LOANS (Tables)

9 Months Ended

Sep. 30, 2014

The balances of these classes are summarized as follows:

	September 30,	December 31,
(000's omitted)	2014	2013
Consumer mortgage	$1,598,298	$1,582,058
Business lending	1,251,178	1,260,364
Consumer indirect	841,975	740,002
Consumer direct	186,672	180,139
Home equity	339,121	346,520
Gross loans, including deferred origination costs	4,217,244	4,109,083
Allowance for loan losses	(45,273)	(44,319)
Loans, net of allowance for loan losses	$4,171,971	$4,064,764

Schedule of Accretable Discount Related to Credit Impaired Acquired Loans

The outstanding balance related to credit impaired acquired loans was $7.0 million and $13.1 million at September 30, 2014 and December 31, 2013, respectively. 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	(567)
Net reclassification to accretable from nonaccretable	355
Balance at September 30, 2014	$785

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 September 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	$12,044	$2,074	$12,228	$26,346	$1,499,800	$1,526,146
Business lending	3,567	66	3,005	6,638	1,101,014	1,107,652
Consumer indirect	9,483	115	11	9,609	830,786	840,395
Consumer direct	1,201	20	2	1,223	179,165	180,388
Home equity	2,349	269	2,067	4,685	272,045	276,730
Total	$28,644	$2,544	$17,313	$48,501	$3,882,810	$3,931,311

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	$2,303	$53	$2,033	$4,389	$0	$67,763	$72,152
Business lending	134	0	1,421	1,555	5,487	136,484	143,526
Consumer indirect	64	0	0	64	0	1,516	1,580
Consumer direct	148	18	0	166	0	6,118	6,284
Home equity	483	75	556	1,114	0	61,277	62,391
Total	$3,132	$146	$4,010	$7,288	$5,487	$273,158	$285,933

(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:

	September 30, 2014			December 31, 2013
(000’s omitted)	Legacy	Acquired	Total	Legacy	Acquired	Total
Pass	$927,154	$95,640	$1,022,794	$908,885	$116,271	$1,025,156
Special mention	104,353	20,567	124,920	93,600	24,264	117,864
Classified	76,145	21,832	97,977	83,379	26,714	110,093
Doubtful	0	0	0	161	0	161
Acquired impaired	0	5,487	5,487	0	7,090	7,090
Total	$1,107,652	$143,526	$1,251,178	$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 September 30, 2014:

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

	Consumer	Consumer	Consumer	Home
(000’s omitted)	Mortgage	Indirect	Direct	Equity	Total
Performing	$1,511,844	$840,269	$180,366	$274,394	$2,806,873
Nonperforming	14,302	126	22	2,336	16,786
Total	$1,526,146	$840,395	$180,388	$276,730	$2,823,659

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

	Consumer	Consumer	Consumer	Home
(000’s omitted)	Mortgage	Indirect	Direct	Equity	Total
Performing	$70,066	$1,580	$6,266	$61,760	$139,672
Nonperforming	2,086	0	18	631	2,735
Total	$72,152	$1,580	$6,284	$62,391	$142,407

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

All loan classes are collectively evaluated for impairment except business lending, as described in Note C. A summary of individually evaluated impaired loans as of September 30, 2014 and December 31, 2013 follows:

	September 30,	December 31,
(000’s omitted)	2014	2013
Loans with allowance allocation	$945	$945
Loans without allowance allocation	0	600
Carrying balance	945	1,545
Contractual balance	1,003	1,852
Specifically allocated allowance	50	50

Troubled Debt Restructurings on Financing Receivables

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

	September 30, 2014						December 31, 2013
(000’s omitted)	Nonaccrual		Accruing		Total		Nonaccrual		Accruing		Total
	#	Amount	#	Amount	#	Amount	#	Amount	#	Amount	#	Amount
Consumer mortgage	37	$1,796	50	$2,215	87	$4,011	31	$1,682	48	$2,171	79	$3,853
Business lending	7	609	2	93	9	702	4	162	1	47	5	209
Consumer indirect	0	0	81	693	81	693	0	0	98	692	98	692
Consumer direct	0	0	19	80	19	80	0	0	46	116	46	116
Home equity	14	297	14	328	28	625	12	202	20	363	32	565
Total	58	$2,702	166	$3,409	224	$6,111	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 nine months ended September 30, 2014. Of the loans noted in the table below, all but two loans for the three and nine months ended September 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 September 30, 2014		Nine Month Ended September 30, 2014
(000’s omitted)	Number of loans modified	Outstanding Balance	Number of loans modified	Outstanding Balance
Consumer mortgage	6	$283	22	$1,016
Business lending	0	0	7	556
Consumer indirect	16	165	29	334
Consumer direct	5	7	7	14
Home equity	0	0	5	173
Total	27	$455	70	$2,093

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 September 30, 2014
	Consumer	Business	Consumer	Consumer	Home		Acquired
(000’s omitted)	Mortgage	Lending	Indirect	Direct	Equity	Unallocated	Impaired	Total
Beginning balance	$9,375	$16,553	$11,354	$3,298	$1,860	$2,012	$163	$44,615
Charge-offs	(203)	(435)	(1,711)	(307)	(74)	0	(10)	(2,740)
Recoveries	14	335	1,025	239	38	0	0	1,651
Provision	268	138	1,231	100	77	(65)	(2)	1,747
Ending balance	$9,454	$16,591	$11,899	$3,330	$1,901	$1,947	$151	$45,273

	Three Months Ended September 30, 2013
	Consumer	Business	Consumer	Consumer	Home		Acquired
(000’s omitted)	Mortgage	Lending	Indirect	Direct	Equity	Unallocated	Impaired	Total
Beginning balance	$7,373	$18,283	$9,369	$3,054	$1,674	$2,745	$975	$43,473
Charge-offs	(217)	(1,012)	(1,186)	(348)	(59)	0	(59)	(2,881)
Recoveries	2	375	811	206	4	0	0	1,398
Provision	443	625	1,074	253	95	(500)	103	2,093
Ending balance	$7,601	$18,271	$10,068	$3,165	$1,714	$2,245	$1,019	$44,083

	Nine Months Ended September 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	(734)	(940)	(4,573)	(1,219)	(450)	0	(30)	(7,946)
Recoveries	67	607	2,826	677	76	0	0	4,253
Provision	1,127	(583)	3,398	691	445	(82)	(349)	4,647
Ending balance	$9,454	$16,591	$11,899	$3,330	$1,901	$1,947	$151	$45,273

	Nine Months Ended September 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	(817)	(2,075)	(3,075)	(1,300)	(379)	0	(59)	(7,705)
Recoveries	15	619	2,682	761	16	0	0	4,093
Provision	1,333	1,714	855	401	626	(421)	299	4,807
Ending balance	$7,601	$18,271	$10,068	$3,165	$1,714	$2,245	$1,019	$44,083