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Reserve for Loan and Lease Losses | 3 Months Ended
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Mar. 31, 2018
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract] |
Reserve for Loan and Lease Losses | Reserve for Loan and Lease Losses The reserve for loan and lease loss methodology has been consistently applied for several years, with enhancements instituted periodically. Reserve ratios are reviewed quarterly and revised periodically to reflect recent loss history and to incorporate current risks and trends which may not be recognized in historical data. As the historical charge-off analysis is updated, the Company reviews the look-back periods for each business loan portfolio. Furthermore, a thorough analysis of charge-offs, non-performing asset levels, special attention outstandings and delinquency is performed in order to review portfolio trends and other factors, including specific industry risks and economic conditions, which may have an impact on the reserves and reserve ratios applied to various portfolios. The Company adjusts the calculated historical based ratio as a result of the analysis of environmental factors, principally economic risk and concentration risk. Key economic factors affecting the portfolios are growth in gross domestic product, unemployment rates, housing market trends, commodity prices, inflation and global economic and political issues. Concentration risk is impacted primarily by geographic concentration in Northern Indiana and Southwestern Lower Michigan in the business banking and commercial real estate portfolios and by collateral concentration in the specialty finance portfolios and exposure to foreign markets by geographic risk. The reserve for loan and lease losses is maintained at a level believed to be appropriate by the Company to absorb probable losses inherent in the loan and lease portfolio. The determination of the reserve requires significant judgment reflecting the Company’s best estimate of probable loan and lease losses related to specifically identified impaired loans and leases as well as probable losses in the remainder of the various loan and lease portfolios. For purposes of determining the reserve, the Company has segmented loans and leases into classes based on the associated risk within these segments. The Company has determined that eight classes exist within the loan and lease portfolio. The methodology for assessing the appropriateness of the reserve consists of several key elements, which include: specific reserves for impaired loans, formula reserves for each business lending division portfolio including percentage allocations for special attention loans and leases not deemed impaired, and reserves for pooled homogeneous loans and leases. The Company’s evaluation is based upon a continuing review of these portfolios, estimates of customer performance, collateral values and dispositions, and assessments of economic and geopolitical events, all of which are subject to judgment and will change.
The following table shows the changes in the reserve for loan and lease losses, segregated by class, for the three months ended March 31, 2018 and 2017.
(Dollars in thousands) |  | Commercial and agricultural loans |  | Auto and light truck |  | Medium and heavy duty truck |  | Aircraft |  | Construction equipment |  | Commercial real estate |  | Residential real estate and home equity |  | Consumer loans |  | Total
March 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period |  | $ | 16,228 |  |  | $ | 10,103 |  |  | $ | 4,844 |  |  | $ | 34,619 |  |  | $ | 9,343 |  |  | $ | 14,792 |  |  | $ | 3,666 |  |  | $ | 1,288 |  |  | $ | 94,883 |
Charge-offs |  | 25 |  |  | 316 |  |  | — |  |  | 29 |  |  | 5 |  |  | 7 |  |  | 11 |  |  | 163 |  |  | 556 |
Recoveries |  | 49 |  |  | 6 |  |  | — |  |  | 44 |  |  | 19 |  |  | 21 |  |  | 6 |  |  | 73 |  |  | 218 |
Net charge-offs (recoveries) |  | (24 | ) |  | 310 |  |  | — |  |  | (15 | ) |  | (14 | ) |  | (14 | ) |  | 5 |  |  | 90 |  |  | 338 |
Provision (recovery of provision) |  | 1,357 |  |  | 1,017 |  |  | (351 | ) |  | 202 |  |  | 1,560 |  |  | (36 | ) |  | (96 | ) |  | 133 |  |  | 3,786 |
Balance, end of period |  | $ | 17,609 |  |  | $ | 10,810 |  |  | $ | 4,493 |  |  | $ | 34,836 |  |  | $ | 10,917 |  |  | $ | 14,770 |  |  | $ | 3,565 |  |  | $ | 1,331 |  |  | $ | 98,331 |
March 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period |  | $ | 14,668 |  |  | $ | 8,064 |  |  | $ | 4,740 |  |  | $ | 34,352 |  |  | $ | 8,207 |  |  | $ | 13,677 |  |  | $ | 3,550 |  |  | $ | 1,285 |  |  | $ | 88,543 |
Charge-offs |  | 208 |  |  | 21 |  |  | — |  |  | 1,103 |  |  | — |  |  | 2 |  |  | 4 |  |  | 220 |  |  | 1,558 |
Recoveries |  | 595 |  |  | 1,127 |  |  | — |  |  | 183 |  |  | 22 |  |  | 50 |  |  | 71 |  |  | 85 |  |  | 2,133 |
Net charge-offs (recoveries) |  | (387 | ) |  | (1,106 | ) |  | — |  |  | 920 |  |  | (22 | ) |  | (48 | ) |  | (67 | ) |  | 135 |  |  | (575 | )
Provision (recovery of provision) |  | 934 |  |  | 602 |  |  | (64 | ) |  | (1,424 | ) |  | 703 |  |  | 143 |  |  | (25 | ) |  | 131 |  |  | 1,000 |
Balance, end of period |  | $ | 15,989 |  |  | $ | 9,772 |  |  | $ | 4,676 |  |  | $ | 32,008 |  |  | $ | 8,932 |  |  | $ | 13,868 |  |  | $ | 3,592 |  |  | $ | 1,281 |  |  | $ | 90,118 |
The following table shows the reserve for loan and lease losses and recorded investment in loans and leases, segregated by class, separated between individually and collectively evaluated for impairment as of March 31, 2018 and December 31, 2017.
(Dollars in thousands) |  | Commercial and agricultural loans |  | Auto and light truck |  | Medium and heavy duty truck |  | Aircraft |  | Construction equipment |  | Commercial real estate |  | Residential real estate and home equity |  | Consumer loans |  | Total
March 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserve for loan and lease losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance, individually evaluated for impairment |  | $ | — |  |  | $ | 360 |  |  | $ | — |  |  | $ | 431 |  |  | $ | 101 |  |  | $ | 173 |  |  | $ | 132 |  |  | $ | — |  |  | $ | 1,197 |
Ending balance, collectively evaluated for impairment |  | 17,609 |  |  | 10,450 |  |  | 4,493 |  |  | 34,405 |  |  | 10,816 |  |  | 14,597 |  |  | 3,433 |  |  | 1,331 |  |  | 97,134 |
Total reserve for loan and lease losses |  | $ | 17,609 |  |  | $ | 10,810 |  |  | $ | 4,493 |  |  | $ | 34,836 |  |  | $ | 10,917 |  |  | $ | 14,770 |  |  | $ | 3,565 |  |  | $ | 1,331 |  |  | $ | 98,331 |
Recorded investment in loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance, individually evaluated for impairment |  | $ | 3,013 |  |  | $ | 8,885 |  |  | $ | 337 |  |  | $ | 5,752 |  |  | $ | 945 |  |  | $ | 3,809 |  |  | $ | 350 |  |  | $ | — |  |  | $ | 23,091 |
Ending balance, collectively evaluated for impairment |  | 1,008,687 |  |  | 502,166 |  |  | 279,673 |  |  | 862,667 |  |  | 618,274 |  |  | 745,117 |  |  | 517,780 |  |  | 133,642 |  |  | 4,668,006 |
Total recorded investment in loans |  | $ | 1,011,700 |  |  | $ | 511,051 |  |  | $ | 280,010 |  |  | $ | 868,419 |  |  | $ | 619,219 |  |  | $ | 748,926 |  |  | $ | 518,130 |  |  | $ | 133,642 |  |  | $ | 4,691,097 |
December 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserve for loan and lease losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance, individually evaluated for impairment |  | $ | — |  |  | $ | 243 |  |  | $ | — |  |  | $ | — |  |  | $ | 108 |  |  | $ | 181 |  |  | $ | 134 |  |  | $ | — |  |  | $ | 666 |
Ending balance, collectively evaluated for impairment |  | 16,228 |  |  | 9,860 |  |  | 4,844 |  |  | 34,619 |  |  | 9,235 |  |  | 14,611 |  |  | 3,532 |  |  | 1,288 |  |  | 94,217 |
Total reserve for loan and lease losses |  | $ | 16,228 |  |  | $ | 10,103 |  |  | $ | 4,844 |  |  | $ | 34,619 |  |  | $ | 9,343 |  |  | $ | 14,792 |  |  | $ | 3,666 |  |  | $ | 1,288 |  |  | $ | 94,883 |
Recorded investment in loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance, individually evaluated for impairment |  | $ | 2,439 |  |  | $ | 7,780 |  |  | $ | 371 |  |  | $ | 1,901 |  |  | $ | 928 |  |  | $ | 3,346 |  |  | $ | 352 |  |  | $ | — |  |  | $ | 17,117 |
Ending balance, collectively evaluated for impairment |  | 927,558 |  |  | 489,036 |  |  | 296,564 |  |  | 842,756 |  |  | 562,509 |  |  | 738,222 |  |  | 525,770 |  |  | 128,146 |  |  | 4,510,561 |
Total recorded investment in loans |  | $ | 929,997 |  |  | $ | 496,816 |  |  | $ | 296,935 |  |  | $ | 844,657 |  |  | $ | 563,437 |  |  | $ | 741,568 |  |  | $ | 526,122 |  |  | $ | 128,146 |  |  | $ | 4,527,678 |

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- Definition The entire disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -URI http://asc.fasb.org/topic&trid=2196771 + Details
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