Loans (Tables)

12 Months Ended

Dec. 31, 2012

The following is a summary of loans:



(Dollars in thousands)	December 31, 2012				December 31, 2011
	Amount		%		Amount		%
Commercial:
Mortgages (1)		$710,813	31	%		$624,813	29	%
Construction and development (2)	27,842		1	%	10,955		1	%
Other (3)	513,764		23	%	488,860		22	%
Total commercial	1,252,419		55	%	1,124,628		52	%
Residential real estate:
Mortgages (4)	692,798		30	%	678,582		32	%
Homeowner construction	24,883		1	%	21,832		1	%
Total residential real estate	717,681		31	%	700,414		33	%
Consumer:
Home equity lines (5)	226,861		10	%	223,430		10	%
Home equity loans (5)	39,329		2	%	43,121		2	%
Other (6)	57,713		2	%	55,566		3	%
Total consumer	323,903		14	%	322,117		15	%
Total loans (7)		$2,294,003	100	%		$2,147,159	100	%


(1)	Amortizing mortgages and lines of credit, primarily secured by income producing property. As of December 31, 2012 and 2011, $238.6 million and $107.1 million, respectively, of these loans were pledged as collateral for FHLBB borrowings (see Note 11).


(2)	Loans for construction of residential and commercial properties and for land development.

(3)

Loans to businesses and individuals, a substantial portion of which are fully or partially collateralized by real estate. As of December 31, 2012, $51.8 million and $29.5 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, 2011 were $27.2 million and $42.1 million, respectively (see Note 11).


(4)	As of December 31, 2012 and 2011, $627.4 million and $611.8 million, respectively, of these loans were pledged as collateral for FHLBB borrowings (see Note 11).


(5)	As of December 31, 2012 and 2011, $189.4 million and $165.4 million, respectively, of these loans were pledged as collateral for FHLBB borrowings (see Note 11).


(6)	Fixed rate consumer installment loans.


(7)	Includes net unamortized loan origination costs of $39 thousand and $31 thousand, respectively, and net unamortized premiums on purchased loans of $83 thousand and $67 thousand, respectively, at December 31, 2012 and 2011.

Nonaccrual Loans

The following is a summary of nonaccrual loans, segregated by class of loans:



(Dollars in thousands)
December 31,	2012		2011
Commercial:
Mortgages		$10,681		$5,709
Construction and development	—		—
Other	4,412		3,708
Residential real estate:
Mortgages	6,158		10,614
Homeowner construction	—		—
Consumer:
Home equity lines	840		718
Home equity loans	371		335
Other	81		153
Total nonaccrual loans		$22,543		$21,237
Accruing loans 90 days or more past due		$—		$—

As of December 31, 2012 and 2011, nonaccrual loans of $1.6 million and $3.6 million, respectively, were current as to the payment of principal and interest.

Past Due Loans

The following tables present an age analysis of past due loans, segregated by class of loans, as of the dates indicated:



(Dollars in thousands)	Days Past Due
December 31, 2012	30-59		60-89		Over 90		Total Past Due		Current		Total Loans
Commercial:
Mortgages		$373		$408		$10,300		$11,081		$699,732		$710,813
Construction and development	—		—		—		—		27,842		27,842
Other	260		296		3,647		4,203		509,561		513,764
Residential real estate:
Mortgages	4,840		1,951		3,658		10,449		682,349		692,798
Homeowner construction	—		—		—		—		24,883		24,883
Consumer:
Home equity lines	753		207		528		1,488		225,373		226,861
Home equity loans	252		114		250		616		38,713		39,329
Other	129		64		66		259		57,454		57,713
Total loans		$6,607		$3,040		$18,449		$28,096		$2,265,907		$2,294,003



(Dollars in thousands)	Days Past Due
December 31, 2011	30-59		60-89		Over 90		Total Past Due		Current		Total Loans
Commercial:
Mortgages		$1,621		$315		$4,995		$6,931		$617,882		$624,813
Construction and development	—		—		—		—		10,955		10,955
Other	3,760		982		633		5,375		483,485		488,860
Residential real estate:
Mortgages	3,969		1,505		6,283		11,757		666,825		678,582
Homeowner construction	—		—		—		—		21,832		21,832
Consumer:
Home equity lines	645		210		525		1,380		222,050		223,430
Home equity loans	362		46		202		610		42,511		43,121
Other	66		7		147		220		55,346		55,566
Total loans		$10,423		$3,065		$12,785		$26,273		$2,120,886		$2,147,159

Included in past due loans as of December 31, 2012 and 2011, were nonaccrual loans of $21.0 million and $17.6 million, respectively. All loans 90 days or more past due at December 31, 2012 and 2011 were classified as nonaccrual.

Impaired Loans

The following is a summary of impaired loans, as of the dates indicated:



(Dollars in thousands)	Recorded Investment (1)				Unpaid Principal				Related Allowance
	Recorded Investment (1)				Unpaid Principal				Related Allowance
December 31,	2012		2011		2012		2011		2012		2011
No Related Allowance Recorded:
Commercial:
Mortgages		$2,357		$7,093		$2,360		$7,076		$—		$—
Construction and development	—		—		—		—		—		—
Other	1,058		1,622		1,057		1,620		—		—
Residential real estate:
Mortgages	1,294		2,383		1,315		2,471		—		—
Homeowner construction	—		—		—		—		—		—
Consumer:
Home equity lines	—		—		—		—		—		—
Home equity loans	—		—		—		—		—		—
Other	—		—		—		—		—		—
Subtotal		$4,709		$11,098		$4,732		$11,167		$—		$—
With Related Allowance Recorded:
Commercial:
Mortgages		$17,897		$5,023		$19,738		$6,760		$1,720		$329
Construction and development	—		—		—		—		—		—
Other	9,939		8,739		10,690		9,740		694		839
Residential real estate:
Mortgages	2,576		3,606		2,947		4,138		463		495
Homeowner construction	—		—		—		—		—		—
Consumer:
Home equity lines	187		278		255		373		1		82
Home equity loans	117		130		160		153		—		1
Other	137		205		136		227		2		69
Subtotal		$30,853		$17,981		$33,926		$21,391		$2,880		$1,815
Total impaired loans		$35,562		$29,079		$38,658		$32,558		$2,880		$1,815
Total:
Commercial		$31,251		$22,477		$33,845		$25,196		$2,414		$1,168
Residential real estate	3,870		5,989		4,262		6,609		463		495
Consumer	441		613		551		753		3		152
Total impaired loans		$35,562		$29,079		$38,658		$32,558		$2,880		$1,815

(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 December 31, 2012 and December 31, 2011, recorded investment in impaired loans included accrued interest of $13 thousand and $46 thousand, respectively.

The following table presents the average recorded investment balance of impaired loans and related interest income recognized during the periods indicated:



(Dollars in thousands)	Average Recorded Investment				Interest Income Recognized
Years ended December 31,	2012		2011		2012		2011
Commercial:
Mortgages		$10,785		$14,923		$273		$539
Construction and development	—		—		—		—
Other	10,661		8,226		297		388
Residential real estate:
Mortgages	4,651		5,743		88		188
Homeowner construction	—		—		—		—
Consumer:
Home equity lines	172		127		3		5
Home equity loans	131		290		7		17
Other	151		235		11		15
Totals		$26,551		$29,544		$679		$1,152

The average recorded investment in impaired loans was $26.6 million, $29.5 million and $31.9 million at December 31, 2012, 2011 and 2010, respectively. Interest income recognized on impaired loans was $679 thousand, $1.2 million and $1.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.

At December 31, 2012 and 2011, there were no significant commitments to lend additional funds to borrowers whose loans were on nonaccrual status or had been restructured.

Troubled Debt Restructurings

The following table presents loans modified as a troubled debt restructuring during the years ended December 31, 2012 and 2011.



(Dollars in thousands)			Outstanding Recorded Investment (1)
	# of Loans		Pre-Modifications				Post-Modifications
Years ended December 31,	2012	2011	2012		2011		2012		2011
Commercial:
Mortgages	6	2		$9,525		$215		$9,525		$215
Construction and development	—	—	—		—		—		—
Other	8	13	1,889		6,619		1,889		6,619
Residential real estate:
Mortgages	2	8	651		2,127		651		2,127
Homeowner construction	—	—	—		—		—		—
Consumer:
Home equity lines	—	—	—		—		—		—
Home equity loans	—	1	—		28		—		28
Other	2	2	5		131		5		131
Totals	18	26		$12,070		$9,120		$12,070		$9,120


(1)	The recorded investment in troubled debt restructurings consists of unpaid principal balance, net of charge-offs and unamortized deferred loan origination fees and costs, at the time of the restructuring. For accruing troubled debt restructurings the recorded investment also includes accrued interest.

Troubled Debt Restructurings, Type of Modification

The following table provides information on how loans were modified as a troubled debt restructuring during the years ended December 31, 2012 and 2011.



(Dollars in thousands)
Years ended December 31,	2012		2011
Payment deferral		$240		$2,744
Maturity / amortization concession	917		1,196
Interest only payments	361		15
Below market interest rate concession	1,426		4,726
Combination (1)	9,126		439
Total		$12,070		$9,120

(1)

Loans included in this classification had a combination of any two of the concessions included in this table. In the third quarter of 2012 , a restructuring involving one accruing commercial real estate relationship with a carrying value of $8.2 million occurred. The restructuring included a modification of certain payment terms and a below market interest rate reduction for a temporary period on approximately $3.1 million of the total balance.

Troubled Debt Restructurings, Subsequent Default

The following table presents loans modified in a troubled debt restructuring within the previous twelve months for which there was a payment default during the years ended December 31, 2012 and 2011.



(Dollars in thousands)	# of Loans		Recorded Investment (1)
Years ended December 31,	2012	2011	2012		2011
Commercial:
Mortgages	1	2		$195		$215
Construction and development	—	—	—		—
Other	3	11	866		937
Residential real estate:
Mortgages	—	3	—		913
Homeowner construction	—	—	—		—
Consumer:
Home equity lines	—	—	—		—
Home equity loans	—	—	—		—
Other	—	—	—		—
Totals	4	16		$1,061		$2,065


(1)	The recorded investment in troubled debt restructurings consists of unpaid principal balance, net of charge-offs and unamortized deferred loan origination fees and costs. For accruing troubled debt restructurings the recorded investment also includes accrued interest.

Credit Quality Indicators - Commercial

The following table presents the commercial loan portfolio, segregated by category of credit quality indicator.



(Dollars in thousands)
	Pass				Special Mention				Classified
December 31,	2012		2011		2012		2011		2012		2011
Mortgages		$669,220		$583,162		$21,649		$29,759		$19,944		$11,892
Construction and development	27,842		10,955		—		—		—		—
Other	483,371		455,577		24,393		22,731		6,000		10,552
Total commercial loans		$1,180,433		$1,049,694		$46,042		$52,490		$25,944		$22,444

Credit Quality Indicators - Residential & Consumer

The following table presents the residential and consumer loan portfolios, segregated by category of credit quality indicator:



(Dollars in thousands)	Under 90 Days Past Due				Over 90 Days Past Due
December 31,	2012		2011		2012		2011
Residential real estate:
Accruing mortgages		$686,640		$667,968		$—		$—
Nonaccrual mortgages	2,500		4,331		3,658		6,283
Homeowner construction	24,883		21,832		—		—
Total residential loans		$714,023		$694,131		$3,658		$6,283
Consumer:
Home equity lines		$226,333		$222,905		$528		$525
Home equity loans	39,078		42,919		251		202
Other	57,648		55,419		65		147
Total consumer loans		$323,059		$321,243		$844		$874

Analysis of Loan Servicing Rights

An analysis of loan servicing rights for the years ended December 31, 2012, 2011 and 2010 follows:



(Dollars in thousands)	Loan Servicing Rights			Valuation Allowance			Total
Balance at December 31, 2009		$969			($167	)		$802
Loan servicing rights capitalized	153			—			153
Amortization (1)	(209		)	—			(209		)
Decrease in impairment reserve (2)	—			11			11
Balance at December 31, 2010	913			(156		)	757
Loan servicing rights capitalized	248			—			248
Amortization (1)	(224		)	—			(224		)
Increase in impairment reserve (2)	—			(16		)	(16		)
Balance at December 31, 2011	937			(172		)	765
Loan servicing rights capitalized	569			—			569
Amortization (1)	(231		)	—			(231		)
Decrease in impairment reserve (2)	—			7			7
Balance at December 31, 2012		$1,275			($165	)		$1,110


(1)	Amortization expense is charged against loan servicing fee income.


(2)	(Increases) decreases in the impairment reserve are recorded as (reductions) additions to loan servicing fee income.

Estimated Aggregate Amortization Expense Related to Loan Servicing Assets

Estimated aggregate amortization expense related to loan servicing assets is as follows:



(Dollars in thousands)
Years ending December 31:	2013		$263
	2014	215
	2015	169
	2016	132
	2017	104
	Thereafter	392
Total estimated amortization expense			$1,275

Loans Serviced for Others, by Type of Loan

Balance of loans serviced for others, by type of loan:



(Dollars in thousands)
December 31,	2012		2011
Residential mortgages		$144,360		$87,049
Commercial loans	60,444		56,929
Total		$204,804		$143,978