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 September 30, 2017 and December 31, 2016 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, and real estate construction and land development loans are referred to as the Corporation’s commercial loan portfolio, while residential mortgage, consumer installment and home equity loans are referred to as the Corporation’s consumer loan portfolio. A summary of the Corporation's loans follows:



(Dollars in thousands)	Originated		Acquired⁽¹⁾		Total Loans
September 30, 2017
Commercial loan portfolio:
Commercial	$	2,255,444	$	1,064,521	$	3,319,965
Commercial real estate	2,472,224		1,843,754		4,315,978
Real estate construction and land development	421,764		79,649		501,413
Subtotal	5,149,432		2,987,924		8,137,356
Consumer loan portfolio:
Residential mortgage	1,881,285		1,340,022		3,221,307
Consumer installment	1,502,814		113,169		1,615,983
Home equity	622,565		236,157		858,722
Subtotal	4,006,664		1,689,348		5,696,012
Total loans	$	9,156,096	$	4,677,272	$	13,833,368	⁽²⁾
December 31, 2016
Commercial loan portfolio:
Commercial	$	1,901,526	$	1,315,774	$	3,217,300
Commercial real estate	1,921,799		2,051,341		3,973,140
Real estate construction and land development	281,724		122,048		403,772
Subtotal	4,105,049		3,489,163		7,594,212
Consumer loan portfolio:
Residential mortgage	1,475,342		1,611,132		3,086,474
Consumer installment	1,282,588		151,296		1,433,884
Home equity	595,422		280,787		876,209
Subtotal	3,353,352		2,043,215		5,396,567
Total loans	$	7,458,401	$	5,532,378	$	12,990,779	⁽²⁾


⁽¹⁾	Acquired loans are accounted for under ASC 310-30.


⁽²⁾	Reported net of deferred costs totaling $25.6 million and $14.8 million at September 30, 2017 and December 31, 2016, respectively.

The Corporation acquired loans at fair value as of the acquisition date, which includes loans acquired in the acquisitions of Talmer, Lake Michigan Financial Corporation ("Lake Michigan"), Monarch Community Bancorp, Inc. ("Monarch"), Northwestern Bancorp, Inc. ("Northwestern") and O.A.K. Financial Corporation ("OAK"). Acquired loans are accounted for under ASC 310-30 which recognizes the expected shortfall of expected future cash flows, as compared to the contractual amount due, as nonaccretable discount. Any excess of the net present value of expected future cash flows over the acquisition date fair value is recognized as the accretable discount, or accretable yield. The accretable discount is recognized over the expected remaining life of the acquired loans on a pool basis.

Activity for the accretable yield, which includes contractually due interest for acquired loans that have been renewed or extended since the date of acquisition and continue to be accounted for in loan pools in accordance with ASC 310-30, follows:



(Dollars in thousands)	Talmer			Lake Michigan			Monarch			North-western			OAK			Total
Three Months Ended September 30, 2017
Balance at beginning of period	$	801,369		$	121,572		$	24,270		$	71,212		$	19,796		$	1,038,219
Accretion recognized in interest income	(43,816		)	(7,201		)	(1,119		)	(5,263		)	(3,004		)	(60,403		)
Net reclassification (to) from nonaccretable difference⁽¹⁾	11,861			(14,482		)	168			(1,358		)	1,999			(1,812		)
Balance at end of period	$	769,414		$	99,889		$	23,319		$	64,591		$	18,791		$	976,004

Three Months Ended September 30, 2016
Balance at beginning of period	$	—		$	125,343		$	30,859		$	73,746		$	26,592		$	256,540
Addition attributable to acquisitions	862,127			—			—			—			—			862,127
Accretion recognized in interest income	(17,415		)	(7,968		)	(1,322		)	(3,890		)	(3,423		)	(34,018		)
Net reclassification (to) from nonaccretable difference⁽¹⁾	—			6,565			114			526			19			7,224
Balance at end of period	$	844,712		$	123,940		$	29,651		$	70,382		$	23,188		$	1,091,873

Nine Months Ended September 30, 2017
Balance at beginning of period	$	798,210		$	121,416		$	27,182		$	69,847		$	23,316		$	1,039,971
Accretion recognized in interest income	(133,478		)	(22,050		)	(3,459		)	(15,222		)	(9,595		)	(183,804		)
Net reclassification (to) from nonaccretable difference⁽¹⁾	104,682			523			(404		)	9,966			5,070			119,837
Balance at end of period	$	769,414		$	99,889		$	23,319		$	64,591		$	18,791		$	976,004

Nine Months Ended September 30, 2016
Balance at beginning of period	$	—		$	152,999		$	34,558		$	82,623		$	28,077		$	298,257
Additions attributable to acquisitions	862,127			—			—			—			—			862,127
Accretion recognized in interest income	(17,415		)	(25,259		)	(4,158		)	(11,919		)	(9,707		)	(68,458		)
Net reclassification (to) from nonaccretable difference⁽¹⁾	—			(3,800		)	(749		)	(322		)	4,818			(53		)
Balance at end of period	$	844,712		$	123,940		$	29,651		$	70,382		$	23,188		$	1,091,873

⁽¹⁾

The net reclassification results from changes in expected cash flows of the acquired loans which may include increases in the amount of contractual principal and interest expected to be collected due to improvement in credit quality, increases in balances outstanding from advances, renewals, extensions and interest rates; as well as reductions in contractual principal and interest expected to be collected due to credit deterioration, payoffs, and decreases in interest rates.

Credit Quality Monitoring

The Corporation maintains loan policies and credit underwriting standards as part of the process of managing credit risk. These standards include making loans generally only within the Corporation’s market areas. The Corporation’s lending markets generally consist of communities throughout Michigan and additional communities located within Northeast Ohio and Northern Indiana.

The Corporation, through Chemical Bank, has a commercial loan portfolio approval process involving underwriting and individual and group loan approval authorities to consider credit quality and loss exposure at loan origination. The loans in the Corporation’s commercial loan portfolio are risk rated at origination based on the grading system set forth below. The approval authority of relationship managers is established based on experience levels, with credit decisions greater than $1.25 million requiring credit officer approval and credit decisions greater than $3.0 million requiring group loan authority approval, except for six executive and senior officers who have varying loan limits up to $8.0 million. With respect to the group loan authorities, Chemical Bank has various regional loan committees that meet weekly to consider loans ranging in amounts of $3.0 million to $7.0 million, and a senior loan committee, consisting of certain executive and senior officers, that meets weekly to consider loans ranging in amounts from $7.0 million up to Chemical Bank's internal lending limit, depending on risk rating and credit action required. Credit actions exceeding Chemical Bank's internal lending limit require the approval of the board of directors of Chemical Bank.

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

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

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

Credit Quality Indicators

Commercial Loan Portfolio

Risk categories for the Corporation's commercial loan portfolio establish the credit quality of a borrower by measuring liquidity, debt capacity, coverage and payment behavior as shown in the borrower's financial statements. The risk categories also measure the quality of the borrower's management and the repayment support offered by any guarantors. Risk categories for the Corporation's commercial loan portfolio are described as follows:

Pass: Includes all loans without weaknesses or potential weaknesses identified in the categories of special mention, substandard or doubtful.

Special Mention: Loans with potential credit weakness or credit deficiency, which, if not corrected, pose an unwarranted financial risk that could weaken the loan by adversely impacting the future repayment ability of the borrower.

Substandard: Loans with a well-defined weakness, or weaknesses, such as loans to borrowers who may be experiencing losses from operations or inadequate liquidity of a degree and duration that jeopardizes the orderly repayment of the loan. Substandard loans also are distinguished by the distinct possibility of loss in the future if these weaknesses are not corrected.

Doubtful: Loans with all the characteristics of a loan classified as Substandard, with the added characteristic that credit weaknesses make collection in full highly questionable and improbable. The primary source of repayment is nonexistent and there is doubt as to the value of the secondary source of repayments. A doubtful asset has a high probability of total or substantial loss, but because of pending events that may strengthen the asset, its classification as loss is deferred.

Loss: An asset classified as loss is considered uncollectible and of such little value that the continuance as a bankable asset is not warranted. This classification does not mean that an asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even through partial recovery may occur in the future.

The following schedule presents the recorded investment of loans in the commercial loan portfolio by credit risk categories at September 30, 2017 and December 31, 2016:



(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
September 30, 2017
Originated Portfolio:
Commercial	$	2,170,377	$	34,571	$	49,504	$	992	$	2,255,444
Commercial real estate	2,405,684		20,037		45,483		1,020		2,472,224
Real estate construction and land development	421,213		337		214		—		421,764
Subtotal	4,997,274		54,945		95,201		2,012		5,149,432
Acquired Portfolio:
Commercial	990,101		34,169		40,251		—		1,064,521
Commercial real estate	1,693,878		68,261		81,450		165		1,843,754
Real estate construction and land development	75,560		2,134		1,955		—		79,649
Subtotal	2,759,539		104,564		123,656		165		2,987,924
Total	$	7,756,813	$	159,509	$	218,857	$	2,177	$	8,137,356
December 31, 2016
Originated Portfolio:
Commercial	$	1,803,750	$	44,809	$	51,898	$	1,069	$	1,901,526
Commercial real estate	1,849,315		36,981		35,502		1		1,921,799
Real estate construction and land development	280,968		157		599		—		281,724
Subtotal	3,934,033		81,947		87,999		1,070		4,105,049
Acquired Portfolio:
Commercial	1,218,848		46,643		50,283		—		1,315,774
Commercial real estate	1,897,011		61,441		92,636		253		2,051,341
Real estate construction and land development	117,505		1,982		2,561		—		122,048
Subtotal	3,233,364		110,066		145,480		253		3,489,163
Total	$	7,167,397	$	192,013	$	233,479	$	1,323	$	7,594,212

Consumer Loan Portfolio

The Corporation evaluates the credit quality of loans in the consumer loan portfolio based on the performing or nonperforming status of the loan. Loans in the consumer loan portfolio that are performing in accordance with original contractual terms and are less than 90 days past due and accruing interest are considered to be in a performing status, while those that are in nonaccrual status, contractually past due 90 days or more as to interest or principal payments, are considered to be in a nonperforming status. Loans accounted for under ASC 310-30, "Acquired loans", that are not performing in accordance with contractual terms are not reported as nonperforming because these loans are recorded in pools at their net realizable value based on the principal and interest the Corporation expects to collect on these loans.

The following schedule presents the recorded investment of loans in the consumer loan portfolio based on loans in a performing status and loans in a nonperforming status at September 30, 2017 and December 31, 2016:



(Dollars in thousands)	Residential Mortgage		Consumer Installment		Home Equity		Total Consumer
September 30, 2017
Originated Loans:
Performing	$	1,872,639	$	1,501,939	$	618,657	$	3,993,235
Nonperforming	8,646		875		3,908		13,429
Subtotal	1,881,285		1,502,814		622,565		4,006,664
Acquired Loans	1,340,022		113,169		236,157		1,689,348
Total	$	3,221,307	$	1,615,983	$	858,722	$	5,696,012
December 31, 2016
Originated Loans:
Performing	$	1,468,373	$	1,281,709	$	592,071	$	3,342,153
Nonperforming	6,969		879		3,351		11,199
Subtotal	1,475,342		1,282,588		595,422		3,353,352
Acquired Loans	1,611,132		151,296		280,787		2,043,215
Total	$	3,086,474	$	1,433,884	$	876,209	$	5,396,567

Nonperforming Assets and Past Due Loans

Nonperforming assets consist of loans for which the accrual of interest has been discounted, other real estate owned acquired through acquisitions, other real estate owned obtained through foreclosure and other repossessed assets.

Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date of the scheduled payments. Loans outside of those accounted for under ASC 310-30 are classified as nonaccrual when, in the opinion of management, collection of principal or interest is doubtful. The accrual of interest is discontinued when a loan is placed in nonaccrual status and any payments received reduce the carrying value of the loan. A loan may be placed back on accrual status if all contractual payments have been received and collection of future principal and interest payments are no longer doubtful. Acquired loans that are not performing in accordance with contractual terms are not reported as nonperforming because these loans are recorded in pools at their net realizable value based on the principal and interest the Corporation expects to collect on these loans.

A summary of nonperforming loans follows:



(Dollars in thousands)	September 30, 2017		December 31, 2016
Nonperforming assets
Nonaccrual loans:
Commercial	$	15,648	$	13,178
Commercial real estate	25,150		19,877
Real estate construction and land development	78		80
Residential mortgage	8,646		6,969
Consumer installment	875		879
Home equity	3,908		3,351
Total nonaccrual loans	54,305		44,334
Other real estate owned and repossessed assets	10,605		17,187
Total nonperforming assets	$	64,910	$	61,521
Accruing loans contractually past due 90 days or more as to interest or principal payments, excluding acquired loans accounted for under ASC 310-30
Commercial	3,521		11
Commercial real estate	144		277
Home equity	2,367		995
Total accruing loans contractually past due 90 days or more as to interest or principal payments, excluding acquired loans accounted for under ASC 310-30	$	6,032	$	1,283

The Corporation’s nonaccrual loans at September 30, 2017 and December 31, 2016 included $24.0 million and $30.5 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, 2017, compared to $7.3 million at December 31, 2016.

Loan delinquency, excluding acquired loans accounted for under ASC 310-30, was as follows:



(Dollars in thousands)	30-59 days past due		60-89 days past due		90 days or more past due		Total past due		Current		Total loans		90 days or more past due and still accruing
September 30, 2017
Originated Portfolio:
Commercial	$	13,786	$	10,449	$	11,539	$	35,774	$	2,219,670	$	2,255,444	$	3,521
Commercial real estate	7,545		6,574		7,192		21,311		2,450,913		2,472,224		144
Real estate construction and land development	248		—		—		248		421,516		421,764		—
Residential mortgage	4,380		22		1,756		6,158		1,875,127		1,881,285		—
Consumer installment	3,393		266		219		3,878		1,498,936		1,502,814		—
Home equity	2,469		1,297		2,690		6,456		616,109		622,565		2,367
Total	$	31,821	$	18,608	$	23,396	$	73,825	$	9,082,271	$	9,156,096	$	6,032
December 31, 2016
Originated Portfolio:
Commercial	$	10,421	$	4,842	$	3,641	$	18,904	$	1,882,622	$	1,901,526	$	11
Commercial real estate	6,551		1,589		5,165		13,305		1,908,494		1,921,799		277
Real estate construction and land development	2,721		499		—		3,220		278,504		281,724		—
Residential mortgage	3,147		62		1,752		4,961		1,470,381		1,475,342		—
Consumer installment	3,991		675		238		4,904		1,277,684		1,282,588		—
Home equity	3,097		893		2,349		6,339		589,083		595,422		995
Total	$	29,928	$	8,560	$	13,145	$	51,633	$	7,406,768	$	7,458,401	$	1,283

Impaired Loans

A loan is impaired when, based on current information and events, it is probable that the Corporation will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans include nonperforming loans and all TDRs. Impaired loans are accounted for at the lower of the present value of expected cash flows or the estimated fair value of the collateral. When the present value of expected cash flows or the fair value of the collateral of an impaired loan not accounted for under ASC 310-30 is less than the amount of unpaid principal outstanding on the loan, the recorded principal balance of the loan is reduced to its carrying value through either a specific allowance for loan loss or a partial charge-off of the loan balance.

The following schedules present impaired loans by classes of loans at September 30, 2017 and December 31, 2016:



(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Valuation Allowance
September 30, 2017
Impaired loans with a valuation allowance:
Commercial	$	27,521	$	32,626	$	1,688
Commercial real estate	21,569		28,104		1,486
Real estate construction and land development	181		181		7
Residential mortgage	16,416		16,416		1,814
Consumer installment	1,041		1,041		99
Home equity	4,551		4,551		620
Subtotal	71,279		82,919		5,714
Impaired loans with no related valuation allowance:
Commercial	7,290		9,989		—
Commercial real estate	25,123		28,457		—
Real estate construction and land development	78		78		—
Residential mortgage	4,800		4,800		—
Home equity	1,524		1,524		—
Subtotal	38,815		44,848		—
Total impaired loans:
Commercial	34,811		42,615		1,688
Commercial real estate	46,692		56,561		1,486
Real estate construction and land development	259		259		7
Residential mortgage	21,216		21,216		1,814
Consumer installment	1,041		1,041		99
Home equity	6,075		6,075		620
Total	$	110,094	$	127,767	$	5,714
December 31, 2016
Impaired loans with a valuation allowance:
Commercial	$	28,925	$	33,209	$	3,128
Commercial real estate	21,318		27,558		2,102
Real estate construction and land development	177		177		4
Residential mortgage	20,864		20,864		3,528
Consumer installment	879		879		240
Home equity	2,577		2,577		390
Subtotal	74,740		85,264		9,392
Impaired loans with no related valuation allowance:
Commercial	7,435		11,153		—
Commercial real estate	20,588		23,535		—
Real estate construction and land development	80		80		—
Residential mortgage	3,252		3,252		—
Home equity	774		774		—
Subtotal	32,129		38,794		—
Total impaired loans:
Commercial	36,360		44,362		3,128
Commercial real estate	41,906		51,093		2,102
Real estate construction and land development	257		257		4
Residential mortgage	24,116		24,116		3,528
Consumer installment	879		879		240
Home equity	3,351		3,351		390
Total	$	106,869	$	124,058	$	9,392

The following schedule presents additional information regarding impaired loans by classes of loans segregated by those requiring a valuation allowance and those not requiring a valuation allowance for the three and nine months ended September 30, 2017 and 2016, and the respective interest income amounts recognized:



	Three Months Ended September 30, 2017				Three Months Ended September 30, 2016				Nine Months Ended September 30, 2017				Nine Months Ended September 30, 2016
(Dollars in thousands)	Average recorded investment		Interest income recognized while on impaired status		Average recorded investment		Interest income recognized while on impaired status		Average recorded investment		Interest income recognized while on impaired status		Average recorded investment		Interest income recognized while on impaired status
Impaired loans with a valuation allowance:
Commercial	$	25,628	$	222	$	4,350	$	—	$	25,278	$	647	$	6,256	$	—
Commercial real estate	18,300		197		2,430		—		19,120		602		4,461		—
Real estate construction and land development	175		3		—		—		159		8		—		—
Residential mortgage	15,945		144		20,238		321		16,529		446		20,725		987
Consumer installment	748		1		—		—		737		3		—		—
Home equity	4,369		21		—		—		4,154		58		—		—
Subtotal	$	65,165	$	588	$	27,018	$	321	$	65,977	$	1,764	$	31,442	$	987
Impaired loans with no related valuation allowance:
Commercial	$	10,120	$	14	$	31,717	$	399	$	10,142	$	92	$	31,874	$	986
Commercial real estate	25,435		101		41,205		285		24,697		304		44,207		977
Real estate construction and land development	71		—		385		5		86		—		720		13
Residential mortgage	5,144		8		5,173		—		4,511		25		5,139		—
Consumer installment	244		—		340		—		201		—		320		—
Home equity	1,639		—		2,124		—		1,227		6		2,166		—
Subtotal	$	42,653	$	123	$	80,944	$	689	$	40,864	$	427	$	84,426	$	1,976
Total impaired loans:
Commercial	$	35,748	$	236	$	36,067	$	399	$	35,420	$	739	$	38,130	$	986
Commercial real estate	43,735		298		43,635		285		43,817		906		48,668		977
Real estate construction and land development	246		3		385		5		245		8		720		13
Residential mortgage	21,089		152		25,411		321		21,040		471		25,864		987
Consumer installment	992		1		340		—		938		3		320		—
Home equity	6,008		21		2,124		—		5,381		64		2,166		—
Total	$	107,818	$	711	$	107,962	$	1,010	$	106,841	$	2,191	$	115,868	$	2,963

The difference between an impaired loan’s recorded investment and the unpaid principal balance for originated loans represents a partial charge-off resulting from a confirmed loss due to the value of the collateral securing the loan being below the loan balance and management’s assessment that full collection of the loan balance is not likely.

Impaired loans included $55.8 million and $62.5 million at September 30, 2017 and December 31, 2016, respectively, of accruing TDRs.

Loans Modified Under Troubled Debt Restructurings (TDRs)

The following tables present the recorded investment of loans modified into TDRs during the three and nine months ended September 30, 2017 and 2016 by type of concession granted. In cases where more than one type of concession was granted, the loans were categorized based on the most significant concession.



	Concession type
(Dollars in thousands)	Principal deferral		Interest rate		Forbearance agreement		Total number of loans	Pre-modification recorded investment		Post-modification recorded investment
For the three months ended September 30, 2017
Commercial loan portfolio:
Commercial	$	506	$	281	$	1,332	14	$	2,173	$	2,119
Commercial real estate	—		69		335		4	418		404
Real estate construction and land development	35		—		—		1	36		35
Subtotal	541		350		1,667		19	2,627		2,558
Consumer loan portfolio:
Residential mortgage	76		122		—		3	262		198
Consumer installment	47		7		—		11	58		54
Home equity	116		—		—		5	124		116
Subtotal	239		129		—		19	444		368
Total loans	$	780	$	479	$	1,667	38	$	3,071	$	2,926
For the nine months ended September 30, 2017
Commercial loan portfolio:
Commercial	$	841	$	1,648	$	1,911	26	$	4,476	$	4,400
Commercial real estate	447		209		457		10	1,134		1,113
Real estate construction and land development	35		—		—		1	36		35
Subtotal	1,323		1,857		2,368		37	5,646		5,548
Consumer loan portfolio:
Residential mortgage	211		383		—		9	676		594
Consumer installment	79		7		—		17	93		86
Home equity	380		—		—		10	449		380
Subtotal	670		390		—		36	1,218		1,060
Total loans	$	1,993	$	2,247	$	2,368	73	$	6,864	$	6,608



	Concession type
(Dollars in thousands)	Principal deferral		Interest rate		Forbearance agreement		Total number of loans	Pre-modification recorded investment		Post-modification recorded investment
For the three months ended September 30, 2016
Commercial loan portfolio:
Commercial	$	4,160	$	—	$	—	4	$	4,160	$	4,160
Subtotal	4,160		—		—		4	4,160		4,160
Consumer loan portfolio:
Home equity	—		89		—		2	89		89
Subtotal	—		89		—		2	89		89
Total loans	$	4,160	$	89	$	—	6	$	4,249	$	4,249
For the nine months ended September 30, 2016
Commercial loan portfolio:
Commercial	$	10,391	$	—	$	1,750	32	$	12,141	$	12,141
Commercial real estate	2,441		—		—		6	2,441		2,441
Subtotal	12,832		—		1,750		38	14,582		14,582
Consumer loan portfolio:
Residential mortgage	279		—		—		3	279		279
Consumer installment	80		—		—		12	80		80
Home equity	127		297		—		8	424		424
Subtotal	486		297		—		23	783		783
Total loans	$	13,318	$	297	$	1,750	61	$	15,365	$	15,365

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

The following schedule presents the Corporation's TDRs at September 30, 2017 and December 31, 2016:



(Dollars in thousands)	Accruing TDRs		Nonaccrual TDRs		Total
September 30, 2017
Commercial loan portfolio	$	40,886	$	19,342	$	60,228
Consumer loan portfolio	14,903		4,662		19,565
Total	$	55,789	$	24,004	$	79,793
December 31, 2016
Commercial loan portfolio	$	45,388	$	25,397	$	70,785
Consumer loan portfolio	17,147		5,134		22,281
Total	$	62,535	$	30,531	$	93,066

The following schedule includes TDRs for which there was a payment default during the three and nine months ended September 30, 2017 and 2016, whereby the borrower was past due with respect to principal and/or interest for 90 days or more, and the loan became a TDR during the twelve-month period prior to the default:



	For The Three Months Ended September 30, 2017			For The Nine Months Ended September 30, 2017
(Dollars in thousands)	Number of loans	Principal balance		Number of loans	Principal balance
Commercial loan portfolio (commercial)	—	$	—	5	$	1,617
Consumer loan portfolio (residential mortgage)	—	—		5	163
Total	—	$	—	10	$	1,780

	For The Three Months Ended September 30, 2016			For The Nine Months Ended September 30, 2016
(Dollars in thousands)	Number of loans	Principal balance		Number of loans	Principal balance
Commercial loan portfolio (commercial real estate)	—	$	—	2	$	1,721
Consumer loan portfolio (residential mortgage)	1	—		3	—
Total	1	$	—	5	$	1,721

At September 30, 2017, commitments to lend additional funds to borrowers whose terms have been modified in TDRs totaled $1.8 million.

Allowance for Loan Losses

The following schedule presents, by loan portfolio segment, the changes in the allowance for the originated loan portfolio for the three and nine months ended September 30, 2017 and 2016.



(Dollars in thousands)	Commercial Loan Portfolio			Consumer Loan Portfolio			Total
Originated Loan Portfolio
Changes in allowance for loan losses for the three months ended September 30, 2017:
Beginning balance	$	57,955		$	25,842		$	83,797
Provision for loan losses	664			4,256			4,920
Charge-offs	(3,792		)	(1,650		)	(5,442		)
Recoveries	1,270			636			1,906
Ending balance	$	56,097		$	29,084		$	85,181
Changes in allowance for loan losses for the nine months ended September 30, 2017:
Beginning balance	$	51,201		$	27,067		$	78,268
Provision for loan losses	9,140			6,060			15,200
Charge-offs	(7,209		)	(6,112		)	(13,321		)
Recoveries	2,965			2,069			5,034
Ending balance	$	56,097		$	29,084		$	85,181
Changes in allowance for loan losses for the three months ended September 30, 2016:
Beginning balance	$	44,228		$	27,278		$	71,506
Provision for loan losses	3,537			566			4,103
Charge-offs	(824		)	(2,037		)	(2,861		)
Recoveries	489			538			1,027
Ending balance	$	47,430		$	26,345		$	73,775
Changes in allowance for loan losses for the nine months ended September 30, 2016:
Beginning balance	$	47,234		$	26,094		$	73,328
Provision for loan losses	5,437			3,166			8,603
Charge-offs	(7,262		)	(4,677		)	(11,939		)
Recoveries	2,021			1,762			3,783
Ending balance	$	47,430		$	26,345		$	73,775

The following schedule presents, by loan portfolio, the changes in the allowance for the acquired loan portfolio for the three and nine months ended September 30, 2017. There was no allowance established for the acquired loan portfolio prior to the third quarter of 2017.



(Dollars in thousands)	Commercial Loan Portfolio		Consumer Loan Portfolio		Total
Acquired Loan Portfolio
Changes in allowance for loan losses for the three months ended September 30, 2017:
Beginning balance	$	—	$	—	$	—
Provision for loan losses	409		170		579
Charge-offs	—		—		—
Recoveries	—		—		—
Ending balance	$	409	$	170	$	579
Changes in allowance for loan losses for the nine months ended September 30, 2017:
Beginning balance	$	—	$	—	$	—
Provision for loan losses	409		170		579
Charge-offs	—		—		—
Recoveries	—		—		—
Ending balance	$	409	$	170	$	579

The following schedule presents by loan portfolio segment, details regarding the balance in the allowance and the recorded investment in loans at September 30, 2017 and December 31, 2016 by impairment evaluation method.



Allowance for loan losses balance at September 30, 2017 attributable to:
Loans individually evaluated for impairment	$	3,181	$	2,533	$	5,714
Loans collectively evaluated for impairment	52,916		26,551		79,467
Loans acquired with deteriorated credit quality	409		170		579
Total	$	56,506	$	29,254	$	85,760
Recorded investment (loan balance) at September 30, 2017:
Loans individually evaluated for impairment	$	81,762	$	28,332	$	110,094
Loans collectively evaluated for impairment	5,067,670		3,978,332		9,046,002
Loans acquired with deteriorated credit quality	2,987,924		1,689,348		4,677,272
Total	$	8,137,356	$	5,696,012	$	13,833,368



Allowance for loan losses balance at December 31, 2016 attributable to:
Loans individually evaluated for impairment	$	5,234	$	4,158	$	9,392
Loans collectively evaluated for impairment	45,967		22,909		68,876
Loans acquired with deteriorated credit quality	—		—		—
Total	$	51,201	$	27,067	$	78,268
Recorded investment (loan balance) at December 31, 2016:
Loans individually evaluated for impairment	$	78,523	$	28,346	$	106,869
Loans collectively evaluated for impairment	4,026,526		3,325,006		7,351,532
Loans acquired with deteriorated credit quality	3,489,163		2,043,215		5,532,378
Total	$	7,594,212	$	5,396,567	$	12,990,779