Loans

Loan portfolio segments are defined as the level at which an entity develops and documents a systematic methodology to determine its allowance. The Corporation has two loan portfolio segments (commercial loans and consumer loans) that it uses in determining the allowance. Both quantitative and qualitative factors are used by management at the loan portfolio segment level in determining the adequacy of the allowance for the Corporation. Classes of loans are a disaggregation of an entity’s loan portfolio segments. Classes of loans are defined as a group of loans which share similar initial measurement attributes, risk characteristics, and methods for monitoring and assessing credit risk. The Corporation has seven classes of loans, which are set forth below.

Commercial — Loans and lines of credit to varying types of businesses, including municipalities, school districts and nonprofit organizations, for the purpose of supporting working capital, operational needs and term financing of equipment. Repayment of such loans is generally provided through operating cash flows of the business. Commercial loans are predominately secured by equipment, inventory, accounts receivable, personal guarantees of the owner and other sources of repayment, although the Corporation may also secure commercial loans with real estate.

Commercial real estate — Loans secured by real estate occupied by the borrower for ongoing operations, non-owner occupied real estate leased to one or more tenants and vacant land that has been acquired for investment or future land development.

Real estate construction — Secured loans for the construction of business properties. Real estate construction loans often convert to a commercial real estate loan at the completion of the construction period.

Land development — Secured development loans made to borrowers for the purpose of infrastructure improvements to vacant land to create finished marketable residential and commercial lots/land. Most land development loans are originated with the intention that the loans will be paid through the sale of developed lots/land by the developers within twelve months of the completion date. Land development loans at September 30, 2015, December 31, 2014 and September 30, 2014 were primarily comprised of loans to develop residential properties.

Residential mortgage — Loans secured by one- to four-family residential properties, generally with fixed interest rates for periods of fifteen years or less. The loan-to-value ratio at the time of origination is generally 80% or less. Residential mortgage loans with a loan-to-value ratio of more than 80% generally require private mortgage insurance.

Consumer installment — Loans to consumers primarily for the purpose of acquiring automobiles, recreational vehicles and personal watercraft and comprised primarily of indirect loans purchased from dealers. These loans consist of relatively small amounts that are spread across many individual borrowers.

Home equity — Loans and lines of credit whereby consumers utilize equity in their personal residence, generally through a second mortgage, as collateral to secure the loan.

Commercial, commercial real estate, real estate construction and land development loans are referred to as the Corporation’s commercial loan portfolio, while residential mortgage, consumer installment and home equity loans are referred to as the Corporation’s consumer loan portfolio. A summary of loans follows:



	September 30, 2015		December 31, 2014		September 30, 2014
	(In thousands)
Commercial loan portfolio:
Commercial	$	1,829,870	$	1,354,881	$	1,239,946
Commercial real estate	2,227,364		1,557,648		1,322,646
Real estate construction	133,405		152,745		125,782
Land development	12,176		18,750		10,434
Subtotal	4,202,815		3,084,024		2,698,808
Consumer loan portfolio:
Residential mortgage	1,394,427		1,110,390		984,049
Consumer installment	899,751		829,570		783,443
Home equity	719,202		664,246		574,620
Subtotal	3,013,380		2,604,206		2,342,112
Total loans	$	7,216,195	$	5,688,230	$	5,040,920

Credit Quality Monitoring

The Corporation maintains loan policies and credit underwriting standards as part of the process of managing credit risk. These standards include making loans generally only within the Corporation’s market areas. The Corporation’s lending markets generally consist of communities across the lower peninsula of Michigan, except for the southeastern portion of Michigan. The Corporation has no foreign loans.

The Corporation, through its subsidiary banks, has a commercial loan portfolio approval process involving underwriting and individual and group loan approval authorities to consider credit quality and loss exposure at loan origination. The loans in the Corporation’s commercial loan portfolio are risk rated at origination based on the grading system set forth below. The approval authority of relationship managers is established based on experience levels, with credit decisions greater than $1.0 million requiring group loan authority approval, except for six executive and senior officers who have varying limits exceeding $1.5 million and up to $3.5 million. During the first quarter of 2015, the Corporation increased the upper range for each level of group loan authority by $5.0 million, resulting in group loan authorities as follows. Chemical Bank has a loan committee, consisting of certain executive and senior officers, that meets weekly to consider loans ranging in amounts from $1.0 million to $10.0 million, depending on risk rating and credit action required. A directors’ loan committee of Chemical Bank, consisting of eight independent members of the board of directors of Chemical Bank, the chief executive officer of Chemical Bank and senior credit officer of Chemical Bank, meets bi-weekly to consider loans in amounts over $10.0 million, and certain loans under $10.0 million depending on a loan’s risk rating and credit action required. Loans over $15.0 million require majority approval of the board of directors of Chemical Bank. The approval authorities of relationship managers at The Bank of Holland and The Bank of Northern Michigan are similar to those at Chemical Bank, while approval authority for the loan committees at The Bank of Holland and The Bank of Northern Michigan are lower than those at Chemical Bank. Further, certain loan relationships of The Bank of Holland and The Bank of Northern Michigan, depending on a loan’s risk rating and credit action needed, require approval by the directors' loan committee of Chemical Bank, in addition to approval by the respective board of directors of The Bank of Holland or The Bank of Northern Michigan.

The majority of the Corporation’s consumer loan portfolio is comprised of secured loans that are relatively small. The Corporation’s consumer loan portfolio has a centralized approval process which utilizes standardized underwriting criteria. The ongoing measurement of credit quality of the consumer loan portfolio is largely done on an exception basis. If payments are made on schedule, as agreed, then no further monitoring is performed. However, if delinquency occurs, the delinquent loans are turned over to the Corporation’s collection department for resolution, resulting in repossession or foreclosure if payments are not brought current. Credit quality for the entire consumer loan portfolio is measured by the periodic delinquency rate, nonaccrual amounts and actual losses incurred.

Loans in the commercial loan portfolio tend to be larger and more complex than those in the consumer loan portfolio, and therefore, are subject to more intensive monitoring. All loans in the commercial loan portfolio have an assigned relationship manager, and most borrowers provide periodic financial and operating information that allows the relationship managers to stay abreast of credit quality during the life of the loans. The risk ratings of loans in the commercial loan portfolio are reassessed at least annually, with loans below an acceptable risk rating reassessed more frequently and reviewed by various loan committees within the Corporation at least quarterly.

The Corporation maintains a centralized independent loan review function that monitors the approval process and ongoing asset quality of the loan portfolio, including the accuracy of loan grades. The Corporation also maintains an independent appraisal review function that participates in the review of all appraisals obtained by the Corporation for loans in the commercial loan portfolio.

Credit Quality Indicators

Commercial Loan Portfolio

The Corporation uses a nine grade risk rating system to monitor the ongoing credit quality of its commercial loan portfolio. These loan grades rank the credit quality of a borrower by measuring liquidity, debt capacity, coverage and payment behavior as shown in the borrower’s financial statements. The loan grades also measure the quality of the borrower’s management and the repayment support offered by any guarantors. A summary of the Corporation’s loan grades (or characteristics of the loans within each grade) follows:

Risk Grades 1-5 (Acceptable Credit Quality) — All loans in risk grades 1 through 5 are considered to be acceptable credit risks by the Corporation and are grouped for purposes of allowance for loan loss considerations and financial reporting. The five grades essentially represent a ranking of loans that are all viewed to be of acceptable credit quality, taking into consideration the various factors mentioned above, but with varying degrees of financial strength, debt coverage, management and factors that could impact credit quality. Business credits within risk grades 1 through 5 range from Risk Grade 1: Prime Quality (factors include: excellent business credit; excellent debt capacity and coverage; outstanding management; strong guarantors; superior liquidity and net worth; favorable loan-to-value ratios; debt secured by cash or equivalents, or backed by the full faith and credit of the U.S. Government) to Risk Grade 5: Acceptable Quality With Care (factors include: acceptable business credit, but with added risk due to specific industry or internal situations).

Risk Grade 6 (Watch) — A business credit that is not acceptable within the Corporation’s loan origination criteria; cash flow may not be adequate or is continually inconsistent to service current debt; financial condition has deteriorated as company trends/management have become inconsistent; the company is slow in furnishing quality financial information; working capital needs of the company are reliant on short-term borrowings; personal guarantees are weak and/or with little or no liquidity; the net worth of the company has deteriorated after recent or continued losses; the loan requires constant monitoring and attention from the Corporation; payment delinquencies becoming more serious; if left uncorrected, these potential weaknesses may, at some future date, result in deterioration of repayment prospects.

Risk Grade 7 (Substandard — Accrual) — A business credit that is inadequately protected by the current financial net worth and paying capacity of the obligor or of the collateral pledged, if any; management has deteriorated or has become non-existent; quality financial information is not available; a high level of maintenance is required by the Corporation; cash flow can no longer support debt requirements; loan payments are continually and/or severely delinquent; negative net worth; personal guaranty has become insignificant; a credit that has a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. The Corporation still expects a full recovery of all contractual principal and interest payments; however, a possibility exists that the Corporation will sustain some loss if deficiencies are not corrected.

Risk Grade 8 (Substandard — Nonaccrual) — A business credit accounted for on a nonaccrual basis that has all the weaknesses inherent in a loan classified as risk grade 7 with the added characteristic that the weaknesses are so pronounced that, on the basis of current financial information, conditions, and values, collection in full is highly questionable; a partial loss is possible and interest is no longer being accrued. This loan meets the definition of an impaired loan. The risk of loss requires analysis to determine whether a valuation allowance needs to be established.

Risk Grade 9 (Substandard — Doubtful) — A business credit that has all the weaknesses inherent in a loan classified as risk grade 8 and interest is no longer being accrued, but additional deficiencies make it highly probable that liquidation will not satisfy the majority of the obligation; the primary source of repayment is nonexistent and there is doubt as to the value of the secondary source of repayment; the possibility of loss is likely, but current pending factors could strengthen the credit. This loan meets the definition of an impaired loan. A loan charge-off is recorded when management deems an amount uncollectible; however, the Corporation will establish a valuation allowance for probable losses, if required.

The Corporation considers all loans graded 1 through 5 as acceptable credit risks and structures and manages such relationships accordingly. Periodic financial and operating data combined with regular loan officer interactions are deemed adequate to monitor borrower performance. Loans graded 6 and 7 are considered higher-risk credits than loans graded 1 through 5 and the frequency of loan officer contact and receipt of financial data is increased to stay abreast of borrower performance. Loans graded 8 and 9 are considered problematic and require special care. Further, loans graded 6 through 9 are managed and monitored regularly through a number of processes, procedures and committees, including oversight by a loan administration committee comprised of executive and senior management of the Corporation, which include highly structured reporting of financial and operating data, intensive loan officer intervention and strategies to exit, as well as potential management by the Corporation’s special assets group.

The following schedule presents the recorded investment of loans in the commercial loan portfolio by risk rating categories at September 30, 2015, December 31, 2014 and September 30, 2014:



	Commercial		Commercial Real Estate		Real Estate Construction		Land Development		Total
	(In thousands)
September 30, 2015
Originated Portfolio:
Risk Grades 1-5	$	1,356,073	$	1,345,565	$	126,836	$	6,233	$	2,834,707
Risk Grade 6	39,781		31,303		—		433		71,517
Risk Grade 7	42,923		26,951		737		868		71,479
Risk Grade 8	24,341		24,966		247		297		49,851
Risk Grade 9	2,122		3		—		—		2,125
Subtotal	1,465,240		1,428,788		127,820		7,831		3,029,679
Acquired Portfolio:
Risk Grades 1-5	327,862		736,248		5,432		1,416		1,070,958
Risk Grade 6	18,970		28,901		—		106		47,977
Risk Grade 7	11,554		28,168		—		2,099		41,821
Risk Grade 8	6,244		5,259		153		724		12,380
Risk Grade 9	—		—		—		—		—
Subtotal	364,630		798,576		5,585		4,345		1,173,136
Total	$	1,829,870	$	2,227,364	$	133,405	$	12,176	$	4,202,815
December 31, 2014
Originated Portfolio:
Risk Grades 1-5	$	1,171,817	$	1,114,529	$	134,668	$	2,952	$	2,423,966
Risk Grade 6	37,800		34,996		1,408		738		74,942
Risk Grade 7	29,863		29,935		2,502		613		62,913
Risk Grade 8	16,417		24,958		162		225		41,762
Risk Grade 9	1		8		—		—		9
Subtotal	1,255,898		1,204,426		138,740		4,528		2,603,592
Acquired Portfolio:
Risk Grades 1-5	76,780		321,018		14,005		11,789		423,592
Risk Grade 6	12,687		8,698		—		583		21,968
Risk Grade 7	4,089		12,478		—		197		16,764
Risk Grade 8	5,427		11,028		—		1,653		18,108
Risk Grade 9	—		—		—		—		—
Subtotal	98,983		353,222		14,005		14,222		480,432
Total	$	1,354,881	$	1,557,648	$	152,745	$	18,750	$	3,084,024
September 30, 2014
Originated Portfolio:
Risk Grades 1-5	$	1,098,885	$	1,090,397	$	110,402	$	3,228	$	2,302,912
Risk Grade 6	16,469		27,087		666		943		45,165
Risk Grade 7	34,409		42,134		3,751		618		80,912
Risk Grade 8	18,006		23,847		162		1,467		43,482
Risk Grade 9	207		11		—		—		218
Subtotal	1,167,976		1,183,476		114,981		6,256		2,472,689
Acquired Portfolio:
Risk Grades 1-5	58,342		130,887		10,801		2,303		202,333
Risk Grade 6	3,909		2,086		—		—		5,995
Risk Grade 7	5,885		6,197		—		148		12,230
Risk Grade 8	3,834		—		—		1,727		5,561
Risk Grade 9	—		—		—		—		—
Subtotal	71,970		139,170		10,801		4,178		226,119
Total	$	1,239,946	$	1,322,646	$	125,782	$	10,434	$	2,698,808

Consumer Loan Portfolio

The Corporation evaluates the credit quality of loans in the consumer loan portfolio based on the performing or nonperforming status of the loan. Loans in the consumer loan portfolio that are performing in accordance with original contractual terms and are less than 90 days past due and accruing interest are considered to be in a performing status, while those that are in nonaccrual status, contractually past due 90 days or more as to interest or principal payments or classified as a nonperforming TDR are considered to be in a nonperforming status. Nonaccrual TDRs in the consumer loan portfolio are included with nonaccrual loans, while other TDRs in the consumer loan portfolio are considered in a nonperforming status until they meet the Corporation’s definition of a performing TDR, at which time they are considered in a performing status.

The following schedule presents the recorded investment of loans in the consumer loan portfolio based on loans in a performing status and loans in a nonperforming status at September 30, 2015, December 31, 2014 and September 30, 2014:



	Residential Mortgage		Consumer Installment		Home Equity		Total Consumer
	(In thousands)
September 30, 2015
Originated Loans:
Performing	$	1,150,736	$	886,921	$	586,479	$	2,624,136
Nonperforming	10,374		536		2,434		13,344
Subtotal	1,161,110		887,457		588,913		2,637,480
Acquired Loans:
Performing	229,930		12,227		129,033		371,190
Nonperforming	3,387		67		1,256		4,710
Subtotal	233,317		12,294		130,289		375,900
Total	$	1,394,427	$	899,751	$	719,202	$	3,013,380
December 31, 2014
Originated Loans:
Performing	$	987,542	$	818,878	$	566,083	$	2,372,503
Nonperforming	10,459		500		3,013		13,972
Subtotal	998,001		819,378		569,096		2,386,475
Acquired Loans:
Performing	111,101		10,174		94,696		215,971
Nonperforming	1,288		18		454		1,760
Subtotal	112,389		10,192		95,150		217,731
Total	$	1,110,390	$	829,570	$	664,246	$	2,604,206
September 30, 2014
Originated Loans:
Performing	$	963,469	$	782,087	$	544,227	$	2,289,783
Nonperforming	10,720		527		3,895		15,142
Subtotal	974,189		782,614		548,122		2,304,925
Acquired Loans:
Performing	9,658		728		26,327		36,713
Nonperforming	202		101		171		474
Subtotal	9,860		829		26,498		37,187
Total	$	984,049	$	783,443	$	574,620	$	2,342,112

Nonperforming Loans

A summary of nonperforming loans follows:



	September 30, 2015		December 31, 2014		September 30, 2014
	(In thousands)
Nonaccrual loans:
Commercial	$	26,463	$	16,418	$	18,213
Commercial real estate	24,969		24,966		23,858
Real estate construction	247		162		162
Land development	297		225		1,467
Residential mortgage	6,248		6,706		6,693
Consumer installment	536		500		527
Home equity	1,876		1,667		2,116
Total nonaccrual loans	60,636		50,644		53,036
Accruing loans contractually past due 90 days or more as to interest or principal payments:
Commercial	122		170		16
Commercial real estate	216		—		87
Real estate construction	—		—		—
Land development	—		—		—
Residential mortgage	572		557		380
Consumer installment	—		—		—
Home equity	558		1,346		1,779
Total accruing loans contractually past due 90 days or more as to interest or principal payments	1,468		2,073		2,262
Nonperforming TDRs:
Commercial loan portfolio	15,559		15,271		11,797
Consumer loan portfolio	3,554		3,196		3,647
Total nonperforming TDRs	19,113		18,467		15,444
Total nonperforming loans	$	81,217	$	71,184	$	70,742

The Corporation’s nonaccrual loans at September 30, 2015, December 31, 2014 and September 30, 2014 included $35.1 million, $37.2 million and $40.5 million, respectively, of nonaccrual TDRs.

The Corporation had $3.4 million of residential mortgage loans that were in the process of foreclosure at September 30, 2015, compared to $2.3 million and $1.9 million at December 31, 2014 and September 30, 2014, respectively.

Impaired Loans

The following schedule presents impaired loans by classes of loans at September 30, 2015, December 31, 2014 and September 30, 2014:



	Recorded Investment		Unpaid Principal Balance		Related Valuation Allowance
	(In thousands)
September 30, 2015
Impaired loans with a valuation allowance:
Commercial	$	19,784	$	20,059	$	5,711
Commercial real estate	4,634		5,481		711
Residential mortgage	21,261		21,261		226
Subtotal	45,679		46,801		6,648
Impaired loans with no related valuation allowance:
Commercial	28,742		35,072		—
Commercial real estate	52,651		72,381		—
Real estate construction	400		480		—
Land development	1,354		2,285		—
Residential mortgage	9,635		9,635		—
Consumer installment	603		603		—
Home equity	3,132		3,132		—
Subtotal	96,517		123,588		—
Total impaired loans:
Commercial	48,526		55,131		5,711
Commercial real estate	57,285		77,862		711
Real estate construction	400		480		—
Land development	1,354		2,285		—
Residential mortgage	30,896		30,896		226
Consumer installment	603		603		—
Home equity	3,132		3,132		—
Total	$	142,196	$	170,389	$	6,648
December 31, 2014
Impaired loans with a valuation allowance:
Commercial	$	966	$	1,040	$	293
Commercial real estate	2,587		2,927		710
Residential mortgage	19,681		19,681		335
Subtotal	23,234		23,648		1,338
Impaired loans with no related valuation allowance:
Commercial	38,094		44,557		—
Commercial real estate	60,616		82,693		—
Real estate construction	162		255		—
Land development	1,928		3,484		—
Residential mortgage	7,994		7,994		—
Consumer installment	518		518		—
Home equity	2,121		2,121		—
Subtotal	111,433		141,622		—
Total impaired loans:
Commercial	39,060		45,597		293
Commercial real estate	63,203		85,620		710
Real estate construction	162		255		—
Land development	1,928		3,484		—
Residential mortgage	27,675		27,675		335
Consumer installment	518		518		—
Home equity	2,121		2,121		—
Total	$	134,667	$	165,270	$	1,338



	Recorded Investment		Unpaid Principal Balance		Related Valuation Allowance
	(In thousands)
September 30, 2014
Impaired loans with a valuation allowance:
Commercial	$	1,253	$	1,396	$	313
Commercial real estate	3,779		4,094		862
Residential mortgage	19,629		19,629		328
Subtotal	24,661		25,119		1,503
Impaired loans with no related valuation allowance:
Commercial	40,344		45,259		—
Commercial real estate	45,550		59,037		—
Real estate construction	162		369		—
Land development	3,244		5,969		—
Residential mortgage	6,693		6,693		—
Consumer installment	527		527		—
Home equity	2,116		2,116		—
Subtotal	98,636		119,970		—
Total impaired loans:
Commercial	41,597		46,655		313
Commercial real estate	49,329		63,131		862
Real estate construction	162		369		—
Land development	3,244		5,969		—
Residential mortgage	26,322		26,322		328
Consumer installment	527		527		—
Home equity	2,116		2,116		—
Total	$	123,297	$	145,089	$	1,503

The difference between an impaired loan’s recorded investment and the unpaid principal balance for originated loans represents a partial charge-off resulting from a confirmed loss due to the value of the collateral securing the loan being below the loan balance and management’s assessment that full collection of the loan balance is not likely, and for acquired loans that meet the definition of an impaired loan represents fair value adjustments recognized at the acquisition date attributable to expected credit losses and the discounting of expected cash flows at market interest rates. The difference between the recorded investment and the unpaid principal balance of $28.2 million, $30.6 million and $21.8 million at September 30, 2015, December 31, 2014 and September 30, 2014, respectively, includes confirmed losses (partial charge-offs) of $14.6 million, $15.4 million and $18.2 million, respectively, and fair value discount adjustments of $13.6 million, $15.2 million and $3.6 million, respectively.

Impaired loans included $17.6 million, $19.9 million and $10.2 million at September 30, 2015, December 31, 2014 and September 30, 2014, respectively, of acquired loans that were not performing in accordance with original contractual terms. Acquired loans that are not performing in accordance with contractual terms are not reported as nonperforming loans because these loans are recorded in pools at their net realizable value based on the principal and interest the Corporation expects to collect on these loans. Impaired loans also included $44.8 million, $45.7 million and $44.6 million at September 30, 2015, December 31, 2014 and September 30, 2014, respectively, of performing TDRs.

The following schedule presents information related to impaired loans for the three and nine months ended September 30, 2015 and 2014:



	Three Months Ended September 30, 2015				Nine Months Ended September 30, 2015
	Average Recorded Investment		Interest Income Recognized While on Impaired Status		Average Recorded Investment		Interest Income Recognized While on Impaired Status
	(In thousands)
Commercial	$	42,847	$	310	$	39,387	$	862
Commercial real estate	59,150		470		59,927		1,453
Real estate construction	445		3		491		5
Land development	1,765		23		1,847		84
Residential mortgage	30,467		387		29,084		1,098
Consumer installment	497		—		474		1
Home equity	3,026		20		2,635		42
Total	$	138,197	$	1,213	$	133,845	$	3,545



	Three Months Ended September 30, 2014				Nine Months Ended September 30, 2014
	Average Recorded Investment		Interest Income Recognized While on Impaired Status		Average Recorded Investment		Interest Income Recognized While on Impaired Status
	(In thousands)
Commercial	$	41,903	$	346	$	42,046	$	1,026
Commercial real estate	50,133		263		51,571		990
Real estate construction	162		—		164		—
Land development	3,284		30		4,079		101
Residential mortgage	26,166		310		26,561		941
Consumer installment	481		—		630		—
Home equity	2,246		—		2,212		—
Total	$	124,375	$	949	$	127,263	$	3,058

The following schedule presents the aging status of the recorded investment in loans by classes of loans at September 30, 2015, December 31, 2014 and September 30, 2014:



	31-60 Days Past Due		61-89 Days Past Due		Accruing Loans Past Due 90 Days or More		Non-accrual Loans		Total Past Due		Current		Total Loans
	(In thousands)
September 30, 2015
Originated Portfolio:
Commercial	$	4,580	$	1,297	$	122	$	26,463	$	32,462	$	1,432,778	$	1,465,240
Commercial real estate	7,716		344		216		24,969		33,245		1,395,543		1,428,788
Real estate construction	—		—		—		247		247		127,573		127,820
Land development	—		—		—		297		297		7,534		7,831
Residential mortgage	1,818		85		572		6,248		8,723		1,152,387		1,161,110
Consumer installment	3,075		375		—		536		3,986		883,471		887,457
Home equity	2,427		750		558		1,876		5,611		583,302		588,913
Total	$	19,616	$	2,851	$	1,468	$	60,636	$	84,571	$	5,582,588	$	5,667,159
Acquired Portfolio:
Commercial	$	209	$	—	$	6,273	$	—	$	6,482	$	358,148	$	364,630
Commercial real estate	722		760		5,783		—		7,265		791,311		798,576
Real estate construction	—		—		153		—		153		5,432		5,585
Land development	—		—		725		—		725		3,620		4,345
Residential mortgage	908		—		3,387		—		4,295		229,022		233,317
Consumer installment	30		—		67		—		97		12,197		12,294
Home equity	675		340		1,256		—		2,271		128,018		130,289
Total	$	2,544	$	1,100	$	17,644	$	—	$	21,288	$	1,527,748	$	1,549,036



	31-60 Days Past Due		61-89 Days Past Due		Accruing Loans Past Due 90 Days or More		Non-accrual Loans		Total Past Due		Current		Total Loans
	(In thousands)
December 31, 2014
Originated Portfolio:
Commercial	$	4,033	$	743	$	170	$	16,418	$	21,364	$	1,234,534	$	1,255,898
Commercial real estate	7,515		1,383		—		24,966		33,864		1,170,562		1,204,426
Real estate construction	262		—		—		162		424		138,316		138,740
Land development	—		—		—		225		225		4,303		4,528
Residential mortgage	2,126		54		557		6,706		9,443		988,558		998,001
Consumer installment	3,620		512		—		500		4,632		814,746		819,378
Home equity	3,039		660		1,346		1,667		6,712		562,384		569,096
Total	$	20,595	$	3,352	$	2,073	$	50,644	$	76,664	$	4,913,403	$	4,990,067
Acquired Portfolio:
Commercial	$	133	$	—	$	5,427	$	—	$	5,560	$	93,423	$	98,983
Commercial real estate	2,014		352		11,052		—		13,418		339,804		353,222
Real estate construction	—		—		—		—		—		14,005		14,005
Land development	—		—		1,653		—		1,653		12,569		14,222
Residential mortgage	156		—		18		—		174		112,215		112,389
Consumer installment	55		3		454		—		512		9,680		10,192
Home equity	636		106		1,288		—		2,030		93,120		95,150
Total	$	2,994	$	461	$	19,892	$	—	$	23,347	$	674,816	$	698,163
September 30, 2014
Originated Portfolio:
Commercial	$	3,717	$	1,145	$	16	$	18,213	$	23,091	$	1,144,885	$	1,167,976
Commercial real estate	3,837		29		87		23,858		27,811		1,155,665		1,183,476
Real estate construction	1,075		—		—		162		1,237		113,744		114,981
Land development	—		—		—		1,467		1,467		4,789		6,256
Residential mortgage	1,669		—		380		6,693		8,742		965,447		974,189
Consumer installment	2,859		437		—		527		3,823		778,791		782,614
Home equity	2,592		361		1,779		2,116		6,848		541,274		548,122
Total	$	15,749	$	1,972	$	2,262	$	53,036	$	73,019	$	4,704,595	$	4,777,614
Acquired Portfolio:
Commercial	$	—	$	—	$	6,514	$	—	$	6,514	$	65,456	$	71,970
Commercial real estate	—		—		1,559		—		1,559		137,611		139,170
Real estate construction	—		—		—		—		—		10,801		10,801
Land development	—		—		1,727		—		1,727		2,451		4,178
Residential mortgage	—		—		202		—		202		9,658		9,860
Consumer installment	—		—		—		—		—		829		829
Home equity	335		—		227		—		562		25,936		26,498
Total	$	335	$	—	$	10,229	$	—	$	10,564	$	252,742	$	263,306

Loans Modified Under Troubled Debt Restructurings (TDRs)

The following schedule presents the Corporation’s loans reported as TDRs at September 30, 2015, December 31, 2014 and September 30, 2014:



	Performing TDRs		Non-Performing TDRs		Nonaccrual TDRs		Total
	(In thousands)
September 30, 2015
Commercial loan portfolio	$	27,096	$	15,559	$	31,743	$	74,398
Consumer loan portfolio	17,707		3,554		3,329		24,590
Total	$	44,803	$	19,113	$	35,072	$	98,988
December 31, 2014
Commercial loan portfolio	$	29,179	$	15,271	$	32,597	$	77,047
Consumer loan portfolio	16,485		3,196		4,594		24,275
Total	$	45,664	$	18,467	$	37,191	$	101,322
September 30, 2014
Commercial loan portfolio	$	28,606	$	11,797	$	36,549	$	76,952
Consumer loan portfolio	15,982		3,647		3,996		23,625
Total	$	44,588	$	15,444	$	40,545	$	100,577

The following schedule provides information on the Corporation's TDRs that were modified during the three and nine months ended September 30, 2015 and 2014:



	Three Months Ended September 30, 2015					Nine Months Ended September 30, 2015
	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
	(Dollars in thousands)
Commercial loan portfolio:
Commercial	3	$	882	$	882	21	$	5,146	$	5,146
Commercial real estate	3	2,044		2,044		12	5,105		5,105
Land development	—	—		—		1	305		305
Subtotal – commercial loan portfolio	6	2,926		2,926		34	10,556		10,556
Consumer loan portfolio	15	481		481		54	2,450		2,448
Total	21	$	3,407	$	3,407	88	$	13,006	$	13,004



	Three Months Ended September 30, 2014					Nine Months Ended September 30, 2014
	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
	(Dollars in thousands)
Commercial loan portfolio:
Commercial	7	$	448	$	448	34	$	12,379	$	12,379
Commercial real estate	7	1,138		1,138		28	7,062		7,062
Land development	—	—		—		1	72		72
Subtotal – commercial loan portfolio	14	1,586		1,586		63	19,513		19,513
Consumer loan portfolio	14	572		565		107	3,208		3,191
Total	28	$	2,158	$	2,151	170	$	22,721	$	22,704

The pre-modification and post-modification recorded investment represents amounts as of the date of loan modification. The difference between the pre-modification and post-modification recorded investment of residential mortgage TDRs represents impairment recognized by the Corporation through the provision for loan losses computed based on a loan's post-modification present value of expected future cash flows discounted at the loan's original effective interest rate.

The following schedule includes TDRs for which there was a payment default during the three and nine months ended September 30, 2015 and 2014, whereby the borrower was past due with respect to principal and/or interest for 90 days or more, and the loan became a TDR during the twelve-month period prior to the default:



	Three Months Ended September 30, 2015			Nine Months Ended September 30, 2015
	Number of Loans	Principal Balance at End of Period		Number of Loans	Principal Balance at End of Period
	(Dollars in thousands)
Commercial loan portfolio:
Commercial	—	$	—	—	$	—
Commercial real estate	1	74		5	1,016
Subtotal – commercial loan portfolio	1	74		5	1,016
Consumer loan portfolio	1	13		2	46
Total	2	$	87	7	$	1,062

	Three Months Ended September 30, 2014			Nine Months Ended September 30, 2014
	Number of Loans	Principal Balance at End of Period		Number of Loans	Principal Balance at End of Period
	(Dollars in thousands)
Commercial loan portfolio:
Commercial	—	$	—	6	$	875
Commercial real estate	—	—		5	2,273
Subtotal – commercial loan portfolio	—	—		11	3,148
Consumer loan portfolio	4	162		7	242
Total	4	$	162	18	$	3,390

Allowance for Loan Losses

The following schedule presents, by loan portfolio segment, the changes in the allowance for the three and nine months ended September 30, 2015 and details regarding the balance in the allowance and the recorded investment in loans at September 30, 2015 by impairment evaluation method.



	Commercial Loan Portfolio			Consumer Loan Portfolio			Unallocated			Total
	(In thousands)
Changes in allowance for loan losses for the three months ended September 30, 2015:
Beginning balance	$	45,527		$	23,321		$	6,093		$	74,941
Provision for loan losses	2,637			(351		)	(786		)	1,500
Charge-offs	(539		)	(1,656		)	—			(2,195		)
Recoveries	769			611			—			1,380
Ending balance	$	48,394		$	21,925		$	5,307		$	75,626
Changes in allowance for loan losses for the nine months ended September 30, 2015:
Beginning balance	$	44,156		$	28,803		$	2,724		$	75,683
Provision for loan losses	5,604			(3,687		)	2,583			4,500
Charge-offs	(2,958		)	(5,104		)	—			(8,062		)
Recoveries	1,592			1,913			—			3,505
Ending balance	$	48,394		$	21,925		$	5,307		$	75,626
Allowance for loan losses balance at September 30, 2015 attributable to:
Loans individually evaluated for impairment	$	6,422		$	226		$	—		$	6,648
Loans collectively evaluated for impairment	41,972			21,699			5,307			68,978
Loans acquired with deteriorated credit quality	—			—			—			—
Total	$	48,394		$	21,925		$	5,307		$	75,626
Recorded investment (loan balance) at September 30, 2015:
Loans individually evaluated for impairment	$	94,631		$	21,261		$	—		$	115,892
Loans collectively evaluated for impairment	2,935,048			2,616,219			—			5,551,267
Loans acquired with deteriorated credit quality	1,173,136			375,900			—			1,549,036
Total	$	4,202,815		$	3,013,380		$	—		$	7,216,195

The following schedule presents, by loan portfolio segment, details regarding the balance in the allowance and the recorded investment in loans at December 31, 2014 by impairment evaluation method.



	Commercial Loan Portfolio		Consumer Loan Portfolio		Unallocated		Total
	(In thousands)
Allowance for loan losses balance at December 31, 2014 attributable to:
Loans individually evaluated for impairment	$	1,003	$	335	$	—	$	1,338
Loans collectively evaluated for impairment	43,153		27,968		2,724		73,845
Loans acquired with deteriorated credit quality	—		500		—		500
Total	$	44,156	$	28,803	$	2,724	$	75,683
Recorded investment (loan balance) at December 31, 2014:
Loans individually evaluated for impairment	$	86,221	$	19,681	$	—	$	105,902
Loans collectively evaluated for impairment	2,517,371		2,366,794		—		4,884,165
Loans acquired with deteriorated credit quality	480,432		217,731		—		698,163
Total	$	3,084,024	$	2,604,206	$	—	$	5,688,230

The following schedule presents, by loan portfolio segment, the changes in the allowance for the three and nine months ended September 30, 2014 and details regarding the balance in the allowance and the recorded investment in loans at September 30, 2014 by impairment evaluation method.



	Commercial Loan Portfolio			Consumer Loan Portfolio			Unallocated			Total
	(In thousands)
Changes in allowance for loan losses for the three months ended September 30, 2014:
Beginning balance	$	44,224		$	29,565		$	4,004		$	77,793
Provision for loan losses	715			834			(49		)	1,500
Charge-offs	(1,733		)	(1,889		)	—			(3,622		)
Recoveries	789			546			—			1,335
Ending balance	$	43,995		$	29,056		$	3,955		$	77,006
Changes in allowance for loan losses for the nine months ended September 30, 2014:
Beginning balance	$	44,482		$	30,145		$	4,445		$	79,072
Provision for loan losses	2,114			2,976			(490		)	4,600
Charge-offs	(4,756		)	(5,713		)	—			(10,469		)
Recoveries	2,155			1,648			—			3,803
Ending balance	$	43,995		$	29,056		$	3,955		$	77,006
Allowance for loan losses balance at September 30, 2014 attributable to:
Loans individually evaluated for impairment	$	1,175		$	328		$	—		$	1,503
Loans collectively evaluated for impairment	42,820			28,228			3,955			75,003
Loans acquired with deteriorated credit quality	—			500			—			500
Total	$	43,995		$	29,056		$	3,955		$	77,006
Recorded investment (loan balance) at September 30, 2014:
Loans individually evaluated for impairment	$	84,103		$	19,629		$	—		$	103,732
Loans collectively evaluated for impairment	2,388,586			2,285,296			—			4,673,882
Loans acquired with deteriorated credit quality	226,119			37,187			—			263,306
Total	$	2,698,808		$	2,342,112		$	—		$	5,040,920

The allowance attributable to acquired loans of $0.5 million at December 31, 2014 and September 30, 2014 was primarily attributable to two consumer loan pools in the acquired loan portfolio that had a decline in expected cash flows. There were no material changes in expected cash flows for the remaining acquired loan pools at September 30, 2015, December 31, 2014 or September 30, 2014.