Allowance for Loan Losses and Credit Quality of Loans (Tables)

6 Months Ended

Jun. 30, 2017

Allowance for Loan Losses and Credit Quality of Loans [Abstract]

Portfolio and Class Segments

The following table illustrates the portfolio and class segments for the Company’s loan portfolio:

Portfolio	Class
Commercial Loans	Commercial
	Commercial Real Estate
	Agricultural
	Agricultural Real Estate
	Business Banking
Consumer Loans	Indirect
	Home Equity
	Direct
Residential Real Estate Mortgages

Allowance for Loan Losses by Portfolio

The following tables illustrate the changes in the allowance for loan losses by our portfolio segments:

Three months ended June 30,(In thousands)	Commercial Loans			Consumer Loans			Residential Real Estate Mortgages			Unallocated		Total
Balance as of March 31, 2017	$	24,727		$	34,769		$	6,204		$	-	$	65,700
Charge-offs		(1,123	)		(6,261	)		(698	)		-		(8,082	)
Recoveries		206			1,199			10			-		1,415
Provision		618			5,816			1,133			-		7,567
Ending Balance as of June 30, 2017	$	24,428		$	35,523		$	6,649		$	-	$	66,600
Balance as of March 31, 2016	$	25,299		$	31,035		$	7,984		$	-	$	64,318
Charge-offs		(649	)		(4,950	)		(268	)		-		(5,867	)
Recoveries		339			907			91			-		1,337
Provision		233			4,479			68			-		4,780
Ending Balance as of June 30, 2016	$	25,222		$	31,471		$	7,875		$	-	$	64,568

Six months ended June 30,	Commercial Loans			Consumer Loans			Residential Real Estate Mortgages			Unallocated			Total
Balance as of December 31, 2016	$	25,444		$	33,375		$	6,381		$	-		$	65,200
Charge-offs		(2,417	)		(12,763	)		(1,296	)		-			(16,476	)
Recoveries		653			2,234			43			-			2,930
Provision		748			12,677			1,521			-			14,946
Ending Balance as of June 30, 2017	$	24,428		$	35,523		$	6,649		$	-		$	66,600
Balance as of December 31, 2015	$	25,545		$	29,253		$	7,960		$	260		$	63,018
Charge-offs		(1,086	)		(10,363	)		(977	)		-			(12,426	)
Recoveries		1,104			1,881			113			-			3,098
Provision		(341	)		10,700			779			(260	)		10,878
Ending Balance as of June 30, 2016	$	25,222		$	31,471		$	7,875		$	-		$	64,568

The following tables illustrate the allowance for loan losses and the recorded investment by portfolio segments:

As of June 30, 2017 (In thousands)	Commercial Loans		Consumer Loans		Residential Real Estate Mortgages		Total
Allowance for loan losses	$	24,428	$	35,523	$	6,649	$	66,600
Allowance for loans individually evaluated for impairment		461		-		-		461
Allowance for loans collectively evaluated for impairment	$	23,967	$	35,523	$	6,649	$	66,139
Ending balance of loans	$	2,906,314	$	2,185,790	$	1,275,807	$	6,367,911
Ending balance of originated loans individually evaluated for impairment		9,321		8,214		6,429		23,964
Ending balance of acquired loans collectively evaluated for impairment		222,519		52,539		186,214		461,272
Ending balance of originated loans collectively evaluated for impairment	$	2,674,474	$	2,125,037	$	1,083,164	$	5,882,675
As of December 31, 2016
Allowance for loan losses	$	25,444	$	33,375	$	6,381	$	65,200
Allowance for loans individually evaluated for impairment		1,517		-		-		1,517
Allowance for loans collectively evaluated for impairment	$	23,927	$	33,375	$	6,381	$	63,683
Ending balance of loans	$	2,786,002	$	2,149,441	$	1,262,614	$	6,198,057
Ending balance of originated loans individually evaluated for impairment		13,070		8,488		6,111		27,669
Ending balance of acquired loans individually evaluated for impairment		1,205		-		-		1,205
Ending balance of acquired loans collectively evaluated for impairment		236,413		63,005		199,471		498,889
Ending balance of originated loans collectively evaluated for impairment	$	2,535,314	$	2,077,948	$	1,057,032	$	5,670,294

Past Due and Nonperforming Loans by Loan Class

The following tables set forth information with regard to past due and nonperforming loans by loan class:

As of June 30, 2017(In thousands)	31-60 Days Past Due Accruing		61-90 Days Past Due Accruing		Greater Than 90 Days Past Due Accruing		Total Past Due Accruing		Nonaccrual		Current		Recorded Total Loans
ORIGINATED
Commercial Loans:
Commercial	$	35	$	530	$	-	$	565	$	5,118	$	756,087	$	761,770
Commercial Real Estate		1,621		631		-		2,252		1,928		1,371,367		1,375,547
Agricultural		-		-		-		-		630		37,025		37,655
Agricultural Real Estate		-		-		-		-		1,696		30,329		32,025
Business Banking		1,637		309		-		1,946		4,379		470,473		476,798
Total Commercial Loans		3,293		1,470		-		4,763		13,751		2,665,281		2,683,795
Consumer Loans:
Indirect		16,770		4,188		2,319		23,277		1,835		1,589,934		1,615,046
Home Equity		2,480		701		354		3,535		2,811		448,502		454,848
Direct		197		115		38		350		80		62,927		63,357
Total Consumer Loans		19,447		5,004		2,711		27,162		4,726		2,101,363		2,133,251
Residential Real Estate Mortgages		3,051		974		136		4,161		7,007		1,078,425		1,089,593
Total Originated Loans	$	25,791	$	7,448	$	2,847	$	36,086	$	25,484	$	5,845,069	$	5,906,639
ACQUIRED
Commercial Loans:
Commercial	$	-	$	-	$	-	$	-	$	-	$	51,179	$	51,179
Commercial Real Estate		-		294		-		294		619		124,490		125,403
Business Banking		612		-		-		612		783		44,542		45,937
Total Commercial Loans		612		294		-		906		1,402		220,211		222,519
Consumer Loans:
Indirect		48		3		1		52		37		3,551		3,640
Home Equity		266		63		-		329		183		45,494		46,006
Direct		29		-		1		30		12		2,851		2,893
Total Consumer Loans		343		66		2		411		232		51,896		52,539
Residential Real Estate Mortgages		5		140		-		145		2,016		184,053		186,214
Total Acquired Loans	$	960	$	500	$	2	$	1,462	$	3,650	$	456,160	$	461,272
Total Loans	$	26,751	$	7,948	$	2,849	$	37,548	$	29,134	$	6,301,229	$	6,367,911

As of December 31, 2016 (In thousands)	31-60 Days Past Due Accruing		61-90 Days Past Due Accruing		Greater Than 90 Days Past Due Accruing		Total Past Due Accruing		Nonaccrual		Current		Recorded Total Loans
ORIGINATED
Commercial Loans:
Commercial	$	33	$	5	$	-	$	38	$	2,964	$	650,568	$	653,570
Commercial Real Estate		-		-		-		-		7,935		1,343,854		1,351,789
Agricultural		-		-		-		-		730		37,186		37,916
Agricultural Real Estate		-		-		-		-		1,803		30,619		32,422
Business Banking		1,609		318		-		1,927		4,860		465,900		472,687
Total Commercial Loans		1,642		323		-		1,965		18,292		2,528,127		2,548,384
Consumer Loans:
Indirect		19,253		4,185		2,499		25,937		2,145		1,538,593		1,566,675
Home Equity		3,416		1,065		528		5,009		2,851		448,797		456,657
Direct		452		125		20		597		107		62,400		63,104
Total Consumer Loans		23,121		5,375		3,047		31,543		5,103		2,049,790		2,086,436
Residential Real Estate Mortgages		2,725		172		1,406		4,303		6,682		1,052,158		1,063,143
Total Originated Loans	$	27,488	$	5,870	$	4,453	$	37,811	$	30,077	$	5,630,075	$	5,697,963
ACQUIRED
Commercial Loans:
Commercial	$	-	$	-	$	-	$	-	$	-	$	49,447	$	49,447
Commercial Real Estate		-		-		-		-		1,891		135,398		137,289
Business Banking		236		-		-		236		804		49,842		50,882
Total Commercial Loans		236		-		-		236		2,695		234,687		237,618
Consumer Loans:
Indirect		100		5		-		105		47		8,541		8,693
Home Equity		254		53		30		337		237		50,553		51,127
Direct		30		2		-		32		20		3,133		3,185
Total Consumer Loans		384		60		30		474		304		62,227		63,005
Residential Real Estate Mortgages		609		28		327		964		2,636		195,871		199,471
Total Acquired Loans	$	1,229	$	88	$	357	$	1,674	$	5,635	$	492,785	$	500,094
Total Loans	$	28,717	$	5,958	$	4,810	$	39,485	$	35,712	$	6,122,860	$	6,198,057

Impaired Loans and Specific Reserve Allocations

The following table provides information on loans specifically evaluated for impairment:

	June 30, 2017						December 31, 2016
(In thousands)	Recorded Investment Balance (Book)		Unpaid Principal Balance (Legal)		Related Allowance		Recorded Investment Balance (Book)		Unpaid Principal Balance (Legal)		Related Allowance
ORIGINATED
With no related allowance recorded:
Commercial Loans:
Commercial	$	3,303	$	3,436			$	1,278	$	1,697
Commercial Real Estate		2,614		2,647				3,816		3,841
Agricultural		115		125				130		137
Agricultural Real Estate		1,476		1,635				1,434		1,567
Business Banking		964		1,056				655		728
Total Commercial Loans		8,472		8,899				7,313		7,970
Consumer Loans:
Indirect		31		31				5		16
Home Equity		8,064		8,900				8,483		9,429
Direct		119		119				-		-
Total Consumer Loans		8,214		9,050				8,488		9,445
Residential Real Estate Mortgages		6,429		7,245				6,111		6,906
Total	$	23,115	$	25,194			$	21,912	$	24,321
With an allowance recorded:
Commercial Loans:
Commercial		695		700	$	350		-		-	$	-
Commercial Real Estate		79		83		50		5,553		5,736		735
Agricultural		29		31		30		49		49		37
Agricultural Real Estate		46		48		31		155		155		54
Total Commercial Loans	$	849	$	862	$	461	$	5,757	$	5,940	$	826
ACQUIRED
With an allowance recorded:
Commercial Loans:
Commercial Real Estate		-		-		-		1,205		1,321		691
Total Commercial Loans	$	-	$	-	$	-	$	1,205	$	1,321	$	691
Total:	$	23,964	$	26,056	$	461	$	28,874	$	31,582	$	1,517

The following tables summarize the average recorded investments on impaired loans specifically evaluated for impairment and the interest income recognized:

	For the three months ended
	June 30, 2017				June 30, 2016
(In thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
ORIGINATED
Commercial Loans:
Commercial	$	3,931	$	-	$	3,126	$	-
Commercial Real Estate		3,243		1		15,278		-
Agricultural		157		1		18		-
Agricultural Real Estate		1,549		10		610		11
Business Banking		890		3		969		6
Consumer Loans:
Indirect		25		1		9		-
Home Equity		8,205		110		8,223		120
Direct		120		-		-		-
Residential Real Estate Mortgage		6,388		68		6,203		67
Total Originated	$	24,508	$	194	$	34,436	$	204
ACQUIRED
Commercial Loans:
Commercial Real Estate		-		-		1,205		-
Total Acquired	$	-	$	-	$	1,205	$	-
Total Loans	$	24,508	$	194	$	35,641	$	204

	For the six months ended
	June 30, 2017				June 30, 2016
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
ORIGINATED
Commercial Loans:
Commercial	$	3,419	$	-	$	2,972	$	-
Commercial Real Estate		4,584		45		14,264		74
Agricultural		165		1		98		1
Agricultural Real Estate		1,564		21		613		22
Business Banking		788		5		973		12
Consumer Loans:
Indirect		16		1		10		-
Home Equity		8,310		220		8,093		241
Direct		120		-		-		-
Residential Real Estate Mortgage		6,308		129		6,154		134
Total Originated	$	25,274	$	422	$	33,177	$	484
ACQUIRED
Commercial Loans:
Commercial Real Estate		172		-		1,205		-
Total Acquired	$	172	$	-	$	1,205	$	-
Total Loans	$	25,446	$	422	$	34,382	$	484

Financing Receivable Credit Quality by Loan Class

The following tables illustrate the Company’s credit quality by loan class:

As of June 30, 2017
(In thousands)
ORIGINATED
Commercial Credit Exposure By Internally Assigned Grade:	Commercial		Commercial Real Estate		Agricultural		Agricultural Real Estate		Total
Pass	$	708,569	$	1,318,522	$	32,258	$	24,525	$	2,083,874
Special Mention		24,829		31,829		2,520		2,501		61,679
Substandard		28,372		25,196		2,872		4,999		61,439
Doubtful		-		-		5		-		5
Total	$	761,770	$	1,375,547	$	37,655	$	32,025	$	2,206,997
Business Banking Credit Exposure By Internally Assigned Grade:							Business Banking		Total
Non-classified							$	463,897	$	463,897
Classified								12,901		12,901
Total							$	476,798	$	476,798
Consumer Credit Exposure By Payment Activity:			Indirect		Home Equity		Direct		Total
Performing			$	1,610,892	$	451,683	$	63,239	$	2,125,814
Nonperforming				4,154		3,165		118		7,437
Total			$	1,615,046	$	454,848	$	63,357	$	2,133,251
Residential Mortgage Credit Exposure By Payment Activity:							Residential Mortgage		Total
Performing							$	1,082,450	$	1,082,450
Nonperforming								7,143		7,143
Total							$	1,089,593	$	1,089,593

As of June 30, 2017
(In thousands)
ACQUIRED
Commercial Credit Exposure By Internally Assigned Grade:			Commercial		Commercial Real Estate		Total
Pass			$	44,517	$	116,214	$	160,731
Special Mention				5,719		2,175		7,894
Substandard				943		7,014		7,957
Total			$	51,179	$	125,403	$	176,582
Business Banking Credit Exposure By Internally Assigned Grade:					Business Banking		Total
Non-classified					$	42,499	$	42,499
Classified						3,438		3,438
Total					$	45,937	$	45,937
Consumer Credit Exposure By Payment Activity:	Indirect		Home Equity		Direct		Total
Performing	$	3,603	$	45,823	$	2,881	$	52,307
Nonperforming		37		183		12		232
Total	$	3,640	$	46,006	$	2,893	$	52,539
Residential Mortgage Credit Exposure By Payment Activity:					Residential Mortgage		Total
Performing					$	184,198	$	184,198
Nonperforming						2,016		2,016
Total					$	186,214	$	186,214

As of December 31, 2016
(In thousands)
ORIGINATED
Commercial Credit Exposure By Internally Assigned Grade:	Commercial		Commercial Real Estate		Agricultural		Agricultural Real Estate		Total
Pass	$	616,829	$	1,288,409	$	36,762	$	28,912	$	1,970,912
Special Mention		7,750		31,053		25		1,896		40,724
Substandard		28,991		32,327		1,124		1,614		64,056
Doubtful		-		-		5		-		5
Total	$	653,570	$	1,351,789	$	37,916	$	32,422	$	2,075,697
Business Banking Credit Exposure By Internally Assigned Grade:							Business Banking		Total
Non-classified							$	458,864	$	458,864
Classified								13,823		13,823
Total							$	472,687	$	472,687
Consumer Credit Exposure By Payment Activity:			Indirect		Home Equity		Direct		Total
Performing			$	1,562,031	$	453,278	$	62,977	$	2,078,286
Nonperforming				4,644		3,379		127		8,150
Total			$	1,566,675	$	456,657	$	63,104	$	2,086,436
Residential Mortgage Credit Exposure By Payment Activity:							Residential Mortgage		Total
Performing							$	1,055,055	$	1,055,055
Nonperforming								8,088		8,088
Total							$	1,063,143	$	1,063,143

As of December 31, 2016
(In thousands)
ACQUIRED
Commercial Credit Exposure By Internally Assigned Grade:			Commercial		Commercial Real Estate		Total
Pass			$	48,194	$	127,660	$	175,854
Special Mention				76		1,231		1,307
Substandard				1,177		7,193		8,370
Doubtful				-		1,205		1,205
Total			$	49,447	$	137,289	$	186,736
Business Banking Credit Exposure By Internally Assigned Grade:					Business Banking		Total
Non-classified					$	47,347	$	47,347
Classified						3,535		3,535
Total					$	50,882	$	50,882
Consumer Credit Exposure By Payment Activity:	Indirect		Home Equity		Direct		Total
Performing	$	8,646	$	50,860	$	3,165	$	62,671
Nonperforming		47		267		20		334
Total	$	8,693	$	51,127	$	3,185	$	63,005
Residential Mortgage Credit Exposure By Payment Activity:					Residential Mortgage		Total
Performing					$	196,508	$	196,508
Nonperforming						2,963		2,963
Total					$	199,471	$	199,471

Troubled Debt Restructurings on Financing Receivables

The following tables illustrate the recorded investment and number of modifications for modified loans, including the recorded investment in the loans prior to a modification and the recorded investment in the loans after restructuring:

	Three months ended June 30, 2017
(Dollars in thousands)	Number of contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial
Commercial		1	$	3,300	$	3,239
Business Banking		1		337		333
Total Commercial		2		3,637		3,572
Consumer
Indirect		3		32		31
Home Equity		1		78		78
Direct		1		120		120
Total Consumer		5		230		229
Residential Real Estate		4		346		346
Total Troubled Debt Restructurings		11	$	4,213	$	4,147

	Three months ended June 30, 2016
	Number of contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Consumer
Home Equity		2	$	74	$	73
Total Consumer		2		74		73
Residential Real Estate		2		152		151
Total Troubled Debt Restructurings		4	$	226	$	224

	Six months ended June 30, 2017
(Dollars in thousands)	Number of contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial
Commercial		1	$	3,300	$	3,239
Business Banking		1		337		333
Total Commercial		2		3,637		3,572
Consumer
Indirect		3		32		31
Home Equity		4		185		192
Direct		1		120		120
Total Consumer		8		337		343
Residential Real Estate		6		548		554
Total Troubled Debt Restructurings		16	$	4,522	$	4,469

	Six months ended June 30, 2016
	Number of contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Consumer
Home Equity		14	$	1,109	$	1,017
Total Consumer		14		1,109		1,017
Residential Real Estate		6		683		578
Total Troubled Debt Restructurings		20	$	1,792	$	1,595

TDRs occurring during the three and six months ended June 30, 2017 and 2016 were due to the reduction in the interest rate or extension of the term. The following table illustrates the recorded investment and number of modifications for TDRs where a concession has been made and subsequently defaulted during the period:

	Three months ended June 30, 2017				Three months ended June 30, 2016
(Dollars in thousands)	Number of contracts		Recorded Investment		Number of contracts		Recorded Investment
Commercial
Business Banking		1	$	329		1	$	67
Total Commercial		1		329		1		67
Consumer
Indirect		1		14		-		-
Home Equity		13		589		10		520
Total Consumer		14		603		10		520
Residential Real Estate		4		251		6		664
Total Troubled Debt Restructurings		19	$	1,183		17	$	1,251

	Six months ended June 30, 2017				Six months ended June 30, 2016
	Number of contracts		Recorded Investment		Number of contracts		Recorded Investment
Commercial
Commercial		1	$	145		-	$	-
Business Banking		1		329		1		67
Total Commercial		2		474		1		67
Consumer
Indirect		2		19		-		-
Home Equity		22		1,101		14		898
Total Consumer		24		1,120		14		898
Residential Real Estate		8		419		10		873
Total Troubled Debt Restructurings		34	$	2,013		25	$	1,838