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 June 30, 2018 $2.64 $2.56 December 31, 2017, $78.3 3.1%. June 30, 2018 December 31, 2017, 2017 second 2018, Percent June 30, 2018 December 31, 2017 Increase Balance % Balance % (Decrease) Originated loans Commercial: Commercial and industrial $ 712,138,000 31.0 % $ 680,805,000 31.3 % 4.6 % Vacant land, land development, and residential construction 32,031,000 1.4 23,682,000 1.1 35.3 Real estate – owner occupied 477,696,000 20.8 456,065,000 21.0 4.7 Real estate – non-owner occupied 743,102,000 32.4 708,824,000 32.7 4.8 Real estate – multi-family and residential rental 62,226,000 2.7 64,852,000 3.0 (4.0 ) Total commercial 2,027,193,000 88.3 1,934,228,000 89.1 4.8 Retail: Home equity and other 66,683,000 2.9 69,675,000 3.2 (4.3 ) 1-4 family mortgages 202,328,000 8.8 166,054,000 7.7 21.8 Total retail 269,011,000 11.7 235,729,000 10.9 14.1 Total originated loans $ 2,296,204,000 100.0 % $ 2,169,957,000 100.0 % 5.8 % Percent June 30, 2018 December 31, 2017 Increase Balance % Balance % (Decrease) Acquired loans Commercial: Commercial and industrial $ 64,857,000 19.0 % $ 72,959,000 18.8 % (11.1% ) Vacant land, land development, and residential construction 5,837,000 1.7 6,191,000 1.6 (5.7 ) Real estate – owner occupied 55,379,000 16.3 70,263,000 18.1 (21.2 ) Real estate – non-owner occupied 75,274,000 22.1 82,861,000 21.3 (9.2 ) Real estate – multi-family and residential rental 33,430,000 9.8 37,066,000 9.5 (9.8 ) Total commercial 234,777,000 68.9 269,340,000 69.3 (12.8 ) Retail: Home equity and other 24,546,000 7.2 30,750,000 7.9 (20.2 ) 1-4 family mortgages 81,329,000 23.9 88,505,000 22.8 (8.1 ) Total retail 105,875,000 31.1 119,255,000 30.7 (11.2 ) Total acquired loans $ 340,652,000 100.0 % $ 388,595,000 100.0 % (12.3% ) Percent June 30, 2018 December 31, 2017 Increase Balance % Balance % (Decrease) Total loans Commercial: Commercial and industrial $ 776,995,000 29.5 % $ 753,764,000 29.4 % 3.1 % Vacant land, land development, and residential construction 37,868,000 1.5 29,873,000 1.2 26.8 Real estate – owner occupied 533,075,000 20.2 526,328,000 20.6 1.3 Real estate – non-owner occupied 818,376,000 31.0 791,685,000 30.9 3.4 Real estate – multi-family and residential rental 95,656,000 3.6 101,918,000 4.0 (6.1 ) Total commercial 2,261,970,000 85.8 2,203,568,000 86.1 2.7 Retail: Home equity and other 91,229,000 3.5 100,425,000 3.9 (9.2 ) 1-4 family mortgages 283,657,000 10.7 254,559,000 10.0 11.4 Total retail 374,886,000 14.2 354,984,000 13.9 5.6 Total loans $ 2,636,856,000 100.0 % $ 2,558,552,000 100.0 % 3.1 % The total contractually required payments due on and carrying value of acquired impaired loans were $8.3 $4.7 June 30, 2018. $11.9 $5.2 December 31, 2017. three six June 30, 2018 June 30, 2017 Balance at March 31, 2018 $ 1,319,000 Additions 0 Accretion income (123,000 ) Net reclassification from nonaccretable to accretable 86,000 Reductions (1) (35,000 ) Balance at June 30, 2018 $ 1,247,000 Balance at December 31, 2017 $ 1,404,000 Additions 0 Accretion income (254,000 ) Net reclassification from nonaccretable to accretable 172,000 Reductions (1) (75,000 ) Balance at June 30, 2018 $ 1,247,000 Balance at March 31, 2017 $ 1,464,000 Additions 220,000 Accretion income (140,000 ) Net reclassification from nonaccretable to accretable 184,000 Reductions (1) (70,000 ) Balance at June 30, 2017 $ 1,658,000 Balance at December 31, 2016 $ 1,726,000 Additions 221,000 Accretion income (287,000 ) Net reclassification from nonaccretable to accretable 247,000 Reductions (1) (249,000 ) Balance at June 30, 2017 $ 1,658,000 ( 1 Nonperforming originated loans as of June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017 Loans past due 90 days or more still accruing interest $ 0 $ 0 Nonaccrual loans 2,313,000 3,672,000 Total nonperforming originated loans $ 2,313,000 $ 3,672,000 Nonperforming acquired loans as of June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017 Loans past due 90 days or more still accruing interest $ 0 $ 0 Nonaccrual loans 2,652,000 3,471,000 Total nonperforming acquired loans $ 2,652,000 $ 3,471,000 The recorded principal balance of all nonperforming loans was as follows: June 30, 2018 December 31, 2017 Commercial: Commercial and industrial $ 180,000 $ 1,444,000 Vacant land, land development, and residential construction 0 35,000 Real estate – owner occupied 1,661,000 2,241,000 Real estate – non-owner occupied 0 0 Real estate – multi-family and residential rental 150,000 178,000 Total commercial 1,991,000 3,898,000 Retail: Home equity and other 624,000 577,000 1-4 family mortgages 2,350,000 2,668,000 Total retail 2,974,000 3,245,000 Total nonperforming loans $ 4,965,000 $ 7,143,000 Acquired impaired loans are generally not An age analysis of past due loans is as follows as of June 30, 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 $ 0 $ 0 $ 0 $ 0 $ 712,138,000 $ 712,138,000 $ 0 Vacant land, land development, and residential construction 0 0 0 0 32,031,000 32,031,000 0 Real estate – owner occupied 0 0 195,000 195,000 477,501,000 477,696,000 0 Real estate – non-owner occupied 0 0 0 0 743,102,000 743,102,000 0 Real estate – multi-family and residential rental 0 0 0 0 62,226,000 62,226,000 0 Total commercial 0 0 195,000 195,000 2,026,998,000 2,027,193,000 0 Retail: Home equity and other 46,000 0 0 46,000 66,637,000 66,683,000 0 1-4 family mortgages 0 51,000 172,000 223,000 202,105,000 202,328,000 0 Total retail 46,000 51,000 172,000 269,000 268,742,000 269,011,000 0 Total past due loans $ 46,000 $ 51,000 $ 367,000 $ 464,000 $ 2,295,740,000 $ 2,296,204,000 $ 0 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 Acquired loans Commercial: Commercial and industrial $ 0 $ 0 $ 0 $ 0 $ 64,857,000 $ 64,857,000 $ 0 Vacant land, land development, and residential construction 18,000 0 0 18,000 5,819,000 5,837,000 0 Real estate – owner occupied 0 96,000 243,000 339,000 55,040,000 55,379,000 0 Real estate – non-owner occupied 0 0 0 0 75,274,000 75,274,000 0 Real estate – multi-family and residential rental 0 0 8,000 8,000 33,422,000 33,430,000 0 Total commercial 18,000 96,000 251,000 365,000 234,412,000 234,777,000 0 Retail: Home equity and other 219,000 70,000 95,000 384,000 24,162,000 24,546,000 0 1-4 family mortgages 700,000 510,000 252,000 1,462,000 79,867,000 81,329,000 0 Total retail 919,000 580,000 347,000 1,846,000 104,029,000 105,875,000 0 Total past due loans $ 937,000 $ 676,000 $ 598,000 $ 2,211,000 $ 338,441,000 $ 340,652,000 $ 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 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 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 June 30, 2018, three six June 30, 2018, Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Second Quarter Average Recorded Principal Balance Year-To-Date Average Recorded Principal Balance With no related allowance recorded Commercial: Commercial and industrial $ 513,000 $ 513,000 $ 373,000 $ 308,000 Vacant land, land development and residential construction 99,000 99,000 50,000 45,000 Real estate – owner occupied 31,000 31,000 1,453,000 1,453,000 Real estate – non-owner occupied 0 0 0 0 Real estate – multi-family and residential rental 229,000 229,000 283,000 305,000 Total commercial 872,000 872,000 2,159,000 2,111,000 Retail: Home equity and other 636,000 617,000 684,000 683,000 1-4 family mortgages 1,084,000 391,000 405,000 422,000 Total retail 1,720,000 1,008,000 1,089,000 1,105,000 Total with no related allowance recorded $ 2,592,000 $ 1,880,000 $ 3,248,000 $ 3,216,000 Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Second Quarter Average Recorded Principal Balance Year-To-Date Average Recorded Principal Balance With an allowance recorded Commercial: Commercial and industrial $ 2,390,000 $ 2,045,000 $ 198,000 $ 2,089,000 $ 2,389,000 Vacant land, land development and residential construction 0 0 0 0 0 Real estate – owner occupied 1,882,000 1,753,000 168,000 1,713,000 1,606,000 Real estate – non-owner occupied 0 0 0 0 0 Real estate – multi-family and residential rental 144,000 142,000 25,000 143,000 96,000 Total commercial 4,416,000 3,940,000 391,000 3,945,000 4,091,000 Retail: Home equity and other 500,000 490,000 232,000 494,000 712,000 1-4 family mortgages 410,000 348,000 51,000 351,000 270,000 Total retail 910,000 838,000 283,000 845,000 982,000 Total with an allowance recorded $ 5,326,000 $ 4,778,000 $ 674,000 $ 4,790,000 $ 5,073,000 Total impaired loans: Commercial $ 5,288,000 $ 4,812,000 $ 391,000 $ 6,104,000 $ 6,202,000 Retail 2,630,000 1,846,000 283,000 1,934,000 2,087,000 Total impaired loans $ 7,918,000 $ 6,658,000 $ 674,000 $ 8,038,000 $ 8,289,000 Impaired acquired loans as of June 30, 2018, three six June 30, 2018, Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Second Quarter Average Recorded Principal Balance Year-To-Date Average Recorded Principal Balance With no related allowance recorded Commercial: Commercial and industrial $ 717,000 $ 708,000 $ 720,000 $ 821,000 Vacant land, land development and residential construction 0 0 0 0 Real estate – owner occupied 1,035,000 639,000 677,000 671,000 Real estate – non-owner occupied 225,000 225,000 228,000 231,000 Real estate – multi-family and residential rental 58,000 40,000 42,000 101,000 Total commercial 2,035,000 1,612,000 1,667,000 1,824,000 Retail: Home equity and other 818,000 771,000 710,000 642,000 1-4 family mortgages 2,513,000 1,993,000 2,000,000 2,051,000 Total retail 3,331,000 2,764,000 2,710,000 2,693,000 Total with no related allowance recorded $ 5,366,000 $ 4,376,000 $ 4,377,000 $ 4,517,000 Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Second Quarter Average Recorded Principal Balance Year-To-Date Average Recorded Principal Balance With an allowance recorded Commercial: Commercial and industrial $ 0 $ 0 $ 0 $ 0 $ 0 Vacant land, land development and residential construction 0 0 0 0 0 Real estate – owner occupied 0 0 0 799,000 533,000 Real estate – non-owner occupied 0 0 0 0 0 Real estate – multi-family and residential rental 0 0 0 0 0 Total commercial 0 0 0 799,000 533,000 Retail: Home equity and other 35,000 35,000 35,000 17,000 12,000 1-4 family mortgages 0 0 0 0 0 Total retail 35,000 35,000 35,000 17,000 12,000 Total with an allowance recorded $ 35,000 $ 35,000 $ 35,000 $ 816,000 $ 545,000 Total impaired loans: Commercial $ 2,035,000 $ 1,612,000 $ 0 $ 2,466,000 $ 2,357,000 Retail 3,366,000 2,799,000 35,000 2,727,000 2,705,000 Total impaired loans $ 5,401,000 $ 4,411,000 $ 35,000 $ 5,193,000 $ 5,062,000 Impaired originated loans as of December 31, 2017, three six June 30, 2017, Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Second Quarter Average Recorded Principal Balance Year-To-Date Average Recorded Principal Balance With no related allowance recorded Commercial: Commercial and industrial $ 765,000 $ 178,000 $ 861,000 $ 1,073,000 Vacant land, land development and residential construction 454,000 35,000 73,000 80,000 Real estate – owner occupied 1,528,000 1,452,000 272,000 181,000 Real estate – non-owner occupied 0 0 0 0 Real estate – multi-family and residential rental 349,000 349,000 132,000 131,000 Total commercial 3,096,000 2,014,000 1,338,000 1,465,000 Retail: Home equity and other 693,000 680,000 531,000 392,000 1-4 family mortgages 1,126,000 456,000 647,000 641,000 Total retail 1,819,000 1,136,000 1,178,000 1,033,000 Total with no related allowance recorded $ 4,915,000 $ 3,150,000 $ 2,516,000 $ 2,498,000 Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Second Quarter Average Recorded Principal Balance Year-To-Date Average Recorded Principal Balance With an allowance recorded Commercial: Commercial and industrial $ 3,038,000 $ 2,989,000 $ 963,000 $ 3,584,000 $ 3,183,000 Vacant land, land development and residential construction 0 0 0 499,000 665,000 Real estate – owner occupied 1,409,000 1,391,000 239,000 1,606,000 1,373,000 Real estate – non-owner occupied 0 0 0 2,479,000 3,326,000 Real estate – multi-family and residential rental 0 0 0 519,000 693,000 Total commercial 4,447,000 4,380,000 1,202,000 8,687,000 9,240,000 Retail: Home equity and other 1,225,000 1,147,000 652,000 993,000 799,000 1-4 family mortgages 165,000 110,000 13,000 115,000 129,000 Total retail 1,390,000 1,257,000 665,000 1,108,000 928,000 Total with an allowance recorded $ 5,837,000 $ 5,637,000 $ 1,867,000 $ 9,795,000 $ 10,168,000 Total impaired loans: Commercial $ 7,543,000 $ 6,394,000 $ 1,202,000 $ 10,025,000 $ 10,705,000 Retail 3,209,000 2,393,000 665,000 2,286,000 1,961,000 Total impaired loans $ 10,752,000 $ 8,787,000 $ 1,867,000 $ 12,311,000 $ 12,666,000 Impaired acquired loans as of December 31, 2017, three six June 30, 2017, Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Second Quarter Average Recorded Principal Balance Year-To-Date Average Recorded Principal Balance With no related allowance recorded Commercial: Commercial and industrial $ 1,039,000 $ 1,021,000 $ 1,146,000 $ 1,040,000 Vacant land, land development and residential construction 0 0 17,000 11,000 Real estate – owner occupied 1,027,000 659,000 1,125,000 1,153,000 Real estate – non-owner occupied 238,000 237,000 837,000 821,000 Real estate – multi-family and residential rental 237,000 218,000 221,000 177,000 Total commercial 2,541,000 2,135,000 3,346,000 3,202,000 Retail: Home equity and other 694,000 507,000 366,000 361,000 1-4 family mortgages 2,703,000 2,153,000 1,811,000 1,750,000 Total retail 3,397,000 2,660,000 2,177,000 2,111,000 Total with no related allowance recorded $ 5,938,000 $ 4,795,000 $ 5,523,000 $ 5,313,000 Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Second Quarter Average Recorded Principal Balance Year-To-Date Average Recorded Principal Balance With an allowance recorded Commercial: Commercial and industrial $ 0 $ 0 $ 0 $ 15,000 $ 16,000 Vacant land, land development and residential construction 0 0 0 0 0 Real estate – owner occupied 0 0 0 47,000 48,000 Real estate – non-owner occupied 0 0 0 0 0 Real estate – multi-family and residential rental 0 0 0 0 0 Total commercial 0 0 0 62,000 64,000 Retail: Home equity and other 0 0 0 0 0 1-4 family mortgages 0 0 0 171,000 171,000 Total retail 0 0 0 171,000 171,000 Total with an allowance recorded $ 0 $ 0 $ 0 $ 233,000 $ 235,000 Total impaired loans: Commercial $ 2,541,000 $ 2,135,000 $ 0 $ 3,408,000 $ 3,266,000 Retail 3,397,000 2,660,000 0 2,348,000 2,282,000 Total impaired loans $ 5,938,000 $ 4,795,000 $ 0 $ 5,756,000 $ 5,548,000 Impaired loans for which no $0.1 $0.2 second 2018 2017, $0.5 $0.3 first six 2018 2017, No second first six 2018 2017 $0.1 second 2018 2017, $0.1 first six 2018 2017. Credit Quality Indicators. ten Credit quality indicators were as follows as of June 30, 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 $ 485,217,000 $ 19,188,000 $ 317,954,000 $ 550,444,000 $ 39,788,000 Grades 5 – 7 207,645,000 12,744,000 146,819,000 192,658,000 22,015,000 Grades 8 – 9 19,276,000 99,000 12,923,000 0 423,000 Total commercial $ 712,138,000 $ 32,031,000 $ 477,696,000 $ 743,102,000 $ 62,226,000 Retail credit exposure – credit risk profiled by collateral type: Retail Home Equity and Other Retail 1-4 Family Mortgages Total retail $ 66,683,000 $ 202,328,000 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 $ 40,786,000 $ 1,425,000 $ 25,930,000 $ 56,037,000 $ 17,246,000 Grades 5 – 7 23,788,000 4,389,000 27,543,000 19,160,000 16,021,000 Grades 8 – 9 283,000 23,000 1,906,000 77,000 163,000 Total commercial $ 64,857,000 $ 5,837,000 $ 55,379,000 $ 75,274,000 $ 33,430,000 Retail credit exposure – credit risk profiled by collateral type: Retail Home Equity and Other Retail 1-4 Family Mortgages Total retail $ 24,546,000 $ 81,329,000 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 Home Equity and Other Retail 1-4 Family 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 Home Equity and Other Retail 1-4 Family 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 six June 30, 2018 Commercial Loans Retail Loans Unallocated Total Allowance for loan losses: Balance at March 31, 2018 $ 16,865,000 $ 2,001,000 $ 215,000 $ 19,081,000 Provision for loan losses 892,000 297,000 (275,000 ) 914,000 Charge-offs (85,000 ) (189,000 ) 0 (274,000 ) Recoveries 654,000 107,000 0 761,000 Ending balance $ 18,326,000 $ 2,216,000 $ (60,000 ) $ 20,482,000 Allowance for loan losses: Balance at December 31, 2017 $ 16,456,000 $ 2,584,000 $ 93,000 $ 19,133,000 Provision for loan losses 551,000 (266,000 ) (153,000 ) 132,000 Charge-offs (342,000 ) (324,000 ) 0 (666,000 ) Recoveries 1,661,000 222,000 0 1,883,000 Ending balance $ 18,326,000 $ 2,216,000 $ (60,000 ) $ 20,482,000 Ending balance: individually evaluated for impairment $ 391,000 $ 283,000 $ 0 $ 674,000 Ending balance: collectively evaluated for impairment $ 17,935,000 $ 1,933,000 $ (60,000 ) $ 19,808,000 Total loans: Ending balance $ 2,027,193,000 $ 269,011,000 $ 2,296,204,000 Ending balance: individually evaluated for impairment $ 4,812,000 $ 1,846,000 $ 6,658,000 Ending balance: collectively evaluated for impairment $ 2,022,381,000 $ 267,165,000 $ 2,289,546,000 Activity in the allowance for loan losses for acquired loans during the three six June 30, 2018 Commercial Loans Retail Loans Unallocated Total Allowance for loan losses: Balance at March 31, 2018 $ 359,000 $ 534,000 $ 0 $ 893,000 Provision for loan losses (254,000 ) 40,000 0 (214,000 ) Charge-offs 0 0 0 0 Recoveries 0 6,000 0 6,000 Ending balance $ 105,000 $ 580,000 $ 0 $ 685,000 Allowance for loan losses: Balance at December 31, 2017 $ 291,000 $ 77,000 $ 0 $ 368,000 Provision for loan losses 60,000 508,000 0 568,000 Charge-offs (246,000 ) (15,000 ) 0 (261,000 ) Recoveries 0 10,000 0 10,000 Ending balance $ 105,000 $ 580,000 $ 0 $ 685,000 Activity in the allowance for loan losses for originated loans during the three six June 30, 2017 December 31, 2017 Commercial Loans Retail Loans Unallocated Total Allowance for loan losses: Balance at March 31, 2017 $ 15,671,000 $ 2,365,000 $ 90,000 $ 18,126,000 Provision for loan losses 372,000 121,000 69,000 562,000 Charge-offs (1,006,000 ) (144,000 ) 0 (1,150,000 ) Recoveries 326,000 91,000 0 417,000 Ending balance $ 15,363,000 $ 2,433,000 $ 159,000 $ 17,955,000 Allowance for loan losses: Balance at December 31, 2016 $ 16,026,000 $ 1,882,000 $ (40,000 ) $ 17,868,000 Provision for loan losses 147,000 764,000 199,000 1,110,000 Charge-offs (1,231,000 ) (364,000 ) 0 (1,595,000 ) Recoveries 421,000 151,000 0 572,000 Ending balance $ 15,363,000 $ 2,433,000 $ 159,000 $ 17,955,000 Ending balance: individually evaluated for impairment $ 2,044,000 $ 755,000 $ 0 $ 2,799,000 Ending balance: collectively evaluated for impairment $ 13,319,000 $ 1,678,000 $ 159,000 $ 15,156,000 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 three six June 30, 2017 Commercial Loans Retail Loans Unallocated Total Allowance for loan losses: Balance at March 31, 2017 $ 125,000 $ 25,000 $ 0 $ 150,000 Provision for loan losses 197,000 (9,000 ) 0 188,000 Charge-offs 0 0 0 0 Recoveries 2,000 0 0 2,000 Ending balance $ 324,000 $ 16,000 $ 0 $ 340,000 Allowance for loan losses: Balance at December 31, 2016 $ 75,000 $ 18,000 $ 0 $ 93,000 Provision for loan losses 242,000 (2,000 ) 0 240,000 Charge-offs (11,000 ) 0 0 (11,000 ) Recoveries 18,000 0 0 18,000 Ending balance $ 324,000 $ 16,000 $ 0 $ 340,000 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 June 30, 2018 Number of Contracts Pre- Modification Recorded Principal Balance Post- Modification Recorded Principal Balance Originated loans Commercial: Commercial and industrial 2 $ 974,000 $ 1,079,000 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 2 974,000 1,079,000 Retail: Home equity and other 0 0 0 1-4 family mortgages 0 0 0 Total originated retail 0 0 0 Total originated loans 2 $ 974,000 $ 1,079,000 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 5 113,000 114,000 1-4 family mortgages 1 24,000 24,000 Total acquired retail 6 137,000 138,000 Total acquired loans 6 $ 137,000 $ 138,000 Loans modified as troubled debt restructurings during the six June 30, 2018 Number of Contracts Pre- Modification Recorded Principal Balance Post- Modification Recorded Principal Balance Originated loans Commercial: Commercial and industrial 4 $ 1,068,000 $ 1,162,000 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 2 1,192,000 1,180,000 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 0 0 0 Total originated commercial 6 2,260,000 2,342,000 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 7 $ 2,310,000 $ 2,392,000 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 10 217,000 218,000 1-4 family mortgages 1 24,000 24,000 Total acquired retail 11 241,000 242,000 Total acquired loans 11 $ 241,000 $ 242,000 Loans modified as troubled debt restructurings during the three June 30, 2017 Number of Contracts Pre- Modification Recorded Principal Balance Post- Modification Recorded Principal Balance Originated loans Commercial: Commercial and industrial 6 $ 2,752,000 $ 2,931,000 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 3 818,000 818,000 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 0 0 0 Total originated commercial 9 3,570,000 3,749,000 Retail: Home equity and other 2 260,000 261,000 1-4 family mortgages 0 0 0 Total originated retail 2 260,000 261,000 Total originated loans 11 $ 3,830,000 $ 4,010,000 Acquired loans Commercial: Commercial and industrial 1 $ 118,000 $ 117,000 Vacant land, land development and residential construction 1 38,000 38,000 Real estate – owner occupied 0 0 0 Real estate – non-owner occupied 1 680,000 680,000 Real estate – multi-family and residential rental 0 0 0 Total acquired commercial 3 836,000 835,000 Retail: Home equity and other 3 160,000 161,000 1-4 family mortgages 1 77,000 77,000 Total acquired retail 4 237,000 238,000 Total acquired loans 7 $ 1,073,000 $ 1,073,000 Loans modified as troubled deb |