Loans | Loans Loan portfolio segments are defined as the level at which an entity develops and documents a systematic methodology to determine its allowance. The Corporation has two loan portfolio segments (commercial loans and consumer loans) that it uses in determining the allowance. Both quantitative and qualitative factors are used by management at the loan portfolio segment level in determining the adequacy of the allowance for the Corporation. Classes of loans are a disaggregation of an entity’s loan portfolio segments. Classes of loans are defined as a group of loans which share similar initial measurement attributes, risk characteristics, and methods for monitoring and assessing credit risk. The Corporation has six classes of loans, which are set forth below. Commercial — Loans and lines of credit to varying types of businesses, including municipalities, school districts and nonprofit organizations, for the purpose of supporting working capital, operational needs and term financing of equipment. Repayment of such loans is generally provided through operating cash flows of the business. Commercial loans are predominately secured by equipment, inventory, accounts receivable, personal guarantees of the owner and other sources of repayment, although the Corporation may also secure commercial loans with real estate. Commercial real estate — Loans secured by real estate occupied by the borrower for ongoing operations (owner-occupied), non-owner occupied real estate leased to one or more tenants (non-owner occupied) and vacant land that has been acquired for investment or future land development (vacant land). Real estate construction and land development — Real estate construction loans represent secured loans for the construction of business properties. Real estate construction loans often convert to a commercial real estate loan at the completion of the construction period. Land development loans represent secured development loans made to borrowers for the purpose of infrastructure improvements to vacant land to create finished marketable residential and commercial lots/land. Most land development loans are originated with the intention that the loans will be paid through the sale of developed lots/land by the developers within twelve months of the completion date. Land development loans at March 31, 2018 and December 31, 2017 were primarily comprised of loans to develop residential properties. Residential mortgage — Loans secured by one - to four -family residential properties, generally with fixed interest rates for periods of fifteen years or less. The loan-to-value ratio at the time of origination is generally 80% or less. Residential mortgage loans with a loan-to-value ratio of more than 80% generally require private mortgage insurance. Consumer installment — Loans to consumers primarily for the purpose of acquiring automobiles, recreational vehicles and personal watercraft and comprised primarily of indirect loans purchased from dealers. These loans consist of relatively small amounts that are spread across many individual borrowers. Home equity — Loans and lines of credit whereby consumers utilize equity in their personal residence, generally through a second mortgage, as collateral to secure the loan. Loans held-for-sale, comprised of fixed-rate residential mortgage loans, were $31.6 million at March 31, 2018 and $52.1 million at December 31, 2017 . The Corporation sold loans totaling $190.4 million and $191.5 million during the three months ended March 31, 2018 and 2017 , respectively. Commercial, commercial real estate, and real estate construction and land development loans are referred to as the Corporation’s commercial loan portfolio, while residential mortgage, consumer installment and home equity loans are referred to as the Corporation’s consumer loan portfolio. A summary of the Corporation's loans follows: (Dollars in thousands) Originated Acquired (1) Total Loans March 31, 2018 Commercial loan portfolio: Commercial $ 2,486,533 $ 940,752 $ 3,427,285 Commercial real estate: Owner-occupied 1,185,797 647,027 1,832,824 Non-owner occupied 1,689,022 991,779 2,680,801 Vacant land 43,984 30,767 74,751 Total commercial real estate 2,918,803 1,669,573 4,588,376 Real estate construction and land development 485,474 74,306 559,780 Subtotal 5,890,810 2,684,631 8,575,441 Consumer loan portfolio: Residential mortgage 2,039,349 1,225,271 3,264,620 Consumer installment 1,478,673 93,567 1,572,240 Home equity 603,684 202,762 806,446 Subtotal 4,121,706 1,521,600 5,643,306 Total loans (2) $ 10,012,516 $ 4,206,231 $ 14,218,747 December 31, 2017 Commercial loan portfolio: Commercial $ 2,407,606 $ 978,036 $ 3,385,642 Commercial real estate: Owner-occupied 1,185,614 627,948 1,813,562 Non-owner occupied 1,518,787 1,087,974 2,606,761 Vacant land 47,024 33,323 80,347 Total commercial real estate 2,751,425 1,749,245 4,500,670 Real estate construction and land development 498,155 76,060 574,215 Subtotal 5,657,186 2,803,341 8,460,527 Consumer loan portfolio: Residential mortgage 1,967,857 1,284,630 3,252,487 Consumer installment 1,510,540 102,468 1,613,008 Home equity 611,846 217,399 829,245 Subtotal 4,090,243 1,604,497 5,694,740 Total loans (2) $ 9,747,429 $ 4,407,838 $ 14,155,267 (1) Acquired loans are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (ASC 310-30) (2) Reported net of deferred costs totaling $23.9 million and $26.1 million at March 31, 2018 and December 31, 2017 , respectively. The Corporation acquired loans at fair value as of the acquisition date, which includes loans acquired in the acquisitions of Talmer Bancorp, Inc. ("Talmer"), Lake Michigan Financial Corporation ("Lake Michigan"), Monarch Community Bancorp, Inc. ("Monarch"), Northwestern Bancorp, Inc. ("Northwestern") and O.A.K. Financial Corporation ("OAK"). Acquired loans are accounted for under ASC 310-30 which recognizes the expected shortfall of expected future cash flows, as compared to the contractual amount due, as nonaccretable discount. Any excess of the net present value of expected future cash flows over the acquisition date fair value is recognized as the accretable discount, or accretable yield. The accretable discount is recognized over the expected remaining life of the acquired loans on a pool basis. In the event an acquired loan is renewed or extended, the loan continues to be accounted for as an acquired loan on a pool basis in accordance with ASC 310-30. Activity for the accretable yield, which includes contractually due interest for acquired loans that have been renewed or extended since the date of acquisition and continue to be accounted for in loan pools in accordance with ASC 310-30, follows: (Dollars in thousands) Talmer Lake Michigan Monarch North-western OAK Total Three Months Ended March 31, 2018 Balance at beginning of period $ 731,353 $ 95,124 $ 22,496 $ 60,814 $ 17,110 $ 926,897 Accretion recognized in interest income (42,640 ) (6,758 ) (1,156 ) (4,904 ) (3,103 ) (58,561 ) Net reclassification (to) from nonaccretable difference (1) (2,883 ) 1,790 (186 ) (510 ) 2,151 362 Balance at end of period $ 685,830 $ 90,156 $ 21,154 $ 55,400 $ 16,158 $ 868,698 Three Months Ended March 31, 2017 Balance at beginning of period $ 798,210 $ 121,416 $ 27,182 $ 69,847 $ 23,316 $ 1,039,971 Accretion recognized in interest income (44,571 ) (7,266 ) (1,181 ) (3,892 ) (3,277 ) (60,187 ) Net reclassification (to) from nonaccretable difference (1) 21,139 (939 ) 54 (1,058 ) 1,428 20,624 Balance at end of period $ 774,778 $ 113,211 $ 26,055 $ 64,897 $ 21,467 $ 1,000,408 (1) The net reclassification results from changes in expected cash flows of the acquired loans which may include increases in the amount of contractual principal and interest expected to be collected due to improvement in credit quality, increases in balances outstanding from advances, renewals, extensions and interest rates; as well as reductions in contractual principal and interest expected to be collected due to credit deterioration, payoffs, and decreases in interest rates. Credit Quality Monitoring The Corporation maintains loan policies and credit underwriting standards as part of the process of managing credit risk. These standards include making loans generally only within the Corporation’s market areas. The Corporation’s lending markets generally consist of communities throughout Michigan and additional communities located within Northeast Ohio and Northern Indiana. The Corporation, through Chemical Bank, has a commercial loan portfolio approval process involving underwriting and individual and group loan approval authorities to consider credit quality and loss exposure at loan origination. The loans in the Corporation’s commercial loan portfolio are risk rated at origination based on the grading system set forth below. The approval authority of relationship managers is established based on experience levels, with credit decisions greater than $1.25 million requiring credit officer approval and credit decisions greater than $3.0 million requiring group loan authority approval, except for six executive and senior officers who have varying loan limits up to $8.0 million . With respect to the group loan authorities, Chemical Bank has various regional loan committees that meet weekly to consider loans ranging in amounts of $3.0 million to $7.0 million , and a senior loan committee, consisting of certain executive and senior officers, that meets weekly to consider loans ranging in amounts from $7.0 million up to Chemical Bank's internal lending limit, depending on risk rating and credit action required. Credit actions exceeding Chemical Bank's internal lending limit require the approval of the board of directors of Chemical Bank. The majority of the Corporation’s consumer loan portfolio is comprised of secured loans that are relatively small. The Corporation’s consumer loan portfolio has a centralized approval process which utilizes standardized underwriting criteria. The ongoing measurement of credit quality of the consumer loan portfolio is largely done on an exception basis. If payments are made on schedule, as agreed, then no further monitoring is performed. However, if delinquency occurs, the delinquent loans are turned over to the Corporation’s collection department for resolution, resulting in repossession or foreclosure if payments are not brought current. Credit quality for the entire consumer loan portfolio is measured by the periodic delinquency rate, nonaccrual amounts and actual losses incurred. Loans in the commercial loan portfolio tend to be larger and more complex than those in the consumer loan portfolio, and therefore, are subject to more intensive monitoring. All loans in the commercial loan portfolio have an assigned relationship manager, and most borrowers provide periodic financial and operating information that allows the relationship managers to stay abreast of credit quality during the life of the loans. The risk ratings of loans in the commercial loan portfolio are reassessed at least annually, with loans below an acceptable risk rating reassessed more frequently and reviewed by various loan committees within the Corporation at least quarterly. The Corporation maintains a centralized independent loan review function that monitors the approval process and ongoing asset quality of the loan portfolio, including the accuracy of loan grades. The Corporation also maintains an independent appraisal review function that participates in the review of all appraisals obtained by the Corporation for loans in the commercial loan portfolio. Credit Quality Indicators Commercial Loan Portfolio Risk categories for the Corporation's commercial loan portfolio establish the credit quality of a borrower by measuring liquidity, debt capacity, coverage and payment behavior as shown in the borrower's financial statements. The risk categories also measure the quality of the borrower's management and the repayment support offered by any guarantors. Risk categories for the Corporation's commercial loan portfolio are described as follows: Pass: Includes all loans without weaknesses or potential weaknesses identified in the categories of special mention, substandard or doubtful. Special Mention: Loans with potential credit weakness or credit deficiency, which, if not corrected, pose an unwarranted financial risk that could weaken the loan by adversely impacting the future repayment ability of the borrower. Substandard: Loans with a well-defined weakness, or weaknesses, such as loans to borrowers who may be experiencing losses from operations or inadequate liquidity of a degree and duration that jeopardizes the orderly repayment of the loan. Substandard loans also are distinguished by the distinct possibility of loss in the future if these weaknesses are not corrected. Doubtful: Loans with all the characteristics of a loan classified as Substandard, with the added characteristic that credit weaknesses make collection in full highly questionable and improbable. The primary source of repayment is nonexistent and there is doubt as to the value of the secondary source of repayments. A doubtful asset has a high probability of total or substantial loss, but because of pending events that may strengthen the asset, its classification as loss is deferred. Loss: An asset classified as loss is considered uncollectible and of such little value that the continuance as a bankable asset is not warranted. This classification does not mean that an asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even through partial recovery may occur in the future. The following schedule presents the recorded investment of loans in the commercial loan portfolio by credit risk categories at March 31, 2018 and December 31, 2017 : (Dollars in thousands) Pass Special Mention Substandard Doubtful Total March 31, 2018 Originated Portfolio: Commercial $ 2,401,859 $ 37,084 $ 47,590 $ — $ 2,486,533 Commercial real estate: Owner-occupied 1,123,847 16,850 44,789 311 1,185,797 Non-owner occupied 1,652,313 33,895 2,813 1 1,689,022 Vacant land 37,179 53 6,752 — 43,984 Total commercial real estate 2,813,339 50,798 54,354 312 2,918,803 Real estate construction and land development 472,340 9,724 3,410 — 485,474 Subtotal 5,687,538 97,606 105,354 312 5,890,810 Acquired Portfolio: Commercial 830,615 66,480 43,471 186 940,752 Commercial real estate: Owner-occupied 583,937 26,683 36,022 385 647,027 Non-owner occupied 913,327 45,146 33,306 — 991,779 Vacant land 25,632 312 4,823 — 30,767 Total commercial real estate 1,522,896 72,141 74,151 385 1,669,573 Real estate construction and land development 71,736 1,611 959 — 74,306 Subtotal 2,425,247 140,232 118,581 571 2,684,631 Total $ 8,112,785 $ 237,838 $ 223,935 $ 883 $ 8,575,441 December 31, 2017 Originated Portfolio: Commercial $ 2,316,464 $ 41,059 $ 50,083 $ — $ 2,407,606 Commercial real estate: Owner-occupied 1,133,609 19,438 32,567 — 1,185,614 Non-owner occupied 1,504,195 4,728 9,864 — 1,518,787 Vacant land 39,775 38 7,211 — 47,024 Total commercial real estate 2,677,579 24,204 49,642 — 2,751,425 Real estate construction and land development 494,528 837 2,790 — 498,155 Subtotal 5,488,571 66,100 102,515 — 5,657,186 Acquired Portfolio: Commercial 873,861 68,418 35,539 218 978,036 Commercial real estate: Owner-occupied 580,127 23,998 23,036 787 627,948 Non-owner occupied 995,709 43,645 48,620 — 1,087,974 Vacant land 27,849 327 5,147 — 33,323 Total commercial real estate 1,603,685 67,970 76,803 787 1,749,245 Real estate construction and land development 72,346 2,218 1,496 — 76,060 Subtotal 2,549,892 138,606 113,838 1,005 2,803,341 Total $ 8,038,463 $ 204,706 $ 216,353 $ 1,005 $ 8,460,527 Consumer Loan Portfolio The Corporation evaluates the credit quality of loans in the consumer loan portfolio based on the performing or nonperforming status of the loan. Loans in the consumer loan portfolio that are performing in accordance with original contractual terms and are less than 90 days past due and accruing interest are considered to be in a performing status, while those that are in nonaccrual status, contractually past due 90 days or more as to interest or principal payments, are considered to be in a nonperforming status. Loans accounted for under ASC 310-30, "Acquired loans", that are not performing in accordance with contractual terms are not reported as nonperforming because these loans are recorded in pools at their net realizable value based on the principal and interest the Corporation expects to collect on these loans. The following schedule presents the recorded investment of loans in the consumer loan portfolio based on loans in a performing status and loans in a nonperforming status at March 31, 2018 and December 31, 2017 : (Dollars in thousands) Residential Mortgage Consumer Installment Home Equity Total Consumer March 31, 2018 Originated Loans: Performing $ 2,031,728 $ 1,477,751 $ 600,645 $ 4,110,124 Nonperforming 7,621 922 3,039 11,582 Subtotal 2,039,349 1,478,673 603,684 4,121,706 Acquired Loans 1,225,271 93,567 202,762 1,521,600 Total $ 3,264,620 $ 1,572,240 $ 806,446 $ 5,643,306 December 31, 2017 Originated Loans: Performing $ 1,959,222 $ 1,509,698 $ 607,541 $ 4,076,461 Nonperforming 8,635 842 4,305 13,782 Subtotal 1,967,857 1,510,540 611,846 4,090,243 Acquired Loans 1,284,630 102,468 217,399 1,604,497 Total $ 3,252,487 $ 1,613,008 $ 829,245 $ 5,694,740 Nonperforming Assets and Past Due Loans Nonperforming assets consist of loans for which the accrual of interest has been discounted, other real estate owned acquired through acquisitions, other real estate owned obtained through foreclosure and other repossessed assets. Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date of the scheduled payments. Loans outside of those accounted for under ASC 310-30 are classified as nonaccrual when, in the opinion of management, collection of principal or interest is doubtful. The accrual of interest is discontinued when a loan is placed in nonaccrual status and any payments received reduce the carrying value of the loan. A loan may be placed back on accrual status if all contractual payments have been received and collection of future principal and interest payments are no longer doubtful. Acquired loans that are not performing in accordance with contractual terms are not reported as nonperforming because these loans are recorded in pools at their net realizable value based on the principal and interest the Corporation expects to collect on these loans. A summary of nonperforming loans follows: (Dollars in thousands) March 31, December 31, Nonperforming assets Nonaccrual loans: Commercial $ 20,000 $ 19,691 Commercial real estate: Owner-occupied 19,855 19,070 Non-owner occupied 5,489 5,270 Vacant land 4,829 5,205 Total commercial real estate 30,173 29,545 Real estate construction and land development 77 77 Residential mortgage 7,621 8,635 Consumer installment 922 842 Home equity 3,039 4,305 Total nonaccrual loans 61,832 63,095 Other real estate owned and repossessed assets 7,719 8,807 Total nonperforming assets $ 69,551 $ 71,902 Accruing loans contractually past due 90 days or more as to interest or principal payments, excluding acquired loans accounted for under ASC 310-30 Commercial $ 322 $ — Commercial real estate: Non-owner occupied — 13 Total commercial real estate — 13 Home equity 913 1,364 Total accruing loans contractually past due 90 days or more as to interest or principal payments, excluding acquired loans accounted for under ASC 310-30 $ 1,235 $ 1,377 The Corporation’s nonaccrual loans at March 31, 2018 and December 31, 2017 included $26.2 million and $29.1 million , respectively, of nonaccrual TDRs. The Corporation had $3.2 million of residential mortgage loans that were in the process of foreclosure at March 31, 2018 , compared to $4.2 million at December 31, 2017 . Loan delinquency, excluding acquired loans accounted for under ASC 310-30, was as follows: (Dollars in thousands) 30-59 days past due 60-89 days past due 90 days or more past due Total past due Current Total loans 90 days or more past due and still accruing March 31, 2018 Originated Portfolio: Commercial $ 8,689 $ 6,079 $ 12,122 $ 26,890 $ 2,459,643 $ 2,486,533 $ 322 Commercial real estate: Owner-occupied 10,829 3,368 8,394 22,591 1,163,206 1,185,797 — Non-owner occupied 3,749 897 928 5,574 1,683,448 1,689,022 — Vacant land 675 — 180 855 43,129 43,984 — Total commercial real estate 15,253 4,265 9,502 29,020 2,889,783 2,918,803 — Real estate construction and land development 100 — — 100 485,374 485,474 — Residential mortgage 3,020 246 2,276 5,542 2,033,807 2,039,349 — Consumer installment 2,817 570 257 3,644 1,475,029 1,478,673 — Home equity 3,631 1,360 2,049 7,040 596,644 603,684 913 Total $ 33,510 $ 12,520 $ 26,206 $ 72,236 $ 9,940,280 $ 10,012,516 $ 1,235 December 31, 2017 Originated Portfolio: Commercial $ 13,906 $ 3,766 $ 9,494 $ 27,166 $ 2,380,440 $ 2,407,606 $ — Commercial real estate: Owner-occupied 7,644 1,306 5,027 13,977 1,171,637 1,185,614 — Non-owner occupied 1,653 228 693 2,574 1,516,213 1,518,787 13 Vacant land 83 28 153 264 46,760 47,024 — Total commercial real estate 9,380 1,562 5,873 16,815 2,734,610 2,751,425 13 Real estate construction and land development — — — — 498,155 498,155 — Residential mortgage 2,795 1,415 858 5,068 1,962,789 1,967,857 — Consumer installment 3,324 442 226 3,992 1,506,548 1,510,540 — Home equity 2,319 1,301 2,196 5,816 606,030 611,846 1,364 Total $ 31,724 $ 8,486 $ 18,647 $ 58,857 $ 9,688,572 $ 9,747,429 $ 1,377 Impaired Loans A loan is impaired when, based on current information and events, it is probable that the Corporation will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans include nonperforming loans and all TDRs. Impaired loans are accounted for at the lower of the present value of expected cash flows or the estimated fair value of the collateral. When the present value of expected cash flows or the fair value of the collateral of an impaired loan not accounted for under ASC 310-30 is less than the amount of unpaid principal outstanding on the loan, the recorded principal balance of the loan is reduced to its carrying value through either a specific allowance for loan loss or a partial charge-off of the loan balance. The following schedules present impaired loans by classes of loans at March 31, 2018 and December 31, 2017 : (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Valuation Allowance March 31, 2018 Impaired loans with a valuation allowance: Commercial $ 23,500 $ 25,998 $ 1,987 Commercial real estate: Owner-occupied 15,177 19,266 2,510 Non-owner occupied 2,952 5,545 201 Vacant land 1,317 1,520 356 Total commercial real estate 19,446 26,331 3,067 Real estate construction and land development 164 164 26 Residential mortgage 13,434 13,434 1,422 Consumer installment 1,101 1,101 206 Home equity 3,409 3,409 286 Subtotal 61,054 70,437 6,994 Impaired loans with no related valuation allowance: Commercial 14,771 15,637 — Commercial real estate: Owner-occupied 15,435 16,291 — Non-owner occupied 8,122 9,135 — Vacant land 3,854 4,652 — Total commercial real estate 27,411 30,078 — Real estate construction and land development 174 241 — Residential mortgage 5,928 5,928 — Consumer installment — — — Home equity 1,780 1,780 — Subtotal 50,064 53,664 — Total impaired loans: Commercial 38,271 41,635 1,987 Commercial real estate: Owner-occupied 30,612 35,557 2,510 Non-owner occupied 11,074 14,680 201 Vacant land 5,171 6,172 356 Total commercial real estate 46,857 56,409 3,067 Real estate construction and land development 338 405 26 Residential mortgage 19,362 19,362 1,422 Consumer installment 1,101 1,101 206 Home equity 5,189 5,189 286 Total $ 111,118 $ 124,101 $ 6,994 (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Valuation Allowance December 31, 2017 Impaired loans with a valuation allowance: Commercial $ 28,897 $ 31,655 $ 2,296 Commercial real estate: Owner-occupied 17,774 21,588 2,317 Non-owner occupied 5,307 7,870 316 Vacant land 4,922 5,122 594 Total commercial real estate 28,003 34,580 3,227 Real estate construction and land development 313 313 14 Residential mortgage 15,872 15,872 1,487 Consumer installment 966 966 120 Home equity 4,570 4,570 858 Subtotal 78,621 87,956 8,002 Impaired loans with no related valuation allowance: Commercial 8,504 9,291 — Commercial real estate: Owner-occupied 11,351 12,631 — Non-owner occupied 5,977 6,438 — Vacant land 752 792 — Total commercial real estate 18,080 19,861 — Residential mortgage 4,902 4,902 — Home equity 1,770 1,770 — Subtotal 33,256 35,824 — Total impaired loans: Commercial 37,401 40,946 2,296 Commercial real estate: Owner-occupied 29,125 34,219 2,317 Non-owner occupied 11,284 14,308 316 Vacant land 5,674 5,914 594 Total commercial real estate 46,083 54,441 3,227 Real estate construction and land development 313 313 14 Residential mortgage 20,774 20,774 1,487 Consumer installment 966 966 120 Home equity 6,340 6,340 858 Total $ 111,877 $ 123,780 $ 8,002 The following schedule presents additional information regarding impaired loans by classes of loans segregated by those requiring a valuation allowance and those not requiring a valuation allowance for the three months ended March 31, 2018 and 2017 , and the respective interest income amounts recognized: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 (Dollars in thousands) Average recorded investment Interest income recognized while on impaired status Average recorded investment Interest income recognized while on impaired status Impaired loans with a valuation allowance: Commercial $ 20,402 $ 165 $ 25,712 $ 224 Commercial real estate: Owner-occupied 14,072 82 14,659 154 Non-owner occupied 3,870 11 3,388 24 Vacant land 3,695 15 1,988 25 Total commercial real estate 21,637 108 20,035 203 Real estate construction and land development 225 2 161 2 Residential mortgage 13,604 117 17,398 155 Consumer installment 906 1 780 1 Home equity 3,694 17 4,071 21 Subtotal $ 60,468 $ 410 $ 68,157 $ 606 Impaired loans with no related valuation allowance: Commercial $ 18,126 $ 95 $ 9,297 $ 30 Commercial real estate: Owner-occupied 15,369 56 9,866 6 Non-owner occupied 7,158 65 9,131 85 Vacant land 1,769 — 4,476 12 Total commercial real estate 24,296 121 23,473 103 Real estate construction and land development 107 1 81 — Residential mortgage 6,138 23 3,808 8 Consumer installment 140 — 215 — Home equity 2,046 7 880 1 Subtotal $ 50,853 $ 247 $ 37,754 $ 142 Total impaired loans: Commercial $ 38,528 $ 260 $ 35,009 $ 254 Commercial real estate: Owner-occupied 29,441 138 24,525 160 Non-owner occupied 11,028 76 12,519 109 Vacant land 5,464 15 6,464 37 Total commercial real estate 45,933 229 43,508 306 Real estate construction and land development 332 3 242 2 Residential mortgage 19,742 140 21,206 163 Consumer installment 1,046 1 995 1 Home equity 5,740 24 4,951 22 Total $ 111,321 $ 657 $ 105,911 $ 748 The difference between an impaired loan’s recorded investment and the unpaid principal balance for originated loans represents a partial charge-off resulting from a confirmed loss due to the value of the collateral securing the loan being below the loan balance and management’s assessment that full collection of the loan balance is not likely. Impaired loans included $49.3 million and $48.8 million at March 31, 2018 and December 31, 2017 , respectively, of accruing TDRs. Loans Modified Under Troubled Debt Restructurings (TDRs) The following tables present the recorded investment of loans modified into TDRs during the three months ended March 31, 2018 and 2017 by type of concession granted. In cases where more than one type of concession was granted, the loans were categorized based on the most significant concession. Concession type (Dollars in thousands) Principal Principal Interest Forbearance Total Pre-modification recorded investment Post-modification recorded investment For the three months ended March 31, 2018 Commercial loan portfolio: Commercial $ 903 $ — $ 1,065 $ 261 18 $ 2,235 $ 2,229 Commercial real estate: Owner-occupied — — 726 482 2 1,208 1,208 Non-owner occupied 68 — — — 1 74 68 Total commercial real estate 68 — 726 482 3 1,282 1,276 Total Commercial 971 — 1,791 743 21 3,517 3,505 Consumer loan portfolio: Residential mortgage 138 — — — 4 142 138 Consumer installment 71 23 28 — 16 128 122 Home equity 185 — 28 — 5 253 213 Total Consumer 394 23 56 — 25 523 473 Total loans $ 1,365 $ 23 $ 1,847 $ 743 46 $ 4,040 $ 3,978 Concession type (Dollars in thousands) Principal Interest Forbearance Total Pre-modification recorded investment Post-modification recorded investment For the three months ended March 31, 2017 Commercial loan portfolio: Commercial $ 50 $ 1,101 $ 579 5 $ 1,739 $ 1,730 Commercial real estate: Owner-occupied 447 75 — 3 522 522 Total commercial real estate 447 75 — 3 522 522 Total Commercial 497 1,176 579 8 2,261 2,252 Consumer loan portfolio: Residential mortgage 98 — — 1 98 98 Consumer installment 10 — — 2 11 10 Home equity 111 — — 1 165 111 Total Consumer 219 — — 4 274 219 Total loans $ 716 $ 1,176 $ 579 12 $ 2,535 $ 2,471 The pre-modification and post-modification recorded investment represents amounts as of the date of loan modification. The difference between the pre-modification and post-modification recorded investment of residential mortgage TDRs represents impairment recognized by the Corporation through the provision for loan losses computed based on a loan's post-modification present value of expected future cash flows discounted at the loan's original effective interest rate. The following schedule presents the Corporation's TDRs at March 31, 2018 and December 31, 2017 : (Dollars in thousands) Accruing TDRs Nonaccrual TDRs Total March 31, 2018 Commercial loan portfolio $ 35,216 $ 21,914 $ 57,130 Consumer loan portfolio 14,070 4,265 18,335 Total $ 49,286 $ 26,179 $ 75,465 December 31, 2017 Commercial loan portfolio $ 34,484 $ 24,358 $ 58,842 Consumer loan portfolio 14,298 4,748 19,046 Total $ 48,782 $ 29,106 $ 77,888 The following schedule includes TDRs for which there was a payment default during the three months ended March 31, 2018 and 2017 , whereby the borrower was past due with respect to principal and/or interest for 90 days or more, and the loan became a TDR during the twelve-month period prior to the default: For The Three Months Ended March 31, 2018 (Dollars in thousands) Number of loans Principal balance Commercial loan portfolio (commercial) 1 $ 82 Consumer loan portfolio (residential mortgage) 1 3 Total 2 $ 85 For The Three Months Ended March 31, 2017 (Dollars in thousands) Number of loans Principal balance Commercial loan portfolio (commercial) 3 $ 620 Consumer loan portfolio (residential mortgage) 2 105 Total 5 $ 725 Commitments to lend additional funds to borrowers whose terms have been modified in TDRs totaled $1.6 million and $2 thousand at March 31, 2018 and December 31, 2017 , respectively. Allowance for Loan Losses The following schedule presents, by loan portfolio segment, the changes in the allowance for the originated loan portfolio for the three months ended March 31, 2018 and 2017 . (Dollars in thousands) Commercial Loan Portfolio Consumer Loan Portfolio Total Originated Loan Portfolio Changes in allowance for loan losses for the three months ended March 31, 2018: Beginning balance $ 66,133 $ 25,754 $ 91,887 Provision for loan losses 3,400 2,856 6,256 Charge-offs (2,594 ) (2,230 ) (4,824 ) Recoveries 805 638 1,443 Ending balance $ 67,744 $ 27,018 $ 94,762 Changes in allowance for loan losses for the three months ended March 31, 2017: Beginning balance $ 51,201 $ 27,067 $ 78,268 Provision for loan losses 4,392 (342 ) 4,050 Charge-offs (2,691 ) (2,883 ) (5,574 ) Recoveries 1,413 617 2,030 Ending balance $ 54,315 $ 24,459 $ 78,774 The following schedule presents by loan portfolio segment, details regarding the balance in the allowance and the recorded investment in loans at March 31, 2018 and December 31, 2017 by impairment evaluation method. (Dollars in thousands) Commercial Consumer Total Allowance for loan losses balance at March 31, 2018 attributable to: Loans individually evaluated for impairment $ 5,080 $ 1,914 $ 6,994 Loans collectively evaluated for impairment 62,664 25,104 87,768 Loans acquired with deteriorated credit quality |