with an allowance recorded	909		2		689		1
Total acquired impaired loans and leases	23,463		114		23,709		75

Total impaired loans and leases	$	74,240	$	379	$	60,191	$	333




	Nine Months Ended
	September 30, 2016				September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
Originated:
With no related allowance recorded:
Commercial real estate	$	5,655	$	119	$	4,403	$	65
Commercial	16,602		412		15,095		474
Consumer	3,865		55		4,156		45
Total originated with no related allowance recorded	26,122		586		23,654		584
With an allowance recorded:
Commercial real estate	4,957		146		4,791		148
Commercial	13,017		5		6,687		8
Consumer	165		—		112		—
Total originated with an allowance recorded	18,139		151		11,590		156
Total originated impaired loans and leases	44,261		737		35,244		740

Acquired:
With no related allowance recorded:
Commercial real estate	8,341		126		9,912		114
Commercial	4,254		66		4,516		48
Consumer	7,795		51		7,927		48
Total acquired with no related allowance recorded	20,390		243		22,355		210
With an allowance recorded:
Commercial real estate	1,458		—		81		—
Commercial	486		—		689		—
Consumer	490		6		274		6
Total acquired with an allowance recorded	2,434		6		1,044		6
Total acquired impaired loans and leases	22,824		249		23,399		216

Total impaired loans and leases	$	67,085	$	986	$	58,643	$	956

The following tables present information regarding impaired and non-impaired loans and leases at the dates indicated:



	At September 30, 2016
	Commercial Real Estate		Commercial		Indirect Automobile		Consumer		Total
	(In Thousands)
Allowance for Loan and Lease Losses:
Originated:
Individually evaluated for impairment	$	153	$	5,580	$	—	$	98	$	5,831
Collectively evaluated for impairment	26,978		20,365		150		3,928		51,421
Total originated loans and leases	27,131		25,945		150		4,026		57,252

Acquired:
Individually evaluated for impairment	—		410		—		29		439
Collectively evaluated for impairment	260		19		—		40		319
Acquired with deteriorated credit quality	665		90		—		127		882
Total acquired loans and leases	925		519		—		196		1,640

Total allowance for loan and lease losses	$	28,056	$	26,464	$	150	$	4,222	$	58,892

Loans and Leases:
Originated:
Individually evaluated for impairment	$	11,151	$	35,185	$	—	$	3,610	$	49,946
Collectively evaluated for impairment	2,683,110		1,413,462		7,607		831,798		4,935,977
Total originated loans and leases	2,694,261		1,448,647		7,607		835,408		4,985,923

Acquired:
Individually evaluated for impairment	546		3,454		—		2,865		6,865
Collectively evaluated for impairment	51,933		11,860		—		78,531		142,324
Acquired with deteriorated credit quality	136,688		6,905		—		53,595		197,188
Total acquired loans and leases	189,167		22,219		—		134,991		346,377

Total loans and leases	$	2,883,428	$	1,470,866	$	7,607	$	970,399	$	5,332,300



	At December 31, 2015
	Commercial Real Estate		Commercial		Indirect Automobile		Consumer		Total
	(In Thousands)
Allowance for Loan and Lease Losses:
Originated:
Individually evaluated for impairment	$	2,167	$	1,202	$	—	$	—	$	3,369
Collectively evaluated for impairment	26,857		20,545		269		3,947		51,618
Total originated loans and leases	29,024		21,747		269		3,947		54,987

Acquired:
Individually evaluated for impairment	148		112		—		9		269
Collectively evaluated for impairment	333		71		—		45		449
Acquired with deteriorated credit quality	646		88		—		300		1,034
Total acquired loans and leases	1,127		271		—		354		1,752

Total allowance for loan and lease losses	$	30,151	$	22,018	$	269	$	4,301	$	56,739

Loans and Leases:
Originated:
Individually evaluated for impairment	$	8,907	$	15,806	$	—	$	4,471	$	29,184
Collectively evaluated for impairment	2,426,248		1,333,656		13,678		770,122		4,543,704
Total originated loans and leases	2,435,155		1,349,462		13,678		774,593		4,572,888

Acquired:
Individually evaluated for impairment	3,188		4,090		—		2,606		9,884
Collectively evaluated for impairment	63,857		12,081		—		105,146		181,084
Acquired with deteriorated credit quality	162,194		8,663		—		60,827		231,684
Total acquired loans and leases	229,239		24,834		—		168,579		422,652

Total loans and leases	$	2,664,394	$	1,374,296	$	13,678	$	943,172	$	4,995,540

Troubled Debt Restructured Loans and Leases

A specific valuation allowance for losses on troubled debt restructured loans is determined by comparing the net carrying amount of the troubled debt restructured loan with the restructured loan's cash flows discounted at the original effective rate.

The following table sets forth information regarding troubled debt restructured loans and leases at the dates indicated:



	At September 30, 2016		At December 31, 2015
	(In Thousands)
Troubled debt restructurings:
On accrual	$	16,303	$	17,953
On nonaccrual	15,715		4,965
Total troubled debt restructurings	$	32,018	$	22,918

Total troubled debt restructuring loans and leases increased by $9.1 million to $32.0 million at September 30, 2016 from $22.9 million at December 31, 2015. The increase was primarily due to $8.8 million of taxi medallion loans which were restructured under the definition of a troubled debt restructuring and placed on nonaccrual during the first nine months of 2016.

The recorded investment in troubled debt restructurings and the associated specific allowances for loan and lease losses, in the originated and acquired loan and lease portfolios, are as follows for the periods indicated.



	At and for the Three Months Ended September 30, 2016
	Recorded Investment					Specific				Defaulted⁽¹⁾
	Number of Loans/ Leases	At Modification		At End of Period		Allowance for Loan and Lease Losses		Nonaccrual Loans and Leases		Additional Commitment		Number of Loans/ Leases	Recorded Investment
	(Dollars in Thousands)
Originated:
Commercial	2	$	812	$	812	$	220	$	473	$	—	1	$	348
Equipment financing	1	433		433		—		433		—		2	353
Total Originated	3	1,245		1,245		220		906		—		3	701

Acquired:
Home equity	4	323		323		20		146		—		—	—
Total Acquired	4	323		323		20		146		—		—	—

Total	7	$	1,568	$	1,568	$	240	$	1,052	$	—	3	$	701

(1) Includes loans and leases that have been modified within the past twelve months and subsequently had payment defaults during the period indicated.



	At and for the Three Months Ended September 30, 2015
	Recorded Investment					Specific				Defaulted⁽¹⁾
	Number of Loans/ Leases	At Modification		At End of Period		Allowance for Loan and Lease Losses		Nonaccrual Loans and Leases		Additional Commitment		Number of Loans/ Leases	Recorded Investment
	(Dollars in Thousands)
Originated:
Commercial	7	$	5,600	$	5,197	$	119	$	239	$	—	—	$	—
Equipment financing	4	318		305		—		—		—		—	—
Residential mortgage	1	152		153		—		153		—		—	—
Home equity	2	$	273	$	274			$	101
Total Originated	14	6,343		5,929		119		493		—		—	—

Acquired:
Commercial	2	379		372		—		—		—		1	399
Home equity	1	175		174				—		—		—	—
Total Acquired	3	554		546		—		—		—		1	399

Total	17	$	6,897	$	6,475	$	119	$	493	$	—	1	$	399

(1) Includes loans and leases that have been modified within the past twelve months and subsequently had payment defaults during the period indicated.




	At and for the Nine Months Ended September 30, 2016
	Recorded Investment					Specific				Defaulted
	Number of Loans/ Leases	At Modification		At End of Period		Allowance for Loan and Lease Losses		Nonaccrual Loans and Leases		Additional Commitment		Number of Loans/ Leases	Recorded Investment
	(Dollars in Thousands)
Originated:
Commercial real estate	2	$	1,155	$	1,127	$	—	$	1,127	$	—	—	$	—
Commercial	22	9,701		9,504		3,478		9,136		—		2	376
Equipment financing	3	797		786		—		786		—		2	353
Total Originated	27	11,653		11,417		3,478		11,049		—		4	729

Acquired:
Commercial	—	—		—		—		—		—		2	696
Home equity	5	374		372		20		146		—		—	—
Total Acquired	5	374		372		20		146		—		2	696

Total	32	$	12,027	$	11,789	$	3,498	$	11,195	$	—	6	$	1,425




	At and for the Nine Months Ended September 30, 2015
	Recorded Investment					Specific				Defaulted
	Number of Loans/ Leases	At Modification		At End of Period		Allowance for Loan and Lease Losses		Nonaccrual Loans and Leases		Additional Commitment		Number of Loans/ Leases	Recorded Investment
	(Dollars in Thousands)
Originated:
Commercial	8	$	5,735	$	5,429	$	119	$	239	$	—	—	$	—
Equipment financing	5	430		403		—		—		—		—	—
Residential mortgage	1	152		153		—		153		—		—	—
Home Equity	2	273		274				101
Total Originated	16	6,590		6,259		119		493		—		—	—

Acquired:
Commercial	4	642		634		—		12		—		1	399
Home Equity	2	200		197		—		23		—		—	—
Total Acquired	6	842		831		—		35		—		1	399

Total	22	$	7,432	$	7,090	$	119	$	528	$	—	1	$	399

The following table sets forth the Company’s balances of troubled debt restructurings that were modified for the periods indicated, by type of modification.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(In Thousands)
Loans with one modification:
Extended maturity	$	528	$	1,632	$	604	$	2,137
Adjusted principal	—		—		410		—
Interest only	—		1,335		2,346		1,335
Combination maturity, principal, interest rate	1,040		906		8,201		1,004
Total loans with one modification	1,568		3,873		11,561		4,476

Loans with more than one modification:
Extended maturity	—		2,602		228		2,603
Combination maturity, principal, interest rate	—		—		—		11
Total loans with more than one modification	—		2,602		228		2,614

Total loans with modifications	$	1,568	$	6,475	$	11,789	$	7,090

The net charge-offs of the performing and nonperforming troubled debt restructuring loans and leases for the three months and nine months ended September 30, 2016 were $28 thousand and $110 thousand, respectively. The net recoveries of performing and nonperforming troubled debt restructuring loans and leases for the three months ended September 30, 2015 was $3 thousand; while the net charge-offs for the performing and nonperforming troubled debt restructuring loans and leases for the nine months ended September 30, 2015 was $14 thousand.

As of September 30, 2016 and 2015, there were no commitments to lend funds to debtors owing receivables whose terms had been modified in troubled debt restructurings.