Loans

The majority of the Bank’s lending activities are conducted in Massachusetts with other lending activity principally in New Hampshire, Rhode Island, Connecticut and New York. The Bank originates construction, commercial and residential real estate loans, commercial and industrial loans, municipal loans, consumer, home equity and other loans for its portfolio.

The following summary shows the composition of the loan portfolio at the dates indicated.


December 31,	2019		2018
(dollars in thousands)
Construction and land development	$	8,992	$	13,628
Commercial and industrial		812,417		761,625
Municipal		120,455		97,290
Commercial real estate		786,102		750,362
Residential real estate		371,897		348,250
Consumer		21,071		21,359
Home equity		304,363		292,340
Overdrafts		822		724

Total	$	2,426,119	$	2,285,578

At December 31, 2019, and December 31, 2018, loans were carried net of (premiums) discounts of $(292,000) and $(364,000), respectively. Net deferred fees included in loans at December 31, 2019, and December 31, 2018, were $220,000 and $496,000, respectively.

The Company was servicing mortgage loans sold to others without recourse of approximately $204,690,000 and $209,160,000 at December 31, 2019, and December 31, 2018, respectively. The Company had no residential real estate loans held for sale at December 31, 2019 and December 31, 2018. The Company’s mortgage servicing rights totaled $1,202,000 and $1,226,000 at December 31, 2019 and December 31, 2018, respectively.

As of December 31, 2019, and 2018, the Company’s recorded investment in impaired loans was $3,252,000 and $3,051,000, respectively. If an impaired loan is placed on nonaccrual, the loan may be returned to an accrual status when principal and interest payments are not delinquent, and the risk characteristics have improved to the extent that there no longer exists a concern as to the collectibility of principal and interest. At December 31, 2019, there were $2,322,000

impaired loans with specific reserves of $102,000. At December 31, 2018, there were $2,774,000

impaired loans with specific reserves of $145,000.

Loans are designated as troubled debt restructures when a concession is made on a credit as a result of financial difficulties of the borrower. Typically, such concessions consist of a reduction in interest rate to a below-market rate, taking into account the credit quality of the note, or a deferment of payments, principal or interest, which materially alters the Bank’s position or significantly extends the note’s maturity date, such that the present value of cash flows to be received is materially less than those contractually established at the loan’s origination. Restructured loans are included in the impaired loan category.

The composition of nonaccrual loans and impaired loans is as follows:


December 31,	2019		2018		2017
(dollars in thousands)
Loans on nonaccrual	$	2,014	$	1,313	$	1,684
Loans 90 days past due and still accruing		—		—		—
Impaired loans on nonaccrual included above		—		296		254
Total recorded investment in impaired loans		3,252		3,051		7,114
Average recorded investment of impaired loans		3,161		5,491		5,608
Accruing troubled debt restructures		2,361		2,559		2,749
Interest income not recorded on nonaccrual loans according to their original terms		67		64		51
Interest income on nonaccrual loans actually recorded		—		—		—
Interest income recognized on impaired loans		103		196		182

Directors and officers of the Company and their associates are customers of, and have other transactions with, the Company in the normal course of business. All loans and commitments included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risk of collection or present other unfavorable features.

The following table shows the aggregate amount of loans to directors and officers of the Company and their associates during 2019.


Balance at December 31, 2018	Additions		Repayments and Deletions		Balance at December 31, 2019
(dollars in thousands)
$ 12,547	$	706	$	1,222	$	12,031