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 September 30, 2019 $2.93 $2.75 December 31, 2018, $180 6.5%. September 30, 2019 December 31, 2018, 2018 third 2019, Percent September 30, 2019 December 31, 2018 Increase Balance % Balance % (Decrease) Originated loans Commercial: Commercial and industrial $ 848,659,000 31.5 % $ 768,698,000 31.3 % 10.4 % Vacant land, land development, and residential construction 44,016,000 1.6 39,950,000 1.6 10.2 Real estate – owner occupied 527,580,000 19.6 500,188,000 20.4 5.5 Real estate – non-owner occupied 819,743,000 30.5 745,127,000 30.4 10.0 Real estate – multi-family and residential rental 101,799,000 3.8 98,035,000 4.0 3.8 Total commercial 2,341,797,000 87.0 2,151,998,000 87.7 8.8 Retail: Home equity and other 63,026,000 2.4 65,023,000 2.7 (3.1 ) 1-4 family mortgages 285,354,000 10.6 235,425,000 9.6 21.2 Total retail 348,380,000 13.0 300,448,000 12.3 16.0 Total originated loans $ 2,690,177,000 100.0 % $ 2,452,446,000 100.0 % 9.7 % Percent September 30, 2019 December 31, 2018 Increase Balance % Balance % (Decrease) Acquired loans Commercial: Commercial and industrial $ 34,089,000 14.1 % $ 54,025,000 18.0 % (36.9 %) Vacant land, land development, and residential construction 4,401,000 1.8 4,935,000 1.6 (10.8 ) Real estate – owner occupied 39,687,000 16.3 48,431,000 16.1 (18.1 ) Real estate – non-owner occupied 63,337,000 26.1 71,155,000 23.7 (11.0 ) Real estate – multi-family and residential rental 25,056,000 10.3 29,562,000 9.8 (15.2 ) Total commercial 166,570,000 68.6 208,108,000 69.2 (20.0 ) Retail: Home equity and other 15,526,000 6.4 20,416,000 6.8 (24.0 ) 1-4 family mortgages 60,740,000 25.0 72,115,000 24.0 (15.8 ) Total retail 76,266,000 31.4 92,531,000 30.8 (17.6 ) Total acquired loans $ 242,836,000 100.0 % $ 300,639,000 100.0 % (19.2 %) Percent September 30, 2019 December 31, 2018 Increase Balance % Balance % (Decrease) Total loans Commercial: Commercial and industrial $ 882,748,000 30.1 % $ 822,723,000 29.9 % 7.3 % Vacant land, land development, and residential construction 48,417,000 1.7 44,885,000 1.6 7.9 Real estate – owner occupied 567,267,000 19.3 548,619,000 19.9 3.4 Real estate – non-owner occupied 883,080,000 30.1 816,282,000 29.7 8.2 Real estate – multi-family and residential rental 126,855,000 4.3 127,597,000 4.6 (0.6 ) Total commercial 2,508,367,000 85.5 2,360,106,000 85.7 6.3 Retail: Home equity and other 78,552,000 2.7 85,439,000 3.1 (8.1 ) 1-4 family mortgages 346,094,000 11.8 307,540,000 11.2 12.5 Total retail 424,646,000 14.5 392,979,000 14.3 8.1 Total loans $ 2,933,013,000 100.0 % $ 2,753,085,000 100.0 % 6.5 % The total contractually required payments due on and carrying value of acquired impaired loans were $6.2 $3.6 September 30, 2019. $8.0 $4.6 December 31, 2018. three nine September 30, 2019 September 30, 2018 Balance at June 30, 2019 $ 1,236,000 Additions 0 Accretion income (90,000 ) Net reclassification from nonaccretable to accretable 230,000 Reductions (1) (57,000 ) Balance at September 30, 2019 $ 1,319,000 Balance at December 31, 2018 $ 1,274,000 Additions 9,000 Accretion income (315,000 ) Net reclassification from nonaccretable to accretable 435,000 Reductions (1) (84,000 ) Balance at September 30, 2019 $ 1,319,000 Balance at June 30, 2018 $ 1,247,000 Additions 0 Accretion income (118,000 ) Net reclassification from nonaccretable to accretable 118,000 Reductions (1) (2,000 ) Balance at September 30, 2018 $ 1,245,000 Balance at December 31, 2017 $ 1,404,000 Additions 0 Accretion income (372,000 ) Net reclassification from nonaccretable to accretable 289,000 Reductions (1) (76,000 ) Balance at September 30, 2018 $ 1,245,000 ( 1 Nonperforming originated loans as of September 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018 Loans past due 90 days or more still accruing interest $ 0 $ 0 Nonaccrual loans 753,000 803,000 Total nonperforming originated loans $ 753,000 $ 803,000 Nonperforming acquired loans as of September 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018 Loans past due 90 days or more still accruing interest $ 0 $ 0 Nonaccrual loans 1,891,000 3,338,000 Total nonperforming acquired loans $ 1,891,000 $ 3,338,000 The recorded principal balance of all nonperforming loans was as follows: September 30, 2019 December 31, 2018 Commercial: Commercial and industrial $ 0 $ 17,000 Vacant land, land development, and residential construction 0 0 Real estate – owner occupied 183,000 950,000 Real estate – non-owner occupied 25,000 0 Real estate – multi-family and residential rental 3,000 141,000 Total commercial 211,000 1,108,000 Retail: Home equity and other 279,000 454,000 1-4 family mortgages 2,154,000 2,579,000 Total retail 2,433,000 3,033,000 Total nonperforming loans $ 2,644,000 $ 4,141,000 Acquired impaired loans are generally not An age analysis of past due loans is as follows as of September 30, 2019: 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 $ 848,659,000 $ 848,659,000 $ 0 Vacant land, land development, and residential construction 0 0 0 0 44,016,000 44,016,000 0 Real estate – owner occupied 0 0 183,000 183,000 527,397,000 527,580,000 0 Real estate – non-owner occupied 0 0 0 0 819,743,000 819,743,000 0 Real estate – multi-family and residential rental 0 0 0 0 101,799,000 101,799,000 0 Total commercial 0 0 183,000 183,000 2,341,614,000 2,341,797,000 0 Retail: Home equity and other 75,000 0 0 75,000 62,951,000 63,026,000 0 1-4 family mortgages 10,000 0 100,000 110,000 285,244,000 285,354,000 0 Total retail 85,000 0 100,000 185,000 348,195,000 348,380,000 0 Total past due loans $ 85,000 $ 0 $ 283,000 $ 368,000 $ 2,689,809,000 $ 2,690,177,000 $ 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 $ 34,089,000 $ 34,089,000 $ 0 Vacant land, land development, and residential construction 24,000 0 0 24,000 4,377,000 4,401,000 0 Real estate – owner occupied 0 0 0 0 39,687,000 39,687,000 0 Real estate – non-owner occupied 0 0 26,000 26,000 63,311,000 63,337,000 0 Real estate – multi-family and residential rental 1,000 0 0 1,000 25,055,000 25,056,000 0 Total commercial 25,000 0 26,000 51,000 166,519,000 166,570,000 0 Retail: Home equity and other 124,000 1,000 32,000 157,000 15,369,000 15,526,000 0 1-4 family mortgages 310,000 299,000 387,000 996,000 59,744,000 60,740,000 0 Total retail 434,000 300,000 419,000 1,153,000 75,113,000 76,266,000 0 Total past due loans $ 459,000 $ 300,000 $ 445,000 $ 1,204,000 $ 241,632,000 $ 242,836,000 $ 0 An age analysis of past due loans is as follows as of December 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 $ 186,000 $ 0 $ 0 $ 186,000 $ 768,512,000 $ 768,698,000 $ 0 Vacant land, land development, and residential construction 0 0 0 0 39,950,000 39,950,000 0 Real estate – owner occupied 0 0 0 0 500,188,000 500,188,000 0 Real estate – non-owner occupied 0 0 0 0 745,127,000 745,127,000 0 Real estate – multi-family and residential rental 0 0 0 0 98,035,000 98,035,000 0 Total commercial 186,000 0 0 186,000 2,151,812,000 2,151,998,000 0 Retail: Home equity and other 44,000 0 0 44,000 64,979,000 65,023,000 0 1-4 family mortgages 291,000 0 137,000 428,000 234,997,000 235,425,000 0 Total retail 335,000 0 137,000 472,000 299,976,000 300,448,000 0 Total past due loans $ 521,000 $ 0 $ 137,000 $ 658,000 $ 2,451,788,000 $ 2,452,446,000 $ 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 $ 8,000 $ 0 $ 0 $ 8,000 $ 54,017,000 $ 54,025,000 $ 0 Vacant land, land development, and residential construction 19,000 0 0 19,000 4,916,000 4,935,000 0 Real estate – owner occupied 108,000 950,000 0 1,058,000 47,373,000 48,431,000 0 Real estate – non-owner occupied 62,000 0 0 62,000 71,093,000 71,155,000 0 Real estate – multi-family and residential rental 0 0 0 0 29,562,000 29,562,000 0 Total commercial 197,000 950,000 0 1,147,000 206,961,000 208,108,000 0 Retail: Home equity and other 167,000 31,000 0 198,000 20,218,000 20,416,000 0 1-4 family mortgages 821,000 347,000 612,000 1,780,000 70,335,000 72,115,000 0 Total retail 988,000 378,000 612,000 1,978,000 90,553,000 92,531,000 0 Total past due loans $ 1,185,000 $ 1,328,000 $ 612,000 $ 3,125,000 $ 297,514,000 $ 300,639,000 $ 0 Impaired originated loans as of September 30, 2019, three nine September 30, 2019, Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Third Quarter Average Recorded Principal Balance Year-To- Date Average Recorded Principal Balance With no related allowance recorded Commercial: Commercial and industrial $ 20,280,000 $ 20,280,000 $ 15,144,000 $ 12,117,000 Vacant land, land development and residential construction 87,000 87,000 88,000 90,000 Real estate – owner occupied 665,000 665,000 1,362,000 965,000 Real estate – non-owner occupied 0 0 0 0 Real estate – multi-family and residential rental 0 0 63,000 32,000 Total commercial 21,032,000 21,032,000 16,657,000 13,204,000 Retail: Home equity and other 743,000 720,000 764,000 680,000 1-4 family mortgages 896,000 320,000 329,000 353,000 Total retail 1,639,000 1,040,000 1,093,000 1,033,000 Total with no related allowance recorded $ 22,671,000 $ 22,072,000 $ 17,750,000 $ 14,237,000 Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Third Quarter Average Recorded Principal Balance Year-To- Date Average Recorded Principal Balance With an allowance recorded Commercial: Commercial and industrial $ 3,333,000 $ 3,333,000 $ 699,000 $ 8,494,000 $ 6,876,000 Vacant land, land development and residential construction 0 0 0 0 0 Real estate – owner occupied 1,533,000 1,533,000 1,000,000 767,000 1,722,000 Real estate – non-owner occupied 0 0 0 0 0 Real estate – multi-family and residential rental 0 0 0 0 66,000 Total commercial 4,866,000 4,866,000 1,699,000 9,261,000 8,664,000 Retail: Home equity and other 411,000 397,000 312,000 385,000 395,000 1-4 family mortgages 405,000 327,000 14,000 329,000 334,000 Total retail 816,000 724,000 326,000 714,000 729,000 Total with an allowance recorded $ 5,682,000 $ 5,590,000 $ 2,025,000 $ 9,975,000 $ 9,393,000 Total impaired loans: Commercial $ 25,898,000 $ 25,898,000 $ 1,699,000 $ 25,918,000 $ 21,868,000 Retail 2,455,000 1,764,000 326,000 1,807,000 1,762,000 Total impaired loans $ 28,353,000 $ 27,662,000 $ 2,025,000 $ 27,725,000 $ 23,630,000 Impaired acquired loans as of September 30, 2019, three nine September 30, 2019, Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Third Quarter Average Recorded Principal Balance Year-To- Date Average Recorded Principal Balance With no related allowance recorded Commercial: Commercial and industrial $ 307,000 $ 307,000 $ 330,000 $ 363,000 Vacant land, land development and residential construction 0 0 0 0 Real estate – owner occupied 126,000 126,000 521,000 768,000 Real estate – non-owner occupied 209,000 207,000 209,000 120,000 Real estate – multi-family and residential rental 35,000 15,000 18,000 22,000 Total commercial 677,000 655,000 1,078,000 1,273,000 Retail: Home equity and other 577,000 527,000 578,000 522,000 1-4 family mortgages 2,466,000 1,650,000 1,692,000 1,753,000 Total retail 3,043,000 2,177,000 2,270,000 2,275,000 Total with no related allowance recorded $ 3,720,000 $ 2,832,000 $ 3,348,000 $ 3,548,000 Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Third Quarter Average Recorded Principal Balance Year-To- Date Average Recorded Principal Balance With an allowance recorded Commercial: Commercial and industrial $ 134,000 $ 132,000 $ 30,000 $ 135,000 $ 146,000 Vacant land, land development and residential construction 0 0 0 0 0 Real estate – owner occupied 101,000 101,000 5,000 51,000 98,000 Real estate – non-owner occupied 0 0 0 0 100,000 Real estate – multi-family and residential rental 0 0 0 0 1,000 Total commercial 235,000 233,000 35,000 186,000 345,000 Retail: Home equity and other 247,000 245,000 120,000 243,000 306,000 1-4 family mortgages 406,000 404,000 87,000 394,000 402,000 Total retail 653,000 649,000 207,000 637,000 708,000 Total with an allowance recorded $ 888,000 $ 882,000 $ 242,000 $ 823,000 $ 1,053,000 Total impaired loans: Commercial $ 912,000 $ 888,000 $ 35,000 $ 1,264,000 $ 1,618,000 Retail 3,696,000 2,826,000 207,000 2,907,000 2,983,000 Total impaired loans $ 4,608,000 $ 3,714,000 $ 242,000 $ 4,171,000 $ 4,601,000 Impaired originated loans as of December 31, 2018, three nine September 30, 2018, Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Third Quarter Average Recorded Principal Balance Year-To- Date Average Recorded Principal Balance With no related allowance recorded Commercial: Commercial and industrial $ 8,604,000 $ 8,604,000 $ 732,000 $ 469,000 Vacant land, land development and residential construction 94,000 94,000 98,000 58,000 Real estate – owner occupied 632,000 632,000 383,000 1,273,000 Real estate – non-owner occupied 0 0 0 0 Real estate – multi-family and residential rental 0 0 125,000 234,000 Total commercial 9,330,000 9,330,000 1,338,000 2,034,000 Retail: Home equity and other 607,000 586,000 719,000 717,000 1-4 family mortgages 1,053,000 390,000 402,000 420,000 Total retail 1,660,000 976,000 1,121,000 1,137,000 Total with no related allowance recorded $ 10,990,000 $ 10,306,000 $ 2,459,000 $ 3,171,000 Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Third Quarter Average Recorded Principal Balance Year-To- Date Average Recorded Principal Balance With an allowance recorded Commercial: Commercial and industrial $ 5,011,000 $ 5,011,000 $ 83,000 $ 3,572,000 $ 3,067,000 Vacant land, land development and residential construction 0 0 0 0 0 Real estate – owner occupied 2,658,000 2,658,000 363,000 2,320,000 1,926,000 Real estate – non-owner occupied 0 0 0 0 0 Real estate – multi-family and residential rental 140,000 135,000 5,000 140,000 106,000 Total commercial 7,809,000 7,804,000 451,000 6,032,000 5,099,000 Retail: Home equity and other 442,000 431,000 194,000 463,000 643,000 1-4 family mortgages 409,000 341,000 44,000 346,000 289,000 Total retail 851,000 772,000 238,000 809,000 932,000 Total with an allowance recorded $ 8,660,000 $ 8,576,000 $ 689,000 $ 6,841,000 $ 6,031,000 Total impaired loans: Commercial $ 17,139,000 $ 17,134,000 $ 451,000 $ 7,370,000 $ 7,133,000 Retail 2,511,000 1,748,000 238,000 1,930,000 2,069,000 Total impaired loans $ 19,650,000 $ 18,882,000 $ 689,000 $ 9,300,000 $ 9,202,000 Impaired acquired loans as of December 31, 2018, three nine September 30, 2018, Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Third Quarter Average Recorded Principal Balance Year-To- Date Average Recorded Principal Balance With no related allowance recorded Commercial: Commercial and industrial $ 398,000 $ 398,000 $ 648,000 $ 763,000 Vacant land, land development and residential construction 0 0 0 0 Real estate – owner occupied 1,193,000 1,193,000 588,000 638,000 Real estate – non-owner occupied 0 0 221,000 228,000 Real estate – multi-family and residential rental 45,000 26,000 38,000 85,000 Total commercial 1,636,000 1,617,000 1,495,000 1,714,000 Retail: Home equity and other 388,000 361,000 778,000 678,000 1-4 family mortgages 2,494,000 1,849,000 2,073,000 2,077,000 Total retail 2,882,000 2,210,000 2,851,000 2,755,000 Total with no related allowance recorded $ 4,518,000 $ 3,827,000 $ 4,346,000 $ 4,469,000 Unpaid Contractual Principal Balance Recorded Principal Balance Related Allowance Third Quarter Average Recorded Principal Balance Year-To- Date Average Recorded Principal Balance With an allowance recorded Commercial: Commercial and industrial $ 175,000 $ 166,000 $ 43,000 $ 0 $ 0 Vacant land, land development and residential construction 0 0 0 0 0 Real estate – owner occupied 147,000 147,000 0 0 400,000 Real estate – non-owner occupied 210,000 210,000 0 0 0 Real estate – multi-family and residential rental 3,000 3,000 0 0 0 Total commercial 535,000 526,000 43,000 0 400,000 Retail: Home equity and other 462,000 440,000 178,000 34,000 12,000 1-4 family mortgages 418,000 371,000 89,000 0 0 Total retail 880,000 811,000 267,000 34,000 12,000 Total with an allowance recorded $ 1,415,000 $ 1,337,000 $ 310,000 $ 34,000 $ 412,000 Total impaired loans: Commercial $ 2,171,000 $ 2,143,000 $ 43,000 $ 1,495,000 $ 2,114,000 Retail 3,762,000 3,021,000 267,000 2,885,000 2,767,000 Total impaired loans $ 5,933,000 $ 5,164,000 $ 310,000 $ 4,380,000 $ 4,881,000 Impaired loans for which no $0.5 $0.2 third 2019 2018, $0.9 $0.7 first nine 2019 2018, No third first nine 2019 2018 $0.1 third 2019 2018, $0.1 $0.2 first nine 2019 2018, Credit Quality Indicators. ten Credit quality indicators were as follows as of September 30, 2019: 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 $ 510,197,000 $ 25,101,000 $ 330,704,000 $ 562,161,000 $ 69,498,000 Grades 5 – 7 314,845,000 18,828,000 194,440,000 257,495,000 32,155,000 Grades 8 – 9 23,617,000 87,000 2,436,000 87,000 146,000 Total commercial $ 848,659,000 $ 44,016,000 $ 527,580,000 $ 819,743,000 $ 101,799,000 Retail credit exposure – credit risk profiled by collateral type: Retail Home Equity and Other Retail 1-4 Family Mortgages Total retail $ 63,026,000 $ 285,354,000 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 $ 16,261,000 $ 1,076,000 $ 20,231,000 $ 51,020,000 $ 16,097,000 Grades 5 – 7 17,369,000 3,079,000 19,122,000 12,153,000 8,924,000 Grades 8 – 9 459,000 246,000 334,000 164,000 35,000 Total commercial $ 34,089,000 $ 4,401,000 $ 39,687,000 $ 63,337,000 $ 25,056,000 Retail credit exposure – credit risk profiled by collateral type: Retail Home Equity and Other Retail 1-4 Family Mortgages Total retail $ 15,526,000 $ 60,740,000 Credit quality indicators were as follows as of December 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 $ 508,611,000 $ 28,170,000 $ 325,459,000 $ 526,445,000 $ 75,051,000 Grades 5 – 7 238,942,000 11,686,000 163,455,000 218,682,000 22,798,000 Grades 8 – 9 21,145,000 94,000 11,274,000 0 186,000 Total commercial $ 768,698,000 $ 39,950,000 $ 500,188,000 $ 745,127,000 $ 98,035,000 Retail credit exposure – credit risk profiled by collateral type: Retail Home Equity and Other Retail 1-4 Family Mortgages Total retail $ 65,023,000 $ 235,425,000 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 $ 34,678,000 $ 1,246,000 $ 21,595,000 $ 54,401,000 $ 16,050,000 Grades 5 – 7 19,122,000 3,431,000 25,485,000 16,687,000 13,460,000 Grades 8 – 9 225,000 258,000 1,351,000 67,000 52,000 Total commercial $ 54,025,000 $ 4,935,000 $ 48,431,000 $ 71,155,000 $ 29,562,000 Retail credit exposure – credit risk profiled by collateral type: Retail Home Equity and Other Retail 1-4 Family Mortgages Total retail $ 20,416,000 $ 72,115,000 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 nine September 30, 2019 Commercial Loans Retail Loans Unallocated Total Allowance for loan losses: Balance at June 30, 2019 $ 21,073,000 $ 2,161,000 $ 97,000 $ 23,331,000 Provision for loan losses 522,000 149,000 69,000 740,000 Charge-offs (405,000 ) (114,000 ) 0 (519,000 ) Recoveries 96,000 84,000 0 180,000 Ending balance $ 21,286,000 $ 2,280,000 $ 166,000 $ 23,732,000 Allowance for loan losses: Balance at December 31, 2018 $ 19,442,000 $ 2,068,000 $ 44,000 $ 21,554,000 Provision for loan losses 2,080,000 405,000 122,000 2,607,000 Charge-offs (407,000 ) (364,000 ) 0 (771,000 ) Recoveries 171,000 171,000 0 342,000 Ending balance $ 21,286,000 $ 2,280,000 $ 166,000 $ 23,732,000 Ending balance: individually evaluated for impairment $ 1,699,000 $ 326,000 $ 0 $ 2,025,000 Ending balance: collectively evaluated for impairment $ 19,587,000 $ 1,954,000 $ 166,000 $ 21,707,000 Total loans: Ending balance $ 2,341,797,000 $ 348,380,000 $ 2,690,177,000 Ending balance: individually evaluated for impairment $ 25,898,000 $ 1,764,000 $ 27,662,000 Ending balance: collectively evaluated for impairment $ 2,315,899,000 $ 346,616,000 $ 2,662,515,000 Activity in the allowance for loan losses for acquired loans during the three nine September 30, 2019 Commercial Loans Retail Loans Unallocated Total Allowance for loan losses: Balance at June 30, 2019 $ 198,000 $ 524,000 $ 0 $ 722,000 Provision for loan losses (23,000 ) (17,000 ) 0 (40,000 ) Charge-offs 0 0 0 0 Recoveries 0 0 0 0 Ending balance $ 175,000 $ 507,000 $ 0 $ 682,000 Allowance for loan losses: Balance at December 31, 2018 $ 177,000 $ 649,000 $ 0 $ 826,000 Provision for loan losses (3,000 ) (154,000 ) 0 (157,000 ) Charge-offs 0 0 0 0 Recoveries 1,000 12,000 0 13,000 Ending balance $ 175,000 $ 507,000 $ 0 $ 682,000 Activity in the allowance for loan losses for originated loans during the three nine September 30, 2018 December 31, 2018 Commercial Loans Retail Loans Unallocated Total Allowance for loan losses: Balance at June 30, 2018 $ 18,326,000 $ 2,216,000 $ (60,000 ) $ 20,482,000 Provision for loan losses 371,000 (41,000 ) 143,000 473,000 Charge-offs 0 (169,000 ) 0 (169,000 ) Recoveries 63,000 227,000 0 290,000 Ending balance $ 18,760,000 $ 2,233,000 $ 83,000 $ 21,076,000 Allowance for loan losses: Balance at December 31, 2017 $ 16,456,000 $ 2,584,000 $ 93,000 $ 19,133,000 Provision for loan losses 922,000 (307,000 ) (10,000 ) 605,000 Charge-offs (342,000 ) (493,000 ) 0 (835,000 ) Recoveries 1,724,000 449,000 0 2,173,000 Ending balance $ 18,760,000 $ 2,233,000 $ 83,000 $ 21,076,000 Ending balance: individually evaluated for impairment $ 750,000 $ 248,000 $ 0 $ 998,000 Ending balance: collectively evaluated for impairment $ 18,010,000 $ 1,985,000 $ 83,000 $ 20,078,000 Total loans: Ending balance $ 2,151,998,000 $ 300,448,000 $ 2,452,446,000 Ending balance: individually evaluated for impairment $ 17,134,000 $ 1,748,000 $ 18,882,000 Ending balance: collectively evaluated for impairment $ 2,134,864,000 $ 298,700,000 $ 2,433,564,000 Activity in the allowance for loan losses for acquired loans during the three nine September 30, 2018 Commercial Loans Retail Loans Unallocated Total Allowance for loan losses: Balance at June 30, 2018 $ 105,000 $ 580,000 $ 0 $ 685,000 Provision for loan losses 9,000 (82,000 ) 0 (73,000 ) Charge-offs 0 0 0 0 Recoveries 0 4,000 0 4,000 Ending balance $ 114,000 $ 502,000 $ 0 $ 616,000 Allowance for loan losses: Balance at December 31, 2017 $ 291,000 $ 77,000 $ 0 $ 368,000 Provision for loan losses 69,000 426,000 0 495,000 Charge-offs (246,000 ) (15,000 ) 0 (261,000 ) Recoveries 0 14,000 0 14,000 Ending balance $ 114,000 $ 502,000 $ 0 $ 616,000 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 September 30, 2019 Number of Contracts Pre- Modification Recorded Principal Balance Post- Modification Recorded Principal Balance Originated loans Commercial: Commercial and industrial 1 $ 28,000 $ 28,000 Vacant land, land development and residential construction 1 87,000 87,000 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 2 115,000 115,000 Retail: Home equity and other 1 14,000 14,000 1-4 family mortgages 0 0 0 Total originated retail 1 14,000 14,000 Total originated loans 3 $ 129,000 $ 129,000 Acquired loans Commercial: Commercial and industrial 0 $ 0 $ 0 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 1 102,000 102,000 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 0 0 0 Total acquired commercial 1 102,000 102,000 Retail: Home equity and other 4 48,000 47,000 1-4 family mortgages 1 49,000 49,000 Total acquired retail 5 97,000 96,000 Total acquired loans 6 $ 199,000 $ 198,000 Loans modified as troubled debt restructurings during the nine September 30, 2019 Number of Contracts Pre- Modification Recorded Principal Balance Post- Modification Recorded Principal Balance Originated loans Commercial: Commercial and industrial 7 $ 14,457,000 $ 14,754,000 Vacant land, land development and residential construction 1 87,000 87,000 Real estate – owner occupied 1 1,567,000 1,567,000 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 0 0 0 Total originated commercial 9 16,111,000 16,408,000 Retail: Home equity and other 3 37,000 37,000 1-4 family mortgages 0 0 0 Total originated retail 3 37,000 37,000 Total originated loans 12 $ 16,148,000 $ 16,445,000 Acquired loans Commercial: Commercial and industrial 0 $ 0 $ 0 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 1 102,000 102,000 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 0 0 0 Total acquired commercial 1 102,000 102,000 Retail: Home equity and other 10 188,000 188,000 1-4 family mortgages 5 202,000 203,000 Total acquired retail 15 390,000 391,000 Total acquired loans 16 $ 492,000 $ 493,000 Loans modified as troubled debt restructurings during the three September 30, 2018 Number of Contracts Pre- Modification Recorded Principal Balance Post- Modification Recorded Principal Balance Originated loans Commercial: Commercial and industrial 5 $ 3,118,000 $ 2,964,000 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 1 2,284,000 2,284,000 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 0 0 0 Total originated commercial 6 5,402,000 5,248,000 Retail: Home equity and other 0 0 0 1-4 family mortgages 0 0 0 Total originated retail 0 0 0 Total originated loans 6 $ 5,402,000 $ 5,248,000 Acquired loans Commercial: Commercial and industrial 1 $ 33,000 $ 29,000 Vacant land, land development and residential construction 0 0 0 Real estate – owner occupied 1 150,000 150,000 Real estate – non-owner occupied 0 0 0 Real estate – multi-family and residential rental 0 0 0 Total acquired comme |