LOANS

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

LOANS

NOTE 3.           LOANS

The Company’s loan portfolio is comprised of the following segments: commercial real estate, commercial and industrial, residential real estate, and consumer loans. Commercial real estate loans include multi-family, commercial construction and land development, and other commercial real estate classes. Commercial and industrial loans include loans to commercial and agricultural businesses and tax exempt entities. Residential real estate loans consist of mortgages for 1-to-4 family housing. Consumer loans include home equity loans, auto and other installment loans.

The Company’s lending activities are principally conducted in Maine, New Hampshire, and Vermont.

Total loans include business activity loans and acquired loans. Acquired loans are those loans previously acquired from other institutions. The following is a summary of total loans:

	March 31, 2020						December 31, 2019
	Business						Business
	Activities		Acquired				Activities		Acquired
(in thousands)	Loans		Loans		Total		Loans		Loans		Total
Commercial real estate:
Construction and land development	$	49,157	$	2,422	$	51,579	$	31,387	$	2,903	$	34,290
Other commercial real estate		680,578		216,021		896,599		666,051		230,320		896,371
Total commercial real estate		729,735		218,443		948,178		697,438		233,223		930,661
Commercial and industrial:
Commercial		288,082		52,713		340,795		239,692		59,072		298,764
Agricultural		18,597		200		18,797		20,018		206		20,224
Tax exempt		55,694		11,071		66,765		66,860		37,443		104,303
Total commercial and industrial		362,373		63,984		426,357		326,570		96,721		423,291
Total commercial loans		1,092,108		282,427		1,374,535		1,024,008		329,944		1,353,952
Residential real estate:
Residential mortgages		742,710		389,618		1,132,328		740,687		411,170		1,151,857
Total residential real estate		742,710		389,618		1,132,328		740,687		411,170		1,151,857
Consumer:
Home equity		64,514		53,030		117,544		59,368		63,033		122,401
Other consumer		9,226		1,350		10,576		11,167		1,715		12,882
Total consumer		73,740		54,380		128,120		70,535		64,748		135,283
Total loans	$	1,908,558	$	726,425	$	2,634,983	$	1,835,230	$	805,862	$	2,641,092

The carrying amount of the acquired loans at March 31, 2020 totaled $726.4 million. A subset of these loans was determined to have evidence of credit deterioration at acquisition date, which is accounted for in accordance with ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer. These purchased credit-impaired loans presently maintain a carrying value of $15.2 million (and total note balances of $19.3 million). These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Acquired loans considered not impaired at the acquisition date had a carrying amount of $711.2 million as of March 31, 2020.

The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer:

	Three Months Ended March 31,
(in thousands)	2020		2019
Balance at beginning of period	$	7,367	$	3,509
Reclassification from nonaccretable difference for loans with improved cash flows		—		2,031
Accretion		(528)		(1,063)
Balance at end of period	$	6,839	$	4,477

The following is a summary of past due loans at March 31, 2020 and December 31, 2019:

Business Activities Loans

					90 Days or								Past Due >
	30-59 Days		60-89 Days		Greater		Total Past						90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
March 31, 2020
Commercial real estate:
Construction and land development	$	142	$	—	$	276	$	418	$	48,739	$	49,157	$	—
Other commercial real estate		1,521		533		1,010		3,064		677,514		680,578		—
Total commercial real estate		1,663		533		1,286		3,482		726,253		729,735		—
Commercial and industrial:
Commercial		1,108		1,515		1,251		3,874		284,208		288,082		381
Agricultural		38		—		169		207		18,390		18,597		51
Tax exempt		—		—		—		—		55,694		55,694		—
Total commercial and industrial		1,146		1,515		1,420		4,081		358,292		362,373		432
Total commercial loans		2,809		2,048		2,706		7,563		1,084,545		1,092,108		432
Residential real estate:
Residential mortgages		8,824		69		1,207		10,100		732,610		742,710		293
Total residential real estate		8,824		69		1,207		10,100		732,610		742,710		293
Consumer:
Home equity		471		20		412		903		63,611		64,514		221
Other consumer		19		5		2		26		9,200		9,226		—
Total consumer		490		25		414		929		72,811		73,740		221
Total loans	$	12,123	$	2,142	$	4,327	$	18,592	$	1,889,966	$	1,908,558	$	946

Acquired Loans

					90 Days or				Acquired				Past Due >
	30-59 Days		60-89 Days		Greater		Total Past		Credit				90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Impaired		Total Loans		Accruing
March 31, 2020
Commercial real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	245	$	2,422	$	—
Other commercial real estate		1,843		256		1,024		3,123		7,275		216,021		737
Total commercial real estate		1,843		256		1,024		3,123		7,520		218,443		737
Commercial and industrial:
Commercial		97		—		—		97		1,752		52,713		—
Agricultural		—		—		—		—		200		200		—
Tax exempt		—		—		—		—		—		11,071		—
Total commercial and industrial		97		—		—		97		1,952		63,984		—
Total commercial loans		1,940		256		1,024		3,220		9,472		282,427		737
Residential real estate:
Residential mortgages		5,043		99		834		5,976		4,856		389,618		401
Total residential real estate		5,043		99		834		5,976		4,856		389,618		401
Consumer:
Home equity		626		—		199		825		789		53,030		43
Other consumer		1		—		—		1		58		1,350		—
Total consumer		627		—		199		826		847		54,380		43
Total loans	$	7,610	$	355	$	2,057	$	10,022	$	15,175	$	726,425	$	1,181

Business Activities Loans

					90 Days or								Past Due >
	30-59 Days		60-89 Days		Greater		Total Past						90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
December 31, 2019
Commercial real estate:
Construction and land development	$	205	$	53	$	—	$	258	$	31,129	$	31,387	$	—
Other commercial real estate		40		1,534		1,810		3,384		662,667		666,051		—
Total commercial real estate		245		1,587		1,810		3,642		693,796		697,438		—
Commercial and industrial:
Commercial		452		50		894		1,396		238,296		239,692		—
Agricultural		62		34		96		192		19,826		20,018		—
Tax exempt		—		—		—		—		66,860		66,860		—
Total commercial and industrial		514		84		990		1,588		324,982		326,570		—
Total commercial loans		759		1,671		2,800		5,230		1,018,778		1,024,008		—
Residential real estate:
Residential mortgages		7,293		1,243		668		9,204		731,483		740,687		—
Total residential real estate		7,293		1,243		668		9,204		731,483		740,687		—
Consumer:
Home equity		597		43		429		1,069		58,299		59,368		50
Other consumer		36		12		—		48		11,119		11,167		—
Total consumer		633		55		429		1,117		69,418		70,535		50
Total loans	$	8,685	$	2,969	$	3,897	$	15,551	$	1,819,679	$	1,835,230	$	50

Acquired Loans

					90 Days or				Acquired				Past Due >
	30-59 Days		60-89 Days		Greater		Total Past		Credit				90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Impaired		Total Loans		Accruing
December 31, 2019
Commercial real estate:
Construction and land development	$	—	$	12	$	—	$	12	$	384	$	2,903	$	—
Other commercial real estate		2,029		245		231		2,505		8,289		230,320		—
Total commercial real estate		2,029		257		231		2,517		8,673		233,223		—
Commercial and industrial:
Commercial		440		335		140		915		2,723		59,072		—
Agricultural		—		—		—		—		173		206		—
Tax exempt		—		—		—		—		36		37,443		—
Total commercial and industrial		440		335		140		915		2,932		96,721		—
Total commercial loans		2,469		592		371		3,432		11,605		329,944		—
Residential real estate:
Residential mortgages		3,185		864		1,015		5,064		5,591		411,170		—
Total residential real estate		3,185		864		1,015		5,064		5,591		411,170		—
Consumer:
Home equity		208		548		217		973		1,291		63,033		217
Other consumer		2		9		—		11		66		1,715		—
Total consumer		210		557		217		984		1,357		64,748		217
Total loans	$	5,864	$	2,013	$	1,603	$	9,480	$	18,553	$	805,862	$	217

Non-Accrual Loans

The following is summary information pertaining to non-accrual loans at March 31, 2020 and December 31, 2019:

	March 31, 2020						December 31, 2019
	Business						Business
	Activities		Acquired				Activities		Acquired
(in thousands)	Loans		Loans		Total		Loans		Loans		Total
Commercial real estate:
Construction and land development	$	276	$	—	$	276	$	258	$	—	$	258
Other commercial real estate		1,664		287		1,951		2,888		343		3,231
Total commercial real estate		1,940		287		2,227		3,146		343		3,489
Commercial and industrial:
Commercial		1,282		89		1,371		932		626		1,558
Agricultural		625		—		625		278		—		278
Tax exempt		—		—		—		—		—		—
Total commercial and industrial		1,907		89		1,996		1,210		626		1,836
Total commercial loans		3,847		376		4,223		4,356		969		5,325
Residential real estate:
Residential mortgages		4,077		1,012		5,089		3,362		1,973		5,335
Total residential real estate		4,077		1,012		5,089		3,362		1,973		5,335
Consumer:
Home equity		440		284		724		615		254		869
Other consumer		20		—		20		21		—		21
Total consumer		460		284		744		636		254		890
Total loans	$	8,384	$	1,672	$	10,056	$	8,354	$	3,196	$	11,550

Loans evaluated for impairment as of March 31, 2020 and December 31, 2019 are, as follows:

Business Activities Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
March 31, 2020
Balance at end of period
Individually evaluated for impairment	$	2,638	$	1,733	$	3,586	$	13	$	7,970
Collectively evaluated		727,097		360,640		739,124		73,727		1,900,588
Total	$	729,735	$	362,373	$	742,710	$	73,740	$	1,908,558

Acquired Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
March 31, 2020
Balance at end of period
Individually evaluated for impairment	$	70	$	—	$	296	$	—	$	366
Purchased credit impaired		7,520		1,952		4,856		847		15,175
Collectively evaluated		210,853		62,032		384,466		53,533		710,884
Total	$	218,443	$	63,984	$	389,618	$	54,380	$	726,425

Business Activities Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
December 31, 2019
Balance at end of period
Individually evaluated for impairment	$	3,964	$	1,353	$	2,620	$	13	$	7,950
Collectively evaluated		693,474		325,217		738,067		70,522		1,827,280
Total	$	697,438	$	326,570	$	740,687	$	70,535	$	1,835,230

Acquired Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
December 31, 2019
Balance at end of period
Individually evaluated for impairment	$	258	$	385	$	1,032	$	—	$	1,675
Purchased credit impaired		8,673		2,932		5,591		1,357		18,553
Collectively evaluated		224,292		93,404		404,547		63,391		785,634
Total	$	233,223	$	96,721	$	411,170	$	64,748	$	805,862

The following is a summary of impaired loans at March 31, 2020 and December 31, 2019:

Business Activities Loans

	March 31, 2020
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		1,341		2,060		—
Commercial		1,075		1,242		—
Agricultural		67		68		—
Tax exempt loans		—		—		—
Residential real estate		2,603		2,794		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		265		266		213
Other commercial real estate		1,032		1,082		462
Commercial		230		236		47
Agricultural		361		361		91
Tax exempt loans		—		—		—
Residential real estate		983		1,111		126
Home equity		13		13		—
Other consumer		—		—		—
Total
Commercial real estate		2,638		3,408		675
Commercial and industrial		1,733		1,907		138
Residential real estate		3,586		3,905		126
Consumer		13		13		—
Total impaired loans	$	7,970	$	9,233	$	939

Acquired Loans

	March 31, 2020
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		—		—		—
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		134		308		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		—		—		—
Other commercial real estate		70		71		13
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		162		185		14
Home equity		—		—		—
Other consumer		—		—		—
Total
Commercial real estate		70		71		13
Commercial and industrial		—		—		—
Residential real estate		296		493		14
Consumer		—		—		—
Total impaired loans	$	366	$	564	$	27

Business Activities Loans

	December 31, 2019
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		1,911		1,957		—
Commercial		710		773		—
Agricultural		361		261		—
Tax exempt loans		—		—		—
Residential real estate		2,067		2,227		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		258		258		205
Other commercial real estate		1,795		1,940		1,026
Commercial		282		289		164
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		553		590		57
Home equity		13		13		—
Other consumer		—		—		—
Total
Commercial real estate		3,964		4,155		1,231
Commercial and industrial		1,353		1,423		164
Residential real estate		2,620		2,817		57
Consumer		13		13		—
Total impaired loans	$	7,950	$	8,408	$	1,452

Acquired Loans

	December 31, 2019
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		90		90		—
Commercial		385		481		—
Agricultural		—		—		—
Tax exempt		—		—		—
Residential mortgages		678		938		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		—		—		—
Other commercial real estate		168		168		12
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt		—		—		—
Residential mortgages		354		376		49
Home equity		—		—		—
Other consumer		—		—		—
Total
Commercial real estate		258		258		12
Commercial and industrial		385		481		—
Residential real estate		1,032		1,314		49
Consumer		—		—		—
Total impaired loans	$	1,675	$	2,053	$	61

The following is a summary of the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2020 and 2019:

Business Activities Loans

	Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
	Average Recorded		Interest		Average Recorded		Interest
(in thousands)	Investment		Income Recognized		Investment		Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate		1,728		3		7,773		26
Commercial		1,071		1		527		2
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		2,589		17		1,965		15
Home equity		—		—		—		—
Other consumer		—		—		—		—
With an allowance recorded:
Construction and land development		261		1		5		—
Other commercial real estate		1,021		—		1,203		—
Commercial		233		—		890		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		979		2		652		2
Home equity		12		—		13		—
Other consumer		—		—		—		—
Total
Commercial real estate		3,010		4		8,981		26
Commercial and industrial		1,304		1		1,417		2
Residential real estate		3,568		19		2,617		17
Consumer		12		—		13		—
Total impaired loans	$	7,894	$	24	$	13,028	$	45

Acquired Loans

	Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
	Average Recorded		Interest		Average Recorded		Interest
(in thousands)	Investment		Income Recognized		Investment		Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate		—		—		90		—
Commercial		—		—		479		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		195		—		436		—
Home equity		—		—		—		—
Other consumer		—		—		—		—
With an allowance recorded:
Construction and land development		—		—		—		—
Other commercial real estate		70		—		36		—
Commercial		—		—		—		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		163		—		367		—
Home equity		—		—		—		—
Other consumer		—		—		—		—
Total
Commercial real estate		70		—		126		—
Commercial and industrial		—		—		479		—
Residential real estate		358		—		803		—
Consumer		—		—		—		—
Total impaired loans	$	428	$	—	$	1,408	$	—

Troubled Debt Restructuring Loans

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring ("TDR"), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as non-performing at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. TDRs are evaluated individually for impairment and may result in a specific allowance amount allocated to an individual loan.

The following tables include the recorded investment and number of modifications identified during the three months ended March 31, 2020 and 2019, respectively. The table includes the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. Modifications may include adjustments to interest rates, payment amounts, extensions of maturity, court ordered concessions or other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral.

	Three Months Ended March 31, 2020
		Pre-Modification		Post-Modification
	Number of	Outstanding Recorded		Outstanding Recorded
(in thousands)	Modifications	Investment		Investment
Troubled Debt Restructurings
Other commercial real estate	1	$	54	$	259
Other commercial	3		41		208
Home equity	1		26		25
Other consumer	1		9		9
Total	6	$	130	$	501

	Three Months Ended March 31, 2019
		Pre-Modification			Post-Modification
	Number of	Outstanding Recorded		Outstanding Recorded
(in thousands)	Modifications	Investment		Investment
Troubled Debt Restructurings
Other commercial real estate	3	$	113	$	113
Other commercial	2		31		31
Residential mortgages	6		530		527
Total	11	$	674	$	671

The following tables summarize the types of loan concessions made for the periods presented:

	Three Months Ended March 31,
	2020			2019
		Post-Modification			Post-Modification
		Outstanding			outstanding
	Number of	Recorded		Number of	Recorded
(in thousands, except modifications)	Modifications	Investment		Modifications	Investment
Troubled Debt Restructurings
Interest rate and maturity concession	—	$	—	2	$	12
Interest rate, forbearance and maturity concession	4		467	—		—
Amortization and maturity concession	—		—	5		314
Amortization concession	—		—	1		156
Amortization, interest rate and maturity concession	—		—	1		77
Forbearance and interest only payments	1		25	2		112
Maturity concession	1		9	—		—
Total	6	$	501	11	$	671

For the three months ended March 31, 2020, there were no loans that were restructured that had subsequently defaulted during the period. The evaluation of certain loans individually for specific impairment includes loans that were previously classified as TDRs or continue to be classified as TDRs.

Modifications in response to COVID-19

The Company began offering short-term loan modifications to assist borrowers during the COVID-19 national emergency. The CARES Act along with a joint agency statement issued by banking agencies, provides that short-term modifications made in response to COVID-19 do not need to be accounted for as a TDR. Accordingly, the Company does not account for such loan modifications as TDRs. See Note 1 - Basis of Presentation for more information.

Foreclosure

As of March 31, 2020 and December 31, 2019, the Company maintained bank-owned residential real estate with a fair value of $2.2 million. Additionally, residential mortgage loans collateralized by real estate that are in the process of foreclosure as of March 31, 2020 and December 31, 2019 totaled $931 thousand and $810 thousand, respectively.

Mortgage Banking

Total residential loans included held for sale loans of $11.7 million and $6.5 million at March 31, 2020 and December 31, 2019, respectively.