Loans

The following table shows the composition of the Company's loan portfolio as of June 30, 2016 and 2015 and at December 31, 2015:



	June 30, 2016				December 31, 2015				June 30, 2015
Commercial
Real estate	$	303,312,000	29.2	%	$	269,462,000	27.3	%	$	249,414,000	25.9	%
Construction	18,439,000		1.8	%	24,881,000		2.5	%	39,504,000		4.1	%
Other	136,651,000		13.2	%	128,341,000		13.0	%	128,249,000		13.3	%
Municipal	25,531,000		2.5	%	19,751,000		2.0	%	22,821,000		2.4	%
Residential
Term	403,461,000		38.8	%	403,030,000		40.7	%	378,090,000		39.2	%
Construction	13,403,000		1.3	%	8,451,000		0.9	%	14,215,000		1.5	%
Home equity line of credit	112,536,000		10.8	%	110,202,000		11.1	%	108,788,000		11.3	%
Consumer	24,880,000		2.4	%	24,520,000		2.5	%	22,028,000		2.3	%
Total	$	1,038,213,000	100.0	%	$	988,638,000	100.0	%	$	963,109,000	100.0	%

Loan balances include net deferred loan costs of $4,478,000 as of June 30, 2016, $3,686,000 as of December 31, 2015, and $3,246,000 as of June 30, 2015. Pursuant to collateral agreements, qualifying first mortgage loans, which totaled $270,293,000 at June 30, 2016, $279,463,000 at December 31, 2015, and $284,707,000 at June 30, 2015, were used to collateralize borrowings from the FHLB. In addition, commercial, construction and home equity loans totaling $263,707,000 at June 30, 2016, $243,578,000 at December 31, 2015, and $278,235,000 at June 30, 2015, were used to collateralize a standby line of credit at the Federal Reserve Bank of Boston that is currently unused.

For all loan classes, loans over 30 days past due are considered delinquent. Information on the past-due status of loans by class of financing receivable as of June 30, 2016, 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	$	332,000	$	998,000	$	296,000	$	1,626,000	$	301,686,000	$	303,312,000	$	—
Construction	—		29,000		17,000		46,000		18,393,000		18,439,000		—
Other	131,000		218,000		314,000		663,000		135,988,000		136,651,000		—
Municipal	—		—		—		—		25,531,000		25,531,000		—
Residential
Term	662,000		4,235,000		2,110,000		7,007,000		396,454,000		403,461,000		245,000
Construction	—		—		—		—		13,403,000		13,403,000		—
Home equity line of credit	764,000		27,000		362,000		1,153,000		111,383,000		112,536,000		68,000
Consumer	283,000		7,000		8,000		298,000		24,582,000		24,880,000		8,000
Total	$	2,172,000	$	5,514,000	$	3,107,000	$	10,793,000	$	1,027,420,000	$	1,038,213,000	$	321,000

Information on the past-due status of loans by class of financing receivable as of December 31, 2015, 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	$	603,000	$	—	$	281,000	$	884,000	$	268,578,000	$	269,462,000	$	—
Construction	35,000		—		238,000		273,000		24,608,000		24,881,000		—
Other	303,000		—		25,000		328,000		128,013,000		128,341,000		25,000
Municipal	—		—		—		—		19,751,000		19,751,000		—
Residential
Term	450,000		2,098,000		2,639,000		5,187,000		397,843,000		403,030,000		100,000
Construction	368,000		—		—		368,000		8,083,000		8,451,000		—
Home equity line of credit	261,000		255,000		592,000		1,108,000		109,094,000		110,202,000		—
Consumer	102,000		26,000		11,000		139,000		24,381,000		24,520,000		11,000
Total	$	2,122,000	$	2,379,000	$	3,786,000	$	8,287,000	$	980,351,000	$	988,638,000	$	136,000

Information on the past-due status of loans by class of financing receivable as of June 30, 2015, 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	$	1,850,000	$	—	$	264,000	$	2,114,000	$	247,300,000	$	249,414,000	$	—
Construction	—		—		208,000		208,000		39,296,000		39,504,000		—
Other	124,000		—		138,000		262,000		127,987,000		128,249,000		—
Municipal	—		—		—		—		22,821,000		22,821,000		—
Residential
Term	810,000		2,314,000		3,146,000		6,270,000		371,820,000		378,090,000		90,000
Construction	160,000		—		—		160,000		14,055,000		14,215,000		—
Home equity line of credit	649,000		122,000		838,000		1,609,000		107,179,000		108,788,000		35,000
Consumer	152,000		130,000		111,000		393,000		21,635,000		22,028,000		111,000
Total	$	3,745,000	$	2,566,000	$	4,705,000	$	11,016,000	$	952,093,000	$	963,109,000	$	236,000

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 June 30, 2016 and 2015 and at December 31, 2015 is presented in the following table:



	June 30, 2016		December 31, 2015		June 30, 2015
Commercial
Real estate	$	1,227,000	$	915,000	$	1,538,000
Construction	46,000		238,000		208,000
Other	378,000		66,000		429,000
Municipal	—		—		—
Residential
Term	4,291,000		5,260,000		5,698,000
Construction	—		—		—
Home equity line of credit	421,000		893,000		964,000
Consumer	115,000		—		95,000
Total	$	6,478,000	$	7,372,000	$	8,932,000

Impaired loans include troubled debt restructured and loans placed on non-accrual. These loans are measured at the present value of expected future cash flows discounted at the loan's effective interest rate or at the fair value of the collateral if the loan is collateral dependent. If the measure of an impaired loan is lower than the recorded investment in the loan and estimated selling costs, a specific reserve is established for the difference, or, in certain situations, if the measure of an impaired loan is lower than the recorded investment in the loan and estimated selling costs, the difference is written off.

A breakdown of impaired loans by class of financing receivable as of and for the period ended June 30, 2016 is presented in the following table:



							For the six months ended June 30, 2016				For the quarter ended June 30, 2016
	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	$	6,654,000	$	6,817,000	$	—	$	7,068,000	$	145,000	$	6,916,000	$	66,000
Construction	46,000		46,000		—		60,000		1,000		40,000		—
Other	955,000		994,000		—		1,083,000		21,000		1,045,000		13,000
Municipal	—		—		—		—		—		—		—
Residential
Term	10,924,000		12,085,000		—		10,653,000		209,000		10,592,000		118,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	912,000		1,266,000		—		1,216,000		13,000		1,079,000		5,000
Consumer	—		—		—		—		—		—		—
	$	19,491,000	$	21,208,000	$	—	$	20,080,000	$	389,000	$	19,672,000	$	202,000
With an Allowance Recorded
Commercial
Real estate	$	4,031,000	$	4,116,000	$	369,000	$	3,458,000	$	71,000	$	3,518,000	$	35,000
Construction	788,000		788,000		97,000		857,000		18,000		788,000		10,000
Other	524,000		530,000		158,000		209,000		12,000		337,000		12,000
Municipal	—		—		—		—		—		—		—
Residential
Term	3,181,000		3,266,000		326,000		3,830,000		66,000		3,664,000		23,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	63,000		64,000		28,000		73,000		1,000		63,000		—
Consumer	115,000		115,000		51,000		19,000		—		38,000		—
	$	8,702,000	$	8,879,000	$	1,029,000	$	8,446,000	$	168,000	$	8,408,000	$	80,000
Total
Commercial
Real estate	$	10,685,000	$	10,933,000	$	369,000	$	10,526,000	$	216,000	$	10,434,000	$	101,000
Construction	834,000		834,000		97,000		917,000		19,000		828,000		10,000
Other	1,479,000		1,524,000		158,000		1,292,000		33,000		1,382,000		25,000
Municipal	—		—		—		—		—		—		—
Residential
Term	14,105,000		15,351,000		326,000		14,483,000		275,000		14,256,000		141,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	975,000		1,330,000		28,000		1,289,000		14,000		1,142,000		5,000
Consumer	115,000		115,000		51,000		19,000		—		38,000		—
	$	28,193,000	$	30,087,000	$	1,029,000	$	28,526,000	$	557,000	$	28,080,000	$	282,000

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, 2015 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	$	7,173,000	$	7,496,000	$	—	$	8,990,000	$	301,000
Construction	30,000		30,000		—		3,000		1,000
Other	1,163,000		1,210,000		—		1,893,000		76,000
Municipal	—		—		—		—		—
Residential
Term	11,122,000		12,157,000		—		10,480,000		415,000
Construction	—		—		—		—		—
Home equity line of credit	1,401,000		2,054,000		—		1,400,000		43,000
Consumer	—		—		—		42,000		3,000
	$	20,889,000	$	22,947,000	$	—	$	22,808,000	$	839,000
With an Allowance Recorded
Commercial
Real estate	$	3,544,000	$	3,627,000	$	89,000	$	3,066,000	$	149,000
Construction	996,000		996,000		302,000		1,153,000		44,000
Other	71,000		77,000		8,000		256,000		5,000
Municipal	—		—		—		—		—
Residential
Term	3,966,000		4,193,000		326,000		5,228,000		180,000
Construction	—		—		—		—		—
Home equity line of credit	65,000		66,000		29,000		187,000		3,000
Consumer	—		—		—		—		—
	$	8,642,000	$	8,959,000	$	754,000	$	9,890,000	$	381,000
Total
Commercial
Real estate	$	10,717,000	$	11,123,000	$	89,000	$	12,056,000	$	450,000
Construction	1,026,000		1,026,000		302,000		1,156,000		45,000
Other	1,234,000		1,287,000		8,000		2,149,000		81,000
Municipal	—		—		—		—		—
Residential
Term	15,088,000		16,350,000		326,000		15,708,000		595,000
Construction	—		—		—		—		—
Home equity line of credit	1,466,000		2,120,000		29,000		1,587,000		46,000
Consumer	—		—		—		42,000		3,000
	$	29,531,000	$	31,906,000	$	754,000	$	32,698,000	$	1,220,000

A breakdown of impaired loans by class of financing receivable as of and for the period ended June 30, 2015 is presented in the following table:



							For the six months ended June 30, 2015				For the quarter ended June 30, 2015
	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	$	8,986,000	$	9,436,000	$	—	$	9,959,000	$	182,000	$	9,020,000	$	93,000
Construction	—		—		—		—		—		—		—
Other	1,789,000		1,855,000		—		2,267,000		42,000		2,069,000		27,000
Municipal	—		—		—		—		—		—		—
Residential
Term	9,636,000		10,537,000		—		10,797,000		173,000		10,458,000		90,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	1,504,000		2,140,000		—		1,326,000		15,000		1,371,000		8,000
Consumer	95,000		138,000		—		52,000		3,000		80,000		—
	$	22,010,000	$	24,106,000	$	—	$	24,401,000	$	415,000	$	22,998,000	$	218,000
With an Allowance Recorded
Commercial
Real estate	$	3,580,000	$	3,671,000	$	225,000	$	2,807,000	$	71,000	$	3,618,000	$	39,000
Construction	989,000		989,000		275,000		1,311,000		25,000		1,249,000		13,000
Other	317,000		331,000		275,000		399,000		4,000		471,000		3,000
Municipal	—		—		—		—		—		—		—
Residential
Term	5,784,000		6,082,000		501,000		5,348,000		120,000		5,463,000		60,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	68,000		69,000		31,000		307,000		2,000		226,000		—
Consumer	—		—		—		—		—		—		2,000
	$	10,738,000	$	11,142,000	$	1,307,000	$	10,172,000	$	222,000	$	11,027,000	$	117,000
Total
Commercial
Real estate	$	12,566,000	$	13,107,000	$	225,000	$	12,766,000	$	253,000	$	12,638,000	$	132,000
Construction	989,000		989,000		275,000		1,311,000		25,000		1,249,000		13,000
Other	2,106,000		2,186,000		275,000		2,666,000		46,000		2,540,000		30,000
Municipal	—		—		—		—		—		—		—
Residential
Term	15,420,000		16,619,000		501,000		16,145,000		293,000		15,921,000		150,000
Construction	—		—		—		—		—		—		—
Home equity line of credit	1,572,000		2,209,000		31,000		1,633,000		17,000		1,597,000		8,000
Consumer	95,000		138,000		—		52,000		3,000		80,000		2,000
	$	32,748,000	$	35,248,000	$	1,307,000	$	34,573,000	$	637,000	$	34,025,000	$	335,000

Troubled Debt Restructured

A troubled debt restructured ("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 June 30, 2016, the Company had 78 loans with a value of $22,595,000 that have been classified as TDRs. This compares to 84 loans with a value of $23,923,000 and 88 loans with a value of $25,791,000 classified as TDRs as of December 31, 2015 and June 30, 2015, 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 June 30, 2016:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	11	$	9,459,000	$	105,000
Construction	1	788,000		97,000
Other	10	1,101,000		78,000
Municipal	—	—		—
Residential
Term	53	10,693,000		264,000
Construction	—	—		—
Home equity line of credit	3	554,000		—
Consumer	—	—		—
	78	$	22,595,000	$	544,000

The following table shows TDRs by class and the specific reserve as of December 31, 2015:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	15	$	10,350,000	$	85,000
Construction	1	788,000		94,000
Other	11	1,168,000		1,000
Municipal	—	—		—
Residential
Term	53	10,875,000		275,000
Construction	—	—		—
Home equity line of credit	4	742,000		—
Consumer	—	—		—
	84	$	23,923,000	$	455,000

The following table shows TDRs by class and the specific reserve as of June 30, 2015:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	17	$	11,754,000	$	130,000
Construction	1	781,000		68,000
Other	13	1,675,000		—
Municipal	—	—		—
Residential
Term	52	10,789,000		435,000
Construction	—	—		—
Home equity line of credit	5	792,000		—
Consumer	—	—		—
	88	$	25,791,000	$	633,000

As of June 30, 2016, nine of the loans classified as TDRs with a total balance of $979,000 were more than 30 days past due. Of these loans, one loan with a balance of $108,000 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 June 30, 2016:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	—	$	—	$	—
Construction	—	—		—
Other	1	10,000		—
Municipal	—	—		—
Residential
Term	8	969,000		49,000
Construction	—	—		—
Home equity line of credit	—	—		—
Consumer	—	—		—
	9	$	979,000	$	49,000

As of June 30, 2015, nine of the loans classified as TDRs with a total balance of $1,455,000 were more than 30 days past due. None of these loans 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 June 30, 2015:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	—	$	—	$	—
Construction	—	—		—
Other	—	—		—
Municipal	—	—		—
Residential
Term	8	1,271,000		87,000
Construction	—	—		—
Home equity line of credit	1	184,000		—
Consumer	—	—		—
	9	$	1,455,000	$	87,000

For the three months and six months ended June 30, 2016 and 2015, no loans were placed on TDR status.

As of June 30, 2016, Management is aware of six loans classified as TDRs that are involved in bankruptcy with an outstanding balance of $1,068,000. There were also eight loans with an outstanding balance of $879,000 that were classified as TDRs and on non-accrual status. Two loans with an outstanding balance of $117,000, that were classified as TDRs, were in the process of foreclosure.

Residential Mortgage Loans in Process of Foreclosure

As of June 30, 2016, there were 13 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,514,000; this compares to 17 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,881,000 as of June 30, 2015.