LOANS AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

6 Months Ended

Jun. 30, 2023

Loans and Leases Receivable Disclosure [Abstract]

LOANS AND ALLOWANCE FOR LOAN LOSSES

LOANS AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

Loans

The composition of the Company’s loan portfolio, excluding residential loans held for sale, was as follows for the dates indicated:

(In thousands)	June 30, 2023		December 31, 2022
Commercial Loans:
Commercial real estate - non-owner-occupied	$	1,341,138	$	1,292,443
Commercial real estate - owner-occupied	335,864		332,494
Commercial	422,437		430,131
Total commercial loans	2,099,439		2,055,068
Retail Loans:
Residential real estate	1,748,303		1,700,266
Home equity	232,618		234,428
Consumer	19,771		20,591
Total retail loans	2,000,692		1,955,285
Total loans	$	4,100,131	$	4,010,353

The loan balances for each portfolio segment presented above are net of their respective unamortized fair value mark discount on acquired loans and net of unamortized loan origination costs for the dates indicated:

(In thousands)	June 30, 2023		December 31, 2022
Net unamortized fair value mark discount on acquired loans	$	(232)	$	(313)
Net unamortized loan origination costs	7,169		6,890
Total	$	6,937	$	6,577

The Company's lending activities are primarily conducted in Maine, but also include loan production offices in Massachusetts and New Hampshire. The Company originates single- and multi-family residential loans, commercial real estate loans, business loans, municipal loans and a variety of consumer loans. In addition, the Company makes loans for the construction of residential homes, multi-family properties and commercial real estate properties. The ability and willingness of borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the geographic area and the general economy.

SBA PPP Loans. Beginning in April 2020, the Company originated SBA PPP loans issued to qualifying businesses as part of the federal stimulus packages issued due to the COVID-19 pandemic. This program provided qualifying businesses a specialized, low-interest-rate loan by the U.S. Treasury Department and was administered by the SBA. SBA PPP loans provided borrower guarantees for lenders, as well as loan forgiveness incentives for borrowers that utilized the loan proceeds to cover employee compensation-related business operating costs, as well as certain other costs up to pre-established limits. Effective May 31, 2021, the SBA PPP loan program ended and the Company ceased originating loans under this program. At June 30, 2023 and December 31, 2022, four loans with a total principal balance of $469,000 and five loans with a total principal balance of $648,000, respectively, remained outstanding and were presented in commercial loans.

Related Party Loans. In the normal course of business, the Bank makes loans to certain officers, directors and their associated companies, under terms that are consistent with the Company's lending policies and regulatory requirements and that do not involve more than the normal risk of collectability or present other unfavorable features. At June 30, 2023 and December 31, 2022, outstanding loans to certain officers, directors and their associated companies were less than 5% of the Company's shareholders' equity.

Loan Sales

For the three months ended June 30, 2023 and 2022, the Company sold $36.0 million and $47.0 million, respectively, of residential mortgage loans on the secondary market, which resulted in gains on the sale of loans (net of costs) of $377,000 and $1.0 million, respectively. For the six months ended June 30, 2023 and 2022, the Company sold $71.1 million and $93.7 million, respectively, of residential mortgage loans on the secondary market, which resulted in gains on the sale of loans (net of costs) of $761,000 and $2.2 million, respectively.

At June 30, 2023 and December 31, 2022, the Company had certain residential mortgage loans with a principal balance of $12.1 million and $5.3 million, respectively, designated as held for sale. The Company has elected the fair value option of accounting for its loans held for sale, and at June 30, 2023 and December 31, 2022, recorded an unrealized loss of $42,000 and $62,000, respectively on residential mortgage loans held for sale. For the three months ended June 30, 2023 and 2022, the Company recorded an unrealized (loss) gain on residential mortgage loans held for sale recorded within mortgage banking income, net, on the Company's consolidated statements of income of $(65,000) and $73,000, respectively. For the six months ended June 30, 2023 and 2022, the Company recorded an unrealized gain (loss) on residential mortgage loans held for sale recorded within mortgage banking income, net, on the Company's consolidated statements of income of $20,000 and $(69,000), respectively.

The Company has forward delivery commitments with a secondary market investor on each of its residential mortgage loans held for sale at June 30, 2023 and December 31, 2022. Refer to Note 8 for further discussion of the Company's forward delivery commitments.

ACL on Loans

The Company manages its loan portfolio proactively to effectively identify problem credits and assess trends early, implement effective work-out strategies, and take charge-offs as promptly as practical. In addition, the Company continuously reassesses its underwriting standards in response to credit risk posed by changes in economic conditions. The Company monitors and manages credit risk through the following governance structure:

•The Credit Risk and Special Assets team and the Credit Risk Policy Committee, which is an internal management committee comprised of various executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Credit Risk and Special Assets, Compliance, and Commercial and Retail Banking, oversee the Company's systems and procedures to monitor the credit quality of its loan portfolio, conduct a loan review program, and maintain the integrity of the loan rating system.

•The adequacy of the ACL is overseen by the Management Provision Committee, which is an internal management committee comprised of various Company executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Credit Risk and Special Assets, Compliance, and Commercial and Retail Banking. The Management Provision Committee supports the oversight efforts of the Audit Committee of the Board of Directors.

•The Directors' Credit Committee of the Board of Directors reviews large credit exposures, monitors external loan review reports, reviews the lending authority for individual loan officers when required, and has approval authority and responsibility for all matters regarding the loan policy and other credit-related policies, including reviewing and monitoring asset quality trends, and concentration levels.

•The Audit Committee of the Board of Directors has approval authority and oversight responsibility for the ACL adequacy and methodology.

Segmentation. For purposes of determining the ACL on loans, the Company disaggregates its loans into portfolio segments. Each portfolio segment possesses unique risk characteristics that are considered when determining the appropriate level of allowance. As of June 30, 2023 and December 31, 2022, the Company's loan portfolio segments, as determined based on the unique risk characteristics of each, include the following:

Commercial Real Estate - Non-Owner-Occupied. Non-owner-occupied commercial real estate loans are, in substance, all commercial real estate loans that are not categorized by the Company as owner-occupied commercial real estate loans. Non-owner-occupied commercial estate loans are investment properties in which the primary source for repayment of the loan by the borrower is derived from rental income associated with the property or the proceeds of the sale, refinancing, or permanent refinancing of the property. Non-owner-occupied commercial real estate loans consist of mortgage loans to finance investments in real property that may include, but are not limited to, multi-family residential, commercial/retail office space, industrial/warehouse space, hotels, assisted living facilities and other specific use properties. Also included within the non-owner-occupied commercial real estate loan segment are construction projects until they are completed. Commercial real estate loans are typically written with amortizing payment structures. Collateral values are determined based upon appraisals and evaluations in accordance with established policy guidelines. Maximum loan-to-value ratios at origination are governed by established policy and regulatory guidelines.

Commercial Real Estate - Owner-Occupied. Generally, owner-occupied commercial real estate loans are properties that are owned and operated by the borrower, and the primary source for repayment is the cash flow from the ongoing operations and activities conducted by the borrower's business. Owner-occupied commercial real estate loans consist of mortgage loans to finance investments in real property that may include, but are not limited to, commercial/retail office space, restaurants, educational and medical practice facilities and other specific use properties. Commercial real estate loans are typically written with amortizing payment structures. Collateral values are determined based upon appraisals and evaluations in accordance with established policy guidelines. Maximum loan-to-value ratios at origination are governed by established policy and regulatory guidelines.

Commercial. Commercial loans consist of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to, accounts receivable, inventory, plant and equipment, and/or real estate, if applicable. Commercial loans are primarily paid by the operating cash flow of the borrower. Commercial loans may be secured or unsecured.

Residential Real Estate.  Residential real estate loans held in the Company's loan portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan-to-value ratios within established policy guidelines. Collateral consists of mortgage liens on one- to four-family residences, including for investment purposes.

Home Equity. Home equity loans and lines of credit are made to qualified individuals and are secured by senior or junior mortgage liens on owner-occupied one- to four-family homes, condominiums, or vacation homes. Each home equity loan has a fixed rate and is billed as equal payments comprised of principal and interest. Each home equity line of credit has a variable rate and is billed as interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the principal balance plus all accrued interest. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan-to-value ratios within established policy guidelines.

Consumer. Consumer loan products include personal lines of credit and amortizing loans made to qualified individuals for various purposes such as education, auto loans, debt consolidation, personal expenses or overdraft protection. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines, as applicable. Consumer loans may be secured or unsecured.

The following table presents the activity in the ACL on loans for the periods indicated:

	Commercial Real Estate
(In thousands)	Non-Owner-Occupied		Owner- Occupied		Commercial		Residential Real Estate		Home Equity		Consumer		Total
At or For The Three Months Ended June 30, 2023
Beginning balance, March 31, 2023	$	16,324	$	2,470	$	4,581	$	10,812	$	2,440	$	507	$	37,134
Charge-offs	—		—		(534)		—		—		(27)		(561)
Recoveries	1		—		64		29		—		11		105
(Credit) provision for loan losses	(170)		(119)		684		(214)		(43)		167		305
Ending balance, June 30, 2023	$	16,155	$	2,351	$	4,795	$	10,627	$	2,397	$	658	$	36,983
At or For The Six Months Ended June 30, 2023
Beginning balance, December 31, 2022	$	17,296	$	2,362	$	5,446	$	9,089	$	2,225	$	504	$	36,922
Charge-offs	—		—		(846)		(18)		—		(31)		(895)
Recoveries	2		—		163		33		—		14		212
(Credit) provision for loan losses	(1,143)		(11)		32		1,523		172		171		744
Ending balance, June 30, 2023	$	16,155	$	2,351	$	4,795	$	10,627	$	2,397	$	658	$	36,983
At or For The Three Months Ended June 30, 2022
Beginning balance, March 31, 2022	$	16,572	$	2,339	$	4,842	$	6,476	$	1,435	$	106	$	31,770
Charge-offs	—		—		(316)		(16)		—		(17)		(349)
Recoveries	—		—		223		—		86		3		312
(Credit) provision for loan losses	(362)		162		397		1,978		275		61		2,511
Ending balance, June 30, 2022	$	16,210	$	2,501	$	5,146	$	8,438	$	1,796	$	153	$	34,244
At or For The Six Months Ended June 30, 2022
Beginning balance, December 31, 2021	$	18,834	$	2,539	$	4,202	$	6,133	$	1,469	$	79	$	33,256
Charge-offs	—		—		(561)		(16)		—		(84)		(661)
Recoveries	1		2		280		—		86		5		374
(Credit) provision for loan losses	(2,625)		(40)		1,225		2,321		241		153		1,275
Ending balance, June 30, 2022	$	16,210	$	2,501	$	5,146	$	8,438	$	1,796	$	153	$	34,244
At or For The Year Ended December 31, 2022
Beginning balance, December 31, 2021	$	18,834	$	2,539	$	4,202	$	6,133	$	1,469	$	79	$	33,256
Charge-offs	—		—		(1,042)		(66)		—		(134)		(1,242)
Recoveries	3		2		379		—		87		7		478
(Credit) provision for loan losses	(1,541)		(179)		1,907		3,022		669		552		4,430
Ending balance, December 31, 2022	$	17,296	$	2,362	$	5,446	$	9,089	$	2,225	$	504	$	36,922

The ACL on loans increased $61,000 during the six months ended June 30, 2023, to $37.0 million. The net increase over this period was primarily driven by:

•A $1.5 million increase in the residential real estate ACL on loans primarily due to the forecasted decrease in the Maine House Price Index over the Company's forecast period, as compared to December 31, 2022, and 3% loan growth in this loan portfolio during the period.

•A $1.1 million decrease in the CRE non-owner-occupied ACL on loans primarily due to the forecasted improvement in Maine GDP and Maine unemployment over the Company's forecast period, as compared to December 31, 2022, more than offsetting the 4% loan growth in this loan portfolio during the period.

Credit Concentrations

The Company focuses on maintaining a well-balanced and diversified loan portfolio. Despite such efforts, it is recognized that credit concentrations may occasionally emerge as a result of economic conditions, changes in local demand, natural loan growth and runoff. To identify credit concentrations effectively, all commercial and commercial real estate loans are assigned Standard Industrial Classification codes, North American Industry Classification System codes, and state and county codes. Shifts in portfolio concentrations are monitored. As of June 30, 2023, the Company's total exposure to the lessors of nonresidential buildings' industry and lessors of residential buildings' industry were 13% and 11% of total loans and 32% and 26% of total commercial real estate loans, respectively. There were no other industry exposures exceeding 10% of the Company's total loan portfolio as of June 30, 2023.

Credit Quality Indicators

To further identify loans with similar risk profiles, the Company categorizes each portfolio segment into classes by credit risk characteristic and applies a credit quality indicator to each portfolio segment. The indicators for commercial real estate - non-owner-occupied and owner-occupied, commercial and residential real estate portfolio segments are represented by Grades 1 through 10 as outlined below. In general, risk ratings are adjusted periodically throughout the year as updated analysis and review warrants. This process may include, but is not limited to, annual credit and loan reviews, periodic reviews of loan performance metrics, such as delinquency rates, and quarterly reviews of adversely risk rated loans. The Company uses the following definitions when assessing grades for the purpose of evaluating the risk and adequacy of the ACL on loans:

•Grade 1 through 6 — Grades 1 through 6 represent groups of loans that are not subject to adverse criticism as defined in regulatory guidance. Loans in these groups exhibit characteristics that represent low to moderate risks, which is measured using a variety of credit risk criteria, such as cash flow coverage, debt service coverage, balance sheet leverage, liquidity, management experience, industry position, prevailing economic conditions, support from secondary sources of repayment and other credit factors that may be relevant to a specific loan. In general, these loans are supported by properly margined collateral and guarantees of principal parties.

•Grade 7 — Loans with potential weakness (Special Mention). Loans in this category are currently protected based on collateral and repayment capacity and do not constitute undesirable credit risk, but have potential weakness that may result in deterioration of the repayment process at some future date. This classification is used if a negative trend is evident in the obligor’s financial situation. Special mention loans do not sufficiently expose the Company to warrant adverse classification.

•Grade 8 — Loans with definite weakness (Substandard). Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or by collateral pledged. Borrowers experience difficulty in meeting debt repayment requirements. Deterioration is sufficient to cause the Company to look to the sale of collateral.

•Grade 9 — Loans with potential loss (Doubtful). Loans classified as doubtful have all the weaknesses inherent in the substandard grade with the added characteristic that the weaknesses make collection or liquidation of the loan in full highly questionable and improbable. The possibility of some loss is extremely high, but because of specific pending factors that may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined.

•Grade 10 — Loans with definite loss (Loss). Loans classified as loss are considered uncollectible. The loss classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the asset because recovery and collection time may be protracted.

The Company periodically reassesses asset quality indicators to reflect appropriately the risk composition of the Company’s loan portfolio. Home equity and consumer loans are not individually risk rated, but rather analyzed as groups taking into account delinquency rates and other economic conditions which may affect the ability of borrowers to meet debt service requirements, including interest rates and energy costs. Performing loans include loans that are current and loans that are past due less than 90 days. Loans that are past due over 90 days and non-accrual loans, including TDRs prior to adoption of ASU 2022-02, are considered non-performing.

Based on the most recent analysis performed, the risk category of loans by portfolio segment by vintage was as follows as of and for the dates indicated:

(In thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of and for the period ended June 30, 2023
Commercial real estate - non-owner-occupied
Risk rating
Pass (Grades 1-6)	$	54,990	$	351,938	$	296,093	$	153,529	$	121,813	$	352,101	$	—	$	—	$	1,330,464
Special mention (Grade 7)	—		—		165		354		246		379		—		—		1,144
Substandard (Grade 8)	—		176		119		945		116		8,174		—		—		9,530
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total commercial real estate - non-owner-occupied	$	54,990	$	352,114	$	296,377	$	154,828	$	122,175	$	360,654	$	—	$	—	$	1,341,138
Gross charge-offs for the six months ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate - owner-occupied
Risk rating
Pass (Grades 1-6)	$	22,789	$	56,703	$	78,340	$	27,420	$	21,554	$	99,781	$	—	$	—	$	306,587
Special mention (Grade 7)	—		—		—		—		—		464		—		—		464
Substandard (Grade 8)	—		—		2,203		—		19,990		6,620		—		—		28,813
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total commercial real estate - owner occupied	$	22,789	$	56,703	$	80,543	$	27,420	$	41,544	$	106,865	$	—	$	—	$	335,864
Gross charge-offs for the six months ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial
Risk rating
Pass (Grades 1-6)	$	20,721	$	63,346	$	62,997	$	28,583	$	29,499	$	41,727	$	127,696	$	42,492	$	417,061
Special mention (Grade 7)	—		—		—		80		103		457		375		9		1,024
Substandard (Grade 8)	189		253		49		140		281		1,186		843		1,411		4,352
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total commercial	$	20,910	$	63,599	$	63,046	$	28,803	$	29,883	$	43,370	$	128,914	$	43,912	$	422,437
Gross charge-offs for the six months ended	$	—	$	68	$	137	$	23	$	—	$	538	$	20	$	60	$	846
Residential Real Estate
Risk rating
Pass (Grades 1-6)	$	85,198	$	547,343	$	562,723	$	230,363	$	74,997	$	244,040	$	354	$	394	$	1,745,412
Special mention (Grade 7)	—		—		—		—		—		—		—		—		—
Substandard (Grade 8)	—		—		314		—		91		2,486		—		—		2,891
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total residential real estate	$	85,198	$	547,343	$	563,037	$	230,363	$	75,088	$	246,526	$	354	$	394	$	1,748,303
Gross charge-offs for the six months ended	$	—	$	—	$	—	$	—	$	—	$	18	$	—	$	—	$	18
Home equity
Risk rating
Performing	$	8,177	$	24,663	$	559	$	334	$	4,452	$	14,214	$	167,186	$	12,567	$	232,152
Non-performing	—		—		—		—		—		17		351		98		466
Total home equity	$	8,177	$	24,663	$	559	$	334	$	4,452	$	14,231	$	167,537	$	12,665	$	232,618
Gross charge-offs for the six months ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer
Risk rating
Performing	$	3,512	$	6,276	$	2,777	$	1,206	$	596	$	2,562	$	2,826	$	—	$	19,755
Non-performing	—		—		—		—		7		9		—		—		16
Total consumer	$	3,512	$	6,276	$	2,777	$	1,206	$	603	$	2,571	$	2,826	$	—	$	19,771
Gross charge-offs for the six months ended	$	—	$	—	$	14	$	10	$	1	$	4	$	2	$	—	$	31

(In thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of December 31, 2022
Commercial real estate - non-owner-occupied
Risk rating
Pass (Grades 1-6)	$	339,171	$	287,749	$	160,621	$	125,029	$	108,823	$	242,024	$	—	$	—	$	1,263,417
Special mention (Grade 7)	—		167		364		259		75		321		—		—		1,186
Substandard (Grade 8)	—		127		1,306		203		7,798		18,406		—		—		27,840
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total commercial real estate - non-owner-occupied	$	339,171	$	288,043	$	162,291	$	125,491	$	116,696	$	260,751	$	—	$	—	$	1,292,443
Commercial real estate - owner-occupied
Risk rating
Pass (Grades 1-6)	$	60,127	$	80,781	$	28,378	$	23,381	$	39,554	$	70,568	$	—	$	—	$	302,789
Special mention (Grade 7)	—		2,053		—		19,992		—		411		—		—		22,456
Substandard (Grade 8)	17		—		—		—		3,266		3,966		—		—		7,249
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total commercial real estate - owner occupied	$	60,144	$	82,834	$	28,378	$	43,373	$	42,820	$	74,945	$	—	$	—	$	332,494
Commercial
Risk rating
Pass (Grades 1-6)	$	73,537	$	70,110	$	32,272	$	33,491	$	22,271	$	26,245	$	135,157	$	30,191	$	423,274
Special mention (Grade 7)	—		—		93		141		70		189		1,196		12		1,701
Substandard (Grade 8)	149		52		133		216		846		1,524		50		2,186		5,156
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total commercial	$	73,686	$	70,162	$	32,498	$	33,848	$	23,187	$	27,958	$	136,403	$	32,389	$	430,131
Residential Real Estate
Risk rating
Pass (Grades 1-6)	$	533,035	$	579,216	$	244,691	$	79,492	$	50,214	$	210,262	$	340	$	—	$	1,697,250
Special mention (Grade 7)	—		—		—		—		—		23		—		—		23
Substandard (Grade 8)	—		—		—		—		163		2,830		—		—		2,993
Doubtful (Grade 9)	—		—		—		—		—		—		—		—		—
Total residential real estate	$	533,035	$	579,216	$	244,691	$	79,492	$	50,377	$	213,115	$	340	$	—	$	1,700,266
Home equity
Risk rating
Performing	$	26,712	$	693	$	341	$	4,842	$	7,730	$	8,551	$	173,338	$	11,735	$	233,942
Non-performing	—		—		—		—		—		27		377		82		486
Total home equity	$	26,712	$	693	$	341	$	4,842	$	7,730	$	8,578	$	173,715	$	11,817	$	234,428
Consumer
Risk rating
Performing	$	8,009	$	3,816	$	1,702	$	1,188	$	345	$	2,462	$	3,069	$	—	$	20,591
Non-performing	—		—		—		—		—		—		—		—		—
Total consumer	$	8,009	$	3,816	$	1,702	$	1,188	$	345	$	2,462	$	3,069	$	—	$	20,591

Past Due and Non-Accrual Loans

The Company closely monitors the performance of its loan portfolio. A loan is placed on non-accrual status when the financial condition of the borrower is deteriorating, payment in full of both principal and interest is not expected as scheduled, or principal or interest has been in default for 90 days or more. Exceptions may be made if the asset is secured by collateral sufficient to satisfy both the principal and accrued interest in full and collection is reasonably assured. When one loan to a borrower is placed on non-accrual status, all other loans to the borrower are re-evaluated to determine if they should also be placed on non-accrual status. All previously accrued and unpaid interest is reversed at this time. A loan will return to accrual status when collection of principal and interest is assured and the borrower has demonstrated timely payments of principal and interest for a reasonable period, generally at least six months. Unsecured loans, however, are not normally placed on non-accrual status because they are generally charged-off once their collectability is in doubt.

The following is a loan aging analysis by portfolio segment (including loans past due over 90 days and non-accrual loans) and loans past due over 90 days and accruing as of the following dates:

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans Outstanding		Loans > 90 Days Past Due and Accruing
June 30, 2023
Commercial real estate - non-owner-occupied	$	112	$	—	$	9	$	121	$	1,341,017	$	1,341,138	$	—
Commercial real estate - owner-occupied	—		—		47		47		335,817		335,864
Commercial	292		260		458		1,010		421,427		422,437		—
Residential real estate	721		777		628		2,126		1,746,177		1,748,303		—
Home equity	396		281		125		802		231,816		232,618		—
Consumer	77		3		7		87		19,684		19,771		—
Total	$	1,598	$	1,321	$	1,274	$	4,193	$	4,095,938	$	4,100,131	$	—
December 31, 2022
Commercial real estate - non-owner-occupied	$	267	$	—	$	11	$	278	$	1,292,165	$	1,292,443	$	—
Commercial real estate - owner-occupied	55		—		47		102		332,392		332,494		—
Commercial	667		134		640		1,441		428,690		430,131		—
Residential real estate	852		186		524		1,562		1,698,704		1,700,266		—
Home equity	357		—		171		528		233,900		234,428		—
Consumer	23		11		—		34		20,557		20,591		—
Total	$	2,221	$	331	$	1,393	$	3,945	$	4,006,408	$	4,010,353	$	—

The following table presents the amortized cost basis of loans on non-accrual status (including non-accruing TDRs prior to adoption of ASU 2022-02) by portfolio segment as of the dates indicated:

	June 30, 2023						December 31, 2022
(In thousands)	Non-Accrual Loans With an Allowance		Non-Accrual Loans Without an Allowance		Total Non-Accrual Loans		Non-Accrual Loans With an Allowance		Non-Accrual Loans Without an Allowance		Total Non-Accrual Loans
Commercial real estate - non-owner-occupied	$	—	$	9	$	9	$	—	$	11	$	11
Commercial real estate - owner-occupied	—		47		47		—		46		46
Commercial	596		133		729		415		300		715
Residential real estate	1,527		254		1,781		1,314		419		1,733
Home equity	403		63		466		421		65		486
Consumer	16		—		16		—		—		—
Total	$	2,542	$	506	$	3,048	$	2,150	$	841	$	2,991

The following table presents the amortized cost basis of collateral-dependent non-accrual loans (including non-accruing TDRs prior to adoption of ASU 2022-02) by portfolio segment and collateral type, as of the dates indicated:

	June 30, 2023						December 31, 2022
	Collateral Type				Total Collateral -Dependent Non-Accrual Loans		Collateral Type				Total Collateral -Dependent Non-Accrual Loans
(In thousands)	Real Estate		General Business Assets				Real Estate		General Business Assets
Residential real estate	$	229	$	—	$	229	$	387	$	—	$	387
Home equity	—		—		—		—		—		—
Total	$	229	$	—	$	229	$	387	$	—	$	387

Collateral-dependent loans are loans for which repayment is expected to be provided substantially by the underlying collateral and there are no other available and reliable sources of repayment.

Interest income that would have been recognized if loans on non-accrual status had been current in accordance with their original terms is estimated to have been $24,000 and $38,000 for the three months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023 and 2022, the interest income that is estimated to have been recognized if loans on non-accrual status had been current in accordance with their original terms was $50,000 and $85,000, respectively.

The Company's policy is to reverse previously recorded interest income when a loan is placed on non-accrual. As a result, the Company did not record any interest income on its non-accruals for the three or six months ended June 30, 2023 and 2022. At June 30, 2023 and December 31, 2022, total accrued interest receivable on loans, which has been excluded from reported amortized cost basis on loans, was $10.8 million and $10.3 million, respectively, and reported within other assets on the consolidated statements of condition. An allowance was not carried on the accrued interest receivable at either date.

Loan Modifications for Borrowers Experiencing Financial Difficulty

Effective January 1, 2023, the Company adopted prospectively ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"). ASU 2022-02 provided guidance that eliminated the recognition and measurement of TDRs. Following the adoption of this guidance, the Company evaluates all loan modifications made to borrowers experiencing financial difficulty according to the accounting guidance for loan refinancing and restructuring to determine whether such loan modification should be accounted for as a new loan or a continuation of the existing loan. Our loan modifications for borrowers experiencing financial difficulty are generally accounted for as a continuation of the existing loan.

We offer several types of loans and receivables modification programs to borrowers experiencing financial difficulty, primarily interest rate reductions and term extensions. In such instances, we may modify loans and receivables with the intention to minimize future losses and improve collectability, while providing customers with temporary or permanent financial relief. There were no modified loans that required disclosure for the three and six months ended June 30, 2023.

Troubled Debt Restructuring Disclosures Prior to Adoption of ASU 2022-02

Prior to the Company's adoption of ASU 2022-02, which became effective for the Company on January 1, 2023, TDRs consisted of loans where the Company, for economic or legal reasons related to the borrower’s financial difficulties, granted a concession to the borrower that it would not otherwise consider. TDRs typically involved term modifications or a reduction of either interest or principal. Once such an obligation has been restructured, it will remain a TDR until paid in full, or until the loan is again restructured at current market rates and no concessions are granted.

The specific reserve allowance was determined by discounting the total expected future cash flows from the borrower at the original loan interest rate, or if the loan is currently collateral-dependent, using net realizable value, which was obtained through independent appraisals and internal evaluations. The following is a summary of TDRs prior to adoption of ASU 2022-02, by portfolio segment, and the associated specific reserve included within the ACL as of December 31, 2022:

	Number of Contracts	Recorded Investment		Specific Reserve
(In thousands, except number of contracts)	December 31, 2022	December 31, 2022		December 31, 2022
Commercial real estate - owner-occupied	1	$	113	$	50
Commercial	—	—		—
Residential real estate	18	2,208		$	307
Consumer and home equity	3	245		9
Total	22	$	2,566	$	366

At December 31, 2022, the Company had performing and non-performing TDRs with a recorded investment balance of $2.1 million and $452,000, respectively.

The following represents loan modifications that qualified as TDRs during the year ended December 31, 2022:

(In thousands, except number of contracts)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve
Home equity:
Interest rate concession and payment deferral	—	$	—	$	—	$	—
Maturity concession	1	69		96		—
Total	1	$	69	$	96	$	—

For the year ended December 31, 2022, no loans were modified as TDRs within the previous 12 months for which the borrower subsequently defaulted.

In-Process Foreclosure Proceedings

At June 30, 2023 and December 31, 2022, the Company had $378,000 and $481,000, respectively, of consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings were in process.

FHLB Advances

FHLB advances are those borrowings from the FHLBB greater than 90 days. FHLB advances are collateralized by a blanket lien on qualified collateral consisting primarily of loans with first mortgages secured by one- to four-family properties, certain commercial real estate loans, certain pledged investment securities and other qualified assets. The carrying value of residential real estate and commercial loans pledged as collateral was $1.9 billion at June 30, 2023 and $1.8 billion December 31, 2022, respectively.

Refer to Notes 3 and 6 of the consolidated financial statements for discussion of securities pledged as collateral.