DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

6 Months Ended

Jun. 30, 2013

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Schedule of derivative assets and liabilities

Information about derivative assets and liabilities at June 30, 2013, follows:

			Weighted					Estimated
	Notional		Average	Weighted Average Rate				Fair Value
	Amount		Maturity	Received		Paid		Asset (Liability)
	(In thousands)		(In years)					(In thousands)
Cash flow hedges:
Interest rate swaps on FHLBB borrowings	$	125,000	1.8	0.28	%	3.37	%	$	(4,014	)
Forward-starting interest rate swaps on FHLBB borrowings	160,000		5.6	—		1.86	%	1,036
Interest rate swaps on junior subordinated notes	15,000		0.9	2.12	%	5.54	%	(453		)
Total cash flow hedges	300,000							(3,431		)
Economic hedges:
Interest rate swap on tax advantaged economic development bond	13,355		16.4	0.57	%	5.09	%	(2,396		)
Interest rate swaps on loans with commercial loan customers	194,363		5.0	2.58	%	5.51	%	7,615
Reverse interest rate swaps on loans with commercial loan customers	194,363		5.0	5.51	%	2.58	%	(7,731		)
Forward commitments	186,939		0.2					4,913
Total economic hedges	589,020							2,401
Non-hedging derivatives:
Interest rate lock commitments	124,414		0.2					(1,507		)
Total non-hedging derivatives	124,414							(1,507		)
Total	$	1,013,434						$	(2,537	)

Information about derivative assets and liabilities at December 31, 2012, follows:

			Weighted					Estimated
	Notional		Average	Weighted Average Rate				Fair Value
	Amount		Maturity	Received		Paid		Asset (Liability)
	(In thousands)		(In years)					(In thousands)
Cash flow hedges:
Interest rate swaps on FHLBB borrowings	$	115,000	1.6	0.35	%	3.47	%	$	(4,608	)
Forward-starting interest rate swaps on FHLBB borrowings	140,000		5.4	—		2.37	%	(5,810		)
Interest rate swaps on junior subordinated notes	15,000		1.4	2.16	%	5.54	%	(704		)
Total cash flow hedges	270,000							(11,122		)
Economic hedges:
Interest rate swap on tax advantaged economic development bond	13,609		16.9	0.58	%	5.09	%	(3,473		)
Interest rate swaps on loans with commercial loan customers	205,319		5.1	2.54	%	5.28	%	(15,219		)
Reverse interest rate swaps on loans with commercial loan customers	205,319		5.1	5.28	%	0.11	%	14,746
Forward commitments	335,548		0.1					(1,336		)
Total economic hedges	759,795							(5,282		)
Non-hedging derivatives:
Interest rate lock commitments	282,752		0.2					6,258
Total non-hedging derivatives	282,752							6,258
Total	$	1,312,547						$	(10,146	)

Schedule of amounts included in the consolidated statements of income and in the other comprehensive income section of the consolidated statements of changes in stockholders' equity

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2013			2012			2013			2012
Interest rate swaps on FHLBB borrowings:
Unrealized gain (loss) recognized in accumulated other comprehensive loss	$	5,131		$	(1,664	)	$	5,437		$	(575	)
Reclassification of unrealized gain (loss) from accumulated other comprehensive loss to interest expense	899			(922		)	1,910			(1,785		)
Reclassification of unrealized gain (loss) from accumulated other comprehensive loss to other non-interest expense for termination of swaps	236			235			472			471
Reclassification of unrealized deferred tax benefit from accumulated other comprehensive loss to tax expense for terminated swaps	(95		)	(31		)	(303		)	(129		)
Net tax benefit (expense) on items recognized in accumulated other comprehensive loss	(2,433		)	1,171			(2,955		)	1,007
Interest rate swaps on junior subordinated debentures:
Unrealized gain (loss) recognized in accumulated other comprehensive loss	(4		)	2			(5		)	(59		)
Reclassification of unrealized loss from accumulated other comprehensive loss to interest expense	129			97			256			215
Net tax (expense) benefit on items recognized in accumulated other comprehensive loss	(48		)	(19		)	(102		)	(61		)
Other comprehensive income recorded in accumulated other comprehensive loss, net of reclassification adjustments and tax effects	$	3,815		$	(1,131	)	$	4,710		$	(916	)
Net interest expense recognized in interest expense on hedged FHLBB borrowings	$	1,076		$	1,123		$	2,319		$	2,206
Net interest expense recognized in interest expense on junior subordinated notes	$	129		$	97		$	256		$	215

Schedule of amounts included in the consolidated statements of income related to economic hedges and non-hedging derivatives

	Three Months Ended June 30,						SixMonths Ended June 30,
(In thousands)	2013			2012			2013			2012
Economic hedges
Interest rate swap on industrial revenue bond:
Unrealized gain (loss) recognized in other non-interest income	$	665		$	(654	)	$	772		$	(1,094	)
Interest rate swaps on loans with commercial loan customers:
Unrealized gain recognized in other non-interest income	4,996			2,149			6,550			3,260
Reverse interest rate swaps on loans with commercial loan customers:
Unrealized loss recognized in other non-interest income	(4,996		)	(2,149		)	(6,550		)	(3,260		)
Favorable (unfavorable) change in credit valuation adjustment recognized in other non-interest income	259			(113		)	337			9
Forward Commitments:
Unrealized gain (loss) recognized in other non-interest income	4,913			(2,131		)	4,363			(2,131		)
Realized gain in other non-interest income	517			—			1,572			—
Non-hedging derivatives
Interest rate lock commitments
Unrealized (loss) gain recognized in other non-interest income	(1,507		)	4,337			1,251			4,337
Realized gain in other non-interest income	$	2,758		$	—		$	3,998		$	—

Schedule of assets and liabilities subject to an enforceable master netting arrangement

Offsetting of Financial Assets and Derivative Assets

						Net Amounts
	Gross		Gross Amounts			of Assets		Gross Amounts Not Offset in the Statements
	Amounts of		Offset in the			Presented in the		of Condition
	Recognized		Statements of			Statements of		Financial		Cash
(in thousands)	Assets		Condition			Condition		Instruments		Collateral Received		Net Amount
As of June 30, 2013
Interest Rate Swap Agreements:
Institutional counterparties	$	—	$	—		$	—	$	—	$	—	$	—
Commercial counterparties	8,063		(5		)	8,058		—		—		8,058
Total	$	8,063	$	(5	)	$	8,058	$	—	$	—	$	8,058

Offsetting of Financial Liabilities and Derivative Liaibilities

						Net Amounts
	Gross			Gross Amounts		of Liabilities			Gross Amounts Not Offset in the Statements
	Amounts of			Offset in the		Presented in the			of Condition
	Recognized			Statements of		Statements of			Financial		Cash
(in thousands)	Liabilities			Condition		Condition			Instruments		Collateral Pledged		Net Amount
As of June 30, 2013
Interest Rate Swap Agreements:
Institutional counterparties	$	(15,714	)	$	2,157	$	(13,557	)	$	9,127	$	4,430	$	—
Commercial counterparties	(427		)	—		(427		)	—		—		(427		)
Total	$	(16,141	)	$	2,157	$	(13,984	)	$	9,127	$	4,430	$	(427	)

Offsetting of Financial Assets and Derivative Assets

					Net Amounts
	Gross		Gross Amounts		of Assets		Gross Amounts Not Offset in the Statements
	Amounts of		Offset in the		Presented in the		of Condition
	Recognized		Statements of		Statements of		Financial		Cash
(in thousands)	Assets		Condition		Condition		Instruments		Collateral Received		Net Amount
As of December 31, 2012
Interest Rate Swap Agreements:
Institutional counterparties	$	—	$	—	$	—	$	—	$	—	$	—
Commercial counterparties	14,746		—		14,746		—		—		14,746
Total	$	14,746	$	—	$	14,746	$	—	$	—	$	14,746

Offsetting of Financial Liabilities and Derivative Liaibilities

						Net Amounts
	Gross			Gross Amounts		of Liabilities			Gross Amounts Not Offset in the Statements
	Amounts of			Offset in the		Presented in the			of Condition
	Recognized			Statements of		Statements of			Financial		Cash
(in thousands)	Liabilities			Condition		Condition			Instruments		Collateral Pledged		Net Amount
As of December 31, 2012
Interest Rate Swap Agreements:
Institutional counterparties	$	(29,814	)	$	—	$	(29,814	)	$	25,384	$	4,430	$	—
Commercial counterparties	—			—		—			—		—		—
Total	$	(29,814	)	$	—	$	(29,814	)	$	25,384	$	4,430	$	—