Loans

The following table shows the composition of the Company's loan portfolio as of March 31, 2018 and 2017 and at December 31, 2017:



	March 31, 2018				December 31, 2017				March 31, 2017
Commercial
Real estate	$	339,306,000	28.6	%	$	323,809,000	27.8	%	$	304,663,000	28.0	%
Construction	43,813,000		3.7	%	38,056,000		3.3	%	28,775,000		2.6	%
Other	177,783,000		15.0	%	181,528,000		15.6	%	158,507,000		14.4	%
Municipal	35,463,000		3.0	%	33,391,000		2.9	%	28,327,000		2.6	%
Residential
Term	439,984,000		37.0	%	432,661,000		37.1	%	421,202,000		38.7	%
Construction	15,847,000		1.3	%	17,868,000		1.5	%	13,717,000		1.3	%
Home equity line of credit	110,298,000		9.3	%	111,302,000		9.6	%	110,016,000		10.1	%
Consumer	25,508,000		2.1	%	25,524,000		2.2	%	24,528,000		2.3	%
Total	$	1,188,002,000	100.0	%	$	1,164,139,000	100.0	%	$	1,089,735,000	100.0	%

Loan balances include net deferred loan costs of $5,990,000 as of March 31, 2018, $5,748,000 as of December 31, 2017, and $5,167,000 as of March 31, 2017. Pursuant to collateral agreements, qualifying first mortgage loans, which totaled $237,239,000 at March 31, 2018, $239,805,000 at December 31, 2017, and $254,512,000 at March 31, 2017, were used to collateralize borrowings from the FHLB. In addition, commercial, construction and home equity loans totaling $255,020,000 at March 31, 2018, $290,247,000 at December 31, 2017, and $285,464,000 at March 31, 2017, 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 March 31, 2018, 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	$	963,000	$	17,000	$	202,000	$	1,182,000	$	338,124,000	$	339,306,000	$	—
Construction	347,000		—		—		347,000		43,466,000		43,813,000		—
Other	6,887,000		52,000		294,000		7,233,000		170,550,000		177,783,000		—
Municipal	—		—		—		—		35,463,000		35,463,000		—
Residential
Term	3,175,000		345,000		1,880,000		5,400,000		434,584,000		439,984,000		—
Construction	—		—		—		—		15,847,000		15,847,000		—
Home equity line of credit	449,000		438,000		664,000		1,551,000		108,747,000		110,298,000		126,000
Consumer	119,000		8,000		27,000		154,000		25,354,000		25,508,000		11,000
Total	$	11,940,000	$	860,000	$	3,067,000	$	15,867,000	$	1,172,135,000	$	1,188,002,000	$	137,000

Information on the past-due status of loans by class of financing receivable as of December 31, 2017, 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	$	574,000	$	80,000	$	220,000	$	874,000	$	322,935,000	$	323,809,000	$	—
Construction	—		—		—		—		38,056,000		38,056,000		—
Other	542,000		6,663,000		574,000		7,779,000		173,749,000		181,528,000		—
Municipal	—		—		—		—		33,391,000		33,391,000		—
Residential
Term	1,031,000		4,372,000		2,256,000		7,659,000		425,002,000		432,661,000		436,000
Construction	101,000		370,000		—		471,000		17,397,000		17,868,000		—
Home equity line of credit	537,000		445,000		725,000		1,707,000		109,595,000		111,302,000		—
Consumer	159,000		18,000		9,000		186,000		25,338,000		25,524,000		9,000
Total	$	2,944,000	$	11,948,000	$	3,784,000	$	18,676,000	$	1,145,463,000	$	1,164,139,000	$	445,000

Information on the past-due status of loans by class of financing receivable as of March 31, 2017, 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	$	142,000	$	772,000	$	1,823,000	$	2,737,000	$	301,926,000	$	304,663,000	$	—
Construction	20,000		—		—		20,000		28,755,000		28,775,000		—
Other	199,000		154,000		439,000		792,000		157,715,000		158,507,000		—
Municipal	—		—		—		—		28,327,000		28,327,000		—
Residential
Term	3,555,000		—		1,603,000		5,158,000		416,044,000		421,202,000		—
Construction	—		—		—		—		13,717,000		13,717,000		—
Home equity line of credit	392,000		167,000		773,000		1,332,000		108,684,000		110,016,000		—
Consumer	328,000		34,000		11,000		373,000		24,155,000		24,528,000		11,000
Total	$	4,636,000	$	1,127,000	$	4,649,000	$	10,412,000	$	1,079,323,000	$	1,089,735,000	$	11,000

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 March 31, 2018 and 2017 and at December 31, 2017 is presented in the following table:



	March 31, 2018		December 31, 2017		March 31, 2017
Commercial
Real estate	$	1,021,000	$	752,000	$	2,625,000
Construction	—		—		—
Other	8,895,000		9,357,000		938,000
Municipal	—		—		—
Residential
Term	3,654,000		3,778,000		4,028,000
Construction	—		—		—
Home equity line of credit	697,000		833,000		909,000
Consumer	16,000		16,000		—
Total	$	14,283,000	$	14,736,000	$	8,500,000

Impaired loans include troubled debt restructured ("TDR") 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 March 31, 2018 is presented in the following table:



							For the three months ended March 31, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Recognized Interest Income
With No Related Allowance
Commercial
Real estate	$	5,054,000	$	5,269,000	$	—	$	4,163,000	$	54,000
Construction	741,000		741,000		—		741,000		10,000
Other	2,281,000		2,360,000		—		2,302,000		6,000
Municipal	—		—		—		—		—
Residential
Term	9,594,000		10,733,000		—		9,700,000		71,000
Construction	—		—		—		—		—
Home equity line of credit	917,000		1,008,000		—		1,090,000		5,000
Consumer	16,000		29,000		—		16,000		—
	$	18,603,000	$	20,140,000	$	—	$	18,012,000	$	146,000
With an Allowance Recorded
Commercial
Real estate	$	3,897,000	$	4,002,000	$	254,000	$	3,889,000	$	39,000
Construction	—		—		—		—		—
Other	7,159,000		7,324,000		1,664,000		7,182,000		—
Municipal	—		—		—		—		—
Residential
Term	1,934,000		2,146,000		272,000		1,968,000		24,000
Construction	—		—		—		—		—
Home equity line of credit	122,000		125,000		16,000		70,000		—
Consumer	—		—		—		—		—
	$	13,112,000	$	13,597,000	$	2,206,000	$	13,109,000	$	63,000
Total
Commercial
Real estate	$	8,951,000	$	9,271,000	$	254,000	$	8,052,000	$	93,000
Construction	741,000		741,000		—		741,000		10,000
Other	9,440,000		9,684,000		1,664,000		9,484,000		6,000
Municipal	—		—		—		—		—
Residential
Term	11,528,000		12,879,000		272,000		11,668,000		95,000
Construction	—		—		—		—		—
Home equity line of credit	1,039,000		1,133,000		16,000		1,160,000		5,000
Consumer	16,000		29,000		—		16,000		—
	$	31,715,000	$	33,737,000	$	2,206,000	$	31,121,000	$	209,000

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, 2017 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	$	3,791,000	$	3,996,000	$	—	$	5,124,000	$	164,000
Construction	741,000		741,000		—		62,000		38,000
Other	2,591,000		2,671,000		—		1,908,000		36,000
Municipal	—		—		—		—		—
Residential
Term	9,769,000		10,909,000		—		10,770,000		297,000
Construction	—		—		—		—		—
Home equity line of credit	1,115,000		1,429,000		—		1,351,000		18,000
Consumer	16,000		29,000		—		12,000		—
	$	18,023,000	$	19,775,000	$	—	$	19,227,000	$	553,000
With an Allowance Recorded
Commercial
Real estate	$	3,999,000	$	4,116,000	$	224,000	$	4,460,000	$	152,000
Construction	—		—		—		699,000		—
Other	7,327,000		7,371,000		1,309,000		2,584,000		—
Municipal	—		—		—		—		—
Residential
Term	1,979,000		2,144,000		255,000		2,106,000		79,000
Construction	—		—		—		—		—
Home equity line of credit	64,000		67,000		24,000		32,000		—
Consumer	—		—		—		—		—
	$	13,369,000	$	13,698,000	$	1,812,000	$	9,881,000	$	231,000
Total
Commercial
Real estate	$	7,790,000	$	8,112,000	$	224,000	$	9,584,000	$	316,000
Construction	741,000		741,000		—		761,000		38,000
Other	9,918,000		10,042,000		1,309,000		4,492,000		36,000
Municipal	—		—		—		—		—
Residential
Term	11,748,000		13,053,000		255,000		12,876,000		376,000
Construction	—		—		—		—		—
Home equity line of credit	1,179,000		1,496,000		24,000		1,383,000		18,000
Consumer	16,000		29,000		—		12,000		—
	$	31,392,000	$	33,473,000	$	1,812,000	$	29,108,000	$	784,000

A breakdown of impaired loans by class of financing receivable as of and for the period ended March 31, 2017 is presented in the following table:



							For the three months ended March 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Recognized Interest Income
With No Related Allowance
Commercial
Real estate	$	5,949,000	$	6,450,000	$	—	$	5,444,000	$	51,000
Construction	—		—		—		—		—
Other	1,476,000		1,636,000		—		1,595,000		22,000
Municipal	—		—		—		—		—
Residential
Term	11,388,000		12,470,000		—		11,402,000		129,000
Construction	—		—		—		—		—
Home equity line of credit	1,422,000		1,752,000		—		1,376,000		9,000
Consumer	—		—		—		—		—
	$	20,235,000	$	22,308,000	$	—	$	19,817,000	$	211,000
With an Allowance Recorded
Commercial
Real estate	$	4,722,000	$	4,908,000	$	351,000	$	4,741,000	$	46,000
Construction	763,000		763,000		101,000		763,000		9,000
Other	234,000		272,000		39,000		125,000		4,000
Municipal	—		—		—		—		—
Residential
Term	1,872,000		2,020,000		251,000		2,077,000		23,000
Construction	—		—		—		—		—
Home equity line of credit	26,000		27,000		26,000		26,000		—
Consumer	—		—		—		—		—
	$	7,617,000	$	7,990,000	$	768,000	$	7,732,000	$	82,000
Total
Commercial
Real estate	$	10,671,000	$	11,358,000	$	351,000	$	10,185,000	$	97,000
Construction	763,000		763,000		101,000		763,000		9,000
Other	1,710,000		1,908,000		39,000		1,720,000		26,000
Municipal	—		—		—		—		—
Residential
Term	13,260,000		14,490,000		251,000		13,479,000		152,000
Construction	—		—		—		—		—
Home equity line of credit	1,448,000		1,779,000		26,000		1,402,000		9,000
Consumer	—		—		—		—		—
	$	27,852,000	$	30,298,000	$	768,000	$	27,549,000	$	293,000

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 March 31, 2018, the Company had 69 loans with a balance of $18,709,000 that have been classified as TDRs. This compares to 62 loans with a balance of $17,801,000 and 70 loans with a balance of $21,121,000 classified as TDRs as of December 31, 2017 and March 31, 2017, 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 March 31, 2018:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	15	$	8,030,000	$	132,000
Construction	1	741,000		—
Other	4	546,000		—
Municipal	—	—		—
Residential
Term	46	8,883,000		271,000
Construction	—	—		—
Home equity line of credit	3	509,000		—
Consumer	—	—		—
	69	$	18,709,000	$	403,000

The following table shows TDRs by class and the specific reserve as of December 31, 2017:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	8	$	7,038,000	$	90,000
Construction	1	741,000		—
Other	4	561,000		—
Municipal	—	—		—
Residential
Term	46	8,948,000		233,000
Construction	—	—		—
Home equity line of credit	3	513,000		—
Consumer	—	—		—
	62	$	17,801,000	$	323,000

The following table shows TDRs by class and the specific reserve as of March 31, 2017:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	10	$	8,703,000	$	82,000
Construction	1	763,000		101,000
Other	5	772,000		2,000
Municipal	—	—		—
Residential
Term	51	10,344,000		201,000
Construction	—	—		—
Home equity line of credit	3	539,000		—
Consumer	—	—		—
	70	$	21,121,000	$	386,000

As of March 31, 2018, seven of the loans classified as TDRs with a total balance of $810,000 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 March 31, 2018:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	—	$	—	$	—
Construction	—	—		—
Other	—	—		—
Municipal	—	—		—
Residential
Term	6	643,000		45,000
Construction	—	—		—
Home equity line of credit	1	167,000		—
Consumer	—	—		—
	7	$	810,000	$	45,000

As of March 31, 2017, nine of the loans classified as TDRs with a total balance of $1,651,000 were more than 30 days past due. Of these loans, none 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 March 31, 2017:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	1	$	658,000	$	—
Construction	—	—		—
Other	—	—		—
Municipal	—	—		—
Residential
Term	7	826,000		—
Construction	—	—		—
Home equity line of credit	1	167,000		—
Consumer	—	—		—
	9	$	1,651,000	$	—

For the three months ended March 31, 2018, seven 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 March 31, 2018:



For the quarter ended March 31, 2018	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	7	$	1,056,000	$	1,056,000	$	36,000
Construction	—	—		—		—
Other	—	—		—		—
Municipal	—	—		—		—
Residential
Term	—	—		—		—
Construction	—	—		—		—
Home equity line of credit	—	—		—		—
Consumer	—	—		—		—
	7	$	1,056,000	$	1,056,000	$	36,000

For the three months ended March 31, 2017, no loans were placed on TDR status.

As of March 31, 2018, Management is aware of four loans classified as TDRs that are involved in bankruptcy with an outstanding balance of $684,000. There were also 11 loans with an outstanding balance of $1,276,000 that were classified as TDRs and on non-accrual status, of which three loans with an outstanding balance of $456,000 were in the process of foreclosure.

Residential Mortgage Loans in Process of Foreclosure

As of March 31, 2018, there were 13 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,388,000. This compares to 12 mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $1,773,000 as of March 31, 2017.