LOANS (Tables)

6 Months Ended

Jun. 30, 2014

The balances of these classes are summarized as follows:

	June 30,	December 31,
(000's omitted)	2014	2013
Consumer mortgage	$1,580,584	$1,582,058
Business lending	1,247,129	1,260,364
Consumer indirect	797,297	740,002
Consumer direct	183,448	180,139
Home equity	339,345	346,520
Gross loans, including deferred origination costs	4,147,803	4,109,083
Allowance for loan losses	(44,615)	(44,319)
Loans, net of allowance for loan losses	$4,103,188	$4,064,764

Schedule of Accretable Discount Related to Credit Impaired Acquired Loans

The changes in the accretable discount related to the credit impaired acquired loans are as follows:

(000’s omitted)
Balance at December 31, 2013	$997
Accretion recognized, year-to-date	(384)
Net reclassification to accretable from nonaccretable	120
Balance at June 30, 2014	$733

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

The following is an aged analysis of the Company’s past due loans, by class as of June 30, 2014:

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

	Past Due	90+ Days Past
	30 – 89	Due and		Total
(000’s omitted)	Days	Still Accruing	Nonaccrual	Past Due	Current	Total Loans
Consumer mortgage	$11,065	$930	$12,381	$24,376	$1,481,382	$1,505,758
Business lending	3,104	579	3,788	7,471	1,083,583	1,091,054
Consumer indirect	8,658	153	12	8,823	786,344	795,167
Consumer direct	1,112	29	3	1,144	175,433	176,577
Home equity	1,852	122	1,963	3,937	269,751	273,688
Total	$25,791	$1,813	$18,147	$45,751	$3,796,493	$3,842,244

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

	Past Due	90+ Days Past
	30 – 89	Due and		Total	Acquired
(000’s omitted)	Days	Still Accruing	Nonaccrual	Past Due	Impaired(1)	Current	Total Loans
Consumer mortgage	$1,120	$36	$1,941	$3,097	$0	$71,729	$74,826
Business lending	32	0	1,419	1,451	5,599	149,025	156,075
Consumer indirect	52	1	0	53	0	2,077	2,130
Consumer direct	135	0	0	135	0	6,736	6,871
Home equity	516	80	484	1,080	0	64,577	65,657
Total	$1,855	$117	$3,844	$5,816	$5,599	$294,144	$305,559

(1)

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, 2013:

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

	Past Due	90+ Days Past
	30 – 89	Due and		Total
(000’s omitted)	Days	Still Accruing	Nonaccrual	Past Due	Current	Total Loans
Consumer mortgage	$16,589	$1,253	$11,097	$28,939	$1,473,320	$1,502,259
Business lending	2,960	164	3,083	6,207	1,079,818	1,086,025
Consumer indirect	11,647	738	14	12,399	723,878	736,277
Consumer direct	1,858	90	4	1,952	169,452	171,404
Home equity	2,635	173	1,867	4,675	271,235	275,910
Total	$35,689	$2,418	$16,065	$54,172	$3,717,703	$3,771,875

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

	Past Due	90+ Days Past
	30 – 89	Due and		Total	Acquired
(000’s omitted)	Days	Still Accruing	Nonaccrual	Past Due	Impaired(1)	Current	Total Loans
Consumer mortgage	$1,857	$85	$1,463	$3,405	$0	$76,394	$79,799
Business lending	531	0	1,472	2,003	7,090	165,246	174,339
Consumer indirect	157	17	0	174	0	3,551	3,725
Consumer direct	385	27	0	412	0	8,323	8,735
Home equity	592	8	473	1,073	0	69,537	70,610
Total	$3,522	$137	$3,408	$7,067	$7,090	$323,051	$337,208

(1)

Schedule of Business Lending Loans by Credit Quality Category

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

	June 30, 2014			December 31, 2013
(000’s omitted)	Legacy	Acquired	Total	Legacy	Acquired	Total
Pass	$910,318	$104,479	$1,014,797	$908,885	$116,271	$1,025,156
Special mention	102,219	20,228	122,447	93,600	24,264	117,864
Classified	78,517	25,769	104,286	83,379	26,714	110,093
Doubtful	0	0	0	161	0	161
Acquired impaired	0	5,599	5,599	0	7,090	7,090
Total	$1,091,054	$156,075	$1,247,129	$1,086,025	$174,339	$1,260,364

Schedule of Loans by Credit Quality Indicator

The following table details the balances in all other loan categories at June 30, 2014:

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

	Consumer	Consumer	Consumer	Home
(000’s omitted)	Mortgage	Indirect	Direct	Equity	Total
Performing	$1,492,447	795,002	176,545	271,603	$2,735,597
Nonperforming	13,311	165	32	2,085	15,593
Total	$1,505,758	$795,167	$176,577	$273,688	$2,751,190

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

	Consumer	Consumer	Consumer	Home
(000’s omitted)	Mortgage	Indirect	Direct	Equity	Total
Performing	$72,849	2,129	6,871	65,093	$146,942
Nonperforming	1,977	1	0	564	2,542
Total	$74,826	$2,130	$6,871	$65,657	$149,484

The following table details the balances in all other loan categories at December 31, 2013:

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

	Consumer	Consumer	Consumer	Home
(000’s omitted)	Mortgage	Indirect	Direct	Equity	Total
Performing	$1,489,909	$735,525	$171,310	$273,870	$2,670,614
Nonperforming	12,350	752	94	2,040	15,236
Total	$1,502,259	$736,277	$171,404	$275,910	$2,685,850

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

	Consumer	Consumer	Consumer	Home
(000’s omitted)	Mortgage	Indirect	Direct	Equity	Total
Performing	$78,251	$3,708	$8,708	$70,129	$160,796
Nonperforming	1,548	17	27	481	2,073
Total	$79,799	$3,725	$8,735	$70,610	$162,869

Summary of Non-business Impaired Loans

A summary of individually evaluated impaired loans as of June 30, 2014 and December 31, 2013 follows:

	June 30,	December 31,
(000’s omitted)	2014	2013
Loans with allowance allocation	$945	$945
Loans without allowance allocation	420	600
Carrying balance	1,365	1,545
Contractual balance	1,796	1,852
Specifically allocated allowance	50	50

Troubled debt restructurings on financing receivables

Information regarding TDRs as of June 30, 2014 and December 31, 2013 is as follows:

	June 30, 2014						December 31, 2013
(000’s omitted)	Nonaccrual		Accruing		Total		Nonaccrual		Accruing		Total
	#	Amount	#	Amount	#	Amount	#	Amount	#	Amount	#	Amount
Consumer mortgage	45	$2,198	38	$1,812	83	$4,010	31	$1,682	48	$2,171	79	$3,853
Business lending	8	638	2	95	10	733	4	162	1	47	5	209
Consumer indirect	0	0	76	614	76	614	0	0	98	692	98	692
Consumer direct	0	0	40	98	40	98	0	0	46	116	46	116
Home equity	13	286	17	358	30	644	12	202	20	363	32	565
Total	66	$3,122	173	$2,977	239	$6,099	47	$2,046	213	$3,389	260	$5,435

The following table presents information related to loans modified in a TDR during the three and six months ended June 30, 2014. Of the loans noted in the table below, all but two loans for the three and six months ended June 30, 2014 were modified due to a Chapter 7 bankruptcy as described previously. The two exceptions were business loans restructured via granting a waiver of payments for a period of time. The financial effects of these restructurings were immaterial.

	Three Month Ended June 30, 2014		Six Month Ended June 30, 2014
(000’s omitted)	Number of loans modified	Outstanding Balance	Number of loans modified	Outstanding Balance
Consumer mortgage	8	$420	19	$941
Business lending	4	391	8	580
Consumer indirect	9	96	18	201
Consumer direct	1	2	3	11
Home equity	4	126	5	155
Total	26	$1,035	53	$1,888

Schedule of Allowance for Loan Losses by Class

The allowance for loan losses is general in nature and is available to absorb losses from any loan type despite the analysis below. The following presents by class the activity in the allowance for loan losses:

	Three Months Ended June 30, 2014
	Consumer	Business	Consumer	Consumer	Home		Acquired
(000’s omitted)	Mortgage	Lending	Indirect	Direct	Equity	Unallocated	Impaired	Total
Beginning balance	$9,281	$17,046	$10,586	$3,087	$1,818	$2,178	$201	$44,197
Charge-offs	(364)	(385)	(1,435)	(420)	(246)	0	(7)	(2,857)
Recoveries	12	100	1,005	226	32	0	0	1,375
Provision	446	(208)	1,198	405	256	(166)	(31)	1,900
Ending balance	$9,375	$16,553	$11,354	$3,298	$1,860	$2,012	$163	$44,615

	Three Months Ended June 30, 2013
	Consumer	Business	Consumer	Consumer	Home		Acquired
(000’s omitted)	Mortgage	Lending	Indirect	Direct	Equity	Unallocated	Impaired	Total
Beginning balance	$7,292	$17,557	$9,448	$3,084	$1,683	$2,927	$922	$42,913
Charge-offs	(229)	(280)	(997)	(407)	(135)	0	0	(2,048)
Recoveries	7	102	913	257	8	0	0	1,287
Provision	303	904	5	120	118	(182)	53	1,321
Ending balance	$7,373	$18,283	$9,369	$3,054	$1,674	$2,745	$975	$43,473

	Six Months Ended June 30, 2014
	Consumer	Business	Consumer	Consumer	Home		Acquired
(000’s omitted)	Mortgage	Lending	Indirect	Direct	Equity	Unallocated	Impaired	Total
Beginning balance	$8,994	$17,507	$10,248	$3,181	$1,830	$2,029	$530	$44,319
Charge-offs	(531)	(505)	(2,862)	(912)	(375)	0	(20)	(5,205)
Recoveries	53	271	1,801	438	38	0	0	2,601
Provision	859	(720)	2,167	591	367	(17)	(347)	2,900
Ending balance	$9,375	$16,553	$11,354	$3,298	$1,860	$2,012	$163	$44,615

	Six Months Ended June 30, 2013
	Consumer	Business	Consumer	Consumer	Home		Acquired
(000’s omitted)	Mortgage	Lending	Indirect	Direct	Equity	Unallocated	Impaired	Total
Beginning balance	$7,070	$18,013	$9,606	$3,303	$1,451	$2,666	$779	$42,888
Charge-offs	(600)	(1,064)	(1,888)	(952)	(320)	0	0	(4,824)
Recoveries	13	244	1,871	555	12	0	0	2,695
Provision	890	1,090	(220)	148	531	79	196	2,714
Ending balance	$7,373	$18,283	$9,369	$3,054	$1,674	$2,745	$975	$43,473