10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2019

Commission file number   0-7818

INDEPENDENT BANK CORPORATION

(Exact name of registrant as specified in its charter)

Michigan	38-2032782
(State or jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

4200 East Beltline, Grand Rapids, Michigan  49525

(Address of principal executive offices)

(616) 527-5820

(Registrant’s telephone number, including area code)

NONE

Former name, address and fiscal year, if changed since last report.

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class	Trading Symbol	Name of each exchange which registered
Common stock, no par value	IBCP	The Nasdaq Stock Market, LLC

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES ☒   NO ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, smaller reporting company or an emerging growth company.

Large accelerated filer  ☐  Accelerated filer  ☒  Non-accelerated filer  ☐  Smaller reporting company  ☐  Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act.  Yes ☐ No ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ☐  NO ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: common stock, no par value, 22,499,498 as of August 1, 2019.

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

INDEX

		Number(s)
PART I -	Financial Information
Item 1.	Condensed Consolidated Statements of Financial Condition June 30, 2019 and December 31, 2018	3
	Condensed Consolidated Statements of Operations Three- and Six-month periods ended June 30, 2019 and 2018	4
	Condensed Consolidated Statements of Comprehensive Income Three- and Six-month periods ended June 30, 2019 and 2018	5
	Condensed Consolidated Statements of Cash Flows Six-month periods ended June 30, 2019 and 2018	6
	Condensed Consolidated Statements of Shareholders’ Equity Three- and Six-month periods ended June 30, 2019 and 2018	7
	Notes to Interim Condensed Consolidated Financial Statements	8-66
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	66-88
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	89
Item 4.	Controls and Procedures	89
PART II -	Other Information
Item 1A	Risk Factors	90
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	90
Item 6.	Exhibits	91

1

FORWARD-LOOKING STATEMENTS

Statements in this report that are not statements of historical fact, including statements that include terms such as ‘‘will,’’ ‘‘may,’’ ‘‘should,’’ ‘‘believe,’’ ‘‘expect,’’ ‘‘forecast,’’ ‘‘anticipate,’’ ‘‘estimate,’’ ‘‘project,’’ ‘‘intend,’’ ‘‘likely,’’ ‘‘optimistic’’ and ‘‘plan’’ and statements about future or projected financial and operating results, plans, projections, objectives, expectations, and intentions, are forward-looking statements. Forward-looking statements include, but are not limited to, descriptions of plans and objectives for future operations, products or services; projections of our future revenue, earnings or other measures of economic performance; forecasts of credit losses and other asset quality trends; statements about our business and growth strategies; and expectations about economic and market conditions and trends. These forward-looking statements express our current expectations, forecasts of future events, or long-term goals. They are based on assumptions, estimates, and forecasts that, although believed to be reasonable, may turn out to be incorrect. Actual results could differ materially from those discussed in the forward-looking statements for a variety of reasons, including:

• economic, market, operational, liquidity, credit, and interest rate risks associated with our business;

• economic conditions generally and in the financial services industry, particularly economic conditions within Michigan and the regional and local real estate markets in which our bank operates;

• the failure of assumptions underlying the establishment of, and provisions made to, our allowance for loan losses;

• increased competition in the financial services industry, either nationally or regionally;

• our ability to achieve loan and deposit growth;

• volatility and direction of market interest rates;

• the continued services of our management team; and

• implementation of new legislation, which may have significant effects on us and the financial services industry.

This list provides examples of factors that could affect the results described by forward-looking statements contained in this report, but the list is not intended to be all-inclusive.  The risk factors disclosed in Part I – Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018, as updated by any new or modified risk factors disclosed in Part II – Item 1A of any subsequently filed Quarterly Report on Form 10-Q, include all known risks our management believes could materially affect the results described by forward-looking statements in this report. However, those risks may not be the only risks we face. Our results of operations, cash flows, financial position, and prospects could also be materially and adversely affected by additional factors that are not presently known to us that we currently consider to be immaterial, or that develop after the date of this report. We cannot assure you that our future results will meet expectations. While we believe the forward-looking statements in this report are reasonable, you should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. We do not undertake, and expressly disclaim, any obligation to update or alter any statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.

2

Part I - Item 1.

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Condition

	June 30, 2019			December 31, 2018
	(unaudited)
	(In thousands, except share amounts)
Assets
Cash and due from banks	$	34,461		$	23,350
Interest bearing deposits		20,676			46,894
Cash and Cash Equivalents		55,137			70,244
Interest bearing deposits - time		498			595
Equity securities at fair value		-			393
Securities available for sale		430,305			427,926
Federal Home Loan Bank and Federal Reserve Bank stock, at cost		18,359			18,359
Loans held for sale, carried at fair value		62,883			44,753
Loans held for sale, carried at lower of cost or fair value		-			41,471
Loans
Commercial		1,175,970			1,144,481
Mortgage		1,086,309			1,042,890
Installment		444,247			395,149
Total Loans		2,706,526			2,582,520
Allowance for loan losses		(25,903	)		(24,888	)
Net Loans		2,680,623			2,557,632
Other real estate and repossessed assets, net		1,990			1,299
Property and equipment, net		37,703			38,777
Bank-owned life insurance		55,580			55,068
Deferred tax assets, net		2,746			5,779
Capitalized mortgage loan servicing rights, carried at fair value		17,894			21,400
Other intangibles		5,870			6,415
Goodwill		28,300			28,300
Accrued income and other assets		40,414			34,870
Total Assets	$	3,438,302		$	3,353,281
Liabilities and Shareholders’ Equity
Deposits
Non-interest bearing	$	864,481		$	879,549
Savings and interest-bearing checking		1,158,910			1,194,865
Reciprocal		326,326			182,072
Time		384,477			385,981
Brokered time		244,691			270,961
Total Deposits		2,978,885			2,913,428
Other borrowings		41,144			25,700
Subordinated debentures		39,422			39,388
Accrued expenses and other liabilities		48,005			35,771
Total Liabilities		3,107,456			3,014,287
Commitments and contingent liabilities
Shareholders’ Equity
Preferred stock, no par value, 200,000 shares authorized;  none issued or outstanding		-			-
Common stock, no par value, 500,000,000 shares authorized; issued and outstanding: 22,498,776 shares at June 30, 2019 and 23,579,725 shares at December 31, 2018		351,894			377,372
Accumulated deficit		(16,617	)		(28,270	)
Accumulated other comprehensive loss		(4,431	)		(10,108	)
Total Shareholders’ Equity		330,846			338,994
Total Liabilities and Shareholders’ Equity	$	3,438,302		$	3,353,281

See notes to interim condensed consolidated financial statements (unaudited)

3

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

	Three months ended June 30,					Six months ended June 30,
	2019			2018		2019			2018
	(unaudited)					(unaudited)
	(In thousands, except per share amounts)
Interest Income
Interest and fees on loans	$	33,836		$	29,674	$	66,517		$	53,027
Interest on securities
Taxable		3,034			2,720		6,040			5,355
Tax-exempt		324			444		698			923
Other investments		379			265		954			595
Total Interest Income		37,573			33,103		74,209			59,900
Interest Expense
Deposits		6,021			3,209		11,702			5,496
Other borrowings and subordinated debentures		796			914		1,508			1,488
Total Interest Expense		6,817			4,123		13,210			6,984
Net Interest Income		30,756			28,980		60,999			52,916
Provision for loan losses		652			650		1,316			965
Net Interest Income After Provision for Loan Losses		30,104			28,330		59,683			51,951
Non-interest Income
Service charges on deposit accounts		2,800			3,095		5,440			6,000
Interchange income		2,604			2,504		4,959			4,750
Net gains (losses) on assets
Mortgage loans		4,302			3,255		7,913			5,826
Securities		-			9		304			(164	)
Mortgage loan servicing, net		(1,907	)		1,235		(3,122	)		3,456
Other		2,106			2,217		4,370			4,160
Total Non-interest Income		9,905			12,315		19,864			24,028
Non-interest Expense
Compensation and employee benefits		15,931			15,869		32,282			30,337
Occupancy, net		2,131			2,170		4,636			4,434
Data processing		2,171			2,251		4,315			4,129
Furniture, fixtures and equipment		1,006			1,019		2,035			1,986
Communications		717			704		1,486			1,384
Interchange expense		753			661		1,441			1,259
Loan and collection		628			692		1,262			1,369
Advertising		627			543		1,299			984
Legal and professional		371			456		740			834
FDIC deposit insurance		342			250		710			480
Merger related expenses		-			3,082		-			3,256
Other		1,915			2,064		4,376			3,444
Total Non-interest Expense		26,592			29,761		54,582			53,896
Income Before Income Tax		13,417			10,884		24,965			22,083
Income tax expense		2,687			2,067		4,854			4,105
Net Income	$	10,730		$	8,817	$	20,111		$	17,978
Net Income Per Common Share
Basic	$	0.47		$	0.37	$	0.86		$	0.79
Diluted	$	0.46		$	0.36	$	0.85		$	0.78

See notes to interim condensed consolidated financial statements (unaudited)

4

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
	(unaudited - In thousands)
Net income	$	10,730		$	8,817		$	20,111		$	17,978
Other comprehensive income (loss)
Securities available for sale
Unrealized gains (losses) arising during period		3,920			(1,198	)		9,284			(5,063	)
Change in unrealized losses for which a portion of other than temporary impairment has been recognized in earnings		-			(2	)		(2	)		(3	)
Reclassification adjustments for (gains) losses included in earnings		-			26			(137	)		45
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale		3,920			(1,174	)		9,145			(5,021	)
Income tax expense (benefit)		823			(246	)		1,920			(1,054	)
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale, net of tax		3,097			(928	)		7,225			(3,967	)
Derivative instruments
Unrealized gain (loss) arising during period		(756	)		327			(1,668	)		1,011
Reclassification adjustment for income recognized in earnings		(142	)		(53	)		(291	)		(59	)
Unrealized gains (losses) recognized in other comprehensive income (loss) on derivative instruments		(898	)		274			(1,959	)		952
Income tax expense (benefit)		(187	)		58			(411	)		200
Unrealized gains (losses) recognized in other comprehensive income (loss) on derivative instruments, net of tax		(711	)		216			(1,548	)		752
Other comprehensive income (loss)		2,386			(712	)		5,677			(3,215	)
Comprehensive income	$	13,116		$	8,105		$	25,788		$	14,763

See notes to interim condensed consolidated financial statements (unaudited)

5

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

	Six months ended June 30,
	2019			2018
	(unaudited - In thousands)
Net Income	$	20,111		$	17,978
Adjustments to Reconcile Net Income to Net Cash From Operating Activities
Proceeds from the sale of equity securities at fair value		560			-
Proceeds from sales of loans held for sale		222,953			210,641
Disbursements for loans held for sale		(233,170	)		(214,952	)
Provision for loan losses		1,316			965
Deferred income tax expense		1,524			4,518
Deferred loan fees and costs		(1,947	)		(2,457	)
Net depreciation, amortization of intangible assets and premiums and accretion of discounts on securities, loans and interest bearing deposits - time		2,906			3,192
Net gains on mortgage loans		(7,913	)		(5,826	)
Net (gains) losses on securities		(304	)		164
Share based compensation		888			848
Increase in accrued income and other assets		(3,112	)		(3,377	)
Increase in accrued expenses and other liabilities		10,125			1,604
Total Adjustments		(6,174	)		(4,680	)
Net Cash From Operating Activities		13,937			13,298
Cash Flow Used in Investing Activities
Proceeds from the sale of securities available for sale		42,236			31,445
Proceeds from maturities, prepayments and calls of securities available for sale		76,579			88,131
Purchases of securities available for sale		(81,639	)		(47,054	)
Proceeds from the sale of interest bearing deposits - time		-			2,474
Proceeds from the maturity of interest bearing deposits - time		100			1,842
Net increase in portfolio loans (loans originated, net of principal payments)		(152,256	)		(181,365	)
Proceeds from the sale of portfolio loans		40,630			16,460
Acquisition of TCSB Bancorp Inc., less cash received		-			23,516
Proceeds from bank-owned life insurance		-			474
Proceeds from the sale of other real estate and repossessed assets		808			889
Capital expenditures		(1,542	)		(2,033	)
Net Cash Used in Investing Activities		(75,084	)		(65,221	)
Cash Flow From Financing Activities
Net increase in total deposits		65,457			92,273
Net increase (decrease) in other borrowings		550			(3,093	)
Proceeds from Federal Home Loan Bank Advances		27,000			1,044,000
Payments of Federal Home Loan Bank Advances		(12,143	)		(1,069,287	)
Dividends paid		(8,458	)		(6,823	)
Proceeds from issuance of common stock		282			147
Repurchase of common stock		(25,782	)		-
Share based compensation withholding obligation		(866	)		(1,321	)
Net Cash From Financing Activities		46,040			55,896
Net Increase (Decrease) in Cash and Cash Equivalents		(15,107	)		3,973
Cash and Cash Equivalents at Beginning of Period		70,244			54,738
Cash and Cash Equivalents at End of Period	$	55,137		$	58,711
Cash paid during the period for
Interest	$	13,188		$	6,545
Income taxes		2,457			120
Operating leases		1,127			-
Transfers to other real estate and repossessed assets		1,420			641
Purchase of securities available for sale not yet settled		645			-
Securitization of portfolio loans		29,790			-
Right of use assets obtained in exchange for lease obligations		7,703			-
Transfer of loans to held for sale		-			13,216

See notes to interim condensed consolidated financial statements (unaudited)

6

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

	Common Stock			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	(Dollars in thousands, except per share amounts)
Balances at April 1, 2019	$	374,678		$	(23,135	)	$	(6,817	)	$	344,726
Net income, three months ended June 30, 2019		-			10,730			-			10,730
Cash dividends declared, $.18 per share		-			(4,212	)		-			(4,212	)
Repurchase of 1,063,901 shares of common stock		(23,252	)		-			-			(23,252	)
Share based compensation (issuance of 2,498 shares of common stock)		468			-			-			468
Other comprehensive income		-			-			2,386			2,386
Balances at June 30, 2019	$	351,894		$	(16,617	)	$	(4,431	)	$	330,846
Balances at April 1, 2018	$	324,518		$	(48,099	)	$	(8,502	)	$	267,917
Net income, three months ended June 30, 2018		-			8,817			-			8,817
Cash dividends declared, $.15 per share		-			(3,617	)		-			(3,617	)
Acquisition of TCSB Bancorp, Inc.		64,536			-			-			64,536
Issuance of 101,408 shares of common stock		134			-			-			134
Share based compensation (issuance of 7,444 shares of common stock)		441			-			-			441
Share based compensation withholding obligation (withholding of 50,057 shares of common stock)		(433	)		-			-			(433	)
Other comprehensive loss		-			-			(712	)		(712	)
Balances at June 30, 2018	$	389,196		$	(42,899	)	$	(9,214	)	$	337,083
Balances at January 1, 2019	$	377,372		$	(28,270	)	$	(10,108	)	$	338,994
Net income, six months ended June 30, 2019		-			20,111			-			20,111
Cash dividends declared, $.36 per share		-			(8,458	)		-			(8,458	)
Repurchase of 1,179,688 shares of common stock		(25,782	)		-			-			(25,782	)
Issuance of 68,399 shares of common stock		282			-			-			282
Share based compensation (issuance of 86,626 shares of common stock)		888			-			-			888
Share based compensation withholding obligation (withholding of 56,286 shares of common stock)		(866	)		-			-			(866	)
Other comprehensive income		-			-			5,677			5,677
Balances at June 30, 2019	$	351,894		$	(16,617	)	$	(4,431	)	$	330,846
Balances at January 1, 2018	$	324,986		$	(54,054	)	$	(5,999	)	$	264,933
Net income, six months ended June 30, 2018		-			17,978			-			17,978
Cash dividends declared, $.30 per share		-			(6,823	)		-			(6,823	)
Acquisition of TCSB Bancorp, Inc.		64,536			-			-			64,536
Issuance of 105,208 shares of common stock		147			-			-			147
Share based compensation (issuance of 81,919 shares of common stock)		848			-			-			848
Share based compensation withholding obligation (withholding of 87,385 shares of common stock)		(1,321	)		-			-			(1,321	)
Other comprehensive loss		-			-			(3,215	)		(3,215	)
Balances at June 30, 2018	$	389,196		$	(42,899	)	$	(9,214	)	$	337,083

See notes to interim condensed consolidated financial statements (unaudited)

7

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.   Preparation of Financial Statements

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading.  The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2018 included in our Annual Report on Form 10-K.

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary to present fairly our consolidated financial condition as of June 30, 2019 and December 31, 2018, and the results of operations for the three and six-month periods ended June 30, 2019 and 2018.  The results of operations for the three and six-month periods ended June 30, 2019, are not necessarily indicative of the results to be expected for the full year.  Certain reclassifications have been made in the prior period financial statements to conform to the current period presentation.  Our critical accounting policies include the determination of the allowance for loan losses and the valuation of capitalized mortgage loan servicing rights.  Refer to our 2018 Annual Report on Form 10-K for a disclosure of our accounting policies.

2.  New Accounting Standards

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”.  This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.  This ASU:

• Replaces the existing incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost, which will reflect our estimate of credit losses over the full remaining expected life of the financial assets and will consider expected future changes in macroeconomic conditions.

• Eliminates existing guidance for purchase credit impaired (“PCI”) loans, and requires recognition of the nonaccretable difference as an increase to the allowance for expected credit losses on financial assets purchased with more than insignificant credit deterioration since origination, which will be offset by an increase in the recorded investment of the related loans.

• Requires inclusion of expected recoveries, limited to the cumulative amount of prior write-offs, when estimating the allowance for credit losses for in scope financial assets (including collateral dependent assets).

• Amends existing impairment guidance for securities available for sale to incorporate an allowance, which will allow for reversals of credit impairments in the event that the credit of an issuer improves. Credit losses on securities available for sale are limited to the amount of the decline in fair value regardless of what the credit loss model would show for impairment.

• Generally requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption.

• Is effective for us on January 1, 2020.

8

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

We began evaluating this ASU in 2016 and established a company-wide, cross-discipline governance structure, which provides implementation oversight. We continue to test and refine our current expected credit loss models that satisfy the requirements of this ASU. Oversight and testing, as well as efforts to meet expanded disclosure requirements, will extend through the remainder of 2019.  We expect that the allowance related to our loans will increase as it will cover credit losses over the full remaining expected life of the portfolio. We currently intend to estimate losses over approximately a two year forecast period using the Federal Open Market Committee median economic projections (which are typically published in March of each year) as well as considering other economic forecast sources, and then revert to longer term historical loss experience to estimate losses over more extended periods. We currently expect the increase in the allowance for loan losses to be in the range of $9.5 million to $11.5 million, primarily driven by the longer contractual maturities of our mortgage and consumer installment loan segments.  This estimated range is based on our June 30, 2019 loan portfolio and currently available economic forecasts. The mid-point of the range utilizes a two year forecast period and a two year reversion period. This estimated range also includes a qualitative adjustment to the allowance for loan losses. In addition, we currently expect this ASU to increase the allowance for losses related to unfunded loan commitments between $0.5 million and $1.5 million. These estimates are subject to further refinement based on continuing reviews, testing, enhancements and approvals of models, methodologies and judgments. The ultimate impact will depend upon the nature and characteristics of our loan portfolio at the adoption date, the macroeconomic conditions and forecasts at that date, further regulatory or accounting guidance and other management judgments. We currently do not expect to record any allowance for loss on available for sale securities. The ultimate impact will depend upon the nature and characteristics of our securities available for sale (including issuer specific matters) at the adoption date, the macroeconomic conditions and forecasts at that date, and other management judgments.

In August 2018, the FASB issued ASU 2018-13, ‘‘Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement’’. This new ASU amends disclosure requirements in Topic 820 to eliminate, add and modify certain disclosure requirements for fair value measurements as part of its disclosure framework project. The amended guidance eliminates the requirements to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the entity’s policy for the timing of transfers between levels of the fair value hierarchy and the entity’s valuation processes for Level 3 fair value measurements. The amended guidance adds the requirements to disclose the changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements of instruments held at the end of the reporting period and for recurring and nonrecurring Level 3 fair value measurements, the range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated, with certain exceptions. This amended guidance is effective for us on January 1, 2020, and is not expected to have a material impact on our consolidated operating results or financial condition.

9

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”.  This ASU amends existing guidance related to the accounting for leases. These amendments, among other things, require lessees to account for most leases on the balance sheet while recognizing expense on the income statement in a manner similar to existing guidance.  For lessors the guidance modifies the classification criteria and the accounting for sales-type and direct finance leases. This amended guidance was effective for us on January 1, 2019 and did not have a material impact on our consolidated operating results or financial condition.  Based on our operating leases that we currently have in place we do not expect a material change in the recognition, measurement and presentation of lease expense or impact on cash flow.  The primary impact was the recognition of certain operating leases on our Condensed Consolidated Statements of Financial Condition which resulted in the recording of right of use (“ROU”) assets and offsetting lease liabilities each totaling approximately $7.7 million at January 1, 2019.  See note #16.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities”.  This new ASU amends the hedge accounting model in Topic 815 to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The amendments expand an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness.  This amended guidance was effective for us on January 1, 2019, and did not have a material impact on our consolidated operating results or financial condition.

10

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

3.  Securities

Securities available for sale consist of the following:

	Amortized Cost		Unrealized				Fair Value
			Gains		Losses
	(In thousands)
June 30, 2019
U.S. agency	$	16,997	$	200	$	14	$	17,183
U.S. agency residential mortgage-backed		135,853		1,541		377		137,017
U.S. agency commercial mortgage-backed		12,183		99		44		12,238
Private label mortgage-backed		29,617		588		76		30,129
Other asset backed		91,196		186		231		91,151
Obligations of states and political subdivisions		103,652		1,378		203		104,827
Corporate		32,964		929		11		33,882
Trust preferred		1,966		-		115		1,851
Foreign government		2,030		1		4		2,027
Total	$	426,458	$	4,922	$	1,075	$	430,305
December 31, 2018
U.S. agency	$	20,198	$	9	$	193	$	20,014
U.S. agency residential mortgage-backed		124,777		817		1,843		123,751
U.S. agency commercial mortgage-backed		5,909		1		184		5,726
Private label mortgage-backed		29,735		321		637		29,419
Other asset backed		83,481		86		248		83,319
Obligations of states and political subdivisions		130,244		257		2,946		127,555
Corporate		34,866		29		586		34,309
Trust preferred		1,964		-		145		1,819
Foreign government		2,050		-		36		2,014
Total	$	433,224	$	1,520	$	6,818	$	427,926

11

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Our investments’ gross unrealized losses and fair values aggregated by investment type and length of time that individual securities have been at a continuous unrealized loss position follows:

	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
June 30, 2019
U.S. agency	$	-	$	-	$	4,427	$	14	$	4,427	$	14
U.S. agency residential mortgage-backed		5,109		11		36,367		366		41,476		377
U.S. agency commercial mortgage-backed		-		-		4,322		44		4,322		44
Private label mortgage-backed		2,682		3		3,273		73		5,955		76
Other asset backed		38,729		140		9,794		91		48,523		231
Obligations of states and political subdivisions		9,211		15		27,595		188		36,806		203
Corporate		288		1		3,188		10		3,476		11
Trust preferred		941		60		910		55		1,851		115
Foreign government		-		-		1,526		4		1,526		4
Total	$	56,960	$	230	$	91,402	$	845	$	148,362	$	1,075
December 31, 2018
U.S. agency	$	7,150	$	46	$	11,945	$	147	$	19,095	$	193
U.S. agency residential mortgage-backed		18,374		180		48,184		1,663		66,558		1,843
U.S. agency commercial mortgage-backed		566		3		5,094		181		5,660		184
Private label mortgage-backed		8,273		57		16,145		580		24,418		637
Other asset backed		53,043		160		10,235		88		63,278		248
Obligations of states and political subdivisions		25,423		262		80,701		2,684		106,124		2,946
Corporate		17,758		343		9,222		243		26,980		586
Trust preferred		939		61		880		84		1,819		145
Foreign government		-		-		2,014		36		2,014		36
Total	$	131,526	$	1,112	$	184,420	$	5,706	$	315,946	$	6,818

Our portfolio of securities available for sale is reviewed quarterly for impairment in value. In performing this review management considers (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) the impact of changes in market interest rates on the market value of the security and (4) an assessment of whether we intend to sell, or it is more likely than not that we will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. For securities that do not meet the aforementioned recovery criteria, the amount of impairment recognized in earnings is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income (loss).

12

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

U.S. agency, U.S. agency residential mortgage-backed securities and U.S. agency commercial mortgage backed securities — at June 30, 2019, we had 22 U.S. agency, 104 U.S. agency residential mortgage-backed and nine U.S. agency commercial mortgage-backed securities whose fair market value is less than amortized cost. The unrealized losses are largely attributed to increases in interest rates since acquisition and widening spreads to Treasury bonds. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Private label mortgage backed securities — at June 30, 2019, we had 11 of this type of security whose fair value is less than amortized cost. Unrealized losses are primarily due to credit spread widening and increases in interest rates since their acquisition.

Two private label mortgage-backed securities (including two of the three securities discussed further below) were reviewed for other than temporary impairment (‘‘OTTI’’) utilizing a cash flow projection. The cash flow analysis forecasts cash flow from the underlying loans in each transaction and then applies these cash flows to the bonds in the securitization. See further discussion below.

As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no other declines discussed above are deemed to be other than temporary.

Other asset backed — at June 30, 2019, we had 65 other asset backed securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Obligations of states and political subdivisions — at June 30, 2019, we had 86 municipal securities whose fair value is less than amortized cost. The unrealized losses are primarily due to wider benchmark pricing spreads and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Corporate — at June 30, 2019, we had five corporate securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

13

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Trust preferred securities — at June 30, 2019, we had two trust preferred securities whose fair value is less than amortized cost. Both of our trust preferred securities are single issue securities issued by a trust subsidiary of a bank holding company. The pricing of trust preferred securities has suffered from credit spread widening. One of the securities is rated by a major rating agency as investment grade while the other one is non-rated. The non-rated issue is a relatively small bank and was never rated. The issuer of this non-rated trust preferred security, which had a total amortized cost of $1.0 million and total fair value of $0.94 million as of June 30, 2019, continues to have satisfactory credit metrics and make interest payments. As management does not intend to liquidate this security and it is more likely than not that we will not be required to sell this security prior to recovery of the unrealized loss, this decline is not deemed to be other than temporary.

Foreign government — at June 30, 2019, we had one foreign government security whose fair value is less than amortized cost. The unrealized loss is primarily due to increases in interest rates since acquisition. As management does not intend to liquidate this security and it is more likely than not that we will not be required to sell this security prior to recovery of this unrealized loss, this decline is not deemed to be other than temporary.

We recorded no credit related OTTI charges in our Condensed Consolidated Statements of Operations related to securities available for sale during the three and six month periods ended June 30, 2019 and 2018, respectively.

At June 30, 2019, three private label mortgage-backed securities had credit related OTTI and are summarized as follows:

	Senior Security		Super Senior Security		Senior Support Security		Total
	(In thousands)
Fair value	$	713	$	700	$	17	$	1,430
Amortized cost		595		521		-		1,116
Non-credit unrealized loss		-		-		-		-
Unrealized gain		118		179		17		314
Cumulative credit related OTTI		757		457		380		1,594

Each of these securities is receiving principal and interest payments similar to principal reductions in the underlying collateral. All three of these securities have unrealized gains at June 30, 2019. The original amortized cost (current amortized cost excluding cumulative credit related OTTI) for each of these securities has been permanently adjusted downward for previously recorded credit related OTTI. The unrealized loss (based on original amortized cost) for these securities is now less than previously recorded credit related OTTI amounts.

14

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

A roll forward of credit losses recognized in earnings on securities available for sale follows:

	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018
	(In thousands)				(In thousands)
Balance at beginning of period	$	1,594	$	1,594	$	1,594	$	1,594
Additions to credit losses on securities for which no previous OTTI was recognized		-		-		-		-
Increases to credit losses on securities for which OTTI was previously recognized		-		-		-		-
Balance at end of period	$	1,594	$	1,594	$	1,594	$	1,594

The amortized cost and fair value of securities available for sale at June 30, 2019, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	13,478	$	13,481
Maturing after one year but within five years		55,186		55,754
Maturing after five years but within ten years		50,659		51,759
Maturing after ten years		38,286		38,776
		157,609		159,770
U.S. agency residential mortgage-backed		135,853		137,017
U.S. agency commercial mortgage-backed		12,183		12,238
Private label mortgage-backed		29,617		30,129
Other asset backed		91,196		91,151
Total	$	426,458	$	430,305

The actual maturity may differ from the contractual maturity because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Gains and losses realized on the sale of securities available for sale are determined using the specific identification method and are recognized on a trade-date basis.  A summary of proceeds from the sale of securities available for sale and gains and losses for the six month periods ending June 30, follows:

	Proceeds		Realized
			Gains		Losses
	(In thousands)
2019	$	42,236	$	169	$	32
2018	$	31,445	$	81	$	126

Certain preferred stocks which were all sold during the first quarter of 2019 had been classified as equity securities at fair value in our Condensed Consolidated Statement of Financial Condition.  During the six months ended June 30, 2019 and 2018 we recognized gains (losses) on these preferred stocks of $0.167 million and $(0.119) million, respectively, that are included in net gains (losses) on securities in the Condensed Consolidated Statements of Operations.  Zero and $(0.119) million of these gains (losses) during the six months ended June 30, 2019 and 2018, respectively relate to preferred stock still held at each respective period end.

15

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

4.  Loans

Our assessment of the allowance for loan losses is based on an evaluation of the loan portfolio, recent and historical loss experience, current economic conditions and other pertinent factors.

An analysis of the allowance for loan losses by portfolio segment for the three months ended June 30, follows:

	Commercial			Mortgage			Installment			Subjective Allocation		Total
	(In thousands)
2019
Balance at beginning of period	$	7,518		$	8,412		$	1,251		$	8,073	$	25,254
Additions (deductions)
Provision for loan losses		475			(386	)		209			354		652
Recoveries credited to the allowance		378			327			184			-		889
Loans charged against the allowance		(250	)		(291	)		(351	)		-		(892	)
Balance at end of period	$	8,121		$	8,062		$	1,293		$	8,427	$	25,903
2018
Balance at beginning of period	$	6,026		$	8,621		$	795		$	7,629	$	23,071
Additions (deductions)
Provision for loan losses		(362	)		216			138			658		650
Recoveries credited to the allowance		434			177			235			-		846
Loans charged against the allowance		(25	)		(718	)		(320	)		-		(1,063	)
Balance at end of period	$	6,073		$	8,296		$	848		$	8,287	$	23,504

An analysis of the allowance for loan losses by portfolio segment for the six months ended June 30, follows:

	Commercial			Mortgage			Installment			Subjective Allocation			Total
	(In thousands)
2019
Balance at beginning of period	$	7,090		$	7,978		$	895		$	8,925		$	24,888
Additions (deductions)
Provision for loan losses		895			187			732			(498	)		1,316
Recoveries credited to the allowance		505			551			401			-			1,457
Loans charged against the allowance		(369	)		(654	)		(735	)		-			(1,758	)
Balance at end of period	$	8,121		$	8,062		$	1,293		$	8,427		$	25,903
2018
Balance at beginning of period	$	5,595		$	8,733		$	864		$	7,395		$	22,587
Additions (deductions)
Provision for loan losses		(497	)		363			207			892			965
Recoveries credited to the allowance		1,040			357			463			-			1,860
Loans charged against the allowance		(65	)		(1,157	)		(686	)		-			(1,908	)
Balance at end of period	$	6,073		$	8,296		$	848		$	8,287		$	23,504

16

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Allowance for loan losses and recorded investment in loans by portfolio segment follows:

	Commercial		Mortgage		Installment		Subjective Allocation		Total
	(In thousands)
June 30, 2019
Allowance for loan losses:
Individually evaluated for impairment	$	1,047	$	4,715	$	265	$	-	$	6,027
Collectively evaluated for impairment		7,074		3,347		1,028		8,427		19,876
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	8,121	$	8,062	$	1,293	$	8,427	$	25,903
Loans
Individually evaluated for impairment	$	8,082	$	44,095	$	3,258			$	55,435
Collectively evaluated for impairment		1,169,792		1,046,177		441,859				2,657,828
Loans acquired with deteriorated credit quality		1,490		587		324				2,401
Total loans recorded investment		1,179,364		1,090,859		445,441				2,715,664
Accrued interest included in recorded investment		3,394		4,550		1,194				9,138
Total loans	$	1,175,970	$	1,086,309	$	444,247			$	2,706,526
December 31, 2018
Allowance for loan losses:
Individually evaluated for impairment	$	1,305	$	4,799	$	206	$	-	$	6,310
Collectively evaluated for impairment		5,785		3,179		689		8,925		18,578
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	7,090	$	7,978	$	895	$	8,925	$	24,888
Loans
Individually evaluated for impairment	$	8,697	$	46,394	$	3,370			$	58,461
Collectively evaluated for impairment		1,137,586		1,000,038		392,460				2,530,084
Loans acquired with deteriorated credit quality		1,609		555		349				2,513
Total loans recorded investment		1,147,892		1,046,987		396,179				2,591,058
Accrued interest included in recorded investment		3,411		4,097		1,030				8,538
Total loans	$	1,144,481	$	1,042,890	$	395,149			$	2,582,520

17

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                          (unaudited)

Loans on non-accrual status and past due more than 90 days (“Non-performing Loans”) follow:

	90+ and Still Accruing		Non- Accrual		Total Non- Performing Loans
	(In thousands)
June 30, 2019
Commercial
Income producing - real estate	$	-	$	-	$	-
Land, land development and construction - real estate		-		-		-
Commercial and industrial		-		803		803
Mortgage
1-4 family		-		4,142		4,142
Resort lending		-		720		720
Home equity - 1st lien		-		196		196
Home equity - 2nd lien		-		600		600
Installment
Home equity - 1st lien		-		168		168
Home equity - 2nd lien		-		220		220
Boat lending		-		278		278
Recreational vehicle lending		-		2		2
Other		-		234		234
Total recorded investment	$	-	$	7,363	$	7,363
Accrued interest included in recorded investment	$	-	$	-	$	-
December 31, 2018
Commercial
Income producing - real estate	$	-	$	-	$	-
Land, land development and construction - real estate		-		-		-
Commercial and industrial		-		2,220		2,220
Mortgage
1-4 family		5		4,695		4,700
Resort lending		-		755		755
Home equity - 1st lien		-		159		159
Home equity - 2nd lien		-		419		419
Installment
Home equity - 1st lien		-		178		178
Home equity - 2nd lien		-		226		226
Boat lending		-		166		166
Recreational vehicle lending		-		7		7
Other		-		204		204
Total recorded investment	$	5	$	9,029	$	9,034
Accrued interest included in recorded investment	$	-	$	-	$	-

18

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

An aging analysis of loans by class follows:

	Loans Past Due								Loans not Past Due		Total Loans
	30-59 days		60-89 days		90+ days		Total
	(In thousands)
June 30, 2019
Commercial
Income producing - real estate	$	50	$	-	$	-	$	50	$	398,697	$	398,747
Land, land development and construction - real estate		-		-		-		-		93,213		93,213
Commercial and industrial		132		37		705		874		686,530		687,404
Mortgage
1-4 family		4,488		1,663		1,734		7,885		851,775		859,660
Resort lending		484		238		433		1,155		73,578		74,733
Home equity - 1st lien		178		96		51		325		36,201		36,526
Home equity - 2nd lien		458		234		195		887		119,053		119,940
Installment
Home equity - 1st lien		97		1		11		109		6,320		6,429
Home equity - 2nd lien		188		19		113		320		5,431		5,751
Boat lending		287		24		32		343		197,315		197,658
Recreational vehicle lending		72		3		2		77		144,403		144,480
Other		200		46		172		418		90,705		91,123
Total recorded investment	$	6,634	$	2,361	$	3,448	$	12,443	$	2,703,221	$	2,715,664
Accrued interest included in recorded investment	$	66	$	32	$	-	$	98	$	9,040	$	9,138
December 31, 2018
Commercial
Income producing - real estate	$	44	$	-	$	-	$	44	$	388,729	$	388,773
Land, land development and construction - real estate		-		-		-		-		84,458		84,458
Commercial and industrial		1,538		-		-		1,538		673,123		674,661
Mortgage
1-4 family		1,608		194		4,882		6,684		833,760		840,444
Resort lending		252		-		755		1,007		80,774		81,781
Home equity - 1st lien		176		-		159		335		38,909		39,244
Home equity - 2nd lien		446		100		419		965		84,553		85,518
Installment
Home equity - 1st lien		200		55		197		452		6,985		7,437
Home equity - 2nd lien		111		24		226		361		6,683		7,044
Boat lending		316		295		166		777		169,117		169,894
Recreational vehicle lending		28		21		7		56		125,780		125,836
Other		241		131		204		576		85,392		85,968
Total recorded investment	$	4,960	$	820	$	7,015	$	12,795	$	2,578,263	$	2,591,058
Accrued interest included in recorded investment	$	44	$	11	$	-	$	55	$	8,483	$	8,538

19

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Impaired loans are as follows:

	June 30, 2019		December 31, 2018
Impaired loans with no allocated allowance for loan losses	(In thousands)
Troubled debt restructurings (“TDR”)	$	266	$	-
Non - TDR		500		-
Impaired loans with an allocated allowance for loan losses
TDR - allowance based on collateral		1,611		2,787
TDR - allowance based on present value cash flow		50,262		53,258
Non - TDR - allowance based on collateral		2,536		2,145
Total impaired loans	$	55,175	$	58,190
Amount of allowance for loan losses allocated
TDR - allowance based on collateral	$	272	$	769
TDR - allowance based on present value cash flow		4,874		4,849
Non - TDR - allowance based on collateral		881		692
Total amount of allowance for loan losses allocated	$	6,027	$	6,310

20

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Impaired loans by class are as follows:

	June 30, 2019						December 31, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance For Loan Losses		Recorded Investment		Unpaid Principal Balance		Related Allowance For Loan Losses
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Income producing - real estate	$	-	$	-	$	-	$	-	$	-	$	-
Land, land development & construction-real estate		-		-		-		-		-		-
Commercial and industrial		-		-		-		-		-		-
Mortgage
1-4 family		613		800		-		3		474		-
Resort lending		-		-		-		-		-		-
Home equity - 1st lien		-		-		-		-		-		-
Home equity - 2nd lien		-		-		-		-		-		-
Installment
Home equity - 1st lien		-		-		-		1		122		-
Home equity - 2nd lien		-		16		-		-		-		-
Boat lending		-		5		-		-		5		-
Recreational vehicle lending		-		-		-		-		-		-
Other		-		15		-		-		15		-
		613		836		-		4		616		-
With an allowance for loan losses recorded:
Commercial
Income producing - real estate	$	5,874	$	5,863		518		4,770		4,758		303
Land, land development & construction-real estate		290		288		31		290		289		35
Commercial and industrial		1,918		2,184		498		3,637		3,735		967
Mortgage
1-4 family		30,411		32,568		3,171		32,842		34,427		2,859
Resort lending		12,392		12,704		1,397		13,328		13,354		1,927
Home equity - 1st lien		125		187		26		65		64		4
Home equity - 2nd lien		554		564		121		156		155		9
Installment
Home equity - 1st lien		1,264		1,440		77		1,440		1,524		89
Home equity - 2nd lien		1,434		1,442		100		1,471		1,491		92
Boat lending		32		48		11		-		-		-
Recreational vehicle lending		51		51		4		79		79		4
Other		477		553		73		379		406		21
		54,822		57,892		6,027		58,457		60,282		6,310
Total
Commercial
Income producing - real estate		5,874		5,863		518		4,770		4,758		303
Land, land development & construction-real estate		290		288		31		290		289		35
Commercial and industrial		1,918		2,184		498		3,637		3,735		967
Mortgage
1-4 family		31,024		33,368		3,171		32,845		34,901		2,859
Resort lending		12,392		12,704		1,397		13,328		13,354		1,927
Home equity - 1st lien		125		187		26		65		64		4
Home equity - 2nd lien		554		564		121		156		155		9
Installment
Home equity - 1st lien		1,264		1,440		77		1,441		1,646		89
Home equity - 2nd lien		1,434		1,458		100		1,471		1,491		92
Boat lending		32		53		11		-		5		-
Recreational vehicle lending		51		51		4		79		79		4
Other		477		568		73		379		421		21
Total	$	55,435	$	58,728	$	6,027	$	58,461	$	60,898	$	6,310
Accrued interest included in recorded investment	$	260					$	271

21

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Average recorded investment in and interest income earned on impaired loans by class for the three month periods ending June 30, follows:

	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Income producing - real estate	$	-	$	-	$	-	$	-
Land, land development & construction-real estate		-		-		1,201		-
Commercial and industrial		-		-		509		9
Mortgage
1-4 family		484		2		138		3
Resort lending		-		-		-		-
Home equity - 1st lien		-		-		-		-
Home equity - 2nd lien		-		-		-		-
Installment
Home equity - 1st lien		-		-		1		2
Home equity - 2nd lien		-		-		-		-
Boat lending		-		-		-		-
Recreational vehicle lending		-		-		-		-
Other		-		-		-		1
		484		2		1,849		15
With an allowance for loan losses recorded:
Commercial
Income producing - real estate		5,297		81		5,142		70
Land, land development & construction-real estate		290		2		155		2
Commercial and industrial		2,418		16		2,522		34
Mortgage								-
1-4 family		31,364		414		35,345		431
Resort lending		12,680		147		15,098		150
Home equity - 1st lien		122		2		111		1
Home equity - 2nd lien		556		3		167		1
Installment
Home equity - 1st lien		1,326		19		1,596		25
Home equity - 2nd lien		1,453		19		1,746		25
Boat lending		67		-		1		-
Recreational vehicle lending		67		-		86		1
Other		479		5		414		7
		56,119		708		62,383		747
Total
Commercial
Income producing - real estate		5,297		81		5,142		70
Land, land development & construction-real estate		290		2		1,356		2
Commercial and industrial		2,418		16		3,031		43
Mortgage
1-4 family		31,848		416		35,483		434
Resort lending		12,680		147		15,098		150
Home equity - 1st lien		122		2		111		1
Home equity - 2nd lien		556		3		167		1
Installment
Home equity - 1st lien		1,326		19		1,597		27
Home equity - 2nd lien		1,453		19		1,746		25
Boat lending		67		-		1		-
Recreational vehicle lending		67		-		86		1
Other		479		5		414		8
Total	$	56,603	$	710	$	64,232	$	762

22

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Average recorded investment in and interest income earned on impaired loans by class for the six month periods ending June 30, follows:

	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Income producing - real estate	$	-	$	-	$	-	$	-
Land, land development & construction-real estate		-		-		801		-
Commercial and industrial		-		-		514		13
Mortgage
1-4 family		324		2		92		9
Resort lending		-		-		-		-
Home equity - 1st lien		-		-		-		-
Home equity - 2nd lien		-		-		-		-
Installment
Home equity - 1st lien		-		-		1		4
Home equity - 2nd lien		-		-		-		-
Boat lending		-		-		-		-
Recreational vehicle lending		-		-		-		-
Other		-		-		-		1
		324		2		1,408		27
With an allowance for loan losses recorded:
Commercial
Income producing - real estate		5,121		146		5,160		138
Land, land development & construction-real estate		290		4		159		4
Commercial and industrial		2,824		36		2,526		66
Mortgage
1-4 family		31,857		860		35,846		889
Resort lending		12,896		322		15,391		314
Home equity - 1st lien		103		3		131		3
Home equity - 2nd lien		423		6		171		3
Installment
Home equity - 1st lien		1,364		43		1,619		54
Home equity - 2nd lien		1,459		41		1,762		52
Boat lending		44		-		1		-
Recreational vehicle lending		71		1		87		2
Other		446		11		407		13
		56,898		1,473		63,260		1,538
Total
Commercial
Income producing - real estate		5,121		146		5,160		138
Land, land development & construction-real estate		290		4		960		4
Commercial and industrial		2,824		36		3,040		79
Mortgage
1-4 family		32,181		862		35,938		898
Resort lending		12,896		322		15,391		314
Home equity - 1st lien		103		3		131		3
Home equity - 2nd lien		423		6		171		3
Installment
Home equity - 1st lien		1,364		43		1,620		58
Home equity - 2nd lien		1,459		41		1,762		52
Boat lending		44		-		1		-
Recreational vehicle lending		71		1		87		2
Other		446		11		407		14
Total	$	57,222	$	1,475	$	64,668	$	1,565

23

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Cash receipts on impaired loans on non-accrual status are generally applied to the principal balance.

TDRs follow:

	June 30, 2019
	Commercial		Retail (1)			Total
			(In thousands)
Performing TDRs	$	7,166	$	42,136		$	49,302
Non-performing TDRs (2)		54		2,783	(3)		2,837
Total	$	7,220	$	44,919		$	52,139

	December 31, 2018
	Commercial		Retail (1)			Total
				(In thousands)
Performing TDRs	$	6,460	$	46,627		$	53,087
Non-performing TDRs (2)		74		2,884	(3)		2,958
Total	$	6,534	$	49,511		$	56,045

(1) Retail loans include mortgage and installment loan segments.

(2) Included in non-performing loans table above.

(3) Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.

We allocated $5.1 million and $5.6 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2019 and December 31, 2018, respectively.

During the six months ended June 30, 2019 and 2018, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans generally included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

Modifications involving a reduction of the stated interest rate of the loan have generally been for periods ranging from 9 months to 36 months but have extended to as much as 480 months in certain circumstances. Modifications involving an extension of the maturity date have generally been for periods ranging from 1 month to 60 months but have extended to as much as 230 months in certain circumstances.

24

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Loans that have been classified as troubled debt restructurings during the three-month periods ended June 30 follow:

	Number of Contracts		Pre-modification Recorded Balance		Post-modification Recorded Balance
	(Dollars in thousands)
2019
Commercial
Income producing - real estate		2	$	1,329	$	1,329
Land, land development & construction-real estate		-		-		-
Commercial and industrial		-		-		-
Mortgage
1-4 family		1		506		505
Resort lending		-		-		-
Home equity - 1st lien		-		-		-
Home equity - 2nd lien		-		-		-
Installment
Home equity - 1st lien		1		25		26
Home equity - 2nd lien		3		75		76
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		-		-		-
Total		7	$	1,935	$	1,936
2018
Commercial
Income producing - real estate		-	$	-	$	-
Land, land development & construction-real estate		-		-		-
Commercial and industrial		2		153		153
Mortgage
1-4 family		1		66		69
Resort lending		-		-		-
Home equity - 1st lien		-		-		-
Home equity - 2nd lien		-		-		-
Installment
Home equity - 1st lien		2		90		91
Home equity - 2nd lien		1		32		32
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		1		41		41
Total		7	$	382	$	386

25

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Loans that have been classified as troubled debt restructurings during the six-month periods ended June 30 follow:

	Number of Contracts		Pre-modification Recorded Balance		Post-modification Recorded Balance
	(Dollars in thousands)
2019
Commercial
Income producing - real estate		2	$	1,329	$	1,329
Land, land development & construction-real estate		-		-		-
Commercial and industrial		1		49		49
Mortgage
1-4 family		2		787		786
Resort lending		-		-		-
Home equity - 1st lien		-		-		-
Home equity - 2nd lien		-		-		-
Installment
Home equity - 1st lien		2		49		51
Home equity - 2nd lien		4		111		112
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		-		-		-
Total		11	$	2,325	$	2,327
2018
Commercial
Income producing - real estate		1	$	67	$	67
Land, land development & construction-real estate		-		-		-
Commercial and industrial		5		587		587
Mortgage
1-4 family		4		294		280
Resort lending		-		-		-
Home equity - 1st lien		-		-		-
Home equity - 2nd lien		-		-		-
Installment
Home equity - 1st lien		5		188		190
Home equity - 2nd lien		2		93		93
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		2		76		73
Total		19	$	1,305	$	1,290

The troubled debt restructurings described above for 2019 increased the allowance for loan losses by $0.04 million and resulted in zero charge offs during the three months ended June 30, 2019, and increased the allowance for loan losses by $0.05 million and resulted in zero charge offs during the six months ended June 30, 2019.

The troubled debt restructurings described above for 2018 increased the allowance for loan losses by $0.04 million and resulted in zero charge offs during the three months ended June 30, 2018, and increased the allowance for loan losses by $0.01 million and resulted in zero charge offs during the six months ended June 30, 2018.

26

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

There were no troubled debt restructurings that subsequently defaulted within twelve months following the modification during the three and six months periods ended June 30, 2019 and 2018.

A loan is considered to be in payment default generally once it is 90 days contractually past due under the modified terms.

In order to determine whether a borrower is experiencing financial difficulty, we perform an evaluation of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under our internal underwriting policy.

Credit Quality Indicators – As part of our on-going monitoring of the credit quality of our loan portfolios, we track certain credit quality indicators including (a) weighted-average risk grade of commercial loans, (b) the level of classified commercial loans, (c) credit scores of mortgage and installment loan borrowers, and (d) delinquency history and non-performing loans.

For commercial loans, we use a loan rating system that is similar to those employed by state and federal banking regulators. Loans are graded on a scale of 1 to 12. A description of the general characteristics of the ratings follows:

Rating 1 through 6: These loans are generally referred to as our “non-watch” commercial credits that include very high or exceptional credit fundamentals through acceptable credit fundamentals.

Rating 7 and 8: These loans are generally referred to as our “watch” commercial credits. These ratings include loans to borrowers that exhibit potential credit weakness or downward trends. If not checked or cured these trends could weaken our asset or credit position. While potentially weak, no loss of principal or interest is envisioned with these ratings.

Rating 9: These loans are generally referred to as our “substandard accruing” commercial credits. This rating includes loans to borrowers that exhibit a well-defined weakness where payment default is probable and loss is possible if deficiencies are not corrected. Generally, loans with this rating are considered collectible as to both principal and interest primarily due to collateral coverage.

Rating 10 and 11: These loans are generally referred to as our ‘‘substandard - non-accrual’’ and ‘‘doubtful’’ commercial credits. Our doubtful rating includes a sub classification for a loss rate other than 50% (which is the standard doubtful loss rate).  These ratings include loans to borrowers with weaknesses that make collection of debt in full, on the basis of current facts, conditions and values at best questionable and at worst improbable. All of these loans are placed in non-accrual.

Rating 12: These loans are generally referred to as our “loss” commercial credits. This rating includes loans to borrowers that are deemed incapable of repayment and are charged-off.

27

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table summarizes loan ratings by loan class for our commercial loan segment:

	Commercial
	Non-watch 1-6		Watch 7-8		Substandard Accrual 9		Non- Accrual 10-11		Total
					(In thousands)
June 30, 2019
Income producing - real estate	$	382,198	$	15,777	$	772	$	-	$	398,747
Land, land development and construction - real estate		83,971		8,467		775		-		93,213
Commercial and industrial		634,098		48,598		3,905		803		687,404
Total	$	1,100,267	$	72,842	$	5,452	$	803	$	1,179,364
Accrued interest included in total	$	3,158	$	219	$	17	$	-	$	3,394
December 31, 2018
Income producing - real estate	$	375,142	$	13,387	$	200	$	44	$	388,773
Land, land development and construction - real estate		76,120		8,328		-		10		84,458
Commercial and industrial		631,248		35,469		5,577		2,367		674,661
Total	$	1,082,510	$	57,184	$	5,777	$	2,421	$	1,147,892
Accrued interest included in total	$	3,107	$	174	$	130	$	-	$	3,411

For each of our mortgage and installment segment classes, we generally monitor credit quality based on the credit scores of the borrowers. These credit scores are generally updated semi-annually.

28

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following tables summarize credit scores by loan class for our mortgage and installment loan segments:

	Mortgage (1)
	1-4 Family		Resort Lending		Home Equity 1st Lien		Home Equity 2nd Lien		Total
	(In thousands)
June 30, 2019
800 and above	$	110,599	$	11,748	$	5,783	$	12,623	$	140,753
750-799		391,241		32,894		15,624		52,785		492,544
700-749		195,867		15,747		9,584		33,377		254,575
650-699		89,819		8,074		3,623		13,055		114,571
600-649		31,668		2,597		663		4,212		39,140
550-599		16,755		1,465		652		1,929		20,801
500-549		11,333		684		325		1,148		13,490
Under 500		4,192		81		272		392		4,937
Unknown		8,186		1,443		-		419		10,048
Total	$	859,660	$	74,733	$	36,526	$	119,940	$	1,090,859
Accrued interest included in total	$	3,503	$	367	$	176	$	504	$	4,550
December 31, 2018
800 and above	$	94,492	$	10,898	$	6,784	$	8,838	$	121,012
750-799		384,344		36,542		17,303		38,295		476,484
700-749		202,440		17,282		9,155		23,249		252,126
650-699		91,847		9,945		3,987		8,681		114,460
600-649		34,342		3,088		959		3,359		41,748
550-599		13,771		1,867		427		1,236		17,301
500-549		8,439		106		418		826		9,789
Under 500		2,533		143		98		381		3,155
Unknown		8,236		1,910		113		653		10,912
Total	$	840,444	$	81,781	$	39,244	$	85,518	$	1,046,987
Accrued interest included in total	$	3,079	$	363	$	199	$	456	$	4,097

(1) Credit scores have been updated within the last twelve months.

29

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

	Installment(1)
	Home Equity 1st Lien		Home Equity 2nd Lien		Boat Lending		Recreational Vehicle Lending		Other		Total
	(In thousands)
June 30, 2019
800 and above	$	449	$	231	$	26,585	$	22,213	$	6,683	$	56,161
750-799		1,219		1,517		115,402		85,635		34,760		238,533
700-749		1,390		1,224		41,608		28,261		23,945		96,428
650-699		1,496		1,161		10,612		5,728		10,426		29,423
600-649		993		730		1,879		1,767		2,954		8,323
550-599		550		573		831		653		853		3,460
500-549		313		217		486		181		859		2,056
Under 500		19		55		229		42		187		532
Unknown		-		43		26		-		10,456		10,525
Total	$	6,429	$	5,751	$	197,658	$	144,480	$	91,123	$	445,441
Accrued interest included in total	$	23	$	19	$	493	$	368	$	291	$	1,194
December 31, 2018
800 and above	$	555	$	235	$	20,767	$	20,197	$	6,272	$	48,026
750-799		1,502		1,642		100,191		74,154		31,483		208,972
700-749		1,582		1,682		35,455		24,890		24,369		87,978
650-699		1,606		1,217		10,581		4,918		9,840		28,162
600-649		996		1,272		1,657		992		2,751		7,668
550-599		759		658		652		453		838		3,360
500-549		384		229		286		225		651		1,775
Under 500		51		6		266		7		218		548
Unknown		2		103		39		-		9,546		9,690
Total	$	7,437	$	7,044	$	169,894	$	125,836	$	85,968	$	396,179
Accrued interest included in total	$	28	$	25	$	403	$	311	$	263	$	1,030

(1) Credit scores have been updated within the last twelve months.

Foreclosed residential real estate properties included in other real estate and repossessed assets on our Condensed Consolidated Statements of Financial Condition totaled $1.2 million at both June 30, 2019 and December 31, 2018, respectively.  Retail mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements totaled $0.6 million and $0.3 million at June 30, 2019 and December 31, 2018, respectively.

During the first quarter of 2019, we sold $40.6 million, of residential adjustable rate mortgage loans servicing released (classified on the Condensed Consolidated Statements of Financial Condition as held for sale, carried at the lower of cost or fair value at December 31, 2018) to another financial institution and recognized a gain on sale of $0.01 million.  During the first quarter of 2019 we also securitized $29.8 million, of portfolio residential fixed rate mortgage loans servicing retained with Freddie Mac and recognized a gain on sale of $0.53 million.  These transactions were done primarily for asset/liability management purposes.

During the first quarter of 2018, we sold $16.5 million, of residential fixed and adjustable rate portfolio mortgage loans servicing retained to another financial institution and recognized a gain on sale of $0.05 million.  These mortgage loans were sold primarily for asset/liability management purposes.

30

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Purchase Credit Impaired (“PCI”) Loans

Loans acquired in a business combination are recorded at estimated fair value on their purchase date with no carryover of the related allowance for loan losses. In determining the estimated fair value of purchased loans, we consider a number of factors including, among others, the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, and net present value of cash flows expected to be received. Purchased loans are accounted for in accordance with guidance for certain loans acquired in a transfer (ASC 310-30), when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments. The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in expected cash flows will result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income.

As a result of our acquisition of TCSB Bancorp, Inc. (“TCSB”) (see note #17) we purchased loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. For these loans that meet the criteria of ASC 310-30 treatment, the carrying amount was as follows:

	June 30, 2019		December 31, 2018
	(In thousands)
Commercial	$	1,490	$	1,609
Mortgage		587		555
Installment		324		349
Total carrying amount		2,401		2,513
Allowance for loan losses		-		-
Carrying amount, net of allowance for loan losses	$	2,401	$	2,513

The accretable difference on PCI loans is the difference between the expected cash flows and the net present value of expected cash flows with such difference accreted into earnings using the effective yield method over the term of the loans. Accretion recorded as loan interest income is included in the table below.  Accretable yield of PCI loans, or income expected to be collected follows:

	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
	(unaudited)						(unaudited)
	(In thousands)						(In thousands)
Balance at beginning of period	$	788		$	-		$	462		$	-
New loans purchased		-			568			-			568
Accretion recorded as loan interest income		(39	)		(35	)		(78	)		(35	)
Reclassification from (to) nonaccretable difference		-			-			365			-
Displosals/other adjustments		-			-			-			-
Balance at end of period	$	749		$	533		$	749		$	533

31

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

5.    Shareholders’ Equity and Earnings Per Common Share

In December, 2018, our Board of Directors authorized a share repurchase plan (the “Repurchase Plan”) to buy back up to 5% of our outstanding common stock through December 31, 2019.  During the first six months of 2019, we completed the repurchase of 5% of our outstanding common shares.  In June 2019, our Board of Directors authorized a 300,000 share expansion of the 2019 repurchase plan.  We expect to accomplish any remaining repurchases through open market transactions, though we could execute repurchases through other means, such as privately negotiated transactions.  The timing and amount of any share repurchases will depend on a variety of factors, including, among others, securities law restrictions, the trading price of our common stock, regulatory requirements, potential alternative uses for capital, and our financial performance. The Repurchase Plan does not obligate us to acquire any particular amount of common stock, and it may be modified or suspended at any time at our discretion. We expect to fund any repurchases from cash on hand.  During the six month periods ended June 30, 2019 and 2018 repurchases were made totaling 1,179,688 shares and zero shares of common stock, respectively for an aggregate purchase price of $25.8 million and zero, respectively.

A reconciliation of basic and diluted net income per common share follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(In thousands, except per share data)
Net income	$	10,730	$	8,817	$	20,111	$	17,978
Weighted average shares outstanding (1)		23,036		24,109		23,310		22,745
Stock units for deferred compensation plan for non-employee directors		128		126		130		125
Effect of stock options		112		224		119		179
Performance share units		37		51		39		50
Weighted average shares outstanding for calculation of diluted earnings per share		23,313		24,510		23,598		23,099
Net income per common share
Basic (1)	$	0.47	$	0.37	$	0.86	$	0.79
Diluted	$	0.46	$	0.36	$	0.85	$	0.78

⁽¹⁾Basic net income per common share includes weighted average common shares outstanding during the period and participating share awards.

Weighted average stock options outstanding that were not considered in computing diluted net income per common share because they were anti-dilutive were zero for the three and six month periods ended June 30, 2019 and 2018, respectively.

6.    Derivative Financial Instruments

We are required to record derivatives on our Condensed Consolidated Statements of Financial Condition as assets and liabilities measured at their fair value.  The accounting for increases and decreases in the value of derivatives depends upon the use of derivatives and whether the derivatives qualify for hedge accounting.

32

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Our derivative financial instruments according to the type of hedge in which they are designated follows:

	June 30, 2019
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Fair value hedge designation - Pay-fixed interest rate swap agreements	$	7,117		9.9	$	(203	)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		2.1	$	(171	)
Interest rate cap agreements		150,000		3.1		576
Total	$	175,000		3.0	$	405
No hedge designation
Rate-lock mortgage loan commitments	$	81,784		0.1	$	2,147
Mandatory commitments to sell mortgage loans		141,434		0.1		(334	)
Pay-fixed interest rate swap agreements - commercial		108,895		5.3		(3,179	)
Pay-variable interest rate swap agreements - commercial		108,895		5.3		3,179
Purchased options		3,095		2.0		171
Written options		3,035		2.0		(170	)
Total	$	447,138		2.7	$	1,814

	December 31, 2018
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		2.6	$	280
Interest rate cap agreements		150,000		3.6		2,245
Total	$	175,000		3.5	$	2,525
No hedge designation
Rate-lock mortgage loan commitments	$	32,473		0.1	$	687
Mandatory commitments to sell mortgage loans		57,583		0.1		(383	)
Pay-fixed interest rate swap agreements - commercial		94,451		5.5		405
Pay-variable interest rate swap agreements - commercial		94,451		5.5		(405	)
Purchased options		3,095		2.5		116
Written options		3,095		2.5		(116	)
Total	$	285,148		3.7	$	304

33

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

We use variable-rate and short-term fixed-rate (less than 12 months) debt obligations to fund a portion of our Condensed Consolidated Statements of Financial Condition, which exposes us to variability in interest rates. To meet our asset/liability management objectives, we may periodically enter into derivative financial instruments to mitigate exposure to fluctuations in cash flows resulting from changes in interest rates (“Cash Flow Hedges”).  Cash Flow Hedges included certain pay-fixed interest rate swaps and interest rate cap agreements.  Pay-fixed interest rate swaps convert the variable-rate cash flows on debt obligations to fixed-rates.  Under interest-rate cap agreements, we will receive cash if interest rates rise above a predetermined level. As a result, we effectively have variable-rate debt with an established maximum rate. We pay an upfront premium on interest rate caps which is recognized in earnings in the same period in which the hedged item affects earnings.  Unrecognized premiums from interest rate caps aggregated to $2.5 million at June 30, 2019 and $2.7 million at December 31, 2018.

We record the fair value of Cash Flow Hedges in accrued income and other assets and accrued expenses and other liabilities on our Condensed Consolidated Statements of Financial Condition.  On an ongoing basis, we adjust our Condensed Consolidated Statements of Financial Condition to reflect the then current fair value of Cash Flow Hedges.  The related gains or losses are reported in other comprehensive income or loss and are subsequently reclassified into earnings, as a yield adjustment in the same period in which the related interest on the hedged items (variable-rate debt obligations) affect earnings.  It is anticipated that approximately $0.12 million, of unrealized gains on Cash Flow Hedges at June 30, 2019 will be reclassified to earnings over the next twelve months.  To the extent that the Cash Flow Hedges are not effective, the ineffective portion of the Cash Flow Hedges is immediately recognized in interest expense.  The maximum term of the Cash Flow Hedge at June 30, 2019 is 4.3 years.

Beginning in the second quarter of 2019 we entered into a pay-fixed interest rate swap to protect a portion of the fair value of a certain fixed rate commercial loan (“Fair Value Hedge”).  As a result, changes in the fair value of the pay-fixed interest rate swap is expected to offset changes in the fair value of the fixed rate commercial loan due to fluctuations in interest rates.  We record the fair value of Fair Value Hedges in accrued income and other assets and accrued expenses and other liabilities on our Condensed Consolidated Statements of Financial Condition.  The hedged item (fixed rate commercial loan) is also recorded at fair value which offsets the adjustment to the Fair Value Hedge.  On an ongoing basis, we adjust our Condensed Consolidated Statements of Financial Condition to reflect the then current fair value of both the Fair Value Hedge and the hedged item.  The related gains or losses are reported in interest income – interest and fees on loans in our Condensed Consolidated Statements of Operations.

Certain financial derivative instruments have not been designated as hedges. The fair value of these derivative financial instruments has been recorded on our Condensed Consolidated Statements of Financial Condition and is adjusted on an ongoing basis to reflect their then current fair value. The changes in fair value of derivative financial instruments not designated as hedges are recognized in our Condensed Consolidated Statements of Operations.

34

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

In the ordinary course of business, we enter into rate-lock mortgage loan commitments with customers (“Rate-Lock Commitments”).  These commitments expose us to interest rate risk.  We also enter into mandatory commitments to sell mortgage loans (“Mandatory Commitments”) to reduce the impact of price fluctuations of mortgage loans held for sale and Rate-Lock Commitments.  Mandatory Commitments help protect our loan sale profit margin from fluctuations in interest rates. The changes in the fair value of Rate-Lock Commitments and Mandatory Commitments are recognized currently as part of net gains on mortgage loans in our Condensed Consolidated Statements of Operations.  We obtain market prices on Mandatory Commitments and Rate-Lock Commitments.  Net gains on mortgage loans, as well as net income may be more volatile as a result of these derivative instruments, which are not designated as hedges.

In prior periods we offered to our deposit customers an equity linked time deposit product (“Altitude CD”).  The Altitude CD was a time deposit that provides the customer a guaranteed return of principal at maturity plus a potential equity return (a written option), while we receive a like stream of funds based on the equity return (a purchased option).  The written and purchased options will generally move in opposite directions resulting in little or no net impact on our Condensed Consolidated Statements of Operations.  All of the written and purchased options in the table above relate to this Altitude CD product.

We have a program that allows commercial loan customers to lock in a fixed rate for a longer period of time than we would normally offer for interest rate risk reasons.  We will enter into a variable rate commercial loan and an interest rate swap agreement with a customer and then enter into an offsetting interest rate swap agreement with an unrelated party.  The interest rate swap agreement fair values will generally move in opposite directions resulting in little or no net impact on our Condensed Consolidated Statements of Operations.  All of the interest rate swap agreements noted as commercial in the table above with no hedge designation relate to this program.

35

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following tables illustrate the impact that the derivative financial instruments discussed above have on individual line items in the Condensed Consolidated Statements of Financial Condition for the periods presented:

Fair Values of Derivative Instruments

	Asset Derivatives						Liability Derivatives
	June 30, 2019			December 31, 2018			June 30, 2019			December 31, 2018
	Balance  Sheet  Location	Fair Value		Balance  Sheet  Location	Fair Value		Balance  Sheet  Location	Fair Value		Balance  Sheet  Location	Fair Value
	(In thousands)
Derivatives designated as hedging instruments
Pay-fixed interest rate swap agreements	Other assets	$	-	Other assets	$	280	Other liabilities	$	374	Other liabilities	$	-
Interest rate cap agreements	Other assets		576	Other assets		2,245	Other liabilities		-	Other liabilities		-
			576			2,525			374			-
Derivatives not designated as hedging instruments
Rate-lock mortgage loan commitments	Other assets		2,147	Other assets		687	Other liabilities		-	Other liabilities		-
Mandatory commitments to sell mortgage loans	Other assets		-	Other assets		-	Other liabilities		334	Other liabilities		383
Pay-fixed interest rate swap agreements -commercial	Other assets		80	Other assets		1,116	Other liabilities		3,259	Other liabilities		711
Pay-variable interest rate swap agreements -commercial	Other assets		3,259	Other assets		711	Other liabilities		80	Other liabilities		1,116
Purchased options	Other assets		171	Other assets		116	Other liabilities		-	Other liabilities		-
Written options	Other assets		-	Other assets		-	Other liabilities		170	Other liabilities		116
			5,657			2,630			3,843			2,326
Total derivatives		$	6,233		$	5,155		$	4,217		$	2,326

36

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The effect of derivative financial instruments on the Condensed Consolidated Statements of Operations follows:

Three Month Periods Ended June 30,
	Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)					Location of  Gain  Reclassified  from  Accumulated  Other  Comprehensive  Loss into  Income  (Effective	Gain Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)				Location of  Gain (Loss)  Recognized	Gain (Loss) Recognized in Income (1)
	2019			2018		Portion)	2019		2018		in Income (1)	2019			2018
							(In thousands)
Fair Value Hedges
Pay-fixed interest rate swap agreements											Interest income	$	(203	)	$	-
Cash Flow Hedges
Interest rate cap agreements	$	(489	)	$	244	Interest expense	$	115	$	45	Interest expense	$	-		$	-
Pay-fixed interest rate swap agreements		(267	)		83	Interest expense		27		8	Interest expense		-			(24	)
Total	$	(756	)	$	327		$	142	$	53		$	-		$	(24	)
No hedge designation
Rate-lock mortgage loan commitments											Net gains on mortgage  loans	$	831		$	244
Mandatory commitments to sell mortgage loans											Net gains on mortgage loans		(125	)		(110	)
Pay-fixed interest rate swap agreements -commercial											Interest income		(2,437	)		487
Pay-variable interest rate swap agreements -commercial											Interest income		2,437			(487	)
Pay-variable interest rate swap agreements											Interest expense		-			36
Purchased options											Interest expense		(31	)		(6	)
Written options											Interest expense		30			6
Total												$	705		$	170

(1)  For cash flow hedges, this location and amount refers to the ineffective portion.

37

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Six Month Periods Ended June 30,
	Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)					Location of  Gain  Reclassified  from  Accumulated  Other  Comprehensive  Loss into  Income  (Effective	Gain Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)				Location of  Gain (Loss)  Recognized	Gain (Loss) Recognized in Income (1)
	2019			2018		Portion)	2019		2018		in Income (1)	2019			2018
							(In thousands)
Fair Value Hedges
Pay-fixed interest rate swap agreements											Interest income	$	(203	)	$	-
Cash Flow Hedges
Interest rate cap agreements	$	(1,274	)	$	757	Interest expense	$	233	$	52	Interest expense	$	-		$	-
Pay-fixed interest rate swap agreements		(394	)		254	Interest expense		58		7	Interest expense		-			(12	)
Total	$	(1,668	)	$	1,011		$	291	$	59		$	-		$	(12	)
No hedge designation
Rate-lock mortgage loan commitments											Net gains on mortgage loans	$	1,460		$	672
Mandatory commitments to sell mortgage loans											Net gains on mortgage  loans		49			(270	)
Pay-fixed interest rate swap agreements -commercial											Interest income		(3,584	)		1,543
Pay-variable interest rate swap agreements -commercial											Interest income		3,584			(1,543	)
Pay-variable interest rate swap agreements											Interest expense		-			36
Purchased options											Interest expense		55			(99	)
Written options											Interest expense		(54	)		99
Total												$	1,510		$	438

(1)  For cash flow hedges, this location and amount refers to the ineffective portion.

38

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

7.    Goodwill and other Intangibles

The following table summarizes intangible assets, net of amortization:

	June 30, 2019				December 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Amortized intangible assets - core deposits	$	11,916	$	6,046	$	11,916	$	5,501
Unamortized intangible assets - goodwill	$	28,300			$	28,300

A summary of estimated core deposit intangible amortization at June 30, 2019 follows:

	(In thousands)
Six months ending December 31, 2019	$	544
2020		1,020
2021		970
2022		785
2023		547
2024 and thereafter		2,004
Total	$	5,870

8.    Share Based Compensation

We maintain share based payment plans that include a non-employee director stock purchase plan and a long-term incentive plan that permits the issuance of share based compensation, including stock options and non-vested share awards. The long-term incentive plan, which is shareholder approved, permits the grant of additional share based awards for up to 0.5 million shares of common stock as of June 30, 2019.  The non-employee director stock purchase plan permits the issuance of additional share based payments for up to 0.2 million shares of common stock as of June 30, 2019. Share based awards and payments are measured at fair value at the date of grant and are expensed over the requisite service period. Common shares issued upon exercise of stock options come from currently authorized but unissued shares.

During the three month periods ended June 30, 2019 and 2018 pursuant to our long-term incentive plan, we granted 0.004 million and 0.009 million shares of restricted stock to certain officers.  For both six month periods ended June 30, 2019 and 2018, pursuant to our long-term incentive plan, we granted 0.05 million shares of restricted stock and 0.02 million performance stock units (“PSU”) to certain officers.  Except for 0.002 million shares of restricted stock issued during the first quarters of 2019 and 2018 that vest ratably over three years, the shares of restricted stock and PSUs cliff vest after a period of three years.  The performance feature of the PSUs is based on a comparison of our total shareholder return over the three year period starting on the grant date to the total shareholder return over that period for a banking index of our peers.

Our directors may elect to receive a portion of their quarterly cash retainer fees in the form of common stock (either on a current basis or on a deferred basis pursuant to the non-employee director stock purchase plan referenced above). Shares equal in value to that portion of each director’s fees that he or she has elected to receive in stock are issued each quarter and vest immediately.  We issued 0.005 million shares during each six month period ended June 30, 2019 and 2018 pursuant to this plan and expensed their value during those same periods.

39

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Total compensation expense recognized for grants pursuant to our long-term incentive plan was $0.4 million and $0.8 million during the three and six month periods ended June 30, 2019, respectively, and was $0.4 million and $0.7 million during the same periods in 2018, respectively.  The corresponding tax benefit relating to this expense was $0.1 million and $0.2 million for the three and six month periods ended June 30, 2019, respectively and $0.1 million and $0.2 million for the same periods in 2018. Total expense recognized for non-employee director share based payments was $0.06 million and $0.11 million during the three and six month periods ended June 30, 2019, respectively, and was $0.05 million and $0.11 million during the same periods in 2018, respectively.  The corresponding tax benefit relating to this expense was $0.01 million and $0.02 million for the three and six month periods ended June 30, 2019, respectively and $0.01 million and $0.02 million during the same periods in 2018.

At June 30, 2019, the total expected compensation cost related to non-vested restricted stock and PSUs not yet recognized was $2.7 million.  The weighted-average period over which this amount will be recognized is 2.0 years.

A summary of outstanding stock option grants and related transactions follows:

	Number of Shares			Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregated Intrinsic Value
								(In thousands)
Outstanding at January 1, 2019		211,421		$	6.48
Granted		-
Exercised		(68,399	)		10.16
Forfeited		-
Expired		(558	)		22.35
Outstanding at June 30, 2019		142,464		$	4.66		3.5	$	2,442
Vested and expected to vest at
June 30, 2019		142,464		$	4.66		3.5	$	2,442
Exercisable at June 30, 2019		142,464		$	4.66		3.5	$	2,442

A summary of outstanding non-vested restricted stock and PSUs and related transactions follows:

	Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2019		258,419		$	19.00
Granted		78,283			22.98
Vested		(85,788	)		14.55
Forfeited		(11,475	)		22.91
Outstanding at June 30, 2019		239,439		$	21.72

40

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Certain information regarding options exercised during the periods follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Intrinsic value	$	-	$	1,596	$	836	$	1,674
Cash proceeds received	$	-	$	971	$	695	$	984
Tax benefit realized	$	-	$	336	$	176	$	352

9.    Income Tax

Income tax expense was $2.7 million and $2.1 million during the three month periods ended June 30, 2019 and 2018, respectively and $4.9 million and $4.1 million during the six months ended June 30, 2019 and 2018, respectively.  Our actual federal income tax expense is different than the amount computed by applying our statutory income tax rate to our income before income tax primarily due to tax-exempt interest income and tax-exempt income from the increase in the cash surrender value on life insurance.  In addition, the three and six month periods ending June 30, 2019 include reductions of zero and $0.2 million, respectively, of income tax expense related to the impact of the excess value of stock awards that vested and stock options that were exercised as compared to the initial fair values that were expensed.  These amounts during the same periods in 2018 were $0.1 million and $0.3 million, respectively.

We assess whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard.  The ultimate realization of this asset is primarily based on generating future income.  We concluded at June 30, 2019, June 30, 2018 and December 31, 2018 that the realization of substantially all of our deferred tax assets continues to be more likely than not.

At both June 30, 2019 and December 31, 2018, we had approximately $0.6 million, of gross unrecognized tax benefits.  We do not expect the total amount of unrecognized tax benefits to significantly increase or decrease during the balance of 2019.

10.  Regulatory Matters

Capital guidelines adopted by federal and state regulatory agencies and restrictions imposed by law limit the amount of cash dividends our Bank can pay to us. Under these guidelines, the amount of dividends that may be paid in any calendar year is limited to the Bank’s current year net profits, combined with the retained net profits of the preceding two years. Further, the Bank cannot pay a dividend at any time that it has negative undivided profits.  As of June 30, 2019, the Bank had positive undivided profits of $32.6 million.  It is not our intent to have dividends paid in amounts that would reduce the capital of our Bank to levels below those which we consider prudent and in accordance with guidelines of regulatory authorities.

We are also subject to various regulatory capital requirements. The prompt corrective action regulations establish quantitative measures to ensure capital adequacy and require minimum amounts and ratios of total, Tier 1, and common equity Tier 1 capital to risk-weighted assets and Tier 1 capital to average assets. Failure to meet minimum capital requirements can result in certain mandatory, and possibly discretionary, actions by regulators that could have a material effect on our interim condensed consolidated financial statements. Under capital adequacy guidelines, we must meet specific capital requirements that involve quantitative measures as well as qualitative judgments by the regulators. The most recent regulatory filings as of June 30, 2019 and December 31, 2018, categorized our Bank as well capitalized. Management is not aware of any conditions or events that would have changed the most recent Federal Deposit Insurance Corporation (“FDIC”) categorization.

41

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Our actual capital amounts and ratios follow (1):

	Actual					Minimum for Adequately Capitalized Institutions					Minimum for Well-Capitalized Institutions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
June 30, 2019
Total capital to risk-weighted assets
Consolidated	$	360,894		13.36	%	$	216,166		8.00	%	NA		NA
Independent Bank		346,015		12.81			216,074		8.00		$	270,093		10.00	%
Tier 1 capital to risk-weighted assets
Consolidated	$	333,508		12.34	%	$	162,125		6.00	%	NA		NA
Independent Bank		318,629		11.80			162,056		6.00		$	216,074		8.00	%
Common equity tier 1 capital to risk-weighted assets
Consolidated	$	295,310		10.93	%	$	121,594		4.50	%	NA		NA
Independent Bank		318,629		11.80			121,542		4.50		$	175,561		6.50	%
Tier 1 capital to average assets
Consolidated	$	333,508		9.95	%	$	134,131		4.00	%	NA		NA
Independent Bank		318,629		9.50			134,138		4.00		$	167,673		5.00	%
December 31, 2018
Total capital to risk-weighted assets
Consolidated	$	371,603		14.25	%	$	208,572		8.00	%	NA		NA
Independent Bank		337,227		12.94			208,456		8.00		$	260,569		10.00	%
Tier 1 capital to risk-weighted assets
Consolidated	$	345,419		13.25	%	$	156,429		6.00	%	NA		NA
Independent Bank		311,043		11.94			156,342		6.00		$	208,456		8.00	%
Common equity tier 1 capital to risk-weighted assets
Consolidated	$	307,255		11.79	%	$	117,322		4.50	%	NA		NA
Independent Bank		311,043		11.94			117,256		4.50		$	169,370		6.50	%
Tier 1 capital to average assets
Consolidated	$	345,419		10.47	%	$	131,930		4.00	%	NA		NA
Independent Bank		311,043		9.44			131,778		4.00		$	164,723		5.00	%

(1) These ratios do not reflect a capital conservation buffer of 2.50% and 1.875% at June 30, 2019 and December 31, 2018, respectfully.

NA - Not applicable

42

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The components of our regulatory capital are as follows:

	Consolidated						Independent Bank
	June 30, 2019			December 31, 2018			June 30, 2019			December 31, 2018
	(In thousands)
Total shareholders’ equity	$	330,846		$	338,994		$	354,165		$	341,496
Add (deduct)
Accumulated other comprehensive (income) loss for regulatory purposes		(1,366	)		4,311			(1,366	)		4,311
Goodwill and other intangibles		(34,170	)		(34,715	)		(34,170	)		(34,715	)
Disallowed deferred tax assets		-			(1,335	)		-			(49	)
Common equity tier 1 capital		295,310			307,255			318,629			311,043
Qualifying trust preferred securities		38,198			38,164			-			-
Tier 1 capital		333,508			345,419			318,629			311,043
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		27,386			26,184			27,386			26,184
Total risk-based capital	$	360,894		$	371,603		$	346,015		$	337,227

11.  Fair Value Disclosures

FASB ASC topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Valuation is based upon quoted prices for identical instruments traded in active markets. Level 1 instruments include securities traded on active exchange markets, such as the New York Stock Exchange, as well as U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets.

Level 2:  Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 2 instruments include securities traded in less active dealer or broker markets.

Level 3:  Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

43

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

We used the following methods and significant assumptions to estimate fair value:

Securities:  Where quoted market prices are available in an active market, securities (equity securities at fair value or available for sale) are classified as Level 1 of the valuation hierarchy.  Level 1 securities include certain preferred stocks included in our equity securities at fair value for which there are quoted prices in active markets (at December 31, 2018).  If quoted market prices are not available for the specific security, then fair values are estimated by (1) using quoted market prices of securities with similar characteristics, (2) matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices, or (3) a discounted cash flow analysis whose significant fair value inputs can generally be verified and do not typically involve judgment by management. These securities are classified as Level 2 of the valuation hierarchy and primarily include agency securities, private label mortgage-backed securities, other asset backed securities, obligations of states and political subdivisions, trust preferred securities, corporate securities and foreign government securities.

Loans held for sale:  The fair value of mortgage loans held for sale, carried at fair value is based on agency cash window loan pricing for comparable assets (recurring Level 2) and the fair value of mortgage loans held for sale, carried at the lower of cost or fair value (at December 31, 2018) is based on a quoted sales price (non-recurring Level 1).

Impaired loans with specific loss allocations based on collateral value:  From time to time, certain loans are considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. We measure our investment in an impaired loan based on one of three methods: the loan’s observable market price, the fair value of the collateral or the present value of expected future cash flows discounted at the loan’s effective interest rate. Those impaired loans not requiring an allowance for loan losses represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At June 30, 2019 and December 31, 2018, all of our impaired loans were evaluated based on either the fair value of the collateral or the present value of expected future cash flows discounted at the loan’s effective interest rate. When the fair value of the collateral is based on an appraised value or when an appraised value is not available we record the impaired loan as nonrecurring Level 3.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments can be significant and thus will typically result in a Level 3 classification of the inputs for determining fair value.

44

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Other real estate:  At the time of acquisition, other real estate is recorded at fair value, less estimated costs to sell, which becomes the property’s new basis. Subsequent write-downs to reflect declines in value since the time of acquisition may occur from time to time and are recorded in net (gains) losses on other real estate and repossessed assets, which is part of non-interest expense - other in the Condensed Consolidated Statements of Operations. The fair value of the property used at and subsequent to the time of acquisition is typically determined by a third party appraisal of the property. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments can be significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and other real estate  are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by us. Once received, an independent third party, or a member of our Collateral Evaluation Department (for commercial properties), or a member of our Special Assets Group (for residential properties) reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. We compare the actual selling price of collateral that has been sold to the most recent appraised value of our properties to determine what additional adjustment, if any, should be made to the appraisal value to arrive at fair value. For commercial and residential properties we typically discount an appraisal to account for various factors that the appraisal excludes in its assumptions. These additional discounts generally do not result in material adjustments to the appraised value.

Capitalized mortgage loan servicing rights:  The fair value of capitalized mortgage loan servicing rights is based on a valuation model used by an independent third party that calculates the present value of estimated net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income. Certain model assumptions are generally unobservable and are based upon the best information available including data relating to our own servicing portfolio, reviews of mortgage servicing assumption and valuation surveys and input from various mortgage servicers and, therefore, are recorded as Level 3.  Management evaluates the third party valuation for reasonableness each quarter as part of our financial reporting control processes.

Derivatives:  The fair value of rate-lock mortgage loan commitments is based on agency cash window loan pricing for comparable assets and the fair value of mandatory commitments to sell mortgage loans is based on mortgage backed security pricing for comparable assets (recurring Level 2). The fair value of interest rate swap and interest rate cap agreements are derived from proprietary models which utilize current market data.  The significant fair value inputs can generally be observed in the market place and do not typically involve judgment by management (recurring Level 2). The fair value of purchased and written options is based on prices of financial instruments with similar characteristics and do not typically involve judgment by management (recurring Level 2).

45

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Assets and liabilities measured at fair value, including financial assets for which we have elected the fair value option, were as follows:

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
June 30, 2019:
Measured at Fair Value on a Recurring Basis
Assets
Securities available for sale
U.S. agency	$	17,183	$	-	$	17,183	$	-
U.S. agency residential mortgage-backed		137,017		-		137,017		-
U.S. agency commercial mortgage-backed		12,238		-		12,238		-
Private label mortgage-backed		30,129		-		30,129		-
Other asset backed		91,151		-		91,151		-
Obligations of states and political subdivisions		104,827		-		104,827		-
Corporate		33,882		-		33,882		-
Trust preferred		1,851		-		1,851		-
Foreign government		2,027		-		2,027		-
Loans held for sale, carried at fair value		62,883		-		62,883		-
Capitalized mortgage loan servicing rights		17,894		-		-		17,894
Derivatives (1)		6,233		-		6,233		-
Liabilities
Derivatives (2)		4,217		-		4,217		-
Measured at Fair Value on a Non-recurring Basis:
Assets
Impaired loans (3)
Commercial
Income producing - real estate		116		-		-		116
Land, land development & construction-real estate		1,198		-		-		1,198
Commercial and industrial		106		-		-		106
Mortgage
1-4 family		839		-		-		839
Resort lending		360		-		-		360
Home equity - 1st lien		41		-		-		41
Home equity - 2nd lien		182		-		-		182
Installment
Home equity - 1st lien		2		-		-		2
Home equity - 2nd lien		31		-		-		31
Boat lending		21		-		-		21
Recreational vehicle lending		1		-		-		1
Other		97		-		-		97
Other real estate (4)
Mortgage
1-4 family		8		-		-		8
Home equity - 2nd lien		59		-		-		59

(1)  Included in accrued income and other assets

(2)  Included in accrued expenses and other liabilities

(3)  Only includes impaired loans with specific loss allocations based on collateral value.

(4)  Only includes other real estate with subsequent write downs to fair value.

46

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
December 31, 2018:
Measured at Fair Value on a Recurring Basis
Assets
Equity securities at fair value	$	393	$	393	$	-	$	-
Securities available for sale
U.S. agency		20,014		-		20,014		-
U.S. agency residential mortgage-backed		123,751		-		123,751		-
U.S. agency commercial mortgage-backed		5,726		-		5,726		-
Private label mortgage-backed		29,419		-		29,419		-
Other asset backed		83,319		-		83,319		-
Obligations of states and political subdivisions		127,555		-		127,555		-
Corporate		34,309		-		34,309		-
Trust preferred		1,819		-		1,819		-
Foreign government		2,014		-		2,014		-
Loans held for sale, carried at fair value		44,753		-		44,753		-
Capitalized mortgage loan servicing rights		21,400		-		-		21,400
Derivatives (1)		5,155		-		5,155		-
Liabilities
Derivatives (2)		2,326		-		2,326		-
Measured at Fair Value on a Non-recurring Basis:
Assets
Loans held for sale, carried at the lower of cost or fair value		41,471		41,471		-		-
Impaired loans (3)
Commercial
Income producing - real estate		217		-		-		217
Land, land development & construction-real estate		106		-		-		106
Commercial and industrial		2,243		-		-		2,243
Mortgage
1-4 family		333		-		-		333
Resort lending		572		-		-		572
Other real estate (4)
Mortgage
1-4 family		95		-		-		95
Home equity - 2nd lien		59		-		-		59

(1)  Included in accrued income and other assets

(2)  Included in accrued expenses and other liabilities

(3)  Only includes impaired loans with specific loss allocations based on collateral value.

(4)  Only includes other real estate with subsequent write downs to fair value.

There were no transfers between Level 1 and Level 2 during the six months ended June 30, 2019 and 2018.

47

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Changes in fair values for financial assets which we have elected the fair value option for the periods presented were as follows:

	Changes in Fair Values for the Six-Month Periods Ended June 30 for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
	Net Gains (Losses) on Assets					Mortgage			Total Change in Fair Values Included in Current
	Securities			Mortgage Loans		Loan Servicing, net			Period Earnings
	(In thousands)
2019
Equity securities at fair value	$	167		$	-	$	-		$	167
Loans held for sale		-			577		-			577
Capitalized mortgage loan servicing rights		-			-		(6,113	)		(6,113	)
2018
Equity securities at fair value	$	(119	)	$	-	$	-		$	(119	)
Loans held for sale		-			367		-			367
Capitalized mortgage loan servicing rights		-			-		892			892

For those items measured at fair value pursuant to our election of the fair value option, interest income is recorded within the Condensed Consolidated Statements of Operations based on the contractual amount of interest income earned on these financial assets and dividend income is recorded based on cash dividends received.

The following represent impairment charges recognized during the three and six month periods ended June 30, 2019 and 2018 relating to assets measured at fair value on a non-recurring basis:

• Loanswhicharemeasured forimpairmentusingthefairvalueofcollateralforcollateraldependent loans hadacarryingamountof$3.0million,which is net ofavaluationallowance of$1.2millionat June 30,2019, andhadacarryingamountof$3.5million,which is net ofavaluationallowanceof$1.5millionatDecember31, 2018.  The provision for loan losses included in our results of operations relating to impaired loans was a net expense of $0.3 million and $0.5 million for the three month periods ending June 30, 2019 and 2018, respectively, and a net expense of $0.4 million and $0.5 million for the six month periods ending June 30, 2019 and 2018, respectively.

• Otherrealestate,which ismeasuredusing thefairvalueoftheproperty,hadacarryingamountof $0.1million whichisnetofavaluationallowance of$0.1millionatJune 30,2019,andacarrying amountof$0.2million,whichisnetofavaluationallowance of$0.1million,atDecember 31,2018. Charges included in our results of operations relating to other real estate measured at fair value were zero and $0.01 million during each of the three and six month periods ended June 30, 2019, and were zero during each of the three and six month periods ended June 30, 2018.

48

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

A reconciliation for all assets and (liabilities) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) follows:

	Capitalized Mortgage Loan Servicing Rights
	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(In thousands)						(In thousands)
Beginning balance	$	19,909		$	17,783		$	21,400		$	15,699
Total gains (losses) realized and unrealized:
Included in results of operations		(3,422	)		(137	)		(6,113	)		892
Included in other comprehensive income (loss)		-			-			-			-
Purchases, issuances, settlements, maturities and calls		1,407			4,202			2,607			5,257
Transfers in and/or out of Level 3		-			-			-			-
Ending balance	$	17,894		$	21,848		$	17,894		$	21,848
Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at June 30	$	(3,422	)	$	(137	)	$	(6,113	)	$	892

The fair value of our capitalized mortgage loan servicing rights has been determined based on a valuation model used by an independent third party as discussed above.  The significant unobservable inputs used in the fair value measurement of the capitalized mortgage loan servicing rights are discount rate, cost to service, ancillary income and float rate.  Significant changes in all four of these assumptions in isolation would result in significant changes to the value of our capitalized mortgage loan servicing rights.  Quantitative information about our Level 3 fair value measurements measured on a recurring basis follows:

	Asset Fair Value		Valuation Technique	Unobservable Inputs	Range			Weighted Average
	(In thousands)
June 30, 2019
Capitalized mortgage loan servicing rights	$	17,894	Present value of net	Discount rate	10.00% to 13.00		%		10.14	%
			servicing revenue	Cost to service	$	66 to $216		$	80
				Ancillary income	20 to 36				22
				Float rate		1.77	%		1.77	%
December 31, 2018
Capitalized mortgage loan servicing rights	$	21,400	Present value of net	Discount rate	10.00% to 13.00		%		10.15	%
			servicing revenue	Cost to service	$	68 to $216		$	81
				Ancillary income	20 to 36				23
				Float rate		2.57	%		2.57	%

49

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis follows:

	Asset Fair Value		Valuation Technique	Unobservable Inputs	Range		Weighted Average
	(In thousands)
June 30, 2019
Impaired loans
Commercial(1)	$	1,420	Sales comparison approach	Adjustment for differences between comparable sales	(48.0)% to 40.0	%		(6.0	)%
Mortgage and
Installment(2)		1,574	Sales comparison approach	Adjustment for  differences between comparable sales	(40.1) to 56.7			(2.6	)
Other real estate
Mortgage		67	Sales comparison approach	Adjustment for differences between comparable sales	(0.0) to 10.2			4.1
December 31, 2018
Impaired loans
Commercial(1)	$	2,566	Sales comparison approach	Adjustment for differences between comparable sales	(32.5)% to 60.0	%		(1.9	)%
Mortgage		905	Sales comparison approach	Adjustment for differences between comparable sales	(40.1) to 25.6			0.7
Other real estate
Mortgage		154	Sales comparison approach	Adjustment for  differences between comparable sales	0.0 to 34.1			11.2

(1) In addition to the valuation techniques and unobservable inputs discussed above, at June 30, 2019 and December 31, 2018, we had an impaired collateral dependent commercial relationship that totaled $0.5 million and $0.7 million, respectively that was secured by collateral other than real estate. Collateral securing this relationship primarily included accounts receivable, inventory and cash at June 30, 2019 and December 31, 2018. Valuation techniques at June 30, 2019 and December 31, 2018, included discounting financial statement values for each particular asset type. Discount rates used ranged from 5% to 97% of stated values at June 30, 2019 and 20% to 80% of stated values at December 31, 2018.

(2) In addition to the valuation techniques and unobservable inputs discussed above, at June 30, 2019 certain impaired collateral dependent installment loans totaling approximately $0.1 million are secured by collateral other than real estate.  For the majority of these loans, we apply internal discount rates to industry valuation guides.

The following table reflects the difference between the aggregate fair value and the aggregate remaining contractual principal balance outstanding for loans held for sale for which the fair value option has been elected for the periods presented.

	Aggregate Fair Value		Difference		Contractual Principal
	(In thousands)
Loans held for sale
June 30, 2019	$	62,883	$	1,834	$	61,049
December 31, 2018		44,753		1,257		43,496

50

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

12.  Fair Values of Financial Instruments

Most of our assets and liabilities are considered financial instruments. Many of these financial instruments lack an available trading market and it is our general practice and intent to hold the majority of our financial instruments to maturity. Significant estimates and assumptions were used to determine the fair value of financial instruments. These estimates are subjective in nature, involving uncertainties and matters of judgment, and therefore, fair values may not be a precise estimate. Changes in assumptions could significantly affect the estimates.

Estimated fair values have been determined using available data and methodologies that are considered suitable for each category of financial instrument. For instruments with adjustable interest rates which reprice frequently and without significant credit risk, it is presumed that estimated fair values approximate the recorded book balances.

51

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The estimated recorded book balances and fair values follow:

					Fair Value Using
	Recorded Book Balance		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
June 30, 2019
Assets
Cash and due from banks	$	34,461	$	34,461	$	34,461	$	-	$	-
Interest bearing deposits		20,676		20,676		20,676		-		-
Interest bearing deposits - time		498		498		-		498		-
Securities available for sale		430,305		430,305		-		430,305		-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA		NA		NA		NA
Net loans and loans held for sale		2,743,506		2,747,828		-		62,883		2,684,945
Accrued interest receivable		10,816		10,816		1		1,634		9,181
Derivative financial instruments		6,233		6,233		-		6,233		-
Liabilities
Deposits with no stated maturity (1)	$	2,294,255	$	2,294,255	$	2,294,255	$	-	$	-
Deposits with stated maturity (1)		684,630		683,547		-		683,547		-
Other borrowings		41,144		41,271		-		41,271		-
Subordinated debentures		39,422		33,214		-		33,214		-
Accrued interest payable		1,668		1,668		128		1,540		-
Derivative financial instruments		4,217		4,217		-		4,217		-
December 31, 2018
Assets
Cash and due from banks	$	23,350	$	23,350	$	23,350	$	-	$	-
Interest bearing deposits		46,894		46,894		46,894		-		-
Interest bearing deposits - time		595		594		-		594		-
Equity securities at fair value		393		393		393		-		-
Securities available for sale		427,926		427,926		-		427,926		-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA		NA		NA		NA
Net loans and loans held for sale		2,643,856		2,606,256		41,471		44,753		2,520,032
Accrued interest receivable		10,164		10,164		22		1,789		8,353
Derivative financial instruments		5,155		5,155		-		5,155		-
Liabilities
Deposits with no stated maturity (1)	$	2,197,494	$	2,197,494	$	2,197,494	$	-	$	-
Deposits with stated maturity (1)		715,934		711,312		-		711,312		-
Other borrowings		25,700		25,706		-		25,706		-
Subordinated debentures		39,388		35,021		-		35,021		-
Accrued interest payable		1,646		1,646		114		1,532		-
Derivative financial instruments		2,326		2,326		-		2,326		-

(1) Deposits with no stated maturity include reciprocal deposits with a recorded book balance of $270.864 million and $123.080 million at June 30, 2019 and December 31, 2018, respectively. Deposits with a stated maturity include reciprocal deposits with a recorded book balance of $55.462 million and $58.992 million at June 30, 2019 and December 31, 2018, respectively.

52

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The fair values for commitments to extend credit and standby letters of credit are estimated to approximate their aggregate book balance, which is nominal and therefore are not disclosed.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale the entire holdings of a particular financial instrument.

Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business, the value of future earnings attributable to off-balance sheet activities and the value of assets and liabilities that are not considered financial instruments.

Fair value estimates for deposit accounts do not include the value of the core deposit intangible asset resulting from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market.

13. Contingencies

We are involved in various litigation matters in the ordinary course of business. At the present time, we do not believe any of these matters will have a significant impact on our consolidated financial position or results of operations. The aggregate amount we have accrued for losses we consider probable as a result of these litigation matters is immaterial. However, because of the inherent uncertainty of outcomes from any litigation matter, we believe it is reasonably possible we may incur losses in addition to the amounts we have accrued.  At this time, we estimate the maximum amount of additional losses that are reasonably possible is insignificant.  However, because of a number of factors, including the fact that certain of these litigation matters are still in their early stages, this maximum amount may change in the future.

The litigation matters described in the preceding paragraph primarily include claims that have been brought against us for damages, but do not include litigation matters where we seek to collect amounts owed to us by third parties (such as litigation initiated to collect delinquent loans). These excluded, collection-related matters may involve claims or counterclaims by the opposing party or parties, but we have excluded such matters from the disclosure contained in the preceding paragraph in all cases where we believe the possibility of us paying damages to any opposing party is remote. Risks associated with the likelihood that we will not collect the full amount owed to us, net of reserves, are disclosed elsewhere in this report.

53

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The provision for loss reimbursement on sold loans represents our estimate of incurred losses related to mortgage loans that we have sold to investors (primarily Fannie Mae, Freddie Mac, Ginnie Mae and the Federal Home Loan Bank of Indianapolis). Since we sell mortgage loans without recourse, loss reimbursements only occur in those instances where we have breached a representation or warranty or other contractual requirement related to the loan sale. The provision for loss reimbursement on sold loans was an expense of $0.03 million and $0.02 million for the three month periods ended June 30, 2019 and 2018 and an expense of $0.15 million and $0.03 million for the six month periods ended June 30, 2019 and 2018, respectively. The reserve for loss reimbursements on sold mortgage loans totaled $0.83 million and $0.78 million at June 30, 2019 and December 31, 2018, respectively. This reserve is included in accrued expenses and other liabilities in our Condensed Consolidated Statements of Financial Condition. This reserve is based on an analysis of mortgage loans that we have sold which are further categorized by delinquency status, loan to value, and year of origination. The calculation includes factors such as probability of default, probability of loss reimbursement (breach of representation or warranty) and estimated loss severity. We believe that the amounts that we have accrued for incurred losses on sold mortgage loans are appropriate given our analyses. However, future losses could exceed our current estimate.

We own 12,566 shares of VISA Class B common stock. At the present time, these shares can only be sold to other Class B shareholders. As a result, there has generally been limited transfer activity in private transactions between buyers and sellers. Given the limited activity that we have become aware of  and the continuing uncertainty regarding the likelihood, ultimate timing and eventual exchange rate for Class B shares into Class A shares, we have elected to value these shares at zero. However, given the current conversion ratio of 1.6298 to Class A shares and the closing price of VISA Class A shares on July 30, 2019 of $181.53 per share, our 12,566 Class B shares would have a current “value” of approximately $3.7 million. We continue to monitor Class B trading activity and the status of the resolution of certain litigation matters at VISA that would trigger the conversion of Class B common shares into Class A common shares that would have no trading restrictions.

54

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

14.  Accumulated Other Comprehensive Loss (“AOCL”)

A summary of changes in AOCL follows:

	Unrealized Gains (Losses) on Securities Available for Sale			Dispropor- tionate Tax Effects from Securities Available for Sale			Unrealized Gains (Losses) on Cash Flow Hedges			Total
	(In thousands)
For the three months ended June 30,
2019
Balances at beginning of period	$	(57	)	$	(5,798	)	$	(962	)	$	(6,817	)
Other comprehensive income (loss) before reclassifications		3,097			-			(599	)		2,498
Amounts reclassified from AOCL		-			-			(112	)		(112	)
Net current period other comprehensive income (loss)		3,097			-			(711	)		2,386
Balances at end of period	$	3,040		$	(5,798	)	$	(1,673	)	$	(4,431	)
2018
Balances at beginning of period	$	(3,509	)	$	(5,798	)	$	805		$	(8,502	)
Other comprehensive income (loss) before reclassifications		(949	)		-			258			(691	)
Amounts reclassified from AOCL		21			-			(42	)		(21	)
Net current period other comprehensive income (loss)		(928	)		-			216			(712	)
Balances at end of period	$	(4,437	)	$	(5,798	)	$	1,021		$	(9,214	)
For the six months ended June 30,
2019
Balances at beginning of period	$	(4,185	)	$	(5,798	)	$	(125	)	$	(10,108	)
Other comprehensive income (loss) before reclassifications		7,333			-			(1,318	)		6,015
Amounts reclassified from AOCL		(108	)		-			(230	)		(338	)
Net current period other comprehensive income (loss)		7,225			-			(1,548	)		5,677
Balances at end of period	$	3,040		$	(5,798	)	$	(1,673	)	$	(4,431	)
2018
Balances at beginning of period	$	(470	)	$	(5,798	)	$	269		$	(5,999	)
Other comprehensive income (loss) before reclassifications		(4,003	)		-			799			(3,204	)
Amounts reclassified from AOCL		36			-			(47	)		(11	)
Net current period other comprehensive income (loss)		(3,967	)		-			752			(3,215	)
Balances at end of period	$	(4,437	)	$	(5,798	)	$	1,021		$	(9,214	)

55

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The disproportionate tax effects from securities available for sale arose due to tax effects of other comprehensive income (“OCI”) in the presence of a valuation allowance against our deferred tax assets and a pretax loss from operations.  Generally, the amount of income tax expense or benefit allocated to operations is determined without regard to the tax effects of other categories of income or loss, such as OCI. However, an exception to the general rule is provided when, in the presence of a valuation allowance against deferred tax assets, there is a pretax loss from operations and pretax income from other categories in the current period.  In such instances, income from other categories must offset the current loss from operations, the tax benefit of such offset being reflected in operations. Release of material disproportionate tax effects from other comprehensive income to earnings is done by the portfolio method whereby the effects will remain in AOCL as long as we carry a more than inconsequential portfolio of securities available for sale.

A summary of reclassifications out of each component of AOCL for the three months ended June 30 follows:

AOCL Component	Amount Reclassified From AOCL			Affected Line Item in Condensed  Consolidated Statements of Operations
	(In thousands)
2019
Unrealized gains (losses) on securities available for sale
	$	-		Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		-		Total reclassifications before tax
		-		Income tax expense
	$	-		Reclassifications, net of tax
Unrealized gains (losses) on cash flow hedges
	$	(142	)	Interest expense
		(30	)	Income tax expense
	$	(112	)	Reclassification, net of tax
	$	112		Total reclassifications for the period, net of tax
2018
Unrealized gains (losses) on securities available for sale
	$	(26	)	Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		(26	)	Total reclassifications before tax
		(5	)	Income tax expense
	$	(21	)	Reclassifications, net of tax
Unrealized gains (losses) on cash flow hedges
	$	(53	)	Interest expense
		(11	)	Income tax expense
	$	(42	)	Reclassification, net of tax
	$	21		Total reclassifications for the period, net of tax

56

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

A summary of reclassifications out of each component of AOCL for the six months ended June 30 follows:

AOCL Component	Amount Reclassified From AOCL			Affected Line Item in Condensed  Consolidated Statements of Operations
	(In thousands)
2019
Unrealized gains (losses) on securities available for sale
	$	137		Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		137		Total reclassifications before tax
		29		Income tax expense
	$	108		Reclassifications, net of tax
Unrealized gains (losses) on cash flow hedges
	$	(291	)	Interest expense
		(61	)	Income tax expense
	$	(230	)	Reclassification, net of tax
	$	338		Total reclassifications for the period, net of tax
2018
Unrealized gains (losses) on securities available for sale
	$	(45	)	Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		(45	)	Total reclassifications before tax
		(9	)	Income tax expense
	$	(36	)	Reclassifications, net of tax
Unrealized gains (losses) on cash flow hedges
	$	(59	)	Interest expense
		(12	)	Income tax expense
	$	(47	)	Reclassification, net of tax
	$	11		Total reclassifications for the period, net of tax

15.  Revenue from Contracts with Customers

We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. We derive the majority of our revenue from financial instruments and their related contractual rights and obligations which for the most part are excluded from the scope of this topic.  These sources of revenue that are excluded from the scope of this topic include interest income, net gains on mortgage loans, net gains (losses) on securities, mortgage loan servicing, net and bank owned life insurance and were approximately 84.6% and 82.8% of total revenues at June 30, 2019 and 2018, respectively.

57

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Material sources of revenue that are included in the scope of this topic include service charges on deposit accounts, other deposit related income, interchange income and investment and insurance commissions and are discussed in the following paragraphs.  Generally these sources of revenue are earned at the time the service is delivered or over the course of a monthly period and do not result in any contract asset or liability balance at any given period end.  As a result, there were no contract assets or liabilities recorded as of June 30, 2019 and December 31, 2018.

Service charges on deposit accounts and other deposit related income:Revenues are earned on depository accounts for commercial and retail customers and include fees for transaction-based, account maintenance and overdraft services. Transaction-based fees, which includes services such as ATM use fees, stop payment charges and ACH fees are recognized at the time the transaction is executed as that is the time we fulfill our customer’s request.  Account maintenance fees, which includes monthly maintenance services are earned over the course of a month representing the period over which the performance obligation is satisfied. Our obligation for overdraft services is satisfied at the time of the overdraft.

Interchange income:Interchange income primarilyincludes debit card interchange and network revenues.  Debit card interchange and network revenues are earned on debit card transactions conducted through payment networks such as MasterCard and NYCE. Interchange income is recognized concurrently with the delivery of services on a daily basis. Interchange and network revenues are presented gross of interchange expenses, which are presented separately as a component of non-interest expense.

Investment and insurance commissions:  Investment and insurance commissions include fees and commissions from asset management, custody, recordkeeping, investment advisory and other services provided to our customers. Revenue is recognized on an accrual basis at the time the services are performed and are generally based on either the market value of the assets managed or the services provided.  We have an agent relationship with a third party provider of these services and net certain direct costs charged by the third party provider associated with providing these services to our customers.

Net (gains) losses on other real estate and repossessed assets:  We record a gain or loss from the sale of other real estate when control of the property transfers to the buyer, which generally occurs at the time of an executed deed.  If we were to finance the sale of other real estate to the buyer, we would assess whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction is probable.  Once these criteria are met, the other real estate asset would be derecognized and the gain or loss on sale would be recorded upon the transfer of control of the property to the buyer.  There were no other real estate properties sold during the three and six month periods ending June 30, 2019 and 2018 that were financed by us.

58

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Disaggregation of our revenue sources by attribute follows:

Three months ending June 30, 2019
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	1,882		-		-		-	$	1,882
Account service charges		541		-		-		-		541
ATM fees		-	$	346		-		-		346
Other		-		212		-		-		212
Business
Overdraft fees		377		-		-		-		377
Account service charges		-		-		-		-		-
ATM fees		-		9		-		-		9
Other		-		89		-		-		89
Interchange income		-		-	$	2,604		-		2,604
Asset management revenue		-		-		-	$	277		277
Transaction based revenue		-		-		-		173		173
Total	$	2,800	$	656	$	2,604	$	450	$	6,510
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	656
Investment and insurance commissions										450
Bank owned life insurance										270
Other										730
Total									$	2,106

59

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Three months ending June 30, 2018
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	2,044		-		-		-	$	2,044
Account service charges		588		-		-		-		588
ATM fees		-	$	358		-		-		358
Other		-		230		-		-		230
Business
Overdraft fees		380		-		-		-		380
Account service charges		83		-		-		-		83
ATM fees		-		8		-		-		8
Other		-		146		-		-		146
Interchange income		-		-	$	2,504		-		2,504
Asset management revenue		-		-		-	$	281		281
Transaction based revenue		-		-		-		202		202
Total	$	3,095	$	742	$	2,504	$	483	$	6,824
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	742
Investment and insurance commissions										483
Bank owned life insurance										220
Other										772
Total									$	2,217

60

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Six months ending June 30, 2019
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	3,612		-		-		-	$	3,612
Account service charges		1,057		-		-		-		1,057
ATM fees		-	$	668		-		-		668
Other		-		463		-		-		463
Business
Overdraft fees		762		-		-		-		762
Account service charges		9		-		-		-		9
ATM fees		-		17		-		-		17
Other		-		218		-		-		218
Interchange income		-		-	$	4,959		-		4,959
Asset management revenue		-		-		-	$	531		531
Transaction based revenue		-		-		-		216		216
Total	$	5,440	$	1,366	$	4,959	$	747	$	12,512
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	1,366
Investment and insurance commissions										747
Bank owned life insurance										512
Other										1,745
Total									$	4,370

61

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Six months ending June 30, 2018
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	4,016		-		-		-	$	4,016
Account service charges		1,088		-		-		-		1,088
ATM fees		-	$	703		-		-		703
Other		-		437		-		-		437
Business
Overdraft fees		745		-		-		-		745
Account service charges		151		-		-		-		151
ATM fees		-		16		-		-		16
Other		-		275		-		-		275
Interchange income		-		-	$	4,750		-		4,750
Asset management revenue		-		-		-	$	552		552
Transaction based revenue		-		-		-		369		369
Total	$	6,000	$	1,431	$	4,750	$	921	$	13,102
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	1,431
Investment and insurance commissions										921
Bank owned life insurance										476
Other										1,332
Total									$	4,160

16.  Leases

We have operating leases, primarily relating to certain office facilities, some of which include renewal options and escalation clauses.  Certain leases also include both lease components (fixed payments including rent, taxes and insurance costs) and non-lease components (common area or other maintenance costs) which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases.  Most of our leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion and are included in our ROU assets and lease liabilities if they are reasonably certain of exercise.  As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

The cost components of our operating leases follows:

	Three Months Ended		Six Months Ended
	June 30, 2019
	(In thousands)
Operating lease cost	$	563	$	1,127
Variable lease cost		49		72
Short-term lease cost		5		10
Total	$	617	$	1,209

62

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Variable lease costs consist primarily of taxes, insurance, and common area or other maintenance costs for our leased facilities.

Supplemental balance sheet information related to our operating leases follows:

	June 30, 2019
	(In thousands)
Lease right of use asset (1)	$	6,692
Lease liabilities (2)	$	6,700
Weighted average remaining lease term (years)		5.58
Weighted average discount rate		3.2	%

(1)  Included in Accrued income and other assets in our Condensed Consolidated Statements of Financial Condition.

(2)  Included in Accrued expenses and other liabilities in our Condensed Consolidated Statements of Financial Condition.

Maturity analysis of our lease liabilities at June 30, 2019 based on required contractual payments follows:

	(In thousands)
Six months ending December 31, 2019	$	1,098
2020		1,711
2021		1,248
2022		963
2023		925
2024 and thereafter		1,428
Total lease payments		7,373
Less imputed interest		(673	)
Total	$	6,700

63

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

17.  Recent Acquisition

Effective April 1, 2018, we completed the acquisition of all of the issued and outstanding shares of common stock of TCSB through a merger of TCSB into Independent Bank Corporation (“IBCP”), with IBCP as the surviving corporation (the ‘‘Merger’’).  On that same date we also consolidated Traverse City State Bank, TCSB’s wholly-owned subsidiary bank, into Independent Bank (with Independent Bank as the surviving institution).  Under the terms of the merger agreement each holder of TCSB common stock received 1.1166 shares of IBCP common stock plus cash in lieu of fractional shares totaling $0.005 million.  TCSB option holders had their options converted into IBCP stock options.  As a result we issued 2.71 million shares of common stock and 0.19 million stock options with a fair value of approximately $64.5 million to the shareholders and option holders of TCSB.  The fair value of common stock and stock options issued as the consideration paid for TCSB was determined using the closing price of our common stock on the acquisition date.  This acquisition was accounted for under the acquisition method of accounting.  Accordingly, we recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values.  TCSB results of operations are included in our results beginning April 1, 2018.

The following table reflects our final valuation of the assets acquired and liabilities assumed:

	(In thousands)
Cash and cash equivalents	$	23,521
Interest bearing deposits - time		4,054
Securities available for sale		6,066
Federal Home Loan Bank stock		778
Loans, net		295,799
Property and equipement, net		1,067
Capitalized mortgage loan servicing rights		3,047
Accrued income and other assets		3,362
Other intangibles (1)		5,798
Total assets acquired		343,492
Deposits		287,710
Other borrowings		14,345
Subordinated debentures		3,768
Accrued expenses and other liabilities		1,429
Total liabilities assumed		307,252
Net assets acquired		36,240
Goodwill		28,300
Purchase price (fair value of consideration)	$	64,540

(1) Relates to core deposit intangibles (see note #7).

64

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Management views the disclosed fair values presented above to be final as the one-year measurement period for finalizing acquisition-date fair values has expired.  During this measurement period we had one adjustment to our acquisition date fair values.  During the third quarter of 2018, goodwill was reduced by $0.7 million (to $28.3 million) related to the collection of a TCSB acquired loan that had been charged off in full prior to the Merger.  Because of the status of the collection activities related to this loan at the time of the Merger, we determined that this transaction was a measurement period adjustment and reduced goodwill accordingly.

Goodwill related to this acquisition will not be deductible for tax purposes and consists largely of synergies and cost savings resulting from the combining of the operations of TCSB into ours as well as expansion into a new market.

The estimated fair value of the core deposit intangible was $5.8 million and is being amortized over an estimated useful life of 10 years.

The fair value of net assets acquired includes fair value adjustments to certain receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows.  However, we believe that all contractual cash flows related to these financial instruments will be collected.  As such, these receivables were not considered impaired at the acquisition date and were not subject to the guidance relating to purchased credit impaired loans which have shown evidence of credit deterioration since origination.  Receivables acquired that are not subject to these requirements included non-impaired customer receivables with a fair value and gross contractual amounts receivable of $292.9 million and $298.6 million on the date of acquisition.

65

ITEM 2.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

Introduction. The following section presents additional information to assess the financial condition and results of operations of Independent Bank Corporation (“IBCP”), its wholly-owned bank, Independent Bank (the “Bank”), and their subsidiaries. This section should be read in conjunction with the Condensed Consolidated Financial Statements. We also encourage you to read our 2018 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”). That report includes a list of risk factors that you should consider in connection with any decision to buy or sell our securities.

Overview. We provide banking services to customers located primarily in Michigan’s Lower Peninsula.  We also have two loan production offices in Ohio (Columbus and Fairlawn).  As a result, our success depends to a great extent upon the economic conditions in Michigan’s Lower Peninsula.

Recent Developments. On December 4, 2017, we entered into an Agreement and Plan of Merger with TCSB Bancorp, Inc. (“TCSB”) (the “Merger Agreement”) providing for a business combination of IBCP and TCSB.  On April 1, 2018, TCSB was merged with and into IBCP, with IBCP as the surviving corporation (the “Merger”).  In connection with the Merger, on April 1, 2018, IBCP consolidated Traverse City State Bank, TCSB’s wholly-owned subsidiary bank, with and into Independent Bank (with Independent Bank as the surviving institution). See note #17.

It is against this backdrop that we discuss our results of operations and financial condition in the second quarter and first six months of 2019 as compared to 2018.

Results of Operations

Summary.  We recorded net income of $10.7 million and $8.8 million during the three months ended June 30, 2019 and 2018, respectively.  The increase in 2019 second quarter results as compared to 2018 primarily reflects an increase in net interest income and a decrease in non-interest expense that were partially offset by a decline in non-interest income and an increase in income tax expense.

We recorded net income of $20.1 million and $18.0 million during the six months ended June 30, 2019 and 2018, respectively.  The increase in 2019 year-to-date results as compared to 2018 is primarily due to an increase in net interest income that was partially offset by a decline in non-interest income as well as increases in the provision for loan losses, non-interest expense and income tax expense.

66

Key performance ratios

	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
Net income (annualized) to
Average assets		1.27	%		1.12	%		1.20	%		1.22	%
Average common shareholders’ equity		12.72			10.57			11.93			12.09
Net income per common share
Basic	$	0.47		$	0.37		$	0.86		$	0.79
Diluted		0.46			0.36			0.85			0.78

Net interest income.Net interest income is the most important source of our earnings and thus is critical in evaluating our results of operations. Changes in our net interest income are primarily influenced by our level of interest-earning assets and the income or yield that we earn on those assets and the manner and cost of funding our interest-earning assets. Certain macro-economic factors can also influence our net interest income such as the level and direction of interest rates, the difference between short-term and long-term interest rates (the steepness of the yield curve) and the general strength of the economies in which we are doing business. Finally, risk management plays an important role in our level of net interest income. The ineffective management of credit risk and interest-rate risk in particular can adversely impact our net interest income.

Our net interest income totaled $30.8 million during the second quarter of 2019, an increase of $1.8 million, or 6.1% from the year-ago period.  This increase primarily reflects a $227.3 million increase in average interest-earning assets that was partially offset by a six basis point decrease in our tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”).

For the first six months of 2019, net interest income totaled $61.0 million, an increase of $8.1 million, or 15.3% from 2018.  This increase primarily reflects a $382.9 million increase in average interest-earning assets as well as a five basis point increase in our net interest margin.

Interest and fees on loans include $0.4 million and $0.8 million for the second quarter and first six months of 2019, respectively, and include $0.6 million for both the second quarter and first six months of 2018, of accretion of the discount recorded on loans acquired in the Merger.

The increase in average interest-earning assets primarily reflects loan growth utilizing funds from increases in deposits and borrowed funds as well as the impact of the Merger (for the year-to-date comparative periods).  The quarterly comparative decrease in the net interest margin reflects the impact of the flattening yield curve during 2019 and rising funding costs. The year-to-date comparative increase in the net interest margin reflects a change in the mix of average-interest earning assets (higher percentage of loans), increases in short-term market interest rates during 2018 and the impact of the Merger.

Our net interest income is also adversely impacted by our level of non-accrual loans. In the second quarter and first six months of 2019, non-accrual loans averaged $8.4 million and $8.8 million, respectively. In the second quarter and first six months of 2018, non-accrual loans averaged $7.5 million in each period.  In addition, in the second quarter and first six months of 2019, we had net recoveries of $0.20 million and $0.43 million, respectively, of unpaid interest on loans placed on or taken off non-accrual during each period or on loans previously charged-off compared to net recoveries of $0.18 million and $0.35 million, respectively, during the same periods in 2018.

67

Average Balances and Tax Equivalent Rates

	Three Months Ended June 30,
	2019							2018
	Average Balance		Interest		Rate (2)			Average Balance		Interest		Rate (2)
	(Dollars in thousands)
Assets
Taxable loans	$	2,692,168	$	33,762		5.02	%	$	2,442,159	$	29,606		4.86	%
Tax-exempt loans (1)		7,480		94		5.04			6,897		85		4.94
Taxable securities		392,075		3,034		3.10			401,102		2,720		2.71
Tax-exempt securities (1)		49,448		406		3.28			69,325		559		3.23
Interest bearing cash		31,734		115		1.45			28,187		66		0.94
Other investments		18,359		264		5.77			16,312		199		4.89
Interest Earning Assets		3,191,264		37,675		4.73			2,963,982		33,235		4.49
Cash and due from banks		33,252							31,564
Other assets, net		163,882							172,650
Total Assets	$	3,388,398						$	3,168,196
Liabilities
Savings and interest- bearing checking	$	1,413,073		2,647		0.75		$	1,241,700		1,011		0.33
Time deposits		664,909		3,374		2.04			603,833		2,198		1.46
Other borrowings		77,678		796		4.11			100,754		914		3.64
Interest Bearing Liabilities		2,155,660		6,817		1.27			1,946,287		4,123		0.85
Non-interest bearing deposits		851,903							855,829
Other liabilities		42,581							31,454
Shareholders’ equity		338,254							334,626
Total liabilities and shareholders’ equity	$	3,388,398						$	3,168,196
Net Interest Income			$	30,858						$	29,112
Net Interest Income as a Percent of Average Interest Earning Assets						3.87	%						3.93	%

(1) Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.

(2) Annualized

68

Average Balances and Tax Equivalent Rates

	Six Months Ended June 30,
	2019							2018
	Average Balance		Interest		Rate (2)			Average Balance		Interest		Rate (2)
	(Dollars in thousands)
Assets
Taxable loans	$	2,652,893	$	66,362		5.03	%	$	2,252,492	$	52,945		4.72	%
Tax-exempt loans (1)		8,081		197		4.92			4,526		104		4.63
Taxable securities		390,966		6,040		3.09			411,619		5,355		2.60
Tax-exempt securities (1)		53,148		875		3.29			73,810		1,162		3.15
Interest bearing cash		48,381		426		1.78			30,531		148		0.98
Other investments		18,359		528		5.80			15,930		447		5.66
Interest Earning Assets		3,171,828		74,428		4.72			2,788,908		60,161		4.33
Cash and due from banks		33,744							31,848
Other assets, net		167,270							152,912
Total Assets	$	3,372,842						$	2,973,668
Liabilities
Savings and interest- bearing checking	$	1,387,208		4,969		0.72		$	1,168,747		1,562		0.27
Time deposits		676,606		6,733		2.01			584,167		3,934		1.36
Other borrowings		71,901		1,508		4.23			82,920		1,488		3.62
Interest Bearing Liabilities		2,135,715		13,210		1.25			1,835,834		6,984		0.77
Non-interest bearing deposits		855,732							807,504
Other liabilities		41,481							30,531
Shareholders’ equity		339,914							299,799
Total liabilities and shareholders’ equity	$	3,372,842						$	2,973,668
Net Interest Income			$	61,218						$	53,177
Net Interest Income as a Percent of Average Interest Earning Assets						3.88	%						3.83	%

(1) Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.

(2) Annualized

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Reconciliation of Non-GAAP Financial Measures

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Net Interest Margin, Fully Taxable Equivalent (“FTE”)
Net interest income	$	30,756		$	28,980		$	60,999		$	52,916
Add:  taxable equivalent adjustment		102			132			219			261
Net interest income - taxable equivalent	$	30,858		$	29,112		$	61,218		$	53,177
Net interest margin (GAAP) (1)		3.86	%		3.92	%		3.86	%		3.81	%
Net interest margin (FTE) (1)		3.87	%		3.93	%		3.88	%		3.83	%

(1) Annualized.

Provision for loan losses.  The provision for loan losses was an expense of $0.7 million during both the three months ended June 30, 2019 and 2018. During the six-month periods ended June 30, 2019 and 2018, the provision was an expense of $1.3 million and $1.0 million, respectively. The provision reflects our assessment of the allowance for loan losses taking into consideration factors such as loan growth, loan mix, levels of non-performing and classified loans and loan net charge-offs.  While we use relevant information to recognize losses on loans, additional provisions for related losses may be necessary based on changes in economic conditions, customer circumstances and other credit risk factors.  See “Portfolio Loans and asset quality” for a discussion of the various components of the allowance for loan losses and their impact on the provision for loan losses in the second quarter and first half of 2019.

Non-interest income.  Non-interest income is a significant element in assessing our results of operations. Non-interest income totaled $9.9 million during the second quarter of 2019 compared to $12.3 million in the second quarter of 2018.  For the first six months of 2019, non-interest income totaled $19.9 million compared to $24.0 million for the first six months of 2018.

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The components of non-interest income are as follows:

Non-Interest Income

	Three months ended June 30,					Six months ended June 30,
	2019			2018		2019			2018
				(In thousands)
Service charges on deposit accounts	$	2,800		$	3,095	$	5,440		$	6,000
Interchange income		2,604			2,504		4,959			4,750
Net gains (losses) on assets:
Mortgage loans		4,302			3,255		7,913			5,826
Securities		--			9		304			(164	)
Mortgage loan servicing, net		(1,907	)		1,235		(3,122	)		3,456
Investment and insurance commissions		450			483		747			921
Bank owned life insurance		270			220		512			476
Other		1,386			1,514		3,111			2,763
Total non-interest income	$	9,905		$	12,315	$	19,864		$	24,028

Service charges on deposit accounts decreased on both a comparative quarterly and year-to-date basis in 2019 as compared to 2018.  These decreases were principally due to lower service charges on commercial accounts and a decrease in non-sufficient funds occurrences.

Interchange income increased on both a comparative quarterly and year-to-date basis in 2019 as compared to 2018 due primarily to an increase in debit card transaction volume.

Net gains on mortgage loans increased from 2018 on both a quarterly and a year to date basis. Mortgage loan activity is summarized as follows:

Mortgage Loan Activity

	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Mortgage loans originated	$	241,402		$	226,264		$	379,160		$	385,231
Mortgage loans sold		131,636			115,299			286,161			221,642
Net gains on mortgage loans		4,302			3,255			7,913			5,826
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”)		3.27	%		2.82	%		2.77	%		2.63	%
Fair value adjustments included in the Loan Sales Margin		0.74			0.57			0.66			0.35

The quarterly comparative increase in mortgage loans originated is due primarily to lower interest rates in the second quarter of 2019 which have begun to increase refinance volumes.  On a year-to-date comparative basis, mortgage loans originated were relatively unchanged. Mortgage loans sold increased due to a higher mix of salable loans in our origination volumes and some portfolio mortgage loan sales that were completed during the first quarter of 2019. Net gains on mortgage loans also increased in 2019 as compared to 2018 due to fair value adjustments as discussed below.

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The volume of loans sold is dependent upon our ability to originate mortgage loans as well as the demand for fixed-rate obligations and other loans that we choose to not put into portfolio because of our established interest-rate risk parameters. (See “Portfolio Loans and asset quality.”) Net gains on mortgage loans are also dependent upon economic and competitive factors as well as our ability to effectively manage exposure to changes in interest rates and thus can often be a volatile part of our overall revenues.

Our Loan Sales Margin is impacted by several factors including competition and the manner in which the loan is sold. Net gains on mortgage loans are also impacted by recording fair value accounting adjustments.  Excluding these fair value accounting adjustments, the Loan Sales Margin would have been 2.53% and 2.25% in the second quarters of 2019 and 2018, respectively and 2.11% and 2.28% for the comparative 2019 and 2018 year-to-date periods, respectively.  The increase in the Loan Sales Margin (excluding fair value adjustments) in the second quarter of 2019 was generally due to a widening of primary-to-secondary market pricing spreads as market interest rates fell during this period.  The lower Loan Sales Margin (excluding fair value adjustments) for the first six months of 2019, primarily reflects the impact of some portfolio mortgage loan sales in the first quarter of 2019 that were executed at lower pricing spreads. The changes in the fair value accounting adjustments are primarily due to changes in the amount of commitments to originate mortgage loans for sale.

Net gains (losses) on securities were relatively nominal for the comparative quarterly periods.  We recorded a net gain of $0.3 million and a net loss of $0.2 million on securities for the first six months of 2019 and 2018, respectively.  We recorded no net impairment losses in either 2019 or 2018 for other than temporary impairment of securities available for sale.  See “Securities” below and note #3 to the Condensed Consolidated Financial Statements.

Mortgage loan servicing, net, generated a loss of $1.9 million and income of $1.2 million in the second quarters of 2019 and 2018, respectively. For the first six months of 2019, mortgage loan servicing, net, generated a loss of $3.1 million as compared to income of $3.5 million for the comparable period in 2018. The significant variances in mortgage loan servicing, net are primarily due to changes in the fair value of capitalized mortgage loan servicing rights associated with changes in mortgage loan interest rates (a decline in 2019 as compared to an increase in 2018) and expected future prepayment levels. Mortgage loan servicing, net activity is summarized in the following table:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Mortgage loan servicing, net:	(In thousands)
Revenue, net	$	1,515		$	1,372		$	2,991		$	2,564
Fair value change due to price		(2,670	)		518			(4,873	)		1,976
Fair value change due to pay-downs		(752	)		(655	)		(1,240	)		(1,084	)
Total	$	(1,907	)	$	1,235		$	(3,122	)	$	3,456

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Activity related to capitalized mortgage loan servicing rights is as follows:

Capitalized Mortgage Loan Servicing Rights

	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
	(In thousands)
Balance at beginning of period	$	19,909		$	17,783		$	21,400		$	15,699
Servicing rights acquired		-		$	3,047			-		$	3,047
Originated servicing rights capitalized		1,407			1,155			2,607			2,210
Change in fair value		(3,422	)		(137	)		(6,113	)		892
Balance at end of period	$	17,894		$	21,848		$	17,894		$	21,848

At June 30, 2019 we were servicing approximately $2.41 billion in mortgage loans for others on which servicing rights have been capitalized. This servicing portfolio had a weighted average coupon rate of 4.27% and a weighted average service fee of approximately 25.8 basis points. Capitalized mortgage loan servicing rights at June 30, 2019 totaled $17.9 million, representing approximately 74.1 basis points on the related amount of mortgage loans serviced for others.

Investment and insurance commissions represent revenues generated on the sale or management of investments and insurance for our customers.  These revenues were relatively comparable on a quarterly basis, but declined on a year-to-date basis in 2019 as compared to 2018.  The year-to-date decline in 2019 was primarily due to slower sales in the first quarter of 2019, principally reflecting market volatility and uncertainty.

Income from bank owned life insurance (“BOLI”) increased on both a comparative quarterly and year-to-date basis in 2019 compared to 2018 reflecting a higher crediting rate on our cash surrender value. Our BOLI separate account is primarily invested in agency mortgage-backed securities. The crediting rate (on which the earnings are based) reflects the performance of the separate account.  The total cash surrender value of our BOLI was $55.6 million and $55.1 million at June 30, 2019 and December 31, 2018, respectively.

Other non-interest income decreased slightly on a comparative quarterly basis, but increased on a year-to-date basis in 2019 compared to 2018.  The year-to-date increase in 2019 compared to 2018 is primarily due to $0.38 million of recoveries recorded in the first quarter of 2019 on TCSB loans that had been charged-off prior to the Merger.

Non-interest expense.  Non-interest expense is an important component of our results of operations. We strive to efficiently manage our cost structure.

Non-interest expense decreased by $3.2 million to $26.6 million and increased by $0.7 million to $54.6 million during the three- and six-month periods ended June 30, 2019, respectively, compared to the same periods in 2018.  On a year-to-date basis, several of our components of non-interest expense increased in 2019 due to the Merger.

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The components of non-interest expense are as follows:

Non-Interest Expense

	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
	(In thousands)
Compensation	$	10,185		$	9,574		$	20,666		$	18,504
Performance-based compensation		2,296			3,150			4,516			5,933
Payroll taxes and employee benefits		3,450			3,145			7,100			5,900
Compensation and employee benefits		15,931			15,869			32,282			30,337
Occupancy, net		2,131			2,170			4,636			4,434
Data processing		2,171			2,251			4,315			4,129
Furniture, fixtures and equipment		1,006			1,019			2,035			1,986
Communications		717			704			1,486			1,384
Interchange expense		753			661			1,441			1,259
Advertising		627			543			1,299			984
Loan and collection		628			692			1,262			1,369
Legal and professional		371			456			740			834
FDIC deposit insurance		342			250			710			480
Amortization of intangible assets		273			295			545			381
Supplies		153			178			311			343
Credit card and bank service fees		97			106			200			202
Costs (recoveries) related to unfunded lending commitments		27			37			187			(77	)
Provision for loss reimbursement on sold loans		35			20			146			31
Net gains on other real estate and repossessed assets		(198	)		(4	)		(79	)		(294	)
Merger related expenses		--			3,082			--			3,256
Other		1,528			1,432			3,066			2,858
Total non-interest expense	$	26,592		$	29,761		$	54,582		$	53,896

Compensation and employee benefits expenses, in total, increased $0.1 million on a quarterly comparative basis and increased $1.9 million for the first six months of 2019 compared to the same periods in 2018.

Compensation expense increased by $0.6 million and $2.2 million in the second quarter and first six months of 2019, respectively, compared to the same periods in 2018.  The quarterly comparative increase in 2019 is primarily due to salary increases that were predominantly effective on January 1, 2019.  The higher year-to-date comparative increase in 2019 also reflects the impact of the Merger.

Performance-based compensation decreased by $0.9 million and $1.4 million in the second quarter and first six months of 2019, respectively, versus the same periods in 2018, due primarily to relative comparative changes in the accrual for anticipated incentive compensation based on our estimated full-year performance as compared to goals.

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Payroll taxes and employee benefits increased by $0.3 million and $1.2 million in the second quarter and first six months of 2019, respectively, compared to the same periods in 2018, due primarily to increases in health care costs (due to increased claims in 2019) and workers’ compensation insurance costs and for the year-to-date comparative periods, the impact of the Merger.

Occupancy, net, data processing, furniture, fixtures and equipment, communications, supplies, and credit card and bank service fees expenses were all relatively unchanged on a comparative quarterly basis in 2019 as compared to 2018.

Interchange expense primarily represents our third-party cost to process debit card transactions.  This cost increased in 2019 on both a comparative quarterly and year-to-date basis as compared to 2018 due principally to an increase in transaction volume.

Total advertising expenses increased in 2019 on both a comparative quarterly and year-to-date basis as compared to 2018 due primarily to an increase in outdoor (billboard) advertising.

Loan and collection expenses reflect costs related to new lending activity as well as the management and collection of non-performing loans and other problem credits.  These costs did not vary significantly in 2019 as compared to 2018.

Legal and professional fees declined in 2019 on both a comparative quarterly and year-to-date basis as compared to 2018 due primarily to a decrease in consulting fees related to certain deposit account acquisition and branch evaluation projects.

FDIC deposit insurance expense increased in 2019 on both a comparative quarterly and year-to-date basis as compared to 2018 due to a combination of an increase in our assessment rate and growth in our total assets.

The amortization of intangible assets relates to the Merger and prior branch acquisitions and the amortization of the deposit customer relationship value, including core deposit value, which was acquired in connection with those acquisitions. We had remaining unamortized intangible assets of $5.9 million and $6.4 million at June 30, 2019 and December 31, 2018, respectively. See note #7 to the Condensed Consolidated Financial Statements for a schedule of future amortization of intangible assets.

The changes in cost (recoveries) related to unfunded lending commitments are primarily impacted by changes in the amounts of such commitments to originate portfolio loans as well as (for commercial loan commitments) the grade (pursuant to our loan rating system) of such commitments.

The provision for loss reimbursement on sold loans was an expense of $0.04 million and $0.15 million in the second quarter and first six months of 2019, respectively, compared to an expense of $0.02 million and $0.03 million in the second quarter and first six months of 2018, respectively. This provision represents our estimate of incurred losses related to mortgage loans that we have sold to investors (primarily Fannie Mae, Freddie Mac, Ginnie Mae and the Federal Home Loan Bank of Indianapolis).  The small expense provisions in 2019 and 2018 are primarily due to growth in the balance of loans serviced for investors.  Since we sell mortgage loans without recourse, loss reimbursements only occur in those instances where we have breached a representation or warranty or other contractual requirement related to the loan sale.  The reserve for loss reimbursements on sold mortgage loans totaled $0.83 million and $0.78 million at June 30, 2019 and December 31, 2018, respectively. This reserve is included in accrued expenses and other liabilities in our Condensed Consolidated Statements of Financial Condition.

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Net gains on other real estate and repossessed assets primarily represent the gain or loss on the sale or additional write downs on these assets subsequent to the transfer of the asset from our loan portfolio. This transfer occurs at the time we acquire the collateral that secured the loan. At the time of acquisition, the other real estate or repossessed asset is valued at fair value, less estimated costs to sell, which becomes the new basis for the asset. Any write-downs at the time of acquisition are charged to the allowance for loan losses.

Merger related expenses totaled $3.1 million and $3.3 million for the second quarter and first six months of 2018, respectively.  These expenses included our investment banking fees, certain accounting and legal costs, various contract termination fees, data processing conversion costs, payments made on officer change-in-control contracts, and employee severance costs.

Other non-interest expenses increased in 2019 on both a comparative quarterly and year-to-date basis as compared to 2018 due primarily to an increase in deposit account/debit card fraud costs.

Income tax expense.  We recorded an income tax expense of $2.7 million and $4.9 million in the second quarter and the first six months of 2019, respectively. This compares to an income tax expense of $2.1 million and $4.1 million in the second quarter and the first six months of 2018, respectively.

Our actual income tax expense is different than the amount computed by applying our statutory income tax rate to our income before income tax primarily due to tax-exempt interest income, tax-exempt income from the increase in the cash surrender value on life insurance, and differences in the value of stock awards that vest and stock options that are exercised as compared to the initial fair values that were expensed.

We assess whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard.  The ultimate realization of this asset is primarily based on generating future income.  We concluded at June 30, 2019 and 2018 and at December 31, 2018, that the realization of substantially all of our deferred tax assets continues to be more likely than not.

Financial Condition

Summary.  Our total assets increased by $85.0 million during the first six months of 2019.  Loans, excluding loans held for sale (“Portfolio Loans”), totaled $2.71 billion at June 30, 2019, an increase of $124.0 million, or 4.8%, from December 31, 2018.  (See “Portfolio Loans and asset quality.”)

Deposits totaled $2.98 billion at June 30, 2019, compared to $2.91 billion at December 31, 2018.  The $65.5 million increase in total deposits during the period is due to growth in reciprocal deposits.

Securities.  We maintain diversified securities portfolios, which include obligations of U.S. government-sponsored agencies, securities issued by states and political subdivisions, residential and commercial mortgage-backed securities, asset-backed securities, corporate securities, trust preferred securities and foreign government securities (that are denominated in U.S. dollars). We regularly evaluate asset/liability management needs and attempt to maintain a portfolio structure that provides sufficient liquidity and cash flow. Except as discussed below, we believe that the unrealized losses on securities available for sale are temporary in nature and are expected to be recovered within a reasonable time period. We believe that we have the ability to hold securities with unrealized losses to maturity or until such time as the unrealized losses reverse. (See “Asset/liability management.”)

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Securities

					Unrealized
	Amortized Cost		Gains			Losses		Fair Value
			(In thousands)
Securities available for sale
June 30, 2019	$	426,458	$	4,922		$	1,075		$	430,305
December 31, 2018		433,224		1,520			6,818			427,926

Securities available for sale increased $2.4 million during the first six months of 2019.  Our portfolio of securities available for sale is reviewed quarterly for impairment in value. In performing this review, management considers (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) the impact of changes in market interest rates on the market value of the security and (4) an assessment of whether we intend to sell, or it is more likely than not that we will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. For securities that do not meet these recovery criteria, the amount of impairment recognized in earnings is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income (loss).  We recorded no impairment losses related to other than temporary impairment on securities available for sale in either of the first six months of 2019 or 2018.

Sales of securities were as follows (See “Non-interest income.”):

	Six months ended June 30,
	2019			2018
	(In thousands)
Proceeds	$	42,236		$	31,445
Gross gains	$	169		$	81
Gross losses		(32	)		(126	)
Net impairment charges		--			-
Fair value adjustments		167			(119	)
Net gains (losses)	$	304		$	(164	)

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Portfolio Loans and asset quality.  In addition to the communities served by our Bank branch and loan production office network, our principal lending markets also include nearby communities and metropolitan areas. Subject to established underwriting criteria, we also may participate in commercial lending transactions with certain non-affiliated banks and make whole loan purchases from other financial institutions.

The senior management and board of directors of our Bank retain authority and responsibility for credit decisions and we have adopted uniform underwriting standards. Our loan committee structure and the loan review process attempt to provide requisite controls and promote compliance with such established underwriting standards. However, there can be no assurance that our lending procedures and the use of uniform underwriting standards will prevent us from incurring significant credit losses in our lending activities.

We generally retain loans that may be profitably funded within established risk parameters. (See “Asset/liability management.”) As a result, we may hold adjustable-rate conventional and fixed rate jumbo mortgage loans as Portfolio Loans, while 15- and 30-year fixed-rate non-jumbo mortgage loans are generally sold to mitigate exposure to changes in interest rates. (See “Non-interest income.”) Due primarily to the expansion of our mortgage-banking activities and a change in mix in our mortgage loan originations, we are now originating and putting into Portfolio Loans more fixed rate mortgage loans than as compared to past periods.  These fixed rate mortgage loans generally have terms from 15 to 30 years, do not have prepayment penalties and expose us to more interest rate risk.  To date, our interest rate risk profile has not changed significantly.  However, we are carefully monitoring this change in the composition of our Portfolio Loans and the impact of potential future changes in interest rates on our changes in market value of portfolio equity and changes in net interest income. (See “Asset/liability management.”).  As a result, we have added and may continue to add some longer-term borrowings, may utilize derivatives (interest rate swaps and interest rate caps) to manage interest rate risk and may begin to attempt to sell fixed rate jumbo mortgage loans in the future.

A summary of our Portfolio Loans follows:

	June 30, 2019		December 31, 2018
	(In thousands)
Real estate(1)
Residential first mortgages	$	844,151	$	811,719
Residential home equity and other junior mortgages		175,330		177,574
Construction and land development		202,997		180,286
Other(2)		713,008		707,347
Consumer		431,227		379,607
Commercial		333,522		319,058
Agricultural		6,291		6,929
Total loans	$	2,706,526	$	2,582,520

(1) Includes both residential and non-residential commercial loans secured by real estate.

(2) Includes loans secured by multi-family residential and non-farm, non-residential property.

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Non-performing assets⁽¹⁾

	June 30, 2019			December 31, 2018
	(Dollars in thousands)
Non-accrual loans	$	7,798		$	9,029
Loans 90 days or more past due and still accruing interest		--			5
Less - government guaranteed loans		(436	)		(460	)
Total non-performing loans		7,362			8,574
Other real estate and repossessed assets		1,990			1,299
Total non-performing assets	$	9,352		$	9,873
As a percent of Portfolio Loans
Non-performing loans		0.27	%		0.33	%
Allowance for loan losses		0.96			0.96
Non-performing assets to total assets		0.27			0.29
Allowance for loan losses as a percent of non-performing loans		351.85			290.27

⁽¹⁾ Excludes loans classified as “troubled debt restructured” that are not past due.

Troubled debt restructurings (“TDR”)

	June 30, 2019
	Commercial		Retail (1)			Total
	(In thousands)
Performing TDR’s	$	7,166	$	42,136		$	49,302
Non-performing TDR’s (2)		54		2,783	(3)		2,837
Total	$	7,220	$	44,919		$	52,139

	December 31, 2018
	Commercial		Retail (1)			Total
	(In thousands)
Performing TDR’s	$	6,460	$	46,627		$	53,087
Non-performing TDR’s (2)		74		2,884	(3)		2,958
Total	$	6,534	$	49,511		$	56,045

(1) Retail loans include mortgage and installment loan segments.

(2) Included in non-performing assets table above.

(3) Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.

Non-performing loans decreased by $1.2 million during the first six months of 2019 due principally to a decline in non-performing commercial loans. This decline primarily reflects reduced levels of new loan defaults as well as loan charge-offs, pay-offs, negotiated transactions, and the migration of loans into other real estate. In general, stable economic conditions in our market areas, as well as our collection and resolution efforts, have resulted in a downward trend in non-performing loans.  However, we are still experiencing some loan defaults, particularly related to commercial loans secured by income-producing property and mortgage loans secured by resort/vacation property.

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Non-performing loans exclude performing loans that are classified as troubled debt restructurings (“TDRs”). Performing TDRs totaled $49.3 million, or 1.8% of total Portfolio Loans, and $53.1 million, or 2.1% of total Portfolio Loans, at June 30, 2019 and December 31, 2018, respectively. The decrease in the amount of performing TDRs in the first six months of 2019 primarily reflects pay downs and payoffs.

Other real estate and repossessed assets totaled $2.0 million and $1.3 million at June 30, 2019 and December 31, 2018, respectively. This increase is primarily due to the addition of a $0.6 million commercial office building located in Grand Rapids, Michigan during the second quarter of 2019.

We will place a loan that is 90 days or more past due on non-accrual, unless we believe the loan is both well secured and in the process of collection. Accordingly, we have determined that the collection of the accrued and unpaid interest on any loans that are 90 days or more past due and still accruing interest is probable.

The ratio of loan net charge-offs to average Portfolio Loans was 0.02% and 0.00% (on an annualized basis) in the first six months of 2019 and 2018, respectively.  This year-over-year change was primarily due to a decline in recoveries on previously charged-off commercial loans that was partially offset by a decline in mortgage loan charge-offs.

Allowance for loan losses

	Six months ended June 30,
	2019					2018
	Loans			Unfunded Commitments		Loans			Unfunded Commitments
	(Dollars in thousands)
Balance at beginning of period	$	24,888		$	1,296	$	22,587		$	1,125
Additions (deductions)
Provision for loan losses		1,316			-		965			-
Recoveries credited to allowance		1,457			-		1,860			-
Loans charged against the allowance		(1,758	)		-		(1,908	)		-
Additions included in non-interest expense		-			187		-			(77	)
Balance at end of period	$	25,903		$	1,483	$	23,504		$	1,048
Net loans charged against the allowance to average Portfolio Loans		0.02	%				0.00	%

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Allocation of the Allowance for Loan Losses

	June 30, 2019		December 31, 2018
	(In thousands)
Specific allocations	$	6,027	$	6,310
Other adversely rated commercial loans		2,908		1,861
Historical loss allocations		8,541		7,792
Additional allocations based on subjective factors		8,427		8,925
Total	$	25,903	$	24,888

Some loans will not be repaid in full. Therefore, an allowance for loan losses (“AFLL”) is maintained at a level which represents our best estimate of losses incurred. In determining the AFLL and the related provision for loan losses, we consider four principal elements: (i) specific allocations based upon probable losses identified during the review of the loan portfolio, (ii) allocations established for other adversely rated commercial loans, (iii) allocations based principally on historical loan loss experience, and (iv) additional allowances based on subjective factors, including local and general economic business factors and trends, portfolio concentrations and changes in the size and/or the general terms of the loan portfolios.

The first AFLL element (specific allocations) reflects our estimate of probable incurred losses based upon our systematic review of specific loans. These estimates are based upon a number of factors, such as payment history, financial condition of the borrower, discounted collateral exposure and discounted cash flow analysis. Impaired commercial, mortgage and installment loans are allocated AFLL amounts using this first element. The second AFLL element (other adversely rated commercial loans) reflects the application of our commercial loan rating system. This rating system is similar to those employed by state and federal banking regulators. Commercial loans that are rated below a certain predetermined classification are assigned a loss allocation factor for each loan classification category that is based upon a historical analysis of both the probability of default and the expected loss rate (“loss given default”). The lower the rating assigned to a loan or category, the greater the allocation percentage that is applied. The third AFLL element (historical loss allocations) is determined by assigning allocations to higher rated (“non-watch credit”) commercial loans using a probability of default and loss given default similar to the second AFLL element and to homogenous mortgage and installment loan groups based upon borrower credit score and portfolio segment.  For homogenous mortgage and installment loans a probability of default for each homogenous pool is calculated by way of credit score migration.  Historical loss data for each homogenous pool coupled with the associated probability of default is utilized to calculate an expected loss allocation rate.  The fourth AFLL element (additional allocations based on subjective factors) is based on factors that cannot be associated with a specific credit or loan category and reflects our attempt to ensure that the overall AFLL appropriately reflects a margin for the imprecision necessarily inherent in the estimates of expected credit losses. We consider a number of subjective factors when determining this fourth element, including local and general economic business factors and trends, portfolio concentrations and changes in the size, mix and the general terms of the overall loan portfolio.

Increases in the AFLL are recorded by a provision for loan losses charged to expense. Although we periodically allocate portions of the AFLL to specific loans and loan portfolios, the entire AFLL is available for incurred losses. We generally charge-off commercial, homogenous residential mortgage and installment loans when they are deemed uncollectible or reach a predetermined number of days past due based on product, industry practice and other factors. Collection efforts may continue and recoveries may occur after a loan is charged against the AFLL.

While we use relevant information to recognize losses on loans, additional provisions for related losses may be necessary based on changes in economic conditions, customer circumstances and other credit risk factors.

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The AFLL increased $1.0 million to $25.9 million at June 30, 2019 from $24.9 million at December 31, 2018 and was equal to 0.96% of total Portfolio Loans at both June 30, 2019 and December 31, 2018, respectively.

During the first quarter of 2019, we deployed a third-party software solution (we previously used spreadsheet software) to assist in the determination of our AFLL.  This new third-party software will also assist us in moving to the expected loss framework that is required to be implemented on January 1, 2020.  Although the use of this new third-party software did not have any material impact on our overall AFLL, it did result in some classification shifts from the AFLL related to subjective factors into the AFLL related to historical losses as the new software model allowed us to capture longer historical look-back periods (previously this was being captured in the subjective portion of the AFLL).

Two of the four components of the AFLL outlined above increased during the first six months of 2019. The AFLL related to specific loans decreased $0.3 million during the first six months of 2019 due primarily to a $3.0 million decline in the amount of such loans.  The AFLL related to other adversely rated commercial loans increased $1.0 million during the first six months of 2019, primarily due to an increase in the balance of such loans included in this component to $59.0 million at June 30, 2019 from $44.7 million at December 31, 2018.  The increase in other adversely rated commercial loans was primarily in early watch credit categories and these loans are largely performing.  We do not believe that we will experience any significant loan losses as a result of this rise in other adversely rated commercial loans.  The AFLL related to historical losses increased $0.7 million during the first six months of 2019, and the AFLL related to subjective factors decreased $0.5 million during the first six months of 2019, due primarily to the classification shifts discussed above.

Deposits and borrowings.  Historically, the loyalty of our customer base has allowed us to price deposits competitively, contributing to a net interest margin that compares favorably to our peers. However, we still face a significant amount of competition for deposits within many of the markets served by our branch network, which limits our ability to materially increase deposits without adversely impacting the weighted-average cost of core deposits.

To attract new core deposits, we have implemented various account acquisition strategies as well as branch staff sales training. Account acquisition initiatives have historically generated increases in customer relationships. Over the past several years, we have also expanded our treasury management products and services for commercial businesses and municipalities or other governmental units and have also increased our sales calling efforts in order to attract additional deposit relationships from these sectors. We view long-term core deposit growth as an important objective. Core deposits generally provide a more stable and lower cost source of funds than alternative sources such as short-term borrowings. (See “Liquidity and capital resources.”)

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Deposits totaled $2.98 billion and $2.91 billion at June 30, 2019 and December 31, 2018, respectively.  The $65.5 million increase in deposits during the first six months of 2019 is primarily due to growth in reciprocal deposits.  Reciprocal deposits totaled $326.3 million and $182.1 million at June 30, 2019 and December 31, 2018, respectively.  These deposits represent demand, money market and time deposits from our customers that have been placed through Promontory Interfinancial Network’s Insured Cash Sweep^® service and Certificate of Deposit Account Registry Service^®.  These services allow our customers to access multi-million dollar FDIC deposit insurance on deposit balances greater than the standard FDIC insurance maximum.  The significant increase in reciprocal deposits is due in part to an automated sweep product that we introduced in mid-2018 as well as the marketing and sales efforts of our treasury management team.

We cannot be sure that we will be able to maintain our current level of core deposits. In particular, those deposits that are uninsured may be susceptible to outflow. At June 30, 2019, we had approximately $491.9 million of uninsured deposits. A reduction in core deposits would likely increase our need to rely on wholesale funding sources.

We have also implemented strategies that incorporate using federal funds purchased, other borrowings and Brokered CDs to fund a portion of our interest-earning assets. The use of such alternate sources of funds supplements our core deposits and is also an integral part of our asset/liability management efforts.

Other borrowings, comprised primarily of advances from the FHLB, totaled $41.1 million and $25.7 million at June 30, 2019 and December 31, 2018, respectively.

As described above, we utilize wholesale funding, including FHLB borrowings and Brokered CDs to augment our core deposits and fund a portion of our assets. At June 30, 2019, our use of such wholesale funding sources (including reciprocal deposits) amounted to approximately $612.2 million, or 20.3% of total funding (deposits and total borrowings, excluding subordinated debentures). Because wholesale funding sources are affected by general market conditions, the availability of such funding may be dependent on the confidence these sources have in our financial condition and operations. The continued availability to us of these funding sources is not certain, and Brokered CDs may be difficult for us to retain or replace at attractive rates as they mature. Our liquidity may be constrained if we are unable to renew our wholesale funding sources or if adequate financing is not available in the future at acceptable rates of interest or at all.  Our financial performance could also be affected if we are unable to maintain our access to funding sources or if we are required to rely more heavily on more expensive funding sources. In such case, our net interest income and results of operations could be adversely affected.

We historically employed derivative financial instruments to manage our exposure to changes in interest rates.  During the first six months of 2019 and 2018, we entered into $17.6 million and $10.4 million (aggregate notional amounts), respectively, of interest rate swaps with commercial loan customers, which were offset with interest rate swaps that the Bank entered into with a broker-dealer. We recorded $0.25 million and $0.33 million of fee income related to these transactions during the first six months of 2019 and 2018, respectively. See note #6 to the Condensed Consolidated Financial Statements included within this report for more information on our derivative financial instruments.

Liquidity and capital resources. Liquidity risk is the risk of being unable to timely meet obligations as they come due at a reasonable funding cost or without incurring unacceptable losses. Our liquidity management involves the measurement and monitoring of a variety of sources and uses of funds. Our Condensed Consolidated Statements of Cash Flows categorize these sources and uses into operating, investing and financing activities. We primarily focus our liquidity management on maintaining adequate levels of liquid assets (primarily funds on deposit with the FRB and certain securities available for sale) as well as developing access to a variety of borrowing sources to supplement our deposit gathering activities and provide funds for purchasing securities available for sale or originating Portfolio Loans as well as to be able to respond to unforeseen liquidity needs.

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Our primary sources of funds include our deposit base, secured advances from the FHLB, federal funds purchased borrowing facilities with other banks, and access to the capital markets (for Brokered CDs).

At June 30, 2019, we had $556.2 million of time deposits that mature in the next 12 months. Historically, a majority of these maturing time deposits are renewed by our customers. Additionally, $2.29 billion of our deposits at June 30, 2019, were in account types from which the customer could withdraw the funds on demand. Changes in the balances of deposits that can be withdrawn upon demand are usually predictable and the total balances of these accounts have generally grown or have been stable over time as a result of our marketing and promotional activities. However, there can be no assurance that historical patterns of renewing time deposits or overall growth or stability in deposits will continue in the future.

We have developed contingency funding plans that stress test our liquidity needs that may arise from certain events such as an adverse change in our financial metrics (for example, credit quality or regulatory capital ratios). Our liquidity management also includes periodic monitoring that measures quick assets (defined generally as highly liquid or short-term assets) to total assets, short-term liability dependence and basic surplus (defined as quick assets less volatile liabilities to total assets). Policy limits have been established for our various liquidity measurements and are monitored on a quarterly basis. In addition, we also prepare cash flow forecasts that include a variety of different scenarios.

We believe that we currently have adequate liquidity at our Bank because of our cash and cash equivalents, our portfolio of securities available for sale, our access to secured advances from the FHLB and our ability to issue Brokered CDs.

We also believe that the available cash on hand at the parent company (including time deposits) of approximately $13.3 million as of June 30, 2019 provides sufficient liquidity resources at the parent company to meet operating expenses, to make interest payments on the subordinated debentures, and to pay projected cash dividends on our common stock.

Effective management of capital resources is critical to our mission to create value for our shareholders. In addition to common stock, our capital structure also currently includes cumulative trust preferred securities.

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Capitalization

	June 30, 2019			December 31, 2018
	(In thousands)
Subordinated debentures	$	39,422		$	39,388
Amount not qualifying as regulatory capital		(1,224	)		(1,224	)
Amount qualifying as regulatory capital		38,198			38,164
Shareholders’ equity
Common stock		351,894			377,372
Accumulated deficit		(16,617	)		(28,270	)
Accumulated other comprehensive loss		(4,431	)		(10,108	)
Total shareholders’ equity		330,846			338,994
Total capitalization	$	369,044		$	377,158

We currently have four special purpose entities with $39.4 million of outstanding cumulative trust preferred securities as of June 30, 2019.  These special purpose entities issued common securities and provided cash to our parent company that in turn issued subordinated debentures to these special purpose entities equal to the trust preferred securities and common securities. The subordinated debentures represent the sole asset of the special purpose entities. The common securities and subordinated debentures are included in our Condensed Consolidated Statements of Financial Condition.

The FRB has issued rules regarding trust preferred securities as a component of the Tier 1 capital of bank holding companies. The aggregate amount of trust preferred securities (and certain other capital elements) are limited to 25 percent of Tier 1 capital elements, net of goodwill (net of any associated deferred tax liability). The amount of trust preferred securities and certain other elements in excess of the limit can be included in Tier 2 capital, subject to restrictions. At the parent company, all of these securities qualified as Tier 1 capital at June 30, 2019 and December 31, 2018.

Common shareholders’ equity decreased to $330.8 million at June 30, 2019, from $339.0 million at December 31, 2018, due primarily to our share repurchases and cash dividend payments that were partially offset by our net income and a decrease in our accumulated other comprehensive loss. Our tangible common equity (“TCE”) totaled $296.7 million and $304.3 million, respectively, at those same dates. Our ratio of TCE to tangible assets was 8.72% and 9.17% at June 30, 2019, and December 31, 2018, respectively.  TCE and the ratio of TCE to tangible assets are non-GAAP measures.  TCE represents total common equity less goodwill and other intangible assets.

In December 2018, our Board of Directors authorized a 2019 share repurchase plan.  Under the terms of the original 2019 share repurchase plan, we were authorized to buy back up to 5% of our outstanding common stock.  During the first six months of 2019, we completed the repurchase of 5% of our outstanding common shares (1,179,688 shares at a weighted average purchase price of $21.85 per share). In June 2019, our Board of Directors supplemented the 2019 share repurchase plan and authorized the repurchase of up to 300,000 additional common shares. The 2019 share repurchase plan is authorized to last through December 31, 2019.

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We pay a quarterly cash dividend on our common stock.  These dividends totaled $0.18 per share in the first and second quarters of 2019 and $0.15 per share in the first and second quarters 2018.    We generally favor a dividend payout ratio between 30% and 50% of net income.

As of June 30, 2019 and December 31, 2018, our Bank (and holding company) continued to meet the requirements to be considered “well-capitalized” under federal regulatory standards (also see note #10 to the Condensed Consolidated Financial Statements included within this report).

Asset/liability management.  Interest-rate risk is created by differences in the cash flow characteristics of our assets and liabilities. Options embedded in certain financial instruments, including caps on adjustable-rate loans as well as borrowers’ rights to prepay fixed-rate loans, also create interest-rate risk.

Our asset/liability management efforts identify and evaluate opportunities to structure our assets and liabilities in a manner that is consistent with our mission to maintain profitable financial leverage within established risk parameters. We evaluate various opportunities and alternate asset/liability management strategies carefully and consider the likely impact on our risk profile as well as the anticipated contribution to earnings. The marginal cost of funds is a principal consideration in the implementation of our asset/liability management strategies, but such evaluations further consider interest-rate and liquidity risk as well as other pertinent factors. We have established parameters for interest-rate risk. We regularly monitor our interest-rate risk and report at least quarterly to our board of directors.

We employ simulation analyses to monitor our interest-rate risk profile and evaluate potential changes in our net interest income and market value of portfolio equity that result from changes in interest rates. The purpose of these simulations is to identify sources of interest-rate risk. The simulations do not anticipate any actions that we might initiate in response to changes in interest rates and, accordingly, the simulations do not provide a reliable forecast of anticipated results. The simulations are predicated on immediate, permanent and parallel shifts in interest rates and generally assume that current loan and deposit pricing relationships remain constant. The simulations further incorporate assumptions relating to changes in customer behavior, including changes in prepayment rates on certain assets and liabilities.

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CHANGES IN MARKET VALUE OF PORTFOLIO EQUITY AND NET INTEREST INCOME

Change in Interest Rates	Market Value of Portfolio Equity(1)		Percent Change			Net Interest Income(2)		Percent Change
	(Dollars in thousands)
June 30, 2019
200 basis point rise	$	407,000		(5.66	)%	$	124,500		1.55	%
100 basis point rise		427,000		(1.02	)		123,900		1.06
Base-rate scenario		431,400		-			122,600		-
100 basis point decline		407,200		(5.61	)		120,500		(1.71	)
December 31, 2018
200 basis point rise	$	481,100		(3.37	)%	$	126,200		3.27	%
100 basis point rise		495,400		(0.50	)		124,800		2.13
Base-rate scenario		497,900		-			122,200		-
100 basis point decline		482,800		(3.03	)		119,600		(2.13	)

(1) Simulation analyses calculate the change in the net present value of our assets and liabilities, including debt and related financial derivative instruments, under parallel shifts in interest rates by discounting the estimated future cash flows using a market-based discount rate. Cash flow estimates incorporate anticipated changes in prepayment speeds and other embedded options.

(2) Simulation analyses calculate the change in net interest income under immediate parallel shifts in interest rates over the next twelve months, based upon a static statement of financial condition, which includes debt and related financial derivative instruments, and do not consider loan fees.

Accounting standards update. See note #2  to  the Condensed Consolidated Financial Statements included elsewhere in this report for details on recently issued accounting pronouncements and their impact on our financial statements.

Fair valuation of financial instruments.Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) topic 820 - “Fair Value Measurements and Disclosures” (“FASB ASC topic 820”) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

We utilize fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures. FASB ASC topic 820 differentiates between those assets and liabilities required to be carried at fair value at every reporting period (“recurring”) and those assets and liabilities that are only required to be adjusted to fair value under certain circumstances (“nonrecurring”). Certain equity securities (at December 31, 2018), securities available for sale, loans held for sale, derivatives and capitalized mortgage loan servicing rights are financial instruments recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record at fair value other financial assets on a nonrecurring basis, such as loans held for investment and certain other assets. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets. See note #11 to the Condensed Consolidated Financial Statements included within this report for a complete discussion on our use of fair valuation of financial instruments and the related measurement techniques.

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Litigation Matters

The aggregate amount we have accrued for losses we consider probable as a result of litigation matters is immaterial. However, because of the inherent uncertainty of outcomes from any litigation matter, we believe it is reasonably possible we may incur losses in addition to the amounts we have accrued.  At this time, we estimate the maximum amount of additional losses that are reasonably possible is insignificant.  However, because of a number of factors, including the fact that certain of these litigation matters are still in their early stages, this maximum amount may change in the future.

The litigation matters described in the preceding paragraph primarily include claims that have been brought against us for damages, but do not include litigation matters where we seek to collect amounts owed to us by third parties (such as litigation initiated to collect delinquent loans). These excluded, collection-related matters may involve claims or counterclaims by the opposing party or parties, but we have excluded such matters from the disclosure contained in the preceding paragraph in all cases where we believe the possibility of us paying damages to any opposing party is remote. Risks associated with the likelihood that we will not collect the full amount owed to us, net of reserves, are disclosed elsewhere in this report.

Critical Accounting Policies

Our accounting and reporting policies are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the banking industry. Accounting and reporting policies for the AFLL and capitalized mortgage loan servicing rights are deemed critical since they involve the use of estimates and require significant management judgments. Application of assumptions different than those that we have used could result in material changes in our consolidated financial position or results of operations.  There have been no material changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.

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Item 3.

Quantitative and Qualitative Disclosures about Market Risk

See applicable disclosures set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 under the caption “Asset/liability management.”

Item 4.

Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

With the participation of management, our chief executive officer and chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15(e) and 15d – 15(e)) for the period ended June 30, 2019, have concluded that, as of such date, our disclosure controls and procedures were effective.

(b) Changes in Internal Controls.

During the quarter ended June 30, 2019, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company maintains a Deferred Compensation and Stock Purchase Plan for Non-Employee Directors (the “Plan”) pursuant to which non-employee directors can elect to receive shares of the Company’s common stock in lieu of fees otherwise payable to the director for his or her service as a director.  A director can elect to receive shares on a current basis or to defer receipt of the shares, in which case the shares are issued to a trust to be held for the account of the director and then generally distributed to the director after his or her retirement from the Board.  Pursuant to this Plan, during the second quarter of 2019, the Company issued 731 shares of common stock to non-employee directors on a current basis and 2,093 shares of common stock to the trust for distribution to directors on a deferred basis.  These shares were issued on April 1, 2019 representing aggregate fees of $0.06 million. The shares on a current basis were issued at a price of $21.50 per share and the shares on a deferred basis were issued at a price of $19.35 per share, representing 90% of the fair value of the shares on the credit date.  The price per share was the consolidated closing bid price per share of the Company’s common stock as of the date of issuance, as determined in accordance with NASDAQ Marketplace Rules.  The Company issued the shares pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933 due to the fact that the issuance of the shares was made on a private basis pursuant to the Plan.

The following table shows certain information relating to repurchases of common stock for the three-months ended June 30, 2019:

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan		Remaining Number of Shares Authorized for Purchase Under the Plan
April 2019		65,196	$	21.28		65,196		998,003
May 2019		998,705		21.89		998,705		(702	)(1)
June 2019		--		--		--		299,298
Total		1,063,901	$	21.86		1,063,901		299,298

(1) In May 2019, the Company repurchased a large number of shares in a private transaction. The number of shares repurchased included an immaterial number of shares (702 shares) in excess of the remaining shares under the publicly-announced plan. As previously disclosed, the Company’s Board of Directors expanded the repurchase plan in June 2019.

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Item 6. Exhibits

(a) The following exhibits (listed by number corresponding to the Exhibit Table as Item 601 in Regulation S-K) are filed with this report:

31.1	Certificate of the Chief Executive Officer of Independent Bank Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
31.2	Certificate of the Chief Financial Officer of Independent Bank Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.1	Certificate of the Chief Executive Officer of Independent Bank Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.2	Certificate of the Chief Financial Officer of Independent Bank Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

101.INS Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

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

Date	August 2, 2019	By	/s/ Robert N. Shuster
			Robert N. Shuster, Principal Financial Officer
Date	August 2, 2019	By	/s/ James J. Twarozynski
			James J. Twarozynski, Principal Accounting Officer

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, William B. Kessel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Independent Bank Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

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

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

	INDEPENDENT BANK CORPORATION
Date:  August 2, 2019	/s/ William B. Kessel
	William B. Kessel President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Robert N. Shuster, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Independent Bank Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

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

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

	INDEPENDENT BANK CORPORATION
Date:  August 2, 2019	/s/ Robert N. Shuster
	Robert N. Shuster Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATE OF THE

CHIEF EXECUTIVE OFFICER OF

INDEPENDENT BANK CORPORATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350):

I, William B. Kessel, President and Chief Executive Officer of Independent Bank Corporation, certify, to the best of my knowledge and belief, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) that:

(1)          The quarterly report on Form 10-Q for the quarterly period ended June 30, 2019, which this statement accompanies, fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and;

(2)          The information contained in this quarterly report on Form 10-Q for the quarterly period ended June 30, 2019, fairly presents, in all material respects, the financial condition and results of operations of Independent Bank Corporation.

	INDEPENDENT BANK CORPORATION
Date:  August 2, 2019	/s/ William B. Kessel
	William B. Kessel President and Chief Executive Officer

The signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Independent Bank Corporation and will be retained by Independent Bank Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATE OF THE

CHIEF FINANCIAL OFFICER OF

INDEPENDENT BANK CORPORATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350):

I, Robert N. Shuster, Chief Financial Officer of Independent Bank Corporation, certify, to the best of my knowledge and belief, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) that:

(1)          The quarterly report on Form 10-Q for the quarterly period ended June 30, 2019, which this statement accompanies, fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and;

(2)          The information contained in this quarterly report on Form 10-Q for the quarterly period ended June 30, 2019, fairly presents, in all material respects, the financial condition and results of operations of Independent Bank Corporation.

	INDEPENDENT BANK CORPORATION
Date:  August 2, 2019	/s/ Robert N. Shuster
	Robert N. Shuster Chief Financial Officer

The signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Independent Bank Corporation and will be retained by Independent Bank Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 01, 2019
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2019
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity Registrant Name	INDEPENDENT BANK CORP /MI/
Entity Address, State or Province	MI
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		22,499,498
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Central Index Key	0000039311

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Condensed Consolidated Statements of Financial Condition (unaudited) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets
Cash and due from banks	$ 34,461	$ 23,350
Interest bearing deposits	20,676	46,894
Cash and Cash Equivalents	55,137	70,244
Interest bearing deposits - time	498	595
Equity securities at fair value	0	393
Securities available for sale	430,305	427,926
Federal Home Loan Bank and Federal Reserve Bank stock, at cost	18,359	18,359
Loans held for sale, carried at fair value	62,883	44,753
Loans held for sale, carried at lower of cost or fair value	0	41,471
Loans
Loans	2,706,526	2,582,520
Allowance for loan losses	(25,903)	(24,888)
Net Loans	2,680,623	2,557,632
Other real estate and repossessed assets, net	1,990	1,299
Property and equipment, net	37,703	38,777
Bank-owned life insurance	55,580	55,068
Deferred tax assets, net	2,746	5,779
Capitalized mortgage loan servicing rights, carried at fair value	17,894	21,400
Other intangibles	5,870	6,415
Goodwill	28,300	28,300
Accrued income and other assets	40,414	34,870
Total Assets	3,438,302	3,353,281
Deposits
Non-interest bearing	864,481	879,549
Savings and interest-bearing checking	1,158,910	1,194,865
Reciprocal	326,326	182,072
Time	384,477	385,981
Brokered time	244,691	270,961
Total Deposits	2,978,885	2,913,428
Other borrowings	41,144	25,700
Subordinated debentures	39,422	39,388
Accrued expenses and other liabilities	48,005	35,771
Total Liabilities	3,107,456	3,014,287
Commitments and contingent liabilities
Shareholders' Equity
Preferred stock, no par value, 200,000 shares authorized; none issued or outstanding	0	0
Common stock, no par value, 500,000,000 shares authorized; issued and outstanding: 22,498,776 shares at June 30, 2019 and 23,579,725 shares at December 31, 2018	351,894	377,372
Accumulated deficit	(16,617)	(28,270)
Accumulated other comprehensive loss	(4,431)	(10,108)
Total Shareholders' Equity	330,846	338,994
Total Liabilities and Shareholders' Equity	3,438,302	3,353,281
Commercial [Member]
Loans
Loans	1,175,970	1,144,481
Allowance for loan losses	(8,121)	(7,090)
Mortgage [Member]
Loans
Loans	1,086,309	1,042,890
Allowance for loan losses	(8,062)	(7,978)
Installment [Member]
Loans
Loans	444,247	395,149
Allowance for loan losses	$ (1,293)	$ (895)

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Condensed Consolidated Statements of Financial Condition (unaudited) (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Shareholders' Equity
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	200,000	200,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	22,498,776	23,579,725
Common stock, shares outstanding (in shares)	22,498,776	23,579,725

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Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Interest Income
Interest and fees on loans		$ 33,836	$ 29,674	$ 66,517	$ 53,027
Interest on securities
Taxable		3,034	2,720	6,040	5,355
Tax-exempt		324	444	698	923
Other investments		379	265	954	595
Total Interest Income		37,573	33,103	74,209	59,900
Interest Expense
Deposits		6,021	3,209	11,702	5,496
Other borrowings and subordinated debentures		796	914	1,508	1,488
Total Interest Expense		6,817	4,123	13,210	6,984
Net Interest Income		30,756	28,980	60,999	52,916
Provision for loan losses		652	650	1,316	965
Net Interest Income After Provision for Loan Losses		30,104	28,330	59,683	51,951
Non-interest Income
Service charges on deposit accounts		2,800	3,095	5,440	6,000
Interchange income		2,604	2,504	4,959	4,750
Net gains (losses) on assets
Mortgage loans		4,302	3,255	7,913	5,826
Securities		0	9	304	(164)
Mortgage loan servicing, net		(1,907)	1,235	(3,122)	3,456
Other		2,106	2,217	4,370	4,160
Total Non-interest Income		9,905	12,315	19,864	24,028
Non-interest Expense
Compensation and employee benefits		15,931	15,869	32,282	30,337
Occupancy, net		2,131	2,170	4,636	4,434
Data processing		2,171	2,251	4,315	4,129
Furniture, fixtures and equipment		1,006	1,019	2,035	1,986
Communications		717	704	1,486	1,384
Interchange expense		753	661	1,441	1,259
Loan and collection		628	692	1,262	1,369
Advertising		627	543	1,299	984
Legal and professional		371	456	740	834
FDIC deposit insurance		342	250	710	480
Merger related expenses		0	3,082	0	3,256
Other		1,915	2,064	4,376	3,444
Total Non-interest Expense		26,592	29,761	54,582	53,896
Income Before Income Tax		13,417	10,884	24,965	22,083
Income tax expense		2,687	2,067	4,854	4,105
Net Income		$ 10,730	$ 8,817	$ 20,111	$ 17,978
Net Income Per Common Share
Basic (in dollars per share)	[1]	$ 0.47	$ 0.37	$ 0.86	$ 0.79
Diluted (in dollars per share)		$ 0.46	$ 0.36	$ 0.85	$ 0.78

[1] Basic net income per common share includes weighted average common shares outstanding during the period and participating share awards.

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Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Condensed Consolidated Statements of Comprehensive Income (unaudited) [Abstract]
Net income	$ 10,730	$ 8,817	$ 20,111	$ 17,978
Securities available for sale
Unrealized gains (losses) arising during period	3,920	(1,198)	9,284	(5,063)
Change in unrealized losses for which a portion of other than temporary impairment has been recognized in earnings	0	(2)	(2)	(3)
Reclassification adjustments for (gains) losses included in earnings	0	26	(137)	45
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale	3,920	(1,174)	9,145	(5,021)
Income tax expense (benefit)	823	(246)	1,920	(1,054)
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale, net of tax	3,097	(928)	7,225	(3,967)
Derivative instruments
Unrealized gain (loss) arising during period	(756)	327	(1,668)	1,011
Reclassification adjustment for income recognized in earnings	(142)	(53)	(291)	(59)
Unrealized gains (losses) recognized in other comprehensive income (loss) on derivative instruments	(898)	274	(1,959)	952
Income tax expense (benefit)	(187)	58	(411)	200
Unrealized gains (losses) recognized in other comprehensive income (loss) on derivative instruments, net of tax	(711)	216	(1,548)	752
Other comprehensive income (loss)	2,386	(712)	5,677	(3,215)
Comprehensive income	$ 13,116	$ 8,105	$ 25,788	$ 14,763

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Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Condensed Consolidated Statements of Cash Flows (unaudited) [Abstract]
Net Income	$ 20,111	$ 17,978
Adjustments to Reconcile Net Income to Net Cash From Operating Activities
Proceeds from the sale of equity securities at fair value	560	0
Proceeds from sales of loans held for sale	222,953	210,641
Disbursements for loans held for sale	(233,170)	(214,952)
Provision for loan losses	1,316	965
Deferred income tax expense	1,524	4,518
Deferred loan fees and costs	(1,947)	(2,457)
Net depreciation, amortization of intangible assets and premiums and accretion of discounts on securities, loans and interest bearing deposits - time	2,906	3,192
Net gains on mortgage loans	(7,913)	(5,826)
Net (gains) losses on securities	(304)	164
Share based compensation	888	848
Increase in accrued income and other assets	(3,112)	(3,377)
Increase in accrued expenses and other liabilities	10,125	1,604
Total Adjustments	(6,174)	(4,680)
Net Cash From Operating Activities	13,937	13,298
Cash Flow Used in Investing Activities
Proceeds from the sale of securities available for sale	42,236	31,445
Proceeds from maturities, prepayments and calls of securities available for sale	76,579	88,131
Purchases of securities available for sale	(81,639)	(47,054)
Proceeds from the sale of interest bearing deposits - time	0	2,474
Proceeds from the maturity of interest bearing deposits - time	100	1,842
Net increase in portfolio loans (loans originated, net of principal payments)	(152,256)	(181,365)
Proceeds from the sale of portfolio loans	40,630	16,460
Acquisition of TCSB Bancorp Inc., less cash received	0	23,516
Proceeds from bank-owned life insurance	0	474
Proceeds from the sale of other real estate and repossessed assets	808	889
Capital expenditures	(1,542)	(2,033)
Net Cash Used in Investing Activities	(75,084)	(65,221)
Cash Flow From Financing Activities
Net increase in total deposits	65,457	92,273
Net increase (decrease) in other borrowings	550	(3,093)
Proceeds from Federal Home Loan Bank Advances	27,000	1,044,000
Payments of Federal Home Loan Bank Advances	(12,143)	(1,069,287)
Dividends paid	(8,458)	(6,823)
Proceeds from issuance of common stock	282	147
Repurchase of common stock	(25,782)	0
Share based compensation withholding obligation	(866)	(1,321)
Net Cash From Financing Activities	46,040	55,896
Net Increase (Decrease) in Cash and Cash Equivalents	(15,107)	3,973
Cash and Cash Equivalents at Beginning of Period	70,244	54,738
Cash and Cash Equivalents at End of Period	55,137	58,711
Cash paid during the period for
Interest	13,188	6,545
Income taxes	2,457	120
Operating leases	1,127	0
Transfers to other real estate and repossessed assets	1,420	641
Purchase of securities available for sale not yet settled	645	0
Securitization of portfolio loans	29,790	0
Right of use assets obtained in exchange for lease obligations	7,703	0
Transfer of loans to held for sale	$ 0	$ 13,216

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Condensed Consolidated Statements of Shareholders' Equity (unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Balance at beginning of period at Dec. 31, 2017	$ 324,986	$ (54,054)	$ (5,999)	$ 264,933
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		17,978		17,978
Cash dividends declared	0	(6,823)	0	(6,823)
Acquisition of TCSB Bancorp, Inc.	64,536	0	0	64,536
Repurchase of common stock	0
Issuance of common stock	147	0	0	147
Share based compensation	848	0	0	848
Share based compensation withholding obligation	(1,321)	0	0	(1,321)
Other comprehensive income (loss)	0	0	(3,215)	(3,215)
Balances at end of period at Jun. 30, 2018	389,196	(42,899)	(9,214)	337,083
Balance at beginning of period at Mar. 31, 2018	324,518	(48,099)	(8,502)	267,917
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		8,817		8,817
Cash dividends declared	0	(3,617)	0	(3,617)
Acquisition of TCSB Bancorp, Inc.	64,536	0	0	64,536
Issuance of common stock	134	0	0	134
Share based compensation	441	0	0	441
Share based compensation withholding obligation	(433)	0	0	(433)
Other comprehensive income (loss)	0	0	(712)	(712)
Balances at end of period at Jun. 30, 2018	389,196	(42,899)	(9,214)	337,083
Balance at beginning of period at Dec. 31, 2018	377,372	(28,270)	(10,108)	338,994
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		20,111		20,111
Cash dividends declared	0	(8,458)	0	(8,458)
Repurchase of common stock	(25,782)	0	0	(25,782)
Issuance of common stock	282	0	0	282
Share based compensation	888	0	0	888
Share based compensation withholding obligation	(866)	0	0	(866)
Other comprehensive income (loss)	0	0	5,677	5,677
Balances at end of period at Jun. 30, 2019	351,894	(16,617)	(4,431)	330,846
Balance at beginning of period at Mar. 31, 2019	374,678	(23,135)	(6,817)	344,726
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		10,730		10,730
Cash dividends declared	0	(4,212)	0	(4,212)
Repurchase of common stock	(23,252)	0	0	(23,252)
Share based compensation	468	0	0	468
Other comprehensive income (loss)	0	0	2,386	2,386
Balances at end of period at Jun. 30, 2019	$ 351,894	$ (16,617)	$ (4,431)	$ 330,846

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Condensed Consolidated Statements of Shareholders' Equity (unaudited) (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Condensed Consolidated Statements of Shareholders' Equity (unaudited) [Abstract]
Cash dividends declared (in dollars per share)	$ 0.18	$ 0.15	$ 0.36	$ 0.30
Repurchase of shares of common stock (in shares)	1,063,901		1,179,688
Issuance of shares of common stock (in shares)		101,408	68,399	105,208
Share based compensation, common stock (in shares)	2,498	7,444	86,626	81,919
Share based compensation withholding obligation, common stock (in shares)		50,057	56,286	87,325

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Preparation of Financial Statements

6 Months Ended

Jun. 30, 2019

Preparation of Financial Statements [Abstract]

Preparation of Financial Statements

1.   Preparation of Financial Statements

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading.  The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2018 included in our Annual Report on Form 10-K.

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary to present fairly our consolidated financial condition as of June 30, 2019 and December 31, 2018, and the results of operations for the three and six-month periods ended June 30, 2019 and 2018.  The results of operations for the three and six-month periods ended June 30, 2019, are not necessarily indicative of the results to be expected for the full year.  Certain reclassifications have been made in the prior period financial statements to conform to the current period presentation.  Our critical accounting policies include the determination of the allowance for loan losses and the valuation of capitalized mortgage loan servicing rights.  Refer to our 2018 Annual Report on Form 10-K for a disclosure of our accounting policies.

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New Accounting Standards

6 Months Ended

Jun. 30, 2019

New Accounting Standards [Abstract]

New Accounting Standards

2.  New Accounting Standards

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”.  This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.  This ASU:

• Replaces the existing incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost, which will reflect our estimate of credit losses over the full remaining expected life of the financial assets and will consider expected future changes in macroeconomic conditions.

• Eliminates existing guidance for purchase credit impaired (“PCI”) loans, and requires recognition of the nonaccretable difference as an increase to the allowance for expected credit losses on financial assets purchased with more than insignificant credit deterioration since origination, which will be offset by an increase in the recorded investment of the related loans.

• Requires inclusion of expected recoveries, limited to the cumulative amount of prior write-offs, when estimating the allowance for credit losses for in scope financial assets (including collateral dependent assets).

• Amends existing impairment guidance for securities available for sale to incorporate an allowance, which will allow for reversals of credit impairments in the event that the credit of an issuer improves. Credit losses on securities available for sale are limited to the amount of the decline in fair value regardless of what the credit loss model would show for impairment.

• Generally requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption.

• Is effective for us on January 1, 2020.

We began evaluating this ASU in 2016 and established a company-wide, cross-discipline governance structure, which provides implementation oversight. We continue to test and refine our current expected credit loss models that satisfy the requirements of this ASU. Oversight and testing, as well as efforts to meet expanded disclosure requirements, will extend through the remainder of 2019.  We expect that the allowance related to our loans will increase as it will cover credit losses over the full remaining expected life of the portfolio. We currently intend to estimate losses over approximately a two year forecast period using the Federal Open Market Committee median economic projections (which are typically published in March of each year) as well as considering other economic forecast sources, and then revert to longer term historical loss experience to estimate losses over more extended periods. We currently expect the increase in the allowance for loan losses to be in the range of $9.5 million to $11.5 million, primarily driven by the longer contractual maturities of our mortgage and consumer installment loan segments.  This estimated range is based on our June 30, 2019 loan portfolio and currently available economic forecasts. The mid-point of the range utilizes a two year forecast period and a two year reversion period. This estimated range also includes a qualitative adjustment to the allowance for loan losses. In addition, we currently expect this ASU to increase the allowance for losses related to unfunded loan commitments between $0.5 million and $1.5 million. These estimates are subject to further refinement based on continuing reviews, testing, enhancements and approvals of models, methodologies and judgments. The ultimate impact will depend upon the nature and characteristics of our loan portfolio at the adoption date, the macroeconomic conditions and forecasts at that date, further regualatory or accounting guidance and other management judgments. We currently do not expect to record any allowance for loss on available for sale securities. The ultimate impact will depend upon the nature and characteristics of our securities available for sale (including issuer specific matters) at the adoption date, the macroeconomic conditions and forecasts at that date, and other management judgments.

In August 2018, the FASB issued ASU 2018-13, ‘‘Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement’’. This new ASU amends disclosure requirements in Topic 820 to eliminate, add and modify certain disclosure requirements for fair value measurements as part of its disclosure framework project. The amended guidance eliminates the requirements to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the entity’s policy for the timing of transfers between levels of the fair value hierarchy and the entity’s valuation processes for Level 3 fair value measurements. The amended guidance adds the requirements to disclose the changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements of instruments held at the end of the reporting period and for recurring and nonrecurring Level 3 fair value measurements, the range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated, with certain exceptions. This amended guidance is effective for us on January 1, 2020, and is not expected to have a material impact on our consolidated operating results or financial condition.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”.  This ASU amends existing guidance related to the accounting for leases. These amendments, among other things, require lessees to account for most leases on the balance sheet while recognizing expense on the income statement in a manner similar to existing guidance.  For lessors the guidance modifies the classification criteria and the accounting for sales-type and direct finance leases. This amended guidance was effective for us on January 1, 2019 and did not have a material impact on our consolidated operating results or financial condition.  Based on our operating leases that we currently have in place we do not expect a material change in the recognition, measurement and presentation of lease expense or impact on cash flow.  The primary impact was the recognition of certain operating leases on our Condensed Consolidated Statements of Financial Condition which resulted in the recording of right of use (“ROU”) assets and offsetting lease liabilities each totaling approximately $7.7 million at January 1, 2019.  See note #16.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities”.  This new ASU amends the hedge accounting model in Topic 815 to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The amendments expand an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness.  This amended guidance was effective for us on January 1, 2019, and did not have a material impact on our consolidated operating results or financial condition.

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Securities

6 Months Ended

Jun. 30, 2019

Securities [Abstract]

Securities

3.  Securities

Securities available for sale consist of the following:

	Amortized Cost		Unrealized				Fair Value
			Gains		Losses
	(In thousands)
June 30, 2019
U.S. agency	$	16,997	$	200	$	14	$	17,183
U.S. agency residential mortgage-backed		135,853		1,541		377		137,017
U.S. agency commercial mortgage-backed		12,183		99		44		12,238
Private label mortgage-backed		29,617		588		76		30,129
Other asset backed		91,196		186		231		91,151
Obligations of states and political subdivisions		103,652		1,378		203		104,827
Corporate		32,964		929		11		33,882
Trust preferred		1,966		-		115		1,851
Foreign government		2,030		1		4		2,027
Total	$	426,458	$	4,922	$	1,075	$	430,305
December 31, 2018
U.S. agency	$	20,198	$	9	$	193	$	20,014
U.S. agency residential mortgage-backed		124,777		817		1,843		123,751
U.S. agency commercial mortgage-backed		5,909		1		184		5,726
Private label mortgage-backed		29,735		321		637		29,419
Other asset backed		83,481		86		248		83,319
Obligations of states and political subdivisions		130,244		257		2,946		127,555
Corporate		34,866		29		586		34,309
Trust preferred		1,964		-		145		1,819
Foreign government		2,050		-		36		2,014
Total	$	433,224	$	1,520	$	6,818	$	427,926

Our investments’ gross unrealized losses and fair values aggregated by investment type and length of time that individual securities have been at a continuous unrealized loss position follows:

	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
June 30, 2019
U.S. agency	$	-	$	-	$	4,427	$	14	$	4,427	$	14
U.S. agency residential mortgage-backed		5,109		11		36,367		366		41,476		377
U.S. agency commercial mortgage-backed		-		-		4,322		44		4,322		44
Private label mortgage-backed		2,682		3		3,273		73		5,955		76
Other asset backed		38,729		140		9,794		91		48,523		231
Obligations of states and political subdivisions		9,211		15		27,595		188		36,806		203
Corporate		288		1		3,188		10		3,476		11
Trust preferred		941		60		910		55		1,851		115
Foreign government		-		-		1,526		4		1,526		4
Total	$	56,960	$	230	$	91,402	$	845	$	148,362	$	1,075
December 31, 2018
U.S. agency	$	7,150	$	46	$	11,945	$	147	$	19,095	$	193
U.S. agency residential mortgage-backed		18,374		180		48,184		1,663		66,558		1,843
U.S. agency commercial mortgage-backed		566		3		5,094		181		5,660		184
Private label mortgage-backed		8,273		57		16,145		580		24,418		637
Other asset backed		53,043		160		10,235		88		63,278		248
Obligations of states and political subdivisions		25,423		262		80,701		2,684		106,124		2,946
Corporate		17,758		343		9,222		243		26,980		586
Trust preferred		939		61		880		84		1,819		145
Foreign government		-		-		2,014		36		2,014		36
Total	$	131,526	$	1,112	$	184,420	$	5,706	$	315,946	$	6,818

Our portfolio of securities available for sale is reviewed quarterly for impairment in value. In performing this review management considers (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) the impact of changes in market interest rates on the market value of the security and (4) an assessment of whether we intend to sell, or it is more likely than not that we will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. For securities that do not meet the aforementioned recovery criteria, the amount of impairment recognized in earnings is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income (loss).

U.S. agency, U.S. agency residential mortgage-backed securities and U.S. agency commercial mortgage backed securities — at June 30, 2019, we had 22 U.S. agency, 104 U.S. agency residential mortgage-backed and nine U.S. agency commercial mortgage-backed securities whose fair market value is less than amortized cost. The unrealized losses are largely attributed to increases in interest rates since acquisition and widening spreads to Treasury bonds. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Private label mortgage backed securities — at June 30, 2019, we had 11 of this type of security whose fair value is less than amortized cost. Unrealized losses are primarily due to credit spread widening and increases in interest rates since their acquisition.

Two private label mortgage-backed securities (including two of the three securities discussed further below) were reviewed for other than temporary impairment (‘‘OTTI’’) utilizing a cash flow projection. The cash flow analysis forecasts cash flow from the underlying loans in each transaction and then applies these cash flows to the bonds in the securitization. See further discussion below.

As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no other declines discussed above are deemed to be other than temporary.

Other asset backed — at June 30, 2019, we had 65 other asset backed securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Obligations of states and political subdivisions — at June 30, 2019, we had 86 municipal securities whose fair value is less than amortized cost. The unrealized losses are primarily due to wider benchmark pricing spreads and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Corporate — at June 30, 2019, we had five corporate securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Trust preferred securities — at June 30, 2019, we had two trust preferred securities whose fair value is less than amortized cost. Both of our trust preferred securities are single issue securities issued by a trust subsidiary of a bank holding company. The pricing of trust preferred securities has suffered from credit spread widening. One of the securities is rated by a major rating agency as investment grade while the other one is non-rated. The non-rated issue is a relatively small bank and was never rated. The issuer of this non-rated trust preferred security, which had a total amortized cost of $1.0 million and total fair value of $0.94 million as of June 30, 2019, continues to have satisfactory credit metrics and make interest payments. As management does not intend to liquidate this security and it is more likely than not that we will not be required to sell this security prior to recovery of the unrealized loss, this decline is not deemed to be other than temporary.

Foreign government — at June 30, 2019, we had one foreign government security whose fair value is less than amortized cost. The unrealized loss is primarily due to increases in interest rates since acquisition. As management does not intend to liquidate this security and it is more likely than not that we will not be required to sell this security prior to recovery of this unrealized loss, this decline is not deemed to be other than temporary.

We recorded no credit related OTTI charges in our Condensed Consolidated Statements of Operations related to securities available for sale during the three and six month periods ended June 30, 2019 and 2018, respectively.

At June 30, 2019, three private label mortgage-backed securities had credit related OTTI and are summarized as follows:

	Senior Security		Super Senior Security		Senior Support Security		Total
	(In thousands)
Fair value	$	713	$	700	$	17	$	1,430
Amortized cost		595		521		-		1,116
Non-credit unrealized loss		-		-		-		-
Unrealized gain		118		179		17		314
Cumulative credit related OTTI		757		457		380		1,594

Each of these securities is receiving principal and interest payments similar to principal reductions in the underlying collateral. All three of these securities have unrealized gains at June 30, 2019. The original amortized cost (current amortized cost excluding cumulative credit related OTTI) for each of these securities has been permanently adjusted downward for previously recorded credit related OTTI. The unrealized loss (based on original amortized cost) for these securities is now less than previously recorded credit related OTTI amounts.

A roll forward of credit losses recognized in earnings on securities available for sale follows:

	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018
	(In thousands)				(In thousands)
Balance at beginning of period	$	1,594	$	1,594	$	1,594	$	1,594
Additions to credit losses on securities for which no previous OTTI was recognized		-		-		-		-
Increases to credit losses on securities for which OTTI was previously recognized		-		-		-		-
Balance at end of period	$	1,594	$	1,594	$	1,594	$	1,594

The amortized cost and fair value of securities available for sale at June 30, 2019, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	13,478	$	13,481
Maturing after one year but within five years		55,186		55,754
Maturing after five years but within ten years		50,659		51,759
Maturing after ten years		38,286		38,776
		157,609		159,770
U.S. agency residential mortgage-backed		135,853		137,017
U.S. agency commercial mortgage-backed		12,183		12,238
Private label mortgage-backed		29,617		30,129
Other asset backed		91,196		91,151
Total	$	426,458	$	430,305

The actual maturity may differ from the contractual maturity because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Gains and losses realized on the sale of securities available for sale are determined using the specific identification method and are recognized on a trade-date basis.  A summary of proceeds from the sale of securities available for sale and gains and losses for the six month periods ending June 30, follows:

	Proceeds		Realized
			Gains		Losses
	(In thousands)
2019	$	42,236	$	169	$	32
2018	$	31,445	$	81	$	126

Certain preferred stocks which were all sold during the first quarter of 2019 had been classified as equity securities at fair value in our Condensed Consolidated Statement of Financial Condition.  During the six months ended June 30, 2019 and 2018 we recognized gains (losses) on these preferred stocks of $0.167 million and $(0.119) million, respectively, that are included in net gains (losses) on securities in the Condensed Consolidated Statements of Operations.  Zero and $(0.119) million of these gains (losses) during the six months ended June 30, 2019 and 2018, respectively relate to preferred stock still held at each respective period end.

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Loans

6 Months Ended

Jun. 30, 2019

Loans [Abstract]

Loans

4.  Loans

Our assessment of the allowance for loan losses is based on an evaluation of the loan portfolio, recent and historical loss experience, current economic conditions and other pertinent factors.

An analysis of the allowance for loan losses by portfolio segment for the three months ended June 30, follows:

	Commercial			Mortgage			Installment			Subjective Allocation		Total
	(In thousands)
2019
Balance at beginning of period	$	7,518		$	8,412		$	1,251		$	8,073	$	25,254
Additions (deductions)
Provision for loan losses		475			(386	)		209			354		652
Recoveries credited to the allowance		378			327			184			-		889
Loans charged against the allowance		(250	)		(291	)		(351	)		-		(892	)
Balance at end of period	$	8,121		$	8,062		$	1,293		$	8,427	$	25,903
2018
Balance at beginning of period	$	6,026		$	8,621		$	795		$	7,629	$	23,071
Additions (deductions)
Provision for loan losses		(362	)		216			138			658		650
Recoveries credited to the allowance		434			177			235			-		846
Loans charged against the allowance		(25	)		(718	)		(320	)		-		(1,063	)
Balance at end of period	$	6,073		$	8,296		$	848		$	8,287	$	23,504

An analysis of the allowance for loan losses by portfolio segment for the six months ended June 30, follows:

	Commercial			Mortgage			Installment			Subjective Allocation			Total
	(In thousands)
2019
Balance at beginning of period	$	7,090		$	7,978		$	895		$	8,925		$	24,888
Additions (deductions)
Provision for loan losses		895			187			732			(498	)		1,316
Recoveries credited to the allowance		505			551			401			-			1,457
Loans charged against the allowance		(369	)		(654	)		(735	)		-			(1,758	)
Balance at end of period	$	8,121		$	8,062		$	1,293		$	8,427		$	25,903
2018
Balance at beginning of period	$	5,595		$	8,733		$	864		$	7,395		$	22,587
Additions (deductions)
Provision for loan losses		(497	)		363			207			892			965
Recoveries credited to the allowance		1,040			357			463			-			1,860
Loans charged against the allowance		(65	)		(1,157	)		(686	)		-			(1,908	)
Balance at end of period	$	6,073		$	8,296		$	848		$	8,287		$	23,504

Allowance for loan losses and recorded investment in loans by portfolio segment follows:

	Commercial		Mortgage		Installment		Subjective Allocation		Total
	(In thousands)
June 30, 2019
Allowance for loan losses:
Individually evaluated for impairment	$	1,047	$	4,715	$	265	$	-	$	6,027
Collectively evaluated for impairment		7,074		3,347		1,028		8,427		19,876
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	8,121	$	8,062	$	1,293	$	8,427	$	25,903
Loans
Individually evaluated for impairment	$	8,082	$	44,095	$	3,258			$	55,435
Collectively evaluated for impairment		1,169,792		1,046,177		441,859				2,657,828
Loans acquired with deteriorated credit quality		1,490		587		324				2,401
Total loans recorded investment		1,179,364		1,090,859		445,441				2,715,664
Accrued interest included in recorded investment		3,394		4,550		1,194				9,138
Total loans	$	1,175,970	$	1,086,309	$	444,247			$	2,706,526
December 31, 2018
Allowance for loan losses:
Individually evaluated for impairment	$	1,305	$	4,799	$	206	$	-	$	6,310
Collectively evaluated for impairment		5,785		3,179		689		8,925		18,578
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	7,090	$	7,978	$	895	$	8,925	$	24,888
Loans
Individually evaluated for impairment	$	8,697	$	46,394	$	3,370			$	58,461
Collectively evaluated for impairment		1,137,586		1,000,038		392,460				2,530,084
Loans acquired with deteriorated credit quality		1,609		555		349				2,513
Total loans recorded investment		1,147,892		1,046,987		396,179				2,591,058
Accrued interest included in recorded investment		3,411		4,097		1,030				8,538
Total loans	$	1,144,481	$	1,042,890	$	395,149			$	2,582,520

Loans on non-accrual status and past due more than 90 days (“Non-performing Loans”) follow:

	90+ and Still Accruing		Non- Accrual		Total Non- Performing Loans
	(In thousands)
June 30, 2019
Commercial
Income producing - real estate	$	-	$	-	$	-
Land, land development and construction - real estate		-		-		-
Commercial and industrial		-		803		803
Mortgage
1-4 family		-		4,142		4,142
Resort lending		-		720		720
Home equity - 1st lien		-		196		196
Home equity - 2nd lien		-		600		600
Installment
Home equity - 1st lien		-		168		168
Home equity - 2nd lien		-		220		220
Boat lending		-		278		278
Recreational vehicle lending		-		2		2
Other		-		234		234
Total recorded investment	$	-	$	7,363	$	7,363
Accrued interest included in recorded investment	$	-	$	-	$	-
December 31, 2018
Commercial
Income producing - real estate	$	-	$	-	$	-
Land, land development and construction - real estate		-		-		-
Commercial and industrial		-		2,220		2,220
Mortgage
1-4 family		5		4,695		4,700
Resort lending		-		755		755
Home equity - 1st lien		-		159		159
Home equity - 2nd lien		-		419		419
Installment
Home equity - 1st lien		-		178		178
Home equity - 2nd lien		-		226		226
Boat lending		-		166		166
Recreational vehicle lending		-		7		7
Other		-		204		204
Total recorded investment	$	5	$	9,029	$	9,034
Accrued interest included in recorded investment	$	-	$	-	$	-

An aging analysis of loans by class follows:

	Loans Past Due								Loans not Past Due		Total Loans
	30-59 days		60-89 days		90+ days		Total
	(In thousands)
June 30, 2019
Commercial
Income producing - real estate	$	50	$	-	$	-	$	50	$	398,697	$	398,747
Land, land development and construction - real estate		-		-		-		-		93,213		93,213
Commercial and industrial		132		37		705		874		686,530		687,404
Mortgage
1-4 family		4,488		1,663		1,734		7,885		851,775		859,660
Resort lending		484		238		433		1,155		73,578		74,733
Home equity - 1st lien		178		96		51		325		36,201		36,526
Home equity - 2nd lien		458		234		195		887		119,053		119,940
Installment
Home equity - 1st lien		97		1		11		109		6,320		6,429
Home equity - 2nd lien		188		19		113		320		5,431		5,751
Boat lending		287		24		32		343		197,315		197,658
Recreational vehicle lending		72		3		2		77		144,403		144,480
Other		200		46		172		418		90,705		91,123
Total recorded investment	$	6,634	$	2,361	$	3,448	$	12,443	$	2,703,221	$	2,715,664
Accrued interest included in recorded investment	$	66	$	32	$	-	$	98	$	9,040	$	9,138
December 31, 2018
Commercial
Income producing - real estate	$	44	$	-	$	-	$	44	$	388,729	$	388,773
Land, land development and construction - real estate		-		-		-		-		84,458		84,458
Commercial and industrial		1,538		-		-		1,538		673,123		674,661
Mortgage
1-4 family		1,608		194		4,882		6,684		833,760		840,444
Resort lending		252		-		755		1,007		80,774		81,781
Home equity - 1st lien		176		-		159		335		38,909		39,244
Home equity - 2nd lien		446		100		419		965		84,553		85,518
Installment
Home equity - 1st lien		200		55		197		452		6,985		7,437
Home equity - 2nd lien		111		24		226		361		6,683		7,044
Boat lending		316		295		166		777		169,117		169,894
Recreational vehicle lending		28		21		7		56		125,780		125,836
Other		241		131		204		576		85,392		85,968
Total recorded investment	$	4,960	$	820	$	7,015	$	12,795	$	2,578,263	$	2,591,058
Accrued interest included in recorded investment	$	44	$	11	$	-	$	55	$	8,483	$	8,538

Impaired loans are as follows:

	June 30, 2019		December 31, 2018
Impaired loans with no allocated allowance for loan losses	(In thousands)
Troubled debt restructurings (“TDR”)	$	266	$	-
Non - TDR		500		-
Impaired loans with an allocated allowance for loan losses
TDR - allowance based on collateral		1,611		2,787
TDR - allowance based on present value cash flow		50,262		53,258
Non - TDR - allowance based on collateral		2,536		2,145
Total impaired loans	$	55,175	$	58,190
Amount of allowance for loan losses allocated
TDR - allowance based on collateral	$	272	$	769
TDR - allowance based on present value cash flow		4,874		4,849
Non - TDR - allowance based on collateral		881		692
Total amount of allowance for loan losses allocated	$	6,027	$	6,310

Impaired loans by class are as follows:

	June 30, 2019						December 31, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance For Loan Losses		Recorded Investment		Unpaid Principal Balance		Related Allowance For Loan Losses
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Income producing - real estate	$	-	$	-	$	-	$	-	$	-	$	-
Land, land development & construction-real estate		-		-		-		-		-		-
Commercial and industrial		-		-		-		-		-		-
Mortgage
1-4 family		613		800		-		3		474		-
Resort lending		-		-		-		-		-		-
Home equity - 1st lien		-		-		-		-		-		-
Home equity - 2nd lien		-		-		-		-		-		-
Installment
Home equity - 1st lien		-		-		-		1		122		-
Home equity - 2nd lien		-		16		-		-		-		-
Boat lending		-		5		-		-		5		-
Recreational vehicle lending		-		-		-		-		-		-
Other		-		15		-		-		15		-
		613		836		-		4		616		-
With an allowance for loan losses recorded:
Commercial
Income producing - real estate	$	5,874	$	5,863		518		4,770		4,758		303
Land, land development & construction-real estate		290		288		31		290		289		35
Commercial and industrial		1,918		2,184		498		3,637		3,735		967
Mortgage
1-4 family		30,411		32,568		3,171		32,842		34,427		2,859
Resort lending		12,392		12,704		1,397		13,328		13,354		1,927
Home equity - 1st lien		125		187		26		65		64		4
Home equity - 2nd lien		554		564		121		156		155		9
Installment
Home equity - 1st lien		1,264		1,440		77		1,440		1,524		89
Home equity - 2nd lien		1,434		1,442		100		1,471		1,491		92
Boat lending		32		48		11		-		-		-
Recreational vehicle lending		51		51		4		79		79		4
Other		477		553		73		379		406		21
		54,822		57,892		6,027		58,457		60,282		6,310
Total
Commercial
Income producing - real estate		5,874		5,863		518		4,770		4,758		303
Land, land development & construction-real estate		290		288		31		290		289		35
Commercial and industrial		1,918		2,184		498		3,637		3,735		967
Mortgage
1-4 family		31,024		33,368		3,171		32,845		34,901		2,859
Resort lending		12,392		12,704		1,397		13,328		13,354		1,927
Home equity - 1st lien		125		187		26		65		64		4
Home equity - 2nd lien		554		564		121		156		155		9
Installment
Home equity - 1st lien		1,264		1,440		77		1,441		1,646		89
Home equity - 2nd lien		1,434		1,458		100		1,471		1,491		92
Boat lending		32		53		11		-		5		-
Recreational vehicle lending		51		51		4		79		79		4
Other		477		568		73		379		421		21
Total	$	55,435	$	58,728	$	6,027	$	58,461	$	60,898	$	6,310
Accrued interest included in recorded investment	$	260					$	271

Average recorded investment in and interest income earned on impaired loans by class for the three month periods ending June 30, follows:

	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Income producing - real estate	$	-	$	-	$	-	$	-
Land, land development & construction-real estate		-		-		1,201		-
Commercial and industrial		-		-		509		9
Mortgage
1-4 family		484		2		138		3
Resort lending		-		-		-		-
Home equity - 1st lien		-		-		-		-
Home equity - 2nd lien		-		-		-		-
Installment
Home equity - 1st lien		-		-		1		2
Home equity - 2nd lien		-		-		-		-
Boat lending		-		-		-		-
Recreational vehicle lending		-		-		-		-
Other		-		-		-		1
		484		2		1,849		15
With an allowance for loan losses recorded:
Commercial
Income producing - real estate		5,297		81		5,142		70
Land, land development & construction-real estate		290		2		155		2
Commercial and industrial		2,418		16		2,522		34
Mortgage								-
1-4 family		31,364		414		35,345		431
Resort lending		12,680		147		15,098		150
Home equity - 1st lien		122		2		111		1
Home equity - 2nd lien		556		3		167		1
Installment
Home equity - 1st lien		1,326		19		1,596		25
Home equity - 2nd lien		1,453		19		1,746		25
Boat lending		67		-		1		-
Recreational vehicle lending		67		-		86		1
Other		479		5		414		7
		56,119		708		62,383		747
Total
Commercial
Income producing - real estate		5,297		81		5,142		70
Land, land development & construction-real estate		290		2		1,356		2
Commercial and industrial		2,418		16		3,031		43
Mortgage
1-4 family		31,848		416		35,483		434
Resort lending		12,680		147		15,098		150
Home equity - 1st lien		122		2		111		1
Home equity - 2nd lien		556		3		167		1
Installment
Home equity - 1st lien		1,326		19		1,597		27
Home equity - 2nd lien		1,453		19		1,746		25
Boat lending		67		-		1		-
Recreational vehicle lending		67		-		86		1
Other		479		5		414		8
Total	$	56,603	$	710	$	64,232	$	762

Average recorded investment in and interest income earned on impaired loans by class for the six month periods ending June 30, follows:

	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Income producing - real estate	$	-	$	-	$	-	$	-
Land, land development & construction-real estate		-		-		801		-
Commercial and industrial		-		-		514		13
Mortgage
1-4 family		324		2		92		9
Resort lending		-		-		-		-
Home equity - 1st lien		-		-		-		-
Home equity - 2nd lien		-		-		-		-
Installment
Home equity - 1st lien		-		-		1		4
Home equity - 2nd lien		-		-		-		-
Boat lending		-		-		-		-
Recreational vehicle lending		-		-		-		-
Other		-		-		-		1
		324		2		1,408		27
With an allowance for loan losses recorded:
Commercial
Income producing - real estate		5,121		146		5,160		138
Land, land development & construction-real estate		290		4		159		4
Commercial and industrial		2,824		36		2,526		66
Mortgage
1-4 family		31,857		860		35,846		889
Resort lending		12,896		322		15,391		314
Home equity - 1st lien		103		3		131		3
Home equity - 2nd lien		423		6		171		3
Installment
Home equity - 1st lien		1,364		43		1,619		54
Home equity - 2nd lien		1,459		41		1,762		52
Boat lending		44		-		1		-
Recreational vehicle lending		71		1		87		2
Other		446		11		407		13
		56,898		1,473		63,260		1,538
Total
Commercial
Income producing - real estate		5,121		146		5,160		138
Land, land development & construction-real estate		290		4		960		4
Commercial and industrial		2,824		36		3,040		79
Mortgage
1-4 family		32,181		862		35,938		898
Resort lending		12,896		322		15,391		314
Home equity - 1st lien		103		3		131		3
Home equity - 2nd lien		423		6		171		3
Installment
Home equity - 1st lien		1,364		43		1,620		58
Home equity - 2nd lien		1,459		41		1,762		52
Boat lending		44		-		1		-
Recreational vehicle lending		71		1		87		2
Other		446		11		407		14
Total	$	57,222	$	1,475	$	64,668	$	1,565

Cash receipts on impaired loans on non-accrual status are generally applied to the principal balance.

TDRs follow:

	June 30, 2019
	Commercial		Retail (1)			Total
			(In thousands)
Performing TDRs	$	7,166	$	42,136		$	49,302
Non-performing TDRs (2)		54		2,783	(3)		2,837
Total	$	7,220	$	44,919		$	52,139

	December 31, 2018
	Commercial		Retail (1)			Total
				(In thousands)
Performing TDRs	$	6,460	$	46,627		$	53,087
Non-performing TDRs (2)		74		2,884	(3)		2,958
Total	$	6,534	$	49,511		$	56,045

(1) Retail loans include mortgage and installment loan segments.

(2) Included in non-performing loans table above.

(3) Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.

We allocated $5.1 million and $5.6 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2019 and December 31, 2018, respectively.

During the six months ended June 30, 2019 and 2018, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans generally included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

Modifications involving a reduction of the stated interest rate of the loan have generally been for periods ranging from 9 months to 36 months but have extended to as much as 480 months in certain circumstances. Modifications involving an extension of the maturity date have generally been for periods ranging from 1 month to 60 months but have extended to as much as 230 months in certain circumstances.

Loans that have been classified as troubled debt restructurings during the three-month periods ended June 30 follow:

	Number of Contracts		Pre-modification Recorded Balance		Post-modification Recorded Balance
	(Dollars in thousands)
2019
Commercial
Income producing - real estate		2	$	1,329	$	1,329
Land, land development & construction-real estate		-		-		-
Commercial and industrial		-		-		-
Mortgage
1-4 family		1		506		505
Resort lending		-		-		-
Home equity - 1st lien		-		-		-
Home equity - 2nd lien		-		-		-
Installment
Home equity - 1st lien		1		25		26
Home equity - 2nd lien		3		75		76
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		-		-		-
Total		7	$	1,935	$	1,936
2018
Commercial
Income producing - real estate		-	$	-	$	-
Land, land development & construction-real estate		-		-		-
Commercial and industrial		2		153		153
Mortgage
1-4 family		1		66		69
Resort lending		-		-		-
Home equity - 1st lien		-		-		-
Home equity - 2nd lien		-		-		-
Installment
Home equity - 1st lien		2		90		91
Home equity - 2nd lien		1		32		32
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		1		41		41
Total		7	$	382	$	386

Loans that have been classified as troubled debt restructurings during the six-month periods ended June 30 follow:

	Number of Contracts		Pre-modification Recorded Balance		Post-modification Recorded Balance
	(Dollars in thousands)
2019
Commercial
Income producing - real estate		2	$	1,329	$	1,329
Land, land development & construction-real estate		-		-		-
Commercial and industrial		1		49		49
Mortgage
1-4 family		2		787		786
Resort lending		-		-		-
Home equity - 1st lien		-		-		-
Home equity - 2nd lien		-		-		-
Installment
Home equity - 1st lien		2		49		51
Home equity - 2nd lien		4		111		112
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		-		-		-
Total		11	$	2,325	$	2,327
2018
Commercial
Income producing - real estate		1	$	67	$	67
Land, land development & construction-real estate		-		-		-
Commercial and industrial		5		587		587
Mortgage
1-4 family		4		294		280
Resort lending		-		-		-
Home equity - 1st lien		-		-		-
Home equity - 2nd lien		-		-		-
Installment
Home equity - 1st lien		5		188		190
Home equity - 2nd lien		2		93		93
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		2		76		73
Total		19	$	1,305	$	1,290

The troubled debt restructurings described above for 2019 increased the allowance for loan losses by $0.04 million and resulted in zero charge offs during the three months ended June 30, 2019, and increased the allowance for loan losses by $0.05 million and resulted in zero charge offs during the six months ended June 30, 2019.

The troubled debt restructurings described above for 2018 increased the allowance for loan losses by $0.04 million and resulted in zero charge offs during the three months ended June 30, 2018, and increased the allowance for loan losses by $0.01 million and resulted in zero charge offs during the six months ended June 30, 2018.

There were no troubled debt restructurings that subsequently defaulted within twelve months following the modification during the three and six months periods ended June 30, 2019 and 2018.

A loan is considered to be in payment default generally once it is 90 days contractually past due under the modified terms.

In order to determine whether a borrower is experiencing financial difficulty, we perform an evaluation of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under our internal underwriting policy.

Credit Quality Indicators – As part of our on-going monitoring of the credit quality of our loan portfolios, we track certain credit quality indicators including (a) weighted-average risk grade of commercial loans, (b) the level of classified commercial loans, (c) credit scores of mortgage and installment loan borrowers, and (d) delinquency history and non-performing loans.

For commercial loans, we use a loan rating system that is similar to those employed by state and federal banking regulators. Loans are graded on a scale of 1 to 12. A description of the general characteristics of the ratings follows:

Rating 1 through 6: These loans are generally referred to as our “non-watch” commercial credits that include very high or exceptional credit fundamentals through acceptable credit fundamentals.

Rating 7 and 8: These loans are generally referred to as our “watch” commercial credits. These ratings include loans to borrowers that exhibit potential credit weakness or downward trends. If not checked or cured these trends could weaken our asset or credit position. While potentially weak, no loss of principal or interest is envisioned with these ratings.

Rating 9: These loans are generally referred to as our “substandard accruing” commercial credits. This rating includes loans to borrowers that exhibit a well-defined weakness where payment default is probable and loss is possible if deficiencies are not corrected. Generally, loans with this rating are considered collectible as to both principal and interest primarily due to collateral coverage.

Rating 10 and 11: These loans are generally referred to as our ‘‘substandard - non-accrual’’ and ‘‘doubtful’’ commercial credits. Our doubtful rating includes a sub classification for a loss rate other than 50% (which is the standard doubtful loss rate).  These ratings include loans to borrowers with weaknesses that make collection of debt in full, on the basis of current facts, conditions and values at best questionable and at worst improbable. All of these loans are placed in non-accrual.

Rating 12: These loans are generally referred to as our “loss” commercial credits. This rating includes loans to borrowers that are deemed incapable of repayment and are charged-off.

The following table summarizes loan ratings by loan class for our commercial loan segment:

	Commercial
	Non-watch 1-6		Watch 7-8		Substandard Accrual 9		Non- Accrual 10-11		Total
					(In thousands)
June 30, 2019
Income producing - real estate	$	382,198	$	15,777	$	772	$	-	$	398,747
Land, land development and construction - real estate		83,971		8,467		775		-		93,213
Commercial and industrial		634,098		48,598		3,905		803		687,404
Total	$	1,100,267	$	72,842	$	5,452	$	803	$	1,179,364
Accrued interest included in total	$	3,158	$	219	$	17	$	-	$	3,394
December 31, 2018
Income producing - real estate	$	375,142	$	13,387	$	200	$	44	$	388,773
Land, land development and construction - real estate		76,120		8,328		-		10		84,458
Commercial and industrial		631,248		35,469		5,577		2,367		674,661
Total	$	1,082,510	$	57,184	$	5,777	$	2,421	$	1,147,892
Accrued interest included in total	$	3,107	$	174	$	130	$	-	$	3,411

For each of our mortgage and installment segment classes, we generally monitor credit quality based on the credit scores of the borrowers. These credit scores are generally updated semi-annually.

The following tables summarize credit scores by loan class for our mortgage and installment loan segments:

	Mortgage (1)
	1-4 Family		Resort Lending		Home Equity 1st Lien		Home Equity 2nd Lien		Total
	(In thousands)
June 30, 2019
800 and above	$	110,599	$	11,748	$	5,783	$	12,623	$	140,753
750-799		391,241		32,894		15,624		52,785		492,544
700-749		195,867		15,747		9,584		33,377		254,575
650-699		89,819		8,074		3,623		13,055		114,571
600-649		31,668		2,597		663		4,212		39,140
550-599		16,755		1,465		652		1,929		20,801
500-549		11,333		684		325		1,148		13,490
Under 500		4,192		81		272		392		4,937
Unknown		8,186		1,443		-		419		10,048
Total	$	859,660	$	74,733	$	36,526	$	119,940	$	1,090,859
Accrued interest included in total	$	3,503	$	367	$	176	$	504	$	4,550
December 31, 2018
800 and above	$	94,492	$	10,898	$	6,784	$	8,838	$	121,012
750-799		384,344		36,542		17,303		38,295		476,484
700-749		202,440		17,282		9,155		23,249		252,126
650-699		91,847		9,945		3,987		8,681		114,460
600-649		34,342		3,088		959		3,359		41,748
550-599		13,771		1,867		427		1,236		17,301
500-549		8,439		106		418		826		9,789
Under 500		2,533		143		98		381		3,155
Unknown		8,236		1,910		113		653		10,912
Total	$	840,444	$	81,781	$	39,244	$	85,518	$	1,046,987
Accrued interest included in total	$	3,079	$	363	$	199	$	456	$	4,097

(1) Credit scores have been updated within the last twelve months.

	Installment(1)
	Home Equity 1st Lien		Home Equity 2nd Lien		Boat Lending		Recreational Vehicle Lending		Other		Total
	(In thousands)
June 30, 2019
800 and above	$	449	$	231	$	26,585	$	22,213	$	6,683	$	56,161
750-799		1,219		1,517		115,402		85,635		34,760		238,533
700-749		1,390		1,224		41,608		28,261		23,945		96,428
650-699		1,496		1,161		10,612		5,728		10,426		29,423
600-649		993		730		1,879		1,767		2,954		8,323
550-599		550		573		831		653		853		3,460
500-549		313		217		486		181		859		2,056
Under 500		19		55		229		42		187		532
Unknown		-		43		26		-		10,456		10,525
Total	$	6,429	$	5,751	$	197,658	$	144,480	$	91,123	$	445,441
Accrued interest included in total	$	23	$	19	$	493	$	368	$	291	$	1,194
December 31, 2018
800 and above	$	555	$	235	$	20,767	$	20,197	$	6,272	$	48,026
750-799		1,502		1,642		100,191		74,154		31,483		208,972
700-749		1,582		1,682		35,455		24,890		24,369		87,978
650-699		1,606		1,217		10,581		4,918		9,840		28,162
600-649		996		1,272		1,657		992		2,751		7,668
550-599		759		658		652		453		838		3,360
500-549		384		229		286		225		651		1,775
Under 500		51		6		266		7		218		548
Unknown		2		103		39		-		9,546		9,690
Total	$	7,437	$	7,044	$	169,894	$	125,836	$	85,968	$	396,179
Accrued interest included in total	$	28	$	25	$	403	$	311	$	263	$	1,030

(1) Credit scores have been updated within the last twelve months.

Foreclosed residential real estate properties included in other real estate and repossessed assets on our Condensed Consolidated Statements of Financial Condition totaled $1.2 million at both June 30, 2019 and December 31, 2018, respectively.  Retail mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements totaled $0.6 million and $0.3 million at June 30, 2019 and December 31, 2018, respectively.

During the first quarter of 2019, we sold $40.6 million, of residential adjustable rate mortgage loans servicing released (classified on the Condensed Consolidated Statements of Financial Condition as held for sale, carried at the lower of cost or fair value at December 31, 2018) to another financial institution and recognized a gain on sale of $0.01 million.  During the first quarter of 2019 we also securitized $29.8 million, of portfolio residential fixed rate mortgage loans servicing retained with Freddie Mac and recognized a gain on sale of $0.53 million.  These transactions were done primarily for asset/liability management purposes.

During the first quarter of 2018, we sold $16.5 million, of residential fixed and adjustable rate portfolio mortgage loans servicing retained to another financial institution and recognized a gain on sale of $0.05 million.  These mortgage loans were sold primarily for asset/liability management purposes.

Purchase Credit Impaired (“PCI”) Loans

Loans acquired in a business combination are recorded at estimated fair value on their purchase date with no carryover of the related allowance for loan losses. In determining the estimated fair value of purchased loans, we consider a number of factors including, among others, the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, and net present value of cash flows expected to be received. Purchased loans are accounted for in accordance with guidance for certain loans acquired in a transfer (ASC 310-30), when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments. The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in expected cash flows will result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income.

As a result of our acquisition of TCSB Bancorp, Inc. (“TCSB”) (see note #17) we purchased loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. For these loans that meet the criteria of ASC 310-30 treatment, the carrying amount was as follows:

	June 30, 2019		December 31, 2018
	(In thousands)
Commercial	$	1,490	$	1,609
Mortgage		587		555
Installment		324		349
Total carrying amount		2,401		2,513
Allowance for loan losses		-		-
Carrying amount, net of allowance for loan losses	$	2,401	$	2,513

The accretable difference on PCI loans is the difference between the expected cash flows and the net present value of expected cash flows with such difference accreted into earnings using the effective yield method over the term of the loans. Accretion recorded as loan interest income is included in the table below.  Accretable yield of PCI loans, or income expected to be collected follows:

	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
	(unaudited)						(unaudited)
	(In thousands)						(In thousands)
Balance at beginning of period	$	788		$	-		$	462		$	-
New loans purchased		-			568			-			568
Accretion recorded as loan interest income		(39	)		(35	)		(78	)		(35	)
Reclassification from (to) nonaccretable difference		-			-			365			-
Displosals/other adjustments		-			-			-			-
Balance at end of period	$	749		$	533		$	749		$	533

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Shareholders' Equity and Earnings Per Common Share

6 Months Ended

Jun. 30, 2019

Shareholders' Equity and Earnings Per Common Share [Abstract]

Shareholders' Equity and Earnings Per Common Share

5.    Shareholders’ Equity and Earnings Per Common Share

In December, 2018, our Board of Directors authorized a share repurchase plan (the “Repurchase Plan”) to buy back up to 5% of our outstanding common stock through December 31, 2019.  During the first six months of 2019, we completed the repurchase of 5% of our outstanding common shares.  In June 2019, our Board of Directors authorized a 300,000 share expansion of the 2019 repurchase plan.  We expect to accomplish any remaining repurchases through open market transactions, though we could execute repurchases through other means, such as privately negotiated transactions.  The timing and amount of any share repurchases will depend on a variety of factors, including, among others, securities law restrictions, the trading price of our common stock, regulatory requirements, potential alternative uses for capital, and our financial performance. The Repurchase Plan does not obligate us to acquire any particular amount of common stock, and it may be modified or suspended at any time at our discretion. We expect to fund any repurchases from cash on hand.  During the six month periods ended June 30, 2019 and 2018 repurchases were made totaling 1,179,688 shares and zero shares of common stock, respectively for an aggregate purchase price of $25.8 million and zero, respectively.

A reconciliation of basic and diluted net income per common share follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(In thousands, except per share data)
Net income	$	10,730	$	8,817	$	20,111	$	17,978
Weighted average shares outstanding (1)		23,036		24,109		23,310		22,745
Stock units for deferred compensation plan for non-employee directors		128		126		130		125
Effect of stock options		112		224		119		179
Performance share units		37		51		39		50
Weighted average shares outstanding for calculation of diluted earnings per share		23,313		24,510		23,598		23,099
Net income per common share
Basic (1)	$	0.47	$	0.37	$	0.86	$	0.79
Diluted	$	0.46	$	0.36	$	0.85	$	0.78

⁽¹⁾Basic net income per common share includes weighted average common shares outstanding during the period and participating share awards.

Weighted average stock options outstanding that were not considered in computing diluted net income per common share because they were anti-dilutive were zero for the three and six month periods ended June 30, 2019 and 2018, respectively.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2019

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

6.    Derivative Financial Instruments

We are required to record derivatives on our Condensed Consolidated Statements of Financial Condition as assets and liabilities measured at their fair value.  The accounting for increases and decreases in the value of derivatives depends upon the use of derivatives and whether the derivatives qualify for hedge accounting.

Our derivative financial instruments according to the type of hedge in which they are designated follows:

	June 30, 2019
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Fair value hedge designation - Pay-fixed interest rate swap agreements	$	7,117		9.9	$	(203	)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		2.1	$	(171	)
Interest rate cap agreements		150,000		3.1		576
Total	$	175,000		3.0	$	405
No hedge designation
Rate-lock mortgage loan commitments	$	81,784		0.1	$	2,147
Mandatory commitments to sell mortgage loans		141,434		0.1		(334	)
Pay-fixed interest rate swap agreements - commercial		108,895		5.3		(3,179	)
Pay-variable interest rate swap agreements - commercial		108,895		5.3		3,179
Purchased options		3,095		2.0		171
Written options		3,035		2.0		(170	)
Total	$	447,138		2.7	$	1,814

	December 31, 2018
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		2.6	$	280
Interest rate cap agreements		150,000		3.6		2,245
Total	$	175,000		3.5	$	2,525
No hedge designation
Rate-lock mortgage loan commitments	$	32,473		0.1	$	687
Mandatory commitments to sell mortgage loans		57,583		0.1		(383	)
Pay-fixed interest rate swap agreements - commercial		94,451		5.5		405
Pay-variable interest rate swap agreements - commercial		94,451		5.5		(405	)
Purchased options		3,095		2.5		116
Written options		3,095		2.5		(116	)
Total	$	285,148		3.7	$	304

We use variable-rate and short-term fixed-rate (less than 12 months) debt obligations to fund a portion of our Condensed Consolidated Statements of Financial Condition, which exposes us to variability in interest rates. To meet our asset/liability management objectives, we may periodically enter into derivative financial instruments to mitigate exposure to fluctuations in cash flows resulting from changes in interest rates (“Cash Flow Hedges”).  Cash Flow Hedges included certain pay-fixed interest rate swaps and interest rate cap agreements.  Pay-fixed interest rate swaps convert the variable-rate cash flows on debt obligations to fixed-rates.  Under interest-rate cap agreements, we will receive cash if interest rates rise above a predetermined level. As a result, we effectively have variable-rate debt with an established maximum rate. We pay an upfront premium on interest rate caps which is recognized in earnings in the same period in which the hedged item affects earnings.  Unrecognized premiums from interest rate caps aggregated to $2.5 million at June 30, 2019 and $2.7 million at December 31, 2018.

We record the fair value of Cash Flow Hedges in accrued income and other assets and accrued expenses and other liabilities on our Condensed Consolidated Statements of Financial Condition.  On an ongoing basis, we adjust our Condensed Consolidated Statements of Financial Condition to reflect the then current fair value of Cash Flow Hedges.  The related gains or losses are reported in other comprehensive income or loss and are subsequently reclassified into earnings, as a yield adjustment in the same period in which the related interest on the hedged items (variable-rate debt obligations) affect earnings.  It is anticipated that approximately $0.12 million, of unrealized gains on Cash Flow Hedges at June 30, 2019 will be reclassified to earnings over the next twelve months.  To the extent that the Cash Flow Hedges are not effective, the ineffective portion of the Cash Flow Hedges is immediately recognized in interest expense.  The maximum term of the Cash Flow Hedge at June 30, 2019 is 4.3 years.

Beginning in the second quarter of 2019 we entered into a pay-fixed interest rate swap to protect a portion of the fair value of a certain fixed rate commercial loan (“Fair Value Hedge”).  As a result, changes in the fair value of the pay-fixed interest rate swap is expected to offset changes in the fair value of the fixed rate commercial loan due to fluctuations in interest rates.  We record the fair value of Fair Value Hedges in accrued income and other assets and accrued expenses and other liabilities on our Condensed Consolidated Statements of Financial Condition.  The hedged item (fixed rate commercial loan) is also recorded at fair value which offsets the adjustment to the Fair Value Hedge.  On an ongoing basis, we adjust our Condensed Consolidated Statements of Financial Condition to reflect the then current fair value of both the Fair Value Hedge and the hedged item.  The related gains or losses are reported in interest income – interest and fees on loans in our Condensed Consolidated Statements of Operations.

Certain financial derivative instruments have not been designated as hedges. The fair value of these derivative financial instruments has been recorded on our Condensed Consolidated Statements of Financial Condition and is adjusted on an ongoing basis to reflect their then current fair value. The changes in fair value of derivative financial instruments not designated as hedges are recognized in our Condensed Consolidated Statements of Operations.

In the ordinary course of business, we enter into rate-lock mortgage loan commitments with customers (“Rate-Lock Commitments”).  These commitments expose us to interest rate risk.  We also enter into mandatory commitments to sell mortgage loans (“Mandatory Commitments”) to reduce the impact of price fluctuations of mortgage loans held for sale and Rate-Lock Commitments.  Mandatory Commitments help protect our loan sale profit margin from fluctuations in interest rates. The changes in the fair value of Rate-Lock Commitments and Mandatory Commitments are recognized currently as part of net gains on mortgage loans in our Condensed Consolidated Statements of Operations.  We obtain market prices on Mandatory Commitments and Rate-Lock Commitments.  Net gains on mortgage loans, as well as net income may be more volatile as a result of these derivative instruments, which are not designated as hedges.

In prior periods we offered to our deposit customers an equity linked time deposit product (“Altitude CD”).  The Altitude CD was a time deposit that provides the customer a guaranteed return of principal at maturity plus a potential equity return (a written option), while we receive a like stream of funds based on the equity return (a purchased option).  The written and purchased options will generally move in opposite directions resulting in little or no net impact on our Condensed Consolidated Statements of Operations.  All of the written and purchased options in the table above relate to this Altitude CD product.

We have a program that allows commercial loan customers to lock in a fixed rate for a longer period of time than we would normally offer for interest rate risk reasons.  We will enter into a variable rate commercial loan and an interest rate swap agreement with a customer and then enter into an offsetting interest rate swap agreement with an unrelated party.  The interest rate swap agreement fair values will generally move in opposite directions resulting in little or no net impact on our Condensed Consolidated Statements of Operations.  All of the interest rate swap agreements noted as commercial in the table above with no hedge designation relate to this program.

The following tables illustrate the impact that the derivative financial instruments discussed above have on individual line items in the Condensed Consolidated Statements of Financial Condition for the periods presented:

Fair Values of Derivative Instruments

	Asset Derivatives						Liability Derivatives
	June 30, 2019			December 31, 2018			June 30, 2019			December 31, 2018
	Balance  Sheet  Location	Fair Value		Balance  Sheet  Location	Fair Value		Balance  Sheet  Location	Fair Value		Balance  Sheet  Location	Fair Value
	(In thousands)
Derivatives designated as hedging instruments
Pay-fixed interest rate swap agreements	Other assets	$	-	Other assets	$	280	Other liabilities	$	374	Other liabilities	$	-
Interest rate cap agreements	Other assets		576	Other assets		2,245	Other liabilities		-	Other liabilities		-
			576			2,525			374			-
Derivatives not designated as hedging instruments
Rate-lock mortgage loan commitments	Other assets		2,147	Other assets		687	Other liabilities		-	Other liabilities		-
Mandatory commitments to sell mortgage loans	Other assets		-	Other assets		-	Other liabilities		334	Other liabilities		383
Pay-fixed interest rate swap agreements -commercial	Other assets		80	Other assets		1,116	Other liabilities		3,259	Other liabilities		711
Pay-variable interest rate swap agreements -commercial	Other assets		3,259	Other assets		711	Other liabilities		80	Other liabilities		1,116
Purchased options	Other assets		171	Other assets		116	Other liabilities		-	Other liabilities		-
Written options	Other assets		-	Other assets		-	Other liabilities		170	Other liabilities		116
			5,657			2,630			3,843			2,326
Total derivatives		$	6,233		$	5,155		$	4,217		$	2,326

The effect of derivative financial instruments on the Condensed Consolidated Statements of Operations follows:

Three Month Periods Ended June 30,
	Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)					Location of  Gain  Reclassified  from  Accumulated  Other  Comprehensive  Loss into  Income  (Effective	Gain Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)				Location of  Gain (Loss)  Recognized	Gain (Loss) Recognized in Income (1)
	2019			2018		Portion)	2019		2018		in Income (1)	2019			2018
							(In thousands)
Fair Value Hedges
Pay-fixed interest rate swap agreements											Interest income	$	(203	)	$	-
Cash Flow Hedges
Interest rate cap agreements	$	(489	)	$	244	Interest expense	$	115	$	45	Interest expense	$	-		$	-
Pay-fixed interest rate swap agreements		(267	)		83	Interest expense		27		8	Interest expense		-			(24	)
Total	$	(756	)	$	327		$	142	$	53		$	-		$	(24	)
No hedge designation
Rate-lock mortgage loan commitments											Net gains on mortgage  loans	$	831		$	244
Mandatory commitments to sell mortgage loans											Net gains on mortgage loans		(125	)		(110	)
Pay-fixed interest rate swap agreements -commercial											Interest income		(2,437	)		487
Pay-variable interest rate swap agreements -commercial											Interest income		2,437			(487	)
Pay-variable interest rate swap agreements											Interest expense		-			36
Purchased options											Interest expense		(31	)		(6	)
Written options											Interest expense		30			6
Total												$	705		$	170

(1)  For cash flow hedges, this location and amount refers to the ineffective portion.

Six Month Periods Ended June 30,
	Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)					Location of  Gain  Reclassified  from  Accumulated  Other  Comprehensive  Loss into  Income  (Effective	Gain Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)				Location of  Gain (Loss)  Recognized	Gain (Loss) Recognized in Income (1)
	2019			2018		Portion)	2019		2018		in Income (1)	2019			2018
							(In thousands)
Fair Value Hedges
Pay-fixed interest rate swap agreements											Interest income	$	(203	)	$	-
Cash Flow Hedges
Interest rate cap agreements	$	(1,274	)	$	757	Interest expense	$	233	$	52	Interest expense	$	-		$	-
Pay-fixed interest rate swap agreements		(394	)		254	Interest expense		58		7	Interest expense		-			(12	)
Total	$	(1,668	)	$	1,011		$	291	$	59		$	-		$	(12	)
No hedge designation
Rate-lock mortgage loan commitments											Net gains on mortgage loans	$	1,460		$	672
Mandatory commitments to sell mortgage loans											Net gains on mortgage  loans		49			(270	)
Pay-fixed interest rate swap agreements -commercial											Interest income		(3,584	)		1,543
Pay-variable interest rate swap agreements -commercial											Interest income		3,584			(1,543	)
Pay-variable interest rate swap agreements											Interest expense		-			36
Purchased options											Interest expense		55			(99	)
Written options											Interest expense		(54	)		99
Total												$	1,510		$	438

(1)  For cash flow hedges, this location and amount refers to the ineffective portion.

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Goodwill and Other Intangibles

6 Months Ended

Jun. 30, 2019

Goodwill and Other Intangibles [Abstract]

Goodwill and other Intangibles

7.    Goodwill and other Intangibles

The following table summarizes intangible assets, net of amortization:

	June 30, 2019				December 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Amortized intangible assets - core deposits	$	11,916	$	6,046	$	11,916	$	5,501
Unamortized intangible assets - goodwill	$	28,300			$	28,300

A summary of estimated core deposit intangible amortization at June 30, 2019 follows:

	(In thousands)
Six months ending December 31, 2019	$	544
2020		1,020
2021		970
2022		785
2023		547
2024 and thereafter		2,004
Total	$	5,870

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Share Based Compensation

6 Months Ended

Jun. 30, 2019

Share Based Compensation [Abstract]

Share Based Compensation

8.    Share Based Compensation

We maintain share based payment plans that include a non-employee director stock purchase plan and a long-term incentive plan that permits the issuance of share based compensation, including stock options and non-vested share awards. The long-term incentive plan, which is shareholder approved, permits the grant of additional share based awards for up to 0.5 million shares of common stock as of June 30, 2019.  The non-employee director stock purchase plan permits the issuance of additional share based payments for up to 0.2 million shares of common stock as of June 30, 2019. Share based awards and payments are measured at fair value at the date of grant and are expensed over the requisite service period. Common shares issued upon exercise of stock options come from currently authorized but unissued shares.

During the three month periods ended June 30, 2019 and 2018 pursuant to our long-term incentive plan, we granted 0.004 million and 0.009 million shares of restricted stock to certain officers.  For both six month periods ended June 30, 2019 and 2018, pursuant to our long-term incentive plan, we granted 0.05 million shares of restricted stock and 0.02 million performance stock units (“PSU”) to certain officers.  Except for 0.002 million shares of restricted stock issued during the first quarters of 2019 and 2018 that vest ratably over three years, the shares of restricted stock and PSUs cliff vest after a period of three years.  The performance feature of the PSUs is based on a comparison of our total shareholder return over the three year period starting on the grant date to the total shareholder return over that period for a banking index of our peers.

Our directors may elect to receive a portion of their quarterly cash retainer fees in the form of common stock (either on a current basis or on a deferred basis pursuant to the non-employee director stock purchase plan referenced above). Shares equal in value to that portion of each director’s fees that he or she has elected to receive in stock are issued each quarter and vest immediately.  We issued 0.005 million shares during each six month period ended June 30, 2019 and 2018 pursuant to this plan and expensed their value during those same periods.

Total compensation expense recognized for grants pursuant to our long-term incentive plan was $0.4 million and $0.8 million during the three and six month periods ended June 30, 2019, respectively, and was $0.4 million and $0.7 million during the same periods in 2018, respectively.  The corresponding tax benefit relating to this expense was $0.1 million and $0.2 million for the three and six month periods ended June 30, 2019, respectively and $0.1 million and $0.2 million for the same periods in 2018. Total expense recognized for non-employee director share based payments was $0.06 million and $0.11 million during the three and six month periods ended June 30, 2019, respectively, and was $0.05 million and $0.11 million during the same periods in 2018, respectively.  The corresponding tax benefit relating to this expense was $0.01 million and $0.02 million for the three and six month periods ended June 30, 2019, respectively and $0.01 million and $0.02 million during the same periods in 2018.

At June 30, 2019, the total expected compensation cost related to non-vested restricted stock and PSUs not yet recognized was $2.7 million.  The weighted-average period over which this amount will be recognized is 2.0 years.

A summary of outstanding stock option grants and related transactions follows:

	Number of Shares			Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregated Intrinsic Value
								(In thousands)
Outstanding at January 1, 2019		211,421		$	6.48
Granted		-
Exercised		(68,399	)		10.16
Forfeited		-
Expired		(558	)		22.35
Outstanding at June 30, 2019		142,464		$	4.66		3.5	$	2,442
Vested and expected to vest at
June 30, 2019		142,464		$	4.66		3.5	$	2,442
Exercisable at June 30, 2019		142,464		$	4.66		3.5	$	2,442

A summary of outstanding non-vested restricted stock and PSUs and related transactions follows:

	Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2019		258,419		$	19.00
Granted		78,283			22.98
Vested		(85,788	)		14.55
Forfeited		(11,475	)		22.91
Outstanding at June 30, 2019		239,439		$	21.72

Certain information regarding options exercised during the periods follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Intrinsic value	$	-	$	1,596	$	836	$	1,674
Cash proceeds received	$	-	$	971	$	695	$	984
Tax benefit realized	$	-	$	336	$	176	$	352

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Income Tax

6 Months Ended

Jun. 30, 2019

Income Tax [Abstract]

Income Tax

9.    Income Tax

Income tax expense was $2.7 million and $2.1 million during the three month periods ended June 30, 2019 and 2018, respectively and $4.9 million and $4.1 million during the six months ended June 30, 2019 and 2018, respectively.  Our actual federal income tax expense is different than the amount computed by applying our statutory income tax rate to our income before income tax primarily due to tax-exempt interest income and tax-exempt income from the increase in the cash surrender value on life insurance.  In addition, the three and six month periods ending June 30, 2019 include reductions of zero and $0.2 million, respectively, of income tax expense related to the impact of the excess value of stock awards that vested and stock options that were exercised as compared to the initial fair values that were expensed.  These amounts during the same periods in 2018 were $0.1 million and $0.3 million, respectively.

We assess whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard.  The ultimate realization of this asset is primarily based on generating future income.  We concluded at June 30, 2019, June 30, 2018 and December 31, 2018 that the realization of substantially all of our deferred tax assets continues to be more likely than not.

At both June 30, 2019 and December 31, 2018, we had approximately $0.6 million, of gross unrecognized tax benefits.  We do not expect the total amount of unrecognized tax benefits to significantly increase or decrease during the balance of 2019.

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Regulatory Matters

6 Months Ended

Jun. 30, 2019

Regulatory Matters [Abstract]

Regulatory Matters

10.  Regulatory Matters

Capital guidelines adopted by federal and state regulatory agencies and restrictions imposed by law limit the amount of cash dividends our Bank can pay to us. Under these guidelines, the amount of dividends that may be paid in any calendar year is limited to the Bank’s current year net profits, combined with the retained net profits of the preceding two years. Further, the Bank cannot pay a dividend at any time that it has negative undivided profits.  As of June 30, 2019, the Bank had positive undivided profits of $32.6 million.  It is not our intent to have dividends paid in amounts that would reduce the capital of our Bank to levels below those which we consider prudent and in accordance with guidelines of regulatory authorities.

We are also subject to various regulatory capital requirements. The prompt corrective action regulations establish quantitative measures to ensure capital adequacy and require minimum amounts and ratios of total, Tier 1, and common equity Tier 1 capital to risk-weighted assets and Tier 1 capital to average assets. Failure to meet minimum capital requirements can result in certain mandatory, and possibly discretionary, actions by regulators that could have a material effect on our interim condensed consolidated financial statements. Under capital adequacy guidelines, we must meet specific capital requirements that involve quantitative measures as well as qualitative judgments by the regulators. The most recent regulatory filings as of June 30, 2019 and December 31, 2018, categorized our Bank as well capitalized. Management is not aware of any conditions or events that would have changed the most recent Federal Deposit Insurance Corporation (“FDIC”) categorization.

Our actual capital amounts and ratios follow (1):

	Actual					Minimum for Adequately Capitalized Institutions					Minimum for Well-Capitalized Institutions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
June 30, 2019
Total capital to risk-weighted assets
Consolidated	$	360,894		13.36	%	$	216,166		8.00	%	NA		NA
Independent Bank		346,015		12.81			216,074		8.00		$	270,093		10.00	%
Tier 1 capital to risk-weighted assets
Consolidated	$	333,508		12.34	%	$	162,125		6.00	%	NA		NA
Independent Bank		318,629		11.80			162,056		6.00		$	216,074		8.00	%
Common equity tier 1 capital to risk-weighted assets
Consolidated	$	295,310		10.93	%	$	121,594		4.50	%	NA		NA
Independent Bank		318,629		11.80			121,542		4.50		$	175,561		6.50	%
Tier 1 capital to average assets
Consolidated	$	333,508		9.95	%	$	134,131		4.00	%	NA		NA
Independent Bank		318,629		9.50			134,138		4.00		$	167,673		5.00	%
December 31, 2018
Total capital to risk-weighted assets
Consolidated	$	371,603		14.25	%	$	208,572		8.00	%	NA		NA
Independent Bank		337,227		12.94			208,456		8.00		$	260,569		10.00	%
Tier 1 capital to risk-weighted assets
Consolidated	$	345,419		13.25	%	$	156,429		6.00	%	NA		NA
Independent Bank		311,043		11.94			156,342		6.00		$	208,456		8.00	%
Common equity tier 1 capital to risk-weighted assets
Consolidated	$	307,255		11.79	%	$	117,322		4.50	%	NA		NA
Independent Bank		311,043		11.94			117,256		4.50		$	169,370		6.50	%
Tier 1 capital to average assets
Consolidated	$	345,419		10.47	%	$	131,930		4.00	%	NA		NA
Independent Bank		311,043		9.44			131,778		4.00		$	164,723		5.00	%

(1) These ratios do not reflect a capital conservation buffer of 2.50% and 1.875% at June 30, 2019 and December 31, 2018, respectfully.

NA - Not applicable

The components of our regulatory capital are as follows:

	Consolidated						Independent Bank
	June 30, 2019			December 31, 2018			June 30, 2019			December 31, 2018
	(In thousands)
Total shareholders’ equity	$	330,846		$	338,994		$	354,165		$	341,496
Add (deduct)
Accumulated other comprehensive (income) loss for regulatory purposes		(1,366	)		4,311			(1,366	)		4,311
Goodwill and other intangibles		(34,170	)		(34,715	)		(34,170	)		(34,715	)
Disallowed deferred tax assets		-			(1,335	)		-			(49	)
Common equity tier 1 capital		295,310			307,255			318,629			311,043
Qualifying trust preferred securities		38,198			38,164			-			-
Tier 1 capital		333,508			345,419			318,629			311,043
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		27,386			26,184			27,386			26,184
Total risk-based capital	$	360,894		$	371,603		$	346,015		$	337,227

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Fair Value Disclosures

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Disclosures

11.  Fair Value Disclosures

FASB ASC topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Valuation is based upon quoted prices for identical instruments traded in active markets. Level 1 instruments include securities traded on active exchange markets, such as the New York Stock Exchange, as well as U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets.

Level 2:  Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 2 instruments include securities traded in less active dealer or broker markets.

Level 3:  Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

We used the following methods and significant assumptions to estimate fair value:

Securities:  Where quoted market prices are available in an active market, securities (equity securities at fair value or available for sale) are classified as Level 1 of the valuation hierarchy.  Level 1 securities include certain preferred stocks included in our equity securities at fair value for which there are quoted prices in active markets (at December 31, 2018).  If quoted market prices are not available for the specific security, then fair values are estimated by (1) using quoted market prices of securities with similar characteristics, (2) matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices, or (3) a discounted cash flow analysis whose significant fair value inputs can generally be verified and do not typically involve judgment by management. These securities are classified as Level 2 of the valuation hierarchy and primarily include agency securities, private label mortgage-backed securities, other asset backed securities, obligations of states and political subdivisions, trust preferred securities, corporate securities and foreign government securities.

Loans held for sale:  The fair value of mortgage loans held for sale, carried at fair value is based on agency cash window loan pricing for comparable assets (recurring Level 2) and the fair value of mortgage loans held for sale, carried at the lower of cost or fair value (at December 31, 2018) is based on a quoted sales price (non-recurring Level 1).

Impaired loans with specific loss allocations based on collateral value:  From time to time, certain loans are considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. We measure our investment in an impaired loan based on one of three methods: the loan’s observable market price, the fair value of the collateral or the present value of expected future cash flows discounted at the loan’s effective interest rate. Those impaired loans not requiring an allowance for loan losses represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At June 30, 2019 and December 31, 2018, all of our impaired loans were evaluated based on either the fair value of the collateral or the present value of expected future cash flows discounted at the loan’s effective interest rate. When the fair value of the collateral is based on an appraised value or when an appraised value is not available we record the impaired loan as nonrecurring Level 3.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments can be significant and thus will typically result in a Level 3 classification of the inputs for determining fair value.

Other real estate:  At the time of acquisition, other real estate is recorded at fair value, less estimated costs to sell, which becomes the property’s new basis. Subsequent write-downs to reflect declines in value since the time of acquisition may occur from time to time and are recorded in net (gains) losses on other real estate and repossessed assets, which is part of non-interest expense - other in the Condensed Consolidated Statements of Operations. The fair value of the property used at and subsequent to the time of acquisition is typically determined by a third party appraisal of the property. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments can be significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and other real estate  are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by us. Once received, an independent third party, or a member of our Collateral Evaluation Department (for commercial properties), or a member of our Special Assets Group (for residential properties) reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. We compare the actual selling price of collateral that has been sold to the most recent appraised value of our properties to determine what additional adjustment, if any, should be made to the appraisal value to arrive at fair value. For commercial and residential properties we typically discount an appraisal to account for various factors that the appraisal excludes in its assumptions. These additional discounts generally do not result in material adjustments to the appraised value.

Capitalized mortgage loan servicing rights:  The fair value of capitalized mortgage loan servicing rights is based on a valuation model used by an independent third party that calculates the present value of estimated net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income. Certain model assumptions are generally unobservable and are based upon the best information available including data relating to our own servicing portfolio, reviews of mortgage servicing assumption and valuation surveys and input from various mortgage servicers and, therefore, are recorded as Level 3.  Management evaluates the third party valuation for reasonableness each quarter as part of our financial reporting control processes.

Derivatives:  The fair value of rate-lock mortgage loan commitments is based on agency cash window loan pricing for comparable assets and the fair value of mandatory commitments to sell mortgage loans is based on mortgage backed security pricing for comparable assets (recurring Level 2). The fair value of interest rate swap and interest rate cap agreements are derived from proprietary models which utilize current market data.  The significant fair value inputs can generally be observed in the market place and do not typically involve judgment by management (recurring Level 2). The fair value of purchased and written options is based on prices of financial instruments with similar characteristics and do not typically involve judgment by management (recurring Level 2).

Assets and liabilities measured at fair value, including financial assets for which we have elected the fair value option, were as follows:

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
June 30, 2019:
Measured at Fair Value on a Recurring Basis
Assets
Securities available for sale
U.S. agency	$	17,183	$	-	$	17,183	$	-
U.S. agency residential mortgage-backed		137,017		-		137,017		-
U.S. agency commercial mortgage-backed		12,238		-		12,238		-
Private label mortgage-backed		30,129		-		30,129		-
Other asset backed		91,151		-		91,151		-
Obligations of states and political subdivisions		104,827		-		104,827		-
Corporate		33,882		-		33,882		-
Trust preferred		1,851		-		1,851		-
Foreign government		2,027		-		2,027		-
Loans held for sale, carried at fair value		62,883		-		62,883		-
Capitalized mortgage loan servicing rights		17,894		-		-		17,894
Derivatives (1)		6,233		-		6,233		-
Liabilities
Derivatives (2)		4,217		-		4,217		-
Measured at Fair Value on a Non-recurring Basis:
Assets
Impaired loans (3)
Commercial
Income producing - real estate		116		-		-		116
Land, land development & construction-real estate		1,198		-		-		1,198
Commercial and industrial		106		-		-		106
Mortgage
1-4 family		839		-		-		839
Resort lending		360		-		-		360
Home equity - 1st lien		41		-		-		41
Home equity - 2nd lien		182		-		-		182
Installment
Home equity - 1st lien		2		-		-		2
Home equity - 2nd lien		31		-		-		31
Boat lending		21		-		-		21
Recreational vehicle lending		1		-		-		1
Other		97		-		-		97
Other real estate (4)
Mortgage
1-4 family		8		-		-		8
Home equity - 2nd lien		59		-		-		59

(1)  Included in accrued income and other assets

(2)  Included in accrued expenses and other liabilities

(3)  Only includes impaired loans with specific loss allocations based on collateral value.

(4)  Only includes other real estate with subsequent write downs to fair value.

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
December 31, 2018:
Measured at Fair Value on a Recurring Basis
Assets
Equity securities at fair value	$	393	$	393	$	-	$	-
Securities available for sale
U.S. agency		20,014		-		20,014		-
U.S. agency residential mortgage-backed		123,751		-		123,751		-
U.S. agency commercial mortgage-backed		5,726		-		5,726		-
Private label mortgage-backed		29,419		-		29,419		-
Other asset backed		83,319		-		83,319		-
Obligations of states and political subdivisions		127,555		-		127,555		-
Corporate		34,309		-		34,309		-
Trust preferred		1,819		-		1,819		-
Foreign government		2,014		-		2,014		-
Loans held for sale, carried at fair value		44,753		-		44,753		-
Capitalized mortgage loan servicing rights		21,400		-		-		21,400
Derivatives (1)		5,155		-		5,155		-
Liabilities
Derivatives (2)		2,326		-		2,326		-
Measured at Fair Value on a Non-recurring Basis:
Assets
Loans held for sale, carried at the lower of cost or fair value		41,471		41,471		-		-
Impaired loans (3)
Commercial
Income producing - real estate		217		-		-		217
Land, land development & construction-real estate		106		-		-		106
Commercial and industrial		2,243		-		-		2,243
Mortgage
1-4 family		333		-		-		333
Resort lending		572		-		-		572
Other real estate (4)
Mortgage
1-4 family		95		-		-		95
Home equity - 2nd lien		59		-		-		59

(1)  Included in accrued income and other assets

(2)  Included in accrued expenses and other liabilities

(3)  Only includes impaired loans with specific loss allocations based on collateral value.

(4)  Only includes other real estate with subsequent write downs to fair value.

There were no transfers between Level 1 and Level 2 during the six months ended June 30, 2019 and 2018.

Changes in fair values for financial assets which we have elected the fair value option for the periods presented were as follows:

	Changes in Fair Values for the Six-Month Periods Ended June 30 for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
	Net Gains (Losses) on Assets					Mortgage			Total Change in Fair Values Included in Current
	Securities			Mortgage Loans		Loan Servicing, net			Period Earnings
	(In thousands)
2019
Equity securities at fair value	$	167		$	-	$	-		$	167
Loans held for sale		-			577		-			577
Capitalized mortgage loan servicing rights		-			-		(6,113	)		(6,113	)
2018
Equity securities at fair value	$	(119	)	$	-	$	-		$	(119	)
Loans held for sale		-			367		-			367
Capitalized mortgage loan servicing rights		-			-		892			892

For those items measured at fair value pursuant to our election of the fair value option, interest income is recorded within the Condensed Consolidated Statements of Operations based on the contractual amount of interest income earned on these financial assets and dividend income is recorded based on cash dividends received.

The following represent impairment charges recognized during the three and six month periods ended June 30, 2019 and 2018 relating to assets measured at fair value on a non-recurring basis:

• Loanswhicharemeasured forimpairmentusingthefairvalueofcollateralforcollateraldependent loans hadacarryingamountof$3.0million,which is net ofavaluationallowance of$1.2millionat June 30,2019, andhadacarryingamountof$3.5million,which is net ofavaluationallowanceof$1.5millionatDecember31, 2018.  The provision for loan losses included in our results of operations relating to impaired loans was a net expense of $0.3 million and $0.5 million for the three month periods ending June 30, 2019 and 2018, respectively, and a net expense of $0.4 million and $0.5 million for the six month periods ending June 30, 2019 and 2018, respectively.

• Otherrealestate,which ismeasuredusing thefairvalueoftheproperty,hadacarryingamountof$0.1million whichisnetofavaluationallowance of$0.1millionatJune 30,2019,andacarrying amountof$0.2million,whichisnetofavaluationallowance of$0.1million,atDecember 31,2018. Charges included in our results of operations relating to other real estate measured at fair value were zero and $0.01 million during each of the three and six month periods ended June 30, 2019, and were zero during each of the three and six month periods ended June 30, 2018.

A reconciliation for all assets and (liabilities) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) follows:

	Capitalized Mortgage Loan Servicing Rights
	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(In thousands)						(In thousands)
Beginning balance	$	19,909		$	17,783		$	21,400		$	15,699
Total gains (losses) realized and unrealized:
Included in results of operations		(3,422	)		(137	)		(6,113	)		892
Included in other comprehensive income (loss)		-			-			-			-
Purchases, issuances, settlements, maturities and calls		1,407			4,202			2,607			5,257
Transfers in and/or out of Level 3		-			-			-			-
Ending balance	$	17,894		$	21,848		$	17,894		$	21,848
Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at June 30	$	(3,422	)	$	(137	)	$	(6,113	)	$	892

The fair value of our capitalized mortgage loan servicing rights has been determined based on a valuation model used by an independent third party as discussed above.  The significant unobservable inputs used in the fair value measurement of the capitalized mortgage loan servicing rights are discount rate, cost to service, ancillary income and float rate.  Significant changes in all four of these assumptions in isolation would result in significant changes to the value of our capitalized mortgage loan servicing rights.  Quantitative information about our Level 3 fair value measurements measured on a recurring basis follows:

	Asset Fair Value		Valuation Technique	Unobservable Inputs	Range			Weighted Average
	(In thousands)
June 30, 2019
Capitalized mortgage loan servicing rights	$	17,894	Present value of net	Discount rate	10.00% to 13.00		%		10.14	%
			servicing revenue	Cost to service	$	66 to $216		$	80
				Ancillary income	20 to 36				22
				Float rate		1.77	%		1.77	%
December 31, 2018
Capitalized mortgage loan servicing rights	$	21,400	Present value of net	Discount rate	10.00% to 13.00		%		10.15	%
			servicing revenue	Cost to service	$	68 to $216		$	81
				Ancillary income	20 to 36				23
				Float rate		2.57	%		2.57	%

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis follows:

	Asset Fair Value		Valuation Technique	Unobservable Inputs	Range		Weighted Average
	(In thousands)
June 30, 2019
Impaired loans
Commercial(1)	$	1,420	Sales comparison approach	Adjustment for differences between comparable sales	(48.0)% to 40.0	%		(6.0	)%
Mortgage and
Installment(2)		1,574	Sales comparison approach	Adjustment for  differences between comparable sales	(40.1) to 56.7			(2.6	)
Other real estate
Mortgage		67	Sales comparison approach	Adjustment for differences between comparable sales	(0.0) to 10.2			4.1
December 31, 2018
Impaired loans
Commercial(1)	$	2,566	Sales comparison approach	Adjustment for differences between comparable sales	(32.5)% to 60.0	%		(1.9	)%
Mortgage		905	Sales comparison approach	Adjustment for differences between comparable sales	(40.1) to 25.6			0.7
Other real estate
Mortgage		154	Sales comparison approach	Adjustment for  differences between comparable sales	0.0 to 34.1			11.2

(1) In addition to the valuation techniques and unobservable inputs discussed above, at June 30, 2019 and December 31, 2018, we had an impaired collateral dependent commercial relationship that totaled $0.5 million and $0.7 million, respectively that was secured by collateral other than real estate. Collateral securing this relationship primarily included accounts receivable, inventory and cash at June 30, 2019 and December 31, 2018. Valuation techniques at June 30, 2019 and December 31, 2018, included discounting financial statement values for each particular asset type. Discount rates used ranged from 5% to 97% of stated values at June 30, 2019 and 20% to 80% of stated values at December 31, 2018.

(2) In addition to the valuation techniques and unobservable inputs discussed above, at June 30, 2019 certain impaired collateral dependent installment loans totaling approximately $0.1 million are secured by collateral other than real estate.  For the majority of these loans, we apply internal discount rates to industry valuation guides.

The following table reflects the difference between the aggregate fair value and the aggregate remaining contractual principal balance outstanding for loans held for sale for which the fair value option has been elected for the periods presented.

	Aggregate Fair Value		Difference		Contractual Principal
	(In thousands)
Loans held for sale
June 30, 2019	$	62,883	$	1,834	$	61,049
December 31, 2018		44,753		1,257		43,496

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Fair Values of Financial Instruments

6 Months Ended

Jun. 30, 2019

Fair Values of Financial Instruments [Abstract]

Fair Values of Financial Instruments

12.  Fair Values of Financial Instruments

Most of our assets and liabilities are considered financial instruments. Many of these financial instruments lack an available trading market and it is our general practice and intent to hold the majority of our financial instruments to maturity. Significant estimates and assumptions were used to determine the fair value of financial instruments. These estimates are subjective in nature, involving uncertainties and matters of judgment, and therefore, fair values may not be a precise estimate. Changes in assumptions could significantly affect the estimates.

Estimated fair values have been determined using available data and methodologies that are considered suitable for each category of financial instrument. For instruments with adjustable interest rates which reprice frequently and without significant credit risk, it is presumed that estimated fair values approximate the recorded book balances.

The estimated recorded book balances and fair values follow:

					Fair Value Using
	Recorded Book Balance		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
June 30, 2019
Assets
Cash and due from banks	$	34,461	$	34,461	$	34,461	$	-	$	-
Interest bearing deposits		20,676		20,676		20,676		-		-
Interest bearing deposits - time		498		498		-		498		-
Securities available for sale		430,305		430,305		-		430,305		-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA		NA		NA		NA
Net loans and loans held for sale		2,743,506		2,747,828		-		62,883		2,684,945
Accrued interest receivable		10,816		10,816		1		1,634		9,181
Derivative financial instruments		6,233		6,233		-		6,233		-
Liabilities
Deposits with no stated maturity (1)	$	2,294,255	$	2,294,255	$	2,294,255	$	-	$	-
Deposits with stated maturity (1)		684,630		683,547		-		683,547		-
Other borrowings		41,144		41,271		-		41,271		-
Subordinated debentures		39,422		33,214		-		33,214		-
Accrued interest payable		1,668		1,668		128		1,540		-
Derivative financial instruments		4,217		4,217		-		4,217		-
December 31, 2018
Assets
Cash and due from banks	$	23,350	$	23,350	$	23,350	$	-	$	-
Interest bearing deposits		46,894		46,894		46,894		-		-
Interest bearing deposits - time		595		594		-		594		-
Equity securities at fair value		393		393		393		-		-
Securities available for sale		427,926		427,926		-		427,926		-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA		NA		NA		NA
Net loans and loans held for sale		2,643,856		2,606,256		41,471		44,753		2,520,032
Accrued interest receivable		10,164		10,164		22		1,789		8,353
Derivative financial instruments		5,155		5,155		-		5,155		-
Liabilities
Deposits with no stated maturity (1)	$	2,197,494	$	2,197,494	$	2,197,494	$	-	$	-
Deposits with stated maturity (1)		715,934		711,312		-		711,312		-
Other borrowings		25,700		25,706		-		25,706		-
Subordinated debentures		39,388		35,021		-		35,021		-
Accrued interest payable		1,646		1,646		114		1,532		-
Derivative financial instruments		2,326		2,326		-		2,326		-

(1) Deposits with no stated maturity include reciprocal deposits with a recorded book balance of $270.864 million and $123.080 million at June 30, 2019 and December 31, 2018, respectively. Deposits with a stated maturity include reciprocal deposits with a recorded book balance of $55.462 million and $58.992 million at June 30, 2019 and December 31, 2018, respectively.

The fair values for commitments to extend credit and standby letters of credit are estimated to approximate their aggregate book balance, which is nominal and therefore are not disclosed.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale the entire holdings of a particular financial instrument.

Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business, the value of future earnings attributable to off-balance sheet activities and the value of assets and liabilities that are not considered financial instruments.

Fair value estimates for deposit accounts do not include the value of the core deposit intangible asset resulting from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market.

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Contingencies

6 Months Ended

Jun. 30, 2019

Contingencies [Abstract]

Contingencies

13. Contingencies

We are involved in various litigation matters in the ordinary course of business. At the present time, we do not believe any of these matters will have a significant impact on our consolidated financial position or results of operations. The aggregate amount we have accrued for losses we consider probable as a result of these litigation matters is immaterial. However, because of the inherent uncertainty of outcomes from any litigation matter, we believe it is reasonably possible we may incur losses in addition to the amounts we have accrued.  At this time, we estimate the maximum amount of additional losses that are reasonably possible is insignificant.  However, because of a number of factors, including the fact that certain of these litigation matters are still in their early stages, this maximum amount may change in the future.

The litigation matters described in the preceding paragraph primarily include claims that have been brought against us for damages, but do not include litigation matters where we seek to collect amounts owed to us by third parties (such as litigation initiated to collect delinquent loans). These excluded, collection-related matters may involve claims or counterclaims by the opposing party or parties, but we have excluded such matters from the disclosure contained in the preceding paragraph in all cases where we believe the possibility of us paying damages to any opposing party is remote. Risks associated with the likelihood that we will not collect the full amount owed to us, net of reserves, are disclosed elsewhere in this report.

The provision for loss reimbursement on sold loans represents our estimate of incurred losses related to mortgage loans that we have sold to investors (primarily Fannie Mae, Freddie Mac, Ginnie Mae and the Federal Home Loan Bank of Indianapolis). Since we sell mortgage loans without recourse, loss reimbursements only occur in those instances where we have breached a representation or warranty or other contractual requirement related to the loan sale. The provision for loss reimbursement on sold loans was an expense of $0.03 million and $0.02 million for the three month periods ended June 30, 2019 and 2018 and an expense of $0.15 million and $0.03 million for the six month periods ended June 30, 2019 and 2018, respectively. The reserve for loss reimbursements on sold mortgage loans totaled $0.83 million and $0.78 million at June 30, 2019 and December 31, 2018, respectively. This reserve is included in accrued expenses and other liabilities in our Condensed Consolidated Statements of Financial Condition. This reserve is based on an analysis of mortgage loans that we have sold which are further categorized by delinquency status, loan to value, and year of origination. The calculation includes factors such as probability of default, probability of loss reimbursement (breach of representation or warranty) and estimated loss severity. We believe that the amounts that we have accrued for incurred losses on sold mortgage loans are appropriate given our analyses. However, future losses could exceed our current estimate.

We own 12,566 shares of VISA Class B common stock. At the present time, these shares can only be sold to other Class B shareholders. As a result, there has generally been limited transfer activity in private transactions between buyers and sellers. Given the limited activity that we have become aware of  and the continuing uncertainty regarding the likelihood, ultimate timing and eventual exchange rate for Class B shares into Class A shares, we have elected to value these shares at zero. However, given the current conversion ratio of 1.6298 to Class A shares and the closing price of VISA Class A shares on July 30, 2019 of $181.53 per share, our 12,566 Class B shares would have a current “value” of approximately $3.7 million. We continue to monitor Class B trading activity and the status of the resolution of certain litigation matters at VISA that would trigger the conversion of Class B common shares into Class A common shares that would have no trading restrictions.

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Accumulated Other Comprehensive Loss ("AOCL")

6 Months Ended

Jun. 30, 2019

Accumulated Other Comprehensive Loss ("AOCL") [Abstract]

Accumulated Other Comprehensive Loss ("AOCL")

14.  Accumulated Other Comprehensive Loss (“AOCL”)

A summary of changes in AOCL follows:

	Unrealized Gains (Losses) on Securities Available for Sale			Dispropor- tionate Tax Effects from Securities Available for Sale			Unrealized Gains (Losses) on Cash Flow Hedges			Total
	(In thousands)
For the three months ended June 30,
2019
Balances at beginning of period	$	(57	)	$	(5,798	)	$	(962	)	$	(6,817	)
Other comprehensive income (loss) before reclassifications		3,097			-			(599	)		2,498
Amounts reclassified from AOCL		-			-			(112	)		(112	)
Net current period other comprehensive income (loss)		3,097			-			(711	)		2,386
Balances at end of period	$	3,040		$	(5,798	)	$	(1,673	)	$	(4,431	)
2018
Balances at beginning of period	$	(3,509	)	$	(5,798	)	$	805		$	(8,502	)
Other comprehensive income (loss) before reclassifications		(949	)		-			258			(691	)
Amounts reclassified from AOCL		21			-			(42	)		(21	)
Net current period other comprehensive income (loss)		(928	)		-			216			(712	)
Balances at end of period	$	(4,437	)	$	(5,798	)	$	1,021		$	(9,214	)
For the six months ended June 30,
2019
Balances at beginning of period	$	(4,185	)	$	(5,798	)	$	(125	)	$	(10,108	)
Other comprehensive income (loss) before reclassifications		7,333			-			(1,318	)		6,015
Amounts reclassified from AOCL		(108	)		-			(230	)		(338	)
Net current period other comprehensive income (loss)		7,225			-			(1,548	)		5,677
Balances at end of period	$	3,040		$	(5,798	)	$	(1,673	)	$	(4,431	)
2018
Balances at beginning of period	$	(470	)	$	(5,798	)	$	269		$	(5,999	)
Other comprehensive income (loss) before reclassifications		(4,003	)		-			799			(3,204	)
Amounts reclassified from AOCL		36			-			(47	)		(11	)
Net current period other comprehensive income (loss)		(3,967	)		-			752			(3,215	)
Balances at end of period	$	(4,437	)	$	(5,798	)	$	1,021		$	(9,214	)

The disproportionate tax effects from securities available for sale arose due to tax effects of other comprehensive income (“OCI”) in the presence of a valuation allowance against our deferred tax assets and a pretax loss from operations.  Generally, the amount of income tax expense or benefit allocated to operations is determined without regard to the tax effects of other categories of income or loss, such as OCI. However, an exception to the general rule is provided when, in the presence of a valuation allowance against deferred tax assets, there is a pretax loss from operations and pretax income from other categories in the current period.  In such instances, income from other categories must offset the current loss from operations, the tax benefit of such offset being reflected in operations. Release of material disproportionate tax effects from other comprehensive income to earnings is done by the portfolio method whereby the effects will remain in AOCL as long as we carry a more than inconsequential portfolio of securities available for sale.

A summary of reclassifications out of each component of AOCL for the three months ended June 30 follows:

AOCL Component	Amount Reclassified From AOCL			Affected Line Item in Condensed  Consolidated Statements of Operations
	(In thousands)
2019
Unrealized gains (losses) on securities available for sale
	$	-		Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		-		Total reclassifications before tax
		-		Income tax expense
	$	-		Reclassifications, net of tax
Unrealized gains (losses) on cash flow hedges
	$	(142	)	Interest expense
		(30	)	Income tax expense
	$	(112	)	Reclassification, net of tax
	$	112		Total reclassifications for the period, net of tax
2018
Unrealized gains (losses) on securities available for sale
	$	(26	)	Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		(26	)	Total reclassifications before tax
		(5	)	Income tax expense
	$	(21	)	Reclassifications, net of tax
Unrealized gains (losses) on cash flow hedges
	$	(53	)	Interest expense
		(11	)	Income tax expense
	$	(42	)	Reclassification, net of tax
	$	21		Total reclassifications for the period, net of tax

A summary of reclassifications out of each component of AOCL for the six months ended June 30 follows:

AOCL Component	Amount Reclassified From AOCL			Affected Line Item in Condensed  Consolidated Statements of Operations
	(In thousands)
2019
Unrealized gains (losses) on securities available for sale
	$	137		Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		137		Total reclassifications before tax
		29		Income tax expense
	$	108		Reclassifications, net of tax
Unrealized gains (losses) on cash flow hedges
	$	(291	)	Interest expense
		(61	)	Income tax expense
	$	(230	)	Reclassification, net of tax
	$	338		Total reclassifications for the period, net of tax
2018
Unrealized gains (losses) on securities available for sale
	$	(45	)	Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		(45	)	Total reclassifications before tax
		(9	)	Income tax expense
	$	(36	)	Reclassifications, net of tax
Unrealized gains (losses) on cash flow hedges
	$	(59	)	Interest expense
		(12	)	Income tax expense
	$	(47	)	Reclassification, net of tax
	$	11		Total reclassifications for the period, net of tax

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Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2019

Revenue from Contracts with Customers [Abstract]

Revenue from Contracts with Customers

15.  Revenue from Contracts with Customers

We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. We derive the majority of our revenue from financial instruments and their related contractual rights and obligations which for the most part are excluded from the scope of this topic.  These sources of revenue that are excluded from the scope of this topic include interest income, net gains on mortgage loans, net gains (losses) on securities, mortgage loan servicing, net and bank owned life insurance and were approximately 84.6% and 82.8% of total revenues at June 30, 2019 and 2018, respectively.

Material sources of revenue that are included in the scope of this topic include service charges on deposit accounts, other deposit related income, interchange income and investment and insurance commissions and are discussed in the following paragraphs.  Generally these sources of revenue are earned at the time the service is delivered or over the course of a monthly period and do not result in any contract asset or liability balance at any given period end.  As a result, there were no contract assets or liabilities recorded as of June 30, 2019 and December 31, 2018.

Service charges on deposit accounts and other deposit related income:Revenues are earned on depository accounts for commercial and retail customers and include fees for transaction-based, account maintenance and overdraft services. Transaction-based fees, which includes services such as ATM use fees, stop payment charges and ACH fees are recognized at the time the transaction is executed as that is the time we fulfill our customer’s request.  Account maintenance fees, which includes monthly maintenance services are earned over the course of a month representing the period over which the performance obligation is satisfied. Our obligation for overdraft services is satisfied at the time of the overdraft.

Interchange income:Interchange income primarilyincludes debit card interchange and network revenues.  Debit card interchange and network revenues are earned on debit card transactions conducted through payment networks such as MasterCard and NYCE. Interchange income is recognized concurrently with the delivery of services on a daily basis. Interchange and network revenues are presented gross of interchange expenses, which are presented separately as a component of non-interest expense.

Investment and insurance commissions:  Investment and insurance commissions include fees and commissions from asset management, custody, recordkeeping, investment advisory and other services provided to our customers. Revenue is recognized on an accrual basis at the time the services are performed and are generally based on either the market value of the assets managed or the services provided.  We have an agent relationship with a third party provider of these services and net certain direct costs charged by the third party provider associated with providing these services to our customers.

Net (gains) losses on other real estate and repossessed assets:  We record a gain or loss from the sale of other real estate when control of the property transfers to the buyer, which generally occurs at the time of an executed deed.  If we were to finance the sale of other real estate to the buyer, we would assess whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction is probable.  Once these criteria are met, the other real estate asset would be derecognized and the gain or loss on sale would be recorded upon the transfer of control of the property to the buyer.  There were no other real estate properties sold during the three and six month periods ending June 30, 2019 and 2018 that were financed by us.

Disaggregation of our revenue sources by attribute follows:

Three months ending June 30, 2019
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	1,882		-		-		-	$	1,882
Account service charges		541		-		-		-		541
ATM fees		-	$	346		-		-		346
Other		-		212		-		-		212
Business
Overdraft fees		377		-		-		-		377
Account service charges		-		-		-		-		-
ATM fees		-		9		-		-		9
Other		-		89		-		-		89
Interchange income		-		-	$	2,604		-		2,604
Asset management revenue		-		-		-	$	277		277
Transaction based revenue		-		-		-		173		173
Total	$	2,800	$	656	$	2,604	$	450	$	6,510
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	656
Investment and insurance commissions										450
Bank owned life insurance										270
Other										730
Total									$	2,106

Three months ending June 30, 2018
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	2,044		-		-		-	$	2,044
Account service charges		588		-		-		-		588
ATM fees		-	$	358		-		-		358
Other		-		230		-		-		230
Business
Overdraft fees		380		-		-		-		380
Account service charges		83		-		-		-		83
ATM fees		-		8		-		-		8
Other		-		146		-		-		146
Interchange income		-		-	$	2,504		-		2,504
Asset management revenue		-		-		-	$	281		281
Transaction based revenue		-		-		-		202		202
Total	$	3,095	$	742	$	2,504	$	483	$	6,824
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	742
Investment and insurance commissions										483
Bank owned life insurance										220
Other										772
Total									$	2,217

Six months ending June 30, 2019
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	3,612		-		-		-	$	3,612
Account service charges		1,057		-		-		-		1,057
ATM fees		-	$	668		-		-		668
Other		-		463		-		-		463
Business
Overdraft fees		762		-		-		-		762
Account service charges		9		-		-		-		9
ATM fees		-		17		-		-		17
Other		-		218		-		-		218
Interchange income		-		-	$	4,959		-		4,959
Asset management revenue		-		-		-	$	531		531
Transaction based revenue		-		-		-		216		216
Total	$	5,440	$	1,366	$	4,959	$	747	$	12,512
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	1,366
Investment and insurance commissions										747
Bank owned life insurance										512
Other										1,745
Total									$	4,370

Six months ending June 30, 2018
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	4,016		-		-		-	$	4,016
Account service charges		1,088		-		-		-		1,088
ATM fees		-	$	703		-		-		703
Other		-		437		-		-		437
Business
Overdraft fees		745		-		-		-		745
Account service charges		151		-		-		-		151
ATM fees		-		16		-		-		16
Other		-		275		-		-		275
Interchange income		-		-	$	4,750		-		4,750
Asset management revenue		-		-		-	$	552		552
Transaction based revenue		-		-		-		369		369
Total	$	6,000	$	1,431	$	4,750	$	921	$	13,102
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	1,431
Investment and insurance commissions										921
Bank owned life insurance										476
Other										1,332
Total									$	4,160

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Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

16.  Leases

We have operating leases, primarily relating to certain office facilities, some of which include renewal options and escalation clauses.  Certain leases also include both lease components (fixed payments including rent, taxes and insurance costs) and non-lease components (common area or other maintenance costs) which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases.  Most of our leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion and are included in our ROU assets and lease liabilities if they are reasonably certain of exercise.  As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

The cost components of our operating leases follows:

	Three Months Ended		Six Months Ended
	June 30, 2019
	(In thousands)
Operating lease cost	$	563	$	1,127
Variable lease cost		49		72
Short-term lease cost		5		10
Total	$	617	$	1,209

Variable lease costs consist primarily of taxes, insurance, and common area or other maintenance costs for our leased facilities.

Supplemental balance sheet information related to our operating leases follows:

	June 30, 2019
	(In thousands)
Lease right of use asset (1)	$	6,692
Lease liabilities (2)	$	6,700
Weighted average remaining lease term (years)		5.58
Weighted average discount rate		3.2	%

(1)  Included in Accrued income and other assets in our Condensed Consolidated Statements of Financial Condition.

(2)  Included in Accrued expenses and other liabilities in our Condensed Consolidated Statements of Financial Condition.

Maturity analysis of our lease liabilities at June 30, 2019 based on required contractual payments follows:

	(In thousands)
Six months ending December 31, 2019	$	1,098
2020		1,711
2021		1,248
2022		963
2023		925
2024 and thereafter		1,428
Total lease payments		7,373
Less imputed interest		(673	)
Total	$	6,700

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Recent Acquisition

6 Months Ended

Jun. 30, 2019

Recent Acquisition [Abstract]

Recent Acquisition

17.  Recent Acquisition

Effective April 1, 2018, we completed the acquisition of all of the issued and outstanding shares of common stock of TCSB through a merger of TCSB into Independent Bank Corporation (“IBCP”), with IBCP as the surviving corporation (the ‘‘Merger’’).  On that same date we also consolidated Traverse City State Bank, TCSB’s wholly-owned subsidiary bank, into Independent Bank (with Independent Bank as the surviving institution).  Under the terms of the merger agreement each holder of TCSB common stock received 1.1166 shares of IBCP common stock plus cash in lieu of fractional shares totaling $0.005 million.  TCSB option holders had their options converted into IBCP stock options.  As a result we issued 2.71 million shares of common stock and 0.19 million stock options with a fair value of approximately $64.5 million to the shareholders and option holders of TCSB.  The fair value of common stock and stock options issued as the consideration paid for TCSB was determined using the closing price of our common stock on the acquisition date.  This acquisition was accounted for under the acquisition method of accounting.  Accordingly, we recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values.  TCSB results of operations are included in our results beginning April 1, 2018.

The following table reflects our final valuation of the assets acquired and liabilities assumed:

	(In thousands)
Cash and cash equivalents	$	23,521
Interest bearing deposits - time		4,054
Securities available for sale		6,066
Federal Home Loan Bank stock		778
Loans, net		295,799
Property and equipement, net		1,067
Capitalized mortgage loan servicing rights		3,047
Accrued income and other assets		3,362
Other intangibles (1)		5,798
Total assets acquired		343,492
Deposits		287,710
Other borrowings		14,345
Subordinated debentures		3,768
Accrued expenses and other liabilities		1,429
Total liabilities assumed		307,252
Net assets acquired		36,240
Goodwill		28,300
Purchase price (fair value of consideration)	$	64,540

(1) Relates to core deposit intangibles (see note #7).

Management views the disclosed fair values presented above to be final as the one-year measurement period for finalizing acquisition-date fair values has expired.  During this measurement period we had one adjustment to our acquisition date fair values.  During the third quarter of 2018, goodwill was reduced by $0.7 million (to $28.3 million) related to the collection of a TCSB acquired loan that had been charged off in full prior to the Merger.  Because of the status of the collection activities related to this loan at the time of the Merger, we determined that this transaction was a measurement period adjustment and reduced goodwill accordingly.

Goodwill related to this acquisition will not be deductible for tax purposes and consists largely of synergies and cost savings resulting from the combining of the operations of TCSB into ours as well as expansion into a new market.

The estimated fair value of the core deposit intangible was $5.8 million and is being amortized over an estimated useful life of 10 years.

The fair value of net assets acquired includes fair value adjustments to certain receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows.  However, we believe that all contractual cash flows related to these financial instruments will be collected.  As such, these receivables were not considered impaired at the acquisition date and were not subject to the guidance relating to purchased credit impaired loans which have shown evidence of credit deterioration since origination.  Receivables acquired that are not subject to these requirements included non-impaired customer receivables with a fair value and gross contractual amounts receivable of $292.9 million and $298.6 million on the date of acquisition.

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New Accounting Standards (Policies)

6 Months Ended

Jun. 30, 2019

New Accounting Standards [Abstract]

New Accounting Standards

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”.  This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.  This ASU:

• Replaces the existing incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost, which will reflect our estimate of credit losses over the full remaining expected life of the financial assets and will consider expected future changes in macroeconomic conditions.

• Eliminates existing guidance for purchase credit impaired (“PCI”) loans, and requires recognition of the nonaccretable difference as an increase to the allowance for expected credit losses on financial assets purchased with more than insignificant credit deterioration since origination, which will be offset by an increase in the recorded investment of the related loans.

• Requires inclusion of expected recoveries, limited to the cumulative amount of prior write-offs, when estimating the allowance for credit losses for in scope financial assets (including collateral dependent assets).

• Amends existing impairment guidance for securities available for sale to incorporate an allowance, which will allow for reversals of credit impairments in the event that the credit of an issuer improves. Credit losses on securities available for sale are limited to the amount of the decline in fair value regardless of what the credit loss model would show for impairment.

• Generally requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption.

• Is effective for us on January 1, 2020.

We began evaluating this ASU in 2016 and established a company-wide, cross-discipline governance structure, which provides implementation oversight. We continue to test and refine our current expected credit loss models that satisfy the requirements of this ASU. Oversight and testing, as well as efforts to meet expanded disclosure requirements, will extend through the remainder of 2019.  We expect that the allowance related to our loans will increase as it will cover credit losses over the full remaining expected life of the portfolio. We currently intend to estimate losses over approximately a two year forecast period using the Federal Open Market Committee median economic projections (which are typically published in March of each year) as well as considering other economic forecast sources, and then revert to longer term historical loss experience to estimate losses over more extended periods. We currently expect the increase in the allowance for loan losses to be in the range of $9.5 million to $11.5 million, primarily driven by the longer contractual maturities of our mortgage and consumer installment loan segments.  This estimated range is based on our June 30, 2019 loan portfolio and currently available economic forecasts. The mid-point of the range utilizes a two year forecast period and a two year reversion period. This estimated range also includes a qualitative adjustment to the allowance for loan losses. In addition, we currently expect this ASU to increase the allowance for losses related to unfunded loan commitments between $0.5 million and $1.5 million. These estimates are subject to further refinement based on continuing reviews, testing, enhancements and approvals of models, methodologies and judgments. The ultimate impact will depend upon the nature and characteristics of our loan portfolio at the adoption date, the macroeconomic conditions and forecasts at that date, further regualatory or accounting guidance and other management judgments. We currently do not expect to record any allowance for loss on available for sale securities. The ultimate impact will depend upon the nature and characteristics of our securities available for sale (including issuer specific matters) at the adoption date, the macroeconomic conditions and forecasts at that date, and other management judgments.

In August 2018, the FASB issued ASU 2018-13, ‘‘Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement’’. This new ASU amends disclosure requirements in Topic 820 to eliminate, add and modify certain disclosure requirements for fair value measurements as part of its disclosure framework project. The amended guidance eliminates the requirements to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the entity’s policy for the timing of transfers between levels of the fair value hierarchy and the entity’s valuation processes for Level 3 fair value measurements. The amended guidance adds the requirements to disclose the changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements of instruments held at the end of the reporting period and for recurring and nonrecurring Level 3 fair value measurements, the range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated, with certain exceptions. This amended guidance is effective for us on January 1, 2020, and is not expected to have a material impact on our consolidated operating results or financial condition.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”.  This ASU amends existing guidance related to the accounting for leases. These amendments, among other things, require lessees to account for most leases on the balance sheet while recognizing expense on the income statement in a manner similar to existing guidance.  For lessors the guidance modifies the classification criteria and the accounting for sales-type and direct finance leases. This amended guidance was effective for us on January 1, 2019 and did not have a material impact on our consolidated operating results or financial condition.  Based on our operating leases that we currently have in place we do not expect a material change in the recognition, measurement and presentation of lease expense or impact on cash flow.  The primary impact was the recognition of certain operating leases on our Condensed Consolidated Statements of Financial Condition which resulted in the recording of right of use (“ROU”) assets and offsetting lease liabilities each totaling approximately $7.7 million at January 1, 2019.  See note #16.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities”.  This new ASU amends the hedge accounting model in Topic 815 to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The amendments expand an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness.  This amended guidance was effective for us on January 1, 2019, and did not have a material impact on our consolidated operating results or financial condition.

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Securities (Tables)

6 Months Ended

Jun. 30, 2019

Securities [Abstract]

Securities Available for Sale

Securities available for sale consist of the following:

	Amortized Cost		Unrealized				Fair Value
			Gains		Losses
	(In thousands)
June 30, 2019
U.S. agency	$	16,997	$	200	$	14	$	17,183
U.S. agency residential mortgage-backed		135,853		1,541		377		137,017
U.S. agency commercial mortgage-backed		12,183		99		44		12,238
Private label mortgage-backed		29,617		588		76		30,129
Other asset backed		91,196		186		231		91,151
Obligations of states and political subdivisions		103,652		1,378		203		104,827
Corporate		32,964		929		11		33,882
Trust preferred		1,966		-		115		1,851
Foreign government		2,030		1		4		2,027
Total	$	426,458	$	4,922	$	1,075	$	430,305
December 31, 2018
U.S. agency	$	20,198	$	9	$	193	$	20,014
U.S. agency residential mortgage-backed		124,777		817		1,843		123,751
U.S. agency commercial mortgage-backed		5,909		1		184		5,726
Private label mortgage-backed		29,735		321		637		29,419
Other asset backed		83,481		86		248		83,319
Obligations of states and political subdivisions		130,244		257		2,946		127,555
Corporate		34,866		29		586		34,309
Trust preferred		1,964		-		145		1,819
Foreign government		2,050		-		36		2,014
Total	$	433,224	$	1,520	$	6,818	$	427,926

Investments in a Continuous Unrealized Loss Position

Our investments’ gross unrealized losses and fair values aggregated by investment type and length of time that individual securities have been at a continuous unrealized loss position follows:

	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
June 30, 2019
U.S. agency	$	-	$	-	$	4,427	$	14	$	4,427	$	14
U.S. agency residential mortgage-backed		5,109		11		36,367		366		41,476		377
U.S. agency commercial mortgage-backed		-		-		4,322		44		4,322		44
Private label mortgage-backed		2,682		3		3,273		73		5,955		76
Other asset backed		38,729		140		9,794		91		48,523		231
Obligations of states and political subdivisions		9,211		15		27,595		188		36,806		203
Corporate		288		1		3,188		10		3,476		11
Trust preferred		941		60		910		55		1,851		115
Foreign government		-		-		1,526		4		1,526		4
Total	$	56,960	$	230	$	91,402	$	845	$	148,362	$	1,075
December 31, 2018
U.S. agency	$	7,150	$	46	$	11,945	$	147	$	19,095	$	193
U.S. agency residential mortgage-backed		18,374		180		48,184		1,663		66,558		1,843
U.S. agency commercial mortgage-backed		566		3		5,094		181		5,660		184
Private label mortgage-backed		8,273		57		16,145		580		24,418		637
Other asset backed		53,043		160		10,235		88		63,278		248
Obligations of states and political subdivisions		25,423		262		80,701		2,684		106,124		2,946
Corporate		17,758		343		9,222		243		26,980		586
Trust preferred		939		61		880		84		1,819		145
Foreign government		-		-		2,014		36		2,014		36
Total	$	131,526	$	1,112	$	184,420	$	5,706	$	315,946	$	6,818

Private Label Mortgage Backed Securities Below Investment Grade

At June 30, 2019, three private label mortgage-backed securities had credit related OTTI and are summarized as follows:

	Senior Security		Super Senior Security		Senior Support Security		Total
	(In thousands)
Fair value	$	713	$	700	$	17	$	1,430
Amortized cost		595		521		-		1,116
Non-credit unrealized loss		-		-		-		-
Unrealized gain		118		179		17		314
Cumulative credit related OTTI		757		457		380		1,594

Credit Losses Recognized in Earnings on Securities Available for Sale

A roll forward of credit losses recognized in earnings on securities available for sale follows:

	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018
	(In thousands)				(In thousands)
Balance at beginning of period	$	1,594	$	1,594	$	1,594	$	1,594
Additions to credit losses on securities for which no previous OTTI was recognized		-		-		-		-
Increases to credit losses on securities for which OTTI was previously recognized		-		-		-		-
Balance at end of period	$	1,594	$	1,594	$	1,594	$	1,594

Amortized Cost and Fair Value of Securities Available for Sale by Contractual Maturity

The amortized cost and fair value of securities available for sale at June 30, 2019, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	13,478	$	13,481
Maturing after one year but within five years		55,186		55,754
Maturing after five years but within ten years		50,659		51,759
Maturing after ten years		38,286		38,776
		157,609		159,770
U.S. agency residential mortgage-backed		135,853		137,017
U.S. agency commercial mortgage-backed		12,183		12,238
Private label mortgage-backed		29,617		30,129
Other asset backed		91,196		91,151
Total	$	426,458	$	430,305

Gains and Losses Realized on Sale of Securities Available for Sale

A summary of proceeds from the sale of securities available for sale and gains and losses for the six month periods ending June 30, follows:

	Proceeds		Realized
			Gains		Losses
	(In thousands)
2019	$	42,236	$	169	$	32
2018	$	31,445	$	81	$	126

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Loans (Tables)

6 Months Ended

Jun. 30, 2019

Loans [Abstract]

Analysis of Allowance for Loan Losses by Portfolio Segment

An analysis of the allowance for loan losses by portfolio segment for the three months ended June 30, follows:

	Commercial			Mortgage			Installment			Subjective Allocation		Total
	(In thousands)
2019
Balance at beginning of period	$	7,518		$	8,412		$	1,251		$	8,073	$	25,254
Additions (deductions)
Provision for loan losses		475			(386	)		209			354		652
Recoveries credited to the allowance		378			327			184			-		889
Loans charged against the allowance		(250	)		(291	)		(351	)		-		(892	)
Balance at end of period	$	8,121		$	8,062		$	1,293		$	8,427	$	25,903
2018
Balance at beginning of period	$	6,026		$	8,621		$	795		$	7,629	$	23,071
Additions (deductions)
Provision for loan losses		(362	)		216			138			658		650
Recoveries credited to the allowance		434			177			235			-		846
Loans charged against the allowance		(25	)		(718	)		(320	)		-		(1,063	)
Balance at end of period	$	6,073		$	8,296		$	848		$	8,287	$	23,504

An analysis of the allowance for loan losses by portfolio segment for the six months ended June 30, follows:

	Commercial			Mortgage			Installment			Subjective Allocation			Total
	(In thousands)
2019
Balance at beginning of period	$	7,090		$	7,978		$	895		$	8,925		$	24,888
Additions (deductions)
Provision for loan losses		895			187			732			(498	)		1,316
Recoveries credited to the allowance		505			551			401			-			1,457
Loans charged against the allowance		(369	)		(654	)		(735	)		-			(1,758	)
Balance at end of period	$	8,121		$	8,062		$	1,293		$	8,427		$	25,903
2018
Balance at beginning of period	$	5,595		$	8,733		$	864		$	7,395		$	22,587
Additions (deductions)
Provision for loan losses		(497	)		363			207			892			965
Recoveries credited to the allowance		1,040			357			463			-			1,860
Loans charged against the allowance		(65	)		(1,157	)		(686	)		-			(1,908	)
Balance at end of period	$	6,073		$	8,296		$	848		$	8,287		$	23,504

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment

Allowance for loan losses and recorded investment in loans by portfolio segment follows:

	Commercial		Mortgage		Installment		Subjective Allocation		Total
	(In thousands)
June 30, 2019
Allowance for loan losses:
Individually evaluated for impairment	$	1,047	$	4,715	$	265	$	-	$	6,027
Collectively evaluated for impairment		7,074		3,347		1,028		8,427		19,876
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	8,121	$	8,062	$	1,293	$	8,427	$	25,903
Loans
Individually evaluated for impairment	$	8,082	$	44,095	$	3,258			$	55,435
Collectively evaluated for impairment		1,169,792		1,046,177		441,859				2,657,828
Loans acquired with deteriorated credit quality		1,490		587		324				2,401
Total loans recorded investment		1,179,364		1,090,859		445,441				2,715,664
Accrued interest included in recorded investment		3,394		4,550		1,194				9,138
Total loans	$	1,175,970	$	1,086,309	$	444,247			$	2,706,526
December 31, 2018
Allowance for loan losses:
Individually evaluated for impairment	$	1,305	$	4,799	$	206	$	-	$	6,310
Collectively evaluated for impairment		5,785		3,179		689		8,925		18,578
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	7,090	$	7,978	$	895	$	8,925	$	24,888
Loans
Individually evaluated for impairment	$	8,697	$	46,394	$	3,370			$	58,461
Collectively evaluated for impairment		1,137,586		1,000,038		392,460				2,530,084
Loans acquired with deteriorated credit quality		1,609		555		349				2,513
Total loans recorded investment		1,147,892		1,046,987		396,179				2,591,058
Accrued interest included in recorded investment		3,411		4,097		1,030				8,538
Total loans	$	1,144,481	$	1,042,890	$	395,149			$	2,582,520

Loans on Non-Accrual Status and Past Due More than 90 Days

Loans on non-accrual status and past due more than 90 days (“Non-performing Loans”) follow:

	90+ and Still Accruing		Non- Accrual		Total Non- Performing Loans
	(In thousands)
June 30, 2019
Commercial
Income producing - real estate	$	-	$	-	$	-
Land, land development and construction - real estate		-		-		-
Commercial and industrial		-		803		803
Mortgage
1-4 family		-		4,142		4,142
Resort lending		-		720		720
Home equity - 1st lien		-		196		196
Home equity - 2nd lien		-		600		600
Installment
Home equity - 1st lien		-		168		168
Home equity - 2nd lien		-		220		220
Boat lending		-		278		278
Recreational vehicle lending		-		2		2
Other		-		234		234
Total recorded investment	$	-	$	7,363	$	7,363
Accrued interest included in recorded investment	$	-	$	-	$	-
December 31, 2018
Commercial
Income producing - real estate	$	-	$	-	$	-
Land, land development and construction - real estate		-		-		-
Commercial and industrial		-		2,220		2,220
Mortgage
1-4 family		5		4,695		4,700
Resort lending		-		755		755
Home equity - 1st lien		-		159		159
Home equity - 2nd lien		-		419		419
Installment
Home equity - 1st lien		-		178		178
Home equity - 2nd lien		-		226		226
Boat lending		-		166		166
Recreational vehicle lending		-		7		7
Other		-		204		204
Total recorded investment	$	5	$	9,029	$	9,034
Accrued interest included in recorded investment	$	-	$	-	$	-

Aging Analysis of Loans by Class

An aging analysis of loans by class follows:

	Loans Past Due								Loans not Past Due		Total Loans
	30-59 days		60-89 days		90+ days		Total
	(In thousands)
June 30, 2019
Commercial
Income producing - real estate	$	50	$	-	$	-	$	50	$	398,697	$	398,747
Land, land development and construction - real estate		-		-		-		-		93,213		93,213
Commercial and industrial		132		37		705		874		686,530		687,404
Mortgage
1-4 family		4,488		1,663		1,734		7,885		851,775		859,660
Resort lending		484		238		433		1,155		73,578		74,733
Home equity - 1st lien		178		96		51		325		36,201		36,526
Home equity - 2nd lien		458		234		195		887		119,053		119,940
Installment
Home equity - 1st lien		97		1		11		109		6,320		6,429
Home equity - 2nd lien		188		19		113		320		5,431		5,751
Boat lending		287		24		32		343		197,315		197,658
Recreational vehicle lending		72		3		2		77		144,403		144,480
Other		200		46		172		418		90,705		91,123
Total recorded investment	$	6,634	$	2,361	$	3,448	$	12,443	$	2,703,221	$	2,715,664
Accrued interest included in recorded investment	$	66	$	32	$	-	$	98	$	9,040	$	9,138
December 31, 2018
Commercial
Income producing - real estate	$	44	$	-	$	-	$	44	$	388,729	$	388,773
Land, land development and construction - real estate		-		-		-		-		84,458		84,458
Commercial and industrial		1,538		-		-		1,538		673,123		674,661
Mortgage
1-4 family		1,608		194		4,882		6,684		833,760		840,444
Resort lending		252		-		755		1,007		80,774		81,781
Home equity - 1st lien		176		-		159		335		38,909		39,244
Home equity - 2nd lien		446		100		419		965		84,553		85,518
Installment
Home equity - 1st lien		200		55		197		452		6,985		7,437
Home equity - 2nd lien		111		24		226		361		6,683		7,044
Boat lending		316		295		166		777		169,117		169,894
Recreational vehicle lending		28		21		7		56		125,780		125,836
Other		241		131		204		576		85,392		85,968
Total recorded investment	$	4,960	$	820	$	7,015	$	12,795	$	2,578,263	$	2,591,058
Accrued interest included in recorded investment	$	44	$	11	$	-	$	55	$	8,483	$	8,538

Impaired Loans

Impaired loans are as follows:

	June 30, 2019		December 31, 2018
Impaired loans with no allocated allowance for loan losses	(In thousands)
Troubled debt restructurings (“TDR”)	$	266	$	-
Non - TDR		500		-
Impaired loans with an allocated allowance for loan losses
TDR - allowance based on collateral		1,611		2,787
TDR - allowance based on present value cash flow		50,262		53,258
Non - TDR - allowance based on collateral		2,536		2,145
Total impaired loans	$	55,175	$	58,190
Amount of allowance for loan losses allocated
TDR - allowance based on collateral	$	272	$	769
TDR - allowance based on present value cash flow		4,874		4,849
Non - TDR - allowance based on collateral		881		692
Total amount of allowance for loan losses allocated	$	6,027	$	6,310

Impaired loans by class are as follows:

	June 30, 2019						December 31, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance For Loan Losses		Recorded Investment		Unpaid Principal Balance		Related Allowance For Loan Losses
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Income producing - real estate	$	-	$	-	$	-	$	-	$	-	$	-
Land, land development & construction-real estate		-		-		-		-		-		-
Commercial and industrial		-		-		-		-		-		-
Mortgage
1-4 family		613		800		-		3		474		-
Resort lending		-		-		-		-		-		-
Home equity - 1st lien		-		-		-		-		-		-
Home equity - 2nd lien		-		-		-		-		-		-
Installment
Home equity - 1st lien		-		-		-		1		122		-
Home equity - 2nd lien		-		16		-		-		-		-
Boat lending		-		5		-		-		5		-
Recreational vehicle lending		-		-		-		-		-		-
Other		-		15		-		-		15		-
		613		836		-		4		616		-
With an allowance for loan losses recorded:
Commercial
Income producing - real estate	$	5,874	$	5,863		518		4,770		4,758		303
Land, land development & construction-real estate		290		288		31		290		289		35
Commercial and industrial		1,918		2,184		498		3,637		3,735		967
Mortgage
1-4 family		30,411		32,568		3,171		32,842		34,427		2,859
Resort lending		12,392		12,704		1,397		13,328		13,354		1,927
Home equity - 1st lien		125		187		26		65		64		4
Home equity - 2nd lien		554		564		121		156		155		9
Installment
Home equity - 1st lien		1,264		1,440		77		1,440		1,524		89
Home equity - 2nd lien		1,434		1,442		100		1,471		1,491		92
Boat lending		32		48		11		-		-		-
Recreational vehicle lending		51		51		4		79		79		4
Other		477		553		73		379		406		21
		54,822		57,892		6,027		58,457		60,282		6,310
Total
Commercial
Income producing - real estate		5,874		5,863		518		4,770		4,758		303
Land, land development & construction-real estate		290		288		31		290		289		35
Commercial and industrial		1,918		2,184		498		3,637		3,735		967
Mortgage
1-4 family		31,024		33,368		3,171		32,845		34,901		2,859
Resort lending		12,392		12,704		1,397		13,328		13,354		1,927
Home equity - 1st lien		125		187		26		65		64		4
Home equity - 2nd lien		554		564		121		156		155		9
Installment
Home equity - 1st lien		1,264		1,440		77		1,441		1,646		89
Home equity - 2nd lien		1,434		1,458		100		1,471		1,491		92
Boat lending		32		53		11		-		5		-
Recreational vehicle lending		51		51		4		79		79		4
Other		477		568		73		379		421		21
Total	$	55,435	$	58,728	$	6,027	$	58,461	$	60,898	$	6,310
Accrued interest included in recorded investment	$	260					$	271

Average Recorded Investment in and Interest Income Earned on Impaired Loans by Class

Average recorded investment in and interest income earned on impaired loans by class for the three month periods ending June 30, follows:

	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Income producing - real estate	$	-	$	-	$	-	$	-
Land, land development & construction-real estate		-		-		1,201		-
Commercial and industrial		-		-		509		9
Mortgage
1-4 family		484		2		138		3
Resort lending		-		-		-		-
Home equity - 1st lien		-		-		-		-
Home equity - 2nd lien		-		-		-		-
Installment
Home equity - 1st lien		-		-		1		2
Home equity - 2nd lien		-		-		-		-
Boat lending		-		-		-		-
Recreational vehicle lending		-		-		-		-
Other		-		-		-		1
		484		2		1,849		15
With an allowance for loan losses recorded:
Commercial
Income producing - real estate		5,297		81		5,142		70
Land, land development & construction-real estate		290		2		155		2
Commercial and industrial		2,418		16		2,522		34
Mortgage								-
1-4 family		31,364		414		35,345		431
Resort lending		12,680		147		15,098		150
Home equity - 1st lien		122		2		111		1
Home equity - 2nd lien		556		3		167		1
Installment
Home equity - 1st lien		1,326		19		1,596		25
Home equity - 2nd lien		1,453		19		1,746		25
Boat lending		67		-		1		-
Recreational vehicle lending		67		-		86		1
Other		479		5		414		7
		56,119		708		62,383		747
Total
Commercial
Income producing - real estate		5,297		81		5,142		70
Land, land development & construction-real estate		290		2		1,356		2
Commercial and industrial		2,418		16		3,031		43
Mortgage
1-4 family		31,848		416		35,483		434
Resort lending		12,680		147		15,098		150
Home equity - 1st lien		122		2		111		1
Home equity - 2nd lien		556		3		167		1
Installment
Home equity - 1st lien		1,326		19		1,597		27
Home equity - 2nd lien		1,453		19		1,746		25
Boat lending		67		-		1		-
Recreational vehicle lending		67		-		86		1
Other		479		5		414		8
Total	$	56,603	$	710	$	64,232	$	762

Average recorded investment in and interest income earned on impaired loans by class for the six month periods ending June 30, follows:

	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Income producing - real estate	$	-	$	-	$	-	$	-
Land, land development & construction-real estate		-		-		801		-
Commercial and industrial		-		-		514		13
Mortgage
1-4 family		324		2		92		9
Resort lending		-		-		-		-
Home equity - 1st lien		-		-		-		-
Home equity - 2nd lien		-		-		-		-
Installment
Home equity - 1st lien		-		-		1		4
Home equity - 2nd lien		-		-		-		-
Boat lending		-		-		-		-
Recreational vehicle lending		-		-		-		-
Other		-		-		-		1
		324		2		1,408		27
With an allowance for loan losses recorded:
Commercial
Income producing - real estate		5,121		146		5,160		138
Land, land development & construction-real estate		290		4		159		4
Commercial and industrial		2,824		36		2,526		66
Mortgage
1-4 family		31,857		860		35,846		889
Resort lending		12,896		322		15,391		314
Home equity - 1st lien		103		3		131		3
Home equity - 2nd lien		423		6		171		3
Installment
Home equity - 1st lien		1,364		43		1,619		54
Home equity - 2nd lien		1,459		41		1,762		52
Boat lending		44		-		1		-
Recreational vehicle lending		71		1		87		2
Other		446		11		407		13
		56,898		1,473		63,260		1,538
Total
Commercial
Income producing - real estate		5,121		146		5,160		138
Land, land development & construction-real estate		290		4		960		4
Commercial and industrial		2,824		36		3,040		79
Mortgage
1-4 family		32,181		862		35,938		898
Resort lending		12,896		322		15,391		314
Home equity - 1st lien		103		3		131		3
Home equity - 2nd lien		423		6		171		3
Installment
Home equity - 1st lien		1,364		43		1,620		58
Home equity - 2nd lien		1,459		41		1,762		52
Boat lending		44		-		1		-
Recreational vehicle lending		71		1		87		2
Other		446		11		407		14
Total	$	57,222	$	1,475	$	64,668	$	1,565

Troubled Debt Restructurings

Cash receipts on impaired loans on non-accrual status are generally applied to the principal balance.

TDRs follow:

	June 30, 2019
	Commercial		Retail (1)			Total
			(In thousands)
Performing TDRs	$	7,166	$	42,136		$	49,302
Non-performing TDRs (2)		54		2,783	(3)		2,837
Total	$	7,220	$	44,919		$	52,139

	December 31, 2018
	Commercial		Retail (1)			Total
				(In thousands)
Performing TDRs	$	6,460	$	46,627		$	53,087
Non-performing TDRs (2)		74		2,884	(3)		2,958
Total	$	6,534	$	49,511		$	56,045

(1) Retail loans include mortgage and installment loan segments.

(2) Included in non-performing loans table above.

(3) Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.

Troubled Debt Restructuring During the Period

Loans that have been classified as troubled debt restructurings during the three-month periods ended June 30 follow:

	Number of Contracts		Pre-modification Recorded Balance		Post-modification Recorded Balance
	(Dollars in thousands)
2019
Commercial
Income producing - real estate		2	$	1,329	$	1,329
Land, land development & construction-real estate		-		-		-
Commercial and industrial		-		-		-
Mortgage
1-4 family		1		506		505
Resort lending		-		-		-
Home equity - 1st lien		-		-		-
Home equity - 2nd lien		-		-		-
Installment
Home equity - 1st lien		1		25		26
Home equity - 2nd lien		3		75		76
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		-		-		-
Total		7	$	1,935	$	1,936
2018
Commercial
Income producing - real estate		-	$	-	$	-
Land, land development & construction-real estate		-		-		-
Commercial and industrial		2		153		153
Mortgage
1-4 family		1		66		69
Resort lending		-		-		-
Home equity - 1st lien		-		-		-
Home equity - 2nd lien		-		-		-
Installment
Home equity - 1st lien		2		90		91
Home equity - 2nd lien		1		32		32
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		1		41		41
Total		7	$	382	$	386

Loans that have been classified as troubled debt restructurings during the six-month periods ended June 30 follow:

	Number of Contracts		Pre-modification Recorded Balance		Post-modification Recorded Balance
	(Dollars in thousands)
2019
Commercial
Income producing - real estate		2	$	1,329	$	1,329
Land, land development & construction-real estate		-		-		-
Commercial and industrial		1		49		49
Mortgage
1-4 family		2		787		786
Resort lending		-		-		-
Home equity - 1st lien		-		-		-
Home equity - 2nd lien		-		-		-
Installment
Home equity - 1st lien		2		49		51
Home equity - 2nd lien		4		111		112
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		-		-		-
Total		11	$	2,325	$	2,327
2018
Commercial
Income producing - real estate		1	$	67	$	67
Land, land development & construction-real estate		-		-		-
Commercial and industrial		5		587		587
Mortgage
1-4 family		4		294		280
Resort lending		-		-		-
Home equity - 1st lien		-		-		-
Home equity - 2nd lien		-		-		-
Installment
Home equity - 1st lien		5		188		190
Home equity - 2nd lien		2		93		93
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		2		76		73
Total		19	$	1,305	$	1,290

Loan Ratings by Loan Class

The following table summarizes loan ratings by loan class for our commercial loan segment:

	Commercial
	Non-watch 1-6		Watch 7-8		Substandard Accrual 9		Non- Accrual 10-11		Total
					(In thousands)
June 30, 2019
Income producing - real estate	$	382,198	$	15,777	$	772	$	-	$	398,747
Land, land development and construction - real estate		83,971		8,467		775		-		93,213
Commercial and industrial		634,098		48,598		3,905		803		687,404
Total	$	1,100,267	$	72,842	$	5,452	$	803	$	1,179,364
Accrued interest included in total	$	3,158	$	219	$	17	$	-	$	3,394
December 31, 2018
Income producing - real estate	$	375,142	$	13,387	$	200	$	44	$	388,773
Land, land development and construction - real estate		76,120		8,328		-		10		84,458
Commercial and industrial		631,248		35,469		5,577		2,367		674,661
Total	$	1,082,510	$	57,184	$	5,777	$	2,421	$	1,147,892
Accrued interest included in total	$	3,107	$	174	$	130	$	-	$	3,411

The following tables summarize credit scores by loan class for our mortgage and installment loan segments:

	Mortgage (1)
	1-4 Family		Resort Lending		Home Equity 1st Lien		Home Equity 2nd Lien		Total
	(In thousands)
June 30, 2019
800 and above	$	110,599	$	11,748	$	5,783	$	12,623	$	140,753
750-799		391,241		32,894		15,624		52,785		492,544
700-749		195,867		15,747		9,584		33,377		254,575
650-699		89,819		8,074		3,623		13,055		114,571
600-649		31,668		2,597		663		4,212		39,140
550-599		16,755		1,465		652		1,929		20,801
500-549		11,333		684		325		1,148		13,490
Under 500		4,192		81		272		392		4,937
Unknown		8,186		1,443		-		419		10,048
Total	$	859,660	$	74,733	$	36,526	$	119,940	$	1,090,859
Accrued interest included in total	$	3,503	$	367	$	176	$	504	$	4,550
December 31, 2018
800 and above	$	94,492	$	10,898	$	6,784	$	8,838	$	121,012
750-799		384,344		36,542		17,303		38,295		476,484
700-749		202,440		17,282		9,155		23,249		252,126
650-699		91,847		9,945		3,987		8,681		114,460
600-649		34,342		3,088		959		3,359		41,748
550-599		13,771		1,867		427		1,236		17,301
500-549		8,439		106		418		826		9,789
Under 500		2,533		143		98		381		3,155
Unknown		8,236		1,910		113		653		10,912
Total	$	840,444	$	81,781	$	39,244	$	85,518	$	1,046,987
Accrued interest included in total	$	3,079	$	363	$	199	$	456	$	4,097

(1) Credit scores have been updated within the last twelve months.

	Installment(1)
	Home Equity 1st Lien		Home Equity 2nd Lien		Boat Lending		Recreational Vehicle Lending		Other		Total
	(In thousands)
June 30, 2019
800 and above	$	449	$	231	$	26,585	$	22,213	$	6,683	$	56,161
750-799		1,219		1,517		115,402		85,635		34,760		238,533
700-749		1,390		1,224		41,608		28,261		23,945		96,428
650-699		1,496		1,161		10,612		5,728		10,426		29,423
600-649		993		730		1,879		1,767		2,954		8,323
550-599		550		573		831		653		853		3,460
500-549		313		217		486		181		859		2,056
Under 500		19		55		229		42		187		532
Unknown		-		43		26		-		10,456		10,525
Total	$	6,429	$	5,751	$	197,658	$	144,480	$	91,123	$	445,441
Accrued interest included in total	$	23	$	19	$	493	$	368	$	291	$	1,194
December 31, 2018
800 and above	$	555	$	235	$	20,767	$	20,197	$	6,272	$	48,026
750-799		1,502		1,642		100,191		74,154		31,483		208,972
700-749		1,582		1,682		35,455		24,890		24,369		87,978
650-699		1,606		1,217		10,581		4,918		9,840		28,162
600-649		996		1,272		1,657		992		2,751		7,668
550-599		759		658		652		453		838		3,360
500-549		384		229		286		225		651		1,775
Under 500		51		6		266		7		218		548
Unknown		2		103		39		-		9,546		9,690
Total	$	7,437	$	7,044	$	169,894	$	125,836	$	85,968	$	396,179
Accrued interest included in total	$	28	$	25	$	403	$	311	$	263	$	1,030

(1) Credit scores have been updated within the last twelve months.

Purchase Credit Impaired (PCI) Loans

For these loans that meet the criteria of ASC 310-30 treatment, the carrying amount was as follows:

	June 30, 2019		December 31, 2018
	(In thousands)
Commercial	$	1,490	$	1,609
Mortgage		587		555
Installment		324		349
Total carrying amount		2,401		2,513
Allowance for loan losses		-		-
Carrying amount, net of allowance for loan losses	$	2,401	$	2,513

Accretable yield of PCI loans, or income expected to be collected follows:

	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
	(unaudited)						(unaudited)
	(In thousands)						(In thousands)
Balance at beginning of period	$	788		$	-		$	462		$	-
New loans purchased		-			568			-			568
Accretion recorded as loan interest income		(39	)		(35	)		(78	)		(35	)
Reclassification from (to) nonaccretable difference		-			-			365			-
Displosals/other adjustments		-			-			-			-
Balance at end of period	$	749		$	533		$	749		$	533

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Shareholders' Equity and Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2019

Shareholders' Equity and Earnings Per Common Share [Abstract]

Reconciliation of Basic and Diluted Net Income Per Share

A reconciliation of basic and diluted net income per common share follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(In thousands, except per share data)
Net income	$	10,730	$	8,817	$	20,111	$	17,978
Weighted average shares outstanding (1)		23,036		24,109		23,310		22,745
Stock units for deferred compensation plan for non-employee directors		128		126		130		125
Effect of stock options		112		224		119		179
Performance share units		37		51		39		50
Weighted average shares outstanding for calculation of diluted earnings per share		23,313		24,510		23,598		23,099
Net income per common share
Basic (1)	$	0.47	$	0.37	$	0.86	$	0.79
Diluted	$	0.46	$	0.36	$	0.85	$	0.78

⁽¹⁾Basic net income per common share includes weighted average common shares outstanding during the period and participating share awards.

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2019

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments According to Type of Hedge Designation

Our derivative financial instruments according to the type of hedge in which they are designated follows:

	June 30, 2019
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Fair value hedge designation - Pay-fixed interest rate swap agreements	$	7,117		9.9	$	(203	)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		2.1	$	(171	)
Interest rate cap agreements		150,000		3.1		576
Total	$	175,000		3.0	$	405
No hedge designation
Rate-lock mortgage loan commitments	$	81,784		0.1	$	2,147
Mandatory commitments to sell mortgage loans		141,434		0.1		(334	)
Pay-fixed interest rate swap agreements - commercial		108,895		5.3		(3,179	)
Pay-variable interest rate swap agreements - commercial		108,895		5.3		3,179
Purchased options		3,095		2.0		171
Written options		3,035		2.0		(170	)
Total	$	447,138		2.7	$	1,814

	December 31, 2018
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		2.6	$	280
Interest rate cap agreements		150,000		3.6		2,245
Total	$	175,000		3.5	$	2,525
No hedge designation
Rate-lock mortgage loan commitments	$	32,473		0.1	$	687
Mandatory commitments to sell mortgage loans		57,583		0.1		(383	)
Pay-fixed interest rate swap agreements - commercial		94,451		5.5		405
Pay-variable interest rate swap agreements - commercial		94,451		5.5		(405	)
Purchased options		3,095		2.5		116
Written options		3,095		2.5		(116	)
Total	$	285,148		3.7	$	304

Fair Value of Derivative Instruments

The following tables illustrate the impact that the derivative financial instruments discussed above have on individual line items in the Condensed Consolidated Statements of Financial Condition for the periods presented:

Fair Values of Derivative Instruments

	Asset Derivatives						Liability Derivatives
	June 30, 2019			December 31, 2018			June 30, 2019			December 31, 2018
	Balance  Sheet  Location	Fair Value		Balance  Sheet  Location	Fair Value		Balance  Sheet  Location	Fair Value		Balance  Sheet  Location	Fair Value
	(In thousands)
Derivatives designated as hedging instruments
Pay-fixed interest rate swap agreements	Other assets	$	-	Other assets	$	280	Other liabilities	$	374	Other liabilities	$	-
Interest rate cap agreements	Other assets		576	Other assets		2,245	Other liabilities		-	Other liabilities		-
			576			2,525			374			-
Derivatives not designated as hedging instruments
Rate-lock mortgage loan commitments	Other assets		2,147	Other assets		687	Other liabilities		-	Other liabilities		-
Mandatory commitments to sell mortgage loans	Other assets		-	Other assets		-	Other liabilities		334	Other liabilities		383
Pay-fixed interest rate swap agreements -commercial	Other assets		80	Other assets		1,116	Other liabilities		3,259	Other liabilities		711
Pay-variable interest rate swap agreements -commercial	Other assets		3,259	Other assets		711	Other liabilities		80	Other liabilities		1,116
Purchased options	Other assets		171	Other assets		116	Other liabilities		-	Other liabilities		-
Written options	Other assets		-	Other assets		-	Other liabilities		170	Other liabilities		116
			5,657			2,630			3,843			2,326
Total derivatives		$	6,233		$	5,155		$	4,217		$	2,326

Effect of Derivative Financial Instruments on Condensed Consolidated Statement of Operations

The effect of derivative financial instruments on the Condensed Consolidated Statements of Operations follows:

Three Month Periods Ended June 30,
	Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)					Location of  Gain  Reclassified  from  Accumulated  Other  Comprehensive  Loss into  Income  (Effective	Gain Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)				Location of  Gain (Loss)  Recognized	Gain (Loss) Recognized in Income (1)
	2019			2018		Portion)	2019		2018		in Income (1)	2019			2018
							(In thousands)
Fair Value Hedges
Pay-fixed interest rate swap agreements											Interest income	$	(203	)	$	-
Cash Flow Hedges
Interest rate cap agreements	$	(489	)	$	244	Interest expense	$	115	$	45	Interest expense	$	-		$	-
Pay-fixed interest rate swap agreements		(267	)		83	Interest expense		27		8	Interest expense		-			(24	)
Total	$	(756	)	$	327		$	142	$	53		$	-		$	(24	)
No hedge designation
Rate-lock mortgage loan commitments											Net gains on mortgage  loans	$	831		$	244
Mandatory commitments to sell mortgage loans											Net gains on mortgage loans		(125	)		(110	)
Pay-fixed interest rate swap agreements -commercial											Interest income		(2,437	)		487
Pay-variable interest rate swap agreements -commercial											Interest income		2,437			(487	)
Pay-variable interest rate swap agreements											Interest expense		-			36
Purchased options											Interest expense		(31	)		(6	)
Written options											Interest expense		30			6
Total												$	705		$	170

(1)  For cash flow hedges, this location and amount refers to the ineffective portion.

Six Month Periods Ended June 30,
	Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)					Location of  Gain  Reclassified  from  Accumulated  Other  Comprehensive  Loss into  Income  (Effective	Gain Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)				Location of  Gain (Loss)  Recognized	Gain (Loss) Recognized in Income (1)
	2019			2018		Portion)	2019		2018		in Income (1)	2019			2018
							(In thousands)
Fair Value Hedges
Pay-fixed interest rate swap agreements											Interest income	$	(203	)	$	-
Cash Flow Hedges
Interest rate cap agreements	$	(1,274	)	$	757	Interest expense	$	233	$	52	Interest expense	$	-		$	-
Pay-fixed interest rate swap agreements		(394	)		254	Interest expense		58		7	Interest expense		-			(12	)
Total	$	(1,668	)	$	1,011		$	291	$	59		$	-		$	(12	)
No hedge designation
Rate-lock mortgage loan commitments											Net gains on mortgage loans	$	1,460		$	672
Mandatory commitments to sell mortgage loans											Net gains on mortgage  loans		49			(270	)
Pay-fixed interest rate swap agreements -commercial											Interest income		(3,584	)		1,543
Pay-variable interest rate swap agreements -commercial											Interest income		3,584			(1,543	)
Pay-variable interest rate swap agreements											Interest expense		-			36
Purchased options											Interest expense		55			(99	)
Written options											Interest expense		(54	)		99
Total												$	1,510		$	438

(1)  For cash flow hedges, this location and amount refers to the ineffective portion.

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Goodwill and Other Intangibles (Tables)

6 Months Ended

Jun. 30, 2019

Goodwill and Other Intangibles [Abstract]

Other Intangible Assets, Net of Amortization

The following table summarizes intangible assets, net of amortization:

	June 30, 2019				December 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Amortized intangible assets - core deposits	$	11,916	$	6,046	$	11,916	$	5,501
Unamortized intangible assets - goodwill	$	28,300			$	28,300

Estimated Core Deposit Intangible Amortization

A summary of estimated core deposit intangible amortization at June 30, 2019 follows:

	(In thousands)
Six months ending December 31, 2019	$	544
2020		1,020
2021		970
2022		785
2023		547
2024 and thereafter		2,004
Total	$	5,870

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Share Based Compensation (Tables)

6 Months Ended

Jun. 30, 2019

Share Based Compensation [Abstract]

Outstanding Stock Option Grants and Transactions

A summary of outstanding stock option grants and related transactions follows:

	Number of Shares			Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregated Intrinsic Value
								(In thousands)
Outstanding at January 1, 2019		211,421		$	6.48
Granted		-
Exercised		(68,399	)		10.16
Forfeited		-
Expired		(558	)		22.35
Outstanding at June 30, 2019		142,464		$	4.66		3.5	$	2,442
Vested and expected to vest at
June 30, 2019		142,464		$	4.66		3.5	$	2,442
Exercisable at June 30, 2019		142,464		$	4.66		3.5	$	2,442

Non-Vested Restricted Stock, Restricted Stock Units and PSU's

A summary of outstanding non-vested restricted stock and PSUs and related transactions follows:

	Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2019		258,419		$	19.00
Granted		78,283			22.98
Vested		(85,788	)		14.55
Forfeited		(11,475	)		22.91
Outstanding at June 30, 2019		239,439		$	21.72

Information Regarding Options Exercised

Certain information regarding options exercised during the periods follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Intrinsic value	$	-	$	1,596	$	836	$	1,674
Cash proceeds received	$	-	$	971	$	695	$	984
Tax benefit realized	$	-	$	336	$	176	$	352

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Regulatory Matters (Tables)

6 Months Ended

Jun. 30, 2019

Regulatory Matters [Abstract]

Actual Capital Amounts and Ratios

Our actual capital amounts and ratios follow (1):

	Actual					Minimum for Adequately Capitalized Institutions					Minimum for Well-Capitalized Institutions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
June 30, 2019
Total capital to risk-weighted assets
Consolidated	$	360,894		13.36	%	$	216,166		8.00	%	NA		NA
Independent Bank		346,015		12.81			216,074		8.00		$	270,093		10.00	%
Tier 1 capital to risk-weighted assets
Consolidated	$	333,508		12.34	%	$	162,125		6.00	%	NA		NA
Independent Bank		318,629		11.80			162,056		6.00		$	216,074		8.00	%
Common equity tier 1 capital to risk-weighted assets
Consolidated	$	295,310		10.93	%	$	121,594		4.50	%	NA		NA
Independent Bank		318,629		11.80			121,542		4.50		$	175,561		6.50	%
Tier 1 capital to average assets
Consolidated	$	333,508		9.95	%	$	134,131		4.00	%	NA		NA
Independent Bank		318,629		9.50			134,138		4.00		$	167,673		5.00	%
December 31, 2018
Total capital to risk-weighted assets
Consolidated	$	371,603		14.25	%	$	208,572		8.00	%	NA		NA
Independent Bank		337,227		12.94			208,456		8.00		$	260,569		10.00	%
Tier 1 capital to risk-weighted assets
Consolidated	$	345,419		13.25	%	$	156,429		6.00	%	NA		NA
Independent Bank		311,043		11.94			156,342		6.00		$	208,456		8.00	%
Common equity tier 1 capital to risk-weighted assets
Consolidated	$	307,255		11.79	%	$	117,322		4.50	%	NA		NA
Independent Bank		311,043		11.94			117,256		4.50		$	169,370		6.50	%
Tier 1 capital to average assets
Consolidated	$	345,419		10.47	%	$	131,930		4.00	%	NA		NA
Independent Bank		311,043		9.44			131,778		4.00		$	164,723		5.00	%

(1) These ratios do not reflect a capital conservation buffer of 2.50% and 1.875% at June 30, 2019 and December 31, 2018, respectfully.

NA - Not applicable

Regulatory Capital

The components of our regulatory capital are as follows:

	Consolidated						Independent Bank
	June 30, 2019			December 31, 2018			June 30, 2019			December 31, 2018
	(In thousands)
Total shareholders’ equity	$	330,846		$	338,994		$	354,165		$	341,496
Add (deduct)
Accumulated other comprehensive (income) loss for regulatory purposes		(1,366	)		4,311			(1,366	)		4,311
Goodwill and other intangibles		(34,170	)		(34,715	)		(34,170	)		(34,715	)
Disallowed deferred tax assets		-			(1,335	)		-			(49	)
Common equity tier 1 capital		295,310			307,255			318,629			311,043
Qualifying trust preferred securities		38,198			38,164			-			-
Tier 1 capital		333,508			345,419			318,629			311,043
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		27,386			26,184			27,386			26,184
Total risk-based capital	$	360,894		$	371,603		$	346,015		$	337,227

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Fair Value Disclosures (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value

Assets and liabilities measured at fair value, including financial assets for which we have elected the fair value option, were as follows:

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
June 30, 2019:
Measured at Fair Value on a Recurring Basis
Assets
Securities available for sale
U.S. agency	$	17,183	$	-	$	17,183	$	-
U.S. agency residential mortgage-backed		137,017		-		137,017		-
U.S. agency commercial mortgage-backed		12,238		-		12,238		-
Private label mortgage-backed		30,129		-		30,129		-
Other asset backed		91,151		-		91,151		-
Obligations of states and political subdivisions		104,827		-		104,827		-
Corporate		33,882		-		33,882		-
Trust preferred		1,851		-		1,851		-
Foreign government		2,027		-		2,027		-
Loans held for sale, carried at fair value		62,883		-		62,883		-
Capitalized mortgage loan servicing rights		17,894		-		-		17,894
Derivatives (1)		6,233		-		6,233		-
Liabilities
Derivatives (2)		4,217		-		4,217		-
Measured at Fair Value on a Non-recurring Basis:
Assets
Impaired loans (3)
Commercial
Income producing - real estate		116		-		-		116
Land, land development & construction-real estate		1,198		-		-		1,198
Commercial and industrial		106		-		-		106
Mortgage
1-4 family		839		-		-		839
Resort lending		360		-		-		360
Home equity - 1st lien		41		-		-		41
Home equity - 2nd lien		182		-		-		182
Installment
Home equity - 1st lien		2		-		-		2
Home equity - 2nd lien		31		-		-		31
Boat lending		21		-		-		21
Recreational vehicle lending		1		-		-		1
Other		97		-		-		97
Other real estate (4)
Mortgage
1-4 family		8		-		-		8
Home equity - 2nd lien		59		-		-		59

(1)  Included in accrued income and other assets

(2)  Included in accrued expenses and other liabilities

(3)  Only includes impaired loans with specific loss allocations based on collateral value.

(4)  Only includes other real estate with subsequent write downs to fair value.

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
December 31, 2018:
Measured at Fair Value on a Recurring Basis
Assets
Equity securities at fair value	$	393	$	393	$	-	$	-
Securities available for sale
U.S. agency		20,014		-		20,014		-
U.S. agency residential mortgage-backed		123,751		-		123,751		-
U.S. agency commercial mortgage-backed		5,726		-		5,726		-
Private label mortgage-backed		29,419		-		29,419		-
Other asset backed		83,319		-		83,319		-
Obligations of states and political subdivisions		127,555		-		127,555		-
Corporate		34,309		-		34,309		-
Trust preferred		1,819		-		1,819		-
Foreign government		2,014		-		2,014		-
Loans held for sale, carried at fair value		44,753		-		44,753		-
Capitalized mortgage loan servicing rights		21,400		-		-		21,400
Derivatives (1)		5,155		-		5,155		-
Liabilities
Derivatives (2)		2,326		-		2,326		-
Measured at Fair Value on a Non-recurring Basis:
Assets
Loans held for sale, carried at the lower of cost or fair value		41,471		41,471		-		-
Impaired loans (3)
Commercial
Income producing - real estate		217		-		-		217
Land, land development & construction-real estate		106		-		-		106
Commercial and industrial		2,243		-		-		2,243
Mortgage
1-4 family		333		-		-		333
Resort lending		572		-		-		572
Other real estate (4)
Mortgage
1-4 family		95		-		-		95
Home equity - 2nd lien		59		-		-		59

(1)  Included in accrued income and other assets

(2)  Included in accrued expenses and other liabilities

(3)  Only includes impaired loans with specific loss allocations based on collateral value.

(4)  Only includes other real estate with subsequent write downs to fair value.

Changes in Fair Value for Financial Assets

Changes in fair values for financial assets which we have elected the fair value option for the periods presented were as follows:

	Changes in Fair Values for the Six-Month Periods Ended June 30 for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
	Net Gains (Losses) on Assets					Mortgage			Total Change in Fair Values Included in Current
	Securities			Mortgage Loans		Loan Servicing, net			Period Earnings
	(In thousands)
2019
Equity securities at fair value	$	167		$	-	$	-		$	167
Loans held for sale		-			577		-			577
Capitalized mortgage loan servicing rights		-			-		(6,113	)		(6,113	)
2018
Equity securities at fair value	$	(119	)	$	-	$	-		$	(119	)
Loans held for sale		-			367		-			367
Capitalized mortgage loan servicing rights		-			-		892			892

Reconciliation for all Assets and (Liabilities) Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

A reconciliation for all assets and (liabilities) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) follows:

	Capitalized Mortgage Loan Servicing Rights
	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(In thousands)						(In thousands)
Beginning balance	$	19,909		$	17,783		$	21,400		$	15,699
Total gains (losses) realized and unrealized:
Included in results of operations		(3,422	)		(137	)		(6,113	)		892
Included in other comprehensive income (loss)		-			-			-			-
Purchases, issuances, settlements, maturities and calls		1,407			4,202			2,607			5,257
Transfers in and/or out of Level 3		-			-			-			-
Ending balance	$	17,894		$	21,848		$	17,894		$	21,848
Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at June 30	$	(3,422	)	$	(137	)	$	(6,113	)	$	892

Quantitative Information About Level 3 Fair Value Measurements Measured on a Recurring Basis and Non-recurring Basis

Quantitative information about our Level 3 fair value measurements measured on a recurring basis follows:

	Asset Fair Value		Valuation Technique	Unobservable Inputs	Range			Weighted Average
	(In thousands)
June 30, 2019
Capitalized mortgage loan servicing rights	$	17,894	Present value of net	Discount rate	10.00% to 13.00		%		10.14	%
			servicing revenue	Cost to service	$	66 to $216		$	80
				Ancillary income	20 to 36				22
				Float rate		1.77	%		1.77	%
December 31, 2018
Capitalized mortgage loan servicing rights	$	21,400	Present value of net	Discount rate	10.00% to 13.00		%		10.15	%
			servicing revenue	Cost to service	$	68 to $216		$	81
				Ancillary income	20 to 36				23
				Float rate		2.57	%		2.57	%

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis follows:

	Asset Fair Value		Valuation Technique	Unobservable Inputs	Range		Weighted Average
	(In thousands)
June 30, 2019
Impaired loans
Commercial(1)	$	1,420	Sales comparison approach	Adjustment for differences between comparable sales	(48.0)% to 40.0	%		(6.0	)%
Mortgage and
Installment(2)		1,574	Sales comparison approach	Adjustment for  differences between comparable sales	(40.1) to 56.7			(2.6	)
Other real estate
Mortgage		67	Sales comparison approach	Adjustment for differences between comparable sales	(0.0) to 10.2			4.1
December 31, 2018
Impaired loans
Commercial(1)	$	2,566	Sales comparison approach	Adjustment for differences between comparable sales	(32.5)% to 60.0	%		(1.9	)%
Mortgage		905	Sales comparison approach	Adjustment for differences between comparable sales	(40.1) to 25.6			0.7
Other real estate
Mortgage		154	Sales comparison approach	Adjustment for  differences between comparable sales	0.0 to 34.1			11.2

(1) In addition to the valuation techniques and unobservable inputs discussed above, at June 30, 2019 and December 31, 2018, we had an impaired collateral dependent commercial relationship that totaled $0.5 million and $0.7 million, respectively that was secured by collateral other than real estate. Collateral securing this relationship primarily included accounts receivable, inventory and cash at June 30, 2019 and December 31, 2018. Valuation techniques at June 30, 2019 and December 31, 2018, included discounting financial statement values for each particular asset type. Discount rates used ranged from 5% to 97% of stated values at June 30, 2019 and 20% to 80% of stated values at December 31, 2018.

(2) In addition to the valuation techniques and unobservable inputs discussed above, at June 30, 2019 certain impaired collateral dependent installment loans totaling approximately $0.1 million are secured by collateral other than real estate.  For the majority of these loans, we apply internal discount rates to industry valuation guides.

Aggregate Fair Value and Aggregate Remaining Contractual Principal Balance for Loans Held for Sale

The following table reflects the difference between the aggregate fair value and the aggregate remaining contractual principal balance outstanding for loans held for sale for which the fair value option has been elected for the periods presented.

	Aggregate Fair Value		Difference		Contractual Principal
	(In thousands)
Loans held for sale
June 30, 2019	$	62,883	$	1,834	$	61,049
December 31, 2018		44,753		1,257		43,496

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Fair Values of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2019

Fair Values of Financial Instruments [Abstract]

Estimated Recorded Book Balances and Fair Values

The estimated recorded book balances and fair values follow:

					Fair Value Using
	Recorded Book Balance		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
June 30, 2019
Assets
Cash and due from banks	$	34,461	$	34,461	$	34,461	$	-	$	-
Interest bearing deposits		20,676		20,676		20,676		-		-
Interest bearing deposits - time		498		498		-		498		-
Securities available for sale		430,305		430,305		-		430,305		-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA		NA		NA		NA
Net loans and loans held for sale		2,743,506		2,747,828		-		62,883		2,684,945
Accrued interest receivable		10,816		10,816		1		1,634		9,181
Derivative financial instruments		6,233		6,233		-		6,233		-
Liabilities
Deposits with no stated maturity (1)	$	2,294,255	$	2,294,255	$	2,294,255	$	-	$	-
Deposits with stated maturity (1)		684,630		683,547		-		683,547		-
Other borrowings		41,144		41,271		-		41,271		-
Subordinated debentures		39,422		33,214		-		33,214		-
Accrued interest payable		1,668		1,668		128		1,540		-
Derivative financial instruments		4,217		4,217		-		4,217		-
December 31, 2018
Assets
Cash and due from banks	$	23,350	$	23,350	$	23,350	$	-	$	-
Interest bearing deposits		46,894		46,894		46,894		-		-
Interest bearing deposits - time		595		594		-		594		-
Equity securities at fair value		393		393		393		-		-
Securities available for sale		427,926		427,926		-		427,926		-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA		NA		NA		NA
Net loans and loans held for sale		2,643,856		2,606,256		41,471		44,753		2,520,032
Accrued interest receivable		10,164		10,164		22		1,789		8,353
Derivative financial instruments		5,155		5,155		-		5,155		-
Liabilities
Deposits with no stated maturity (1)	$	2,197,494	$	2,197,494	$	2,197,494	$	-	$	-
Deposits with stated maturity (1)		715,934		711,312		-		711,312		-
Other borrowings		25,700		25,706		-		25,706		-
Subordinated debentures		39,388		35,021		-		35,021		-
Accrued interest payable		1,646		1,646		114		1,532		-
Derivative financial instruments		2,326		2,326		-		2,326		-

(1) Deposits with no stated maturity include reciprocal deposits with a recorded book balance of $270.864 million and $123.080 million at June 30, 2019 and December 31, 2018, respectively. Deposits with a stated maturity include reciprocal deposits with a recorded book balance of $55.462 million and $58.992 million at June 30, 2019 and December 31, 2018, respectively.

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Accumulated Other Comprehensive Loss ("AOCL") (Tables)

6 Months Ended

Jun. 30, 2019

Accumulated Other Comprehensive Loss ("AOCL") [Abstract]

Accumulated Other Comprehensive Loss (AOCL), Net of Tax

A summary of changes in AOCL follows:

	Unrealized Gains (Losses) on Securities Available for Sale			Dispropor- tionate Tax Effects from Securities Available for Sale			Unrealized Gains (Losses) on Cash Flow Hedges			Total
	(In thousands)
For the three months ended June 30,
2019
Balances at beginning of period	$	(57	)	$	(5,798	)	$	(962	)	$	(6,817	)
Other comprehensive income (loss) before reclassifications		3,097			-			(599	)		2,498
Amounts reclassified from AOCL		-			-			(112	)		(112	)
Net current period other comprehensive income (loss)		3,097			-			(711	)		2,386
Balances at end of period	$	3,040		$	(5,798	)	$	(1,673	)	$	(4,431	)
2018
Balances at beginning of period	$	(3,509	)	$	(5,798	)	$	805		$	(8,502	)
Other comprehensive income (loss) before reclassifications		(949	)		-			258			(691	)
Amounts reclassified from AOCL		21			-			(42	)		(21	)
Net current period other comprehensive income (loss)		(928	)		-			216			(712	)
Balances at end of period	$	(4,437	)	$	(5,798	)	$	1,021		$	(9,214	)
For the six months ended June 30,
2019
Balances at beginning of period	$	(4,185	)	$	(5,798	)	$	(125	)	$	(10,108	)
Other comprehensive income (loss) before reclassifications		7,333			-			(1,318	)		6,015
Amounts reclassified from AOCL		(108	)		-			(230	)		(338	)
Net current period other comprehensive income (loss)		7,225			-			(1,548	)		5,677
Balances at end of period	$	3,040		$	(5,798	)	$	(1,673	)	$	(4,431	)
2018
Balances at beginning of period	$	(470	)	$	(5,798	)	$	269		$	(5,999	)
Other comprehensive income (loss) before reclassifications		(4,003	)		-			799			(3,204	)
Amounts reclassified from AOCL		36			-			(47	)		(11	)
Net current period other comprehensive income (loss)		(3,967	)		-			752			(3,215	)
Balances at end of period	$	(4,437	)	$	(5,798	)	$	1,021		$	(9,214	)

Reclassifications Out of Each Component of AOCL

A summary of reclassifications out of each component of AOCL for the three months ended June 30 follows:

AOCL Component	Amount Reclassified From AOCL			Affected Line Item in Condensed  Consolidated Statements of Operations
	(In thousands)
2019
Unrealized gains (losses) on securities available for sale
	$	-		Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		-		Total reclassifications before tax
		-		Income tax expense
	$	-		Reclassifications, net of tax
Unrealized gains (losses) on cash flow hedges
	$	(142	)	Interest expense
		(30	)	Income tax expense
	$	(112	)	Reclassification, net of tax
	$	112		Total reclassifications for the period, net of tax
2018
Unrealized gains (losses) on securities available for sale
	$	(26	)	Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		(26	)	Total reclassifications before tax
		(5	)	Income tax expense
	$	(21	)	Reclassifications, net of tax
Unrealized gains (losses) on cash flow hedges
	$	(53	)	Interest expense
		(11	)	Income tax expense
	$	(42	)	Reclassification, net of tax
	$	21		Total reclassifications for the period, net of tax

A summary of reclassifications out of each component of AOCL for the six months ended June 30 follows:

AOCL Component	Amount Reclassified From AOCL			Affected Line Item in Condensed  Consolidated Statements of Operations
	(In thousands)
2019
Unrealized gains (losses) on securities available for sale
	$	137		Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		137		Total reclassifications before tax
		29		Income tax expense
	$	108		Reclassifications, net of tax
Unrealized gains (losses) on cash flow hedges
	$	(291	)	Interest expense
		(61	)	Income tax expense
	$	(230	)	Reclassification, net of tax
	$	338		Total reclassifications for the period, net of tax
2018
Unrealized gains (losses) on securities available for sale
	$	(45	)	Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		(45	)	Total reclassifications before tax
		(9	)	Income tax expense
	$	(36	)	Reclassifications, net of tax
Unrealized gains (losses) on cash flow hedges
	$	(59	)	Interest expense
		(12	)	Income tax expense
	$	(47	)	Reclassification, net of tax
	$	11		Total reclassifications for the period, net of tax

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Revenue from Contracts with Customers (Tables)

6 Months Ended

Jun. 30, 2019

Revenue from Contracts with Customers [Abstract]

Disaggregation of Revenue Sources by Attribute

Disaggregation of our revenue sources by attribute follows:

Three months ending June 30, 2019
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	1,882		-		-		-	$	1,882
Account service charges		541		-		-		-		541
ATM fees		-	$	346		-		-		346
Other		-		212		-		-		212
Business
Overdraft fees		377		-		-		-		377
Account service charges		-		-		-		-		-
ATM fees		-		9		-		-		9
Other		-		89		-		-		89
Interchange income		-		-	$	2,604		-		2,604
Asset management revenue		-		-		-	$	277		277
Transaction based revenue		-		-		-		173		173
Total	$	2,800	$	656	$	2,604	$	450	$	6,510
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	656
Investment and insurance commissions										450
Bank owned life insurance										270
Other										730
Total									$	2,106

Three months ending June 30, 2018
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	2,044		-		-		-	$	2,044
Account service charges		588		-		-		-		588
ATM fees		-	$	358		-		-		358
Other		-		230		-		-		230
Business
Overdraft fees		380		-		-		-		380
Account service charges		83		-		-		-		83
ATM fees		-		8		-		-		8
Other		-		146		-		-		146
Interchange income		-		-	$	2,504		-		2,504
Asset management revenue		-		-		-	$	281		281
Transaction based revenue		-		-		-		202		202
Total	$	3,095	$	742	$	2,504	$	483	$	6,824
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	742
Investment and insurance commissions										483
Bank owned life insurance										220
Other										772
Total									$	2,217

Six months ending June 30, 2019
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	3,612		-		-		-	$	3,612
Account service charges		1,057		-		-		-		1,057
ATM fees		-	$	668		-		-		668
Other		-		463		-		-		463
Business
Overdraft fees		762		-		-		-		762
Account service charges		9		-		-		-		9
ATM fees		-		17		-		-		17
Other		-		218		-		-		218
Interchange income		-		-	$	4,959		-		4,959
Asset management revenue		-		-		-	$	531		531
Transaction based revenue		-		-		-		216		216
Total	$	5,440	$	1,366	$	4,959	$	747	$	12,512
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	1,366
Investment and insurance commissions										747
Bank owned life insurance										512
Other										1,745
Total									$	4,370

Six months ending June 30, 2018
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	4,016		-		-		-	$	4,016
Account service charges		1,088		-		-		-		1,088
ATM fees		-	$	703		-		-		703
Other		-		437		-		-		437
Business
Overdraft fees		745		-		-		-		745
Account service charges		151		-		-		-		151
ATM fees		-		16		-		-		16
Other		-		275		-		-		275
Interchange income		-		-	$	4,750		-		4,750
Asset management revenue		-		-		-	$	552		552
Transaction based revenue		-		-		-		369		369
Total	$	6,000	$	1,431	$	4,750	$	921	$	13,102
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	1,431
Investment and insurance commissions										921
Bank owned life insurance										476
Other										1,332
Total									$	4,160

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Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Components of Operating Leases

The cost components of our operating leases follows:

	Three Months Ended		Six Months Ended
	June 30, 2019
	(In thousands)
Operating lease cost	$	563	$	1,127
Variable lease cost		49		72
Short-term lease cost		5		10
Total	$	617	$	1,209

Supplemental Balance Sheet Information Related to Operating Leases

Supplemental balance sheet information related to our operating leases follows:

	June 30, 2019
	(In thousands)
Lease right of use asset (1)	$	6,692
Lease liabilities (2)	$	6,700
Weighted average remaining lease term (years)		5.58
Weighted average discount rate		3.2	%

(1)  Included in Accrued income and other assets in our Condensed Consolidated Statements of Financial Condition.

(2)  Included in Accrued expenses and other liabilities in our Condensed Consolidated Statements of Financial Condition.

Maturity Analysis of Lease Liabilities

Maturity analysis of our lease liabilities at June 30, 2019 based on required contractual payments follows:

	(In thousands)
Six months ending December 31, 2019	$	1,098
2020		1,711
2021		1,248
2022		963
2023		925
2024 and thereafter		1,428
Total lease payments		7,373
Less imputed interest		(673	)
Total	$	6,700

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Recent Acquisition (Tables)

6 Months Ended

Jun. 30, 2019

Recent Acquisition [Abstract]

Final Valuation of Assets Acquired and Liabilities Assumed

The following table reflects our final valuation of the assets acquired and liabilities assumed:

	(In thousands)
Cash and cash equivalents	$	23,521
Interest bearing deposits - time		4,054
Securities available for sale		6,066
Federal Home Loan Bank stock		778
Loans, net		295,799
Property and equipement, net		1,067
Capitalized mortgage loan servicing rights		3,047
Accrued income and other assets		3,362
Other intangibles (1)		5,798
Total assets acquired		343,492
Deposits		287,710
Other borrowings		14,345
Subordinated debentures		3,768
Accrued expenses and other liabilities		1,429
Total liabilities assumed		307,252
Net assets acquired		36,240
Goodwill		28,300
Purchase price (fair value of consideration)	$	64,540

(1) Relates to core deposit intangibles (see note #7).

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New Accounting Standards (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
New Accounting Standards [Abstract]
Right of use asset	$ 6,692	[1]
Lease liability	$ 6,700	[2]
ASU 2016-13 [Member]
New Accounting Standards [Abstract]
Allowance for loan losses forecast period	2 years
Allowance for loan losses reversion period	2 years
ASU 2016-13 [Member] | Minimum [Member]
New Accounting Standards [Abstract]
Expected increase in the allowance for loan losses	$ 9,500
Expected increase to the allowance for losses related to unfunded loan commitments	500
ASU 2016-13 [Member] | Maximum [Member]
New Accounting Standards [Abstract]
Expected increase in the allowance for loan losses	11,500
Expected increase to the allowance for losses related to unfunded loan commitments	1,500
ASU 2016-02 [Member]
New Accounting Standards [Abstract]
Right of use asset	7,700
Lease liability	$ 7,700

[1] Included in Accrued income and other assets in our Condensed Consolidated Statements of Financial Condition.

[2] Included in Accrued expenses and other liabilities in our Condensed Consolidated Statements of Financial Condition.

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Securities (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($) Security	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) Security	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 426,458		$ 426,458		$ 433,224
Unrealized Gains	4,922		4,922		1,520
Unrealized Losses	1,075		1,075		6,818
Fair Value	430,305		430,305		427,926
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	56,960		56,960		131,526
Less Than Twelve Months, Unrealized Losses	230		230		1,112
Twelve Months or More, Fair Value	91,402		91,402		184,420
Twelve Months or More, Unrealized Losses	845		845		5,706
Total, Fair Value	148,362		148,362		315,946
Total, Unrealized Losses	1,075		1,075		6,818
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Fair value	1,430		1,430
Amortized cost	1,116		1,116
Non-credit unrealized loss	0		0
Unrealized gain	314		314
Cumulative credit related OTTI	1,594		1,594
Credit related OTTI recognized in earnings	0	$ 0	0	$ 0
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Balance at beginning of period	1,594	1,594	1,594	1,594
Additions to credit losses on securities for which no previous OTTI was recognized	0	0	0	0
Increases to credit losses on securities for which OTTI was previously recognized	0	0	0	0
Balance at end of period	1,594	$ 1,594	1,594	$ 1,594
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Maturing within one year	13,478		13,478
Maturing after one year but within five years	55,186		55,186
Maturing after five years but within ten years	50,659		50,659
Maturing after ten years	38,286		38,286
Amortized cost	157,609		157,609
U.S. agency residential mortgage-backed	135,853		135,853
U.S. agency commercial mortgage-backed	12,183		12,183
Private label mortgage-backed	29,617		29,617
Other asset backed	91,196		91,196
Amortized cost	426,458		426,458		433,224
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Maturing within one year	13,481		13,481
Maturing after one year but within five years	55,754		55,754
Maturing after five years but within ten years	51,759		51,759
Maturing after ten years	38,776		38,776
Total available-for-sale securities fair value	159,770		159,770
U.S. agency residential mortgage-backed	137,017		137,017
U.S. agency commercial mortgage-backed	12,238		12,238
Private label mortgage-backed	30,129		30,129
Other asset backed	91,151		91,151
Total	430,305		430,305		427,926
U.S. Agency [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	16,997		16,997		20,198
Unrealized Gains	200		200		9
Unrealized Losses	14		14		193
Fair Value	17,183		17,183		20,014
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	0		0		7,150
Less Than Twelve Months, Unrealized Losses	0		0		46
Twelve Months or More, Fair Value	4,427		4,427		11,945
Twelve Months or More, Unrealized Losses	14		14		147
Total, Fair Value	4,427		4,427		19,095
Total, Unrealized Losses	$ 14		$ 14		193
Number of securities with market fair value less than amortized cost | Security	22		22
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Amortized cost	$ 16,997		$ 16,997		20,198
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Total	17,183		17,183		20,014
U.S. Agency Residential Mortgage-Backed [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	135,853		135,853		124,777
Unrealized Gains	1,541		1,541		817
Unrealized Losses	377		377		1,843
Fair Value	137,017		137,017		123,751
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	5,109		5,109		18,374
Less Than Twelve Months, Unrealized Losses	11		11		180
Twelve Months or More, Fair Value	36,367		36,367		48,184
Twelve Months or More, Unrealized Losses	366		366		1,663
Total, Fair Value	41,476		41,476		66,558
Total, Unrealized Losses	$ 377		$ 377		1,843
Number of securities with market fair value less than amortized cost | Security	104		104
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Amortized cost	$ 135,853		$ 135,853		124,777
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Total	137,017		137,017		123,751
U.S. Agency Commercial Mortgage-Backed [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	12,183		12,183		5,909
Unrealized Gains	99		99		1
Unrealized Losses	44		44		184
Fair Value	12,238		12,238		5,726
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	0		0		566
Less Than Twelve Months, Unrealized Losses	0		0		3
Twelve Months or More, Fair Value	4,322		4,322		5,094
Twelve Months or More, Unrealized Losses	44		44		181
Total, Fair Value	4,322		4,322		5,660
Total, Unrealized Losses	$ 44		$ 44		184
Number of securities with market fair value less than amortized cost | Security	9		9
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Amortized cost	$ 12,183		$ 12,183		5,909
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Total	12,238		12,238		5,726
Private Label Mortgage-Backed [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	29,617		29,617		29,735
Unrealized Gains	588		588		321
Unrealized Losses	76		76		637
Fair Value	30,129		30,129		29,419
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	2,682		2,682		8,273
Less Than Twelve Months, Unrealized Losses	3		3		57
Twelve Months or More, Fair Value	3,273		3,273		16,145
Twelve Months or More, Unrealized Losses	73		73		580
Total, Fair Value	5,955		5,955		24,418
Total, Unrealized Losses	$ 76		$ 76		637
Number of securities with market fair value less than amortized cost | Security	11		11
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Number of private label mortgage backed securities complete recovery of cost basis | Security	2		2
Number of private label mortgage backed securities currently with OTTI unrealized gains | Security	3		3
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Amortized cost	$ 29,617		$ 29,617		29,735
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Total	30,129		30,129		29,419
Senior Security [Member]
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Fair value	713		713
Amortized cost	595		595
Non-credit unrealized loss	0		0
Unrealized gain	118		118
Cumulative credit related OTTI	757		757
Super Senior Security [Member]
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Fair value	700		700
Amortized cost	521		521
Non-credit unrealized loss	0		0
Unrealized gain	179		179
Cumulative credit related OTTI	457		457
Senior Support Security [Member]
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Fair value	17		17
Amortized cost	0		0
Non-credit unrealized loss	0		0
Unrealized gain	17		17
Cumulative credit related OTTI	380		380
Other Asset Backed [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	91,196		91,196		83,481
Unrealized Gains	186		186		86
Unrealized Losses	231		231		248
Fair Value	91,151		91,151		83,319
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	38,729		38,729		53,043
Less Than Twelve Months, Unrealized Losses	140		140		160
Twelve Months or More, Fair Value	9,794		9,794		10,235
Twelve Months or More, Unrealized Losses	91		91		88
Total, Fair Value	48,523		48,523		63,278
Total, Unrealized Losses	$ 231		$ 231		248
Number of securities with market fair value less than amortized cost | Security	65		65
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Amortized cost	$ 91,196		$ 91,196		83,481
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Total	91,151		91,151		83,319
Obligations of States and Political Subdivisions [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	103,652		103,652		130,244
Unrealized Gains	1,378		1,378		257
Unrealized Losses	203		203		2,946
Fair Value	104,827		104,827		127,555
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	9,211		9,211		25,423
Less Than Twelve Months, Unrealized Losses	15		15		262
Twelve Months or More, Fair Value	27,595		27,595		80,701
Twelve Months or More, Unrealized Losses	188		188		2,684
Total, Fair Value	36,806		36,806		106,124
Total, Unrealized Losses	$ 203		$ 203		2,946
Number of securities with market fair value less than amortized cost | Security	86		86
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Amortized cost	$ 103,652		$ 103,652		130,244
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Total	104,827		104,827		127,555
Corporate [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	32,964		32,964		34,866
Unrealized Gains	929		929		29
Unrealized Losses	11		11		586
Fair Value	33,882		33,882		34,309
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	288		288		17,758
Less Than Twelve Months, Unrealized Losses	1		1		343
Twelve Months or More, Fair Value	3,188		3,188		9,222
Twelve Months or More, Unrealized Losses	10		10		243
Total, Fair Value	3,476		3,476		26,980
Total, Unrealized Losses	$ 11		$ 11		586
Number of securities with market fair value less than amortized cost | Security	5		5
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Amortized cost	$ 32,964		$ 32,964		34,866
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Total	33,882		33,882		34,309
Trust Preferred [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	1,966		1,966		1,964
Unrealized Gains	0		0		0
Unrealized Losses	115		115		145
Fair Value	1,851		1,851		1,819
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	941		941		939
Less Than Twelve Months, Unrealized Losses	60		60		61
Twelve Months or More, Fair Value	910		910		880
Twelve Months or More, Unrealized Losses	55		55		84
Total, Fair Value	1,851		1,851		1,819
Total, Unrealized Losses	$ 115		$ 115		145
Number of securities with market fair value less than amortized cost | Security	2		2
Number of issues rated as investment grade | Security	1		1
Number of securities not rated | Security	1		1
Non-rated securities, amortized cost	$ 1,000		$ 1,000
Fair value of non-rated trust preferred securities	940		940
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Amortized cost	1,966		1,966		1,964
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Total	1,851		1,851		1,819
Foreign Government [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	2,030		2,030		2,050
Unrealized Gains	1		1		0
Unrealized Losses	4		4		36
Fair Value	2,027		2,027		2,014
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	0		0		0
Less Than Twelve Months, Unrealized Losses	0		0		0
Twelve Months or More, Fair Value	1,526		1,526		2,014
Twelve Months or More, Unrealized Losses	4		4		36
Total, Fair Value	1,526		1,526		2,014
Total, Unrealized Losses	$ 4		$ 4		36
Number of securities with market fair value less than amortized cost | Security	1		1
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Amortized cost	$ 2,030		$ 2,030		2,050
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Total	$ 2,027		$ 2,027		$ 2,014

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Securities, Gains and Losses Realized on Sale of Securities Available for Sale (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Gain and losses realized on sale of securities available for sale [Abstract]
Proceeds	$ 42,236	$ 31,445
Realized gains	169	81
Realized losses	32	126
Trading securities, realized gain (loss)	167	(119)
Gains (losses) related to preferred stock held for sale	$ 0	$ (119)

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Loans, Allowance for Loan Losses (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Analysis of allowance for loan losses by portfolio segment [Roll Forward]
Balance at beginning of period		$ 25,254	$ 23,071	$ 24,888	$ 22,587
Additions (deductions) [Abstract]
Provision for loan losses		652	650	1,316	965
Recoveries credited to the allowance		889	846	1,457	1,860
Loans charged against the allowance		(892)	(1,063)	(1,758)	(1,908)
Balance at end of period		25,903	23,504	25,903	23,504
Allowance for loan losses [Abstract]
Individually evaluated for impairment		6,027		6,027		$ 6,310
Collectively evaluated for impairment		19,876		19,876		18,578
Total ending allowance for loan losses balance		25,903		25,903		24,888
Loans [Abstract]
Individually evaluated for impairment		55,435		55,435		58,461
Collectively evaluated for impairment		2,657,828		2,657,828		2,530,084
Total loans recorded investment		2,715,664		2,715,664		2,591,058
Accrued interest included in recorded investment		9,138		9,138		8,538
Total loans		2,706,526		2,706,526		2,582,520
Loans Acquired with Deteriorated Credit Quality [Member]
Allowance for loan losses [Abstract]
Loans acquired with deteriorated credit quality		0		0		0
Loans [Abstract]
Loans acquired with deteriorated credit quality		2,401		2,401		2,513
Commercial [Member]
Analysis of allowance for loan losses by portfolio segment [Roll Forward]
Balance at beginning of period		7,518	6,026	7,090	5,595
Additions (deductions) [Abstract]
Provision for loan losses		475	(362)	895	(497)
Recoveries credited to the allowance		378	434	505	1,040
Loans charged against the allowance		(250)	(25)	(369)	(65)
Balance at end of period		8,121	6,073	8,121	6,073
Allowance for loan losses [Abstract]
Individually evaluated for impairment		1,047		1,047		1,305
Collectively evaluated for impairment		7,074		7,074		5,785
Total ending allowance for loan losses balance		8,121		8,121		7,090
Loans [Abstract]
Individually evaluated for impairment		8,082		8,082		8,697
Collectively evaluated for impairment		1,169,792		1,169,792		1,137,586
Total loans recorded investment		1,179,364		1,179,364		1,147,892
Accrued interest included in recorded investment		3,394		3,394		3,411
Total loans		1,175,970		1,175,970		1,144,481
Commercial [Member] | Loans Acquired with Deteriorated Credit Quality [Member]
Allowance for loan losses [Abstract]
Loans acquired with deteriorated credit quality		0		0		0
Loans [Abstract]
Loans acquired with deteriorated credit quality		1,490		1,490		1,609
Mortgage [Member]
Analysis of allowance for loan losses by portfolio segment [Roll Forward]
Balance at beginning of period		8,412	8,621	7,978	8,733
Additions (deductions) [Abstract]
Provision for loan losses		(386)	216	187	363
Recoveries credited to the allowance		327	177	551	357
Loans charged against the allowance		(291)	(718)	(654)	(1,157)
Balance at end of period		8,062	8,296	8,062	8,296
Allowance for loan losses [Abstract]
Individually evaluated for impairment		4,715		4,715		4,799
Collectively evaluated for impairment		3,347		3,347		3,179
Total ending allowance for loan losses balance		8,062		8,062		7,978
Loans [Abstract]
Individually evaluated for impairment		44,095		44,095		46,394
Collectively evaluated for impairment		1,046,177		1,046,177		1,000,038
Total loans recorded investment		1,090,859		1,090,859		1,046,987
Accrued interest included in recorded investment	[1]	4,550		4,550		4,097
Total loans		1,086,309		1,086,309		1,042,890
Mortgage [Member] | Loans Acquired with Deteriorated Credit Quality [Member]
Allowance for loan losses [Abstract]
Loans acquired with deteriorated credit quality		0		0		0
Loans [Abstract]
Loans acquired with deteriorated credit quality		587		587		555
Installment [Member]
Analysis of allowance for loan losses by portfolio segment [Roll Forward]
Balance at beginning of period		1,251	795	895	864
Additions (deductions) [Abstract]
Provision for loan losses		209	138	732	207
Recoveries credited to the allowance		184	235	401	463
Loans charged against the allowance		(351)	(320)	(735)	(686)
Balance at end of period		1,293	848	1,293	848
Allowance for loan losses [Abstract]
Individually evaluated for impairment		265		265		206
Collectively evaluated for impairment		1,028		1,028		689
Total ending allowance for loan losses balance		1,293		1,293		895
Loans [Abstract]
Individually evaluated for impairment		3,258		3,258		3,370
Collectively evaluated for impairment		441,859		441,859		392,460
Total loans recorded investment		445,441		445,441		396,179
Accrued interest included in recorded investment	[1]	1,194		1,194		1,030
Total loans		444,247		444,247		395,149
Installment [Member] | Loans Acquired with Deteriorated Credit Quality [Member]
Allowance for loan losses [Abstract]
Loans acquired with deteriorated credit quality		0		0		0
Loans [Abstract]
Loans acquired with deteriorated credit quality		324		324		349
Subjective Allocation [Member]
Analysis of allowance for loan losses by portfolio segment [Roll Forward]
Balance at beginning of period		8,073	7,629	8,925	7,395
Additions (deductions) [Abstract]
Provision for loan losses		354	658	(498)	892
Recoveries credited to the allowance		0	0	0	0
Loans charged against the allowance		0	0	0	0
Balance at end of period		8,427	$ 8,287	8,427	$ 8,287
Allowance for loan losses [Abstract]
Individually evaluated for impairment		0		0		0
Collectively evaluated for impairment		8,427		8,427		8,925
Total ending allowance for loan losses balance		8,427		8,427		8,925
Subjective Allocation [Member] | Loans Acquired with Deteriorated Credit Quality [Member]
Allowance for loan losses [Abstract]
Loans acquired with deteriorated credit quality		$ 0		$ 0		$ 0

[1] Credit scores have been updated within the last twelve months.

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Loans, Receivables Past Due (Details) - USD ($) $ in Thousands		Jun. 30, 2019	Dec. 31, 2018
Non performing loans [Abstract]
90+ and Still Accruing		$ 0	$ 5
Non-Accrual		7,363	9,029
Total Non-performing Loans		7,363	9,034
Accrued interest included in recorded investment		0	0
Aging analysis of loans by class [Abstract]
Total		12,443	12,795
Loans not Past Due		2,703,221	2,578,263
Total loans recorded investment		2,715,664	2,591,058
Accrued interest included in recorded investment		9,138	8,538
Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		6,634	4,960
Accrued interest included in recorded investment		66	44
Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		2,361	820
Accrued interest included in recorded investment		32	11
Loans Past Due, 90+ days [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment		0	0
Aging analysis of loans by class [Abstract]
Total		3,448	7,015
Accrued interest included in recorded investment		0	0
Loans Past Due Total [Member]
Aging analysis of loans by class [Abstract]
Accrued interest included in recorded investment		98	55
Loans Not Past Due [Member]
Aging analysis of loans by class [Abstract]
Accrued interest included in recorded investment		9,040	8,483
Commercial [Member]
Aging analysis of loans by class [Abstract]
Accrued interest included in recorded investment		3,394	3,411
Commercial [Member] | Income Producing - Real Estate [Member]
Non performing loans [Abstract]
90+ and Still Accruing		0	0
Non-Accrual		0	0
Total Non-performing Loans		0	0
Aging analysis of loans by class [Abstract]
Total		50	44
Loans not Past Due		398,697	388,729
Total loans recorded investment		398,747	388,773
Commercial [Member] | Income Producing - Real Estate [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		50	44
Commercial [Member] | Income Producing - Real Estate [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		0	0
Commercial [Member] | Income Producing - Real Estate [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		0	0
Commercial [Member] | Land, Land Development and Construction - Real Estate [Member]
Non performing loans [Abstract]
90+ and Still Accruing		0	0
Non-Accrual		0	0
Total Non-performing Loans		0	0
Aging analysis of loans by class [Abstract]
Total		0	0
Loans not Past Due		93,213	84,458
Total loans recorded investment		93,213	84,458
Commercial [Member] | Land, Land Development and Construction - Real Estate [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		0	0
Commercial [Member] | Land, Land Development and Construction - Real Estate [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		0	0
Commercial [Member] | Land, Land Development and Construction - Real Estate [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		0	0
Commercial [Member] | Commercial and Industrial [Member]
Non performing loans [Abstract]
90+ and Still Accruing		0	0
Non-Accrual		803	2,220
Total Non-performing Loans		803	2,220
Aging analysis of loans by class [Abstract]
Total		874	1,538
Loans not Past Due		686,530	673,123
Total loans recorded investment		687,404	674,661
Commercial [Member] | Commercial and Industrial [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		132	1,538
Commercial [Member] | Commercial and Industrial [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		37	0
Commercial [Member] | Commercial and Industrial [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		705	0
Mortgage [Member]
Aging analysis of loans by class [Abstract]
Accrued interest included in recorded investment	[1]	4,550	4,097
Mortgage [Member] | 1-4 Family [Member]
Non performing loans [Abstract]
90+ and Still Accruing		0	5
Non-Accrual		4,142	4,695
Total Non-performing Loans		4,142	4,700
Aging analysis of loans by class [Abstract]
Total		7,885	6,684
Loans not Past Due		851,775	833,760
Total loans recorded investment		859,660	840,444
Accrued interest included in recorded investment	[1]	3,503	3,079
Mortgage [Member] | 1-4 Family [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		4,488	1,608
Mortgage [Member] | 1-4 Family [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		1,663	194
Mortgage [Member] | 1-4 Family [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		1,734	4,882
Mortgage [Member] | Resort Lending [Member]
Non performing loans [Abstract]
90+ and Still Accruing		0	0
Non-Accrual		720	755
Total Non-performing Loans		720	755
Aging analysis of loans by class [Abstract]
Total		1,155	1,007
Loans not Past Due		73,578	80,774
Total loans recorded investment		74,733	81,781
Accrued interest included in recorded investment	[1]	367	363
Mortgage [Member] | Resort Lending [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		484	252
Mortgage [Member] | Resort Lending [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		238	0
Mortgage [Member] | Resort Lending [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		433	755
Mortgage [Member] | Home Equity - 1st Lien [Member]
Non performing loans [Abstract]
90+ and Still Accruing		0	0
Non-Accrual		196	159
Total Non-performing Loans		196	159
Aging analysis of loans by class [Abstract]
Total		325	335
Loans not Past Due		36,201	38,909
Total loans recorded investment		36,526	39,244
Accrued interest included in recorded investment	[1]	176	199
Mortgage [Member] | Home Equity - 1st Lien [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		178	176
Mortgage [Member] | Home Equity - 1st Lien [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		96	0
Mortgage [Member] | Home Equity - 1st Lien [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		51	159
Mortgage [Member] | Home Equity - 2nd Lien [Member]
Non performing loans [Abstract]
90+ and Still Accruing		0	0
Non-Accrual		600	419
Total Non-performing Loans		600	419
Aging analysis of loans by class [Abstract]
Total		887	965
Loans not Past Due		119,053	84,553
Total loans recorded investment		119,940	85,518
Accrued interest included in recorded investment	[1]	504	456
Mortgage [Member] | Home Equity - 2nd Lien [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		458	446
Mortgage [Member] | Home Equity - 2nd Lien [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		234	100
Mortgage [Member] | Home Equity - 2nd Lien [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		195	419
Installment [Member]
Aging analysis of loans by class [Abstract]
Accrued interest included in recorded investment	[1]	1,194	1,030
Installment [Member] | Home Equity - 1st Lien [Member]
Non performing loans [Abstract]
90+ and Still Accruing		0	0
Non-Accrual		168	178
Total Non-performing Loans		168	178
Aging analysis of loans by class [Abstract]
Total		109	452
Loans not Past Due		6,320	6,985
Total loans recorded investment		6,429	7,437
Accrued interest included in recorded investment	[1]	23	28
Installment [Member] | Home Equity - 1st Lien [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		97	200
Installment [Member] | Home Equity - 1st Lien [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		1	55
Installment [Member] | Home Equity - 1st Lien [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		11	197
Installment [Member] | Home Equity - 2nd Lien [Member]
Non performing loans [Abstract]
90+ and Still Accruing		0	0
Non-Accrual		220	226
Total Non-performing Loans		220	226
Aging analysis of loans by class [Abstract]
Total		320	361
Loans not Past Due		5,431	6,683
Total loans recorded investment		5,751	7,044
Accrued interest included in recorded investment	[1]	19	25
Installment [Member] | Home Equity - 2nd Lien [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		188	111
Installment [Member] | Home Equity - 2nd Lien [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		19	24
Installment [Member] | Home Equity - 2nd Lien [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		113	226
Installment [Member] | Boat Lending [Member]
Non performing loans [Abstract]
90+ and Still Accruing		0	0
Non-Accrual		278	166
Total Non-performing Loans		278	166
Aging analysis of loans by class [Abstract]
Total		343	777
Loans not Past Due		197,315	169,117
Total loans recorded investment		197,658	169,894
Accrued interest included in recorded investment	[1]	493	403
Installment [Member] | Boat Lending [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		287	316
Installment [Member] | Boat Lending [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		24	295
Installment [Member] | Boat Lending [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		32	166
Installment [Member] | Recreational Vehicle Lending [Member]
Non performing loans [Abstract]
90+ and Still Accruing		0	0
Non-Accrual		2	7
Total Non-performing Loans		2	7
Aging analysis of loans by class [Abstract]
Total		77	56
Loans not Past Due		144,403	125,780
Total loans recorded investment		144,480	125,836
Accrued interest included in recorded investment	[1]	368	311
Installment [Member] | Recreational Vehicle Lending [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		72	28
Installment [Member] | Recreational Vehicle Lending [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		3	21
Installment [Member] | Recreational Vehicle Lending [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		2	7
Installment [Member] | Other [Member]
Non performing loans [Abstract]
90+ and Still Accruing		0	0
Non-Accrual		234	204
Total Non-performing Loans		234	204
Aging analysis of loans by class [Abstract]
Total		418	576
Loans not Past Due		90,705	85,392
Total loans recorded investment		91,123	85,968
Accrued interest included in recorded investment	[1]	291	263
Installment [Member] | Other [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		200	241
Installment [Member] | Other [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		46	131
Installment [Member] | Other [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		$ 172	$ 204

[1] Credit scores have been updated within the last twelve months.

XML

Loans, Impaired Financing Receivables (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Impaired loans with no allocated allowance for loan losses [Abstract]
Troubled debt restructurings ("TDR")	$ 266		$ 266		$ 0
Non - TDR	500		500		0
Impaired loans with an allocated allowance for loan losses [Abstract]
TDR - allowance based on collateral	1,611		1,611		2,787
TDR - allowance based on present value cash flow	50,262		50,262		53,258
Non - TDR - allowance based on collateral	2,536		2,536		2,145
Total impaired loans	55,175		55,175		58,190
Amount of allowance for loan losses allocated [Abstract]
TDR - allowance based on collateral	272		272		769
TDR - allowance based on present value cash flow	4,874		4,874		4,849
Non - TDR - allowance based on collateral	881		881		692
Total amount of allowance for loan losses allocated	6,027		6,027		6,310
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	613		613		4
Unpaid Principal Balance, with no related allowance for loan losses recorded	836		836		616
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	54,822		54,822		58,457
Unpaid Principal Balance, with an allowance for loan losses recorded	57,892		57,892		60,282
Recorded Investment	55,435		55,435		58,461
Unpaid Principal Balance	58,728		58,728		60,898
Related Allowance	6,027		6,027		6,310
Accrued interest included in recorded investment	260		260		271
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	484	$ 1,849	324	$ 1,408
Interest Income Recognized, with no related allowance for loan losses recorded	2	15	2	27
Average Recorded Investment, with an allowance for loan losses recorded	56,119	62,383	56,898	63,260
Interest Income Recognized, with an allowance for loan losses recorded	708	747	1,473	1,538
Average Recorded Investment	56,603	64,232	57,222	64,668
Interest Income Recognized	710	762	1,475	1,565
Commercial [Member] | Income Producing - Real Estate [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		0		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	0		0		0
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	5,874		5,874		4,770
Unpaid Principal Balance, with an allowance for loan losses recorded	5,863		5,863		4,758
Recorded Investment	5,874		5,874		4,770
Unpaid Principal Balance	5,863		5,863		4,758
Related Allowance	518		518		303
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	0	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	5,297	5,142	5,121	5,160
Interest Income Recognized, with an allowance for loan losses recorded	81	70	146	138
Average Recorded Investment	5,297	5,142	5,121	5,160
Interest Income Recognized	81	70	146	138
Commercial [Member] | Land, Land Development and Construction - Real Estate [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		0		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	0		0		0
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	290		290		290
Unpaid Principal Balance, with an allowance for loan losses recorded	288		288		289
Recorded Investment	290		290		290
Unpaid Principal Balance	288		288		289
Related Allowance	31		31		35
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	1,201	0	801
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	290	155	290	159
Interest Income Recognized, with an allowance for loan losses recorded	2	2	4	4
Average Recorded Investment	290	1,356	290	960
Interest Income Recognized	2	2	4	4
Commercial [Member] | Commercial and Industrial [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		0		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	0		0		0
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	1,918		1,918		3,637
Unpaid Principal Balance, with an allowance for loan losses recorded	2,184		2,184		3,735
Recorded Investment	1,918		1,918		3,637
Unpaid Principal Balance	2,184		2,184		3,735
Related Allowance	498		498		967
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	509	0	514
Interest Income Recognized, with no related allowance for loan losses recorded	0	9	0	13
Average Recorded Investment, with an allowance for loan losses recorded	2,418	2,522	2,824	2,526
Interest Income Recognized, with an allowance for loan losses recorded	16	34	36	66
Average Recorded Investment	2,418	3,031	2,824	3,040
Interest Income Recognized	16	43	36	79
Mortgage [Member] | 1-4 Family [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	613		613		3
Unpaid Principal Balance, with no related allowance for loan losses recorded	800		800		474
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	30,411		30,411		32,842
Unpaid Principal Balance, with an allowance for loan losses recorded	32,568		32,568		34,427
Recorded Investment	31,024		31,024		32,845
Unpaid Principal Balance	33,368		33,368		34,901
Related Allowance	3,171		3,171		2,859
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	484	138	324	92
Interest Income Recognized, with no related allowance for loan losses recorded	2	3	2	9
Average Recorded Investment, with an allowance for loan losses recorded	31,364	35,345	31,857	35,846
Interest Income Recognized, with an allowance for loan losses recorded	414	431	860	889
Average Recorded Investment	31,848	35,483	32,181	35,938
Interest Income Recognized	416	434	862	898
Mortgage [Member] | Resort Lending [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		0		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	0		0		0
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	12,392		12,392		13,328
Unpaid Principal Balance, with an allowance for loan losses recorded	12,704		12,704		13,354
Recorded Investment	12,392		12,392		13,328
Unpaid Principal Balance	12,704		12,704		13,354
Related Allowance	1,397		1,397		1,927
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	0	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	12,680	15,098	12,896	15,391
Interest Income Recognized, with an allowance for loan losses recorded	147	150	322	314
Average Recorded Investment	12,680	15,098	12,896	15,391
Interest Income Recognized	147	150	322	314
Mortgage [Member] | Home Equity - 1st Lien [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		0		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	0		0		0
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	125		125		65
Unpaid Principal Balance, with an allowance for loan losses recorded	187		187		64
Recorded Investment	125		125		65
Unpaid Principal Balance	187		187		64
Related Allowance	26		26		4
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	0	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	122	111	103	131
Interest Income Recognized, with an allowance for loan losses recorded	2	1	3	3
Average Recorded Investment	122	111	103	131
Interest Income Recognized	2	1	3	3
Mortgage [Member] | Home Equity - 2nd Lien [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		0		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	0		0		0
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	554		554		156
Unpaid Principal Balance, with an allowance for loan losses recorded	564		564		155
Recorded Investment	554		554		156
Unpaid Principal Balance	564		564		155
Related Allowance	121		121		9
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	0	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	556	167	423	171
Interest Income Recognized, with an allowance for loan losses recorded	3	1	6	3
Average Recorded Investment	556	167	423	171
Interest Income Recognized	3	1	6	3
Installment [Member] | Home Equity - 1st Lien [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		0		1
Unpaid Principal Balance, with no related allowance for loan losses recorded	0		0		122
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	1,264		1,264		1,440
Unpaid Principal Balance, with an allowance for loan losses recorded	1,440		1,440		1,524
Recorded Investment	1,264		1,264		1,441
Unpaid Principal Balance	1,440		1,440		1,646
Related Allowance	77		77		89
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	1	0	1
Interest Income Recognized, with no related allowance for loan losses recorded	0	2	0	4
Average Recorded Investment, with an allowance for loan losses recorded	1,326	1,596	1,364	1,619
Interest Income Recognized, with an allowance for loan losses recorded	19	25	43	54
Average Recorded Investment	1,326	1,597	1,364	1,620
Interest Income Recognized	19	27	43	58
Installment [Member] | Home Equity - 2nd Lien [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		0		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	16		16		0
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	1,434		1,434		1,471
Unpaid Principal Balance, with an allowance for loan losses recorded	1,442		1,442		1,491
Recorded Investment	1,434		1,434		1,471
Unpaid Principal Balance	1,458		1,458		1,491
Related Allowance	100		100		92
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	0	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	1,453	1,746	1,459	1,762
Interest Income Recognized, with an allowance for loan losses recorded	19	25	41	52
Average Recorded Investment	1,453	1,746	1,459	1,762
Interest Income Recognized	19	25	41	52
Installment [Member] | Boat Lending [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		0		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	5		5		5
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	32		32		0
Unpaid Principal Balance, with an allowance for loan losses recorded	48		48		0
Recorded Investment	32		32		0
Unpaid Principal Balance	53		53		5
Related Allowance	11		11		0
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	0	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	67	1	44	1
Interest Income Recognized, with an allowance for loan losses recorded	0	0	0	0
Average Recorded Investment	67	1	44	1
Interest Income Recognized	0	0	0	0
Installment [Member] | Recreational Vehicle Lending [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		0		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	0		0		0
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	51		51		79
Unpaid Principal Balance, with an allowance for loan losses recorded	51		51		79
Recorded Investment	51		51		79
Unpaid Principal Balance	51		51		79
Related Allowance	4		4		4
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	0	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	67	86	71	87
Interest Income Recognized, with an allowance for loan losses recorded	0	1	1	2
Average Recorded Investment	67	86	71	87
Interest Income Recognized	0	1	1	2
Installment [Member] | Other [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		0		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	15		15		15
With no related allowance for loan losses recorded	0		0		0
Recorded Investment, with an allowance for loan losses recorded	477		477		379
Unpaid Principal Balance, with an allowance for loan losses recorded	553		553		406
Recorded Investment	477		477		379
Unpaid Principal Balance	568		568		421
Related Allowance	73		73		$ 21
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	0	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	1	0	1
Average Recorded Investment, with an allowance for loan losses recorded	479	414	446	407
Interest Income Recognized, with an allowance for loan losses recorded	5	7	11	13
Average Recorded Investment	479	414	446	407
Interest Income Recognized	$ 5	$ 8	$ 11	$ 14

XML

Loans, Troubled Debt Restructurings (Details) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2019 USD ($) Contract	Jun. 30, 2018 USD ($) Contract	Jun. 30, 2019 USD ($) Payment Contract	Jun. 30, 2018 USD ($) Contract	Dec. 31, 2018 USD ($)
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring		$ 52,139		$ 52,139		$ 56,045
Number of consecutive timely payments required | Payment				6
Troubled debt restructuring, specific reserve		$ 5,100		$ 5,100		5,600
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		7	7	11	19
Pre-modification recorded balance		$ 1,935	$ 382	$ 2,325	$ 1,305
Post-modification recorded balance		1,936	386	2,327	1,290
Increase in allowance for loan losses		40	40	50	10
Charge offs due to troubled debt restructurings		0	0	$ 0	0
Past due period for modified loans				90 days
Charge-offs on TDRs that subsequently defaulted		0	$ 0	$ 0	$ 0
Minimum [Member]
Troubled Debt Restructuring [Abstract]
Modification of stated interest rate of loans, range of period				9 months
Modifications involving extension of maturity date, period range				1 month
Maximum [Member]
Troubled Debt Restructuring [Abstract]
Modification of stated interest rate of loans, range of period				36 months
Modification of stated interest rate of loans, range of period in certain circumstances				480 months
Modifications involving extension of maturity date, period range				60 months
Modifications involving extension of maturity date, period range in certain circumstances				230 months
Performing TDRs [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring		49,302		$ 49,302		53,087
Non-performing TDRs [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring	[1]	2,837		2,837		2,958
Commercial [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring		7,220		7,220		6,534
Commercial [Member] | Performing TDRs [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring		7,166		7,166		6,460
Commercial [Member] | Non-performing TDRs [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring	[1]	$ 54		$ 54		74
Commercial [Member] | Income Producing - Real Estate [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		2	0	2	1
Pre-modification recorded balance		$ 1,329	$ 0	$ 1,329	$ 67
Post-modification recorded balance		$ 1,329	$ 0	$ 1,329	$ 67
Commercial [Member] | Land, Land Development and Construction - Real Estate [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	0	0	0
Pre-modification recorded balance		$ 0	$ 0	$ 0	$ 0
Post-modification recorded balance		$ 0	$ 0	$ 0	$ 0
Commercial [Member] | Commercial and Industrial [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	2	1	5
Pre-modification recorded balance		$ 0	$ 153	$ 49	$ 587
Post-modification recorded balance		$ 0	$ 153	$ 49	$ 587
Mortgage [Member] | 1-4 Family [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		1	1	2	4
Pre-modification recorded balance		$ 506	$ 66	$ 787	$ 294
Post-modification recorded balance		$ 505	$ 69	$ 786	$ 280
Mortgage [Member] | Resort Lending [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	0	0	0
Pre-modification recorded balance		$ 0	$ 0	$ 0	$ 0
Post-modification recorded balance		$ 0	$ 0	$ 0	$ 0
Mortgage [Member] | Home Equity - 1st Lien [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	0	0	0
Pre-modification recorded balance		$ 0	$ 0	$ 0	$ 0
Post-modification recorded balance		$ 0	$ 0	$ 0	$ 0
Mortgage [Member] | Home Equity - 2nd Lien [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	0	0	0
Pre-modification recorded balance		$ 0	$ 0	$ 0	$ 0
Post-modification recorded balance		$ 0	$ 0	$ 0	$ 0
Installment [Member] | Home Equity - 1st Lien [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		1	2	2	5
Pre-modification recorded balance		$ 25	$ 90	$ 49	$ 188
Post-modification recorded balance		$ 26	$ 91	$ 51	$ 190
Installment [Member] | Home Equity - 2nd Lien [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		3	1	4	2
Pre-modification recorded balance		$ 75	$ 32	$ 111	$ 93
Post-modification recorded balance		$ 76	$ 32	$ 112	$ 93
Installment [Member] | Boat Lending [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	0	0	0
Pre-modification recorded balance		$ 0	$ 0	$ 0	$ 0
Post-modification recorded balance		$ 0	$ 0	$ 0	$ 0
Installment [Member] | Recreational Vehicle Lending [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	0	0	0
Pre-modification recorded balance		$ 0	$ 0	$ 0	$ 0
Post-modification recorded balance		$ 0	$ 0	$ 0	$ 0
Installment [Member] | Other [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	1	0	2
Pre-modification recorded balance		$ 0	$ 41	$ 0	$ 76
Post-modification recorded balance		0	$ 41	0	$ 73
Retail [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring	[2]	44,919		44,919		49,511
Retail [Member] | Performing TDRs [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring	[2]	42,136		42,136		46,627
Retail [Member] | Non-performing TDRs [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring	[1],[2],[3]	$ 2,783		$ 2,783		$ 2,884

[1] Included in non-performing loans table above.

[2] Retail loans include mortgage and installment loan segments.

[3] Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.

XML

Loans, Loan Ratings by Loan Class, Commercial (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	$ 2,715,664	$ 2,591,058
Accrued interest included in total	9,138	8,538
Commercial [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	1,179,364	1,147,892
Accrued interest included in total	3,394	3,411
Commercial [Member] | Non-Watch 1-6 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	1,100,267	1,082,510
Accrued interest included in total	3,158	3,107
Commercial [Member] | Watch 7-8 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	72,842	57,184
Accrued interest included in total	219	174
Commercial [Member] | Substandard Accrual 9 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	5,452	5,777
Accrued interest included in total	17	130
Commercial [Member] | Non-Accrual 10-11 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	803	2,421
Accrued interest included in total	0	0
Commercial [Member] | Income Producing - Real Estate [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	398,747	388,773
Commercial [Member] | Income Producing - Real Estate [Member] | Non-Watch 1-6 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	382,198	375,142
Commercial [Member] | Income Producing - Real Estate [Member] | Watch 7-8 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	15,777	13,387
Commercial [Member] | Income Producing - Real Estate [Member] | Substandard Accrual 9 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	772	200
Commercial [Member] | Income Producing - Real Estate [Member] | Non-Accrual 10-11 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	0	44
Commercial [Member] | Land, Land Development and Construction - Real Estate [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	93,213	84,458
Commercial [Member] | Land, Land Development and Construction - Real Estate [Member] | Non-Watch 1-6 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	83,971	76,120
Commercial [Member] | Land, Land Development and Construction - Real Estate [Member] | Watch 7-8 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	8,467	8,328
Commercial [Member] | Land, Land Development and Construction - Real Estate [Member] | Substandard Accrual 9 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	775	0
Commercial [Member] | Land, Land Development and Construction - Real Estate [Member] | Non-Accrual 10-11 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	0	10
Commercial [Member] | Commercial and Industrial [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	687,404	674,661
Commercial [Member] | Commercial and Industrial [Member] | Non-Watch 1-6 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	634,098	631,248
Commercial [Member] | Commercial and Industrial [Member] | Watch 7-8 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	48,598	35,469
Commercial [Member] | Commercial and Industrial [Member] | Substandard Accrual 9 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	3,905	5,577
Commercial [Member] | Commercial and Industrial [Member] | Non-Accrual 10-11 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Commercial	$ 803	$ 2,367

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Loans, Credit Scores by Loan Class, Mortgage and Installment Segments (Details) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended
		Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Loan ratings/credit scores by loan class [Abstract]
Accrued interest included in total		$ 9,138				$ 9,138		$ 8,538
Other Real Estate and Foreclosed Assets [Abstract]
Foreclosed residential real estate properties		1,200				1,200		1,200
Retail mortgage loans in process of foreclosure		600				600		300
Sale of Mortgage Loans [Abstract]
Proceeds from sale of mortgage loan						40,630	$ 16,460
Net gains on mortgage loans		4,302		$ 3,255		7,913	$ 5,826
Fixed Rate Residential Mortgage and Adjustable Rate Residential Mortgage [Member]
Sale of Mortgage Loans [Abstract]
Proceeds from sale of mortgage loan					$ 16,500
Net gains on mortgage loans					$ 50
Residential Adjustable Rate Mortgage Loans [Member]
Sale of Mortgage Loans [Abstract]
Proceeds from sale of mortgage loan			$ 40,600
Net gains on mortgage loans			10
Residential Fixed Rate Mortgage Loans [Member] | Freddie Mac [Member]
Sale of Mortgage Loans [Abstract]
Proceeds from sale of mortgage loan			29,800
Net gains on mortgage loans			$ 530
Mortgage [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	140,753				140,753		121,012
750-799	[1]	492,544				492,544		476,484
700-749	[1]	254,575				254,575		252,126
650-699	[1]	114,571				114,571		114,460
600-649	[1]	39,140				39,140		41,748
550-599	[1]	20,801				20,801		17,301
500-549	[1]	13,490				13,490		9,789
Under 500	[1]	4,937				4,937		3,155
Unknown	[1]	10,048				10,048		10,912
Total	[1]	1,090,859				1,090,859		1,046,987
Accrued interest included in total	[1]	4,550				4,550		4,097
Mortgage [Member] | 1-4 Family [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	110,599				110,599		94,492
750-799	[1]	391,241				391,241		384,344
700-749	[1]	195,867				195,867		202,440
650-699	[1]	89,819				89,819		91,847
600-649	[1]	31,668				31,668		34,342
550-599	[1]	16,755				16,755		13,771
500-549	[1]	11,333				11,333		8,439
Under 500	[1]	4,192				4,192		2,533
Unknown	[1]	8,186				8,186		8,236
Total	[1]	859,660				859,660		840,444
Accrued interest included in total	[1]	3,503				3,503		3,079
Mortgage [Member] | Resort Lending [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	11,748				11,748		10,898
750-799	[1]	32,894				32,894		36,542
700-749	[1]	15,747				15,747		17,282
650-699	[1]	8,074				8,074		9,945
600-649	[1]	2,597				2,597		3,088
550-599	[1]	1,465				1,465		1,867
500-549	[1]	684				684		106
Under 500	[1]	81				81		143
Unknown	[1]	1,443				1,443		1,910
Total	[1]	74,733				74,733		81,781
Accrued interest included in total	[1]	367				367		363
Mortgage [Member] | Home Equity - 1st Lien [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	5,783				5,783		6,784
750-799	[1]	15,624				15,624		17,303
700-749	[1]	9,584				9,584		9,155
650-699	[1]	3,623				3,623		3,987
600-649	[1]	663				663		959
550-599	[1]	652				652		427
500-549	[1]	325				325		418
Under 500	[1]	272				272		98
Unknown	[1]	0				0		113
Total	[1]	36,526				36,526		39,244
Accrued interest included in total	[1]	176				176		199
Mortgage [Member] | Home Equity - 2nd Lien [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	12,623				12,623		8,838
750-799	[1]	52,785				52,785		38,295
700-749	[1]	33,377				33,377		23,249
650-699	[1]	13,055				13,055		8,681
600-649	[1]	4,212				4,212		3,359
550-599	[1]	1,929				1,929		1,236
500-549	[1]	1,148				1,148		826
Under 500	[1]	392				392		381
Unknown	[1]	419				419		653
Total	[1]	119,940				119,940		85,518
Accrued interest included in total	[1]	504				504		456
Installment [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	56,161				56,161		48,026
750-799	[1]	238,533				238,533		208,972
700-749	[1]	96,428				96,428		87,978
650-699	[1]	29,423				29,423		28,162
600-649	[1]	8,323				8,323		7,668
550-599	[1]	3,460				3,460		3,360
500-549	[1]	2,056				2,056		1,775
Under 500	[1]	532				532		548
Unknown	[1]	10,525				10,525		9,690
Total	[1]	445,441				445,441		396,179
Accrued interest included in total	[1]	1,194				1,194		1,030
Installment [Member] | Home Equity - 1st Lien [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	449				449		555
750-799	[1]	1,219				1,219		1,502
700-749	[1]	1,390				1,390		1,582
650-699	[1]	1,496				1,496		1,606
600-649	[1]	993				993		996
550-599	[1]	550				550		759
500-549	[1]	313				313		384
Under 500	[1]	19				19		51
Unknown	[1]	0				0		2
Total	[1]	6,429				6,429		7,437
Accrued interest included in total	[1]	23				23		28
Installment [Member] | Home Equity - 2nd Lien [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	231				231		235
750-799	[1]	1,517				1,517		1,642
700-749	[1]	1,224				1,224		1,682
650-699	[1]	1,161				1,161		1,217
600-649	[1]	730				730		1,272
550-599	[1]	573				573		658
500-549	[1]	217				217		229
Under 500	[1]	55				55		6
Unknown	[1]	43				43		103
Total	[1]	5,751				5,751		7,044
Accrued interest included in total	[1]	19				19		25
Installment [Member] | Boat Lending [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	26,585				26,585		20,767
750-799	[1]	115,402				115,402		100,191
700-749	[1]	41,608				41,608		35,455
650-699	[1]	10,612				10,612		10,581
600-649	[1]	1,879				1,879		1,657
550-599	[1]	831				831		652
500-549	[1]	486				486		286
Under 500	[1]	229				229		266
Unknown	[1]	26				26		39
Total	[1]	197,658				197,658		169,894
Accrued interest included in total	[1]	493				493		403
Installment [Member] | Recreational Vehicle Lending [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	22,213				22,213		20,197
750-799	[1]	85,635				85,635		74,154
700-749	[1]	28,261				28,261		24,890
650-699	[1]	5,728				5,728		4,918
600-649	[1]	1,767				1,767		992
550-599	[1]	653				653		453
500-549	[1]	181				181		225
Under 500	[1]	42				42		7
Unknown	[1]	0				0		0
Total	[1]	144,480				144,480		125,836
Accrued interest included in total	[1]	368				368		311
Installment [Member] | Other [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	6,683				6,683		6,272
750-799	[1]	34,760				34,760		31,483
700-749	[1]	23,945				23,945		24,369
650-699	[1]	10,426				10,426		9,840
600-649	[1]	2,954				2,954		2,751
550-599	[1]	853				853		838
500-549	[1]	859				859		651
Under 500	[1]	187				187		218
Unknown	[1]	10,456				10,456		9,546
Total	[1]	91,123				91,123		85,968
Accrued interest included in total	[1]	$ 291				$ 291		$ 263

[1] Credit scores have been updated within the last twelve months.

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Loans, Purchase Credit Impaired ("PCI") Loans (Details) - TCSB Bancorp, Inc. [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Carrying amount of loans that meet the criteria of ASC 310-30 treatment [Abstract]
Total carrying amount	$ 2,401		$ 2,401		$ 2,513
Allowance for loan losses	0		0		0
Carrying amount, net of allowance for loan losses	2,401		2,401		2,513
Accretable yield of PCI loans, or income expected to be collected [Roll Forward]
Balance at beginning of period	788	$ 0	462	$ 0
New loans purchased	0	568	0	568
Accretion recorded as loan interest income	(39)	(35)	(78)	(35)
Reclassification from (to) nonaccretable difference	0	0	365	0
Disposals/other adjustments	0	0	0	0
Balance at end of period	749	$ 533	749	$ 533
Commercial [Member]
Carrying amount of loans that meet the criteria of ASC 310-30 treatment [Abstract]
Total carrying amount	1,490		1,490		1,609
Mortgage [Member]
Carrying amount of loans that meet the criteria of ASC 310-30 treatment [Abstract]
Total carrying amount	587		587		555
Installment [Member]
Carrying amount of loans that meet the criteria of ASC 310-30 treatment [Abstract]
Total carrying amount	$ 324		$ 324		$ 349

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Shareholders' Equity and Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 18, 2018
Share Repurchase Plan [Abstract]
Share repurchase plan percentage of shares authorized to be repurchased						5.00%
Stock repurchased (in shares)		1,063,901		1,179,688
Stock repurchased		$ 23,252		$ 25,782
Earnings Per Share Reconciliation [Abstract]
Net Income		$ 10,730	$ 8,817	$ 20,111	$ 17,978
Weighted average shares outstanding (in shares)	[1]	23,036,000	24,109,000	23,310,000	22,745,000
Stock units for deferred compensation plan for non-employee directors (in shares)		128,000	126,000	130,000	125,000
Effect of stock options (in shares)		112,000	224,000	119,000	179,000
Performance share units (in shares)		37,000	51,000	39,000	50,000
Weighted average shares outstanding for calculation of diluted earnings per share (in shares)		23,313,000	24,510,000	23,598,000	23,099,000
Net income per common share [Abstract]
Basic (in dollars per share)	[1]	$ 0.47	$ 0.37	$ 0.86	$ 0.79
Diluted (in dollars per share)		$ 0.46	$ 0.36	$ 0.85	$ 0.78
Common Stock [Member]
Share Repurchase Plan [Abstract]
Share repurchase plan percentage of shares repurchased				5.00%
Number of shares authorized for repurchase (in shares)		300,000		300,000
Stock repurchased (in shares)				1,179,688	0
Stock repurchased		$ 23,252		$ 25,782	$ 0
Stock Options [Member]
Antidilutive Securities [Abstract]
Antidilutive shares excluded from computation of diluted loss per share (in shares)		0	0	0	0

[1] Basic net income per common share includes weighted average common shares outstanding during the period and participating share awards.

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Derivative Financial Instruments (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Derivative financial instrument according to type of hedge [Abstract]
Unrealized gain on cash flow hedges, net of tax	$ 120
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	6,233	$ 5,155
Liability Derivatives	4,217	2,326
Interest-Rate Cap Agreements [Member]
Derivative financial instrument according to type of hedge [Abstract]
Unrecognized premiums	$ 2,500	2,700
Maximum [Member]
Derivative financial instrument according to type of hedge [Abstract]
Term of cash flow hedge	4 years 3 months 18 days
Cash Flow Hedge Designation [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 175,000	$ 175,000
Average Maturity	3 years	3 years 6 months
Fair Value	$ 405	$ 2,525
Cash Flow Hedge Designation [Member] | Interest-Rate Cap Agreements [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 150,000	$ 150,000
Average Maturity	3 years 1 month 6 days	3 years 7 months 6 days
Fair Value	$ 576	$ 2,245
Designated as Hedging Instrument [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	576	2,525
Liability Derivatives	374	0
No Hedge Designation [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 447,138	$ 285,148
Average Maturity	2 years 8 months 12 days	3 years 8 months 12 days
Fair Value	$ 1,814	$ 304
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	5,657	2,630
Liability Derivatives	3,843	2,326
No Hedge Designation [Member] | Rate-Lock Mortgage Loan Commitments [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 81,784	$ 32,473
Average Maturity	1 month 6 days	1 month 6 days
Fair Value	$ 2,147	$ 687
No Hedge Designation [Member] | Mandatory Commitments to Sell Mortgage Loans [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 141,434	$ 57,583
Average Maturity	1 month 6 days	1 month 6 days
Fair Value	$ (334)	$ (383)
No Hedge Designation [Member] | Purchased Options [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 3,095	$ 3,095
Average Maturity	2 years	2 years 6 months
Fair Value	$ 171	$ 116
No Hedge Designation [Member] | Written Options [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 3,035	$ 3,095
Average Maturity	2 years	2 years 6 months
Fair Value	$ (170)	$ (116)
Fixed Income Interest Rate [Member] | Fair Value Hedge Designation [Member] | Interest Rate Swap [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 7,117
Average Maturity	9 years 10 months 24 days
Fair Value	$ (203)
Fixed Income Interest Rate [Member] | Cash Flow Hedge Designation [Member] | Interest Rate Swap [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 25,000	$ 25,000
Average Maturity	2 years 1 month 6 days	2 years 7 months 6 days
Fair Value	$ (171)	$ 280
Fixed Income Interest Rate [Member] | No Hedge Designation [Member] | Interest Rate Swap [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 108,895	$ 94,451
Average Maturity	5 years 3 months 18 days	5 years 6 months
Fair Value	$ (3,179)	$ 405
Variable Income Interest Rate [Member] | No Hedge Designation [Member] | Interest Rate Swap [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 108,895	$ 94,451
Average Maturity	5 years 3 months 18 days	5 years 6 months
Fair Value	$ 3,179	$ (405)
Other Assets [Member] | Designated as Hedging Instrument [Member] | Interest-Rate Cap Agreements [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	576	2,245
Other Assets [Member] | No Hedge Designation [Member] | Rate-Lock Mortgage Loan Commitments [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	2,147	687
Other Assets [Member] | No Hedge Designation [Member] | Mandatory Commitments to Sell Mortgage Loans [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	0	0
Other Assets [Member] | No Hedge Designation [Member] | Purchased Options [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	171	116
Other Assets [Member] | No Hedge Designation [Member] | Written Options [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	0	0
Other Assets [Member] | Fixed Income Interest Rate [Member] | Designated as Hedging Instrument [Member] | Interest Rate Swap [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	0	280
Other Assets [Member] | Fixed Income Interest Rate [Member] | No Hedge Designation [Member] | Interest Rate Swap [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	80	1,116
Other Assets [Member] | Variable Income Interest Rate [Member] | No Hedge Designation [Member] | Interest Rate Swap [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	3,259	711
Other Liabilities [Member] | Designated as Hedging Instrument [Member] | Interest-Rate Cap Agreements [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	0	0
Other Liabilities [Member] | No Hedge Designation [Member] | Rate-Lock Mortgage Loan Commitments [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	0	0
Other Liabilities [Member] | No Hedge Designation [Member] | Mandatory Commitments to Sell Mortgage Loans [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	334	383
Other Liabilities [Member] | No Hedge Designation [Member] | Purchased Options [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	0	0
Other Liabilities [Member] | No Hedge Designation [Member] | Written Options [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	170	116
Other Liabilities [Member] | Fixed Income Interest Rate [Member] | Designated as Hedging Instrument [Member] | Interest Rate Swap [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	374	0
Other Liabilities [Member] | Fixed Income Interest Rate [Member] | No Hedge Designation [Member] | Interest Rate Swap [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	3,259	711
Other Liabilities [Member] | Variable Income Interest Rate [Member] | No Hedge Designation [Member] | Interest Rate Swap [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	$ 80	$ 1,116

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Derivative Financial Instruments, Effect on Statement of Operations (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)		$ (756)	$ 327	$ (1,668)	$ 1,011
Fair Value Hedge Designation [Member] | Interest Rate Swap [Member] | Interest Income [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Income	[1]	(203)	0	(203)	0
Cash Flow Hedge Designation [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)		(756)	327	(1,668)	1,011
Gain Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)		142	53	291	59
Gain (Loss) Recognized in Income	[1]	0	(24)	0	(12)
Cash Flow Hedge Designation [Member] | Interest-Rate Cap Agreements [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)		(489)	244	(1,274)	757
Cash Flow Hedge Designation [Member] | Interest-Rate Cap Agreements [Member] | Interest Expense [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)		115	45	233	52
Gain (Loss) Recognized in Income	[1]	0	0	0	0
Cash Flow Hedge Designation [Member] | Fixed Income Interest Rate [Member] | Interest Rate Swap [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)		(267)	83	(394)	254
Cash Flow Hedge Designation [Member] | Fixed Income Interest Rate [Member] | Interest Rate Swap [Member] | Interest Expense [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)		27	8	58	7
Gain (Loss) Recognized in Income	[1]	0	(24)	0	(12)
No Hedge Designation [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Income		705	170	1,510	438
No Hedge Designation [Member] | Rate-Lock Mortgage Loan Commitments [Member] | Mortgage Loan Gains [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Income		831	244	1,460	672
No Hedge Designation [Member] | Mandatory Commitments to Sell Mortgage Loans [Member] | Mortgage Loan Gains [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Income		(125)	(110)	49	(270)
No Hedge Designation [Member] | Purchased Options [Member] | Interest Expense [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Income		(31)	(6)	55	(99)
No Hedge Designation [Member] | Written Options [Member] | Interest Expense [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Income		30	6	(54)	99
No Hedge Designation [Member] | Fixed Income Interest Rate [Member] | Interest Rate Swap [Member] | Interest Income [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Income		(2,437)	487	(3,584)	1,543
No Hedge Designation [Member] | Variable Income Interest Rate [Member] | Interest Rate Swap [Member] | Interest Expense [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Income		0	36	0	36
No Hedge Designation [Member] | Variable Income Interest Rate [Member] | Interest Rate Swap [Member] | Interest Income [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Income		$ 2,437	$ (487)	$ 3,584	$ (1,543)

[1] For cash flow hedges, this location and amount refers to the ineffective portion.

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Goodwill and Other Intangibles (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Amortized intangible assets - core deposits [Abstract]
Gross Carrying Amount	$ 11,916	$ 11,916
Accumulated Amortization	6,046	5,501
Unamortized intangible assets - goodwill [Abstract]
Gross Carrying Amount	28,300	$ 28,300
Summary of estimated core deposit intangible amortization [Abstract]
Six months ending December 31, 2019	544
2020	1,020
2021	970
2022	785
2023	547
2024 and thereafter	2,004
Total	$ 5,870

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Share Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share Based Compensation [Abstract]
Number of additional shares approved for grant (in shares)			500,000
Total compensation cost not yet recognized	$ 2,700		$ 2,700
Total compensation cost not yet recognized, period for recognition			2 years
Information regarding options exercised [Abstract]
Intrinsic value	0	$ 1,596	$ 836	$ 1,674
Cash proceeds received	0	971	695	984
Tax benefit realized	0	336	176	352
Long-Term Incentive Plan [Member]
Share Based Compensation [Abstract]
Total compensation expense recognized	400	400	800	700
Tax benefit relating to compensation expense recognized	$ 100	$ 100	$ 200	200
Stock Options [Member]
Number of Shares [Roll Forward]
Outstanding, beginning balance (in shares)			211,421
Granted (in shares)			0
Exercised (in shares)			(68,399)
Forfeited (in shares)			0
Expired (in shares)			(558)
Outstanding, ending balance (in shares)	142,464		142,464
Vested and expected to vest, period end (in shares)	142,464		142,464
Exercisable, period end (in shares)	142,464		142,464
Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share)			$ 6.48
Exercised (in dollars per share)			10.16
Expired (in dollars per share)			22.35
Outstanding, ending balance (in dollars per share)	$ 4.66		4.66
Vested and expected to vest, period end (in dollars per share)	4.66		4.66
Exercisable, period end (in dollars per share)	$ 4.66		$ 4.66
Weighted-Average Remaining Contractual Term (Years) [Abstract]
Outstanding, weighted average remaining contractual term			3 years 6 months
Vested and expected to vest, weighted-average remaining contractual term			3 years 6 months
Exercisable, weighted average remaining contractual term			3 years 6 months
Aggregate Intrinsic Value [Abstract]
Outstanding, aggregate intrinsic value	$ 2,442		$ 2,442
Vested and expected to vest, aggregate intrinsic value	2,442		2,442
Exercisable, aggregate intrinsic value	$ 2,442		$ 2,442
Restricted Stock [Member] | Long-Term Incentive Plan [Member]
Share Based Compensation [Abstract]
Number of stock units or restricted shares issued in period (in shares)	2,000	2,000
Vesting period	3 years	3 years
Non-Vested Restricted Stock and PSUs [Member]
Number of Shares [Roll Forward]
Outstanding, beginning balance (in shares)			258,419
Granted (in shares)			78,283
Vested (in shares)			(85,788)
Forfeited (in shares)			(11,475)
Outstanding, ending balance (in shares)	239,439		239,439
Weighted Average Grant Date Fair Value [Roll Forward]
Outstanding, beginning balance (in dollars per share)			$ 19.00
Granted (in dollars per share)			22.98
Vested (in dollars per share)			14.55
Forfeited (in dollars per share)			22.91
Outstanding, ending balance (in dollars per share)	$ 21.72		$ 21.72
Non-Employee Directors [Member]
Share Based Compensation [Abstract]
Number of additional shares approved for grant (in shares)			200,000
Total compensation expense recognized	$ 60	$ 50	$ 110	110
Tax benefit relating to compensation expense recognized	$ 10	$ 10	$ 20	$ 20
Executive Officers [Member] | Restricted Stock [Member] | Long-Term Incentive Plan [Member]
Share Based Compensation [Abstract]
Number of stock units or restricted shares issued in period (in shares)	4,000	9,000	50,000	50,000
Vesting period			3 years	3 years
Executive Officers [Member] | Performance Stock Units [Member] | Long-Term Incentive Plan [Member]
Share Based Compensation [Abstract]
Number of stock units or restricted shares issued in period (in shares)			20,000	20,000
Vesting period			3 years	3 years
Performance feature comparison period			3 years
Directors [Member]
Share Based Compensation [Abstract]
Shares issues as retainer fees (in shares)			5,000	5,000

XML

Income Tax (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Income Tax [Abstract]
Income tax expense	$ 2,687	$ 2,067	$ 4,854	$ 4,105
Decrease in income tax expense	0	$ 100	200	$ 300
Gross unrecognized tax benefits	$ 600		$ 600		$ 600

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Regulatory Matters (Details) - USD ($) $ in Thousands		6 Months Ended	12 Months Ended
		Jun. 30, 2019	Dec. 31, 2018	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Regulatory Matters [Abstract]
Undivided profits		$ 32,600
Tier 1 capital to average assets [Abstract]
Capital conservation buffer		2.50%	1.875%
Components of regulatory capital [Abstract]
Total shareholders' equity		$ 330,846	$ 338,994	$ 344,726	$ 337,083	$ 267,917	$ 264,933
Add (deduct) [Abstract]
Accumulated other comprehensive (income) loss for regulatory purposes		(4,431)	(10,108)
Consolidated [Member]
Total capital to risk-weighted assets [Abstract]
Total risk-based capital	[1]	$ 360,894	$ 371,603
Actual, Ratio	[1]	13.36%	14.25%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 216,166	$ 208,572
Minimum for Adequately Capitalized Institutions, Ratio	[1]	8.00%	8.00%
Tier 1 capital to risk-weighted assets [Abstract]
Actual, Amount	[1]	$ 333,508	$ 345,419
Actual, Ratio	[1]	12.34%	13.25%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 162,125	$ 156,429
Minimum for Adequately Capitalized Institutions, Ratio	[1]	6.00%	6.00%
Common equity tier 1 capital to risk-weighted assets [Abstract]
Actual, Amount	[1]	$ 295,310	$ 307,255
Actual, Ratio	[1]	10.93%	11.79%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 121,594	$ 117,322
Minimum for Adequately Capitalized Institutions, Ratio	[1]	4.50%	4.50%
Tier 1 capital to average assets [Abstract]
Tier 1 capital	[1]	$ 333,508	$ 345,419
Actual, Ratio	[1]	9.95%	10.47%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 134,131	$ 131,930
Minimum for Adequately Capitalized Institutions, Ratio	[1]	4.00%	4.00%
Components of regulatory capital [Abstract]
Total shareholders' equity		$ 330,846	$ 338,994
Add (deduct) [Abstract]
Accumulated other comprehensive (income) loss for regulatory purposes		(1,366)	4,311
Goodwill and other intangibles		(34,170)	(34,715)
Disallowed deferred tax assets		0	(1,335)
Common equity tier 1 capital	[1]	295,310	307,255
Qualifying trust preferred securities		38,198	38,164
Tier 1 capital	[1]	333,508	345,419
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		27,386	26,184
Total risk-based capital	[1]	360,894	371,603
Independent Bank [Member]
Total capital to risk-weighted assets [Abstract]
Total risk-based capital	[1]	$ 346,015	$ 337,227
Actual, Ratio	[1]	12.81%	12.94%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 216,074	$ 208,456
Minimum for Adequately Capitalized Institutions, Ratio	[1]	8.00%	8.00%
Minimum for Well Capitalized Institutions, Amount	[1]	$ 270,093	$ 260,569
Minimum for Well-Capitalized Institutions, Ratio	[1]	10.00%	10.00%
Tier 1 capital to risk-weighted assets [Abstract]
Actual, Amount	[1]	$ 318,629	$ 311,043
Actual, Ratio	[1]	11.80%	11.94%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 162,056	$ 156,342
Minimum for Adequately Capitalized Institutions, Ratio	[1]	6.00%	6.00%
Minimum for Well-Capitalized Institutions, Amount	[1]	$ 216,074	$ 208,456
Minimum for Well Capitalized Institutions, Ratio	[1]	8.00%	8.00%
Common equity tier 1 capital to risk-weighted assets [Abstract]
Actual, Amount	[1]	$ 318,629	$ 311,043
Actual, Ratio	[1]	11.80%	11.94%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 121,542	$ 117,256
Minimum for Adequately Capitalized Institutions, Ratio	[1]	4.50%	4.50%
Minimum for Well-Capitalized Institutions, Amount	[1]	$ 175,561	$ 169,370
Minimum for Well Capitalized Institutions, Ratio	[1]	6.50%	6.50%
Tier 1 capital to average assets [Abstract]
Tier 1 capital	[1]	$ 318,629	$ 311,043
Actual, Ratio	[1]	9.50%	9.44%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 134,138	$ 131,778
Minimum for Adequately Capitalized Institutions, Ratio	[1]	4.00%	4.00%
Minimum for Well-Capitalized Institutions, Amount	[1]	$ 167,673	$ 164,723
Minimum for Well-Capitalized Institutions, Ratio	[1]	5.00%	5.00%
Components of regulatory capital [Abstract]
Total shareholders' equity		$ 354,165	$ 341,496
Add (deduct) [Abstract]
Accumulated other comprehensive (income) loss for regulatory purposes		(1,366)	4,311
Goodwill and other intangibles		(34,170)	(34,715)
Disallowed deferred tax assets		0	(49)
Common equity tier 1 capital	[1]	318,629	311,043
Qualifying trust preferred securities		0	0
Tier 1 capital	[1]	318,629	311,043
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		27,386	26,184
Total risk-based capital	[1]	$ 346,015	$ 337,227

[1] These ratios do not reflect a capital conservation buffer of 2.50% and 1.875% at June 30, 2019 and December 31, 2018, respectfully.

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Fair Value Disclosures, Significant Assumptions (Details) - USD ($) $ in Thousands		Jun. 30, 2019	Dec. 31, 2018
Assets [Abstract]
Equity securities at fair value		$ 0	$ 393
Securities available for sale		430,305	427,926
Loans held for sale, carried at fair value		62,883	44,753
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets [Abstract]
Equity securities at fair value			393
Securities available for sale		0	0
Derivatives		0	0
Liabilities [Abstract]
Derivatives		0	0
Significant Other Observable Inputs (Level 2) [Member]
Assets [Abstract]
Equity securities at fair value			0
Securities available for sale		430,305	427,926
Derivatives		6,233	5,155
Liabilities [Abstract]
Derivatives		4,217	2,326
Significant Un-observable Inputs (Level 3) [Member]
Assets [Abstract]
Equity securities at fair value			0
Securities available for sale		0	0
Derivatives		0	0
Liabilities [Abstract]
Derivatives		0	0
Recurring Basis [Member]
Assets [Abstract]
Equity securities at fair value			393
Loans held for sale, carried at fair value		62,883	44,753
Capitalized mortgage loan servicing rights		17,894	21,400
Derivatives	[1]	6,233	5,155
Liabilities [Abstract]
Derivatives	[2]	4,217	2,326
Recurring Basis [Member] | U.S. Agency [Member]
Assets [Abstract]
Securities available for sale		17,183	20,014
Recurring Basis [Member] | U.S. Agency Residential Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		137,017	123,751
Recurring Basis [Member] | U.S. Agency Commercial Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		12,238	5,726
Recurring Basis [Member] | Private Label Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		30,129	29,419
Recurring Basis [Member] | Other Asset Backed [Member]
Assets [Abstract]
Securities available for sale		91,151	83,319
Recurring Basis [Member] | Obligations of States and Political Subdivisions [Member]
Assets [Abstract]
Securities available for sale		104,827	127,555
Recurring Basis [Member] | Corporate [Member]
Assets [Abstract]
Securities available for sale		33,882	34,309
Recurring Basis [Member] | Trust Preferred [Member]
Assets [Abstract]
Securities available for sale		1,851	1,819
Recurring Basis [Member] | Foreign Government [Member]
Assets [Abstract]
Securities available for sale		2,027	2,014
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets [Abstract]
Equity securities at fair value			393
Loans held for sale, carried at fair value		0	0
Capitalized mortgage loan servicing rights		0	0
Derivatives	[1]	0	0
Liabilities [Abstract]
Derivatives	[2]	0	0
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Agency [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Agency Residential Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Agency Commercial Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Private Label Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Asset Backed [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Obligations of States and Political Subdivisions [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Trust Preferred [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Foreign Government [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets [Abstract]
Equity securities at fair value			0
Loans held for sale, carried at fair value		62,883	44,753
Capitalized mortgage loan servicing rights		0	0
Derivatives	[1]	6,233	5,155
Liabilities [Abstract]
Derivatives	[2]	4,217	2,326
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Agency [Member]
Assets [Abstract]
Securities available for sale		17,183	20,014
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Agency Residential Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		137,017	123,751
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Agency Commercial Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		12,238	5,726
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Private Label Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		30,129	29,419
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other Asset Backed [Member]
Assets [Abstract]
Securities available for sale		91,151	83,319
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Obligations of States and Political Subdivisions [Member]
Assets [Abstract]
Securities available for sale		104,827	127,555
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate [Member]
Assets [Abstract]
Securities available for sale		33,882	34,309
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Trust Preferred [Member]
Assets [Abstract]
Securities available for sale		1,851	1,819
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Foreign Government [Member]
Assets [Abstract]
Securities available for sale		2,027	2,014
Recurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member]
Assets [Abstract]
Equity securities at fair value			0
Loans held for sale, carried at fair value		0	0
Capitalized mortgage loan servicing rights		17,894	21,400
Derivatives	[1]	0	0
Liabilities [Abstract]
Derivatives	[2]	0	0
Recurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | U.S. Agency [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | U.S. Agency Residential Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | U.S. Agency Commercial Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Private Label Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Other Asset Backed [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Obligations of States and Political Subdivisions [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Corporate [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Trust Preferred [Member]
Assets [Abstract]
Securities available for sale		0	0
Recurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Foreign Government [Member]
Assets [Abstract]
Securities available for sale		0	0
Nonrecurring Basis [Member]
Assets [Abstract]
Loans held for sale, carried at fair value			41,471
Nonrecurring Basis [Member] | Impaired Loans [Member] | Commercial [Member] | Income Producing - Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[3]	116	217
Nonrecurring Basis [Member] | Impaired Loans [Member] | Commercial [Member] | Land, Land Development and Construction - Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[3]	1,198	106
Nonrecurring Basis [Member] | Impaired Loans [Member] | Commercial [Member] | Commercial and Industrial [Member]
Impaired loans [Abstract]
Loans receivable	[3]	106	2,243
Nonrecurring Basis [Member] | Impaired Loans [Member] | Mortgage [Member] | 1-4 Family [Member]
Impaired loans [Abstract]
Loans receivable	[3]	839	333
Nonrecurring Basis [Member] | Impaired Loans [Member] | Mortgage [Member] | Resort Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	360	572
Nonrecurring Basis [Member] | Impaired Loans [Member] | Mortgage [Member] | Home Equity - 1st Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	41
Nonrecurring Basis [Member] | Impaired Loans [Member] | Mortgage [Member] | Home Equity - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	182
Nonrecurring Basis [Member] | Impaired Loans [Member] | Installment [Member] | Home Equity - 1st Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	2
Nonrecurring Basis [Member] | Impaired Loans [Member] | Installment [Member] | Home Equity - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	31
Nonrecurring Basis [Member] | Impaired Loans [Member] | Installment [Member] | Boat Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	21
Nonrecurring Basis [Member] | Impaired Loans [Member] | Installment [Member] | Recreational Vehicle Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	1
Nonrecurring Basis [Member] | Impaired Loans [Member] | Installment [Member] | Other [Member]
Impaired loans [Abstract]
Loans receivable	[3]	97
Nonrecurring Basis [Member] | Other Real Estate [Member] | Mortgage [Member] | 1-4 Family [Member]
Impaired loans [Abstract]
Loans receivable	[4]	8	95
Nonrecurring Basis [Member] | Other Real Estate [Member] | Mortgage [Member] | Home Equity - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[4]	59	59
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets [Abstract]
Loans held for sale, carried at fair value			41,471
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member] | Commercial [Member] | Income Producing - Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member] | Commercial [Member] | Land, Land Development and Construction - Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member] | Commercial [Member] | Commercial and Industrial [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member] | Mortgage [Member] | 1-4 Family [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member] | Mortgage [Member] | Resort Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member] | Mortgage [Member] | Home Equity - 1st Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member] | Mortgage [Member] | Home Equity - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member] | Installment [Member] | Home Equity - 1st Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member] | Installment [Member] | Home Equity - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member] | Installment [Member] | Boat Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member] | Installment [Member] | Recreational Vehicle Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Impaired Loans [Member] | Installment [Member] | Other [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Real Estate [Member] | Mortgage [Member] | 1-4 Family [Member]
Impaired loans [Abstract]
Loans receivable	[4]	0	0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Real Estate [Member] | Mortgage [Member] | Home Equity - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[4]	0	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets [Abstract]
Loans held for sale, carried at fair value			0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Impaired Loans [Member] | Commercial [Member] | Income Producing - Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Impaired Loans [Member] | Commercial [Member] | Land, Land Development and Construction - Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Impaired Loans [Member] | Commercial [Member] | Commercial and Industrial [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Impaired Loans [Member] | Mortgage [Member] | 1-4 Family [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Impaired Loans [Member] | Mortgage [Member] | Resort Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Impaired Loans [Member] | Mortgage [Member] | Home Equity - 1st Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Impaired Loans [Member] | Mortgage [Member] | Home Equity - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Impaired Loans [Member] | Installment [Member] | Home Equity - 1st Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Impaired Loans [Member] | Installment [Member] | Home Equity - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Impaired Loans [Member] | Installment [Member] | Boat Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Impaired Loans [Member] | Installment [Member] | Recreational Vehicle Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Impaired Loans [Member] | Installment [Member] | Other [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other Real Estate [Member] | Mortgage [Member] | 1-4 Family [Member]
Impaired loans [Abstract]
Loans receivable	[4]	0	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other Real Estate [Member] | Mortgage [Member] | Home Equity - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[4]	0	0
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member]
Assets [Abstract]
Loans held for sale, carried at fair value			0
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Commercial [Member] | Income Producing - Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[3]	116	217
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Commercial [Member] | Land, Land Development and Construction - Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[3]	1,198	106
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Commercial [Member] | Commercial and Industrial [Member]
Impaired loans [Abstract]
Loans receivable	[3]	106	2,243
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Mortgage [Member] | 1-4 Family [Member]
Impaired loans [Abstract]
Loans receivable	[3]	839	333
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Mortgage [Member] | Resort Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	360	572
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Mortgage [Member] | Home Equity - 1st Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	41
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Mortgage [Member] | Home Equity - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	182
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Installment [Member] | Home Equity - 1st Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	2
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Installment [Member] | Home Equity - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	31
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Installment [Member] | Boat Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	21
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Installment [Member] | Recreational Vehicle Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	1
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Installment [Member] | Other [Member]
Impaired loans [Abstract]
Loans receivable	[3]	97
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Other Real Estate [Member] | Mortgage [Member] | 1-4 Family [Member]
Impaired loans [Abstract]
Loans receivable	[4]	8	95
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Other Real Estate [Member] | Mortgage [Member] | Home Equity - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[4]	$ 59	$ 59

[1] Included in accrued income and other assets.

[2] Included in accrued expenses and other liabilities.

[3] Only includes impaired loans with specific loss allocations based on collateral value.

[4] Only includes other real estate with subsequent write downs to fair value.

XML

Fair Value Disclosures, Changes in Fair Value for Financial Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Changes in fair value for financial assets [Abstract]
Equity Securities at fair value, net gains (losses)			$ 167	$ (119)
Loans held for sale, net gains (losses)			577	367
Capitalized mortgage loan servicing rights, net gains (losses)			(6,113)	892
Impairment charges recognized [Abstract]
Collateral dependent loans, carrying amount	$ 3,000		3,000		$ 3,500
Collateral dependent loans, valuation allowance	1,200		1,200		1,500
Additional provision for loan losses on impaired loans	300	$ 500	400	500
Other real estate, carrying amount	100		100		200
Other real estate, valuation allowance	100		100		$ 100
Other real estate, additional charge	$ 0	$ 0	10	0
Securities [Member]
Changes in fair value for financial assets [Abstract]
Equity Securities at fair value, net gains (losses)			167	(119)
Mortgage Loans [Member]
Changes in fair value for financial assets [Abstract]
Loans held for sale, net gains (losses)			577	367
Mortgage Loan Servicing, Net [Member]
Changes in fair value for financial assets [Abstract]
Capitalized mortgage loan servicing rights, net gains (losses)			$ (6,113)	$ 892

XML

Fair Value Disclosures, Reconciliation for all Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) (Details) - Capitalized Mortgage Loan Servicing Rights [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Reconciliation for all assets and (liabilities) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) [Roll Forward]
Beginning balance	$ 19,909	$ 17,783	$ 21,400	$ 15,699
Total gains (losses) realized and unrealized [Abstract]
Included in results of operations	(3,422)	(137)	(6,113)	892
Included in other comprehensive income (loss)	0	0	0	0
Purchases, issuances, settlements, maturities and calls	1,407	4,202	2,607	5,257
Transfers in and/or out of Level 3	0	0	0	0
Ending balance	17,894	21,848	17,894	21,848
Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at June 30	$ (3,422)	$ (137)	$ (6,113)	$ 892

XML

Fair Value Disclosures, Quantitative Information About Level 3 (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Impaired Loans Commercial [Member]
Ranges and Weighted Average [Abstract]
Total Impaired collateral value	$ 500,000	$ 700,000
Impaired Loans Commercial [Member] | Minimum [Member]
Ranges and Weighted Average [Abstract]
Discount rate	5.00%	20.00%
Impaired Loans Commercial [Member] | Maximum [Member]
Ranges and Weighted Average [Abstract]
Discount rate	97.00%	80.00%
Installment [Member]
Ranges and Weighted Average [Abstract]
Total Impaired collateral value	$ 100,000
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Significant Un-observable Inputs (Level 3) [Member]
Asset Fair Value [Abstract]
Servicing asset fair value	$ 17,894,000	$ 21,400,000
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Present Value of Net Servicing Revenue [Member] | Significant Un-observable Inputs (Level 3) [Member] | Float Rate [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input	0.0177	0.0257
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Minimum [Member] | Significant Un-observable Inputs (Level 3) [Member] | Cost to Service [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input	66	68
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Minimum [Member] | Significant Un-observable Inputs (Level 3) [Member] | Ancillary Income [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input	20	20
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Minimum [Member] | Present Value of Net Servicing Revenue [Member] | Significant Un-observable Inputs (Level 3) [Member] | Discount Rate [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input	0.1000	0.1000
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Maximum [Member] | Significant Un-observable Inputs (Level 3) [Member] | Cost to Service [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input	216	216
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Maximum [Member] | Significant Un-observable Inputs (Level 3) [Member] | Ancillary Income [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input	36	36
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Maximum [Member] | Present Value of Net Servicing Revenue [Member] | Significant Un-observable Inputs (Level 3) [Member] | Discount Rate [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input	0.1300	0.1300
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Weighted Average [Member] | Significant Un-observable Inputs (Level 3) [Member] | Cost to Service [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input	80	81
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Weighted Average [Member] | Significant Un-observable Inputs (Level 3) [Member] | Ancillary Income [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input	22	23
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Weighted Average [Member] | Present Value of Net Servicing Revenue [Member] | Significant Un-observable Inputs (Level 3) [Member] | Discount Rate [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input	0.1014	0.1015
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Weighted Average [Member] | Present Value of Net Servicing Revenue [Member] | Significant Un-observable Inputs (Level 3) [Member] | Float Rate [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input	0.0177	0.0257
Nonrecurring Basis [Member] | Impaired Loans Commercial [Member] | Significant Un-observable Inputs (Level 3) [Member]
Asset Fair Value [Abstract]
Impaired loans fair value	$ 1,420,000	$ 2,566,000
Nonrecurring Basis [Member] | Impaired Loans Commercial [Member] | Minimum [Member] | Sales Comparison Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Adjustment for Differences Between Comparable Sales [Member]
Ranges and Weighted Average [Abstract]
Impaired loans measurement input	(0.480)	(0.325)
Nonrecurring Basis [Member] | Impaired Loans Commercial [Member] | Maximum [Member] | Sales Comparison Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Adjustment for Differences Between Comparable Sales [Member]
Ranges and Weighted Average [Abstract]
Impaired loans measurement input	0.400	0.600
Nonrecurring Basis [Member] | Impaired Loans Commercial [Member] | Weighted Average [Member] | Sales Comparison Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Adjustment for Differences Between Comparable Sales [Member]
Ranges and Weighted Average [Abstract]
Impaired loans measurement input	(0.060)	(0.019)
Nonrecurring Basis [Member] | Impaired Loans Mortgage and Installment [Member] | Significant Un-observable Inputs (Level 3) [Member]
Asset Fair Value [Abstract]
Impaired loans fair value	$ 1,574,000
Nonrecurring Basis [Member] | Impaired Loans Mortgage and Installment [Member] | Minimum [Member] | Sales Comparison Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Adjustment for Differences Between Comparable Sales [Member]
Ranges and Weighted Average [Abstract]
Impaired loans measurement input	(0.401)
Nonrecurring Basis [Member] | Impaired Loans Mortgage and Installment [Member] | Maximum [Member] | Sales Comparison Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Adjustment for Differences Between Comparable Sales [Member]
Ranges and Weighted Average [Abstract]
Impaired loans measurement input	0.567
Nonrecurring Basis [Member] | Impaired Loans Mortgage and Installment [Member] | Weighted Average [Member] | Sales Comparison Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Adjustment for Differences Between Comparable Sales [Member]
Ranges and Weighted Average [Abstract]
Impaired loans measurement input	(0.026)
Nonrecurring Basis [Member] | Impaired Loans Mortgage [Member] | Significant Un-observable Inputs (Level 3) [Member]
Asset Fair Value [Abstract]
Impaired loans fair value		$ 905,000
Nonrecurring Basis [Member] | Impaired Loans Mortgage [Member] | Minimum [Member] | Sales Comparison Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Adjustment for Differences Between Comparable Sales [Member]
Ranges and Weighted Average [Abstract]
Impaired loans measurement input		(0.401)
Nonrecurring Basis [Member] | Impaired Loans Mortgage [Member] | Maximum [Member] | Sales Comparison Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Adjustment for Differences Between Comparable Sales [Member]
Ranges and Weighted Average [Abstract]
Impaired loans measurement input		0.256
Nonrecurring Basis [Member] | Impaired Loans Mortgage [Member] | Weighted Average [Member] | Sales Comparison Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Adjustment for Differences Between Comparable Sales [Member]
Ranges and Weighted Average [Abstract]
Impaired loans measurement input		0.007
Nonrecurring Basis [Member] | Other Real Estate Mortgage [Member] | Significant Un-observable Inputs (Level 3) [Member]
Asset Fair Value [Abstract]
Other real estate fair value	$ 67,000	$ 154,000
Nonrecurring Basis [Member] | Other Real Estate Mortgage [Member] | Minimum [Member] | Sales Comparison Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Adjustment for Differences Between Comparable Sales [Member]
Ranges and Weighted Average [Abstract]
Other real estate measurement input	0.000	0
Nonrecurring Basis [Member] | Other Real Estate Mortgage [Member] | Maximum [Member] | Sales Comparison Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Adjustment for Differences Between Comparable Sales [Member]
Ranges and Weighted Average [Abstract]
Other real estate measurement input	0.102	0.341
Nonrecurring Basis [Member] | Other Real Estate Mortgage [Member] | Weighted Average [Member] | Sales Comparison Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Adjustment for Differences Between Comparable Sales [Member]
Ranges and Weighted Average [Abstract]
Other real estate measurement input	0.041	0.112

XML

Fair Value Disclosures, Difference Between Aggregate Fair Value and Aggregate Remaining Contractual Principal (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Loans held for sale [Abstract]
Aggregate Fair Value	$ 62,883	$ 44,753
Difference	1,834	1,257
Contractual Principal	$ 61,049	$ 43,496

XML

Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands		Jun. 30, 2019	Dec. 31, 2018
Assets [Abstract]
Interest bearing deposits - time		$ 498	$ 595
Equity securities at fair value		0	393
Securities available for sale		430,305	427,926
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	18,359
Liabilities [Abstract]
Other borrowings		41,144	25,700
Subordinated debentures		39,422	39,388
Reciprocal deposits included in deposits with no stated maturity		270,864	123,080
Reciprocal deposits included in deposits with stated maturity		55,462	58,992
Recorded Book Balance [Member]
Assets [Abstract]
Cash and due from banks		34,461	23,350
Interest bearing deposits		20,676	46,894
Interest bearing deposits - time		498	595
Equity securities at fair value			393
Securities available for sale		430,305	427,926
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	18,359
Net loans and loans held for sale		2,743,506	2,643,856
Accrued interest receivable		10,816	10,164
Derivative financial instruments		6,233	5,155
Liabilities [Abstract]
Deposits with no stated maturity	[1]	2,294,255	2,197,494
Deposits with stated maturity	[1]	684,630	715,934
Other borrowings		41,144	25,700
Subordinated debentures		39,422	39,388
Accrued interest payable		1,668	1,646
Derivative financial instruments		4,217	2,326
Fair Value [Member]
Assets [Abstract]
Cash and due from banks		34,461	23,350
Interest bearing deposits		20,676	46,894
Interest bearing deposits - time		498	594
Equity securities at fair value			393
Securities available for sale		430,305	427,926
Net loans and loans held for sale		2,747,828	2,606,256
Accrued interest receivable		10,816	10,164
Derivative financial instruments		6,233	5,155
Liabilities [Abstract]
Deposits with no stated maturity		2,294,255	2,197,494
Deposits with stated maturity		683,547	711,312
Other borrowings		41,271	25,706
Subordinated debentures		33,214	35,021
Accrued interest payable		1,668	1,646
Derivative financial instruments		4,217	2,326
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets [Abstract]
Cash and due from banks		34,461	23,350
Interest bearing deposits		20,676	46,894
Interest bearing deposits - time		0	0
Equity securities at fair value			393
Securities available for sale		0	0
Net loans and loans held for sale		0	41,471
Accrued interest receivable		1	22
Derivative financial instruments		0	0
Liabilities [Abstract]
Deposits with no stated maturity		2,294,255	2,197,494
Deposits with stated maturity		0	0
Other borrowings		0	0
Subordinated debentures		0	0
Accrued interest payable		128	114
Derivative financial instruments		0	0
Significant Other Observable Inputs (Level 2) [Member]
Assets [Abstract]
Cash and due from banks		0	0
Interest bearing deposits		0	0
Interest bearing deposits - time		498	594
Equity securities at fair value			0
Securities available for sale		430,305	427,926
Net loans and loans held for sale		62,883	44,753
Accrued interest receivable		1,634	1,789
Derivative financial instruments		6,233	5,155
Liabilities [Abstract]
Deposits with no stated maturity		0	0
Deposits with stated maturity		683,547	711,312
Other borrowings		41,271	25,706
Subordinated debentures		33,214	35,021
Accrued interest payable		1,540	1,532
Derivative financial instruments		4,217	2,326
Significant Unobservable Inputs (Level 3) [Member]
Assets [Abstract]
Cash and due from banks		0	0
Interest bearing deposits		0	0
Interest bearing deposits - time		0	0
Equity securities at fair value			0
Securities available for sale		0	0
Net loans and loans held for sale		2,684,945	2,520,032
Accrued interest receivable		9,181	8,353
Derivative financial instruments		0	0
Liabilities [Abstract]
Deposits with no stated maturity		0	0
Deposits with stated maturity		0	0
Other borrowings		0	0
Subordinated debentures		0	0
Accrued interest payable		0	0
Derivative financial instruments		$ 0	$ 0

[1] Deposits with no stated maturity include reciprocal deposits with a recorded book balance of $270.864 million and $123.080 million at June 30, 2019 and December 31, 2018, respectively. Deposits with a stated maturity include reciprocal deposits with a recorded book balance of $55.462 million and $58.992 million at June 30, 2019 and December 31, 2018, respectively.

XML

Contingencies (Details) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($) shares	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) shares	Jun. 30, 2018 USD ($)	Jul. 30, 2019 USD ($) $ / shares	Dec. 31, 2018 USD ($)
Contingencies [Abstract]
Provision for loss reimbursement on sold loans	$ 30	$ 20	$ 150	$ 30
Reserve for loss reimbursement on sold mortgage loans	$ 830		$ 830			$ 780
VISA Class B Common Stock [Member]
Investment Owned [Abstract]
Number of shares owned (in shares) | shares	12,566		12,566
Current conversion ratio			1.6298
VISA Class B Common Stock [Member] | Subsequent Event [Member]
Investment Owned [Abstract]
Closing price (in dollars per share) | $ / shares					$ 181.53
Current value of shares owned					$ 3,700

XML

Accumulated Other Comprehensive Loss ("AOCL"), Summary of Changes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Changes in AOCL [Roll Forward]
Balance at beginning of period	$ 344,726	$ 267,917	$ 338,994	$ 264,933
Other comprehensive income (loss) before reclassifications	2,498	(691)	6,015	(3,204)
Amounts reclassified from AOCL	(112)	(21)	(338)	(11)
Other comprehensive income (loss)	2,386	(712)	5,677	(3,215)
Balances at end of period	330,846	337,083	330,846	337,083
Accumulated Other Comprehensive Loss [Member]
Changes in AOCL [Roll Forward]
Balance at beginning of period	(6,817)	(8,502)	(10,108)	(5,999)
Other comprehensive income (loss)	2,386	(712)	5,677	(3,215)
Balances at end of period	(4,431)	(9,214)	(4,431)	(9,214)
Unrealized Gains (Losses) on Securities Available For Sale [Member]
Changes in AOCL [Roll Forward]
Balance at beginning of period	(57)	(3,509)	(4,185)	(470)
Other comprehensive income (loss) before reclassifications	3,097	(949)	7,333	(4,003)
Amounts reclassified from AOCL	0	21	(108)	36
Other comprehensive income (loss)	3,097	(928)	7,225	(3,967)
Balances at end of period	3,040	(4,437)	3,040	(4,437)
Disproportionate Tax Effects from Securities Available for Sale [Member]
Changes in AOCL [Roll Forward]
Balance at beginning of period	(5,798)	(5,798)	(5,798)	(5,798)
Other comprehensive income (loss) before reclassifications	0	0	0	0
Amounts reclassified from AOCL	0	0	0	0
Other comprehensive income (loss)	0	0	0	0
Balances at end of period	(5,798)	(5,798)	(5,798)	(5,798)
Unrealized Gains (Losses) on Cash Flow Hedges [Member]
Changes in AOCL [Roll Forward]
Balance at beginning of period	(962)	805	(125)	269
Other comprehensive income (loss) before reclassifications	(599)	258	(1,318)	799
Amounts reclassified from AOCL	(112)	(42)	(230)	(47)
Other comprehensive income (loss)	(711)	216	(1,548)	752
Balances at end of period	$ (1,673)	$ 1,021	$ (1,673)	$ 1,021

XML

Accumulated Other Comprehensive Loss ("AOCL"), Reclassification Out of Each Components (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Reclassifications out of AOCL [Abstract]
Total reclassifications before tax	$ 13,417	$ 10,884	$ 24,965	$ 22,083
Interest expense	(6,817)	(4,123)	(13,210)	(6,984)
Income tax expense	2,687	2,067	4,854	4,105
Reclassifications, net of tax	10,730	8,817	20,111	17,978
Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassifications out of AOCL [Abstract]
Reclassifications, net of tax	112	21	338	11
Unrealized Gains (Losses) on Securities Available For Sale [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassifications out of AOCL [Abstract]
Net gains (losses) on securities	0	(26)	137	(45)
Net impairment loss recognized in earnings	0	0	0	0
Total reclassifications before tax	0	(26)	137	(45)
Income tax expense	0	(5)	29	(9)
Reclassifications, net of tax	0	(21)	108	(36)
Unrealized Gains (Losses) on Cash Flow Hedges [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassifications out of AOCL [Abstract]
Interest expense	(142)	(53)	(291)	(59)
Income tax expense	(30)	(11)	(61)	(12)
Reclassifications, net of tax	$ (112)	$ (42)	$ (230)	$ (47)

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Revenue from Contracts with Customers (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($) Asset	Jun. 30, 2018 USD ($) Asset	Jun. 30, 2019 USD ($) Asset	Jun. 30, 2018 USD ($) Asset	Dec. 31, 2018 USD ($)
Revenue from Contracts with Customers [Abstract]
Percentage of revenues excluded from ASC Topic 606	84.60%	82.80%	84.60%	82.80%
Contract assets	$ 0		$ 0		$ 0
Contract liabilities	$ 0		$ 0		$ 0
Number of real estate assets sold during the period | Asset	0	0	0	0
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	$ 6,510	$ 6,824	$ 12,512	$ 13,102
Bank owned life insurance	270	220	512	476
Other	730	772	1,745	1,332
Total	2,106	2,217	4,370	4,160
Service Charges on Deposit Accounts
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	2,800	3,095	5,440	6,000
Overdraft Fees [Member] | Retail [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	1,882	2,044	3,612	4,016
Overdraft Fees [Member] | Business [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	377	380	762	745
Account Service Charges [Member] | Retail [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	541	588	1,057	1,088
Account Service Charges [Member] | Business [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	0	83	9	151
Other Deposit Related Income [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	656	742	1,366	1,431
ATM Fees [Member] | Retail [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	346	358	668	703
ATM Fees [Member] | Business [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	9	8	17	16
Other [Member] | Retail [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	212	230	463	437
Other [Member] | Business [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	89	146	218	275
Interchange Income [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	2,604	2,504	4,959	4,750
Investment and Insurance Commissions [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	450	483	747	921
Asset Management Revenue [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	277	281	531	552
Transaction Based Revenue [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	$ 173	$ 202	$ 216	$ 369

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Leases (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($)		Jun. 30, 2019 USD ($)
Components of operating leases [Abstract]
Operating lease cost	$ 563		$ 1,127
Variable lease cost	49		72
Short-term lease cost	5		10
Total	617		1,209
Supplemental balance sheet information related to operating leases [Abstract]
Lease right of use asset	6,692	[1]	6,692	[1]
Lease liabilities	$ 6,700	[2]	$ 6,700	[2]
Weighted average remaining lease term (years)	5 years 6 months 29 days		5 years 6 months 29 days
Weighted average discount rate	3.20%		3.20%
Maturities of lease liabilities [Abstract]
Six months ending December 31, 2019	$ 1,098		$ 1,098
2020	1,711		1,711
2021	1,248		1,248
2022	963		963
2023	925		925
2024 and thereafter	1,428		1,428
Total lease payments	7,373		7,373
Less imputed interest	(673)		(673)
Total	$ 6,700	[2]	$ 6,700	[2]

[1] Included in Accrued income and other assets in our Condensed Consolidated Statements of Financial Condition.

[2] Included in Accrued expenses and other liabilities in our Condensed Consolidated Statements of Financial Condition.

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Recent Acquisition (Details) - USD ($) $ in Thousands			3 Months Ended	6 Months Ended
		Apr. 01, 2018	Sep. 30, 2018	Jun. 30, 2019	Dec. 31, 2018	Mar. 31, 2018
Valuation of the assets acquired and liabilities assumed [Abstract]
Goodwill				$ 28,300	$ 28,300
TCSB Bancorp, Inc. [Member]
Recent Acquisition [Abstract]
Equity interest issued to each holder of common stock under merger agreement (in shares)		1.1166
Total value of common stock and cash paid in lieu of fractional shares		$ 5
Equity issued under merger agreement (in shares)		2,710,000
Options issued under merger agreement (in shares)		190,000
Fair value of equity issued under merger agreement		$ 64,500
Valuation of the assets acquired and liabilities assumed [Abstract]
Cash and cash equivalents						$ 23,521
Interest bearing deposits - time						4,054
Securities available for sale						6,066
Federal Home Loan Bank stock						778
Loans, net						295,799
Property and equipment, net						1,067
Capitalized mortgage loan servicing rights						3,047
Accrued income and other assets						3,362
Other intangibles	[1]					5,798
Total assets acquired						343,492
Deposits						287,710
Other borrowings						14,345
Subordinated debentures						3,768
Accrued expenses and other liabilities						1,429
Total liabilities assumed						307,252
Net assets acquired						36,240
Goodwill						28,300
Purchase price (fair value of consideration)						64,540
Decrease in goodwill			$ (700)
Fair value of acquired receivables						292,900
Gross contractual amounts receivable						$ 298,600
TCSB Bancorp, Inc. [Member] | Core Deposits [Member]
Valuation of the assets acquired and liabilities assumed [Abstract]
Estimated fair value of intangible assets		$ 5,800
Estimated useful life				10 years

[1] Relates to core deposit intangibles (see note #7).