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

3 Months Ended

Mar. 31, 2017

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 months ended March 31, 2017 and 2016:

(In thousands)	Commercial Loans			Consumer Loans			Residential Real Estate Mortgages			Unallocated			Total
Balance as of December 31, 2016	$	25,444		$	33,375		$	6,381		$	-		$	65,200
Charge-offs		(1,294	)		(6,502	)		(598	)		-			(8,394	)
Recoveries		447			1,035			33			-			1,515
Provision		130			6,861			388			-			7,379
Ending Balance as of March 31, 2017	$	24,727		$	34,769		$	6,204		$	-		$	65,700

Balance as of December 31, 2015	$	25,545		$	29,253		$	7,960		$	260		$	63,018
Charge-offs		(437	)		(5,413	)		(709	)		-			(6,559	)
Recoveries		765			974			22			-			1,761
Provision		(574	)		6,221			711			(260	)		6,098
Ending Balance as of March 31, 2016	$	25,299		$	31,035		$	7,984		$	-		$	64,318

The following tables illustrate the allowance for loan losses and the recorded investment by portfolio segments as of March 31, 2017 and December 31, 2016:

(In thousands)	Commercial Loans		Consumer Loans		Residential Real Estate Mortgages		Total
As of March 31, 2017
Allowance for loan losses	$	24,727	$	34,769	$	6,204	$	65,700
Allowance for loans individually evaluated for impairment		422		-		-		422
Allowance for loans collectively evaluated for impairment	$	24,305	$	34,769	$	6,204	$	65,278
Ending balance of loans	$	2,824,936	$	2,171,593	$	1,275,774	$	6,272,303
Ending balance of originated loans individually evaluated for impairment		10,736		8,379		6,194		25,309
Ending balance of acquired loans individually evaluated for impairment		-		-		-		-
Ending balance of acquired loans collectively evaluated for impairment		228,021		56,852		193,253		478,126
Ending balance of originated loans collectively evaluated for impairment	$	2,586,179	$	2,106,362	$	1,076,327	$	5,768,868

As of December 31, 2016
Allowance for loan losses	$	25,444	$	33,375	$	6,381	$	65,200
Allowance for loans individually evaluated for impairment		1,517		-		-		1,517
Allowance for loans collectively evaluated for impairment	$	23,927	$	33,375	$	6,381	$	63,683
Ending balance of loans	$	2,786,002	$	2,149,441	$	1,262,614	$	6,198,057
Ending balance of originated loans individually evaluated for impairment		13,070		8,488		6,111		27,669
Ending balance of acquired loans individually evaluated for impairment		1,205		-		-		1,205
Ending balance of acquired loans collectively evaluated for impairment		236,413		63,005		199,471		498,889
Ending balance of originated loans collectively evaluated for impairment	$	2,535,314	$	2,077,948	$	1,057,032	$	5,670,294

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 March 31, 2017 and December 31, 2016:

As of March 31, 2017

(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		Nonaccrual		Current		Recorded Total Loans
ORIGINATED
Commercial Loans:
Commercial	$	292	$	-	$	-	$	292	$	4,913	$	702,383	$	707,588
Commercial Real Estate		286		-		-		286		2,516		1,346,470		1,349,272
Agricultural		-		-		-		-		685		36,052		36,737
Agricultural Real Estate		-		-		-		-		1,771		30,314		32,085
Business Banking		2,965		428		-		3,393		4,766		463,074		471,233
Total Commercial Loans		3,543		428		-		3,971		14,651		2,578,293		2,596,915
Consumer Loans:
Indirect		15,407		3,552		2,222		21,181		2,135		1,575,393		1,598,709
Home Equity		2,635		614		58		3,307		2,926		447,902		454,135
Direct		246		71		103		420		63		61,414		61,897
Total Consumer Loans		18,288		4,237		2,383		24,908		5,124		2,084,709		2,114,741
Residential Real Estate Mortgages		2,444		322		-		2,766		8,585		1,071,170		1,082,521
Total Originated Loans	$	24,275	$	4,987	$	2,383	$	31,645	$	28,360	$	5,734,172	$	5,794,177

ACQUIRED
Commercial Loans:
Commercial	$	-	$	-	$	-	$	-	$	-	$	45,908	$	45,908
Commercial Real Estate		-		-		-		-		889		132,611		133,500
Business Banking		441		-		-		441		800		47,372		48,613
Total Commercial Loans		441		-		-		441		1,689		225,891		228,021
Consumer Loans:
Indirect		37		1		9		47		39		5,713		5,799
Home Equity		177		-		-		177		196		47,716		48,089
Direct		24		1		-		25		13		2,926		2,964
Total Consumer Loans		238		2		9		249		248		56,355		56,852
Residential Real Estate Mortgages		1,300		15		-		1,315		2,377		189,561		193,253
Total Acquired Loans	$	1,979	$	17	$	9	$	2,005	$	4,314	$	471,807	$	478,126
Total Loans	$	26,254	$	5,004	$	2,392	$	33,650	$	32,674	$	6,205,979	$	6,272,303

As of December 31, 2016

(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		Nonaccrual		Current		Recorded Total Loans
ORIGINATED
Commercial Loans:
Commercial	$	33	$	5	$	-	$	38	$	2,964	$	650,568	$	653,570
Commercial Real Estate		-		-		-		-		7,935		1,343,854		1,351,789
Agricultural		-		-		-		-		730		37,186		37,916
Agricultural Real Estate		-		-		-		-		1,803		30,619		32,422
Business Banking		1,609		318		-		1,927		4,860		465,900		472,687
Total Commercial Loans		1,642		323		-		1,965		18,292		2,528,127		2,548,384
Consumer Loans:
Indirect		19,253		4,185		2,499		25,937		2,145		1,538,593		1,566,675
Home Equity		3,416		1,065		528		5,009		2,851		448,797		456,657
Direct		452		125		20		597		107		62,400		63,104
Total Consumer Loans		23,121		5,375		3,047		31,543		5,103		2,049,790		2,086,436
Residential Real Estate Mortgages		2,725		172		1,406		4,303		6,682		1,052,158		1,063,143
Total Originated Loans	$	27,488	$	5,870	$	4,453	$	37,811	$	30,077	$	5,630,075	$	5,697,963

ACQUIRED
Commercial Loans:
Commercial	$	-	$	-	$	-	$	-	$	-	$	49,447	$	49,447
Commercial Real Estate		-		-		-		-		1,891		135,398		137,289
Business Banking		236		-		-		236		804		49,842		50,882
Total Commercial Loans		236		-		-		236		2,695		234,687		237,618
Consumer Loans:
Indirect		100		5		-		105		47		8,541		8,693
Home Equity		254		53		30		337		237		50,553		51,127
Direct		30		2		-		32		20		3,133		3,185
Total Consumer Loans		384		60		30		474		304		62,227		63,005
Residential Real Estate Mortgages		609		28		327		964		2,636		195,871		199,471
Total Acquired Loans	$	1,229	$	88	$	357	$	1,674	$	5,635	$	492,785	$	500,094
Total Loans	$	28,717	$	5,958	$	4,810	$	39,485	$	35,712	$	6,122,860	$	6,198,057

Impaired Loans and Specific Reserve Allocations

The following table provides information on loans specifically evaluated for impairment as of March 31, 2017 and December 31, 2016:

	March 31, 2017						December 31, 2016
(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	$	3,495	$	3,536			$	1,278	$	1,697
Commercial Real Estate		3,778		3,810				3,816		3,841
Agricultural		130		138				130		137
Agricultural Real Estate		1,520		1,660				1,434		1,567
Business Banking		645		724				655		728
Total Commercial Loans		9,568		9,868				7,313		7,970

Consumer Loans:
Indirect		5		15				5		16
Home Equity		8,374		9,272				8,483		9,429
Total Consumer Loans		8,379		9,287				8,488		9,445

Residential Real Estate Mortgages		6,194		7,028				6,111		6,906
Total		24,141		26,183				21,912		24,321

With an allowance recorded:
Commercial Loans:
Commercial Real Estate		1,081		1,081	$	335		5,553		5,736	$	735
Agricultural		37		37		37		49		49		37
Agricultural Real Estate		50		50		50		155		155		54
Total Commercial Loans		1,168		1,168		422		5,757		5,940		826

ACQUIRED
With an allowance recorded:
Commercial Loans:
Commercial Real Estate		-		-		-		1,205		1,321		691
Total Commercial Loans		-		-		-		1,205		1,321		691

Total:	$	25,309	$	27,351	$	422	$	28,874	$	31,582	$	1,517

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 March 31, 2017 and 2016:

	For the three months ended
	March 31, 2017				March 31, 2016
(In thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
ORIGINATED
Commercial Loans:
Commercial	$	2,926	$	-	$	2,773	$	19
Commercial Real Estate		5,995		44		13,509		100
Agricultural		173		-		158		-
Agricultural Real Estate		1,580		11		616		11
Business Banking		650		2		978		6
Consumer Loans:
Indirect		5		-		11		-
Home Equity		8,431		110		8,003		121
Residential Real Estate Mortgages		5,611		39		6,121		67
Total Originated		25,371		206		32,169		324

ACQUIRED
Commercial Loans:
Commercial Real Estate		301		-		1,205		-
Total Acquired		301		-		1,205		-
Total Loans	$	25,672	$	206	$	33,374	$	324

Financing Receivable Credit Quality by Loan Class

The following tables illustrate the Company’s credit quality by loan class as of March 31, 2017 and December 31, 2016:

Credit Quality Indicators

As of March 31, 2017

(In thousands)

ORIGINATED
Commercial Credit Exposure
By Internally Assigned Grade:	Commercial		Commercial Real Estate		Agricultural		Agricultural Real Estate		Total
Pass	$	658,916	$	1,286,478	$	34,144	$	27,349	$	2,006,887
Special Mention		12,987		31,208		310		2,558		47,063
Substandard		35,685		31,586		2,278		2,178		71,727
Doubtful		-		-		5		-		5
Total	$	707,588	$	1,349,272	$	36,737	$	32,085	$	2,125,682

Business Banking Credit Exposure
By Internally Assigned Grade:							Business Banking		Total
Non-classified							$	457,783	$	457,783
Classified								13,450		13,450
Total							$	471,233	$	471,233

Consumer Credit Exposure
By Payment Activity:			Indirect		Home Equity		Direct		Total
Performing			$	1,594,352	$	451,151	$	61,731	$	2,107,234
Nonperforming				4,357		2,984		166		7,507
Total			$	1,598,709	$	454,135	$	61,897	$	2,114,741

Residential Mortgage Credit Exposure
By Payment Activity:							Residential Mortgage		Total
Performing							$	1,073,936	$	1,073,936
Nonperforming								8,585		8,585
Total							$	1,082,521	$	1,082,521

Credit Quality Indicators

As of March 31, 2017

(In thousands)

ACQUIRED
Commercial Credit Exposure
By Internally Assigned Grade:			Commercial		Commercial Real Estate		Total
Pass			$	44,782	$	123,532	$	168,314
Special Mention				55		2,883		2,938
Substandard				1,071		7,085		8,156
Total			$	45,908	$	133,500	$	179,408

Business Banking Credit Exposure
By Internally Assigned Grade:					Business Banking		Total
Non-classified					$	44,889	$	44,889
Classified						3,724		3,724
Total					$	48,613	$	48,613

Consumer Credit Exposure
By Payment Activity:	Indirect		Home Equity		Direct		Total
Performing	$	5,751	$	47,893	$	2,951	$	56,595
Nonperforming		48		196		13		257
Total	$	5,799	$	48,089	$	2,964	$	56,852

Residential Mortgage Credit Exposure
By Payment Activity:					Residential Mortgage		Total
Performing					$	190,876	$	190,876
Nonperforming						2,377		2,377
Total					$	193,253	$	193,253

Credit Quality Indicators

As of December 31, 2016

(In thousands)

ORIGINATED
Commercial Credit Exposure
By Internally Assigned Grade:	Commercial		Commercial Real Estate		Agricultural		Agricultural Real Estate		Total
Pass	$	616,829	$	1,288,409	$	36,762	$	28,912	$	1,970,912
Special Mention		7,750		31,053		25		1,896		40,724
Substandard		28,991		32,327		1,124		1,614		64,056
Doubtful		-		-		5		-		5
Total	$	653,570	$	1,351,789	$	37,916	$	32,422	$	2,075,697

Business Banking Credit Exposure
By Internally Assigned Grade:							Business Banking		Total
Non-classified							$	458,864	$	458,864
Classified								13,823		13,823
Total							$	472,687	$	472,687

Consumer Credit Exposure
By Payment Activity:			Indirect		Home Equity		Direct		Total
Performing			$	1,562,031	$	453,278	$	62,977	$	2,078,286
Nonperforming				4,644		3,379		127		8,150
Total			$	1,566,675	$	456,657	$	63,104	$	2,086,436

Residential Mortgage Credit Exposure
By Payment Activity:							Residential Mortgage		Total
Performing							$	1,055,055	$	1,055,055
Nonperforming								8,088		8,088
Total							$	1,063,143	$	1,063,143

Credit Quality Indicators

As of December 31, 2016

(In thousands)

ACQUIRED
Commercial Credit Exposure
By Internally Assigned Grade:			Commercial		Commercial Real Estate		Total
Pass			$	48,194	$	127,660	$	175,854
Special Mention				76		1,231		1,307
Substandard				1,177		7,193		8,370
Doubtful				-		1,205		1,205
Total			$	49,447	$	137,289	$	186,736

Business Banking Credit Exposure
By Internally Assigned Grade:					Business Banking		Total
Non-classified					$	47,347	$	47,347
Classified						3,535		3,535
Total					$	50,882	$	50,882

Consumer Credit Exposure
By Payment Activity:	Indirect		Home Equity		Direct		Total
Performing	$	8,646	$	50,860	$	3,165	$	62,671
Nonperforming		47		267		20		334
Total	$	8,693	$	51,127	$	3,185	$	63,005

Residential Mortgage Credit Exposure
By Payment Activity:					Residential Mortgage		Total
Performing					$	196,508	$	196,508
Nonperforming						2,963		2,963
Total					$	199,471	$	199,471

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 months ended March 31, 2017 and 2016 (dollars in thousands):

	Three months ended March 31, 2017
	Number of contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Consumer
Home Equity		2	$	78	$	77
Total Consumer		2		78		77

Residential Real Estate		1		141		138

Total Troubled Debt Restructurings		3	$	219	$	215

	Three months ended March 31, 2016
	Number of contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Consumer
Home Equity		12	$	1,035	$	952
Total Consumer		12		1,035		952

Residential Real Estate		4		531		437

Total Troubled Debt Restructurings		16	$	1,566	$	1,389

Residential and home equity TDRs occurring during 2017 and 2016 were due to the reduction in the interest rate or extension of the term. The following table illustrates the recorded investment and number of modifications for TDRs within the three months ended March 31, 2017 and 2016 where a concession has been made and subsequently defaulted during the period (dollars in thousands):

	Three months ended March 31, 2017				Three months ended March 31, 2016
	Number of contracts		Recorded Investment		Number of contracts		Recorded Investment
Residential Real Estate		-	$	-		1	$	175

Total Troubled Debt Restructurings		-	$	-		1	$	175