Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 3. LOANS AND ALLOWANCE FOR LOAN LOSSES Loans originated for investment are stated at their principal amount outstanding adjusted for partial charge-offs, the allowance, and net deferred loan fees and costs. Interest income on loans is accrued over the term of the loans primarily using the simple interest method based on the principal balance outstanding. Interest is not accrued on loans where collectability is uncertain. Accrued interest is presented separately in the consolidated balance sheet. Loan origination fees and certain direct costs incurred to extend credit are deferred and amortized over the term of the loan or loan commitment period as an adjustment to the related loan yield. Acquired loans are those purchased in the Firstbank merger. These loans were recorded at estimated fair value at the merger date with no carryover of the related allowance. The acquired loans were segregated between those considered to be performing (“acquired non-impaired loans”) and those with evidence of credit deterioration (“acquired impaired loans”). Acquired loans are considered impaired if there is evidence of credit deterioration and if it is probable, at acquisition, all contractually required payments will not be collected. Acquired loans restructured after acquisition are not considered or reported as troubled debt restructurings if the loans evidenced credit deterioration as of the merger date and are accounted for in pools. The fair value estimates for acquired loans are based on expected prepayments and the amount and timing of discounted expected principal, interest and other cash flows. Credit discounts representing the principal losses expected over the life of the loan are also a component of the initial fair value. In determining the merger date fair value of acquired impaired loans, and in subsequent accounting, we have generally aggregated acquired commercial and consumer loans into pools of loans with common risk characteristics. The difference between the fair value of an acquired non-impaired loan and contractual amounts due at the merger date is accreted into income over the estimated life of the loan. Contractually required payments represent the total undiscounted amount of all uncollected principal and interest payments. Acquired non-impaired loans are placed on nonaccrual status and reported as nonperforming or past due using the same criteria applied to the originated loan portfolio. The excess of an acquired impaired loan’s undiscounted contractually required payments over the amount of its undiscounted cash flows expected to be collected is referred to as the non-accretable difference. The non-accretable difference, which is neither accreted into income nor recorded on the consolidated balance sheet, reflects estimated future credit losses and uncollectible contractual interest expected to be incurred over the life of the acquired impaired loan. The excess cash flows expected to be collected over the carrying amount of the acquired loan is referred to as the accretable yield. This amount is accreted into interest income over the remaining life of the acquired loans or pools using the level yield method. The accretable yield is affected by changes in interest rate indices for variable rate loans, changes in prepayment speed assumptions and changes in expected principal and interest payments over the estimated lives of the acquired impaired loans. We evaluate quarterly the remaining contractual required payments receivable and estimate cash flows expected to be collected over the lives of the impaired loans. Contractually required payments receivable may increase or decrease for a variety of reasons, for example, when the contractual terms of the loan agreement are modified, when interest rates on variable rate loans change, or when principal and/or interest payments are received. Cash flows expected to be collected on acquired impaired loans are estimated by incorporating several key assumptions similar to the initial estimate of fair value. These key assumptions include probability of default, loss given default, and the amount of actual prepayments after the merger date. Prepayments affect the estimated lives of loans and could change the amount of interest income, and possibly principal, expected to be collected. In re-forecasting future estimated cash flows, credit loss expectations are adjusted as necessary. The adjustments are based, in part, on actual loss severities recognized for each loan type, as well as changes in the probability of default. For periods in which estimated cash flows are not re-forecasted, the prior reporting period’s estimated cash flows are adjusted to reflect the actual cash received and credit events that transpired during the current reporting period. Increases in expected cash flows of acquired impaired loans subsequent to the merger date are recognized prospectively through adjustments of the yield on the loans or pools over their remaining lives, while decreases in expected cash flows are recognized as impairment through a provision for loan losses and an increase in the allowance. Our total loans at March 31, 2016 were $2.30 billion compared to $2.28 billion at December 31, 2015, an increase of $17.9 million, or 0.8%. The components of our loan portfolio disaggregated by class of loan within the loan portfolio segments at March 31, 2016 and December 31, 2015, and the percentage change in loans from the end of 2015 to the end of the first quarter of 2016, are as follows: Percent March 31, 2016 December 31, 2015 Increase Balance % Balance % (Decrease) Originated loans Commercial: Commercial and industrial $ 613,570,000 36.4 % $ 577,872,000 35.7 % 6.2 % Vacant land, land development, and residential construction 28,451,000 1.7 30,138,000 1.9 (5.6 ) Real estate – owner occupied 334,948,000 19.8 330,798,000 20.5 1.3 Real estate – non-owner occupied 549,226,000 32.5 520,754,000 32.2 5.5 Real estate – multi-family and residential rental 36,582,000 2.2 33,954,000 2.1 7.7 Total commercial 1,562,777,000 92.6 1,493,516,000 92.4 4.6 Retail: Home equity and other 68,342,000 4.1 67,816,000 4.2 0.8 1-4 family mortgages 56,357,000 3.3 55,255,000 3.4 2.0 Total retail 124,699,000 7.4 123,071,000 7.6 1.3 Total originated loans $ 1,687,476,000 100.0 % $ 1,616,587,000 100.0 % 4.4 % Percent March 31, 2016 December 31, 2015 Increase Balance % Balance % (Decrease) Acquired loans Commercial: Commercial and industrial $ 101,042,000 16.6 % $ 118,431,000 17.9 % (14.7% ) Vacant land, land development, and residential construction 11,179,000 1.9 14,982,000 2.3 (25.4 ) Real estate – owner occupied 106,714,000 17.5 115,121,000 17.4 (7.3 ) Real estate – non-owner occupied 116,787,000 19.2 123,597,000 18.7 (5.5 ) Real estate – multi-family and residential rental 75,951,000 12.5 81,049,000 12.3 (6.3 ) Total commercial 411,673,000 67.7 453,180,000 68.6 (9.2 ) Retail: Home equity and other 67,341,000 11.1 72,830,000 11.0 (7.5 ) 1-4 family mortgages 129,178,000 21.2 135,130,000 20.4 (4.4 ) Total retail 196,519,000 32.3 207,960,000 31.4 (5.5 ) Total acquired loans $ 608,192,000 100.0 % $ 661,140,000 100.0 % (8.0% ) Percent March 31, 2016 December 31, 2015 Increase Balance % Balance % (Decrease) Total loans Commercial: Commercial and industrial $ 714,612,000 31.1 % $ 696,303,000 30.6 % 2.6 % Vacant land, land development, and residential construction 39,630,000 1.7 45,120,000 2.0 (12.2 ) Real estate – owner occupied 441,662,000 19.3 445,919,000 19.6 (1.0 ) Real estate – non-owner occupied 666,013,000 29.0 644,351,000 28.3 3.4 Real estate – multi-family and residential rental 112,533,000 4.9 115,003,000 5.0 (2.1 ) Total commercial 1,974,450,000 86.0 1,946,696,000 85.5 1.4 Retail: Home equity and other 135,683,000 5.9 140,646,000 6.2 (3.5 ) 1-4 family mortgages 185,535,000 8.1 190,385,000 8.3 (2.5 ) Total retail 321,218,000 14.0 331,031,000 14.5 (3.0 ) Total loans $ 2,295,668,000 100.0 % $ 2,277,727,000 100.0 % 0.8 % The total contractually required payments due on and carrying value of acquired impaired loans were $21.3 million and $10.1 million, respectively, as of March 31, 2016. The total contractually required payments due on and carrying value of acquired impaired loans were $24.6 million and $13.1 million, respectively, as of December 31, 2015. Changes in the accretable yield for acquired impaired loans for the three months ended March 31, 2016 and March 31, 2015 were as follows: Balance at December 31, 2015 $ 5,193,000 Additions 21,000 Accretion income (680,000 ) Net reclassification from nonaccretable to accretable 2,372,000 Reductions (1) (587,000 ) Balance at March 31, 2016 $ 6,319,000 Balance at December 31, 2014 $ 4,998,000 Additions 0 Accretion income (646,000 ) Net reclassification from nonaccretable to accretable 941,000 Reductions (1) (52,000 ) Balance at March 31, 2015 $ 5,241,000 (1) Reductions primarily reflect the result of exit events, including loan payoffs and charge-offs. Nonperforming originated loans as of March 31, 2016 and December 31, 2015 were as follows: March 31, December 31, 2016 2015 Loans past due 90 days or more still accruing interest $ 0 $ 0 Nonaccrual loans 1,702,000 1,954,000 Total nonperforming originated loans $ 1,702,000 $ 1,954,000 Nonperforming acquired loans as of March 31, 2016 and December 31, 2015 were as follows: March 31, December 31, 2016 2015 Loans past due 90 days or more still accruing interest $ 0 $ 5,000 Nonaccrual loans 3,140,000 3,485,000 Total nonperforming acquired loans $ 3,140,000 $ 3,490,000 The recorded principal balance of nonperforming loans was as follows: March 31, December 31, 2016 2015 Commercial: Commercial and industrial $ 486,000 $ 458,000 Vacant land, land development, and residential construction 140,000 155,000 Real estate – owner occupied 1,641,000 1,797,000 Real estate – non-owner occupied 51,000 79,000 Real estate – multi-family and residential rental 81,000 157,000 Total commercial 2,399,000 2,646,000 Retail: Home equity and other 611,000 771,000 1-4 family mortgages 1,832,000 2,027,000 Total retail 2,443,000 2,798,000 Total nonperforming loans $ 4,842,000 $ 5,444,000 Acquired impaired loans are not reported as nonperforming loans based on acquired impaired loan accounting. Acquired non-impaired loans are placed on nonaccrual status and reported as nonperforming or past due using the same criteria applied to the originated loan portfolio. An age analysis of past due loans is as follows as of March 31, 2016: 30 – 59 Days Past Due 60 – 89 Days Past Due Greater Than 89 Days Past Due Total Past Due Current Total Loans Recorded Balance > 89 Days and Accruing Originated loans Commercial: Commercial and industrial $ 0 $ 0 $ 0 $ 0 $ 613,570,000 $ 613,570,000 $ 0 Vacant land, land development, and residential construction 0 0 0 0 28,451,000 28,451,000 0 Real estate – owner occupied 425,000 0 4,000 429,000 334,519,000 334,948,000 0 Real estate – non-owner occupied 0 0 0 0 549,226,000 549,226,000 0 Real estate – multi-family and residential rental 0 0 0 0 36,582,000 36,582,000 0 Total commercial 425,000 0 4,000 429,000 1,562,348,000 1,562,777,000 0 Retail: Home equity and other 99,000 0 2,000 101,000 68,241,000 68,342,000 0 1-4 family mortgages 0 17,000 351,000 368,000 55,989,000 56,357,000 0 Total retail 99,000 17,000 353,000 469,000 124,230,000 124,699,000 0 Total past due loans $ 524,000 $ 17,000 $ 357,000 $ 898,000 $ 1,686,578,000 $ 1,687,476,000 $ 0 Greater Recorded 30 – 59 60 – 89 Than 89 Balance > 89 Days Days Days Total Total Days and Past Due Past Due Past Due Past Due Current Loans Accruing Acquired loans Commercial: Commercial and industrial $ 20,000 $ 17,000 $ 383,000 $ 420,000 $ 100,622,000 $ 101,042,000 $ 0 Vacant land, land development, and residential construction 0 0 0 0 11,179,000 11,179,000 0 Real estate – owner occupied 269,000 0 648,000 917,000 105,797,000 106,714,000 0 Real estate – non-owner occupied 0 0 498,000 498,000 116,289,000 116,787,000 0 Real estate – multi-family and residential rental 15,000 0 65,000 80,000 75,871,000 75,951,000 0 Total commercial 304,000 17,000 1,594,000 1,915,000 409,758,000 411,673,000 0 Retail: Home equity and other 353,000 134,000 19,000 506,000 66,835,000 67,341,000 0 1-4 family mortgages 979,000 233,000 381,000 1,593,000 127,585,000 129,178,000 0 Total retail 1,332,000 367,000 400,000 2,099,000 194,420,000 196,519,000 0 Total past due loans $ 1,636,000 $ 384,000 $ 1,994,000 $ 4,014,000 $ 604,178,000 $ 608,192,000 $ 0 An age analysis of past due loans is as follows as of December 31, 2015: Greater Recorded 30 – 59 60 – 89 Than 89 Balance > 89 Days Days Days Total Total Days and Past Due Past Due Past Due Past Due Current Loans Accruing Originated loans Commercial: Commercial and industrial $ 0 $ 0 $ 0 $ 0 $ 577,872,000 $ 577,872,000 $ 0 Vacant land, land development, and residential construction 0 0 0 0 30,138,000 30,138,000 0 Real estate – owner occupied 432,000 0 9,000 441,000 330,357,000 330,798,000 0 Real estate – non-owner occupied 0 0 0 0 520,754,000 520,754,000 0 Real estate – multi-family and residential rental 0 0 0 0 33,954,000 33,954,000 0 Total commercial 432,000 0 9,000 441,000 1,493,075,000 1,493,516,000 0 Retail: Home equity and other 186,000 108,000 0 294,000 67,522,000 67,816,000 0 1-4 family mortgages 107,000 95,000 356,000 558,000 54,697,000 55,255,000 0 Total retail 293,000 203,000 356,000 852,000 122,219,000 123,071,000 0 Total past due loans $ 725,000 $ 203,000 $ 365,000 $ 1,293,000 $ 1,615,294,000 $ 1,616,587,000 $ 0 Greater Recorded 30 – 59 60 – 89 Than 89 Balance > 89 Days Days Days Total Total Days and Past Due Past Due Past Due Past Due Current Loans Accruing Acquired Loans Commercial: Commercial and industrial $ 0 $ 5,000 $ 541,000 $ 546,000 $ 117,885,000 $ 118,431,000 $ 0 Vacant land, land development, and residential construction 27,000 0 0 27,000 14,955,000 14,982,000 0 Real estate – owner occupied 323,000 425,000 1,142,000 1,890,000 113,231,000 115,121,000 0 Real estate – non-owner occupied 53,000 703,000 79,000 835,000 122,762,000 123,597,000 0 Real estate – multi-family and residential rental 223,000 54,000 0 277,000 80,772,000 81,049,000 0 Total commercial 626,000 1,187,000 1,762,000 3,575,000 449,605,000 453,180,000 0 Retail: Home equity and other 395,000 44,000 28,000 467,000 72,363,000 72,830,000 5,000 1-4 family mortgages 960,000 354,000 416,000 1,730,000 133,400,000 135,130,000 0 Total retail 1,355,000 398,000 444,000 2,197,000 205,763,000 207,960,000 5,000 Total past due loans $ 1,981,000 $ 1,585,000 $ 2,206,000 $ 5,772,000 $ 655,368,000 $ 661,140,000 $ 5,000 Impaired originated loans as of March 31, 2016, and average originated impaired loans for the three months ended March 31, 2016, were as follows: First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With no related allowance recorded: Commercial: Commercial and industrial $ 1,888,000 $ 1,888,000 $ 1,695,000 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 285,000 69,000 287,000 Real estate – non-owner occupied 5,659,000 5,659,000 5,678,000 Real estate – multi-family and residential rental 0 0 0 Total commercial 7,832,000 7,616,000 7,660,000 Retail: Home equity and other 19,000 9,000 7,000 1-4 family mortgages 1,222,000 573,000 615,000 Total retail 1,241,000 582,000 622,000 Total with no related allowance recorded $ 9,073,000 $ 8,198,000 $ 8,282,000 First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With an allowance recorded: Commercial: Commercial and industrial $ 284,000 $ 235,000 $ 78,000 $ 270,000 Vacant land, land development and residential construction 2,010,000 1,640,000 73,000 1,648,000 Real estate – owner occupied 5,852,000 1,300,000 238,000 1,307,000 Real estate – non-owner occupied 4,754,000 4,754,000 188,000 4,798,000 Real estate – multi-family and residential rental 1,006,000 1,006,000 335,000 1,017,000 Total commercial 13,906,000 8,935,000 912,000 9,040,000 Retail: Home equity and other 511,000 470,000 140,000 516,000 1-4 family mortgages 165,000 126,000 35,000 127,000 Total retail 676,000 596,000 175,000 643,000 Total with an allowance recorded $ 14,582,000 $ 9,531,000 $ 1,087,000 $ 9,683,000 Total impaired loans: Commercial $ 21,738,000 $ 16,551,000 $ 912,000 $ 16,700,000 Retail 1,917,000 1,178,000 175,000 1,265,000 Total impaired loans $ 23,655,000 $ 17,729,000 $ 1,087,000 $ 17,965,000 Impaired acquired loans as of March 31, 2016, and average impaired acquired loans for the three months ended March 31, 2016, were as follows: First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With no related allowance recorded: Commercial: Commercial and industrial $ 1,456,000 $ 1,430,000 $ 1,462,000 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 1,885,000 1,669,000 1,811,000 Real estate – non-owner occupied 773,000 772,000 826,000 Real estate – multi-family and residential rental 405,000 282,000 343,000 Total commercial 4,519,000 4,153,000 4,442,000 Retail: Home equity and other 394,000 277,000 293,000 1-4 family mortgages 1,609,000 1,274,000 1,411,000 Total retail 2,003,000 1,551,000 1,704,000 Total with no related allowance recorded $ 6,522,000 $ 5,704,000 $ 6,146,000 First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With an allowance recorded: Commercial: Commercial and industrial $ 391,000 $ 379,000 $ 102,000 $ 378,000 Vacant land, land development and residential construction 0 0 0 0 Real estate – owner occupied 50,000 50,000 4,000 50,000 Real estate – non-owner occupied 0 0 0 0 Real estate – multi-family and residential rental 20,000 20,000 1,000 22,000 Total commercial 461,000 449,000 107,000 450,000 Retail: Home equity and other 0 0 0 0 1-4 family mortgages 0 0 0 88,000 Total retail 0 0 0 88,000 Total with an allowance recorded $ 461,000 $ 449,000 $ 107,000 $ 538,000 Total impaired loans: Commercial $ 4,980,000 $ 4,602,000 $ 107,000 $ 4,892,000 Retail 2,003,000 1,551,000 0 1,792,000 Total impaired loans $ 6,983,000 $ 6,153,000 $ 107,000 $ 6,684,000 Impaired originated loans as of December 31, 2015, and average impaired originated loans for the three months ended March 31, 2015, were as follows: First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With no related allowance recorded: Commercial: Commercial and industrial $ 1,509,000 $ 1,501,000 $ 1,550,000 Vacant land, land development and residential construction 0 0 203,000 Real estate – owner occupied 712,000 505,000 1,950,000 Real estate – non-owner occupied 5,696,000 5,696,000 662,000 Real estate – multi-family and residential rental 0 0 313,000 Total commercial 7,917,000 7,702,000 4,678,000 Retail: Home equity and other 14,000 5,000 191,000 1-4 family mortgages 1,328,000 657,000 547,000 Total retail 1,342,000 662,000 738,000 Total with no related allowance recorded $ 9,259,000 $ 8,364,000 $ 5,416,000 First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With an allowance recorded: Commercial: Commercial and industrial $ 352,000 $ 305,000 $ 165,000 $ 5,196,000 Vacant land, land development and residential construction 2,017,000 1,655,000 245,000 2,000,000 Real estate – owner occupied 5,867,000 1,314,000 242,000 15,596,000 Real estate – non-owner occupied 4,841,000 4,841,000 201,000 15,816,000 Real estate – multi-family and residential rental 1,028,000 1,028,000 365,000 1,354,000 Total commercial 14,105,000 9,143,000 1,218,000 39,962,000 Retail: Home equity and other 600,000 562,000 209,000 125,000 1-4 family mortgages 165,000 128,000 47,000 1,151,000 Total retail 765,000 690,000 256,000 1,276,000 Total with an allowance recorded $ 14,870,000 $ 9,833,000 $ 1,474,000 $ 41,238,000 Total impaired loans: Commercial $ 22,022,000 $ 16,845,000 $ 1,218,000 $ 44,640,000 Retail 2,107,000 1,352,000 256,000 2,014,000 Total impaired loans $ 24,129,000 $ 18,197,000 $ 1,474,000 $ 46,654,000 Impaired acquired loans as of December 31, 2015, and average impaired acquired loans for the three months ended March 31, 2015, were as follows: First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With no related allowance recorded: Commercial: Commercial and industrial $ 1,528,000 $ 1,494,000 $ 1,267,000 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 2,233,000 1,952,000 160,000 Real estate – non-owner occupied 880,000 880,000 317,000 Real estate – multi-family and residential rental 452,000 404,000 714,000 Total commercial 5,093,000 4,730,000 2,458,000 Retail: Home equity and other 471,000 310,000 504,000 1-4 family mortgages 1,804,000 1,548,000 894,000 Total retail 2,275,000 1,858,000 1,398,000 Total with no related allowance recorded $ 7,368,000 $ 6,588,000 $ 3,856,000 First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With an allowance recorded: Commercial: Commercial and industrial $ 383,000 $ 376,000 $ 102,000 $ 57,000 Vacant land, land development and residential construction 0 0 0 0 Real estate – owner occupied 51,000 51,000 4,000 1,464,000 Real estate – non-owner occupied 0 0 0 0 Real estate – multi-family and residential rental 23,000 23,000 0 14,000 Total commercial 457,000 450,000 106,000 1,535,000 Retail: Home equity and other 0 0 0 0 1-4 family mortgages 175,000 175,000 6,000 142,000 Total retail 175,000 175,000 6,000 142,000 Total with an allowance recorded $ 632,000 $ 625,000 $ 112,000 $ 1,677,000 Total impaired loans: Commercial $ 5,550,000 $ 5,180,000 $ 106,000 $ 3,993,000 Retail 2,450,000 2,033,000 6,000 1,540,000 Total impaired loans $ 8,000,000 $ 7,213,000 $ 112,000 $ 5,533,000 Impaired loans for which no allocation of the allowance for loan losses has been made generally reflect situations whereby the loans have been charged-down to estimated collateral value. Interest income recognized on accruing troubled debt restructurings totaled $0.3 million and $0.4 million during the first quarter of 2016 and 2015, respectively. No interest income was recognized on nonaccrual loans during either the first quarter of 2016 or 2015. Credit Quality Indicators. Credit quality indicators were as follows as of March 31, 2016: Originated loans Commercial credit exposure – credit risk profiled by internal credit risk grades: Commercial and Industrial Commercial Vacant Land, Land Development, and Residential Construction Commercial Real Estate - Owner Occupied Commercial Real Estate - Non-Owner Occupied Commercial Real Estate - Multi-Family and Residential Rental Internal credit risk grade groupings: Grades 1 – 4 $ 417,049,000 $ 16,694,000 $ 231,625,000 $ 434,645,000 $ 19,947,000 Grades 5 – 7 196,431,000 11,617,000 101,552,000 114,581,000 15,629,000 Grades 8 – 9 90,000 140,000 1,771,000 0 1,006,000 Total commercial $ 613,570,000 $ 28,451,000 $ 334,948,000 $ 549,226,000 $ 36,582,000 Retail credit exposure – credit risk profiled by collateral type: Retail Retail Home Equity 1-4 Family and Other Mortgages Total retail $ 68,342,000 $ 56,357,000 Acquired loans Commercial credit exposure – credit risk profiled by internal credit risk grades: Commercial and Industrial Commercial Vacant Land, Land Development, and Residential Construction Commercial Real Estate - Owner Occupied Commercial Real Estate - Non-Owner Occupied Commercial Real Estate - Multi-Family and Residential Rental Internal credit risk grade groupings: Grades 1 – 4 $ 51,717,000 $ 2,892,000 $ 43,806,000 $ 66,096,000 $ 42,159,000 Grades 5 – 7 46,749,000 7,811,000 58,971,000 48,792,000 33,071,000 Grades 8 – 9 2,576,000 476,000 3,937,000 1,899,000 721,000 Total commercial $ 101,042,000 $ 11,179,000 $ 106,714,000 $ 116,787,000 $ 75,951,000 Retail credit exposure – credit risk profiled by collateral type: Retail Retail Home Equity 1-4 Family and Other Mortgages Total retail $ 67,341,000 $ 129,178,000 Credit quality indicators were as follows as of December 31, 2015: Originated loans Commercial credit exposure – credit risk profiled by internal credit risk grades: Commercial and Industrial Commercial Vacant Land, Land Development, and Residential Construction Commercial Real Estate - Owner Occupied Commercial Real Estate - Non-Owner Occupied Commercial Real Estate - Multi-Family and Residential Rental Internal credit risk grade groupings: Grades 1 – 4 $ 417,120,000 $ 18,118,000 $ 230,629,000 $ 400,350,000 $ 19,121,000 Grades 5 – 7 160,454,000 10,365,000 98,332,000 120,404,000 13,806,000 Grades 8 – 9 298,000 1,655,000 1,837,000 0 1,027,000 Total commercial $ 577,872,000 $ 30,138,000 $ 330,798,000 $ 520,754,000 $ 33,954,000 Retail credit exposure – credit risk profiled by collateral type: Retail Retail Home Equity 1-4 Family and Other Mortgages Total retail $ 67,816,000 $ 55,255,000 Acquired loans Commercial credit exposure – credit risk profiled by internal credit risk grades: Commercial and Industrial Commercial Vacant Land, Land Development, and Residential Construction Commercial Real Estate - Owner Occupied Commercial Real Estate - Non-Owner Occupied Commercial Real Estate - Multi-Family and Residential Rental Internal credit risk grade groupings: Grades 1 – 4 $ 67,978,000 $ 3,095,000 $ 45,807,000 $ 71,197,000 $ 44,763,000 Grades 5 – 7 47,589,000 11,364,000 63,563,000 50,066,000 35,288,000 Grades 8 – 9 2,864,000 523,000 5,751,000 2,334,000 998,000 Total commercial $ 118,431,000 $ 14,982,000 $ 115,121,000 $ 123,597,000 $ 81,049,000 Retail credit exposure – credit risk profiled by collateral type: Retail Retail Home Equity 1-4 Family and Other Mortgages Total retail $ 72,830,000 $ 135,130,000 All commercial loans are graded using the following criteria: Grade 1. Excellent credit rating that contain very little, if any, risk of loss. Grade 2. Strong sources of repayment and have low repayment risk. Grade 3. Good sources of repayment and have limited repayment risk. Grade 4. Adequate sources of repayment and acceptable repayment risk; however, characteristics are present that render the credit more vulnerable to a negative event. Grade 5. Marginally acceptable sources of repayment and exhibit defined weaknesses and negative characteristics. Grade 6. Well defined weaknesses which may include negative current cash flow, high leverage, or operating losses. Generally, if the credit does not stabilize or if further deterioration is observed in the near term, the loan will likely be downgraded and placed on the Watch List (i.e., list of lending relationships that receive increased scrutiny and review by the Board of Directors and senior management). Grade 7. Defined weaknesses or negative trends that merit close monitoring through Watch List status. Grade 8. Inadequately protected by current sound net worth, paying capacity of the obligor, or pledged collateral, resulting in a distinct possibility of loss requiring close monitoring through Watch List status. Grade 9. Vital weaknesses exist where collection of principal is highly questionable. Grade 10. Considered uncollectable and of such little value that continuance as an asset is not warranted. The primary risk elements with respect to commercial loans are the financial condition of the borrower, the sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers and employ a disciplined and formalized review of the existence of collateral and its value. The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments. We have a reporting system that monitors past due loans and have adopted policies to pursue creditor’s rights in order to preserve our collateral position. Activity in the allowance for loan losses and the recorded investments in originated loans as of and during the three months ended March 31, 2016 are as follows: Commercial Retail Loans Loans Unallocated Total Allowance for loan losses: Beginning balance $ 13,672,000 $ 1,421,000 $ 140,000 $ 15,233,000 Provision for loan losses 94,000 503,000 74,000 671,000 Charge-offs (89,000 ) (386,000 ) 0 (475,000 ) Recoveries 247,000 296,000 0 543,000 Ending balance $ 13,924,000 $ 1,834,000 $ 214,000 $ 15,972,000 Ending balance: individually evaluated for impairment $ 913,000 $ 175,000 $ 0 $ 1,088,000 Ending balance: collectively evaluated for impairment $ 13,011,000 $ 1,659,000 $ 214,000 $ 14,884,000 Total loans: Ending balance $ 1,562,777,000 $ 124,699,000 $ 1,687,476,000 Ending balance: individually evaluated for impairment $ 16,551,000 $ 1,178,000 $ 17,729,000 Ending balance: collectively evaluated for impairment $ 1,546,226,000 $ 123,521,000 $ 1,669,747,000 Activity in the allowance for loan losses for acquired loans during the three months ended March 31, 2016 is as follows: Commercial Retail Loans Loans Unallocated Total Allowance for loan losses: Beginning balance $ 420,000 $ 28,000 $ 0 $ 448,000 Provision for loan losses (110,000 ) 39,000 0 (71,000 ) Charge-offs 0 0 0 0 Recoveries (44,000 ) (43,000 ) 0 (87,000 ) Ending balance $ 266,000 $ 24,000 $ 0 $ 290,000 The negative loan recoveries reflected for acquired loans during the first three months of 2016 resulted from reversals of prior-period recoveries associated with certain purchased credit impaired (“PCI”) loans that were subject to pre-acquisition charge-offs. Post-acquisition payments received on these PCI loans were incorrectly reported as loan loss recoveries in prior periods; during the first quarter of 2016, these recoveries were reversed and properly reported as recovery income if associated with specifically reviewed PCI loans or retained gains if associated with PCI-pooled loans. Activity in the allowance for loan losses and the recorded investments in originated loans as of and during the three months ended March 31, 2015 are as follows: Commercial Retail Loans Loans Unallocated Total Allowance for loan losses: Beginning balance $ 17,736,000 $ 1,487,000 $ 76,000 $ 19,299,000 Provision for loan losses (499,000 ) 79,000 (37,000 ) (457,000 ) Charge-offs (78,000 ) (363,000 ) 0 (441,000 ) Recoveries 1,818,000 32,000 0 1,850,000 Ending balance $ 18,977,000 $ 1,235,000 $ 39,000 $ 20,251,000 Ending balance: individually evaluated for impairment $ 10,158,000 $ 208,000 $ 0 $ 10,366,000 Ending balance: collectively evaluated for impairment $ 8,819,000 $ 1,027,000 $ 39,000 $ 9,885,000 Total loans: Ending balance $ 1,230,841,000 $ 97,872,000 $ 1,328,713,000 Ending balance: individually evaluated for impairment $ 44,257,000 $ 1,193,000 $ 45,450,000 Ending balance: collectively evaluated for impairment $ 1,186,584,000 $ 96,679,000 $ 1,283,263,000 Activity in the allowance for loan losses for acquired loans during the three months ended March 31, 2015 is as follows: Commercial Retail Loans Loans Unallocated Total Allowance for loan losses: Beginning balance $ 681,000 $ 61,000 $ 0 $ 742,000 Provision for loan losses (60,000 ) 117,000 0 57,000 Charge-offs 0 (7,000 ) 0 (7,000 ) Recoveries 1,000 6,000 0 7,000 Ending balance $ 622,000 $ 177,000 $ 0 $ 799,000 In accordance with acquisition accounting rules, acquired loans were recorded at fair value at the merger date and the prior allowance was eliminated. Loans modified as troubled debt restructurings during the three months ended March 31, 2016 were as follows: Pre- Post- Modification Modification Recorded Recorded Number of Principal Principal Contracts Balance Balance Originated loans Commercial: Commercial and industrial 1 $ 20,000 $ 20,000 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 0 0 0 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 0 0 0 Total originated commercial 1 20,000 20,000 Retail: Home equity and other 0 0 0 1-4 family mortgages 0 0 0 Total originated retail 0 0 0 Total originated loans 1 $ 20,000 $ 20,000 Acquired loans Commercial: Commercial and industrial 0 $ 0 $ 0 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 0 0 0 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 0 0 0 Total acquired commercial 0 0 0 Retail: Home equity and other 1 26,000 26,000 1-4 family mortgages 1 19,000 19,000 Tota |