LOANS (Tables)

9 Months Ended

Sep. 30, 2012

The segments of the Company's loan portfolio are disaggregated into classes that allow management to monitor risk and performance. Consumer mortgages consist primarily of fixed rate residential instruments, typically 15 – 30 years in contractual term, secured by first liens on real property. Business lending is comprised of general purpose commercial and industrial loans including agricultural-related and dealer floor plans, as well as mortgages on commercial property. Consumer installment – indirect consists primarily of loans originated through selected dealerships and are secured by automobiles, marine and other recreational vehicles. Consumer installment – direct are all other loans to consumers such as personal installment loans and lines of credit. Home equity products are consumer purpose installment loans or lines of credit most often secured by a first or second lien position on residential real estate with terms of 15 years or less. Loans are summarized as follows:

	September 30,			December 31,
(000's omitted)	2012			2011
Consumer mortgage	$	1,390,130		$	1,214,621
Business lending		1,233,928			1,226,439
Consumer installment - indirect		642,196			556,955
Consumer installment - direct		173,710			149,170
Home equity		372,493			323,840
Gross loans, including deferred origination costs		3,812,457			3,471,025
Allowance for loan losses		(42,817	)		(42,213	)
Loans, net of allowance for loan losses	$	3,769,640		$	3,428,812

Schedule of Accretable Discount Related to Credit Impaired Acquired Loans

The outstanding balance related to credit impaired acquired loans was $23.3 million and $25.9 million at September 30, 2012 and December 31, 2011, respectively. The changes in the accretable discount related to the credit impaired acquired loans are as follows:

Balance at December 31, 2011	$	2,610
Accretion recognized, to-date		(1,195	)
Net reclassification to accretable from nonaccretable		396
Balance at September 30, 2012	$	1,811

Aged Analysis of the Company's Past Due Loans by Class

Management monitors the credit quality of its loan portfolio on an ongoing basis. Measurement of delinquency and past due status are based on the contractual terms of each loan. Past due loans are reviewed on a monthly basis to identify loans for non-accrual status. The following is an aged analysis of the Company's past due loans, by class as of September 30, 2012:

Legacy Loans (excludes loans acquired after January 1, 2009)

(000's omitted)	30 - 89 Days		90+ Days Past Due and Still Accruing		Nonaccrual		Troubled Debt Restructure		Total Past Due		Current		Total Loans
Consumer mortgage	$	13,705	$	2,050	$	8,210	$	0	$	23,965	$	1,256,381	$	1,280,346
Business lending		5,055		679		10,394		1,986		18,114		966,180		984,294
Consumer installment - indirect		8,335		141		0		0		8,476		621,304		629,780
Consumer installment – direct		1,384		31		0		0		1,415		154,824		156,239
Home equity		2,112		137		1,143		0		3,392		275,811		279,203
Total	$	30,591	$	3,038	$	19,747	$	1,986	$	55,362	$	3,274,500	$	3,329,862

Acquired Loans (includes loans acquired after January 1, 2009)

(000's omitted)	30 - 89 Days		90+ Days Past Due and Still Accruing		Nonaccrual		Total Past Due		Acquired Impaired(1)		Current		Total Loans
Consumer mortgage	$	1,875	$	294	$	1,554	$	3,723	$	0	$	106,061	$	109,784
Business lending		3,162		17		3,742		6,921		14,623		228,090		249,634
Consumer installment - indirect		451		0		0		451		0		11,965		12,416
Consumer installment – direct		545		0		0		545		0		16,926		17,471
Home equity		796		0		341		1,137		0		92,153		93,290
Total	$	6,829	$	311	$	5,637	$	12,777	$	14,623	$	455,195	$	482,595

)

Acquired impaired loans were not classified as nonperforming assets as the loans are considered to be performing under ASC 310-30. As a result interest income, through the accretion of the difference between the carrying amount of the loans and the expected cashflows, is being recognized on all acquired impaired loans.

The following is an aged analysis of the Company's past due loans by class as of December 31, 2011:

Legacy Loans (excludes loans acquired after January 1, 2009)

(000's omitted)	30 - 89 Days		90+ Days Past Due and Still Accruing		Nonaccrual		Total Past Due		Current		Total Loans
Consumer mortgage	$	16,026	$	2,144	$	5,755	$	23,925	$	1,111,795	$	1,135,720
Business lending		4,799		389		10,966		16,154		953,745		969,899
Consumer installment – indirect		8,847		32		0		8,879		527,030		535,909
Consumer installment – direct		1,912		95		0		2,007		138,500		140,507
Home equity		2,269		218		864		3,351		290,093		293,444
Total	$	33,853	$	2,878	$	17,585	$	54,316	$	3,021,163	$	3,075,479

Acquired Loans (includes loans acquired after January 1, 2009)

(000's omitted)	30 - 89 Days		90+ Days Past Due and Still Accruing		Nonaccrual		Total Past Due		Acquired Impaired(1)		Current		Total Loans
Consumer mortgage	$	985	$	27	$	765	$	1,777	$	0	$	77,124	$	78,901
Business lending		3,473		10		9,592		13,075		17,428		226,037		256,540
Consumer installment – indirect		737		0		2		739		0		20,307		21,046
Consumer installment – direct		167		0		0		167		0		8,496		8,663
Home equity		465		175		341		981		0		29,415		30,396
Total	$	5,827	$	212	$	10,700	$	16,739	$	17,428	$	361,379	$	395,546

)

Schedule of Business Lending Loans by Credit Quality Category

The following table shows the amount of business lending loans by credit quality category:

	September 30, 2012						December 31, 2011
(000's omitted)	Legacy		Acquired		Total		Legacy		Acquired		Total
Pass	$	776,559	$	161,508	$	938,067	$	732,873	$	157,494	$	890,367
Special mention		102,855		38,093		140,948		118,800		47,890		166,690
Classified		104,880		35,410		140,290		118,226		33,728		151,954
Doubtful		0		0		0		0		0		0
Acquired impaired		0		14,623		14,623		0		17,428		17,428
Total	$	984,294	$	249,634	$	1,233,928	$	969,899	$	256,540	$	1,226,439

Schedule of Loans by Credit Quality Indicator

The following table details the balances in all other loan categories at September 30, 2012:

Legacy loans (excludes loans acquired after January 1, 2009)

(000's omitted)	Consumer Mortgage		Consumer Indirect		Consumer Direct		Home Equity		Total
Performing	$	1,270,086	$	629,639	$	156,208	$	277,923	$	2,333,856
Nonperforming		10,260		141		31		1,280		11,712
Total	$	1,280,346	$	629,780	$	156,239	$	279,203	$	2,345,568

Acquired loans (includes loans acquired after January 1, 2009)

(000's omitted)	Consumer Mortgage		Consumer Indirect		Consumer Direct		Home Equity		Total
Performing	$	107,936	$	12,416	$	17,471	$	92,949	$	230,772
Nonperforming		1,848		0		0		341		2,189
Total	$	109,784	$	12,416	$	17,471	$	93,290	$	232,961

The following table details the balances in all other loan categories at December 31, 2011:

Legacy loans (excludes loans acquired after January 1, 2009)

(000's omitted)	Consumer Mortgage		Consumer Indirect		Consumer Direct		Home Equity		Total
Performing	$	1,127,821	$	535,877	$	140,412	$	292,362	$	2,096,472
Nonperforming		7,899		32		95		1,082		9,108
Total	$	1,135,720	$	535,909	$	140,507	$	293,444	$	2,105,580

Acquired loans (includes loans acquired after January 1, 2009)

(000's omitted)	Consumer Mortgage		Consumer Indirect		Consumer Direct		Home Equity		Total
Performing	$	78,109	$	21,044	$	8,663	$	29,880	$	137,696
Nonperforming		792		2		0		516		1,310
Total	$	78,901	$	21,046	$	8,663	$	30,396	$	139,006

Summary of Non-business Impaired Loans

All loan classes are collectively evaluated for impairment except business lending, as described in Note B. A summary of individually evaluated impaired loans as of September 30, 2012 and December 31, 2011 follows:

	September 30,		December 31,
(000's omitted)	2012		2011
Loans with allowance allocation	$	605	$	4,118
Loans without allowance allocation		11,350		2,308
Carrying balance		11,955		6,426
Contractual balance		16,004		8,527
Specifically allocated allowance		311		895

Schedule of Allowance for Loan Losses by Class

The following presents by class the activity in the allowance for loan losses:

	Three Months Ended September 30, 2012
	Consumer			Business			Consumer			Consumer			Home						Acquired
(000's omitted)	Mortgage			Lending			Indirect			Direct			Equity			Unallocated			Impaired		Total
Beginning balance	$	6,313		$	18,698		$	8,670		$	3,223		$	1,392		$	3,112		$	420	$	41,828
Charge-offs		(293	)		(1,100	)		(1,460	)		(344	)		(39	)		0			0		(3,236	)
Recoveries		17			454			850			259			2			0			0		1,582
Provision		730			510			1,340			220			40			(390	)		193		2,643
Ending balance	$	6,767		$	18,562		$	9,400		$	3,358		$	1,395		$	2,722		$	613	$	42,817

	Three Months Ended September 30, 2011
	Consumer			Business			Consumer			Consumer			Home						Acquired
(000's omitted)	Mortgage			Lending			Indirect			Direct			Equity			Unallocated			Impaired		Total
Beginning balance	$	3,286		$	20,949		$	10,277		$	3,878		$	911		$	3,230		$	0	$	42,531
Charge-offs		(157	)		(249	)		(1,294	)		(283	)		(43	)		0			0		(2,026	)
Recoveries		2			88			668			151			6			0			0		915
Provision		1,056			105			(210	)		(224	)		126			(53	)		243		1,043
Ending balance	$	4,187		$	20,893		$	9,441		$	3,522		$	1,000		$	3,177		$	243	$	42,463

	Nine Months Ended September 30, 2012
	Consumer			Business			Consumer			Consumer			Home						Acquired
(000's omitted)	Mortgage			Lending			Indirect			Direct			Equity			Unallocated			Impaired		Total
Beginning balance	$	4,651		$	20,574		$	8,960		$	3,290		$	1,130		$	3,222		$	386	$	42,213
Charge-offs		(712	)		(4,327	)		(3,633	)		(1,074	)		(220	)		0			0		(9,966	)
Recoveries		34			787			2,674			613			20			0			0		4,128
Provision		2,794			1,528			1,399			529			465			(500	)		227		6,442
Ending balance	$	6,767		$	18,562		$	9,400		$	3,358		$	1,395		$	2,722		$	613	$	42,817

	Nine Months Ended September 30, 2011
	Consumer			Business			Consumer			Consumer			Home						Acquired
(000's omitted)	Mortgage			Lending			Indirect			Direct			Equity			Unallocated			Impaired		Total
Beginning balance	$	2,451		$	22,326		$	9,922		$	3,977		$	689		$	3,145		$	0	$	42,510
Charge-offs		(501	)		(1,819	)		(3,249	)		(904	)		(174	)		0			0		(6,647	)
Recoveries		28			406			2,461			545			17			0			0		3,457
Provision		2,209			(20	)		307			(96	)		468			32			243		3,143
Ending balance	$	4,187		$	20,893		$	9,441		$	3,522		$	1,000		$	3,177		$	243	$	42,463