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 Acquired loans are those purchased in the Firstbank merger. These loans were recorded at estimated fair value at the merger date with no not not 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 not 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, 2018 $2.55 $2.56 December 31, 2017, $7.3 0.3%. March 31, 2018 December 31, 2017, 2017 first 2018, Percent March 31, 2018 December 31, 2017 Increase Balance % Balance % (Decrease) Originated loans Commercial: Commercial and industrial $ 675,188,000 30.8 % $ 680,805,000 31.3 % (0.8 %) Vacant land, land development, and residential construction 25,514,000 1.2 23,682,000 1.1 7.7 Real estate – owner occupied 468,777,000 21.4 456,065,000 21.0 2.8 Real estate – non-owner occupied 715,725,000 32.6 708,824,000 32.7 1.0 Real estate – multi-family and residential rental 61,762,000 2.8 64,852,000 3.0 (4.8 ) Total commercial 1,946,966,000 88.8 1,934,228,000 89.1 0.7 Retail: Home equity and other 65,604,000 3.0 69,675,000 3.2 (5.8 ) 1-4 family mortgages 179,281,000 8.2 166,054,000 7.7 8.0 Total retail 244,885,000 11.2 235,729,000 10.9 3.9 Total originated loans $ 2,191,851,000 100.0 % $ 2,169,957,000 100.0 % 1.0 % Percent March 31, 2018 December 31, 2017 Increase Balance % Balance % (Decrease) Acquired loans Commercial: Commercial and industrial $ 64,617,000 18.0 % $ 72,959,000 18.8 % (11.4 %) Vacant land, land development, and residential construction 5,924,000 1.6 6,191,000 1.6 (4.3 ) Real estate – owner occupied 62,375,000 17.5 70,263,000 18.1 (11.2 ) Real estate – non-owner occupied 78,481,000 21.8 82,861,000 21.3 (5.3 ) Real estate – multi-family and residential rental 34,666,000 9.6 37,066,000 9.5 (6.5 ) Total commercial 246,063,000 68.5 269,340,000 69.3 (8.6 ) Retail: Home equity and other 27,575,000 7.7 30,750,000 7.9 (10.3 ) 1-4 family mortgages 85,715,000 23.8 88,505,000 22.8 (3.2 ) Total retail 113,290,000 31.5 119,255,000 30.7 (5.0 ) Total acquired loans $ 359,353,000 100.0 % $ 388,595,000 100.0 % (7.5 %) Percent March 31, 2018 December 31, 2017 Increase Balance % Balance % (Decrease) Total loans Commercial: Commercial and industrial $ 739,805,000 29.0 % $ 753,764,000 29.4 % (1.9 %) Vacant land, land development, and residential construction 31,438,000 1.2 29,873,000 1.2 5.2 Real estate – owner occupied 531,152,000 20.8 526,328,000 20.6 0.9 Real estate – non-owner occupied 794,206,000 31.2 791,685,000 30.9 0.3 Real estate – multi-family and residential rental 96,428,000 3.8 101,918,000 4.0 (5.4 ) Total commercial 2,193,029,000 86.0 2,203,568,000 86.1 (0.5 ) Retail: Home equity and other 93,179,000 3.6 100,425,000 3.9 (7.2 ) 1-4 family mortgages 264,996,000 10.4 254,559,000 10.0 4.1 Total retail 358,175,000 14.0 354,984,000 13.9 0.9 Total loans $ 2,551,204,000 100.0 % $ 2,558,552,000 100.0 % (0.3 %) The total contractually required payments due on and carrying value of acquired impaired loans were $9.2 $5.0 March 31, 2018. $11.9 $5.2 December 31, 2017. three March 31, 2018 March 31, 2017 Balance at December 31, 2017 $ 1,404,000 Additions 0 Accretion income (131,000 ) Net reclassification from nonaccretable to accretable 86,000 Reductions (1) (40,000 ) Balance at March 31, 2018 $ 1,319,000 Balance at December 31, 2016 $ 1,726,000 Additions 1,000 Accretion income (147,000 ) Net reclassification from nonaccretable to accretable 63,000 Reductions (1) (179,000 ) Balance at March 31, 2017 $ 1,464,000 ( 1 Nonperforming originated loans as of March 31, 2018 December 31, 2017 March 31, December 31, 2018 2017 Loans past due 90 days or more still accruing interest $ 0 $ 0 Nonaccrual loans 2,763,000 3,672,000 Total nonperforming originated loans $ 2,763,000 $ 3,672,000 Nonperforming acquired loans as of March 31, 2018 December 31, 2017 March 31, December 31, 2018 2017 Loans past due 90 days or more still accruing interest $ 0 $ 0 Nonaccrual loans 2,979,000 3,471,000 Total nonperforming acquired loans $ 2,979,000 $ 3,471,000 The recorded principal balance of all nonperforming loans was as follows: March 31, December 31, 2018 2017 Commercial: Commercial and industrial $ 619,000 $ 1,444,000 Vacant land, land development, and residential construction 0 35,000 Real estate – owner occupied 1,831,000 2,241,000 Real estate – non-owner occupied 0 0 Real estate – multi-family and residential rental 154,000 178,000 Total commercial 2,604,000 3,898,000 Retail: Home equity and other 512,000 577,000 1-4 family mortgages 2,626,000 2,668,000 Total retail 3,138,000 3,245,000 Total nonperforming loans $ 5,742,000 $ 7,143,000 Acquired impaired loans are not An age analysis of past due loans is as follows as of March 31, 2018: 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 $ 1,350,000 $ 929,000 $ 0 $ 2,279,000 $ 672,909,000 $ 675,188,000 $ 0 Vacant land, land development, and residential construction 0 0 0 0 25,514,000 25,514,000 0 Real estate – owner occupied 0 0 251,000 251,000 468,526,000 468,777,000 0 Real estate – non-owner occupied 0 0 0 0 715,725,000 715,725,000 0 Real estate – multi-family and residential rental 0 0 0 0 61,762,000 61,762,000 0 Total commercial 1,350,000 929,000 251,000 2,530,000 1,944,436,000 1,946,966,000 0 Retail: Home equity and other 65,000 0 0 65,000 65,539,000 65,604,000 0 1-4 family mortgages 0 246,000 220,000 466,000 178,815,000 179,281,000 0 Total retail 65,000 246,000 220,000 531,000 244,354,000 244,885,000 0 Total past due loans $ 1,415,000 $ 1,175,000 $ 471,000 $ 3,061,000 $ 2,188,790,000 $ 2,191,851,000 $ 0 30 – 59 60 – 89 Greater Than 89 Recorded 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 $ 0 $ 113,000 $ 113,000 $ 64,504,000 $ 64,617,000 $ 0 Vacant land, land development, and residential construction 0 0 0 0 5,924,000 5,924,000 0 Real estate – owner occupied 0 156,000 243,000 399,000 61,976,000 62,375,000 0 Real estate – non-owner occupied 0 0 0 0 78,481,000 78,481,000 0 Real estate – multi-family and residential rental 27,000 0 9,000 36,000 34,630,000 34,666,000 0 Total commercial 27,000 156,000 365,000 548,000 245,515,000 246,063,000 0 Retail: Home equity and other 163,000 44,000 42,000 249,000 27,326,000 27,575,000 0 1-4 family mortgages 645,000 231,000 475,000 1,351,000 84,364,000 85,715,000 0 Total retail 808,000 275,000 517,000 1,600,000 111,690,000 113,290,000 0 Total past due loans $ 835,000 $ 431,000 $ 882,000 $ 2,148,000 $ 357,205,000 $ 359,353,000 $ 0 An age analysis of past due loans is as follows as of December 31, 2017: 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 $ 178,000 $ 178,000 $ 680,627,000 $ 680,805,000 $ 0 Vacant land, land development, and residential construction 0 0 35,000 35,000 23,647,000 23,682,000 0 Real estate – owner occupied 0 0 1,244,000 1,244,000 454,821,000 456,065,000 0 Real estate – non-owner occupied 0 0 0 0 708,824,000 708,824,000 0 Real estate – multi-family and residential rental 0 0 0 0 64,852,000 64,852,000 0 Total commercial 0 0 1,457,000 1,457,000 1,932,771,000 1,934,228,000 0 Retail: Home equity and other 647,000 11,000 86,000 744,000 68,931,000 69,675,000 0 1-4 family mortgages 0 0 250,000 250,000 165,804,000 166,054,000 0 Total retail 647,000 11,000 336,000 994,000 234,735,000 235,729,000 0 Total past due loans $ 647,000 $ 11,000 $ 1,793,000 $ 2,451,000 $ 2,167,506,000 $ 2,169,957,000 $ 0 30 – 59 60 – 89 Greater Than 89 Recorded 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 $ 40,000 $ 0 $ 114,000 $ 154,000 $ 72,805,000 $ 72,959,000 $ 0 Vacant land, land development, and residential construction 14,000 0 0 14,000 6,177,000 6,191,000 0 Real estate – owner occupied 634,000 0 271,000 905,000 69,358,000 70,263,000 0 Real estate – non-owner occupied 0 0 0 0 82,861,000 82,861,000 0 Real estate – multi-family and residential rental 0 0 108,000 108,000 36,958,000 37,066,000 0 Total commercial 688,000 0 493,000 1,181,000 268,159,000 269,340,000 0 Retail: Home equity and other 408,000 52,000 154,000 614,000 30,136,000 30,750,000 0 1-4 family mortgages 690,000 333,000 661,000 1,684,000 86,821,000 88,505,000 0 Total retail 1,098,000 385,000 815,000 2,298,000 116,957,000 119,255,000 0 Total past due loans $ 1,786,000 $ 385,000 $ 1,308,000 $ 3,479,000 $ 385,116,000 $ 388,595,000 $ 0 Impaired originated loans as of March 31, 2018, three March 31, 2018, First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With no related allowance recorded: Commercial: Commercial and industrial $ 234,000 $ 234,000 $ 206,000 Vacant land, land development and residential construction 0 0 17,000 Real estate – owner occupied 2,937,000 2,875,000 2,164,000 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 337,000 337,000 343,000 Total commercial 3,508,000 3,446,000 2,730,000 Retail: Home equity and other 768,000 751,000 716,000 1-4 family mortgages 1,106,000 419,000 437,000 Total retail 1,874,000 1,170,000 1,153,000 Total with no related allowance recorded $ 5,382,000 $ 4,616,000 $ 3,883,000 First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With an allowance recorded: Commercial: Commercial and industrial $ 2,623,000 $ 2,133,000 $ 304,000 $ 2,561,000 Vacant land, land development and residential construction 0 0 0 0 Real estate – owner occupied 1,717,000 1,674,000 226,000 1,532,000 Real estate – non-owner occupied 0 0 0 0 Real estate – multi-family and residential rental 145,000 145,000 17,000 72,000 Total commercial 4,485,000 3,952,000 547,000 4,165,000 Retail: Home equity and other 508,000 498,000 258,000 823,000 1-4 family mortgages 412,000 354,000 58,000 232,000 Total retail 920,000 852,000 316,000 1,055,000 Total with an allowance recorded $ 5,405,000 $ 4,804,000 $ 863,000 $ 5,220,000 Total impaired loans: Commercial $ 7,993,000 $ 7,398,000 $ 547,000 $ 6,895,000 Retail 2,794,000 2,022,000 316,000 2,208,000 Total impaired loans $ 10,787,000 $ 9,420,000 $ 863,000 $ 9,103,000 Impaired acquired loans as of March 31, 2018, three March 31, 2018, First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With no related allowance recorded: Commercial: Commercial and industrial $ 743,000 $ 733,000 $ 877,000 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 1,110,000 715,000 687,000 Real estate – non-owner occupied 232,000 232,000 235,000 Real estate – multi-family and residential rental 62,000 44,000 131,000 Total commercial 2,147,000 1,724,000 1,930,000 Retail: Home equity and other 690,000 649,000 578,000 1-4 family mortgages 2,586,000 2,007,000 2,080,000 Total retail 3,276,000 2,656,000 2,658,000 Total with no related allowance recorded $ 5,423,000 $ 4,380,000 $ 4,588,000 First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With an allowance recorded: Commercial: Commercial and industrial $ 0 $ 0 $ 0 $ 0 Vacant land, land development and residential construction 0 0 0 0 Real estate – owner occupied 1,597,000 1,597,000 307,000 799,000 Real estate – non-owner occupied 0 0 0 0 Real estate – multi-family and residential rental 0 0 0 0 Total commercial 1,597,000 1,597,000 307,000 799,000 Retail: Home equity and other 0 0 0 0 1-4 family mortgages 0 0 0 0 Total retail 0 0 0 0 Total with an allowance recorded $ 1,597,000 $ 1,597,000 $ 307,000 $ 799,000 Total impaired loans: Commercial $ 3,744,000 $ 3,321,000 $ 307,000 $ 2,729,000 Retail 3,276,000 2,656,000 0 2,658,000 Total impaired loans $ 7,020,000 $ 5,977,000 $ 307,000 $ 5,387,000 Impaired originated loans as of December 31, 2017, three March 31, 2017, First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With no related allowance recorded: Commercial: Commercial and industrial $ 765,000 $ 178,000 $ 1,589,000 Vacant land, land development and residential construction 454,000 35,000 88,000 Real estate – owner occupied 1,528,000 1,452,000 113,000 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 349,000 349,000 197,000 Total commercial 3,096,000 2,014,000 1,987,000 Retail: Home equity and other 693,000 680,000 247,000 1-4 family mortgages 1,126,000 456,000 649,000 Total retail 1,819,000 1,136,000 896,000 Total with no related allowance recorded $ 4,915,000 $ 3,150,000 $ 2,883,000 First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With an allowance recorded: Commercial: Commercial and industrial $ 3,038,000 $ 2,989,000 $ 963,000 $ 2,690,000 Vacant land, land development and residential construction 0 0 0 749,000 Real estate – owner occupied 1,409,000 1,391,000 239,000 1,144,000 Real estate – non-owner occupied 0 0 0 4,745,000 Real estate – multi-family and residential rental 0 0 0 751,000 Total commercial 4,447,000 4,380,000 1,202,000 10,079,000 Retail: Home equity and other 1,225,000 1,147,000 652,000 697,000 1-4 family mortgages 165,000 110,000 13,000 137,000 Total retail 1,390,000 1,257,000 665,000 834,000 Total with an allowance recorded $ 5,837,000 $ 5,637,000 $ 1,867,000 $ 10,913,000 Total impaired loans: Commercial $ 7,543,000 $ 6,394,000 $ 1,202,000 $ 12,066,000 Retail 3,209,000 2,393,000 665,000 1,730,000 Total impaired loans $ 10,752,000 $ 8,787,000 $ 1,867,000 $ 13,796,000 Impaired acquired loans as of December 31, 2017, three March 31, 2017, First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With no related allowance recorded: Commercial: Commercial and industrial $ 1,039,000 $ 1,021,000 $ 892,000 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 1,027,000 659,000 1,151,000 Real estate – non-owner occupied 238,000 237,000 751,000 Real estate – multi-family and residential rental 237,000 218,000 160,000 Total commercial 2,541,000 2,135,000 2,954,000 Retail: Home equity and other 694,000 507,000 336,000 1-4 family mortgages 2,703,000 2,153,000 1,662,000 Total retail 3,397,000 2,660,000 1,998,000 Total with no related allowance recorded $ 5,938,000 $ 4,795,000 $ 4,952,000 First Quarter Unpaid Average Contractual Recorded Recorded Principal Principal Related Principal Balance Balance Allowance Balance With an allowance recorded: Commercial: Commercial and industrial $ 0 $ 0 $ 0 $ 19,000 Vacant land, land development and residential construction 0 0 0 0 Real estate – owner occupied 0 0 0 48,000 Real estate – non-owner occupied 0 0 0 0 Real estate – multi-family and residential rental 0 0 0 0 Total commercial 0 0 0 67,000 Retail: Home equity and other 0 0 0 0 1-4 family mortgages 0 0 0 172,000 Total retail 0 0 0 172,000 Total with an allowance recorded $ 0 $ 0 $ 0 $ 239,000 Total impaired loans: Commercial $ 2,541,000 $ 2,135,000 $ 0 $ 3,021,000 Retail 3,397,000 2,660,000 0 2,170,000 Total impaired loans $ 5,938,000 $ 4,795,000 $ 0 $ 5,191,000 Impaired loans for which no $0.3 $0.2 first 2018 2017, No first 2018 2017. $0.1 first 2018 2017 Credit Quality Indicators. ten Credit quality indicators were as follows as of March 31, 2018: 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 $ 468,826,000 $ 17,645,000 $ 313,933,000 $ 564,093,000 $ 39,571,000 Grades 5 – 7 187,118,000 7,767,000 140,088,000 151,632,000 21,709,000 Grades 8 – 9 19,244,000 102,000 14,756,000 0 482,000 Total commercial $ 675,188,000 $ 25,514,000 $ 468,777,000 $ 715,725,000 $ 61,762,000 Retail credit exposure – credit risk profiled by collateral type: Retail Retail Home Equity 1-4 Family and Other Mortgages Total retail $ 65,604,000 $ 179,281,000 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 $ 39,543,000 $ 1,412,000 $ 28,823,000 $ 54,951,000 $ 17,376,000 Grades 5 – 7 24,591,000 4,512,000 30,940,000 23,448,000 17,132,000 Grades 8 – 9 483,000 0 2,612,000 82,000 158,000 Total commercial $ 64,617,000 $ 5,924,000 $ 62,375,000 $ 78,481,000 $ 34,666,000 Retail credit exposure – credit risk profiled by collateral type: Retail Retail Home Equity 1-4 Family and Other Mortgages Total retail $ 27,575,000 $ 85,715,000 Credit quality indicators were as follows as of December 31, 2017: 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 $ 469,537,000 $ 15,090,000 $ 326,700,000 $ 559,388,000 $ 42,951,000 Grades 5 – 7 189,851,000 8,557,000 123,024,000 149,135,000 21,552,000 Grades 8 – 9 21,417,000 35,000 6,341,000 301,000 349,000 Total commercial $ 680,805,000 $ 23,682,000 $ 456,065,000 $ 708,824,000 $ 64,852,000 Retail credit exposure – credit risk profiled by collateral type: Retail Retail Home Equity 1-4 Family and Other Mortgages Total retail $ 69,675,000 $ 166,054,000 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 $ 46,263,000 $ 1,446,000 $ 28,706,000 $ 52,674,000 $ 17,499,000 Grades 5 – 7 25,654,000 4,745,000 39,565,000 30,102,000 19,212,000 Grades 8 – 9 1,042,000 0 1,992,000 85,000 355,000 Total commercial $ 72,959,000 $ 6,191,000 $ 70,263,000 $ 82,861,000 $ 37,066,000 Retail credit exposure – credit risk profiled by collateral type: Retail Retail Home Equity 1-4 Family and Other Mortgages Total retail $ 30,750,000 $ 88,505,000 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 not 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 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 March 31, 2018 Commercial Retail Loans Loans Unallocated Total Allowance for loan losses: Beginning balance $ 16,456,000 $ 2,584,000 $ 93,000 $ 19,133,000 Provision for loan losses (341,000 ) (563,000 ) 122,000 (782,000 ) Charge-offs (258,000 ) (135,000 ) 0 (393,000 ) Recoveries 1,008,000 115,000 0 1,123,000 Ending balance $ 16,865,000 $ 2,001,000 $ 215,000 $ 19,081,000 Ending balance: individually evaluated for impairment $ 547,000 $ 316,000 $ 0 $ 863,000 Ending balance: collectively evaluated for impairment $ 16,318,000 $ 1,685,000 $ 215,000 $ 18,218,000 Total loans: Ending balance $ 1,946,966,000 $ 244,885,000 $ 2,191,851,000 Ending balance: individually evaluated for impairment $ 7,398,000 $ 2,022,000 $ 9,420,000 Ending balance: collectively evaluated for impairment $ 1,939,568,000 $ 242,863,000 $ 2,182,431,000 Activity in the allowance for loan losses for acquired loans during the three March 31, 2018 Commercial Retail Loans Loans Unallocated Total Allowance for loan losses: Beginning balance $ 291,000 $ 77,000 $ 0 $ 368,000 Provision for loan losses 314,000 468,000 0 782,000 Charge-offs (246,000 ) (15,000 ) 0 (261,000 ) Recoveries 0 4,000 0 4,000 Ending balance $ 359,000 $ 534,000 $ 0 $ 893,000 Activity in the allowance for loan losses and the recorded investments in originated loans as of and during the twelve December 31, 2017 Commercial Retail Loans Loans Unallocated Total Allowance for loan losses: Beginning balance $ 16,026,000 $ 1,882,000 $ (40,000 ) $ 17,868,000 Provision for loan losses 1,148,000 1,360,000 133,000 2,641,000 Charge-offs (2,292,000 ) (891,000 ) 0 (3,183,000 ) Recoveries 1,574,000 233,000 0 1,807,000 Ending balance $ 16,456,000 $ 2,584,000 $ 93,000 $ 19,133,000 Ending balance: individually evaluated for impairment $ 1,202,000 $ 665,000 $ 0 $ 1,867,000 Ending balance: collectively evaluated for impairment $ 15,254,000 $ 1,919,000 $ 93,000 $ 17,266,000 Total loans: Ending balance $ 1,934,228,000 $ 235,729,000 $ 2,169,957,000 Ending balance: individually evaluated for impairment $ 6,394,000 $ 2,393,000 $ 8,787,000 Ending balance: collectively evaluated for impairment $ 1,927,834,000 $ 233,336,000 $ 2,161,170,000 Activity in the allowance for loan losses for acquired loans during the twelve December 31, 2017 Commercial Retail Loans Loans Unallocated Total Allowance for loan losses: Beginning balance $ 75,000 $ 18,000 $ 0 $ 93,000 Provision for loan losses 210,000 99,000 0 309,000 Charge-offs (12,000 ) (40,000 ) 0 (52,000 ) Recoveries 18,000 0 0 18,000 Ending balance $ 291,000 $ 77,000 $ 0 $ 368,000 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 March 31, 2018 Pre- Post- Modification Modification Recorded Recorded Number of Principal Principal Contracts Balance Balance Originated loans Commercial: Commercial and industrial 3 $ 107,000 $ 96,000 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 4 3,865,000 3,854,000 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 0 0 0 Total originated commercial 7 3,972,000 3,950,000 Retail: Home equity and other 1 50,000 50,000 1-4 family mortgages 0 0 0 Total originated retail 1 50,000 50,000 Total originated loans 8 $ 4,022,000 $ 4,000,000 Acquired loans Commercial: Commercial and industrial 0 $ 0 $ 0 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 3 1,597,000 1,597,000 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 0 0 0 Total acquired commercial 3 1,597,000 1,597,000 Retail: Home equity and other 6 118,000 119,000 1-4 family mortgages 0 0 0 Total acquired retail 6 118,000 119,000 Total acquired loans 9 $ 1,715,000 $ 1,716,000 Loans modified as troubled debt restructurings during the three March 31, 2017 Pre- Post- Modification Modification Recorded Recorded Number of Principal Principal Contracts Balance Balance Originated 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 originated commercial 0 0 0 Retail: Home equity and other 4 328,000 329,000 1-4 family mortgages 0 0 0 Total originated retail 4 328,000 329,000 Total originated loans 4 $ 328,000 $ 329,000 Acquired loans Commercial: Commercial and industrial 1 $ 31,000 $ 31,000 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 acquired commercial 1 31,000 31,000 Retail: Home equity and other 2 6,000 7,000 1-4 family mortgages 1 57,000 57,000 Total acquired retail 3 63,000 64,000 Total acquired loans 4 $ 94,000 $ 95,000 The following originated loans, modified as troubled debt restructurings within the previous twelve 30 three March 31, 2018 ( Recorded Number of Principal Contracts Balance Commercial: Commercial and industrial 0 $ 0 Vacant land, land development and residential construction 0 0 Real estate – owner occupied 1 251,000 Real estate – non-owner occupied 0 0 Real estate – multi-family and residential rental 0 0 Total commercial 1 251,000 Retail: Home equity and other 0 0 1-4 family mortgages 0 0 Total retail 0 0 Total 1 $ 251,000 The following acquired loans, modified as troubled debt restructurings within the previous twelve 30 three March 31, 2018 ( Recorded Number of Principal Contracts Balance Commercial: Commercial and industrial 1 $ 113,000 Vacant land, land development and residential construction 0 0 Real estate – owner occupied 0 0 Real estate – non-owner occupied 0 0 Real estate – multi-family and residential rental 0 0 Total commercial 1 113,000 Retail: Home equity and other 2 20,000 1-4 family mortgages 0 0 Total retail 2 20,000 Total 3 $ 133,000 The following originated loans, modified as troubled debt restructurings within the previous twelve 30 three March 31, 2017 ( Recorded Number of Principal Contracts Balance Commercial: Commercial and industrial 2 $ 34,000 Vacant land, land development and residential construction 0 0 Real estate – owner occupied 0 0 Real estate – non-owner occupied 0 0 Real estate – multi-family and residential rental 1 130,000 Total commercial 3 164,000 Retail: Home equity and other 0 0 1-4 family mortgages 0 0 Total retail 0 0 Total 3 $ 164,000 The following acquired loans, modified as troubled debt restructurings within the previous twelve 30 three March 31, 2017 ( Recorded Number of Principal Contracts Balance Commercial: Commercial and industrial 1 $ 24,000 Vacant land, land development and residential construction 0 0 Real estate – owner occupied 0 0 Real estate – non-owner occupied 0 0 Real estate – multi-family and residential rental 0 0 Total commercial 1 24,000 Retail: Home equity and other 0 0 1-4 family mortgages 0 0 Total retail 0 0 Total 1 $ 24,000 Activity for originated loans categorized as troubled debt restructurings during the three March 31, 2018 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 Commercial Loan Portfolio: Beginning Balance $ 2,989,000 $ 383,000 $ 1,599,000 $ 0 $ 0 Charge-Offs (230,000 ) 0 0 0 0 Payments (882,000 ) (45,000 ) (855,000 ) 0 0 Transfers to ORE 0 0 0 0 0 Net Additions/Deletions 105,000 0 3,804,000 0 0 Ending Balance $ 1,982,000 $ 338,000 $ 4,548,000 $ 0 $ 0 Retail Retail Home Equity 1-4 Family and Other Mortgages Retail Loan Portfolio: Beginning Balance $ 1,127,000 $ 146,000 Charge-Offs 0 0 Payments (8,000 ) (2,000 ) Transfers to ORE 0 0 Net Additions/Deletions 50,000 0 Ending Balance $ 1,169,000 $ 144,000 Activity for acquired loans categorized as troubled debt restructurings during the three March 31, 2018 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 Commercial Loan Portfolio: Beginning Balance $ 1,001,000 $ 0 $ 427,000 $ 237,000 $ 41,000 Charge-Offs (275,000 ) 0 0 0 0 Payments (10,000 ) 0 (17,000 ) (5,000 ) (5,000 ) Transfers to ORE 0 0 0 0 0 Net Additions/Deletions 0 0 1,597,000 0 0 Ending Balance $ 716,000 $ 0 $ 2,007,000 $ 232,000 $ 36,000 Retail Retail Home Equity 1-4 Family and Other Mortgages Retail Loan Portfolio: Beginning Balance $ 219,000 $ 393,000 Charge-Offs (15,000 ) 0 Payments (1,000 ) (9,000 ) Transfers to ORE (82,000 ) 0 Net Additions/Deletions 11 |