Allowance for Loan Losses and Credit Quality of Loans (Tables)

9 Months Ended

Sep. 30, 2015

Allowance for Loan Losses and Credit Quality of Loans [Abstract]

The following table illustrates the portfolio and class segments for the Company’s loan portfolio:

Portfolio	Class
Commercial Loans	Commercial
	Commercial Real Estate
	Agricultural
	Agricultural Real Estate
	Business Banking

Consumer Loans	Indirect
	Home Equity
	Direct

Residential Real Estate Mortgages

Allowance for Loan Losses by Portfolio

The following tables illustrate the changes in the allowance for loan losses by our portfolio segments for the three and nine months ended September 30, 2015 and 2014:

Three months ended September 30,	Commercial Loans			Consumer Loans			Residential Real Estate Mortgages			Unallocated		Total
Balance as of June 30, 2015	$	28,326		$	28,314		$	8,281		$	38	$	64,959
Charge-offs		(1,333	)		(4,530	)		(511	)		-		(6,374	)
Recoveries		258			889			161			-		1,308
Provision		(2,800	)		7,333			51			382		4,966
Ending Balance as of September 30, 2015	$	24,451		$	32,006		$	7,982		$	420	$	64,859

Balance as of June 30, 2014	$	35,123		$	27,973		$	6,205		$	233	$	69,534
Charge-offs		(1,517	)		(3,979	)		(481	)		-		(5,977	)
Recoveries		253			632			7			-		892
Provision		1,779			2,826			212			68		4,885
Ending Balance as of September 30, 2014	$	35,638		$	27,452		$	5,943		$	301	$	69,334

Nine months ended September 30,	Commercial Loans			Consumer Loans			Residential Real Estate Mortgages			Unallocated		Total
Balance as of December 31, 2014	$	32,433		$	26,720		$	7,130		$	76	$	66,359
Charge-offs		(2,715	)		(13,183	)		(1,524	)		-		(17,422	)
Recoveries		772			2,334			310			-		3,416
Provision		(6,039	)		16,135			2,066			344		12,506
Ending Balance as of September 30, 2015	$	24,451		$	32,006		$	7,982		$	420	$	64,859

Balance as of December 31, 2013	$	35,090		$	27,694		$	6,520		$	130	$	69,434
Charge-offs		(3,423	)		(11,659	)		(965	)		-		(16,047	)
Recoveries		966			2,087			247			-		3,300
Provision		3,005			9,330			141			171		12,647
Ending Balance as of September 30, 2014	$	35,638		$	27,452		$	5,943		$	301	$	69,334

The following tables illustrate the allowance for loan losses and the recorded investment by portfolio segments as of September 30, 2015 and December 31, 2014:

Allowance for Loan Losses and Recorded Investment in Loans

(in thousands)

	Commercial Loans		Consumer Loans		Residential Real Estate Mortgages		Unallocated		Total
As of September 30, 2015
Allowance for loan losses	$	24,451	$	32,006	$	7,982	$	420	$	64,859

Allowance for loans individually evaluated for impairment		3,545		-		-				3,545

Allowance for loans collectively evaluated for impairment	$	20,906	$	32,006	$	7,982	$	420	$	61,314

Ending balance of loans	$	2,602,385	$	2,091,408	$	1,177,195			$	5,870,988

Ending balance of originated loans individually evaluated for impairment		12,559		7,590		5,867				26,016
Ending balance of acquired loans individually evaluated for impairment		9,317		-		-				9,317
Ending balance of acquired loans collectively evaluated for impairment		295,890		106,968		241,646				644,504
Ending balance of originated loans collectively evaluated for impairment	$	2,284,619	$	1,976,850	$	929,682			$	5,191,151

As of December 31, 2014
Allowance for loan losses	$	32,433	$	26,720	$	7,130	$	76	$	66,359

Allowance for loans individually evaluated for impairment		1,100		-		-				1,100

Allowance for loans collectively evaluated for impairment	$	31,333	$	26,720	$	7,130	$	76	$	65,259

Ending balance of loans	$	2,473,702	$	2,005,980	$	1,115,589			$	5,595,271

Ending balance of originated loans individually evaluated for impairment		11,079		5,498		3,544				20,121
Ending balance of acquired loans individually evaluated for impairment		5,675		-		-				5,675
Ending balance of acquired loans collectively evaluated for impairment		327,656		147,256		266,747				741,659
Ending balance of originated loans collectively evaluated for impairment	$	2,129,292	$	1,853,226	$	845,298			$	4,827,816

Past Due and Nonperforming Loans by Loan Class

The following tables set forth information with regard to past due and nonperforming loans by loan class as of September 30, 2015 and December 31, 2014:

Age Analysis of Past Due Financing Receivables

As of September 30, 2015

(in thousands)

	31-60 Days Past Due Accruing		61-90 Days Past Due Accruing		Greater Than 90 Days Past Due Accruing		Total Past Due Accruing		Non-Accrual		Current		Recorded Total Loans
ORIGINATED
Commercial Loans
Commercial	$	2,050	$	100	$	-	$	2,150	$	1,264	$	647,577	$	650,991
Commercial Real Estate		537		-		-		537		6,236		1,176,523		1,183,296
Agricultural		-		-		-		-		900		32,486		33,386
Agricultural Real Estate		557		-		-		557		500		25,758		26,815
Business Banking		1,930		145		-		2,075		4,947		395,668		402,690
		5,074		245		-		5,319		13,847		2,278,012		2,297,178

Consumer Loans
Indirect		15,041		3,159		1,488		19,688		1,718		1,431,946		1,453,352
Home Equity		4,091		1,205		384		5,680		5,436		462,546		473,662
Direct		526		99		59		684		86		56,656		57,426
		19,658		4,463		1,931		26,052		7,240		1,951,148		1,984,440
Residential Real Estate Mortgages		2,312		80		1,253		3,645		8,462		923,442		935,549
	$	27,044	$	4,788	$	3,184	$	35,016	$	29,549	$	5,152,602	$	5,217,167

ACQUIRED
Commercial Loans
Commercial	$	-	$	-	$	-	$	-	$	2,509	$	69,553	$	72,062
Commercial Real Estate		-		-		-		-		6,804		175,026		181,830
Business Banking		63		19		12		94		144		51,077		51,315
		63		19		12		94		9,457		295,656		305,207

Consumer Loans
Indirect		219		70		14		303		96		34,623		35,022
Home Equity		177		70		-		247		591		67,064		67,902
Direct		24		23		1		48		34		3,962		4,044
		420		163		15		598		721		105,649		106,968
Residential Real Estate Mortgages		863		41		579		1,483		2,797		237,366		241,646
	$	1,346	$	223	$	606	$	2,175	$	12,975	$	638,671	$	653,821
Total Loans	$	28,390	$	5,011	$	3,790	$	37,191	$	42,524	$	5,791,273	$	5,870,988

Age Analysis of Past Due Financing Receivables

As of December 31, 2014

(in thousands)

	31-60 Days Past Due Accruing		61-90 Days Past Due Accruing		Greater Than 90 Days Past Due Accruing		Total Past Due Accruing		Non-Accrual		Current		Recorded Total Loans
ORIGINATED
Commercial Loans
Commercial	$	-	$	735	$	-	$	735	$	1,012	$	613,400	$	615,147
Commercial Real Estate		192		-		-		192		4,127		1,064,549		1,068,868
Agricultural		-		-		-		-		817		32,130		32,947
Agricultural Real Estate		19		-		-		19		565		24,390		24,974
Business Banking		799		235		84		1,118		6,910		390,407		398,435
		1,010		970		84		2,064		13,431		2,124,876		2,140,371

Consumer Loans
Indirect		16,434		3,154		1,991		21,579		1,964		1,286,507		1,310,050
Home Equity		4,591		1,428		821		6,840		6,596		479,444		492,880
Direct		560		157		52		769		84		54,941		55,794
		21,585		4,739		2,864		29,188		8,644		1,820,892		1,858,724
Residential Real Estate Mortgages		2,901		96		1,256		4,253		8,770		835,819		848,842
	$	25,496	$	5,805	$	4,204	$	35,505	$	30,845	$	4,781,587	$	4,847,937

ACQUIRED
Commercial Loans
Commercial	$	-	$	-	$	-	$	-	$	3,009	$	72,255	$	75,264
Commercial Real Estate		-		-		-		-		2,666		197,222		199,888
Business Banking		5		15		-		20		665		57,494		58,179
		5		15		-		20		6,340		326,971		333,331

Consumer Loans
Indirect		518		5		54		577		106		64,540		65,223
Home Equity		190		60		5		255		557		75,904		76,716
Direct		31		-		7		38		33		5,246		5,317
		739		65		66		870		696		145,690		147,256
Residential Real Estate Mortgages		1,162		265		671		2,098		3,193		261,456		266,747
	$	1,906	$	345	$	737	$	2,988	$	10,229	$	734,117	$	747,334
Total Loans	$	27,402	$	6,150	$	4,941	$	38,493	$	41,074	$	5,515,704	$	5,595,271

Impaired Loans and Specific Reserve Allocations

The following table provides information on loans specifically evaluated for impairment as of September 30, 2015 and December 31, 2014:

	September 30, 2015							December 31, 2014
(in thousands)	Recorded Investment Balance (Book)		Unpaid Principal Balance (Legal)		Related Allowance			Recorded Investment Balance (Book)		Unpaid Principal Balance (Legal)		Related Allowance
ORIGINATED
With no related allowance recorded:
Commercial Loans
Commercial	$	1,694	$	1,846				$	1,748	$	1,901
Commercial Real Estate		3,187		3,198					4,505		4,520
Agricultural		19		25					20		26
Agricultural Real Estate		623		749					1,147		1,441
Business Banking		995		1,037					896		1,301
Total Commercial Loans		6,518		6,855					8,316		9,189

Consumer Loans
Indirect		13		23					-		-
Home Equity		7,577		8,380					5,498		6,033
Direct		-		-					-		-
Total Consumer Loans		7,590		8,403					5,498		6,033

Residential Real Estate Mortgages		5,867		6,386					3,544		3,959
Total		19,975		21,644					17,358		19,181

With an allowance recorded:
Commercial Loans
Commercial		948		953			300		-		-			-
Commercial Real Estate		5,093		6,959			1,395		2,763		4,611			600
Total Commercial Loans		6,041		7,912			1,695		2,763		4,611			600

ACQUIRED
With no related allowance recorded:
Commercial Loans
Commercial Real Estate		5,488		5,789					2,666		3,830

With an allowance recorded:
Commercial Loans
Commercial		2,508		4,668			1,000		3,009		4,668			500
Commercial Real Estate		1,321		1,321			850		-		-			-
Total Commercial Loans		3,829		5,989			1,850		3,009		4,668			500

Total:	$	35,333	$	41,334		$	3,545	$	25,796	$	32,290		$	1,100

The following tables summarize the average recorded investments on impaired loans specifically evaluated for impairment and the interest income recognized for the three months ended September 30, 2015 and 2014:

	For the three months ended
	September 30, 2015				September 30, 2014
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
ORIGINATED
Commercial Loans
Commercial	$	2,469	$	42	$	1,957	$	-
Commercial Real Estate		8,560		42		9,619		43
Agricultural		19		-		102		-
Agricultural Real Estate		626		11		1,395		12
Business Banking		1,003		3		677		10
Consumer Loans
Indirect		20		-		-		-
Home Equity		7,432		134		5,435		85
Direct		-		-		-		-
Residential Real Estate Mortgage		5,564		37		2,961		29
Total Originated	$	25,693	$	269	$	22,146	$	179

ACQUIRED
Commercial Loans
Commercial		2,531		-		6,161		-
Commercial Real Estate		6,918		-		3,398		-
Total Acquired	$	9,449	$	-	$	9,559	$	-

Total Loans	$	35,142	$	269	$	31,705	$	179

	For the nine months ended
	September 30, 2015				September 30, 2014
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
ORIGINATED
Commercial Loans
Commercial	$	2,026	$	128	$	2,001	$	-
Commercial Real Estate		8,884		124		10,400		127
Agricultural		19		1		115		1
Agricultural Real Estate		630		34		1,410		35
Business Banking		952		9		509		33
Consumer Loans
Indirect		14		-		-		-
Home Equity		6,869		298		5,099		188
Direct		1		-		-		-
Residential Real Estate Mortgage		4,857		100		2,864		79

Total Originated	$	24,252	$	694	$	22,398	$	463

ACQUIRED
Commercial Loans
Commercial		2,658		-		6,303		-
Commercial Real Estate		7,070		-		3,461		-
Total Acquired	$	9,728	$	-	$	9,764	$	-

Total Loans	$	33,980	$	694	$	32,162	$	463

Financing Receivable Credit Quality by Loan Class

The following tables illustrate the Company’s credit quality by loan class as of September 30, 2015 and December 31, 2014:

Credit Quality Indicators

As of September 30, 2015

ORIGINATED
Commercial Credit Exposure By Internally Assigned Grade:	Commercial		Commercial Real Estate		Agricultural		Agricultural Real Estate		Total
Pass	$	600,507	$	1,127,116	$	32,759	$	25,784	$	1,786,166
Special Mention		18,395		28,718		1		6		47,120
Substandard		32,089		27,462		618		1,025		61,194
Doubtful		-		-		8		-		8
Total	$	650,991	$	1,183,296	$	33,386	$	26,815	$	1,894,488

Business Banking Credit Exposure By Internally Assigned Grade:	Business Banking								Total
Non-classified	$	387,378							$	387,378
Classified		15,312								15,312
Total	$	402,690							$	402,690

Consumer Credit Exposure By Payment Activity:	Indirect		Home Equity		Direct				Total
Performing	$	1,450,146	$	467,842	$	57,281			$	1,975,269
Nonperforming		3,206		5,820		145				9,171
Total	$	1,453,352	$	473,662	$	57,426			$	1,984,440

Residential Mortgage Credit Exposure By Payment Activity:	Residential Mortgage								Total
Performing	$	925,834							$	925,834
Nonperforming		9,715								9,715
Total	$	935,549							$	935,549

Credit Quality Indicators

As of September 30, 2015

ACQUIRED
Commercial Credit Exposure By Internally Assigned Grade:	Commercial		Commercial Real Estate				Total
Pass	$	66,770	$	163,948			$	230,718
Special Mention		939		5,780				6,719
Substandard		4,353		12,102				16,455
Total	$	72,062	$	181,830			$	253,892

Business Banking Credit Exposure By Internally Assigned Grade:	Business Banking						Total
Non-classified	$	47,310					$	47,310
Classified		4,005						4,005
Total	$	51,315					$	51,315

Consumer Credit Exposure By Payment Activity:	Indirect		Home Equity		Direct		Total
Performing	$	34,912	$	67,311	$	4,009	$	106,232
Nonperforming		110		591		35		736
Total	$	35,022	$	67,902	$	4,044	$	106,968

Residential Mortgage Credit Exposure By Payment Activity:	Residential Mortgage						Total
Performing	$	238,270					$	238,270
Nonperforming		3,376						3,376
Total	$	241,646					$	241,646

Credit Quality Indicators

As of December 31, 2014

ORIGINATED
Commercial Credit Exposure By Internally Assigned Grade:	Commercial		Commercial Real Estate		Agricultural		Agricultural Real Estate		Total
Pass	$	570,884	$	1,023,856	$	30,481	$	23,443	$	1,648,664
Special Mention		6,022		17,341		275		42		23,680
Substandard		38,241		27,671		2,183		1,489		69,584
Doubtful		-		-		8		-		8
Total	$	615,147	$	1,068,868	$	32,947	$	24,974	$	1,741,936

Business Banking Credit Exposure By Internally Assigned Grade:	Business Banking								Total
Non-classified	$	379,445							$	379,445
Classified		18,990								18,990
Total	$	398,435							$	398,435

Consumer Credit Exposure By Payment Activity:	Indirect		Home Equity		Direct				Total
Performing	$	1,306,095	$	485,463	$	55,658			$	1,847,216
Nonperforming		3,955		7,417		136				11,508
Total	$	1,310,050	$	492,880	$	55,794			$	1,858,724

Residential Mortgage Credit Exposure By Payment Activity:	Residential Mortgage								Total
Performing	$	838,816							$	838,816
Nonperforming		10,026								10,026
Total	$	848,842							$	848,842

Credit Quality Indicators

As of December 31, 2014

ACQUIRED
Commercial Credit Exposure By Internally Assigned Grade:	Commercial		Commercial Real Estate				Total
Pass	$	63,630	$	186,036			$	249,666
Special Mention		2,840		2,646				5,486
Substandard		8,794		11,206				20,000
Total	$	75,264	$	199,888			$	275,152

Business Banking Credit Exposure By Internally Assigned Grade:	Business Banking						Total
Non-classified	$	53,264					$	53,264
Classified		4,915						4,915
Total	$	58,179					$	58,179

Consumer Credit Exposure By Payment Activity:	Indirect		Home Equity		Direct		Total
Performing	$	65,063	$	76,154	$	5,277	$	146,494
Nonperforming		160		562		40		762
Total	$	65,223	$	76,716	$	5,317	$	147,256

Residential Mortgage Credit Exposure By Payment Activity:	Residential Mortgage						Total
Performing	$	262,883					$	262,883
Nonperforming		3,864						3,864
Total	$	266,747					$	266,747

Troubled Debt Restructurings on Financing Receivables

The following tables illustrate the recorded investment and number of modifications for modified loans, including the recorded investment in the loans prior to a modification and the recorded investment in the loans after restructuring for the three and nine months ended September 30, 2015 and 2014:

	Three months ended September 30, 2015
	Number of contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment

Consumer
Home Equity		12	$	863	$	802

Residential Real Estate		16		1,293		1,191

Total Troubled Debt Restructurings		28	$	2,156	$	1,993

	Three months ended September 30, 2014
	Number of contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Consumer
Home Equity		1	$	25	$	24
Direct		7		225		163
Total Consumer		8		250		187

Residential Real Estate		3		179		161

Total Troubled Debt Restructurings		11	$	429	$	348

	Nine months ended September 30, 2015
	Number of contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial
Commercial		1	$	1,250	$	186
Small Business		1		220		173
Total Commercial		2		1,470		359

Consumer
Home Equity		39		3,212		2,915
Direct		4		109		102
Total Consumer		43		3,321		3,017

Residential Real Estate		32		3,066		2,854

Total Troubled Debt Restructurings		77	$	7,857	$	6,230

	Nine months ended September 30, 2014
	Number of contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial
Small Business		2	$	570	$	558

Consumer
Indirect		2		69		38
Home Equity		7		286		273
Direct		40		2,701		2,043
Total Consumer		49		3,056		2,354

Residential Real Estate		19		2,157		1,628

Total Troubled Debt Restructurings		70	$	5,783	$	4,540

The following table illustrates the recorded investment and number of modifications for TDRs within the three and nine months ended September 30, 2015 and 2014 where a concession has been made and subsequently defaulted during the period:

	Three months ended September 30, 2015				Three months ended September 30, 2014
	Number of contracts		Recorded Investment		Number of contracts		Recorded Investment

Consumer
Home Equity		-	$	-		1	$	25

Residential Real Estate		2		174		1		48

Total Troubled Debt Restructurings		2	$	174		2	$	73

	Nine months ended September 30, 2015				Nine months ended September 30, 2014
	Number of contracts		Recorded Investment		Number of contracts		Recorded Investment

Consumer
Home Equity		4	$	344		7	$	515

Residential Real Estate		2		174		-		-

Total Troubled Debt Restructurings		6	$	518		7	$	515