10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2017

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                  

Commission File Number:001-15781

BERKSHIRE HILLS BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware	04-3510455
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
24 North Street, Pittsfield, Massachusetts	01201
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (413) 236-3149

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filers,” “accelerated filers,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer     ý        Accelerated filer     o

Non-accelerated filer    o     (Do not check if a smaller reporting company)    

Smaller reporting company    o

Emerging growth company    o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o  No ý

The Registrant had 45,267,321 shares of common stock, par value $0.01 per share, outstanding as of November 7, 2017.

BERKSHIRE HILLS BANCORP, INC.

FORM 10-Q

INDEX 

				Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (unaudited)
	Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016			4
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2017 and 2016			5
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2017 and 2016			6
	Consolidated Statements of Changes in Shareholders’ Equity for the Nine Months Ended September 30, 2017 and 2016			7
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016			8
	Notes to Consolidated Financial Statements
		Note 1	Basis of Presentation	10
		Note 2	Trading Security	13
		Note 3	Securities Available for Sale and Held to Maturity	14
		Note 4	Loans	19
		Note 5	Loan Loss Allowance	32
		Note 6	Deposits	39
		Note 7	Borrowed Funds	39
		Note 8	Capital Ratios and Shareholders’ Equity	41
		Note 9	Earnings per Share	45
		Note 10	Stock-Based Compensation Plans	46
		Note 11	Derivative Financial Instruments and Hedging Activities	47
		Note 12	Fair Value Measurements	54
		Note 13	Net Interest Income after Provision for Loan Losses	62
		Note 14	Subsequent Events	63
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			64
	Selected Financial Data			64
	Average Balances and Average Yields/Rates			66
	Non-GAAP Financial Measures			68
Item 3.	Quantitative and Qualitative Disclosures about Market Risk			84
Item 4.	Controls and Procedures			85

2

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	86
Item 1A.	Risk Factors	87
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	88
Item 3.	Defaults Upon Senior Securities	88
Item 4.	Mine Safety Disclosures	88
Item 5.	Other Information	88
Item 6.	Exhibits	89
Signatures		90

3

PART I

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

	September 30, 2017			December 31, 2016
(In thousands, except share data)
Assets
Cash and due from banks	$	62,827		$	71,494
Short-term investments	29,219			41,581
Total cash and cash equivalents	92,046			113,075
Trading security, at fair value	12,603			13,229
Securities available for sale, at fair value	1,341,013			1,209,537
Securities held to maturity (fair values of $402,799 and $337,680)	395,065			334,368
Federal Home Loan Bank stock and other restricted securities	75,117			71,112
Total securities	1,823,798			1,628,246
Loans held for sale, at fair value	143,745			120,673
Commercial real estate	2,671,237			2,616,438
Commercial and industrial loans	1,254,947			1,062,038
Residential mortgages	1,983,126			1,893,131
Consumer loans	1,038,096			978,180
Total loans	6,947,406			6,549,787
Less: Allowance for loan losses	(49,004		)	(43,998		)
Net loans	6,898,402			6,505,789
Premises and equipment, net	94,729			93,215
Other real estate owned	288			151
Goodwill	403,106			403,106
Other intangible assets	17,136			19,445
Cash surrender value of bank-owned life insurance policies	161,290			139,257
Deferred tax assets, net	39,467			41,128
Other assets	92,696			98,457
Total assets	$	9,766,703		$	9,162,542
Liabilities
Demand deposits	$	1,221,043		$	1,278,875
NOW deposits	573,607			570,583
Money market deposits	1,751,190			1,781,605
Savings deposits	670,683			657,486
Time deposits	2,573,623			2,333,543
Total deposits	6,790,146			6,622,092
Short-term debt	1,061,300			1,082,044
Long-term Federal Home Loan Bank advances	338,054			142,792
Subordinated borrowings	89,295			89,161
Total borrowings	1,488,649			1,313,997
Other liabilities	203,381			133,155
Total liabilities	$	8,482,176		$	8,069,244
(continued)
Shareholders’ equity
Common stock ($.01 par value; 50,000,000 shares authorized and 41,369,819 shares issued and 40,423,777 shares outstanding in 2017; 36,732,129 shares issued and 35,672,817 shares outstanding in 2016)	412			366
Additional paid-in capital	1,053,509			898,989
Unearned compensation	(7,770		)	(6,374		)
Retained earnings	251,835			217,494
Accumulated other comprehensive income	11,187			9,766
Treasury stock, at cost (946,042 shares in 2017 and 1,059,312 shares in 2016)	(24,646		)	(26,943		)
Total shareholders’ equity	1,284,527			1,093,298
Total liabilities and shareholders’ equity	$	9,766,703		$	9,162,542

The accompanying notes are an integral part of these consolidated financial statements.

4

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME 

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands, except per share data)	2017			2016		2017			2016
Interest and dividend income
Loans	$	76,024		$	61,571	$	216,950		$	179,716
Securities and other	13,036			8,940		37,485			28,289
Total interest and dividend income	89,060			70,511		254,435			208,005
Interest expense
Deposits	10,984			7,790		30,053			22,327
Borrowings	6,078			4,750		15,953			12,569
Total interest expense	17,062			12,540		46,006			34,896
Net interest income	71,998			57,971		208,429			173,109
Non-interest income
Mortgage banking originations	13,374			1,862		42,333			4,018
Loan related income	6,081			5,102		15,535			11,046
Deposit related fees	6,445			6,278		19,294			18,678
Insurance commissions and fees	2,581			2,601		8,305			8,154
Wealth management fees	2,315			2,269		7,127			7,006
Total fee income	30,796			18,112		92,594			48,902
Other, net	(2,255		)	188		(2,438		)	(440		)
(Loss) Gain on sale of securities, net	(1		)	78		12,568			101
Gain on sale of business operations, net	296			563		296			563
Loss on termination of hedges	—			—		(6,629		)	—
Total non-interest income	28,836			18,941		96,391			49,126
Total net revenue	100,834			76,912		304,820			222,235
Provision for loan losses	4,900			4,734		14,884			13,262
Non-interest expense
Compensation and benefits	37,643			26,119		110,759			76,497
Occupancy and equipment	8,267			6,650		25,971			19,900
Technology and communications	6,644			4,902		19,614			14,573
Marketing and promotion	2,128			671		7,304			2,081
Professional services	2,247			1,744		6,888			4,533
FDIC premiums and assessments	1,651			1,208		4,537			3,644
Other real estate owned and foreclosures	(23		)	46		35			702
Amortization of intangible assets	739			749		2,310			2,355
Acquisition, restructuring, and other expenses	1,420			2,170		16,005			3,828
Other	5,104			4,585		16,246			14,099
Total non-interest expense	65,820			48,844		209,669			142,212
Income before income taxes	30,114			23,334		80,267			66,761
Income tax expense	7,211			6,953		22,210			18,422
Net income	$	22,903		$	16,381	$	58,057		$	48,339
Earnings per share:
Basic	$	0.57		$	0.53	$	1.55		$	1.58
Diluted	$	0.57		$	0.53	$	1.54		$	1.57
Weighted average common shares outstanding:
Basic	39,984			30,621		37,547			30,584
Diluted	40,145			30,811		37,708			30,757

The accompanying notes are an integral part of these consolidated financial statements.

5

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2017			2016			2017			2016
Net income	$	22,903		$	16,381		$	58,057		$	48,339
Other comprehensive income, before tax:
Changes in unrealized gain on securities available-for-sale	1,461			(5,654		)	(4,044		)	21,639
Changes in unrealized gains and losses on derivative hedges	—			2,730			6,573			(2,660		)
Income taxes related to other comprehensive income:
Changes in unrealized gain on securities available-for-sale	(605		)	2,218			1,481			(8,330		)
Changes in unrealized gains and losses on derivative hedges	—			(1,096		)	(2,589		)	1,067
Total other comprehensive income/(loss)	856			(1,802		)	1,421			11,716
Total comprehensive income	$	23,759		$	14,579		$	59,478		$	60,055

The accompanying notes are an integral part of these consolidated financial statements.

6

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

					Additional									Accumulated other
	Common stock				paid-in			Unearned			Retained			comprehensive			Treasury
(In thousands)	Shares		Amount		capital			compensation			earnings			income			stock			Total
Balance at December 31, 2015	30,974		$	322	$	742,619		$	(6,997	)	$	183,885		$	(3,305	)	$	(29,335	)	$	887,189
Comprehensive income:
Net income	—		—		—			—			48,339			—			—			48,339
Other comprehensive income	—		—		—			—			—			11,716			—			11,716
Total comprehensive income	—		—		—			—			48,339			11,716			—			60,055
Acquisition of 44 Business Capital	45		—		—			—			—			—			1,217			1,217
Cash dividends declared ($0.60 per share)	—		—		—			—			(18,675		)	—			—			(18,675		)
Treasury stock adjustment (1)	—		—		4,632			—			—			—			(4,632		)	—
Forfeited shares	(63	)	—		106			1,592			—			—			(1,698		)	—
Exercise of stock options	9		—		—			—			(96		)	—			238			142
Restricted stock grants	185		—		504			(5,052		)	—			—			4,548			—
Stock-based compensation	—		—		—			3,466			—			—			—			3,466
Net tax benefit related to stock-based compensation	—		—		(1		)	—			—			—			—			(1		)
Other, net	(28	)	—		(16		)	—			—			—			(784		)	(800		)
Balance at September 30, 2016	31,122		$	322	$	747,844		$	(6,991	)	$	213,453		$	8,411		$	(30,446	)	$	932,593
Balance at December 31, 2016	35,673		$	366	$	898,989		$	(6,374	)	$	217,494		$	9,766		$	(26,943	)	$	1,093,298
Comprehensive income:
Net income	—		—		—			—			58,057			—			—			58,057
Other comprehensive income	—		—		—			—			—			1,421			—			1,421
Total comprehensive income	—		—		—			—			58,057			1,421			—			59,478
Common stock issued	4,638		46		152,879			—			—			—			—			152,925
Cash dividends declared ($0.63 per share)	—		—		—			—			(23,515		)	—			—			(23,515		)
Treasury stock adjustment	—		—		—			—			—			—			—			—
Forfeited shares	(10	)	—		63			304			—			—			(367		)	—
Exercise of stock options	11		—		—			—			(132		)	—			293			161
Restricted stock grants	156		—		1,582			(5,565		)	—			—			3,983			—
Stock-based compensation	—		—		—			3,865			—			—			—			3,865
Net tax benefit related to stock-based compensation	—		—		—			—			—			—			—			—
Other, net	(44	)	—		(4		)	—			(69		)	—			(1,612		)	(1,685		)
Balance at September 30, 2017	40,424		$	412	$	1,053,509		$	(7,770	)	$	251,835		$	11,187		$	(24,646	)	$	1,284,527

(1) Treasury stock adjustment represents the extinguishment of 168,931 shares of Berkshire Hills common stock held by the Company's subsidiary.

The accompanying notes are an integral part of these consolidated financial statements.

7

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
(In thousands)	2017			2016
Cash flows from operating activities:
Net income	$	58,057		$	48,339
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	14,884			13,262
Net amortization of securities	2,103			3,476
Change in unamortized net loan costs and premiums	1,388			(3,825		)
Premises and equipment depreciation and amortization expense	7,448			6,226
Stock-based compensation expense	3,865			3,466
Accretion of purchase accounting entries, net	(11,837		)	(7,266		)
Amortization of other intangibles	2,310			2,355
Write down of other real estate owned	10			395
Excess tax loss from stock-based payment arrangements	—			(105		)
Income from cash surrender value of bank-owned life insurance policies	(2,343		)	(2,905		)
Gain on sales of securities, net	(12,568		)	(101		)
Net decrease (increase) in loans held for sale	(23,072		)	(7,280		)
Loss on disposition of assets	912			32
(Gain) loss on sale of real estate	(54		)	62
Amortization of interest in tax-advantaged projects	6,129			4,454
Net change in other	8,845			(1,089		)
Net cash provided by operating activities	56,077			59,496
Cash flows from investing activities:
Net decrease in trading security	468			446
Proceeds from sales of securities available for sale	57,308			283,755
Proceeds from maturities, calls and prepayments of securities available for sale	139,434			128,566
Purchases of securities available for sale	(323,292		)	(186,392		)
Proceeds from maturities, calls and prepayments of securities held to maturity	8,094			5,946
Purchases of securities held to maturity	(70,153		)	(5,969		)
Net change in loans	(330,869		)	(284,440		)
Purchases of bank owned life insurance	(20,000		)	—
Proceeds from surrender of bank-owned life insurance	310			258
Proceeds from sale of Federal Home Loan Bank stock	72,820			18,544
Purchase of Federal Home Loan Bank stock	(76,646		)	(8,803		)
Net investment in limited partnership tax credits	(4,742		)	(5,189		)
Proceeds from the sale of premises and equipment	—			226
Purchase of premises and equipment, net	(9,740		)	(4,314		)
Acquisitions, net of cash (paid) acquired	—			(55,542		)
Payment to terminate cash flow hedges	6,573			—
Proceeds from sale of other real estate	352			1,483
Net cash (used) by investing activities	(550,083		)	(111,425		)
(continued)

8

	Nine Months Ended September 30,
(In thousands)	2017			2016
Cash flows from financing activities:
Net increase in deposits	170,381			161,114
Proceeds from Federal Home Loan Bank advances and other borrowings	5,291,601			7,264,120
Repayments of Federal Home Loan Bank advances and other borrowings	(5,116,876		)	(7,389,048		)
Exercise of stock options	161			141
Common stock cash dividends paid	(23,515		)	(18,675		)
Common stock issued, net	152,925			—
Acquisition contingent consideration paid	(1,700		)	—
Net cash provided by financing activities	472,977			17,652
Net change in cash and cash equivalents	(21,029		)	(34,277		)
Cash and cash equivalents at beginning of period	113,075			103,562
Cash and cash equivalents at end of period	$	92,046		$	69,285
Supplemental cash flow information:
Interest paid on deposits	$	29,822		$	21,954
Interest paid on borrowed funds	15,775			12,166
Income taxes paid, net	9,467			10,995
Acquisition of non-cash assets and liabilities:
Assets acquired	—			56,976
Liabilities assumed	—			(109		)
Other non-cash changes:
Other net comprehensive income	1,421			11,716
Real estate owned acquired in settlement of loans	444			295

The accompanying notes are an integral part of these consolidated financial statements.

9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.           BASIS OF PRESENTATION

The consolidated financial statements (the “financial statements”) of Berkshire Hills Bancorp, Inc. and its subsidiaries (the “Company” or “Berkshire”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company is a Delaware corporation and the holding company for Berkshire Bank (the “Bank”), a Massachusetts-chartered trust company headquartered in Pittsfield, Massachusetts, and Berkshire Insurance Group, Inc. These financial statements include the accounts of the Company, its wholly-owned subsidiaries and the Bank’s consolidated subsidiaries. In consolidation, all significant intercompany accounts and transactions are eliminated. All material wholly-owned and majority-owned subsidiaries are consolidated unless GAAP requires otherwise.

The Company has evaluated subsequent events for potential recognition and/or disclosure through the date these consolidated financial statements were issued.

These interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, certain information and footnote disclosures normally included in financial statements prepared according to GAAP have been omitted.

The results for any interim period are not necessarily indicative of results for the full year. These consolidated financial statements should be read in conjunction with the audited financial statements and note disclosures for Berkshire Hills Bancorp, Inc. previously filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. In management’s opinion, all adjustment’s necessary for a fair statement are reflected in the interim periods presented.

Reclassifications

Certain items in prior financial statements have been reclassified to conform to the current presentation.

Recently Adopted Accounting Principles

Effective January 1, 2017, the following new accounting guidance was adopted by the Company:

• ASU No. 2016-05, Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships;

• ASU No. 2016-06, Contingent Put and Call Options in Debt Instruments;

• ASU No. 2016-07, Simplifying the Transition to the Equity Method of Accounting

• ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments; and

• ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities

The adoption of these accounting standards did not have a material impact on the Company's financial statements.

Future Application of Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This ASU provides a revenue recognition framework for any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other accounting standards. ASU 2014-09 is effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period with early adoption not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. In August 2015, ASU No. 2015-14, “Deferral of the Effective Date” was issued and delayed the effective date of ASU 2014-09 to annual and interim periods in fiscal years beginning after December 15, 2017. While the assessment of the provisions of ASU No. 2014-09 is not complete, the timing of the Company’s revenue recognition is not expected to materially change. This ASU impacts the Company’s wealth management services, administrative services for customer deposit accounts, interchange fees, and sale of owned real estate properties. The extent of this ASU on these revenue lines is being evaluated by the Company. The Company intends to adopt the ASU for the first quarter of 2018. Adoption is not anticipated to have a material impact on the Company’s financial statements.

10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU requires an entity to: i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in other comprehensive income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of available-for-sale debt securities in combination with other deferred tax assets. The guidance provides an election to subsequently measure certain non-marketable equity investments at cost less any impairment and adjusted for certain observable price changes. The guidance also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. The guidance is effective for annual periods beginning after December 15, 2017. Early adoption is only permitted for the provision related to instrument specific credit risk. While the Company has performed a preliminary evaluation of the provisions of ASU No. 2016-01, the effect of the adoption will depend on the Company’s portfolio at the time of transition.

In February 2016, the FASB issued ASU No. 2016-02, “Leases”. The new pronouncement improves the transparency and comparability of financial reporting around leasing transactions and more closely aligns accounting for leases with the recently issued International Financial Reporting Standard.  The pronouncement affects all entities that are participants to leasing agreements. From a lessee accounting perspective, the ASU requires a lessee to recognize assets and liabilities on the balance sheet for operating leases and changes many key definitions, including the definition of a lease. The ASU includes a short-term lease exception for leases with a term of twelve months or less, in which a lessee can make an accounting policy election not to recognize lease assets and lease liabilities. Lessees will continue to differentiate between finance leases (previously referred to as capital leases) and operating leases, using classification criteria that are substantially similar to the previous guidance. For lessees, the recognition, measurement, and presentation of expenses and cash flows arising from a lease have not significantly changed from previous GAAP. From a lessor accounting perspective, the guidance is largely unchanged, except for targeted improvements to align with new terminology under lessee accounting and with the updated revenue recognition guidance in Topic 606. For sale-leaseback transactions, for a sale to occur the transfer must meet the sale criteria under the new revenue standard, ASC 606. Entities will not be required to reassess transactions previously accounted under then existing guidance.

Additionally, the ASU includes additional quantitative and qualitative disclosures required by lessees and lessors to help users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 is effective for fiscal years beginning after December 31, 2018, and interim periods within those fiscal years. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply as well as transition guidance specific to nonstandard leasing transactions. The Company is currently evaluating the provisions of ASU No. 2016-02 to determine the potential impact the new standard will have on the Company's consolidated financial statements. It is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date; however, this is not expected to be material to the Company's results of operations or financial position. The Company continues to evaluate the extent of potential impact the new guidance will have on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” This ASU improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments. The ASU requires companies to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Forward-looking information will now be used in credit loss estimates. The ASU requires enhanced disclosures to provide better understanding surrounding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of a company’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. Most debt instruments will require a cumulative-effect adjustment to retained earnings on the statement of financial position as of the beginning of the first reporting

11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

period in which the guidance is adopted (modified retrospective approach). However, there is instrument-specific transition guidance. ASU No. 2016-13 is effective for interim and annual periods beginning after December 15, 2019. Early application will be permitted for interim and annual periods beginning after December 15, 2018. The Company is evaluating the provisions of ASU No. 2016-13, and will closely monitor developments and additional guidance to determine the potential impact on the Company's consolidated financial statements. The Company expects the primary changes to be the application of the expected credit loss model to the financial statements. In addition, the Company expects the guidance to change the presentation of credit losses within the available-for-sale fixed maturities portfolio through an allowance method rather than as a direct write-down. The expected credit loss model will require a financial asset to be presented at the net amount expected to be collected. The allowance method for available-for-sale debt securities will allow the Company to record reversals of credit losses if the estimate of credit losses declines. The Company is in the process of identifying and implementing required changes to loan loss estimation models and processes and evaluating the impact of this new accounting guidance, which at the date of adoption is expected to increase the allowance for credit losses with a resulting negative adjustment to retained earnings.

In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities.” The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU No. 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the consolidated balance sheet as of the date of adoption. While the Company continues to assess all potential impacts of the standard, we currently expect adoption to have an immaterial impact on our consolidated financial statements.

12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.           TRADING SECURITY

The Company holds a tax advantaged economic development bond accounted for at fair value. The security had an amortized cost of $10.9 million and $11.4 million, and a fair value of $12.6 million and $13.2 million, at September 30, 2017 and December 31, 2016, respectively. As discussed further in Note 11 - Derivative Financial Instruments and Hedging Activities, the Company entered into a swap contract to swap-out the fixed rate of the security in exchange for a variable rate. The Company does not purchase securities with the intent of selling them in the near term, and there were no other securities in the trading portfolio at September 30, 2017.

13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY

The following is a summary of securities available for sale and held to maturity:

(In thousands)	Amortized  Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
September 30, 2017
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	114,365	$	4,828	$	(433	)	$	118,760
Agency collateralized mortgage obligations	807,772		2,538		(2,874		)	807,436
Agency mortgage-backed securities	217,626		911		(1,470		)	217,067
Agency commercial mortgage-backed securities	64,296		126		(1,378		)	63,044
Corporate bonds	66,321		1,059		(146		)	67,234
Trust preferred securities	11,350		442		—			11,792
Other bonds and obligations	10,095		204		(8		)	10,291
Total debt securities	1,291,825		10,108		(6,309		)	1,295,624
Marketable equity securities	36,054		9,645		(310		)	45,389
Total securities available for sale	1,327,879		19,753		(6,619		)	1,341,013
Securities held to maturity
Municipal bonds and obligations	268,990		6,196		(1,300		)	273,886
Agency collateralized mortgage obligations	74,277		1,679		(356		)	75,600
Agency mortgage-backed securities	8,080		—		(142		)	7,938
Agency commercial mortgage-backed securities	10,497		—		(180		)	10,317
Tax advantaged economic development bonds	32,899		1,837		—			34,736
Other bonds and obligations	322		—		—			322
Total securities held to maturity	395,065		9,712		(1,978		)	402,799
Total	$	1,722,944	$	29,465	$	(8,597	)	$	1,743,812
December 31, 2016
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	117,910	$	2,955	$	(1,049	)	$	119,816
Agency collateralized mortgage obligations	652,680		2,522		(3,291		)	651,911
Agency mortgage-backed securities	230,308		557		(2,181		)	228,684
Agency commercial mortgage-backed securities	65,673		229		(1,368		)	64,534
Corporate bonds	56,320		408		(722		)	56,006
Trust preferred securities	11,578		368		(59		)	11,887
Other bonds and obligations	10,979		195		(16		)	11,158
Total debt securities	1,145,448		7,234		(8,686		)	1,143,996
Marketable equity securities	47,858		19,296		(1,613		)	65,541
Total securities available for sale	1,193,306		26,530		(10,299		)	1,209,537
Securities held to maturity
Municipal bonds and obligations	203,463		3,939		(2,416		)	204,986
Agency collateralized mortgage obligations	75,655		1,281		(411		)	76,525
Agency mortgage-backed securities	9,102		—		(243		)	8,859
Agency commercial mortgage-backed securities	10,545		—		(434		)	10,111
Tax advantaged economic development bonds	35,278		1,596		—			36,874
Other bonds and obligations	325		—		—			325
Total securities held to maturity	334,368		6,816		(3,504		)	337,680
Total	$	1,527,674	$	33,346	$	(13,803	)	$	1,547,217

14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The amortized cost and estimated fair value of available for sale (“AFS”) and held to maturity (“HTM”) securities, segregated by contractual maturity at September 30, 2017 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable. Equity securities have no maturity and are also shown in total.

	Available for sale				Held to maturity
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value
Within 1 year	$	623	$	626	$	2,640	$	2,642
Over 1 year to 5 years	31,653		32,254		26,324		27,305
Over 5 years to 10 years	56,336		57,943		8,467		8,925
Over 10 years	113,519		117,254		264,780		270,072
Total bonds and obligations	202,131		208,077		302,211		308,944
Marketable equity securities	36,054		45,389		—		—
Mortgage-backed securities	1,089,694		1,087,547		92,854		93,855
Total	$	1,327,879	$	1,341,013	$	395,065	$	402,799

15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
September 30, 2017
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	52	$	3,046	$	381	$	8,828	$	433	$	11,874
Agency collateralized mortgage obligations	2,547		466,132		327		15,320		2,874		481,452
Agency mortgage-backed securities	1,121		106,495		349		12,654		1,470		119,149
Agency commercial mortgage-backed securities	681		32,357		697		20,678		1,378		53,035
Corporate bonds	—		—		146		15,859		146		15,859
Other bonds and obligations	8		2,109		—		—		8		2,109
Total debt securities	4,409		610,139		1,900		73,339		6,309		683,478
Marketable equity securities	310		4,950		—		—		310		4,950
Total securities available for sale	4,719		615,089		1,900		73,339		6,619		688,428
Securities held to maturity
Municipal bonds and obligations	856		64,187		444		12,362		1,300		76,549
Agency collateralized mortgage obligations	356		13,557		—		—		356		13,557
Agency mortgage-backed securities	142		7,938		—		—		142		7,938
Agency commercial mortgage-backed securities	180		10,317		—		—		180		10,317
Total securities held to maturity	1,534		95,999		444		12,362		1,978		108,361
Total	$	6,253	$	711,088	$	2,344	$	85,701	$	8,597	$	796,789
December 31, 2016
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	1,049	$	13,839	$	—	$	—	$	1,049	$	13,839
Agency collateralized mortgage obligations	3,291		319,448		—		—		3,291		319,448
Agency mortgage-backed securities	2,153		130,766		28		2,061		2,181		132,827
Agency commercial mortgage-backed securities	1,368		44,860		—		—		1,368		44,860
Corporate bonds	11		4,780		711		19,655		722		24,435
Trust preferred securities	—		—		59		1,204		59		1,204
Other bonds and obligations	15		3,014		1		27		16		3,041
Total debt securities	7,887		516,707		799		22,947		8,686		539,654
Marketable equity securities	157		6,600		1,456		5,927		1,613		12,527
Total securities available for sale	8,044		523,307		2,255		28,874		10,299		552,181
Securities held to maturity
Municipal bonds and obligations	2,416		69,308		—		—		2,416		69,308
Agency collateralized mortgage obligations	411		14,724		—		—		411		14,724
Agency mortgage-backed securities	243		8,859		—		—		243		8,859
Agency commercial mortgage-backed securities	434		10,111		—		—		434		10,111
Total securities held to maturity	3,504		103,002		—		—		3,504		103,002
Total	$	11,548	$	626,309	$	2,255	$	28,874	$	13,803	$	655,183

16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt Securities

The Company expects to recover its amortized cost basis on all debt securities in its AFS and HTM portfolios. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of September 30, 2017, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover.

The following summarizes, by investment security type, the basis for the conclusion that the debt securities in an unrealized loss position within the Company’s AFS and HTM portfolios were not other-than-temporarily impaired at September 30, 2017:

AFS municipal bonds and obligations

At September 30, 2017, 7 of the total 263 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 3.5% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for that risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

AFS collateralized mortgage obligations

At September 30, 2017, 99 out of the total 241 securities in the Company’s portfolios of AFS collateralized mortgage obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.6% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and Government National Mortgage Association (“GNMA”) guarantee the contractual cash flows of all of the Company’s collateralized mortgage obligations. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

AFS commercial and residential mortgage-backed securities

At September 30, 2017, 49 out of the total 103 securities in the Company’s portfolios of AFS mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 1.6% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of all of the Company’s mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

AFS corporate bonds

At September 30, 2017, 1 out of 14 securities in the Company’s portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 0.9% of the amortized cost of bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities.

At September 30, 2017, $146 thousand of the total unrealized losses was attributable to a $16.0 million investment. The Company evaluated this security, with a Level 2 fair value of $15.9 million, for potential other-than-temporary impairment (“OTTI”) at September 30, 2017 and determined that OTTI was not evident based on both the Company’s ability and intent to hold the security until the recovery of its remaining amortized cost.

AFS other bonds and obligations

At September 30, 2017, 5 of the 9 securities in the Company’s portfolio of other bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.4% of the amortized cost of securities in unrealized loss positions. The securities are all investment grade rated, and there were no material underlying credit downgrades during the quarter. All securities are performing.

17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HTM Municipal bonds and obligations

At September 30, 2017, 52 of the 232 securities in the Company’s portfolio of other bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 1.7% of the amortized cost of securities in unrealized loss positions. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM collateralized mortgage obligations

At September 30, 2017, 1 of the 9 securities in the Company’s portfolio of HTM collateralized mortgage obligations was in an unrealized loss position. Aggregate unrealized losses represented 1.8% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of all of the Company's collateralized residential mortgage obligations. The securities are investment grade rated, and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM commercial and residential mortgage-backed securities

At September 30, 2017, 2 out of a total of 2 securities in the Company’s portfolio of HTM mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 1.7% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of the Company’s residential mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

Marketable Equity Securities

In evaluating its marketable equity securities portfolio for OTTI, the Company considers its ability to more likely than not hold an equity security to recovery. The Company additionally considers other various factors including the length of time and the extent to which the fair value has been less than cost and the financial condition and near term prospects of the issuer. Any OTTI is recognized immediately through earnings.

At September 30, 2017, 3 out of the total 19 securities in the Company’s portfolio of marketable equity securities were in an unrealized loss position. The unrealized loss represented 5.6% of the amortized cost of the securities. The Company has the ability and intent to hold the securities until recovery of their cost basis and does not consider the securities other-than-temporarily impaired at September 30, 2017. As new information becomes available in future periods, changes to the Company’s assumptions may be warranted and could lead to a different conclusion regarding the OTTI of these securities.

18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. LOANS

The Company’s loan portfolio is segregated into the following segments: commercial real estate, commercial and industrial, residential mortgage, and consumer. Commercial real estate loans include construction, single and multi-family, and other commercial real estate classes. Residential mortgage loans include classes for 1-4 family owner occupied and construction loans. Consumer loans include home equity, direct and indirect auto, and other. These portfolio segments each have unique risk characteristics that are considered when determining the appropriate level for the allowance for loan losses. A substantial portion of the loan portfolio is secured by real estate in Massachusetts, southern Vermont, northeastern New York, New Jersey and in the Bank’s other New England lending areas. The ability of many of the Bank’s borrowers to honor their contracts is dependent, among other things, on the specific economy and real estate markets of these areas.

Total loans include business activity loans and acquired loans. Acquired loans are those loans acquired from First Choice Bank, Parke Bank, Firestone Financial Corp., Hampden Bancorp, Inc., the New York branch acquisition, Beacon Federal Bancorp, Inc., The Connecticut Bank and Trust Company, Legacy Bancorp, Inc., and Rome Bancorp, Inc. Acquired loans that are refinanced are transferred to business activity loans. Business activity and acquired loans are serviced, managed, and accounted for under the Company's same control environment. The following is a summary of total loans:

	September 30, 2017						December 31, 2016
(In thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities Loans		Acquired Loans		Total
Commercial real estate:
Construction	$	265,059	$	18,490	$	283,549	$	253,302	$	34,207	$	287,509
Single and multi-family	342,426		84,668		427,094		191,819		125,672		317,491
Other commercial real estate	1,462,500		498,094		1,960,594		1,481,223		530,215		2,011,438
Total commercial real estate	2,069,985		601,252		2,671,237		1,926,344		690,094		2,616,438
Commercial and industrial loans:	1,154,988		99,959		1,254,947		908,102		153,936		1,062,038
Total commercial loans	3,224,973		701,211		3,926,184		2,834,446		844,030		3,678,476
Residential mortgages:
1-4 family	1,717,160		258,789		1,975,949		1,583,794		297,355		1,881,149
Construction	6,933		244		7,177		11,178		804		11,982
Total residential mortgages	1,724,093		259,033		1,983,126		1,594,972		298,159		1,893,131
Consumer loans:
Home equity	290,144		95,746		385,890		313,521		80,279		393,800
Auto and other	601,905		50,301		652,206		478,368		106,012		584,380
Total consumer loans	892,049		146,047		1,038,096		791,889		186,291		978,180
Total loans	$	5,841,115	$	1,106,291	$	6,947,406	$	5,221,307	$	1,328,480	$	6,549,787

19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The carrying amount of the acquired loans at September 30, 2017 totaled $1.1 billion. A subset of these loans was determined to have evidence of credit deterioration at acquisition date, which is accounted for in accordance with ASC 310-30. These purchased credit-impaired loans presently maintain a carrying value of $32.2 million (and a note balance of $56.8 million). These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Loans considered not credit-impaired at acquisition date had a carrying amount of $1.1 billion.

At December 31, 2016, acquired loans maintained a carrying value of $1.3 billion and purchased credit-impaired loans totaled $46.8 million (note balance of $86.6 million). Loans considered not credit-impaired at acquisition date had a carrying amount of $1.3 billion.

The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality:

	Three Months Ended September 30,
(In thousands)	2017			2016
Balance at beginning of period	$	5,767		$	6,213
Acquisitions	—			—
Reclassification from nonaccretable difference for loans with improved cash flows	10			688
Change in cash flows that do not affect nonaccretable difference	—			—
Reclassification to TDR	—			—
Accretion	(1,712		)	(2,298		)
Balance at end of period	$	4,065		$	4,603

	Nine Months Ended September 30,
(In thousands)	2017			2016
Balance at beginning of period	$	8,738		$	6,925
Acquisitions	—			708
Reclassification from nonaccretable difference for loans with improved cash flows	343			2,106
Change in cash flows that do not affect nonaccretable difference	—			—
Reclassification to TDR	—			(185		)
Accretion	(5,016		)	(4,951		)
Balance at end of period	$	4,065		$	4,603

20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of past due loans at September 30, 2017 and December 31, 2016:

Business Activities Loans

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
September 30, 2017
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	265,059	$	265,059	$	—
Single and multi-family	143		260		326		729		341,697		342,426		163
Other commercial real estate	307		—		4,369		4,676		1,457,824		1,462,500		—
Total	450		260		4,695		5,405		2,064,580		2,069,985		163
Commercial and industrial loans:
Total	1,370		640		8,483		10,493		1,144,495		1,154,988		32
Residential mortgages:
1-4 family	1,055		1,396		2,093		4,544		1,712,616		1,717,160		125
Construction	—		—		—		—		6,933		6,933		—
Total	1,055		1,396		2,093		4,544		1,719,549		1,724,093		125
Consumer loans:
Home equity	74		267		1,872		2,213		287,931		290,144		228
Auto and other	2,620		384		1,115		4,119		597,786		601,905		31
Total	2,694		651		2,987		6,332		885,717		892,049		259
Total	$	5,569	$	2,947	$	18,258	$	26,774	$	5,814,341	$	5,841,115	$	579

Business Activities Loans

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
December 31, 2016
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	253,302	$	253,302	$	—
Single and multi-family	618		110		624		1,352		190,467		191,819		155
Other commercial real estate	481		2,243		4,212		6,936		1,474,287		1,481,223		—
Total	1,099		2,353		4,836		8,288		1,918,056		1,926,344		155
Commercial and industrial loans:
Total	3,090		1,301		6,290		10,681		897,421		908,102		5
Residential mortgages:
1-4 family	1,393		701		4,179		6,273		1,577,521		1,583,794		1,956
Construction	10		—		—		10		11,168		11,178		—
Total	1,403		701		4,179		6,283		1,588,689		1,594,972		1,956
Consumer loans:
Home equity	99		—		2,981		3,080		310,441		313,521		306
Auto and other	2,483		494		968		3,945		474,423		478,368		16
Total	2,582		494		3,949		7,025		784,864		791,889		322
Total	$	8,174	$	4,849	$	19,254	$	32,277	$	5,189,030	$	5,221,307	$	2,438

21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Acquired Loans

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
September 30, 2017
Commercial real estate:
Construction	$	570	$	—	$	—	$	570	$	—	$	18,490	$	—
Single and multi-family	421		78		2,600		3,099		3,285		84,668		2,385
Other commercial real estate	1,633		145		481		2,259		18,962		498,094		—
Total	2,624		223		3,081		5,928		22,247		601,252		2,385
Commercial and industrial loans:
Total	634		52		1,284		1,970		1,497		99,959		54
Residential mortgages:
1-4 family	624		383		1,154		2,161		7,167		258,789		30
Construction	—		—		—		—		—		244		—
Total	624		383		1,154		2,161		7,167		259,033		30
Consumer loans:
Home equity	23		2		1,220		1,245		930		95,746		—
Auto and other	258		29		416		703		358		50,301		14
Total	281		31		1,636		1,948		1,288		146,047		14
Total	$	4,163	$	689	$	7,155	$	12,007	$	32,199	$	1,106,291	$	2,483

Acquired Loans

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
December 31, 2016
Commercial real estate:							—
Construction	$	—	$	—	$	—	$	—	$	47	$	34,207	$	—
Single and multi-family	2		—		437		439		4,726		125,672		—
Other commercial real estate	1,555		—		765		2,320		30,047		530,215		—
Total	1,557		—		1,202		2,759		34,820		690,094		—
Commercial and industrial loans:
Total	1,850		15		1,262		3,127		3,369		153,936		24
Residential mortgages:
1-4 family	321		343		2,015		2,679		7,283		297,355		443
Construction	—		—		—		—		—		804		—
Total	321		343		2,015		2,679		7,283		298,159		443
Consumer loans:
Home equity	753		—		870		1,623		957		80,279		353
Auto and other	542		314		1,686		2,542		387		106,012		791
Total	1,295		314		2,556		4,165		1,344		186,291		1,144
Total	$	5,023	$	672	$	7,035	$	12,730	$	46,816	$	1,328,480	$	1,611

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is summary information pertaining to non-accrual loans at September 30, 2017 and December 31, 2016:

	September 30, 2017						December 31, 2016
(In thousands)	Business Activities Loans		Acquired Loans (1)		Total		Business Activities Loans		Acquired Loans (2)		Total
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	—	$	—
Single and multi-family	163		215		378		469		437		906
Other commercial real estate	4,369		481		4,850		4,212		765		4,977
Total	4,532		696		5,228		4,681		1,202		5,883
Commercial and industrial loans:
Total	8,451		1,147		9,598		6,285		1,155		7,440
Residential mortgages:
1-4 family	1,968		1,124		3,092		2,223		1,572		3,795
Construction	—		—		—		—		—		—
Total	1,968		1,124		3,092		2,223		1,572		3,795
Consumer loans:
Home equity	1,644		1,220		2,864		2,675		517		3,192
Auto and other	1,084		402		1,486		952		895		1,847
Total	2,728		1,622		4,350		3,627		1,412		5,039
Total non-accrual loans	$	17,679	$	4,589	$	22,268	$	16,816	$	5,341	$	22,157

_______________________________________

(1)  At quarter end September 30, 2017, acquired credit impaired loans accounted for $83 thousand of loans greater than 90 days past due that are not presented in the above table.

(2)  At December 31, 2016, acquired credit impaired loans accounted for $83 thousand of loans greater than 90 days past due that are not presented in the above table.

23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loans evaluated for impairment as of September 30, 2017 and December 31, 2016 were as follows:

Business Activities Loans

(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
September 30, 2017
Loans receivable:
Balance at end of period
Individually evaluated for impairment	$	34,064	$	10,164	$	2,205	$	1,860	$	48,293
Collectively evaluated for impairment	2,035,921		1,144,824		1,721,888		890,189		5,792,822
Total	$	2,069,985	$	1,154,988	$	1,724,093	$	892,049	$	5,841,115

Business Activities Loans

(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
December 31, 2016
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	25,549	$	5,705	$	2,775	$	2,703	$	36,732
Collectively evaluated for impairment	1,900,795		902,397		1,592,197		789,186		5,184,575
Total	$	1,926,344	$	908,102	$	1,594,972	$	791,889	$	5,221,307

Acquired Loans

(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
September 30, 2017
Loans receivable:
Balance at end of Period
Individually evaluated for impairment	$	2,770	$	592	$	475	$	950	$	4,787
Purchased credit-impaired loans	22,247		1,497		7,167		1,288		32,199
Collectively evaluated for impairment	576,235		97,870		251,391		143,809		1,069,305
Total	$	601,252	$	99,959	$	259,033	$	146,047	$	1,106,291

Acquired Loans

(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
December 31, 2016
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	4,256	$	635	$	308	$	406	$	5,605
Purchased credit-impaired loans	34,820		3,369		7,283		1,344		46,816
Collectively evaluated for impairment	651,018		149,932		290,568		184,541		1,276,059
Total	$	690,094	$	153,936	$	298,159	$	186,291	$	1,328,480

24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of impaired loans at September 30, 2017 and December 31, 2016:

Business Activities Loans

	September 30, 2017
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	—	$	—	$	—
Other commercial real estate loans	19,005		19,005		—
Commercial and industrial loans	2,043		2,043		—
Residential mortgages - 1-4 family	1,033		1,033		—
Consumer - home equity	769		769		—
Consumer - other	—		—		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	162	$	163	$	1
Other commercial real estate loans	14,758		14,896		138
Commercial and industrial loans	7,842		8,121		279
Residential mortgages - 1-4 family	1,036		1,172		136
Consumer - home equity	1,052		1,091		39
Consumer - other	—		—		—
Total
Commercial real estate	$	33,925	$	34,064	$	139
Commercial and industrial loans	9,885		10,164		279
Residential mortgages	2,069		2,205		136
Consumer	1,821		1,860		39
Total impaired loans	$	47,700	$	48,293	$	593

25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Business Activities Loans

	December 31, 2016
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	—	$	—	$	—
Other commercial real estate loans	18,905		18,905		—
Commercial and industrial loans	382		382		—
Residential mortgages - 1-4 family	2,101		2,101		—
Consumer - home equity	1,605		1,605		—
Consumer - other	—		—		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	179	$	181	$	2
Other commercial real estate loans	6,306		6,462		156
Commercial and industrial loans	5,060		5,324		264
Residential mortgages - 1-4 family	538		674		136
Consumer - home equity	942		1,098		156
Consumer - other	—		—		—
Total
Commercial real estate	$	25,390	$	25,548	$	158
Commercial and industrial loans	5,442		5,706		264
Residential mortgages	2,639		2,775		136
Consumer	2,547		2,703		156
Total impaired loans	$	36,018	$	36,732	$	714

26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Acquired Loans

	September 30, 2017
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	216	$	216	$	—
Other commercial real estate loans	195		195		—
Commercial and industrial loans	287		287		—
Residential mortgages - 1-4 family	165		165		—
Consumer - home equity	581		581		—
Consumer - other	—		—		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	871	$	892	$	21
Other commercial real estate loans	1,442		1,467		25
Commercial and industrial loans	303		305		2
Residential mortgages - 1-4 family	291		310		19
Consumer - home equity	325		369		44
Total					x
Commercial real estate	$	2,724	$	2,770	$	46
Commercial and industrial loans	590		592		2
Residential mortgages	456		475		19
Consumer	906		950		44
Total impaired loans	$	4,676	$	4,787	$	111

Acquired Loans

	December 31, 2016
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	—	$	—	$	—
Other commercial real estate loans	547		547		—
Commercial and industrial loans	—		—		—
Residential mortgages - 1-4 family	208		208		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	1,250	$	1,358	$	108
Other commercial real estate loans	2,209		2,351		142
Commercial and industrial loans	576		635		59
Residential mortgages - 1-4 family	89		100		11
Consumer - home equity	292		406		114
Total
Commercial real estate	$	4,006	$	4,256	$	250
Commercial and industrial loans	576		635		59
Residential mortgages	297		308		11
Consumer	292		406		114
Total impaired loans	$	5,171	$	5,605	$	434

27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of the average recorded investment and interest income recognized on impaired loans as of September 30, 2017 and 2016:

Business Activities Loans

	Nine Months Ended September 30, 2017				Nine Months Ended September 30, 2016
(In thousands)	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
With no related allowance:
Commercial real estate - single and multifamily	$	84	$	—	$	48	$	1
Other commercial real estate loans	21,132		934		2,624		111
Commercial and industrial loans	1,825		69		805		26
Residential mortgages - 1-4 family	1,391		29		2,309		51
Consumer - home equity	1,301		26		693		5
Consumer - other	—		—		1		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	172	$	10	$	—	$	—
Other commercial real estate loans	10,553		363		10,266		351
Commercial and industrial loans	6,493		354		4,609		154
Residential mortgages - 1-4 family	1,187		38		684		21
Consumer - home equity	1,094		32		999		26
Consumer - other	—		—		104		3
Total
Commercial real estate	$	31,941	$	1,307	$	12,938	$	463
Commercial and industrial loans	8,318		423		5,414		180
Residential mortgages	2,578		67		2,993		72
Consumer loans	2,395		58		1,797		34
Total impaired loans	$	45,232	$	1,855	$	23,142	$	749

28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Acquired Loans

	Nine Months Ended September 30, 2017				Nine Months Ended September 30, 2016
(In thousands)	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
With no related allowance:
Commercial real estate - single and multifamily	$	424	$	79	$	—	$	—
Other commercial real estate loans	483		73		546		20
Commercial and Industrial loans	319		4		191		1
Residential mortgages - 1-4 family	170		7		321		9
Consumer - home equity	567		—		—		—
Consumer - other	—		—		140		1
With an allowance recorded:
Commercial real estate - single and multifamily	$	904	$	36	$	942	$	37
Other commercial real estate loans	1,481		56		2,606		127
Commercial and Industrial loans	332		29		404		10
Residential mortgages - 1-4 family	319		12		117		4
Consumer - home equity	387		13		356		13
Consumer - other	—		—		—		—
Total
Other commercial real estate loans	$	3,292	$	244	$	4,094	$	184
Commercial and industrial loans	651		33		595		11
Residential mortgages	489		19		438		13
Consumer loans	954		13		496		14
Total impaired loans	$	5,386	$	309	$	5,623	$	222

29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Troubled Debt Restructuring Loans

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring (TDR), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. TDRs are evaluated individually for impairment and may result in a specific allowance amount allocated to an individual loan.

The following tables include the recorded investment and number of modifications identified during the three and nine months ended September 30, 2017. The table includes the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. The modifications for the three and nine months ended September 30, 2017 and 2016 were attributable to interest rate concessions, principal concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity. 

	Three Months Ended September 30, 2017
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Other	—	—		—
Commercial and industrial	3	1,654		1,654
Residential - 1-4 Family	—	—		—
Consumer - Home Equity	—	—		—
Total	3	$	1,654	$	1,654

	Nine Months Ended September 30, 2017
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Other	15	$	13,445	$	11,718
Commercial and industrial	8	3,471		3,471
Residential - 1-4 Family	2	205		188
Consumer - Home Equity	1	53		53
Total	26	$	17,174	$	15,430

	Three Months Ended September 30, 2016
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial and industrial	2	404		404
Residential - 1-4 Family	2	5		5
Total	4	$	409	$	409

	Nine Months Ended September 30, 2016
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Other	2	$	1,049	$	1,049
Commercial and industrial	4	555		555
Residential - 1-4 Family	2	5		5
Consumer - Home Equity	1	117		117
Total	9	$	1,726	$	1,726

30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table discloses the recorded investments and numbers of modifications for TDRs where a concession has been made, that then defaulted in the respective reporting period. For the three months ended September 30, 2017, there were no loans that were restructured that had subsequently defaulted during the period. For the nine months ended September 30, 2017, there were two loans that were restructured that had subsequently defaulted during the period.

	Modifications that Subsequently Defaulted
	Three Months Ended September 30, 2017
(Dollars in thousands)	Number of Contracts	Recorded Investment
Troubled Debt Restructurings
Commercial - Other	—	$	—
Commercial and industrial	—	$	—

	Modifications that Subsequently Defaulted
	Nine Months Ended September 30, 2017
(Dollars in thousands)	Number of Contracts	Recorded Investment
Troubled Debt Restructurings
Commercial - Other	1	$	113
Commercial and industrial	1	$	101

The following table presents the Company’s TDR activity for the three and nine months ended September 30, 2017 and 2016:

	Three Months Ended September 30,
(In thousands)	2017			2016
Balance at beginning of the period	$	44,556		$	22,122
Principal payments	(373		)	(932		)
TDR status change (1)	—			—
Other reductions/increases (2)	(1,939		)	—
Newly identified TDRs	1,654			409
Balance at end of the period	$	43,898		$	21,599

	Nine Months Ended September 30,
(In thousands)	2017			2016
Balance at beginning of the period	$	33,829		$	22,048
Principal payments	(1,527		)	(2,041		)
TDR status change (1)	—			2,236
Other reductions/increases (2)	(3,834		)	(2,370		)
Newly identified TDRs	15,430			1,726
Balance at end of the period	$	43,898		$	21,599

_________________________________

(1) TDR status change classification represents TDR loans with a specified interest rate equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk and  the loan was on current payment status and not impaired based on the terms specified by the restructuring agreement.

(2) Other reductions classification consists of transfer to other real estate owned and charge-offs and advances to loans.

The evaluation of certain loans individually for specific impairment includes loans that were previously classified as TDRs or continue to be classified as TDRs.

As of September 30, 2017, the Company maintained foreclosed residential real estate property with a fair value of $288 thousand. Additionally, residential mortgage loans collateralized by real estate property that are in the process of foreclosure as of September 30, 2017 and December 31, 2016 totaled $4.7 million and $4.8 million, respectively. As of December 31, 2016, foreclosed residential real estate property totaled $151 thousand.

31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5.               LOAN LOSS ALLOWANCE

Activity in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 was as follows:

	At or for the three months ended September 30, 2017
Business Activities Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	15,972	$	12,588	$	8,114	$	6,221	$	42,895
Charged-off loans	1,367		606		42		1,352		3,367
Recoveries on charged-off loans	14		37		241		39		331
Provision/(releases) for loan losses	1,210		1,952		241		1,473		4,876
Balance at end of period	$	15,829	$	13,971	$	8,554	$	6,381	$	44,735
Individually evaluated for impairment	139		279		136		39		593
Collectively evaluated for impairment	15,690		13,692		8,418		6,342		44,142
Total	$	15,829	$	13,971	$	8,554	$	6,381	$	44,735

	At or for the nine months ended September 30, 2017
Business Activities Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	16,499	$	9,446	$	7,800	$	5,484	$	39,229
Charged-off loans	2,883		2,457		555		2,670		8,565
Recoveries on charged-off loans	71		108		270		211		660
Provision/(releases) for loan losses	2,142		6,874		1,039		3,356		13,411
Balance at end of period	$	15,829	$	13,971	$	8,554	$	6,381	$	44,735
Individually evaluated for impairment	139		279		136		39		593
Collectively evaluated for impairment	15,690		13,692		8,418		6,342		44,142
Total	$	15,829	$	13,971	$	8,554	$	6,381	$	44,735

	At or for the three months ended September 30, 2016
Business Activities Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	16,732	$	8,216	$	7,453	$	4,723	$	37,124
Charged-off loans	—		1,599		253		434		2,286
Recoveries on charged-off loans	114		37		96		61		308
Provision/(releases) for loan losses	620		1,831		88		936		3,475
Balance at end of period	$	17,466	$	8,485	$	7,384	$	5,286	$	38,621
Individually evaluated for impairment	190		194		89		165		638
Collectively evaluated for impairment	17,276		8,291		7,295		5,121		37,983
Total	$	17,466	$	8,485	$	7,384	$	5,286	$	38,621

32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	At or for the nine months ended September 30, 2016
Business Activities Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	14,610	$	7,367	$	7,612	$	4,985	$	34,574
Charged-off loans	1,578		4,145		1,340		1,175		8,238
Recoveries on charged-off loans	242		114		101		183		640
Provision/(releases) for loan losses	4,192		5,149		1,011		1,293		11,645
Balance at end of period	$	17,466	$	8,485	$	7,384	$	5,286	$	38,621
Individually evaluated for impairment	190		194		89		165		638
Collectively evaluated for impairment	17,276		8,291		7,295		5,121		37,983
Total	$	17,466	$	8,485	$	7,384	$	5,286	$	38,621

	At or for the three months ended September 30, 2017
Acquired Loans (In thousands)	Commercial real estate		Commercial and industrial loans			Residential mortgages		Consumer		Total
Balance at beginning of period	$	2,356	$	1,014		$	690	$	404	$	4,464
Charged-off loans	95		153			70		111		429
Recoveries on charged-off loans	22		150			1		37		210
Provision for loan losses	109		(149		)	49		15		24
Balance at end of period	$	2,392	$	862		$	670	$	345	$	4,269
Individually evaluated for impairment	46		2			19		44		111
Purchased credit-impaired loans	—		—			—		—		—
Collectively evaluated for impairment	2,346		860			651		301		4,158
Total	$	2,392	$	862		$	670	$	345	$	4,269

	At or for the nine months ended September 30, 2017
Acquired Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	2,303	$	1,164	$	766	$	536	$	4,769
Charged-off loans	765		634		285		601		2,285
Recoveries on charged-off loans	44		151		39		78		312
Provision for loan losses	810		181		150		332		1,473
Balance at end of period	$	2,392	$	862	$	670	$	345	$	4,269
Individually evaluated for impairment	46		2		19		44		111
Purchased credit-impaired loans	—		—		—		—		—
Collectively evaluated for impairment	2,346		860		651		301		4,158
Total	$	2,392	$	862	$	670	$	345	$	4,269

33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	At or for the three months ended September 30, 2016
Acquired Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	2,140	$	776	$	881	$	476	$	4,273
Charged-off loans	662		84		332		77		1,155
Recoveries on charged-off loans	—		37		37		33		107
Provision for loan losses	907		210		111		31		1,259
Balance at end of period	$	2,385	$	939	$	697	$	463	$	4,484
Individually evaluated for impairment	704		121		12		135		972
Purchased credit-impaired loans	—		—		—		—		—
Collectively evaluated for impairment	1,681		818		685		328		3,512
Total	$	2,385	$	939	$	697	$	463	$	4,484

	At or for the nine months ended September 30, 2016
Acquired Loans (In thousands)	Commercial real estate		Commercial and industrial loans			Residential mortgages		Consumer		Total
Balance at beginning of period	$	1,903	$	1,330		$	976	$	525	$	4,734
Charged-off loans	788		359			696		457		2,300
Recoveries on charged-off loans	—		213			141		79		433
Provision for loan losses	1,270		(245		)	276		316		1,617
Balance at end of period	$	2,385	$	939		$	697	$	463	$	4,484
Individually evaluated for impairment	704		121			12		135		972
Purchased credit-impaired loans	—		—			—		—		—
Collectively evaluated for impairment	1,681		818			685		328		3,512
Total	$	2,385	$	939		$	697	$	463	$	4,484

Credit Quality Information

Business Activities Loans Credit Quality Analysis

The Company monitors the credit quality of its portfolio by using internal risk ratings that are based on regulatory guidance. Loans that are given a Pass rating are not considered a problem credit. Loans that are classified as Special Mention loans are considered to have potential credit problems and are evaluated closely by management. Substandard and non-accruing loans are loans for which a definitive weakness has been identified and which may make full collection of contractual cash flows questionable. Doubtful loans are those with identified weaknesses that make full collection of contractual cash flows, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. 

For commercial credits, the Company assigns an internal risk rating at origination and reviews the rating annually, semiannually or quarterly depending on the risk rating. The rating is also reassessed at any point in time when management becomes aware of information that may affect the borrower’s ability to fulfill their obligations.

The Company risk rates its residential mortgages, including 1-4 family and residential construction loans, based on a three rating system: Pass, Special Mention and Substandard. Loans that are current within 59 days are rated Pass. Residential mortgages that are 60-89 days delinquent are rated Special Mention. Loans delinquent for 90 days or greater are rated Substandard and generally placed on non-accrual status. Home equity loans are risk rated based on the same rating system as the Company’s residential mortgages.

34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Ratings for other consumer loans, including auto loans, are based on a two rating system. Loans that are current within 119 days are rated Performing while loans delinquent for 120 days or more are rated Non-performing. Other consumer loans are placed on non-accrual at such time as they become Non-performing.

Acquired Loans Credit Quality Analysis

Upon acquiring a loan portfolio, the Company's internal loan review function assigns risk ratings to the acquired loans, utilizing the same methodology as it does with business activities loans. This may differ from the risk rating policy of the predecessor bank. Loans which are rated Substandard or worse according to the rating process outlined below are deemed to be credit impaired loans accounted for under ASC 310-30, regardless of whether they are classified as performing or non-performing.

The Bank utilizes an eleven grade internal loan rating system for each of its acquired commercial real estate, construction and commercial loans as outlined in the Credit Quality Information section of this Note. The ratings system is similar to loans originated through business activities.

The Company subjects loans that do not meet the ASC 310-30 criteria to ASC 450-20 (Loss Contingencies) by collectively evaluating these loans for an allowance for loan loss. The Company applies a methodology similar to the methodology prescribed for business activities loans, which includes the application of environmental factors to each category of loans. The methodology to collectively evaluate the acquired loans outside the scope of ASC 310-30 includes the application of a number of environmental factors that reflect management’s best estimate of the level of incremental credit losses that might be recognized given current conditions. This is reviewed as part of the allowance for loan loss adequacy analysis. As the loan portfolio matures and environmental factors change, the loan portfolio will be reassessed each quarter to determine an appropriate reserve allowance.

Additionally, the Company considers the need for a reserve for acquired loans accounted for outside of the scope of ASC 310-30 under ASC 310-20. At acquisition date, the Bank determined a fair value mark with credit and interest rate components. Under the Company’s model, the impairment evaluation process involves comparing the carrying value of acquired loans, including the entire unamortized premium or discount, to the calculated reserve allowance. If necessary, the Company books a reserve to account for shortfalls identified through this calculation. Fair value marks are not bifurcated when evaluating for impairment.

A decrease in the expected cash flows in subsequent periods requires the establishment of an allowance for loan losses at that time for ASC 310-30 loans. At September 30, 2017, the allowance for loan losses related to acquired loans under ASC 310-30 and ASC 310-20 was $4.3 million using the above mentioned criteria.

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the Company’s loans by risk rating at September 30, 2017 and December 31, 2016:

Business Activities Loans

Commercial Real Estate

Credit Risk Profile by Creditworthiness Category

	Construction				Single and multi-family				Other				Total commercial real estate
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Grade:
Pass	$	265,059	$	253,302	$	339,846	$	189,310	$	1,419,153	$	1,434,762	$	2,024,058	$	1,877,374
Special mention	—		—		529		334		12,604		5,827		13,133		6,161
Substandard	—		—		2,051		2,175		30,743		40,598		32,794		42,773
Doubtful	—		—		—		—		—		36		—		36
Total	$	265,059	$	253,302	$	342,426	$	191,819	$	1,462,500	$	1,481,223	$	2,069,985	$	1,926,344

Commercial and Industrial Loans

Credit Risk Profile by Creditworthiness Category

	Total comm. and industrial loans
(In thousands)	September 30, 2017		December 31, 2016
Grade:
Pass	$	1,136,498	$	890,974
Special mention	2,522		123
Substandard	12,981		13,825
Doubtful	2,987		3,180
Total	$	1,154,988	$	908,102

Residential Mortgages

Credit Risk Profile by Internally Assigned Grade

	1-4 family				Construction				Total residential mortgages
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Grade:
Pass	$	1,713,671	$	1,578,913	$	6,933	$	11,178	$	1,720,604	$	1,590,091
Special mention	1,396		701		—		—		1,396		701
Substandard	2,093		4,179		—		—		2,093		4,179
Total	$	1,717,160	$	1,583,793	$	6,933	$	11,178	$	1,724,093	$	1,594,971

Consumer Loans

Credit Risk Profile Based on Payment Activity

	Home equity				Auto and other				Total consumer loans
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Performing	$	288,500	$	310,846	$	600,821	$	477,416	$	889,321	$	788,262
Nonperforming	1,644		2,675		1,084		952		2,728		3,627
Total	$	290,144	$	313,521	$	601,905	$	478,368	$	892,049	$	791,889

36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Acquired Loans

Commercial Real Estate

Credit Risk Profile by Creditworthiness Category

	Construction				Single and multi-family				Other				Total commercial real estate
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Grade:
Pass	$	17,221	$	33,461	$	81,935	$	119,414	$	454,081	$	496,562	$	553,237	$	649,437
Special mention	570		—		607		907		18,626		1,622		19,803		2,529
Substandard	699		746		2,126		5,351		25,387		32,031		28,212		38,128
Total	$	18,490	$	34,207	$	84,668	$	125,672	$	498,094	$	530,215	$	601,252	$	690,094

Commercial and Industrial Loans

Credit Risk Profile by Creditworthiness Category

	Total comm. and industrial loans
(In thousands)	September 30, 2017		December 31, 2016
Grade:
Pass	$	95,098	$	147,102
Special mention	51		1,260
Substandard	4,810		5,574
Total	$	99,959	$	153,936

Residential Mortgages

Credit Risk Profile by Internally Assigned Grade

	1-4 family				Construction				Total residential mortgages
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Grade:
Pass	$	253,414	$	294,983	$	244	$	804	$	253,658	$	295,787
Special mention	398		343		—		—		398		343
Substandard	4,977		2,029		—		—		4,977		2,029
Total	$	258,789	$	297,355	$	244	$	804	$	259,033	$	298,159

Consumer Loans

Credit Risk Profile Based on Payment Activity

	Home equity				Auto and other				Total consumer loans
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Performing	$	94,526	$	79,762	$	49,900	$	105,117	$	144,426	$	184,879
Nonperforming	1,220		517		401		895		1,621		1,412
Total	$	95,746	$	80,279	$	50,301	$	106,012	$	146,047	$	186,291

37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes information about total loans rated Special Mention or lower as of September 30, 2017 and December 31, 2016. The table below includes consumer loans that are special mention and substandard accruing that are classified in the above table as performing based on payment activity.

	September 30, 2017						December 31, 2016
(In thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities Loans		Acquired Loans		Total
Non-Accrual	$	17,679	$	4,672	$	22,351	$	16,816	$	5,424	$	22,240
Substandard Accruing	36,162		35,089		71,251		51,125		44,177		95,302
Total Classified	53,841		39,761		93,602		67,941		49,601		117,542
Special Mention	17,699		20,284		37,983		7,479		4,323		11,802
Total Criticized	$	71,540	$	60,045	$	131,585	$	75,420	$	53,924	$	129,344

38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6.               DEPOSITS

A summary of time deposits is as follows:

(In thousands)	September 30, 2017		December 31, 2016
Time less than $250,000	$	2,200,338	$	2,015,332
Time $250,000 or more	373,285		318,211
Total time deposits	$	2,573,623	$	2,333,543

Included in total deposits are brokered deposits of $1.1 billion and $0.9 billion at September 30, 2017 and December 31, 2016, respectively. Included in total brokered deposits are reciprocal deposits of $97.4 million and $113.4 million at September 30, 2017 and December 31, 2016, respectively.

NOTE 7.               BORROWED FUNDS

Borrowed funds at September 30, 2017 and December 31, 2016 are summarized, as follows:

	September 30, 2017				December 31, 2016
			Weighted				Weighted
			Average				Average
(Dollars in thousands)	Principal		Rate		Principal		Rate
Short-term borrowings:
Advances from the FHLB	$	1,061,300	1.27	%	$	1,072,044	0.71	%
Other borrowings	—		—		10,000		2.42
Total short-term borrowings:	1,061,300		1.27		1,082,044		0.72
Long-term borrowings:
Advances from the FHLB and other borrowings	338,054		1.49		142,792		1.53
Subordinated borrowings	73,831		7.00		73,697		7.00
Junior subordinated borrowings	15,464		3.16		15,464		2.77
Total long-term borrowings:	427,349		2.50		231,953		3.35
Total	$	1,488,649	1.63	%	$	1,313,997	1.19	%

Short-term debt includes Federal Home Loan Bank (“FHLB”) advances with an original maturity of less than one year and a short-term line-of-credit drawdown through a correspondent bank. The Bank also maintains a $3.0 million secured line of credit with the FHLB that bears a daily adjustable rate calculated by the FHLB. There was no outstanding balance on the FHLB line of credit for the periods ended September 30, 2017 and December 31, 2016.

The Bank is approved to borrow on a short-term basis from the Federal Reserve Bank of Boston as a non-member bank. The Bank has pledged certain loans and securities to the Federal Reserve Bank to support this arrangement. No borrowings with the Federal Reserve Bank took place for the periods ended September 30, 2017 and December 31, 2016.

Long-term FHLB advances consist of advances with an original maturity of more than one year. The advances outstanding at September 30, 2017 include callable advances totaling $4.0 million, and amortizing advances totaling $1.1 million. The advances outstanding at December 31, 2016 include callable advances totaling $11.0 million, and amortizing advances totaling $1.2 million. All FHLB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally all residential first mortgage loans and certain securities.

39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of maturities of FHLB advances as of September 30, 2017 is as follows:

	September 30, 2017
			Weighted Average
(In thousands, except rates)	Principal		Rate
Fixed rate advances maturing:
2017	$	1,018,565	1.28	%
2018	218,836		1.28
2019	150,000		1.64
2020	4,464		1.94
2021 and beyond	7,489		2.69
Total FHLB advances	$	1,399,354	1.33	%

The Company did not have variable-rate FHLB advances for the periods ended September 30, 2017 and December 31, 2016.

In September 2012, the Company issued fifteen year subordinated notes in the amount of $75.0 million at a discount of 1.15%. The interest rate is fixed at 6.875% for the first ten years. After ten years, the notes become callable and convert to an interest rate of three-month LIBOR rate plus 5.113%. The subordinated note includes reduction to the note principal balance of $614 thousand and $706 thousand for unamortized debt issuance costs as of September 30, 2017 and December 31 2016, respectively.

The Company holds 100% of the common stock of Berkshire Hills Capital Trust I (“Trust I”) which is included in other assets with a cost of $0.5 million. The sole asset of Trust I is $15.5 million of the Company’s junior subordinated debentures due in 2035. These debentures bear interest at a variable rate equal to LIBOR plus 1.85% and had a rate of 3.16% and 2.77% at September 30, 2017 and December 31, 2016, respectively. The Company has the right to defer payments of interest for up to five years on the debentures at any time, or from time to time, with certain limitations, including a restriction on the payment of dividends to shareholders while such interest payments on the debentures have been deferred. The Company has not exercised this right to defer payments. The Company has the right to redeem the debentures at par value. Trust I is considered a variable interest entity for which the Company is not the primary beneficiary. Accordingly, Trust I is not consolidated into the Company’s financial statements.

40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8.           CAPITAL RATIOS AND SHAREHOLDERS’ EQUITY

The actual and required capital ratios were as follows:

	September 30, 2017		Regulatory Minimum to be Well Capitalized		December 31, 2016		Regulatory Minimum to be Well Capitalized
Company (consolidated)
Total capital to risk weighted assets	14.3	%	10.0	%	11.9	%	10.0	%
Common equity tier 1 capital to risk weighted assets	12.3		6.5		9.9		6.5
Tier 1 capital to risk weighted assets	12.5		8.0		10.1		8.0
Tier 1 capital to average assets	9.5		5.0		7.9		5.0
Bank
Total capital to risk weighted assets	11.7	%	10.0	%	11.2	%	10.0	%
Common equity tier 1 capital to risk weighted assets	10.4		6.5		10.0		6.5
Tier 1 capital to risk weighted assets	10.4		8.0		10.0		8.0
Tier 1 capital to average assets	8.0		5.0		7.8		5.0

At each date shown, the Company and the Bank met the conditions to be classified as “well capitalized” under the relevant regulatory framework. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table above.

Effective January 1, 2015, the Company and the Bank became subject to the Basel III rule that requires the Company and the Bank to assess their Common equity Tier 1 capital to risk weighted assets and the Company and the Bank each exceed the minimum to be well capitalized. In addition, the final capital rules added a requirement to maintain a minimum conservation buffer, composed of Common equity Tier 1 capital, of 2.5% of risk-weighted assets, to be phased in over three years and applied to the Common equity Tier 1 risk-based capital ratio, the Tier 1 risk-based capital ratio, and the Total risk-based capital ratio. Accordingly, banking organizations, on a fully phased in basis no later than January 1, 2019, must maintain a minimum Common equity Tier 1 risk-based capital ratio of 7.0%, a minimum Tier 1 risk-based capital ratio of 8.5%, and a minimum Total risk-based capital ratio of 10.5%.

The required minimum conservation buffer began to be phased in incrementally, starting at 0.625% on January 1, 2016, increased to 1.25% on January 1, 2017, and will increase to 1.875% on January 1, 2018 and 2.5% on January 1, 2019. The final capital rules impose restrictions on capital distributions and certain discretionary cash bonus payments if the minimum capital conservation buffer is not met.

At September 30, 2017, the capital levels of both the Company and the Bank exceeded all regulatory capital requirements and their regulatory capital ratios were above the minimum levels required to be considered well capitalized for regulatory purposes. The capital levels of both the Company and the Bank at September 30, 2017 also exceeded the minimum capital requirements including the currently applicable capital conservation buffer of 1.25%.

41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accumulated other comprehensive income (loss)

Components of accumulated other comprehensive income is as follows:

(In thousands)	September 30, 2017			December 31, 2016
Other accumulated comprehensive income, before tax:
Net unrealized holding gain on AFS securities	$	21,132		$	25,176
Net unrealized loss on cash flow hedging derivatives	—			(6,573		)
Net unrealized holding loss on pension plans	(2,954		)	(2,954		)
Income taxes related to items of accumulated other comprehensive income:
Net unrealized holding gain on AFS securities	(8,155		)	(9,636		)
Net unrealized loss on cash flow hedging derivatives	—			2,589
Net unrealized holding loss on pension plans	1,164			1,164
Accumulated other comprehensive income	$	11,187		$	9,766

The following table presents the components of other comprehensive income for the three and nine months ended September 30, 2017 and 2016:

(In thousands)	Before Tax			Tax Effect			Net of Tax
Three Months Ended September 30, 2017
Net unrealized holding gain on AFS securities:	x
Net unrealized gains arising during the period	$	1,460		$	(605	)	$	855
Less: reclassification adjustment for (losses) realized in net income	(1		)	—			(1		)
Net unrealized holding gain on AFS securities	1,461			(605		)	856
Net unrealized gain on cash flow hedging derivatives:
Net unrealized (loss) arising during the period	—			—			—
Less: reclassification adjustment for (losses) realized in net income	—			—			—
Net unrealized gain on cash flow hedging derivatives	—			—			—
Other comprehensive income	$	1,461		$	(605	)	$	856
Three Months Ended September 30, 2016
Net unrealized holding (loss) on AFS securities:
Net unrealized (losses) arising during the period	$	(5,576	)	$	2,190		$	(3,386	)
Less: reclassification adjustment for gains realized in net income	78			(28		)	50
Net unrealized holding (loss) on AFS securities	(5,654		)	2,218			(3,436		)
Net unrealized gain on cash flow hedging derivatives:
Net unrealized gain arising during the period	1,363			(547		)	816
Less: reclassification adjustment for (losses) realized in net income	(1,367		)	549			(818		)
Net unrealized gain on cash flow hedging derivatives	2,730			(1,096		)	1,634
Other comprehensive (loss)	$	(2,924	)	$	1,122		$	(1,802	)

42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands)	Before Tax			Tax Effect			Net of Tax
Nine Months Ended September 30, 2017
Net unrealized holding (loss) on AFS securities:	x
Net unrealized gains arising during the period	$	8,524		$	(3,232	)	$	5,292
Less: reclassification adjustment for gains realized in net income	12,568			(4,713		)	7,855
Net unrealized holding (loss) on AFS securities	(4,044		)	1,481			(2,563		)
Net unrealized gain on cash flow hedging derivatives:
Net unrealized (loss) arising during the period	(449		)	180			(269		)
Less: reclassification adjustment for (losses) realized in net income	(7,022		)	2,769			(4,253		)
Net unrealized gain on cash flow hedging derivatives	6,573			(2,589		)	3,984
Other comprehensive income	$	2,529		$	(1,108	)	$	1,421
Nine Months Ended September 30, 2016
Net unrealized holding gain on AFS securities:
Net unrealized gains arising during the period	$	21,740		$	(8,366	)	$	13,374
Less: reclassification adjustment for gains realized in net income	101			(36		)	65
Net unrealized holding gain on AFS securities	21,639			(8,330		)	13,309
Net unrealized (loss) on cash flow hedging derivatives:
Net unrealized (loss) arising during the period	(5,322		)	2,136			(3,186		)
Less: reclassification adjustment for (losses) realized in net income	(2,662		)	1,069			(1,593		)
Net unrealized (loss) on cash flow hedging derivatives	(2,660		)	1,067			(1,593		)
Other comprehensive income	$	18,979		$	(7,263	)	$	11,716

The following table presents the changes in each component of accumulated other comprehensive income (loss), for the three and nine months ended September 30, 2017 and 2016:

(In thousands)	Net unrealized holding gain on AFS Securities			Net loss on effective cash flow hedging derivatives			Net unrealized holding loss on pension plans			Total
Three Months Ended September 30, 2017
Balance at Beginning of Period	$	12,121		$	—		$	(1,790	)	$	10,331
Other comprehensive gain before reclassifications	855			—			—			855
Less: amounts reclassified from accumulated other comprehensive income (loss)	(1		)	—			—			(1		)
Total other comprehensive income	856			—			—			856
Balance at End of Period	$	12,977		$	—		$	(1,790	)	$	11,187
Three Months Ended September 30, 2016
Balance at Beginning of Period	$	20,625		$	(8,335	)	$	(2,077	)	$	10,213
Other comprehensive (loss) gain before reclassifications	(3,386		)	816			—			(2,570		)
Less: amounts reclassified from accumulated other comprehensive income (loss)	50			(818		)	—			(768		)
Total other comprehensive (loss) income	(3,436		)	1,634			—			(1,802		)
Balance at End of Period	$	17,189		$	(6,701	)	$	(2,077	)	$	8,411

43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands)	Net unrealized holding gain on AFS Securities			Net loss on effective cash flow hedging derivatives			Net unrealized holding loss on pension plans			Total
Nine Months Ended September 30, 2017
Balance at Beginning of Period	$	15,540		$	(3,984	)	$	(1,790	)	$	9,766
Other comprehensive gain (loss) before reclassifications	5,292			(269		)	—			5,023
Less: amounts reclassified from accumulated other comprehensive income (loss)	7,855			(4,253		)	—			3,602
Total other comprehensive (loss) income	(2,563		)	3,984			—			1,421
Balance at End of Period	$	12,977		$	—		$	(1,790	)	$	11,187
Nine Months Ended September 30, 2016
Balance at Beginning of Period	$	3,880		$	(5,108	)	$	(2,077	)	$	(3,305	)
Other comprehensive gain (loss) before reclassifications	13,374			(3,186		)	—			10,188
Less: amounts reclassified from accumulated other comprehensive income (loss)	65			(1,593		)	—			(1,528		)
Total other comprehensive income (loss)	13,309			(1,593		)	—			11,716
Balance at End of Period	$	17,189		$	(6,701	)	$	(2,077	)	$	8,411

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016:

							Affected Line Item in the
	Three Months Ended September 30,						Statement where Net Income
(In thousands)	2017			2016			is Presented
Realized (losses)/gains on AFS securities:
	$	(1	)	$	78		Non-interest income
	—			(28		)	Tax expense
	(1		)	50			Net of tax
Realized (losses) on cash flow hedging derivatives:
	—			(1,367		)	Non-interest income
	—			549			Tax expense
	—			(818		)	Net of tax
Total reclassifications for the period	$	(1	)	$	(768	)	Net of tax

							Affected Line Item in the
	Nine Months Ended September 30,						Statement where Net Income
(In thousands)	2017			2016			is Presented
Realized gains on AFS securities:
	$	12,568		$	101		Non-interest income
	(4,713		)	(36		)	Tax expense
	7,855			65			Net of tax
Realized (losses) on cash flow hedging derivatives:
	(393		)	—			Interest expense
	(6,629		)	—			Non-interest income
	—			(2,662		)	Non-interest expense
	2,769			1,069			Tax benefit
	(4,253		)	(1,593		)	Net of tax
Total reclassifications for the period	$	3,602		$	(1,528	)	Net of tax

44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. EARNINGS PER SHARE

Earnings per share have been computed based on the following (average diluted shares outstanding are calculated using the treasury stock method):

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	2017		2016		2017		2016
Net income	$	22,903	$	16,381	$	58,057	$	48,339
Average number of common shares issued	41,370		32,273		38,958		32,216
Less: average number of treasury shares	947		1,137		970		1,117
Less: average number of unvested stock award shares	439		515		441		515
Average number of basic common shares outstanding	39,984		30,621		37,547		30,584
Plus: dilutive effect of unvested stock award shares	116		131		116		115
Plus: dilutive effect of stock options outstanding	45		59		45		58
Average number of diluted common shares outstanding	40,145		30,811		37,708		30,757
Earnings per share:
Basic	$	0.57	$	0.53	$	1.55	$	1.58
Diluted	$	0.57	$	0.53	$	1.54	$	1.57

For the nine months ended September 30, 2017, 325 thousand shares of restricted stock and 46 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations. For the nine months ended September 30, 2016, 401 thousand shares of restricted stock and 201 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations.

45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. STOCK-BASED COMPENSATION PLANS

A combined summary of activity in the Company’s stock award and stock option plans for the nine months ended September 30, 2017 is presented in the following table:

	Non-Vested Stock Awards Outstanding				Stock Options Outstanding
(Shares in thousands)	Number of Shares		Weighted-Average Grant Date Fair Value		Number of Shares		Weighted-Average Exercise Price
December 31, 2016	448		$	26.28	109		$	15.72
Granted	156		35.60		—		—
Stock options exercised	—		—		(11	)	14.47
Stock awards vested	(162	)	25.56		—		—
Forfeited	(10	)	29.26		—		—
Expired	—		—		(10	)	33.46
September 30, 2017	432		$	29.64	88		$	13.86
Exercisable options at September 30, 2017					88		$	13.86

During the nine months ended September 30, 2017 and 2016, proceeds from stock option exercises totaled $161 thousand and $142 thousand, respectively. During the nine months ended September 30, 2017, there were 162 thousand shares issued in connection with vested stock awards. During the nine months ended September 30, 2016, there were 116 thousand shares issued in connection with vested stock awards. All of these shares were issued from available treasury stock. Stock-based compensation expense totaled $3.9 million and $3.5 million during the nine months ended September 30, 2017 and 2016, respectively. Stock-based compensation expense is recognized over the requisite service period for all awards.

46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

As of September 30, 2017, the Company held derivatives with a total notional amount of $2.5 billion. The Company had economic hedges and non-hedging derivatives totaling $2.2 billion and $0.3 billion, respectively, which are not designated as hedges for accounting purposes with changes in fair value recorded directly through earnings. Economic hedges included interest rate swaps totaling $1.6 billion, risk participation agreements with dealer banks of $0.1 billion, and $0.5 billion in forward commitment contracts.

As part of the Company’s risk management strategy, the Company enters into interest rate swap agreements to mitigate the interest rate risk inherent in certain of the Company’s assets and liabilities. Interest rate swap agreements involve the risk of dealing with both Bank customers and institutional derivative counterparties and their ability to meet contractual terms. The agreements are entered into with counterparties that meet established credit standards and contain master netting and collateral provisions protecting the at-risk party. The derivatives program is overseen by the Risk Management/Capital Committee of the Company’s Board of Directors. Based on adherence to the Company’s credit standards and the presence of the netting and collateral provisions, the Company believes that the credit risk inherent in these contracts was not significant at September 30, 2017.

The Company pledged collateral to derivative counterparties in the form of cash totaling $1.4 million and securities with an amortized cost of $26.0 million and a fair value of $25.9 million as of September 30, 2017. The Company does not typically require its commercial customers to post cash or securities as collateral on its program of back-to-back economic hedges. However certain language is written into the International Swaps Dealers Association, Inc. (“ISDA”) and loan documents where, in default situations, the Bank is allowed to access collateral supporting the loan relationship to recover any losses suffered on the derivative asset or liability. The Company may need to post additional collateral in the future in proportion to potential increases in unrealized loss positions.

Information about derivative assets and liabilities at September 30, 2017, follows:

			Weighted	Weighted Average Rate				Estimated
	Notional		Average			Contract		Fair Value
	Amount		Maturity	Received		pay rate		Asset (Liability)
	(In thousands)		(In years)					(In thousands)
Cash flow hedges:
Interest rate swaps on FHLB borrowings	$	—	0	—	%	—	%	$	—
Total cash flow hedges	—							—
Economic hedges:
Interest rate swap on tax advantaged economic development bond	10,916		12.2	1.60	%	5.09	%	(1,827		)
Interest rate swaps on loans with commercial loan customers	796,914		6.1	3.09	%	4.19	%	(8,576		)
Reverse interest rate swaps on loans with commercial loan customers	796,914		6.1	4.19	%	3.09	%	8,572
Risk participation agreements with dealer banks	117,067		9.4					12
Forward sale commitments	459,203		0.2					500
Total economic hedges	2,181,014							(1,319		)
Non-hedging derivatives:
Commitments to lend	310,327		0.2					6,455
Total non-hedging derivatives	310,327							6,455
Total	$	2,491,341						$	5,136

47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information about derivative assets and liabilities at December 31, 2016, follows:

			Weighted	Weighted Average Rate				Estimated
	Notional		Average			Contract		Fair Value
	Amount		Maturity	Received		pay rate		Asset (Liability)
	(In thousands)		(In years)					(In thousands)
Cash flow hedges:
Interest rate swaps on FHLB borrowings	$	300,000	2.3	0.63	%	2.29	%	$	(6,573	)
Total cash flow hedges	300,000							(6,573		)
Economic hedges:
Interest rate swap on tax advantaged economic development bond	11,386		12.9	0.98	%	5.09	%	(2,021		)
Interest rate swaps on loans with commercial loan customers	668,541		6.2	2.43	%	4.21	%	(6,752		)
Reverse interest rate swaps on loans with commercial loan customers	668,541		6.2	4.21	%	2.43	%	7,077
Risk participation agreements with dealer banks	83,360		11.6					5
Forward sale commitments	259,889		0.2					722
Total economic hedges	1,691,717							(969		)
Non-hedging derivatives:
Commitments to lend	208,145		0.2					4,738
Total non-hedging derivatives	208,145							4,738
Total	$	2,199,862						$	(2,804	)

48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash flow hedges

In the first quarter of 2017, the Company maintained six interest rate swap contracts with an aggregate notional value of $300 million with original durations of three years. This hedge strategy converted one month rolling FHLB borrowings based on the FHLB’s one month fixed interest rate to fixed interest rates, thereby protecting the Company from floating interest rate variability.

On February 7, 2017, the Company initiated and subsequently terminated all of its interest rate swaps associated with FHLB advances with 1-month LIBOR based floating interest rates of an aggregate notional amount of $300 million. As of March 31, 2017, the Company no longer held the FHLB advances associated with the interest rate swaps. As a result, the Company reclassified $6.6 million of losses from the effective portion of the unrealized changes in the fair value of the terminated derivatives from other comprehensive income to non-interest income as the forecasted transactions to the related FHLB advances will not occur.

For the periods presented prior to the termination, the effective portion of unrealized changes in the fair value of derivatives accounted for as cash flow hedges was reported in other comprehensive income. Each quarter, the Company assessed the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction. Hedge ineffectiveness on interest rate swaps designated as cash flow hedges was immaterial to the Company’s financial statements during the three and nine months ended September 30, 2017 and 2016.

Amounts included in the Consolidated Statements of Income and in the other comprehensive income section of the Consolidated Statements of Comprehensive Income (related to interest rate derivatives designated as hedges of cash flows), were as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2017		2016			2017			2016
Interest rate swaps on FHLB borrowings:
Unrealized (loss) recognized in accumulated other comprehensive loss	$	—	$	1,363		$	(449	)	$	(5,322	)
Less: reclassification of unrealized (loss) from accumulated other comprehensive income to interest expense	—		(1,367		)	(393		)	(2,662		)
Less: reclassification of unrealized (loss) from accumulated other comprehensive income to other non-interest expense	—		—			(6,629		)	—
Net tax (expense) benefit on items recognized in accumulated other comprehensive income	—		(1,096		)	(2,589		)	1,067
Other comprehensive gain (loss) recorded in accumulated other comprehensive income, net of reclassification adjustments and tax effects	$	—	$	1,634		$	3,984		$	(1,593	)

49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Economic hedges

As of September 30, 2017, the Company has an interest rate swap with a $10.9 million notional amount to swap out the fixed rate of interest on an economic development bond bearing a fixed rate of 5.09%, currently within the Company’s trading portfolio under the fair value option, in exchange for a LIBOR-based floating rate. The intent of the economic hedge is to improve the Company’s asset sensitivity to changing interest rates in anticipation of favorable average floating rates of interest over the 21-year life of the bond. The fair value changes of the economic development bond are mostly offset by fair value changes of the related interest rate swap.

The Company also offers certain derivative products directly to qualified commercial borrowers. The Company economically hedges derivative transactions executed with commercial borrowers by entering into mirror-image, offsetting derivatives with third-party financial institutions. The transaction allows the Company’s customer to convert a variable-rate loan to a fixed rate loan. Because the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts mostly offset each other in earnings. Credit valuation adjustments arising from the difference in credit worthiness of the commercial loan and financial institution counterparties totaled $(53) thousand as of September 30, 2017. The interest income and expense on these mirror image swaps exactly offset each other.

The Company has risk participation agreements with dealer banks. Risk participation agreements occur when the Company participates on a loan and a swap where another bank is the lead. The Company gets paid a fee to take on the risk associated with having to make the lead bank whole on Berkshire’s portion of the pro-rated swap should the borrower default. Changes in fair value are recorded in current period earnings.

The Company utilizes forward sale commitments to hedge interest rate risk and the associated effects on the fair value of interest rate lock commitments and loans originated for sale. The forward sale commitments are accounted for as derivatives with changes in fair value recorded in current period earnings.

The Company uses the following types of forward sale commitments contracts:

• Best efforts loan sales,

• Mandatory delivery loan sales, and

• To Be Announced (“TBA”) mortgage-backed securities sales.

A best efforts contract refers to a loan sale agreement where the Company commits to deliver an individual mortgage loan of a specified principal amount and quality to an investor if the loan to the underlying borrower closes. The Company may enter into a best efforts contract once the price is known, which is shortly after the potential borrower’s interest rate is locked.

A mandatory delivery contract is a loan sale agreement where the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. Generally, the Company may enter into mandatory delivery contracts shortly after the loan closes with a customer.

The Company may sell TBA mortgage-backed securities to hedge the changes in fair value of interest rate lock commitments and held for sale loans, which do not have corresponding best efforts or mandatory delivery contracts. These security sales transactions are closed once mandatory contracts are written. On the closing date the price of the security is locked-in, and the sale is paired-off with a purchase of the same security. Settlement of the security purchase/sale transaction is done with cash on a net-basis.

50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Non-hedging derivatives

The Company enters into interest rate lock commitments (“IRLCs”) for residential mortgage loans, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs that relate to the origination of mortgage loans that will be held for sale are considered derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose the Company to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. The IRLCs are free-standing derivatives which are carried at fair value with changes recorded in noninterest income in the Company’s consolidated statements of income. Changes in the fair value of IRLCs subsequent to inception are based on changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and changes in the probability that the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time.

Amounts included in the Consolidated Statements of Income related to economic hedges and non-hedging derivatives were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2017			2016			2017			2016
Economic hedges
Interest rate swap on industrial revenue bond:
Unrealized gain (loss) recognized in other non-interest income	$	70		$	29		$	194		$	(802	)
Interest rate swaps on loans with commercial loan customers:
Unrealized (loss) recognized in other non-interest income	(142		)	2,411			(1,824		)	(18,911		)
Reverse interest rate swaps on loans with commercial loan customers:
Unrealized gain recognized in other non-interest income	142			(2,411		)	1,824			18,911
(Unfavorable) Favorable change in credit valuation adjustment recognized in other non-interest income	(53		)	(62		)	(329		)	(495		)
Risk participation agreements:
Unrealized gain recognized in other non-interest income	2			(14		)	7			102
Forward commitments:
Unrealized gain (loss) recognized in other non-interest income	500			(582		)	224			(1,898		)
Realized gain (loss) in other non-interest income	(983		)	109			(3,651		)	(224		)
Non-hedging derivatives
Commitments to lend
Unrealized gain recognized in other non-interest income	$	6,455		$	1,574		$	21,891		$	3,635
Realized gain in other non-interest income	7,402			760			23,869			2,505

51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Assets and Liabilities Subject to Enforceable Master Netting Arrangements

Interest Rate Swap Agreements (“Swap Agreements”)

The Company enters into swap agreements to facilitate the risk management strategies for commercial banking customers. The Company mitigates this risk by entering into equal and offsetting swap agreements with highly rated third party financial institutions. The swap agreements are free-standing derivatives and are recorded at fair value in the Company’s consolidated statements of condition. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in the event of default on, or termination of, any one contract. Collateral generally in the form of marketable securities is received or posted by the counterparty with net liability positions, respectively, in accordance with contract thresholds.

The Company had net asset positions with its commercial banking counterparties totaling $11.9 million and $11.5 million as of September 30, 2017 and December 31, 2016, respectively. The Company had net liability positions with its financial institution counterparties totaling $10.5 million and $15.4 million as of September 30, 2017 and December 31, 2016, respectively. The Company had net liability positions with its commercial banking counterparties totaling $3.3 million and $4.4 million as of September 30, 2017 and December 31, 2016. The collateral posted by the Company that covered liability positions was $10.5 million and $19.8 million as of September 30, 2017 and December 31, 2016, respectively.

The following table presents the assets and liabilities subject to an enforceable master netting arrangement as of September 30, 2017 and December 31, 2016:

Offsetting of Financial Assets and Derivative Assets

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Assets Presented in the		Gross Amounts Not Offset in the Statements of Condition
	Recognized		Statements of		Statements of		Financial		Cash
(In thousands)	Assets		Condition		Condition		Instruments		Collateral Received		Net Amount
September 30, 2017
Interest Rate Swap Agreements:
Institutional counterparties	$	63	$	—	$	63	$	—	$	—	$	63
Commercial counterparties	11,909		—		11,909		—		—		11,909
Total	$	11,972	$	—	$	11,972	$	—	$	—	$	11,972

Offsetting of Financial Liabilities and Derivative Liabilities

	Gross Amounts of			Gross Amounts Offset in the		Net Amounts of Liabilities Presented in the			Gross Amounts Not Offset in the Statements of Condition
	Recognized			Statements of		Statements of			Financial		Cash
(In thousands)	Liabilities			Condition		Condition			Instruments		Collateral Pledged		Net Amount
September 30, 2017
Interest Rate Swap Agreements:
Institutional counterparties	$	(13,903	)	$	3,450	$	(10,453	)	$	9,043	$	1,410	$	—
Commercial counterparties	(3,369		)	32		(3,337		)	—		—		(3,337		)
Total	$	(17,272	)	$	3,482	$	(13,790	)	$	9,043	$	1,410	$	(3,337	)

52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Offsetting of Financial Assets and Derivative Assets

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Assets Presented in the		Gross Amounts Not Offset in the Statements of Condition
	Recognized		Statements of		Statements of		Financial		Cash
(In thousands)	Assets		Condition		Condition		Instruments		Collateral Received		Net Amount
December 31, 2016
Interest Rate Swap Agreements:
Institutional counterparties	$	49	$	—	$	49	$	—	$	—	$	49
Commercial counterparties	11,461		—		11,461		—		—		11,461
Total	$	11,510	$	—	$	11,510	$	—	$	—	$	11,510

Offsetting of Financial Liabilities and Derivative Liabilities

	Gross Amounts of			Gross Amounts Offset in the		Net Amounts of Liabilities Presented in the			Gross Amounts Not Offset in the Statements of Condition
	Recognized			Statements of		Statements of			Financial		Cash
(In thousands)	Liabilities			Condition		Condition			Instruments		Collateral Pledged		Net Amount
December 31, 2016
Interest Rate Swap Agreements:
Institutional counterparties	$	(20,077	)	$	4,689	$	(15,388	)	$	14,738	$	650	$	—
Commercial counterparties	(4,407		)	23		(4,384		)	—		—		(4,384		)
Total	$	(24,484	)	$	4,712	$	(19,772	)	$	14,738	$	650	$	(4,384	)

53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. FAIR VALUE MEASUREMENTS

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities that are carried at fair value.

Recurring Fair Value Measurements

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.

	September 30, 2017
	Level 1		Level 2		Level 3		Total
(In thousands)	Inputs		Inputs		Inputs		Fair Value
Trading security	$	—	$	—	$	12,603	$	12,603
Available-for-sale securities:
Municipal bonds and obligations	—		118,760		—		118,760
Agency collateralized mortgage obligations	—		807,436		—		807,436
Agency residential mortgage-backed securities	—		217,067		—		217,067
Agency commercial mortgage-backed securities	—		63,044		—		63,044
Corporate bonds	—		67,234		—		67,234
Trust preferred securities	—		11,792		—		11,792
Other bonds and obligations	—		10,291		—		10,291
Marketable equity securities	45,055		334		—		45,389
Loans held for sale	—		143,745		—		143,745
Derivative assets	518		15,379		6,437		22,334
Capitalized servicing rights	—		—		2,707		2,707
Derivative liabilities	—		17,198		—		17,198

	December 31, 2016
	Level 1		Level 2		Level 3		Total
(In thousands)	Inputs		Inputs		Inputs		Fair Value
Trading security	$	—	$	—	$	13,229	$	13,229
Available-for-sale securities:
Municipal bonds and obligations	—		119,816		—		119,816
Agency collateralized mortgage obligations	—		651,911		—		651,911
Agency residential mortgage-backed securities	—		228,684		—		228,684
Agency commercial mortgage-backed securities	—		64,534		—		64,534
Corporate bonds	—		56,006		—		56,006
Trust preferred securities	—		11,887		—		11,887
Other bonds and obligations	—		11,158		—		11,158
Marketable equity securities	62,284		3,257		—		65,541
Loans held for sale	—		120,673		—		120,673
Derivative assets	622		16,157		4,838		21,617
Capitalized servicing rights	—		—		798		798
Derivative liabilities	—		24,420		—		24,420

54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There were no transfers between levels during the three months ended September 30, 2017. During the nine months ended September 30, 2016, the Company had one transfer of $708 thousand in marketable equity securities from Level 3 to Level 2 based on a change in valuation technique driven by the availability of market data.

Trading Security at Fair Value. The Company holds one security designated as a trading security. It is a tax advantaged economic development bond issued to the Company by a local nonprofit which provides wellness and health programs. The determination of the fair value for this security is determined based on a discounted cash flow methodology. Certain inputs to the fair value calculation are unobservable and there is little to no market activity in the security; therefore, the security meets the definition of a Level 3 security. The discount rate used in the valuation of the security is sensitive to movements in the 3-month LIBOR rate.

Securities Available for Sale. AFS securities classified as Level 1 consist of publicly-traded equity securities for which the fair values can be obtained through quoted market prices in active exchange markets. AFS securities classified as Level 2 include most of the Company’s debt securities. The pricing on Level 2 was primarily sourced from third party pricing services, overseen by management, and is based on models that consider standard input factors such as dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and condition, among other things.

Loans Held for Sale. The Company elected the fair value option for all loans held for sale (HFS) originated for sale on or after May 1, 2012. Loans HFS are classified as Level 2 as the fair value is based on input factors such as quoted prices for similar loans in active markets.

					Aggregate Fair Value
September 30, 2017	Aggregate		Aggregate		Less Aggregate
(In thousands)	Fair Value		Unpaid Principal		Unpaid Principal
Loans Held for Sale	$	143,745	$	139,298	$	4,447

					Aggregate Fair Value
December 31, 2016	Aggregate		Aggregate		Less Aggregate
(In thousands)	Fair Value		Unpaid Principal		Unpaid Principal
Loans Held for Sale	$	120,673	$	118,178	$	2,495

The changes in fair value of loans held for sale for the three and nine months ended September 30, 2017, were losses of $0.4 million and gains of $2.0 million, respectively. The changes in fair value for the three and nine months ended September 30, 2016, were losses of $0.2 million and gains of $0.4 million, respectively.The changes in fair value are included in mortgage banking originations in the Consolidated Statements of Income.

Interest Rate Swaps. The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves.

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings.

Although the Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2017, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit

55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Commitments to Lend.The Company enters into commitments to lend for residential mortgage loans intended for sale, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time.  The estimated fair value of commitments to originate residential mortgage loans for sale is based on quoted prices for similar loans in active markets. However, this value is adjusted by a factor which considers the likelihood that the loan in a lock position will ultimately close, and by the non-refundable costs of originating the loan. The closing ratio is derived from the Bank’s internal data and is adjusted using significant management judgment. The costs to originate are primarily based on the Company’s internal commission rates that are not observable. As such, these commitments are classified as Level 3 measurements.

Forward Sale Commitments. The Company utilizes forward sale commitments as economic hedges against potential changes in the values of the commitments to lend and loans originated for sale. To Be Announced (“TBA”) mortgage-backed securities forward commitment sales are used as the hedging instrument, are classified as Level 1, and consist of publicly-traded debt securities for which identical fair values can be obtained through quoted market prices in active exchange markets. The fair values of the Company’s best efforts and mandatory delivery loan sale commitments are determined similarly to the commitments to lend using quoted prices in the market place that are observable. However, costs to originate and closing ratios included in the calculation are internally generated and are based on management’s judgment and prior experience, which are considered factors that are not observable. As such, best efforts and mandatory forward commitments are classified as Level 3 measurements.

Capitalized Servicing Rights.The Company accounts for certain capitalized servicing rights at fair value in its Consolidated Financial Statements, as the Company is permitted to elect the fair value option for each specific instrument. A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy. These capitalized servicing rights are included in other assets on the consolidated balance sheet.

56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below presents the changes in Level 3 assets and liabilities that were measured at fair value on a recurring basis for the three and nine months ended September 30, 2017 and 2016.

	Assets (Liabilities)
				Securities								Capitalized
	Trading			Available		Commitments			Forward			Servicing
(In thousands)	Security			for Sale		to Lend			Commitments			Rights
Three Months Ended September 30, 2017
June 30, 2017	$	12,837		$	—	$	7,374		$	12		$	1,568
Unrealized (loss) gain, net recognized in other non-interest income	(76		)	—		15,146			(30		)	(132		)
Paydown of trading security	(158		)	—		—			—			—
Transfers to held for sale loans	—			—		(16,065		)	—			—
Additions to servicing rights	—			—		—			—			1,271
September 30, 2017	$	12,603		$	—	$	6,455		$	(18	)	$	2,707

Nine Months Ended September 30, 2017
December 31, 2016	$	13,229		$	—	$	4,738		$	100		$	798
Unrealized gain, net recognized in other non-interest income	(155		)	—		48,963			(118		)	(202		)
Paydown of trading security	(471		)	—		—			—			—
Transfers to held for sale loans	—			—		(47,246		)	—			—
Additions to servicing rights	—			—		—			—			2,111
September 30, 2017	$	12,603		$	—	$	6,455		$	(18	)	$	2,707
Unrealized gains (losses) relating to instruments still held at September 30, 2017	$	1,763		$	—	$	6,455		$	(18	)	$	—

	Assets (Liabilities)
				Securities								Capitalized
	Trading			Available		Commitments			Forward			Servicing
(In thousands)	Security			for Sale		to Lend			Commitments			Rights
Three Months Ended September 30, 2016
June 30, 2016	$	14,479		$	—	$	1,259		$	(189	)	$	—
Unrealized (loss) gain, net recognized in other non-interest income	(180		)	—		3,563			(62		)	—
Paydown of trading security	(150		)	—		—			—			—
Transfers to held for sale loans	—			—		(3,248		)	—			—
September 30, 2016	$	14,149		$	—	$	1,574		$	(251	)	$	—

Nine Months Ended September 30, 2016
December 31, 2015	$	14,189		$	708		$	323		$	9		$	—
Unrealized gain, net recognized in other non-interest income	405			—			6,480			(260		)	—
Paydown of trading security	(445		)	—			—			—			—
Transfers to Level 2	—			(708		)	—			—			—
Transfers to held for sale loans	—			—			(5,229		)	—			—
September 30, 2016	$	14,149		$	—		$	1,574		$	(251	)	$	—
Unrealized gains (losses) relating to instruments still held at September 30, 2016	$	2,610		$	—		$	1,574		$	(251	)	$	—

57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Quantitative information about the significant unobservable inputs within Level 3 recurring assets and liabilities is as follows:

	Fair Value					Significant Unobservable Input
(In thousands)	September 30, 2017			Valuation Techniques	Unobservable Inputs	Value
Assets (Liabilities)
Trading Security	$	12,603		Discounted Cash Flow	Discount Rate	2.59		%
Commitments to Lend	6,455			Historical Trend	Closing Ratio	80.50		%
				Pricing Model	Origination Costs, per loan	$	3,692
Forward Commitments	(18		)	Historical Trend	Closing Ratio	80.50		%
				Pricing Model	Origination Costs, per loan	$	3,692
Capitalized Servicing Rights	2,707			Discounted Cash Flow	Constant Prepayment rate (CPR)	10.20		%
					Discount Rate	10.95		%
Total	$	21,747

	Fair Value				Significant Unobservable Input
(In thousands)	December 31, 2016		Valuation Techniques	Unobservable Inputs	Value
Assets (Liabilities)
Trading Security	$	13,229	Discounted Cash Flow	Discount Rate	2.62		%
Commitments to Lend	4,738		Historical Trend	Closing Ratio	80.36		%
			Pricing Model	Origination Costs, per loan	$	3,692
Forward Commitments	100		Historical Trend	Closing Ratio	80.36		%
			Pricing Model	Origination Costs, per loan	$	3,692
Capitalized Servicing Rights	798		Discounted Cash Flow	Constant Prepayment rate (CPR)	10.40		%
				Discount Rate	11.00		%
Total	$	18,865

58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Non-Recurring Fair Value Measurements

The Company is required, on a non-recurring basis, to adjust the carrying value or provide valuation allowances for certain assets using fair value measurements in accordance with GAAP. The following is a summary of applicable non-recurring fair value measurements. There are no liabilities measured at fair value on a non-recurring basis.

	September 30, 2017		December 31, 2016		Fair Value Measurement Date as of September 30, 2017
	Level 3		Level 3		Level 3
(In thousands)	Inputs		Inputs		Inputs
Assets
Impaired loans	$	28,082	$	17,761	September 2017
Capitalized servicing rights	12,663		10,726		August/September 2017
Other real estate owned	288		151		April 2016 - June 2017
Total	$	41,033	$	28,638

Quantitative information about the significant unobservable inputs within Level 3 non-recurring assets is as follows:

	Fair Value
(In thousands)	September 30, 2017		Valuation Techniques	Unobservable Inputs	Range (Weighted Average) (a)
Assets
Impaired loans	$	28,082	Appraised value of collateral	Discounted cash flow - loss severity	39.05% to 0.13% (3.70%)
				Appraised value	$16 to $5,987 ($2,062)
Capitalized servicing rights	12,663		Discounted cash flow	Constant prepayment rate (CPR)	7.78% to 13.69% (10.57%)
				Discount rate	10.00% to 12.76% (11.55%)
Other real estate owned	288		Appraised value of collateral	Appraised value	$94 to $215 ($226)
Total	$	41,033

(a)  Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

	Fair Value
(In thousands)	December 31, 2016		Valuation Techniques	Unobservable Inputs	Range (Weighted Average) (a)
Assets
Impaired loans	$	17,761	Appraised value of collateral	Discounted cash flow - loss severity	0.00% to 88.70% (9.73%)
				Appraised value	$0 to $2,192 ($1,026)
Capitalized servicing rights	10,726		Discounted cash flow	Constant prepayment rate (CPR)	7.35% to 14.28% (10.44%)
				Discount rate	10.00% to 14.00 (11.77%)
Other real estate owned	151		Appraised value of collateral	Appraised value	$101 to $129 ($122)
Total	$	28,638

(a)  Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

There were no Level 1 or Level 2 nonrecurring fair value measurements for the periods ended September 30, 2017 and December 31, 2016.

59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impaired loans. Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records non-recurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments can also include certain impairment amounts for collateral-dependent loans calculated when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace. However, the choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values. Additionally, commercial real estate appraisals frequently involve discounting of projected cash flows, which relies inherently on unobservable data. Therefore, nonrecurring fair value measurement adjustments that relate to real estate collateral have generally been classified as Level 3. Estimates of fair value for other collateral that supports commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3. 

Capitalized loan servicing rights. A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Adjustments are only recorded when the discounted cash flows derived from the valuation model are less than the carrying value of the asset. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

Other real estate owned (“OREO”). OREO results from the foreclosure process on residential or commercial loans issued by the Bank. Upon assuming the real estate, the Company records the property at the fair value of the asset less the estimated sales costs. Thereafter, OREO properties are recorded at the lower of cost or fair value less the estimated sales costs. OREO fair values are primarily determined based on Level 3 data including comparable sales and appraisals.

60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of Estimated Fair Values of Financial Instruments

The following tables summarize the estimated fair values, and related carrying amounts, of the Company’s financial instruments. Certain financial instruments and all non-financial instruments are excluded. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

	September 30, 2017
	Carrying		Fair
(In thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	92,046	$	92,046	$	92,046	$	—	$	—
Trading security	12,603		12,603		—		—		12,603
Securities available for sale	1,341,013		1,341,013		45,055		1,295,958		—
Securities held to maturity	395,065		402,799		—		368,063		34,736
FHLB bank stock and restricted securities	75,117		75,117		—		75,117		—
Net loans	6,898,402		6,930,703		—		—		6,930,703
Loans held for sale	143,745		143,745		—		143,745		—
Accrued interest receivable	29,133		29,133		—		29,133		—
Cash surrender value of bank-owned life insurance policies	161,290		161,290		—		161,290		—
Derivative assets	22,334		22,334		518		15,379		6,437
Assets held for sale	322		322		—		322		—
Financial Liabilities
Total deposits	$	6,790,146	$	6,785,879	$	—	$	6,785,879	$	—
Short-term debt	1,061,300		1,061,232		—		1,061,232		—
Long-term Federal Home Loan Bank advances	338,054		337,653		—		337,653		—
Subordinated borrowings	89,295		98,394		—		98,394		—
Derivative liabilities	17,198		17,198		—		17,198		—

	December 31, 2016
	Carrying		Fair
(In thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	113,075	$	113,075	$	113,075	$	—	$	—
Trading security	13,229		13,229		—		—		13,229
Securities available for sale	1,209,537		1,209,537		62,284		1,147,253		—
Securities held to maturity	334,368		337,680		—		300,806		36,874
FHLB bank stock and restricted securities	71,112		71,112		—		71,112		—
Net loans	6,505,789		6,532,745		—		—		6,532,745
Loans held for sale	120,673		120,673		—		120,673		—
Accrued interest receivable	26,113		26,113		—		26,113		—
Cash surrender value of bank-owned life insurance policies	139,257		139,257		—		139,257		—
Derivative assets	21,617		21,617		622		16,157		4,838
Assets held for sale	322		322		—		322		—
Financial Liabilities
Total deposits	$	6,622,092	$	6,624,108	$	—	$	6,624,108	$	—
Short-term debt	1,082,044		1,081,996		—		1,081,996		—
Long-term Federal Home Loan Bank advances	142,792		143,151		—		143,151		—
Subordinated borrowings	89,161		96,973		—		96,973		—
Derivative liabilities	24,420		24,420		—		24,420		—

61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other than as discussed above, the following methods and assumptions were used by management to estimate the fair value of significant classes of financial instruments for which it is practicable to estimate that value.

Cash and cash equivalents. Carrying value is assumed to represent fair value for cash and cash equivalents that have original maturities of ninety days or less.

FHLB bank stock and restricted securities. Carrying value approximates fair value based on the redemption provisions of the issuers.

Cash surrender value of life insurance policies. Carrying value approximates fair value.

Loans, net. The carrying value of the loans in the loan portfolio is based on cash flows discounted over their respective loan origination rates. The origination rates are adjusted for substandard and special mention loans to factor the impact of declines in the loan’s credit standing. The fair value of the loans is estimated by discounting future cash flows using the current interest rates at which similar loans with similar terms would be made to borrowers of similar credit quality. The methodology utilized to determine fair value does not represent exit price.

Accrued interest receivable. Carrying value approximates fair value.

Deposits. The fair value of demand, non-interest bearing checking, savings and money market deposits is determined as the amount payable on demand at the reporting date. The fair value of time deposits is estimated by discounting the estimated future cash flows using market rates offered for deposits of similar remaining maturities.

Borrowed funds. The fair value of borrowed funds is estimated by discounting the future cash flows using market rates for similar borrowings.  Such funds include all categories of debt and debentures in the table above.

Subordinated borrowings. The Company utilizes a pricing service along with internal models to estimate the valuation of its junior subordinated debentures. The junior subordinated debentures re-price every ninety days.

Off-balance-sheet financial instruments. Off-balance-sheet financial instruments include standby letters of credit and other financial guarantees and commitments considered immaterial to the Company’s financial statements.

NOTE 13. NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

Presented below is net interest income after provision for loan losses for the three and nine months ended September 30, 2017 and 2016, respectively.

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Net interest income	$	71,998	$	57,971	$	208,429	$	173,109
Provision for loan losses	4,900		4,734		14,884		13,262
Net interest income after provision for loan losses	$	67,098	$	53,237	$	193,545	$	159,847

62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14. SUBSEQUENT EVENTS

On October 13, 2017, Commerce Bancshares Corp. ("Commerce"), the parent company of Commerce Bank & Trust Company ("Commerce Bank") merged with and into the Company in a transaction accounted for as a business combination. Commerce Bank also merged with and into Berkshire Bank. Headquartered in Worcester, Mass., Commerce Bank operated 16 branch banking offices providing a range of services in Central Massachusetts and greater Boston. With this agreement, the Company established a market position in Worcester, New England’s second largest city. Additionally, this acquisition was a catalyst for the Company’s decision to relocate its corporate headquarters to Boston and to expand its Greater Boston market initiatives. This acquisition also increased the Company’s total assets over the $10 billion Dodd Frank Act threshold for additional regulatory requirements.

As established by the merger agreement, each of the 6.328 million outstanding shares of Commerce common stock was converted into the right to receive 0.93 shares of the Company's common stock, plus cash in lieu of fractional shares. Certain Commerce common stock was instead converted into the right to receive 0.465 shares of new Series B preferred stock (non-voting) issued by the Company, pursuant to limited circumstances established by the merger agreement. Each preferred share is convertible into two shares of the Company's common stock under specified conditions. As of close of business on October 13, 2017, the Company issued 4.842 million common shares and 522 thousand preferred shares as merger consideration, pursuant to the merger agreement. The value of this consideration was measured at $188.6 million for the common stock and $40.7 million for the preferred stock based on the $38.95 closing price of the Company’s common stock on the issuance date.

As of the merger date, Commerce, on a consolidated basis, maintained assets with a carrying value of approximately $1.9 billion (unaudited), including loans outstanding with a carrying value of approximately $1.4 billion (unaudited). In addition, Commerce maintained deposits with a carrying value of approximately $1.7 billion (unaudited).

The merger had no significant effect on the Company’s financial statements for the periods presented, aside from expenses related to the merger and ongoing systems and processes integration. These amounts are included in the financial statement line item Acquisition, Restructuring, and Other Expenses of the Consolidated Statements of Income, representing $788 thousand and $2.4 million for the three and nine months ended September 30, 2017, respectively.

63

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SELECTED FINANCIAL DATA

The following summary data is based in part on the consolidated financial statements and accompanying notes and other information appearing elsewhere in this or prior Forms 10-Q.

	At or for the						At or for the
	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
PER COMMON SHARE DATA
Net earnings, diluted	$	0.57		$	0.53		$	1.54		$	1.57
Adjusted earnings, diluted (1)	0.59			0.57			1.71			1.64
Total book value	31.78			29.97			31.78			29.97
Tangible book value (2)	21.38			18.78			21.38			18.78
Dividends	0.21			0.20			0.63			0.60
Common stock price:							0
High	39.00			28.37			39.00			28.93
Low	32.85			25.90			32.85			24.71
Close	38.75			27.71			38.75			27.71
PERFORMANCE RATIOS (3)
Return on assets	0.95		%	0.82		%	0.83		%	0.82		%
Adjusted return on assets (1)	0.98			0.88			0.92			0.86
Return on equity	7.26			7.29			6.63			7.21
Adjusted return on equity (1)	7.47			7.75			7.37			7.53
Adjusted return on tangible equity (1)	11.42			12.99			11.78			12.55
Net interest margin, fully taxable equivalent (FTE) (4)	3.36			3.27			3.35			3.30
Fee income/Net interest and fee income	29.96			23.81			30.76			22.03
Efficiency ratio (2)	59.28			57.32			60.96			58.22
GROWTH RATIOS
Total commercial loans, (annualized)	1		%	6		%	9		%	8		%
Total loans, (annualized)	5			3			8			7
Total deposits, (annualized)	4			7			3			4
Total net revenues, (compared to prior year)	31			10			37			13
Earnings per share, (compared to prior year)	8			8			(2		)	31
Adjusted earnings per share, (compared to prior year) (1)	2			6			4			6
FINANCIAL DATA:(In millions)
Total assets	$	9,767		$	7,931		$	9,767		$	7,931
Total earning assets	8,944			7,229			8,944			7,229
Total investments	1,853			1,162			1,853			1,162
Total borrowings	1,489			1,138			1,489			1,138
Total loans	6,947			6,047			6,947			6,047
Allowance for loan losses	49			43			49			43
Total intangible assets	420			348			420			348
Total deposits	6,790			5,750			6,790			5,750
Total common stockholders’ equity	1,285			933			1,285			933

64

	At or for the						At or for the
	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
ASSET QUALITY AND CONDITION RATIOS(5)
Net charge-offs (annualized)/average loans	0.19		%	0.20		%	0.20		%	0.22		%
Allowance for loan losses/total loans	0.71			0.71			0.71			0.71
Loans/deposits	102			105			102			105
Shareholders' equity to total assets	13.15			11.76			13.15			11.76
Tangible shareholders' equity to tangible assets (2)	9.25			7.70			9.25			7.70
FOR THE PERIOD:(In thousands)
Net interest income	$	71,998		$	57,971		$	208,429		$	173,109
Non-interest income	28,836			18,941			96,391			49,126
Provision for loan losses	4,900			4,734			14,884			13,262
Non-interest expense	65,820			48,844			209,669			142,212
Net income	22,903			16,381			58,057			48,339
Adjusted Income (1)	23,554			17,418			64,513			50,421

____________________________________________________________________________________________

(1)  Adjusted measurements are non-GAAP financial measures that are adjusted to exclude net non-operating charges primarily related to acquisitions and restructuring activities. Refer to the Reconciliation of Non-GAAP Financial Measures for additional information.

(2) Non-GAAP financial measure.

(3)  All performance ratios are annualized and are based on average balance sheet amounts, where applicable.

(4) Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.

(5)  Generally accepted accounting principles require that loans acquired in a business combination be recorded at fair value, whereas loans from business activities are recorded at cost. The fair value of loans acquired in a business combination includes expected loan losses, and there is no loan loss allowance recorded for these loans at the time of acquisition. Accordingly, the ratio of the loan loss allowance to total loans is reduced as a result of the existence of such loans, and this measure is not directly comparable to prior periods. Similarly, net loan charge-offs are normally reduced for loans acquired in a business combination since these loans are recorded net of expected loan losses. Therefore, the ratio of net loan charge-offs to average loans is reduced as a result of the existence of such loans, and this measure is not directly comparable to prior periods. Other institutions may have loans acquired in a business combination, and therefore there may be no direct comparability of these ratios between and among other institutions.

65

AVERAGE BALANCES AND AVERAGE YIELDS/RATES

The following table presents average balances and an analysis of average rates and yields on an annualized fully taxable equivalent basis for the periods included:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2017				2016				2017				2016
($ In millions)	Average Balance		Yield/Rate (FTE basis)		Average Balance		Yield/Rate (FTE basis)		Average Balance		Yield/Rate (FTE basis)		Average Balance		Yield/Rate (FTE basis)
Assets
Loans:
Commercial real estate	$	2,669	4.64	%	$	2,261	4.25	%	$	2,664	4.54	%	$	2,171	4.27	%
Commercial and industrial loans	1,184		5.09		1,010		5.06		1,129		5.08		1,028		4.96
Residential mortgages	1,978		3.68		1,839		3.62		1,918		3.62		1,799		3.69
Consumer loans	1,030		3.88		900		3.40		1,002		3.77		851		3.41
Total loans (1)	6,861		4.33		6,010		4.06		6,713		4.26		5,849		4.09
Investment securities (2)	1,779		3.43		1,198		3.47		1,702		3.42		1,263		3.45
Short term investments & loans held for sale (3)	168		3.40		40		1.68		145		2.95		46		1.32
Total interest-earning assets	8,808		4.13		7,248		3.95		8,560		4.07		7,158		3.95
Intangible assets	421				349				422				343
Other non-interest earning assets	402				360				387				352
Total assets	$	9,631			$	7,957			$	9,369			$	7,853
Liabilities and shareholders’ equity
Deposits:
NOW	$	571	0.26	%	$	475	0.12	%	$	573	0.24	%	$	484	0.13	%
Money market	1,768		0.57		1,448		0.46		1,789		0.54		1,423		0.47
Savings	670		0.14		608		0.12		662		0.14		608		0.12
Time	2,588		1.20		2,095		1.10		2,471		1.14		2,069		1.05
Total interest-bearing deposits	5,597		0.78		4,626		0.67		5,495		0.73		4,584		0.65
Borrowings and notes (4)	1,457		1.65		1,247		1.52		1,418		1.50		1,239		1.36
Total interest-bearing liabilities	7,054		0.96		5,873		0.85		6,913		0.89		5,823		0.80
Non-interest-bearing demand deposits	1,196				1,085				1,177				1,048
Other non-interest earning liabilities	119				100				112				89
Total liabilities	8,369				7,058				8,202				6,960
Total shareholders’ equity (2)	1,262				899				1,167				893
Total liabilities and stockholders’ equity	$	9,631			$	7,957			$	9,369			$	7,853

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	Three Months Ended September 30,								Nine Months Ended September 30,
	2017				2016				2017				2016
	Average Balance		Yield/Rate (FTE basis)		Average Balance		Yield/Rate (FTE basis)		Average Balance		Yield/Rate (FTE basis)		Average Balance		Yield/Rate (FTE basis)
Net interest spread			3.17	%			3.10	%			3.18	%			3.15	%
Net interest margin (5)			3.36				3.27				3.35				3.31
Cost of funds			0.82				0.72				0.76				0.68
Cost of deposits			0.64				0.54				0.60				0.53
Supplementary data
Total deposits (In millions)	$	6,793			$	5,711			$	6,672			$	5,632
Fully taxable equivalent income adj. (In thousands) (6)	2,950				2,004				8,105				5,870

____________________________________

(1)  The average balances of loans include nonaccrual loans and deferred fees and costs.

(2)  The average balance for securities available for sale is based on amortized cost. The average balance of equity also reflects this adjustment.

(3)  Interest income on loans held for sale is included in loan interest income on the income statement.

(4)  The average balances of borrowings includes the capital lease obligation presented under other liabilities on the consolidated balance sheet.

(5)  Purchased loan accretion totaled $3.1 million and $2.2 million for the three months ended September 30, 2017 and 2016, respectively. Purchased loan accretion totaled $9.3 million and $6.3 million for the nine months ended September 30, 2017 and 2016, respectively.

(6) Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.

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NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is provided below. In all cases, it should be understood that non-GAAP measures do not depict amounts that accrue directly to the benefit of shareholders. An item which management excludes when computing non-GAAP adjusted earnings can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP adjusted earnings information set forth is not necessarily comparable to non- GAAP information which may be presented by other companies. Each non-GAAP measure used by the Company in this report as supplemental financial data should be considered in conjunction with the Company’s GAAP financial information.

The Company utilizes the non-GAAP measure of adjusted earnings in evaluating operating trends, including components for adjusted revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including securities gains/losses, gains on the sale of business operations, losses recorded for hedge terminations, merger costs, restructuring costs, legal settlements, systems conversion costs, and out-of-period adjustments. Non-GAAP adjustments are presented net of an adjustment for income tax expense.

The Company also calculates adjusted earnings per share based on its measure of adjusted earnings. The Company views these amounts as important to understanding its operating trends, particularly due to the impact of accounting standards related to merger and acquisition activity. Analysts also rely on these measures in estimating and evaluating the Company’s performance. Management also believes that the computation of non-GAAP adjusted earnings and adjusted earnings per share may facilitate the comparison of the Company to other companies in the financial services industry.

Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, system conversion costs, variable compensation expenses, and professional fees. Systems conversion costs relate primarily to the Company’s core systems conversion and related systems conversions costs. Restructuring costs primarily consist of the Company's continued effort to create efficiencies in operations through calculated adjustments to the branch banking and office footprint. Expense adjustments include variable rate compensation related to non-operating items. In 2017, expense adjustments also included costs to settle customer and other disputes viewed as not related to normalized operations, totaling $600 thousand in the second quarter and $200 thousand in the third quarter.

The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The following table summarizes the reconciliation of non-GAAP items recorded for the periods indicated:

		At or for the Three Months Ended September 30,						At or for the Nine Months Ended September 30,
(in thousands)		2017			2016			2017			2016
GAAP Net income		$	22,903		$	16,381		$	58,057		$	48,339
Adj: Losses/(gains) on sale of securities, net		1			(78		)	(12,568		)	(101		)
Adj: Loss on termination of hedges		—			—			6,629			—
Adj: Net (gains) on sale of business operations		(296		)	(563		)	(296		)	(563		)
Adj: Merger and acquisition expense		1,110			1,453			9,323			2,681
Adj: Restructuring and other expense		310			717			6,682			1,147
Adj: Income taxes		(474		)	(492		)	(3,314		)	(1,082		)
Total adjusted income (non-GAAP)	(A)	$	23,554		$	17,418		$	64,513		$	50,421
GAAP Total revenue		$	100,834		$	76,912		$	304,820		$	222,235
Adj: Losses/(gains) on sale of securities, net		1			(78		)	(12,568		)	(101		)
Adj: Net (gains) on sale of business operations		(296		)	(563		)	(296		)	(563		)
Adj. Loss on termination of hedges		—			—			6,629			—
Total operating revenue (non-GAAP)	(B)	$	100,539		$	76,271		$	298,585		$	221,571
GAAP Total non-interest expense		$	65,820		$	48,844		$	209,669		$	142,212
Less: Total non-operating expense (see above)		(1,420		)	(2,170		)	(16,005		)	(3,828		)
Operating non-interest expense (non-GAAP)	(C)	$	64,400		$	46,674		$	193,664		$	138,384
(in millions, except per share data)
Total average assets	(D)	$	9,631		$	7,957		$	9,369		$	7,852
Total average shareholders’ equity	(E)	1,262			899			1,167			893
Total average tangible shareholders’ equity	(F)	841			550			746			551
Total tangible shareholders’ equity, period-end (1)	(G)	864			584			864			584
Total tangible assets, period-end (1)	(H)	9,346			7,583			9,346			7,583
Total common shares outstanding, period-end (thousands)	(I)	40,424			31,122			40,424			31,122
Average diluted shares outstanding (thousands)	(J)	40,145			30,811			37,708			30,757
Earnings per share, diluted		$	0.57		$	0.53		$	1.54		$	1.57
Adjusted earnings per share, diluted	(A/J)	0.59			0.57			1.71			1.64
Book value per share, period-end		31.78			29.97			31.78			29.97
Tangible book value per share, period-end	(G/I)	21.38			18.78			21.38			18.78
Total shareholders' equity/total assets		13.15			11.76			13.15			11.76
Total tangible shareholder's equity/total tangible assets	(G)/(H)	9.25			7.70			9.25			7.70
Performance ratios(2)
GAAP return on assets		0.95		%	0.82		%	0.83		%	0.82		%
Adjusted return on assets	(A/D)	0.98			0.88			0.92			0.86
GAAP return on equity		7.26			7.29			6.63			7.21
Adjusted return on equity	(A/E)	7.47			7.75			7.37			7.53
Adjusted return on tangible equity (3)	(A/F)	11.42			12.99			11.78			12.55

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Efficiency ratio	(C-M)/(B+K+N)	59.28			57.32			60.96			58.22
Supplementary data(in thousands)
Tax benefit on tax-credit investments (4)	(K)	$	3,905		$	1,852		$	7,225		$	6,217
Non-interest income charge on tax-credit investments (5)	(L)	(3,347		)	(1,525		)	(6,129		)	(4,564		)
Net income on tax-credit investments	(K+L)	558			327			1,096			1,653
Intangible amortization	(M)	739			749			2,310			2,355
Fully taxable equivalent income adjustment	(N)	2,950			2,004			8,105			5,870

__________________________________________________________________________________________

(1)  Total tangible shareholders’ equity is computed by taking total shareholders’ equity less the intangible assets at period-end. Total tangible assets is computed by taking total assets less the intangible assets at period-end.

(2)  Ratios are annualized and based on average balance sheet amounts, where applicable.

(3)  Adjusted return on tangible equity is computed by dividing the total adjusted income adjusted for the tax-affected amortization of intangible assets, assuming a 40% marginal rate, by tangible equity.

(4)  The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic rehabilitation, low-income housing, new market projects, and renewable energy projects.

(5)  The non-interest income charge is the reduction to the tax-advantaged commercial project investments, which are incurred as the tax credits are generated.

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GENERAL

Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Company. The following discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and the notes thereto appearing in Part I, Item 1 of this document and with the Company’s consolidated financial statements and the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2016 Annual Report on Form 10-K. In the following discussion, income statement comparisons are against the same period of the previous year and balance sheet comparisons are against the previous fiscal year-end, unless otherwise noted. Operating results discussed herein are not necessarily indicative of the results for the year 2017 or any future period. In management’s discussion and analysis of financial condition and results of operations, certain reclassifications have been made to make prior periods comparable. Tax-equivalent adjustments during the current period are the result of increasing income from tax-advantaged securities by an amount equal to the taxes that would be paid if the income were fully taxable based on a 39.4% marginal income tax rate. In the discussion, references to earnings per share refer to diluted earnings per share unless otherwise specified.

Berkshire Hills Bancorp, Inc. (“Berkshire” or “the Company”) is a Delaware corporation headquartered in Pittsfield, Massachusetts and the holding company for Berkshire Bank (“the Bank”) and Berkshire Insurance Group. Established in 1846, the Bank operates as a commercial bank under a Massachusetts trust company charter. Berkshire Bank operates under the brand America’s Most Exciting Bank®. The Company has announced a relocation of its corporate headquarters to Boston, Massachusetts.

Berkshire is a regional financial services company that seeks to distinguish itself over the long term based on the following attributes:

• Strong growth from organic, de novo, product, and acquisition strategies

• Solid capital, core funding, and risk management culture

• Experienced executive team focused on earnings and stockholder value

• Distinctive brand and culture as America’s Most Exciting Bank®

• Diversified integrated financial service revenues

• Targeted expansion in Boston and Eastern Massachusetts

• Positioned to be regional consolidator in attractive markets.

Shown below is a profile of the Company as of report date:

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FORWARD-LOOKING STATEMENTS

Certain statements contained in this document that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (referred to as the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (referred to as the Securities Exchange Act), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including among other things, changes in general economic and business conditions, increased competitive pressures, changes in the interest rate environment, legislative and regulatory change, changes in the financial markets, and other risks and uncertainties disclosed from time to time in documents that Berkshire Hills Bancorp files with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and the Risk Factors in Item 1A of this report. Because of these and other uncertainties, Berkshire’s actual results, performance or achievements, or industry results, may be materially different from the results indicated by these forward-looking statements. In addition, Berkshire’s past results of operations do not necessarily indicate Berkshire’s combined future results. You should not place undue reliance on any of the forward-looking statements, which speak only as of the dates on which they were made. Berkshire is not undertaking an obligation to update forward-looking statements, even though its situation may change in the future, except as required under federal securities law. Berkshire qualifies all of its forward-looking statements by these cautionary statements.

SUMMARY

The first nine months of 2017 were transformative for Berkshire, as it:

• put together a strategic bank acquisition;

• announced a headquarters move to Boston;

• expanded its growth initiatives in eastern Massachusetts;

• positioned itself for constructively crossing the $10 billion asset threshold;

• and publicly placed a stock offering to support its growth initiatives.

While moving forward with these initiatives, the Company integrated its 2016 business acquisitions and pursued expansion across its business lines, generating bottom line growth and improved profitability.

Third quarter total net income increased year-over-year by 40%, driven primarily by 31% net revenue growth which reflected business combinations and organic business development. Third quarter earnings per share increased by 8% to $0.57. The third quarter return on assets improved by 13 basis points to 0.95% including the benefit of a 9 basis point expansion of the net interest margin as well as a 70% increase in fee income primarily due to acquired mortgage banking operations. Additionally the efficiency ratio on operations other than mortgage banking improved from 57% to an estimated 55% including the benefit of branch consolidations and other restructuring initiatives.

Year-to-date net income was up 20% on a 37% net revenue increase. Year-to-date earnings per share decreased by 2% to $1.54, including the impact of increased charges viewed as non-operating and related primarily to mergers and restructuring. EPS increased by 4% excluding these charges. Per share results in 2017 included the impact of shares issued in 2016 business combinations and in the May 2017 public common stock offering.

THIRD QUARTER FINANCIAL HIGHLIGHTS (comparisons are to prior quarter unless otherwise stated):

• 9% annualized increase in commercial and industrial loans

• 14% annualized increase in demand deposit accounts

• 4% increase in net interest income

• 3.36% net interest margin

• 59.3% efficiency ratio

• 0.95% ROA

• 0.23% non-performing assets/assets

• 0.19% net loan charge-offs/average loans

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On May 22, 2017, Berkshire announced an agreement to acquire Worcester, MA based Commerce Bancshares. On October 13, 2017, the Company completed this acquisition, bringing total assets to approximately $11.6 billion and total shares outstanding to 45.3 million shares, with a market capitalization of $1.8 billion. This acquisition gives Berkshire the largest deposit market share in New England’s second largest city. The Bank now has 19 branches in the Greater Boston area, including four in Boston. Berkshire is now the third largest regional bank headquartered in New England and will be the largest regional bank headquartered in Boston. Greater Boston is the country’s sixth largest combined statistical area, and is growing strongly including world class education, health care, financial, and technology sectors. Berkshire entered into a lease for its new Boston headquarters location at 60 State Streetstrategically positioned in the heart of Boston’s financial district and steps from historic Faneuil Hall. Berkshire also brought on board several Boston area senior bankers to service the commercial, retail, and private banking markets.

The Commerce acquisition fills in the length of Berkshire’s Massachusetts footprint and centers on the Worcester market where Berkshire has operated for a number of years. The merger is targeted to offer opportunities for cost efficiencies and revenue synergies. The Company’s plan is that this merger will bring the Company over the $10 billion asset Dodd Frank Act threshold while absorbing the earnings impacts and contributing accretively to earnings and profitability when fully integrated. Commerce was acquired in a stock for stock exchange. The Company’s stock offering in the second quarter provided capital that is targeted to be sufficient to fund deal related costs and intangibles and also to provide resources for future growth in Greater Boston and other markets.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2017 AND DECEMBER 31, 2016

Summary:Total assets measured $9.8 billion at September 30, 2017, increasing by $604 million at a 9% annualized rate in the first nine months of the year. The 8% annualized loan growth for the year-to-date was driven by solid growth in all major loan categories, including a 9% annualized increase in commercial loans. Average loan yields increased in each successive quarter and included the benefit of higher short term interest rates. Deposit growth was 3% annualized over this period. Total equity grew by 17% including the second quarter $153 million stock offering, and the ratio of equity to assets increased to 13.2% from 11.9%. Borrowings funded a 12% increase in investments in order to leverage the new capital. Book value per share increased by 4% to $31.78 for the year-to-date, while tangible book value per share (a non-GAAP financial measure) grew by 14% to $21.38. Delinquent and non-accruing loans decreased to 0.74% of total loans, and quarterly annualized net loan charge-offs declined to 0.19% of average loans. The Commerce acquisition in October was funded with a stock for stock exchange and provides new deposit funding sources which contribute to the Company’s liquidity. The quarterly cash dividend was increased by 5% in the first quarter and the Company continues to generate double digit annualized internal generation of tangible equity to support organic growth.

Securities: Total investment securities increased by $196 million, or 12%, as the Company supplemented loan growth to utilize the capital generated from the stock offering. Growth was concentrated in a $156 million increase in agency collateralized mortgage obligations available for sale and a $69 million increase in municipal bonds held to maturity. In the first quarter, the Company sold $25 million in equity securities, and realized $13 million in net securities gains. These gains were already included at the start of the year as a component of shareholders’ equity in accumulated other comprehensive income. This sale took advantage of strong market conditions for bank stocks.

The securities portfolio yield decreased to 3.43% in the most recent quarter, compared to 3.58% in the fourth quarter of 2016. This included the impact of the First Choice portfolio, the sale of equity securities, ongoing yield compression in the bond markets, and portfolio growth. The weighted average life of the bond portfolio decreased to 5.4 years from 5.9 years at the start of the year. The net unrealized securities gain totaling 1.2% of book value at the third quarter-end was little changed from 1.3% at the start of the year. The reduction in the unrealized equity gain resulting from the realized gain on sale in the first quarter was largely offset by improved bond market prices tied primarily to lower long term interest rates at the end of the third quarter.

Loans: Total loans increased by $393 million, at an 8% annualized rate, in the first nine months of 2017. All major categories increased, led by commercial and industrial loans, which grew by $193 million at a 24% annualized rate.

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This category is one of Berkshire’s primary areas of strategic focus, to support commercial relationship development, increase the mix of non-real estate related credit, and generate growth in higher-yielding assets. During the first quarter, the Company recruited new commercial banking leadership for the Mid-Atlantic region, and at the end of the third quarter, the Company recruited expanded commercial banking leadership for the Boston market. Growth in this category includes balances related to loan participations and other wholesale loan transactions.

Total commercial loans increased by $247 million at a 9% annualized rate for the year-to-date. Commercial real estate loans totaled $2.7 billion and constituted the largest loan category. Owner occupied commercial real estate loans totaled $562 million at third quarter-end. Taken together with commercial and industrial loans, these loans measured 46% of total commercial loans and are viewed by the Bank as the primary commercial relationship related outstandings. Berkshire monitors its commercial real estate lending risk using the enhanced processes required for banks exceeding the related federal regulatory monitoring thresholds even though it is well margined below those thresholds. Berkshire’s total commercial real estate outstandings measured 248% of bank regulatory capital at September 30, 2017, compared to the 300% regulatory monitoring guidelines (based on regulatory definitions). Total construction loans outstanding were 39% of regulatory capital for the above respective dates, compared to the 100% monitoring guideline.

Most of the Bank’s residential mortgage lending activities are for conforming loans targeted for sale in the secondary markets. These operations are further addressed in later discussion of operating results. The portfolio of held for investment mortgages increased by $90 million, or 6% annualized, in the first nine months of the year. The balance of mortgages held for sale increased seasonally by $23 million. The Bank also purchases and sells seasoned loans in conjunction with its financial institutions banking activities. The volume of these sales totaled $255 million, including some balances sold as part of a shift into shorter duration mortgage backed securities in conjunction with asset liability management.

Consumer loans increased by $60 million, or 8% annualized, in the first nine months of 2017. Auto and other loans increased at a 15% annualized rate, while home equity balances decreased at a 3% annualized rate. The Bank has an indirect auto lending team originating prime auto loans throughout its New England/New York footprint.

The First Choice acquisition was completed on December 2, 2016. The portfolio yield in 2017 reflects these additional acquired balances, along with changes in loan activity in 2017. The average loan yield increased to 4.33% in the third quarter of 2017, compared to 4.00% in the fourth quarter of 2016. In addition to the First Choice impacts, the yield change was primarily due to fed funds rate hikes by the Federal Reserve Bank in December, March, and June. These higher rates benefited the yield on Prime and LIBOR based loans. At third quarter-end, 43% of total loans contractually repriced within one year, 20% repriced in one to five years, and 37% repriced after five years. The portfolio repricing life was slightly shorter than at the start of the year due to the growth of shorter duration commercial and consumer loans.

Asset Quality: Asset quality metrics remained favorable and generally improved slightly in the first nine months of 2017. Annualized net loan charge-offs for this period were 0.20%. At period-end, non-performing assets were 0.23% of total assets, and total delinquent and non-accruing loans were 0.74% of total loans. At period-end, the total contractual balance of purchased credit impaired loans was $57 million, with a $32 million carrying value, representing a $25 million discount, which is a 44% discount from the contractual amount. Included in this amount was a $4 million accretable balance net of $3 million in accretion recorded during the year. Impaired loans increased to $52 million from $41 million. Criticized loans measured 1.3% of total assets at September 30, 2017, compared to 1.4% at the start of the year.

The loan loss allowance increased by $5 million, or 11%, to $49 million during the year-to-date. The ratio of the allowance to total loans increased to 0.71% from 0.67%, including the impact of higher growth in commercial and industrial loans, which carry a higher reserve. For business activities loans, the ratio of the allowance increased to 0.77% from 0.74% of related balances, and net charge-offs totaled $8 million for the first nine months of the year. For acquired loans, this ratio decreased to 0.39% from 0.40%, and net charge-offs totaled $2 million.

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Deposits: Total deposits increased by $168 million, or 3% annualized, in the first nine months of 2017. This growth resulted from a $240 million, or 14% annualized, increase in time deposits which was partially offset by decreases in transaction and money market deposits. As interest rates have risen, some customer demand has shifted towards time deposits with higher interest rates. Additionally, some year-end 2016 commercial non-maturity balances were unusually high due to timing factors. Brokered time deposits increased by $249 million as part of the Company’s wholesale strategy to target funding durations and support the capital leverage initiative. Brokered balances also included some deposits acquired from First Choice.

The cost of deposits increased to 0.64% in the most recent quarter, compared to 0.56% in the fourth quarter of 2016, despite three rate hikes aggregating 0.75% during this interval. Berkshire has been adjusting its Mid-Atlantic deposit offerings which were historically higher cost at First Choice Bank, while pursuing its goals for retaining and growing accounts in this promising new market. The loans/deposits ratio measured 102% at September 30, 2017 and has subsequently declined due to the Commerce acquisition.

In 2017, Berkshire consolidated three branch offices and opened its first Boston office, located in the downtown financial district. With the planned move of its corporate headquarters to Boston, and with the addition of three Boston offices from Commerce, Berkshire plans to focus on deposit growth in this promising market. The Company has relocated a Hartford area office and has plans to open branches in its Hartford and Albany area markets. Berkshire continues to diversify its distribution network, including expanding its My Banker and private banking teams and integrating more closely with its wealth management, investment services, small business, insurance, and other business lines. The Company utilizes its virtual teller platform in its new Boston office and is deploying this technology in other strategic locations. For the 12 months ended September 30, 2017, the median deposit growth rate for Berkshire’s branches was 5%, with the highest growth in its New York and Connecticut markets. The median growth in Mid-Atlantic branches was negative due to anticipated runoff following the First Choice acquisition and the restructuring of certain uneconomic deposit products. These comparisons are based on data provided to the FDIC, including reports filed by First Choice prior to the acquisition.

Borrowings and Derivative Financial Instruments: Total borrowings increased by $175 million, or 14%, in the first nine months of 2017 to support earning asset growth. This growth was in term FHLB borrowings. The cost of borrowings was 1.65% in the most recent quarter, which was little changed from 1.63% in the fourth quarter of 2016. The interest expense reduction resulting from the termination of the cash flow hedges was offset by the impact of higher interest rates on short term borrowings and the increased use of higher costing long term advances. The overall cost of funds advanced to 0.82% from 0.73% due to the higher deposit costs.

The notional balance of derivative financial instruments increased to $2.5 billion at third quarter, compared to $2.2 billion at the start of the year. The termination of $300 million of cash flow hedges was offset by a $257 million increase in derivatives related to commercial loan interest rate swaps and a $301 million increase in derivatives related to mortgage banking. Commercial loan interest rate swap arrangements increased at a 26% annualized rate in the first nine months of 2017 due to lending activity and customer demand for interest rate protection. Mortgage banking derivatives increased seasonally by 64% due to higher lending volume compared to year-end 2016.

The cash flow hedges were terminated in early February in conjunction with the integration of the acquired First Choice balance sheet, including excess deposits. The Company retired the one month rolling FHLB loans that were hedged by the terminated fixed payment interest rate swaps. The Company recorded a $7 million loss on this termination; this loss was already a component of shareholders’ equity in accumulated other comprehensive income. The swaps had a fixed pay rate of 2.3% with a remaining maturity of 2.3 years at the start of the year.

The net fair value of derivatives improved from a $3 million liability at year-end 2016 to a $5 million premium at third quarter-end. This was due to the realization of the $7 million loss on cash flow hedges and a $1.5 million increase in the fair value of mortgage derivatives related to the seasonal increase in mortgage applications in the processing pipeline.

Shareholders’ Equity: In May 2017, Berkshire completed its first public common stock offering since 2009, in the amount of $153 million (net of offering costs). This offering was for general corporate purposes and was conducted

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under the Company’s universal shelf registration statement with the SEC. The offering resulted in the issuance of 4.6 million shares at $34.50 per share ($32.97 per share net of costs). Also, in October, the Company completed the acquisition of Commerce Bancshares for total consideration estimated at $229 million in a stock for stock exchange. The Company issued 4.84 million common shares and 522 thousand shares of a new Series B non-voting preferred stock in this exchange, and the consideration was valued based on the $38.95 closing price of Berkshire common stock on October 13, 2017.

During the second quarter, $30 million of the stock offering proceeds were reinvested in Berkshire Bank as additional paid-in capital. The Company invested an additional $70 million of the offering proceeds into the Bank to coincide with the closing of the merger.

Berkshire’s capital metrics increased significantly in the first nine months of the year as a result of the May stock offering. Additionally, the Company’s double digit return on tangible equity during the period provided solid support for organic growth, together with a 5% increase in the quarterly shareholder dividend beginning in the first quarter. The Bank’s risk based capital ratio increased to 11.7% at the third quarter, while Berkshire’s consolidated risk based capital ratio improved to 14.3%. These ratios decreased subsequent to the third quarter-end due to the goodwill associated with the Commerce transaction but are targeted to end the year above the year-end 2016 levels, including the impacts of the merger and related transaction costs. For the year-to-date, book value per share increased by 4% to $31.78 including the impact of the stock offering issued at a net amount of $32.97 per share. Tangible book value per share increased by 14% to $21.38.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

Summary: Berkshire reported third quarter net income of $22.9 million, increasing 40% year-over-year. Including new shares issued, net income per share increased by 8% to $0.57. The non-GAAP measure of adjusted earnings per share increased by 4% to $0.59. Earnings growth included the accretive benefit of mergers and restructurings as well as the benefit of increases in short term interest rates, and was net of the dilutive impact of the stock offering in May 2017. Third quarter results included the seasonal benefit of mortgage banking and SBA loan sale gains included in fee income. Income for the first nine months of the year increased by 20% to $58.1 million while earnings per share decreased by 2% to $1.54 due to elevated merger and restructuring charges in 2017. Adjusted earnings per share increased by 4% to $1.71 due to the combined accretive benefit of Berkshire’s expansion strategies.

Third quarter return on assets increased by 13 basis points to 0.95% and reflected the benefit of a higher net interest margin and growth in mortgage banking and SBA lending non-interest income. The adjusted return on assets increased by 10 basis points to 0.98%. The return on equity for this period was unchanged at 7.3% year-to-year reflecting the higher capital base from the 2017 stock offering prior to the Commerce acquisition. The non-GAAP measure of adjusted return on tangible equity had been at or above 12% in recent quarters and decreased to 11.4% in the most recent quarter due to the additional equity from the stock offering. The efficiency ratio measured 59% in the most recent quarter, compared to 57% in the same quarter of 2016, due to the lower margin of acquired mortgage banking operations. The Company estimates that the efficiency ratio of operations excluding mortgage banking improved to 55% in the most recent quarter.

Of note, most categories of revenue and expense increased year-over-year due primarily to the 2016 business combinations. Based on the pro forma analysis in the most recent Form 10-K, pro forma revenue in the first year of operations was estimated to be 33% higher as a result of these business combinations, based on the assumptions set forth in the analysis. Net income in 2017 also included the benefit of the integration of First Choice operations acquired in December 2016. This integration was completed in the first nine months of 2017, including the third quarter integration of Berkshire Home Lending mortgage operations into the First Choice Loan Services mortgage banking model.

As noted previously, Berkshire uses a non-GAAP measure of adjusted net income (or adjusted earnings) to supplement its evaluation of operating results. Adjusted net income excludes certain amounts not viewed as related to normalized operations. These adjusting items consist primarily of merger, acquisition, conversion, and

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restructuring expenses, together with net gains recorded on securities and the loss on termination of hedges recorded in the first quarter of 2017. Berkshire views its net merger related costs as part of the economic investment for its acquisitions. Berkshire also makes references to adjusted revenues and adjusted expenses in its discussion of operating results. Please see the non-GAAP reconciliation section of this discussion for more information about adjusted net income and other non-GAAP financial measures discussed in this report.

As a result of its growth and the Commerce acquisition, in October 2017 the Company crossed the $10 billion asset threshold for additional regulatory requirements under the Dodd Frank Act. As a result of crossing the threshold, the Company will have additional compliance costs, additional FDIC insurance premium expense, and also will forfeit a portion of its card related fee income under the Durbin Amendment. The Company has been enhancing its staff and resources with the goal of having the resources in place to meet the compliance related costs as they become effective for the Company.

Revenue: Berkshire focuses on organic revenue growth to improve market share and wallet share, to diversify its revenue drivers, and to increase earnings. The expansion in Boston and Eastern Massachusetts provides opportunities to develop and diversify revenues. Berkshire’s annualized quarterly net revenue now exceeds $400 million and fee income has increased as a contributor to total revenue. For the first nine months of 2017, Commerce reported $51 million in net revenue. The Commerce acquisition is expected to further contribute to Berkshire’s revenue growth beginning in the fourth quarter.

Net revenue increased year-over-year by 31% in the third quarter and 37% in the first nine months of 2017. Growth included the benefit of mortgage banking revenues at First Choice Loan Services. Net interest income was up 24% and 20% for the above respective periods and fee income increased 70% and 89% including the mortgage banking impact. On a per share basis, third quarter annualized net revenue increased year-over-year to $10.05 from $9.99 including the impact of the 2017 stock offering which is largely being used to support the acquisition of Commerce with its related revenues in the fourth quarter. For the first nine months, revenue per share increased to $10.78 from $9.63.

Net Interest Income: Year-over-year, net interest income increased by $14 million in the third quarter and by $35 million for the first nine months of the year. This growth resulted from an improvement in the net interest margin on top of the increase of the size of the Company, as previously discussed. The third quarter net interest margin improved year-over-year to 3.36% from 3.27%. The nine month margin improved to 3.35% from 3.30%. The improvement in the margin is primarily attributed to the 75 basis point increase in short term interest rates based on the 25 basis point hikes in the fed funds target rate in December, March, and June. The Company’s variable rate assets adjust more quickly than its liabilities. The third quarter total loan yield increased by 27 basis points year-over-year, while the cost of deposits increased by 10 basis points. The improvement in the margin reflects the Company’s positioning as asset sensitive during this period. This asset sensitivity has been supported by the low deposit beta, which indicates the slow responsiveness of deposit rates to initial increases off of the bottom in market rates. Interest rate sensitivity is further discussed in the Market Risk section of this report.

The third quarter margin improvement year-over-year included a 2 basis point increase in purchased loan accretion, which contributed a total of 14 basis points to the margin. The amount of purchased loan accretion depends primarily on the amount of recoveries on the resolution of purchased impaired loans and on changes in loan behaviors which are expected to vary from quarter to quarter. The margin has also benefited from the termination of the fixed payment interest rate swaps in February 2017 while it has been negatively impacted by the leveraged growth of the securities portfolio primarily related to the reinvestment of proceeds from the May 2017 stock offering. The third quarter net interest margin was stable compared to the prior quarter, and the Company estimates that most of the benefit from recent rate increases has been absorbed.

Non-Interest Income: The Company views fee income as a key strategic focus for achieving its marketplace and profitability objectives. Year-over-year, fee income increased by $13 million in the third quarter and by $44 million in the first nine months of the year. This growth was primarily due to higher mortgage banking income, which increased by $12 million and $38 million for the above respective periods. Mortgage banking income increased due to the acquired operations of First Choice Loan Services. Additionally, loan related income was up $1 million and

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$5 million for these respective periods. This growth was primarily due to higher SBA loan sale income from the acquired 44 Business Capital operations.

Mortgage banking income is based on the value of customer interest rate lock commitments for loans which are sold to secondary market investors. This income is seasonal and variable, based on market conditions, customer behaviors, business mix, channel mix, conditions in the Company’s national mortgage markets, and weather. Originations of mortgages held for sale totaled $664 million in the third quarter, which was unchanged from the prior quarter. Interest rate lock volumes decreased due to hot weather and storms in the Company’s southwest markets, and gain on sale margins tightened. Due to the Company’s cost management model, reductions in origination expenses offset most of the revenue decline from the linked quarter. Industry revenues have decreased year-over-year due to lower refinancing demand as a result of generally higher mortgage interest rates in 2017. Loans for home purchases constituted approximately 70% of originations volume in the most recent quarter.

With the crossing of the $10 billion asset threshold, debit card payment related revenues are expected to decrease in the future based on the impacts of the Durbin amendment. The Company expects that this impact will become effective beginning in the second half of 2018, and that lost revenues will approximate $5 million per year due to this change. The Company’s goal is that the accretive benefits of the Commerce acquisition will more than offset all earnings related impacts resulting from crossing this threshold.

Non-interest income in the first quarter of 2017 included $13 million in net securities gains and $7 million in loss on termination of hedges as previously discussed. These transactions affected cash flow but did not affect net equity since the fair value adjustments were already included as components of accumulated other comprehensive income. Included in the category of “Other” is accrued income on bank owned life insurance which is more than offset by charges for the amortization of tax credit investments. This amortization generates benefit to income tax expense as discussed below. The Company also recorded a $296 thousand gain on the sale of its secured credit card operations in the most recent quarter.

Loan Loss Provision: The nine month provision for loan losses increased year-over-year by $2 million. The provision for loan losses is a charge to earnings in an amount sufficient to maintain the allowance for loan losses at a level deemed adequate by the Company. It is an estimate of the probable and estimable loan losses in the portfolio as of period-end. The level of the allowance is a critical accounting estimate and the level of the allowance was included in the discussion of financial condition. The amount of the provision exceeded net charge-offs, as the allowance has risen due to loan portfolio growth from business operations.

Non-Interest Expense: Non-interest expense increased by $17 million in the third quarter and by $67 million in the first nine months of 2017, compared to the prior year. This growth included costs related to operations acquired in 2016. For the first nine months of the year, expense growth included a $7 million increase in merger related expense. This was primarily related to the First Choice acquisition and included the costs of systems integration. The Company estimates that the total First Choice merger related costs will remain within its original $14 million after-tax estimate. The Company estimates that Commerce merger related costs will total $32 million pre-tax through the planned completion of its integration in 2018. During 2017 year-to-date, the Company recorded $7 million in restructuring and other non-ordinary costs. The $6 million of restructuring charges in the first quarter of 2017 were related to the consolidation of certain branch and operating offices, and primarily related to the termination of leases and the write-down of leasehold improvements. The Company has also recorded approximately $1 million in charges related to customer and other dispute settlements.

As previously noted, the mortgage banking operations have comparatively higher expense ratios and lower margins and those expenses are more variable from quarter to quarter, based on business volumes. Other current period expenses have benefited from restructuring charges recorded in earlier periods. The Company consolidated three branch offices in 2017, after selling two offices in the year 2016. The Company’s goal is to achieve positive operating leverage based on revenue growth and expense disciplines. The expense categories with the highest year-over-year third quarter increase included compensation and marketing. These reflected the expense structure of the acquired mortgage banking operations. Full time equivalent staff totaled 1,788 positions at the end of the third quarter compared to 1,731 at the start of the year, reflecting current year growth and infrastructure investment,

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including risk and compliance staff related to the increased regulatory burden in crossing the $10 billion asset threshold. The Company has absorbed most of the increased costs related to this crossing, although some additional staff expense and FDIC insurance expense increases are expected as new regulations become effective.

Income Tax Expense: The nine month effective tax rate was 28% in the first nine months of both 2017 and 2016. The tax rate changes from quarter-to-quarter were due to changes in merger and restructuring charges, as well as due to normal fluctuations in the benefits from tax credit investments. The third quarter tax rate was 24% in 2017 and 30% in 2016 due to these tax credit changes. The timing of these tax credit investments is based on the construction schedules of the supported community development projects and is largely offset by charges to non-interest income as previously discussed. The third quarter benefit to earnings per share was $0.01 in both years. The $13 million of securities gains recorded in 2017 will be available to offset projected 2020 capital losses from the planned sale of a tax credit investment. Federal law allows for net capital losses to be carried back, up to three years, to recover prior taxes paid on net capital gains realized in the carry-back period. The Company is monitoring its tax strategies and evaluating potential impacts of proposed federal income tax reforms.

Total Comprehensive Income: Total comprehensive income includes net income together with other comprehensive income. In 2017, other comprehensive income was a comparatively low $0.9 million in the third quarter and $1.4 million for the first nine months of the year. For the year-to-date, the impact of the realization of gains on the sale of equity securities was partially offset by the realization of the derivatives loss when the hedges were terminated. For the first nine months of 2016, other comprehensive income of $12 million resulted from the impact of lower long term interest rates, increasing the unrealized securities gain and decreasing the unrealized loss on derivative hedges.

Commerce Acquisition: The notes to the financial statements describe the subsequent event of the acquisition of Commerce Bancshares and its subsidiary, Commerce Bank, on October 13, 2017. This is Berkshire’s largest acquisition to date, as measured by total assets acquired, and was further described in the Form S-4 Registration Statement, as amended, which was previously filed with the SEC by the Company. At announcement of the transaction, the Company’s objective (including $100 million of the common stock offering proceeds) was that this acquisition would be accretive to earnings per share after integration and that tangible book value dilution would be repaid from the integrated acquired operations in the near term. This objective was based on a target of approximately $8 million in cost saves, equivalent to 20% of the Commerce expense base. The Company planned on one-time transaction related charges totaling $32 million pre-tax.

Liquidity and Cash Flows: Berkshire manages its liquidity and cash flows with the goal to support growth and to meet expected as well as stressed cash needs for the foreseeable future. During the first nine months of 2017, the $604 million increase in total assets was primarily funded by a $249 million increase in brokered time deposits, a $175 million increase in borrowings, and the $153 million common stock offering. The loans/deposits ratio increased from 99% to 102%. This ratio had decreased from 106% at midyear 2016 as a result of the excess deposits acquired with the First Choice merger in December 2016. The bank is taking advantage of its recent upgrades in internal systems to analyze and monitor assets which can be used as additional collateral with the Federal Reserve Bank and the Federal Home Loan Bank in order to further supplement its liquidity resources. At September 30, 2017, the Bank had $766 million in borrowing availability with the FHLBB, which was a 37% increase from $559 million at the start of the year.

Berkshire generally plans that over the medium term, deposit growth will be the primary source of funds and loan growth will be the primary use of funds. The Bank is diversifying its deposit sources including institutional and wholesale sources as part of the expansion of its liquidity management program and to provide additional options for managing its funds costs and asset liability objectives. In select cases, the Bank provides insured brokered reciprocal money market deposits to large institutional accounts to supplement its deposit insurance protection. FHLB borrowings continue to be a significant source of liquidity for daily operations and borrowings targeted for specific asset/liability purposes. The Company’s mortgage banking operations have extensive secondary market hedging and investor counterparties which are necessary to support these business models. The Company’s financial institutions banking function is building a network of regional counterparties for wholesale transactions related to the purchase and sale of loans. The Company’s commercial banking and specialty lending units have

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national and regional counterparty banks for loan participations and syndications, and the Bank is designated as an SBA preferred lender to support its small business lending activities. The Bank regularly purchases and sells seasoned loans as part of its overall balance sheet management strategies. With the First Choice merger, the Bank acquired excess deposits which have supported its overall growth. The Commerce acquisition provided additional deposit funding, bringing the initial combined loan/deposit ratio below 100%. With this acquisition, Berkshire also anticipates that it may hold more short term investments due to the liquidity requirements of the Commerce payroll deposit service bureau program, which can vary daily by more than $100 million due to the fluctuations in payroll volumes.

Berkshire raised $153 million in cash proceeds from the May 2017 stock offering. The Company invested $30 million of these proceeds into additional paid-in capital in the Bank, and the balance remained with the holding company in deposit accounts with the Bank. The holding company invested another $70 million into additional paid-in capital of the Bank to support the completion of the merger on October 13. The remaining $53 million in proceeds are expected to be available for general corporate purposes, including additional investments in the Bank to support further organic growth. At September 30, 2017, the cash balances held by the holding company totaled $164 million. The holding company has maintained a $15 million unsecured line of credit which was unused at September. This line was recently renewed at a reduced amount of $5 million due to the excess liquidity currently held by the holding company. The primary long run routine sources of funds for the Parent are expected to be dividends from Berkshire Bank and Berkshire Insurance Group. The Bank paid $28 million in dividends to the Parent during the first nine months of the year. The Parent uses cash for dividends, debt service, and holding company operating expenses. Based on its charter, it also makes targeted purchase and sales of equity securities to support the overall consolidated investment plan. Additionally, the Parent sometimes uses cash as an element of merger consideration and sometimes acquires cash as a source of funds as a result of business combinations. The Parent's goal is to maintain access to additional sources of senior or subordinated debt at the holding company as an additional source of liquidity to support is initiatives.

Capital Resources: Please see the “Shareholders’ Equity” section of the Comparison of Financial Condition for a discussion of shareholders’ equity together with the note on Shareholders' Equity in the consolidated financial statements. Additional information about regulatory capital is contained in the notes to the consolidated financial statements and in the most recent Form 10-K.

Berkshire views its earnings and related internal capital generation as a primary source of capital to support dividends and growth of the franchise. Additionally, the Company generally uses the issuance of common stock as the primary source of consideration for bank acquisitions, and such acquisitions may result in net increases or decreases in its capital ratios. Berkshire’s long term objective is to generate a double digit annual return on equity, and the Company evaluates lending, investment, and acquisition decisions with this objective as a benchmark. The Company also evaluates its return on tangible equity as an indicator of its capital generation to support ongoing balance sheet growth. The Risk Management and Capital Committee of Berkshire’s Board of Directors is responsible for assisting the Board in planning for future capital needs and for ensuring compliance with regulations pertaining to capital structure and levels. The Company believes that the market for its stock is an additional capital resource over the long run and that Berkshire’s common stock is a significant resource available as merger consideration in the event of future acquisitions and business combinations. Additionally, the Company continues to monitor market conditions for the various forms of regulatory capital, which are additional potential future capital resources to the Company and/or the Bank. The Company continues to enhance its internal processes for evaluating capital adequacy under various scenarios including stressed conditions.

In 2017, the Company placed $153 million of common stock in a public offering under its SEC universal shelf registration. This was its largest follow-on public stock offering to date and the first since 2009. Additionally, the Company issued common and preferred stock as consideration for the Commerce acquisition in an amount valued at $229 million based on market conditions at the time of the merger. This issuance has been registered with the SEC and is based on a stock for stock exchange that is the largest amount for a merger-related stock offering in the Company’s history. The preferred stock is non-voting and is convertible to common under limited conditions and was valued at $41 million as of the merger date.

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The Company’s capital metrics became elevated following the stock offering and are expected to decrease as a result of the merger completion. The Company provided a pro forma analysis of capital changes related to the merger in a Form S-4 filed with the SEC. The Company continues to target maintaining a well-capitalized status with appropriate buffers and a ratio of tangible equity to tangible assets generally in the range of 7-8% over the medium term. The Company’s recent history has also demonstrated regular increases in shareholder dividends based on growing earnings and a double digit return on tangible equity that supports growth of both the balance sheet and the return of capital to shareholders.

The Commerce acquisition has resulted in the Company crossing the $10 billion asset threshold under Dodd-Frank, which includes more rigorous capital modeling and stress testing. The Company has been enhancing its capital management function in recent years in anticipation of this cross. It currently conducts informal stress test analysis and expects to meet all regulatory requirements related to crossing over $10 billion in assets.

Off-Balance Sheet Arrangements and Contractual Obligations: In the normal course of operations, Berkshire engages in a variety of financial transactions that, in accordance with generally accepted accounting principles are not recorded in the Company’s financial statements. These transactions involve, to varying degrees, elements of credit, interest rate, and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit. Further information about the Company’s off-balance sheet arrangements and information relating to payments due under contractual obligations is presented in the most recent Form 10-K. Changes in the fair value of derivative financial instruments and hedging activities are included on the balance sheet and information related to these matters is reported in the related footnote to the consolidated financial statements, and was included in management’s discussion of changes in financial condition. With the Commerce acquisition, the Company has assumed the arrangements and obligations of Commerce, which are generally similar in nature to those of the Company. Commerce also has a payroll payment processing business which processes ACH transactions for payroll service bureaus. The Company also estimates that there will be $32 million in transaction costs related to the Commerce acquisition, most of which have not yet been reflected in the Company’s operations or financial records. The Company has additionally entered into a lease for its new Boston headquarters space and is committing to certain staff expansions and business expenditures related to that initiative.

Fair Value Measurements: The most significant fair value measurements recorded by the Company are those related to assets and liabilities acquired in business combinations. The premium or discount value of acquired loans has historically been the most significant element of these measurements. Berkshire provides a summary of estimated fair values of financial instruments at each quarter-end. The premium or discount value of loans has historically been the most significant element of this quarter-end presentation. This premium or discount is a Level 3 estimate and reflects management’s subjective judgments. At September 30, 2017, the premium value of the loan portfolio was $32 million, or 0.5% of the carrying value, compared to $27 million, or 0.4% of carrying value at year-end 2016. The Company makes further measurements of fair value of certain assets and liabilities, as described in the related note in the financial statements. The most significant measurements of recurring fair values of financial instruments primarily relate to securities available for sale, loans held for sale, and derivative instruments. These measurements were generally based on Level 2 market based inputs.

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APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES, AND RECENT ACCOUNTING PRONOUNCEMENTS

The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements in this Form 10-Q and in the most recent Form 10-K. Please see those policies in conjunction with this discussion. The accounting and reporting policies followed by the Company conform, in all material respects, to accounting principles generally accepted in the United States and to general practices within the financial services industry. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While the Company bases estimates on historical experience, current information and other factors deemed to be relevant, actual results could differ from those estimates.

The SEC defines “critical accounting policies” as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in future periods. Please see those policies in conjunction with this discussion. Management believes that the following policies would be considered critical under the SEC’s definition:

Allowance for Loan Losses. The allowance for loan losses represents probable credit losses that are inherent in the loan portfolio at the financial statement date and which may be estimated. Management uses historical information, as well as current economic data, to assess the adequacy of the allowance for loan losses as it is affected by changing economic conditions and various external factors, which may impact the portfolio in ways currently unforeseen. Although management believes that it uses appropriate available information to establish the allowance for loan losses, future additions to the allowance may be necessary if certain future events occur that cause actual results to differ from the assumptions used in making the evaluation. Conditions in the local economy and real estate values could require the Company to increase provisions for loan losses, which would negatively impact earnings.

Acquired Loans. Loans that the Company acquired in business combinations are initially recorded at fair value with no carryover of the related allowance for credit losses. Determining the fair value of the loans involves estimating the amount and timing of principal and interest cash flows initially expected to be collected on the loans and discounting those cash flows at an appropriate market rate of interest. Going forward, the Company continues to evaluate reasonableness of expectations for the timing and the amount of cash to be collected. Subsequent decreases in expected cash flows may result in changes in the amortization or accretion of fair market value adjustments, and in some cases may result in the loan being considered impaired. For collateral dependent loans with deteriorated credit quality, the Company estimates the fair value of the underlying collateral of the loans. These values are discounted using market derived rates of return, with consideration given to the period of time and costs associated with the foreclosure and disposition of the collateral.

Income Taxes. Significant management judgment is required in determining income tax expense and deferred tax assets and liabilities. The Company uses the asset and liability method of accounting for income taxes in which deferred tax assets and liabilities are established for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. The realization of the net deferred tax asset generally depends upon future levels of taxable ordinary income, taxable capital gain income, and the existence of prior years' taxable income, to which "carry back" refund claims could be made. A valuation allowance is maintained for deferred tax assets that management estimates are more likely than not to be unrealizable based on available evidence at the time the estimate is made. In determining the valuation allowance, the Company uses historical and forecasted future operating results, including a review of the eligible carry-forward periods, tax planning opportunities and other relevant considerations. In particular, income tax benefits and deferred tax assets generated from tax-advantaged commercial development projects are based on management's assessment and interpretation of applicable tax law as it currently stands. These underlying assumptions can change from period to period. For example, tax law changes or variances in projected taxable ordinary income or taxable capital gain income could result in a change in the deferred tax asset or the valuation allowance. Should actual factors and conditions differ materially from those considered by management, the actual realization of the net deferred tax asset could differ materially from the amounts recorded in the financial statements. If the Company is not able to realize all or part of

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its net deferred tax asset in the future, an adjustment to the deferred tax asset in excess of the valuation allowance would be charged to income tax expense in the period such determination is made.

Goodwill and Identifiable Intangible Assets. Goodwill and identifiable intangible assets are recorded as a result of business acquisitions and combinations. These assets are evaluated for impairment annually or whenever events or changes in circumstances indicate the carrying value of these assets may not be recoverable. When these assets are evaluated for impairment, if the carrying amount exceeds fair value, an impairment charge is recorded to income. The fair value is based on observable market prices, when practicable. Other valuation techniques may be used when market prices are unavailable, including estimated discounted cash flows and analysis of market pricing multiples. These types of analyses contain uncertainties because they require management to make assumptions and to apply judgment to estimate industry economic factors and the profitability of future business strategies. In the event of future changes in fair value, the Company may be exposed to an impairment charge that could be material.

Determination of Other-Than-Temporary Impairment of Securities. The Company evaluates debt and equity securities within the Company's available for sale and held to maturity portfolios for other-than-temporary impairment ("OTTI"), at least quarterly. If the fair value of a debt security is below the amortized cost basis of the security, OTTI is required to be recognized if any of the following are met: (1) the Company intends to sell the security; (2) it is "more likely than not" that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) for debt securities, the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. For all impaired debt securities that the Company intends to sell, or more likely than not will be required to sell, the full amount of the loss is recognized as OTTI through earnings. Credit-related OTTI for all other impaired debt securities is recognized through earnings. Noncredit related OTTI for such debt securities is recognized in other comprehensive income, net of applicable taxes. In evaluating its marketable equity securities portfolios for OTTI, the Company considers its intent and ability to hold an equity security to recovery of its cost basis in addition to various other factors, including the length of time and the extent to which the fair value has been less than cost and the financial condition and near term prospects of the issuer. Any OTTI on marketable equity securities is recognized immediately through earnings. Should actual factors and conditions differ materially from those expected by management, the actual realization of gains or losses on investment securities could differ materially from the amounts recorded in the financial statements.

Fair Value of Financial Instruments. The Company uses fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures. Trading assets, securities available for sale, and derivative instruments are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, or to establish a loss allowance or write-down based on the fair value of impaired assets. Further, the notes to financial statements include information about the extent to which fair value is used to measure assets and liabilities, the valuation methodologies used and its impact to earnings. For financial instruments not recorded at fair value, the notes to financial statements disclose the estimate of their fair value. Due to the judgments and uncertainties involved in the estimation process, the estimates could result in materially different results under different assumptions and conditions.

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ITEM 3.                 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes to the way that the Company measures market risk in the first nine months of 2017.

For further discussion about the Company’s Quantitative and Qualitative Aspects of Market Risk, please review Item 7A of the most recent report on Form 10-K which sets forth the methodologies employed by the Company and the various aspects of its analysis of its interest rate sensitivity. Berkshire’s objective is to maintain a neutral or asset sensitive interest rate risk profile, as measured by the sensitivity of net interest income to market interest rate changes.

There were no significant changes in the sensitivity of net interest income at September 30, 2017, compared to the start of the year. The contribution to asset sensitivity of the stock raise, the general shortening of the loan and securities portfolio durations, and the lengthening of some wholesale fund maturities offset the liability sensitivity introduced by the termination of the cash flow hedges and the decrease in demand deposits. The asset sensitivity modeled according to the forward curve is less than the asset sensitivity under an assumption of a 200 basis point parallel ramped increase. These asset sensitivities are based on a comparison to a flat rate environment, which continues to indicate additional margin pressure if rates don’t change due to ongoing asset yield compression, together with some lagged impact on funding costs from recent interest rate increases. The Company believes that in the short run, net income should respond positively to the full volume and margin impacts of the combined aspects of business operations under the scenario of the forward curve, including fee income from mortgage banking, SBA lending, and commercial interest rate swap income. The Company believes that the Commerce balance sheet is asset sensitive and that the overall sensitivity of its net interest income and net income will be neutral or slightly positive taking into consideration the impact of the Commerce acquisition.

The Company estimated its equity at risk as liability sensitive in the approximate amount of 8% at mid-year 2017 in the event of a 200 basis point upward shock, compared to 4% at the start of the year. This change was primarily due to a change in the modeling of the deposit decay timing, with no change in modeled deposit average lives. This change was facilitated by recent systems enhancements. This sensitivity is expected to have decreased with the Commerce combination.

The Company continues to monitor and evaluate strategic positioning to best manage its income and equity value in the event of continued prolonged yield curve flattening. A key sensitivity of the Company’s interest rate risk analysis is the behavior of deposit costs as short term rates increase. Through the first nine months of the year, this sensitivity has been within the expectations of the Company’s modeling and the Company continues to monitor this closely and to watch for any inflection points that might surface and increase the deposit beta in the event of additional future interest rate hikes.

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ITEM 4.           CONTROLS AND PROCEDURES

a)  Disclosure controls and procedures.

The principal executive officers, including the principal financial officer, based on their evaluation of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded that the Company’s disclosure controls and procedures were effective.

b)  Changes in internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

ITEM 1.            LEGAL PROCEEDINGS

Periodically, there have been various claims and lawsuits involving the Company, such as claims to enforce liens, condemnation proceedings on properties in which the Company holds security interests, claims involving the making and servicing of real property loans, and other issues incident to the Company’s business. As of September 30, 2017, other than the items noted below, neither the Company, nor its subsidiaries, is a party to any pending legal proceedings that it believes, in the aggregate, would have a material adverse effect on the financial condition or operations of the Company.

On April 28, 2016, Berkshire Hills and Berkshire Bank were served with a complaint filed in the United States District Court, District of Massachusetts, Springfield Division. The complaint was filed by an individual Berkshire Bank depositor, who claims to have filed the complaint on behalf of a purported class of Berkshire Bank depositors, and alleges violations of the Electronic Funds Transfer Act and certain regulations thereunder, among other matters. On July 15, 2016, the complaint was amended to add purported claims under the Massachusetts Consumer Protection Act. The complaint seeks, in part, compensatory, consequential, statutory, and punitive damages. Berkshire Hills and Berkshire Bank deny the allegations contained in the complaint and are vigorously defending this lawsuit.

86

ITEM 1A.               RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed below and in Part I, “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K, which could materially affect the Company's business, financial condition, or future operating results. The risks described in this form are not the only risks presently facing the Company. Additional risks and uncertainties not currently known to the Company, or currently deemed to be immaterial, also may materially adversely affect the Company's business, financial condition, and/or operating results.

Goodwill incurred in the merger of Commerce Bancshares with and into the Company may negatively affect the Company's financial condition.

The Company expects to record goodwill in the Commerce acquisition. Goodwill is evaluated for impairment at least annually. A failure to realize expected benefits of the merger could adversely impact the carrying value of the goodwill recognized in the merger, and in turn negatively affect the Company's financial condition. The Commerce goodwill may be significantly affected by the value of its taxi medallion loan portfolio. Uncertainties related to the value of this portfolio and the collection of these loans may negatively affect the Company’s financial condition.

The Company may be unable to successfully integrate Commerce Bank’s operations or otherwise realize the expected benefits from the merger, which would adversely affect the Company's results of operations and financial condition.

The merger involves the integration of two companies that have previously operated independently. The difficulties of combining the operations of the two companies include:

• Integrating personnel with diverse business backgrounds;

• Combining different corporate cultures; and

• Retaining key employees.

The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of the business and the loss of key personnel. The integration of the two companies will require the experience and expertise of certain key employees of Commerce who are expected to be retained by the Company. The Company may not be successful in retaining these employees for the time period necessary to successfully integrate Commerce’s operations with those of the Company. The diversion of management's attention and any delay or difficulty encountered in connection with the merger and the integration of the two companies' operations could have an adverse effect on the business and results of operation of the Company following the merger. The success of the merger will depend, in part, on the Company's ability to realize the anticipated benefits and cost savings from combining the business of Commerce with and into the Company. If the Company is unable to successfully integrate Commerce the anticipated benefits and cost savings of the merger may not be realized fully or may take longer to realize than expected. For example, the Company may fail to realize the anticipated increase in earning and cost savings anticipated to be derived from the acquisition. In addition, as with regard to any merger, a significant decline in asset valuations or cash flows may also cause the Company not to realize expected benefits. Commerce has operated a payroll services business for payroll service bureau customers, which is a new line of business for the Company. Many of the Company’s payroll services customers are highly dependent on its ability to process, on a daily basis, a large number of transactions. The Company relies heavily on its payroll, financial, accounting and other data processing systems. Failure to integrate or operate these systems could result in financial loss, a disruption of customers, liability to clients, regulatory intervention or damage to the Company’s reputation.

87

ITEM 2.               UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)                Recent Sales of Unregistered Securities

The Company occasionally engages in the practice of transferring unregistered securities for the purpose of completing business transactions. These shares are issued to vendors or other organizations as consideration for services performed in accordance with each contract. During the nine months ended September 30, 2017 and September 30, 2016, the Company transferred 8,038 and 8,014 shares, respectively.

(b)                 Not applicable.

(c)                 The following table provides certain information with regard to shares repurchased by the Company in the third quarter of 2017:

	Total number of	Average price		Total number of shares purchased as part of publicly announced	Maximum number of shares that may yet be purchased under
Period	shares purchased	paid per share		plans or programs	the plans or programs
July 1-31, 2017	—	$	—	—	500,000
August 1-31, 2017	—	—		—	500,000
September 1-30, 2017	—	—		—	500,000
Total	—	$	—	—	500,000

On December 2, 2015, the Company announced that its Board of Directors authorized a new stock repurchase program, pursuant to which the Company may repurchase up to 500 thousand shares of the Company's common stock, representing approximately 1.6% of the Company’s then outstanding shares. The timing of the purchases will depend on certain factors, including but not limited to, market conditions and prices, available funds, and alternative uses of capital. The stock repurchase program may be carried out through open-market purchases, block trades, negotiated private transactions or pursuant to a trading plan adopted in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. Any repurchased shares will be recorded as treasury shares. The repurchase plan will continue until it is completed or terminated by the Board of Directors. As of September 30, 2017, no shares had been purchased under this program.

ITEM 3.                DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.                  MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.                OTHER INFORMATION

None.

88

ITEM 6.                   EXHIBITS

3.1	Certificate of Incorporation of Berkshire Hills Bancorp, Inc. (1)
3.2	Amended and Restated Bylaws of Berkshire Hills Bancorp, Inc. (2)
3.3	Certificate of Amendment to the Certificate of Incorporation of Berkshire Hills Bancorp, Inc.
4.1	Form of Common Stock Certificate of Berkshire Hills Bancorp, Inc. (1)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Shareholder Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Statements of Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements tagged as blocks of text and in detail.

_______________________________________

(1)  Incorporated herein by reference from the Exhibits to Form S-1, Registration Statement and amendments thereto, initially filed on March 10, 2000, Registration No. 333-32146.

(2)  Incorporated herein by reference from the Exhibits to the Form 8-K as filed on April 28, 2015.

89

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BERKSHIRE HILLS BANCORP, INC.
Dated: November 9, 2017	By:	/s/ Michael P. Daly
	Michael P. Daly
	Chief Executive Officer
Dated: November 9, 2017	By:	/s/ James M. Moses
	James M. Moses
	Senior Executive Vice President, Chief Financial Officer

90

EX-3.3

Exhibit 3.3

CERTIFICATE OF AMENDMENT

TO THE

CERTIFICATE OF INCORPORATION

OF

BERKSHIRE HILLS BANCORP, INC.

(Pursuant to 8 Del. C. Section 242)

Berkshire Hills Bancorp, Inc. (the “Company”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify that:

FIRST: That at a meeting of the Board of Directors of the Company, resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said Company, declaring said amendment to be advisable and calling a meeting of stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows:

RESOLVED, that the Certificate of Incorporation of this Company to be amended by revising Article SIXTH, Paragraph A thereof, so that, as amended, said Article SIXTH, Paragraph A shall be and read as follows:

A.    The number of Directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board. The Directors shall be divided into three classes, as nearly equal in number as reasonably possible, with each Director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders following such initial classification and election, held before the 2017 annual meeting of stockholders, the class of Directors elected to succeed those Directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election. At each annual meeting of stockholders commencing with the 2017 annual meeting of stockholders, Directors elected to succeed those Directors whose terms then expire shall be elected for a term expiring at the next annual meeting of stockholders. Beginning with the 2020 annual meeting of stockholders, the foregoing classification of the Board of Directors shall cease. If the number of Directors is changed prior to the 2017 annual meeting of stockholders, any increase or decrease shall be apportioned among the classes so as to maintain the number of Directors in each class as nearly equal as possible, and any additional Director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class. If the number of Directors is increased at or following the 2020 annual meeting of stockholders, any additional Director elected to fill a vacancy resulting from such increase shall hold office for a term expiring at the next annual meeting of stockholders. In no case shall a decrease in the number of Directors remove or shorten the term of any incumbent Director. Each Director shall hold office for the term for which elected and until his or her successor shall have been duly elected and qualified.

RESOLVED, that the Certificate of Incorporation of this Company to be amended by revising Article SIXTH, Paragraph B thereof, so that, as amended, said Article SIXTH, Paragraph B shall be and read as follows:

B.    Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of Directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office, or other cause may be filled only by a majority vote of the Directors then in office, though less than a quorum, and Directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been chosen expires, except that Directors elected to fill vacancies after the 2020 annual meeting of stockholders shall hold office for a term expiring at the next annual meeting of stockholders. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director.

    SECOND: That therafter, pursuant to resolution of its Board of Directors, the annual meeting of stockholders of the Company was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.

THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Michael P. Daly, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Berkshire Hills Bancorp, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 9, 2017	/s/ Michael P. Daly
	Michael P. Daly
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, James M. Moses, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Berkshire Hills Bancorp, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 9, 2017	/s/ James M. Moses
	James M. Moses
	Senior Executive Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Berkshire Hills Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2017, as filed with the Securities and Exchange Commission (the “Report”), I, Michael P. Daly, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

November 9, 2017	/s/ Michael P. Daly
	Michael P. Daly
	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Berkshire Hills Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2017, as filed with the Securities and Exchange Commission (the “Report”), I, James M. Moses, Senior Executive Vice President, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

November 9, 2017	/s/ James M. Moses
	James M. Moses
	Senior Executive Vice President, Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 07, 2017
Document and Entity Information
Entity Registrant Name	BERKSHIRE HILLS BANCORP INC
Entity Central Index Key	0001108134
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		45,267,321
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Assets
Cash and due from banks	$ 62,827	$ 71,494
Short-term investments	29,219	41,581
Total cash and cash equivalents	92,046	113,075
Trading security, at fair value	12,603	13,229
Securities available for sale, at fair value	1,341,013	1,209,537
Securities held to maturity (fair values of $402,799 and $337,680)	395,065	334,368
Federal Home Loan Bank stock and other restricted securities	75,117	71,112
Total securities	1,823,798	1,628,246
Loans held for sale, at fair value	143,745	120,673
Commercial real estate	2,671,237	2,616,438
Commercial and industrial loans	1,254,947	1,062,038
Residential mortgages	1,983,126	1,893,131
Consumer loans	1,038,096	978,180
Total loans	6,947,406	6,549,787
Less: Allowance for loan losses	(49,004)	(43,998)
Net loans	6,898,402	6,505,789
Premises and equipment, net	94,729	93,215
Other real estate owned	288	151
Goodwill	403,106	403,106
Other intangible assets	17,136	19,445
Cash surrender value of bank-owned life insurance policies	161,290	139,257
Deferred tax assets, net	39,467	41,128
Other assets	92,696	98,457
Total assets	9,766,703	9,162,542
Liabilities
Demand deposits	1,221,043	1,278,875
NOW deposits	573,607	570,583
Money market deposits	1,751,190	1,781,605
Savings deposits	670,683	657,486
Time deposits	2,573,623	2,333,543
Total deposits	6,790,146	6,622,092
Short-term debt	1,061,300	1,082,044
Long-term Federal Home Loan Bank advances	338,054	142,792
Subordinated borrowings	89,295	89,161
Total borrowings	1,488,649	1,313,997
Other liabilities	203,381	133,155
Total liabilities	8,482,176	8,069,244
Shareholders’ equity
Common stock ($.01 par value; 50,000,000 shares authorized and 41,369,819 shares issued and 40,423,777 shares outstanding in 2017; 36,732,129 shares issued and 35,672,817 shares outstanding in 2016)	412	366
Additional paid-in capital	1,053,509	898,989
Unearned compensation	(7,770)	(6,374)
Retained earnings	251,835	217,494
Accumulated other comprehensive income	11,187	9,766
Treasury stock, at cost (946,042 shares in 2017 and 1,059,312 shares in 2016)	(24,646)	(26,943)
Total shareholders’ equity	1,284,527	1,093,298
Total liabilities and shareholders’ equity	$ 9,766,703	$ 9,162,542

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Securities held to maturity, fair value	$ 402,799	$ 337,680
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	41,369,819	36,732,129
Common stock, shares outstanding (in shares)	40,423,777	35,672,817
Treasury stock (in shares)	946,042	1,059,312

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Interest and dividend income
Loans	$ 76,024	$ 61,571	$ 216,950	$ 179,716
Securities and other	13,036	8,940	37,485	28,289
Total interest and dividend income	89,060	70,511	254,435	208,005
Interest expense
Deposits	10,984	7,790	30,053	22,327
Borrowings	6,078	4,750	15,953	12,569
Total interest expense	17,062	12,540	46,006	34,896
Net interest income	71,998	57,971	208,429	173,109
Non-interest income
Mortgage banking originations	13,374	1,862	42,333	4,018
Loan related income	6,081	5,102	15,535	11,046
Deposit related fees	6,445	6,278	19,294	18,678
Insurance commissions and fees	2,581	2,601	8,305	8,154
Wealth management fees	2,315	2,269	7,127	7,006
Total fee income	30,796	18,112	92,594	48,902
Other, net	(2,255)	188	(2,438)	(440)
(Loss) Gain on sale of securities, net	(1)	78	12,568	101
Gain on sale of business operations, net	296	563	296	563
Loss on termination of hedges	0	0	(6,629)	0
Total non-interest income	28,836	18,941	96,391	49,126
Total net revenue	100,834	76,912	304,820	222,235
Provision for loan losses	4,900	4,734	14,884	13,262
Non-interest expense
Compensation and benefits	37,643	26,119	110,759	76,497
Occupancy and equipment	8,267	6,650	25,971	19,900
Technology and communications	6,644	4,902	19,614	14,573
Marketing and promotion	2,128	671	7,304	2,081
Professional services	2,247	1,744	6,888	4,533
FDIC premiums and assessments	1,651	1,208	4,537	3,644
Other real estate owned and foreclosures	(23)	46	35	702
Amortization of intangible assets	739	749	2,310	2,355
Acquisition, restructuring, and other expenses	1,420	2,170	16,005	3,828
Other	5,104	4,585	16,246	14,099
Total non-interest expense	65,820	48,844	209,669	142,212
Income before income taxes	30,114	23,334	80,267	66,761
Income tax expense	7,211	6,953	22,210	18,422
Net income	$ 22,903	$ 16,381	$ 58,057	$ 48,339
Earnings per share:
Basic (in dollars per share)	$ 0.57	$ 0.53	$ 1.55	$ 1.58
Diluted (in dollars per share)	$ 0.57	$ 0.53	$ 1.54	$ 1.57
Weighted average common shares outstanding:
Basic (in shares)	39,984	30,621	37,547	30,584
Diluted (in shares)	40,145	30,811	37,708	30,757

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 22,903	$ 16,381	$ 58,057	$ 48,339
Other comprehensive income, before tax:
Changes in unrealized gain on securities available-for-sale	1,461	(5,654)	(4,044)	21,639
Changes in unrealized gains and losses on derivative hedges	0	2,730	6,573	(2,660)
Income taxes related to other comprehensive income:
Changes in unrealized gain on securities available-for-sale	(605)	2,218	1,481	(8,330)
Changes in unrealized gains and losses on derivative hedges	0	(1,096)	(2,589)	1,067
Total other comprehensive income/(loss)	856	(1,802)	1,421	11,716
Total comprehensive income	$ 23,759	$ 14,579	$ 59,478	$ 60,055

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands		Total	44 Business Capital	Common stock	Common stock 44 Business Capital	Additional paid-in capital	Unearned compensation	Retained earnings	Accumulated other comprehensive (loss) income	Treasury stock	Treasury stock 44 Business Capital
Balance (in shares) at Dec. 31, 2015				30,974
Balance at Beginning of Period at Dec. 31, 2015		$ 887,189		$ 322		$ 742,619	$ (6,997)	$ 183,885	$ (3,305)	$ (29,335)
Comprehensive income:
Net income		48,339						48,339
Other comprehensive income		11,716							11,716
Total comprehensive income		60,055						48,339	11,716
Acquisition of 44 Business Capital (in shares)					45
Acquisition of 44 Business Capital			$ 1,217								$ 1,217
Cash dividends declared		(18,675)						(18,675)
Treasury stock adjustment	[1]	0				4,632				(4,632)
Forfeited shares (in shares)				(63)
Forfeited shares		0				106	1,592			(1,698)
Exercise of stock options (in shares)				9
Exercise of stock options		142						(96)		238
Restricted stock grants (in shares)				185
Restricted stock grants		0				504	(5,052)			4,548
Stock-based compensation		3,466					3,466
Net tax benefit related to stock-based compensation		(1)				(1)
Other, net (in shares)				(28)
Other, net		(800)				(16)				(784)
Balance (in shares) at Sep. 30, 2016				31,122
Balance at End of Period at Sep. 30, 2016		932,593		$ 322		747,844	(6,991)	213,453	8,411	(30,446)
Balance at Beginning of Period at Jun. 30, 2016									10,213
Comprehensive income:
Net income		16,381
Other comprehensive income		(1,802)
Total comprehensive income		14,579
Balance (in shares) at Sep. 30, 2016				31,122
Balance at End of Period at Sep. 30, 2016		932,593		$ 322		747,844	(6,991)	213,453	8,411	(30,446)
Balance (in shares) at Dec. 31, 2016				35,673
Balance at Beginning of Period at Dec. 31, 2016		1,093,298		$ 366		898,989	(6,374)	217,494	9,766	(26,943)
Comprehensive income:
Net income		58,057						58,057
Other comprehensive income		1,421							1,421
Total comprehensive income		59,478						58,057	1,421
Common stock issued (in shares)				4,638
Common stock issued		152,925		$ 46		152,879
Cash dividends declared		(23,515)						(23,515)
Forfeited shares (in shares)				(10)
Forfeited shares		0				63	304			(367)
Exercise of stock options (in shares)				11
Exercise of stock options		161						(132)		293
Restricted stock grants (in shares)				156
Restricted stock grants		0				1,582	(5,565)			3,983
Stock-based compensation		3,865					3,865
Other, net (in shares)				(44)
Other, net		(1,685)				(4)		(69)		(1,612)
Balance (in shares) at Sep. 30, 2017				40,424
Balance at End of Period at Sep. 30, 2017		1,284,527		$ 412		1,053,509	(7,770)	251,835	11,187	(24,646)
Balance at Beginning of Period at Jun. 30, 2017									10,331
Comprehensive income:
Net income		22,903
Other comprehensive income		856
Total comprehensive income		23,759
Balance (in shares) at Sep. 30, 2017				40,424
Balance at End of Period at Sep. 30, 2017		$ 1,284,527		$ 412		$ 1,053,509	$ (7,770)	$ 251,835	$ 11,187	$ (24,646)

[1] Treasury stock adjustment represents the extinguishment of 168,931 shares of Berkshire Hills common stock held by the Company's subsidiary.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Statement of Stockholders' Equity [Abstract]
Treasury stock purchased (in shares)		168,931
Cash dividends declared (in dollars per share)	$ 0.63	$ 0.60

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net income	$ 58,057	$ 48,339
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	14,884	13,262
Net amortization of securities	2,103	3,476
Change in unamortized net loan costs and premiums	1,388	(3,825)
Premises and equipment depreciation and amortization expense	7,448	6,226
Stock-based compensation expense	3,865	3,466
Accretion of purchase accounting entries, net	(11,837)	(7,266)
Amortization of other intangibles	2,310	2,355
Write down of other real estate owned	10	395
Excess tax loss from stock-based payment arrangements	0	(105)
Income from cash surrender value of bank-owned life insurance policies	(2,343)	(2,905)
Gain on sales of securities, net	(12,568)	(101)
Net decrease (increase) in loans held for sale	(23,072)	(7,280)
Loss on disposition of assets	912	32
(Gain) loss on sale of real estate	(54)	62
Amortization of interest in tax-advantaged projects	6,129	4,454
Net change in other	8,845	(1,089)
Net cash provided by operating activities	56,077	59,496
Cash flows from investing activities:
Net decrease in trading security	468	446
Proceeds from sales of securities available for sale	57,308	283,755
Proceeds from maturities, calls and prepayments of securities available for sale	139,434	128,566
Purchases of securities available for sale	(323,292)	(186,392)
Proceeds from maturities, calls and prepayments of securities held to maturity	8,094	5,946
Purchases of securities held to maturity	(70,153)	(5,969)
Net change in loans	(330,869)	(284,440)
Purchases of bank owned life insurance	(20,000)	0
Proceeds from surrender of bank-owned life insurance	310	258
Proceeds from sale of Federal Home Loan Bank stock	72,820	18,544
Purchase of Federal Home Loan Bank stock	(76,646)	(8,803)
Net investment in limited partnership tax credits	(4,742)	(5,189)
Proceeds from the sale of premises and equipment	0	226
Purchase of premises and equipment, net	(9,740)	(4,314)
Acquisitions, net of cash (paid) acquired	0	(55,542)
Payment to terminate cash flow hedges	6,573	0
Proceeds from sale of other real estate	352	1,483
Net cash (used) by investing activities	(550,083)	(111,425)
Cash flows from financing activities:
Net increase in deposits	170,381	161,114
Proceeds from Federal Home Loan Bank advances and other borrowings	5,291,601	7,264,120
Repayments of Federal Home Loan Bank advances and other borrowings	(5,116,876)	(7,389,048)
Exercise of stock options	161	141
Common stock cash dividends paid	(23,515)	(18,675)
Common stock issued, net	152,925	0
Acquisition contingent consideration paid	(1,700)	0
Net cash provided by financing activities	472,977	17,652
Net change in cash and cash equivalents	(21,029)	(34,277)
Cash and cash equivalents at beginning of period	113,075	103,562
Cash and cash equivalents at end of period	92,046	69,285
Supplemental cash flow information:
Interest paid on deposits	29,822	21,954
Interest paid on borrowed funds	15,775	12,166
Income taxes paid, net	9,467	10,995
Acquisition of non-cash assets and liabilities:
Assets acquired	0	56,976
Liabilities assumed	0	(109)
Other non-cash changes:
Other net comprehensive income	1,421	11,716
Real estate owned acquired in settlement of loans	$ 444	$ 295

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The consolidated financial statements (the “financial statements”) of Berkshire Hills Bancorp, Inc. and its subsidiaries (the “Company” or “Berkshire”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company is a Delaware corporation and the holding company for Berkshire Bank (the “Bank”), a Massachusetts-chartered trust company headquartered in Pittsfield, Massachusetts, and Berkshire Insurance Group, Inc. These financial statements include the accounts of the Company, its wholly-owned subsidiaries and the Bank’s consolidated subsidiaries. In consolidation, all significant intercompany accounts and transactions are eliminated. All material wholly-owned and majority-owned subsidiaries are consolidated unless GAAP requires otherwise.

The Company has evaluated subsequent events for potential recognition and/or disclosure through the date these consolidated financial statements were issued.

These interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, certain information and footnote disclosures normally included in financial statements prepared according to GAAP have been omitted.

The results for any interim period are not necessarily indicative of results for the full year. These consolidated financial statements should be read in conjunction with the audited financial statements and note disclosures for Berkshire Hills Bancorp, Inc. previously filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. In management’s opinion, all adjustment’s necessary for a fair statement are reflected in the interim periods presented.

Reclassifications

Certain items in prior financial statements have been reclassified to conform to the current presentation.

Recently Adopted Accounting Principles

Effective January 1, 2017, the following new accounting guidance was adopted by the Company:

• ASU No. 2016-05, Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships;

• ASU No. 2016-06, Contingent Put and Call Options in Debt Instruments;

• ASU No. 2016-07, Simplifying the Transition to the Equity Method of Accounting

• ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments; and

• ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities

The adoption of these accounting standards did not have a material impact on the Company's financial statements.

Future Application of Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This ASU provides a revenue recognition framework for any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other accounting standards. ASU 2014-09 is effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period with early adoption not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. In August 2015, ASU No. 2015-14, “Deferral of the Effective Date” was issued and delayed the effective date of ASU 2014-09 to annual and interim periods in fiscal years beginning after December 15, 2017. While the assessment of the provisions of ASU No. 2014-09 is not complete, the timing of the Company’s revenue recognition is not expected to materially change. This ASU impacts the Company’s wealth management services, administrative services for customer deposit accounts, interchange fees, and sale of owned real estate properties. The extent of this ASU on these revenue lines is being evaluated by the Company. The Company intends to adopt the ASU for the first quarter of 2018. Adoption is not anticipated to have a material impact on the Company’s financial statements.

In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU requires an entity to: i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in other comprehensive income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of available-for-sale debt securities in combination with other deferred tax assets. The guidance provides an election to subsequently measure certain non-marketable equity investments at cost less any impairment and adjusted for certain observable price changes. The guidance also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. The guidance is effective for annual periods beginning after December 15, 2017. Early adoption is only permitted for the provision related to instrument specific credit risk. While the Company has performed a preliminary evaluation of the provisions of ASU No. 2016-01, the effect of the adoption will depend on the Company’s portfolio at the time of transition.

In February 2016, the FASB issued ASU No. 2016-02, “Leases”. The new pronouncement improves the transparency and comparability of financial reporting around leasing transactions and more closely aligns accounting for leases with the recently issued International Financial Reporting Standard.  The pronouncement affects all entities that are participants to leasing agreements. From a lessee accounting perspective, the ASU requires a lessee to recognize assets and liabilities on the balance sheet for operating leases and changes many key definitions, including the definition of a lease. The ASU includes a short-term lease exception for leases with a term of twelve months or less, in which a lessee can make an accounting policy election not to recognize lease assets and lease liabilities. Lessees will continue to differentiate between finance leases (previously referred to as capital leases) and operating leases, using classification criteria that are substantially similar to the previous guidance. For lessees, the recognition, measurement, and presentation of expenses and cash flows arising from a lease have not significantly changed from previous GAAP. From a lessor accounting perspective, the guidance is largely unchanged, except for targeted improvements to align with new terminology under lessee accounting and with the updated revenue recognition guidance in Topic 606. For sale-leaseback transactions, for a sale to occur the transfer must meet the sale criteria under the new revenue standard, ASC 606. Entities will not be required to reassess transactions previously accounted under then existing guidance.

Additionally, the ASU includes additional quantitative and qualitative disclosures required by lessees and lessors to help users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 is effective for fiscal years beginning after December 31, 2018, and interim periods within those fiscal years. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply as well as transition guidance specific to nonstandard leasing transactions. The Company is currently evaluating the provisions of ASU No. 2016-02 to determine the potential impact the new standard will have on the Company's consolidated financial statements. It is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date; however, this is not expected to be material to the Company's results of operations or financial position. The Company continues to evaluate the extent of potential impact the new guidance will have on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” This ASU improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments. The ASU requires companies to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Forward-looking information will now be used in credit loss estimates. The ASU requires enhanced disclosures to provide better understanding surrounding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of a company’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. Most debt instruments will require a cumulative-effect adjustment to retained earnings on the statement of financial position as of the beginning of the first reporting period in which the guidance is adopted (modified retrospective approach). However, there is instrument-specific transition guidance. ASU No. 2016-13 is effective for interim and annual periods beginning after December 15, 2019. Early application will be permitted for interim and annual periods beginning after December 15, 2018. The Company is evaluating the provisions of ASU No. 2016-13, and will closely monitor developments and additional guidance to determine the potential impact on the Company's consolidated financial statements. The Company expects the primary changes to be the application of the expected credit loss model to the financial statements. In addition, the Company expects the guidance to change the presentation of credit losses within the available-for-sale fixed maturities portfolio through an allowance method rather than as a direct write-down. The expected credit loss model will require a financial asset to be presented at the net amount expected to be collected. The allowance method for available-for-sale debt securities will allow the Company to record reversals of credit losses if the estimate of credit losses declines. The Company is in the process of identifying and implementing required changes to loan loss estimation models and processes and evaluating the impact of this new accounting guidance, which at the date of adoption is expected to increase the allowance for credit losses with a resulting negative adjustment to retained earnings.

In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities.” The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU No. 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the consolidated balance sheet as of the date of adoption. While the Company continues to assess all potential impacts of the standard, we currently expect adoption to have an immaterial impact on our consolidated financial statements.

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TRADING SECURITY

9 Months Ended

Sep. 30, 2017

Trading Securities [Abstract]

TRADING SECURITY

TRADING SECURITY

The Company holds a tax advantaged economic development bond accounted for at fair value. The security had an amortized cost of $10.9 million and $11.4 million, and a fair value of $12.6 million and $13.2 million, at September 30, 2017 and December 31, 2016, respectively. As discussed further in Note 11 - Derivative Financial Instruments and Hedging Activities, the Company entered into a swap contract to swap-out the fixed rate of the security in exchange for a variable rate. The Company does not purchase securities with the intent of selling them in the near term, and there were no other securities in the trading portfolio at September 30, 2017.

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SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY

9 Months Ended

Sep. 30, 2017

Investments, Debt and Equity Securities [Abstract]

SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY

SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY

The following is a summary of securities available for sale and held to maturity:

(In thousands)	Amortized  Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
September 30, 2017
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	114,365	$	4,828	$	(433	)	$	118,760
Agency collateralized mortgage obligations	807,772		2,538		(2,874		)	807,436
Agency mortgage-backed securities	217,626		911		(1,470		)	217,067
Agency commercial mortgage-backed securities	64,296		126		(1,378		)	63,044
Corporate bonds	66,321		1,059		(146		)	67,234
Trust preferred securities	11,350		442		—			11,792
Other bonds and obligations	10,095		204		(8		)	10,291
Total debt securities	1,291,825		10,108		(6,309		)	1,295,624
Marketable equity securities	36,054		9,645		(310		)	45,389
Total securities available for sale	1,327,879		19,753		(6,619		)	1,341,013
Securities held to maturity
Municipal bonds and obligations	268,990		6,196		(1,300		)	273,886
Agency collateralized mortgage obligations	74,277		1,679		(356		)	75,600
Agency mortgage-backed securities	8,080		—		(142		)	7,938
Agency commercial mortgage-backed securities	10,497		—		(180		)	10,317
Tax advantaged economic development bonds	32,899		1,837		—			34,736
Other bonds and obligations	322		—		—			322
Total securities held to maturity	395,065		9,712		(1,978		)	402,799
Total	$	1,722,944	$	29,465	$	(8,597	)	$	1,743,812
December 31, 2016
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	117,910	$	2,955	$	(1,049	)	$	119,816
Agency collateralized mortgage obligations	652,680		2,522		(3,291		)	651,911
Agency mortgage-backed securities	230,308		557		(2,181		)	228,684
Agency commercial mortgage-backed securities	65,673		229		(1,368		)	64,534
Corporate bonds	56,320		408		(722		)	56,006
Trust preferred securities	11,578		368		(59		)	11,887
Other bonds and obligations	10,979		195		(16		)	11,158
Total debt securities	1,145,448		7,234		(8,686		)	1,143,996
Marketable equity securities	47,858		19,296		(1,613		)	65,541
Total securities available for sale	1,193,306		26,530		(10,299		)	1,209,537
Securities held to maturity
Municipal bonds and obligations	203,463		3,939		(2,416		)	204,986
Agency collateralized mortgage obligations	75,655		1,281		(411		)	76,525
Agency mortgage-backed securities	9,102		—		(243		)	8,859
Agency commercial mortgage-backed securities	10,545		—		(434		)	10,111
Tax advantaged economic development bonds	35,278		1,596		—			36,874
Other bonds and obligations	325		—		—			325
Total securities held to maturity	334,368		6,816		(3,504		)	337,680
Total	$	1,527,674	$	33,346	$	(13,803	)	$	1,547,217

The amortized cost and estimated fair value of available for sale (“AFS”) and held to maturity (“HTM”) securities, segregated by contractual maturity at September 30, 2017 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable. Equity securities have no maturity and are also shown in total.

	Available for sale				Held to maturity
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value
Within 1 year	$	623	$	626	$	2,640	$	2,642
Over 1 year to 5 years	31,653		32,254		26,324		27,305
Over 5 years to 10 years	56,336		57,943		8,467		8,925
Over 10 years	113,519		117,254		264,780		270,072
Total bonds and obligations	202,131		208,077		302,211		308,944
Marketable equity securities	36,054		45,389		—		—
Mortgage-backed securities	1,089,694		1,087,547		92,854		93,855
Total	$	1,327,879	$	1,341,013	$	395,065	$	402,799

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
September 30, 2017
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	52	$	3,046	$	381	$	8,828	$	433	$	11,874
Agency collateralized mortgage obligations	2,547		466,132		327		15,320		2,874		481,452
Agency mortgage-backed securities	1,121		106,495		349		12,654		1,470		119,149
Agency commercial mortgage-backed securities	681		32,357		697		20,678		1,378		53,035
Corporate bonds	—		—		146		15,859		146		15,859
Other bonds and obligations	8		2,109		—		—		8		2,109
Total debt securities	4,409		610,139		1,900		73,339		6,309		683,478
Marketable equity securities	310		4,950		—		—		310		4,950
Total securities available for sale	4,719		615,089		1,900		73,339		6,619		688,428
Securities held to maturity
Municipal bonds and obligations	856		64,187		444		12,362		1,300		76,549
Agency collateralized mortgage obligations	356		13,557		—		—		356		13,557
Agency mortgage-backed securities	142		7,938		—		—		142		7,938
Agency commercial mortgage-backed securities	180		10,317		—		—		180		10,317
Total securities held to maturity	1,534		95,999		444		12,362		1,978		108,361
Total	$	6,253	$	711,088	$	2,344	$	85,701	$	8,597	$	796,789
December 31, 2016
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	1,049	$	13,839	$	—	$	—	$	1,049	$	13,839
Agency collateralized mortgage obligations	3,291		319,448		—		—		3,291		319,448
Agency mortgage-backed securities	2,153		130,766		28		2,061		2,181		132,827
Agency commercial mortgage-backed securities	1,368		44,860		—		—		1,368		44,860
Corporate bonds	11		4,780		711		19,655		722		24,435
Trust preferred securities	—		—		59		1,204		59		1,204
Other bonds and obligations	15		3,014		1		27		16		3,041
Total debt securities	7,887		516,707		799		22,947		8,686		539,654
Marketable equity securities	157		6,600		1,456		5,927		1,613		12,527
Total securities available for sale	8,044		523,307		2,255		28,874		10,299		552,181
Securities held to maturity
Municipal bonds and obligations	2,416		69,308		—		—		2,416		69,308
Agency collateralized mortgage obligations	411		14,724		—		—		411		14,724
Agency mortgage-backed securities	243		8,859		—		—		243		8,859
Agency commercial mortgage-backed securities	434		10,111		—		—		434		10,111
Total securities held to maturity	3,504		103,002		—		—		3,504		103,002
Total	$	11,548	$	626,309	$	2,255	$	28,874	$	13,803	$	655,183

Debt Securities

The Company expects to recover its amortized cost basis on all debt securities in its AFS and HTM portfolios. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of September 30, 2017, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover.

The following summarizes, by investment security type, the basis for the conclusion that the debt securities in an unrealized loss position within the Company’s AFS and HTM portfolios were not other-than-temporarily impaired at September 30, 2017:

AFS municipal bonds and obligations

At September 30, 2017, 7 of the total 263 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 3.5% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for that risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

AFS collateralized mortgage obligations

At September 30, 2017, 99 out of the total 241 securities in the Company’s portfolios of AFS collateralized mortgage obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.6% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and Government National Mortgage Association (“GNMA”) guarantee the contractual cash flows of all of the Company’s collateralized mortgage obligations. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

AFS commercial and residential mortgage-backed securities

At September 30, 2017, 49 out of the total 103 securities in the Company’s portfolios of AFS mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 1.6% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of all of the Company’s mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

AFS corporate bonds

At September 30, 2017, 1 out of 14 securities in the Company’s portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 0.9% of the amortized cost of bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities.

At September 30, 2017, $146 thousand of the total unrealized losses was attributable to a $16.0 million investment. The Company evaluated this security, with a Level 2 fair value of $15.9 million, for potential other-than-temporary impairment (“OTTI”) at September 30, 2017 and determined that OTTI was not evident based on both the Company’s ability and intent to hold the security until the recovery of its remaining amortized cost.

AFS other bonds and obligations

At September 30, 2017, 5 of the 9 securities in the Company’s portfolio of other bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.4% of the amortized cost of securities in unrealized loss positions. The securities are all investment grade rated, and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM Municipal bonds and obligations

At September 30, 2017, 52 of the 232 securities in the Company’s portfolio of other bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 1.7% of the amortized cost of securities in unrealized loss positions. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM collateralized mortgage obligations

At September 30, 2017, 1 of the 9 securities in the Company’s portfolio of HTM collateralized mortgage obligations was in an unrealized loss position. Aggregate unrealized losses represented 1.8% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of all of the Company's collateralized residential mortgage obligations. The securities are investment grade rated, and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM commercial and residential mortgage-backed securities

At September 30, 2017, 2 out of a total of 2 securities in the Company’s portfolio of HTM mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 1.7% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of the Company’s residential mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

Marketable Equity Securities

In evaluating its marketable equity securities portfolio for OTTI, the Company considers its ability to more likely than not hold an equity security to recovery. The Company additionally considers other various factors including the length of time and the extent to which the fair value has been less than cost and the financial condition and near term prospects of the issuer. Any OTTI is recognized immediately through earnings.

At September 30, 2017, 3 out of the total 19 securities in the Company’s portfolio of marketable equity securities were in an unrealized loss position. The unrealized loss represented 5.6% of the amortized cost of the securities. The Company has the ability and intent to hold the securities until recovery of their cost basis and does not consider the securities other-than-temporarily impaired at September 30, 2017. As new information becomes available in future periods, changes to the Company’s assumptions may be warranted and could lead to a different conclusion regarding the OTTI of these securities.

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LOANS

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

LOANS

LOANS

The Company’s loan portfolio is segregated into the following segments: commercial real estate, commercial and industrial, residential mortgage, and consumer. Commercial real estate loans include construction, single and multi-family, and other commercial real estate classes. Residential mortgage loans include classes for 1-4 family owner occupied and construction loans. Consumer loans include home equity, direct and indirect auto, and other. These portfolio segments each have unique risk characteristics that are considered when determining the appropriate level for the allowance for loan losses. A substantial portion of the loan portfolio is secured by real estate in Massachusetts, southern Vermont, northeastern New York, New Jersey and in the Bank’s other New England lending areas. The ability of many of the Bank’s borrowers to honor their contracts is dependent, among other things, on the specific economy and real estate markets of these areas.

Total loans include business activity loans and acquired loans. Acquired loans are those loans acquired from First Choice Bank, Parke Bank, Firestone Financial Corp., Hampden Bancorp, Inc., the New York branch acquisition, Beacon Federal Bancorp, Inc., The Connecticut Bank and Trust Company, Legacy Bancorp, Inc., and Rome Bancorp, Inc. Acquired loans that are refinanced are transferred to business activity loans. Business activity and acquired loans are serviced, managed, and accounted for under the Company's same control environment. The following is a summary of total loans:

	September 30, 2017						December 31, 2016
(In thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities Loans		Acquired Loans		Total
Commercial real estate:
Construction	$	265,059	$	18,490	$	283,549	$	253,302	$	34,207	$	287,509
Single and multi-family	342,426		84,668		427,094		191,819		125,672		317,491
Other commercial real estate	1,462,500		498,094		1,960,594		1,481,223		530,215		2,011,438
Total commercial real estate	2,069,985		601,252		2,671,237		1,926,344		690,094		2,616,438
Commercial and industrial loans:	1,154,988		99,959		1,254,947		908,102		153,936		1,062,038
Total commercial loans	3,224,973		701,211		3,926,184		2,834,446		844,030		3,678,476
Residential mortgages:
1-4 family	1,717,160		258,789		1,975,949		1,583,794		297,355		1,881,149
Construction	6,933		244		7,177		11,178		804		11,982
Total residential mortgages	1,724,093		259,033		1,983,126		1,594,972		298,159		1,893,131
Consumer loans:
Home equity	290,144		95,746		385,890		313,521		80,279		393,800
Auto and other	601,905		50,301		652,206		478,368		106,012		584,380
Total consumer loans	892,049		146,047		1,038,096		791,889		186,291		978,180
Total loans	$	5,841,115	$	1,106,291	$	6,947,406	$	5,221,307	$	1,328,480	$	6,549,787

The carrying amount of the acquired loans at September 30, 2017 totaled $1.1 billion. A subset of these loans was determined to have evidence of credit deterioration at acquisition date, which is accounted for in accordance with ASC 310-30. These purchased credit-impaired loans presently maintain a carrying value of $32.2 million (and a note balance of $56.8 million). These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Loans considered not credit-impaired at acquisition date had a carrying amount of $1.1 billion.

At December 31, 2016, acquired loans maintained a carrying value of $1.3 billion and purchased credit-impaired loans totaled $46.8 million (note balance of $86.6 million). Loans considered not credit-impaired at acquisition date had a carrying amount of $1.3 billion.

The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality:

	Three Months Ended September 30,
(In thousands)	2017			2016
Balance at beginning of period	$	5,767		$	6,213
Acquisitions	—			—
Reclassification from nonaccretable difference for loans with improved cash flows	10			688
Change in cash flows that do not affect nonaccretable difference	—			—
Reclassification to TDR	—			—
Accretion	(1,712		)	(2,298		)
Balance at end of period	$	4,065		$	4,603

	Nine Months Ended September 30,
(In thousands)	2017			2016
Balance at beginning of period	$	8,738		$	6,925
Acquisitions	—			708
Reclassification from nonaccretable difference for loans with improved cash flows	343			2,106
Change in cash flows that do not affect nonaccretable difference	—			—
Reclassification to TDR	—			(185		)
Accretion	(5,016		)	(4,951		)
Balance at end of period	$	4,065		$	4,603

The following is a summary of past due loans at September 30, 2017 and December 31, 2016:

Business Activities Loans

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
September 30, 2017
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	265,059	$	265,059	$	—
Single and multi-family	143		260		326		729		341,697		342,426		163
Other commercial real estate	307		—		4,369		4,676		1,457,824		1,462,500		—
Total	450		260		4,695		5,405		2,064,580		2,069,985		163
Commercial and industrial loans:
Total	1,370		640		8,483		10,493		1,144,495		1,154,988		32
Residential mortgages:
1-4 family	1,055		1,396		2,093		4,544		1,712,616		1,717,160		125
Construction	—		—		—		—		6,933		6,933		—
Total	1,055		1,396		2,093		4,544		1,719,549		1,724,093		125
Consumer loans:
Home equity	74		267		1,872		2,213		287,931		290,144		228
Auto and other	2,620		384		1,115		4,119		597,786		601,905		31
Total	2,694		651		2,987		6,332		885,717		892,049		259
Total	$	5,569	$	2,947	$	18,258	$	26,774	$	5,814,341	$	5,841,115	$	579

Business Activities Loans

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
December 31, 2016
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	253,302	$	253,302	$	—
Single and multi-family	618		110		624		1,352		190,467		191,819		155
Other commercial real estate	481		2,243		4,212		6,936		1,474,287		1,481,223		—
Total	1,099		2,353		4,836		8,288		1,918,056		1,926,344		155
Commercial and industrial loans:
Total	3,090		1,301		6,290		10,681		897,421		908,102		5
Residential mortgages:
1-4 family	1,393		701		4,179		6,273		1,577,521		1,583,794		1,956
Construction	10		—		—		10		11,168		11,178		—
Total	1,403		701		4,179		6,283		1,588,689		1,594,972		1,956
Consumer loans:
Home equity	99		—		2,981		3,080		310,441		313,521		306
Auto and other	2,483		494		968		3,945		474,423		478,368		16
Total	2,582		494		3,949		7,025		784,864		791,889		322
Total	$	8,174	$	4,849	$	19,254	$	32,277	$	5,189,030	$	5,221,307	$	2,438

Acquired Loans

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
September 30, 2017
Commercial real estate:
Construction	$	570	$	—	$	—	$	570	$	—	$	18,490	$	—
Single and multi-family	421		78		2,600		3,099		3,285		84,668		2,385
Other commercial real estate	1,633		145		481		2,259		18,962		498,094		—
Total	2,624		223		3,081		5,928		22,247		601,252		2,385
Commercial and industrial loans:
Total	634		52		1,284		1,970		1,497		99,959		54
Residential mortgages:
1-4 family	624		383		1,154		2,161		7,167		258,789		30
Construction	—		—		—		—		—		244		—
Total	624		383		1,154		2,161		7,167		259,033		30
Consumer loans:
Home equity	23		2		1,220		1,245		930		95,746		—
Auto and other	258		29		416		703		358		50,301		14
Total	281		31		1,636		1,948		1,288		146,047		14
Total	$	4,163	$	689	$	7,155	$	12,007	$	32,199	$	1,106,291	$	2,483

Acquired Loans

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
December 31, 2016
Commercial real estate:							—
Construction	$	—	$	—	$	—	$	—	$	47	$	34,207	$	—
Single and multi-family	2		—		437		439		4,726		125,672		—
Other commercial real estate	1,555		—		765		2,320		30,047		530,215		—
Total	1,557		—		1,202		2,759		34,820		690,094		—
Commercial and industrial loans:
Total	1,850		15		1,262		3,127		3,369		153,936		24
Residential mortgages:
1-4 family	321		343		2,015		2,679		7,283		297,355		443
Construction	—		—		—		—		—		804		—
Total	321		343		2,015		2,679		7,283		298,159		443
Consumer loans:
Home equity	753		—		870		1,623		957		80,279		353
Auto and other	542		314		1,686		2,542		387		106,012		791
Total	1,295		314		2,556		4,165		1,344		186,291		1,144
Total	$	5,023	$	672	$	7,035	$	12,730	$	46,816	$	1,328,480	$	1,611

The following is summary information pertaining to non-accrual loans at September 30, 2017 and December 31, 2016:

	September 30, 2017						December 31, 2016
(In thousands)	Business Activities Loans		Acquired Loans (1)		Total		Business Activities Loans		Acquired Loans (2)		Total
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	—	$	—
Single and multi-family	163		215		378		469		437		906
Other commercial real estate	4,369		481		4,850		4,212		765		4,977
Total	4,532		696		5,228		4,681		1,202		5,883
Commercial and industrial loans:
Total	8,451		1,147		9,598		6,285		1,155		7,440
Residential mortgages:
1-4 family	1,968		1,124		3,092		2,223		1,572		3,795
Construction	—		—		—		—		—		—
Total	1,968		1,124		3,092		2,223		1,572		3,795
Consumer loans:
Home equity	1,644		1,220		2,864		2,675		517		3,192
Auto and other	1,084		402		1,486		952		895		1,847
Total	2,728		1,622		4,350		3,627		1,412		5,039
Total non-accrual loans	$	17,679	$	4,589	$	22,268	$	16,816	$	5,341	$	22,157

_______________________________________

(1)  At quarter end September 30, 2017, acquired credit impaired loans accounted for $83 thousand of loans greater than 90 days past due that are not presented in the above table.

(2)  At December 31, 2016, acquired credit impaired loans accounted for $83 thousand of loans greater than 90 days past due that are not presented in the above table.

Loans evaluated for impairment as of September 30, 2017 and December 31, 2016 were as follows:

Business Activities Loans

(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
September 30, 2017
Loans receivable:
Balance at end of period
Individually evaluated for impairment	$	34,064	$	10,164	$	2,205	$	1,860	$	48,293
Collectively evaluated for impairment	2,035,921		1,144,824		1,721,888		890,189		5,792,822
Total	$	2,069,985	$	1,154,988	$	1,724,093	$	892,049	$	5,841,115

Business Activities Loans

(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
December 31, 2016
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	25,549	$	5,705	$	2,775	$	2,703	$	36,732
Collectively evaluated for impairment	1,900,795		902,397		1,592,197		789,186		5,184,575
Total	$	1,926,344	$	908,102	$	1,594,972	$	791,889	$	5,221,307

Acquired Loans

(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
September 30, 2017
Loans receivable:
Balance at end of Period
Individually evaluated for impairment	$	2,770	$	592	$	475	$	950	$	4,787
Purchased credit-impaired loans	22,247		1,497		7,167		1,288		32,199
Collectively evaluated for impairment	576,235		97,870		251,391		143,809		1,069,305
Total	$	601,252	$	99,959	$	259,033	$	146,047	$	1,106,291

Acquired Loans

(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
December 31, 2016
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	4,256	$	635	$	308	$	406	$	5,605
Purchased credit-impaired loans	34,820		3,369		7,283		1,344		46,816
Collectively evaluated for impairment	651,018		149,932		290,568		184,541		1,276,059
Total	$	690,094	$	153,936	$	298,159	$	186,291	$	1,328,480

The following is a summary of impaired loans at September 30, 2017 and December 31, 2016:

Business Activities Loans

	September 30, 2017
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	—	$	—	$	—
Other commercial real estate loans	19,005		19,005		—
Commercial and industrial loans	2,043		2,043		—
Residential mortgages - 1-4 family	1,033		1,033		—
Consumer - home equity	769		769		—
Consumer - other	—		—		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	162	$	163	$	1
Other commercial real estate loans	14,758		14,896		138
Commercial and industrial loans	7,842		8,121		279
Residential mortgages - 1-4 family	1,036		1,172		136
Consumer - home equity	1,052		1,091		39
Consumer - other	—		—		—
Total
Commercial real estate	$	33,925	$	34,064	$	139
Commercial and industrial loans	9,885		10,164		279
Residential mortgages	2,069		2,205		136
Consumer	1,821		1,860		39
Total impaired loans	$	47,700	$	48,293	$	593

Business Activities Loans

	December 31, 2016
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	—	$	—	$	—
Other commercial real estate loans	18,905		18,905		—
Commercial and industrial loans	382		382		—
Residential mortgages - 1-4 family	2,101		2,101		—
Consumer - home equity	1,605		1,605		—
Consumer - other	—		—		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	179	$	181	$	2
Other commercial real estate loans	6,306		6,462		156
Commercial and industrial loans	5,060		5,324		264
Residential mortgages - 1-4 family	538		674		136
Consumer - home equity	942		1,098		156
Consumer - other	—		—		—
Total
Commercial real estate	$	25,390	$	25,548	$	158
Commercial and industrial loans	5,442		5,706		264
Residential mortgages	2,639		2,775		136
Consumer	2,547		2,703		156
Total impaired loans	$	36,018	$	36,732	$	714

Acquired Loans

	September 30, 2017
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	216	$	216	$	—
Other commercial real estate loans	195		195		—
Commercial and industrial loans	287		287		—
Residential mortgages - 1-4 family	165		165		—
Consumer - home equity	581		581		—
Consumer - other	—		—		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	871	$	892	$	21
Other commercial real estate loans	1,442		1,467		25
Commercial and industrial loans	303		305		2
Residential mortgages - 1-4 family	291		310		19
Consumer - home equity	325		369		44
Total					x
Commercial real estate	$	2,724	$	2,770	$	46
Commercial and industrial loans	590		592		2
Residential mortgages	456		475		19
Consumer	906		950		44
Total impaired loans	$	4,676	$	4,787	$	111

Acquired Loans

	December 31, 2016
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	—	$	—	$	—
Other commercial real estate loans	547		547		—
Commercial and industrial loans	—		—		—
Residential mortgages - 1-4 family	208		208		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	1,250	$	1,358	$	108
Other commercial real estate loans	2,209		2,351		142
Commercial and industrial loans	576		635		59
Residential mortgages - 1-4 family	89		100		11
Consumer - home equity	292		406		114
Total
Commercial real estate	$	4,006	$	4,256	$	250
Commercial and industrial loans	576		635		59
Residential mortgages	297		308		11
Consumer	292		406		114
Total impaired loans	$	5,171	$	5,605	$	434

The following is a summary of the average recorded investment and interest income recognized on impaired loans as of September 30, 2017 and 2016:

Business Activities Loans

	Nine Months Ended September 30, 2017				Nine Months Ended September 30, 2016
(In thousands)	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
With no related allowance:
Commercial real estate - single and multifamily	$	84	$	—	$	48	$	1
Other commercial real estate loans	21,132		934		2,624		111
Commercial and industrial loans	1,825		69		805		26
Residential mortgages - 1-4 family	1,391		29		2,309		51
Consumer - home equity	1,301		26		693		5
Consumer - other	—		—		1		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	172	$	10	$	—	$	—
Other commercial real estate loans	10,553		363		10,266		351
Commercial and industrial loans	6,493		354		4,609		154
Residential mortgages - 1-4 family	1,187		38		684		21
Consumer - home equity	1,094		32		999		26
Consumer - other	—		—		104		3
Total
Commercial real estate	$	31,941	$	1,307	$	12,938	$	463
Commercial and industrial loans	8,318		423		5,414		180
Residential mortgages	2,578		67		2,993		72
Consumer loans	2,395		58		1,797		34
Total impaired loans	$	45,232	$	1,855	$	23,142	$	749

Acquired Loans

	Nine Months Ended September 30, 2017				Nine Months Ended September 30, 2016
(In thousands)	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
With no related allowance:
Commercial real estate - single and multifamily	$	424	$	79	$	—	$	—
Other commercial real estate loans	483		73		546		20
Commercial and Industrial loans	319		4		191		1
Residential mortgages - 1-4 family	170		7		321		9
Consumer - home equity	567		—		—		—
Consumer - other	—		—		140		1
With an allowance recorded:
Commercial real estate - single and multifamily	$	904	$	36	$	942	$	37
Other commercial real estate loans	1,481		56		2,606		127
Commercial and Industrial loans	332		29		404		10
Residential mortgages - 1-4 family	319		12		117		4
Consumer - home equity	387		13		356		13
Consumer - other	—		—		—		—
Total
Other commercial real estate loans	$	3,292	$	244	$	4,094	$	184
Commercial and industrial loans	651		33		595		11
Residential mortgages	489		19		438		13
Consumer loans	954		13		496		14
Total impaired loans	$	5,386	$	309	$	5,623	$	222

Troubled Debt Restructuring Loans

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring (TDR), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. TDRs are evaluated individually for impairment and may result in a specific allowance amount allocated to an individual loan.

The following tables include the recorded investment and number of modifications identified during the three and nine months ended September 30, 2017. The table includes the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. The modifications for the three and nine months ended September 30, 2017 and 2016 were attributable to interest rate concessions, principal concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity. 

	Three Months Ended September 30, 2017
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Other	—	—		—
Commercial and industrial	3	1,654		1,654
Residential - 1-4 Family	—	—		—
Consumer - Home Equity	—	—		—
Total	3	$	1,654	$	1,654

	Nine Months Ended September 30, 2017
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Other	15	$	13,445	$	11,718
Commercial and industrial	8	3,471		3,471
Residential - 1-4 Family	2	205		188
Consumer - Home Equity	1	53		53
Total	26	$	17,174	$	15,430

	Three Months Ended September 30, 2016
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial and industrial	2	404		404
Residential - 1-4 Family	2	5		5
Total	4	$	409	$	409

	Nine Months Ended September 30, 2016
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Other	2	$	1,049	$	1,049
Commercial and industrial	4	555		555
Residential - 1-4 Family	2	5		5
Consumer - Home Equity	1	117		117
Total	9	$	1,726	$	1,726

The following table discloses the recorded investments and numbers of modifications for TDRs where a concession has been made, that then defaulted in the respective reporting period. For the three months ended September 30, 2017, there were no loans that were restructured that had subsequently defaulted during the period. For the nine months ended September 30, 2017, there were two loans that were restructured that had subsequently defaulted during the period.

	Modifications that Subsequently Defaulted
	Three Months Ended September 30, 2017
(Dollars in thousands)	Number of Contracts	Recorded Investment
Troubled Debt Restructurings
Commercial - Other	—	$	—
Commercial and industrial	—	$	—

	Modifications that Subsequently Defaulted
	Nine Months Ended September 30, 2017
(Dollars in thousands)	Number of Contracts	Recorded Investment
Troubled Debt Restructurings
Commercial - Other	1	$	113
Commercial and industrial	1	$	101

The following table presents the Company’s TDR activity for the three and nine months ended September 30, 2017 and 2016:

	Three Months Ended September 30,
(In thousands)	2017			2016
Balance at beginning of the period	$	44,556		$	22,122
Principal payments	(373		)	(932		)
TDR status change (1)	—			—
Other reductions/increases (2)	(1,939		)	—
Newly identified TDRs	1,654			409
Balance at end of the period	$	43,898		$	21,599

	Nine Months Ended September 30,
(In thousands)	2017			2016
Balance at beginning of the period	$	33,829		$	22,048
Principal payments	(1,527		)	(2,041		)
TDR status change (1)	—			2,236
Other reductions/increases (2)	(3,834		)	(2,370		)
Newly identified TDRs	15,430			1,726
Balance at end of the period	$	43,898		$	21,599

_________________________________

(1) TDR status change classification represents TDR loans with a specified interest rate equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk and  the loan was on current payment status and not impaired based on the terms specified by the restructuring agreement.

(2) Other reductions classification consists of transfer to other real estate owned and charge-offs and advances to loans.

The evaluation of certain loans individually for specific impairment includes loans that were previously classified as TDRs or continue to be classified as TDRs.

As of September 30, 2017, the Company maintained foreclosed residential real estate property with a fair value of $288 thousand. Additionally, residential mortgage loans collateralized by real estate property that are in the process of foreclosure as of September 30, 2017 and December 31, 2016 totaled $4.7 million and $4.8 million, respectively. As of December 31, 2016, foreclosed residential real estate property totaled $151 thousand.

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LOAN LOSS ALLOWANCE

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

LOAN LOSS ALLOWANCE

LOAN LOSS ALLOWANCE

Activity in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 was as follows:

	At or for the three months ended September 30, 2017
Business Activities Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	15,972	$	12,588	$	8,114	$	6,221	$	42,895
Charged-off loans	1,367		606		42		1,352		3,367
Recoveries on charged-off loans	14		37		241		39		331
Provision/(releases) for loan losses	1,210		1,952		241		1,473		4,876
Balance at end of period	$	15,829	$	13,971	$	8,554	$	6,381	$	44,735
Individually evaluated for impairment	139		279		136		39		593
Collectively evaluated for impairment	15,690		13,692		8,418		6,342		44,142
Total	$	15,829	$	13,971	$	8,554	$	6,381	$	44,735

	At or for the nine months ended September 30, 2017
Business Activities Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	16,499	$	9,446	$	7,800	$	5,484	$	39,229
Charged-off loans	2,883		2,457		555		2,670		8,565
Recoveries on charged-off loans	71		108		270		211		660
Provision/(releases) for loan losses	2,142		6,874		1,039		3,356		13,411
Balance at end of period	$	15,829	$	13,971	$	8,554	$	6,381	$	44,735
Individually evaluated for impairment	139		279		136		39		593
Collectively evaluated for impairment	15,690		13,692		8,418		6,342		44,142
Total	$	15,829	$	13,971	$	8,554	$	6,381	$	44,735

	At or for the three months ended September 30, 2016
Business Activities Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	16,732	$	8,216	$	7,453	$	4,723	$	37,124
Charged-off loans	—		1,599		253		434		2,286
Recoveries on charged-off loans	114		37		96		61		308
Provision/(releases) for loan losses	620		1,831		88		936		3,475
Balance at end of period	$	17,466	$	8,485	$	7,384	$	5,286	$	38,621
Individually evaluated for impairment	190		194		89		165		638
Collectively evaluated for impairment	17,276		8,291		7,295		5,121		37,983
Total	$	17,466	$	8,485	$	7,384	$	5,286	$	38,621

	At or for the nine months ended September 30, 2016
Business Activities Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	14,610	$	7,367	$	7,612	$	4,985	$	34,574
Charged-off loans	1,578		4,145		1,340		1,175		8,238
Recoveries on charged-off loans	242		114		101		183		640
Provision/(releases) for loan losses	4,192		5,149		1,011		1,293		11,645
Balance at end of period	$	17,466	$	8,485	$	7,384	$	5,286	$	38,621
Individually evaluated for impairment	190		194		89		165		638
Collectively evaluated for impairment	17,276		8,291		7,295		5,121		37,983
Total	$	17,466	$	8,485	$	7,384	$	5,286	$	38,621

	At or for the three months ended September 30, 2017
Acquired Loans (In thousands)	Commercial real estate		Commercial and industrial loans			Residential mortgages		Consumer		Total
Balance at beginning of period	$	2,356	$	1,014		$	690	$	404	$	4,464
Charged-off loans	95		153			70		111		429
Recoveries on charged-off loans	22		150			1		37		210
Provision for loan losses	109		(149		)	49		15		24
Balance at end of period	$	2,392	$	862		$	670	$	345	$	4,269
Individually evaluated for impairment	46		2			19		44		111
Purchased credit-impaired loans	—		—			—		—		—
Collectively evaluated for impairment	2,346		860			651		301		4,158
Total	$	2,392	$	862		$	670	$	345	$	4,269

	At or for the nine months ended September 30, 2017
Acquired Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	2,303	$	1,164	$	766	$	536	$	4,769
Charged-off loans	765		634		285		601		2,285
Recoveries on charged-off loans	44		151		39		78		312
Provision for loan losses	810		181		150		332		1,473
Balance at end of period	$	2,392	$	862	$	670	$	345	$	4,269
Individually evaluated for impairment	46		2		19		44		111
Purchased credit-impaired loans	—		—		—		—		—
Collectively evaluated for impairment	2,346		860		651		301		4,158
Total	$	2,392	$	862	$	670	$	345	$	4,269

	At or for the three months ended September 30, 2016
Acquired Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	2,140	$	776	$	881	$	476	$	4,273
Charged-off loans	662		84		332		77		1,155
Recoveries on charged-off loans	—		37		37		33		107
Provision for loan losses	907		210		111		31		1,259
Balance at end of period	$	2,385	$	939	$	697	$	463	$	4,484
Individually evaluated for impairment	704		121		12		135		972
Purchased credit-impaired loans	—		—		—		—		—
Collectively evaluated for impairment	1,681		818		685		328		3,512
Total	$	2,385	$	939	$	697	$	463	$	4,484

	At or for the nine months ended September 30, 2016
Acquired Loans (In thousands)	Commercial real estate		Commercial and industrial loans			Residential mortgages		Consumer		Total
Balance at beginning of period	$	1,903	$	1,330		$	976	$	525	$	4,734
Charged-off loans	788		359			696		457		2,300
Recoveries on charged-off loans	—		213			141		79		433
Provision for loan losses	1,270		(245		)	276		316		1,617
Balance at end of period	$	2,385	$	939		$	697	$	463	$	4,484
Individually evaluated for impairment	704		121			12		135		972
Purchased credit-impaired loans	—		—			—		—		—
Collectively evaluated for impairment	1,681		818			685		328		3,512
Total	$	2,385	$	939		$	697	$	463	$	4,484

Credit Quality Information

Business Activities Loans Credit Quality Analysis

The Company monitors the credit quality of its portfolio by using internal risk ratings that are based on regulatory guidance. Loans that are given a Pass rating are not considered a problem credit. Loans that are classified as Special Mention loans are considered to have potential credit problems and are evaluated closely by management. Substandard and non-accruing loans are loans for which a definitive weakness has been identified and which may make full collection of contractual cash flows questionable. Doubtful loans are those with identified weaknesses that make full collection of contractual cash flows, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. 

For commercial credits, the Company assigns an internal risk rating at origination and reviews the rating annually, semiannually or quarterly depending on the risk rating. The rating is also reassessed at any point in time when management becomes aware of information that may affect the borrower’s ability to fulfill their obligations.

The Company risk rates its residential mortgages, including 1-4 family and residential construction loans, based on a three rating system: Pass, Special Mention and Substandard. Loans that are current within 59 days are rated Pass. Residential mortgages that are 60-89 days delinquent are rated Special Mention. Loans delinquent for 90 days or greater are rated Substandard and generally placed on non-accrual status. Home equity loans are risk rated based on the same rating system as the Company’s residential mortgages.

Ratings for other consumer loans, including auto loans, are based on a two rating system. Loans that are current within 119 days are rated Performing while loans delinquent for 120 days or more are rated Non-performing. Other consumer loans are placed on non-accrual at such time as they become Non-performing.

Acquired Loans Credit Quality Analysis

Upon acquiring a loan portfolio, the Company's internal loan review function assigns risk ratings to the acquired loans, utilizing the same methodology as it does with business activities loans. This may differ from the risk rating policy of the predecessor bank. Loans which are rated Substandard or worse according to the rating process outlined below are deemed to be credit impaired loans accounted for under ASC 310-30, regardless of whether they are classified as performing or non-performing.

The Bank utilizes an eleven grade internal loan rating system for each of its acquired commercial real estate, construction and commercial loans as outlined in the Credit Quality Information section of this Note. The ratings system is similar to loans originated through business activities.

The Company subjects loans that do not meet the ASC 310-30 criteria to ASC 450-20 (Loss Contingencies) by collectively evaluating these loans for an allowance for loan loss. The Company applies a methodology similar to the methodology prescribed for business activities loans, which includes the application of environmental factors to each category of loans. The methodology to collectively evaluate the acquired loans outside the scope of ASC 310-30 includes the application of a number of environmental factors that reflect management’s best estimate of the level of incremental credit losses that might be recognized given current conditions. This is reviewed as part of the allowance for loan loss adequacy analysis. As the loan portfolio matures and environmental factors change, the loan portfolio will be reassessed each quarter to determine an appropriate reserve allowance.

Additionally, the Company considers the need for a reserve for acquired loans accounted for outside of the scope of ASC 310-30 under ASC 310-20. At acquisition date, the Bank determined a fair value mark with credit and interest rate components. Under the Company’s model, the impairment evaluation process involves comparing the carrying value of acquired loans, including the entire unamortized premium or discount, to the calculated reserve allowance. If necessary, the Company books a reserve to account for shortfalls identified through this calculation. Fair value marks are not bifurcated when evaluating for impairment.

A decrease in the expected cash flows in subsequent periods requires the establishment of an allowance for loan losses at that time for ASC 310-30 loans. At September 30, 2017, the allowance for loan losses related to acquired loans under ASC 310-30 and ASC 310-20 was $4.3 million using the above mentioned criteria.

The following tables present the Company’s loans by risk rating at September 30, 2017 and December 31, 2016:

Business Activities Loans

Commercial Real Estate

Credit Risk Profile by Creditworthiness Category

	Construction				Single and multi-family				Other				Total commercial real estate
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Grade:
Pass	$	265,059	$	253,302	$	339,846	$	189,310	$	1,419,153	$	1,434,762	$	2,024,058	$	1,877,374
Special mention	—		—		529		334		12,604		5,827		13,133		6,161
Substandard	—		—		2,051		2,175		30,743		40,598		32,794		42,773
Doubtful	—		—		—		—		—		36		—		36
Total	$	265,059	$	253,302	$	342,426	$	191,819	$	1,462,500	$	1,481,223	$	2,069,985	$	1,926,344

Commercial and Industrial Loans

Credit Risk Profile by Creditworthiness Category

	Total comm. and industrial loans
(In thousands)	September 30, 2017		December 31, 2016
Grade:
Pass	$	1,136,498	$	890,974
Special mention	2,522		123
Substandard	12,981		13,825
Doubtful	2,987		3,180
Total	$	1,154,988	$	908,102

Residential Mortgages

Credit Risk Profile by Internally Assigned Grade

	1-4 family				Construction				Total residential mortgages
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Grade:
Pass	$	1,713,671	$	1,578,913	$	6,933	$	11,178	$	1,720,604	$	1,590,091
Special mention	1,396		701		—		—		1,396		701
Substandard	2,093		4,179		—		—		2,093		4,179
Total	$	1,717,160	$	1,583,793	$	6,933	$	11,178	$	1,724,093	$	1,594,971

Consumer Loans

Credit Risk Profile Based on Payment Activity

	Home equity				Auto and other				Total consumer loans
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Performing	$	288,500	$	310,846	$	600,821	$	477,416	$	889,321	$	788,262
Nonperforming	1,644		2,675		1,084		952		2,728		3,627
Total	$	290,144	$	313,521	$	601,905	$	478,368	$	892,049	$	791,889

Acquired Loans

Commercial Real Estate

Credit Risk Profile by Creditworthiness Category

	Construction				Single and multi-family				Other				Total commercial real estate
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Grade:
Pass	$	17,221	$	33,461	$	81,935	$	119,414	$	454,081	$	496,562	$	553,237	$	649,437
Special mention	570		—		607		907		18,626		1,622		19,803		2,529
Substandard	699		746		2,126		5,351		25,387		32,031		28,212		38,128
Total	$	18,490	$	34,207	$	84,668	$	125,672	$	498,094	$	530,215	$	601,252	$	690,094

Commercial and Industrial Loans

Credit Risk Profile by Creditworthiness Category

	Total comm. and industrial loans
(In thousands)	September 30, 2017		December 31, 2016
Grade:
Pass	$	95,098	$	147,102
Special mention	51		1,260
Substandard	4,810		5,574
Total	$	99,959	$	153,936

Residential Mortgages

Credit Risk Profile by Internally Assigned Grade

	1-4 family				Construction				Total residential mortgages
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Grade:
Pass	$	253,414	$	294,983	$	244	$	804	$	253,658	$	295,787
Special mention	398		343		—		—		398		343
Substandard	4,977		2,029		—		—		4,977		2,029
Total	$	258,789	$	297,355	$	244	$	804	$	259,033	$	298,159

Consumer Loans

Credit Risk Profile Based on Payment Activity

	Home equity				Auto and other				Total consumer loans
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Performing	$	94,526	$	79,762	$	49,900	$	105,117	$	144,426	$	184,879
Nonperforming	1,220		517		401		895		1,621		1,412
Total	$	95,746	$	80,279	$	50,301	$	106,012	$	146,047	$	186,291

The following table summarizes information about total loans rated Special Mention or lower as of September 30, 2017 and December 31, 2016. The table below includes consumer loans that are special mention and substandard accruing that are classified in the above table as performing based on payment activity.

	September 30, 2017						December 31, 2016
(In thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities Loans		Acquired Loans		Total
Non-Accrual	$	17,679	$	4,672	$	22,351	$	16,816	$	5,424	$	22,240
Substandard Accruing	36,162		35,089		71,251		51,125		44,177		95,302
Total Classified	53,841		39,761		93,602		67,941		49,601		117,542
Special Mention	17,699		20,284		37,983		7,479		4,323		11,802
Total Criticized	$	71,540	$	60,045	$	131,585	$	75,420	$	53,924	$	129,344

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DEPOSITS

9 Months Ended

Sep. 30, 2017

Deposits [Abstract]

DEPOSITS

DEPOSITS

A summary of time deposits is as follows:

(In thousands)	September 30, 2017		December 31, 2016
Time less than $250,000	$	2,200,338	$	2,015,332
Time $250,000 or more	373,285		318,211
Total time deposits	$	2,573,623	$	2,333,543

Included in total deposits are brokered deposits of $1.1 billion and $0.9 billion at September 30, 2017 and December 31, 2016, respectively. Included in total brokered deposits are reciprocal deposits of $97.4 million and $113.4 million at September 30, 2017 and December 31, 2016, respectively.

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BORROWED FUNDS

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

BORROWED FUNDS

BORROWED FUNDS

Borrowed funds at September 30, 2017 and December 31, 2016 are summarized, as follows:

	September 30, 2017				December 31, 2016
			Weighted				Weighted
			Average				Average
(Dollars in thousands)	Principal		Rate		Principal		Rate
Short-term borrowings:
Advances from the FHLB	$	1,061,300	1.27	%	$	1,072,044	0.71	%
Other borrowings	—		—		10,000		2.42
Total short-term borrowings:	1,061,300		1.27		1,082,044		0.72
Long-term borrowings:
Advances from the FHLB and other borrowings	338,054		1.49		142,792		1.53
Subordinated borrowings	73,831		7.00		73,697		7.00
Junior subordinated borrowings	15,464		3.16		15,464		2.77
Total long-term borrowings:	427,349		2.50		231,953		3.35
Total	$	1,488,649	1.63	%	$	1,313,997	1.19	%

Short-term debt includes Federal Home Loan Bank (“FHLB”) advances with an original maturity of less than one year and a short-term line-of-credit drawdown through a correspondent bank. The Bank also maintains a $3.0 million secured line of credit with the FHLB that bears a daily adjustable rate calculated by the FHLB. There was no outstanding balance on the FHLB line of credit for the periods ended September 30, 2017 and December 31, 2016.

The Bank is approved to borrow on a short-term basis from the Federal Reserve Bank of Boston as a non-member bank. The Bank has pledged certain loans and securities to the Federal Reserve Bank to support this arrangement. No borrowings with the Federal Reserve Bank took place for the periods ended September 30, 2017 and December 31, 2016.

Long-term FHLB advances consist of advances with an original maturity of more than one year. The advances outstanding at September 30, 2017 include callable advances totaling $4.0 million, and amortizing advances totaling $1.1 million. The advances outstanding at December 31, 2016 include callable advances totaling $11.0 million, and amortizing advances totaling $1.2 million. All FHLB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally all residential first mortgage loans and certain securities.

A summary of maturities of FHLB advances as of September 30, 2017 is as follows:

	September 30, 2017
			Weighted Average
(In thousands, except rates)	Principal		Rate
Fixed rate advances maturing:
2017	$	1,018,565	1.28	%
2018	218,836		1.28
2019	150,000		1.64
2020	4,464		1.94
2021 and beyond	7,489		2.69
Total FHLB advances	$	1,399,354	1.33	%

The Company did not have variable-rate FHLB advances for the periods ended September 30, 2017 and December 31, 2016.

In September 2012, the Company issued fifteen year subordinated notes in the amount of $75.0 million at a discount of 1.15%. The interest rate is fixed at 6.875% for the first ten years. After ten years, the notes become callable and convert to an interest rate of three-month LIBOR rate plus 5.113%. The subordinated note includes reduction to the note principal balance of $614 thousand and $706 thousand for unamortized debt issuance costs as of September 30, 2017 and December 31 2016, respectively.

The Company holds 100% of the common stock of Berkshire Hills Capital Trust I (“Trust I”) which is included in other assets with a cost of $0.5 million. The sole asset of Trust I is $15.5 million of the Company’s junior subordinated debentures due in 2035. These debentures bear interest at a variable rate equal to LIBOR plus 1.85% and had a rate of 3.16% and 2.77% at September 30, 2017 and December 31, 2016, respectively. The Company has the right to defer payments of interest for up to five years on the debentures at any time, or from time to time, with certain limitations, including a restriction on the payment of dividends to shareholders while such interest payments on the debentures have been deferred. The Company has not exercised this right to defer payments. The Company has the right to redeem the debentures at par value. Trust I is considered a variable interest entity for which the Company is not the primary beneficiary. Accordingly, Trust I is not consolidated into the Company’s financial statements.

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

CAPITAL RATIOS AND STOCKHOLDERS' EQUITY

 CAPITAL RATIOS AND SHAREHOLDERS’ EQUITY

The actual and required capital ratios were as follows:

	September 30, 2017		Regulatory Minimum to be Well Capitalized		December 31, 2016		Regulatory Minimum to be Well Capitalized
Company (consolidated)
Total capital to risk weighted assets	14.3	%	10.0	%	11.9	%	10.0	%
Common equity tier 1 capital to risk weighted assets	12.3		6.5		9.9		6.5
Tier 1 capital to risk weighted assets	12.5		8.0		10.1		8.0
Tier 1 capital to average assets	9.5		5.0		7.9		5.0
Bank
Total capital to risk weighted assets	11.7	%	10.0	%	11.2	%	10.0	%
Common equity tier 1 capital to risk weighted assets	10.4		6.5		10.0		6.5
Tier 1 capital to risk weighted assets	10.4		8.0		10.0		8.0
Tier 1 capital to average assets	8.0		5.0		7.8		5.0

At each date shown, the Company and the Bank met the conditions to be classified as “well capitalized” under the relevant regulatory framework. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table above.

Effective January 1, 2015, the Company and the Bank became subject to the Basel III rule that requires the Company and the Bank to assess their Common equity Tier 1 capital to risk weighted assets and the Company and the Bank each exceed the minimum to be well capitalized. In addition, the final capital rules added a requirement to maintain a minimum conservation buffer, composed of Common equity Tier 1 capital, of 2.5% of risk-weighted assets, to be phased in over three years and applied to the Common equity Tier 1 risk-based capital ratio, the Tier 1 risk-based capital ratio, and the Total risk-based capital ratio. Accordingly, banking organizations, on a fully phased in basis no later than January 1, 2019, must maintain a minimum Common equity Tier 1 risk-based capital ratio of 7.0%, a minimum Tier 1 risk-based capital ratio of 8.5%, and a minimum Total risk-based capital ratio of 10.5%.

The required minimum conservation buffer began to be phased in incrementally, starting at 0.625% on January 1, 2016, increased to 1.25% on January 1, 2017, and will increase to 1.875% on January 1, 2018 and 2.5% on January 1, 2019. The final capital rules impose restrictions on capital distributions and certain discretionary cash bonus payments if the minimum capital conservation buffer is not met.

At September 30, 2017, the capital levels of both the Company and the Bank exceeded all regulatory capital requirements and their regulatory capital ratios were above the minimum levels required to be considered well capitalized for regulatory purposes. The capital levels of both the Company and the Bank at September 30, 2017 also exceeded the minimum capital requirements including the currently applicable capital conservation buffer of 1.25%.

Accumulated other comprehensive income (loss)

Components of accumulated other comprehensive income is as follows:

(In thousands)	September 30, 2017			December 31, 2016
Other accumulated comprehensive income, before tax:
Net unrealized holding gain on AFS securities	$	21,132		$	25,176
Net unrealized loss on cash flow hedging derivatives	—			(6,573		)
Net unrealized holding loss on pension plans	(2,954		)	(2,954		)
Income taxes related to items of accumulated other comprehensive income:
Net unrealized holding gain on AFS securities	(8,155		)	(9,636		)
Net unrealized loss on cash flow hedging derivatives	—			2,589
Net unrealized holding loss on pension plans	1,164			1,164
Accumulated other comprehensive income	$	11,187		$	9,766

The following table presents the components of other comprehensive income for the three and nine months ended September 30, 2017 and 2016:

(In thousands)	Before Tax			Tax Effect			Net of Tax
Three Months Ended September 30, 2017
Net unrealized holding gain on AFS securities:	x
Net unrealized gains arising during the period	$	1,460		$	(605	)	$	855
Less: reclassification adjustment for (losses) realized in net income	(1		)	—			(1		)
Net unrealized holding gain on AFS securities	1,461			(605		)	856
Net unrealized gain on cash flow hedging derivatives:
Net unrealized (loss) arising during the period	—			—			—
Less: reclassification adjustment for (losses) realized in net income	—			—			—
Net unrealized gain on cash flow hedging derivatives	—			—			—
Other comprehensive income	$	1,461		$	(605	)	$	856
Three Months Ended September 30, 2016
Net unrealized holding (loss) on AFS securities:
Net unrealized (losses) arising during the period	$	(5,576	)	$	2,190		$	(3,386	)
Less: reclassification adjustment for gains realized in net income	78			(28		)	50
Net unrealized holding (loss) on AFS securities	(5,654		)	2,218			(3,436		)
Net unrealized gain on cash flow hedging derivatives:
Net unrealized gain arising during the period	1,363			(547		)	816
Less: reclassification adjustment for (losses) realized in net income	(1,367		)	549			(818		)
Net unrealized gain on cash flow hedging derivatives	2,730			(1,096		)	1,634
Other comprehensive (loss)	$	(2,924	)	$	1,122		$	(1,802	)

(In thousands)	Before Tax			Tax Effect			Net of Tax
Nine Months Ended September 30, 2017
Net unrealized holding (loss) on AFS securities:	x
Net unrealized gains arising during the period	$	8,524		$	(3,232	)	$	5,292
Less: reclassification adjustment for gains realized in net income	12,568			(4,713		)	7,855
Net unrealized holding (loss) on AFS securities	(4,044		)	1,481			(2,563		)
Net unrealized gain on cash flow hedging derivatives:
Net unrealized (loss) arising during the period	(449		)	180			(269		)
Less: reclassification adjustment for (losses) realized in net income	(7,022		)	2,769			(4,253		)
Net unrealized gain on cash flow hedging derivatives	6,573			(2,589		)	3,984
Other comprehensive income	$	2,529		$	(1,108	)	$	1,421
Nine Months Ended September 30, 2016
Net unrealized holding gain on AFS securities:
Net unrealized gains arising during the period	$	21,740		$	(8,366	)	$	13,374
Less: reclassification adjustment for gains realized in net income	101			(36		)	65
Net unrealized holding gain on AFS securities	21,639			(8,330		)	13,309
Net unrealized (loss) on cash flow hedging derivatives:
Net unrealized (loss) arising during the period	(5,322		)	2,136			(3,186		)
Less: reclassification adjustment for (losses) realized in net income	(2,662		)	1,069			(1,593		)
Net unrealized (loss) on cash flow hedging derivatives	(2,660		)	1,067			(1,593		)
Other comprehensive income	$	18,979		$	(7,263	)	$	11,716

The following table presents the changes in each component of accumulated other comprehensive income (loss), for the three and nine months ended September 30, 2017 and 2016:

(In thousands)	Net unrealized holding gain on AFS Securities			Net loss on effective cash flow hedging derivatives			Net unrealized holding loss on pension plans			Total
Three Months Ended September 30, 2017
Balance at Beginning of Period	$	12,121		$	—		$	(1,790	)	$	10,331
Other comprehensive gain before reclassifications	855			—			—			855
Less: amounts reclassified from accumulated other comprehensive income (loss)	(1		)	—			—			(1		)
Total other comprehensive income	856			—			—			856
Balance at End of Period	$	12,977		$	—		$	(1,790	)	$	11,187
Three Months Ended September 30, 2016
Balance at Beginning of Period	$	20,625		$	(8,335	)	$	(2,077	)	$	10,213
Other comprehensive (loss) gain before reclassifications	(3,386		)	816			—			(2,570		)
Less: amounts reclassified from accumulated other comprehensive income (loss)	50			(818		)	—			(768		)
Total other comprehensive (loss) income	(3,436		)	1,634			—			(1,802		)
Balance at End of Period	$	17,189		$	(6,701	)	$	(2,077	)	$	8,411

(In thousands)	Net unrealized holding gain on AFS Securities			Net loss on effective cash flow hedging derivatives			Net unrealized holding loss on pension plans			Total
Nine Months Ended September 30, 2017
Balance at Beginning of Period	$	15,540		$	(3,984	)	$	(1,790	)	$	9,766
Other comprehensive gain (loss) before reclassifications	5,292			(269		)	—			5,023
Less: amounts reclassified from accumulated other comprehensive income (loss)	7,855			(4,253		)	—			3,602
Total other comprehensive (loss) income	(2,563		)	3,984			—			1,421
Balance at End of Period	$	12,977		$	—		$	(1,790	)	$	11,187
Nine Months Ended September 30, 2016
Balance at Beginning of Period	$	3,880		$	(5,108	)	$	(2,077	)	$	(3,305	)
Other comprehensive gain (loss) before reclassifications	13,374			(3,186		)	—			10,188
Less: amounts reclassified from accumulated other comprehensive income (loss)	65			(1,593		)	—			(1,528		)
Total other comprehensive income (loss)	13,309			(1,593		)	—			11,716
Balance at End of Period	$	17,189		$	(6,701	)	$	(2,077	)	$	8,411

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016:

							Affected Line Item in the
	Three Months Ended September 30,						Statement where Net Income
(In thousands)	2017			2016			is Presented
Realized (losses)/gains on AFS securities:
	$	(1	)	$	78		Non-interest income
	—			(28		)	Tax expense
	(1		)	50			Net of tax
Realized (losses) on cash flow hedging derivatives:
	—			(1,367		)	Non-interest income
	—			549			Tax expense
	—			(818		)	Net of tax
Total reclassifications for the period	$	(1	)	$	(768	)	Net of tax

							Affected Line Item in the
	Nine Months Ended September 30,						Statement where Net Income
(In thousands)	2017			2016			is Presented
Realized gains on AFS securities:
	$	12,568		$	101		Non-interest income
	(4,713		)	(36		)	Tax expense
	7,855			65			Net of tax
Realized (losses) on cash flow hedging derivatives:
	(393		)	—			Interest expense
	(6,629		)	—			Non-interest income
	—			(2,662		)	Non-interest expense
	2,769			1,069			Tax benefit
	(4,253		)	(1,593		)	Net of tax
Total reclassifications for the period	$	3,602		$	(1,528	)	Net of tax

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Earnings per share have been computed based on the following (average diluted shares outstanding are calculated using the treasury stock method):

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	2017		2016		2017		2016
Net income	$	22,903	$	16,381	$	58,057	$	48,339
Average number of common shares issued	41,370		32,273		38,958		32,216
Less: average number of treasury shares	947		1,137		970		1,117
Less: average number of unvested stock award shares	439		515		441		515
Average number of basic common shares outstanding	39,984		30,621		37,547		30,584
Plus: dilutive effect of unvested stock award shares	116		131		116		115
Plus: dilutive effect of stock options outstanding	45		59		45		58
Average number of diluted common shares outstanding	40,145		30,811		37,708		30,757
Earnings per share:
Basic	$	0.57	$	0.53	$	1.55	$	1.58
Diluted	$	0.57	$	0.53	$	1.54	$	1.57

For the nine months ended September 30, 2017, 325 thousand shares of restricted stock and 46 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations. For the nine months ended September 30, 2016, 401 thousand shares of restricted stock and 201 thousand options were anti-dilutive and therefore excluded from the earnings per share calculations.

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STOCK-BASED COMPENSATION PLANS

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION PLANS

STOCK-BASED COMPENSATION PLANS

A combined summary of activity in the Company’s stock award and stock option plans for the nine months ended September 30, 2017 is presented in the following table:

	Non-Vested Stock Awards Outstanding				Stock Options Outstanding
(Shares in thousands)	Number of Shares		Weighted-Average Grant Date Fair Value		Number of Shares		Weighted-Average Exercise Price
December 31, 2016	448		$	26.28	109		$	15.72
Granted	156		35.60		—		—
Stock options exercised	—		—		(11	)	14.47
Stock awards vested	(162	)	25.56		—		—
Forfeited	(10	)	29.26		—		—
Expired	—		—		(10	)	33.46
September 30, 2017	432		$	29.64	88		$	13.86
Exercisable options at September 30, 2017					88		$	13.86

During the nine months ended September 30, 2017 and 2016, proceeds from stock option exercises totaled $161 thousand and $142 thousand, respectively. During the nine months ended September 30, 2017, there were 162 thousand shares issued in connection with vested stock awards. During the nine months ended September 30, 2016, there were 116 thousand shares issued in connection with vested stock awards. All of these shares were issued from available treasury stock. Stock-based compensation expense totaled $3.9 million and $3.5 million during the nine months ended September 30, 2017 and 2016, respectively. Stock-based compensation expense is recognized over the requisite service period for all awards.

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

As of September 30, 2017, the Company held derivatives with a total notional amount of $2.5 billion. The Company had economic hedges and non-hedging derivatives totaling $2.2 billion and $0.3 billion, respectively, which are not designated as hedges for accounting purposes with changes in fair value recorded directly through earnings. Economic hedges included interest rate swaps totaling $1.6 billion, risk participation agreements with dealer banks of $0.1 billion, and $0.5 billion in forward commitment contracts.

As part of the Company’s risk management strategy, the Company enters into interest rate swap agreements to mitigate the interest rate risk inherent in certain of the Company’s assets and liabilities. Interest rate swap agreements involve the risk of dealing with both Bank customers and institutional derivative counterparties and their ability to meet contractual terms. The agreements are entered into with counterparties that meet established credit standards and contain master netting and collateral provisions protecting the at-risk party. The derivatives program is overseen by the Risk Management/Capital Committee of the Company’s Board of Directors. Based on adherence to the Company’s credit standards and the presence of the netting and collateral provisions, the Company believes that the credit risk inherent in these contracts was not significant at September 30, 2017.

The Company pledged collateral to derivative counterparties in the form of cash totaling $1.4 million and securities with an amortized cost of $26.0 million and a fair value of $25.9 million as of September 30, 2017. The Company does not typically require its commercial customers to post cash or securities as collateral on its program of back-to-back economic hedges. However certain language is written into the International Swaps Dealers Association, Inc. (“ISDA”) and loan documents where, in default situations, the Bank is allowed to access collateral supporting the loan relationship to recover any losses suffered on the derivative asset or liability. The Company may need to post additional collateral in the future in proportion to potential increases in unrealized loss positions.

Information about derivative assets and liabilities at September 30, 2017, follows:

			Weighted	Weighted Average Rate				Estimated
	Notional		Average			Contract		Fair Value
	Amount		Maturity	Received		pay rate		Asset (Liability)
	(In thousands)		(In years)					(In thousands)
Cash flow hedges:
Interest rate swaps on FHLB borrowings	$	—	0	—	%	—	%	$	—
Total cash flow hedges	—							—
Economic hedges:
Interest rate swap on tax advantaged economic development bond	10,916		12.2	1.60	%	5.09	%	(1,827		)
Interest rate swaps on loans with commercial loan customers	796,914		6.1	3.09	%	4.19	%	(8,576		)
Reverse interest rate swaps on loans with commercial loan customers	796,914		6.1	4.19	%	3.09	%	8,572
Risk participation agreements with dealer banks	117,067		9.4					12
Forward sale commitments	459,203		0.2					500
Total economic hedges	2,181,014							(1,319		)
Non-hedging derivatives:
Commitments to lend	310,327		0.2					6,455
Total non-hedging derivatives	310,327							6,455
Total	$	2,491,341						$	5,136

Information about derivative assets and liabilities at December 31, 2016, follows:

			Weighted	Weighted Average Rate				Estimated
	Notional		Average			Contract		Fair Value
	Amount		Maturity	Received		pay rate		Asset (Liability)
	(In thousands)		(In years)					(In thousands)
Cash flow hedges:
Interest rate swaps on FHLB borrowings	$	300,000	2.3	0.63	%	2.29	%	$	(6,573	)
Total cash flow hedges	300,000							(6,573		)
Economic hedges:
Interest rate swap on tax advantaged economic development bond	11,386		12.9	0.98	%	5.09	%	(2,021		)
Interest rate swaps on loans with commercial loan customers	668,541		6.2	2.43	%	4.21	%	(6,752		)
Reverse interest rate swaps on loans with commercial loan customers	668,541		6.2	4.21	%	2.43	%	7,077
Risk participation agreements with dealer banks	83,360		11.6					5
Forward sale commitments	259,889		0.2					722
Total economic hedges	1,691,717							(969		)
Non-hedging derivatives:
Commitments to lend	208,145		0.2					4,738
Total non-hedging derivatives	208,145							4,738
Total	$	2,199,862						$	(2,804	)

Cash flow hedges

In the first quarter of 2017, the Company maintained six interest rate swap contracts with an aggregate notional value of $300 million with original durations of three years. This hedge strategy converted one month rolling FHLB borrowings based on the FHLB’s one month fixed interest rate to fixed interest rates, thereby protecting the Company from floating interest rate variability.

On February 7, 2017, the Company initiated and subsequently terminated all of its interest rate swaps associated with FHLB advances with 1-month LIBOR based floating interest rates of an aggregate notional amount of $300 million. As of March 31, 2017, the Company no longer held the FHLB advances associated with the interest rate swaps. As a result, the Company reclassified $6.6 million of losses from the effective portion of the unrealized changes in the fair value of the terminated derivatives from other comprehensive income to non-interest income as the forecasted transactions to the related FHLB advances will not occur.

For the periods presented prior to the termination, the effective portion of unrealized changes in the fair value of derivatives accounted for as cash flow hedges was reported in other comprehensive income. Each quarter, the Company assessed the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction. Hedge ineffectiveness on interest rate swaps designated as cash flow hedges was immaterial to the Company’s financial statements during the three and nine months ended September 30, 2017 and 2016.

Amounts included in the Consolidated Statements of Income and in the other comprehensive income section of the Consolidated Statements of Comprehensive Income (related to interest rate derivatives designated as hedges of cash flows), were as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2017		2016			2017			2016
Interest rate swaps on FHLB borrowings:
Unrealized (loss) recognized in accumulated other comprehensive loss	$	—	$	1,363		$	(449	)	$	(5,322	)
Less: reclassification of unrealized (loss) from accumulated other comprehensive income to interest expense	—		(1,367		)	(393		)	(2,662		)
Less: reclassification of unrealized (loss) from accumulated other comprehensive income to other non-interest expense	—		—			(6,629		)	—
Net tax (expense) benefit on items recognized in accumulated other comprehensive income	—		(1,096		)	(2,589		)	1,067
Other comprehensive gain (loss) recorded in accumulated other comprehensive income, net of reclassification adjustments and tax effects	$	—	$	1,634		$	3,984		$	(1,593	)

Economic hedges

As of September 30, 2017, the Company has an interest rate swap with a $10.9 million notional amount to swap out the fixed rate of interest on an economic development bond bearing a fixed rate of 5.09%, currently within the Company’s trading portfolio under the fair value option, in exchange for a LIBOR-based floating rate. The intent of the economic hedge is to improve the Company’s asset sensitivity to changing interest rates in anticipation of favorable average floating rates of interest over the 21-year life of the bond. The fair value changes of the economic development bond are mostly offset by fair value changes of the related interest rate swap.

The Company also offers certain derivative products directly to qualified commercial borrowers. The Company economically hedges derivative transactions executed with commercial borrowers by entering into mirror-image, offsetting derivatives with third-party financial institutions. The transaction allows the Company’s customer to convert a variable-rate loan to a fixed rate loan. Because the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts mostly offset each other in earnings. Credit valuation adjustments arising from the difference in credit worthiness of the commercial loan and financial institution counterparties totaled $(53) thousand as of September 30, 2017. The interest income and expense on these mirror image swaps exactly offset each other.

The Company has risk participation agreements with dealer banks. Risk participation agreements occur when the Company participates on a loan and a swap where another bank is the lead. The Company gets paid a fee to take on the risk associated with having to make the lead bank whole on Berkshire’s portion of the pro-rated swap should the borrower default. Changes in fair value are recorded in current period earnings.

The Company utilizes forward sale commitments to hedge interest rate risk and the associated effects on the fair value of interest rate lock commitments and loans originated for sale. The forward sale commitments are accounted for as derivatives with changes in fair value recorded in current period earnings.

The Company uses the following types of forward sale commitments contracts:

• Best efforts loan sales,

• Mandatory delivery loan sales, and

• To Be Announced (“TBA”) mortgage-backed securities sales.

A best efforts contract refers to a loan sale agreement where the Company commits to deliver an individual mortgage loan of a specified principal amount and quality to an investor if the loan to the underlying borrower closes. The Company may enter into a best efforts contract once the price is known, which is shortly after the potential borrower’s interest rate is locked.

A mandatory delivery contract is a loan sale agreement where the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. Generally, the Company may enter into mandatory delivery contracts shortly after the loan closes with a customer.

The Company may sell TBA mortgage-backed securities to hedge the changes in fair value of interest rate lock commitments and held for sale loans, which do not have corresponding best efforts or mandatory delivery contracts. These security sales transactions are closed once mandatory contracts are written. On the closing date the price of the security is locked-in, and the sale is paired-off with a purchase of the same security. Settlement of the security purchase/sale transaction is done with cash on a net-basis.

Non-hedging derivatives

The Company enters into interest rate lock commitments (“IRLCs”) for residential mortgage loans, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs that relate to the origination of mortgage loans that will be held for sale are considered derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose the Company to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. The IRLCs are free-standing derivatives which are carried at fair value with changes recorded in noninterest income in the Company’s consolidated statements of income. Changes in the fair value of IRLCs subsequent to inception are based on changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and changes in the probability that the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time.

Amounts included in the Consolidated Statements of Income related to economic hedges and non-hedging derivatives were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2017			2016			2017			2016
Economic hedges
Interest rate swap on industrial revenue bond:
Unrealized gain (loss) recognized in other non-interest income	$	70		$	29		$	194		$	(802	)
Interest rate swaps on loans with commercial loan customers:
Unrealized (loss) recognized in other non-interest income	(142		)	2,411			(1,824		)	(18,911		)
Reverse interest rate swaps on loans with commercial loan customers:
Unrealized gain recognized in other non-interest income	142			(2,411		)	1,824			18,911
(Unfavorable) Favorable change in credit valuation adjustment recognized in other non-interest income	(53		)	(62		)	(329		)	(495		)
Risk participation agreements:
Unrealized gain recognized in other non-interest income	2			(14		)	7			102
Forward commitments:
Unrealized gain (loss) recognized in other non-interest income	500			(582		)	224			(1,898		)
Realized gain (loss) in other non-interest income	(983		)	109			(3,651		)	(224		)
Non-hedging derivatives
Commitments to lend
Unrealized gain recognized in other non-interest income	$	6,455		$	1,574		$	21,891		$	3,635
Realized gain in other non-interest income	7,402			760			23,869			2,505

Assets and Liabilities Subject to Enforceable Master Netting Arrangements

Interest Rate Swap Agreements (“Swap Agreements”)

The Company enters into swap agreements to facilitate the risk management strategies for commercial banking customers. The Company mitigates this risk by entering into equal and offsetting swap agreements with highly rated third party financial institutions. The swap agreements are free-standing derivatives and are recorded at fair value in the Company’s consolidated statements of condition. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in the event of default on, or termination of, any one contract. Collateral generally in the form of marketable securities is received or posted by the counterparty with net liability positions, respectively, in accordance with contract thresholds.

The Company had net asset positions with its commercial banking counterparties totaling $11.9 million and $11.5 million as of September 30, 2017 and December 31, 2016, respectively. The Company had net liability positions with its financial institution counterparties totaling $10.5 million and $15.4 million as of September 30, 2017 and December 31, 2016, respectively. The Company had net liability positions with its commercial banking counterparties totaling $3.3 million and $4.4 million as of September 30, 2017 and December 31, 2016. The collateral posted by the Company that covered liability positions was $10.5 million and $19.8 million as of September 30, 2017 and December 31, 2016, respectively.

The following table presents the assets and liabilities subject to an enforceable master netting arrangement as of September 30, 2017 and December 31, 2016:

Offsetting of Financial Assets and Derivative Assets

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Assets Presented in the		Gross Amounts Not Offset in the Statements of Condition
	Recognized		Statements of		Statements of		Financial		Cash
(In thousands)	Assets		Condition		Condition		Instruments		Collateral Received		Net Amount
September 30, 2017
Interest Rate Swap Agreements:
Institutional counterparties	$	63	$	—	$	63	$	—	$	—	$	63
Commercial counterparties	11,909		—		11,909		—		—		11,909
Total	$	11,972	$	—	$	11,972	$	—	$	—	$	11,972

Offsetting of Financial Liabilities and Derivative Liabilities

	Gross Amounts of			Gross Amounts Offset in the		Net Amounts of Liabilities Presented in the			Gross Amounts Not Offset in the Statements of Condition
	Recognized			Statements of		Statements of			Financial		Cash
(In thousands)	Liabilities			Condition		Condition			Instruments		Collateral Pledged		Net Amount
September 30, 2017
Interest Rate Swap Agreements:
Institutional counterparties	$	(13,903	)	$	3,450	$	(10,453	)	$	9,043	$	1,410	$	—
Commercial counterparties	(3,369		)	32		(3,337		)	—		—		(3,337		)
Total	$	(17,272	)	$	3,482	$	(13,790	)	$	9,043	$	1,410	$	(3,337	)

Offsetting of Financial Assets and Derivative Assets

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Assets Presented in the		Gross Amounts Not Offset in the Statements of Condition
	Recognized		Statements of		Statements of		Financial		Cash
(In thousands)	Assets		Condition		Condition		Instruments		Collateral Received		Net Amount
December 31, 2016
Interest Rate Swap Agreements:
Institutional counterparties	$	49	$	—	$	49	$	—	$	—	$	49
Commercial counterparties	11,461		—		11,461		—		—		11,461
Total	$	11,510	$	—	$	11,510	$	—	$	—	$	11,510

Offsetting of Financial Liabilities and Derivative Liabilities

	Gross Amounts of			Gross Amounts Offset in the		Net Amounts of Liabilities Presented in the			Gross Amounts Not Offset in the Statements of Condition
	Recognized			Statements of		Statements of			Financial		Cash
(In thousands)	Liabilities			Condition		Condition			Instruments		Collateral Pledged		Net Amount
December 31, 2016
Interest Rate Swap Agreements:
Institutional counterparties	$	(20,077	)	$	4,689	$	(15,388	)	$	14,738	$	650	$	—
Commercial counterparties	(4,407		)	23		(4,384		)	—		—		(4,384		)
Total	$	(24,484	)	$	4,712	$	(19,772	)	$	14,738	$	650	$	(4,384	)

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities that are carried at fair value.

Recurring Fair Value Measurements

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.

	September 30, 2017
	Level 1		Level 2		Level 3		Total
(In thousands)	Inputs		Inputs		Inputs		Fair Value
Trading security	$	—	$	—	$	12,603	$	12,603
Available-for-sale securities:
Municipal bonds and obligations	—		118,760		—		118,760
Agency collateralized mortgage obligations	—		807,436		—		807,436
Agency residential mortgage-backed securities	—		217,067		—		217,067
Agency commercial mortgage-backed securities	—		63,044		—		63,044
Corporate bonds	—		67,234		—		67,234
Trust preferred securities	—		11,792		—		11,792
Other bonds and obligations	—		10,291		—		10,291
Marketable equity securities	45,055		334		—		45,389
Loans held for sale	—		143,745		—		143,745
Derivative assets	518		15,379		6,437		22,334
Capitalized servicing rights	—		—		2,707		2,707
Derivative liabilities	—		17,198		—		17,198

	December 31, 2016
	Level 1		Level 2		Level 3		Total
(In thousands)	Inputs		Inputs		Inputs		Fair Value
Trading security	$	—	$	—	$	13,229	$	13,229
Available-for-sale securities:
Municipal bonds and obligations	—		119,816		—		119,816
Agency collateralized mortgage obligations	—		651,911		—		651,911
Agency residential mortgage-backed securities	—		228,684		—		228,684
Agency commercial mortgage-backed securities	—		64,534		—		64,534
Corporate bonds	—		56,006		—		56,006
Trust preferred securities	—		11,887		—		11,887
Other bonds and obligations	—		11,158		—		11,158
Marketable equity securities	62,284		3,257		—		65,541
Loans held for sale	—		120,673		—		120,673
Derivative assets	622		16,157		4,838		21,617
Capitalized servicing rights	—		—		798		798
Derivative liabilities	—		24,420		—		24,420

There were no transfers between levels during the three months ended September 30, 2017. During the nine months ended September 30, 2016, the Company had one transfer of $708 thousand in marketable equity securities from Level 3 to Level 2 based on a change in valuation technique driven by the availability of market data.

Trading Security at Fair Value. The Company holds one security designated as a trading security. It is a tax advantaged economic development bond issued to the Company by a local nonprofit which provides wellness and health programs. The determination of the fair value for this security is determined based on a discounted cash flow methodology. Certain inputs to the fair value calculation are unobservable and there is little to no market activity in the security; therefore, the security meets the definition of a Level 3 security. The discount rate used in the valuation of the security is sensitive to movements in the 3-month LIBOR rate.

Securities Available for Sale. AFS securities classified as Level 1 consist of publicly-traded equity securities for which the fair values can be obtained through quoted market prices in active exchange markets. AFS securities classified as Level 2 include most of the Company’s debt securities. The pricing on Level 2 was primarily sourced from third party pricing services, overseen by management, and is based on models that consider standard input factors such as dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and condition, among other things.

Loans Held for Sale. The Company elected the fair value option for all loans held for sale (HFS) originated for sale on or after May 1, 2012. Loans HFS are classified as Level 2 as the fair value is based on input factors such as quoted prices for similar loans in active markets.

					Aggregate Fair Value
September 30, 2017	Aggregate		Aggregate		Less Aggregate
(In thousands)	Fair Value		Unpaid Principal		Unpaid Principal
Loans Held for Sale	$	143,745	$	139,298	$	4,447

					Aggregate Fair Value
December 31, 2016	Aggregate		Aggregate		Less Aggregate
(In thousands)	Fair Value		Unpaid Principal		Unpaid Principal
Loans Held for Sale	$	120,673	$	118,178	$	2,495

The changes in fair value of loans held for sale for the three and nine months ended September 30, 2017, were losses of $0.4 million and gains of $2.0 million, respectively. The changes in fair value for the three and nine months ended September 30, 2016, were losses of $0.2 million and gains of $0.4 million, respectively.The changes in fair value are included in mortgage banking originations in the Consolidated Statements of Income.

Interest Rate Swaps. The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves.

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings.

Although the Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2017, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Commitments to Lend.The Company enters into commitments to lend for residential mortgage loans intended for sale, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time.  The estimated fair value of commitments to originate residential mortgage loans for sale is based on quoted prices for similar loans in active markets. However, this value is adjusted by a factor which considers the likelihood that the loan in a lock position will ultimately close, and by the non-refundable costs of originating the loan. The closing ratio is derived from the Bank’s internal data and is adjusted using significant management judgment. The costs to originate are primarily based on the Company’s internal commission rates that are not observable. As such, these commitments are classified as Level 3 measurements.

Forward Sale Commitments. The Company utilizes forward sale commitments as economic hedges against potential changes in the values of the commitments to lend and loans originated for sale. To Be Announced (“TBA”) mortgage-backed securities forward commitment sales are used as the hedging instrument, are classified as Level 1, and consist of publicly-traded debt securities for which identical fair values can be obtained through quoted market prices in active exchange markets. The fair values of the Company’s best efforts and mandatory delivery loan sale commitments are determined similarly to the commitments to lend using quoted prices in the market place that are observable. However, costs to originate and closing ratios included in the calculation are internally generated and are based on management’s judgment and prior experience, which are considered factors that are not observable. As such, best efforts and mandatory forward commitments are classified as Level 3 measurements.

Capitalized Servicing Rights.The Company accounts for certain capitalized servicing rights at fair value in its Consolidated Financial Statements, as the Company is permitted to elect the fair value option for each specific instrument. A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy. These capitalized servicing rights are included in other assets on the consolidated balance sheet.

The table below presents the changes in Level 3 assets and liabilities that were measured at fair value on a recurring basis for the three and nine months ended September 30, 2017 and 2016.

	Assets (Liabilities)
				Securities								Capitalized
	Trading			Available		Commitments			Forward			Servicing
(In thousands)	Security			for Sale		to Lend			Commitments			Rights
Three Months Ended September 30, 2017
June 30, 2017	$	12,837		$	—	$	7,374		$	12		$	1,568
Unrealized (loss) gain, net recognized in other non-interest income	(76		)	—		15,146			(30		)	(132		)
Paydown of trading security	(158		)	—		—			—			—
Transfers to held for sale loans	—			—		(16,065		)	—			—
Additions to servicing rights	—			—		—			—			1,271
September 30, 2017	$	12,603		$	—	$	6,455		$	(18	)	$	2,707

Nine Months Ended September 30, 2017
December 31, 2016	$	13,229		$	—	$	4,738		$	100		$	798
Unrealized gain, net recognized in other non-interest income	(155		)	—		48,963			(118		)	(202		)
Paydown of trading security	(471		)	—		—			—			—
Transfers to held for sale loans	—			—		(47,246		)	—			—
Additions to servicing rights	—			—		—			—			2,111
September 30, 2017	$	12,603		$	—	$	6,455		$	(18	)	$	2,707
Unrealized gains (losses) relating to instruments still held at September 30, 2017	$	1,763		$	—	$	6,455		$	(18	)	$	—

	Assets (Liabilities)
				Securities								Capitalized
	Trading			Available		Commitments			Forward			Servicing
(In thousands)	Security			for Sale		to Lend			Commitments			Rights
Three Months Ended September 30, 2016
June 30, 2016	$	14,479		$	—	$	1,259		$	(189	)	$	—
Unrealized (loss) gain, net recognized in other non-interest income	(180		)	—		3,563			(62		)	—
Paydown of trading security	(150		)	—		—			—			—
Transfers to held for sale loans	—			—		(3,248		)	—			—
September 30, 2016	$	14,149		$	—	$	1,574		$	(251	)	$	—

Nine Months Ended September 30, 2016
December 31, 2015	$	14,189		$	708		$	323		$	9		$	—
Unrealized gain, net recognized in other non-interest income	405			—			6,480			(260		)	—
Paydown of trading security	(445		)	—			—			—			—
Transfers to Level 2	—			(708		)	—			—			—
Transfers to held for sale loans	—			—			(5,229		)	—			—
September 30, 2016	$	14,149		$	—		$	1,574		$	(251	)	$	—
Unrealized gains (losses) relating to instruments still held at September 30, 2016	$	2,610		$	—		$	1,574		$	(251	)	$	—

Quantitative information about the significant unobservable inputs within Level 3 recurring assets and liabilities is as follows:

	Fair Value					Significant Unobservable Input
(In thousands)	September 30, 2017			Valuation Techniques	Unobservable Inputs	Value
Assets (Liabilities)
Trading Security	$	12,603		Discounted Cash Flow	Discount Rate	2.59		%
Commitments to Lend	6,455			Historical Trend	Closing Ratio	80.50		%
				Pricing Model	Origination Costs, per loan	$	3,692
Forward Commitments	(18		)	Historical Trend	Closing Ratio	80.50		%
				Pricing Model	Origination Costs, per loan	$	3,692
Capitalized Servicing Rights	2,707			Discounted Cash Flow	Constant Prepayment rate (CPR)	10.20		%
					Discount Rate	10.95		%
Total	$	21,747

	Fair Value				Significant Unobservable Input
(In thousands)	December 31, 2016		Valuation Techniques	Unobservable Inputs	Value
Assets (Liabilities)
Trading Security	$	13,229	Discounted Cash Flow	Discount Rate	2.62		%
Commitments to Lend	4,738		Historical Trend	Closing Ratio	80.36		%
			Pricing Model	Origination Costs, per loan	$	3,692
Forward Commitments	100		Historical Trend	Closing Ratio	80.36		%
			Pricing Model	Origination Costs, per loan	$	3,692
Capitalized Servicing Rights	798		Discounted Cash Flow	Constant Prepayment rate (CPR)	10.40		%
				Discount Rate	11.00		%
Total	$	18,865

Non-Recurring Fair Value Measurements

The Company is required, on a non-recurring basis, to adjust the carrying value or provide valuation allowances for certain assets using fair value measurements in accordance with GAAP. The following is a summary of applicable non-recurring fair value measurements. There are no liabilities measured at fair value on a non-recurring basis.

	September 30, 2017		December 31, 2016		Fair Value Measurement Date as of September 30, 2017
	Level 3		Level 3		Level 3
(In thousands)	Inputs		Inputs		Inputs
Assets
Impaired loans	$	28,082	$	17,761	September 2017
Capitalized servicing rights	12,663		10,726		August/September 2017
Other real estate owned	288		151		April 2016 - June 2017
Total	$	41,033	$	28,638

Quantitative information about the significant unobservable inputs within Level 3 non-recurring assets is as follows:

	Fair Value
(In thousands)	September 30, 2017		Valuation Techniques	Unobservable Inputs	Range (Weighted Average) (a)
Assets
Impaired loans	$	28,082	Appraised value of collateral	Discounted cash flow - loss severity	39.05% to 0.13% (3.70%)
				Appraised value	$16 to $5,987 ($2,062)
Capitalized servicing rights	12,663		Discounted cash flow	Constant prepayment rate (CPR)	7.78% to 13.69% (10.57%)
				Discount rate	10.00% to 12.76% (11.55%)
Other real estate owned	288		Appraised value of collateral	Appraised value	$94 to $215 ($226)
Total	$	41,033

(a)  Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

	Fair Value
(In thousands)	December 31, 2016		Valuation Techniques	Unobservable Inputs	Range (Weighted Average) (a)
Assets
Impaired loans	$	17,761	Appraised value of collateral	Discounted cash flow - loss severity	0.00% to 88.70% (9.73%)
				Appraised value	$0 to $2,192 ($1,026)
Capitalized servicing rights	10,726		Discounted cash flow	Constant prepayment rate (CPR)	7.35% to 14.28% (10.44%)
				Discount rate	10.00% to 14.00 (11.77%)
Other real estate owned	151		Appraised value of collateral	Appraised value	$101 to $129 ($122)
Total	$	28,638

(a)  Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

There were no Level 1 or Level 2 nonrecurring fair value measurements for the periods ended September 30, 2017 and December 31, 2016.

Impaired loans. Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records non-recurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments can also include certain impairment amounts for collateral-dependent loans calculated when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace. However, the choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values. Additionally, commercial real estate appraisals frequently involve discounting of projected cash flows, which relies inherently on unobservable data. Therefore, nonrecurring fair value measurement adjustments that relate to real estate collateral have generally been classified as Level 3. Estimates of fair value for other collateral that supports commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3. 

Capitalized loan servicing rights. A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Adjustments are only recorded when the discounted cash flows derived from the valuation model are less than the carrying value of the asset. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

Other real estate owned (“OREO”). OREO results from the foreclosure process on residential or commercial loans issued by the Bank. Upon assuming the real estate, the Company records the property at the fair value of the asset less the estimated sales costs. Thereafter, OREO properties are recorded at the lower of cost or fair value less the estimated sales costs. OREO fair values are primarily determined based on Level 3 data including comparable sales and appraisals.

Summary of Estimated Fair Values of Financial Instruments

The following tables summarize the estimated fair values, and related carrying amounts, of the Company’s financial instruments. Certain financial instruments and all non-financial instruments are excluded. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

	September 30, 2017
	Carrying		Fair
(In thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	92,046	$	92,046	$	92,046	$	—	$	—
Trading security	12,603		12,603		—		—		12,603
Securities available for sale	1,341,013		1,341,013		45,055		1,295,958		—
Securities held to maturity	395,065		402,799		—		368,063		34,736
FHLB bank stock and restricted securities	75,117		75,117		—		75,117		—
Net loans	6,898,402		6,930,703		—		—		6,930,703
Loans held for sale	143,745		143,745		—		143,745		—
Accrued interest receivable	29,133		29,133		—		29,133		—
Cash surrender value of bank-owned life insurance policies	161,290		161,290		—		161,290		—
Derivative assets	22,334		22,334		518		15,379		6,437
Assets held for sale	322		322		—		322		—
Financial Liabilities
Total deposits	$	6,790,146	$	6,785,879	$	—	$	6,785,879	$	—
Short-term debt	1,061,300		1,061,232		—		1,061,232		—
Long-term Federal Home Loan Bank advances	338,054		337,653		—		337,653		—
Subordinated borrowings	89,295		98,394		—		98,394		—
Derivative liabilities	17,198		17,198		—		17,198		—

	December 31, 2016
	Carrying		Fair
(In thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	113,075	$	113,075	$	113,075	$	—	$	—
Trading security	13,229		13,229		—		—		13,229
Securities available for sale	1,209,537		1,209,537		62,284		1,147,253		—
Securities held to maturity	334,368		337,680		—		300,806		36,874
FHLB bank stock and restricted securities	71,112		71,112		—		71,112		—
Net loans	6,505,789		6,532,745		—		—		6,532,745
Loans held for sale	120,673		120,673		—		120,673		—
Accrued interest receivable	26,113		26,113		—		26,113		—
Cash surrender value of bank-owned life insurance policies	139,257		139,257		—		139,257		—
Derivative assets	21,617		21,617		622		16,157		4,838
Assets held for sale	322		322		—		322		—
Financial Liabilities
Total deposits	$	6,622,092	$	6,624,108	$	—	$	6,624,108	$	—
Short-term debt	1,082,044		1,081,996		—		1,081,996		—
Long-term Federal Home Loan Bank advances	142,792		143,151		—		143,151		—
Subordinated borrowings	89,161		96,973		—		96,973		—
Derivative liabilities	24,420		24,420		—		24,420		—

Other than as discussed above, the following methods and assumptions were used by management to estimate the fair value of significant classes of financial instruments for which it is practicable to estimate that value.

Cash and cash equivalents. Carrying value is assumed to represent fair value for cash and cash equivalents that have original maturities of ninety days or less.

FHLB bank stock and restricted securities. Carrying value approximates fair value based on the redemption provisions of the issuers.

Cash surrender value of life insurance policies. Carrying value approximates fair value.

Loans, net. The carrying value of the loans in the loan portfolio is based on cash flows discounted over their respective loan origination rates. The origination rates are adjusted for substandard and special mention loans to factor the impact of declines in the loan’s credit standing. The fair value of the loans is estimated by discounting future cash flows using the current interest rates at which similar loans with similar terms would be made to borrowers of similar credit quality. The methodology utilized to determine fair value does not represent exit price.

Accrued interest receivable. Carrying value approximates fair value.

Deposits. The fair value of demand, non-interest bearing checking, savings and money market deposits is determined as the amount payable on demand at the reporting date. The fair value of time deposits is estimated by discounting the estimated future cash flows using market rates offered for deposits of similar remaining maturities.

Borrowed funds. The fair value of borrowed funds is estimated by discounting the future cash flows using market rates for similar borrowings.  Such funds include all categories of debt and debentures in the table above.

Subordinated borrowings. The Company utilizes a pricing service along with internal models to estimate the valuation of its junior subordinated debentures. The junior subordinated debentures re-price every ninety days.

Off-balance-sheet financial instruments. Off-balance-sheet financial instruments include standby letters of credit and other financial guarantees and commitments considered immaterial to the Company’s financial statements.

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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2017

Banking and Thrift, Interest [Abstract]

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

Presented below is net interest income after provision for loan losses for the three and nine months ended September 30, 2017 and 2016, respectively.

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Net interest income	$	71,998	$	57,971	$	208,429	$	173,109
Provision for loan losses	4,900		4,734		14,884		13,262
Net interest income after provision for loan losses	$	67,098	$	53,237	$	193,545	$	159,847

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2017

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

On October 13, 2017, Commerce Bancshares Corp. ("Commerce"), the parent company of Commerce Bank & Trust Company ("Commerce Bank") merged with and into the Company in a transaction accounted for as a business combination. Commerce Bank also merged with and into Berkshire Bank. Headquartered in Worcester, Mass., Commerce Bank operated 16 branch banking offices providing a range of services in Central Massachusetts and greater Boston. With this agreement, the Company established a market position in Worcester, New England’s second largest city. Additionally, this acquisition was a catalyst for the Company’s decision to relocate its corporate headquarters to Boston and to expand its Greater Boston market initiatives. This acquisition also increased the Company’s total assets over the $10 billion Dodd Frank Act threshold for additional regulatory requirements.

As established by the merger agreement, each of the 6.328 million outstanding shares of Commerce common stock was converted into the right to receive 0.93 shares of the Company's common stock, plus cash in lieu of fractional shares. Certain Commerce common stock was instead converted into the right to receive 0.465 shares of new Series B preferred stock (non-voting) issued by the Company, pursuant to limited circumstances established by the merger agreement. Each preferred share is convertible into two shares of the Company's common stock under specified conditions. As of close of business on October 13, 2017, the Company issued 4.842 million common shares and 522 thousand preferred shares as merger consideration, pursuant to the merger agreement. The value of this consideration was measured at $188.6 million for the common stock and $40.7 million for the preferred stock based on the $38.95 closing price of the Company’s common stock on the issuance date.

As of the merger date, Commerce, on a consolidated basis, maintained assets with a carrying value of approximately $1.9 billion (unaudited), including loans outstanding with a carrying value of approximately $1.4 billion (unaudited). In addition, Commerce maintained deposits with a carrying value of approximately $1.7 billion (unaudited).

The merger had no significant effect on the Company’s financial statements for the periods presented, aside from expenses related to the merger and ongoing systems and processes integration. These amounts are included in the financial statement line item Acquisition, Restructuring, and Other Expenses of the Consolidated Statements of Income, representing $788 thousand and $2.4 million for the three and nine months ended September 30, 2017, respectively.

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BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

The consolidated financial statements (the “financial statements”) of Berkshire Hills Bancorp, Inc. and its subsidiaries (the “Company” or “Berkshire”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company is a Delaware corporation and the holding company for Berkshire Bank (the “Bank”), a Massachusetts-chartered trust company headquartered in Pittsfield, Massachusetts, and Berkshire Insurance Group, Inc. These financial statements include the accounts of the Company, its wholly-owned subsidiaries and the Bank’s consolidated subsidiaries. In consolidation, all significant intercompany accounts and transactions are eliminated. All material wholly-owned and majority-owned subsidiaries are consolidated unless GAAP requires otherwise.

Reclassifications

Reclassifications

Certain items in prior financial statements have been reclassified to conform to the current presentation.

Recently Adopted Accounting Principles and Future Application of Accounting Pronouncements

Recently Adopted Accounting Principles

Effective January 1, 2017, the following new accounting guidance was adopted by the Company:

• ASU No. 2016-05, Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships;

• ASU No. 2016-06, Contingent Put and Call Options in Debt Instruments;

• ASU No. 2016-07, Simplifying the Transition to the Equity Method of Accounting

• ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments; and

• ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities

The adoption of these accounting standards did not have a material impact on the Company's financial statements.

Future Application of Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This ASU provides a revenue recognition framework for any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other accounting standards. ASU 2014-09 is effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period with early adoption not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. In August 2015, ASU No. 2015-14, “Deferral of the Effective Date” was issued and delayed the effective date of ASU 2014-09 to annual and interim periods in fiscal years beginning after December 15, 2017. While the assessment of the provisions of ASU No. 2014-09 is not complete, the timing of the Company’s revenue recognition is not expected to materially change. This ASU impacts the Company’s wealth management services, administrative services for customer deposit accounts, interchange fees, and sale of owned real estate properties. The extent of this ASU on these revenue lines is being evaluated by the Company. The Company intends to adopt the ASU for the first quarter of 2018. Adoption is not anticipated to have a material impact on the Company’s financial statements.

In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU requires an entity to: i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in other comprehensive income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of available-for-sale debt securities in combination with other deferred tax assets. The guidance provides an election to subsequently measure certain non-marketable equity investments at cost less any impairment and adjusted for certain observable price changes. The guidance also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. The guidance is effective for annual periods beginning after December 15, 2017. Early adoption is only permitted for the provision related to instrument specific credit risk. While the Company has performed a preliminary evaluation of the provisions of ASU No. 2016-01, the effect of the adoption will depend on the Company’s portfolio at the time of transition.

In February 2016, the FASB issued ASU No. 2016-02, “Leases”. The new pronouncement improves the transparency and comparability of financial reporting around leasing transactions and more closely aligns accounting for leases with the recently issued International Financial Reporting Standard.  The pronouncement affects all entities that are participants to leasing agreements. From a lessee accounting perspective, the ASU requires a lessee to recognize assets and liabilities on the balance sheet for operating leases and changes many key definitions, including the definition of a lease. The ASU includes a short-term lease exception for leases with a term of twelve months or less, in which a lessee can make an accounting policy election not to recognize lease assets and lease liabilities. Lessees will continue to differentiate between finance leases (previously referred to as capital leases) and operating leases, using classification criteria that are substantially similar to the previous guidance. For lessees, the recognition, measurement, and presentation of expenses and cash flows arising from a lease have not significantly changed from previous GAAP. From a lessor accounting perspective, the guidance is largely unchanged, except for targeted improvements to align with new terminology under lessee accounting and with the updated revenue recognition guidance in Topic 606. For sale-leaseback transactions, for a sale to occur the transfer must meet the sale criteria under the new revenue standard, ASC 606. Entities will not be required to reassess transactions previously accounted under then existing guidance.

Additionally, the ASU includes additional quantitative and qualitative disclosures required by lessees and lessors to help users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 is effective for fiscal years beginning after December 31, 2018, and interim periods within those fiscal years. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply as well as transition guidance specific to nonstandard leasing transactions. The Company is currently evaluating the provisions of ASU No. 2016-02 to determine the potential impact the new standard will have on the Company's consolidated financial statements. It is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date; however, this is not expected to be material to the Company's results of operations or financial position. The Company continues to evaluate the extent of potential impact the new guidance will have on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” This ASU improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments. The ASU requires companies to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Forward-looking information will now be used in credit loss estimates. The ASU requires enhanced disclosures to provide better understanding surrounding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of a company’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. Most debt instruments will require a cumulative-effect adjustment to retained earnings on the statement of financial position as of the beginning of the first reporting period in which the guidance is adopted (modified retrospective approach). However, there is instrument-specific transition guidance. ASU No. 2016-13 is effective for interim and annual periods beginning after December 15, 2019. Early application will be permitted for interim and annual periods beginning after December 15, 2018. The Company is evaluating the provisions of ASU No. 2016-13, and will closely monitor developments and additional guidance to determine the potential impact on the Company's consolidated financial statements. The Company expects the primary changes to be the application of the expected credit loss model to the financial statements. In addition, the Company expects the guidance to change the presentation of credit losses within the available-for-sale fixed maturities portfolio through an allowance method rather than as a direct write-down. The expected credit loss model will require a financial asset to be presented at the net amount expected to be collected. The allowance method for available-for-sale debt securities will allow the Company to record reversals of credit losses if the estimate of credit losses declines. The Company is in the process of identifying and implementing required changes to loan loss estimation models and processes and evaluating the impact of this new accounting guidance, which at the date of adoption is expected to increase the allowance for credit losses with a resulting negative adjustment to retained earnings.

In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities.” The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU No. 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the consolidated balance sheet as of the date of adoption. While the Company continues to assess all potential impacts of the standard, we currently expect adoption to have an immaterial impact on our consolidated financial statements.

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SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY (Tables)

9 Months Ended

Sep. 30, 2017

Investments, Debt and Equity Securities [Abstract]

Summary of securities available for sale ("AFS") and held to maturity

The following is a summary of securities available for sale and held to maturity:

(In thousands)	Amortized  Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
September 30, 2017
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	114,365	$	4,828	$	(433	)	$	118,760
Agency collateralized mortgage obligations	807,772		2,538		(2,874		)	807,436
Agency mortgage-backed securities	217,626		911		(1,470		)	217,067
Agency commercial mortgage-backed securities	64,296		126		(1,378		)	63,044
Corporate bonds	66,321		1,059		(146		)	67,234
Trust preferred securities	11,350		442		—			11,792
Other bonds and obligations	10,095		204		(8		)	10,291
Total debt securities	1,291,825		10,108		(6,309		)	1,295,624
Marketable equity securities	36,054		9,645		(310		)	45,389
Total securities available for sale	1,327,879		19,753		(6,619		)	1,341,013
Securities held to maturity
Municipal bonds and obligations	268,990		6,196		(1,300		)	273,886
Agency collateralized mortgage obligations	74,277		1,679		(356		)	75,600
Agency mortgage-backed securities	8,080		—		(142		)	7,938
Agency commercial mortgage-backed securities	10,497		—		(180		)	10,317
Tax advantaged economic development bonds	32,899		1,837		—			34,736
Other bonds and obligations	322		—		—			322
Total securities held to maturity	395,065		9,712		(1,978		)	402,799
Total	$	1,722,944	$	29,465	$	(8,597	)	$	1,743,812
December 31, 2016
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	117,910	$	2,955	$	(1,049	)	$	119,816
Agency collateralized mortgage obligations	652,680		2,522		(3,291		)	651,911
Agency mortgage-backed securities	230,308		557		(2,181		)	228,684
Agency commercial mortgage-backed securities	65,673		229		(1,368		)	64,534
Corporate bonds	56,320		408		(722		)	56,006
Trust preferred securities	11,578		368		(59		)	11,887
Other bonds and obligations	10,979		195		(16		)	11,158
Total debt securities	1,145,448		7,234		(8,686		)	1,143,996
Marketable equity securities	47,858		19,296		(1,613		)	65,541
Total securities available for sale	1,193,306		26,530		(10,299		)	1,209,537
Securities held to maturity
Municipal bonds and obligations	203,463		3,939		(2,416		)	204,986
Agency collateralized mortgage obligations	75,655		1,281		(411		)	76,525
Agency mortgage-backed securities	9,102		—		(243		)	8,859
Agency commercial mortgage-backed securities	10,545		—		(434		)	10,111
Tax advantaged economic development bonds	35,278		1,596		—			36,874
Other bonds and obligations	325		—		—			325
Total securities held to maturity	334,368		6,816		(3,504		)	337,680
Total	$	1,527,674	$	33,346	$	(13,803	)	$	1,547,217

Schedule of amortized cost and estimated fair value of available for sale (AFS) and held to maturity (HTM) securities, segregated by contractual maturity

The amortized cost and estimated fair value of available for sale (“AFS”) and held to maturity (“HTM”) securities, segregated by contractual maturity at September 30, 2017 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable. Equity securities have no maturity and are also shown in total.

	Available for sale				Held to maturity
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value
Within 1 year	$	623	$	626	$	2,640	$	2,642
Over 1 year to 5 years	31,653		32,254		26,324		27,305
Over 5 years to 10 years	56,336		57,943		8,467		8,925
Over 10 years	113,519		117,254		264,780		270,072
Total bonds and obligations	202,131		208,077		302,211		308,944
Marketable equity securities	36,054		45,389		—		—
Mortgage-backed securities	1,089,694		1,087,547		92,854		93,855
Total	$	1,327,879	$	1,341,013	$	395,065	$	402,799

Schedule of securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
September 30, 2017
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	52	$	3,046	$	381	$	8,828	$	433	$	11,874
Agency collateralized mortgage obligations	2,547		466,132		327		15,320		2,874		481,452
Agency mortgage-backed securities	1,121		106,495		349		12,654		1,470		119,149
Agency commercial mortgage-backed securities	681		32,357		697		20,678		1,378		53,035
Corporate bonds	—		—		146		15,859		146		15,859
Other bonds and obligations	8		2,109		—		—		8		2,109
Total debt securities	4,409		610,139		1,900		73,339		6,309		683,478
Marketable equity securities	310		4,950		—		—		310		4,950
Total securities available for sale	4,719		615,089		1,900		73,339		6,619		688,428
Securities held to maturity
Municipal bonds and obligations	856		64,187		444		12,362		1,300		76,549
Agency collateralized mortgage obligations	356		13,557		—		—		356		13,557
Agency mortgage-backed securities	142		7,938		—		—		142		7,938
Agency commercial mortgage-backed securities	180		10,317		—		—		180		10,317
Total securities held to maturity	1,534		95,999		444		12,362		1,978		108,361
Total	$	6,253	$	711,088	$	2,344	$	85,701	$	8,597	$	796,789
December 31, 2016
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	1,049	$	13,839	$	—	$	—	$	1,049	$	13,839
Agency collateralized mortgage obligations	3,291		319,448		—		—		3,291		319,448
Agency mortgage-backed securities	2,153		130,766		28		2,061		2,181		132,827
Agency commercial mortgage-backed securities	1,368		44,860		—		—		1,368		44,860
Corporate bonds	11		4,780		711		19,655		722		24,435
Trust preferred securities	—		—		59		1,204		59		1,204
Other bonds and obligations	15		3,014		1		27		16		3,041
Total debt securities	7,887		516,707		799		22,947		8,686		539,654
Marketable equity securities	157		6,600		1,456		5,927		1,613		12,527
Total securities available for sale	8,044		523,307		2,255		28,874		10,299		552,181
Securities held to maturity
Municipal bonds and obligations	2,416		69,308		—		—		2,416		69,308
Agency collateralized mortgage obligations	411		14,724		—		—		411		14,724
Agency mortgage-backed securities	243		8,859		—		—		243		8,859
Agency commercial mortgage-backed securities	434		10,111		—		—		434		10,111
Total securities held to maturity	3,504		103,002		—		—		3,504		103,002
Total	$	11,548	$	626,309	$	2,255	$	28,874	$	13,803	$	655,183

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LOANS (Tables)

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Schedule of Loans

The following is a summary of total loans:

	September 30, 2017						December 31, 2016
(In thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities Loans		Acquired Loans		Total
Commercial real estate:
Construction	$	265,059	$	18,490	$	283,549	$	253,302	$	34,207	$	287,509
Single and multi-family	342,426		84,668		427,094		191,819		125,672		317,491
Other commercial real estate	1,462,500		498,094		1,960,594		1,481,223		530,215		2,011,438
Total commercial real estate	2,069,985		601,252		2,671,237		1,926,344		690,094		2,616,438
Commercial and industrial loans:	1,154,988		99,959		1,254,947		908,102		153,936		1,062,038
Total commercial loans	3,224,973		701,211		3,926,184		2,834,446		844,030		3,678,476
Residential mortgages:
1-4 family	1,717,160		258,789		1,975,949		1,583,794		297,355		1,881,149
Construction	6,933		244		7,177		11,178		804		11,982
Total residential mortgages	1,724,093		259,033		1,983,126		1,594,972		298,159		1,893,131
Consumer loans:
Home equity	290,144		95,746		385,890		313,521		80,279		393,800
Auto and other	601,905		50,301		652,206		478,368		106,012		584,380
Total consumer loans	892,049		146,047		1,038,096		791,889		186,291		978,180
Total loans	$	5,841,115	$	1,106,291	$	6,947,406	$	5,221,307	$	1,328,480	$	6,549,787

Schedule of Activity in the Accretable Yield for the Acquired Loan Portfolio that Falls Under the Review of ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer

The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality:

	Three Months Ended September 30,
(In thousands)	2017			2016
Balance at beginning of period	$	5,767		$	6,213
Acquisitions	—			—
Reclassification from nonaccretable difference for loans with improved cash flows	10			688
Change in cash flows that do not affect nonaccretable difference	—			—
Reclassification to TDR	—			—
Accretion	(1,712		)	(2,298		)
Balance at end of period	$	4,065		$	4,603

	Nine Months Ended September 30,
(In thousands)	2017			2016
Balance at beginning of period	$	8,738		$	6,925
Acquisitions	—			708
Reclassification from nonaccretable difference for loans with improved cash flows	343			2,106
Change in cash flows that do not affect nonaccretable difference	—			—
Reclassification to TDR	—			(185		)
Accretion	(5,016		)	(4,951		)
Balance at end of period	$	4,065		$	4,603

Summary of Past Due Loans

The following is a summary of past due loans at September 30, 2017 and December 31, 2016:

Business Activities Loans

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
September 30, 2017
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	265,059	$	265,059	$	—
Single and multi-family	143		260		326		729		341,697		342,426		163
Other commercial real estate	307		—		4,369		4,676		1,457,824		1,462,500		—
Total	450		260		4,695		5,405		2,064,580		2,069,985		163
Commercial and industrial loans:
Total	1,370		640		8,483		10,493		1,144,495		1,154,988		32
Residential mortgages:
1-4 family	1,055		1,396		2,093		4,544		1,712,616		1,717,160		125
Construction	—		—		—		—		6,933		6,933		—
Total	1,055		1,396		2,093		4,544		1,719,549		1,724,093		125
Consumer loans:
Home equity	74		267		1,872		2,213		287,931		290,144		228
Auto and other	2,620		384		1,115		4,119		597,786		601,905		31
Total	2,694		651		2,987		6,332		885,717		892,049		259
Total	$	5,569	$	2,947	$	18,258	$	26,774	$	5,814,341	$	5,841,115	$	579

Business Activities Loans

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
December 31, 2016
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	253,302	$	253,302	$	—
Single and multi-family	618		110		624		1,352		190,467		191,819		155
Other commercial real estate	481		2,243		4,212		6,936		1,474,287		1,481,223		—
Total	1,099		2,353		4,836		8,288		1,918,056		1,926,344		155
Commercial and industrial loans:
Total	3,090		1,301		6,290		10,681		897,421		908,102		5
Residential mortgages:
1-4 family	1,393		701		4,179		6,273		1,577,521		1,583,794		1,956
Construction	10		—		—		10		11,168		11,178		—
Total	1,403		701		4,179		6,283		1,588,689		1,594,972		1,956
Consumer loans:
Home equity	99		—		2,981		3,080		310,441		313,521		306
Auto and other	2,483		494		968		3,945		474,423		478,368		16
Total	2,582		494		3,949		7,025		784,864		791,889		322
Total	$	8,174	$	4,849	$	19,254	$	32,277	$	5,189,030	$	5,221,307	$	2,438

Acquired Loans

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
September 30, 2017
Commercial real estate:
Construction	$	570	$	—	$	—	$	570	$	—	$	18,490	$	—
Single and multi-family	421		78		2,600		3,099		3,285		84,668		2,385
Other commercial real estate	1,633		145		481		2,259		18,962		498,094		—
Total	2,624		223		3,081		5,928		22,247		601,252		2,385
Commercial and industrial loans:
Total	634		52		1,284		1,970		1,497		99,959		54
Residential mortgages:
1-4 family	624		383		1,154		2,161		7,167		258,789		30
Construction	—		—		—		—		—		244		—
Total	624		383		1,154		2,161		7,167		259,033		30
Consumer loans:
Home equity	23		2		1,220		1,245		930		95,746		—
Auto and other	258		29		416		703		358		50,301		14
Total	281		31		1,636		1,948		1,288		146,047		14
Total	$	4,163	$	689	$	7,155	$	12,007	$	32,199	$	1,106,291	$	2,483

Acquired Loans

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
December 31, 2016
Commercial real estate:							—
Construction	$	—	$	—	$	—	$	—	$	47	$	34,207	$	—
Single and multi-family	2		—		437		439		4,726		125,672		—
Other commercial real estate	1,555		—		765		2,320		30,047		530,215		—
Total	1,557		—		1,202		2,759		34,820		690,094		—
Commercial and industrial loans:
Total	1,850		15		1,262		3,127		3,369		153,936		24
Residential mortgages:
1-4 family	321		343		2,015		2,679		7,283		297,355		443
Construction	—		—		—		—		—		804		—
Total	321		343		2,015		2,679		7,283		298,159		443
Consumer loans:
Home equity	753		—		870		1,623		957		80,279		353
Auto and other	542		314		1,686		2,542		387		106,012		791
Total	1,295		314		2,556		4,165		1,344		186,291		1,144
Total	$	5,023	$	672	$	7,035	$	12,730	$	46,816	$	1,328,480	$	1,611

Summary of Information Pertaining to Non-Accrual Loans

The following is summary information pertaining to non-accrual loans at September 30, 2017 and December 31, 2016:

	September 30, 2017						December 31, 2016
(In thousands)	Business Activities Loans		Acquired Loans (1)		Total		Business Activities Loans		Acquired Loans (2)		Total
Commercial real estate:
Construction	$	—	$	—	$	—	$	—	$	—	$	—
Single and multi-family	163		215		378		469		437		906
Other commercial real estate	4,369		481		4,850		4,212		765		4,977
Total	4,532		696		5,228		4,681		1,202		5,883
Commercial and industrial loans:
Total	8,451		1,147		9,598		6,285		1,155		7,440
Residential mortgages:
1-4 family	1,968		1,124		3,092		2,223		1,572		3,795
Construction	—		—		—		—		—		—
Total	1,968		1,124		3,092		2,223		1,572		3,795
Consumer loans:
Home equity	1,644		1,220		2,864		2,675		517		3,192
Auto and other	1,084		402		1,486		952		895		1,847
Total	2,728		1,622		4,350		3,627		1,412		5,039
Total non-accrual loans	$	17,679	$	4,589	$	22,268	$	16,816	$	5,341	$	22,157

_______________________________________

(1)  At quarter end September 30, 2017, acquired credit impaired loans accounted for $83 thousand of loans greater than 90 days past due that are not presented in the above table.

(2)  At December 31, 2016, acquired credit impaired loans accounted for $83 thousand of loans greater than 90 days past due that are not presented in the above table.

Schedule of Loans Evaluated for Impairment

Loans evaluated for impairment as of September 30, 2017 and December 31, 2016 were as follows:

Business Activities Loans

(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
September 30, 2017
Loans receivable:
Balance at end of period
Individually evaluated for impairment	$	34,064	$	10,164	$	2,205	$	1,860	$	48,293
Collectively evaluated for impairment	2,035,921		1,144,824		1,721,888		890,189		5,792,822
Total	$	2,069,985	$	1,154,988	$	1,724,093	$	892,049	$	5,841,115

Business Activities Loans

(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
December 31, 2016
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	25,549	$	5,705	$	2,775	$	2,703	$	36,732
Collectively evaluated for impairment	1,900,795		902,397		1,592,197		789,186		5,184,575
Total	$	1,926,344	$	908,102	$	1,594,972	$	791,889	$	5,221,307

Acquired Loans

(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
September 30, 2017
Loans receivable:
Balance at end of Period
Individually evaluated for impairment	$	2,770	$	592	$	475	$	950	$	4,787
Purchased credit-impaired loans	22,247		1,497		7,167		1,288		32,199
Collectively evaluated for impairment	576,235		97,870		251,391		143,809		1,069,305
Total	$	601,252	$	99,959	$	259,033	$	146,047	$	1,106,291

Acquired Loans

(In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
December 31, 2016
Loans receivable:
Balance at end of year
Individually evaluated for impairment	$	4,256	$	635	$	308	$	406	$	5,605
Purchased credit-impaired loans	34,820		3,369		7,283		1,344		46,816
Collectively evaluated for impairment	651,018		149,932		290,568		184,541		1,276,059
Total	$	690,094	$	153,936	$	298,159	$	186,291	$	1,328,480

Summary of Impaired Loans

The following is a summary of impaired loans at September 30, 2017 and December 31, 2016:

Business Activities Loans

	September 30, 2017
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	—	$	—	$	—
Other commercial real estate loans	19,005		19,005		—
Commercial and industrial loans	2,043		2,043		—
Residential mortgages - 1-4 family	1,033		1,033		—
Consumer - home equity	769		769		—
Consumer - other	—		—		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	162	$	163	$	1
Other commercial real estate loans	14,758		14,896		138
Commercial and industrial loans	7,842		8,121		279
Residential mortgages - 1-4 family	1,036		1,172		136
Consumer - home equity	1,052		1,091		39
Consumer - other	—		—		—
Total
Commercial real estate	$	33,925	$	34,064	$	139
Commercial and industrial loans	9,885		10,164		279
Residential mortgages	2,069		2,205		136
Consumer	1,821		1,860		39
Total impaired loans	$	47,700	$	48,293	$	593

Business Activities Loans

	December 31, 2016
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	—	$	—	$	—
Other commercial real estate loans	18,905		18,905		—
Commercial and industrial loans	382		382		—
Residential mortgages - 1-4 family	2,101		2,101		—
Consumer - home equity	1,605		1,605		—
Consumer - other	—		—		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	179	$	181	$	2
Other commercial real estate loans	6,306		6,462		156
Commercial and industrial loans	5,060		5,324		264
Residential mortgages - 1-4 family	538		674		136
Consumer - home equity	942		1,098		156
Consumer - other	—		—		—
Total
Commercial real estate	$	25,390	$	25,548	$	158
Commercial and industrial loans	5,442		5,706		264
Residential mortgages	2,639		2,775		136
Consumer	2,547		2,703		156
Total impaired loans	$	36,018	$	36,732	$	714

Acquired Loans

	September 30, 2017
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	216	$	216	$	—
Other commercial real estate loans	195		195		—
Commercial and industrial loans	287		287		—
Residential mortgages - 1-4 family	165		165		—
Consumer - home equity	581		581		—
Consumer - other	—		—		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	871	$	892	$	21
Other commercial real estate loans	1,442		1,467		25
Commercial and industrial loans	303		305		2
Residential mortgages - 1-4 family	291		310		19
Consumer - home equity	325		369		44
Total					x
Commercial real estate	$	2,724	$	2,770	$	46
Commercial and industrial loans	590		592		2
Residential mortgages	456		475		19
Consumer	906		950		44
Total impaired loans	$	4,676	$	4,787	$	111

Acquired Loans

	December 31, 2016
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance:
Commercial real estate - single and multifamily	$	—	$	—	$	—
Other commercial real estate loans	547		547		—
Commercial and industrial loans	—		—		—
Residential mortgages - 1-4 family	208		208		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	1,250	$	1,358	$	108
Other commercial real estate loans	2,209		2,351		142
Commercial and industrial loans	576		635		59
Residential mortgages - 1-4 family	89		100		11
Consumer - home equity	292		406		114
Total
Commercial real estate	$	4,006	$	4,256	$	250
Commercial and industrial loans	576		635		59
Residential mortgages	297		308		11
Consumer	292		406		114
Total impaired loans	$	5,171	$	5,605	$	434

Summary of the Average Recorded Investment and Interest Income Recognized on Impaired Loans

The following is a summary of the average recorded investment and interest income recognized on impaired loans as of September 30, 2017 and 2016:

Business Activities Loans

	Nine Months Ended September 30, 2017				Nine Months Ended September 30, 2016
(In thousands)	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
With no related allowance:
Commercial real estate - single and multifamily	$	84	$	—	$	48	$	1
Other commercial real estate loans	21,132		934		2,624		111
Commercial and industrial loans	1,825		69		805		26
Residential mortgages - 1-4 family	1,391		29		2,309		51
Consumer - home equity	1,301		26		693		5
Consumer - other	—		—		1		—
With an allowance recorded:
Commercial real estate - single and multifamily	$	172	$	10	$	—	$	—
Other commercial real estate loans	10,553		363		10,266		351
Commercial and industrial loans	6,493		354		4,609		154
Residential mortgages - 1-4 family	1,187		38		684		21
Consumer - home equity	1,094		32		999		26
Consumer - other	—		—		104		3
Total
Commercial real estate	$	31,941	$	1,307	$	12,938	$	463
Commercial and industrial loans	8,318		423		5,414		180
Residential mortgages	2,578		67		2,993		72
Consumer loans	2,395		58		1,797		34
Total impaired loans	$	45,232	$	1,855	$	23,142	$	749

Acquired Loans

	Nine Months Ended September 30, 2017				Nine Months Ended September 30, 2016
(In thousands)	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
With no related allowance:
Commercial real estate - single and multifamily	$	424	$	79	$	—	$	—
Other commercial real estate loans	483		73		546		20
Commercial and Industrial loans	319		4		191		1
Residential mortgages - 1-4 family	170		7		321		9
Consumer - home equity	567		—		—		—
Consumer - other	—		—		140		1
With an allowance recorded:
Commercial real estate - single and multifamily	$	904	$	36	$	942	$	37
Other commercial real estate loans	1,481		56		2,606		127
Commercial and Industrial loans	332		29		404		10
Residential mortgages - 1-4 family	319		12		117		4
Consumer - home equity	387		13		356		13
Consumer - other	—		—		—		—
Total
Other commercial real estate loans	$	3,292	$	244	$	4,094	$	184
Commercial and industrial loans	651		33		595		11
Residential mortgages	489		19		438		13
Consumer loans	954		13		496		14
Total impaired loans	$	5,386	$	309	$	5,623	$	222

Schedule of Recorded Investment and Number of Modifications for TDRs Identified During the Period

The following tables include the recorded investment and number of modifications identified during the three and nine months ended September 30, 2017. The table includes the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. The modifications for the three and nine months ended September 30, 2017 and 2016 were attributable to interest rate concessions, principal concessions, maturity date extensions, modified payment terms, reamortization, and accelerated maturity. 

	Three Months Ended September 30, 2017
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Other	—	—		—
Commercial and industrial	3	1,654		1,654
Residential - 1-4 Family	—	—		—
Consumer - Home Equity	—	—		—
Total	3	$	1,654	$	1,654

	Nine Months Ended September 30, 2017
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Other	15	$	13,445	$	11,718
Commercial and industrial	8	3,471		3,471
Residential - 1-4 Family	2	205		188
Consumer - Home Equity	1	53		53
Total	26	$	17,174	$	15,430

	Three Months Ended September 30, 2016
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial and industrial	2	404		404
Residential - 1-4 Family	2	5		5
Total	4	$	409	$	409

	Nine Months Ended September 30, 2016
(Dollars in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Other	2	$	1,049	$	1,049
Commercial and industrial	4	555		555
Residential - 1-4 Family	2	5		5
Consumer - Home Equity	1	117		117
Total	9	$	1,726	$	1,726

The following table discloses the recorded investments and numbers of modifications for TDRs where a concession has been made, that then defaulted in the respective reporting period. For the three months ended September 30, 2017, there were no loans that were restructured that had subsequently defaulted during the period. For the nine months ended September 30, 2017, there were two loans that were restructured that had subsequently defaulted during the period.

	Modifications that Subsequently Defaulted
	Three Months Ended September 30, 2017
(Dollars in thousands)	Number of Contracts	Recorded Investment
Troubled Debt Restructurings
Commercial - Other	—	$	—
Commercial and industrial	—	$	—

	Modifications that Subsequently Defaulted
	Nine Months Ended September 30, 2017
(Dollars in thousands)	Number of Contracts	Recorded Investment
Troubled Debt Restructurings
Commercial - Other	1	$	113
Commercial and industrial	1	$	101

Schedule of TDR Activity

The following table presents the Company’s TDR activity for the three and nine months ended September 30, 2017 and 2016:

	Three Months Ended September 30,
(In thousands)	2017			2016
Balance at beginning of the period	$	44,556		$	22,122
Principal payments	(373		)	(932		)
TDR status change (1)	—			—
Other reductions/increases (2)	(1,939		)	—
Newly identified TDRs	1,654			409
Balance at end of the period	$	43,898		$	21,599

	Nine Months Ended September 30,
(In thousands)	2017			2016
Balance at beginning of the period	$	33,829		$	22,048
Principal payments	(1,527		)	(2,041		)
TDR status change (1)	—			2,236
Other reductions/increases (2)	(3,834		)	(2,370		)
Newly identified TDRs	15,430			1,726
Balance at end of the period	$	43,898		$	21,599

_________________________________

(1) TDR status change classification represents TDR loans with a specified interest rate equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk and  the loan was on current payment status and not impaired based on the terms specified by the restructuring agreement.

(2) Other reductions classification consists of transfer to other real estate owned and charge-offs and advances to loans.

XML

LOAN LOSS ALLOWANCE (Tables)

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Schedule of Activity in the Allowance for Loan Losses

Activity in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 was as follows:

	At or for the three months ended September 30, 2017
Business Activities Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	15,972	$	12,588	$	8,114	$	6,221	$	42,895
Charged-off loans	1,367		606		42		1,352		3,367
Recoveries on charged-off loans	14		37		241		39		331
Provision/(releases) for loan losses	1,210		1,952		241		1,473		4,876
Balance at end of period	$	15,829	$	13,971	$	8,554	$	6,381	$	44,735
Individually evaluated for impairment	139		279		136		39		593
Collectively evaluated for impairment	15,690		13,692		8,418		6,342		44,142
Total	$	15,829	$	13,971	$	8,554	$	6,381	$	44,735

	At or for the nine months ended September 30, 2017
Business Activities Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	16,499	$	9,446	$	7,800	$	5,484	$	39,229
Charged-off loans	2,883		2,457		555		2,670		8,565
Recoveries on charged-off loans	71		108		270		211		660
Provision/(releases) for loan losses	2,142		6,874		1,039		3,356		13,411
Balance at end of period	$	15,829	$	13,971	$	8,554	$	6,381	$	44,735
Individually evaluated for impairment	139		279		136		39		593
Collectively evaluated for impairment	15,690		13,692		8,418		6,342		44,142
Total	$	15,829	$	13,971	$	8,554	$	6,381	$	44,735

	At or for the three months ended September 30, 2016
Business Activities Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	16,732	$	8,216	$	7,453	$	4,723	$	37,124
Charged-off loans	—		1,599		253		434		2,286
Recoveries on charged-off loans	114		37		96		61		308
Provision/(releases) for loan losses	620		1,831		88		936		3,475
Balance at end of period	$	17,466	$	8,485	$	7,384	$	5,286	$	38,621
Individually evaluated for impairment	190		194		89		165		638
Collectively evaluated for impairment	17,276		8,291		7,295		5,121		37,983
Total	$	17,466	$	8,485	$	7,384	$	5,286	$	38,621

	At or for the nine months ended September 30, 2016
Business Activities Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	14,610	$	7,367	$	7,612	$	4,985	$	34,574
Charged-off loans	1,578		4,145		1,340		1,175		8,238
Recoveries on charged-off loans	242		114		101		183		640
Provision/(releases) for loan losses	4,192		5,149		1,011		1,293		11,645
Balance at end of period	$	17,466	$	8,485	$	7,384	$	5,286	$	38,621
Individually evaluated for impairment	190		194		89		165		638
Collectively evaluated for impairment	17,276		8,291		7,295		5,121		37,983
Total	$	17,466	$	8,485	$	7,384	$	5,286	$	38,621

	At or for the three months ended September 30, 2017
Acquired Loans (In thousands)	Commercial real estate		Commercial and industrial loans			Residential mortgages		Consumer		Total
Balance at beginning of period	$	2,356	$	1,014		$	690	$	404	$	4,464
Charged-off loans	95		153			70		111		429
Recoveries on charged-off loans	22		150			1		37		210
Provision for loan losses	109		(149		)	49		15		24
Balance at end of period	$	2,392	$	862		$	670	$	345	$	4,269
Individually evaluated for impairment	46		2			19		44		111
Purchased credit-impaired loans	—		—			—		—		—
Collectively evaluated for impairment	2,346		860			651		301		4,158
Total	$	2,392	$	862		$	670	$	345	$	4,269

	At or for the nine months ended September 30, 2017
Acquired Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	2,303	$	1,164	$	766	$	536	$	4,769
Charged-off loans	765		634		285		601		2,285
Recoveries on charged-off loans	44		151		39		78		312
Provision for loan losses	810		181		150		332		1,473
Balance at end of period	$	2,392	$	862	$	670	$	345	$	4,269
Individually evaluated for impairment	46		2		19		44		111
Purchased credit-impaired loans	—		—		—		—		—
Collectively evaluated for impairment	2,346		860		651		301		4,158
Total	$	2,392	$	862	$	670	$	345	$	4,269

	At or for the three months ended September 30, 2016
Acquired Loans (In thousands)	Commercial real estate		Commercial and industrial loans		Residential mortgages		Consumer		Total
Balance at beginning of period	$	2,140	$	776	$	881	$	476	$	4,273
Charged-off loans	662		84		332		77		1,155
Recoveries on charged-off loans	—		37		37		33		107
Provision for loan losses	907		210		111		31		1,259
Balance at end of period	$	2,385	$	939	$	697	$	463	$	4,484
Individually evaluated for impairment	704		121		12		135		972
Purchased credit-impaired loans	—		—		—		—		—
Collectively evaluated for impairment	1,681		818		685		328		3,512
Total	$	2,385	$	939	$	697	$	463	$	4,484

	At or for the nine months ended September 30, 2016
Acquired Loans (In thousands)	Commercial real estate		Commercial and industrial loans			Residential mortgages		Consumer		Total
Balance at beginning of period	$	1,903	$	1,330		$	976	$	525	$	4,734
Charged-off loans	788		359			696		457		2,300
Recoveries on charged-off loans	—		213			141		79		433
Provision for loan losses	1,270		(245		)	276		316		1,617
Balance at end of period	$	2,385	$	939		$	697	$	463	$	4,484
Individually evaluated for impairment	704		121			12		135		972
Purchased credit-impaired loans	—		—			—		—		—
Collectively evaluated for impairment	1,681		818			685		328		3,512
Total	$	2,385	$	939		$	697	$	463	$	4,484

Schedule of Loans by Risk Rating

The following tables present the Company’s loans by risk rating at September 30, 2017 and December 31, 2016:

Business Activities Loans

Commercial Real Estate

Credit Risk Profile by Creditworthiness Category

	Construction				Single and multi-family				Other				Total commercial real estate
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Grade:
Pass	$	265,059	$	253,302	$	339,846	$	189,310	$	1,419,153	$	1,434,762	$	2,024,058	$	1,877,374
Special mention	—		—		529		334		12,604		5,827		13,133		6,161
Substandard	—		—		2,051		2,175		30,743		40,598		32,794		42,773
Doubtful	—		—		—		—		—		36		—		36
Total	$	265,059	$	253,302	$	342,426	$	191,819	$	1,462,500	$	1,481,223	$	2,069,985	$	1,926,344

Commercial and Industrial Loans

Credit Risk Profile by Creditworthiness Category

	Total comm. and industrial loans
(In thousands)	September 30, 2017		December 31, 2016
Grade:
Pass	$	1,136,498	$	890,974
Special mention	2,522		123
Substandard	12,981		13,825
Doubtful	2,987		3,180
Total	$	1,154,988	$	908,102

Residential Mortgages

Credit Risk Profile by Internally Assigned Grade

	1-4 family				Construction				Total residential mortgages
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Grade:
Pass	$	1,713,671	$	1,578,913	$	6,933	$	11,178	$	1,720,604	$	1,590,091
Special mention	1,396		701		—		—		1,396		701
Substandard	2,093		4,179		—		—		2,093		4,179
Total	$	1,717,160	$	1,583,793	$	6,933	$	11,178	$	1,724,093	$	1,594,971

Consumer Loans

Credit Risk Profile Based on Payment Activity

	Home equity				Auto and other				Total consumer loans
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Performing	$	288,500	$	310,846	$	600,821	$	477,416	$	889,321	$	788,262
Nonperforming	1,644		2,675		1,084		952		2,728		3,627
Total	$	290,144	$	313,521	$	601,905	$	478,368	$	892,049	$	791,889

Acquired Loans

Commercial Real Estate

Credit Risk Profile by Creditworthiness Category

	Construction				Single and multi-family				Other				Total commercial real estate
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Grade:
Pass	$	17,221	$	33,461	$	81,935	$	119,414	$	454,081	$	496,562	$	553,237	$	649,437
Special mention	570		—		607		907		18,626		1,622		19,803		2,529
Substandard	699		746		2,126		5,351		25,387		32,031		28,212		38,128
Total	$	18,490	$	34,207	$	84,668	$	125,672	$	498,094	$	530,215	$	601,252	$	690,094

Commercial and Industrial Loans

Credit Risk Profile by Creditworthiness Category

	Total comm. and industrial loans
(In thousands)	September 30, 2017		December 31, 2016
Grade:
Pass	$	95,098	$	147,102
Special mention	51		1,260
Substandard	4,810		5,574
Total	$	99,959	$	153,936

Residential Mortgages

Credit Risk Profile by Internally Assigned Grade

	1-4 family				Construction				Total residential mortgages
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Grade:
Pass	$	253,414	$	294,983	$	244	$	804	$	253,658	$	295,787
Special mention	398		343		—		—		398		343
Substandard	4,977		2,029		—		—		4,977		2,029
Total	$	258,789	$	297,355	$	244	$	804	$	259,033	$	298,159

Consumer Loans

Credit Risk Profile Based on Payment Activity

	Home equity				Auto and other				Total consumer loans
(In thousands)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Performing	$	94,526	$	79,762	$	49,900	$	105,117	$	144,426	$	184,879
Nonperforming	1,220		517		401		895		1,621		1,412
Total	$	95,746	$	80,279	$	50,301	$	106,012	$	146,047	$	186,291

Summary of Information About Total Loans Rated Special Mention or Lower

The following table summarizes information about total loans rated Special Mention or lower as of September 30, 2017 and December 31, 2016. The table below includes consumer loans that are special mention and substandard accruing that are classified in the above table as performing based on payment activity.

	September 30, 2017						December 31, 2016
(In thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities Loans		Acquired Loans		Total
Non-Accrual	$	17,679	$	4,672	$	22,351	$	16,816	$	5,424	$	22,240
Substandard Accruing	36,162		35,089		71,251		51,125		44,177		95,302
Total Classified	53,841		39,761		93,602		67,941		49,601		117,542
Special Mention	17,699		20,284		37,983		7,479		4,323		11,802
Total Criticized	$	71,540	$	60,045	$	131,585	$	75,420	$	53,924	$	129,344

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DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2017

Deposits [Abstract]

Summary of Time Deposits

A summary of time deposits is as follows:

(In thousands)	September 30, 2017		December 31, 2016
Time less than $250,000	$	2,200,338	$	2,015,332
Time $250,000 or more	373,285		318,211
Total time deposits	$	2,573,623	$	2,333,543

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BORROWED FUNDS (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Schedule of Borrowed Funds

Borrowed funds at September 30, 2017 and December 31, 2016 are summarized, as follows:

	September 30, 2017				December 31, 2016
			Weighted				Weighted
			Average				Average
(Dollars in thousands)	Principal		Rate		Principal		Rate
Short-term borrowings:
Advances from the FHLB	$	1,061,300	1.27	%	$	1,072,044	0.71	%
Other borrowings	—		—		10,000		2.42
Total short-term borrowings:	1,061,300		1.27		1,082,044		0.72
Long-term borrowings:
Advances from the FHLB and other borrowings	338,054		1.49		142,792		1.53
Subordinated borrowings	73,831		7.00		73,697		7.00
Junior subordinated borrowings	15,464		3.16		15,464		2.77
Total long-term borrowings:	427,349		2.50		231,953		3.35
Total	$	1,488,649	1.63	%	$	1,313,997	1.19	%

Summary of Maturities of FHLBB Advances

A summary of maturities of FHLB advances as of September 30, 2017 is as follows:

	September 30, 2017
			Weighted Average
(In thousands, except rates)	Principal		Rate
Fixed rate advances maturing:
2017	$	1,018,565	1.28	%
2018	218,836		1.28
2019	150,000		1.64
2020	4,464		1.94
2021 and beyond	7,489		2.69
Total FHLB advances	$	1,399,354	1.33	%

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY (Tables)

9 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

Schedule of Actual and Required Capital Ratios

The actual and required capital ratios were as follows:

	September 30, 2017		Regulatory Minimum to be Well Capitalized		December 31, 2016		Regulatory Minimum to be Well Capitalized
Company (consolidated)
Total capital to risk weighted assets	14.3	%	10.0	%	11.9	%	10.0	%
Common equity tier 1 capital to risk weighted assets	12.3		6.5		9.9		6.5
Tier 1 capital to risk weighted assets	12.5		8.0		10.1		8.0
Tier 1 capital to average assets	9.5		5.0		7.9		5.0
Bank
Total capital to risk weighted assets	11.7	%	10.0	%	11.2	%	10.0	%
Common equity tier 1 capital to risk weighted assets	10.4		6.5		10.0		6.5
Tier 1 capital to risk weighted assets	10.4		8.0		10.0		8.0
Tier 1 capital to average assets	8.0		5.0		7.8		5.0

Schedule of Components of Accumulated Other Comprehensive Income

Components of accumulated other comprehensive income is as follows:

(In thousands)	September 30, 2017			December 31, 2016
Other accumulated comprehensive income, before tax:
Net unrealized holding gain on AFS securities	$	21,132		$	25,176
Net unrealized loss on cash flow hedging derivatives	—			(6,573		)
Net unrealized holding loss on pension plans	(2,954		)	(2,954		)
Income taxes related to items of accumulated other comprehensive income:
Net unrealized holding gain on AFS securities	(8,155		)	(9,636		)
Net unrealized loss on cash flow hedging derivatives	—			2,589
Net unrealized holding loss on pension plans	1,164			1,164
Accumulated other comprehensive income	$	11,187		$	9,766

Schedule of Components of Other Comprehensive Income

The following table presents the components of other comprehensive income for the three and nine months ended September 30, 2017 and 2016:

(In thousands)	Before Tax			Tax Effect			Net of Tax
Three Months Ended September 30, 2017
Net unrealized holding gain on AFS securities:	x
Net unrealized gains arising during the period	$	1,460		$	(605	)	$	855
Less: reclassification adjustment for (losses) realized in net income	(1		)	—			(1		)
Net unrealized holding gain on AFS securities	1,461			(605		)	856
Net unrealized gain on cash flow hedging derivatives:
Net unrealized (loss) arising during the period	—			—			—
Less: reclassification adjustment for (losses) realized in net income	—			—			—
Net unrealized gain on cash flow hedging derivatives	—			—			—
Other comprehensive income	$	1,461		$	(605	)	$	856
Three Months Ended September 30, 2016
Net unrealized holding (loss) on AFS securities:
Net unrealized (losses) arising during the period	$	(5,576	)	$	2,190		$	(3,386	)
Less: reclassification adjustment for gains realized in net income	78			(28		)	50
Net unrealized holding (loss) on AFS securities	(5,654		)	2,218			(3,436		)
Net unrealized gain on cash flow hedging derivatives:
Net unrealized gain arising during the period	1,363			(547		)	816
Less: reclassification adjustment for (losses) realized in net income	(1,367		)	549			(818		)
Net unrealized gain on cash flow hedging derivatives	2,730			(1,096		)	1,634
Other comprehensive (loss)	$	(2,924	)	$	1,122		$	(1,802	)

(In thousands)	Before Tax			Tax Effect			Net of Tax
Nine Months Ended September 30, 2017
Net unrealized holding (loss) on AFS securities:	x
Net unrealized gains arising during the period	$	8,524		$	(3,232	)	$	5,292
Less: reclassification adjustment for gains realized in net income	12,568			(4,713		)	7,855
Net unrealized holding (loss) on AFS securities	(4,044		)	1,481			(2,563		)
Net unrealized gain on cash flow hedging derivatives:
Net unrealized (loss) arising during the period	(449		)	180			(269		)
Less: reclassification adjustment for (losses) realized in net income	(7,022		)	2,769			(4,253		)
Net unrealized gain on cash flow hedging derivatives	6,573			(2,589		)	3,984
Other comprehensive income	$	2,529		$	(1,108	)	$	1,421
Nine Months Ended September 30, 2016
Net unrealized holding gain on AFS securities:
Net unrealized gains arising during the period	$	21,740		$	(8,366	)	$	13,374
Less: reclassification adjustment for gains realized in net income	101			(36		)	65
Net unrealized holding gain on AFS securities	21,639			(8,330		)	13,309
Net unrealized (loss) on cash flow hedging derivatives:
Net unrealized (loss) arising during the period	(5,322		)	2,136			(3,186		)
Less: reclassification adjustment for (losses) realized in net income	(2,662		)	1,069			(1,593		)
Net unrealized (loss) on cash flow hedging derivatives	(2,660		)	1,067			(1,593		)
Other comprehensive income	$	18,979		$	(7,263	)	$	11,716

Schedule of Gross Changes in Each Component of Accumulated Other Comprehensive Income

The following table presents the changes in each component of accumulated other comprehensive income (loss), for the three and nine months ended September 30, 2017 and 2016:

(In thousands)	Net unrealized holding gain on AFS Securities			Net loss on effective cash flow hedging derivatives			Net unrealized holding loss on pension plans			Total
Three Months Ended September 30, 2017
Balance at Beginning of Period	$	12,121		$	—		$	(1,790	)	$	10,331
Other comprehensive gain before reclassifications	855			—			—			855
Less: amounts reclassified from accumulated other comprehensive income (loss)	(1		)	—			—			(1		)
Total other comprehensive income	856			—			—			856
Balance at End of Period	$	12,977		$	—		$	(1,790	)	$	11,187
Three Months Ended September 30, 2016
Balance at Beginning of Period	$	20,625		$	(8,335	)	$	(2,077	)	$	10,213
Other comprehensive (loss) gain before reclassifications	(3,386		)	816			—			(2,570		)
Less: amounts reclassified from accumulated other comprehensive income (loss)	50			(818		)	—			(768		)
Total other comprehensive (loss) income	(3,436		)	1,634			—			(1,802		)
Balance at End of Period	$	17,189		$	(6,701	)	$	(2,077	)	$	8,411

(In thousands)	Net unrealized holding gain on AFS Securities			Net loss on effective cash flow hedging derivatives			Net unrealized holding loss on pension plans			Total
Nine Months Ended September 30, 2017
Balance at Beginning of Period	$	15,540		$	(3,984	)	$	(1,790	)	$	9,766
Other comprehensive gain (loss) before reclassifications	5,292			(269		)	—			5,023
Less: amounts reclassified from accumulated other comprehensive income (loss)	7,855			(4,253		)	—			3,602
Total other comprehensive (loss) income	(2,563		)	3,984			—			1,421
Balance at End of Period	$	12,977		$	—		$	(1,790	)	$	11,187
Nine Months Ended September 30, 2016
Balance at Beginning of Period	$	3,880		$	(5,108	)	$	(2,077	)	$	(3,305	)
Other comprehensive gain (loss) before reclassifications	13,374			(3,186		)	—			10,188
Less: amounts reclassified from accumulated other comprehensive income (loss)	65			(1,593		)	—			(1,528		)
Total other comprehensive income (loss)	13,309			(1,593		)	—			11,716
Balance at End of Period	$	17,189		$	(6,701	)	$	(2,077	)	$	8,411

Schedule of Amounts Reclassified Out of Each Component of Accumulated Other Comprehensive Income

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016:

							Affected Line Item in the
	Three Months Ended September 30,						Statement where Net Income
(In thousands)	2017			2016			is Presented
Realized (losses)/gains on AFS securities:
	$	(1	)	$	78		Non-interest income
	—			(28		)	Tax expense
	(1		)	50			Net of tax
Realized (losses) on cash flow hedging derivatives:
	—			(1,367		)	Non-interest income
	—			549			Tax expense
	—			(818		)	Net of tax
Total reclassifications for the period	$	(1	)	$	(768	)	Net of tax

							Affected Line Item in the
	Nine Months Ended September 30,						Statement where Net Income
(In thousands)	2017			2016			is Presented
Realized gains on AFS securities:
	$	12,568		$	101		Non-interest income
	(4,713		)	(36		)	Tax expense
	7,855			65			Net of tax
Realized (losses) on cash flow hedging derivatives:
	(393		)	—			Interest expense
	(6,629		)	—			Non-interest income
	—			(2,662		)	Non-interest expense
	2,769			1,069			Tax benefit
	(4,253		)	(1,593		)	Net of tax
Total reclassifications for the period	$	3,602		$	(1,528	)	Net of tax

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

Earnings per share have been computed based on the following (average diluted shares outstanding are calculated using the treasury stock method):

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	2017		2016		2017		2016
Net income	$	22,903	$	16,381	$	58,057	$	48,339
Average number of common shares issued	41,370		32,273		38,958		32,216
Less: average number of treasury shares	947		1,137		970		1,117
Less: average number of unvested stock award shares	439		515		441		515
Average number of basic common shares outstanding	39,984		30,621		37,547		30,584
Plus: dilutive effect of unvested stock award shares	116		131		116		115
Plus: dilutive effect of stock options outstanding	45		59		45		58
Average number of diluted common shares outstanding	40,145		30,811		37,708		30,757
Earnings per share:
Basic	$	0.57	$	0.53	$	1.55	$	1.58
Diluted	$	0.57	$	0.53	$	1.54	$	1.57

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STOCK-BASED COMPENSATION PLANS (Tables)

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Activity in the Stock Award and Stock Option Plans

A combined summary of activity in the Company’s stock award and stock option plans for the nine months ended September 30, 2017 is presented in the following table:

	Non-Vested Stock Awards Outstanding				Stock Options Outstanding
(Shares in thousands)	Number of Shares		Weighted-Average Grant Date Fair Value		Number of Shares		Weighted-Average Exercise Price
December 31, 2016	448		$	26.28	109		$	15.72
Granted	156		35.60		—		—
Stock options exercised	—		—		(11	)	14.47
Stock awards vested	(162	)	25.56		—		—
Forfeited	(10	)	29.26		—		—
Expired	—		—		(10	)	33.46
September 30, 2017	432		$	29.64	88		$	13.86
Exercisable options at September 30, 2017					88		$	13.86

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Swap Agreements and Non-Hedging Derivative Assets and Liabilities

Information about derivative assets and liabilities at September 30, 2017, follows:

			Weighted	Weighted Average Rate				Estimated
	Notional		Average			Contract		Fair Value
	Amount		Maturity	Received		pay rate		Asset (Liability)
	(In thousands)		(In years)					(In thousands)
Cash flow hedges:
Interest rate swaps on FHLB borrowings	$	—	0	—	%	—	%	$	—
Total cash flow hedges	—							—
Economic hedges:
Interest rate swap on tax advantaged economic development bond	10,916		12.2	1.60	%	5.09	%	(1,827		)
Interest rate swaps on loans with commercial loan customers	796,914		6.1	3.09	%	4.19	%	(8,576		)
Reverse interest rate swaps on loans with commercial loan customers	796,914		6.1	4.19	%	3.09	%	8,572
Risk participation agreements with dealer banks	117,067		9.4					12
Forward sale commitments	459,203		0.2					500
Total economic hedges	2,181,014							(1,319		)
Non-hedging derivatives:
Commitments to lend	310,327		0.2					6,455
Total non-hedging derivatives	310,327							6,455
Total	$	2,491,341						$	5,136

Information about derivative assets and liabilities at December 31, 2016, follows:

			Weighted	Weighted Average Rate				Estimated
	Notional		Average			Contract		Fair Value
	Amount		Maturity	Received		pay rate		Asset (Liability)
	(In thousands)		(In years)					(In thousands)
Cash flow hedges:
Interest rate swaps on FHLB borrowings	$	300,000	2.3	0.63	%	2.29	%	$	(6,573	)
Total cash flow hedges	300,000							(6,573		)
Economic hedges:
Interest rate swap on tax advantaged economic development bond	11,386		12.9	0.98	%	5.09	%	(2,021		)
Interest rate swaps on loans with commercial loan customers	668,541		6.2	2.43	%	4.21	%	(6,752		)
Reverse interest rate swaps on loans with commercial loan customers	668,541		6.2	4.21	%	2.43	%	7,077
Risk participation agreements with dealer banks	83,360		11.6					5
Forward sale commitments	259,889		0.2					722
Total economic hedges	1,691,717							(969		)
Non-hedging derivatives:
Commitments to lend	208,145		0.2					4,738
Total non-hedging derivatives	208,145							4,738
Total	$	2,199,862						$	(2,804	)

Schedule of Amounts Included in the Consolidated Statements of Income and in the Other Comprehensive Income Section of the Consolidated Statements of Comprehensive Income

Amounts included in the Consolidated Statements of Income and in the other comprehensive income section of the Consolidated Statements of Comprehensive Income (related to interest rate derivatives designated as hedges of cash flows), were as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2017		2016			2017			2016
Interest rate swaps on FHLB borrowings:
Unrealized (loss) recognized in accumulated other comprehensive loss	$	—	$	1,363		$	(449	)	$	(5,322	)
Less: reclassification of unrealized (loss) from accumulated other comprehensive income to interest expense	—		(1,367		)	(393		)	(2,662		)
Less: reclassification of unrealized (loss) from accumulated other comprehensive income to other non-interest expense	—		—			(6,629		)	—
Net tax (expense) benefit on items recognized in accumulated other comprehensive income	—		(1,096		)	(2,589		)	1,067
Other comprehensive gain (loss) recorded in accumulated other comprehensive income, net of reclassification adjustments and tax effects	$	—	$	1,634		$	3,984		$	(1,593	)

Schedule of Amounts Included in the Consolidated Statements of Income Related to Economic Hedges and Non-Hedging Derivatives

Amounts included in the Consolidated Statements of Income related to economic hedges and non-hedging derivatives were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2017			2016			2017			2016
Economic hedges
Interest rate swap on industrial revenue bond:
Unrealized gain (loss) recognized in other non-interest income	$	70		$	29		$	194		$	(802	)
Interest rate swaps on loans with commercial loan customers:
Unrealized (loss) recognized in other non-interest income	(142		)	2,411			(1,824		)	(18,911		)
Reverse interest rate swaps on loans with commercial loan customers:
Unrealized gain recognized in other non-interest income	142			(2,411		)	1,824			18,911
(Unfavorable) Favorable change in credit valuation adjustment recognized in other non-interest income	(53		)	(62		)	(329		)	(495		)
Risk participation agreements:
Unrealized gain recognized in other non-interest income	2			(14		)	7			102
Forward commitments:
Unrealized gain (loss) recognized in other non-interest income	500			(582		)	224			(1,898		)
Realized gain (loss) in other non-interest income	(983		)	109			(3,651		)	(224		)
Non-hedging derivatives
Commitments to lend
Unrealized gain recognized in other non-interest income	$	6,455		$	1,574		$	21,891		$	3,635
Realized gain in other non-interest income	7,402			760			23,869			2,505

Schedule of Assets Subject to an Enforceable Master Netting Arrangement

Offsetting of Financial Assets and Derivative Assets

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Assets Presented in the		Gross Amounts Not Offset in the Statements of Condition
	Recognized		Statements of		Statements of		Financial		Cash
(In thousands)	Assets		Condition		Condition		Instruments		Collateral Received		Net Amount
December 31, 2016
Interest Rate Swap Agreements:
Institutional counterparties	$	49	$	—	$	49	$	—	$	—	$	49
Commercial counterparties	11,461		—		11,461		—		—		11,461
Total	$	11,510	$	—	$	11,510	$	—	$	—	$	11,510

Offsetting of Financial Assets and Derivative Assets

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Assets Presented in the		Gross Amounts Not Offset in the Statements of Condition
	Recognized		Statements of		Statements of		Financial		Cash
(In thousands)	Assets		Condition		Condition		Instruments		Collateral Received		Net Amount
September 30, 2017
Interest Rate Swap Agreements:
Institutional counterparties	$	63	$	—	$	63	$	—	$	—	$	63
Commercial counterparties	11,909		—		11,909		—		—		11,909
Total	$	11,972	$	—	$	11,972	$	—	$	—	$	11,972

Schedule of Liabilities Subject to an Enforceable Master Netting Arrangement

Offsetting of Financial Liabilities and Derivative Liabilities

	Gross Amounts of			Gross Amounts Offset in the		Net Amounts of Liabilities Presented in the			Gross Amounts Not Offset in the Statements of Condition
	Recognized			Statements of		Statements of			Financial		Cash
(In thousands)	Liabilities			Condition		Condition			Instruments		Collateral Pledged		Net Amount
December 31, 2016
Interest Rate Swap Agreements:
Institutional counterparties	$	(20,077	)	$	4,689	$	(15,388	)	$	14,738	$	650	$	—
Commercial counterparties	(4,407		)	23		(4,384		)	—		—		(4,384		)
Total	$	(24,484	)	$	4,712	$	(19,772	)	$	14,738	$	650	$	(4,384	)

Offsetting of Financial Liabilities and Derivative Liabilities

	Gross Amounts of			Gross Amounts Offset in the		Net Amounts of Liabilities Presented in the			Gross Amounts Not Offset in the Statements of Condition
	Recognized			Statements of		Statements of			Financial		Cash
(In thousands)	Liabilities			Condition		Condition			Instruments		Collateral Pledged		Net Amount
September 30, 2017
Interest Rate Swap Agreements:
Institutional counterparties	$	(13,903	)	$	3,450	$	(10,453	)	$	9,043	$	1,410	$	—
Commercial counterparties	(3,369		)	32		(3,337		)	—		—		(3,337		)
Total	$	(17,272	)	$	3,482	$	(13,790	)	$	9,043	$	1,410	$	(3,337	)

XML

FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2017

Quantitative information about the significant unobservable inputs within Level 3

Summary of Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis Segregated by the Level of the Valuation Inputs Within the Fair Value Hierarchy Utilized to Measure Fair Value

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.

	September 30, 2017
	Level 1		Level 2		Level 3		Total
(In thousands)	Inputs		Inputs		Inputs		Fair Value
Trading security	$	—	$	—	$	12,603	$	12,603
Available-for-sale securities:
Municipal bonds and obligations	—		118,760		—		118,760
Agency collateralized mortgage obligations	—		807,436		—		807,436
Agency residential mortgage-backed securities	—		217,067		—		217,067
Agency commercial mortgage-backed securities	—		63,044		—		63,044
Corporate bonds	—		67,234		—		67,234
Trust preferred securities	—		11,792		—		11,792
Other bonds and obligations	—		10,291		—		10,291
Marketable equity securities	45,055		334		—		45,389
Loans held for sale	—		143,745		—		143,745
Derivative assets	518		15,379		6,437		22,334
Capitalized servicing rights	—		—		2,707		2,707
Derivative liabilities	—		17,198		—		17,198

	December 31, 2016
	Level 1		Level 2		Level 3		Total
(In thousands)	Inputs		Inputs		Inputs		Fair Value
Trading security	$	—	$	—	$	13,229	$	13,229
Available-for-sale securities:
Municipal bonds and obligations	—		119,816		—		119,816
Agency collateralized mortgage obligations	—		651,911		—		651,911
Agency residential mortgage-backed securities	—		228,684		—		228,684
Agency commercial mortgage-backed securities	—		64,534		—		64,534
Corporate bonds	—		56,006		—		56,006
Trust preferred securities	—		11,887		—		11,887
Other bonds and obligations	—		11,158		—		11,158
Marketable equity securities	62,284		3,257		—		65,541
Loans held for sale	—		120,673		—		120,673
Derivative assets	622		16,157		4,838		21,617
Capitalized servicing rights	—		—		798		798
Derivative liabilities	—		24,420		—		24,420

Schedule of Loans Held for Sale

					Aggregate Fair Value
September 30, 2017	Aggregate		Aggregate		Less Aggregate
(In thousands)	Fair Value		Unpaid Principal		Unpaid Principal
Loans Held for Sale	$	143,745	$	139,298	$	4,447

					Aggregate Fair Value
December 31, 2016	Aggregate		Aggregate		Less Aggregate
(In thousands)	Fair Value		Unpaid Principal		Unpaid Principal
Loans Held for Sale	$	120,673	$	118,178	$	2,495

Schedule of Changes in Level 3 Assets and Liabilities That Were Measured at Fair Value on a Recurring Basis

The table below presents the changes in Level 3 assets and liabilities that were measured at fair value on a recurring basis for the three and nine months ended September 30, 2017 and 2016.

	Assets (Liabilities)
				Securities								Capitalized
	Trading			Available		Commitments			Forward			Servicing
(In thousands)	Security			for Sale		to Lend			Commitments			Rights
Three Months Ended September 30, 2017
June 30, 2017	$	12,837		$	—	$	7,374		$	12		$	1,568
Unrealized (loss) gain, net recognized in other non-interest income	(76		)	—		15,146			(30		)	(132		)
Paydown of trading security	(158		)	—		—			—			—
Transfers to held for sale loans	—			—		(16,065		)	—			—
Additions to servicing rights	—			—		—			—			1,271
September 30, 2017	$	12,603		$	—	$	6,455		$	(18	)	$	2,707

Nine Months Ended September 30, 2017
December 31, 2016	$	13,229		$	—	$	4,738		$	100		$	798
Unrealized gain, net recognized in other non-interest income	(155		)	—		48,963			(118		)	(202		)
Paydown of trading security	(471		)	—		—			—			—
Transfers to held for sale loans	—			—		(47,246		)	—			—
Additions to servicing rights	—			—		—			—			2,111
September 30, 2017	$	12,603		$	—	$	6,455		$	(18	)	$	2,707
Unrealized gains (losses) relating to instruments still held at September 30, 2017	$	1,763		$	—	$	6,455		$	(18	)	$	—

	Assets (Liabilities)
				Securities								Capitalized
	Trading			Available		Commitments			Forward			Servicing
(In thousands)	Security			for Sale		to Lend			Commitments			Rights
Three Months Ended September 30, 2016
June 30, 2016	$	14,479		$	—	$	1,259		$	(189	)	$	—
Unrealized (loss) gain, net recognized in other non-interest income	(180		)	—		3,563			(62		)	—
Paydown of trading security	(150		)	—		—			—			—
Transfers to held for sale loans	—			—		(3,248		)	—			—
September 30, 2016	$	14,149		$	—	$	1,574		$	(251	)	$	—

Nine Months Ended September 30, 2016
December 31, 2015	$	14,189		$	708		$	323		$	9		$	—
Unrealized gain, net recognized in other non-interest income	405			—			6,480			(260		)	—
Paydown of trading security	(445		)	—			—			—			—
Transfers to Level 2	—			(708		)	—			—			—
Transfers to held for sale loans	—			—			(5,229		)	—			—
September 30, 2016	$	14,149		$	—		$	1,574		$	(251	)	$	—
Unrealized gains (losses) relating to instruments still held at September 30, 2016	$	2,610		$	—		$	1,574		$	(251	)	$	—

Summary of Applicable Non-Recurring Fair Value Measurements

Quantitative information about the significant unobservable inputs within Level 3 non-recurring assets is as follows:

	Fair Value
(In thousands)	September 30, 2017		Valuation Techniques	Unobservable Inputs	Range (Weighted Average) (a)
Assets
Impaired loans	$	28,082	Appraised value of collateral	Discounted cash flow - loss severity	39.05% to 0.13% (3.70%)
				Appraised value	$16 to $5,987 ($2,062)
Capitalized servicing rights	12,663		Discounted cash flow	Constant prepayment rate (CPR)	7.78% to 13.69% (10.57%)
				Discount rate	10.00% to 12.76% (11.55%)
Other real estate owned	288		Appraised value of collateral	Appraised value	$94 to $215 ($226)
Total	$	41,033

(a)  Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

	Fair Value
(In thousands)	December 31, 2016		Valuation Techniques	Unobservable Inputs	Range (Weighted Average) (a)
Assets
Impaired loans	$	17,761	Appraised value of collateral	Discounted cash flow - loss severity	0.00% to 88.70% (9.73%)
				Appraised value	$0 to $2,192 ($1,026)
Capitalized servicing rights	10,726		Discounted cash flow	Constant prepayment rate (CPR)	7.35% to 14.28% (10.44%)
				Discount rate	10.00% to 14.00 (11.77%)
Other real estate owned	151		Appraised value of collateral	Appraised value	$101 to $129 ($122)
Total	$	28,638

(a)  Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

Summary of Estimated Fair Values, and Related Carrying Amounts, of Financial Instruments

The following tables summarize the estimated fair values, and related carrying amounts, of the Company’s financial instruments. Certain financial instruments and all non-financial instruments are excluded. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

	September 30, 2017
	Carrying		Fair
(In thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	92,046	$	92,046	$	92,046	$	—	$	—
Trading security	12,603		12,603		—		—		12,603
Securities available for sale	1,341,013		1,341,013		45,055		1,295,958		—
Securities held to maturity	395,065		402,799		—		368,063		34,736
FHLB bank stock and restricted securities	75,117		75,117		—		75,117		—
Net loans	6,898,402		6,930,703		—		—		6,930,703
Loans held for sale	143,745		143,745		—		143,745		—
Accrued interest receivable	29,133		29,133		—		29,133		—
Cash surrender value of bank-owned life insurance policies	161,290		161,290		—		161,290		—
Derivative assets	22,334		22,334		518		15,379		6,437
Assets held for sale	322		322		—		322		—
Financial Liabilities
Total deposits	$	6,790,146	$	6,785,879	$	—	$	6,785,879	$	—
Short-term debt	1,061,300		1,061,232		—		1,061,232		—
Long-term Federal Home Loan Bank advances	338,054		337,653		—		337,653		—
Subordinated borrowings	89,295		98,394		—		98,394		—
Derivative liabilities	17,198		17,198		—		17,198		—

	December 31, 2016
	Carrying		Fair
(In thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	113,075	$	113,075	$	113,075	$	—	$	—
Trading security	13,229		13,229		—		—		13,229
Securities available for sale	1,209,537		1,209,537		62,284		1,147,253		—
Securities held to maturity	334,368		337,680		—		300,806		36,874
FHLB bank stock and restricted securities	71,112		71,112		—		71,112		—
Net loans	6,505,789		6,532,745		—		—		6,532,745
Loans held for sale	120,673		120,673		—		120,673		—
Accrued interest receivable	26,113		26,113		—		26,113		—
Cash surrender value of bank-owned life insurance policies	139,257		139,257		—		139,257		—
Derivative assets	21,617		21,617		622		16,157		4,838
Assets held for sale	322		322		—		322		—
Financial Liabilities
Total deposits	$	6,622,092	$	6,624,108	$	—	$	6,624,108	$	—
Short-term debt	1,082,044		1,081,996		—		1,081,996		—
Long-term Federal Home Loan Bank advances	142,792		143,151		—		143,151		—
Subordinated borrowings	89,161		96,973		—		96,973		—
Derivative liabilities	24,420		24,420		—		24,420		—

Recurring

Quantitative information about the significant unobservable inputs within Level 3

Schedule of Quantitative Information About the Significant Unobservable Inputs Within Level 3

Quantitative information about the significant unobservable inputs within Level 3 recurring assets and liabilities is as follows:

	Fair Value					Significant Unobservable Input
(In thousands)	September 30, 2017			Valuation Techniques	Unobservable Inputs	Value
Assets (Liabilities)
Trading Security	$	12,603		Discounted Cash Flow	Discount Rate	2.59		%
Commitments to Lend	6,455			Historical Trend	Closing Ratio	80.50		%
				Pricing Model	Origination Costs, per loan	$	3,692
Forward Commitments	(18		)	Historical Trend	Closing Ratio	80.50		%
				Pricing Model	Origination Costs, per loan	$	3,692
Capitalized Servicing Rights	2,707			Discounted Cash Flow	Constant Prepayment rate (CPR)	10.20		%
					Discount Rate	10.95		%
Total	$	21,747

	Fair Value				Significant Unobservable Input
(In thousands)	December 31, 2016		Valuation Techniques	Unobservable Inputs	Value
Assets (Liabilities)
Trading Security	$	13,229	Discounted Cash Flow	Discount Rate	2.62		%
Commitments to Lend	4,738		Historical Trend	Closing Ratio	80.36		%
			Pricing Model	Origination Costs, per loan	$	3,692
Forward Commitments	100		Historical Trend	Closing Ratio	80.36		%
			Pricing Model	Origination Costs, per loan	$	3,692
Capitalized Servicing Rights	798		Discounted Cash Flow	Constant Prepayment rate (CPR)	10.40		%
				Discount Rate	11.00		%
Total	$	18,865

Non-recurring

Quantitative information about the significant unobservable inputs within Level 3

Schedule of Quantitative Information About the Significant Unobservable Inputs Within Level 3

The following is a summary of applicable non-recurring fair value measurements. There are no liabilities measured at fair value on a non-recurring basis.

	September 30, 2017		December 31, 2016		Fair Value Measurement Date as of September 30, 2017
	Level 3		Level 3		Level 3
(In thousands)	Inputs		Inputs		Inputs
Assets
Impaired loans	$	28,082	$	17,761	September 2017
Capitalized servicing rights	12,663		10,726		August/September 2017
Other real estate owned	288		151		April 2016 - June 2017
Total	$	41,033	$	28,638

XML

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 2017

Banking and Thrift, Interest [Abstract]

Schedule of Net Interest Income After Provision for Loan Losses

Presented below is net interest income after provision for loan losses for the three and nine months ended September 30, 2017 and 2016, respectively.

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Net interest income	$	71,998	$	57,971	$	208,429	$	173,109
Provision for loan losses	4,900		4,734		14,884		13,262
Net interest income after provision for loan losses	$	67,098	$	53,237	$	193,545	$	159,847

XML

TRADING SECURITY (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Trading Securities [Abstract]
Amortized cost	$ 10,900,000	$ 11,400,000
Fair value	12,603,000	$ 13,229,000
Amount of other securities in the trading portfolio	$ 0

XML

SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY - Summary of Securities Available for Sale and Held to Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Available-for-sale debt securities, amortized cost basis	$ 1,291,825	$ 1,145,448
Available-for-sale debt securities, accumulated gross unrealized gain	10,108	7,234
Available-for-sale debt securities, accumulated gross unrealized loss	(6,309)	(8,686)
Available-for-sale securities, debt securities	1,295,624	1,143,996
Available-for-sale Equity Securities, Amortized Cost Basis [Abstract]
Available-for-sale equity securities, amortized cost basis	36,054	47,858
Available-for-sale equity securities, accumulated gross unrealized gain	9,645	19,296
Available-for-sale equity securities, accumulated gross unrealized loss	(310)	(1,613)
Available-for-sale securities, equity securities	45,389	65,541
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Available-for-sale securities, amortized cost basis	1,327,879	1,193,306
Available-for-sale securities, accumulated gross unrealized gain	19,753	26,530
Available-for-sale securities, accumulated gross unrealized loss	(6,619)	(10,299)
Available for sale securities	1,341,013	1,209,537
Securities held to maturity
Held to maturity, amortized cost basis	395,065	334,368
Held to maturity securities accumulated unrecognized holding gains	9,712	6,816
Held to maturity securities, accumulated unrecognized holding loss	(1,978)	(3,504)
Securities held to maturity, fair value	402,799	337,680
Available-for-sale Securities and Held-to-maturity Securities [Abstract]
Held to maturity and available for sale securities, amortized cost basis	1,722,944	1,527,674
Held to maturity and available for sale securities, gross unrealized gain	29,465	33,346
Held to maturity and available for sale securities, gross unrealized loss	(8,597)	(13,803)
Held to maturity and available for sale securities, fair value	1,743,812	1,547,217
Municipal bonds and obligations
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Available-for-sale debt securities, amortized cost basis	114,365	117,910
Available-for-sale debt securities, accumulated gross unrealized gain	4,828	2,955
Available-for-sale debt securities, accumulated gross unrealized loss	(433)	(1,049)
Available-for-sale securities, debt securities	118,760	119,816
Securities held to maturity
Held to maturity, amortized cost basis	268,990	203,463
Held to maturity securities accumulated unrecognized holding gains	6,196	3,939
Held to maturity securities, accumulated unrecognized holding loss	(1,300)	(2,416)
Securities held to maturity, fair value	273,886	204,986
Agency collateralized mortgage obligations
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Available-for-sale debt securities, amortized cost basis	807,772	652,680
Available-for-sale debt securities, accumulated gross unrealized gain	2,538	2,522
Available-for-sale debt securities, accumulated gross unrealized loss	(2,874)	(3,291)
Available-for-sale securities, debt securities	807,436	651,911
Securities held to maturity
Held to maturity, amortized cost basis	74,277	75,655
Held to maturity securities accumulated unrecognized holding gains	1,679	1,281
Held to maturity securities, accumulated unrecognized holding loss	(356)	(411)
Securities held to maturity, fair value	75,600	76,525
Agency mortgage-backed securities
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Available-for-sale debt securities, amortized cost basis	217,626	230,308
Available-for-sale debt securities, accumulated gross unrealized gain	911	557
Available-for-sale debt securities, accumulated gross unrealized loss	(1,470)	(2,181)
Available-for-sale securities, debt securities	217,067	228,684
Securities held to maturity
Held to maturity, amortized cost basis	8,080	9,102
Held to maturity securities accumulated unrecognized holding gains	0	0
Held to maturity securities, accumulated unrecognized holding loss	(142)	(243)
Securities held to maturity, fair value	7,938	8,859
Agency commercial mortgage-backed securities
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Available-for-sale debt securities, amortized cost basis	64,296	65,673
Available-for-sale debt securities, accumulated gross unrealized gain	126	229
Available-for-sale debt securities, accumulated gross unrealized loss	(1,378)	(1,368)
Available-for-sale securities, debt securities	63,044	64,534
Securities held to maturity
Held to maturity, amortized cost basis	10,497	10,545
Held to maturity securities accumulated unrecognized holding gains	0	0
Held to maturity securities, accumulated unrecognized holding loss	(180)	(434)
Securities held to maturity, fair value	10,317	10,111
Tax advantaged economic development bonds
Securities held to maturity
Held to maturity, amortized cost basis	32,899	35,278
Held to maturity securities accumulated unrecognized holding gains	1,837	1,596
Held to maturity securities, accumulated unrecognized holding loss	0	0
Securities held to maturity, fair value	34,736	36,874
Corporate bonds
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Available-for-sale debt securities, amortized cost basis	66,321	56,320
Available-for-sale debt securities, accumulated gross unrealized gain	1,059	408
Available-for-sale debt securities, accumulated gross unrealized loss	(146)	(722)
Available-for-sale securities, debt securities	67,234	56,006
Trust preferred securities
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Available-for-sale debt securities, amortized cost basis	11,350	11,578
Available-for-sale debt securities, accumulated gross unrealized gain	442	368
Available-for-sale debt securities, accumulated gross unrealized loss	0	(59)
Available-for-sale securities, debt securities	11,792	11,887
Other bonds and obligations
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Available-for-sale debt securities, amortized cost basis	10,095	10,979
Available-for-sale debt securities, accumulated gross unrealized gain	204	195
Available-for-sale debt securities, accumulated gross unrealized loss	(8)	(16)
Available-for-sale securities, debt securities	10,291	11,158
Securities held to maturity
Held to maturity, amortized cost basis	322	325
Held to maturity securities accumulated unrecognized holding gains	0	0
Held to maturity securities, accumulated unrecognized holding loss	0	0
Securities held to maturity, fair value	$ 322	$ 325

XML

SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY - Schedule of Maturity of Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Available for sale, Amortized Cost
Within 1 year	$ 623
Over 1 year to 5 years	31,653
Over 5 years to 10 years	56,336
Over 10 years	113,519
Total bonds and obligations	202,131
Marketable equity securities	36,054	$ 47,858
Mortgage-backed securities	1,089,694
Available-for-sale securities, amortized cost basis	1,327,879	1,193,306
Available for sale, Fair Value
Within 1 year	626
Over 1 year to 5 years	32,254
Over 5 years to 10 years	57,943
Over 10 years	117,254
Total bonds and obligations	208,077
Marketable equity securities	45,389	65,541
Mortgage-backed securities	1,087,547
Available for sale securities	1,341,013	1,209,537
Held to maturity, Amortized Cost
Within 1 year	2,640
Over 1 year to 5 years	26,324
Over 5 years to 10 years	8,467
Over 10 years	264,780
Total bonds and obligations	302,211
Mortgage-backed securities	92,854
Held to maturity, amortized cost basis	395,065	334,368
Held to maturity, Fair Value
Within 1 year	2,642
Over 1 year to 5 years	27,305
Over 5 years to 10 years	8,925
Over 10 years	270,072
Total bonds and obligations	308,944
Total bonds and obligations	93,855
Fair Value	$ 402,799	$ 337,680

XML

SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY - Summary of Securities with Unrealized Losses (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Available for sale securities, less than twelve months, gross unrealized losses	$ 4,719	$ 8,044
Available for sale securities, over twelve months, gross unrealized losses	1,900	2,255
Available for sale securities, continuous unrealized loss position, accumulated loss	6,619	10,299
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available for sale securities, continuous unrealized loss position, less than twelve months, fair value	615,089	523,307
Available for sale securities, continuous unrealized loss position, over twelve months, fair value	73,339	28,874
Available for sale securities, continuous unrealized loss position, fair value	688,428	552,181
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Held-to-maturity securities, continuous unrealized loss position, less than twelve months, accumulated loss	1,534	3,504
Held-to-maturity securities, continuous unrealized loss position, over twelve months, gross unrealized losses	444	0
Held to maturity securities, accumulated unrecognized holding loss	1,978	3,504
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Held to maturity securities, accumulated unrecognized holding loss, less than twelve months, fair value	95,999	103,002
Held to maturity securities, accumulated unrecognized holding loss, over twelve months, fair value	12,362	0
Held to maturity securities, accumulated unrecognized holding loss, fair value	108,361	103,002
Securities available for sale and held to maturity
Held to maturity and available for sale securities continuous unrealized loss position, less than twelve months, aggregate losses	6,253	11,548
Held to maturity and available for sale securities continuous unrealized loss position, less than twelve months, fair value	711,088	626,309
Held to maturity and available for sale securities continuous unrealized loss position, over twelve months, aggregate losses	2,344	2,255
Held to maturity and available for sale securities continuous unrealized loss position, over twelve months, fair value	85,701	28,874
Held to maturity and available for sale securities continuous unrealized loss position, aggregate losses	8,597	13,803
Held to maturity and available for sale securities continuous unrealized loss position, fair value	796,789	655,183
Debt securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Available for sale securities, less than twelve months, gross unrealized losses	4,409	7,887
Available for sale securities, over twelve months, gross unrealized losses	1,900	799
Available for sale securities, continuous unrealized loss position, accumulated loss	6,309	8,686
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available for sale securities, continuous unrealized loss position, less than twelve months, fair value	610,139	516,707
Available for sale securities, continuous unrealized loss position, over twelve months, fair value	73,339	22,947
Available for sale securities, continuous unrealized loss position, fair value	683,478	539,654
Debt securities | Municipal bonds and obligations
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Available for sale securities, less than twelve months, gross unrealized losses	52	1,049
Available for sale securities, over twelve months, gross unrealized losses	381	0
Available for sale securities, continuous unrealized loss position, accumulated loss	433	1,049
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available for sale securities, continuous unrealized loss position, less than twelve months, fair value	3,046	13,839
Available for sale securities, continuous unrealized loss position, over twelve months, fair value	8,828	0
Available for sale securities, continuous unrealized loss position, fair value	11,874	13,839
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Held-to-maturity securities, continuous unrealized loss position, less than twelve months, accumulated loss	856	2,416
Held-to-maturity securities, continuous unrealized loss position, over twelve months, gross unrealized losses	444	0
Held to maturity securities, accumulated unrecognized holding loss	1,300	2,416
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Held to maturity securities, accumulated unrecognized holding loss, less than twelve months, fair value	64,187	69,308
Held to maturity securities, accumulated unrecognized holding loss, over twelve months, fair value	12,362	0
Held to maturity securities, accumulated unrecognized holding loss, fair value	76,549	69,308
Debt securities | Agency collateralized mortgage obligations
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Available for sale securities, less than twelve months, gross unrealized losses	2,547	3,291
Available for sale securities, over twelve months, gross unrealized losses	327	0
Available for sale securities, continuous unrealized loss position, accumulated loss	2,874	3,291
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available for sale securities, continuous unrealized loss position, less than twelve months, fair value	466,132	319,448
Available for sale securities, continuous unrealized loss position, over twelve months, fair value	15,320	0
Available for sale securities, continuous unrealized loss position, fair value	481,452	319,448
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Held-to-maturity securities, continuous unrealized loss position, less than twelve months, accumulated loss	356	411
Held-to-maturity securities, continuous unrealized loss position, over twelve months, gross unrealized losses	0	0
Held to maturity securities, accumulated unrecognized holding loss	356	411
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Held to maturity securities, accumulated unrecognized holding loss, less than twelve months, fair value	13,557	14,724
Held to maturity securities, accumulated unrecognized holding loss, over twelve months, fair value	0	0
Held to maturity securities, accumulated unrecognized holding loss, fair value	13,557	14,724
Debt securities | Agency mortgage-backed securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Available for sale securities, less than twelve months, gross unrealized losses	1,121	2,153
Available for sale securities, over twelve months, gross unrealized losses	349	28
Available for sale securities, continuous unrealized loss position, accumulated loss	1,470	2,181
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available for sale securities, continuous unrealized loss position, less than twelve months, fair value	106,495	130,766
Available for sale securities, continuous unrealized loss position, over twelve months, fair value	12,654	2,061
Available for sale securities, continuous unrealized loss position, fair value	119,149	132,827
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Held-to-maturity securities, continuous unrealized loss position, less than twelve months, accumulated loss	142	243
Held-to-maturity securities, continuous unrealized loss position, over twelve months, gross unrealized losses	0	0
Held to maturity securities, accumulated unrecognized holding loss	142	243
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Held to maturity securities, accumulated unrecognized holding loss, less than twelve months, fair value	7,938	8,859
Held to maturity securities, accumulated unrecognized holding loss, over twelve months, fair value	0	0
Held to maturity securities, accumulated unrecognized holding loss, fair value	7,938	8,859
Debt securities | Agency commercial mortgage-backed securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Available for sale securities, less than twelve months, gross unrealized losses	681	1,368
Available for sale securities, over twelve months, gross unrealized losses	697	0
Available for sale securities, continuous unrealized loss position, accumulated loss	1,378	1,368
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available for sale securities, continuous unrealized loss position, less than twelve months, fair value	32,357	44,860
Available for sale securities, continuous unrealized loss position, over twelve months, fair value	20,678	0
Available for sale securities, continuous unrealized loss position, fair value	53,035	44,860
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Held-to-maturity securities, continuous unrealized loss position, less than twelve months, accumulated loss	180	434
Held-to-maturity securities, continuous unrealized loss position, over twelve months, gross unrealized losses	0	0
Held to maturity securities, accumulated unrecognized holding loss	180	434
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Held to maturity securities, accumulated unrecognized holding loss, less than twelve months, fair value	10,317	10,111
Held to maturity securities, accumulated unrecognized holding loss, over twelve months, fair value	0	0
Held to maturity securities, accumulated unrecognized holding loss, fair value	10,317	10,111
Debt securities | Corporate bonds
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Available for sale securities, less than twelve months, gross unrealized losses	0	11
Available for sale securities, over twelve months, gross unrealized losses	146	711
Available for sale securities, continuous unrealized loss position, accumulated loss	146	722
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available for sale securities, continuous unrealized loss position, less than twelve months, fair value	0	4,780
Available for sale securities, continuous unrealized loss position, over twelve months, fair value	15,859	19,655
Available for sale securities, continuous unrealized loss position, fair value	15,859	24,435
Debt securities | Trust preferred securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Available for sale securities, less than twelve months, gross unrealized losses		0
Available for sale securities, over twelve months, gross unrealized losses		59
Available for sale securities, continuous unrealized loss position, accumulated loss		59
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available for sale securities, continuous unrealized loss position, less than twelve months, fair value		0
Available for sale securities, continuous unrealized loss position, over twelve months, fair value		1,204
Available for sale securities, continuous unrealized loss position, fair value		1,204
Debt securities | Other bonds and obligations
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Available for sale securities, less than twelve months, gross unrealized losses	8	15
Available for sale securities, over twelve months, gross unrealized losses	0	1
Available for sale securities, continuous unrealized loss position, accumulated loss	8	16
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available for sale securities, continuous unrealized loss position, less than twelve months, fair value	2,109	3,014
Available for sale securities, continuous unrealized loss position, over twelve months, fair value	0	27
Available for sale securities, continuous unrealized loss position, fair value	2,109	3,041
Marketable equity securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Available for sale securities, less than twelve months, gross unrealized losses	310	157
Available for sale securities, over twelve months, gross unrealized losses	0	1,456
Available for sale securities, continuous unrealized loss position, accumulated loss	310	1,613
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available for sale securities, continuous unrealized loss position, less than twelve months, fair value	4,950	6,600
Available for sale securities, continuous unrealized loss position, over twelve months, fair value	0	5,927
Available for sale securities, continuous unrealized loss position, fair value	$ 4,950	$ 12,527

XML

SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY - Narrative (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($) security	Dec. 31, 2016 USD ($)
Investment Holdings [Line Items]
Securities available for sale, at fair value | $	$ 1,341,013	$ 1,209,537
Level 2
Investment Holdings [Line Items]
Securities available for sale, at fair value | $	$ 1,295,958	$ 1,147,253
Marketable equity securities
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	3
Available for sale securities portfolio, number of securities (security)	19
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (as percent)	5.60%
Municipal bonds and obligations
Investment Holdings [Line Items]
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (as percent)	1.70%
Held-to-maturity, securities in unrealized loss positions (security)	52
Held-to-maturity securities portfolio, number of securities (security)	232
Municipal bonds and obligations | Debt securities
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	7
Available for sale securities portfolio, number of securities (security)	263
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (as percent)	3.50%
Agency collateralized mortgage obligations
Investment Holdings [Line Items]
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (as percent)	1.80%
Held-to-maturity, securities in unrealized loss positions (security)	1
Held-to-maturity securities portfolio, number of securities (security)	9
Agency collateralized mortgage obligations | Debt securities
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	99
Available for sale securities portfolio, number of securities (security)	241
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (as percent)	0.60%
Mortgage-backed securities
Investment Holdings [Line Items]
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (as percent)	1.70%
Held-to-maturity, securities in unrealized loss positions (security)	2
Held-to-maturity securities portfolio, number of securities (security)	2
Mortgage-backed securities | Debt securities
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	49
Available for sale securities portfolio, number of securities (security)	103
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (as percent)	1.60%
Corporate bonds | One Investment | Level 2
Investment Holdings [Line Items]
Securities available for sale, at fair value | $	$ 15,900
Corporate bonds | Debt securities
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	1
Available for sale securities portfolio, number of securities (security)	14
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (as percent)	0.90%
Corporate bonds | Debt securities | One Investment
Investment Holdings [Line Items]
Available for sale securities gross unrealized loss accumulated in investments | $	$ 146
Securities available for sale, at fair value | $	$ 16,000
Other bonds and obligations | Debt securities
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	5
Available for sale securities portfolio, number of securities (security)	9
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (as percent)	0.40%

XML

LOANS - Summary of Total Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 6,947,406	$ 6,549,787
Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	5,841,115	5,221,307
Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,106,291	1,328,480
Total commercial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	3,926,184	3,678,476
Total commercial loans | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	3,224,973	2,834,446
Total commercial loans | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	701,211	844,030
Commercial Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	2,671,237	2,616,438
Commercial Real Estate | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	2,069,985	1,926,344
Commercial Real Estate | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	601,252	690,094
Commercial Real Estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	283,549	287,509
Commercial Real Estate | Construction | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	265,059	253,302
Commercial Real Estate | Construction | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	18,490	34,207
Commercial Real Estate | Single and multi-family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	427,094	317,491
Commercial Real Estate | Single and multi-family | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	342,426	191,819
Commercial Real Estate | Single and multi-family | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	84,668	125,672
Commercial Real Estate | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,960,594	2,011,438
Commercial Real Estate | Other | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,462,500	1,481,223
Commercial Real Estate | Other | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	498,094	530,215
Commercial and industrial loans | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,154,988	908,102
Commercial and industrial loans | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	99,959	153,936
Commercial and industrial loans | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,254,947	1,062,038
Commercial and industrial loans | Other | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,154,988	908,102
Commercial and industrial loans | Other | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	99,959	153,936
Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,983,126	1,893,131
Residential Mortgages | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,724,093	1,594,972
Residential Mortgages | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	259,033	298,159
Residential Mortgages | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	7,177	11,982
Residential Mortgages | Construction | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	6,933	11,178
Residential Mortgages | Construction | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	244	804
Residential Mortgages | 1-4 family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,975,949	1,881,149
Residential Mortgages | 1-4 family | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,717,160	1,583,794
Residential Mortgages | 1-4 family | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	258,789	297,355
Consumer Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,038,096	978,180
Consumer Loans | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	892,049	791,889
Consumer Loans | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	146,047	186,291
Consumer Loans | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	385,890	393,800
Consumer Loans | Home equity | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	290,144	313,521
Consumer Loans | Home equity | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	95,746	80,279
Consumer Loans | Auto and other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	652,206	584,380
Consumer Loans | Auto and other | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	601,905	478,368
Consumer Loans | Auto and other | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 50,301	$ 106,012

XML

LOANS - Narrative (Details) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2017 USD ($) contract	Sep. 30, 2017 USD ($) contract	Dec. 31, 2016 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 6,947,406	$ 6,947,406	$ 6,549,787
Borrower's sustained repayment performance period		6 months
Modifications that subsequently defaulted, number of contracts | contract	0	2
Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 1,983,126	$ 1,983,126	1,893,131
Foreclosed property	288	288	151
Residential Mortgages | Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Process of foreclosure		4,700	4,800
Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,106,291	1,106,291	1,328,480
Acquired Credit Impaired	32,199	32,199	46,816
Certain loans acquired in transfer not accounted for as debt securities, note balance, net	56,800	56,800	86,600
Financing receivable not considered impaired at time of acquisition	1,100,000	1,100,000	1,300,000
Acquired Loans | Residential Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	259,033	259,033	298,159
Acquired Credit Impaired	7,167	7,167	7,283
Acquired Loans | Residential Mortgages | Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 259,033	$ 259,033	$ 298,159

XML

LOANS - Accretable Yield Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	$ 5,767	$ 6,213	$ 8,738	$ 6,925
Acquisitions	0	0	0	708
Reclassification from nonaccretable difference for loans with improved cash flows	10	688	343	2,106
Change in cash flows that do not affect nonaccretable difference	0	0	0	0
Reclassification to TDR	0	0	0	(185)
Accretion	(1,712)	(2,298)	(5,016)	(4,951)
Balance at end of period	$ 4,065	$ 4,603	$ 4,065	$ 4,603

XML

LOANS - Summary of Past Due Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	$ 6,947,406	$ 6,549,787
Commercial Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	2,671,237	2,616,438
Commercial Real Estate | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	283,549	287,509
Commercial Real Estate | Single and multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	427,094	317,491
Commercial Real Estate | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	1,960,594	2,011,438
Commercial and industrial loans | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	1,254,947	1,062,038
Residential Mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	1,983,126	1,893,131
Residential Mortgages | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	7,177	11,982
Residential Mortgages | 1-4 family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	1,975,949	1,881,149
Consumer Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	1,038,096	978,180
Consumer Loans | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	385,890	393,800
Consumer Loans | Auto and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	652,206	584,380
Business Activities Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	26,774	32,277
Current	5,814,341	5,189,030
Total loans	5,841,115	5,221,307
Past Due 90 days and Accruing	579	2,438
Business Activities Loans | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	5,569	8,174
Business Activities Loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,947	4,849
Business Activities Loans | 90 Days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	18,258	19,254
Business Activities Loans | Commercial Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	5,405	8,288
Current	2,064,580	1,918,056
Total loans	2,069,985	1,926,344
Past Due 90 days and Accruing	163	155
Business Activities Loans | Commercial Real Estate | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Current	265,059	253,302
Total loans	265,059	253,302
Past Due 90 days and Accruing	0	0
Business Activities Loans | Commercial Real Estate | Single and multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	729	1,352
Current	341,697	190,467
Total loans	342,426	191,819
Past Due 90 days and Accruing	163	155
Business Activities Loans | Commercial Real Estate | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,676	6,936
Current	1,457,824	1,474,287
Total loans	1,462,500	1,481,223
Past Due 90 days and Accruing	0	0
Business Activities Loans | Commercial Real Estate | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	450	1,099
Business Activities Loans | Commercial Real Estate | 30-59 Days Past Due | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Commercial Real Estate | 30-59 Days Past Due | Single and multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	143	618
Business Activities Loans | Commercial Real Estate | 30-59 Days Past Due | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	307	481
Business Activities Loans | Commercial Real Estate | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	260	2,353
Business Activities Loans | Commercial Real Estate | 60-89 Days Past Due | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Commercial Real Estate | 60-89 Days Past Due | Single and multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	260	110
Business Activities Loans | Commercial Real Estate | 60-89 Days Past Due | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	2,243
Business Activities Loans | Commercial Real Estate | 90 Days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,695	4,836
Business Activities Loans | Commercial Real Estate | 90 Days or Greater Past Due | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Commercial Real Estate | 90 Days or Greater Past Due | Single and multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	326	624
Business Activities Loans | Commercial Real Estate | 90 Days or Greater Past Due | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,369	4,212
Business Activities Loans | Commercial and industrial loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	10,493	10,681
Current	1,144,495	897,421
Total loans	1,154,988	908,102
Past Due 90 days and Accruing	32	5
Business Activities Loans | Commercial and industrial loans | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	1,154,988	908,102
Business Activities Loans | Commercial and industrial loans | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,370	3,090
Business Activities Loans | Commercial and industrial loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	640	1,301
Business Activities Loans | Commercial and industrial loans | 90 Days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	8,483	6,290
Business Activities Loans | Residential Mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,544	6,283
Current	1,719,549	1,588,689
Total loans	1,724,093	1,594,972
Past Due 90 days and Accruing	125	1,956
Business Activities Loans | Residential Mortgages | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	10
Current	6,933	11,168
Total loans	6,933	11,178
Past Due 90 days and Accruing	0	0
Business Activities Loans | Residential Mortgages | 1-4 family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,544	6,273
Current	1,712,616	1,577,521
Total loans	1,717,160	1,583,794
Past Due 90 days and Accruing	125	1,956
Business Activities Loans | Residential Mortgages | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,055	1,403
Business Activities Loans | Residential Mortgages | 30-59 Days Past Due | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	10
Business Activities Loans | Residential Mortgages | 30-59 Days Past Due | 1-4 family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,055	1,393
Business Activities Loans | Residential Mortgages | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,396	701
Business Activities Loans | Residential Mortgages | 60-89 Days Past Due | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Residential Mortgages | 60-89 Days Past Due | 1-4 family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,396	701
Business Activities Loans | Residential Mortgages | 90 Days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,093	4,179
Business Activities Loans | Residential Mortgages | 90 Days or Greater Past Due | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Residential Mortgages | 90 Days or Greater Past Due | 1-4 family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,093	4,179
Business Activities Loans | Consumer Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	6,332	7,025
Current	885,717	784,864
Total loans	892,049	791,889
Past Due 90 days and Accruing	259	322
Business Activities Loans | Consumer Loans | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,213	3,080
Current	287,931	310,441
Total loans	290,144	313,521
Past Due 90 days and Accruing	228	306
Business Activities Loans | Consumer Loans | Auto and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,119	3,945
Current	597,786	474,423
Total loans	601,905	478,368
Past Due 90 days and Accruing	31	16
Business Activities Loans | Consumer Loans | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,694	2,582
Business Activities Loans | Consumer Loans | 30-59 Days Past Due | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	74	99
Business Activities Loans | Consumer Loans | 30-59 Days Past Due | Auto and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,620	2,483
Business Activities Loans | Consumer Loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	651	494
Business Activities Loans | Consumer Loans | 60-89 Days Past Due | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	267	0
Business Activities Loans | Consumer Loans | 60-89 Days Past Due | Auto and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	384	494
Business Activities Loans | Consumer Loans | 90 Days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,987	3,949
Business Activities Loans | Consumer Loans | 90 Days or Greater Past Due | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,872	2,981
Business Activities Loans | Consumer Loans | 90 Days or Greater Past Due | Auto and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,115	968
Acquired Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	12,007	12,730
Acquired Credit Impaired	32,199	46,816
Total loans	1,106,291	1,328,480
Past Due 90 days and Accruing	2,483	1,611
Acquired Loans | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,163	5,023
Acquired Loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	689	672
Acquired Loans | 90 Days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	7,155	7,035
Acquired Loans | Commercial Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	5,928	2,759
Acquired Credit Impaired	22,247	34,820
Total loans	601,252	690,094
Past Due 90 days and Accruing	2,385	0
Acquired Loans | Commercial Real Estate | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	570	0
Acquired Credit Impaired	0	47
Total loans	18,490	34,207
Past Due 90 days and Accruing	0	0
Acquired Loans | Commercial Real Estate | Single and multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,099	439
Acquired Credit Impaired	3,285	4,726
Total loans	84,668	125,672
Past Due 90 days and Accruing	2,385	0
Acquired Loans | Commercial Real Estate | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,259	2,320
Acquired Credit Impaired	18,962	30,047
Total loans	498,094	530,215
Past Due 90 days and Accruing	0	0
Acquired Loans | Commercial Real Estate | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,624	1,557
Acquired Loans | Commercial Real Estate | 30-59 Days Past Due | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	570	0
Acquired Loans | Commercial Real Estate | 30-59 Days Past Due | Single and multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	421	2
Acquired Loans | Commercial Real Estate | 30-59 Days Past Due | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,633	1,555
Acquired Loans | Commercial Real Estate | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	223	0
Acquired Loans | Commercial Real Estate | 60-89 Days Past Due | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Commercial Real Estate | 60-89 Days Past Due | Single and multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	78	0
Acquired Loans | Commercial Real Estate | 60-89 Days Past Due | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	145	0
Acquired Loans | Commercial Real Estate | 90 Days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,081	1,202
Acquired Loans | Commercial Real Estate | 90 Days or Greater Past Due | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Commercial Real Estate | 90 Days or Greater Past Due | Single and multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,600	437
Acquired Loans | Commercial Real Estate | 90 Days or Greater Past Due | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	481	765
Acquired Loans | Commercial and industrial loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,970	3,127
Acquired Credit Impaired	1,497	3,369
Total loans	99,959	153,936
Past Due 90 days and Accruing	54	24
Acquired Loans | Commercial and industrial loans | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	99,959	153,936
Acquired Loans | Commercial and industrial loans | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	634	1,850
Acquired Loans | Commercial and industrial loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	52	15
Acquired Loans | Commercial and industrial loans | 90 Days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,284	1,262
Acquired Loans | Residential Mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,161	2,679
Acquired Credit Impaired	7,167	7,283
Total loans	259,033	298,159
Past Due 90 days and Accruing	30	443
Acquired Loans | Residential Mortgages | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Acquired Credit Impaired	0	0
Total loans	244	804
Past Due 90 days and Accruing	0	0
Acquired Loans | Residential Mortgages | 1-4 family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,161	2,679
Acquired Credit Impaired	7,167	7,283
Total loans	258,789	297,355
Past Due 90 days and Accruing	30	443
Acquired Loans | Residential Mortgages | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	624	321
Acquired Loans | Residential Mortgages | 30-59 Days Past Due | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Residential Mortgages | 30-59 Days Past Due | 1-4 family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	624	321
Acquired Loans | Residential Mortgages | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	383	343
Acquired Loans | Residential Mortgages | 60-89 Days Past Due | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Residential Mortgages | 60-89 Days Past Due | 1-4 family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	383	343
Acquired Loans | Residential Mortgages | 90 Days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,154	2,015
Acquired Loans | Residential Mortgages | 90 Days or Greater Past Due | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Residential Mortgages | 90 Days or Greater Past Due | 1-4 family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,154	2,015
Acquired Loans | Consumer Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,948	4,165
Acquired Credit Impaired	1,288	1,344
Total loans	146,047	186,291
Past Due 90 days and Accruing	14	1,144
Acquired Loans | Consumer Loans | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,245	1,623
Acquired Credit Impaired	930	957
Total loans	95,746	80,279
Past Due 90 days and Accruing	0	353
Acquired Loans | Consumer Loans | Auto and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	703	2,542
Acquired Credit Impaired	358	387
Total loans	50,301	106,012
Past Due 90 days and Accruing	14	791
Acquired Loans | Consumer Loans | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	281	1,295
Acquired Loans | Consumer Loans | 30-59 Days Past Due | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	23	753
Acquired Loans | Consumer Loans | 30-59 Days Past Due | Auto and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	258	542
Acquired Loans | Consumer Loans | 60-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	31	314
Acquired Loans | Consumer Loans | 60-89 Days Past Due | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2	0
Acquired Loans | Consumer Loans | 60-89 Days Past Due | Auto and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	29	314
Acquired Loans | Consumer Loans | 90 Days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,636	2,556
Acquired Loans | Consumer Loans | 90 Days or Greater Past Due | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,220	870
Acquired Loans | Consumer Loans | 90 Days or Greater Past Due | Auto and other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 416	$ 1,686

XML

LOANS - Summary Information Pertaining to Non-accrual Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Non-accrual loans
Non-accrual loans	$ 22,268	$ 22,157
Business Activities Loans
Non-accrual loans
Non-accrual loans	17,679	16,816
Acquired Loans
Non-accrual loans
Non-accrual loans	4,589	5,341
Acquired Credit Impaired Loans
Non-accrual loans
Non-accrual loans	83	83
Commercial Real Estate
Non-accrual loans
Non-accrual loans	5,228	5,883
Commercial Real Estate | Business Activities Loans
Non-accrual loans
Non-accrual loans	4,532	4,681
Commercial Real Estate | Acquired Loans
Non-accrual loans
Non-accrual loans	696	1,202
Commercial Real Estate | Construction
Non-accrual loans
Non-accrual loans	0	0
Commercial Real Estate | Construction | Business Activities Loans
Non-accrual loans
Non-accrual loans	0	0
Commercial Real Estate | Construction | Acquired Loans
Non-accrual loans
Non-accrual loans	0	0
Commercial Real Estate | Single and multi-family
Non-accrual loans
Non-accrual loans	378	906
Commercial Real Estate | Single and multi-family | Business Activities Loans
Non-accrual loans
Non-accrual loans	163	469
Commercial Real Estate | Single and multi-family | Acquired Loans
Non-accrual loans
Non-accrual loans	215	437
Commercial Real Estate | Other
Non-accrual loans
Non-accrual loans	4,850	4,977
Commercial Real Estate | Other | Business Activities Loans
Non-accrual loans
Non-accrual loans	4,369	4,212
Commercial Real Estate | Other | Acquired Loans
Non-accrual loans
Non-accrual loans	481	765
Commercial and industrial loans
Non-accrual loans
Non-accrual loans	9,598	7,440
Commercial and industrial loans | Business Activities Loans
Non-accrual loans
Non-accrual loans	8,451	6,285
Commercial and industrial loans | Acquired Loans
Non-accrual loans
Non-accrual loans	1,147	1,155
Residential Mortgages
Non-accrual loans
Non-accrual loans	3,092	3,795
Residential Mortgages | Business Activities Loans
Non-accrual loans
Non-accrual loans	1,968	2,223
Residential Mortgages | Acquired Loans
Non-accrual loans
Non-accrual loans	1,124	1,572
Residential Mortgages | Construction
Non-accrual loans
Non-accrual loans	0	0
Residential Mortgages | Construction | Business Activities Loans
Non-accrual loans
Non-accrual loans	0	0
Residential Mortgages | Construction | Acquired Loans
Non-accrual loans
Non-accrual loans	0	0
Residential Mortgages | 1-4 family
Non-accrual loans
Non-accrual loans	3,092	3,795
Residential Mortgages | 1-4 family | Business Activities Loans
Non-accrual loans
Non-accrual loans	1,968	2,223
Residential Mortgages | 1-4 family | Acquired Loans
Non-accrual loans
Non-accrual loans	1,124	1,572
Consumer Loans
Non-accrual loans
Non-accrual loans	4,350	5,039
Consumer Loans | Business Activities Loans
Non-accrual loans
Non-accrual loans	2,728	3,627
Consumer Loans | Acquired Loans
Non-accrual loans
Non-accrual loans	1,622	1,412
Consumer Loans | Home equity
Non-accrual loans
Non-accrual loans	2,864	3,192
Consumer Loans | Home equity | Business Activities Loans
Non-accrual loans
Non-accrual loans	1,644	2,675
Consumer Loans | Home equity | Acquired Loans
Non-accrual loans
Non-accrual loans	1,220	517
Consumer Loans | Auto and other
Non-accrual loans
Non-accrual loans	1,486	1,847
Consumer Loans | Auto and other | Business Activities Loans
Non-accrual loans
Non-accrual loans	1,084	952
Consumer Loans | Auto and other | Acquired Loans
Non-accrual loans
Non-accrual loans	$ 402	$ 895

XML

LOANS - Loans Evaluated for Impairment (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Loans receivable: balance at end of period
Total loans	$ 6,947,406	$ 6,549,787
Commercial Real Estate
Loans receivable: balance at end of period
Total loans	2,671,237	2,616,438
Residential Mortgages
Loans receivable: balance at end of period
Total loans	1,983,126	1,893,131
Consumer Loans
Loans receivable: balance at end of period
Total loans	1,038,096	978,180
Business Activities Loans
Loans receivable: balance at end of period
Individually evaluated for impairment	48,293	36,732
Collectively evaluated for impairment	5,792,822	5,184,575
Total loans	5,841,115	5,221,307
Business Activities Loans | Commercial Real Estate
Loans receivable: balance at end of period
Individually evaluated for impairment	34,064	25,549
Collectively evaluated for impairment	2,035,921	1,900,795
Total loans	2,069,985	1,926,344
Business Activities Loans | Commercial and industrial loans
Loans receivable: balance at end of period
Individually evaluated for impairment	10,164	5,705
Collectively evaluated for impairment	1,144,824	902,397
Total loans	1,154,988	908,102
Business Activities Loans | Residential Mortgages
Loans receivable: balance at end of period
Individually evaluated for impairment	2,205	2,775
Collectively evaluated for impairment	1,721,888	1,592,197
Total loans	1,724,093	1,594,972
Business Activities Loans | Consumer Loans
Loans receivable: balance at end of period
Individually evaluated for impairment	1,860	2,703
Collectively evaluated for impairment	890,189	789,186
Total loans	892,049	791,889
Acquired Loans
Loans receivable: balance at end of period
Individually evaluated for impairment	4,787	5,605
Purchased credit-impaired loans	32,199	46,816
Collectively evaluated for impairment	1,069,305	1,276,059
Total loans	1,106,291	1,328,480
Acquired Loans | Commercial Real Estate
Loans receivable: balance at end of period
Individually evaluated for impairment	2,770	4,256
Purchased credit-impaired loans	22,247	34,820
Collectively evaluated for impairment	576,235	651,018
Total loans	601,252	690,094
Acquired Loans | Commercial and industrial loans
Loans receivable: balance at end of period
Individually evaluated for impairment	592	635
Purchased credit-impaired loans	1,497	3,369
Collectively evaluated for impairment	97,870	149,932
Total loans	99,959	153,936
Acquired Loans | Residential Mortgages
Loans receivable: balance at end of period
Individually evaluated for impairment	475	308
Purchased credit-impaired loans	7,167	7,283
Collectively evaluated for impairment	251,391	290,568
Total loans	259,033	298,159
Acquired Loans | Consumer Loans
Loans receivable: balance at end of period
Individually evaluated for impairment	950	406
Purchased credit-impaired loans	1,288	1,344
Collectively evaluated for impairment	143,809	184,541
Total loans	$ 146,047	$ 186,291

XML

LOANS - Summary of Impaired Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Business Activities Loans
Recorded Investment
Total	$ 47,700	$ 36,018
Unpaid Principal Balance
Total	48,293	36,732
Related Allowance
With an allowance recorded	593	714
Business Activities Loans | Commercial Real Estate
Recorded Investment
Total	33,925	25,390
Unpaid Principal Balance
Total	34,064	25,548
Related Allowance
With an allowance recorded	139	158
Business Activities Loans | Commercial Real Estate | Single and multi-family
Recorded Investment
With no related allowance	0	0
With an allowance recorded	162	179
Unpaid Principal Balance
With no related allowance	0	0
With an allowance recorded	163	181
Related Allowance
With an allowance recorded	1	2
Business Activities Loans | Commercial Real Estate | Other
Recorded Investment
With no related allowance	19,005	18,905
With an allowance recorded	14,758	6,306
Unpaid Principal Balance
With no related allowance	19,005	18,905
With an allowance recorded	14,896	6,462
Related Allowance
With an allowance recorded	138	156
Business Activities Loans | Commercial and industrial loans
Recorded Investment
Total	9,885	5,442
Unpaid Principal Balance
Total	10,164	5,706
Related Allowance
With an allowance recorded	279	264
Business Activities Loans | Commercial and industrial loans | Other
Recorded Investment
With no related allowance	2,043	382
With an allowance recorded	7,842	5,060
Unpaid Principal Balance
With no related allowance	2,043	382
With an allowance recorded	8,121	5,324
Related Allowance
With an allowance recorded	279	264
Business Activities Loans | Residential Mortgages
Recorded Investment
Total	2,069	2,639
Unpaid Principal Balance
Total	2,205	2,775
Related Allowance
With an allowance recorded	136	136
Business Activities Loans | Residential Mortgages | 1-4 Family
Recorded Investment
With no related allowance	1,033	2,101
With an allowance recorded	1,036	538
Unpaid Principal Balance
With no related allowance	1,033	2,101
With an allowance recorded	1,172	674
Related Allowance
With an allowance recorded	136	136
Business Activities Loans | Consumer Loans
Recorded Investment
Total	1,821	2,547
Unpaid Principal Balance
Total	1,860	2,703
Related Allowance
With an allowance recorded	39	156
Business Activities Loans | Consumer Loans | Other
Recorded Investment
With no related allowance	0	0
With an allowance recorded	0	0
Unpaid Principal Balance
With no related allowance	0	0
With an allowance recorded	0	0
Related Allowance
With an allowance recorded	0	0
Business Activities Loans | Consumer Loans | Home equity
Recorded Investment
With no related allowance	769	1,605
With an allowance recorded	1,052	942
Unpaid Principal Balance
With no related allowance	769	1,605
With an allowance recorded	1,091	1,098
Related Allowance
With an allowance recorded	39	156
Acquired Loans
Recorded Investment
Total	4,676	5,171
Unpaid Principal Balance
Total	4,787	5,605
Related Allowance
With an allowance recorded	111	434
Acquired Loans | Commercial Real Estate
Recorded Investment
Total	2,724	4,006
Unpaid Principal Balance
Total	2,770	4,256
Related Allowance
With an allowance recorded	46	250
Acquired Loans | Commercial Real Estate | Single and multi-family
Recorded Investment
With no related allowance	216	0
With an allowance recorded	871	1,250
Unpaid Principal Balance
With no related allowance	216	0
With an allowance recorded	892	1,358
Related Allowance
With an allowance recorded	21	108
Acquired Loans | Commercial Real Estate | Other
Recorded Investment
With no related allowance	195	547
With an allowance recorded	1,442	2,209
Unpaid Principal Balance
With no related allowance	195	547
With an allowance recorded	1,467	2,351
Related Allowance
With an allowance recorded	25	142
Acquired Loans | Commercial and industrial loans
Recorded Investment
With no related allowance	287	0
With an allowance recorded	303	576
Total	590	576
Unpaid Principal Balance
With no related allowance	287	0
With an allowance recorded	305	635
Total	592	635
Related Allowance
With an allowance recorded	2	59
Acquired Loans | Residential Mortgages
Recorded Investment
Total	456	297
Unpaid Principal Balance
Total	475	308
Related Allowance
With an allowance recorded	19	11
Acquired Loans | Residential Mortgages | 1-4 Family
Recorded Investment
With no related allowance	165	208
With an allowance recorded	291	89
Unpaid Principal Balance
With no related allowance	165	208
With an allowance recorded	310	100
Related Allowance
With an allowance recorded	19	11
Acquired Loans | Consumer Loans
Recorded Investment
Total	906	292
Unpaid Principal Balance
Total	950	406
Related Allowance
With an allowance recorded	44	114
Acquired Loans | Consumer Loans | Other
Recorded Investment
With no related allowance	0
Unpaid Principal Balance
With no related allowance	0
Acquired Loans | Consumer Loans | Home equity
Recorded Investment
With no related allowance	581
With an allowance recorded	325	292
Unpaid Principal Balance
With no related allowance	581
With an allowance recorded	369	406
Related Allowance
With an allowance recorded	$ 44	$ 114

XML

LOANS - Average Recorded Investment and Interest Income Recognized on Impaired Loans (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment	$ 45,232	$ 23,142
Interest income, cash basis method	1,855	749
Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment	5,386	5,623
Interest income, cash basis method	309	222
Commercial Real Estate | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment	31,941	12,938
Interest income, cash basis method	1,307	463
Commercial Real Estate | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment	3,292	4,094
Interest income, cash basis method	244	184
Commercial Real Estate | Single and multi-family | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	84	48
Cash basis interest income recognized, with no related allowance	0	1
Average recorded investment with related allowance	172	0
Cash basis interest income recognized, with related allowance	10	0
Commercial Real Estate | Single and multi-family | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	424	0
Cash basis interest income recognized, with no related allowance	79	0
Average recorded investment with related allowance	904	942
Cash basis interest income recognized, with related allowance	36	37
Commercial Real Estate | Other | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	21,132	2,624
Cash basis interest income recognized, with no related allowance	934	111
Average recorded investment with related allowance	10,553	10,266
Cash basis interest income recognized, with related allowance	363	351
Commercial Real Estate | Other | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	483	546
Cash basis interest income recognized, with no related allowance	73	20
Average recorded investment with related allowance	1,481	2,606
Cash basis interest income recognized, with related allowance	56	127
Commercial and industrial loans | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	1,825	805
Cash basis interest income recognized, with no related allowance	69	26
Average recorded investment with related allowance	6,493	4,609
Cash basis interest income recognized, with related allowance	354	154
Average recorded investment	8,318	5,414
Interest income, cash basis method	423	180
Commercial and industrial loans | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	319	191
Cash basis interest income recognized, with no related allowance	4	1
Average recorded investment with related allowance	332	404
Cash basis interest income recognized, with related allowance	29	10
Average recorded investment	651	595
Interest income, cash basis method	33	11
Residential Mortgages | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment	2,578	2,993
Interest income, cash basis method	67	72
Residential Mortgages | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment	489	438
Interest income, cash basis method	19	13
Residential Mortgages | 1-4 Family | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	1,391	2,309
Cash basis interest income recognized, with no related allowance	29	51
Average recorded investment with related allowance	1,187	684
Cash basis interest income recognized, with related allowance	38	21
Residential Mortgages | 1-4 Family | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	170	321
Cash basis interest income recognized, with no related allowance	7	9
Average recorded investment with related allowance	319	117
Cash basis interest income recognized, with related allowance	12	4
Consumer Loans | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment	2,395	1,797
Interest income, cash basis method	58	34
Consumer Loans | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment	954	496
Interest income, cash basis method	13	14
Consumer Loans | Other | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	0	1
Cash basis interest income recognized, with no related allowance	0	0
Average recorded investment with related allowance	0	104
Cash basis interest income recognized, with related allowance	0	3
Consumer Loans | Other | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	0	140
Cash basis interest income recognized, with no related allowance	0	1
Average recorded investment with related allowance	0	0
Cash basis interest income recognized, with related allowance	0	0
Consumer Loans | Home equity | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	1,301	693
Cash basis interest income recognized, with no related allowance	26	5
Average recorded investment with related allowance	1,094	999
Cash basis interest income recognized, with related allowance	32	26
Consumer Loans | Home equity | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	567	0
Cash basis interest income recognized, with no related allowance	0	0
Average recorded investment with related allowance	387	356
Cash basis interest income recognized, with related allowance	$ 13	$ 13

XML

LOANS - Recorded Investment and Number of Modifications (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($) modification	Sep. 30, 2016 USD ($) modification	Sep. 30, 2017 USD ($) modification	Sep. 30, 2016 USD ($) modification
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications | modification	3	4	26	9
Pre-Modification Outstanding Recorded Investment	$ 1,654	$ 409	$ 17,174	$ 1,726
Post-Modification Outstanding Recorded Investment	$ 1,654	$ 409	$ 15,430	$ 1,726
Total commercial loans | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications | modification	0		15	2
Pre-Modification Outstanding Recorded Investment	$ 0		$ 13,445	$ 1,049
Post-Modification Outstanding Recorded Investment	$ 0		$ 11,718	$ 1,049
Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications | modification	3	2	8	4
Pre-Modification Outstanding Recorded Investment	$ 1,654	$ 404	$ 3,471	$ 555
Post-Modification Outstanding Recorded Investment	$ 1,654	$ 404	$ 3,471	$ 555
Residential Mortgages | 1-4 Family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications | modification	0	2	2	2
Pre-Modification Outstanding Recorded Investment	$ 0	$ 5	$ 205	$ 5
Post-Modification Outstanding Recorded Investment	$ 0	$ 5	$ 188	$ 5
Consumer Loans | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications | modification	0		1	1
Pre-Modification Outstanding Recorded Investment	$ 0		$ 53	$ 117
Post-Modification Outstanding Recorded Investment	$ 0		$ 53	$ 117

XML

LOANS - Troubled Debt Restructurings (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2017 USD ($) contract	Sep. 30, 2017 USD ($) contract
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modifications that subsequently defaulted, number of contracts	0	2
Total commercial loans | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modifications that subsequently defaulted, number of contracts	0	1
Modifications that subsequently defaulted, recorded investment | $	$ 0	$ 113
Commercial and industrial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Modifications that subsequently defaulted, number of contracts	0	1
Modifications that subsequently defaulted, recorded investment | $	$ 0	$ 101

XML

LOANS - Troubled Debt Restructuring Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Trouble Debt Restructuring on Financing Receivables [Roll Forward]
Balance at beginning of the period	$ 44,556	$ 22,122	$ 33,829	$ 22,048
Principal payments	(373)	(932)	(1,527)	(2,041)
TDR status change	0	0	0	2,236
Other reductions/increases	(1,939)	0	(3,834)	(2,370)
Newly identified TDRs	1,654	409	15,430	1,726
Balance at end of the period	$ 43,898	$ 21,599	$ 43,898	$ 21,599

XML

LOAN LOSS ALLOWANCE - Allowance Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Activity in the allowance for loan losses
Balance at beginning of period			$ 43,998
Provision/(releases) for loan losses	$ 4,900	$ 4,734	14,884	$ 13,262
Balance at end of period	49,004		49,004
Allowance For Loan Losses
Total	49,004		43,998		$ 49,004
Business Activities Loans
Activity in the allowance for loan losses
Balance at beginning of period	42,895	37,124	39,229	34,574
Charged-off loans	3,367	2,286	8,565	8,238
Recoveries on charged-off loans	331	308	660	640
Provision/(releases) for loan losses	4,876	3,475	13,411	11,645
Balance at end of period	44,735	38,621	44,735	38,621
Allowance For Loan Losses
Individually evaluated for impairment					593	$ 638
Collectively evaluated for impairment					44,142	37,983
Total	42,895	37,124	39,229	34,574	44,735	38,621
Business Activities Loans | Commercial real estate
Activity in the allowance for loan losses
Balance at beginning of period	15,972	16,732	16,499	14,610
Charged-off loans	1,367	0	2,883	1,578
Recoveries on charged-off loans	14	114	71	242
Provision/(releases) for loan losses	1,210	620	2,142	4,192
Balance at end of period	15,829	17,466	15,829	17,466
Allowance For Loan Losses
Individually evaluated for impairment					139	190
Collectively evaluated for impairment					15,690	17,276
Total	15,972	16,732	16,499	14,610	15,829	17,466
Business Activities Loans | Commercial and industrial loans
Activity in the allowance for loan losses
Balance at beginning of period	12,588	8,216	9,446	7,367
Charged-off loans	606	1,599	2,457	4,145
Recoveries on charged-off loans	37	37	108	114
Provision/(releases) for loan losses	1,952	1,831	6,874	5,149
Balance at end of period	13,971	8,485	13,971	8,485
Allowance For Loan Losses
Individually evaluated for impairment					279	194
Collectively evaluated for impairment					13,692	8,291
Total	12,588	8,216	9,446	7,367	13,971	8,485
Business Activities Loans | Residential mortgages
Activity in the allowance for loan losses
Balance at beginning of period	8,114	7,453	7,800	7,612
Charged-off loans	42	253	555	1,340
Recoveries on charged-off loans	241	96	270	101
Provision/(releases) for loan losses	241	88	1,039	1,011
Balance at end of period	8,554	7,384	8,554	7,384
Allowance For Loan Losses
Individually evaluated for impairment					136	89
Collectively evaluated for impairment					8,418	7,295
Total	8,114	7,453	7,800	7,612	8,554	7,384
Business Activities Loans | Consumer
Activity in the allowance for loan losses
Balance at beginning of period	6,221	4,723	5,484	4,985
Charged-off loans	1,352	434	2,670	1,175
Recoveries on charged-off loans	39	61	211	183
Provision/(releases) for loan losses	1,473	936	3,356	1,293
Balance at end of period	6,381	5,286	6,381	5,286
Allowance For Loan Losses
Individually evaluated for impairment					39	165
Collectively evaluated for impairment					6,342	5,121
Total	6,221	4,723	5,484	4,985	6,381	5,286
Acquired Loans
Activity in the allowance for loan losses
Balance at beginning of period	4,464	4,273	4,769	4,734
Charged-off loans	429	1,155	2,285	2,300
Recoveries on charged-off loans	210	107	312	433
Provision/(releases) for loan losses	24	1,259	1,473	1,617
Balance at end of period	4,269	4,484	4,269	4,484
Allowance For Loan Losses
Individually evaluated for impairment					111	972
Purchased credit-impaired loans					0	0
Collectively evaluated for impairment					4,158	3,512
Total	4,464	4,273	4,769	4,734	4,269	4,484
Acquired Loans | Commercial real estate
Activity in the allowance for loan losses
Balance at beginning of period	2,356	2,140	2,303	1,903
Charged-off loans	95	662	765	788
Recoveries on charged-off loans	22	0	44	0
Provision/(releases) for loan losses	109	907	810	1,270
Balance at end of period	2,392	2,385	2,392	2,385
Allowance For Loan Losses
Individually evaluated for impairment					46	704
Purchased credit-impaired loans					0	0
Collectively evaluated for impairment					2,346	1,681
Total	2,356	2,140	2,303	1,903	2,392	2,385
Acquired Loans | Commercial and industrial loans
Activity in the allowance for loan losses
Balance at beginning of period	1,014	776	1,164	1,330
Charged-off loans	153	84	634	359
Recoveries on charged-off loans	150	37	151	213
Provision/(releases) for loan losses	(149)	210	181	(245)
Balance at end of period	862	939	862	939
Allowance For Loan Losses
Individually evaluated for impairment					2	121
Purchased credit-impaired loans					0	0
Collectively evaluated for impairment					860	818
Total	1,014	776	1,164	1,330	862	939
Acquired Loans | Residential mortgages
Activity in the allowance for loan losses
Balance at beginning of period	690	881	766	976
Charged-off loans	70	332	285	696
Recoveries on charged-off loans	1	37	39	141
Provision/(releases) for loan losses	49	111	150	276
Balance at end of period	670	697	670	697
Allowance For Loan Losses
Individually evaluated for impairment					19	12
Purchased credit-impaired loans					0	0
Collectively evaluated for impairment					651	685
Total	690	881	766	976	670	697
Acquired Loans | Consumer
Activity in the allowance for loan losses
Balance at beginning of period	404	476	536	525
Charged-off loans	111	77	601	457
Recoveries on charged-off loans	37	33	78	79
Provision/(releases) for loan losses	15	31	332	316
Balance at end of period	345	463	345	463
Allowance For Loan Losses
Individually evaluated for impairment					44	135
Purchased credit-impaired loans					0	0
Collectively evaluated for impairment					301	328
Total	$ 404	$ 476	$ 536	$ 525	$ 345	$ 463

XML

LOAN LOSS ALLOWANCE - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2017 USD ($) grade
Credit quality information
Allowance for losses on acquired loans under Subtopic ASC 310-30 | $	$ 4.3
Acquired Loans
Credit quality information
Number of grades in internal loan rating system (grade)	11
Residential Mortgages | Mortgages
Credit quality information
Number of grades in internal loan rating system (grade)	3
Residential Mortgages | Mortgages | Pass | Maximum
Credit quality information
Delinquency period of loans based on which risk rating is assigned to loans (in days)	59 days
Residential Mortgages | Mortgages | Special mention | Minimum
Credit quality information
Delinquency period of loans based on which risk rating is assigned to loans (in days)	60 days
Residential Mortgages | Mortgages | Special mention | Maximum
Credit quality information
Delinquency period of loans based on which risk rating is assigned to loans (in days)	89 days
Residential Mortgages | Mortgages | Substandard | Minimum
Credit quality information
Delinquency period of loans based on which risk rating is assigned to loans (in days)	90 days
Consumer Loans | Other
Credit quality information
Number of grades in internal loan rating system (grade)	2
Consumer Loans | Performing | Maximum | Other
Credit quality information
Period within which loans are current, based on which risk rating is assigned (in days)	119 days
Consumer Loans | Nonperforming | Minimum | Other
Credit quality information
Delinquency period of loans based on which risk rating is assigned to loans (in days)	120 days

XML

LOAN LOSS ALLOWANCE - Loans by Credit Risk Rating (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Credit quality information
Total Loans	$ 6,947,406	$ 6,549,787
Special mention
Credit quality information
Total Loans	37,983	11,802
Substandard
Credit quality information
Total Loans	71,251	95,302
Non Accrual
Credit quality information
Total Loans	22,351	22,240
Classified
Credit quality information
Total Loans	93,602	117,542
Criticized
Credit quality information
Total Loans	131,585	129,344
Commercial Real Estate
Credit quality information
Total Loans	2,671,237	2,616,438
Commercial Real Estate | Construction
Credit quality information
Total Loans	283,549	287,509
Commercial Real Estate | Single and multi-family
Credit quality information
Total Loans	427,094	317,491
Commercial Real Estate | Other
Credit quality information
Total Loans	1,960,594	2,011,438
Commercial and industrial loans | Other
Credit quality information
Total Loans	1,254,947	1,062,038
Residential Mortgages
Credit quality information
Total Loans	1,983,126	1,893,131
Residential Mortgages | Construction
Credit quality information
Total Loans	7,177	11,982
Residential Mortgages | 1-4 family
Credit quality information
Total Loans	1,975,949	1,881,149
Consumer Loans
Credit quality information
Total Loans	1,038,096	978,180
Consumer Loans | Home equity
Credit quality information
Total Loans	385,890	393,800
Consumer Loans | Auto and other
Credit quality information
Total Loans	652,206	584,380
Business Activities Loans
Credit quality information
Total Loans	5,841,115	5,221,307
Business Activities Loans | Special mention
Credit quality information
Total Loans	17,699	7,479
Business Activities Loans | Substandard
Credit quality information
Total Loans	36,162	51,125
Business Activities Loans | Non Accrual
Credit quality information
Total Loans	17,679	16,816
Business Activities Loans | Classified
Credit quality information
Total Loans	53,841	67,941
Business Activities Loans | Criticized
Credit quality information
Total Loans	71,540	75,420
Business Activities Loans | Commercial Real Estate
Credit quality information
Total Loans	2,069,985	1,926,344
Business Activities Loans | Commercial Real Estate | Pass
Credit quality information
Total Loans	2,024,058	1,877,374
Business Activities Loans | Commercial Real Estate | Special mention
Credit quality information
Total Loans	13,133	6,161
Business Activities Loans | Commercial Real Estate | Substandard
Credit quality information
Total Loans	32,794	42,773
Business Activities Loans | Commercial Real Estate | Doubtful
Credit quality information
Total Loans	0	36
Business Activities Loans | Commercial Real Estate | Construction
Credit quality information
Total Loans	265,059	253,302
Business Activities Loans | Commercial Real Estate | Construction | Pass
Credit quality information
Total Loans	265,059	253,302
Business Activities Loans | Commercial Real Estate | Construction | Special mention
Credit quality information
Total Loans	0	0
Business Activities Loans | Commercial Real Estate | Construction | Substandard
Credit quality information
Total Loans	0	0
Business Activities Loans | Commercial Real Estate | Construction | Doubtful
Credit quality information
Total Loans	0	0
Business Activities Loans | Commercial Real Estate | Single and multi-family
Credit quality information
Total Loans	342,426	191,819
Business Activities Loans | Commercial Real Estate | Single and multi-family | Pass
Credit quality information
Total Loans	339,846	189,310
Business Activities Loans | Commercial Real Estate | Single and multi-family | Special mention
Credit quality information
Total Loans	529	334
Business Activities Loans | Commercial Real Estate | Single and multi-family | Substandard
Credit quality information
Total Loans	2,051	2,175
Business Activities Loans | Commercial Real Estate | Single and multi-family | Doubtful
Credit quality information
Total Loans	0	0
Business Activities Loans | Commercial Real Estate | Other
Credit quality information
Total Loans	1,462,500	1,481,223
Business Activities Loans | Commercial Real Estate | Other | Pass
Credit quality information
Total Loans	1,419,153	1,434,762
Business Activities Loans | Commercial Real Estate | Other | Special mention
Credit quality information
Total Loans	12,604	5,827
Business Activities Loans | Commercial Real Estate | Other | Substandard
Credit quality information
Total Loans	30,743	40,598
Business Activities Loans | Commercial Real Estate | Other | Doubtful
Credit quality information
Total Loans	0	36
Business Activities Loans | Commercial and industrial loans
Credit quality information
Total Loans	1,154,988	908,102
Business Activities Loans | Commercial and industrial loans | Other
Credit quality information
Total Loans	1,154,988	908,102
Business Activities Loans | Commercial and industrial loans | Commercial Loan
Credit quality information
Total Loans	1,154,988	908,102
Business Activities Loans | Commercial and industrial loans | Commercial Loan | Pass
Credit quality information
Total Loans	1,136,498	890,974
Business Activities Loans | Commercial and industrial loans | Commercial Loan | Special mention
Credit quality information
Total Loans	2,522	123
Business Activities Loans | Commercial and industrial loans | Commercial Loan | Substandard
Credit quality information
Total Loans	12,981	13,825
Business Activities Loans | Commercial and industrial loans | Commercial Loan | Doubtful
Credit quality information
Total Loans	2,987	3,180
Business Activities Loans | Residential Mortgages
Credit quality information
Total Loans	1,724,093	1,594,972
Business Activities Loans | Residential Mortgages | Construction
Credit quality information
Total Loans	6,933	11,178
Business Activities Loans | Residential Mortgages | 1-4 family
Credit quality information
Total Loans	1,717,160	1,583,794
Business Activities Loans | Residential Mortgages | Mortgages
Credit quality information
Total Loans	1,724,093	1,594,971
Business Activities Loans | Residential Mortgages | Mortgages | Pass
Credit quality information
Total Loans	1,720,604	1,590,091
Business Activities Loans | Residential Mortgages | Mortgages | Special mention
Credit quality information
Total Loans	1,396	701
Business Activities Loans | Residential Mortgages | Mortgages | Substandard
Credit quality information
Total Loans	2,093	4,179
Business Activities Loans | Residential Mortgages | Mortgages | Construction
Credit quality information
Total Loans	6,933	11,178
Business Activities Loans | Residential Mortgages | Mortgages | Construction | Pass
Credit quality information
Total Loans	6,933	11,178
Business Activities Loans | Residential Mortgages | Mortgages | Construction | Special mention
Credit quality information
Total Loans	0	0
Business Activities Loans | Residential Mortgages | Mortgages | Construction | Substandard
Credit quality information
Total Loans	0	0
Business Activities Loans | Residential Mortgages | Mortgages | 1-4 family
Credit quality information
Total Loans	1,717,160	1,583,793
Business Activities Loans | Residential Mortgages | Mortgages | 1-4 family | Pass
Credit quality information
Total Loans	1,713,671	1,578,913
Business Activities Loans | Residential Mortgages | Mortgages | 1-4 family | Special mention
Credit quality information
Total Loans	1,396	701
Business Activities Loans | Residential Mortgages | Mortgages | 1-4 family | Substandard
Credit quality information
Total Loans	2,093	4,179
Business Activities Loans | Consumer Loans
Credit quality information
Total Loans	892,049	791,889
Business Activities Loans | Consumer Loans | Performing
Credit quality information
Total Loans	889,321	788,262
Business Activities Loans | Consumer Loans | Nonperforming
Credit quality information
Total Loans	2,728	3,627
Business Activities Loans | Consumer Loans | Home equity
Credit quality information
Total Loans	290,144	313,521
Business Activities Loans | Consumer Loans | Home equity | Performing
Credit quality information
Total Loans	288,500	310,846
Business Activities Loans | Consumer Loans | Home equity | Nonperforming
Credit quality information
Total Loans	1,644	2,675
Business Activities Loans | Consumer Loans | Auto and other
Credit quality information
Total Loans	601,905	478,368
Business Activities Loans | Consumer Loans | Auto and other | Performing
Credit quality information
Total Loans	600,821	477,416
Business Activities Loans | Consumer Loans | Auto and other | Nonperforming
Credit quality information
Total Loans	1,084	952
Acquired Loans
Credit quality information
Total Loans	1,106,291	1,328,480
Acquired Loans | Special mention
Credit quality information
Total Loans	20,284	4,323
Acquired Loans | Substandard
Credit quality information
Total Loans	35,089	44,177
Acquired Loans | Non Accrual
Credit quality information
Total Loans	4,672	5,424
Acquired Loans | Classified
Credit quality information
Total Loans	39,761	49,601
Acquired Loans | Criticized
Credit quality information
Total Loans	60,045	53,924
Acquired Loans | Commercial Real Estate
Credit quality information
Total Loans	601,252	690,094
Acquired Loans | Commercial Real Estate | Pass
Credit quality information
Total Loans	553,237	649,437
Acquired Loans | Commercial Real Estate | Special mention
Credit quality information
Total Loans	19,803	2,529
Acquired Loans | Commercial Real Estate | Substandard
Credit quality information
Total Loans	28,212	38,128
Acquired Loans | Commercial Real Estate | Construction
Credit quality information
Total Loans	18,490	34,207
Acquired Loans | Commercial Real Estate | Construction | Pass
Credit quality information
Total Loans	17,221	33,461
Acquired Loans | Commercial Real Estate | Construction | Special mention
Credit quality information
Total Loans	570	0
Acquired Loans | Commercial Real Estate | Construction | Substandard
Credit quality information
Total Loans	699	746
Acquired Loans | Commercial Real Estate | Single and multi-family
Credit quality information
Total Loans	84,668	125,672
Acquired Loans | Commercial Real Estate | Single and multi-family | Pass
Credit quality information
Total Loans	81,935	119,414
Acquired Loans | Commercial Real Estate | Single and multi-family | Special mention
Credit quality information
Total Loans	607	907
Acquired Loans | Commercial Real Estate | Single and multi-family | Substandard
Credit quality information
Total Loans	2,126	5,351
Acquired Loans | Commercial Real Estate | Other
Credit quality information
Total Loans	498,094	530,215
Acquired Loans | Commercial Real Estate | Other | Pass
Credit quality information
Total Loans	454,081	496,562
Acquired Loans | Commercial Real Estate | Other | Special mention
Credit quality information
Total Loans	18,626	1,622
Acquired Loans | Commercial Real Estate | Other | Substandard
Credit quality information
Total Loans	25,387	32,031
Acquired Loans | Commercial and industrial loans
Credit quality information
Total Loans	99,959	153,936
Acquired Loans | Commercial and industrial loans | Other
Credit quality information
Total Loans	99,959	153,936
Acquired Loans | Commercial and industrial loans | Commercial Loan
Credit quality information
Total Loans	99,959	153,936
Acquired Loans | Commercial and industrial loans | Commercial Loan | Pass
Credit quality information
Total Loans	95,098	147,102
Acquired Loans | Commercial and industrial loans | Commercial Loan | Special mention
Credit quality information
Total Loans	51	1,260
Acquired Loans | Commercial and industrial loans | Commercial Loan | Substandard
Credit quality information
Total Loans	4,810	5,574
Acquired Loans | Residential Mortgages
Credit quality information
Total Loans	259,033	298,159
Acquired Loans | Residential Mortgages | Construction
Credit quality information
Total Loans	244	804
Acquired Loans | Residential Mortgages | 1-4 family
Credit quality information
Total Loans	258,789	297,355
Acquired Loans | Residential Mortgages | Mortgages
Credit quality information
Total Loans	259,033	298,159
Acquired Loans | Residential Mortgages | Mortgages | Pass
Credit quality information
Total Loans	253,658	295,787
Acquired Loans | Residential Mortgages | Mortgages | Special mention
Credit quality information
Total Loans	398	343
Acquired Loans | Residential Mortgages | Mortgages | Substandard
Credit quality information
Total Loans	4,977	2,029
Acquired Loans | Residential Mortgages | Mortgages | Construction
Credit quality information
Total Loans	244	804
Acquired Loans | Residential Mortgages | Mortgages | Construction | Pass
Credit quality information
Total Loans	244	804
Acquired Loans | Residential Mortgages | Mortgages | Construction | Special mention
Credit quality information
Total Loans	0	0
Acquired Loans | Residential Mortgages | Mortgages | Construction | Substandard
Credit quality information
Total Loans	0	0
Acquired Loans | Residential Mortgages | Mortgages | 1-4 family
Credit quality information
Total Loans	258,789	297,355
Acquired Loans | Residential Mortgages | Mortgages | 1-4 family | Pass
Credit quality information
Total Loans	253,414	294,983
Acquired Loans | Residential Mortgages | Mortgages | 1-4 family | Special mention
Credit quality information
Total Loans	398	343
Acquired Loans | Residential Mortgages | Mortgages | 1-4 family | Substandard
Credit quality information
Total Loans	4,977	2,029
Acquired Loans | Consumer Loans
Credit quality information
Total Loans	146,047	186,291
Acquired Loans | Consumer Loans | Performing
Credit quality information
Total Loans	144,426	184,879
Acquired Loans | Consumer Loans | Nonperforming
Credit quality information
Total Loans	1,621	1,412
Acquired Loans | Consumer Loans | Home equity
Credit quality information
Total Loans	95,746	80,279
Acquired Loans | Consumer Loans | Home equity | Performing
Credit quality information
Total Loans	94,526	79,762
Acquired Loans | Consumer Loans | Home equity | Nonperforming
Credit quality information
Total Loans	1,220	517
Acquired Loans | Consumer Loans | Auto and other
Credit quality information
Total Loans	50,301	106,012
Acquired Loans | Consumer Loans | Auto and other | Performing
Credit quality information
Total Loans	49,900	105,117
Acquired Loans | Consumer Loans | Auto and other | Nonperforming
Credit quality information
Total Loans	$ 401	$ 895

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DEPOSITS (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Deposits [Abstract]
Time less than $250,000	$ 2,200,338	$ 2,015,332
Time $250,000 or more	373,285	318,211
Total time deposits	2,573,623	2,333,543
Brokered time deposits	1,100,000	900,000
Reciprocal deposits	$ 97,400	$ 113,400

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BORROWED FUNDS - Summary of Borrowed Funds (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Short-term borrowings	$ 1,061,300	$ 1,082,044
Long-term borrowings	427,349	231,953
Total borrowings	$ 1,488,649	$ 1,313,997
Weighted average rate on short-term borrowings (as percent)	1.27%	0.72%
Weighted average rate on long-term borrowings (as percent)	2.50%	3.35%
Weighted average rate (as percent)	1.63%	1.19%
Advances from the FHLB
Debt Instrument [Line Items]
Short-term borrowings	$ 1,061,300	$ 1,072,044
Long-term borrowings	$ 338,054	$ 142,792
Weighted average rate on short-term borrowings (as percent)	1.27%	0.71%
Weighted average rate on long-term borrowings (as percent)	1.49%	1.53%
Other borrowings
Debt Instrument [Line Items]
Short-term borrowings	$ 0	$ 10,000
Weighted average rate on short-term borrowings (as percent)	0.00%	2.42%
Subordinated borrowings
Debt Instrument [Line Items]
Long-term borrowings	$ 73,831	$ 73,697
Weighted average rate on long-term borrowings (as percent)	7.00%	7.00%
Junior subordinated borrowings
Debt Instrument [Line Items]
Long-term borrowings	$ 15,464	$ 15,464
Weighted average rate on long-term borrowings (as percent)	3.16%	2.77%

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BORROWED FUNDS - Narrative (Details) - USD ($)	1 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Line of credit, current		$ 3,000,000
Short-term debt		1,061,300,000	$ 1,082,044,000
Long-term borrowings		427,349,000	231,953,000
Advances from the FHLB
Debt Instrument [Line Items]
Long-term line of credit		0	0
Short-term debt		1,061,300,000	1,072,044,000
Long-term borrowings		338,054,000	142,792,000
Federal Reserve Bank Advances
Debt Instrument [Line Items]
Short-term debt		0	0
Federal Home Loan Bank Certificates And Obligations F H L B Callable Advances
Debt Instrument [Line Items]
Long-term borrowings		4,000,000	11,000,000
Federal Home Loan Bank Certificates And Obligations F H L B Amortizing Advances
Debt Instrument [Line Items]
Long-term borrowings		1,100,000	1,200,000
Subordinated borrowings
Debt Instrument [Line Items]
Long-term borrowings		73,831,000	73,697,000
Maturity period (in years)	15 years
Principal amount of debt issued	$ 75,000,000.0
Discount rate (as a percent)	1.15%
Fixed interest rate (as percent)	6.875%
Maturity period with fixed interest rate (in months)	10 years
Subordinated borrowings | Three-month LIBOR rate
Debt Instrument [Line Items]
Interest rate margin (as percent)	5.113%
Unamortized debt issuance expense		614,000	706,000
Junior subordinated borrowings
Debt Instrument [Line Items]
Long-term borrowings		$ 15,464,000	$ 15,464,000
Junior subordinated borrowings | Trust I
Debt Instrument [Line Items]
Common stock of trust (as percent)		100.00%
Common stock of trust included in other asset		$ 500,000
Sole asset of trust in form of debt		$ 15,500,000
Variable interest rate (as percent)		3.16%	2.77%
Period up to which interest payments can be deferred (in years)		5 years
Junior subordinated borrowings | LIBOR | Trust I
Debt Instrument [Line Items]
Interest rate margin (as percent)		1.85%

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BORROWED FUNDS - Summary of Maturities of FHLB (Details) - Fixed rate advances $ in Thousands	Sep. 30, 2017 USD ($)
Principal
2017	$ 1,018,565
2018	218,836
2019	150,000
2020	4,464
2021 and beyond	7,489
Total FHLB advances	$ 1,399,354
Weighted Average
Weighted Average Rate (as a percent)
2017	1.28%
2018	1.28%
2019	1.64%
2020	1.94%
2021 and beyond	2.69%
Total FHLB advances	1.33%

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Actual and Required Capital Ratios (Details)	Sep. 30, 2017	Dec. 31, 2016
Tier 1 capital to risk-weighted assets
Total capital to risk weighted assets	14.30%	11.90%
Common equity tier 1 capital to risk weighted assets	12.30%	9.90%
Tier 1 capital to risk weighted assets	12.50%	10.10%
Tier 1 capital to average assets	9.50%	7.90%
Regulatory minimum to be well capitalized, Total capital to risk weighted assets (as percent)	10.00%	10.00%
Regulatory minimum to be well capitalized, Common equity tier 1 capital to risk weighted assets (as percent)	6.50%	6.50%
Regulatory minimum to be well capitalized, Tier 1 capital to risk weighted assets (as percent)	8.00%	8.00%
Regulatory minimum to be well capitalized, Tier 1 capital to average assets (as percent)	5.00%	5.00%
Bank
Tier 1 capital to risk-weighted assets
Total capital to risk weighted assets	11.70%	11.20%
Common equity tier 1 capital to risk weighted assets	10.40%	10.00%
Tier 1 capital to risk weighted assets	10.40%	10.00%
Tier 1 capital to average assets	8.00%	7.80%
Regulatory minimum to be well capitalized, Total capital to risk weighted assets (as percent)	10.00%	10.00%
Regulatory minimum to be well capitalized, Common equity tier 1 capital to risk weighted assets (as percent)	6.50%	6.50%
Regulatory minimum to be well capitalized, Tier 1 capital to risk weighted assets (as percent)	8.00%	8.00%
Regulatory minimum to be well capitalized, Tier 1 capital to average assets (as percent)	5.00%	5.00%

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Components of AOCI (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Total shareholders’ equity	$ 1,284,527		$ 1,093,298	$ 932,593		$ 887,189
Accumulated other comprehensive income
Total shareholders’ equity	11,187	$ 10,331	9,766	8,411	$ 10,213	(3,305)
Net unrealized holding gain on AFS securities
Other accumulated comprehensive income (loss), before tax	21,132		25,176
Income taxes related to items of accumulated other comprehensive income	(8,155)		(9,636)
Total shareholders’ equity	12,977	12,121	15,540	17,189	20,625	3,880
Net unrealized loss on cash flow hedging derivatives
Other accumulated comprehensive income (loss), before tax	0		(6,573)
Income taxes related to items of accumulated other comprehensive income	0		2,589
Total shareholders’ equity	0	0	(3,984)	(6,701)	(8,335)	(5,108)
Net unrealized holding loss on pension plans
Other accumulated comprehensive income (loss), before tax	(2,954)		(2,954)
Income taxes related to items of accumulated other comprehensive income	1,164		1,164
Total shareholders’ equity	$ (1,790)	$ (1,790)	$ (1,790)	$ (2,077)	$ (2,077)	$ (2,077)

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Components of OCI (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net unrealized holding gain
Net of Tax	$ 855	$ (2,570)	$ 5,023	$ 10,188
Less: reclassification adjustment for gains (losses) realized in net income
Net of Tax	(1)	(768)	3,602	(1,528)
Other comprehensive income
Before Tax	1,461	(2,924)	2,529	18,979
Tax Effect	(605)	1,122	(1,108)	(7,263)
Total other comprehensive income/(loss)	856	(1,802)	1,421	11,716
Realized (losses)/gains on AFS securities:
Net unrealized holding gain
Before Tax	1,460	(5,576)	8,524	21,740
Tax Effect	(605)	2,190	(3,232)	(8,366)
Net of Tax	855	(3,386)	5,292	13,374
Less: reclassification adjustment for gains (losses) realized in net income
Before Tax	(1)	78	12,568	101
Tax Effect	0	(28)	(4,713)	(36)
Net of Tax	(1)	50	7,855	65
Other comprehensive income
Before Tax	1,461	(5,654)	(4,044)	21,639
Tax Effect	(605)	2,218	1,481	(8,330)
Total other comprehensive income/(loss)	856	(3,436)	(2,563)	13,309
Realized (losses) on cash flow hedging derivatives:
Net unrealized holding gain
Before Tax	0	1,363	(449)	(5,322)
Tax Effect	0	(547)	180	2,136
Net of Tax	0	816	(269)	(3,186)
Less: reclassification adjustment for gains (losses) realized in net income
Before Tax	0	(1,367)	(7,022)	(2,662)
Tax Effect	0	549	2,769	1,069
Net of Tax	0	(818)	(4,253)	(1,593)
Other comprehensive income
Before Tax	0	2,730	6,573	(2,660)
Tax Effect	0	(1,096)	(2,589)	1,067
Total other comprehensive income/(loss)	$ 0	$ 1,634	$ 3,984	$ (1,593)

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Changes in AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at Beginning of Period			$ 1,093,298	$ 887,189
Other comprehensive gain (loss) before reclassifications	$ 855	$ (2,570)	5,023	10,188
Less: amounts reclassified from accumulated other comprehensive income (loss)	(1)	(768)	3,602	(1,528)
Total other comprehensive income/(loss)	856	(1,802)	1,421	11,716
Balance at End of Period	1,284,527	932,593	1,284,527	932,593
Net unrealized holding gain on AFS securities
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at Beginning of Period	12,121	20,625	15,540	3,880
Other comprehensive gain (loss) before reclassifications	855	(3,386)	5,292	13,374
Less: amounts reclassified from accumulated other comprehensive income (loss)	(1)	50	7,855	65
Total other comprehensive income/(loss)	856	(3,436)	(2,563)	13,309
Balance at End of Period	12,977	17,189	12,977	17,189
Net unrealized loss on cash flow hedging derivatives
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at Beginning of Period	0	(8,335)	(3,984)	(5,108)
Other comprehensive gain (loss) before reclassifications	0	816	(269)	(3,186)
Less: amounts reclassified from accumulated other comprehensive income (loss)	0	(818)	(4,253)	(1,593)
Total other comprehensive income/(loss)	0	1,634	3,984	(1,593)
Balance at End of Period	0	(6,701)	0	(6,701)
Net unrealized holding loss on pension plans
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at Beginning of Period	(1,790)	(2,077)	(1,790)	(2,077)
Other comprehensive gain (loss) before reclassifications	0	0	0	0
Less: amounts reclassified from accumulated other comprehensive income (loss)	0	0	0	0
Total other comprehensive income/(loss)	0	0	0	0
Balance at End of Period	(1,790)	(2,077)	(1,790)	(2,077)
Accumulated other comprehensive (loss) income
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at Beginning of Period	10,331	10,213	9,766	(3,305)
Total other comprehensive income/(loss)			1,421	11,716
Balance at End of Period	$ 11,187	$ 8,411	$ 11,187	$ 8,411

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Amounts Reclassified Out of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Amounts reclassified out of each component of accumulated other comprehensive income
Non-interest income	$ 28,836	$ 18,941	$ 96,391	$ 49,126
Interest expense	(17,062)	(12,540)	(46,006)	(34,896)
Non-interest expense	(65,820)	(48,844)	(209,669)	(142,212)
Tax (expense) benefit	(7,211)	(6,953)	(22,210)	(18,422)
Net income	22,903	16,381	58,057	48,339
Amount Reclassified From Accumulated Other Comprehensive Income (loss)
Amounts reclassified out of each component of accumulated other comprehensive income
Net income	(1)	(768)	3,602	(1,528)
Realized (losses)/gains on AFS securities: | Amount Reclassified From Accumulated Other Comprehensive Income (loss)
Amounts reclassified out of each component of accumulated other comprehensive income
Non-interest income	(1)	78	12,568	101
Tax (expense) benefit	0	(28)	(4,713)	(36)
Net income	(1)	50	7,855	65
Realized (losses) on cash flow hedging derivatives: | Amount Reclassified From Accumulated Other Comprehensive Income (loss)
Amounts reclassified out of each component of accumulated other comprehensive income
Non-interest income	0	(1,367)	(6,629)	0
Interest expense			(393)	0
Non-interest expense			0	(2,662)
Tax (expense) benefit	0	549	2,769	1,069
Net income	$ 0	$ (818)	$ (4,253)	$ (1,593)

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EARNINGS PER SHARE - Schedule of Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings per share
Net income	$ 22,903	$ 16,381	$ 58,057	$ 48,339
Average number of common shares issued (in shares)	41,370	32,273	38,958	32,216
Less: average number of treasury shares (in shares)	947	1,137	970	1,117
Less: average number of unvested stock award shares (in shares)	439	515	441	515
Average number of basic common shares outstanding (in shares)	39,984	30,621	37,547	30,584
Average number of diluted common shares outstanding (in shares)	40,145	30,811	37,708	30,757
Earnings per share:
Basic (in dollars per share)	$ 0.57	$ 0.53	$ 1.55	$ 1.58
Diluted (in dollars per share)	$ 0.57	$ 0.53	$ 1.54	$ 1.57
Unvested Stock Award shares
Earnings per share
Plus: dilutive effect of share-based payment arrangements (in shares)	116	131	116	115
Options
Earnings per share
Plus: dilutive effect of share-based payment arrangements (in shares)	45	59	45	58

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EARNINGS PER SHARE - Narrative (Details) - shares shares in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Unvested Stock Award shares
Anti-dilutive securities
Securities excluded from the earnings per share calculations (in shares)	325	401
Options
Anti-dilutive securities
Securities excluded from the earnings per share calculations (in shares)	46	201

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STOCK-BASED COMPENSATION PLANS (Details) - $ / shares shares in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Non-Vested Stock Awards Outstanding
Non-vested Stock Awards Outstanding, Number of Shares
Balance at the beginning of the period (in shares)	448
Granted (in shares)	156
Stock awards vested (in shares)	(162)	(116)
Forfeited (in shares)	(10)
Balance at the end of the period (in shares)	432
Non-vested Stock Awards Outstanding, Weighted-Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share)	$ 26.28
Granted (in dollars per share)	35.60
Stock awards vested (in dollars per share)	25.56
Forfeited (in dollars per share)	29.26
Balance at the end of the period (in dollars per share)	$ 29.64
Stock Options Outstanding
Stock Options Outstanding, Number of Shares
Balance at the beginning of the period (in shares)	109
Stock options exercised (in shares)	(11)
Expired (in shares)	(10)
Balance at the end of the period (in shares)	88
Exercisable options at the end of the period (in shares)	88
Stock Options Outstanding, Weighted-Average Exercise Price
Balance at the beginning of the period (in dollars per share)	$ 15.72
Stock options exercised (in dollars per share)	14.47
Expired (in dollars per share)	33.46
Balance at the end of the period (in dollars per share)	13.86
Exercisable options at the end of the period (in dollars per share)	$ 13.86

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STOCK-BASED COMPENSATION PLANS - Narrative (Details) - USD ($) shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise of stock options	$ 161	$ 141
Total compensation cost	3,900	3,500
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise of stock options	$ 161	$ 142
Non-Vested Stock Awards Outstanding
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards vested (in shares)	162	116

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Narrative (Details) $ in Thousands		3 Months Ended			9 Months Ended
	Feb. 07, 2017 USD ($)	Sep. 30, 2017 USD ($)	Mar. 31, 2017 USD ($) contract	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Derivative [Line Items]
Notional amount		$ 2,491,341			$ 2,491,341		$ 2,199,862
Cash collateral pledged		1,400			1,400
Amortized cost of securities pledged as collateral to derivative counterparties		26,000			26,000
Fair value of securities as pledged collateral to derivative counterparties		25,900			25,900
Interest expense		17,062		$ 12,540	46,006	$ 34,896
Commercial counterparties
Derivative [Line Items]
Net asset position		11,900			11,900		11,500
Amount Reclassified From Accumulated Other Comprehensive Income (loss) | Accumulated net gain (loss) from cash flow hedges
Derivative [Line Items]
Interest expense	$ 6,600
Interest rate swaps
Derivative [Line Items]
Notional amount		10,900			10,900
Cash collateral pledged		1,410			1,410		650
Derivative liability		13,790			13,790		19,772
Amount of collateral posted for the net liability positions		10,500			10,500		19,800
Interest rate swaps | Commercial counterparties
Derivative [Line Items]
Cash collateral pledged		0			0		0
Derivative liability		3,337			3,337		4,384
Interest rate swaps | Institutional counterparties
Derivative [Line Items]
Cash collateral pledged		1,410			1,410		650
Derivative liability		10,453			10,453		15,388
Not Designated as Hedging Instrument
Derivative [Line Items]
Notional amount		310,327			310,327		$ 208,145
Economic hedges
Derivative [Line Items]
Notional amount		2,200,000			2,200,000
Credit valuation adjustments		$ (53)			$ (53)
Economic hedges | Tax advantaged economic development bonds
Derivative [Line Items]
Fixed rate of interest (as percent)		5.09%			5.09%
Maturity period (in years)					21 years
Economic hedges | Interest rate swaps
Derivative [Line Items]
Notional amount		$ 1,600,000			$ 1,600,000
Economic hedges | Risk participation agreements with dealer banks
Derivative [Line Items]
Notional amount		100,000			100,000
Economic hedges | Forward sale commitments
Derivative [Line Items]
Notional amount		500,000			500,000
Cash flow hedges
Derivative [Line Items]
Durations of derivative instruments (in years)			3 years
Amount of ineffectiveness		$ 0		$ 0	$ 0	$ 0
Cash flow hedges | Interest rate swaps
Derivative [Line Items]
Number of instruments (contract) | contract			6
Cash flow hedges | Interest rate swaps | FHLB borrowings
Derivative [Line Items]
Notional amount	$ 300,000		$ 300,000

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Derivative Assets and Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Mar. 31, 2017	Feb. 07, 2017
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	$ 2,491,341	$ 2,199,862
Estimated fair value asset (liability)	5,136	(2,804)
Interest rate swaps
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	10,900
Total cash flow hedges | Interest rate swaps | FHLB borrowings
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount			$ 300,000	$ 300,000
Total economic hedges
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	2,200,000
Total economic hedges | Interest rate swaps
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	1,600,000
Total economic hedges | Risk participation agreements with dealer banks
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	100,000
Total economic hedges | Forward sale commitments
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	500,000
Designated as Hedging Instrument | Total cash flow hedges
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	0	300,000
Estimated fair value asset (liability)	0	(6,573)
Designated as Hedging Instrument | Total cash flow hedges | Interest rate swaps | FHLB borrowings
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	$ 0	$ 300,000
Weighted average maturity		2 years 3 months 18 days
Weighted average rate, received (as percent)	0.00%	0.63%
Weighted average rate, contract pay rate (as percent)	0.00%	2.29%
Estimated fair value asset (liability)	$ 0	$ (6,573)
Designated as Hedging Instrument | Total economic hedges
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	2,181,014	1,691,717
Estimated fair value asset (liability)	(1,319)	(969)
Designated as Hedging Instrument | Total economic hedges | Interest rate swaps | Tax advantaged economic development bonds
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	$ 10,916	$ 11,386
Weighted average maturity	12 years 2 months 24 days	12 years 10 months 24 days
Weighted average rate, received (as percent)	1.60%	0.98%
Weighted average rate, contract pay rate (as percent)	5.09%	5.09%
Estimated fair value asset (liability)	$ (1,827)	$ (2,021)
Designated as Hedging Instrument | Total economic hedges | Interest rate swaps | Loans with commercial loan customers
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	$ 796,914	$ 668,541
Weighted average maturity	6 years 1 month 1 day	6 years 2 months 12 days
Weighted average rate, received (as percent)	3.09%	2.43%
Weighted average rate, contract pay rate (as percent)	4.19%	4.21%
Estimated fair value asset (liability)	$ (8,576)	$ (6,752)
Designated as Hedging Instrument | Total economic hedges | Reverse interest rate swaps | Loans with commercial loan customers
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	$ 796,914	$ 668,541
Weighted average maturity	6 years 1 month 1 day	6 years 2 months 12 days
Weighted average rate, received (as percent)	4.19%	4.21%
Weighted average rate, contract pay rate (as percent)	3.09%	2.43%
Estimated fair value asset (liability)	$ 8,572	$ 7,077
Designated as Hedging Instrument | Total economic hedges | Risk participation agreements with dealer banks
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	$ 117,067	$ 83,360
Weighted average maturity	9 years 4 months 30 days	11 years 6 months 20 days
Estimated fair value asset (liability)	$ 12	$ 5
Designated as Hedging Instrument | Total economic hedges | Forward sale commitments
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	$ 459,203	$ 259,889
Weighted average maturity	2 months 12 days	2 months 12 days
Estimated fair value asset (liability)	$ 500	$ 722
Not Designated as Hedging Instrument
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	310,327	208,145
Estimated fair value asset (liability)	6,455	4,738
Not Designated as Hedging Instrument | Commitments to lend
Interest rate swap agreements and non-hedging derivative assets and liabilities
Notional amount	$ 310,327	$ 208,145
Weighted average maturity	2 months 12 days	2 months 12 days
Estimated fair value asset (liability)	$ 6,455	$ 4,738

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Interest Rate Derivatives (Details) - FHLB borrowings - Interest rate swaps - Total cash flow hedges - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Derivative [Line Items]
Unrealized (loss) recognized in accumulated other comprehensive loss	$ 0	$ 1,363	$ (449)	$ (5,322)
Net tax (expense) benefit on items recognized in accumulated other comprehensive income	0	(1,096)	(2,589)	1,067
Other comprehensive gain (loss) recorded in accumulated other comprehensive income, net of reclassification adjustments and tax effects	0	1,634	3,984	(1,593)
Interest Expense
Derivative [Line Items]
Less: reclassification of unrealized (loss) from accumulated other comprehensive income to interest expense	0	(1,367)	(393)	(2,662)
Other non-interest expense
Derivative [Line Items]
Less: reclassification of unrealized (loss) from accumulated other comprehensive income to interest expense	$ 0	$ 0	$ (6,629)	$ 0

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Economic Hedges and Non-hedging Derivatives (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Interest rate swaps | Economic hedges | Industrial revenue bond
Derivative [Line Items]
Unrealized gain (loss) recognized in other non-interest income	$ 70	$ 29	$ 194	$ (802)
Interest rate swaps | Economic hedges | Loans with commercial loan customers
Derivative [Line Items]
Unrealized gain (loss) recognized in other non-interest income	(142)	2,411	(1,824)	(18,911)
Reverse interest rate swaps | Economic hedges | Loans with commercial loan customers
Derivative [Line Items]
Unrealized gain (loss) recognized in other non-interest income	142	(2,411)	1,824	18,911
(Unfavorable) Favorable change in credit valuation adjustment recognized in other non-interest income	(53)	(62)	(329)	(495)
Risk participation agreements with dealer banks | Economic hedges
Derivative [Line Items]
Unrealized gain (loss) recognized in other non-interest income	2	(14)	7	102
Forward sale commitments | Economic hedges
Derivative [Line Items]
Unrealized gain (loss) recognized in other non-interest income	500	(582)	224	(1,898)
Realized gain (loss) in other non-interest income	(983)	109	(3,651)	(224)
Commitments to lend | Non-hedging derivatives
Derivative [Line Items]
Unrealized gain (loss) recognized in other non-interest income	6,455	1,574	21,891	3,635
Realized gain (loss) in other non-interest income	$ 7,402	$ 760	$ 23,869	$ 2,505

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Offsetting of Financial Assets and Derivative Assets (Details) - Interest rate swaps - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Offsetting of Financial Assets and Derivative Assets
Gross amounts of recognized assets	$ 11,972	$ 11,510
Gross amounts offset in the Statements of Condition	0	0
Net amounts of assets presented in the Statements of Condition	11,972	11,510
Gross amounts not offset in the Statements of Condition, financial instruments	0	0
Gross amounts not offset in the Statements of Condition, cash collateral received	0	0
Net amount	11,972	11,510
Institutional counterparties
Offsetting of Financial Assets and Derivative Assets
Gross amounts of recognized assets	63	49
Gross amounts offset in the Statements of Condition	0	0
Net amounts of assets presented in the Statements of Condition	63	49
Gross amounts not offset in the Statements of Condition, financial instruments	0	0
Gross amounts not offset in the Statements of Condition, cash collateral received	0	0
Net amount	63	49
Commercial counterparties
Offsetting of Financial Assets and Derivative Assets
Gross amounts of recognized assets	11,909	11,461
Gross amounts offset in the Statements of Condition	0	0
Net amounts of assets presented in the Statements of Condition	11,909	11,461
Gross amounts not offset in the Statements of Condition, financial instruments	0	0
Gross amounts not offset in the Statements of Condition, cash collateral received	0	0
Net amount	$ 11,909	$ 11,461

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Offsetting Financial Liabilities and Derivative Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Offsetting of Financial Liabilities and Derivative Liabilities
Gross amounts not offset in the Statements of Condition, cash collateral pledged	$ 1,400
Interest rate swaps
Offsetting of Financial Liabilities and Derivative Liabilities
Gross amounts of recognized liabilities	(17,272)	$ (24,484)
Gross amounts offset in the Statements of Condition	3,482	4,712
Net amounts of liabilities presented in the Statements of Condition	(13,790)	(19,772)
Gross amounts not offset in the Statements of Condition, financial instruments	9,043	14,738
Gross amounts not offset in the Statements of Condition, cash collateral pledged	1,410	650
Net amount	(3,337)	(4,384)
Interest rate swaps | Institutional counterparties
Offsetting of Financial Liabilities and Derivative Liabilities
Gross amounts of recognized liabilities	(13,903)	(20,077)
Gross amounts offset in the Statements of Condition	3,450	4,689
Net amounts of liabilities presented in the Statements of Condition	(10,453)	(15,388)
Gross amounts not offset in the Statements of Condition, financial instruments	9,043	14,738
Gross amounts not offset in the Statements of Condition, cash collateral pledged	1,410	650
Net amount	0	0
Interest rate swaps | Commercial counterparties
Offsetting of Financial Liabilities and Derivative Liabilities
Gross amounts of recognized liabilities	(3,369)	(4,407)
Gross amounts offset in the Statements of Condition	32	23
Net amounts of liabilities presented in the Statements of Condition	(3,337)	(4,384)
Gross amounts not offset in the Statements of Condition, financial instruments	0	0
Gross amounts not offset in the Statements of Condition, cash collateral pledged	0	0
Net amount	$ (3,337)	$ (4,384)

XML

FAIR VALUE MEASUREMENTS - Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading security, at fair value	$ 12,603	$ 13,229
Securities available for sale, at fair value	1,341,013	1,209,537
Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading security, at fair value	12,603	13,229
Securities available for sale, at fair value	1,341,013	1,209,537
Loans held for sale	143,745	120,673
Derivative assets	22,334	21,617
Derivative liabilities	17,198	24,420
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading security, at fair value	0	0
Securities available for sale, at fair value	45,055	62,284
Loans held for sale	0	0
Derivative assets	518	622
Derivative liabilities	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading security, at fair value	0	0
Securities available for sale, at fair value	1,295,958	1,147,253
Loans held for sale	143,745	120,673
Derivative assets	15,379	16,157
Derivative liabilities	17,198	24,420
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading security, at fair value	12,603	13,229
Securities available for sale, at fair value	0	0
Loans held for sale	0	0
Derivative assets	6,437	4,838
Derivative liabilities	0	0
Recurring | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading security, at fair value	12,603	13,229
Loans held for sale	143,745	120,673
Derivative assets	22,334	21,617
Capitalized servicing rights	2,707	798
Derivative liabilities	17,198	24,420
Recurring | Total Fair Value | Debt securities | Municipal bonds and obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	118,760	119,816
Recurring | Total Fair Value | Debt securities | Agency collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	807,436	651,911
Recurring | Total Fair Value | Debt securities | Agency residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	217,067	228,684
Recurring | Total Fair Value | Debt securities | Agency commercial mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	63,044	64,534
Recurring | Total Fair Value | Debt securities | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	67,234	56,006
Recurring | Total Fair Value | Debt securities | Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	11,792	11,887
Recurring | Total Fair Value | Debt securities | Other bonds and obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	10,291	11,158
Recurring | Total Fair Value | Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	45,389	65,541
Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading security, at fair value	0	0
Loans held for sale	0	0
Derivative assets	518	622
Capitalized servicing rights	0	0
Derivative liabilities	0	0
Recurring | Level 1 | Debt securities | Municipal bonds and obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 1 | Debt securities | Agency collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 1 | Debt securities | Agency residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 1 | Debt securities | Agency commercial mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 1 | Debt securities | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 1 | Debt securities | Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 1 | Debt securities | Other bonds and obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 1 | Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	45,055	62,284
Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading security, at fair value	0	0
Loans held for sale	143,745	120,673
Derivative assets	15,379	16,157
Capitalized servicing rights	0	0
Derivative liabilities	17,198	24,420
Recurring | Level 2 | Debt securities | Municipal bonds and obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	118,760	119,816
Recurring | Level 2 | Debt securities | Agency collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	807,436	651,911
Recurring | Level 2 | Debt securities | Agency residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	217,067	228,684
Recurring | Level 2 | Debt securities | Agency commercial mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	63,044	64,534
Recurring | Level 2 | Debt securities | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	67,234	56,006
Recurring | Level 2 | Debt securities | Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	11,792	11,887
Recurring | Level 2 | Debt securities | Other bonds and obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	10,291	11,158
Recurring | Level 2 | Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	334	3,257
Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading security, at fair value	12,603	13,229
Loans held for sale	0	0
Derivative assets	6,437	4,838
Capitalized servicing rights	2,707	798
Derivative liabilities	0	0
Recurring | Level 3 | Debt securities | Municipal bonds and obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 3 | Debt securities | Agency collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 3 | Debt securities | Agency residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 3 | Debt securities | Agency commercial mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 3 | Debt securities | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 3 | Debt securities | Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 3 | Debt securities | Other bonds and obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	0	0
Recurring | Level 3 | Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	$ 0	$ 0

XML

FAIR VALUE MEASUREMENTS - Narrative (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) security	Sep. 30, 2016 USD ($) transfer
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfers out of Level 3, number of transfers | transfer				1
Transfers to Level 2				$ 708
Junior subordinated debentures re-price period (in days)			90 days
Loans Held for Sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gains (losses) in fair value of loans held for sale included in earnings	$ (400)	$ (200)	$ 2,000	$ 400
Trading Security
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of securities in the portfolio (security) | security			1

XML

FAIR VALUE MEASUREMENTS - Loans Held for Sale (Details) - Level 2 - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Loans Held for Sale
Aggregate Fair Value	$ 143,745	$ 120,673
Aggregate Unpaid Principal	322	322
Recurring
Loans Held for Sale
Aggregate Fair Value	143,745	120,673
Recurring | Loans Held for Sale
Loans Held for Sale
Aggregate Fair Value	143,745	120,673
Aggregate Unpaid Principal	139,298	118,178
Aggregate Fair Value Less Aggregate Unpaid Principal	$ 4,447	$ 2,495

XML

FAIR VALUE MEASUREMENTS - Changes in Level 3 (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Changes in Level 3 assets that were measured at fair value on a recurring basis
Transfers to Level 2				$ (708)
Commitments to lend
Changes in Level 3 assets that were measured at fair value on a recurring basis
Unrealized gains (losses) relating to instruments still held at the end of the period	$ 6,455	$ 1,574	$ 6,455	1,574
Derivative Asset (Liability)
Beginning balance	7,374	1,259	4,738	323
Unrealized (loss) gain, net recognized in other non-interest income	15,146	3,563	48,963	6,480
Transfers to held for sale loans	(16,065)	(3,248)	(47,246)	(5,229)
Ending balance	6,455	1,574	6,455	1,574
Forward Commitments
Changes in Level 3 assets that were measured at fair value on a recurring basis
Unrealized gains (losses) relating to instruments still held at the end of the period	(18)	(251)	(18)	(251)
Derivative Asset (Liability)
Beginning balance	12	(189)	100	9
Unrealized (loss) gain, net recognized in other non-interest income	(30)		(118)	(260)
Transfers to Level 2				0
Ending balance	(18)	(251)	(18)	(251)
Trading Security
Changes in Level 3 assets that were measured at fair value on a recurring basis
Balance at the beginning of the period	12,837	14,479	13,229	14,189
Unrealized (loss) gain, net recognized in other non-interest income	(76)	(180)	(155)	405
Paydown of trading security	(158)	(150)	(471)	(445)
Balance at the end of the period	12,603	14,149	12,603	14,149
Unrealized gains (losses) relating to instruments still held at the end of the period	1,763	2,610	1,763	2,610
Securities Available for Sale
Changes in Level 3 assets that were measured at fair value on a recurring basis
Balance at the beginning of the period	0	0	0	708
Transfers to Level 2				(708)
Balance at the end of the period	0	0	0	0
Unrealized gains (losses) relating to instruments still held at the end of the period	0	0	0	0
Capitalized servicing rights
Changes in Level 3 assets that were measured at fair value on a recurring basis
Balance at the beginning of the period	1,568	0	798	0
Unrealized (loss) gain, net recognized in other non-interest income	(132)		(202)
Additions to servicing rights	1,271		2,111
Balance at the end of the period	2,707	0	2,707	0
Unrealized gains (losses) relating to instruments still held at the end of the period	$ 0	$ 0	$ 0	$ 0

XML

FAIR VALUE MEASUREMENTS - Unobservable Inputs Recurring (Details) - Level 3 - Recurring - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Quantitative information about the significant unobservable inputs within Level 3
Total	$ 21,747,000	$ 18,865,000
Trading Security
Quantitative information about the significant unobservable inputs within Level 3
Assets measured on recurring basis	$ 12,603,000	$ 13,229,000
Trading Security | Discounted Cash Flow
Quantitative information about the significant unobservable inputs within Level 3
Discount Rate (as percent)	2.59%	2.62%
Commitments to Lend
Quantitative information about the significant unobservable inputs within Level 3
Assets measured on recurring basis	$ 6,455,000	$ 4,738,000
Commitments to Lend | Historical Trend
Quantitative information about the significant unobservable inputs within Level 3
Closing Ratio (as percent)	80.50%	80.36%
Commitments to Lend | Pricing Model
Quantitative information about the significant unobservable inputs within Level 3
Origination Costs, per loan	$ 3,692	$ 3,692
Forward Commitments
Quantitative information about the significant unobservable inputs within Level 3
Assets measured on recurring basis		$ 100,000
Liabilities measured on recurring basis	$ (18,000)
Forward Commitments | Historical Trend
Quantitative information about the significant unobservable inputs within Level 3
Closing Ratio (as percent)	80.50%	80.36%
Forward Commitments | Pricing Model
Quantitative information about the significant unobservable inputs within Level 3
Origination Costs, per loan	$ 3,692	$ 3,692
Capitalized servicing rights
Quantitative information about the significant unobservable inputs within Level 3
Assets measured on recurring basis	$ 2,707,000	$ 798,000
Capitalized servicing rights | Discounted Cash Flow
Quantitative information about the significant unobservable inputs within Level 3
Discount Rate (as percent)	10.95%	11.00%
Constant prepayment rate (CPR) (as percent)	10.20%	10.40%

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FAIR VALUE MEASUREMENTS - Measured on Non-recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Quantitative information about the significant unobservable inputs within Level 3
Other real estate owned	$ 288	$ 151
Non-recurring | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Impaired loans	28,082	17,761
Capitalized servicing rights	12,663	10,726
Other real estate owned	288	151
Total	$ 41,033	$ 28,638

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FAIR VALUE MEASUREMENTS - Unobservable Inputs Non-recurring (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Quantitative information about the significant unobservable inputs within Level 3
Other real estate owned	$ 288	$ 151
Non-recurring | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Impaired loans	28,082	17,761
Capitalized servicing rights	12,663	10,726
Other real estate owned	288	151
Total	41,033	28,638
Non-recurring | Impaired loans | Appraised value of collateral | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Impaired loans	$ 28,082	$ 17,761
Non-recurring | Impaired loans | Minimum | Appraised value of collateral | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Loss severity (as percent)	0.13%	0.00%
Appraised value	$ 16	$ 0
Non-recurring | Impaired loans | Maximum | Appraised value of collateral | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Loss severity (as percent)	39.05%	88.70%
Appraised value	$ 5,987	$ 2,192
Non-recurring | Impaired loans | Weighted Average | Appraised value of collateral | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Loss severity (as percent)	3.70%	9.73%
Appraised value	$ 2,062	$ 1,026
Non-recurring | Capitalized servicing rights | Discounted Cash Flow | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Capitalized servicing rights	$ 12,663	$ 10,726
Non-recurring | Capitalized servicing rights | Minimum | Discounted Cash Flow | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Constant prepayment rate (CPR) (as percent)	7.78%	7.35%
Discount Rate (as percent)	10.00%	10.00%
Non-recurring | Capitalized servicing rights | Maximum | Discounted Cash Flow | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Constant prepayment rate (CPR) (as percent)	13.69%	14.28%
Discount Rate (as percent)	12.76%	14.00%
Non-recurring | Capitalized servicing rights | Weighted Average | Discounted Cash Flow | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Constant prepayment rate (CPR) (as percent)	10.57%	10.44%
Discount Rate (as percent)	11.55%	11.77%
Non-recurring | Other real estate owned | Appraised value of collateral | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Other real estate owned	$ 288	$ 151
Non-recurring | Other real estate owned | Minimum | Appraised value of collateral | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Appraised value	94	101
Non-recurring | Other real estate owned | Maximum | Appraised value of collateral | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Appraised value	215	129
Non-recurring | Other real estate owned | Weighted Average | Appraised value of collateral | Level 3
Quantitative information about the significant unobservable inputs within Level 3
Appraised value	$ 226	$ 122

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FAIR VALUE MEASUREMENTS - Fair Values and Carrying Amounts (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financial Assets
Trading security, at fair value	$ 12,603	$ 13,229
Securities available for sale	1,341,013	1,209,537
Securities held to maturity	402,799	337,680
FHLB bank stock and restricted securities	75,117	71,112
Level 1
Financial Assets
Cash and cash equivalents	92,046	113,075
Trading security, at fair value	0	0
Securities available for sale	45,055	62,284
Securities held to maturity	0	0
FHLB bank stock and restricted securities	0	0
Net loans	0	0
Loans held for sale	0	0
Accrued interest receivable	0	0
Cash surrender value of bank-owned life insurance policies	0	0
Derivative assets	518	622
Assets held for sale	0	0
Financial Liabilities
Total deposits	0	0
Short-term debt	0	0
Long-term Federal Home Loan Bank advances	0	0
Subordinated borrowings	0	0
Derivative liabilities	0	0
Level 2
Financial Assets
Cash and cash equivalents	0	0
Trading security, at fair value	0	0
Securities available for sale	1,295,958	1,147,253
Securities held to maturity	368,063	300,806
FHLB bank stock and restricted securities	75,117	71,112
Net loans	0	0
Loans held for sale	143,745	120,673
Accrued interest receivable	29,133	26,113
Cash surrender value of bank-owned life insurance policies	161,290	139,257
Derivative assets	15,379	16,157
Assets held for sale	322	322
Financial Liabilities
Total deposits	6,785,879	6,624,108
Short-term debt	1,061,232	1,081,996
Long-term Federal Home Loan Bank advances	337,653	143,151
Subordinated borrowings	98,394	96,973
Derivative liabilities	17,198	24,420
Level 3
Financial Assets
Cash and cash equivalents	0	0
Trading security, at fair value	12,603	13,229
Securities available for sale	0	0
Securities held to maturity	34,736	36,874
FHLB bank stock and restricted securities	0	0
Net loans	6,930,703	6,532,745
Loans held for sale	0	0
Accrued interest receivable	0	0
Cash surrender value of bank-owned life insurance policies	0	0
Derivative assets	6,437	4,838
Assets held for sale	0	0
Financial Liabilities
Total deposits	0	0
Short-term debt	0	0
Long-term Federal Home Loan Bank advances	0	0
Subordinated borrowings	0	0
Derivative liabilities	0	0
Carrying Amount
Financial Assets
Cash and cash equivalents	92,046	113,075
Trading security, at fair value	12,603	13,229
Securities available for sale	1,341,013	1,209,537
Securities held to maturity	395,065	334,368
FHLB bank stock and restricted securities	75,117	71,112
Net loans	6,898,402	6,505,789
Loans held for sale	143,745	120,673
Accrued interest receivable	29,133	26,113
Cash surrender value of bank-owned life insurance policies	161,290	139,257
Derivative assets	22,334	21,617
Assets held for sale	322	322
Financial Liabilities
Total deposits	6,790,146	6,622,092
Short-term debt	1,061,300	1,082,044
Long-term Federal Home Loan Bank advances	338,054	142,792
Subordinated borrowings	89,295	89,161
Derivative liabilities	17,198	24,420
Total Fair Value
Financial Assets
Cash and cash equivalents	92,046	113,075
Trading security, at fair value	12,603	13,229
Securities available for sale	1,341,013	1,209,537
Securities held to maturity	402,799	337,680
FHLB bank stock and restricted securities	75,117	71,112
Net loans	6,930,703	6,532,745
Loans held for sale	143,745	120,673
Accrued interest receivable	29,133	26,113
Cash surrender value of bank-owned life insurance policies	161,290	139,257
Derivative assets	22,334	21,617
Assets held for sale	322	322
Financial Liabilities
Total deposits	6,785,879	6,624,108
Short-term debt	1,061,232	1,081,996
Long-term Federal Home Loan Bank advances	337,653	143,151
Subordinated borrowings	98,394	96,973
Derivative liabilities	$ 17,198	$ 24,420

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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Banking and Thrift, Interest [Abstract]
Net interest income	$ 71,998	$ 57,971	$ 208,429	$ 173,109
Provision for loan losses	4,900	4,734	14,884	13,262
Net interest income after provision for loan losses	$ 67,098	$ 53,237	$ 193,545	$ 159,847

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SUBSEQUENT EVENTS (Details) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
	Oct. 13, 2017 USD ($) banking_office $ / shares shares	Sep. 30, 2017 USD ($) shares	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) shares	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($) shares
Subsequent Event [Line Items]
Assets		$ 9,766,703		$ 9,766,703		$ 9,162,542
Common stock, shares outstanding (in shares) | shares		40,423,777		40,423,777		35,672,817
Acquisition, restructuring, and other expenses		$ 1,420	$ 2,170	$ 16,005	$ 3,828
Commerce Bank
Subsequent Event [Line Items]
Acquisition, restructuring, and other expenses		$ 788		$ 2,400
Subsequent event | Commerce Bank
Subsequent Event [Line Items]
Assets	$ 1,900,000
Loans	1,400,000
Deposits	$ 1,700,000
Subsequent event | Commerce Bank | Common stock for common stock
Subsequent Event [Line Items]
Share exchange ratio (in shares) | shares	0.93
Subsequent event | Commerce Bank | Common stock for Series B preferred stock
Subsequent Event [Line Items]
Share exchange ratio (in shares) | shares	0.465
Subsequent event | Commerce Bank | Preferred stock for common stock
Subsequent Event [Line Items]
Share exchange ratio (in shares) | shares	2
Subsequent event | Commerce Bank | Common stock
Subsequent Event [Line Items]
Shares issued (in shares) | shares	4,842,000
Shares issued	$ 188,600
Share price (in dollars per share) | $ / shares	$ 38.95
Subsequent event | Commerce Bank | Preferred stock
Subsequent Event [Line Items]
Shares issued (in shares) | shares	522,000
Shares issued	$ 40,700
Subsequent event | Commerce Bank
Subsequent Event [Line Items]
Number of branch banking offices | banking_office	16
Common stock, shares outstanding (in shares) | shares	6,328,000