LOANS (Tables)

9 Months Ended

Sep. 30, 2017

Accounts, Notes, Loans and Financing Receivable [Line Items]

The balances of these classes are summarized as follows:

(000's omitted)	September 30, 2017			December 31, 2016
Consumer mortgage	$	2,206,527		$	1,819,701
Business lending		2,458,981			1,490,076
Consumer indirect		1,034,716			1,044,972
Consumer direct		183,898			191,815
Home equity		424,598			401,998
Gross loans, including deferred origination costs		6,308,720			4,948,562
Allowance for loan losses		(47,983	)		(47,233	)
Loans, net of allowance for loan losses	$	6,260,737		$	4,901,329

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, 2016	$	498
Accretion recognized, year-to-date		(451	)
Net reclassification to accretable from non-accretable		511
Merchants acquisition		758
Balance at September 30, 2017	$	1,316

Aged Analysis of Past Due Loans by Class

The following is an aged analysis of the Company’s past due loans, by class as of September 30, 2017:

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

(000’s omitted)	Past Due 30 – 89 Days		90+ Days Past Due and Still Accruing		Nonaccrual		Total Past Due		Current		Total Loans
Consumer mortgage	$	11,312	$	1,275	$	10,454	$	23,041	$	1,695,834	$	1,718,875
Business lending		8,982		79		3,153		12,214		1,330,222		1,342,436
Consumer indirect		13,729		167		0		13,896		997,402		1,011,298
Consumer direct		1,506		67		0		1,573		175,823		177,396
Home equity		877		1		1,462		2,340		315,918		318,258
Total	$	36,406	$	1,589	$	15,069	$	53,064	$	4,515,199	$	4,568,263

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

(000’s omitted)	Past Due 30 – 89 Days		90+ Days Past Due and Still Accruing		Nonaccrual		Total Past Due		Acquired Impaired⁽¹⁾		Current		Total Loans
Consumer mortgage	$	1,949	$	230	$	3,526	$	5,705	$	0	$	481,947	$	487,652
Business lending		3,493		0		1,570		5,063		13,594		1,097,888		1,116,545
Consumer indirect		198		0		0		198		0		23,220		23,418
Consumer direct		131		2		0		133		0		6,369		6,502
Home equity		763		40		1,345		2,148		0		104,192		106,340
Total	$	6,534	$	272	$	6,441	$	13,247	$	13,594	$	1,713,616	$	1,740,457

(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, 2016:

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

(000’s omitted)	Past Due 30 – 89 Days		90+ Days Past Due and Still Accruing		Nonaccrual		Total Past Due		Current		Total Loans
Consumer mortgage	$	11,379	$	1,180	$	11,352	$	23,911	$	1,635,849	$	1,659,760
Business lending		3,921		145		3,811		7,877		1,269,789		1,277,666
Consumer indirect		13,883		166		0		14,049		1,000,776		1,014,825
Consumer direct		1,549		58		0		1,607		180,315		181,922
Home equity		1,250		414		1,437		3,101		315,928		319,029
Total	$	31,982	$	1,963	$	16,600	$	50,545	$	4,402,657	$	4,453,202

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

(000’s omitted)	Past Due 30 – 89 Days		90+ Days Past Due and Still Accruing		Nonaccrual		Total Past Due		Acquired Impaired⁽¹⁾		Current		Total Loans
Consumer mortgage	$	1,539	$	205	$	2,332	$	4,076	$	0	$	155,865	$	159,941
Business lending		528		0		1,252		1,780		5,553		205,077		212,410
Consumer indirect		231		3		0		234		0		29,913		30,147
Consumer direct		231		0		0		231		0		9,662		9,893
Home equity		778		905		435		2,118		0		80,851		82,969
Total	$	3,307	$	1,113	$	4,019	$	8,439	$	5,553	$	481,368	$	495,360

(1)

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, 2017 and December 31, 2016 follows:

(000’s omitted)	September 30, 2017		December 31, 2016
Loans with allowance allocation	$	0	$	1,109
Loans without allowance allocation		907		556
Unpaid principal balance		907		1,665
Contractual balance		910		3,340
Allowance for loan loss allocated		0		477

Troubled Debt Restructurings on Financing Receivables

Information regarding TDRs as of September 30, 2017 and December 31, 2016 is as follows:

	September 30, 2017												December 31, 2016
(000’s omitted)	Nonaccrual				Accruing				Total				Nonaccrual				Accruing				Total
		#	Amount			#	Amount			#	Amount			#	Amount			#	Amount			#	Amount
Consumer mortgage		45	$	2,131		47	$	1,940		92	$	4,071		36	$	1,520		45	$	1,956		81	$	3,476
Business lending		9		453		5		383		14		836		6		91		5		690		11		781
Consumer indirect		0		0		70		839		70		839		0		0		78		771		78		771
Consumer direct		0		0		23		62		23		62		0		0		23		65		23		65
Home equity		11		223		7		207		18		430		14		221		7		216		21		437
Total		65	$	2,807		152	$	3,431		217	$	6,238		56	$	1,832		158	$	3,698		214	$	5,530

The following table presents information related to loans modified in a TDR during the three months and nine months ended September 30, 2017 and 2016. Of the loans noted in the table below, all loans for the three months and nine months ended September 30, 2017 and 2016 were modified due to a Chapter 7 bankruptcy as described previously. The financial effects of these restructurings were immaterial.

	Three Months Ended September 30, 2017				Three Months Ended September 30, 2016
(000’s omitted)	Number of loans modified		Outstanding Balance		Number of loans modified		Outstanding Balance
Consumer mortgage		8	$	540		2	$	206
Business lending		1		51		0		0
Consumer indirect		8		181		9		89
Consumer direct		1		1		0		0
Home equity		1		8		0		0
Total		19	$	781		11	$	295

	Nine Months Ended September 30, 2017				Nine Months Ended September 30, 2016
(000’s omitted)	Number of loans modified		Outstanding Balance		Number of loans modified		Outstanding Balance
Consumer mortgage		15	$	1,040		9	$	787
Business lending		4		414		1		29
Consumer indirect		22		323		27		392
Consumer direct		4		7		1		51
Home equity		3		106		3		48
Total		48	$	1,890		41	$	1,307

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, 2017
(000’s omitted)	Consumer Mortgage			Business Lending			Consumer Indirect			Consumer Direct			Home Equity			Unallocated		Acquired Impaired			Total
Beginning balance	$	10,197		$	17,230		$	13,918		$	2,945		$	2,242		$	856	$	63		$	47,451
Charge-offs		(198	)		(124	)		(2,328	)		(574	)		0			0		0			(3,224	)
Recoveries		24			127			1,058			221			12			0		0			1,442
Provision		280			399			1,130			426			(52	)		142		(11	)		2,314
Ending balance	$	10,303		$	17,632		$	13,778		$	3,018		$	2,202		$	998	$	52		$	47,983

	Three Months Ended September 30, 2016
(000’s omitted)	Consumer Mortgage			Business Lending			Consumer Indirect			Consumer Direct			Home Equity			Unallocated		Acquired Impaired		Total
Beginning balance	$	9,853		$	16,949		$	13,215		$	3,020		$	2,500		$	850	$	139	$	46,526
Charge-offs		(202	)		(284	)		(2,037	)		(395	)		(6	)		0		0		(2,924	)
Recoveries		12			220			892			246			27			0		0		1,397
Provision		305			(283	)		1,503			170			10			85		0		1,790
Ending balance	$	9,968		$	16,602		$	13,573		$	3,041		$	2,531		$	935	$	139	$	46,789

	Nine Months Ended September 30, 2017
(000’s omitted)	Consumer Mortgage			Business Lending			Consumer Indirect			Consumer Direct			Home Equity			Unallocated		Acquired Impaired			Total
Beginning balance	$	10,094		$	17,220		$	13,782		$	2,979		$	2,399		$	651	$	108		$	47,233
Charge-offs		(541	)		(1,062	)		(5,969	)		(1,463	)		(228	)		0		(184	)		(9,447	)
Recoveries		42			481			3,379			648			44			0		0			4,594
Provision		708			993			2,586			854			(13	)		347		128			5,603
Ending balance	$	10,303		$	17,632		$	13,778		$	3,018		$	2,202		$	998	$	52		$	47,983

	Nine Months Ended September 30, 2016
(000’s omitted)	Consumer Mortgage			Business Lending			Consumer Indirect			Consumer Direct			Home Equity			Unallocated			Acquired Impaired			Total
Beginning balance	$	10,198		$	15,749		$	12,422		$	2,997		$	2,666		$	1,201		$	168		$	45,401
Charge-offs		(445	)		(1,263	)		(5,439	)		(1,246	)		(142	)		0			(26	)		(8,561	)
Recoveries		96			511			3,146			705			55			0			0			4,513
Provision		119			1,605			3,444			585			(48	)		(266	)		(3	)		5,436
Ending balance	$	9,968		$	16,602		$	13,573		$	3,041		$	2,531		$	935		$	139		$	46,789

Business Lending [Member]

Accounts, Notes, Loans and Financing Receivable [Line Items]

Schedule of Loans by Credit Quality Indicator

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

	September 30, 2017						December 31, 2016
(000’s omitted)	Legacy		Acquired		Total		Legacy		Acquired		Total
Pass	$	1,122,422	$	1,027,919	$	2,150,341	$	1,051,005	$	162,165	$	1,213,170
Special mention		126,928		34,988		161,916		135,602		29,690		165,292
Classified		93,086		40,044		133,130		90,585		15,002		105,587
Doubtful		0		0		0		474		0		474
Acquired impaired		0		13,594		13,594		0		5,553		5,553
Total	$	1,342,436	$	1,116,545	$	2,458,981	$	1,277,666	$	212,410	$	1,490,076

All Other Loans [Member]

Accounts, Notes, Loans and Financing Receivable [Line Items]

Schedule of Loans by Credit Quality Indicator

The following table details the balances in all other loan categories at September 30, 2017:

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

(000’s omitted)	Consumer Mortgage		Consumer Indirect		Consumer Direct		Home Equity		Total
Performing	$	1,707,146	$	1,011,131	$	177,329	$	316,795	$	3,212,401
Nonperforming		11,729		167		67		1,463		13,426
Total	$	1,718,875	$	1,011,298	$	177,396	$	318,258	$	3,225,827

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

(000’s omitted)	Consumer Mortgage		Consumer Indirect		Consumer Direct		Home Equity		Total
Performing	$	483,896	$	23,418	$	6,500	$	104,955	$	618,769
Nonperforming		3,756		0		2		1,385		5,143
Total	$	487,652	$	23,418	$	6,502	$	106,340	$	623,912

The following table details the balances in all other loan categories at December 31, 2016:

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

(000’s omitted)	Consumer Mortgage		Consumer Indirect		Consumer Direct		Home Equity		Total
Performing	$	1,647,228	$	1,014,659	$	181,864	$	317,178	$	3,160,929
Nonperforming		12,532		166		58		1,851		14,607
Total	$	1,659,760	$	1,014,825	$	181,922	$	319,029	$	3,175,536

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

(000’s omitted)	Consumer Mortgage		Consumer Indirect		Consumer Direct		Home Equity		Total
Performing	$	157,404	$	30,144	$	9,893	$	81,629	$	279,070
Nonperforming		2,537		3		0		1,340		3,880
Total	$	159,941	$	30,147	$	9,893	$	82,969	$	282,950