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 are 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:



	June 30, 2016		December 31, 2015		June 30, 2015
	(In thousands)
Commercial loan portfolio:
Commercial	$	1,953,301	$	1,905,879	$	1,754,873
Commercial real estate	2,157,733		2,112,162		2,243,513
Real estate construction and land development	285,848		232,076		112,312
Subtotal	4,396,882		4,250,117		4,110,698
Consumer loan portfolio:
Residential mortgage	1,494,192		1,429,636		1,310,167
Consumer installment	1,048,622		877,457		887,907
Home equity	707,573		713,937		725,971
Subtotal	3,250,387		3,021,030		2,924,045
Total loans	$	7,647,269	$	7,271,147	$	7,034,743

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 June 30, 2016, December 31, 2015 and June 30, 2015:



	Commercial		Commercial Real Estate		Real Estate Construction and Land Development		Total
	(In thousands)
June 30, 2016
Originated Portfolio:
Risk Grades 1-5	$	1,537,612	$	1,479,365	$	239,194	$	3,256,171
Risk Grade 6	46,202		36,814		843		83,859
Risk Grade 7	35,602		15,434		517		51,553
Risk Grade 8	14,577		21,324		496		36,397
Risk Grade 9	—		1		—		1
Subtotal	1,633,993		1,552,938		241,050		3,427,981
Acquired Portfolio:
Risk Grades 1-5	292,492		554,352		40,671		887,515
Risk Grade 6	15,352		20,746		1,500		37,598
Risk Grade 7	8,448		23,879		1,229		33,556
Risk Grade 8	3,016		5,818		1,398		10,232
Risk Grade 9	—		—		—		—
Subtotal	319,308		604,795		44,798		968,901
Total	$	1,953,301	$	2,157,733	$	285,848	$	4,396,882
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
June 30, 2015
Originated Portfolio:
Risk Grades 1-5	$	1,269,091	$	1,273,725	$	97,364	$	2,640,180
Risk Grade 6	32,189		34,677		433		67,299
Risk Grade 7	41,316		29,737		2,127		73,180
Risk Grade 8	17,260		25,283		502		43,045
Risk Grade 9	—		4		—		4
Subtotal	1,359,856		1,363,426		100,426		2,823,708
Acquired Portfolio:
Risk Grades 1-5	347,914		820,400		10,139		1,178,453
Risk Grade 6	29,412		22,796		71		52,279
Risk Grade 7	13,910		30,288		119		44,317
Risk Grade 8	3,781		6,603		1,557		11,941
Risk Grade 9	—		—		—		—
Subtotal	395,017		880,087		11,886		1,286,990
Total	$	1,754,873	$	2,243,513	$	112,312	$	4,110,698

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 June 30, 2016, December 31, 2015 and June 30, 2015:



	Residential Mortgage		Consumer Installment		Home Equity		Total Consumer
	(In thousands)
June 30, 2016
Originated Loans:
Performing	$	1,299,382	$	1,041,978	$	598,283	$	2,939,643
Nonperforming	7,983		285		3,042		11,310
Subtotal	1,307,365		1,042,263		601,325		2,950,953
Acquired Loans:
Performing	185,492		6,298		105,360		297,150
Nonperforming	1,335		61		888		2,284
Subtotal	186,827		6,359		106,248		299,434
Total	$	1,494,192	$	1,048,622	$	707,573	$	3,250,387
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
June 30, 2015
Originated Loans:
Performing	$	1,058,696	$	871,543	$	584,520	$	2,514,759
Nonperforming	9,793		393		2,357		12,543
Subtotal	1,068,489		871,936		586,877		2,527,302
Acquired Loans:
Performing	238,698		15,966		138,086		392,750
Nonperforming	2,980		5		1,008		3,993
Subtotal	241,678		15,971		139,094		396,743
Total	$	1,310,167	$	887,907	$	725,971	$	2,924,045

Nonperforming Loans

A summary of nonperforming loans follows:



	June 30, 2016		December 31, 2015		June 30, 2015
	(In thousands)
Nonaccrual loans:
Commercial	$	14,577	$	28,554	$	17,260
Commercial real estate	21,325		25,163		25,287
Real estate construction and land development	496		521		502
Residential mortgage	5,343		5,557		6,004
Consumer installment	285		451		393
Home equity	1,971		1,979		1,769
Total nonaccrual loans	43,997		62,225		51,215
Accruing loans contractually past due 90 days or more as to interest or principal payments:
Commercial	3		364		711
Commercial real estate	3		254		56
Residential mortgage	407		402		424
Home equity	1,071		1,267		588
Total accruing loans contractually past due 90 days or more as to interest or principal payments	1,484		2,287		1,779
Nonperforming TDRs:
Commercial loan portfolio	14,240		16,297		14,547
Consumer loan portfolio	2,233		3,071		3,365
Total nonperforming TDRs	16,473		19,368		17,912
Total nonperforming loans	$	61,954	$	83,880	$	70,906

The Corporation’s nonaccrual loans at June 30, 2016, December 31, 2015 and June 30, 2015 included $32.4 million, $35.9 million and $35.7 million, respectively, of nonaccrual TDRs.

The Corporation had $0.9 million of residential mortgage loans that were in the process of foreclosure at June 30, 2016, compared to $2.9 million and $2.0 million at December 31, 2015 and June 30, 2015, respectively.

Impaired Loans

The following schedule presents impaired loans by classes of loans at June 30, 2016, December 31, 2015 and June 30, 2015:



	Recorded Investment		Unpaid Principal Balance		Related Valuation Allowance
	(In thousands)
June 30, 2016
Impaired loans with a valuation allowance:
Commercial	$	3,764	$	3,769	$	2,582
Commercial real estate	3,270		3,438		472
Residential mortgage	20,745		20,745		163
Subtotal	27,779		27,952		3,217
Impaired loans with no related valuation allowance:
Commercial	34,633		43,576		—
Commercial real estate	47,894		58,312		—
Real estate construction and land development	2,196		3,770		—
Residential mortgage	6,678		7,365		—
Consumer installment	347		365		—
Home equity	2,859		3,084		—
Subtotal	94,607		116,472		—
Total impaired loans:
Commercial	38,397		47,345		2,582
Commercial real estate	51,164		61,750		472
Real estate construction and land development	2,196		3,770		—
Residential mortgage	27,423		28,110		163
Consumer installment	347		365		—
Home equity	2,859		3,084		—
Total	$	122,386	$	144,424	$	3,217
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)
June 30, 2015
Impaired loans with a valuation allowance:
Commercial	$	4,044	$	4,137	$	718
Commercial real estate	2,789		2,948		603
Residential mortgage	20,970		20,970		260
Subtotal	27,803		28,055		1,581
Impaired loans with no related valuation allowance:
Commercial	32,461		38,160		—
Commercial real estate	56,052		78,490		—
Real estate construction and land development	2,393		4,175		—
Residential mortgage	8,984		8,984		—
Consumer installment	398		398		—
Home equity	2,778		2,778		—
Subtotal	103,066		132,985		—
Total impaired loans:
Commercial	36,505		42,297		718
Commercial real estate	58,841		81,438		603
Real estate construction and land development	2,393		4,175		—
Residential mortgage	29,954		29,954		260
Consumer installment	398		398		—
Home equity	2,778		2,778		—
Total	$	130,869	$	161,040	$	1,581

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 $22.0 million, $25.3 million and $30.2 million at June 30, 2016, December 31, 2015 and June 30, 2015, respectively, includes confirmed losses (partial charge-offs) of $16.3 million, $17.1 million and $15.2 million, respectively, and fair value discount adjustments of $5.7 million, $8.2 million and $15.0 million, respectively.

Impaired loans included $12.5 million, $12.8 million and $15.9 million at June 30, 2016, December 31, 2015 and June 30, 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 $49.4 million, $47.8 million and $45.8 million at June 30, 2016, December 31, 2015 and June 30, 2015, respectively, of performing TDRs.

The following schedule presents information related to impaired loans for the three and six months ended June 30, 2016 and 2015:



	Three Months Ended June 30, 2016				Six Months Ended June 30, 2016
	Average Recorded Investment		Interest Income Recognized While on Impaired Status		Average Recorded Investment		Interest Income Recognized While on Impaired Status
	(In thousands)
Commercial	$	38,606	$	348	$	41,811	$	677
Commercial real estate	53,723		391		55,839		849
Real estate construction and land development	2,265		26		2,166		51
Residential mortgage	27,418		356		27,755		722
Consumer installment	330		1		359		2
Home equity	2,791		13		3,022		28
Total	$	125,133	$	1,135	$	130,952	$	2,329



	Three Months Ended June 30, 2015				Six Months Ended June 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	$	36,735	$	263	$	37,655	$	552
Commercial real estate	60,393		458		60,317		983
Real estate construction and land development	2,290		36		2,403		63
Residential mortgage	29,432		380		28,392		711
Consumer installment	426		1		463		1
Home equity	2,529		14		2,440		22
Total	$	131,805	$	1,152	$	131,670	$	2,332

The following schedule presents the aging status of the recorded investment in loans by classes of loans at June 30, 2016, December 31, 2015 and June 30, 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)
June 30, 2016
Originated Portfolio:
Commercial	$	4,522	$	822	$	3	$	14,577	$	19,924	$	1,614,069	$	1,633,993
Commercial real estate	8,842		343		3		21,325		30,513		1,522,425		1,552,938
Real estate construction and land development	62		—		—		496		558		240,492		241,050
Residential mortgage	1,955		—		407		5,343		7,705		1,299,660		1,307,365
Consumer installment	2,856		554		—		285		3,695		1,038,568		1,042,263
Home equity	2,594		366		1,071		1,971		6,002		595,323		601,325
Total	$	20,831	$	2,085	$	1,484	$	43,997	$	68,397	$	6,310,537	$	6,378,934
Acquired Portfolio:
Commercial	$	547	$	—	$	3,038	$	—	$	3,585	$	315,723	$	319,308
Commercial real estate	90		—		5,817		—		5,907		598,888		604,795
Real estate construction and land development	389		—		1,398		—		1,787		43,011		44,798
Residential mortgage	407		—		1,335		—		1,742		185,085		186,827
Consumer installment	58		25		62		—		145		6,214		6,359
Home equity	416		38		888		—		1,342		104,906		106,248
Total	$	1,907	$	63	$	12,538	$	—	$	14,508	$	1,253,827	$	1,268,335



	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
June 30, 2015
Originated Portfolio:
Commercial	$	4,055	$	2,317	$	711	$	17,260	$	24,343	$	1,335,513	$	1,359,856
Commercial real estate	2,754		1,117		56		25,287		29,214		1,334,212		1,363,426
Real estate construction and land development	413		—		—		502		915		99,511		100,426
Residential mortgage	1,536		—		424		6,004		7,964		1,060,525		1,068,489
Consumer installment	2,526		302		—		393		3,221		868,715		871,936
Home equity	2,334		204		588		1,769		4,895		581,982		586,877
Total	$	13,618	$	3,940	$	1,779	$	51,215	$	70,552	$	5,280,458	$	5,351,010
Acquired Portfolio:
Commercial	$	690	$	—	$	3,781	$	—	$	4,471	$	390,546	$	395,017
Commercial real estate	969		291		6,603		—		7,863		872,224		880,087
Real estate construction and land development	—		—		1,557		—		1,557		10,329		11,886
Residential mortgage	1,077		138		2,980		—		4,195		237,483		241,678
Consumer installment	—		56		5		—		61		15,910		15,971
Home equity	1,153		210		1,008		—		2,371		136,723		139,094
Total	$	3,889	$	695	$	15,934	$	—	$	20,518	$	1,663,215	$	1,683,733

Loans Modified Under Troubled Debt Restructurings (TDRs)

The following schedule presents the Corporation’s TDRs at June 30, 2016, December 31, 2015 and June 30, 2015:



	Performing TDRs		Non-Performing TDRs		Nonaccrual TDRs		Total
	(In thousands)
June 30, 2016
Commercial loan portfolio	$	30,866	$	14,240	$	28,979	$	74,085
Consumer loan portfolio	18,512		2,233		3,402		24,147
Total	$	49,378	$	16,473	$	32,381	$	98,232
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
June 30, 2015
Commercial loan portfolio	$	28,203	$	14,547	$	32,001	$	74,751
Consumer loan portfolio	17,605		3,365		3,707		24,677
Total	$	45,808	$	17,912	$	35,708	$	99,428

The following schedule provides information on the Corporation's TDRs that were modified during the three and six months ended June 30, 2016 and 2015:



	Three Months Ended June 30, 2016					Six Months Ended June 30, 2016
	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	21	$	4,149	$	4,149	28	$	7,981	$	7,981
Commercial real estate	2	1,454		1,454		6	2,441		2,441
Subtotal – commercial loan portfolio	23	5,603		5,603		34	10,422		10,422
Consumer loan portfolio	14	490		490		21	694		694
Total	37	$	6,093	$	6,093	55	$	11,116	$	11,116



	Three Months Ended June 30, 2015					Six Months Ended June 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	13	$	2,332	$	2,332	18	$	4,264	$	4,264
Commercial real estate	4	527		527		9	3,061		3,061
Real estate construction and land development	1	305		305		1	305		305
Subtotal – commercial loan portfolio	18	3,164		3,164		28	7,630		7,630
Consumer loan portfolio	29	1,633		1,631		39	1,969		1,967
Total	47	$	4,797	$	4,795	67	$	9,599	$	9,597

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 six months ended June 30, 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:



	Three Months Ended June 30, 2016			Six Months Ended June 30, 2016
	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	788		2	1,721
Subtotal – commercial loan portfolio	1	788		2	1,721
Consumer loan portfolio	1	—		2	—
Total	2	$	788	4	$	1,721

	Three Months Ended June 30, 2015			Six Months Ended June 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	183		4	942
Subtotal – commercial loan portfolio	1	183		4	942
Consumer loan portfolio	—	—		1	33
Total	1	$	183	5	$	975

Allowance for Loan Losses

The following schedule presents, by loan portfolio segment, the changes in the allowance for the three and six months ended June 30, 2016 and details regarding the balance in the allowance and the recorded investment in loans at June 30, 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 June 30, 2016:
Beginning balance	$	44,668		$	25,650		$	—	$	70,318
Provision for loan losses	900			2,100			—		3,000
Charge-offs	(2,542		)	(1,078		)	—		(3,620		)
Recoveries	1,202			606			—		1,808
Ending balance	$	44,228		$	27,278		$	—	$	71,506
Changes in allowance for loan losses for the six months ended June 30, 2016:
Beginning balance	$	47,234		$	26,094		$	—	$	73,328
Provision for loan losses	1,900			2,600			—		4,500
Charge-offs	(6,438		)	(2,640		)	—		(9,078		)
Recoveries	1,532			1,224			—		2,756
Ending balance	$	44,228		$	27,278		$	—	$	71,506
Allowance for loan losses balance at June 30, 2016 attributable to:
Loans individually evaluated for impairment	$	3,054		$	163		$	—	$	3,217
Loans collectively evaluated for impairment	41,174			27,115			—		68,289
Loans acquired with deteriorated credit quality	—			—			—		—
Total	$	44,228		$	27,278		$	—	$	71,506
Recorded investment (loan balance) at June 30, 2016:
Loans individually evaluated for impairment	$	81,504		$	20,745		$	—	$	102,249
Loans collectively evaluated for impairment	3,346,477			2,930,208			—		6,276,685
Loans acquired with deteriorated credit quality	968,901			299,434			—		1,268,335
Total	$	4,396,882		$	3,250,387		$	—	$	7,647,269

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 and six months ended June 30, 2015 and details regarding the balance in the allowance and the recorded investment in loans at June 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 June 30, 2015:
Beginning balance	$	46,819		$	24,579		$	3,858	$	75,256
Provision for loan losses	(626		)	(109		)	2,235		1,500
Charge-offs	(915		)	(1,809		)	—		(2,724		)
Recoveries	249			660			—		909
Ending balance	$	45,527		$	23,321		$	6,093	$	74,941
Changes in allowance for loan losses for the six months ended June 30, 2015:
Beginning balance	$	44,156		$	28,803		$	2,724	$	75,683
Provision for loan losses	2,967			(3,336		)	3,369		3,000
Charge-offs	(2,419		)	(3,448		)	—		(5,867		)
Recoveries	823			1,302			—		2,125
Ending balance	$	45,527		$	23,321		$	6,093	$	74,941
Allowance for loan losses balance at June 30, 2015 attributable to:
Loans individually evaluated for impairment	$	1,321		$	260		$	—	$	1,581
Loans collectively evaluated for impairment	44,206			23,061			6,093		73,360
Loans acquired with deteriorated credit quality	—			—			—		—
Total	$	45,527		$	23,321		$	6,093	$	74,941
Recorded investment (loan balance) at June 30, 2015:
Loans individually evaluated for impairment	$	85,799		$	20,970		$	—	$	106,769
Loans collectively evaluated for impairment	2,737,909			2,506,332			—		5,244,241
Loans acquired with deteriorated credit quality	1,286,990			396,743			—		1,683,733
Total	$	4,110,698		$	2,924,045		$	—	$	7,034,743