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

9 Months Ended

Sep. 30, 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:

Three months ended September 30, (In thousands)	Commercial Loans			Consumer Loans			Residential Real Estate Mortgages			Unallocated		Total
Balance as of June 30, 2017	$	24,428		$	35,523		$	6,649		$	-	$	66,600
Charge-offs		(574	)		(6,979	)		(421	)		-		(7,974	)
Recoveries		266			1,446			123			-		1,835
Provision		1,434			6,197			258			-		7,889
Ending Balance as of September 30, 2017	$	25,554		$	36,187		$	6,609		$	-	$	68,350

Balance as of June 30, 2016	$	25,222		$	31,471		$	7,875		$	-	$	64,568
Charge-offs		(637	)		(6,046	)		(142	)		-		(6,825	)
Recoveries		512			898			127			-		1,537
Provision		1,514			6,078			(1,481	)		277		6,388
Ending Balance as of September 30, 2016	$	26,611		$	32,401		$	6,379		$	277	$	65,668

Nine months ended September 30,	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		(2,991	)		(19,742	)		(1,717	)		-		(24,450	)
Recoveries		919			3,680			166			-		4,765
Provision		2,182			18,874			1,779			-		22,835
Ending Balance as of September 30, 2017	$	25,554		$	36,187		$	6,609		$	-	$	68,350

Balance as of December 31, 2015	$	25,545		$	29,253		$	7,960		$	260	$	63,018
Charge-offs		(1,723	)		(16,409	)		(1,119	)		-		(19,251	)
Recoveries		1,616			2,779			240			-		4,635
Provision		1,173			16,778			(702	)		17		17,266
Ending Balance as of September 30, 2016	$	26,611		$	32,401		$	6,379		$	277	$	65,668

The following tables illustrate the allowance for loan losses and the recorded investment by portfolio segments:

As of September 30, 2017 (In thousands)	Commercial Loans		Consumer Loans		Residential Real Estate Mortgages		Total

Allowance for loan losses	$	25,554	$	36,187	$	6,609	$	68,350
Allowance for loans individually evaluated for impairment		30		-		-		30
Allowance for loans collectively evaluated for impairment	$	25,524	$	36,187	$	6,609	$	68,320
Ending balance of loans	$	2,962,287	$	2,202,070	$	1,302,577	$	6,466,934
Ending balance of originated loans individually evaluated for impairment	$	4,855	$	8,307	$	6,574	$	19,736
Ending balance of acquired loans collectively evaluated for impairment	$	196,444	$	47,986	$	177,393	$	421,823
Ending balance of originated loans collectively evaluated for impairment	$	2,760,988	$	2,145,777	$	1,118,610	$	6,025,375

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 September 30, 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	$	1	$	156	$	-	$	157	$	430	$	732,535	$	733,122
Commercial Real Estate		1,274		-		-		1,274		2,020		1,477,265		1,480,559
Agricultural		-		-		-		-		391		34,448		34,839
Agricultural Real Estate		234		-		-		234		1,658		33,499		35,391
Business Banking		2,057		91		-		2,148		4,640		475,144		481,932
Total Commercial Loans	$	3,566	$	247	$	-	$	3,813	$	9,139	$	2,752,891	$	2,765,843
Consumer Loans:
Indirect	$	18,755	$	5,112	$	2,452	$	26,319	$	2,069	$	1,602,890	$	1,631,278
Home Equity		2,933		628		213		3,774		2,790		452,189		458,753
Direct		319		47		79		445		78		63,530		64,053
Total Consumer Loans	$	22,007	$	5,787	$	2,744	$	30,538	$	4,937	$	2,118,609	$	2,154,084
Residential Real Estate Mortgages	$	3,812	$	246	$	597	$	4,655	$	6,180	$	1,114,349	$	1,125,184
Total Originated Loans	$	29,385	$	6,280	$	3,341	$	39,006	$	20,256	$	5,985,849	$	6,045,111

Acquired
Commercial Loans:
Commercial	$	-	$	-	$	-	$	-	$	-	$	39,037	$	39,037
Commercial Real Estate		-		-		-		-		501		112,810		113,311
Business Banking		355		275		-		630		773		42,693		44,096
Total Commercial Loans	$	355	$	275	$	-	$	630	$	1,274	$	194,540	$	196,444
Consumer Loans:
Indirect	$	29	$	8	$	3	$	40	$	30	$	2,084	$	2,154
Home Equity		307		-		-		307		160		42,510		42,977
Direct		32		26		7		65		8		2,782		2,855
Total Consumer Loans	$	368	$	34	$	10	$	412	$	198	$	47,376	$	47,986
Residential Real Estate Mortgages	$	660	$	100	$	37	$	797	$	1,725	$	174,871	$	177,393
Total Acquired Loans	$	1,383	$	409	$	47	$	1,839	$	3,197	$	416,787	$	421,823
Total Loans	$	30,768	$	6,689	$	3,388	$	40,845	$	23,453	$	6,402,636	$	6,466,934

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:

	September 30, 2017							December 31, 2016
(In thousands)	RecordedInvestment Balance(Book)		Unpaid Principal Balance (Legal)		Related Allowance			RecordedInvestment Balance (Book)		Unpaid Principal Balance(Legal)		Related Allowance
Originated
With no related allowance recorded:
Commercial Loans:
Commercial	$	-	$	251				$	1,278	$	1,697
Commercial Real Estate		2,239		3,996					3,816		3,841
Agricultural		100		112					130		137
Agricultural Real Estate		1,491		1,663					1,434		1,567
Business Banking		947		1,687					655		728
Total Commercial Loans	$	4,777	$	7,709				$	7,313	$	7,970

Consumer Loans:
Indirect		36		47					5		16
Home Equity		8,153		10,063					8,483		9,429
Direct		118		118					-		-
Total Consumer Loans	$	8,307	$	10,228				$	8,488	$	9,445

Residential Real Estate Mortgages		6,574		8,335					6,111		6,906
Total	$	19,658	$	26,272				$	21,912	$	24,321

With an allowance recorded:
Commercial Loans:
Commercial Real Estate	$	78	$	83		$	30	$	5,553	$	5,736		$	735
Agricultural		-		-			-		49		49			37
Agricultural Real Estate		-		-			-		155		155			54
Total Commercial Loans	$	78	$	83		$	30	$	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:	$	19,736	$	26,355		$	30	$	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
	September 30, 2017				September 30, 2016
(In thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Originated
Commercial Loans:
Commercial	$	1,000	$	-	$	3,204	$	-
Commercial Real Estate		2,415		48		15,799		48
Agricultural		115		-		85		-
Agricultural Real Estate		1,505		11		935		11
Business Banking		955		2		743		-
Consumer Loans:
Indirect		35		1		8		-
Home Equity		8,159		111		8,401		116
Direct		119		2		-		-
Residential Real Estate Mortgage		6,633		82		6,141		76
Total Originated	$	20,936	$	257	$	35,316	$	251

Acquired
Commercial Loans:
Commercial Real Estate	$	-	$	-	$	1,205	$	-
Total Acquired	$	-	$	-	$	1,205	$	-
Total Loans	$	20,936	$	257	$	36,521	$	251

	For the nine months ended
	September 30, 2017				September 30, 2016
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Originated
Commercial Loans:
Commercial	$	2,393	$	-	$	3,041	$	-
Commercial Real Estate		3,906		93		14,782		122
Agricultural		147		1		101		1
Agricultural Real Estate		1,545		32		742		33
Business Banking		837		7		882		7
Consumer Loans:
Indirect		22		2		9		-
Home Equity		8,274		331		8,207		357
Direct		119		2		-		-
Residential Real Estate Mortgage		6,425		211		6,147		211
Total Originated	$	23,668	$	679	$	33,911	$	731

Acquired
Commercial Loans:
Commercial Real Estate	$	121	$	-	$	1,205	$	-
Total Acquired	$	121	$	-	$	1,205	$	-
Total Loans	$	23,789	$	679	$	35,116	$	731

Financing Receivable Credit Quality by Loan Class

The following tables illustrate the Company’s credit quality by loan class:

As of September 30, 2017
(In thousands)
Originated
Commercial Credit Exposure By Internally Assigned Grade:	Commercial		Commercial Real Estate		Agricultural		Agricultural Real Estate		Total
Pass	$	677,943	$	1,424,353	$	30,233	$	25,546	$	2,158,075
Special Mention		40,123		29,785		3,033		3,343		76,284
Substandard		15,056		26,421		1,573		6,502		49,552
Total	$	733,122	$	1,480,559	$	34,839	$	35,391	$	2,283,911

Business Banking Credit Exposure By Internally Assigned Grade:							Business Banking		Total
Non-classified							$	469,025	$	469,025
Classified								12,907		12,907
Total							$	481,932	$	481,932

Consumer Credit Exposure By Payment Activity:			Indirect		Home Equity		Direct		Total
Performing			$	1,626,757	$	455,750	$	63,896	$	2,146,403
Nonperforming				4,521		3,003		157		7,681
Total			$	1,631,278	$	458,753	$	64,053	$	2,154,084

Residential Mortgage Credit Exposure By Payment Activity:							Residential Mortgage		Total
Performing							$	1,118,407	$	1,118,407
Nonperforming								6,777		6,777
Total							$	1,125,184	$	1,125,184

As of September 30, 2017
(In thousands)
Acquired
Commercial Credit Exposure By Internally Assigned Grade:			Commercial		Commercial Real Estate		Total
Pass			$	37,271	$	106,261	$	143,532
Special Mention				327		512		839
Substandard				1,439		6,538		7,977
Total			$	39,037	$	113,311	$	152,348

Business Banking Credit Exposure By Internally Assigned Grade:					Business Banking		Total
Non-classified					$	40,636	$	40,636
Classified						3,460		3,460
Total					$	44,096	$	44,096

Consumer Credit Exposure By Payment Activity:	Indirect		Home Equity		Direct		Total
Performing	$	2,121	$	42,817	$	2,840	$	47,778
Nonperforming		33		160		15		208
Total	$	2,154	$	42,977	$	2,855	$	47,986

Residential Mortgage Credit Exposure By Payment Activity:					Residential Mortgage		Total
Performing					$	175,631	$	175,631
Nonperforming						1,762		1,762
Total					$	177,393	$	177,393

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

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:

	Three months ended September 30, 2017
(Dollars in thousands)	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Consumer
Indirect		1	$	7	$	7
Home Equity		4		189		222
Total Consumer		5		196		229
Residential Real Estate		1		518		518
Total Troubled Debt Restructurings		6	$	714	$	747

	Three months ended September 30, 2016
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Consumer
Home Equity		10	$	580	$	556
Total Consumer		10		580		556
Residential Real Estate		4		230		126
Total Troubled Debt Restructurings		14	$	810	$	682

	Nine months ended September 30, 2017
(Dollars in thousands)	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial
Commercial		1	$	3,300	$	3,239
Business Banking		1		337		333
Total Commercial		2		3,637		3,572
Consumer
Indirect		4		39		37
Home Equity		8		373		414
Direct		1		120		120
Total Consumer		13		532		571
Residential Real Estate		8		1,066		1,068
Total Troubled Debt Restructurings		23	$	5,235	$	5,211

	Nine months ended September 30, 2016
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Consumer
Home Equity		24	$	1,690	$	1,567
Total Consumer		24		1,690		1,567
Residential Real Estate		10		914		692
Total Troubled Debt Restructurings		34	$	2,604	$	2,259

TDRs occurring during the three and nine months ended September 30, 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 where a concession has been made and subsequently defaulted during the period:

	Three months ended September 30, 2017				Three months ended September 30, 2016
(Dollars in thousands)	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Commercial
Commercial		-	$	-		1	$	169
Total Commercial		-		-		1		169
Consumer
Indirect		1		13		-		-
Home Equity		12		622		17		847
Total Consumer		13		635		17		847
Residential Real Estate		6		546		8		485

Total Troubled Debt Restructurings		19	$	1,181		26	$	1,501

	Nine months ended September 30, 2017				Nine months ended September 30, 2016
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Commercial
Commercial		1	$	145		1	$	169
Business Banking		1		329		1		67
Total Commercial		2		474		2		236
Consumer
Indirect		2		19		-		-
Home Equity		30		1,381		30		1,634
Total Consumer		32		1,400		30		1,634
Residential Real Estate		12		817		15		1,075

Total Troubled Debt Restructurings		46	$	2,691		47	$	2,945