(Dollars in thousands)	June 30, 2011					December 31, 2010
	Amount		%			Amount		%
Commercial:
Mortgages (1)	$	562,976		27	%	$	518,623		26	%
Construction and development (2)		19,448		1			47,335		2
Other (3)		491,071		24			461,107		23
Total commercial		1,073,495		52			1,027,065		51
Residential real estate:
Mortgages (4)		644,210		31			634,739		31
Homeowner construction		14,137		1			10,281		1
Total residential real estate		658,347		32			645,020		32
Consumer:
Home equity lines (5)		223,284		11			218,288		11
Home equity loans (5)		46,797		2			50,624		3
Other (6)		55,229		3			54,641		3
Total consumer		325,310		16			323,553		17
Total loans (7)	$	2,057,152		100	%	$	1,995,638		100	%

(3)

Loans to businesses and individuals, a substantial portion of which are fully or partially collateralized by real estate. As of June 30, 2011, $29 million and $48 million, respectively, of these loans were pledged as collateral for FHLBB borrowings and were collateralized for the discount window at the Federal Reserve Bank. Comparable amounts for December 31, 2010 were $30 million and $61 million, respectively (see Note 7).

Loans, with the exception of certain well-secured residential mortgage loans that are in the process of collection, are placed on nonaccrual status and interest recognition is suspended when such loans are 90 days or more overdue with respect to principal and/or interest or sooner if considered appropriate by management. Well-secured residential mortgage loans are permitted to remain on accrual status provided that full collection of principal and interest is assured and the loan is in the process of collection. Loans are also placed on nonaccrual status when, in the opinion of management, full collection of principal and interest is doubtful. Interest previously accrued but not collected on such loans is reversed against current period income. Subsequent cash receipts on nonaccrual loans are applied to the outstanding principal balance of the loan or recognized as interest income depending on management’s assessment of the ultimate collectability of the loan. Loans are removed from nonaccrual status when they have been current as to principal and interest for a period of time, the borrower has demonstrated an ability to comply with repayment terms, and when, in management’s opinion, the loans are considered to be fully collectible.

(Dollars in thousands)	June 30, 2011		December 31, 2010
Commercial:
Mortgages	$	7,476	$	6,624
Construction and development		–		–
Other		3,152		5,259
Residential real estate:
Mortgages		9,570		6,414
Homeowner construction		–		–
Consumer:
Home equity lines		390		152
Home equity loans		199		53
Other		191		8
Total nonaccrual loans	$	20,978	$	18,510

Accruing loans 90 days or more past due	$	–	$	–

(Dollars in thousands)	Days Past Due
June 30, 2011		30-59		60-89	Over 90		Total Past Due		Current		Total Loans
Commercial:
Mortgages	$	1,507	$	1,013	$	5,553	$	8,073	$	554,903	$	562,976
Construction and development		−		−		−		−		19,448		19,448
Other		1,783		80		1,378		3,241		487,830		491,071
Residential real estate:
Mortgages		3,355		992		6,549		10,896		633,314		644,210
Homeowner construction		−		−		−		−		14,137		14,137
Consumer:
Home equity lines		1,539		21		75		1,635		221,649		223,284
Home equity loans		429		–		77		506		46,291		46,797
Other		11		99		93		203		55,026		55,229
Total loans	$	8,624	$	2,205	$	13,725	$	24,554	$	2,032,598	$	2,057,152

(Dollars in thousands)	Days Past Due
December 31, 2010		30-59		60-89	Over 90		Total Past Due		Current		Total Loans
Commercial:
Mortgages	$	2,185	$	514	$	5,322	$	8,021	$	510,602	$	518,623
Construction and development		−		−		−		−		47,335		47,335
Other		1,862		953		3,376		6,191		454,916		461,107
Residential real estate:
Mortgages		3,073		1,477		4,041		8,591		626,148		634,739
Homeowner construction		−		−		−		−		10,281		10,281
Consumer:
Home equity lines		1,255		170		−		1,425		216,863		218,288
Home equity loans		529		180		11		720		49,904		50,624
Other		221		98		−		319		54,322		54,641
Total loans	$	9,125	$	3,392	$	12,750	$	25,267	$	1,970,371	$	1,995,638

Impaired loans are loans for which it is probable that the Corporation will not be able to collect all amounts due according to the contractual terms of the loan agreements and loans restructured in a troubled debt restructuring. Impaired loans do not include large groups of smaller-balance homogenous loans that are collectively evaluated for impairment, which consist of most residential mortgage loans and consumer loans. The following is a summary of impaired loans, as of the dates indicated:

(Dollars in thousands)	Recorded				Unpaid				Related
	Investment (1)				Principal				Allowance
	Jun. 30, 2011		Dec. 31, 2010		Jun. 30, 2011		Dec. 31, 2010		Jun. 30, 2011		Dec. 31, 2010
No Related Allowance Recorded:
Commercial:
Mortgages	$	1,773	$	3,113	$	1,771	$	3,128	$	−	$	−
Construction and development		−		−		−		−		−		−
Other		2,114		3,237		2,249		3,834		−		−
Residential real estate:
Mortgages		2,472		928		2,542		937		−		−
Homeowner construction		−		−		−		−		−		−
Consumer:
Home equity lines		−		−		−		−		−		−
Home equity loans		−		163		−		159		−		−
Other		−		−		−		−		−		−
Subtotal	$	6,359	$	7,441	$	6,562	$	8,058	$	−	$	−

With Related Allowance Recorded:
Commercial:
Mortgages	$	12,273	$	15,287	$	13,374	$	15,930	$	708	$	629
Construction and development		−		−		−		−		−		−
Other		5,085		6,632		6,784		9,311		547		1,245
Residential real estate:
Mortgages		3,899		3,773		4,245		3,971		474		258
Homeowner construction		−		−		−		−		−		−
Consumer:
Home equity lines		105		105		172		172		1		1
Home equity loans		253		307		275		330		1		4
Other		257		145		256		143		1		−
Subtotal	$	21,872	$	26,249	$	25,106	$	29,857	$	1,732	$	2,137
Total impaired loans	$	28,231	$	33,690	$	31,668	$	37,915	$	1,732	$	2,137

Total:
Commercial	$	21,245	$	28,269	$	24,178	$	32,203	$	1,255	$	1,874
Residential real estate		6,371		4,701		6,787		4,908		474		258
Consumer		615		720		703		804		3		5
Total impaired loans	$	28,231	$	33,690	$	31,668	$	37,915	$	1,732	$	2,137

(1)

The recorded investment in impaired loans consists of unpaid principal balance, net of charge-offs, interest payments received applied to principal and unamortized deferred loan origination fees and costs. For impaired accruing loans (those troubled debt restructurings for which management has concluded that the collectibility of the loan is not in doubt), the recorded investment also includes accrued interest. As of June 30, 2011 and December 31, 2010, recorded investment in impaired loans included accrued interest of $48 thousand and $62 thousand, respectively.

(Dollars in thousands)	Average Recorded				Interest Income
	Investment				Recognized
Three months ended June 30,	2011		2010		2011		2010
Commercial:
Mortgages	$	15,231	$	14,195	$	149	$	245
Construction and development		–		–		–		–
Other		8,564		10,806		117		103
Residential real estate:
Mortgages		6,114		4,837		46		41
Homeowner construction		–		–		–		–
Consumer:
Home equity lines		96		336		2		3
Home equity loans		396		924		5		15
Other		260		196		4		4
Totals	$	30,661	$	31,294	$	323	$	411

(Dollars in thousands)	Average Recorded				Interest Income
	Investment				Recognized
Six months ended June 30,	2011		2010		2011		2010
Commercial:
Mortgages	$	16,682	$	15,417	$	322	$	414
Construction and development		–		–		–		–
Other		10,014		10,304		211		169
Residential real estate:
Mortgages		5,574		4,604		90		93
Homeowner construction		–		–		–		–
Consumer:
Home equity lines		101		320		3		6
Home equity loans		427		773		11		27
Other		231		203		8		8
Totals	$	33,029	$	31,621	$	645	$	717

The Corporation utilizes an internal rating system to assign a risk to each of its commercial loans. Loans are rated on a scale of 1 to 10. This scale can be assigned to three broad categories including “pass” for ratings 1 through 6, “special mention” for 7-rated loans, and “classified” for loans rated 8, 9 or 10. The loan rating system takes into consideration parameters including the borrower’s financial condition, the borrower’s performance with respect to loan terms, and the adequacy of collateral. As of June 30, 2011 and December 31, 2010, the weighted average risk rating of the Corporation’s commercial loan portfolio was 4.95 and 5.01, respectively.

Pass – Loans with acceptable credit quality, defined as ranging from superior or very strong to a status of lesser stature. Superior or very strong credit quality is characterized by a high degree of cash collateralization or strong balance sheet liquidity. Lesser stature loans have an acceptable level of credit quality but exhibit some weakness in various credit metrics such as collateral adequacy, cash flow, or performance inconsistency or may be in an industry or of a loan type known to have a higher degree of risk.

Special Mention – Loans with potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s position as creditor at some future date. Special Mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification. Examples of these conditions, include but are not limited to outdated or poor quality financial data, strains on liquidity and leverage, losses or negative trends in operating results, marginal cash flow, weaknesses in occupancy rates or trends in the case of commercial real estate and frequent delinquencies.

Classified – Loans identified as “substandard”, “doubtful” or “loss” based on criteria consistent with guidelines provided by banking regulators. A "substandard" loan has defined weaknesses which make payment default or principal exposure likely, but not yet certain. Such loans are apt to be dependent upon collateral liquidation, a secondary source of repayment or an event outside of the normal course of business. The loans are closely watched and are either already on nonaccrual status or may be placed in nonaccrual status when management determines there is uncertainty of collectibility. A “doubtful” loan is placed on non-accrual status and may be dependent upon collateral having a value that is difficult to determine or upon some near-term event which lacks certainty. A loan in the “loss” category is considered generally uncollectible or the timing or amount of payments cannot be determined. "Loss" is not intended to imply that the loan has no recovery value but rather it is not practical or desirable to continue to carry the asset.

(Dollars in thousands)
	Pass				Special Mention				Classified
	Jun. 30, 2011		Dec. 31, 2010		Jun. 30, 2011		Dec. 31, 2010		Jun. 30, 2011		Dec. 31, 2010
Mortgages	$	524,777	$	485,668	$	23,711	$	16,367	$	14,488	$	16,588
Construction and development		18,743		43,119		705		4,216		−		−
Other		442,953		425,522		40,032		28,131		8,086		7,454
Total commercial loans	$	986,473	$	954,309	$	64,448	$	48,714	$	22,574	$	24,042

The Corporation’s procedures call for loan ratings and classifications to be revised whenever information becomes available that indicates a change is warranted. On a quarterly basis, the criticized loan portfolio which consists of commercial and commercial real estate loans that are risk rated special mention or worse, are reviewed by management, focusing on the current status and strategies to improve the credit. An annual loan review program is conducted by a third party to provide an independent evaluation of the creditworthiness of the commercial loan portfolio, the quality of the underwriting and credit risk management practices and the appropriateness of the risk rating classifications. This review is supplemented with selected targeted internal reviews of the commercial loan portfolio.

The residential and consumer portfolios are monitored on an ongoing basis by the Corporation using delinquency information and loan type as credit quality indicators. These credit quality indicators are assessed on an aggregate basis in these relatively homogenous portfolios. The following table presents the residential and consumer loan portfolios, segregated by category of credit quality indicator:

(Dollars in thousands)	Under 90 Days				Over 90 Days
	Past Due				Past Due
	Jun. 30, 2011		Dec. 31, 2010		Jun. 30, 2011		Dec. 31, 2010
Residential Real Estate:
Accruing mortgages	$	634,640	$	628,325	$	−	$	−
Nonaccrual mortgages		3,021		2,373		6,549		4,041
Homeowner construction		14,137		10,281		−		−
Total residential real estate loans	$	651,798	$	640,979	$	6,549	$	4,041

Consumer:
Home equity lines	$	223,209	$	218,288	$	75	$	−
Home equity loans		46,720		50,613		77		11
Other		55,136		54,641		93		−
Total consumer loans	$	325,065	$	323,542	$	245	$	11

Various other techniques are utilized to monitor indicators of credit deterioration in the portfolios of residential real estate mortgages and home equity lines and loans. Among these techniques is the periodic tracking of loans with an updated FICO score and an estimated loan to value (“LTV”) ratio. LTV is determined via statistical modeling analyses. The indicated LTV levels are estimated based on such factors as the location, the original LTV, and the date of origination of the loan and do not reflect actual appraisal amounts. The results of these analyses are taken into consideration in the determination of loss allocation factors for residential mortgage and home equity consumer credits. See Note 6 for additional information.