Loans

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

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

Commercial real estate — Loans secured by real estate occupied by the borrower for ongoing operations, 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 and land development — Real estate construction loans represent secured loans for the construction of business properties. Real estate construction loans often convert to a commercial real estate loan at the completion of the construction period. Land development loans represent secured development loans made to borrowers for the purpose of infrastructure improvements to vacant land to create finished marketable residential and commercial lots/land. Most land development loans are originated with the intention that the loans will be paid through the sale of developed lots/land by the developers within twelve months of the completion date. Land development loans at March 31, 2016, December 31, 2015 and March 31, 2015 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:



	March 31, 2016		December 31, 2015		March 31, 2015
	(In thousands)
Commercial loan portfolio:
Commercial	$	1,922,259	$	1,905,879	$	1,356,169
Commercial real estate	2,143,051		2,112,162		1,616,923
Real estate construction and land development	242,899		232,076		108,839
Subtotal	4,308,209		4,250,117		3,081,931
Consumer loan portfolio:
Residential mortgage	1,461,120		1,429,636		1,117,445
Consumer installment	897,078		877,457		844,066
Home equity	700,478		713,937		659,432
Subtotal	3,058,676		3,021,030		2,620,943
Total loans	$	7,366,885	$	7,271,147	$	5,702,874

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 Chemical Bank, has a commercial loan portfolio approval process involving underwriting and individual and group loan approval authorities to consider credit quality and loss exposure at loan origination. The loans in the Corporation’s commercial loan portfolio are risk rated at origination based on the grading system set forth below. The approval authority of relationship managers is established based on experience levels, with credit decisions greater than $1.0 million requiring group loan authority approval, except for six executive and senior officers who have varying loan limits exceeding $1.5 million and up to $3.5 million. With respect to the group loan authorities, 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 the 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 the approval of the board of directors of Chemical Bank.

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

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

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

Credit Quality Indicators

Commercial Loan Portfolio

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, and 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 March 31, 2016, December 31, 2015 and March 31, 2015:



	Commercial		Commercial Real Estate		Real Estate Construction and Land Development		Total
	(In thousands)
March 31, 2016
Originated Portfolio:
Risk Grades 1-5	$	1,466,094	$	1,409,991	$	196,982	$	3,073,067
Risk Grade 6	43,129		44,210		1,163		88,502
Risk Grade 7	35,437		20,250		977		56,664
Risk Grade 8	17,595		25,858		546		43,999
Risk Grade 9	1,669		1		—		1,670
Subtotal	1,563,924		1,500,310		199,668		3,263,902
Acquired Portfolio:
Risk Grades 1-5	319,672		590,151		39,260		949,083
Risk Grade 6	25,978		17,692		1,539		45,209
Risk Grade 7	11,103		30,679		1,273		43,055
Risk Grade 8	1,582		4,219		1,159		6,960
Risk Grade 9	—		—		—		—
Subtotal	358,335		642,741		43,231		1,044,307
Total	$	1,922,259	$	2,143,051	$	242,899	$	4,308,209
December 31, 2015
Originated Portfolio:
Risk Grades 1-5	$	1,418,301	$	1,341,202	$	183,323	$	2,942,826
Risk Grade 6	34,727		31,036		180		65,943
Risk Grade 7	39,933		26,658		1,123		67,714
Risk Grade 8	26,459		25,163		521		52,143
Risk Grade 9	2,095		—		—		2,095
Subtotal	1,521,515		1,424,059		185,147		3,130,721
Acquired Portfolio:
Risk Grades 1-5	340,782		629,430		41,683		1,011,895
Risk Grade 6	28,321		23,926		2,556		54,803
Risk Grade 7	11,607		29,975		1,537		43,119
Risk Grade 8	3,654		4,772		1,153		9,579
Risk Grade 9	—		—		—		—
Subtotal	384,364		688,103		46,929		1,119,396
Total	$	1,905,879	$	2,112,162	$	232,076	$	4,250,117
March 31, 2015
Originated Portfolio:
Risk Grades 1-5	$	1,176,021	$	1,175,373	$	96,497	$	2,447,891
Risk Grade 6	40,999		44,248		738		85,985
Risk Grade 7	28,983		27,961		1,997		58,941
Risk Grade 8	18,904		24,760		953		44,617
Risk Grade 9	—		6		—		6
Subtotal	1,264,907		1,272,348		100,185		2,637,440
Acquired Portfolio:
Risk Grades 1-5	71,422		318,113		6,724		396,259
Risk Grade 6	11,299		7,786		253		19,338
Risk Grade 7	6,509		12,735		140		19,384
Risk Grade 8	2,032		5,941		1,537		9,510
Risk Grade 9	—		—		—		—
Subtotal	91,262		344,575		8,654		444,491
Total	$	1,356,169	$	1,616,923	$	108,839	$	3,081,931

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 to be in a nonperforming status until they meet the Corporation’s definition of a performing TDR, at which time they are considered to be 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 March 31, 2016, December 31, 2015 and March 31, 2015:



	Residential Mortgage		Consumer Installment		Home Equity		Total Consumer
	(In thousands)
March 31, 2016
Originated Loans:
Performing	$	1,253,670	$	889,792	$	582,485	$	2,725,947
Nonperforming	8,498		360		3,007		11,865
Subtotal	1,262,168		890,152		585,492		2,737,812
Acquired Loans:
Performing	197,075		6,881		113,989		317,945
Nonperforming	1,877		45		997		2,919
Subtotal	198,952		6,926		114,986		320,864
Total	$	1,461,120	$	897,078	$	700,478	$	3,058,676
December 31, 2015
Originated Loans:
Performing	$	1,207,945	$	868,975	$	587,566	$	2,664,486
Nonperforming	9,030		451		3,246		12,727
Subtotal	1,216,975		869,426		590,812		2,677,213
Acquired Loans:
Performing	210,580		7,984		122,118		340,682
Nonperforming	2,081		47		1,007		3,135
Subtotal	212,661		8,031		123,125		343,817
Total	$	1,429,636	$	877,457	$	713,937	$	3,021,030
March 31, 2015
Originated Loans:
Performing	$	998,196	$	834,926	$	565,992	$	2,399,114
Nonperforming	9,376		433		2,299		12,108
Subtotal	1,007,572		835,359		568,291		2,411,222
Acquired Loans:
Performing	109,005		8,696		90,686		208,387
Nonperforming	868		11		455		1,334
Subtotal	109,873		8,707		91,141		209,721
Total	$	1,117,445	$	844,066	$	659,432	$	2,620,943

Nonperforming Loans

A summary of nonperforming loans follows:



	March 31, 2016		December 31, 2015		March 31, 2015
	(In thousands)
Nonaccrual loans:
Commercial	$	19,264	$	28,554	$	18,904
Commercial real estate	25,859		25,163		24,766
Real estate construction and land development	546		521		953
Residential mortgage	5,062		5,557		6,514
Consumer installment	360		451		433
Home equity	2,328		1,979		1,870
Total nonaccrual loans	53,419		62,225		53,440
Accruing loans contractually past due 90 days or more as to interest or principal payments:
Commercial	370		364		52
Commercial real estate	—		254		148
Residential mortgage	423		402		172
Home equity	679		1,267		429
Total accruing loans contractually past due 90 days or more as to interest or principal payments	1,472		2,287		801
Nonperforming TDRs:
Commercial loan portfolio	15,351		16,297		15,810
Consumer loan portfolio	3,013		3,071		2,690
Total nonperforming TDRs	18,364		19,368		18,500
Total nonperforming loans	$	73,255	$	83,880	$	72,741

The Corporation’s nonaccrual loans at March 31, 2016, December 31, 2015 and March 31, 2015 included $32.5 million, $35.9 million and $37.3 million, respectively, of nonaccrual TDRs.

The Corporation had $2.3 million of residential mortgage loans that were in the process of foreclosure at March 31, 2016, compared to $2.9 million and $2.2 million at December 31, 2015 and March 31, 2015, respectively.

Impaired Loans

The following schedule presents impaired loans by classes of loans at March 31, 2016, December 31, 2015 and March 31, 2015:



	Recorded Investment		Unpaid Principal Balance		Related Valuation Allowance
	(In thousands)
March 31, 2016
Impaired loans with a valuation allowance:
Commercial	$	4,944	$	4,949	$	1,926
Commercial real estate	3,558		4,016		810
Residential mortgage	21,003		21,003		180
Subtotal	29,505		29,968		2,916
Impaired loans with no related valuation allowance:
Commercial	35,353		45,042		—
Commercial real estate	54,097		67,744		—
Real estate construction and land development	2,164		3,104		—
Residential mortgage	6,939		7,793		—
Consumer installment	405		418		—
Home equity	3,325		3,617		—
Subtotal	102,283		127,718		—
Total impaired loans:
Commercial	40,297		49,991		1,926
Commercial real estate	57,655		71,760		810
Real estate construction and land development	2,164		3,104		—
Residential mortgage	27,942		28,796		180
Consumer installment	405		418		—
Home equity	3,325		3,617		—
Total	$	131,788	$	157,686	$	2,916
December 31, 2015
Impaired loans with a valuation allowance:
Commercial	$	18,898	$	19,426	$	5,700
Commercial real estate	4,448		4,688		497
Residential mortgage	21,037		21,037		192
Subtotal	44,383		45,151		6,389
Impaired loans with no related valuation allowance:
Commercial	31,039		37,703		—
Commercial real estate	53,518		69,130		—
Real estate construction and land development	2,136		3,108		—
Residential mortgage	7,638		8,644		—
Consumer installment	498		512		—
Home equity	2,986		3,270		—
Subtotal	97,815		122,367		—
Total impaired loans:
Commercial	49,937		57,129		5,700
Commercial real estate	57,966		73,818		497
Real estate construction and land development	2,136		3,108		—
Residential mortgage	28,675		29,681		192
Consumer installment	498		512		—
Home equity	2,986		3,270		—
Total	$	142,198	$	167,518	$	6,389



	Recorded Investment		Unpaid Principal Balance		Related Valuation Allowance
	(In thousands)
March 31, 2015
Impaired loans with a valuation allowance:
Commercial	$	3,433	$	3,527	$	1,119
Commercial real estate	1,780		1,961		496
Residential mortgage	19,887		19,887		297
Subtotal	25,100		25,375		1,912
Impaired loans with no related valuation allowance:
Commercial	33,733		39,382		—
Commercial real estate	57,628		79,696		—
Real estate construction and land development	2,540		4,264		—
Residential mortgage	7,382		7,382		—
Consumer installment	444		444		—
Home equity	2,325		2,325		—
Subtotal	104,052		133,493		—
Total impaired loans:
Commercial	37,166		42,909		1,119
Commercial real estate	59,408		81,657		496
Real estate construction and land development	2,540		4,264		—
Residential mortgage	27,269		27,269		297
Consumer installment	444		444		—
Home equity	2,325		2,325		—
Total	$	129,152	$	158,868	$	1,912

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 $25.9 million, $25.3 million and $29.7 million at March 31, 2016, December 31, 2015 and March 31, 2015, respectively, includes confirmed losses (partial charge-offs) of $19.9 million, $17.1 million and $14.8 million, respectively, and fair value discount adjustments of $6.0 million, $8.2 million and $14.9 million, respectively.

Impaired loans included $10.1 million, $12.8 million and $11.2 million at March 31, 2016, December 31, 2015 and March 31, 2015, 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 $49.9 million, $47.8 million and $46.0 million at March 31, 2016, December 31, 2015 and March 31, 2015, respectively, of performing TDRs.

The following schedule presents information related to impaired loans for the three months ended March 31, 2016 and 2015:



	Average Recorded Investment		Interest Income Recognized While on Impaired Status
	(In thousands)
Three Months Ended March 31, 2016
Commercial	$	45,017	$	329
Commercial real estate	57,956		458
Real estate construction and land development	2,068		25
Residential mortgage	28,092		366
Consumer installment	387		1
Home equity	3,252		15
Total	$	136,772	$	1,194



Three Months Ended March 31, 2015
Commercial	$	38,576	$	289
Commercial real estate	60,240		525
Real estate construction and land development	2,515		27
Residential mortgage	27,352		331
Consumer installment	499		—
Home equity	2,352		8
Total	$	131,534	$	1,180

The following schedule presents the aging status of the recorded investment in loans by classes of loans at March 31, 2016, December 31, 2015 and March 31, 2015:



	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)
March 31, 2016
Originated Portfolio:
Commercial	$	4,069	$	7,359	$	370	$	19,264	$	31,062	$	1,532,862	$	1,563,924
Commercial real estate	3,096		376		—		25,859		29,331		1,470,979		1,500,310
Real estate construction and land development	216		—		—		546		762		198,906		199,668
Residential mortgage	757		23		423		5,062		6,265		1,255,903		1,262,168
Consumer installment	2,158		336		—		360		2,854		887,298		890,152
Home equity	1,632		323		679		2,328		4,962		580,530		585,492
Total	$	11,928	$	8,417	$	1,472	$	53,419	$	75,236	$	5,926,478	$	6,001,714
Acquired Portfolio:
Commercial	$	55	$	70	$	1,582	$	—	$	1,707	$	356,628	$	358,335
Commercial real estate	249		557		4,459		—		5,265		637,476		642,741
Real estate construction and land development	—		—		1,159		—		1,159		42,072		43,231
Residential mortgage	301		—		1,877		—		2,178		196,774		198,952
Consumer installment	59		—		45		—		104		6,822		6,926
Home equity	543		511		997		—		2,051		112,935		114,986
Total	$	1,207	$	1,138	$	10,119	$	—	$	12,464	$	1,352,707	$	1,365,171



	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, 2015
Originated Portfolio:
Commercial	$	3,685	$	1,230	$	364	$	28,554	$	33,833	$	1,487,682	$	1,521,515
Commercial real estate	4,168		1,603		254		25,163		31,188		1,392,871		1,424,059
Real estate construction and land development	—		—		—		521		521		184,626		185,147
Residential mortgage	1,737		—		402		5,557		7,696		1,209,279		1,216,975
Consumer installment	3,145		644		—		451		4,240		865,186		869,426
Home equity	1,767		788		1,267		1,979		5,801		585,011		590,812
Total	$	14,502	$	4,265	$	2,287	$	62,225	$	83,279	$	5,724,655	$	5,807,934
Acquired Portfolio:
Commercial	$	490	$	532	$	3,735	$	—	$	4,757	$	379,607	$	384,364
Commercial real estate	3,557		691		4,771		—		9,019		679,084		688,103
Real estate construction and land development	—		—		1,154		—		1,154		45,775		46,929
Residential mortgage	1,370		—		2,081		—		3,451		209,210		212,661
Consumer installment	55		—		47		—		102		7,929		8,031
Home equity	847		78		1,007		—		1,932		121,193		123,125
Total	$	6,319	$	1,301	$	12,795	$	—	$	20,415	$	1,442,798	$	1,463,213
March 31, 2015
Originated Portfolio:
Commercial	$	10,121	$	729	$	52	$	18,904	$	29,806	$	1,235,101	$	1,264,907
Commercial real estate	7,238		2,267		148		24,766		34,419		1,237,929		1,272,348
Real estate construction and land development	340		—		—		953		1,293		98,892		100,185
Residential mortgage	1,246		88		172		6,514		8,020		999,552		1,007,572
Consumer installment	2,143		344		—		433		2,920		832,439		835,359
Home equity	1,728		197		429		1,870		4,224		564,067		568,291
Total	$	22,816	$	3,625	$	801	$	53,440	$	80,682	$	4,967,980	$	5,048,662
Acquired Portfolio:
Commercial	$	59	$	5	$	2,089	$	—	$	2,153	$	89,109	$	91,262
Commercial real estate	1,784		138		6,271		—		8,193		336,382		344,575
Real estate construction and land development	—		—		1,537		—		1,537		7,117		8,654
Residential mortgage	104		—		868		—		972		108,901		109,873
Consumer installment	3		1		11		—		15		8,692		8,707
Home equity	349		234		455		—		1,038		90,103		91,141
Total	$	2,299	$	378	$	11,231	$	—	$	13,908	$	640,304	$	654,212

Loans Modified Under Troubled Debt Restructurings (TDRs)

The following schedule presents the Corporation’s TDRs at March 31, 2016, December 31, 2015 and March 31, 2015:



	Performing TDRs		Non-Performing TDRs		Nonaccrual TDRs		Total
	(In thousands)
March 31, 2016
Commercial loan portfolio	$	31,896	$	15,351	$	29,368	$	76,615
Consumer loan portfolio	17,990		3,013		3,146		24,149
Total	$	49,886	$	18,364	$	32,514	$	100,764
December 31, 2015
Commercial loan portfolio	$	29,844	$	16,297	$	32,682	$	78,823
Consumer loan portfolio	17,966		3,071		3,251		24,288
Total	$	47,810	$	19,368	$	35,933	$	103,111
March 31, 2015
Commercial loan portfolio	$	28,784	$	15,810	$	32,917	$	77,511
Consumer loan portfolio	17,197		2,690		4,426		24,313
Total	$	45,981	$	18,500	$	37,343	$	101,824

The following schedule provides information on the Corporation's TDRs that were modified during the three months ended March 31, 2016 and 2015:



	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
	(Dollars in thousands)
Three Months Ended March 31, 2016
Commercial loan portfolio:
Commercial	7	$	3,832	$	3,832
Commercial real estate	4	987		987
Subtotal – commercial loan portfolio	11	4,819		4,819
Consumer loan portfolio	7	204		204
Total	18	$	5,023	$	5,023



Three Months Ended March 31, 2015
Commercial loan portfolio:
Commercial	5	$	1,932	$	1,932
Commercial real estate	5	2,534		2,534
Subtotal – commercial loan portfolio	10	4,466		4,466
Consumer loan portfolio	10	336		336
Total	20	$	4,802	$	4,802

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 months ended March 31, 2016 and 2015, 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:



	Number of Loans	Principal Balance at End of Period
	(Dollars in thousands)
Three Months Ended March 31, 2016
Commercial loan portfolio:
Commercial	—	$	—
Commercial real estate	1	933
Subtotal – commercial loan portfolio	1	933
Consumer loan portfolio	1	—
Total	2	$	933

Three Months Ended March 31, 2015
Commercial loan portfolio:
Commercial	—	$	—
Commercial real estate	3	759
Subtotal – commercial loan portfolio	3	759
Consumer loan portfolio	1	33
Total	4	$	792

Allowance for Loan Losses

The following schedule presents, by loan portfolio segment, the changes in the allowance for the three months ended March 31, 2016 and details regarding the balance in the allowance and the recorded investment in loans at March 31, 2016 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 March 31, 2016:
Beginning balance	$	47,234		$	26,094		$	—	$	73,328
Provision for loan losses	1,000			500			—		1,500
Charge-offs	(3,896		)	(1,562		)	—		(5,458		)
Recoveries	330			618			—		948
Ending balance	$	44,668		$	25,650		$	—	$	70,318
Allowance for loan losses balance at March 31, 2016 attributable to:
Loans individually evaluated for impairment	$	2,736		$	180		$	—	$	2,916
Loans collectively evaluated for impairment	41,932			25,470			—		67,402
Loans acquired with deteriorated credit quality	—			—			—		—
Total	$	44,668		$	25,650		$	—	$	70,318
Recorded investment (loan balance) at March 31, 2016:
Loans individually evaluated for impairment	$	92,916		$	21,003		$	—	$	113,919
Loans collectively evaluated for impairment	3,170,986			2,716,809			—		5,887,795
Loans acquired with deteriorated credit quality	1,044,307			320,864			—		1,365,171
Total	$	4,308,209		$	3,058,676		$	—	$	7,366,885

The following schedule presents, by loan portfolio segment, details regarding the balance in the allowance and the recorded investment in loans at December 31, 2015 by impairment evaluation method.



	Commercial Loan Portfolio		Consumer Loan Portfolio		Unallocated		Total
	(In thousands)
Allowance for loan losses balance at December 31, 2015 attributable to:
Loans individually evaluated for impairment	$	6,197	$	192	$	—	$	6,389
Loans collectively evaluated for impairment	41,037		25,902		—		66,939
Loans acquired with deteriorated credit quality	—		—		—		—
Total	$	47,234	$	26,094	$	—	$	73,328
Recorded investment (loan balance) at December 31, 2015:
Loans individually evaluated for impairment	$	100,379	$	21,037	$	—	$	121,416
Loans collectively evaluated for impairment	3,030,342		2,656,176		—		5,686,518
Loans acquired with deteriorated credit quality	1,119,396		343,817		—		1,463,213
Total	$	4,250,117	$	3,021,030	$	—	$	7,271,147

The following schedule presents, by loan portfolio segment, the changes in the allowance for the three months ended March 31, 2015 and details regarding the balance in the allowance and the recorded investment in loans at March 31, 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 March 31, 2015:
Beginning balance	$	44,156		$	28,803		$	2,724	$	75,683
Provision for loan losses	3,593			(3,227		)	1,134		1,500
Charge-offs	(1,504		)	(1,639		)	—		(3,143		)
Recoveries	574			642			—		1,216
Ending balance	$	46,819		$	24,579		$	3,858	$	75,256
Allowance for loan losses balance at March 31, 2015 attributable to:
Loans individually evaluated for impairment	$	1,615		$	297		$	—	$	1,912
Loans collectively evaluated for impairment	45,204			24,282			3,858		73,344
Loans acquired with deteriorated credit quality	—			—			—		—
Total	$	46,819		$	24,579		$	3,858	$	75,256
Recorded investment (loan balance) at March 31, 2015:
Loans individually evaluated for impairment	$	89,217		$	19,887		$	—	$	109,104
Loans collectively evaluated for impairment	2,548,223			2,391,335			—		4,939,558
Loans acquired with deteriorated credit quality	444,491			209,721			—		654,212
Total	$	3,081,931		$	2,620,943		$	—	$	5,702,874