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 March 31, 2020

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, 21,892,836 as of May 4, 2020.

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

INDEX

		Number(s)
PART I -	Financial Information
Item 1.	Condensed Consolidated Statements of Financial Condition March 31, 2020 and December 31, 2019	3
	Condensed Consolidated Statements of Operations Three-month periods ended March 31, 2020 and 2019	4
	Condensed Consolidated Statements of Comprehensive Income Three-month periods ended March 31, 2020 and 2019	5
	Condensed Consolidated Statements of Cash Flows Three-month periods ended March 31, 2020 and 2019	6
	Condensed Consolidated Statements of Shareholders' Equity Three-month periods ended March 31, 2020 and 2019	7
	Notes to Interim Condensed Consolidated Financial Statements	8-57
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	58-80
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	81
Item 4.	Controls and Procedures	81
PART II -	Other Information
Item 1A	Risk Factors	82
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	85
Item 6.	Exhibits	86

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 including the impact of the ongoing COVID-19 pandemic on each of these items;

• 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 including the economic impact of the ongoing COVID-19 pandemic in each of these areas;

• 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, 2019, 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 the 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

	March 31, 2020			December 31, 2019
	(unaudited)
	(In thousands, except share amounts)
Assets
Cash and due from banks	$	48,753		$	53,295
Interest bearing deposits		21,538			12,009
Cash and Cash Equivalents		70,291			65,304
Interest bearing deposits - time		-			350
Securities available for sale		594,284			518,400
Federal Home Loan Bank and Federal Reserve Bank stock, at cost		18,359			18,359
Loans held for sale, carried at fair value		64,549			69,800
Loans
Commercial		1,181,599			1,166,695
Mortgage		1,069,967			1,098,911
Installment		466,549			459,417
Total Loans		2,718,115			2,725,023
Allowance for loan losses		(32,495	)		(26,148	)
Net Loans		2,685,620			2,698,875
Other real estate and repossessed assets, net		1,494			1,865
Property and equipment, net		37,776			38,411
Bank-owned life insurance		55,035			55,710
Deferred tax assets, net		4,280			2,072
Capitalized mortgage loan servicing rights, carried at fair value		14,829			19,171
Other intangibles		5,071			5,326
Goodwill		28,300			28,300
Accrued income and other assets		52,499			42,751
Total Assets	$	3,632,387		$	3,564,694
Liabilities and Shareholders' Equity
Deposits
Non-interest bearing	$	874,935		$	852,076
Savings and interest-bearing checking		1,229,999			1,186,745
Reciprocal		464,574			431,027
Time		359,050			376,877
Brokered time		155,006			190,002
Total Deposits		3,083,564			3,036,727
Other borrowings		101,954			88,646
Subordinated debentures		39,473			39,456
Accrued expenses and other liabilities		71,778			49,696
Total Liabilities		3,296,769			3,214,525
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: 21,892,001 shares at March 31, 2020 and 22,481,643 shares at December 31, 2019		338,528			352,344
Retained earnings		1,944			1,611
Accumulated other comprehensive loss		(4,854	)		(3,786	)
Total Shareholders’ Equity		335,618			350,169
Total Liabilities and Shareholders’ Equity	$	3,632,387		$	3,564,694

See notes to interim condensed consolidated financial statements (unaudited)

3

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

	Three months ended March 31,
	2020			2019
	(unaudited)
	(In thousands, except per share amounts)
Interest Income
Interest and fees on loans	$	31,764		$	32,681
Interest on securities
Taxable		3,059			3,006
Tax-exempt		390			374
Other investments		366			575
Total Interest Income		35,579			36,636
Interest Expense
Deposits		4,700			5,681
Other borrowings and subordinated debentures		688			712
Total Interest Expense		5,388			6,393
Net Interest Income		30,191			30,243
Provision for loan losses		6,721			664
Net Interest Income After Provision for Loan Losses		23,470			29,579
Non-interest Income
Service charges on deposit accounts		2,591			2,640
Interchange income		2,457			2,355
Net gains on assets
Mortgage loans		8,840			3,611
Securities		253			304
Mortgage loan servicing, net		(5,300	)		(1,215	)
Other		2,163			2,264
Total Non-interest Income		11,004			9,959
Non-interest Expense
Compensation and employee benefits		16,509			16,351
Occupancy, net		2,460			2,505
Data processing		2,355			2,144
Furniture, fixtures and equipment		1,036			1,029
Communications		803			769
Interchange expense		859			688
Loan and collection		805			634
Advertising		683			672
Legal and professional		393			369
FDIC deposit insurance		370			368
Other		2,446			2,461
Total Non-interest Expense		28,719			27,990
Income Before Income Tax		5,755			11,548
Income tax expense		945			2,167
Net Income	$	4,810		$	9,381
Net Income Per Common Share
Basic	$	0.22		$	0.40
Diluted	$	0.21		$	0.39

See notes to interim condensed consolidated financial statements (unaudited)

4

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

	Three months ended March 31,
	2020			2019
	(unaudited - In thousands)
Net income	$	4,810		$	9,381
Other comprehensive income (loss)
Securities available for sale
Unrealized gains (losses) arising during period		(598	)		5,364
Change in unrealized losses for which a portion of other than temporary impairment has been recognized in earnings		(169	)		(2	)
Reclassification adjustments for gains included in earnings		(253	)		(137	)
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale		(1,020	)		5,225
Income tax expense (benefit)		(214	)		1,097
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale, net of tax		(806	)		4,128
Derivative instruments
Unrealized gain (loss) arising during period		(406	)		(912	)
Reclassification adjustment for income recognized in earnings		75			(149	)
Unrealized gains (losses) recognized in other comprehensive income (loss) on derivative instruments		(331	)		(1,061	)
Income tax expense (benefit)		(69	)		(224	)
Unrealized gains (losses) recognized in other comprehensive income (loss) on derivative instruments, net of tax		(262	)		(837	)
Other comprehensive income (loss)		(1,068	)		3,291
Comprehensive income	$	3,742		$	12,672

See notes to interim condensed consolidated financial statements (unaudited)

5

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

	Three months ended March 31,
	2020			2019
	(unaudited - In thousands)
Net Income	$	4,810		$	9,381
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		241,856			87,496
Disbursements for loans held for sale		(227,765	)		(82,230	)
Provision for loan losses		6,721			664
Deferred income tax expense (benefit)		(1,925	)		2,039
Deferred loan fees and costs		(358	)		(111	)
Net depreciation, amortization of intangible assets and premiums and accretion of discounts on securities, loans and interest bearing deposits - time		1,795			1,479
Net gains on mortgage loans		(8,840	)		(3,611	)
Net gains on securities		(253	)		(304	)
Share based compensation		547			420
(Increase) decrease in accrued income and other assets		5,095			(8,107	)
Increase in accrued expenses and other liabilities		599			2,455
Total Adjustments		17,472			750
Net Cash From Operating Activities		22,282			10,131
Cash Flow Used in Investing Activities
Proceeds from the sale of securities available for sale		21,743			42,236
Proceeds from maturities, prepayments and calls of securities available for sale		42,744			32,533
Purchases of securities available for sale		(103,901	)		(71,693	)
Proceeds from the maturity of interest bearing deposits - time		350			100
Net increase in portfolio loans (loans originated, net of principal payments)		(22,432	)		(65,653	)
Proceeds from the sale of portfolio loans		2,395			40,630
Proceeds from bank-owned life insurance		945			-
Proceeds from the sale of other real estate and repossessed assets		328			167
Capital expenditures		(760	)		(511	)
Net Cash Used in Investing Activities		(58,588	)		(22,191	)
Cash Flow From Financing Activities
Net increase in total deposits		46,837			20,797
Net increase in other borrowings		6,296			2
Proceeds from Federal Home Loan Bank Advances		160,000			-
Payments of Federal Home Loan Bank Advances		(153,000	)		-
Dividends paid		(4,477	)		(4,246	)
Proceeds from issuance of common stock		11			282
Repurchase of common stock		(13,784	)		(2,530	)
Share based compensation withholding obligation		(590	)		(866	)
Net Cash From Financing Activities		41,293			13,439
Net Increase in Cash and Cash Equivalents		4,987			1,379
Cash and Cash Equivalents at Beginning of Period		65,304			70,244
Cash and Cash Equivalents at End of Period	$	70,291		$	71,623
Cash paid during the period for
Interest	$	5,489		$	6,253
Income taxes		-			-
Operating leases		476			563
Transfers to other real estate and repossessed assets		66			325
Purchase of securities available for sale not yet settled		10,497			1,500
Securitization of portfolio loans		26,325			29,790
Right of use assets obtained in exchange for lease obligations		116			7,703

See notes to interim condensed consolidated financial statements (unaudited)

6

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders' Equity

	Common Stock			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	(Dollars in thousands, except per share amounts)
Balances at January 1, 2020	$	352,344		$	1,611		$	(3,786	)	$	350,169
Net income, three months ended March 31, 2020		-			4,810			-			4,810
Cash dividends declared, $.20 per share		-			(4,477	)		-			(4,477	)
Repurchase of 678,929 shares of common stock		(13,784	)		-			-			(13,784	)
Issuance of 11,567 shares of common stock		11			-			-			11
Share based compensation (issuance of 105,894 shares of common stock)		547			-			-			547
Share based compensation withholding obligation (withholding of 28,174 shares of common stock)		(590	)		-			-			(590	)
Other comprehensive income		-			-			(1,068	)		(1,068	)
Balances at March 31, 2020	$	338,528		$	1,944		$	(4,854	)	$	335,618
Balances at January 1, 2019	$	377,372		$	(28,270	)	$	(10,108	)	$	338,994
Net income, three months ended March 31, 2019		-			9,381			-			9,381
Cash dividends declared, $.18 per share		-			(4,246	)		-			(4,246	)
Repurchase of 115,787 shares of common stock		(2,530	)		-			-			(2,530	)
Issuance of 68,399 shares of common stock		282			-			-			282
Share based compensation (issuance of 84,128 shares of common stock)		420			-			-			420
Share based compensation withholding obligation (withholding of 56,286 shares of common stock)		(866	)		-			-			(866	)
Other comprehensive income		-			-			3,291			3,291
Balances at March 31, 2019	$	374,678		$	(23,135	)	$	(6,817	)	$	344,726

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, 2019 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 March 31, 2020 and December 31, 2019, and the results of operations for the three month periods ended March 31, 2020 and 2019.  The results of operations for the three month period ended March 31, 2020, 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 2019 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.

8

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

We began evaluating this ASU in 2016 and established a company-wide, cross-discipline governance structure, which provides implementation oversight. We continued to test and refine our current expected credit loss models that satisfied the requirements of this ASU. Oversight and testing, as well as efforts to meet expanded disclosure requirements, extended through the end of 2019.  We currently estimate losses over approximately a two year forecast period using the Federal Open Market Committee median economic projections 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 were originally required to adopt this ASU on January 1, 2020 but section 4014 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act allows for temporary relief from applying this ASU.  Under the CARES Act we may delay the adoption of this ASU until the earlier of the termination of the national emergency that President Trump declared on March 13, 2020, or December 31, 2020.  As such, we have chosen to delay the adoption of this ASU and continue to utilize the existing incurred loss impairment methodology to calculate our allowance for loan losses and our provision for loan losses as required under Accounting Standards Codification 310 (Receivables). When we adopt this ASU as required under the CARES act we will do so retrospectively to January 1, 2020.

We expect to recognize a one-time cumulative effect adjustment at January 1, 2020 increasing the allowance for loan losses.  We are estimating an increase to the allowance for loan losses at that time to be in the range of $8.0 million to $10.0 million primarily driven by the longer contractual maturities of our mortgage and consumer installment loan segments. In addition, we currently expect this ASU to increase the allowance for losses related to unfunded loan commitments between $1.0 million and $2.0 million. The ultimate impact of adopting this ASU, and at each subsequent reporting period, is highly dependent on credit quality, economic forecasts and conditions, composition of our loan portfolios and securities available for sale, along with other management judgements. The transition adjustment to record the allowance for credit losses may fall outside of our estimated increase based on the finalization of assumptions including qualitative adjustments and the economic forecast used in calculating the allowance for credit losses upon the adoption of CECL.

We do not expect a material allowance for credit losses to be recorded on securities available for sale upon adoption of this ASU.

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 was effective for us on January 1, 2020, and did not have a material impact on our consolidated operating results or financial condition.

9

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

In March 2020, the FASB issued ASU 2020-04, ‘‘Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting’’. This new ASU provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. Entities that make such elections would not have to remeasure contracts at the modification date or reassess a previous accounting determination.  Entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met.  This amended guidance and our ability to elect its temporary optional expedients and exceptions are effective for us as of March 12, 2020 through December 31, 2022.

3. Securities

Securities available for sale consist of the following:

	Amortized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
March 31, 2020
U.S. agency	$	12,648	$	207	$	27	$	12,828
U.S. agency residential mortgage-backed		216,436		5,746		353		221,829
U.S. agency commercial mortgage-backed		9,665		252		1		9,916
Private label mortgage-backed		38,188		341		1,458		37,071
Other asset backed		105,971		79		2,169		103,881
Obligations of states and political subdivisions		162,805		2,477		1,341		163,941
Corporate		42,392		932		513		42,811
Trust preferred		1,968		-		477		1,491
Foreign government		499		17		-		516
Total	$	590,572	$	10,051	$	6,339	$	594,284
December 31, 2019
U.S. agency	$	14,591	$	89	$	19	$	14,661
U.S. agency residential mortgage-backed		226,130		1,910		278		227,762
U.S. agency commercial mortgage-backed		10,671		113		28		10,756
Private label mortgage-backed		39,248		544		99		39,693
Other asset backed		94,158		103		375		93,886
Obligations of states and political subdivisions		94,499		1,724		121		96,102
Corporate		31,904		1,296		5		33,195
Trust preferred		1,968		-		125		1,843
Foreign government		499		3		-		502
Total	$	513,668	$	5,782	$	1,050	$	518,400

10

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)
March 31, 2020
U.S. agency	$	1,042	$	1	$	2,473	$	26	$	3,515	$	27
U.S. agency residential mortgage-backed		37,673		289		5,166		64		42,839		353
U.S. agency commercial mortgage-backed		-		-		372		1		372		1
Private label mortgage-backed		22,232		1,388		358		70		22,590		1,458
Other asset backed		67,012		1,442		18,910		727		85,922		2,169
Obligations of states and political subdivisions		50,643		1,321		2,213		20		52,856		1,341
Corporate		14,556		513		-		-		14,556		513
Trust preferred		-		-		1,491		477		1,491		477
Total	$	193,158	$	4,954	$	30,983	$	1,385	$	224,141	$	6,339
December 31, 2019
U.S. agency	$	2,782	$	8	$	2,712	$	11	$	5,494	$	19
U.S. agency residential mortgage-backed		56,377		126		13,551		152		69,928		278
U.S. agency commercial mortgage-backed		3,284		24		659		4		3,943		28
Private label mortgage-backed		16,387		55		343		44		16,730		99
Other asset backed		34,027		233		13,839		142		47,866		375
Obligations of states and political subdivisions		15,666		84		5,396		37		21,062		121
Corporate		2,125		5		-		-		2,125		5
Trust preferred		-		-		1,843		125		1,843		125
Total	$	130,648	$	535	$	38,343	$	515	$	168,991	$	1,050

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).

11

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 March 31, 2020, we had 24 U.S. agency, 52 U.S. agency residential mortgage-backed and six U.S. agency commercial mortgage-backed securities whose fair value is less than amortized cost. The  unrealized losses are largely attributed to widening spreads to Treasury bonds since acquisition.

Private label mortgage backed, other asset backed and corporate securities — at March 31, 2020, we had 35 private label mortgage backed, 122 other asset backed and 18 corporate securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening since acquisition.

Two private label mortgage-backed 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.

Obligations of states and political subdivisions — at March 31, 2020, we had 36 municipal securities whose fair value is less than amortized cost. The unrealized losses are primarily due to wider benchmark pricing spreads since acquisition.

Trust preferred securities — at March 31, 2020, 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 $0.65 million as of March 31, 2020, continues to have satisfactory credit metrics and make interest payments.

As management does not intend to liquidate any of the securities discussed above 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 discussed above (other than certain declines related to the two private label mortgage-backed securities currently being reviewed for OTTI) are 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 month periods ended March 31, 2020 and 2019, respectively.

At March 31, 2020, two private label mortgage-backed securities had credit related OTTI and are summarized as follows:

	Senior Security		Super Senior Security		Total
	(In thousands)
Fair value	$	469	$	513	$	982
Amortized cost		490		410		900
Non-credit unrealized loss		21		-		21
Unrealized gain		-		103		103
Cumulative credit related OTTI		757		457		1,214

12

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Both of these securities are receiving principal and interest payments similar to principal reductions in the underlying collateral and have unrealized gains at March 31, 2020. 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 one of 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 March 31,
	2020		2019
	(In thousands)
Balance at beginning of period	$	1,214	$	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	$	1,214	$	1,594

The amortized cost and fair value of securities available for sale at March 31, 2020, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	13,075	$	13,132
Maturing after one year but within five years		61,789		62,393
Maturing after five years but within ten years		47,654		48,967
Maturing after ten years		97,794		97,095
		220,312		221,587
U.S. agency residential mortgage-backed		216,436		221,829
U.S. agency commercial mortgage-backed		9,665		9,916
Private label mortgage-backed		38,188		37,071
Other asset backed		105,971		103,881
Total	$	590,572	$	594,284

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 three month periods ending March 31, follows:

			Realized
	Proceeds		Gains		Losses
	(In thousands)
2020	$	21,743	$	253	$	-
2019		42,236		169		32

13

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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 three months ended March 31, 2019 we recognized gains on these preferred stocks of $0.167 million that are included in net gains (losses) on securities in the Condensed Consolidated Statements of Operations.

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 March 31, follows:

	Commercial			Mortgage			Installment			Subjective Allocation			Total
	(In thousands)
2020
Balance at beginning of period	$	7,922		$	8,216		$	1,283		$	8,727		$	26,148
Additions (deductions)
Provision for loan losses		2,218			(508	)		129			4,882			6,721
Recoveries credited to the allowance		108			117			174			-			399
Loans charged against the allowance		(36	)		(409	)		(328	)		-			(773	)
Balance at end of period	$	10,212		$	7,416		$	1,258		$	13,609		$	32,495
2019
Balance at beginning of period	$	7,090		$	7,978		$	895		$	8,925		$	24,888
Additions (deductions)
Provision for loan losses		420			573			523			(852	)		664
Recoveries credited to the allowance		127			224			217			-			568
Loans charged against the allowance		(119	)		(363	)		(384	)		-			(866	)
Balance at end of period	$	7,518		$	8,412		$	1,251		$	8,073		$	25,254

14

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)
March 31, 2020
Allowance for loan losses:
Individually evaluated for impairment	$	3,467	$	4,391	$	280	$	-	$	8,138
Collectively evaluated for impairment		6,745		3,025		978		13,609		24,357
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	10,212	$	7,416	$	1,258	$	13,609	$	32,495
Loans
Individually evaluated for impairment	$	18,048	$	42,440	$	2,813			$	63,301
Collectively evaluated for impairment		1,164,903		1,030,996		464,633				2,660,532
Loans acquired with deteriorated credit quality		1,340		567		311				2,218
Total loans recorded investment		1,184,291		1,074,003		467,757				2,726,051
Accrued interest included in recorded investment		2,692		4,036		1,208				7,936
Total loans	$	1,181,599	$	1,069,967	$	466,549			$	2,718,115
December 31, 2019
Allowance for loan losses:
Individually evaluated for impairment	$	1,031	$	4,863	$	261	$	-	$	6,155
Collectively evaluated for impairment		6,891		3,353		1,022		8,727		19,993
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	7,922	$	8,216	$	1,283	$	8,727	$	26,148
Loans
Individually evaluated for impairment	$	9,393	$	43,574	$	2,925			$	55,892
Collectively evaluated for impairment		1,158,906		1,058,917		457,370				2,675,193
Loans acquired with deteriorated credit quality		1,394		575		316				2,285
Total loans recorded investment		1,169,693		1,103,066		460,611				2,733,370
Accrued interest included in recorded investment		2,998		4,155		1,194				8,347
Total loans	$	1,166,695	$	1,098,911	$	459,417			$	2,725,023

15

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⁽¹⁾:

	90+ and Still Accruing		Non- Accrual		Total Non- Performing Loans
	(In thousands)
March 31, 2020
Commercial
Commercial and industrial (2)	$	-	$	1,285	$	1,285
Commercial real estate		-		7,756		7,756
Mortgage
1-4 family owner occupied - jumbo		-		2,356		2,356
1-4 family owner occupied - non-jumbo (3)		-		1,804		1,804
1-4 family non-owner occupied		-		1,122		1,122
1-4 family - 2nd lien		-		1,326		1,326
Resort lending		-		438		438
Installment
Boat lending		-		150		150
Recreational vehicle lending		-		84		84
Other		-		457		457
Total recorded investment	$	-	$	16,778	$	16,778
Accrued interest included in recorded investment	$	-	$	-	$	-
December 31, 2019
Commercial
Commercial and industrial (2)	$	-	$	565	$	565
Commercial real estate		-		735		735
Mortgage
1-4 family owner occupied - jumbo		-		1,179		1,179
1-4 family owner occupied - non-jumbo (3)		-		3,540		3,540
1-4 family non-owner occupied		-		1,039		1,039
1-4 family - 2nd lien		-		979		979
Resort lending		-		690		690
Installment
Boat lending		-		332		332
Recreational vehicle lending		-		3		3
Other		-		470		470
Total recorded investment	$	-	$	9,532	$	9,532
Accrued interest included in recorded investment	$	-	$	-	$	-

(1) Non-performing loans exclude purchase credit impaired loans.

(2) Non-performing commercial and industrial loans exclude $0.053 million and $0.077 million of government guaranteed loans at March 31, 2020 and December 31, 2019, respectively.

(3) Non-performing 1-4 family owner occupied – non jumbo loans exclude $0.623 million and $0.569 million of government guaranteed loans at March 31, 2020 and December 31, 2019, respectively.

16

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

An aging analysis of loans by class follows:

	Loans Past Due								Loans not		Total
	30-59 days		60-89 days		90+ days		Total		Past Due		Loans
	(In thousands)
March 31, 2020
Commercial
Commercial and industrial	$	339	$	-	$	70	$	409	$	581,613	$	582,022
Commercial real estate		175		-		-		175		602,094		602,269
Mortgage
1-4 family owner occupied - jumbo		911		947		1,436		3,294		434,866		438,160
1-4 family owner occupied - non-jumbo		2,296		628		584		3,508		284,956		288,464
1-4 family non-owner occupied		1,039		348		690		2,077		164,961		167,038
1-4 family - 2nd lien		980		455		862		2,297		111,877		114,174
Resort lending		226		-		402		628		65,539		66,167
Installment
Boat lending		548		75		75		698		205,019		205,717
Recreational vehicle lending		242		42		54		338		158,336		158,674
Other		385		184		216		785		102,581		103,366
Total	$	7,141	$	2,679	$	4,389	$	14,209	$	2,711,842	$	2,726,051
Accrued interest included in recorded investment	$	71	$	41	$	-	$	112	$	7,824	$	7,936
December 31, 2019
Commercial
Commercial and industrial	$	-	$	289	$	102	$	391	$	564,480	$	564,871
Commercial real estate		177		-		735		912		603,910		604,822
Mortgage
1-4 family owner occupied - jumbo		1,757		1,037		-		2,794		398,759		401,553
1-4 family owner occupied - non-jumbo		2,672		852		1,387		4,911		342,349		347,260
1-4 family non-owner occupied		695		136		623		1,454		168,083		169,537
1-4 family - 2nd lien		909		90		386		1,385		115,157		116,542
Resort lending		364		53		565		982		67,192		68,174
Installment
Boat lending		337		107		88		532		202,750		203,282
Recreational vehicle lending		161		97		3		261		153,184		153,445
Other		377		275		202		854		103,030		103,884
Total recorded investment	$	7,449	$	2,936	$	4,091	$	14,476	$	2,718,894	$	2,733,370
Accrued interest included in recorded investment	$	74	$	34	$	-	$	108	$	8,239	$	8,347

17

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Impaired loans are as follows:

	March 31, 2020		December 31, 2019
Impaired loans with no allocated allowance for loan losses	(In thousands)
Troubled debt restructurings ("TDR")	$	232	$	337
Non - TDR		1,318		1,550
Impaired loans with an allocated allowance for loan losses
TDR - allowance based on collateral		9,535		1,587
TDR - allowance based on present value cash flow		40,769		48,798
Non - TDR - allowance based on collateral		11,205		3,365
Total impaired loans	$	63,059	$	55,637
Amount of allowance for loan losses allocated
TDR - allowance based on collateral	$	1,247	$	542
TDR - allowance based on present value cash flow		4,000		4,641
Non - TDR - allowance based on collateral		2,891		972
Total amount of allowance for loan losses allocated	$	8,138	$	6,155

18

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Impaired loans by class  are as follows:

	March 31, 2020						December 31, 2019
	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
Commercial and industrial	$	84	$	84	$	-	$	257	$	257	$	-
Commercial real estate		-		-		-		796		796		-
Mortgage
1-4 family owner occupied - jumbo		154		246		-		-		-		-
1-4 family owner occupied - non-jumbo		385		410		-		212		217		-
1-4 family non-owner occupied		389		554		-		214		366		-
1-4 family - 2nd lien		384		384		-		407		438		-
Resort lending		154		379		-		-		-		-
Installment
Boat lending		-		-		-		-		-		-
Recreational vehicle lending		-		-		-		-		-		-
Other		-		-		-		1		41		-
		1,550		2,057		-		1,887		2,115		-
With an allowance for loan losses recorded:
Commercial
Commercial and industrial	$	2,409	$	2,496		685		1,655		1,706		453
Commercial real estate		15,555		15,479		2,782		6,685		6,661		578
Mortgage
1-4 family owner occupied - jumbo		23,413		24,861		2,351		1,447		1,445		91
1-4 family owner occupied - non-jumbo		598		652		157		10,163		10,695		1,031
1-4 family non-owner occupied		4,606		5,052		465		4,962		5,542		572
1-4 family - 2nd lien		813		832		214		14,059		15,243		1,695
Resort lending		11,544		11,786		1,204		12,110		12,263		1,474
Installment
Boat lending		75		99		27		-		-		-
Recreational vehicle lending		129		150		32		-		-		-
Other		2,609		2,907		221		2,924		3,153		261
		61,751		64,314		8,138		54,005		56,708		6,155
Total
Commercial
Commercial and industrial		2,493		2,580		685		1,912		1,963		453
Commercial real estate		15,555		15,479		2,782		7,481		7,457		578
Mortgage
1-4 family owner occupied - jumbo		23,567		25,107		2,351		1,447		1,445		91
1-4 family owner occupied - non-jumbo		983		1,062		157		10,375		10,912		1,031
1-4 family non-owner occupied		4,995		5,606		465		5,176		5,908		572
1-4 family - 2nd lien		1,197		1,216		214		14,466		15,681		1,695
Resort lending		11,698		12,165		1,204		12,110		12,263		1,474
Installment
Boat lending		75		99		27		-		-		-
Recreational vehicle lending		129		150		32		-		-		-
Other		2,609		2,907		221		2,925		3,194		261
Total	$	63,301	$	66,371	$	8,138	$	55,892	$	58,823	$	6,155
Accrued interest included in recorded investment	$	242					$	255

19

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 March 31, follows:

	2020				2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Commercial and industrial	$	171	$	1	$	-	$	-
Commercial real estate		398		-		-		-
Mortgage
1-4 family owner occupied - jumbo		77		1		-		-
1-4 family owner occupied - non-jumbo		299		4		179		-
1-4 family non-owner occupied		302		2		-		-
1-4 family - 2nd lien		396		-		-		-
Resort lending		77		-		-		-
Installment
Boat lending		-		-		-		-
Recreational vehicle lending		-		-		-		-
Other		1		-		1		-
		1,721		8		180		-
With an allowance for loan losses recorded:
Commercial
Commercial and industrial		2,032		38		3,278		20
Commercial real estate		11,120		223		5,035		67
Mortgage
1-4 family owner occupied - jumbo		12,430		360		1,579		27
1-4 family owner occupied - non-jumbo		5,381		4		18,579		356
1-4 family non-owner occupied		4,784		66		4,069		64
1-4 family - 2nd lien		7,436		4		8,802		3
Resort lending		11,827		141		13,148		175
Installment
Boat lending		38		-		51		-
Recreational vehicle lending		65		1		81		1
Other		2,767		41		3,316		52
		57,880		878		57,938		765
Total
Commercial
Commercial and industrial		2,203		39		3,278		20
Commercial real estate		11,518		223		5,035		67
Mortgage
1-4 family owner occupied - jumbo		12,507		361		1,579		27
1-4 family owner occupied - non-jumbo		5,680		8		18,758		356
1-4 family non-owner occupied		5,086		68		4,069		64
1-4 family - 2nd lien		7,832		4		8,802		3
Resort lending		11,904		141		13,148		175
Installment
Boat lending		38		-		51		-
Recreational vehicle lending		65		1		81		1
Other		2,768		41		3,317		52
Total	$	59,601	$	886	$	58,118	$	765

20

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:
	March 31, 2020
	Commercial		Retail (1)			Total
	(In thousands)
Performing TDRs	$	8,924	$	39,253		$	48,177
Non-performing TDRs(2)		264		2,095	(3)		2,359
Total	$	9,188	$	41,348		$	50,536

	December 31, 2019
	Commercial		Retail (1)			Total
	(In thousands)
Performing TDRs	$	7,974	$	39,601		$	47,575
Non-performing TDRs(2)		540		2,607	(3)		3,147
Total	$	8,514	$	42,208		$	50,722

(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 $5.2 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings (“TDR”) at both March 31, 2020 and December 31, 2019, respectively.

During the three months ended March 31, 2020 and 2019, the terms of certain loans were modified as TDRs. 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.

21

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Loans that have been classified as TDRs during the three-month periods ended March 31 follow:

	Number of Contracts		Pre-modification Balance		Post-modification Balance
	(Dollars in thousands)
2020
Commercial
Commercial and industrial		1	$	99	$	99
Commercial real estate		3		1,177		1,177
Mortgage
1-4 family owner occupied - jumbo		1		281		281
1-4 family owner occupied - non-jumbo		-		-		-
1-4 family non-owner occupied		-		-		-
1-4 family - 2nd lien		-		-		-
Resort lending		-		-		-
Installment
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		2		60		61
Total		7	$	1,617	$	1,618
2019
Commercial
Commercial and industrial		1	$	49	$	49
Commercial real estate		-		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-		-
1-4 family owner occupied - non-jumbo		1		281		281
1-4 family non-owner occupied		-		-		-
1-4 family - 2nd lien		-		-		-
Resort lending		-		-		-
Installment
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		2		60		61
Total		4	$	390	$	391

22

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The TDRs described above for 2020 increased the allowance for loan losses by $0.27 million and resulted in zero charge offs while the TDRs described above for 2019 increased the allowance for loan losses by $0.01 million and resulted in zero charge offs.

There were no TDRs that subsequently defaulted within twelve months following the modification during the three months periods ended March 31, 2020 and 2019.

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.

Non-TDR Loan Modifications and Paycheck Protection Program (“PPP”) due to COVID-19 - On March 22, 2020, the federal banking agencies issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus”.  This guidance encourages financial institutions to work prudently with borrowers that may be unable to meet their contractual obligations because of the effects of COVID-19.  The guidance goes on to explain that in consultation with the Financial Accounting Standards Board staff that the federal banking agencies conclude that short-term modifications (e.g. six months) made on a good faith basis to borrowers who were current as of the implementation date of a relief program are not TDRs.  In addition, on March 27, 2020, President Trump signed the CARES Act.  Section 4013 of the CARES Act also addressed COVID-19 related modifications and specified that COVID-19 related modifications on loans that were current as of December 31, 2019 are not TDRs.  We are assisting both commercial and retail (mortgage and installment) borrowers with reduced or suspended payments. Commercial loan accommodations are typically a three month interest-only period while retail loan forbearances have primarily been payment suspensions for three months. For loans subject to these forbearance agreements  each borrower is required to resume making regularly scheduled loan payments at the end of the forbearance period.  The deferred principal and interest will be repaid based upon individualized agreements.  Options for repayment include separate repayment plans, extending the term of the loan or re-amortizing the loan based upon the affordability of the payment in relationship to a reduced income.  While some borrowers may elect to make a lump sum payment, we anticipate the majority will require some type of repayment plan.  During the forbearance period, the loan will not be reported as past due in keeping with the guidance discussed previously.  Through March 31, 2020, we had entered into loan modification agreements with 366 customers under this guidance with respect to $86.9 million of portfolio loans outstanding.

23

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The CARES Act also included a $349 billion loan program administered through the SBA referred to as the PPP. Under the PPP, small businesses and other entities and individuals can apply for loans from existing SBA lenders and other approved regulated lenders that enroll in the program, subject to numerous limitations and eligibility criteria. We are participating as a lender in the PPP. The PPP opened on April 3, 2020; however, because of the short timeframe between the passing of the CARES Act and the opening of the PPP, there is some ambiguity in the laws, rules and guidance regarding the operation of the PPP, which exposes us to potential risks relating to noncompliance with the PPP.

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.

24

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)
March 31, 2020
Commercial and industrial	$	534,064	$	42,460	$	4,213	$	1,285	$	582,022
Commercial real estate		578,466		14,161		1,886		7,756		602,269
Total	$	1,112,530	$	56,621	$	6,099	$	9,041	$	1,184,291
Accrued interest included in total	$	2,503	$	167	$	22	$	-	$	2,692
December 31, 2019
Commercial and industrial	$	515,955	$	44,384	$	3,967	$	565	$	564,871
Commercial real estate		580,516		23,036		535		735		604,822
Total	$	1,096,471	$	67,420	$	4,502	$	1,300	$	1,169,693
Accrued interest included in total	$	2,763	$	205	$	30	$	-	$	2,998

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.

25

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 Owner Occupied - Jumbo		1-4 Family Owner Occupied - Non-jumbo		1-4 Family Non-owner Occupied		1-4 Family 2nd Lien		Resort Lending		Total
	(In thousands)
March 31, 2020
800 and above	$	50,414	$	34,580	$	23,209	$	13,108	$	10,591	$	131,902
750-799		209,339		87,685		83,613		48,332		28,847		457,816
700-749		114,474		90,784		35,455		31,576		14,132		286,421
650-699		37,985		43,241		15,242		14,107		9,280		119,855
600-649		16,755		16,693		5,548		3,848		2,013		44,857
550-599		4,101		8,571		1,751		1,496		659		16,578
500-549		3,693		5,236		1,714		1,208		568		12,419
Under 500		1,399		1,674		506		499		77		4,155
Unknown		-		-		-		-		-		-
Total	$	438,160	$	288,464	$	167,038	$	114,174	$	66,167	$	1,074,003
Accrued interest included in total	$	1,264	$	1,522	$	562	$	448	$	240	$	4,036
December 31, 2019
800 and above	$	48,486	$	43,848	$	24,315	$	13,905	$	11,076	$	141,630
750-799		198,491		111,521		84,656		50,012		29,364		474,044
700-749		106,609		95,064		34,839		30,697		14,626		281,835
650-699		31,553		51,174		13,995		14,267		8,063		119,052
600-649		13,230		21,938		5,897		4,097		2,074		47,236
550-599		514		12,308		1,863		1,703		673		17,061
500-549		1,519		7,940		1,870		1,281		889		13,499
Under 500		641		2,208		533		511		79		3,972
Unknown		510		1,259		1,569		69		1,330		4,737
Total	$	401,553	$	347,260	$	169,537	$	116,542	$	68,174	$	1,103,066
Accrued interest included in total	$	1,139	$	1,662	$	586	$	502	$	266	$	4,155

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

26

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

	Installment(1)
	Boat Lending		Recreational Vehicle Lending		Other		Total
	(In thousands)
March 31, 2020
800 and above	$	28,885	$	26,056	$	7,631	$	62,572
750-799		120,261		90,484		37,810		248,555
700-749		41,494		32,596		27,461		101,551
650-699		11,320		7,116		22,607		41,043
600-649		2,117		1,391		4,115		7,623
550-599		1,029		580		1,764		3,373
500-549		319		429		991		1,739
Under 500		292		22		231		545
Unknown		-		-		756		756
Total	$	205,717	$	158,674	$	103,366	$	467,757
Accrued interest included in total	$	472	$	366	$	370	$	1,208
December 31, 2019
800 and above	$	28,041	$	24,470	$	7,611	$	60,122
750-799		118,380		88,164		37,583		244,127
700-749		41,490		31,055		27,204		99,749
650-699		11,485		7,267		22,517		41,269
600-649		2,254		1,411		4,470		8,135
550-599		946		592		1,884		3,422
500-549		377		464		1,127		1,968
Under 500		309		22		284		615
Unknown		-		-		1,204		1,204
Total	$	203,282	$	153,445	$	103,884	$	460,611
Accrued interest included in total	$	490	$	378	$	326	$	1,194

(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 $1.0 million and $1.2 million at March 31, 2020 and December 31, 2019, respectively.  Retail mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements totaled $0.7 million at both March 31, 2020 and December 31, 2019, respectively.

During the first quarter of 2020, we securitized $26.2 million of portfolio residential fixed rate mortgage loans servicing retained with Freddie Mac and recognized a gain on sale of $0.72 million.  We also sold $2.4 million of portfolio residential fixed rate mortgage loans servicing retained into the secondary market and recognized a gain on sale of $0.7 million.  These transactions were done primarily for asset/liability management purposes.

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.

27

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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. in the second quarter of 2018 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:

	March 31, 2020		December 31, 2019
	(In thousands)
Commercial	$	1,340	$	1,394
Mortgage		567		575
Installment		311		316
Total carrying amount		2,218		2,285
Allowance for loan losses		-		-
Carrying amount, net of allowance for loan losses	$	2,218	$	2,285

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 March 31,
	2020			2019
	(unaudited)
	(In thousands)
Balance at beginning of period	$	640		$	462
New loans purchased		-			-
Accretion recorded as loan interest income		(32	)		(39	)
Reclassification from (to) nonaccretable difference		-			365
Displosals/other adjustments		-			-
Balance at end of period	$	608		$	788

28

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

5. Shareholders’ Equity and Earnings Per Common Share

On December 17, 2019, our Board of Directors authorized a share repurchase plan (the “Repurchase Plan”) to buy back up to 1,120,000 shares of our outstanding common stock through December 31, 2020.  We expect to accomplish the 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 three month periods ended March 31, 2020 and 2019 repurchases were made totaling 678,929 shares and 115,787 shares of common stock, respectively for an aggregate purchase price of $13.8 million and $2.5 million, respectively.

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

	Three Months Ended March 31,
	2020		2019
	(In thousands, except per share data)
Net income	$	4,810	$	9,381
Weighted average shares outstanding (1)		22,271		23,588
Stock units for deferred compensation plan for non-employee directors		122		130
Effect of stock options		99		127
Performance share units		37		40
Weighted average shares outstanding for calculation of diluted earnings per share		22,529		23,885
Net income per common share
Basic (1)	$	0.22	$	0.40
Diluted	$	0.21	$	0.39

⁽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 month periods ended March 31, 2020 and 2019, 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.

29

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:

	March 31, 2020
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Fair value hedge designation - Pay-fixed interest rate swap agreements	$	7,117		9.1	$	(788	)
Cash flow hedge designation - Pay-fixed interest rate swap agreements	$	25,000		1.3	$	(544	)
No hedge designation
Rate-lock mortgage loan commitments	$	145,077		0.1	$	5,732
Mandatory commitments to sell mortgage loans		176,165		0.1		(2,104	)
Pay-fixed interest rate swap agreements - commercial		162,452		5.3		(11,814	)
Pay-variable interest rate swap agreements - commercial		162,452		5.3		11,814
Interest rate cap agreements		150,000		2.3		27
Purchased options		2,908		1.3		37
Written options		2,848		1.3		(36	)
Total	$	801,902		2.6	$	3,656

	December 31, 2019
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Fair value hedge designation - Pay-fixed interest rate swap agreements	$	7,117		9.4	$	(242	)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		1.6	$	(174	)
Interest rate cap agreements		150,000		2.6		214
Total	$	175,000		2.5	$	40
No hedge designation
Rate-lock mortgage loan commitments	$	49,268		0.1	$	1,412
Mandatory commitments to sell mortgage loans		95,363		0.1		(150	)
Pay-fixed interest rate swap agreements - commercial		153,946		5.5		(3,641	)
Pay-variable interest rate swap agreements - commercial		153,946		5.5		3,641
Purchased options		2,908		1.5		141
Written options		2,848		1.5		(139	)
Total	$	458,279		3.7	$	1,264

30

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 paid an upfront premium on interest rate caps which was recognized in earnings in the same period in which the hedged item affected earnings.  During the first quarter of 2020 we transferred all of our interest rate cap agreements to a no hedge designation and the $2.0 million unrealized loss which was included as a component of accumulated other comprehensive loss at the time of the transfer will be reclassified into earnings over the remaining life of the interest rate cap agreements.    We have retained all of the interest rate cap agreements and hedged items (variable rate and short-term fixed-rate debt obligations).  The interest rate caps are classified as a no hedge designation at March 31, 2020 and any future change in fair value will be recorded in earnings.

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 $1.3 million, of unrealized losses on Cash Flow Hedges at March 31, 2020 will be reclassified to earnings over the next twelve months.  The maximum term of Cash Flow Hedges at March 31, 2020 is 1.4 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 commitment (“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 commitment 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 commitment) 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 non-interest income – other 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.

31

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.

32

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
	March 31, 2020			December 31, 2019			March 31, 2020			December 31, 2019
	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	$	-	Other liabilities	$	1,332	Other liabilities	$	416
Interest rate cap agreements	Other assets		-	Other assets		214	Other liabilities		-	Other liabilities		-
			-		$	214			1,332		$	416
Derivatives not designated as hedging instruments
Rate-lock mortgage loan commitments	Other assets		5,732	Other assets	$	1,412	Other liabilities		-	Other liabilities	$	-
Mandatory commitments to sell mortgage loans	Other assets		-	Other assets		-	Other liabilities		2,104	Other liabilities		150
Pay-fixed interest rate swap agreements - commercial	Other assets		-	Other assets		28	Other liabilities		11,814	Other liabilities		3,669
Pay-variable interest rate swap agreements - commercial	Other assets		11,814	Other assets		3,669	Other liabilities		-	Other liabilities		28
Interest rate cap agreements	Other assets		27	Other assets		-	Other liabilities		-	Other liabilities		-
Purchased options	Other assets		37	Other assets		141	Other liabilities		-	Other liabilities		-
Written options	Other assets		-	Other assets		-	Other liabilities		36	Other liabilities		139
			17,610			5,250			13,954			3,986
Total derivatives		$	17,610		$	5,464		$	15,286		$	4,402

33

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 March 31,
	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
	2020			2019			Portion)	2020			2019		in Income	2020			2019
	(In thousands)
Fair Value Hedges
Pay-fixed interest rate swap agreements													Non-interest income-other	$	(546	)	$	-
Cash Flow Hedges
Interest rate cap agreements	$	(14	)	$	(785	)	Interest expense	$	(53	)	$	118	Interest expense	$	-		$	-
Pay-fixed interest rate swap agreements		(392	)		(127	)	Interest expense		(22	)		31	Interest expense		-			-
Total	$	(406	)	$	(912	)		$	(75	)	$	149		$	-		$	-
No hedge designation
Rate-lock mortgage loan commitments													Net gains on mortgage loans	$	4,320		$	629
Mandatory commitments to sell mortgage loans													Net gains on mortgage loans		(1,954	)		174
Pay-fixed interest rate swap agreements -
commercial													Interest expense		(8,173	)		(1,147	)
Pay-variable interest rate swap agreements -
commercial													Interest expense		8,173			1,147
Interest rate cap agreements													Interest expense		(35	)		-
Purchased options													Interest expense		(104	)		86
Written options													Interest expense		103			(84	)
Total														$	2,330		$	805

34

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

7. Goodwill and other Intangibles

The following table summarizes intangible assets, net of amortization:

	March 31, 2020				December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Amortized intangible assets - core deposits	$	11,916	$	6,845	$	11,916	$	6,590
Unamortized intangible assets - goodwill	$	28,300			$	28,300

We performed our required annual goodwill impairment test as of December 31, 2019 and there was no impairment.  During the first quarter of 2020 the stock market in general as well as our market capitalization declined as a result of events surrounding the current COVID-19 pandemic outbreak.  We do not believe this decline is indicative of a permanent deterioration of the fundamental value of our bank. As such we do not believe that it is more likely than not a goodwill impairment exists at March 31, 2020. See note 13, Contingencies, for additional information on COVID-19 and its potential impact to us.

A summary of estimated core deposit intangible amortization at March 31, 2020 follows:

	(In thousands)
Nine months ending December 31, 2020	$	765
2021		970
2022		785
2023		547
2024		516
2025 and thereafter		1,488
Total	$	5,071

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 0.4 million shares of common stock as of March 31, 2020.  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 March 31, 2020. 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.

A summary of restricted stock and performance stock units (“PSU”) granted pursuant to our long-term incentive plan follows:

	Three Months Ended March 31,
	2020		2019
Restricted stock		52,996		52,716
PSU		20,897		22,016

Except for 0.002 million shares of restricted stock issued during the first quarter of 2019 that vest ratably over three years, the shares of restricted stock and PSUs shown in the above table 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.

35

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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 on a current basis are issued each quarter and vest immediately. Shares issued on a deferred basis are credited at the rate of 90% of the current value and vest immediately.  During the three month periods ended March 31, 2020 and 2019 we issued 0.004 million and 0.003 million shares, respectively and expensed their value during those same periods.

Total compensation expense recognized for grants pursuant to our long-term incentive plan was $0.5 million and $0.4 million during the three month periods ended March 31, 2020 and 2019, respectively.  The corresponding tax benefit relating to this expense was $0.1 million for each period. Total expense recognized for non-employee director share based payments was $0.09 million and $0.05 million during the three month periods ended March 31, 2020 and 2019, respectively. The corresponding tax benefit relating to this expense was $0.2 million and $0.01 million for each period, respectively.

At March 31, 2020, the total expected compensation cost related to non-vested restricted stock and PSUs not yet recognized was $3.2 million.  The weighted-average period over which this amount will be recognized is 2.4 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, 2020		138,506		$	4.62
Granted		-
Exercised		(11,567	)		3.54
Forfeited		-
Expired		-
Outstanding at March 31, 2020		126,939		$	4.71		2.8	$	1,044
Vested and expected to vest at March 31, 2020		126,939		$	4.71		2.8	$	1,044
Exercisable at March 31, 2020		126,939		$	4.71		2.8	$	1,044

36

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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, 2020		245,726		$	21.72
Granted		73,893			22.80
Vested		(64,263	)		21.24
Forfeited		(5,468	)		23.71
Outstanding at March 31, 2020		249,888		$	22.12

Certain information regarding options exercised during the periods follows:

	Three Months Ended March 31,
	2020		2019
	(In thousands)
Intrinsic value	$	210	$	836
Cash proceeds received	$	41	$	695
Tax benefit realized	$	44	$	176

9. Income Tax

Income tax expense was $0.9 million and $2.2 million during the three month periods ended March 31, 2020 and 2019, 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 first quarters of 2020 and 2019 each include reductions of $0.2 million of income tax expense related to 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.

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 March 31, 2020, March 31, 2019 and December 31, 2019 that the realization of substantially all of our deferred tax assets continues to be more likely than not.

At both March 31, 2020 and December 31, 2019, we had approximately $0.4 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 2020.

37

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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 March 31, 2020, the Bank had positive undivided profits of $41.6 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. In addition, capital adequacy rules include a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets that applies to all supervised financial institutions. To avoid limits on capital distributions and certain discretionary bonus payments we must meet the minimum ratio for adequately capitalized institutions plus the buffer. 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 March 31, 2020 and December 31, 2019, 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.

38

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)
March 31, 2020
Total capital to risk-weighted assets
Consolidated	$	373,709		13.38	%	$	223,472		8.00	%	NA		NA
Independent Bank		362,547		12.98			223,405		8.00		$	279,256		10.00	%
Tier 1 capital to risk-weighted assets
Consolidated	$	339,553		12.16	%	$	167,604		6.00	%	NA		NA
Independent Bank		328,391		11.76			167,554		6.00		$	223,405		8.00	%
Common equity tier 1 capital to risk-weighted assets
Consolidated	$	301,304		10.79	%	$	125,703		4.50	%	NA		NA
Independent Bank		328,391		11.76			125,665		4.50		$	181,516		6.50	%
Tier 1 capital to average assets
Consolidated	$	339,553		9.63	%	$	141,089		4.00	%	NA		NA
Independent Bank		328,391		9.31			141,099		4.00		$	176,373		5.00	%
December 31, 2019
Total capital to risk-weighted assets
Consolidated	$	380,454		13.74	%	$	221,562		8.00	%	NA		NA
Independent Bank		358,914		12.96			221,482		8.00		$	276,852		10.00	%
Tier 1 capital to risk-weighted assets
Consolidated	$	352,764		12.74	%	$	166,171		6.00	%	NA		NA
Independent Bank		331,224		11.96			166,111		6.00		$	221,482		8.00	%
Common equity tier 1 capital to risk-weighted assets
Consolidated	$	314,532		11.36	%	$	124,628		4.50	%	NA		NA
Independent Bank		331,224		11.96			124,583		4.50		$	179,954		6.50	%
Tier 1 capital to average assets
Consolidated	$	352,764		10.11	%	$	139,632		4.00	%	NA		NA
Independent Bank		331,224		9.49			139,615		4.00		$	174,519		5.00	%

(1) These ratios do not reflect a capital conservation buffer of 2.50% at March 31, 2020 and December 31, 2019, respectively.

NA - Not applicable

39

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The components of our regulatory capital are as follows:

	Consolidated						Independent Bank
	March 31, 2020			December 31, 2019			March 31, 2020			December 31, 2019
	(In thousands)
Total shareholders' equity	$	335,618		$	350,169		$	362,705		$	366,861
Add (deduct)
Accumulated other comprehensive (income) loss for regulatory purposes		(943	)		(2,011	)		(943	)		(2,011	)
Goodwill and other intangibles		(33,371	)		(33,626	)		(33,371	)		(33,626	)
Disallowed deferred tax assets		-			-			-			-
Common equity tier 1 capital		301,304			314,532			328,391			331,224
Qualifying trust preferred securities		38,249			38,232			-			-
Tier 1 capital		339,553			352,764			328,391			331,224
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		34,156			27,690			34,156			27,690
Total risk-based capital	$	373,709		$	380,454		$	362,547		$	358,914

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.

40

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 available for sale are classified as Level 1 of the valuation hierarchy.  We currently do not have any Level 1 securities. 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).

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. 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.

41

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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).

42

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)
March 31, 2020:
Measured at Fair Value on a Recurring Basis
Assets
Securities available for sale
U.S. agency	$	12,828	$	-	$	12,828	$	-
U.S. agency residential mortgage-backed		221,829		-		221,829		-
U.S. agency commercial mortgage-backed		9,916		-		9,916		-
Private label mortgage-backed		37,071		-		37,071		-
Other asset backed		103,881		-		103,881		-
Obligations of states and political subdivisions		163,941		-		163,941		-
Corporate		42,811		-		42,811		-
Trust preferred		1,491		-		1,491		-
Foreign government		516		-		516		-
Loans held for sale, carried at fair value		64,549		-		64,549		-
Capitalized mortgage loan servicing rights		14,829		-		-		14,829
Derivatives (1)		17,610		-		17,610		-
Liabilities
Derivatives (2)		15,286		-		15,286		-
Measured at Fair Value on a Non-recurring Basis:
Assets
Impaired loans (3)
Commercial
Commercial and industrial		1,720		-		-		1,720
Commercial real estate		12,747		-		-		12,747
Mortgage
1-4 family owner occupied - jumbo		930		-		-		930
1-4 family owner occupied - non-jumbo		236		-		-		236
1-4 family non-owner occupied		189		-		-		189
1-4 family - 2nd lien		353		-		-		353
Resort lending		173		-		-		173
Installment
Boat lending		49		-		-		49
Recreational vehicle lending		54		-		-		54
Other		151		-		-		151
Other real estate (4)
Commercial real estate		474		474		-		-
Mortgage - 1-4 family owner occupied - non-jumbo		25		-		-		25

(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. The fair value of the commercial real estate property included in this table was based on a purchase agreement that is expected to close during the second quarter of 2020.

43

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, 2019:
Measured at Fair Value on a Recurring Basis
Assets
Securities available for sale
U.S. agency	$	14,661	$	-	$	14,661	$	-
U.S. agency residential mortgage-backed		227,762		-		227,762		-
U.S. agency commercial mortgage-backed		10,756		-		10,756		-
Private label mortgage-backed		39,693		-		39,693		-
Other asset backed		93,886		-		93,886		-
Obligations of states and political subdivisions		96,102		-		96,102		-
Corporate		33,195		-		33,195		-
Trust preferred		1,843		-		1,843		-
Foreign government		502		-		502		-
Loans held for sale, carried at fair value		69,800		-		69,800		-
Capitalized mortgage loan servicing rights		19,171		-		-		19,171
Derivatives (1)		5,464		-		5,464		-
Liabilities
Derivatives (2)		4,402		-		4,402		-
Measured at Fair Value on a Non-recurring Basis:
Assets
Impaired loans (3)
Commercial
Commercial and industrial		655		-		-		655
Commercial real estate		316		-		-		316
Mortgage
1-4 family owner occupied - jumbo		987		-		-		987
1-4 family owner occupied - non-jumbo		470		-		-		470
1-4 family non-owner occupied		281		-		-		281
1-4 family - 2nd lien		294		-		-		294
Resort lending		245		-		-		245
Installment
Boat lending		67		-		-		67
Recreational vehicle lending		2		-		-		2
Other		121		-		-		121
Other real estate (4)
Mortgage - 1-4 family owner occupied - non-jumbo		31		-		-		31
Installment - other		28		-		-		28

(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.

44

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 Three-Month Periods Ended March 31 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)
2020
Loans held for sale		-		523		-			523
Capitalized mortgage loan servicing rights		-		-		(6,974	)		(6,974	)
2019
Equity securities at fair value	$	167	$	-	$	-		$	167
Loans held for sale		-		96		-			96
Capitalized mortgage loan servicing rights		-		-		(2,691	)		(2,691	)

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 month periods ended March 31, 2020 and 2019 relating to assets measured at fair value on a non-recurring basis:

• Loans which are measured for impairment using the fair value of collateral for collateral dependent loans had a carrying amount of $16.6 million, which is net of a valuation allowance of $4.1 million at March 31, 2020, and had a carrying amount of $3.4 million, which is net of a valuation allowance of  $1.5  million  at December 31, 2019.  The provision for loan losses included in our results of operations relating to impaired loans was an expense of $2.4 million and $0.5 million during the three month periods ended March 31, 2020 and 2019, respectively.

• Other real estate, which is measured using the fair value of the property, had a carrying amount of $0.50 million which is net of a valuation allowance of $0.16 million at March 31, 2020, and a carrying amount of $0.06 million which is net of a valuation allowance of $0.09 million, at December 31, 2019. An additional charge relating to other real estate measured at fair value of $0.09 million and $0.12 million was included in our results of operations during the three month periods ended March 31, 2020 and 2019, respectively.

45

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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

	Capitalized Mortgage Loan Servicing Rights
	Three Months Ended March 31,
	2020			2019
	(In thousands)
Beginning balance	$	19,171		$	21,400
Total gains (losses) realized and unrealized:
Included in results of operations		(6,974	)		(2,691	)
Included in other comprehensive income (loss)		-			-
Purchases, issuances, settlements, maturities and calls		2,632			1,200
Transfers in and/or out of Level 3		-			-
Ending balance	$	14,829		$	19,909
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 March 31	$	(6,974	)	$	(2,691	)

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, float rate and prepayment 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)
March 31, 2020
Capitalized mortgage loan servicing rights	$	14,829	Present value of net	Discount rate	10.00% to 13.00		%		10.13	%
			servicing revenue	Cost to service	$	72 to $201		$	81
				Ancillary income	20 to 37				22
				Float rate		0.52	%		0.52	%
				Prepayment rate	7.02% to 34.00		%		19.65	%
December 31, 2019
Capitalized mortgage loan servicing rights	$	19,171	Present value of net	Discount rate	10.00% to 13.00		%		10.14	%
			servicing revenue	Cost to service	$	66 to $316		$	81
				Ancillary income	20 to 37				22
				Float rate		1.73	%		1.73	%
				Prepayment rate	7.01% to 69.34		%		14.96

46

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)
March 31, 2020
Impaired loans
Commercial	$	14,467	Sales comparison approach	Adjustment for differences between comparable sales	(48.0)% to 35.0	%		0.5	%
			Income approach	Capitalization rate	7.75% to 11.0			8.7
Mortgage and Installment(1)		2,135	Sales comparison approach	Adjustment for differences between comparable sales	(13.0) to 49.2			14.0
Other real estate
Mortgage		25	Sales comparison approach	Adjustment for differences between comparable sales	(16.1) to 10.6			(4.2	)
December 31, 2019
Impaired loans
Commercial	$	971	Sales comparison approach	Adjustment for differences between comparable sales	(48.0)% to 19.2	%		(5.6	)%
Mortgage and Installment(1)		2,467	Sales comparison approach	Adjustment for differences between comparable sales	(25.2)% to 49.2			11.5
Other real estate
Mortgage and Installment		59	Sales comparison approach	Adjustment for differences between comparable sales	(11.6)% to 5.0			(5.1	)

(1) In addition to the valuation techniques and unobservable inputs discussed above, at March 31, 2020 and December 31, 2019 certain impaired collateral dependent installment loans totaling approximately $0.25 million and $0.14 million, respectively 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
March 31, 2020	$	64,549	$	2,417	$	62,132
December 31, 2019		69,800		1,894		67,906

47

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.

48

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)
March 31, 2020
Assets
Cash and due from banks	$	48,753	$	48,753	$	48,753	$	-	$	-
Interest bearing deposits		21,538		21,538		21,538		-		-
Securities available for sale		594,284		594,284		-		594,284		-
Federal Home Loan Bank and Federal
Reserve Bank Stock		18,359	NA		NA		NA		NA
Net loans and loans held for sale		2,750,169		2,645,319		-		64,549		2,580,770
Accrued interest receivable		10,519		10,519		-		2,583		7,936
Derivative financial instruments		17,610		17,610		-		17,610		-
Liabilities
Deposits with no stated maturity (1)	$	2,529,503	$	2,529,503	$	2,529,503	$	-	$	-
Deposits with stated maturity (1)		554,061		555,820		-		555,820		-
Other borrowings		101,954		103,755		-		103,755		-
Subordinated debentures		39,473		25,619		-		25,619		-
Accrued interest payable		1,195		1,195		37		1,158		-
Derivative financial instruments		15,286		15,286		-		15,286		-
December 31, 2019
Assets
Cash and due from banks	$	53,295	$	53,295	$	53,295	$	-	$	-
Interest bearing deposits		12,009		12,009		12,009		-		-
Interest bearing deposits - time		350		350		-		350		-
Securities available for sale		518,400		518,400		-		518,400		-
Federal Home Loan Bank and Federal
Reserve Bank Stock		18,359	NA		NA		NA		NA
Net loans and loans held for sale		2,768,675		2,768,817		-		69,800		2,699,017
Accrued interest receivable		10,108		10,108		8		1,752		8,348
Derivative financial instruments		5,464		5,464		-		5,464		-
Liabilities
Deposits with no stated maturity (1)	$	2,427,190	$	2,427,190	$	2,427,190	$	-	$	-
Deposits with stated maturity (1)		609,537		610,235		-		610,235		-
Other borrowings		88,646		88,680		-		88,680		-
Subordinated debentures		39,456		33,149		-		33,149		-
Accrued interest payable		1,296		1,296		97		1,199		-
Derivative financial instruments		4,402		4,402		-		4,402		-

(1) Deposits with no stated maturity include reciprocal deposits with a recorded book balance of $424.569 million and $388.369 million at March 31, 2020 and December 31, 2019, respectively. Deposits with a stated maturity include reciprocal deposits with a recorded book balance of $40.005 million and $42.658 million at March 31, 2020 and December 31, 2019, respectively.

49

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

On March 11, 2020, the World Health Organization declared COVID-19, the disease caused by the novel coronavirus, a pandemic as a result of the global spread of the coronavirus illness. In response to the outbreak, federal and state authorities in the U.S. introduced various measures to try to limit or slow the spread of the virus, including travel restrictions, nonessential business closures, stay-at-home orders, and strict social distancing. The Governor of Michigan issued her first "stay home, stay safe" executive order effective March 24, 2020.  In general that order and subsequent modifications require individuals in Michigan to stay at home or their place of residence, except for certain specified activities and for work by critical infrastructure workers, work by persons necessary to conduct minimum basic business operations, work by those performing necessary government activities and certain other permitted activities.  In general, businesses may not require workers to leave their homes except to the extent those workers are necessary to sustain or protect human life, to conduct certain minimum basic business operations or to perform certain permitted activities. As a result of these actions, Michigan has already experienced a significant increase in unemployment. It is possible that Michigan's Governor may continue some form of executive order throughout the Company's second quarter.

The COVID-19 pandemic and related executive orders and federal government pandemic response guidance has had and continues to have a significant effect on us, our customers and the markets we serve. Our business, results of operations and financial condition may be adversely affected by a number of factors that could impact us and our customers, including but not limited to:

∙ restrictions on activity and high levels of unemployment may cause increases in loan delinquencies, foreclosures and defaults;

∙ increases in allowance for loan losses may be necessary;

∙ declines in collateral values may occur;

∙ third party disruptions, including outages at network providers, on-line banking vendors and other suppliers;

∙ increased cyber and payment fraud risk, as cybercriminals attempt to profit from the disruption, given increased online and remote activity;

∙ operational failures due to changes in our normal business practices necessitated by the pandemic and related governmental actions; and/or

∙ key personnel or significant numbers of our employees being unable to work effectively, including because of illness or restrictions in connection with COVID-19.

50

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

These factors may continue for a significant period of time.

The extent to which the COVID-19 pandemic will impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.  Those developments and factors include, the duration and spread of the pandemic, its severity, the actions to contain the pandemic or address its impact, and how quickly and to what extent normal economic and operating conditions can resume. We do not yet know the full extent of the impact.   However, the effects could have a material adverse impact on our business, asset valuations, financial condition and results of operations. Material adverse impacts may include all or a combination of valuation impairments on our intangible assets, securities available for sale, loans, capitalized mortgage loan servicing rights or deferred tax assets.

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.

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 $0.04 million and $0.11 million for the three month periods ended March 31, 2020 and 2019, respectively. The reserve for loss reimbursements on sold mortgage loans totaled $0.92 million and $0.88 million at March 31, 2020 and December 31, 2019, 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.

51

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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 continue to carry these shares at zero, representing cost basis less impairment. However, given the current conversion ratio of 1.6228 to Class A shares and the closing price of VISA Class A shares on April 17, 2020 of $169.54 per share, our 12,566 Class B shares would have a current “value” of approximately $3.5 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.

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 Losses on Cash Flow Hedges			Total
	(In thousands)
For the three months ended March 31,
2020
Balances at beginning of period	$	3,739		$	(5,798	)	$	(1,727	)	$	(3,786	)
Other comprehensive income (loss) before reclassifications		(606	)		-			(321	)		(927	)
Amounts reclassified from AOCL		(200	)		-			59			(141	)
Net current period other comprehensive income (loss)		(806	)		-			(262	)		(1,068	)
Balances at end of period	$	2,933		$	(5,798	)	$	(1,989	)	$	(4,854	)
2019
Balances at beginning of period	$	(4,185	)	$	(5,798	)	$	(125	)	$	(10,108	)
Other comprehensive income (loss) before reclassifications		4,236			-			(719	)		3,517
Amounts reclassified from AOCL		(108	)		-			(118	)		(226	)
Net current period other comprehensive income (loss)		4,128			-			(837	)		3,291
Balances at end of period	$	(57	)	$	(5,798	)	$	(962	)	$	(6,817	)

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.

52

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

A summary of reclassifications out of each component of AOCL for the three months ended March 31 follows:

AOCL Component	Amount Reclassified From AOCL			Affected Line Item in Condensed  Consolidated Statements of Operations
	(In thousands)
2020
Unrealized gains (losses) on securities available for sale
	$	253		Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		253		Total reclassifications before tax
		53		Income tax expense
	$	200		Reclassifications, net of tax
Unrealized losses on cash flow hedges
	$	75		Interest expense
		16		Income tax expense
	$	59		Reclassification, net of tax
	$	141		Total reclassifications for the period, net of tax
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 losses on cash flow hedges
	$	(149	)	Interest expense
		(31	)	Income tax expense
	$	(118	)	Reclassification, net of tax
	$	226		Total reclassifications for the period, net of tax

53

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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 85.1% and 84.9% of total revenues for the three month periods ending March 31, 2020 and 2019, 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 March 31, 2020 and December 31, 2019.

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 month periods ending March 31, 2020 and 2019 that were financed by us.

54

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Disaggregation of our revenue sources by attribute follows:

Three months ending March 31, 2020

	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	1,740	$	-	$	-	$	-	$	1,740
Account service charges		506		-		-		-		506
ATM fees		-		300		-		-		300
Other		-		236		-		-		236
Business
Overdraft fees		345		-		-		-		345
ATM fees		-		7		-		-		7
Other		-		90		-		-		90
Interchange income		-		-		2,457		-		2,457
Asset management revenue		-		-		-		313		313
Transaction based revenue		-		-		-		200		200
Total	$	2,591	$	633	$	2,457	$	513	$	6,194
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	633
Investment and insurance commissions										513
Bank owned life insurance										270
Other										747
Total									$	2,163

55

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Three months ending March 31, 2019

	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	1,730		-		-		-	$	1,730
Account service charges		525		-		-		-		525
ATM fees		-		322		-		-		322
Other		-		251		-		-		251
Business
Overdraft fees		385		-		-		-		385
ATM fees		-		8		-		-		8
Other		-		129		-		-		129
Interchange income		-		-		2,355		-		2,355
Asset management revenue		-		-		-		254		254
Transaction based revenue		-		-		-		43		43
Total	$	2,640	$	710	$	2,355	$	297	$	6,002
Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	710
Investment and insurance commissions										297
Bank owned life insurance										242
Other										1,015
Total									$	2,264

16.  Leases

We have entered into leases in the normal course of business primarily for 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 together for all leases.  We have also elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on our Condensed Consolidated Statements of Financial Condition.  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 right of use (“ROU”) assets and lease liabilities if they are reasonably certain of exercise.

Leases are classified as operating or finance leases at the lease commencement date (we did not have any finance leases as of March 31, 2020).  Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term.  The ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of the lease payment over the lease term.

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.

56

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The cost components of our operating leases follows:

	Three Months Ended March 31,
	2020		2019
	(In thousands)
Operating lease cost	$	486	$	564
Variable lease cost		15		23
Short-term lease cost		7		5
Total	$	508	$	592

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:

	March 31, 2020			December 31, 2019
	(Dollars in thousands)
Lease right of use asset (1)	$	7,968		$	8,282
Lease liabilities (2)	$	8,002		$	8,304
Weighted average remaining lease term (years)		7.30			7.47
Weighted average discount rate		2.7	%		2.8	%

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

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

Maturity analysis of our lease liabilities at March 31, 2020 based on required contractual payments follows:

	(In thousands)
Nine months ending December 31, 2020	$	1,228
2021		1,446
2022		1,341
2023		1,186
2024		802
2025 and thereafter		2,840
Total lease payments		8,843
Less imputed interest		(841	)
Total	$	8,002

57

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 2019 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 three loan production offices in Ohio (Columbus, Fairlawn and Toledo).  As a result, our success depends to a great extent upon the economic conditions in Michigan’s Lower Peninsula.

Recent Developments. On March 11, 2020, the World Health Organization declared COVID-19, the disease caused by the novel coronavirus, a pandemic as a result of the global spread of the coronavirus illness. In response to the outbreak, federal and state authorities in the U.S. introduced various measures to try to limit or slow the spread of the virus, including travel restrictions, nonessential business closures, stay-at-home orders, and strict social distancing. The Governor of Michigan issued her first "stay home, stay safe" executive order effective March 24, 2020.  In general that order and subsequent modifications require individuals in Michigan to stay at home or their place of residence, except for certain specified activities and for work by critical infrastructure workers, work by persons necessary to conduct minimum basic business operations, work by those performing necessary government activities and certain other permitted activities.  In general, businesses may not require workers to leave their homes except to the extent those workers are necessary to sustain or protect human life, to conduct certain minimum basic business operations or to perform certain permitted activities. As a result of these actions, Michigan has already experienced a significant increase in unemployment. It is possible that Michigan's Governor may continue some form of executive order throughout the Company's second quarter.

The COVID-19 pandemic and related executive orders and federal government pandemic response guidance has had and continues to have a significant effect on us, our customers and the markets we serve. Our business, results of operations and financial condition may be adversely affected by a number of factors that could impact us and our customers, including but not limited to:

∙ restrictions on activity and high levels of unemployment may cause increases in loan delinquencies, foreclosures and defaults;

∙ increases in allowance for loan losses may be necessary;

∙ declines in collateral values may occur;

∙ third party disruptions, including outages at network providers, on-line banking vendors and other suppliers;

58

∙ increased cyber and payment fraud risk, as cybercriminals attempt to profit from the disruption, given increased online and remote activity;

∙ operational failures due to changes in our normal business practices necessitated by the pandemic and related governmental actions; and/or

∙ key personnel or significant numbers of our employees being unable to work effectively, including because of illness or restrictions in connection with COVID-19.

These factors may continue for a significant period of time.

The spread of COVID-19 has caused us to modify our business practices (such as limiting our branch lobbies to appointment only, requiring roughly 80% of our non-branch personnel to work remotely and expanded sick and vacation time), and we may take further actions as may be required or as we determine to be prudent.  There is no certainty that such measures will be sufficient to mitigate the risks posed by COVID-19.

The extent to which the COVID-19 pandemic will impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.  Those developments and factors include, the duration and spread of the pandemic, its severity, the actions to contain the pandemic or address its impact, and how quickly and to what extent normal economic and operating conditions can resume. We do not yet know the full extent of the impact.   However, the effects could have a material adverse impact on our business, financial condition and results of operations.

It is against this backdrop that we discuss our results of operations and financial condition in the first quarter of 2020 as compared to 2019.

Results of Operations

Summary.  We recorded net income of $4.8 million and $9.4 million, respectively, during the three months ended March 31, 2020 and 2019.  The decrease in 2020 first quarter results as compared to 2019 reflects increases in provision for loan losses and non-interest expense that were partially offset by an increase in non-interest income and a decrease in income tax expense.

Key performance ratios

	Three months ended March 31,
	2020			2019
Net income (annualized) to
Average assets		0.54	%		1.13	%
Average shareholders’ equity		5.54	%		11.14	%
Net income per common share
Basic	$	0.22		$	0.40
Diluted		0.21			0.39

59

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 or interest-rate risk, in particular, can adversely impact our net interest income.

Our net interest income totaled $30.2 million during the first quarter of 2020, a decrease of $0.05 million, or 0.20% from the year-ago period.  This decrease primarily reflects a 25 basis point decrease in our tax equivalent net interest income as a percent of average interest-earning assets (the “net interest margin”) that was partially offset by a $198.8 million increase in average interest-earning assets.

Interest and fees on loans include $0.3 million and $0.4 million for the first quarter of 2020 and 2019, respectively, of accretion of the discount recorded on loans acquired in the acquisition of TCSB Bancorp, Inc. (“TCSB,” the “Merger”) on April 1, 2018.

The increase in average interest-earning assets primarily reflects loan growth utilizing funds from increases in deposits and borrowed funds. The decrease in the net interest margin reflects the impact of lower market interest rates and a flattening of the yield curve during 2019, as well as the rapid decline in interest rates during the first quarter of 2020.

Our net interest income is also adversely impacted by our level of non-accrual loans.  In the first quarter of 2020 non-accrual loans averaged $11.1 million compared to $9.1 million in the first quarter of 2019.  In addition, in the first quarter of 2020 we had net recoveries of $0.16 million of unpaid interest on loans placed on or taken off non-accrual or on loans previously charged-off compared to net recoveries of $0.23 million in the first quarter of 2019.

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Average Balances and Tax Equivalent Rates

	Three months ended March 31,
	2020							2019
	Average Balance		Interest		Rate (2)			Average Balance		Interest		Rate (2)
	(Dollars in thousands)
Assets
Taxable loans	$	2,758,909	$	31,688		4.61	%	$	2,613,182	$	32,600		5.03	%
Tax-exempt loans (1)		7,861		97		4.96			8,689		103		4.81
Taxable securities		468,095		3,059		2.61			389,845		3,006		3.08
Tax-exempt securities (1)		59,300		490		3.31			56,889		469		3.30
Interest bearing cash		38,424		128		1.34			65,213		311		1.93
Other investments		18,359		238		5.21			18,359		264		5.83
Interest Earning Assets		3,350,948		35,700		4.28			3,152,177		36,753		4.70
Cash and due from banks		49,610							34,240
Other assets, net		165,271							170,586
Total Assets	$	3,565,829						$	3,357,003
Liabilities
Savings and interest-
bearing checking	$	1,615,589		1,930		0.48		$	1,361,057		1,486		0.44
Time deposits		594,871		2,770		1.87			688,434		4,195		2.47
Other borrowings		99,535		688		2.78			66,058		712		4.37
Interest Bearing Liabilities		2,309,995		5,388		0.94			2,115,549		6,393		1.23
Non-interest bearing deposits		855,838							859,605
Other liabilities		51,033							40,257
Shareholders’ equity		348,963							341,592
Total liabilities and shareholders’ equity	$	3,565,829						$	3,357,003
Net Interest Income			$	30,312						$	30,360
Net Interest Income as a Percent of Average Interest Earning Assets						3.63	%						3.88	%

(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 March 31,
	2020			2019
	(Dollars in thousands)
Net Interest Margin, Fully Taxable Equivalent ("FTE")
Net interest income	$	30,191		$	30,243
Add:  taxable equivalent adjustment		121			117
Net interest income - taxable equivalent	$	30,312		$	30,360
Net interest margin (GAAP) (1)		3.61	%		3.86	%
Net interest margin (FTE) (1)		3.63	%		3.88	%

(1) Annualized.

Provision for loan losses.  We have elected to delay the adoption of CECL as permitted by Section 4014 of the CARES Act and continue to utilize the existing incurred loss impairment methodology to calculate our allowance for loan losses and our provision for loan losses. See note #2 to the Condensed Consolidated Financial Statements included within this report for our discussion on CECL implementation.

The provision for loan losses was $6.7 million and $0.7 million during the three months ended March 31, 2020 and 2019, 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 first quarter of 2020.

Non-interest income.  Non-interest income is a significant element in assessing our results of operations. Non-interest income totaled $11.0 million during the first quarter of 2020 compared to $10.0 million in 2019.

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The components of non-interest income are as follows:

Non-Interest Income

	Three months ended March 31,
	2020			2019
	(In thousands)
Service charges on deposit accounts	$	2,591		$	2,640
Interchange income		2,457			2,355
Net gains on assets
Mortgage loans		8,840			3,611
Securities		253			304
Mortgage loan servicing, net		(5,300	)		(1,215	)
Investment and insurance commissions		513			297
Bank owned life insurance		270			242
Other		1,380			1,725
Total non-interest income	$	11,004		$	9,959

Comparing first quarter of 2020 to first quarter of 2019:

• Service charges on deposit accounts decreased principally due to a decrease in non-sufficient funds charges.

• Interchange income increased due primarily to an increase in debit card transactions.

Net gains on mortgage loans increased to $8.8 million in the first quarter of 2020 from $3.6 million in the first quarter of 2019.  Mortgage loan sales totaled $262.3 million and $154.5 million in the first quarters of 2020 and 2019 respectively.  Mortgage loans originated totaled $311.1 million in the first quarter of 2020 compared to $137.8 million in the first quarter of 2019.  Mortgage loan activity is summarized as follows:

Mortgage Loan Activity

	Three months ended March 31,
	2020			2019
	(Dollars in thousands)
Mortgage loans originated	$	311,078		$	137,758
Mortgage loans sold		262,260			154,525
Net gains on mortgage loans		8,840			3,611
Net gains as a percent of mortgage loans sold  ("Loan Sales Margin")		3.37	%		2.34	%
Fair value adjustments included in the
Loan Sales Margin		0.78			0.58

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The increase in mortgage loans originated is due primarily to lower interest rates spurring higher mortgage loan refinance volumes. Mortgage loans sold increased due to a higher mix of salable loans in our origination volumes and the rise in mortgage loan refinance activity. These factors resulted in net gains on mortgage loans increasing in the first quarter of 2020 as compared to the first quarter of 2019.

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 the aforementioned fair value accounting adjustments, as well as portfolio mortgage loan sales of $28.7 million and $70.4 million in the first quarters of 2020 and 2019, respectively, the Loan Sales Margin would have been 2.57% and 2.59% for these respective periods.  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 net gains of $0.3 million on securities for the first quarters of both 2020 and 2019.  We recorded no net impairment losses in either 2020 or 2019 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 losses of $5.3 million and $1.2 million in the first quarters of 2020 and 2019, respectively. 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 and expected future prepayment levels.  This activity is summarized in the following table:

Mortgage Servicing Revenue

	Three months ended March 31,
	2020			2019
Mortgage loan servicing	(Dollars in thousands)
Revenue, net	$	1,673		$	1,476
Fair value change due to price		(5,931	)		(2,203	)
Fair value change due to pay-downs		(1,042	)		(488	)
Total	$	(5,300	)	$	(1,215	)

The significant variance in the fair value change due to price relates primarily to the decline in mortgage loan interest rates in the first quarter of 2020.  That decline increased projected prepayment rates for mortgage loans serviced for others, leading to a decrease in fair value.

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

Capitalized Mortgage Loan Servicing Rights

	Three months ended March 31,
	2020			2019
	(In thousands)
Balance at beginning of period	$	19,171		$	21,400
Servicing rights acquired		-			-
Originated servicing rights capitalized		2,632			1,200
Change in fair value		(6,974	)		(2,691	)
Balance at end of period	$	14,829		$	19,909

At March 31, 2020 we were servicing approximately $2.68 billion in mortgage loans for others on which servicing rights have been capitalized. This servicing portfolio had a weighted average coupon rate of 4.18% and a weighted average service fee of approximately 25.8 basis points. Capitalized mortgage loan servicing rights at March 31, 2020 totaled $14.8 million, representing approximately 55 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 increased on a year-to-date basis in 2020 as compared to 2019 primarily due to slower sales in the first quarter of 2019.

Income from bank owned life insurance (“BOLI”) was relatively consistent in the first quarter of 2020 compared to the first quarter of 2019. 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 $55.0 million and $55.7 million at March 31, 2020 and December 31, 2019, respectively.

Other non-interest income decreased in the first quarter of 2020 compared to 2019, due primarily 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 increased by $0.7 million to $28.7 million in the first quarter of 2020 compared to the first quarter of 2019.

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The components of non-interest expense are as follows:

Non-Interest Expense

	Three months ended March 31,
	2020		2019
	(In thousands)
Compensation	$	10,703	$	10,481
Performance-based compensation		2,121		2,220
Payroll taxes and employee benefits		3,685		3,650
Compensation and employee benefits		16,509		16,351
Occupancy, net		2,460		2,505
Data processing		2,355		2,144
Furniture, fixtures and equipment		1,036		1,029
Interchange expense		859		688
Loan and collection		805		634
Communications		803		769
Advertising		683		672
Legal and professional fees		393		369
FDIC deposit insurance		370		368
Amortization of intangible assets		255		272
Supplies		184		158
Costs related to unfunded lending commitments		119		160
Net losses on other real estate and repossessed assets		109		119
Credit card and bank service fees		99		103
Provision for loss reimbursement on sold loans		37		111
Other		1,643		1,538
Total non-interest expense	$	28,719	$	27,990

Compensation and employee benefits expenses, in total, increased $0.2 million on a quarterly comparative basis.

Compensation expense increased by $0.2 million in the first quarter of 2020 compared to the first quarter of 2019.  The increase in 2020 is primarily due to annual compensation increases that were predominantly effective on January 1, 2020.

Performance-based compensation for the first quarter of 2020 decreased by $0.1 million versus the same period in 2019, due primarily to a lower accrual for anticipated incentive compensation based on our estimated full-year performance as compared to goals.

Data processing expenses increased $0.2 million in the first quarter of 2020 compared to the first quarter of 2019.  The increase was due primarily to our retail mortgage loan processing system as well as increases in mobile-banking related costs (due to higher usage and additional features).

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Interchange expense primarily represents our third-party cost to process debit card transactions.  This cost increased in the first quarter of 2020 compared to the first quarter of 2019 due principally to an increase in transaction volume.

Loan and collection expenses reflect costs related to lending activity, including the management and collection of non-performing loans and other problem credits.  The increased expenses in 2020 as compared to 2019 primarily reflects a higher level of lending activity.

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 $5.1 million and $5.3 million at March 31 2020 and December 31, 2019, respectively.  See note #7 to the Condensed Consolidated Financial Statements for a schedule of future amortization of intangible assets.

The provision for loss reimbursement on sold loans was an expense of $0.04 million and $0.11 million in the first quarter of 2020 and the first quarter of 2019, 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 decrease in provision during the first quarter of 2020 as compared to the same period in 2019 is due primarily to lower loan defaults.  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 $0.92 million and $0.88 million at March 31, 2020 and December 31, 2019, respectively. This reserve is included in accrued expenses and other liabilities in our Condensed Consolidated Statements of Financial Condition.

Net (gains) losses 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.

Income tax expense.  We recorded an income tax expense of $0.9 million and $2.2 million in the first quarters of 2020 and 2019, 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 both March 31, 2020 and 2019 and at December 31, 2019 that the realization of substantially all of our deferred tax assets continues to be more likely than not.

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Financial Condition

Summary.  Our total assets increased by $67.7 million during the first quarter of 2020.  Loans, excluding loans held for sale, were $2.72 billion at March 31, 2020, compared to $2.73 billion at December 31, 2019.  Growth in commercial loans of $14.9 million and installment loans of $7.1 million were more than offset by a decline in mortgage loans of $28.9 million, due primarily to the securitization and/or sale of $28.7 million of portfolio mortgage loans during the quarter.  (See "Portfolio Loans and asset quality.")

Deposits totaled $3.08 billion at March 31, 2020, an increase of $46.8 million from December 31, 2019.  The increase in deposits is primarily due to growth in non-interest bearing deposits, savings and interest bearing checking deposits and reciprocal deposits that were partially offset by a decline in time and brokered time 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.”)

Securities

	Amortized Cost		Unrealized				Fair Value
			Gains		Losses
Securities available for sale	(in thousands)
March 31, 2020	$	590,572	$	10,051	$	6,339	$	594,284
December 31, 2019		513,668		5,782		1,050		518,400

Securities available for sale increased $75.9 million during the first three months of 2020.  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 quarter of 2020 or 2019.

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

Sales of Securities

	Three months ended March 31,
	2020		2019
	( in thousands)
Proceeds	$	21,743	$	42,236
Gross gains		253		169
Gross losses		-		(32	)
Net impairment charges		-		-
Fair value adjustments		-		167
Net gains (losses)	$	253	$	304

Portfolio Loans and asset quality. The Paycheck Protection Program, administered by the Small Business Association (“SBA”), is a short-term, forgivable loan program primarily intended to help businesses impacted by COVID-19 to continue paying their employees.

A short summary of the program follows:

• Two year term with payments deferred for six months;

• One percent interest rate;

• No collateral or personal guarantees required;

• No fees paid by the borrower, rather lenders are paid a fee through the SBA according to a set schedule based on loan size, and;

• Loans are forgivable if at least 75% of the loan proceeds are used for payroll with the remainder being used for rent, mortgage interest and/or utilities.

A summary of our participation in the program follows:

Paycheck Protection Program Volume

	As of April 29, 2020
	Amount (#)		Amount ($)
	(Dollars in thousands)
Applications received		1,864	$	255,830
Approved by Independent Bank		1,846		255,317
SBA loan # assigned(1)		1,814		252,755
Closed and funded		770		170,687

1) Denotes that an application has been accepted by the SBA and that PPP funds are reserved for that application.

Congress and the major bank regulatory agencies have encouraged banks to work with their borrowers to provide short-term loan payment relief during the COVID-19 national emergency.  On March 22, 2020, an interagency statement was released by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the State Banking Regulators and the National Credit Union Administration that contained their interpretation as to which modifications would qualify for these exceptions.  In general, to qualify for this exception:

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• The modified loan must be current when the modification is made;

• The modification must be short term in nature (up to six months), and;

• Modifications may include payment deferrals, fee waivers, extensions of repayment terms or other delays in payment that are insignificant.

In addition, section 4013 of the CARES Act provides temporary relief from the accounting and reporting requirements for troubled debt restructurings (“TDRs”) regarding certain loan modifications to our customers.

In response to our customers’ needs during this time of economic uncertainty we’ve initiated forbearance programs for our retail (Mortgage and Installment loans) and our commercial customers.  We also have similar programs for mortgage loans that we service for others.

A summary of accommodations as of April 29, 2020 follows:

Commercial and Retail Loan COVID-19 Accomodations

	Covid-19 Accomodations						Total Loans		% of Total Loans
Loan Category	Customers (#)		Loans (#)		Loans ($)
	(Dollars in thousands)
Commercial		184		276	$	145,690	$	1,181,599		12.3	%
Mortgage portfolio loans		401		401		79,184		1,069,967		7.4	%
Installment & Other		305		305		7,715		466,549		1.7	%
Total		890		982	$	232,589	$	2,718,115		8.6	%
Mortgage loans serviced for others(1)		912		912	$	133,698	$	2,684,258		5.0	%

1) We have delegated authority from all investors to grant these deferrals on their behalf.

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 continue to sell some fixed rate jumbo and other  portfolio mortgage loans in the future.

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A summary of our Portfolio Loans follows:

	March 31, 2020		December 31, 2019
	(In thousands)
Real estate(1)
Residential first mortgages	$	823,207	$	843,746
Residential home equity and other junior mortgages		166,040		166,735
Construction and land development		246,866		249,747
Other(2)		704,541		693,580
Consumer		456,346		448,297
Commercial		316,715		318,504
Agricultural		4,400		4,414
Total loans	$	2,718,115	$	2,725,023

(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.

Non-performing assets ⁽¹⁾

	March 31, 2020			December 31, 2019
	(Dollars in thousands)
Non-accrual loans	$	17,454		$	10,178
Loans 90 days or more past due and still accruing interest		-			-
Total non-accrual loans		17,454			10,178
Less:  Government guaranteed loans		676			646
Total non-performing loans		16,778			9,532
Other real estate and repossessed assets		1,494			1,865
Total non-performing assets	$	18,272		$	11,397
As a percent of Portfolio Loans
Non-performing loans		0.62	%		0.35	%
Allowance for loan losses		1.20			0.96
Non-performing assets to total assets		0.50			0.32
Allowance for loan losses as a percent of non-performing loans		193.68			274.32

⁽¹⁾ Excludes loans classified as "trouble debt restructured" that are not past due.

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Troubled debt restructurings ("TDR")

	March 31, 2020
	Commercial		Retail (1)			Total
	(In thousands)
Performing TDR's	$	8,924	$	39,253		$	48,177
Non-performing TDR's (2)		264		2,095	(3)		2,359
Total	$	9,188	$	41,348		$	50,536

	December 31, 2019
	Commercial		Retail (1)			Total
	(In thousands)
Performing TDR's	$	7,974	$	39,601		$	47,575
Non-performing TDR's (2)		540		2,607	(3)		3,147
Total	$	8,514	$	42,208		$	50,722

(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 increased by $7.2 million since year-end 2019 due to an increase in non-performing commercial loans and reflects the migration of one specific loan relationship to non-accrual.   Excluding the migration of this one specific loan relationship, generally, stable economic conditions in our market areas, as well as our collection and resolution efforts, had 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.  The credit impact of the COVID-19 pandemic, and more specifically the closing of much of the economy in order to contain it may have a negative impact on the level of non-performing loans and assets but as yet, the magnitude of that impact is undeterminable.

Non-performing loans exclude performing loans that are classified as TDRs. Performing TDRs totaled $48.2 million, or 1.8% of total Portfolio Loans, and $47.6 million, or 1.7% of total Portfolio Loans, at March 31, 2020 and December 31, 2019, respectively. The increase in the amount of performing TDRs in the first quarter of 2020 primarily reflects an increase in commercial performing TDRs.

Other real estate and repossessed assets totaled $1.5 million and $1.9 million at March 31, 2020 and December 31, 2019, respectively.

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 following tables reflect activity in and the allocation of the allowance for loan losses (“AFLL”).

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Allowance for loan losses

	Three months ended March 31,
	2020					2019
	Loans			Unfunded Commitments		Loans			Unfunded Commitments
	(Dollars in thousands)
Balance at beginning of period	$	26,148		$	1,542	$	24,888		$	1,296
Additions (deductions)
Provision for loan losses		6,721			-		664			-
Recoveries credited to allowance		399			-		568			-
Loans charged against the allowance		(773	)		-		(866	)		-
Additions included in non-interest expense		-			119		-			160
Balance at end of period	$	32,495		$	1,661	$	25,254		$	1,456
Net loans charged against the allowance to average Portfolio Loans		0.06	%				0.05	%

Allocation of the Allowance for Loan Losses

	March 31, 2020		December 31, 2019
	(Dollars in thousands)
Specific allocations	$	8,138	$	6,155
Other adversely rated commercial loans		2,357		2,502
Historical loss allocations		8,391		8,764
Additional allocations based on subjective factors		13,609		8,727
Total	$	32,495	$	26,148

Some loans will not be repaid in full. Therefore, an 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.

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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.

The AFLL increased $6.3 million to $32.5 million at March 31, 2020 from $26.1 million at December 31, 2019 and was equal to 1.20% and 0.96% of total Portfolio Loans at March 31, 2020 and December 31, 2019, respectively.

Two of the four components of the AFLL outlined above increased during the first quarter of 2020. The AFLL related to specific loans increased $2.0 million during the first quarter of 2020 due primarily to a $7.5 million increase in the amount of such loans.  The AFLL related to other adversely rated commercial loans decreased $0.1 million during the first quarter of 2020, primarily due to a decrease of $8.6 million in the balance of such loans included in this component.  The AFLL related to historical losses decreased $0.4 million during the first quarter of 2020, and the AFLL related to subjective factors increased $4.9 million during the first three months of 2020, due largely to the economic shock of COVID-19, the executive orders suspending all businesses and operations that are not necessary to sustain or protect life, or involved in critical infrastructure,  the significant increase in unemployment claims, especially in the State of Michigan, and heightened requests for payment relief from our borrowers.

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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.”)

Deposits totaled $3.08 billion and $3.04 billion at March 31, 2020 and December 31, 2019, respectively.  The increase in deposits is primarily due to growth in non-interest bearing deposits, savings and interest bearing checking deposits and reciprocal deposits that were partially offset by a decline in time and brokered time deposits.  Reciprocal deposits totaled $464.6 million and $431.0 million at March 31, 2020 and December 31, 2019, 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 continued 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 March 31, 2020, we had approximately $513.0 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 and FRB (at March 31, 2020) as well as federal funds sold (at December 31, 2019), totaled $102.0 million and $88.6 million at March 31, 2020 and December 31, 2019, respectively.

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As described above, we utilize wholesale funding, including federal funds purchased, FHLB and FRB borrowings and Brokered CDs to augment our core deposits and fund a portion of our assets. At March 31, 2020, our use of such wholesale funding sources (including reciprocal deposits) amounted to approximately $721.5 million, or 22.7% of total funding (deposits and all 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 three months of 2020 and 2019, we entered into $21.2 million and $8.4 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 $0.17 million and $0.07 million of fee income related to these transactions during the first three months of 2020 and 2019, 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.

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

At March 31, 2020, we had $466.1 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, $2.53 billion of our deposits at March 31, 2020, 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.

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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 FRB 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 $9.4 million as of March 31, 2020 provides sufficient liquidity resources at the parent company to meet operating expenses, to make interest payments on the subordinated debentures, and, along with dividends from the Bank, 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.

Capitalization

	March 31, 2020			December 31, 2019
	(In thousands)
Subordinated debentures	$	39,473		$	39,456
Amount not qualifying as regulatory capital		(1,224	)		(1,224	)
Amount qualifying as regulatory capital		38,249			38,232
Shareholders’ equity
Common stock		338,528			352,344
Retained earnings		1,944			1,611
Accumulated other comprehensive loss		(4,854	)		(3,786	)
Total shareholders’ equity		335,618			350,169
Total capitalization	$	373,867		$	388,401

We currently have four special purpose entities with $39.5 million of outstanding cumulative trust preferred securities as of March 31, 2020.  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.

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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 March 31, 2020 and December 31, 2019.

Common shareholders’ equity decreased to $335.6 million at March 31, 2020, from $350.2 million at December 31, 2019, due primarily to our net income that was more than offset by an increase in our accumulated other comprehensive loss, by share repurchases and cash dividend payments. Our tangible common equity (“TCE”) totaled $302.2 million and $316.5 million, respectively, at those same dates. Our ratio of TCE to tangible assets was 8.40% and 8.96% at March 31, 2020, and December 31, 2019, 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 2019, our Board of Directors authorized a 2020 share repurchase plan.  Under the terms of the 2020 share repurchase plan, we were authorized to buy back up 1,120,000, or approximately 5% of our outstanding common stock.  During the first three months of 2020, the Company repurchased 678,929 shares at a weighted average purchase price of $20.30 per share.

We pay a quarterly cash dividend on our common stock.  These dividends totaled $0.20 per share and $.18 per share in the first quarters of 2020 and 2019, respectively. We generally favor a dividend payout ratio between 30% and 50% of net income.

As of March 31, 2020 and December 31, 2019, 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.

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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.

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)
March 31, 2020
200 basis point rise	$	463,100		6.17	%	$	126,000		2.52	%
100 basis point rise		464,900		6.58			124,800		1.55
Base-rate scenario		436,200		-			122,900		-
100 basis point decline		375,300		(13.96	)		116,500		(5.21	)
December 31, 2019
200 basis point rise	$	472,500		1.13	%	$	123,900		1.23	%
100 basis point rise		478,800		2.48			123,300		0.74
Base-rate scenario		467,200		-			122,400		-
100 basis point decline		412,100		(11.79	)		118,100		(3.51	)

(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.

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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”). Securities available for sale, loans held for sale, carried at fair value, 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 fair value 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.

 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.

 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, 2019.

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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 March 31, 2020, have concluded that, as of such date, our disclosure controls and procedures were effective.

(b) Changes in Internal Controls.

During the quarter ended March 31, 2020, 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

Item1 A. Risk Factors

In addition to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, the following risk factors apply to the Company:

The ongoing COVID-19 pandemic and measures intended to prevent its spread could have a material adverse effect on our business, results of operations and financial condition, and such effects will depend on future developments, which are highly uncertain and are difficult to predict.

Global health concerns relating to the COVID-19 pandemic and related government actions have resulted in significant disruptions and increased economic uncertainty. Government restrictions and recommendations designed to contain the virus and limit its effects have substantially limited the activities of individuals and the operations of businesses in the markets we serve.

The Governor of Michigan issued her first "stay home, stay safe" executive order effective March 24, 2020.  In general that order and subsequent modifications require individuals in Michigan to stay at home or their place of residence, except for certain specified activities and for work by critical infrastructure workers, work by persons necessary to conduct minimum basic business operations, work by those performing necessary government activities and certain other permitted activities.  In general, businesses may not require workers to leave their homes except to the extent those workers are necessary to sustain or protect human life, to conduct certain minimum basic business operations or to perform certain permitted activities. As a result of these actions, Michigan has already experienced a significant increase in unemployment. It is possible that Michigan's Governor may continue some form of executive order throughout the Company's second quarter.

The COVID-19 pandemic and related executive orders and federal government pandemic response guidance has had and continues to have a significant effect on us, our customers and the markets we serve. Our business, results of operations and financial condition may be adversely affected by a number of factors that could impact us and our customers, including but not limited to:

∙ restrictions on activity and high levels of unemployment may cause increases in loan delinquencies, foreclosures and defaults;

∙ increases in allowance for loan losses may be necessary;

∙ declines in collateral values may occur;

∙ third party disruptions, including outages at network providers, on-line banking vendors and other suppliers;

∙ increased cyber and payment fraud risk, as cybercriminals attempt to profit from the disruption, given increased online and remote activity;

∙ operational failures due to changes in our normal business practices necessitated by the pandemic and related governmental actions; and/or

∙ key personnel or significant numbers of our employees being unable to work effectively, including because of illness or restrictions in connection with COVID-19.

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These factors may continue for a significant period of time. The COVID-19 pandemic may also have the effect of heightening many of the other risks we face, including the risks described in the section entitled “Risk Factors” in our Form 10-K for the fiscal year ended December 31, 2019.

The spread of COVID-19 has caused us to modify our business practices (such as limiting our branch lobbies to appointment only, requiring roughly 80% of our non-branch personnel to work remotely and expanded sick and vacation time), and we may take further actions as may be required or as we determine to be prudent.  There is no certainty that such measures will be sufficient to mitigate the risks posed by COVID-19.

The extent to which the COVID-19 pandemic will impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.  Those developments and factors include, the duration and spread of the pandemic, its severity, the actions to contain the pandemic or address its impact, and how quickly and to what extent normal economic and operating conditions can resume. We do not yet know the full extent of the impact.   However, the effects could have a material adverse impact on our business, financial condition and results of operations.

As a participating lender in the U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), the Company and the Bank are subject to additional risks regarding the Bank’s processing of loans for the PPP and risks that the SBA may not fund some or all PPP loan guaranties.

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which included a $349 billion loan program administered through the SBA referred to as the PPP. Under the PPP, small businesses and other entities and individuals can apply for loans from existing SBA lenders and other approved regulated lenders that enroll in the program, subject to numerous limitations and eligibility criteria. The Bank is participating as a lender in the PPP. The PPP opened on April 3, 2020; however, because of the short timeframe between the passing of the CARES Act and the opening of the PPP, there is some ambiguity in the laws, rules and guidance regarding the operation of the PPP, which exposes us to potential risks relating to noncompliance with the PPP. On or about April 16, 2020, the SBA notified lenders that the $349 billion earmarked for the PPP was exhausted.

Since the initiation of the PPP, several larger banks have been subject to litigation regarding the protocols and procedures that they used in processing applications for the PPP. We may be exposed to the risk of similar litigation, from both customers and non‑customers that approached us regarding PPP loans, regarding our policies and procedures used in processing applications for the PPP. If any such litigation is filed against the Company or the Bank and is not resolved in a manner favorable to us, it could result in financial liability or adversely affect our reputation. In addition, litigation can be costly, regardless of outcome. Any financial liability, litigation costs or reputational damage caused by PPP related litigation could have an adverse impact on our business, financial condition and results of operations.

We also have credit risk on PPP loans if a determination is made by the SBA that there is a deficiency in the manner in which the loan was originated, funded, or serviced by the Bank, such as an issue with the eligibility of a borrower to receive a PPP loan, which may or may not be related to the ambiguity in the laws, rules and guidance regarding the operation of the PPP. In the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which the PPP loan was originated, funded, or serviced by us, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from us.

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Our business is subject to additional risks in the near term related to our plan to complete a core data processing systems conversion.

We are at the beginning of the process to convert our core data processing system to a new system hosted by a different vendor. A systems conversion of this nature is extremely complicated, time-consuming, and resource intensive. The process will be even more challenging in light of the COVID-19 pandemic, including the challenges presented as a result of a portion of our workforce working remotely. The timing and success of this systems conversion is also heavily dependent on the reliability of the vendors for both our existing and new systems. If either or both of these vendors experience workforce shortages due to the pandemic or otherwise, it could impact our ability to complete the systems conversion on the timeline and budget currently expected. Difficulties in completing the conversion could also negatively impact our operations and financial performance.

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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 first quarter of 2020, the Company issued 374 shares of common stock to non-employee directors on a current basis and 3,458 shares of common stock to the trust for distribution to directors on a deferred basis.  These shares were issued on January 1, 2020 representing aggregate fees of $0.08 million. The shares on a current basis were issued at a price of $22.65 per share and the shares on a deferred basis were issued at a price of $20.39 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 March 31, 2020:

Period	Total Number of Shares Purchased (1)		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
January 2020		88,306	$	21.92		62,610		1,057,390
February 2020		356,066		21.74		313,618		743,772
March 2020		303,366		18.57		302,701		441,071
Total		747,738	$	20.47		678,929		441,071

(1) January, February and March include 25,696 shares, 1,813 and 665 shares, respectively, withheld from the shares that would otherwise have been issued to certain officers in order to satisfy tax withholding obligations resulting from the vesting of restricted stock as well as satisfy tax withholding obligations and stock option exercise price resulting from the exercise of stock options. February also includes 40,635 shares of our common stock purchased in the open market by the Independent Bank Corporation Employee Stock Ownership Trust as part of our employee stock ownership plan.

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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	May 5, 2020	By	/s/ Stephen A. Erickson
			Stephen A. Erickson, Principal Financial Officer
Date	May 5, 2020	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:  May 5, 2020	/s/ William B. Kessel
	William B. Kessel
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Stephen A. Erickson, 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:  May 5, 2020
	/s/ Stephen A. Erickson
	Stephen A. Erickson
	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 March 31, 2020, 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 March 31, 2020, fairly presents, in all material respects, the financial condition and results of operations of Independent Bank Corporation.

	INDEPENDENT BANK CORPORATION
Date:  May 5, 2020	/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, Stephen A. Erickson, 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 March 31, 2020, 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 March 31, 2020, fairly presents, in all material respects, the financial condition and results of operations of Independent Bank Corporation.

	INDEPENDENT BANK CORPORATION
Date: May 5, 2020	/s/ Stephen A. Erickson
	Stephen A. Erickson
	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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Share Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share Based Compensation [Abstract]
Number of additional shares approved for grant (in shares)	400,000
Shares issued on deferral basis credited percentage of current value	90.00%
Total compensation cost not yet recognized	$ 3,200
Total compensation cost not yet recognized, period for recognition	2 years 4 months 24 days
Long-Term Incentive Plan [Member]
Share Based Compensation [Abstract]
Total compensation expense recognized	$ 500	$ 400
Tax benefit relating to compensation expense recognized	$ 100	$ 100
Restricted Stock [Member] | Long-Term Incentive Plan [Member]
Share Based Compensation [Abstract]
Restricted stock and Performance stock units granted (in shares)	52,996	52,716
Restricted Stock [Member] | Long-Term Incentive Plan [Member] | Vesting Over Three Years [Member]
Share Based Compensation [Abstract]
Restricted stock and Performance stock units granted (in shares)		2,000
Vesting period		3 years
Restricted Stock [Member] | Long-Term Incentive Plan [Member] | Cliff Vest After Three Years [Member]
Share Based Compensation [Abstract]
Vesting period	3 years	3 years
Performance Stock Units [Member] | Long-Term Incentive Plan [Member]
Share Based Compensation [Abstract]
Restricted stock and Performance stock units granted (in shares)	20,897	22,016
Vesting period		3 years
Performance feature comparison period	3 years
Performance Stock Units [Member] | Long-Term Incentive Plan [Member] | Cliff Vest After Three Years [Member]
Share Based Compensation [Abstract]
Vesting period	3 years
Non-Employee Directors [Member]
Share Based Compensation [Abstract]
Number of additional shares approved for grant (in shares)	200,000
Total compensation expense recognized	$ 90	$ 50
Tax benefit relating to compensation expense recognized	$ 200	$ 10
Directors [Member]
Share Based Compensation [Abstract]
Shares issues as retainer fees (in shares)	4,000	3,000

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Shareholders' Equity and Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019	Dec. 17, 2019
Share Repurchase Plan [Abstract]
Stock repurchased (in shares)		678,929	115,787
Stock repurchased		$ 13,784	$ 2,530
Earnings Per Share Reconciliation [Abstract]
Net income		$ 4,810	$ 9,381
Weighted average shares outstanding (in shares)	[1]	22,271,000	23,588,000
Stock units for deferred compensation plan for non-employee directors (in shares)		122,000	130,000
Effect of stock options (in shares)		99,000	127,000
Performance share units (in shares)		37,000	40,000
Weighted average shares outstanding for calculation of diluted earnings per share (in shares)		22,529,000	23,885,000
Net income per common share [Abstract]
Basic (in dollars per share)	[1]	$ 0.22	$ 0.40
Diluted (in dollars per share)		$ 0.21	$ 0.39
Common Stock [Member]
Share Repurchase Plan [Abstract]
Number of shares authorized for repurchase (in shares)				1,120,000
Stock repurchased (in shares)		678,929	115,787
Stock repurchased		$ 13,784	$ 2,530
Stock Options [Member]
Antidilutive Securities [Abstract]
Antidilutive shares excluded from computation of diluted loss per share (in shares)		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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Income Tax (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Income Tax [Abstract]
Income tax expense	$ 945	$ 2,167
Decrease in income tax expense	200	$ 200
Gross unrecognized tax benefits	$ 400		$ 400

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Income Tax

3 Months Ended

Mar. 31, 2020

Income Tax [Abstract]

Income Tax

9. Income Tax

Income tax expense was $0.9 million and $2.2 million during the three month periods ended March 31, 2020 and 2019, 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 first quarters of 2020 and 2019 each include reductions of $0.2 million of income tax expense related to 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.

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 March 31, 2020, March 31, 2019 and December 31, 2019 that the realization of substantially all of our deferred tax assets continues to be more likely than not.

At both March 31, 2020 and December 31, 2019, we had approximately $0.4 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 2020.

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Shareholders' Equity and Earnings Per Common Share

3 Months Ended

Mar. 31, 2020

Shareholders' Equity and Earnings Per Common Share [Abstract]

Shareholders' Equity and Earnings Per Common Share

5. Shareholders’ Equity and Earnings Per Common Share

On December 17, 2019, our Board of Directors authorized a share repurchase plan (the “Repurchase Plan”) to buy back up to 1,120,000 shares of our outstanding common stock through December 31, 2020.  We expect to accomplish the 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 three month periods ended March 31, 2020 and 2019 repurchases were made totaling 678,929 shares and 115,787 shares of common stock, respectively for an aggregate purchase price of $13.8 million and $2.5 million, respectively.

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

	Three Months Ended March 31,
	2020		2019
	(In thousands, except per share data)
Net income	$	4,810	$	9,381
Weighted average shares outstanding (1)		22,271		23,588
Stock units for deferred compensation plan for non-employee directors		122		130
Effect of stock options		99		127
Performance share units		37		40
Weighted average shares outstanding for calculation of diluted earnings per share		22,529		23,885
Net income per common share
Basic (1)	$	0.22	$	0.40
Diluted	$	0.21	$	0.39

⁽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 month periods ended March 31, 2020 and 2019, respectively.

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New Accounting Standards (Details) - ASU 2016-13 [Member] - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
New Accounting Standards [Abstract]
Allowance for loan losses forecast period	2 years
Minimum [Member]
New Accounting Standards [Abstract]
Expected increase in the allowance for loan losses		$ 8.0
Expected increase to the allowance for losses related to unfunded loan commitments		1.0
Maximum [Member]
New Accounting Standards [Abstract]
Expected increase in the allowance for loan losses		10.0
Expected increase to the allowance for losses related to unfunded loan commitments		$ 2.0

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Goodwill and Other Intangibles (Tables)

3 Months Ended

Mar. 31, 2020

Goodwill and Other Intangibles [Abstract]

Other Intangible Assets, Net of Amortization

The following table summarizes intangible assets, net of amortization:

	March 31, 2020				December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Amortized intangible assets - core deposits	$	11,916	$	6,845	$	11,916	$	6,590
Unamortized intangible assets - goodwill	$	28,300			$	28,300

Estimated Core Deposit Intangible Amortization

We performed our required annual goodwill impairment test as of December 31, 2019 and there was no impairment.  During the first quarter of 2020 the stock market in general as well as our market capitalization declined as a result of events surrounding the current COVID-19 pandemic outbreak.  We do not believe this decline is indicative of a permanent deterioration of the fundamental value of our bank. As such we do not believe that it is more likely than not a goodwill impairment exists at March 31, 2020. See note 13, Contingencies, for additional information on COVID-19 and its potential impact to us.

A summary of estimated core deposit intangible amortization at March 31, 2020 follows:

	(In thousands)
Nine months ending December 31, 2020	$	765
2021		970
2022		785
2023		547
2024		516
2025 and thereafter		1,488
Total	$	5,071

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Fair Values of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2020

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)
March 31, 2020
Assets
Cash and due from banks	$	48,753	$	48,753	$	48,753	$	-	$	-
Interest bearing deposits		21,538		21,538		21,538		-		-
Securities available for sale		594,284		594,284		-		594,284		-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA		NA		NA		NA
Net loans and loans held for sale		2,750,169		2,645,319		-		64,549		2,580,770
Accrued interest receivable		10,519		10,519		-		2,583		7,936
Derivative financial instruments		17,610		17,610		-		17,610		-
Liabilities
Deposits with no stated maturity (1)	$	2,529,503	$	2,529,503	$	2,529,503	$	-	$	-
Deposits with stated maturity (1)		554,061		555,820		-		555,820		-
Other borrowings		101,954		103,755		-		103,755		-
Subordinated debentures		39,473		25,619		-		25,619		-
Accrued interest payable		1,195		1,195		37		1,158		-
Derivative financial instruments		15,286		15,286		-		15,286		-
December 31, 2019
Assets
Cash and due from banks	$	53,295	$	53,295	$	53,295	$	-	$	-
Interest bearing deposits		12,009		12,009		12,009		-		-
Interest bearing deposits - time		350		350		-		350		-
Securities available for sale		518,400		518,400		-		518,400		-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA		NA		NA		NA
Net loans and loans held for sale		2,768,675		2,768,817		-		69,800		2,699,017
Accrued interest receivable		10,108		10,108		8		1,752		8,348
Derivative financial instruments		5,464		5,464		-		5,464		-
Liabilities
Deposits with no stated maturity (1)	$	2,427,190	$	2,427,190	$	2,427,190	$	-	$	-
Deposits with stated maturity (1)		609,537		610,235		-		610,235		-
Other borrowings		88,646		88,680		-		88,680		-
Subordinated debentures		39,456		33,149		-		33,149		-
Accrued interest payable		1,296		1,296		97		1,199		-
Derivative financial instruments		4,402		4,402		-		4,402		-

(1) Deposits with no stated maturity include reciprocal deposits with a recorded book balance of $424.569 million and $388.369 million at March 31, 2020 and December 31, 2019, respectively. Deposits with a stated maturity include reciprocal deposits with a recorded book balance of $40.005 million and $42.658 million at March 31, 2020 and December 31, 2019, respectively.

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New Accounting Standards (Policies)

3 Months Ended

Mar. 31, 2020

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.

We began evaluating this ASU in 2016 and established a company-wide, cross-discipline governance structure, which provides implementation oversight. We continued to test and refine our current expected credit loss models that satisfied the requirements of this ASU. Oversight and testing, as well as efforts to meet expanded disclosure requirements, extended through the end of 2019.  We currently estimate losses over approximately a two year forecast period using the Federal Open Market Committee median economic projections 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 were originally required to adopt this ASU on January 1, 2020 but section 4014 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act allows for temporary relief from applying this ASU.  Under the CARES Act we may delay the adoption of this ASU until the earlier of the termination of the national emergency that President Trump declared on March 13, 2020, or December 31, 2020.  As such, we have chosen to delay the adoption of this ASU and continue to utilize the existing incurred loss impairment methodology to calculate our allowance for loan losses and our provision for loan losses as required under Accounting Standards Codification 310 (Receivables). When we adopt this ASU as required under the CARES act we will do so retrospectively to January 1, 2020.

We expect to recognize a one-time cumulative effect adjustment at January 1, 2020 increasing the allowance for loan losses.  We are estimating an increase to the allowance for loan losses at that time to be in the range of $8.0 million to $10.0 million primarily driven by the longer contractual maturities of our mortgage and consumer installment loan segments. In addition, we currently expect this ASU to increase the allowance for losses related to unfunded loan commitments between $1.0 million and $2.0 million. The ultimate impact of adopting this ASU, and at each subsequent reporting period, is highly dependent on credit quality, economic forecasts and conditions, composition of our loan portfolios and securities available for sale, along with other management judgements. The transition adjustment to record the allowance for credit losses may fall outside of our estimated increase based on the finalization of assumptions including qualitative adjustments and the economic forecast used in calculating the allowance for credit losses upon the adoption of CECL.

We do not expect a material allowance for credit losses to be recorded on securities available for sale upon adoption of this ASU.

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 was effective for us on January 1, 2020, and did not have a material impact on our consolidated operating results or financial condition.

In March 2020, the FASB issued ASU 2020-04, ‘‘Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting’’. This new ASU provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. Entities that make such elections would not have to remeasure contracts at the modification date or reassess a previous accounting determination.  Entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met.  This amended guidance and our ability to elect its temporary optional expedients and exceptions are effective for us as of March 12, 2020 through December 31, 2022.

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Contingencies

3 Months Ended

Mar. 31, 2020

Contingencies [Abstract]

Contingencies

13. Contingencies

On March 11, 2020, the World Health Organization declared COVID-19, the disease caused by the novel coronavirus, a pandemic as a result of the global spread of the coronavirus illness. In response to the outbreak, federal and state authorities in the U.S. introduced various measures to try to limit or slow the spread of the virus, including travel restrictions, nonessential business closures, stay-at-home orders, and strict social distancing. The Governor of Michigan issued her first "stay home, stay safe" executive order effective March 24, 2020.  In general that order and subsequent modifications require individuals in Michigan to stay at home or their place of residence, except for certain specified activities and for work by critical infrastructure workers, work by persons necessary to conduct minimum basic business operations, work by those performing necessary government activities and certain other permitted activities.  In general, businesses may not require workers to leave their homes except to the extent those workers are necessary to sustain or protect human life, to conduct certain minimum basic business operations or to perform certain permitted activities. As a result of these actions, Michigan has already experienced a significant increase in unemployment. It is possible that Michigan's Governor may continue some form of executive order throughout the Company's second quarter. 

The COVID-19 pandemic and related executive orders and federal government pandemic response guidance has had and continues to have a significant effect on us, our customers and the markets we serve. Our business, results of operations and financial condition may be adversely affected by a number of factors that could impact us and our customers, including but not limited to:

∙ restrictions on activity and high levels of unemployment may cause increases in loan delinquencies, foreclosures and defaults; 

∙ increases in allowance for loan losses may be necessary; 

∙ declines in collateral values may occur;

∙ third party disruptions, including outages at network providers, on-line banking vendors and other suppliers;

∙ increased cyber and payment fraud risk, as cybercriminals attempt to profit from the disruption, given increased online and remote activity;

∙ operational failures due to changes in our normal business practices necessitated by the pandemic and related governmental actions; and/or

∙ key personnel or significant numbers of our employees being unable to work effectively, including because of illness or restrictions in connection with COVID-19.

These factors may continue for a significant period of time.

The extent to which the COVID-19 pandemic will impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.  Those developments and factors include, the duration and spread of the pandemic, its severity, the actions to contain the pandemic or address its impact, and how quickly and to what extent normal economic and operating conditions can resume. We do not yet know the full extent of the impact.   However, the effects could have a material adverse impact on our business, asset valuations, financial condition and results of operations. Material adverse impacts may include all or a combination of valuation impairments on our intangible assets, securities available for sale, loans, capitalized mortgage loan servicing rights or deferred tax assets.

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.

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 $0.04 million and $0.11 million for the three month periods ended March 31, 2020 and 2019, respectively. The reserve for loss reimbursements on sold mortgage loans totaled $0.92 million and $0.88 million at March 31, 2020 and December 31, 2019, 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 continue to carry these shares at zero, representing cost basis less impairment. However, given the current conversion ratio of 1.6228 to Class A shares and the closing price of VISA Class A shares on April 17, 2020 of $169.54 per share, our 12,566 Class B shares would have a current “value” of approximately $3.5 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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Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2020

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:

	March 31, 2020
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Fair value hedge designation - Pay-fixed interest rate swap agreements	$	7,117		9.1	$	(788	)
Cash flow hedge designation - Pay-fixed interest rate swap agreements	$	25,000		1.3	$	(544	)
No hedge designation
Rate-lock mortgage loan commitments	$	145,077		0.1	$	5,732
Mandatory commitments to sell mortgage loans		176,165		0.1		(2,104	)
Pay-fixed interest rate swap agreements - commercial		162,452		5.3		(11,814	)
Pay-variable interest rate swap agreements - commercial		162,452		5.3		11,814
Interest rate cap agreements		150,000		2.3		27
Purchased options		2,908		1.3		37
Written options		2,848		1.3		(36	)
Total	$	801,902		2.6	$	3,656

	December 31, 2019
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Fair value hedge designation - Pay-fixed interest rate swap agreements	$	7,117		9.4	$	(242	)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		1.6	$	(174	)
Interest rate cap agreements		150,000		2.6		214
Total	$	175,000		2.5	$	40
No hedge designation
Rate-lock mortgage loan commitments	$	49,268		0.1	$	1,412
Mandatory commitments to sell mortgage loans		95,363		0.1		(150	)
Pay-fixed interest rate swap agreements - commercial		153,946		5.5		(3,641	)
Pay-variable interest rate swap agreements - commercial		153,946		5.5		3,641
Purchased options		2,908		1.5		141
Written options		2,848		1.5		(139	)
Total	$	458,279		3.7	$	1,264

Fair Value of Derivative Instruments

Fair Values of Derivative Instruments

	Asset Derivatives						Liability Derivatives
	March 31, 2020			December 31, 2019			March 31, 2020			December 31, 2019
	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	$	-	Other liabilities	$	1,332	Other liabilities	$	416
Interest rate cap agreements	Other assets		-	Other assets		214	Other liabilities		-	Other liabilities		-
			-		$	214			1,332		$	416
Derivatives not designated as hedging instruments
Rate-lock mortgage loan commitments	Other assets		5,732	Other assets	$	1,412	Other liabilities		-	Other liabilities	$	-
Mandatory commitments to sell mortgage loans	Other assets		-	Other assets		-	Other liabilities		2,104	Other liabilities		150
Pay-fixed interest rate swap agreements -commercial	Other assets		-	Other assets		28	Other liabilities		11,814	Other liabilities		3,669
Pay-variable interest rate swap agreements -commercial	Other assets		11,814	Other assets		3,669	Other liabilities		-	Other liabilities		28
Interest rate cap agreements	Other assets		27	Other assets		-	Other liabilities		-	Other liabilities		-
Purchased options	Other assets		37	Other assets		141	Other liabilities		-	Other liabilities		-
Written options	Other assets		-	Other assets		-	Other liabilities		36	Other liabilities		139
			17,610			5,250			13,954			3,986
Total derivatives		$	17,610		$	5,464		$	15,286		$	4,402

Effect of Derivative Financial Instruments on Consolidated Statement of Operations

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

Three Month Periods Ended March 31,
	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
	2020			2019			Portion)	2020			2019		in Income	2020			2019
	(In thousands)
Fair Value Hedges
Pay-fixed interest rate swap agreements													Non-interest income-other	$	(546	)	$	-
Cash Flow Hedges Interest rate cap agreements	$	(14	)	$	(785	)	Interest expense	$	(53	)	$	118	Interest expense	$	-		$	-
Pay-fixed interest rate swap agreements		(392	)		(127	)	Interest expense		(22	)		31	Interest expense		-			-
Total	$	(406	)	$	(912	)		$	(75	)	$	149		$	-		$	-
No hedge designation
Rate-lock mortgage loan commitments													Net gains on mortgage loans	$	4,320		$	629
Mandatory commitments to sell mortgage loans													Net gains on mortgage loans		(1,954	)		174
Pay-fixed interest rate swap agreements - commercial													Interest income		(8,173	)		(1,147	)
Pay-variable interest rate swap agreements - commercial													Interest income		8,173			1,147
Interest rate cap agreements													Interest expense		(35	)		-
Purchased options													Interest expense		(104	)		86
Written options													Interest expense		103			(84	)
Total														$	2,330		$	805

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Loans, Loan Ratings by Loan Class, Commercial (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Summary of Loan Ratings by Loan Class [Abstract]
Loans	$ 2,726,051	$ 2,733,370
Accrued interest included in total	7,936	8,347
Commercial [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	1,184,291	1,169,693
Accrued interest included in total	2,692	2,998
Commercial [Member] | Non-Watch 1-6 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	1,112,530	1,096,471
Accrued interest included in total	2,503	2,763
Commercial [Member] | Watch 7-8 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	56,621	67,420
Accrued interest included in total	167	205
Commercial [Member] | Substandard Accrual 9 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	6,099	4,502
Accrued interest included in total	22	30
Commercial [Member] | Non-Accrual 10-11 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	9,041	1,300
Accrued interest included in total	0	0
Commercial [Member] | Commercial and Industrial [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	582,022	564,871
Commercial [Member] | Commercial and Industrial [Member] | Non-Watch 1-6 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	534,064	515,955
Commercial [Member] | Commercial and Industrial [Member] | Watch 7-8 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	42,460	44,384
Commercial [Member] | Commercial and Industrial [Member] | Substandard Accrual 9 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	4,213	3,967
Commercial [Member] | Commercial and Industrial [Member] | Non-Accrual 10-11 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	1,285	565
Commercial [Member] | Commercial Real Estate [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	602,269	604,822
Commercial [Member] | Commercial Real Estate [Member] | Non-Watch 1-6 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	578,466	580,516
Commercial [Member] | Commercial Real Estate [Member] | Watch 7-8 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	14,161	23,036
Commercial [Member] | Commercial Real Estate [Member] | Substandard Accrual 9 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	1,886	535
Commercial [Member] | Commercial Real Estate [Member] | Non-Accrual 10-11 [Member]
Summary of Loan Ratings by Loan Class [Abstract]
Loans	$ 7,756	$ 735

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Securities, Amortized Cost and Fair Value Securities Available for Sale Contractual Maturities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Maturing within one year	$ 13,075
Maturing after one year but within five years	61,789
Maturing after five years but within ten years	47,654
Maturing after ten years	97,794
Amortized cost	220,312
U.S. agency residential mortgage-backed	216,436
U.S. agency commercial mortgage-backed	9,665
Private label mortgage-backed	38,188
Other asset backed	105,971
Amortized cost	590,572	$ 513,668
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Maturing within one year	13,132
Maturing after one year but within five years	62,393
Maturing after five years but within ten years	48,967
Maturing after ten years	97,095
Total available-for-sale securities fair value	221,587
U.S. agency residential mortgage-backed	221,829
U.S. agency commercial mortgage-backed	9,916
Private label mortgage-backed	37,071
Other asset backed	103,881
Total	$ 594,284	$ 518,400

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Loans, Aging Analysis of Loans by Class (Details) - USD ($) $ in Thousands		Mar. 31, 2020	Dec. 31, 2019
Aging analysis of loans by class [Abstract]
Total		$ 14,209	$ 14,476
Loans not Past Due		2,711,842	2,718,894
Total loans recorded investment		2,726,051	2,733,370
Accrued interest included in recorded investment		7,936	8,347
Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		7,141	7,449
Accrued interest included in recorded investment		71	74
Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		2,679	2,936
Accrued interest included in recorded investment		41	34
Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		4,389	4,091
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		112	108
Loans Not Past Due [Member]
Aging analysis of loans by class [Abstract]
Accrued interest included in recorded investment		7,824	8,239
Commercial [Member]
Aging analysis of loans by class [Abstract]
Total loans recorded investment		1,184,291	1,169,693
Accrued interest included in recorded investment		2,692	2,998
Commercial [Member] | Commercial and Industrial [Member]
Aging analysis of loans by class [Abstract]
Total		409	391
Loans not Past Due		581,613	564,480
Total loans recorded investment		582,022	564,871
Commercial [Member] | Commercial and Industrial [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		339	0
Commercial [Member] | Commercial and Industrial [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		0	289
Commercial [Member] | Commercial and Industrial [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		70	102
Commercial [Member] | Commercial Real Estate [Member]
Aging analysis of loans by class [Abstract]
Total			912
Loans not Past Due			603,910
Total loans recorded investment		602,269	604,822
Commercial [Member] | Commercial Real Estate [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		175	177
Commercial [Member] | Commercial Real Estate [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		0	0
Commercial [Member] | Commercial Real Estate [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		0	735
Commercial [Member] | Commercial Real Estate [Member] | Loans Past Due Total [Member]
Aging analysis of loans by class [Abstract]
Total		175
Commercial [Member] | Commercial Real Estate [Member] | Loans Not Past Due [Member]
Aging analysis of loans by class [Abstract]
Loans not Past Due		602,094
Mortgage [Member]
Aging analysis of loans by class [Abstract]
Total loans recorded investment		1,074,003	1,103,066
Accrued interest included in recorded investment	[1]	4,036	4,155
Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]
Aging analysis of loans by class [Abstract]
Total		3,294	2,794
Loans not Past Due		434,866	398,759
Total loans recorded investment		438,160	401,553
Accrued interest included in recorded investment	[1]	1,264	1,139
Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		911	1,757
Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		947	1,037
Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		1,436	0
Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]
Aging analysis of loans by class [Abstract]
Total		3,508	4,911
Loans not Past Due		284,956	342,349
Total loans recorded investment		288,464	347,260
Accrued interest included in recorded investment	[1]	1,522	1,662
Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		2,296	2,672
Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		628	852
Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		584	1,387
Mortgage [Member] | 1-4 Non-owner Occupied [Member]
Aging analysis of loans by class [Abstract]
Total		2,077	1,454
Loans not Past Due		164,961	168,083
Total loans recorded investment		167,038	169,537
Accrued interest included in recorded investment	[1]	562	586
Mortgage [Member] | 1-4 Non-owner Occupied [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		1,039	695
Mortgage [Member] | 1-4 Non-owner Occupied [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		348	136
Mortgage [Member] | 1-4 Non-owner Occupied [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		690	623
Mortgage [Member] | 1-4 Family - 2nd Lien [Member]
Aging analysis of loans by class [Abstract]
Total		2,297	1,385
Loans not Past Due		111,877	115,157
Total loans recorded investment		114,174	116,542
Accrued interest included in recorded investment	[1]	448	502
Mortgage [Member] | 1-4 Family - 2nd Lien [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		980	909
Mortgage [Member] | 1-4 Family - 2nd Lien [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		455	90
Mortgage [Member] | 1-4 Family - 2nd Lien [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		862	386
Mortgage [Member] | Resort Lending [Member]
Aging analysis of loans by class [Abstract]
Total			982
Loans not Past Due			67,192
Total loans recorded investment		66,167	68,174
Accrued interest included in recorded investment	[1]	240	266
Mortgage [Member] | Resort Lending [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		226	364
Mortgage [Member] | Resort Lending [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		0	53
Mortgage [Member] | Resort Lending [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		402	565
Mortgage [Member] | Resort Lending [Member] | Loans Past Due Total [Member]
Aging analysis of loans by class [Abstract]
Total		628
Mortgage [Member] | Resort Lending [Member] | Loans Not Past Due [Member]
Aging analysis of loans by class [Abstract]
Loans not Past Due		65,539
Installment [Member]
Aging analysis of loans by class [Abstract]
Total loans recorded investment		467,757	460,611
Accrued interest included in recorded investment	[1]	1,208	1,194
Installment [Member] | Boat Lending [Member]
Aging analysis of loans by class [Abstract]
Total		698	532
Loans not Past Due		205,019	202,750
Total loans recorded investment		205,717	203,282
Accrued interest included in recorded investment	[1]	472	490
Installment [Member] | Boat Lending [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		548	337
Installment [Member] | Boat Lending [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		75	107
Installment [Member] | Boat Lending [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		75	88
Installment [Member] | Recreational Vehicle Lending [Member]
Aging analysis of loans by class [Abstract]
Total		338	261
Loans not Past Due		158,336	153,184
Total loans recorded investment		158,674	153,445
Accrued interest included in recorded investment	[1]	366	378
Installment [Member] | Recreational Vehicle Lending [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		242	161
Installment [Member] | Recreational Vehicle Lending [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		42	97
Installment [Member] | Recreational Vehicle Lending [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		54	3
Installment [Member] | Other [Member]
Aging analysis of loans by class [Abstract]
Total		785	854
Loans not Past Due		102,581	103,030
Total loans recorded investment		103,366	103,884
Accrued interest included in recorded investment	[1]	370	326
Installment [Member] | Other [Member] | Loans Past Due, 30-59 days [Member]
Aging analysis of loans by class [Abstract]
Total		385	377
Installment [Member] | Other [Member] | Loans Past Due, 60-89 days [Member]
Aging analysis of loans by class [Abstract]
Total		184	275
Installment [Member] | Other [Member] | Loans Past Due, 90+ days [Member]
Aging analysis of loans by class [Abstract]
Total		$ 216	$ 202

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

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Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Condensed Consolidated Statements of Comprehensive Income (unaudited) [Abstract]
Net income	$ 4,810	$ 9,381
Securities available for sale
Unrealized gains (losses) arising during period	(598)	5,364
Change in unrealized losses for which a portion of other than temporary impairment has been recognized in earnings	(169)	(2)
Reclassification adjustments for gains included in earnings	(253)	(137)
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale	(1,020)	5,225
Income tax expense (benefit)	(214)	1,097
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale, net of tax	(806)	4,128
Derivative instruments
Unrealized gain (loss) arising during period	(406)	(912)
Reclassification adjustment for income recognized in earnings	75	(149)
Unrealized gains (losses) recognized in other comprehensive income (loss) on derivative instruments	(331)	(1,061)
Income tax expense (benefit)	(69)	(224)
Unrealized gains (losses) recognized in other comprehensive income (loss) on derivative instruments, net of tax	(262)	(837)
Other comprehensive income (loss)	(1,068)	3,291
Comprehensive income	$ 3,742	$ 12,672

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 04, 2020
Cover [Abstract]
Entity Registrant Name	INDEPENDENT BANK CORP /MI/
Entity Central Index Key	0000039311
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		21,892,836
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Entity Address, State or Province	MI

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Preparation of Financial Statements

3 Months Ended

Mar. 31, 2020

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, 2019 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 March 31, 2020 and December 31, 2019, and the results of operations for the three month periods ended March 31, 2020 and 2019.  The results of operations for the three month period ended March 31, 2020, 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 2019 Annual Report on Form 10-K for a disclosure of our accounting policies.

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Contingencies (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) shares	Mar. 31, 2019 USD ($)	Apr. 17, 2020 $ / shares	Dec. 31, 2019 USD ($)
Contingencies [Abstract]
Loss reimbursement on sold loans	$ 40	$ 110
Loss reimbursement reserve on sold mortgage loans	$ 920			$ 880
VISA Class A Common Stock [Member]
Investment Owned [Abstract]
Current conversion ratio	1.6228
VISA Class B Common Stock [Member]
Investment Owned [Abstract]
Number of shares owned (in shares) | shares	12,566
Current value of shares owned	$ 3,500
Subsequent Event [Member] | VISA Class A Common Stock [Member]
Investment Owned [Abstract]
Closing price (in dollars per share) | $ / shares			$ 169.54

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Fair Value Disclosures, Reconciliation for all Assets 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
	Mar. 31, 2020	Mar. 31, 2019
Reconciliation for all assets and (liabilities) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) [Roll Forward]
Beginning balance	$ 19,171	$ 21,400
Total gains (losses) realized and unrealized [Abstract]
Included in results of operations	(6,974)	(2,691)
Included in other comprehensive income (loss)	0	0
Purchases, issuances, settlements, maturities and calls	2,632	1,200
Transfers in and/or out of Level 3	0	0
Ending balance	14,829	19,909
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 March 31	$ (6,974)	$ (2,691)

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Shareholders' Equity and Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2020

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 March 31,
	2020		2019
	(In thousands, except per share data)
Net income	$	4,810	$	9,381
Weighted average shares outstanding (1)		22,271		23,588
Stock units for deferred compensation plan for non-employee directors		122		130
Effect of stock options		99		127
Performance share units		37		40
Weighted average shares outstanding for calculation of diluted earnings per share		22,529		23,885
Net income per common share
Basic (1)	$	0.22	$	0.40
Diluted	$	0.21	$	0.39

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

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Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

16. Leases

We have entered into leases in the normal course of business primarily for 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 together for all leases.  We have also elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on our Condensed Consolidated Statements of Financial Condition.  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 right of use (“ROU”) assets and lease liabilities if they are reasonably certain of exercise.

Leases are classified as operating or finance leases at the lease commencement date (we did not have any finance leases as of March 31, 2020).  Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term.  The ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of the lease payment over the lease term.

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 March 31,
	2020		2019
	(In thousands)
Operating lease cost	$	486	$	564
Variable lease cost		15		23
Short-term lease cost		7		5
Total	$	508	$	592

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:

	March 31, 2020			December 31, 2019
	(Dollars in thousands)
Lease right of use asset (1)	$	7,968		$	8,282
Lease liabilities (2)	$	8,002		$	8,304
Weighted average remaining lease term (years)		7.30			7.47
Weighted average discount rate		2.7	%		2.8	%

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

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

Maturity analysis of our lease liabilities at March 31, 2020 based on required contractual payments follows:

	(In thousands)
Nine months ending December 31, 2020	$	1,228
2021		1,446
2022		1,341
2023		1,186
2024		802
2025 and thereafter		2,840
Total lease payments		8,843
Less imputed interest		(841	)
Total	$	8,002

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Fair Values of Financial Instruments

3 Months Ended

Mar. 31, 2020

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)
March 31, 2020
Assets
Cash and due from banks	$	48,753	$	48,753	$	48,753	$	-	$	-
Interest bearing deposits		21,538		21,538		21,538		-		-
Securities available for sale		594,284		594,284		-		594,284		-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA		NA		NA		NA
Net loans and loans held for sale		2,750,169		2,645,319		-		64,549		2,580,770
Accrued interest receivable		10,519		10,519		-		2,583		7,936
Derivative financial instruments		17,610		17,610		-		17,610		-
Liabilities
Deposits with no stated maturity (1)	$	2,529,503	$	2,529,503	$	2,529,503	$	-	$	-
Deposits with stated maturity (1)		554,061		555,820		-		555,820		-
Other borrowings		101,954		103,755		-		103,755		-
Subordinated debentures		39,473		25,619		-		25,619		-
Accrued interest payable		1,195		1,195		37		1,158		-
Derivative financial instruments		15,286		15,286		-		15,286		-
December 31, 2019
Assets
Cash and due from banks	$	53,295	$	53,295	$	53,295	$	-	$	-
Interest bearing deposits		12,009		12,009		12,009		-		-
Interest bearing deposits - time		350		350		-		350		-
Securities available for sale		518,400		518,400		-		518,400		-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA		NA		NA		NA
Net loans and loans held for sale		2,768,675		2,768,817		-		69,800		2,699,017
Accrued interest receivable		10,108		10,108		8		1,752		8,348
Derivative financial instruments		5,464		5,464		-		5,464		-
Liabilities
Deposits with no stated maturity (1)	$	2,427,190	$	2,427,190	$	2,427,190	$	-	$	-
Deposits with stated maturity (1)		609,537		610,235		-		610,235		-
Other borrowings		88,646		88,680		-		88,680		-
Subordinated debentures		39,456		33,149		-		33,149		-
Accrued interest payable		1,296		1,296		97		1,199		-
Derivative financial instruments		4,402		4,402		-		4,402		-

(1) Deposits with no stated maturity include reciprocal deposits with a recorded book balance of $424.569 million and $388.369 million at March 31, 2020 and December 31, 2019, respectively. Deposits with a stated maturity include reciprocal deposits with a recorded book balance of $40.005 million and $42.658 million at March 31, 2020 and December 31, 2019, 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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Securities, Gains and Losses Realized on Sale of Securities Available for Sale (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Gain and losses realized on sale of securities available for sale [Abstract]
Proceeds	$ 21,743	$ 42,236
Realized gains	253	169
Realized losses	$ 0	32
Trading securities, realized gain (loss)		$ 167

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Loans, Impaired Financing Receivables (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Impaired loans with no allocated allowance for loan losses [Abstract]
Troubled debt restructurings ("TDR")	$ 232		$ 337
Non - TDR	1,318		1,550
Impaired loans with an allocated allowance for loan losses [Abstract]
TDR - allowance based on collateral	9,535		1,587
TDR - allowance based on present value cash flow	40,769		48,798
Non - TDR - allowance based on collateral	11,205		3,365
Total impaired loans	63,059		55,637
Amount of allowance for loan losses allocated [Abstract]
TDR - allowance based on collateral	1,247		542
TDR - allowance based on present value cash flow	4,000		4,641
Non - TDR - allowance based on collateral	2,891		972
Total amount of allowance for loan losses allocated	8,138		6,155
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	1,550		1,887
Unpaid Principal Balance, with no related allowance for loan losses recorded	2,057		2,115
With no related allowance for loan losses recorded	0		0
Recorded Investment, with an allowance for loan losses recorded	61,751		54,005
Unpaid Principal Balance, with an allowance for loan losses recorded	64,314		56,708
Recorded Investment	63,301		55,892
Unpaid Principal Balance	66,371		58,823
Related Allowance	8,138		6,155
Accrued interest included in recorded investment	242		255
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	1,721	$ 180
Interest Income Recognized, with no related allowance for loan losses recorded	8	0
Average Recorded Investment, with an allowance for loan losses recorded	57,880	57,938
Interest Income Recognized, with an allowance for loan losses recorded	878	765
Average Recorded Investment	59,601	58,118
Interest Income Recognized	886	765
Commercial [Member] | Commercial and Industrial [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	84		257
Unpaid Principal Balance, with no related allowance for loan losses recorded	84		257
With no related allowance for loan losses recorded	0		0
Recorded Investment, with an allowance for loan losses recorded	2,409		1,655
Unpaid Principal Balance, with an allowance for loan losses recorded	2,496		1,706
Recorded Investment	2,493		1,912
Unpaid Principal Balance	2,580		1,963
Related Allowance	685		453
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	171	0
Interest Income Recognized, with no related allowance for loan losses recorded	1	0
Average Recorded Investment, with an allowance for loan losses recorded	2,032	3,278
Interest Income Recognized, with an allowance for loan losses recorded	38	20
Average Recorded Investment	2,203	3,278
Interest Income Recognized	39	20
Commercial [Member] | Commercial Real Estate [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		796
Unpaid Principal Balance, with no related allowance for loan losses recorded	0		796
With no related allowance for loan losses recorded	0		0
Recorded Investment, with an allowance for loan losses recorded	15,555		6,685
Unpaid Principal Balance, with an allowance for loan losses recorded	15,479		6,661
Recorded Investment	15,555		7,481
Unpaid Principal Balance	15,479		7,457
Related Allowance	2,782		578
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	398	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0
Average Recorded Investment, with an allowance for loan losses recorded	11,120	5,035
Interest Income Recognized, with an allowance for loan losses recorded	223	67
Average Recorded Investment	11,518	5,035
Interest Income Recognized	223	67
Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	154		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	246		0
With no related allowance for loan losses recorded	0		0
Recorded Investment, with an allowance for loan losses recorded	23,413		1,447
Unpaid Principal Balance, with an allowance for loan losses recorded	24,861		1,445
Recorded Investment	23,567		1,447
Unpaid Principal Balance	25,107		1,445
Related Allowance	2,351		91
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	77	0
Interest Income Recognized, with no related allowance for loan losses recorded	1	0
Average Recorded Investment, with an allowance for loan losses recorded	12,430	1,579
Interest Income Recognized, with an allowance for loan losses recorded	360	27
Average Recorded Investment	12,507	1,579
Interest Income Recognized	361	27
Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	385		212
Unpaid Principal Balance, with no related allowance for loan losses recorded	410		217
With no related allowance for loan losses recorded	0		0
Recorded Investment, with an allowance for loan losses recorded	598		10,163
Unpaid Principal Balance, with an allowance for loan losses recorded	652		10,695
Recorded Investment	983		10,375
Unpaid Principal Balance	1,062		10,912
Related Allowance	157		1,031
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	299	179
Interest Income Recognized, with no related allowance for loan losses recorded	4	0
Average Recorded Investment, with an allowance for loan losses recorded	5,381	18,579
Interest Income Recognized, with an allowance for loan losses recorded	4	356
Average Recorded Investment	5,680	18,758
Interest Income Recognized	8	356
Mortgage [Member] | 1-4 Non-owner Occupied [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	389		214
Unpaid Principal Balance, with no related allowance for loan losses recorded	554		366
With no related allowance for loan losses recorded	0		0
Recorded Investment, with an allowance for loan losses recorded	4,606		4,962
Unpaid Principal Balance, with an allowance for loan losses recorded	5,052		5,542
Recorded Investment	4,995		5,176
Unpaid Principal Balance	5,606		5,908
Related Allowance	465		572
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	302	0
Interest Income Recognized, with no related allowance for loan losses recorded	2	0
Average Recorded Investment, with an allowance for loan losses recorded	4,784	4,069
Interest Income Recognized, with an allowance for loan losses recorded	66	64
Average Recorded Investment	5,086	4,069
Interest Income Recognized	68	64
Mortgage [Member] | 1-4 Family - 2nd Lien [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	384		407
Unpaid Principal Balance, with no related allowance for loan losses recorded	384		438
With no related allowance for loan losses recorded	0		0
Recorded Investment, with an allowance for loan losses recorded	813		14,059
Unpaid Principal Balance, with an allowance for loan losses recorded	832		15,243
Recorded Investment	1,197		14,466
Unpaid Principal Balance	1,216		15,681
Related Allowance	214		1,695
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	396	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0
Average Recorded Investment, with an allowance for loan losses recorded	7,436	8,802
Interest Income Recognized, with an allowance for loan losses recorded	4	3
Average Recorded Investment	7,832	8,802
Interest Income Recognized	4	3
Mortgage [Member] | Resort Lending [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	154		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	379		0
With no related allowance for loan losses recorded	0		0
Recorded Investment, with an allowance for loan losses recorded	11,544		12,110
Unpaid Principal Balance, with an allowance for loan losses recorded	11,786		12,263
Recorded Investment	11,698		12,110
Unpaid Principal Balance	12,165		12,263
Related Allowance	1,204		1,474
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	77	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0
Average Recorded Investment, with an allowance for loan losses recorded	11,827	13,148
Interest Income Recognized, with an allowance for loan losses recorded	141	175
Average Recorded Investment	11,904	13,148
Interest Income Recognized	141	175
Installment [Member] | Boat Lending [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		0
Unpaid Principal Balance, with no related allowance for loan losses recorded	0		0
With no related allowance for loan losses recorded	0		0
Recorded Investment, with an allowance for loan losses recorded	75		0
Unpaid Principal Balance, with an allowance for loan losses recorded	99		0
Recorded Investment	75		0
Unpaid Principal Balance	99		0
Related Allowance	27		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
Interest Income Recognized, with no related allowance for loan losses recorded	0	0
Average Recorded Investment, with an allowance for loan losses recorded	38	51
Interest Income Recognized, with an allowance for loan losses recorded	0	0
Average Recorded Investment	38	51
Interest Income Recognized	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
Unpaid Principal Balance, with no related allowance for loan losses recorded	0		0
With no related allowance for loan losses recorded	0		0
Recorded Investment, with an allowance for loan losses recorded	129		0
Unpaid Principal Balance, with an allowance for loan losses recorded	150		0
Recorded Investment	129		0
Unpaid Principal Balance	150		0
Related Allowance	32		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
Interest Income Recognized, with no related allowance for loan losses recorded	0	0
Average Recorded Investment, with an allowance for loan losses recorded	65	81
Interest Income Recognized, with an allowance for loan losses recorded	1	1
Average Recorded Investment	65	81
Interest Income Recognized	1	1
Installment [Member] | Other [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0		1
Unpaid Principal Balance, with no related allowance for loan losses recorded	0		41
With no related allowance for loan losses recorded	0		0
Recorded Investment, with an allowance for loan losses recorded	2,609		2,924
Unpaid Principal Balance, with an allowance for loan losses recorded	2,907		3,153
Recorded Investment	2,609		2,925
Unpaid Principal Balance	2,907		3,194
Related Allowance	221		$ 261
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	1	1
Interest Income Recognized, with no related allowance for loan losses recorded	0	0
Average Recorded Investment, with an allowance for loan losses recorded	2,767	3,316
Interest Income Recognized, with an allowance for loan losses recorded	41	52
Average Recorded Investment	2,768	3,317
Interest Income Recognized	$ 41	$ 52

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Loans, Credit Scores by Loan Class, Mortgage and Installment Segments (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Loan ratings/credit scores by loan class [Abstract]
Accrued interest included in total		$ 7,936		$ 8,347
Other Real Estate and Foreclosed Assets [Abstract]
Foreclosed residential real estate properties		1,000		1,200
Retail mortgage loans in process of foreclosure		700		700
Sale of Mortgage Loans [Abstract]
Proceeds from sale of loans		2,395	$ 40,630
Gain on sale of loans		8,840	3,611
Residential Fixed Rate Mortgage Loans [Member] | Freddie Mac [Member]
Sale of Mortgage Loans [Abstract]
Proceeds from sale of loans		26,200
Gain on sale of loans		720
Mortgage [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	131,902		141,630
750-799	[1]	457,816		474,044
700-749	[1]	286,421		281,835
650-699	[1]	119,855		119,052
600-649	[1]	44,857		47,236
550-599	[1]	16,578		17,061
500-549	[1]	12,419		13,499
Under 500	[1]	4,155		3,972
Unknown	[1]	0		4,737
Total	[1]	1,074,003		1,103,066
Accrued interest included in total	[1]	4,036		4,155
Mortgage [Member] | Residential Adjustable Rate Mortgage Loans [Member]
Sale of Mortgage Loans [Abstract]
Proceeds from sale of loans			40,600
Gain on sale of loans			10
Mortgage [Member] | Residential Fixed Rate Mortgage Loans [Member]
Sale of Mortgage Loans [Abstract]
Proceeds from sale of loans		2,400
Gain on sale of loans		700
Mortgage [Member] | Residential Fixed Rate Mortgage Loans [Member] | Freddie Mac [Member]
Sale of Mortgage Loans [Abstract]
Proceeds from sale of loans			29,800
Gain on sale of loans			$ 530
Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	50,414		48,486
750-799	[1]	209,339		198,491
700-749	[1]	114,474		106,609
650-699	[1]	37,985		31,553
600-649	[1]	16,755		13,230
550-599	[1]	4,101		514
500-549	[1]	3,693		1,519
Under 500	[1]	1,399		641
Unknown	[1]	0		510
Total	[1]	438,160		401,553
Accrued interest included in total	[1]	1,264		1,139
Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	34,580		43,848
750-799	[1]	87,685		111,521
700-749	[1]	90,784		95,064
650-699	[1]	43,241		51,174
600-649	[1]	16,693		21,938
550-599	[1]	8,571		12,308
500-549	[1]	5,236		7,940
Under 500	[1]	1,674		2,208
Unknown	[1]	0		1,259
Total	[1]	288,464		347,260
Accrued interest included in total	[1]	1,522		1,662
Mortgage [Member] | 1-4 Non-owner Occupied [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	23,209		24,315
750-799	[1]	83,613		84,656
700-749	[1]	35,455		34,839
650-699	[1]	15,242		13,995
600-649	[1]	5,548		5,897
550-599	[1]	1,751		1,863
500-549	[1]	1,714		1,870
Under 500	[1]	506		533
Unknown	[1]	0		1,569
Total	[1]	167,038		169,537
Accrued interest included in total	[1]	562		586
Mortgage [Member] | 1-4 Family - 2nd Lien [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	13,108		13,905
750-799	[1]	48,332		50,012
700-749	[1]	31,576		30,697
650-699	[1]	14,107		14,267
600-649	[1]	3,848		4,097
550-599	[1]	1,496		1,703
500-549	[1]	1,208		1,281
Under 500	[1]	499		511
Unknown	[1]	0		69
Total	[1]	114,174		116,542
Accrued interest included in total	[1]	448		502
Mortgage [Member] | Resort Lending [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	10,591		11,076
750-799	[1]	28,847		29,364
700-749	[1]	14,132		14,626
650-699	[1]	9,280		8,063
600-649	[1]	2,013		2,074
550-599	[1]	659		673
500-549	[1]	568		889
Under 500	[1]	77		79
Unknown	[1]	0		1,330
Total	[1]	66,167		68,174
Accrued interest included in total	[1]	240		266
Installment [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	62,572		60,122
750-799	[1]	248,555		244,127
700-749	[1]	101,551		99,749
650-699	[1]	41,043		41,269
600-649	[1]	7,623		8,135
550-599	[1]	3,373		3,422
500-549	[1]	1,739		1,968
Under 500	[1]	545		615
Unknown	[1]	756		1,204
Total	[1]	467,757		460,611
Accrued interest included in total	[1]	1,208		1,194
Installment [Member] | Boat Lending [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	28,885		28,041
750-799	[1]	120,261		118,380
700-749	[1]	41,494		41,490
650-699	[1]	11,320		11,485
600-649	[1]	2,117		2,254
550-599	[1]	1,029		946
500-549	[1]	319		377
Under 500	[1]	292		309
Unknown	[1]	0		0
Total	[1]	205,717		203,282
Accrued interest included in total	[1]	472		490
Installment [Member] | Recreational Vehicle Lending [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	26,056		24,470
750-799	[1]	90,484		88,164
700-749	[1]	32,596		31,055
650-699	[1]	7,116		7,267
600-649	[1]	1,391		1,411
550-599	[1]	580		592
500-549	[1]	429		464
Under 500	[1]	22		22
Unknown	[1]	0		0
Total	[1]	158,674		153,445
Accrued interest included in total	[1]	366		378
Installment [Member] | Other [Member]
Loan ratings/credit scores by loan class [Abstract]
800 and above	[1]	7,631		7,611
750-799	[1]	37,810		37,583
700-749	[1]	27,461		27,204
650-699	[1]	22,607		22,517
600-649	[1]	4,115		4,470
550-599	[1]	1,764		1,884
500-549	[1]	991		1,127
Under 500	[1]	231		284
Unknown	[1]	756		1,204
Total	[1]	103,366		103,884
Accrued interest included in total	[1]	$ 370		$ 326

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

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Condensed Consolidated Statements of Shareholders' Equity (unaudited) (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Condensed Consolidated Statements of Shareholders' Equity (unaudited) [Abstract]
Cash dividends declared (in dollars per share)	$ 0.20	$ 0.18
Repurchase of shares of common stock (in shares)	678,929	115,787
Issuance of shares of common stock (in shares)	11,567	68,399
Share based compensation, common stock (in shares)	105,894	84,128
Share based compensation withholding obligation, common stock (in shares)	28,174	56,286

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Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands		Mar. 31, 2020	Dec. 31, 2019
Assets [Abstract]
Interest bearing deposits - time		$ 0	$ 350
Securities available for sale		594,284	518,400
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	18,359
Liabilities [Abstract]
Other borrowings		101,954	88,646
Subordinated debentures		39,473	39,456
Reciprocal deposits included in deposits with no stated maturity		424,569	388,369
Reciprocal deposits included in deposits with stated maturity		40,005	42,658
Recorded Book Balance [Member]
Assets [Abstract]
Cash and due from banks		48,753	53,295
Interest bearing deposits		21,538	12,009
Interest bearing deposits - time			350
Securities available for sale		594,284	518,400
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	18,359
Net loans and loans held for sale		2,750,169	2,768,675
Accrued interest receivable		10,519	10,108
Derivative financial instruments		17,610	5,464
Liabilities [Abstract]
Deposits with no stated maturity	[1]	2,529,503	2,427,190
Deposits with stated maturity	[1]	554,061	609,537
Other borrowings		101,954	88,646
Subordinated debentures		39,473	39,456
Accrued interest payable		1,195	1,296
Derivative financial instruments		15,286	4,402
Fair Value [Member]
Assets [Abstract]
Cash and due from banks		48,753	53,295
Interest bearing deposits		21,538	12,009
Interest bearing deposits - time			350
Securities available for sale		594,284	518,400
Net loans and loans held for sale		2,645,319	2,768,817
Accrued interest receivable		10,519	10,108
Derivative financial instruments		17,610	5,464
Liabilities [Abstract]
Deposits with no stated maturity		2,529,503	2,427,190
Deposits with stated maturity		555,820	610,235
Other borrowings		103,755	88,680
Subordinated debentures		25,619	33,149
Accrued interest payable		1,195	1,296
Derivative financial instruments		15,286	4,402
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets [Abstract]
Cash and due from banks		48,753	53,295
Interest bearing deposits		21,538	12,009
Interest bearing deposits - time			0
Securities available for sale		0	0
Net loans and loans held for sale		0	0
Accrued interest receivable		0	8
Derivative financial instruments		0	0
Liabilities [Abstract]
Deposits with no stated maturity		2,529,503	2,427,190
Deposits with stated maturity		0	0
Other borrowings		0	0
Subordinated debentures		0	0
Accrued interest payable		37	97
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			350
Securities available for sale		594,284	518,400
Net loans and loans held for sale		64,549	69,800
Accrued interest receivable		2,583	1,752
Derivative financial instruments		17,610	5,464
Liabilities [Abstract]
Deposits with no stated maturity		0	0
Deposits with stated maturity		555,820	610,235
Other borrowings		103,755	88,680
Subordinated debentures		25,619	33,149
Accrued interest payable		1,158	1,199
Derivative financial instruments		15,286	4,402
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
Securities available for sale		0	0
Net loans and loans held for sale		2,580,770	2,699,017
Accrued interest receivable		7,936	8,348
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 $424.569 million and $388.369 million at March 31, 2020 and December 31, 2019, respectively. Deposits with a stated maturity include reciprocal deposits with a recorded book balance of $40.005 million and $42.658 million at March 31, 2020 and December 31, 2019, respectively.

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Fair Value Disclosures, Changes in Fair Value for Financial Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Changes in fair value for financial assets [Abstract]
Equity Securities at fair value, net gains (losses)		$ 167
Loans held for sale, net gains (losses)	$ 523	96
Capitalized mortgage loan servicing rights, net gains (losses)	(6,974)	(2,691)
Impairment charges recognized [Abstract]
Collateral dependent loans, carrying amount	16,600		$ 3,400
Collateral dependent loans, valuation allowance	4,100		1,500
Additional provision for loan losses on impaired loans	2,400	500
Other real estate, carrying amount	500		60
Other real estate, valuation allowance	160		$ 90
Other real estate, additional charge	90	120
Securities [Member]
Changes in fair value for financial assets [Abstract]
Equity Securities at fair value, net gains (losses)		167
Mortgage Loans [Member]
Changes in fair value for financial assets [Abstract]
Loans held for sale, net gains (losses)	523	96
Mortgage Loan Servicing, Net [Member]
Changes in fair value for financial assets [Abstract]
Capitalized mortgage loan servicing rights, net gains (losses)	$ (6,974)	$ (2,691)

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Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019
Interest Income
Interest and fees on loans		$ 31,764	$ 32,681
Interest on securities
Taxable		3,059	3,006
Tax-exempt		390	374
Other investments		366	575
Total Interest Income		35,579	36,636
Interest Expense
Deposits		4,700	5,681
Other borrowings and subordinated debentures		688	712
Total Interest Expense		5,388	6,393
Net Interest Income		30,191	30,243
Provision for loan losses		6,721	664
Net Interest Income After Provision for Loan Losses		23,470	29,579
Non-interest Income
Service charges on deposit accounts		2,591	2,640
Interchange income		2,457	2,355
Net gains on assets
Mortgage loans		8,840	3,611
Securities		253	304
Mortgage loan servicing, net		(5,300)	(1,215)
Other		2,163	2,264
Total Non-Interest Income		11,004	9,959
Non-interest Expense
Compensation and employee benefits		16,509	16,351
Occupancy, net		2,460	2,505
Data processing		2,355	2,144
Furniture, fixtures and equipment		1,036	1,029
Communications		803	769
Interchange expense		859	688
Loan and collection		805	634
Advertising		683	672
Legal and professional		393	369
FDIC deposit insurance		370	368
Other		2,446	2,461
Total Non-interest Expense		28,719	27,990
Income Before Income Tax		5,755	11,548
Income tax expense		945	2,167
Net Income		$ 4,810	$ 9,381
Net Income Per Common Share
Basic (in dollars per share)	[1]	$ 0.22	$ 0.40
Diluted (in dollars per share)		$ 0.21	$ 0.39

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

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Share Based Compensation, Options Exercised During the Periods (Details) - Stock Options [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Information regarding options exercised [Abstract]
Intrinsic value	$ 210	$ 836
Cash proceeds received	41	695
Tax benefit realized	$ 44	$ 176

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Goodwill and Other Intangibles (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Mar. 31, 2020
Amortized intangible assets - core deposits [Abstract]
Gross Carrying Amount	$ 11,916	$ 11,916
Accumulated Amortization	6,590	6,845
Unamortized intangible assets - goodwill [Abstract]
Gross Carrying Amount	28,300	28,300
Goodwill impairment	$ 0
Summary of estimated core deposit intangible amortization [Abstract]
Nine months ending December 31, 2020		765
2021		970
2022		785
2023		547
2024		516
2025 and thereafter		1,488
Total		$ 5,071

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Loans, Purchase Credit Impaired ("PCI") Loans (Details) - TCSB Bancorp, Inc. [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Carrying amount of loans that meet the criteria of ASC 310-30 treatment [Abstract]
Total carrying amount	$ 2,218		$ 2,285
Allowance for loan losses	0		0
Carrying amount, net of allowance for loan losses	2,218		2,285
Accretable yield of PCI loans, or income expected to be collected [Roll Forward]
Balance at beginning of period	640	$ 462
New loans purchased	0	0
Accretion recorded as loan interest income	(32)	(39)
Reclassification from (to) nonaccretable difference	0	365
Disposals/other adjustments	0	0
Balance at end of period	608	$ 788
Commercial [Member]
Carrying amount of loans that meet the criteria of ASC 310-30 treatment [Abstract]
Total carrying amount	1,340		1,394
Mortgage [Member]
Carrying amount of loans that meet the criteria of ASC 310-30 treatment [Abstract]
Total carrying amount	567		575
Installment [Member]
Carrying amount of loans that meet the criteria of ASC 310-30 treatment [Abstract]
Total carrying amount	$ 311		$ 316

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Share Based Compensation

3 Months Ended

Mar. 31, 2020

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 0.4 million shares of common stock as of March 31, 2020.  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 March 31, 2020. 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.

A summary of restricted stock and performance stock units (“PSU”) granted pursuant to our long-term incentive plan follows:

	Three Months Ended March 31,
	2020		2019
Restricted stock		52,996		52,716
PSU		20,897		22,016

Except for 0.002 million shares of restricted stock issued during the first quarter of 2019 that vest ratably over three years, the shares of restricted stock and PSUs shown in the above table 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 on a current basis are issued each quarter and vest immediately. Shares issued on a deferred basis are credited at the rate of 90% of the current value and vest immediately.  During the three month periods ended March 31, 2020 and 2019 we issued 0.004 million and 0.003 million shares, respectively and expensed their value during those same periods.

Total compensation expense recognized for grants pursuant to our long-term incentive plan was $0.5 million and $0.4 million during the three month periods ended March 31, 2020 and 2019, respectively.  The corresponding tax benefit relating to this expense was $0.1 million for each period. Total expense recognized for non-employee director share based payments was $0.09 million and $0.05 million during the three month periods ended March 31, 2020 and 2019, respectively. The corresponding tax benefit relating to this expense was $0.2 million and $0.01 million for each period, respectively.

At March 31, 2020, the total expected compensation cost related to non-vested restricted stock and PSUs not yet recognized was $3.2 million.  The weighted-average period over which this amount will be recognized is 2.4 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, 2020		138,506		$	4.62
Granted		-
Exercised		(11,567	)		3.54
Forfeited		-
Expired		-
Outstanding at March 31, 2020		126,939		$	4.71		2.8	$	1,044
Vested and expected to vest at March 31, 2020		126,939		$	4.71		2.8	$	1,044
Exercisable at March 31, 2020		126,939		$	4.71		2.8	$	1,044

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, 2020		245,726		$	21.72
Granted		73,893			22.80
Vested		(64,263	)		21.24
Forfeited		(5,468	)		23.71
Outstanding at March 31, 2020		249,888		$	22.12

Certain information regarding options exercised during the periods follows:

	Three Months Ended March 31,
	2020		2019
	(In thousands)
Intrinsic value	$	210	$	836
Cash proceeds received	$	41	$	695
Tax benefit realized	$	44	$	176

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Loans

3 Months Ended

Mar. 31, 2020

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 March 31, follows:

	Commercial			Mortgage			Installment			Subjective Allocation			Total
	(In thousands)
2020
Balance at beginning of period	$	7,922		$	8,216		$	1,283		$	8,727		$	26,148
Additions (deductions)
Provision for loan losses		2,218			(508	)		129			4,882			6,721
Recoveries credited to the allowance		108			117			174			-			399
Loans charged against the allowance		(36	)		(409	)		(328	)		-			(773	)
Balance at end of period	$	10,212		$	7,416		$	1,258		$	13,609		$	32,495
2019
Balance at beginning of period	$	7,090		$	7,978		$	895		$	8,925		$	24,888
Additions (deductions)
Provision for loan losses		420			573			523			(852	)		664
Recoveries credited to the allowance		127			224			217			-			568
Loans charged against the allowance		(119	)		(363	)		(384	)		-			(866	)
Balance at end of period	$	7,518		$	8,412		$	1,251		$	8,073		$	25,254

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

	Commercial		Mortgage		Installment		Subjective Allocation		Total
	(In thousands)
March 31, 2020
Allowance for loan losses:
Individually evaluated for impairment	$	3,467	$	4,391	$	280	$	-	$	8,138
Collectively evaluated for impairment		6,745		3,025		978		13,609		24,357
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	10,212	$	7,416	$	1,258	$	13,609	$	32,495
Loans
Individually evaluated for impairment	$	18,048	$	42,440	$	2,813			$	63,301
Collectively evaluated for impairment		1,164,903		1,030,996		464,633				2,660,532
Loans acquired with deteriorated credit quality		1,340		567		311				2,218
Total loans recorded investment		1,184,291		1,074,003		467,757				2,726,051
Accrued interest included in recorded investment		2,692		4,036		1,208				7,936
Total loans	$	1,181,599	$	1,069,967	$	466,549			$	2,718,115
December 31, 2019
Allowance for loan losses:
Individually evaluated for impairment	$	1,031	$	4,863	$	261	$	-	$	6,155
Collectively evaluated for impairment		6,891		3,353		1,022		8,727		19,993
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	7,922	$	8,216	$	1,283	$	8,727	$	26,148
Loans
Individually evaluated for impairment	$	9,393	$	43,574	$	2,925			$	55,892
Collectively evaluated for impairment		1,158,906		1,058,917		457,370				2,675,193
Loans acquired with deteriorated credit quality		1,394		575		316				2,285
Total loans recorded investment		1,169,693		1,103,066		460,611				2,733,370
Accrued interest included in recorded investment		2,998		4,155		1,194				8,347
Total loans	$	1,166,695	$	1,098,911	$	459,417			$	2,725,023

Loans on non-accrual status and past due more than 90 days (“Non-performing Loans”) follow⁽¹⁾:

	90+ and Still Accruing		Non- Accrual		Total Non- Performing Loans
	(In thousands)
March 31, 2020
Commercial
Commercial and industrial (2)	$	-	$	1,285	$	1,285
Commercial real estate		-		7,756		7,756
Mortgage
1-4 family owner occupied - jumbo		-		2,356		2,356
1-4 family owner occupied - non-jumbo (3)		-		1,804		1,804
1-4 family non-owner occupied		-		1,122		1,122
1-4 family - 2nd lien		-		1,326		1,326
Resort lending		-		438		438
Installment
Boat lending		-		150		150
Recreational vehicle lending		-		84		84
Other		-		457		457
Total recorded investment	$	-	$	16,778	$	16,778
Accrued interest included in recorded investment	$	-	$	-	$	-
December 31, 2019
Commercial
Commercial and industrial (2)	$	-	$	565	$	565
Commercial real estate		-		735		735
Mortgage
1-4 family owner occupied - jumbo		-		1,179		1,179
1-4 family owner occupied - non-jumbo (3)		-		3,540		3,540
1-4 family non-owner occupied		-		1,039		1,039
1-4 family - 2nd lien		-		979		979
Resort lending		-		690		690
Installment
Boat lending		-		332		332
Recreational vehicle lending		-		3		3
Other		-		470		470
Total recorded investment	$	-	$	9,532	$	9,532
Accrued interest included in recorded investment	$	-	$	-	$	-

(1)Non-performing loans exclude purchase credit impaired loans.

(2)Non-performing commercial and industrial loans exclude $0.053 million and $0.077 million of government guaranteed loans at March 31, 2020 and December 31, 2019, respectively.

(3)Non-performing 1-4 family owner occupied – non jumbo loans exclude $0.623 million and $0.569 million of government guaranteed loans at March 31, 2020 and December 31, 2019, respectively.

An aging analysis of loans by class follows:

	Loans Past Due								Loans not		Total
	30-59 days		60-89 days		90+ days		Total		Past Due		Loans
	(In thousands)
March 31, 2020
Commercial
Commercial and industrial	$	339	$	-	$	70	$	409	$	581,613	$	582,022
Commercial real estate		175		-		-		175		602,094		602,269
Mortgage
1-4 family owner occupied - jumbo		911		947		1,436		3,294		434,866		438,160
1-4 family owner occupied - non-jumbo		2,296		628		584		3,508		284,956		288,464
1-4 family non-owner occupied		1,039		348		690		2,077		164,961		167,038
1-4 family - 2nd lien		980		455		862		2,297		111,877		114,174
Resort lending		226		-		402		628		65,539		66,167
Installment
Boat lending		548		75		75		698		205,019		205,717
Recreational vehicle lending		242		42		54		338		158,336		158,674
Other		385		184		216		785		102,581		103,366
Total	$	7,141	$	2,679	$	4,389	$	14,209	$	2,711,842	$	2,726,051
Accrued interest included in recorded investment	$	71	$	41	$	-	$	112	$	7,824	$	7,936
December 31, 2019
Commercial
Commercial and industrial	$	-	$	289	$	102	$	391	$	564,480	$	564,871
Commercial real estate		177		-		735		912		603,910		604,822
Mortgage
1-4 family owner occupied - jumbo		1,757		1,037		-		2,794		398,759		401,553
1-4 family owner occupied - non-jumbo		2,672		852		1,387		4,911		342,349		347,260
1-4 family non-owner occupied		695		136		623		1,454		168,083		169,537
1-4 family - 2nd lien		909		90		386		1,385		115,157		116,542
Resort lending		364		53		565		982		67,192		68,174
Installment
Boat lending		337		107		88		532		202,750		203,282
Recreational vehicle lending		161		97		3		261		153,184		153,445
Other		377		275		202		854		103,030		103,884
Total recorded investment	$	7,449	$	2,936	$	4,091	$	14,476	$	2,718,894	$	2,733,370
Accrued interest included in recorded investment	$	74	$	34	$	-	$	108	$	8,239	$	8,347

Impaired loans are as follows:

	March 31, 2020		December 31, 2019
Impaired loans with no allocated allowance for loan losses	(In thousands)
Troubled debt restructurings (“TDR”)	$	232	$	337
Non - TDR		1,318		1,550
Impaired loans with an allocated allowance for loan losses
TDR - allowance based on collateral		9,535		1,587
TDR - allowance based on present value cash flow		40,769		48,798
Non - TDR - allowance based on collateral		11,205		3,365
Total impaired loans	$	63,059	$	55,637
Amount of allowance for loan losses allocated
TDR - allowance based on collateral	$	1,247	$	542
TDR - allowance based on present value cash flow		4,000		4,641
Non - TDR - allowance based on collateral		2,891		972
Total amount of allowance for loan losses allocated	$	8,138	$	6,155

Impaired loans by class  are as follows:

	March 31, 2020						December 31, 2019
	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
Commercial and industrial	$	84	$	84	$	-	$	257	$	257	$	-
Commercial real estate		-		-		-		796		796		-
Mortgage
1-4 family owner occupied - jumbo		154		246		-		-		-		-
1-4 family owner occupied - non-jumbo		385		410		-		212		217		-
1-4 family non-owner occupied		389		554		-		214		366		-
1-4 family - 2nd lien		384		384		-		407		438		-
Resort lending		154		379		-		-		-		-
Installment
Boat lending		-		-		-		-		-		-
Recreational vehicle lending		-		-		-		-		-		-
Other		-		-		-		1		41		-
		1,550		2,057		-		1,887		2,115		-
With an allowance for loan losses recorded:
Commercial
Commercial and industrial	$	2,409	$	2,496		685		1,655		1,706		453
Commercial real estate		15,555		15,479		2,782		6,685		6,661		578
Mortgage
1-4 family owner occupied - jumbo		23,413		24,861		2,351		1,447		1,445		91
1-4 family owner occupied - non-jumbo		598		652		157		10,163		10,695		1,031
1-4 family non-owner occupied		4,606		5,052		465		4,962		5,542		572
1-4 family - 2nd lien		813		832		214		14,059		15,243		1,695
Resort lending		11,544		11,786		1,204		12,110		12,263		1,474
Installment
Boat lending		75		99		27		-		-		-
Recreational vehicle lending		129		150		32		-		-		-
Other		2,609		2,907		221		2,924		3,153		261
		61,751		64,314		8,138		54,005		56,708		6,155
Total
Commercial
Commercial and industrial		2,493		2,580		685		1,912		1,963		453
Commercial real estate		15,555		15,479		2,782		7,481		7,457		578
Mortgage
1-4 family owner occupied - jumbo		23,567		25,107		2,351		1,447		1,445		91
1-4 family owner occupied - non-jumbo		983		1,062		157		10,375		10,912		1,031
1-4 family non-owner occupied		4,995		5,606		465		5,176		5,908		572
1-4 family - 2nd lien		1,197		1,216		214		14,466		15,681		1,695
Resort lending		11,698		12,165		1,204		12,110		12,263		1,474
Installment
Boat lending		75		99		27		-		-		-
Recreational vehicle lending		129		150		32		-		-		-
Other		2,609		2,907		221		2,925		3,194		261
Total	$	63,301	$	66,371	$	8,138	$	55,892	$	58,823	$	6,155
Accrued interest included in recorded investment	$	242					$	255

Average recorded investment in and interest income earned on impaired loans by class for the three month periods ending March 31, follows:

	2020				2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Commercial and industrial	$	171	$	1	$	-	$	-
Commercial real estate		398		-		-		-
Mortgage
1-4 family owner occupied - jumbo		77		1		-		-
1-4 family owner occupied - non-jumbo		299		4		179		-
1-4 family non-owner occupied		302		2		-		-
1-4 family - 2nd lien		396		-		-		-
Resort lending		77		-		-		-
Installment
Boat lending		-		-		-		-
Recreational vehicle lending		-		-		-		-
Other		1		-		1		-
		1,721		8		180		-
With an allowance for loan losses recorded:
Commercial
Commercial and industrial		2,032		38		3,278		20
Commercial real estate		11,120		223		5,035		67
Mortgage
1-4 family owner occupied - jumbo		12,430		360		1,579		27
1-4 family owner occupied - non-jumbo		5,381		4		18,579		356
1-4 family non-owner occupied		4,784		66		4,069		64
1-4 family - 2nd lien		7,436		4		8,802		3
Resort lending		11,827		141		13,148		175
Installment
Boat lending		38		-		51		-
Recreational vehicle lending		65		1		81		1
Other		2,767		41		3,316		52
		57,880		878		57,938		765
Total
Commercial
Commercial and industrial		2,203		39		3,278		20
Commercial real estate		11,518		223		5,035		67
Mortgage
1-4 family owner occupied - jumbo		12,507		361		1,579		27
1-4 family owner occupied - non-jumbo		5,680		8		18,758		356
1-4 family non-owner occupied		5,086		68		4,069		64
1-4 family - 2nd lien		7,832		4		8,802		3
Resort lending		11,904		141		13,148		175
Installment
Boat lending		38		-		51		-
Recreational vehicle lending		65		1		81		1
Other		2,768		41		3,317		52
Total	$	59,601	$	886	$	58,118	$	765

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

TDRs follow:

	March 31, 2020
	Commercial		Retail (1)			Total
	(In thousands)
Performing TDRs	$	8,924	$	39,253		$	48,177
Non-performing TDRs(2)		264		2,095	(3)		2,359
Total	$	9,188	$	41,348		$	50,536

		December 31, 2019
		Commercial	Retail (1)			Total
		(In thousands)
Performing TDRs	$	7,974	$	39,601		$	47,575
Non-performing TDRs(2)		540		2,607	(3)		3,147
Total	$	8,514	$	42,208		$	50,722

(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 $5.2 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings (“TDR”) at both March 31, 2020 and December 31, 2019, respectively.

During the three months ended March 31, 2020 and 2019, the terms of certain loans were modified as TDRs. 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 TDRs during the three-month periods ended March 31 follow:

	Number of Contracts		Pre-modification Balance		Post-modification Balance
	(Dollars in thousands)
2020
Commercial
Commercial and industrial		1	$	99	$	99
Commercial real estate		3		1,177		1,177
Mortgage
1-4 family owner occupied - jumbo		1		281		281
1-4 family owner occupied - non-jumbo		-		-		-
1-4 family non-owner occupied		-		-		-
1-4 family - 2nd lien		-		-		-
Resort lending		-		-		-
Installment
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		2		60		61
Total		7	$	1,617	$	1,618
2019
Commercial
Commercial and industrial		1	$	49	$	49
Commercial real estate		-		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-		-
1-4 family owner occupied - non-jumbo		1		281		281
1-4 family non-owner occupied		-		-		-
1-4 family - 2nd lien		-		-		-
Resort lending		-		-		-
Installment
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		2		60		61
Total		4	$	390	$	391

The TDRs described above for 2020 increased the allowance for loan losses by $0.27 million and resulted in zero charge offs while the TDRs described above for 2019 increased the allowance for loan losses by $0.01 million and resulted in zero charge offs.

There were no TDRs that subsequently defaulted within twelve months following the modification during the three months periods ended March 31, 2020 and 2019.

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.

Non-TDR Loan Modifications and Paycheck Protection Program (“PPP”) due to COVID-19 - On March 22, 2020, the federal banking agencies issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus”.  This guidance encourages financial institutions to work prudently with borrowers that may be unable to meet their contractual obligations because of the effects of COVID-19.  The guidance goes on to explain that in consultation with the Financial Accounting Standards Board staff that the federal banking agencies conclude that short-term modifications (e.g. six months) made on a good faith basis to borrowers who were current as of the implementation date of a relief program are not TDRs.  In addition, on March 27, 2020, President Trump signed the CARES Act.  Section 4013 of the CARES Act also addressed COVID-19 related modifications and specified that COVID-19 related modifications on loans that were current as of December 31, 2019 are not TDRs.  We are assisting both commercial and retail (mortgage and installment) borrowers with reduced or suspended payments. Commercial loan accommodations are typically a three month interest-only period while retail loan forbearances have primarily been payment suspensions for three months. For loans subject to these forbearance agreements  each borrower is required to resume making regularly scheduled loan payments at the end of the forbearance period.  The deferred principal and interest will be repaid based upon individualized agreements.  Options for repayment include separate repayment plans, extending the term of the loan or re-amortizing the loan based upon the affordability of the payment in relationship to a reduced income.  While some borrowers may elect to make a lump sum payment, we anticipate the majority will require some type of repayment plan.  During the forbearance period, the loan will not be reported as past due in keeping with the guidance discussed previously.  Through March 31, 2020, we had entered into loan modification agreements with 366 customers under this guidance with respect to $86.9 million of portfolio loans outstanding.

The CARES Act also included a $349 billion loan program administered through the SBA referred to as the PPP. Under the PPP, small businesses and other entities and individuals can apply for loans from existing SBA lenders and other approved regulated lenders that enroll in the program, subject to numerous limitations and eligibility criteria. We are participating as a lender in the PPP. The PPP opened on April 3, 2020; however, because of the short timeframe between the passing of the CARES Act and the opening of the PPP, there is some ambiguity in the laws, rules and guidance regarding the operation of the PPP, which exposes us to potential risks relating to noncompliance with the PPP. 

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)
March 31, 2020
Commercial and industrial	$	534,064	$	42,460	$	4,213	$	1,285	$	582,022
Commercial real estate		578,466		14,161		1,886		7,756		602,269
Total	$	1,112,530	$	56,621	$	6,099	$	9,041	$	1,184,291
Accrued interest included in total	$	2,503	$	167	$	22	$	-	$	2,692
December 31, 2019
Commercial and industrial	$	515,955	$	44,384	$	3,967	$	565	$	564,871
Commercial real estate		580,516		23,036		535		735		604,822
Total	$	1,096,471	$	67,420	$	4,502	$	1,300	$	1,169,693
Accrued interest included in total	$	2,763	$	205	$	30	$	-	$	2,998

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 Owner Occupied - Jumbo		1-4 Family Owner Occupied - Non-jumbo		1-4 Family Non-owner Occupied		1-4 Family 2nd Lien		Resort Lending		Total
	(In thousands)
March 31, 2020	$	50,414	$	34,580	$	23,209	$	13,108	$	10,591	$	131,902
800 and above
750-799		209,339		87,685		83,613		48,332		28,847		457,816
700-749		114,474		90,784		35,455		31,576		14,132		286,421
650-699		37,985		43,241		15,242		14,107		9,280		119,855
600-649		16,755		16,693		5,548		3,848		2,013		44,857
550-599		4,101		8,571		1,751		1,496		659		16,578
500-549		3,693		5,236		1,714		1,208		568		12,419
Under 500		1,399		1,674		506		499		77		4,155
Unknown		-		-		-		-		-		-
Total	$	438,160	$	288,464	$	167,038	$	114,174	$	66,167	$	1,074,003
Accrued interest included in total	$	1,264	$	1,522	$	562	$	448	$	240	$	4,036
December 31, 2019	$	48,486	$	43,848	$	24,315	$	13,905	$	11,076	$	141,630
800 and above
750-799		198,491		111,521		84,656		50,012		29,364		474,044
700-749		106,609		95,064		34,839		30,697		14,626		281,835
650-699		31,553		51,174		13,995		14,267		8,063		119,052
600-649		13,230		21,938		5,897		4,097		2,074		47,236
550-599		514		12,308		1,863		1,703		673		17,061
500-549		1,519		7,940		1,870		1,281		889		13,499
Under 500		641		2,208		533		511		79		3,972
Unknown		510		1,259		1,569		69		1,330		4,737
Total	$	401,553	$	347,260	$	169,537	$	116,542	$	68,174	$	1,103,066
Accrued interest included in total	$	1,139	$	1,662	$	586	$	502	$	266	$	4,155

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

	Installment(1)
	Boat Lending		Recreational Vehicle Lending		Other		Total
	(In thousands)
March 31, 2020	$	28,885	$	26,056	$	7,631	$	62,572
800 and above
750-799		120,261		90,484		37,810		248,555
700-749		41,494		32,596		27,461		101,551
650-699		11,320		7,116		22,607		41,043
600-649		2,117		1,391		4,115		7,623
550-599		1,029		580		1,764		3,373
500-549		319		429		991		1,739
Under 500		292		22		231		545
Unknown		-		-		756		756
Total	$	205,717	$	158,674	$	103,366	$	467,757
Accrued interest included in total	$	472	$	366	$	370	$	1,208
December 31, 2019	$	28,041	$	24,470	$	7,611	$	60,122
800 and above
750-799		118,380		88,164		37,583		244,127
700-749		41,490		31,055		27,204		99,749
650-699		11,485		7,267		22,517		41,269
600-649		2,254		1,411		4,470		8,135
550-599		946		592		1,884		3,422
500-549		377		464		1,127		1,968
Under 500		309		22		284		615
Unknown		-		-		1,204		1,204
Total	$	203,282	$	153,445	$	103,884	$	460,611
Accrued interest included in total	$	490	$	378	$	326	$	1,194

(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 $1.0 million and $1.2 million at March 31, 2020 and December 31, 2019, respectively.  Retail mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements totaled $0.7 million at both March 31, 2020 and December 31, 2019, respectively.

During the first quarter of 2020 we securitized $26.2 million of portfolio residential fixed rate mortgage loans servicing retained with Freddie Mac and recognized a gain on sale of $0.72 million.  We also sold $2.4 million of portfolio residential fixed rate mortgage loans servicing retained into the secondary market and recognized a gain on sale of $0.7 million.  These transactions were done primarily for asset/liability management purposes.

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.

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. in the second quarter of 2018 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:

	March 31, 2020		December 31, 2019
	(In thousands)
Commercial	$	1,340	$	1,394
Mortgage		567		575
Installment		311		316
Total carrying amount		2,218		2,285
Allowance for loan losses		-		-
Carrying amount, net of allowance for loan losses	$	2,218	$	2,285

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 March 31,
	2020			2019
	(unaudited)
	(In thousands)
Balance at beginning of period	$	640		$	462
New loans purchased		-			-
Accretion recorded as loan interest income		(32	)		(39	)
Reclassification from (to) nonaccretable difference		-			365
Displosals/other adjustments		-			-
Balance at end of period	$	608		$	788

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Share Based Compensation (Tables)

3 Months Ended

Mar. 31, 2020

Share Based Compensation [Abstract]

Restricted Stock and Performance Stock Units Granted

A summary of restricted stock and performance stock units (“PSU”) granted pursuant to our long-term incentive plan follows:

	Three Months Ended March 31,
	2020		2019
Restricted stock		52,996		52,716
PSU		20,897		22,016

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, 2020		138,506		$	4.62
Granted		-
Exercised		(11,567	)		3.54
Forfeited		-
Expired		-
Outstanding at March 31, 2020		126,939		$	4.71		2.8	$	1,044
Vested and expected to vest at March 31, 2020		126,939		$	4.71		2.8	$	1,044
Exercisable at March 31, 2020		126,939		$	4.71		2.8	$	1,044

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, 2020		245,726		$	21.72
Granted		73,893			22.80
Vested		(64,263	)		21.24
Forfeited		(5,468	)		23.71
Outstanding at March 31, 2020		249,888		$	22.12

Information Regarding Options Exercised

Certain information regarding options exercised during the periods follows:

	Three Months Ended March 31,
	2020		2019
	(In thousands)
Intrinsic value	$	210	$	836
Cash proceeds received	$	41	$	695
Tax benefit realized	$	44	$	176

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

3 Months Ended

Mar. 31, 2020

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 Losses on Cash Flow Hedges			Total
	(In thousands)
For the three months ended March 31,
2020
Balances at beginning of period	$	3,739		$	(5,798	)	$	(1,727	)	$	(3,786	)
Other comprehensive income (loss) before reclassifications		(606	)		-			(321	)		(927	)
Amounts reclassified from AOCL		(200	)		-			59			(141	)
Net current period other comprehensive income (loss)		(806	)		-			(262	)		(1,068	)
Balances at end of period	$	2,933		$	(5,798	)	$	(1,989	)	$	(4,854	)
2019
Balances at beginning of period	$	(4,185	)	$	(5,798	)	$	(125	)	$	(10,108	)
Other comprehensive income (loss) before reclassifications		4,236			-			(719	)		3,517
Amounts reclassified from AOCL		(108	)		-			(118	)		(226	)
Net current period other comprehensive income (loss)		4,128			-			(837	)		3,291
Balances at end of period	$	(57	)	$	(5,798	)	$	(962	)	$	(6,817	)

Reclassifications Out of Each Component of AOCL

A summary of reclassifications out of each component of AOCL for the three months ended March 31 follows:

AOCL Component	Amount Reclassified From AOCL			Affected Line Item in Condensed  Consolidated Statements of Operations
	(In thousands)
2020
Unrealized gains (losses) on securities available for sale
	$	253		Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		253		Total reclassifications before tax
		53		Income tax expense
	$	200		Reclassifications, net of tax
Unrealized losses on cash flow hedges
	$	75		Interest expense
		16		Income tax expense
	$	59		Reclassification, net of tax
	$	141		Total reclassifications for the period, net of tax
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 losses on cash flow hedges
	$	(149	)	Interest expense
		(31	)	Income tax expense
	$	(118	)	Reclassification, net of tax
	$	226		Total reclassifications for the period, net of tax

XML

Securities (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) Security	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 590,572		$ 513,668
Unrealized Gains	10,051		5,782
Unrealized Losses	6,339		1,050
Fair Value	594,284		518,400
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	193,158		130,648
Less Than Twelve Months, Unrealized Losses	4,954		535
Twelve Months or More, Fair Value	30,983		38,343
Twelve Months or More, Unrealized Losses	1,385		515
Total, Fair Value	224,141		168,991
Total, Unrealized Losses	6,339		1,050
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Fair value	982
Amortized cost	900
Non-credit unrealized loss	21
Unrealized gain	103
Cumulative credit related OTTI	1,214
Credit related OTTI recognized in earnings	0	$ 0
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Balance at beginning of period	1,214	1,594
Additions to credit losses on securities for which no previous OTTI was recognized	0	0
Increases to credit losses on securities for which OTTI was previously recognized	0	0
Balance at end of period	1,214	$ 1,594
U.S. Agency [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	12,648		14,591
Unrealized Gains	207		89
Unrealized Losses	27		19
Fair Value	12,828		14,661
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	1,042		2,782
Less Than Twelve Months, Unrealized Losses	1		8
Twelve Months or More, Fair Value	2,473		2,712
Twelve Months or More, Unrealized Losses	26		11
Total, Fair Value	3,515		5,494
Total, Unrealized Losses	$ 27		19
Number of securities with market fair value less than amortized cost | Security	24
U.S. Agency Residential Mortgage-Backed [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 216,436		226,130
Unrealized Gains	5,746		1,910
Unrealized Losses	353		278
Fair Value	221,829		227,762
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	37,673		56,377
Less Than Twelve Months, Unrealized Losses	289		126
Twelve Months or More, Fair Value	5,166		13,551
Twelve Months or More, Unrealized Losses	64		152
Total, Fair Value	42,839		69,928
Total, Unrealized Losses	$ 353		278
Number of securities with market fair value less than amortized cost | Security	52
U.S. Agency Commercial Mortgage-Backed [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 9,665		10,671
Unrealized Gains	252		113
Unrealized Losses	1		28
Fair Value	9,916		10,756
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	0		3,284
Less Than Twelve Months, Unrealized Losses	0		24
Twelve Months or More, Fair Value	372		659
Twelve Months or More, Unrealized Losses	1		4
Total, Fair Value	372		3,943
Total, Unrealized Losses	$ 1		28
Number of securities with market fair value less than amortized cost | Security	6
Private Label Mortgage-Backed [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 38,188		39,248
Unrealized Gains	341		544
Unrealized Losses	1,458		99
Fair Value	37,071		39,693
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	22,232		16,387
Less Than Twelve Months, Unrealized Losses	1,388		55
Twelve Months or More, Fair Value	358		343
Twelve Months or More, Unrealized Losses	70		44
Total, Fair Value	22,590		16,730
Total, Unrealized Losses	$ 1,458		99
Number of securities with market fair value less than amortized cost | Security	35
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Number of private label mortgage backed securities currently with OTTI unrealized gains | Security	2
Senior Security [Member]
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Fair value	$ 469
Amortized cost	490
Non-credit unrealized loss	21
Unrealized gain	0
Cumulative credit related OTTI	757
Super Senior Security [Member]
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Fair value	513
Amortized cost	410
Non-credit unrealized loss	0
Unrealized gain	103
Cumulative credit related OTTI	457
Other Asset Backed [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	105,971		94,158
Unrealized Gains	79		103
Unrealized Losses	2,169		375
Fair Value	103,881		93,886
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	67,012		34,027
Less Than Twelve Months, Unrealized Losses	1,442		233
Twelve Months or More, Fair Value	18,910		13,839
Twelve Months or More, Unrealized Losses	727		142
Total, Fair Value	85,922		47,866
Total, Unrealized Losses	$ 2,169		375
Number of securities with market fair value less than amortized cost | Security	122
Obligations of States and Political Subdivisions [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 162,805		94,499
Unrealized Gains	2,477		1,724
Unrealized Losses	1,341		121
Fair Value	163,941		96,102
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	50,643		15,666
Less Than Twelve Months, Unrealized Losses	1,321		84
Twelve Months or More, Fair Value	2,213		5,396
Twelve Months or More, Unrealized Losses	20		37
Total, Fair Value	52,856		21,062
Total, Unrealized Losses	$ 1,341		121
Number of securities with market fair value less than amortized cost | Security	36
Corporate [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 42,392		31,904
Unrealized Gains	932		1,296
Unrealized Losses	513		5
Fair Value	42,811		33,195
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	14,556		2,125
Less Than Twelve Months, Unrealized Losses	513		5
Twelve Months or More, Fair Value	0		0
Twelve Months or More, Unrealized Losses	0		0
Total, Fair Value	14,556		2,125
Total, Unrealized Losses	$ 513		5
Number of securities with market fair value less than amortized cost | Security	18
Trust Preferred [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 1,968		1,968
Unrealized Gains	0		0
Unrealized Losses	477		125
Fair Value	1,491		1,843
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	0		0
Less Than Twelve Months, Unrealized Losses	0		0
Twelve Months or More, Fair Value	1,491		1,843
Twelve Months or More, Unrealized Losses	477		125
Total, Fair Value	1,491		1,843
Total, Unrealized Losses	$ 477		125
Number of securities with market fair value less than amortized cost | Security	2
Number of issues rated as investment grade | Security	1
Number of securities not rated | Security	1
Non-rated securities, amortized cost	$ 1,000
Fair value of non-rated trust preferred securities	650
Foreign Government [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	499		499
Unrealized Gains	17		3
Unrealized Losses	0		0
Fair Value	$ 516		$ 502

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Securities (Tables)

3 Months Ended

Mar. 31, 2020

Securities [Abstract]

Securities Available for Sale

Securities available for sale consist of the following:

	Amortized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
March 31, 2020
U.S. agency	$	12,648	$	207	$	27	$	12,828
U.S. agency residential mortgage-backed		216,436		5,746		353		221,829
U.S. agency commercial mortgage-backed		9,665		252		1		9,916
Private label mortgage-backed		38,188		341		1,458		37,071
Other asset backed		105,971		79		2,169		103,881
Obligations of states and political subdivisions		162,805		2,477		1,341		163,941
Corporate		42,392		932		513		42,811
Trust preferred		1,968		-		477		1,491
Foreign government		499		17		-		516
Total	$	590,572	$	10,051	$	6,339	$	594,284
December 31, 2019
U.S. agency	$	14,591	$	89	$	19	$	14,661
U.S. agency residential mortgage-backed		226,130		1,910		278		227,762
U.S. agency commercial mortgage-backed		10,671		113		28		10,756
Private label mortgage-backed		39,248		544		99		39,693
Other asset backed		94,158		103		375		93,886
Obligations of states and political subdivisions		94,499		1,724		121		96,102
Corporate		31,904		1,296		5		33,195
Trust preferred		1,968		-		125		1,843
Foreign government		499		3		-		502
Total	$	513,668	$	5,782	$	1,050	$	518,400

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)
March 31, 2020
U.S. agency	$	1,042	$	1	$	2,473	$	26	$	3,515	$	27
U.S. agency residential mortgage-backed		37,673		289		5,166		64		42,839		353
U.S. agency commercial mortgage-backed		-		-		372		1		372		1
Private label mortgage-backed		22,232		1,388		358		70		22,590		1,458
Other asset backed		67,012		1,442		18,910		727		85,922		2,169
Obligations of states and political subdivisions		50,643		1,321		2,213		20		52,856		1,341
Corporate		14,556		513		-		-		14,556		513
Trust preferred		-		-		1,491		477		1,491		477
Total	$	193,158	$	4,954	$	30,983	$	1,385	$	224,141	$	6,339
December 31, 2019
U.S. agency	$	2,782	$	8	$	2,712	$	11	$	5,494	$	19
U.S. agency residential mortgage-backed		56,377		126		13,551		152		69,928		278
U.S. agency commercial mortgage-backed		3,284		24		659		4		3,943		28
Private label mortgage-backed		16,387		55		343		44		16,730		99
Other asset backed		34,027		233		13,839		142		47,866		375
Obligations of states and political subdivisions		15,666		84		5,396		37		21,062		121
Corporate		2,125		5		-		-		2,125		5
Trust preferred		-		-		1,843		125		1,843		125
Total	$	130,648	$	535	$	38,343	$	515	$	168,991	$	1,050

Private Label Mortgage Backed Securities Below Investment Grade

At March 31, 2020, two private label mortgage-backed securities had credit related OTTI and are summarized as follows:

	Senior Security		Super Senior Security		Total
	(In thousands)
Fair value	$	469	$	513	$	982
Amortized cost		490		410		900
Non-credit unrealized loss		21		-		21
Unrealized gain		-		103		103
Cumulative credit related OTTI		757		457		1,214

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 March 31,
	2020		2019
	(In thousands)
Balance at beginning of period	$	1,214	$	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	$	1,214	$	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 March 31, 2020, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	13,075	$	13,132
Maturing after one year but within five years		61,789		62,393
Maturing after five years but within ten years		47,654		48,967
Maturing after ten years		97,794		97,095
		220,312		221,587
U.S. agency residential mortgage-backed		216,436		221,829
U.S. agency commercial mortgage-backed		9,665		9,916
Private label mortgage-backed		38,188		37,071
Other asset backed		105,971		103,881
Total	$	590,572	$	594,284

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 three month periods ending March 31, follows:

			Realized
	Proceeds		Gains		Losses
	(In thousands)
2020	$	21,743	$	253	$	-
2019		42,236		169		32

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Accumulated Other Comprehensive Loss ("AOCL")

3 Months Ended

Mar. 31, 2020

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 Losses on Cash Flow Hedges			Total
	(In thousands)
For the three months ended March 31,
2020
Balances at beginning of period	$	3,739		$	(5,798	)	$	(1,727	)	$	(3,786	)
Other comprehensive income (loss) before reclassifications		(606	)		-			(321	)		(927	)
Amounts reclassified from AOCL		(200	)		-			59			(141	)
Net current period other comprehensive income (loss)		(806	)		-			(262	)		(1,068	)
Balances at end of period	$	2,933		$	(5,798	)	$	(1,989	)	$	(4,854	)
2019
Balances at beginning of period	$	(4,185	)	$	(5,798	)	$	(125	)	$	(10,108	)
Other comprehensive income (loss) before reclassifications		4,236			-			(719	)		3,517
Amounts reclassified from AOCL		(108	)		-			(118	)		(226	)
Net current period other comprehensive income (loss)		4,128			-			(837	)		3,291
Balances at end of period	$	(57	)	$	(5,798	)	$	(962	)	$	(6,817	)

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 March 31 follows:

AOCL Component	Amount Reclassified From AOCL			Affected Line Item in Condensed  Consolidated Statements of Operations
	(In thousands)
2020
Unrealized gains (losses) on securities available for sale
	$	253		Net gains (losses) on securities
		-		Net impairment loss recognized in earnings
		253		Total reclassifications before tax
		53		Income tax expense
	$	200		Reclassifications, net of tax
Unrealized losses on cash flow hedges
	$	75		Interest expense
		16		Income tax expense
	$	59		Reclassification, net of tax
	$	141		Total reclassifications for the period, net of tax
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 losses on cash flow hedges
	$	(149	)	Interest expense
		(31	)	Income tax expense
	$	(118	)	Reclassification, net of tax
	$	226		Total reclassifications for the period, net of tax

XML

Fair Value Disclosures, Quantitative Information About Level 3 (Details)		3 Months Ended		12 Months Ended
		Mar. 31, 2020 USD ($)		Dec. 31, 2019 USD ($)
Installment [Member]
Ranges and Weighted Average [Abstract]
Total Impaired collateral value		$ 250,000		$ 140,000
Recurring Basis [Member] | Capitalized Mortgage Loan Servicing Rights [Member] | Significant Un-observable Inputs (Level 3) [Member]
Asset Fair Value [Abstract]
Servicing asset fair value		$ 14,829,000		$ 19,171,000
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		0.0052		0.0173
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		72		66
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] | Minimum [Member] | Present Value of Net Servicing Revenue [Member] | Significant Un-observable Inputs (Level 3) [Member] | Prepayment Rate [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input		0.0702		0.0701
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		201		316
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		37		37
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] | Maximum [Member] | Present Value of Net Servicing Revenue [Member] | Significant Un-observable Inputs (Level 3) [Member] | Prepayment Rate [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input		0.3400		0.6934
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		81		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		22
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		0.1013		0.1014
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		0.0052		0.0173
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] | Prepayment Rate [Member]
Ranges and Weighted Average [Abstract]
Servicing asset measurement input		0.1965		0.1496
Nonrecurring Basis [Member] | Impaired Loans Commercial [Member] | Significant Un-observable Inputs (Level 3) [Member]
Asset Fair Value [Abstract]
Impaired loans fair value		$ 14,467,000		$ 971,000
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)		(0.480)	[1]
Nonrecurring Basis [Member] | Impaired Loans Commercial [Member] | Minimum [Member] | Income Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Capitalization Rate [Member]
Ranges and Weighted Average [Abstract]
Impaired loans measurement input		0.0775
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		0.350		0.192	[1]
Nonrecurring Basis [Member] | Impaired Loans Commercial [Member] | Maximum [Member] | Income Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Capitalization Rate [Member]
Ranges and Weighted Average [Abstract]
Impaired loans measurement input		0.110
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		0.005		(0.056)	[1]
Nonrecurring Basis [Member] | Impaired Loans Commercial [Member] | Weighted Average [Member] | Income Approach [Member] | Significant Un-observable Inputs (Level 3) [Member] | Capitalization Rate [Member]
Ranges and Weighted Average [Abstract]
Impaired loans measurement input		0.087
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]	$ 2,135,000		$ 2,467,000
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		(0.130)	[1]	(0.252)
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		0.492	[1]	0.492
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		0.140	[1]	0.115
Nonrecurring Basis [Member] | Other Real Estate Mortgage [Member] | Significant Un-observable Inputs (Level 3) [Member]
Asset Fair Value [Abstract]
Other real estate fair value		$ 25,000		$ 59,000
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		0.161		(0.116)
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		0.106		0.050
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		(0.042)		(0.051)

[1] In addition to the valuation techniques and unobservable inputs discussed above, at March 31, 2020 and December 31, 2019 certain impaired collateral dependent installment loans totaling approximately $0.25 million and $0.14 million, respectively are secured by collateral other than real estate. For the majority of these loans, we apply internal discount rates to industry valuation guides.

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Regulatory Matters (Details) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
		Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Regulatory Matters [Abstract]
Undivided profits		$ 41,600
Tier 1 capital to average assets [Abstract]
Capital conservation buffer		2.50%	2.50%
Components of regulatory capital [Abstract]
Total shareholders' equity		$ 335,618	$ 350,169	$ 344,726	$ 338,994
Add (deduct) [Abstract]
Accumulated other comprehensive (income) loss for regulatory purposes		(4,854)	(3,786)
Consolidated [Member]
Total capital to risk-weighted assets [Abstract]
Total risk-based capital	[1]	$ 373,709	$ 380,454
Actual, Ratio	[1]	13.38%	13.74%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 223,472	$ 221,562
Minimum for Adequately Capitalized Institutions, Ratio	[1]	8.00%	8.00%
Tier 1 capital to risk-weighted assets [Abstract]
Actual, Amount	[1]	$ 339,553	$ 352,764
Actual, Ratio	[1]	12.16%	12.74%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 167,604	$ 166,171
Minimum for Adequately Capitalized Institutions, Ratio	[1]	6.00%	6.00%
Common equity tier 1 capital to risk-weighted assets [Abstract]
Actual, Amount	[1]	$ 301,304	$ 314,532
Actual, Ratio	[1]	10.79%	11.36%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 125,703	$ 124,628
Minimum for Adequately Capitalized Institutions, Ratio	[1]	4.50%	4.50%
Tier 1 capital to average assets [Abstract]
Tier 1 capital	[1]	$ 339,553	$ 352,764
Actual, Ratio	[1]	9.63%	10.11%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 141,089	$ 139,632
Minimum for Adequately Capitalized Institutions, Ratio	[1]	4.00%	4.00%
Components of regulatory capital [Abstract]
Total shareholders' equity		$ 335,618	$ 350,169
Add (deduct) [Abstract]
Accumulated other comprehensive (income) loss for regulatory purposes		(943)	(2,011)
Goodwill and other intangibles		(33,371)	(33,626)
Disallowed deferred tax assets		0	0
Common equity tier 1 capital	[1]	301,304	314,532
Qualifying trust preferred securities		38,249	38,232
Tier 1 capital	[1]	339,553	352,764
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		34,156	27,690
Total risk-based capital	[1]	373,709	380,454
Independent Bank [Member]
Total capital to risk-weighted assets [Abstract]
Total risk-based capital	[1]	$ 362,547	$ 358,914
Actual, Ratio	[1]	12.98%	12.96%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 223,405	$ 221,482
Minimum for Adequately Capitalized Institutions, Ratio	[1]	8.00%	8.00%
Minimum for Well-Capitalized Institutions, Amount	[1]	$ 279,256	$ 276,852
Minimum for Well-Capitalized Institutions, Ratio	[1]	10.00%	10.00%
Tier 1 capital to risk-weighted assets [Abstract]
Actual, Amount	[1]	$ 328,391	$ 331,224
Actual, Ratio	[1]	11.76%	11.96%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 167,554	$ 166,111
Minimum for Adequately Capitalized Institutions, Ratio	[1]	6.00%	6.00%
Minimum for Well-Capitalized Institutions, Amount	[1]	$ 223,405	$ 221,482
Minimum for Well-Capitalized Institutions, Ratio	[1]	8.00%	8.00%
Common equity tier 1 capital to risk-weighted assets [Abstract]
Actual, Amount	[1]	$ 328,391	$ 331,224
Actual, Ratio	[1]	11.76%	11.96%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 125,665	$ 124,583
Minimum for Adequately Capitalized Institutions, Ratio	[1]	4.50%	4.50%
Minimum for Well-Capitalized Institutions, Amount	[1]	$ 181,516	$ 179,954
Minimum for Well-Capitalized Institutions, Ratio	[1]	6.50%	6.50%
Tier 1 capital to average assets [Abstract]
Tier 1 capital	[1]	$ 328,391	$ 331,224
Actual, Ratio	[1]	9.31%	9.49%
Minimum for Adequately Capitalized Institutions, Amount	[1]	$ 141,099	$ 139,615
Minimum for Adequately Capitalized Institutions, Ratio	[1]	4.00%	4.00%
Minimum for Well-Capitalized Institutions, Amount	[1]	$ 176,373	$ 174,519
Minimum for Well-Capitalized Institutions, Ratio	[1]	5.00%	5.00%
Components of regulatory capital [Abstract]
Total shareholders' equity		$ 362,705	$ 366,861
Add (deduct) [Abstract]
Accumulated other comprehensive (income) loss for regulatory purposes		(943)	(2,011)
Goodwill and other intangibles		(33,371)	(33,626)
Disallowed deferred tax assets		0	0
Common equity tier 1 capital	[1]	328,391	331,224
Qualifying trust preferred securities		0	0
Tier 1 capital	[1]	328,391	331,224
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		34,156	27,690
Total risk-based capital	[1]	$ 362,547	$ 358,914

[1] These ratios do not reflect a capital conservation buffer of 2.50% at March 31, 2020 and December 31, 2019, respectfully.

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Accumulated Other Comprehensive Loss ("AOCL"), Summary of Changes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Changes in AOCL [Roll Forward]
Balance at beginning of period	$ 350,169	$ 338,994
Other comprehensive income (loss) before reclassifications	(927)	3,517
Amounts reclassified from AOCL	(141)	(226)
Other comprehensive income (loss)	(1,068)	3,291
Balances at end of period	335,618	344,726
Accumulated Other Comprehensive Loss [Member]
Changes in AOCL [Roll Forward]
Balance at beginning of period	(3,786)	(10,108)
Other comprehensive income (loss)	(1,068)	3,291
Balances at end of period	(4,854)	(6,817)
Unrealized Gains (Losses) on Securities Available For Sale [Member]
Changes in AOCL [Roll Forward]
Balance at beginning of period	3,739	(4,185)
Other comprehensive income (loss) before reclassifications	(606)	4,236
Amounts reclassified from AOCL	(200)	(108)
Other comprehensive income (loss)	(806)	4,128
Balances at end of period	2,933	(57)
Disproportionate Tax Effects from Securities Available for Sale [Member]
Changes in AOCL [Roll Forward]
Balance at beginning of period	(5,798)	(5,798)
Other comprehensive income (loss) before reclassifications	0	0
Amounts reclassified from AOCL	0	0
Other comprehensive income (loss)	0	0
Balances at end of period	(5,798)	(5,798)
Unrealized Losses on Cash Flow Hedges [Member]
Changes in AOCL [Roll Forward]
Balance at beginning of period	(1,727)	(125)
Other comprehensive income (loss) before reclassifications	(321)	(719)
Amounts reclassified from AOCL	59	(118)
Other comprehensive income (loss)	(262)	(837)
Balances at end of period	$ (1,989)	$ (962)

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Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Condensed Consolidated Statements of Cash Flows (unaudited) [Abstract]
Net Income	$ 4,810	$ 9,381
Adjustments to Reconcile Net Income to Net Cash From Operating Activities
Proceeds from the sale of equity securities at fair value	0	560
Proceeds from sales of loans held for sale	241,856	87,496
Disbursements for loans held for sale	(227,765)	(82,230)
Provision for loan losses	6,721	664
Deferred income tax expense (benefit)	(1,925)	2,039
Deferred loan fees and costs	(358)	(111)
Net depreciation, amortization of intangible assets and premiums and accretion of discounts on securities, loans and interest bearing deposits - time	1,795	1,479
Net gains on mortgage loans	(8,840)	(3,611)
Net gains on securities	(253)	(304)
Share based compensation	547	420
(Increase) decrease in accrued income and other assets	5,095	(8,107)
Increase in accrued expenses and other liabilities	599	2,455
Total Adjustments	17,472	750
Net Cash From Operating Activities	22,282	10,131
Cash Flow Used in Investing Activities
Proceeds from the sale of securities available for sale	21,743	42,236
Proceeds from maturities, prepayments and calls of securities available for sale	42,744	32,533
Purchases of securities available for sale	(103,901)	(71,693)
Proceeds from the maturity of interest bearing deposits - time	350	100
Net increase in portfolio loans (loans originated, net of principal payments)	(22,432)	(65,653)
Proceeds from the sale of portfolio loans	2,395	40,630
Proceeds from bank-owned life insurance	945	0
Proceeds from the sale of other real estate and repossessed assets	328	167
Capital expenditures	(760)	(511)
Net Cash Used in Investing Activities	(58,588)	(22,191)
CASH FLOW FROM FINANCING ACTIVITIES
Net increase in total deposits	46,837	20,797
Net increase in other borrowings	6,296	2
Proceeds from Federal Home Loan Bank advances	160,000	0
Payments of Federal Home Loan Bank advances	(153,000)	0
Dividends paid	(4,477)	(4,246)
Proceeds from issuance of common stock	11	282
Repurchase of common stock	(13,784)	(2,530)
Share based compensation withholding obligation	(590)	(866)
Net Cash From Financing Activities	41,293	13,439
Net Increase in Cash and Cash Equivalents	4,987	1,379
Cash and Cash Equivalents at Beginning of Period	65,304	70,244
Cash and Cash Equivalents at End of Period	70,291	71,623
Cash paid during the period for
Interest	5,489	6,253
Income taxes	0	0
Operating leases	476	563
Transfers to other real estate and repossessed assets	66	325
Purchase of securities available for sale not yet settled	10,497	1,500
Securitization of portfolio loans	26,325	29,790
Right of use assets obtained in exchange for lease obligations	$ 116	$ 7,703

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Condensed Consolidated Statements of Financial Condition (unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Assets
Cash and due from banks	$ 48,753	$ 53,295
Interest bearing deposits	21,538	12,009
Cash and Cash Equivalents	70,291	65,304
Interest bearing deposits - time	0	350
Securities available for sale	594,284	518,400
Federal Home Loan Bank and Federal Reserve Bank stock, at cost	18,359	18,359
Loans held for sale, carried at fair value	64,549	69,800
Loans
Loans	2,718,115	2,725,023
Allowance for loan losses	(32,495)	(26,148)
Net Loans	2,685,620	2,698,875
Other real estate and repossessed assets, net	1,494	1,865
Property and equipment, net	37,776	38,411
Bank-owned life insurance	55,035	55,710
Deferred tax assets, net	4,280	2,072
Capitalized mortgage loan servicing rights, carried at fair value	14,829	19,171
Other intangibles	5,071	5,326
Goodwill	28,300	28,300
Accrued income and other assets	52,499	42,751
Total Assets	3,632,387	3,564,694
Deposits
Non-interest bearing	874,935	852,076
Savings and interest-bearing checking	1,229,999	1,186,745
Reciprocal	464,574	431,027
Time	359,050	376,877
Brokered time	155,006	190,002
Total Deposits	3,083,564	3,036,727
Other borrowings	101,954	88,646
Subordinated debentures	39,473	39,456
Accrued expenses and other liabilities	71,778	49,696
Total Liabilities	3,296,769	3,214,525
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: 21,892,001 shares at March 31, 2020 and 22,481,643 shares at December 31, 2019	338,528	352,344
Retained earnings	1,944	1,611
Accumulated other comprehensive loss	(4,854)	(3,786)
Total Shareholders' Equity	335,618	350,169
Total Liabilities and Shareholders' Equity	362,387	3,564,694
Commercial [Member]
Loans
Loans	1,181,599	1,166,695
Allowance for loan losses	(10,212)	(7,922)
Mortgage [Member]
Loans
Loans	1,069,967	1,098,911
Allowance for loan losses	(7,416)	(8,216)
Installment [Member]
Loans
Loans	466,549	459,417
Allowance for loan losses	$ (1,258)	$ (1,283)

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Loans, Receivables Past Due (Details) - USD ($)		Mar. 31, 2020	Dec. 31, 2019
Non performing loans [Abstract]
Accrued interest included in recorded investment		$ 7,936,000	$ 8,347,000
Loans Past Due, 90+ days [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment		0	0
Commercial and Industrial [Member]
Non performing loans [Abstract]
Government guaranteed loans excluded from non-performing loans		53,000	77,000
1-4 Family Owner Occupied - Non-jumbo [Member]
Non performing loans [Abstract]
Government guaranteed loans excluded from non-performing loans		623,000	56,900
Commercial [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment		2,692,000	2,998,000
Mortgage [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment	[1]	4,036,000	4,155,000
Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment	[1]	1,264,000	1,139,000
Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment	[1]	1,522,000	1,662,000
Mortgage [Member] | 1-4 Non-owner Occupied [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment	[1]	562,000	586,000
Mortgage [Member] | 1-4 Family - 2nd Lien [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment	[1]	448,000	502,000
Mortgage [Member] | Resort Lending [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment	[1]	240,000	266,000
Installment [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment	[1]	1,208,000	1,194,000
Installment [Member] | Boat Lending [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment	[1]	472,000	490,000
Installment [Member] | Recreational Vehicle Lending [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment	[1]	366,000	378,000
Installment [Member] | Other [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment	[1]	370,000	326,000
Non-Performing Loans [Member]
Non performing loans [Abstract]
90+ and Still Accruing	[2]	0	0
Non-Accrual	[2]	16,778,000	9,532,000
Total Non-performing Loans	[2]	16,778,000	9,532,000
Accrued interest included in recorded investment	[2]	0	0
Non-Performing Loans [Member] | Loans Past Due, 90+ days [Member]
Non performing loans [Abstract]
Accrued interest included in recorded investment	[2]	0	0
Non-Performing Loans [Member] | Commercial [Member] | Commercial and Industrial [Member]
Non performing loans [Abstract]
90+ and Still Accruing	[2],[3]	0	0
Non-Accrual	[2],[3]	1,285,000	565,000
Total Non-performing Loans	[2],[3]	1,285,000	565,000
Non-Performing Loans [Member] | Commercial [Member] | Commercial Real Estate [Member]
Non performing loans [Abstract]
90+ and Still Accruing	[2]	0	0
Non-Accrual	[2]	7,756,000	735,000
Total Non-performing Loans	[2]	7,756,000	735,000
Non-Performing Loans [Member] | Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]
Non performing loans [Abstract]
90+ and Still Accruing	[2]	0	0
Non-Accrual	[2]	2,356,000	1,179,000
Total Non-performing Loans	[2]	2,356,000	1,179,000
Non-Performing Loans [Member] | Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]
Non performing loans [Abstract]
90+ and Still Accruing	[2],[4]	0	0
Non-Accrual	[2],[4]	1,804,000	3,540,000
Total Non-performing Loans	[2],[4]	1,804,000	3,540,000
Non-Performing Loans [Member] | Mortgage [Member] | 1-4 Non-owner Occupied [Member]
Non performing loans [Abstract]
90+ and Still Accruing	[2]	0	0
Non-Accrual	[2]	1,122,000	1,039,000
Total Non-performing Loans	[2]	1,122,000	1,039,000
Non-Performing Loans [Member] | Mortgage [Member] | 1-4 Family - 2nd Lien [Member]
Non performing loans [Abstract]
90+ and Still Accruing	[2]	0	0
Non-Accrual	[2]	1,326,000	979,000
Total Non-performing Loans	[2]	1,326,000	979,000
Non-Performing Loans [Member] | Mortgage [Member] | Resort Lending [Member]
Non performing loans [Abstract]
90+ and Still Accruing	[2]	0	0
Non-Accrual	[2]	438,000	690,000
Total Non-performing Loans	[2]	438,000	690,000
Non-Performing Loans [Member] | Installment [Member] | Boat Lending [Member]
Non performing loans [Abstract]
90+ and Still Accruing	[2]	0	0
Non-Accrual	[2]	150,000	332,000
Total Non-performing Loans	[2]	150,000	332,000
Non-Performing Loans [Member] | Installment [Member] | Recreational Vehicle Lending [Member]
Non performing loans [Abstract]
90+ and Still Accruing	[2]	0	0
Non-Accrual	[2]	84,000	3,000
Total Non-performing Loans	[2]	84,000	3,000
Non-Performing Loans [Member] | Installment [Member] | Other [Member]
Non performing loans [Abstract]
90+ and Still Accruing	[2]	0	0
Non-Accrual	[2]	457,000	470,000
Total Non-performing Loans	[2]	$ 457,000	$ 470,000

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

[2] Non-performing loans exclude purchase credit impaired loans.

[3] Non-performing commercial and industrial loans exclude $0.053 million and $0.077 million of government guaranteed loans at March 31, 2020 and December 31, 2019, respectively.

[4] Non-performing 1-4 family owner occupied - non jumbo loans exclude $0.623 million and $0.569 million of government guaranteed loans at March 31, 2020 and December 31, 2019, respectively.

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Loans, Non-TDR Loan Modifications and Paycheck Protection Program ("PPP") Due to COVID-19 (Details) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($) Modification
Non-TDR Loan Modifications and Paycheck Protection Program ("PPP") due to COVID-19 [Abstract]
Interest only period for Commercial loans	3 months
Suspended payments period for Retail loans	3 months
Number of non-TDR loan modifications | Modification	366
Non-TDR loan modifications, portfolio loans outstanding | $	$ 86.9

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Leases (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019
Components of operating leases [Abstract]
Operating lease cost		$ 486	$ 564
Variable lease cost		15	23
Short-term lease cost		7	5
Total		508	592
Supplemental balance sheet information related to operating leases [Abstract]
Lease right of use asset	[1]	$ 7,968	8,282
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]		us-gaap:OtherAssets
Lease liabilities	[2]	$ 8,002	$ 8,304
Operating Lease, Liability, Statement of Financial Position [Extensible List]		us-gaap:OtherLiabilities
Weighted average remaining lease term (years)		7 years 3 months 18 days	7 years 5 months 19 days
Weighted average discount rate		2.70%	2.80%
Maturities of lease liabilities [Abstract]
Nine months ending December 31, 2020		$ 1,228
2021		1,446
2022		1,341
2023		1,186
2024		802
2025 and thereafter		2,840
Total lease payments		8,843
Less imputed interest		(841)
Total	[2]	$ 8,002	$ 8,304

[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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Share Based Compensation, Outstanding Stock Option Grants and Related Transactions (Details) - Stock Options [Member] $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) $ / shares shares
Number of Shares [Roll Forward]
Outstanding, beginning balance (in shares)	138,506
Granted (in shares)	0
Exercised (in shares)	(11,567)
Forfeited (in shares)	0
Expired (in shares)	0
Outstanding, ending balance (in shares)	126,939
Vested and expected to vest, period end (in shares)	126,939
Exercisable, period end (in shares)	126,939
Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share) | $ / shares	$ 4.62
Exercised (in dollars per share) | $ / shares	3.54
Outstanding, ending balance (in dollars per share) | $ / shares	4.71
Vested and expected to vest, period end (in dollars per share) | $ / shares	4.71
Exercisable, period end (in dollars per share) | $ / shares	$ 4.71
Weighted-Average Remaining Contractual Term (Years) [Abstract]
Outstanding, weighted average remaining contractual term	2 years 9 months 18 days
Vested and expected to vest, weighted-average remaining contractual term	2 years 9 months 18 days
Exercisable, weighted average remaining contractual term	2 years 9 months 18 days
Aggregate Intrinsic Value [Abstract]
Outstanding, aggregate intrinsic value | $	$ 1,044
Vested and expected to vest, aggregate intrinsic value | $	1,044
Exercisable, aggregate intrinsic value | $	$ 1,044

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Derivative Financial Instruments (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Derivative financial instrument according to type of hedge [Abstract]
Unrealized losses on cash flow hedges, net of tax	$ (1,300)
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	17,610	$ 5,464
Liability Derivatives	$ 15,286	4,402
Maximum [Member]
Derivative financial instrument according to type of hedge [Abstract]
Term of cash flow hedge	1 year 4 months 24 days
Cash Flow Hedge Designation [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount		$ 175,000
Average Maturity		2 years 6 months
Fair Value		$ 40
Cash Flow Hedge Designation [Member] | Interest-Rate Cap Agreements [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount		$ 150,000
Average Maturity		2 years 7 months 6 days
Fair Value		$ 214
Designated as Hedging Instrument [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	$ 0	214
Liability Derivatives	1,332	416
No Hedge Designation [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 801,902	$ 458,279
Average Maturity	2 years 7 months 6 days	3 years 8 months 12 days
Fair Value	$ 3,656	$ 1,264
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	17,610	5,250
Liability Derivatives	13,954	3,986
No Hedge Designation [Member] | Rate-Lock Mortgage Loan Commitments [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 145,077	$ 49,268
Average Maturity	1 month 6 days	1 month 6 days
Fair Value	$ 5,732	$ 1,412
No Hedge Designation [Member] | Mandatory Commitments to Sell Mortgage Loans [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 176,165	$ 95,363
Average Maturity	1 month 6 days	1 month 6 days
Fair Value	$ (2,104)	$ (150)
No Hedge Designation [Member] | Interest-Rate Cap Agreements [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 150,000
Average Maturity	2 years 3 months 18 days
Fair Value	$ 27
No Hedge Designation [Member] | Purchased Options [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 2,908	$ 2,908
Average Maturity	1 year 3 months 18 days	1 year 6 months
Fair Value	$ 37	$ 141
No Hedge Designation [Member] | Written Options [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 2,848	$ 2,848
Average Maturity	1 year 3 months 18 days	1 year 6 months
Fair Value	$ (36)	$ (139)
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	$ 7,117
Average Maturity	9 years 1 month 6 days	9 years 4 months 24 days
Fair Value	$ (788)	$ (242)
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	1 year 3 months 18 days	1 year 7 months 6 days
Fair Value	$ (544)	$ (174)
Fixed Income Interest Rate [Member] | No Hedge Designation [Member] | Interest Rate Swap [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 162,452	$ 153,946
Average Maturity	5 years 3 months 18 days	5 years 6 months
Fair Value	$ (11,814)	$ (3,641)
Variable Income Interest Rate [Member] | No Hedge Designation [Member] | Interest Rate Swap [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 162,452	$ 153,946
Average Maturity	5 years 3 months 18 days	5 years 6 months
Fair Value	$ 11,814	$ 3,641
Other Assets [Member] | Designated as Hedging Instrument [Member] | Interest-Rate Cap Agreements [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	0	214
Other Assets [Member] | No Hedge Designation [Member] | Rate-Lock Mortgage Loan Commitments [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	5,732	1,412
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] | Interest-Rate Cap Agreements [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	27	0
Other Assets [Member] | No Hedge Designation [Member] | Purchased Options [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	37	141
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	0
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	0	28
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	11,814	3,669
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	2,104	150
Other Liabilities [Member] | No Hedge Designation [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] | 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	36	139
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	1,332	416
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	11,814	3,669
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	$ 0	$ 28

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Fair Value Disclosures (Tables)

3 Months Ended

Mar. 31, 2020

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)
March 31, 2020:
Measured at Fair Value on a Recurring Basis
Assets
Securities available for sale
U.S. agency	$	12,828	$	-	$	12,828	$	-
U.S. agency residential mortgage-backed		221,829		-		221,829		-
U.S. agency commercial mortgage-backed		9,916		-		9,916		-
Private label mortgage-backed		37,071		-		37,071		-
Other asset backed		103,881		-		103,881		-
Obligations of states and political subdivisions		163,941		-		163,941		-
Corporate		42,811		-		42,811		-
Trust preferred		1,491		-		1,491		-
Foreign government		516		-		516		-
Loans held for sale, carried at fair value		64,549		-		64,549		-
Capitalized mortgage loan servicing rights		14,829		-		-		14,829
Derivatives (1)		17,610		-		17,610		-
Liabilities
Derivatives (2)		15,286		-		15,286		-
Measured at Fair Value on a Non-recurring Basis:
Assets
Impaired loans (3)
Commercial
Commercial and industrial		1,720		-		-		1,720
Commercial real estate		12,747		-		-		12,747
Mortgage
1-4 family owner occupied - jumbo		930		-		-		930
1-4 family owner occupied - non-jumbo		236		-		-		236
1-4 family non-owner occupied		189		-		-		189
1-4 family - 2nd lien		353		-		-		353
Resort lending		173		-		-		173
Installment
Boat lending		49		-		-		49
Recreational vehicle lending		54		-		-		54
Other		151		-		-		151
Other real estate (4)
Commercial real estate		474		474		-		-
Mortgage - 1-4 family owner occupied - non-jumbo		25		-		-		25

(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. The fair value of the commercial real estate property included in this table was based on a purchase agreement that is expected to close during the second quarter of 2020.

			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, 2019:
Measured at Fair Value on a Recurring Basis
Assets
Securities available for sale
U.S. agency	$	14,661	$	-	$	14,661	$	-
U.S. agency residential mortgage-backed		227,762		-		227,762		-
U.S. agency commercial mortgage-backed		10,756		-		10,756		-
Private label mortgage-backed		39,693		-		39,693		-
Other asset backed		93,886		-		93,886		-
Obligations of states and political subdivisions		96,102		-		96,102		-
Corporate		33,195		-		33,195		-
Trust preferred		1,843		-		1,843		-
Foreign government		502		-		502		-
Loans held for sale, carried at fair value		69,800		-		69,800		-
Capitalized mortgage loan servicing rights		19,171		-		-		19,171
Derivatives (1)		5,464		-		5,464		-
Liabilities
Derivatives (2)		4,402		-		4,402		-
Measured at Fair Value on a Non-recurring Basis:
Assets
Impaired loans (3)
Commercial
Commercial and industrial		655		-		-		655
Commercial real estate		316		-		-		316
Mortgage
1-4 family owner occupied - jumbo		987		-		-		987
1-4 family owner occupied - non-jumbo		470		-		-		470
1-4 family non-owner occupied		281		-		-		281
1-4 family - 2nd lien		294		-		-		294
Resort lending		245		-		-		245
Installment
Boat lending		67		-		-		67
Recreational vehicle lending		2		-		-		2
Other		121		-		-		121
Other real estate (4)
Mortgage - 1-4 family owner occupied - non-jumbo		31		-		-		31
Installment - other		28		-		-		28

(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 Three-Month Periods Ended March 31 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)
2020
Loans held for sale		-		523		-			523
Capitalized mortgage loan servicing rights		-		-		(6,974	)		(6,974	)
2019
Equity securities at fair value	$	167	$	-	$	-		$	167
Loans held for sale		-		96		-			96
Capitalized mortgage loan servicing rights		-		-		(2,691	)		(2,691	)

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

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

	Capitalized Mortgage Loan Servicing Rights
	Three Months Ended March 31,
	2020			2019
	(In thousands)
Beginning balance	$	19,171		$	21,400
Total gains (losses) realized and unrealized:
Included in results of operations		(6,974	)		(2,691	)
Included in other comprehensive income (loss)		-			-
Purchases, issuances, settlements, maturities and calls		2,632			1,200
Transfers in and/or out of Level 3		-			-
Ending balance	$	14,829		$	19,909
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 March 31	$	(6,974	)	$	(2,691	)

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)
March 31, 2020
Capitalized mortgage loan servicing rights	$	14,829	Present value of net	Discount rate	10.00% to 13.00		%		10.13	%
			servicing revenue	Cost to service	$	72 to $201		$	81
				Ancillary income	20 to 37				22
				Float rate		0.52	%		0.52	%
				Prepayment rate	7.02% to 34.00		%		19.65	%
December 31, 2019
Capitalized mortgage loan servicing rights	$	19,171	Present value of net	Discount rate	10.00% to 13.00		%		10.14	%
			servicing revenue	Cost to service	$	66 to $316		$	81
				Ancillary income	20 to 37				22
				Float rate		1.73	%		1.73	%
				Prepayment rate	7.01% to 69.34		%		14.96

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)
March 31, 2020
Impaired loans Commercial	$	14,467	Sales comparison  approach	Adjustment for  differences between comparable sales	(48.0)% to 35.0	%		0.5	%
			Income approach	Capitalization rate	7.75% to 11.0			8.7
Mortgage and Installment(1)		2,135	Sales comparison approach	Adjustment for differences between comparable sales	(13.0) to 49.2			14.0
Other real estate Mortgage		25	Sales comparison approach	Adjustment for differences between comparable sales	(16.1) to 10.6			(4.2	)
December 31, 2019
Impaired loans Commercial	$	971	Sales comparison approach	Adjustment for differences between  comparable sales	(48.0)% to 19.2	%		(5.6	)%
Mortgage and Installment(1)		2,467	Sales comparison approach	Adjustment for differences between comparable sales	(25.2)% to 49.2			11.5
Other real estate
Mortgage and Installment		59	Sales comparison approach	Adjustment for  differences between comparable sales	(11.6)% to 5.0			(5.1	)

(1) In addition to the valuation techniques and unobservable inputs discussed above, at March 31, 2020 and December 31, 2019 certain impaired collateral dependent installment loans totaling approximately $0.25 million and $0.14 million, respectively 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
March 31, 2020	$	64,549	$	2,417	$	62,132
December 31, 2019		69,800		1,894		67,906

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Leases (Tables)

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Components of Operating Leases

The cost components of our operating leases follows:

	Three Months Ended March 31,
	2020		2019
	(In thousands)
Operating lease cost	$	486	$	564
Variable lease cost		15		23
Short-term lease cost		7		5
Total	$	508	$	592

Supplemental Balance Sheet Information Related to Operating Leases

Supplemental balance sheet information related to our operating leases follows:

	March 31, 2020			December 31, 2019
	(Dollars in thousands)
Lease right of use asset (1)	$	7,968		$	8,282
Lease liabilities (2)	$	8,002		$	8,304
Weighted average remaining lease term (years)		7.30			7.47
Weighted average discount rate		2.7	%		2.8	%

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

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

Maturity Analysis of Lease Liabilities

Maturity analysis of our lease liabilities at March 31, 2020 based on required contractual payments follows:

	(In thousands)
Nine months ending December 31, 2020	$	1,228
2021		1,446
2022		1,341
2023		1,186
2024		802
2025 and thereafter		2,840
Total lease payments		8,843
Less imputed interest		(841	)
Total	$	8,002

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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2020

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:

	March 31, 2020
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Fair value hedge designation - Pay-fixed interest rate swap agreements	$	7,117		9.1	$	(788	)
Cash flow hedge designation - Pay-fixed interest rate swap agreements	$	25,000		1.3	$	(544	)
No hedge designation
Rate-lock mortgage loan commitments	$	145,077		0.1	$	5,732
Mandatory commitments to sell mortgage loans		176,165		0.1		(2,104	)
Pay-fixed interest rate swap agreements - commercial		162,452		5.3		(11,814	)
Pay-variable interest rate swap agreements - commercial		162,452		5.3		11,814
Interest rate cap agreements		150,000		2.3		27
Purchased options		2,908		1.3		37
Written options		2,848		1.3		(36	)
Total	$	801,902		2.6	$	3,656

	December 31, 2019
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Fair value hedge designation - Pay-fixed interest rate swap agreements	$	7,117		9.4	$	(242	)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		1.6	$	(174	)
Interest rate cap agreements		150,000		2.6		214
Total	$	175,000		2.5	$	40
No hedge designation
Rate-lock mortgage loan commitments	$	49,268		0.1	$	1,412
Mandatory commitments to sell mortgage loans		95,363		0.1		(150	)
Pay-fixed interest rate swap agreements - commercial		153,946		5.5		(3,641	)
Pay-variable interest rate swap agreements - commercial		153,946		5.5		3,641
Purchased options		2,908		1.5		141
Written options		2,848		1.5		(139	)
Total	$	458,279		3.7	$	1,264

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 paid an upfront premium on interest rate caps which was recognized in earnings in the same period in which the hedged item affected earnings.  During the first quarter of 2020 we transferred all of our interest rate cap agreements to a no hedge designation and the $2.0 million unrealized loss which was included as a component of accumulated other comprehensive loss at the time of the transfer will be reclassified into earnings over the remaining life of the interest rate cap agreements.    We have retained all of the interest rate cap agreements and hedged items (variable rate and short-term fixed-rate debt obligations).  The interest rate caps are classified as a no hedge designation at March 31, 2020 and any future change in fair value will be recorded in earnings.

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 $1.3 million, of unrealized losses on Cash Flow Hedges at March 31, 2020 will be reclassified to earnings over the next twelve months.  The maximum term of Cash Flow Hedges at March 31, 2020 is 1.4 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 commitment (“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 commitment 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 commitment) 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 non-interest income – other 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
	March 31, 2020			December 31, 2019			March 31, 2020			December 31, 2019
	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	$	-	Other liabilities	$	1,332	Other liabilities	$	416
Interest rate cap agreements	Other assets		-	Other assets		214	Other liabilities		-	Other liabilities		-
			-		$	214			1,332		$	416
Derivatives not designated as hedging instruments
Rate-lock mortgage loan commitments	Other assets		5,732	Other assets	$	1,412	Other liabilities		-	Other liabilities	$	-
Mandatory commitments to sell mortgage loans	Other assets		-	Other assets		-	Other liabilities		2,104	Other liabilities		150
Pay-fixed interest rate swap agreements -commercial	Other assets		-	Other assets		28	Other liabilities		11,814	Other liabilities		3,669
Pay-variable interest rate swap agreements -commercial	Other assets		11,814	Other assets		3,669	Other liabilities		-	Other liabilities		28
Interest rate cap agreements	Other assets		27	Other assets		-	Other liabilities		-	Other liabilities		-
Purchased options	Other assets		37	Other assets		141	Other liabilities		-	Other liabilities		-
Written options	Other assets		-	Other assets		-	Other liabilities		36	Other liabilities		139
			17,610			5,250			13,954			3,986
Total derivatives		$	17,610		$	5,464		$	15,286		$	4,402

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

Three Month Periods Ended March 31,
	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
	2020			2019			Portion)	2020			2019		in Income	2020			2019
	(In thousands)
Fair Value Hedges
Pay-fixed interest rate swap agreements													Non-interest income-other	$	(546	)	$	-
Cash Flow Hedges Interest rate cap agreements	$	(14	)	$	(785	)	Interest expense	$	(53	)	$	118	Interest expense	$	-		$	-
Pay-fixed interest rate swap agreements		(392	)		(127	)	Interest expense		(22	)		31	Interest expense		-			-
Total	$	(406	)	$	(912	)		$	(75	)	$	149		$	-		$	-
No hedge designation
Rate-lock mortgage loan commitments													Net gains on mortgage loans	$	4,320		$	629
Mandatory commitments to sell mortgage loans													Net gains on mortgage loans		(1,954	)		174
Pay-fixed interest rate swap agreements - commercial													Interest income		(8,173	)		(1,147	)
Pay-variable interest rate swap agreements - commercial													Interest income		8,173			1,147
Interest rate cap agreements													Interest expense		(35	)		-
Purchased options													Interest expense		(104	)		86
Written options													Interest expense		103			(84	)
Total														$	2,330		$	805

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New Accounting Standards

3 Months Ended

Mar. 31, 2020

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.

We began evaluating this ASU in 2016 and established a company-wide, cross-discipline governance structure, which provides implementation oversight. We continued to test and refine our current expected credit loss models that satisfied the requirements of this ASU. Oversight and testing, as well as efforts to meet expanded disclosure requirements, extended through the end of 2019.  We currently estimate losses over approximately a two year forecast period using the Federal Open Market Committee median economic projections 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 were originally required to adopt this ASU on January 1, 2020 but section 4014 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act allows for temporary relief from applying this ASU.  Under the CARES Act we may delay the adoption of this ASU until the earlier of the termination of the national emergency that President Trump declared on March 13, 2020, or December 31, 2020.  As such, we have chosen to delay the adoption of this ASU and continue to utilize the existing incurred loss impairment methodology to calculate our allowance for loan losses and our provision for loan losses as required under Accounting Standards Codification 310 (Receivables). When we adopt this ASU as required under the CARES act we will do so retrospectively to January 1, 2020.

We expect to recognize a one-time cumulative effect adjustment at January 1, 2020 increasing the allowance for loan losses.  We are estimating an increase to the allowance for loan losses at that time to be in the range of $8.0 million to $10.0 million primarily driven by the longer contractual maturities of our mortgage and consumer installment loan segments. In addition, we currently expect this ASU to increase the allowance for losses related to unfunded loan commitments between $1.0 million and $2.0 million. The ultimate impact of adopting this ASU, and at each subsequent reporting period, is highly dependent on credit quality, economic forecasts and conditions, composition of our loan portfolios and securities available for sale, along with other management judgements. The transition adjustment to record the allowance for credit losses may fall outside of our estimated increase based on the finalization of assumptions including qualitative adjustments and the economic forecast used in calculating the allowance for credit losses upon the adoption of CECL.

We do not expect a material allowance for credit losses to be recorded on securities available for sale upon adoption of this ASU.

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 was effective for us on January 1, 2020, and did not have a material impact on our consolidated operating results or financial condition.

In March 2020, the FASB issued ASU 2020-04, ‘‘Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting’’. This new ASU provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. Entities that make such elections would not have to remeasure contracts at the modification date or reassess a previous accounting determination.  Entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met.  This amended guidance and our ability to elect its temporary optional expedients and exceptions are effective for us as of March 12, 2020 through December 31, 2022.

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Regulatory Matters

3 Months Ended

Mar. 31, 2020

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 March 31, 2020, the Bank had positive undivided profits of $41.6 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. In addition, capital adequacy rules include a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets that applies to all supervised financial institutions. To avoid limits on capital distributions and certain discretionary bonus payments we must meet the minimum ratio for adequately capitalized institutions plus the buffer. 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 March 31, 2020 and December 31, 2019, 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)
March 31, 2020
Total capital to risk-weighted assets Consolidated	$	373,709		13.38	%	$	223,472		8.00	%	NA		NA
Independent Bank		362,547		12.98			223,405		8.00		$	279,256		10.00	%
Tier 1 capital to risk-weighted assets Consolidated	$	339,553		12.16	%	$	167,604		6.00	%	NA		NA
Independent Bank		328,391		11.76			167,554		6.00		$	223,405		8.00	%
Common equity tier 1 capital to risk-weighted assets Consolidated	$	301,304		10.79	%	$	125,703		4.50	%	NA		NA
Independent Bank		328,391		11.76			125,665		4.50		$	181,516		6.50	%
Tier 1 capital to average assets Consolidated	$	339,553		9.63	%	$	141,089		4.00	%	NA		NA
Independent Bank		328,391		9.31			141,099		4.00		$	176,373		5.00	%
December 31, 2019
Total capital to risk-weighted assets Consolidated	$	380,454		13.74	%	$	221,562		8.00	%	NA		NA
Independent Bank		358,914		12.96			221,482		8.00		$	276,852		10.00	%
Tier 1 capital to risk-weighted assets Consolidated	$	352,764		12.74	%	$	166,171		6.00	%	NA		NA
Independent Bank		331,224		11.96			166,111		6.00		$	221,482		8.00	%
Common equity tier 1 capital to risk-weighted assets Consolidated	$	314,532		11.36	%	$	124,628		4.50	%	NA		NA
Independent Bank		331,224		11.96			124,583		4.50		$	179,954		6.50	%
Tier 1 capital to average assets Consolidated	$	352,764		10.11	%	$	139,632		4.00	%	NA		NA
Independent Bank		331,224		9.49			139,615		4.00		$	174,519		5.00	%

(1) These ratios do not reflect a capital conservation buffer of 2.50% at March 31, 2020 and December 31, 2019, respectively.

NA - Not applicable

The components of our regulatory capital are as follows:

	Consolidated						Independent Bank
	March 31, 2020			December 31, 2019			March 31, 2020			December 31, 2019
	(In thousands)
Total shareholders’ equity	$	335,618		$	350,169		$	362,705		$	366,861
Add (deduct)
Accumulated other comprehensive (income) loss for regulatory purposes		(943	)		(2,011	)		(943	)		(2,011	)
Goodwill and other intangibles		(33,371	)		(33,626	)		(33,371	)		(33,626	)
Disallowed deferred tax assets		-			-			-			-
Common equity tier 1 capital		301,304			314,532			328,391			331,224
Qualifying trust preferred securities		38,249			38,232			-			-
Tier 1 capital		339,553			352,764			328,391			331,224
Allowance for loan losses and  allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		32,664			27,690			34,156			27,690
Total risk-based capital	$	373,396		$	380,454		$	362,547		$	358,914

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Revenue from Contracts with Customers (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) Asset	Mar. 31, 2019 USD ($) Asset	Dec. 31, 2019 USD ($)
Revenue from Contracts with Customers [Abstract]
Percentage of revenues excluded from ASC Topic 606	85.10%	84.90%
Contract assets	$ 0		$ 0
Contract liabilities	$ 0		$ 0
Number of real estate assets sold during the period | Asset	0	0
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	$ 6,194	$ 6,002
Bank owned life insurance	270	242
Other	747	1,015
Total	2,163	2,264
Service Charges on Deposit Accounts
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	2,591	2,640
Overdraft Fees [Member] | Retail [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	1,740	1,730
Overdraft Fees [Member] | Business [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	345	385
Account Service Charges [Member] | Retail [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	506	525
Other Deposit Related Income [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	633	710
ATM Fees [Member] | Retail [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	300	322
ATM Fees [Member] | Business [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	7	8
Other [Member] | Retail [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	236	251
Other [Member] | Business [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	90	129
Interchange Income [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	2,457	2,355
Investment and Insurance Commissions [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	513	297
Asset Management Revenue [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	313	254
Transaction Based Revenue [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	$ 200	$ 43

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Share Based Compensation, Outstanding Non-vested Restricted Stock and PSUs and Related Transactions (Details) - Non-vested Restricted Stock and PSU's [Member]	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Number of Shares [Roll Forward]
Outstanding, beginning balance (in shares) | shares	245,726
Granted (in shares) | shares	73,893
Vested (in shares) | shares	(64,263)
Forfeited (in shares) | shares	(5,468)
Outstanding, ending balance (in shares) | shares	249,888
Weighted Average Grant Date Fair Value [Roll Forward]
Outstanding, beginning balance (in dollars per share) | $ / shares	$ 21.72
Granted (in dollars per share) | $ / shares	22.80
Vested (in dollars per share) | $ / shares	21.24
Forfeited (in dollars per share) | $ / shares	23.71
Outstanding, ending balance (in dollars per share) | $ / shares	$ 22.12

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Derivative Financial Instruments, Effect on Statement of Operations (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)		$ (406)	$ (912)
Fair Value Hedge Designation [Member] | Interest Rate Swap [Member] | Non-Interest Income-Other [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Income	[1]	(546)	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)		(406)	(912)
Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)		(75)	149
Gain (Loss) Recognized in Income	[1]	0	0
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)		(14)	(785)
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 (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)		(53)	118
Gain (Loss) Recognized in Income	[1]	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)		(392)	(127)
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 (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)		(22)	31
Gain (Loss) Recognized in Income	[1]	0	0
No Hedge Designation [Member]
Effect of derivative financial instruments on the condensed consolidated financial statements of operations [Abstract]
Gain (Loss) Recognized in Income		2,330	805
No 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 (Loss) Recognized in Income		(35)	0
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		4,320	629
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		(1,954)	174
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		(104)	86
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		103	(84)
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		(8,173)	(1,147)
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		$ 8,173	$ 1,147

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

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Regulatory Matters (Tables)

3 Months Ended

Mar. 31, 2020

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)
March 31, 2020
Total capital to risk-weighted assets Consolidated	$	373,709		13.38	%	$	223,472		8.00	%	NA		NA
Independent Bank		362,547		12.98			223,405		8.00		$	279,256		10.00	%
Tier 1 capital to risk-weighted assets Consolidated	$	339,553		12.16	%	$	167,604		6.00	%	NA		NA
Independent Bank		328,391		11.76			167,554		6.00		$	223,405		8.00	%
Common equity tier 1 capital to risk-weighted assets Consolidated	$	301,304		10.79	%	$	125,703		4.50	%	NA		NA
Independent Bank		328,391		11.76			125,665		4.50		$	181,516		6.50	%
Tier 1 capital to average assets Consolidated	$	339,553		9.63	%	$	141,089		4.00	%	NA		NA
Independent Bank		328,391		9.31			141,099		4.00		$	176,373		5.00	%
December 31, 2019
Total capital to risk-weighted assets Consolidated	$	380,454		13.74	%	$	221,562		8.00	%	NA		NA
Independent Bank		358,914		12.96			221,482		8.00		$	276,852		10.00	%
Tier 1 capital to risk-weighted assets Consolidated	$	352,764		12.74	%	$	166,171		6.00	%	NA		NA
Independent Bank		331,224		11.96			166,111		6.00		$	221,482		8.00	%
Common equity tier 1 capital to risk-weighted assets Consolidated	$	314,532		11.36	%	$	124,628		4.50	%	NA		NA
Independent Bank		331,224		11.96			124,583		4.50		$	179,954		6.50	%
Tier 1 capital to average assets Consolidated	$	352,764		10.11	%	$	139,632		4.00	%	NA		NA
Independent Bank		331,224		9.49			139,615		4.00		$	174,519		5.00	%

(1) These ratios do not reflect a capital conservation buffer of 2.50% at March 31, 2020 and December 31, 2019, respectively.

NA - Not applicable

Regulatory Capital

The components of our regulatory capital are as follows:

	Consolidated						Independent Bank
	March 31, 2020			December 31, 2019			March 31, 2020			December 31, 2019
	(In thousands)
Total shareholders’ equity	$	335,618		$	350,169		$	362,705		$	366,861
Add (deduct)
Accumulated other comprehensive (income) loss for regulatory purposes		(943	)		(2,011	)		(943	)		(2,011	)
Goodwill and other intangibles		(33,371	)		(33,626	)		(33,371	)		(33,626	)
Disallowed deferred tax assets		-			-			-			-
Common equity tier 1 capital		301,304			314,532			328,391			331,224
Qualifying trust preferred securities		38,249			38,232			-			-
Tier 1 capital		339,553			352,764			328,391			331,224
Allowance for loan losses and  allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		32,664			27,690			34,156			27,690
Total risk-based capital	$	373,396		$	380,454		$	362,547		$	358,914

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Revenue from Contracts with Customers (Tables)

3 Months Ended

Mar. 31, 2020

Revenue from Contracts with Customers [Abstract]

Disaggregation of Revenue Sources by Attribute

Disaggregation of our revenue sources by attribute follows:

Three months ending March 31, 2020

	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	1,740	$	-	$	-	$	-	$	1,740
Account service charges		506		-		-		-		506
ATM fees		-		300		-		-		300
Other		-		236		-		-		236
Business
Overdraft fees		345		-		-		-		345
ATM fees		-		7		-		-		7
Other		-		90		-		-		90
Interchange income		-		-		2,457		-		2,457
Asset management revenue		-		-		-		313		313
Transaction based revenue		-		-		-		200		200
Total	$	2,591	$	633	$	2,457	$	513	$	6,194

Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income	$	633
Investment and insurance commissions		513
Bank owned life insurance		270
Other		747
Total	$	2,163

Three months ending March 31, 2019

	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	1,730		-		-		-	$	1,730
Account service charges		525		-		-		-		525
ATM fees		-		322		-		-		322
Other		-		251		-		-		251
Business
Overdraft fees		385		-		-		-		385
ATM fees		-		8		-		-		8
Other		-		129		-		-		129
Interchange income		-		-		2,355		-		2,355
Asset management revenue		-		-		-		254		254
Transaction based revenue		-		-		-		43		43
Total	$	2,640	$	710	$	2,355	$	297	$	6,002

Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income	$	710
Investment and insurance commissions		297
Bank owned life insurance		242
Other		1,015
Total	$	2,264

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Fair Value Disclosures

3 Months Ended

Mar. 31, 2020

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 available for sale are classified as Level 1 of the valuation hierarchy.  We currently do not have any Level 1 securities. 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).

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. 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)
March 31, 2020:
Measured at Fair Value on a Recurring Basis
Assets
Securities available for sale
U.S. agency	$	12,828	$	-	$	12,828	$	-
U.S. agency residential mortgage-backed		221,829		-		221,829		-
U.S. agency commercial mortgage-backed		9,916		-		9,916		-
Private label mortgage-backed		37,071		-		37,071		-
Other asset backed		103,881		-		103,881		-
Obligations of states and political subdivisions		163,941		-		163,941		-
Corporate		42,811		-		42,811		-
Trust preferred		1,491		-		1,491		-
Foreign government		516		-		516		-
Loans held for sale, carried at fair value		64,549		-		64,549		-
Capitalized mortgage loan servicing rights		14,829		-		-		14,829
Derivatives (1)		17,610		-		17,610		-
Liabilities
Derivatives (2)		15,286		-		15,286		-
Measured at Fair Value on a Non-recurring Basis:
Assets
Impaired loans (3)
Commercial
Commercial and industrial		1,720		-		-		1,720
Commercial real estate		12,747		-		-		12,747
Mortgage
1-4 family owner occupied - jumbo		930		-		-		930
1-4 family owner occupied - non-jumbo		236		-		-		236
1-4 family non-owner occupied		189		-		-		189
1-4 family - 2nd lien		353		-		-		353
Resort lending		173		-		-		173
Installment
Boat lending		49		-		-		49
Recreational vehicle lending		54		-		-		54
Other		151		-		-		151
Other real estate (4)
Commercial real estate		474		474		-		-
Mortgage - 1-4 family owner occupied - non-jumbo		25		-		-		25

(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. The fair value of the commercial real estate property included in this table was based on a purchase agreement that is expected to close during the second quarter of 2020.

			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, 2019:
Measured at Fair Value on a Recurring Basis
Assets
Securities available for sale
U.S. agency	$	14,661	$	-	$	14,661	$	-
U.S. agency residential mortgage-backed		227,762		-		227,762		-
U.S. agency commercial mortgage-backed		10,756		-		10,756		-
Private label mortgage-backed		39,693		-		39,693		-
Other asset backed		93,886		-		93,886		-
Obligations of states and political subdivisions		96,102		-		96,102		-
Corporate		33,195		-		33,195		-
Trust preferred		1,843		-		1,843		-
Foreign government		502		-		502		-
Loans held for sale, carried at fair value		69,800		-		69,800		-
Capitalized mortgage loan servicing rights		19,171		-		-		19,171
Derivatives (1)		5,464		-		5,464		-
Liabilities
Derivatives (2)		4,402		-		4,402		-
Measured at Fair Value on a Non-recurring Basis:
Assets
Impaired loans (3)
Commercial
Commercial and industrial		655		-		-		655
Commercial real estate		316		-		-		316
Mortgage
1-4 family owner occupied - jumbo		987		-		-		987
1-4 family owner occupied - non-jumbo		470		-		-		470
1-4 family non-owner occupied		281		-		-		281
1-4 family - 2nd lien		294		-		-		294
Resort lending		245		-		-		245
Installment
Boat lending		67		-		-		67
Recreational vehicle lending		2		-		-		2
Other		121		-		-		121
Other real estate (4)
Mortgage - 1-4 family owner occupied - non-jumbo		31		-		-		31
Installment - other		28		-		-		28

(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 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 Three-Month Periods Ended March 31 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)
2020
Loans held for sale		-		523		-			523
Capitalized mortgage loan servicing rights		-		-		(6,974	)		(6,974	)
2019
Equity securities at fair value	$	167	$	-	$	-		$	167
Loans held for sale		-		96		-			96
Capitalized mortgage loan servicing rights		-		-		(2,691	)		(2,691	)

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 month periods ended March 31, 2020 and 2019 relating to assets measured at fair value on a non-recurring basis:

• Loans which are measured for impairment using the fair value of collateral for collateral dependent loans had a carrying amount of $16.6 million, which is net of a valuation allowance of $4.1 million at March 31, 2020, and had a carrying amount of $3.4 million, which is net of a valuation allowance of  $1.5  million   at December 31, 2019.  The provision for loan losses included in our results of operations relating to impaired loans was an expense of $2.4 million and $0.5 million during the three month periods ended March 31, 2020 and 2019, respectively.

• Other real estate, which is measured using the fair value of the property, had a carrying amount of $0.50 million which is net of a valuation allowance of $0.16 million at March 31, 2020, and a carrying amount of $0.06 million which is net of a valuation allowance of $0.09 million, at December 31, 2019. An additional charge relating to other real estate measured at fair value of $0.09 million and $0.12 million was included in our results of operations during the three month periods ended March 31, 2020 and 2019, respectively.

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

	Capitalized Mortgage Loan Servicing Rights
	Three Months Ended March 31,
	2020			2019
	(In thousands)
Beginning balance	$	19,171		$	21,400
Total gains (losses) realized and unrealized:
Included in results of operations		(6,974	)		(2,691	)
Included in other comprehensive income (loss)		-			-
Purchases, issuances, settlements, maturities and calls		2,632			1,200
Transfers in and/or out of Level 3		-			-
Ending balance	$	14,829		$	19,909
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 March 31	$	(6,974	)	$	(2,691	)

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, float rate and prepayment 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)
March 31, 2020
Capitalized mortgage loan servicing rights	$	14,829	Present value of net	Discount rate	10.00% to 13.00		%		10.13	%
			servicing revenue	Cost to service	$	72 to $201		$	81
				Ancillary income	20 to 37				22
				Float rate		0.52	%		0.52	%
				Prepayment rate	7.02% to 34.00		%		19.65	%
December 31, 2019
Capitalized mortgage loan servicing rights	$	19,171	Present value of net	Discount rate	10.00% to 13.00		%		10.14	%
			servicing revenue	Cost to service	$	66 to $316		$	81
				Ancillary income	20 to 37				22
				Float rate		1.73	%		1.73	%
				Prepayment rate	7.01% to 69.34		%		14.96

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)
March 31, 2020
Impaired loans Commercial	$	14,467	Sales comparison  approach	Adjustment for  differences between comparable sales	(48.0)% to 35.0	%		0.5	%
			Income approach	Capitalization rate	7.75% to 11.0			8.7
Mortgage and Installment(1)		2,135	Sales comparison approach	Adjustment for differences between comparable sales	(13.0) to 49.2			14.0
Other real estate Mortgage		25	Sales comparison approach	Adjustment for differences between comparable sales	(16.1) to 10.6			(4.2	)
December 31, 2019
Impaired loans Commercial	$	971	Sales comparison approach	Adjustment for differences between  comparable sales	(48.0)% to 19.2	%		(5.6	)%
Mortgage and Installment(1)		2,467	Sales comparison approach	Adjustment for differences between comparable sales	(25.2)% to 49.2			11.5
Other real estate
Mortgage and Installment		59	Sales comparison approach	Adjustment for  differences between comparable sales	(11.6)% to 5.0			(5.1	)

(1) In addition to the valuation techniques and unobservable inputs discussed above, at March 31, 2020 and December 31, 2019 certain impaired collateral dependent installment loans totaling approximately $0.25 million and $0.14 million, respectively 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
March 31, 2020	$	64,549	$	2,417	$	62,132
December 31, 2019		69,800		1,894		67,906

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Goodwill and Other Intangibles

3 Months Ended

Mar. 31, 2020

Goodwill and Other Intangibles [Abstract]

Goodwill and other Intangibles

7. Goodwill and other Intangibles

The following table summarizes intangible assets, net of amortization:

	March 31, 2020				December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Amortized intangible assets - core deposits	$	11,916	$	6,845	$	11,916	$	6,590
Unamortized intangible assets - goodwill	$	28,300			$	28,300

We performed our required annual goodwill impairment test as of December 31, 2019 and there was no impairment.  During the first quarter of 2020 the stock market in general as well as our market capitalization declined as a result of events surrounding the current COVID-19 pandemic outbreak.  We do not believe this decline is indicative of a permanent deterioration of the fundamental value of our bank. As such we do not believe that it is more likely than not a goodwill impairment exists at March 31, 2020. See note 13, Contingencies, for additional information on COVID-19 and its potential impact to us.

A summary of estimated core deposit intangible amortization at March 31, 2020 follows:

	(In thousands)
Nine months ending December 31, 2020	$	765
2021		970
2022		785
2023		547
2024		516
2025 and thereafter		1,488
Total	$	5,071

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Securities

3 Months Ended

Mar. 31, 2020

Securities [Abstract]

Securities

3. Securities

Securities available for sale consist of the following:

	Amortized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
March 31, 2020
U.S. agency	$	12,648	$	207	$	27	$	12,828
U.S. agency residential mortgage-backed		216,436		5,746		353		221,829
U.S. agency commercial mortgage-backed		9,665		252		1		9,916
Private label mortgage-backed		38,188		341		1,458		37,071
Other asset backed		105,971		79		2,169		103,881
Obligations of states and political subdivisions		162,805		2,477		1,341		163,941
Corporate		42,392		932		513		42,811
Trust preferred		1,968		-		477		1,491
Foreign government		499		17		-		516
Total	$	590,572	$	10,051	$	6,339	$	594,284
December 31, 2019
U.S. agency	$	14,591	$	89	$	19	$	14,661
U.S. agency residential mortgage-backed		226,130		1,910		278		227,762
U.S. agency commercial mortgage-backed		10,671		113		28		10,756
Private label mortgage-backed		39,248		544		99		39,693
Other asset backed		94,158		103		375		93,886
Obligations of states and political subdivisions		94,499		1,724		121		96,102
Corporate		31,904		1,296		5		33,195
Trust preferred		1,968		-		125		1,843
Foreign government		499		3		-		502
Total	$	513,668	$	5,782	$	1,050	$	518,400

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)
March 31, 2020
U.S. agency	$	1,042	$	1	$	2,473	$	26	$	3,515	$	27
U.S. agency residential mortgage-backed		37,673		289		5,166		64		42,839		353
U.S. agency commercial mortgage-backed		-		-		372		1		372		1
Private label mortgage-backed		22,232		1,388		358		70		22,590		1,458
Other asset backed		67,012		1,442		18,910		727		85,922		2,169
Obligations of states and political subdivisions		50,643		1,321		2,213		20		52,856		1,341
Corporate		14,556		513		-		-		14,556		513
Trust preferred		-		-		1,491		477		1,491		477
Total	$	193,158	$	4,954	$	30,983	$	1,385	$	224,141	$	6,339
December 31, 2019
U.S. agency	$	2,782	$	8	$	2,712	$	11	$	5,494	$	19
U.S. agency residential mortgage-backed		56,377		126		13,551		152		69,928		278
U.S. agency commercial mortgage-backed		3,284		24		659		4		3,943		28
Private label mortgage-backed		16,387		55		343		44		16,730		99
Other asset backed		34,027		233		13,839		142		47,866		375
Obligations of states and political subdivisions		15,666		84		5,396		37		21,062		121
Corporate		2,125		5		-		-		2,125		5
Trust preferred		-		-		1,843		125		1,843		125
Total	$	130,648	$	535	$	38,343	$	515	$	168,991	$	1,050

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 March 31, 2020, we had 24 U.S. agency, 52 U.S. agency residential mortgage-backed and six U.S. agency commercial mortgage-backed securities whose fair value is less than amortized cost. The  unrealized losses are largely attributed to widening spreads to Treasury bonds since acquisition.

Private label mortgage backed, other asset backed and corporate securities — at March 31, 2020, we had 35 private label mortgage backed, 122 other asset backed and 18 corporate securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening since acquisition.

Two private label mortgage-backed 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.

Obligations of states and political subdivisions — at March 31, 2020, we had 36 municipal securities whose fair value is less than amortized cost. The unrealized losses are primarily due to wider benchmark pricing spreads since acquisition.

Trust preferred securities — at March 31, 2020, 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 $0.65 million as of March 31, 2020, continues to have satisfactory credit metrics and make interest payments.

As management does not intend to liquidate any of the securities discussed above 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 discussed above (other than certain declines related to the two private label mortgage-backed securities currently being reviewed for OTTI) are 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 month periods ended March 31, 2020 and 2019, respectively.

At March 31, 2020, two private label mortgage-backed securities had credit related OTTI and are summarized as follows:

	Senior Security		Super Senior Security		Total
	(In thousands)
Fair value	$	469	$	513	$	982
Amortized cost		490		410		900
Non-credit unrealized loss		21		-		21
Unrealized gain		-		103		103
Cumulative credit related OTTI		757		457		1,214

Both of these securities are receiving principal and interest payments similar to principal reductions in the underlying collateral and have unrealized gains at March 31, 2020. 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 one of 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 March 31,
	2020		2019
	(In thousands)
Balance at beginning of period	$	1,214	$	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	$	1,214	$	1,594

The amortized cost and fair value of securities available for sale at March 31, 2020, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	13,075	$	13,132
Maturing after one year but within five years		61,789		62,393
Maturing after five years but within ten years		47,654		48,967
Maturing after ten years		97,794		97,095
		220,312		221,587
U.S. agency residential mortgage-backed		216,436		221,829
U.S. agency commercial mortgage-backed		9,665		9,916
Private label mortgage-backed		38,188		37,071
Other asset backed		105,971		103,881
Total	$	590,572	$	594,284

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 three month periods ending March 31, follows:

			Realized
	Proceeds		Gains		Losses
	(In thousands)
2020	$	21,743	$	253	$	-
2019		42,236		169		32

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 three months ended March 31, 2019 we recognized gains on these preferred stocks of $0.167 million that are included in net gains (losses) on securities in the Condensed Consolidated Statements of Operations.

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Loans (Tables)

3 Months Ended

Mar. 31, 2020

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 March 31, follows:

	Commercial			Mortgage			Installment			Subjective Allocation			Total
	(In thousands)
2020
Balance at beginning of period	$	7,922		$	8,216		$	1,283		$	8,727		$	26,148
Additions (deductions)
Provision for loan losses		2,218			(508	)		129			4,882			6,721
Recoveries credited to the allowance		108			117			174			-			399
Loans charged against the allowance		(36	)		(409	)		(328	)		-			(773	)
Balance at end of period	$	10,212		$	7,416		$	1,258		$	13,609		$	32,495
2019
Balance at beginning of period	$	7,090		$	7,978		$	895		$	8,925		$	24,888
Additions (deductions)
Provision for loan losses		420			573			523			(852	)		664
Recoveries credited to the allowance		127			224			217			-			568
Loans charged against the allowance		(119	)		(363	)		(384	)		-			(866	)
Balance at end of period	$	7,518		$	8,412		$	1,251		$	8,073		$	25,254

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)
March 31, 2020
Allowance for loan losses:
Individually evaluated for impairment	$	3,467	$	4,391	$	280	$	-	$	8,138
Collectively evaluated for impairment		6,745		3,025		978		13,609		24,357
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	10,212	$	7,416	$	1,258	$	13,609	$	32,495
Loans
Individually evaluated for impairment	$	18,048	$	42,440	$	2,813			$	63,301
Collectively evaluated for impairment		1,164,903		1,030,996		464,633				2,660,532
Loans acquired with deteriorated credit quality		1,340		567		311				2,218
Total loans recorded investment		1,184,291		1,074,003		467,757				2,726,051
Accrued interest included in recorded investment		2,692		4,036		1,208				7,936
Total loans	$	1,181,599	$	1,069,967	$	466,549			$	2,718,115
December 31, 2019
Allowance for loan losses:
Individually evaluated for impairment	$	1,031	$	4,863	$	261	$	-	$	6,155
Collectively evaluated for impairment		6,891		3,353		1,022		8,727		19,993
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	7,922	$	8,216	$	1,283	$	8,727	$	26,148
Loans
Individually evaluated for impairment	$	9,393	$	43,574	$	2,925			$	55,892
Collectively evaluated for impairment		1,158,906		1,058,917		457,370				2,675,193
Loans acquired with deteriorated credit quality		1,394		575		316				2,285
Total loans recorded investment		1,169,693		1,103,066		460,611				2,733,370
Accrued interest included in recorded investment		2,998		4,155		1,194				8,347
Total loans	$	1,166,695	$	1,098,911	$	459,417			$	2,725,023

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⁽¹⁾:

	90+ and Still Accruing		Non- Accrual		Total Non- Performing Loans
	(In thousands)
March 31, 2020
Commercial
Commercial and industrial (2)	$	-	$	1,285	$	1,285
Commercial real estate		-		7,756		7,756
Mortgage
1-4 family owner occupied - jumbo		-		2,356		2,356
1-4 family owner occupied - non-jumbo (3)		-		1,804		1,804
1-4 family non-owner occupied		-		1,122		1,122
1-4 family - 2nd lien		-		1,326		1,326
Resort lending		-		438		438
Installment
Boat lending		-		150		150
Recreational vehicle lending		-		84		84
Other		-		457		457
Total recorded investment	$	-	$	16,778	$	16,778
Accrued interest included in recorded investment	$	-	$	-	$	-
December 31, 2019
Commercial
Commercial and industrial (2)	$	-	$	565	$	565
Commercial real estate		-		735		735
Mortgage
1-4 family owner occupied - jumbo		-		1,179		1,179
1-4 family owner occupied - non-jumbo (3)		-		3,540		3,540
1-4 family non-owner occupied		-		1,039		1,039
1-4 family - 2nd lien		-		979		979
Resort lending		-		690		690
Installment
Boat lending		-		332		332
Recreational vehicle lending		-		3		3
Other		-		470		470
Total recorded investment	$	-	$	9,532	$	9,532
Accrued interest included in recorded investment	$	-	$	-	$	-

(1)Non-performing loans exclude purchase credit impaired loans.

(2)Non-performing commercial and industrial loans exclude $0.053 million and $0.077 million of government guaranteed loans at March 31, 2020 and December 31, 2019, respectively.

(3)Non-performing 1-4 family owner occupied – non jumbo loans exclude $0.623 million and $0.569 million of government guaranteed loans at March 31, 2020 and December 31, 2019, respectively.

Aging Analysis of Loans by Class

An aging analysis of loans by class follows:

	Loans Past Due								Loans not		Total
	30-59 days		60-89 days		90+ days		Total		Past Due		Loans
	(In thousands)
March 31, 2020
Commercial
Commercial and industrial	$	339	$	-	$	70	$	409	$	581,613	$	582,022
Commercial real estate		175		-		-		175		602,094		602,269
Mortgage
1-4 family owner occupied - jumbo		911		947		1,436		3,294		434,866		438,160
1-4 family owner occupied - non-jumbo		2,296		628		584		3,508		284,956		288,464
1-4 family non-owner occupied		1,039		348		690		2,077		164,961		167,038
1-4 family - 2nd lien		980		455		862		2,297		111,877		114,174
Resort lending		226		-		402		628		65,539		66,167
Installment
Boat lending		548		75		75		698		205,019		205,717
Recreational vehicle lending		242		42		54		338		158,336		158,674
Other		385		184		216		785		102,581		103,366
Total	$	7,141	$	2,679	$	4,389	$	14,209	$	2,711,842	$	2,726,051
Accrued interest included in recorded investment	$	71	$	41	$	-	$	112	$	7,824	$	7,936
December 31, 2019
Commercial
Commercial and industrial	$	-	$	289	$	102	$	391	$	564,480	$	564,871
Commercial real estate		177		-		735		912		603,910		604,822
Mortgage
1-4 family owner occupied - jumbo		1,757		1,037		-		2,794		398,759		401,553
1-4 family owner occupied - non-jumbo		2,672		852		1,387		4,911		342,349		347,260
1-4 family non-owner occupied		695		136		623		1,454		168,083		169,537
1-4 family - 2nd lien		909		90		386		1,385		115,157		116,542
Resort lending		364		53		565		982		67,192		68,174
Installment
Boat lending		337		107		88		532		202,750		203,282
Recreational vehicle lending		161		97		3		261		153,184		153,445
Other		377		275		202		854		103,030		103,884
Total recorded investment	$	7,449	$	2,936	$	4,091	$	14,476	$	2,718,894	$	2,733,370
Accrued interest included in recorded investment	$	74	$	34	$	-	$	108	$	8,239	$	8,347

Impaired Loans

Impaired loans are as follows:

	March 31, 2020		December 31, 2019
Impaired loans with no allocated allowance for loan losses	(In thousands)
Troubled debt restructurings (“TDR”)	$	232	$	337
Non - TDR		1,318		1,550
Impaired loans with an allocated allowance for loan losses
TDR - allowance based on collateral		9,535		1,587
TDR - allowance based on present value cash flow		40,769		48,798
Non - TDR - allowance based on collateral		11,205		3,365
Total impaired loans	$	63,059	$	55,637
Amount of allowance for loan losses allocated
TDR - allowance based on collateral	$	1,247	$	542
TDR - allowance based on present value cash flow		4,000		4,641
Non - TDR - allowance based on collateral		2,891		972
Total amount of allowance for loan losses allocated	$	8,138	$	6,155

Impaired loans by class  are as follows:

	March 31, 2020						December 31, 2019
	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
Commercial and industrial	$	84	$	84	$	-	$	257	$	257	$	-
Commercial real estate		-		-		-		796		796		-
Mortgage
1-4 family owner occupied - jumbo		154		246		-		-		-		-
1-4 family owner occupied - non-jumbo		385		410		-		212		217		-
1-4 family non-owner occupied		389		554		-		214		366		-
1-4 family - 2nd lien		384		384		-		407		438		-
Resort lending		154		379		-		-		-		-
Installment
Boat lending		-		-		-		-		-		-
Recreational vehicle lending		-		-		-		-		-		-
Other		-		-		-		1		41		-
		1,550		2,057		-		1,887		2,115		-
With an allowance for loan losses recorded:
Commercial
Commercial and industrial	$	2,409	$	2,496		685		1,655		1,706		453
Commercial real estate		15,555		15,479		2,782		6,685		6,661		578
Mortgage
1-4 family owner occupied - jumbo		23,413		24,861		2,351		1,447		1,445		91
1-4 family owner occupied - non-jumbo		598		652		157		10,163		10,695		1,031
1-4 family non-owner occupied		4,606		5,052		465		4,962		5,542		572
1-4 family - 2nd lien		813		832		214		14,059		15,243		1,695
Resort lending		11,544		11,786		1,204		12,110		12,263		1,474
Installment
Boat lending		75		99		27		-		-		-
Recreational vehicle lending		129		150		32		-		-		-
Other		2,609		2,907		221		2,924		3,153		261
		61,751		64,314		8,138		54,005		56,708		6,155
Total
Commercial
Commercial and industrial		2,493		2,580		685		1,912		1,963		453
Commercial real estate		15,555		15,479		2,782		7,481		7,457		578
Mortgage
1-4 family owner occupied - jumbo		23,567		25,107		2,351		1,447		1,445		91
1-4 family owner occupied - non-jumbo		983		1,062		157		10,375		10,912		1,031
1-4 family non-owner occupied		4,995		5,606		465		5,176		5,908		572
1-4 family - 2nd lien		1,197		1,216		214		14,466		15,681		1,695
Resort lending		11,698		12,165		1,204		12,110		12,263		1,474
Installment
Boat lending		75		99		27		-		-		-
Recreational vehicle lending		129		150		32		-		-		-
Other		2,609		2,907		221		2,925		3,194		261
Total	$	63,301	$	66,371	$	8,138	$	55,892	$	58,823	$	6,155
Accrued interest included in recorded investment	$	242					$	255

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 March 31, follows:

	2020				2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Commercial and industrial	$	171	$	1	$	-	$	-
Commercial real estate		398		-		-		-
Mortgage
1-4 family owner occupied - jumbo		77		1		-		-
1-4 family owner occupied - non-jumbo		299		4		179		-
1-4 family non-owner occupied		302		2		-		-
1-4 family - 2nd lien		396		-		-		-
Resort lending		77		-		-		-
Installment
Boat lending		-		-		-		-
Recreational vehicle lending		-		-		-		-
Other		1		-		1		-
		1,721		8		180		-
With an allowance for loan losses recorded:
Commercial
Commercial and industrial		2,032		38		3,278		20
Commercial real estate		11,120		223		5,035		67
Mortgage
1-4 family owner occupied - jumbo		12,430		360		1,579		27
1-4 family owner occupied - non-jumbo		5,381		4		18,579		356
1-4 family non-owner occupied		4,784		66		4,069		64
1-4 family - 2nd lien		7,436		4		8,802		3
Resort lending		11,827		141		13,148		175
Installment
Boat lending		38		-		51		-
Recreational vehicle lending		65		1		81		1
Other		2,767		41		3,316		52
		57,880		878		57,938		765
Total
Commercial
Commercial and industrial		2,203		39		3,278		20
Commercial real estate		11,518		223		5,035		67
Mortgage
1-4 family owner occupied - jumbo		12,507		361		1,579		27
1-4 family owner occupied - non-jumbo		5,680		8		18,758		356
1-4 family non-owner occupied		5,086		68		4,069		64
1-4 family - 2nd lien		7,832		4		8,802		3
Resort lending		11,904		141		13,148		175
Installment
Boat lending		38		-		51		-
Recreational vehicle lending		65		1		81		1
Other		2,768		41		3,317		52
Total	$	59,601	$	886	$	58,118	$	765

Troubled Debt Restructurings

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

TDRs follow:

	March 31, 2020
	Commercial		Retail (1)			Total
	(In thousands)
Performing TDRs	$	8,924	$	39,253		$	48,177
Non-performing TDRs(2)		264		2,095	(3)		2,359
Total	$	9,188	$	41,348		$	50,536

		December 31, 2019
		Commercial	Retail (1)			Total
		(In thousands)
Performing TDRs	$	7,974	$	39,601		$	47,575
Non-performing TDRs(2)		540		2,607	(3)		3,147
Total	$	8,514	$	42,208		$	50,722

(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 TDRs during the three-month periods ended March 31 follow:

	Number of Contracts		Pre-modification Balance		Post-modification Balance
	(Dollars in thousands)
2020
Commercial
Commercial and industrial		1	$	99	$	99
Commercial real estate		3		1,177		1,177
Mortgage
1-4 family owner occupied - jumbo		1		281		281
1-4 family owner occupied - non-jumbo		-		-		-
1-4 family non-owner occupied		-		-		-
1-4 family - 2nd lien		-		-		-
Resort lending		-		-		-
Installment
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		2		60		61
Total		7	$	1,617	$	1,618
2019
Commercial
Commercial and industrial		1	$	49	$	49
Commercial real estate		-		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-		-
1-4 family owner occupied - non-jumbo		1		281		281
1-4 family non-owner occupied		-		-		-
1-4 family - 2nd lien		-		-		-
Resort lending		-		-		-
Installment
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		2		60		61
Total		4	$	390	$	391

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)
March 31, 2020
Commercial and industrial	$	534,064	$	42,460	$	4,213	$	1,285	$	582,022
Commercial real estate		578,466		14,161		1,886		7,756		602,269
Total	$	1,112,530	$	56,621	$	6,099	$	9,041	$	1,184,291
Accrued interest included in total	$	2,503	$	167	$	22	$	-	$	2,692
December 31, 2019
Commercial and industrial	$	515,955	$	44,384	$	3,967	$	565	$	564,871
Commercial real estate		580,516		23,036		535		735		604,822
Total	$	1,096,471	$	67,420	$	4,502	$	1,300	$	1,169,693
Accrued interest included in total	$	2,763	$	205	$	30	$	-	$	2,998

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

	Mortgage (1)
	1-4 Family Owner Occupied - Jumbo		1-4 Family Owner Occupied - Non-jumbo		1-4 Family Non-owner Occupied		1-4 Family 2nd Lien		Resort Lending		Total
	(In thousands)
March 31, 2020	$	50,414	$	34,580	$	23,209	$	13,108	$	10,591	$	131,902
800 and above
750-799		209,339		87,685		83,613		48,332		28,847		457,816
700-749		114,474		90,784		35,455		31,576		14,132		286,421
650-699		37,985		43,241		15,242		14,107		9,280		119,855
600-649		16,755		16,693		5,548		3,848		2,013		44,857
550-599		4,101		8,571		1,751		1,496		659		16,578
500-549		3,693		5,236		1,714		1,208		568		12,419
Under 500		1,399		1,674		506		499		77		4,155
Unknown		-		-		-		-		-		-
Total	$	438,160	$	288,464	$	167,038	$	114,174	$	66,167	$	1,074,003
Accrued interest included in total	$	1,264	$	1,522	$	562	$	448	$	240	$	4,036
December 31, 2019	$	48,486	$	43,848	$	24,315	$	13,905	$	11,076	$	141,630
800 and above
750-799		198,491		111,521		84,656		50,012		29,364		474,044
700-749		106,609		95,064		34,839		30,697		14,626		281,835
650-699		31,553		51,174		13,995		14,267		8,063		119,052
600-649		13,230		21,938		5,897		4,097		2,074		47,236
550-599		514		12,308		1,863		1,703		673		17,061
500-549		1,519		7,940		1,870		1,281		889		13,499
Under 500		641		2,208		533		511		79		3,972
Unknown		510		1,259		1,569		69		1,330		4,737
Total	$	401,553	$	347,260	$	169,537	$	116,542	$	68,174	$	1,103,066
Accrued interest included in total	$	1,139	$	1,662	$	586	$	502	$	266	$	4,155

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

	Installment(1)
	Boat Lending		Recreational Vehicle Lending		Other		Total
	(In thousands)
March 31, 2020	$	28,885	$	26,056	$	7,631	$	62,572
800 and above
750-799		120,261		90,484		37,810		248,555
700-749		41,494		32,596		27,461		101,551
650-699		11,320		7,116		22,607		41,043
600-649		2,117		1,391		4,115		7,623
550-599		1,029		580		1,764		3,373
500-549		319		429		991		1,739
Under 500		292		22		231		545
Unknown		-		-		756		756
Total	$	205,717	$	158,674	$	103,366	$	467,757
Accrued interest included in total	$	472	$	366	$	370	$	1,208
December 31, 2019	$	28,041	$	24,470	$	7,611	$	60,122
800 and above
750-799		118,380		88,164		37,583		244,127
700-749		41,490		31,055		27,204		99,749
650-699		11,485		7,267		22,517		41,269
600-649		2,254		1,411		4,470		8,135
550-599		946		592		1,884		3,422
500-549		377		464		1,127		1,968
Under 500		309		22		284		615
Unknown		-		-		1,204		1,204
Total	$	203,282	$	153,445	$	103,884	$	460,611
Accrued interest included in total	$	490	$	378	$	326	$	1,194

(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:

	March 31, 2020		December 31, 2019
	(In thousands)
Commercial	$	1,340	$	1,394
Mortgage		567		575
Installment		311		316
Total carrying amount		2,218		2,285
Allowance for loan losses		-		-
Carrying amount, net of allowance for loan losses	$	2,218	$	2,285

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 March 31,
	2020			2019
	(unaudited)
	(In thousands)
Balance at beginning of period	$	640		$	462
New loans purchased		-			-
Accretion recorded as loan interest income		(32	)		(39	)
Reclassification from (to) nonaccretable difference		-			365
Displosals/other adjustments		-			-
Balance at end of period	$	608		$	788

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Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2020

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 85.1% and 84.9% of total revenues for the three month periods ending March 31, 2020 and 2019, 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 March 31, 2020 and December 31, 2019.

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 month periods ending March 31, 2020 and 2019 that were financed by us.

Disaggregation of our revenue sources by attribute follows:

Three months ending March 31, 2020

	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	1,740	$	-	$	-	$	-	$	1,740
Account service charges		506		-		-		-		506
ATM fees		-		300		-		-		300
Other		-		236		-		-		236
Business
Overdraft fees		345		-		-		-		345
ATM fees		-		7		-		-		7
Other		-		90		-		-		90
Interchange income		-		-		2,457		-		2,457
Asset management revenue		-		-		-		313		313
Transaction based revenue		-		-		-		200		200
Total	$	2,591	$	633	$	2,457	$	513	$	6,194

Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income	$	633
Investment and insurance commissions		513
Bank owned life insurance		270
Other		747
Total	$	2,163

Three months ending March 31, 2019

	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	1,730		-		-		-	$	1,730
Account service charges		525		-		-		-		525
ATM fees		-		322		-		-		322
Other		-		251		-		-		251
Business
Overdraft fees		385		-		-		-		385
ATM fees		-		8		-		-		8
Other		-		129		-		-		129
Interchange income		-		-		2,355		-		2,355
Asset management revenue		-		-		-		254		254
Transaction based revenue		-		-		-		43		43
Total	$	2,640	$	710	$	2,355	$	297	$	6,002

Reconciliation to Condensed Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income	$	710
Investment and insurance commissions		297
Bank owned life insurance		242
Other		1,015
Total	$	2,264

XML

Accumulated Other Comprehensive Loss ("AOCL"), Reclassification Out of Each Components (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Reclassifications out of AOCL [Abstract]
Total reclassifications before tax	$ 5,755	$ 11,548
Interest expense	(5,388)	(6,393)
Income tax expense	945	2,167
Reclassifications, net of tax	4,810	9,381
Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassifications out of AOCL [Abstract]
Reclassifications, net of tax	141	226
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	253	137
Net impairment loss recognized in earnings	0	0
Total reclassifications before tax	253	137
Income tax expense	53	29
Reclassifications, net of tax	200	108
Unrealized Losses on Cash Flow Hedges [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassifications out of AOCL [Abstract]
Interest expense	75	(149)
Income tax expense	16	(31)
Reclassifications, net of tax	$ 59	$ (118)

XML

Condensed Consolidated Statements of Shareholders' Equity (unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Retained Earnings (Accumulated Deficit) [Member]	Accumulated Other Comprehensive Loss [Member]	Total
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		9,381		9,381
Cash dividends declared	0	(4,246)	0	(4,246)
Repurchase of common stock	(2,530)	0	0	(2,530)
Issuance of common stock	282	0	0	282
Share based compensation	420	0	0	420
Share based compensation withholding obligation	(866)	0	0	(866)
Other comprehensive income	0	0	3,291	3,291
Balances at end of period at Mar. 31, 2019	374,678	(23,135)	(6,817)	344,726
Balance at beginning of period at Dec. 31, 2019	352,344	1,611	(3,786)	350,169
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		4,810		4,810
Cash dividends declared	0	(4,477)	0	(4,477)
Repurchase of common stock	(13,784)	0	0	(13,784)
Issuance of common stock	11	0	0	11
Share based compensation	547	0	0	547
Share based compensation withholding obligation	(590)	0	0	(590)
Other comprehensive income	0	0	(1,068)	(1,068)
Balances at end of period at Mar. 31, 2020	$ 338,528	$ 1,944	$ (4,854)	$ 335,618

XML

Condensed Consolidated Statements of Financial Condition (unaudited) (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
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)	21,892,001	22,481,643
Common stock, shares outstanding (in shares)	21,892,001	22,481,643

XML

Fair Value Disclosures, Difference Between Aggregate Fair Value and Aggregate Remaining Contractual Principal (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Loans held for sale [Abstract]
Aggregate Fair Value	$ 64,549	$ 69,800
Difference	2,417	1,894
Contractual Principal	$ 62,132	$ 67,906

XML

Fair Value Disclosures, Significant Assumptions (Details) - USD ($) $ in Thousands		Mar. 31, 2020		Dec. 31, 2019
Assets [Abstract]
Securities available for sale		$ 594,284		$ 518,400
Loans held for sale, carried at fair value		64,549		69,800
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets [Abstract]
Securities available for sale		0		0
Derivatives		0		0
Liabilities [Abstract]
Derivatives		0		0
Significant Other Observable Inputs (Level 2) [Member]
Assets [Abstract]
Securities available for sale		594,284		518,400
Derivatives		17,610		5,464
Liabilities [Abstract]
Derivatives		15,286		4,402
Significant Un-observable Inputs (Level 3) [Member]
Assets [Abstract]
Securities available for sale		0		0
Derivatives		0		0
Liabilities [Abstract]
Derivatives		0		0
Recurring Basis [Member]
Assets [Abstract]
Loans held for sale, carried at fair value		64,549		69,800
Capitalized mortgage loan servicing rights		14,829		19,171
Derivatives	[1]	17,610		5,464
Liabilities [Abstract]
Derivatives	[2]	15,286		4,402
Recurring Basis [Member] | U.S. Agency [Member]
Assets [Abstract]
Securities available for sale		12,828		14,661
Recurring Basis [Member] | U.S. Agency Residential Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		221,829		227,762
Recurring Basis [Member] | U.S. Agency Commercial Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		9,916		10,756
Recurring Basis [Member] | Private Label Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		37,071		39,693
Recurring Basis [Member] | Other Asset Backed [Member]
Assets [Abstract]
Securities available for sale		103,881		93,886
Recurring Basis [Member] | Obligations of States and Political Subdivisions [Member]
Assets [Abstract]
Securities available for sale		163,941		96,102
Recurring Basis [Member] | Corporate [Member]
Assets [Abstract]
Securities available for sale		42,811		33,195
Recurring Basis [Member] | Trust Preferred [Member]
Assets [Abstract]
Securities available for sale		1,491		1,843
Recurring Basis [Member] | Foreign Government [Member]
Assets [Abstract]
Securities available for sale		516		502
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets [Abstract]
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]
Loans held for sale, carried at fair value		64,549		69,800
Capitalized mortgage loan servicing rights		0		0
Derivatives	[1]	17,610		5,464
Liabilities [Abstract]
Derivatives	[2]	15,286		4,402
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Agency [Member]
Assets [Abstract]
Securities available for sale		12,828		14,661
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Agency Residential Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		221,829		227,762
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Agency Commercial Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		9,916		10,756
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Private Label Mortgage-Backed [Member]
Assets [Abstract]
Securities available for sale		37,071		39,693
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other Asset Backed [Member]
Assets [Abstract]
Securities available for sale		103,881		93,886
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Obligations of States and Political Subdivisions [Member]
Assets [Abstract]
Securities available for sale		163,941		96,102
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate [Member]
Assets [Abstract]
Securities available for sale		42,811		33,195
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Trust Preferred [Member]
Assets [Abstract]
Securities available for sale		1,491		1,843
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Foreign Government [Member]
Assets [Abstract]
Securities available for sale		516		502
Recurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member]
Assets [Abstract]
Loans held for sale, carried at fair value		0		0
Capitalized mortgage loan servicing rights		14,829		19,171
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] | Impaired Loans [Member] | Commercial [Member] | Commercial and Industrial [Member]
Impaired loans [Abstract]
Loans receivable	[3]	1,720		655
Nonrecurring Basis [Member] | Impaired Loans [Member] | Commercial [Member] | Commercial Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[3]	12,747		316
Nonrecurring Basis [Member] | Impaired Loans [Member] | Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]
Impaired loans [Abstract]
Loans receivable	[3]	930		987
Nonrecurring Basis [Member] | Impaired Loans [Member] | Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]
Impaired loans [Abstract]
Loans receivable	[3]	236		470
Nonrecurring Basis [Member] | Impaired Loans [Member] | Mortgage [Member] | 1-4 Family Non-owner Occupied [Member]
Impaired loans [Abstract]
Loans receivable	[3]	189		281
Nonrecurring Basis [Member] | Impaired Loans [Member] | Mortgage [Member] | 1-4 Family - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	353		294
Nonrecurring Basis [Member] | Impaired Loans [Member] | Mortgage [Member] | Resort Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	173		245
Nonrecurring Basis [Member] | Impaired Loans [Member] | Installment [Member] | Boat Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	49		67
Nonrecurring Basis [Member] | Impaired Loans [Member] | Installment [Member] | Recreational Vehicle Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	54		2
Nonrecurring Basis [Member] | Impaired Loans [Member] | Installment [Member] | Other [Member]
Impaired loans [Abstract]
Loans receivable	[3]	151		121
Nonrecurring Basis [Member] | Other Real Estate [Member] | Commercial [Member] | Commercial Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[4]	474
Nonrecurring Basis [Member] | Other Real Estate [Member] | Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]
Impaired loans [Abstract]
Loans receivable		25	[4]	31	[5]
Nonrecurring Basis [Member] | Other Real Estate [Member] | Installment [Member] | Other [Member]
Impaired loans [Abstract]
Loans receivable	[5]			28
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] | Commercial [Member] | Commercial 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] | Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [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 Owner Occupied - Non-jumbo [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 Non-owner Occupied [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 - 2nd Lien [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] | Installment [Member] | Boat 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] | Installment [Member] | Recreational Vehicle 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] | Installment [Member] | Other [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0		0
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Real Estate [Member] | Commercial [Member] | Commercial Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[4]	474
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Real Estate [Member] | Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]
Impaired loans [Abstract]
Loans receivable		0	[4]	0	[5]
Nonrecurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Real Estate [Member] | Installment [Member] | Other [Member]
Impaired loans [Abstract]
Loans receivable	[5]			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] | Commercial [Member] | Commercial Real Estate [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 Owner Occupied - Jumbo [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 Owner Occupied - Non-jumbo [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 Non-owner Occupied [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 - 2nd Lien [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] | Installment [Member] | Boat Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	0		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		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		0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other Real Estate [Member] | Commercial [Member] | Commercial Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[4]	0
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other Real Estate [Member] | Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]
Impaired loans [Abstract]
Loans receivable		0	[4]	0	[5]
Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other Real Estate [Member] | Installment [Member] | Other [Member]
Impaired loans [Abstract]
Loans receivable	[5]			0
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]	1,720		655
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Commercial [Member] | Commercial Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[3]	12,747		316
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]
Impaired loans [Abstract]
Loans receivable	[3]	930		987
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]
Impaired loans [Abstract]
Loans receivable	[3]	236		470
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Mortgage [Member] | 1-4 Family Non-owner Occupied [Member]
Impaired loans [Abstract]
Loans receivable	[3]	189		281
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Mortgage [Member] | 1-4 Family - 2nd Lien [Member]
Impaired loans [Abstract]
Loans receivable	[3]	353		294
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Mortgage [Member] | Resort Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	173		245
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Installment [Member] | Boat Lending [Member]
Impaired loans [Abstract]
Loans receivable	[3]	49		67
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]	54		2
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Impaired Loans [Member] | Installment [Member] | Other [Member]
Impaired loans [Abstract]
Loans receivable	[3]	151		121
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Other Real Estate [Member] | Commercial [Member] | Commercial Real Estate [Member]
Impaired loans [Abstract]
Loans receivable	[4]	0
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Other Real Estate [Member] | Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]
Impaired loans [Abstract]
Loans receivable		$ 25	[4]	31	[5]
Nonrecurring Basis [Member] | Significant Un-observable Inputs (Level 3) [Member] | Other Real Estate [Member] | Installment [Member] | Other [Member]
Impaired loans [Abstract]
Loans receivable	[5]			$ 28

[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. The fair value of the commercial real estate property included in this table was based on a purchase agreement that is expected to close during the second quarter of 2020.

[5] Only includes other real estate with subsequent write downs to fair value.

XML

Loans, Allowance for Loan Losses (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Analysis of allowance for loan losses by portfolio segment [Roll Forward]
Balance at beginning of period		$ 26,148	$ 24,888
Additions (deductions) [Abstract]
Provision for loan losses		6,721	664
Recoveries credited to the allowance		399	568
Loans charged against the allowance		(773)	(866)
Balance at end of period		32,495	25,254
Allowance for loan losses [Abstract]
Individually evaluated for impairment		8,138		$ 6,155
Collectively evaluated for impairment		24,357		19,993
Total ending allowance for loan losses balance		32,495		26,148
Loans [Abstract]
Individually evaluated for impairment		63,301		55,892
Collectively evaluated for impairment		2,660,532		2,675,193
Total loans recorded investment		2,726,051		2,733,370
Accrued interest included in recorded investment		7,936		8,347
Total loans		2,718,115		2,725,023
Loans Acquired with Deteriorated Credit Quality [Member]
Allowance for loan losses [Abstract]
Loans acquired with deteriorated credit quality		0		0
Loans [Abstract]
Loans acquired with deteriorated credit quality		2,218		2,285
Commercial [Member]
Analysis of allowance for loan losses by portfolio segment [Roll Forward]
Balance at beginning of period		7,922	7,090
Additions (deductions) [Abstract]
Provision for loan losses		2,218	420
Recoveries credited to the allowance		108	127
Loans charged against the allowance		(36)	(119)
Balance at end of period		10,212	7,518
Allowance for loan losses [Abstract]
Individually evaluated for impairment		3,467		1,031
Collectively evaluated for impairment		6,745		6,891
Total ending allowance for loan losses balance		10,212		7,922
Loans [Abstract]
Individually evaluated for impairment		18,048		9,393
Collectively evaluated for impairment		1,164,903		1,158,906
Total loans recorded investment		1,184,291		1,169,693
Accrued interest included in recorded investment		2,692		2,998
Total loans		1,181,599		1,166,695
Commercial [Member] | Loans Acquired with Deteriorated Credit Quality [Member]
Allowance for loan losses [Abstract]
Loans acquired with deteriorated credit quality		0		0
Loans [Abstract]
Loans acquired with deteriorated credit quality		1,340		1,394
Mortgage [Member]
Analysis of allowance for loan losses by portfolio segment [Roll Forward]
Balance at beginning of period		8,216	7,978
Additions (deductions) [Abstract]
Provision for loan losses		(508)	573
Recoveries credited to the allowance		117	224
Loans charged against the allowance		(409)	(363)
Balance at end of period		7,416	8,412
Allowance for loan losses [Abstract]
Individually evaluated for impairment		4,391		4,863
Collectively evaluated for impairment		3,025		3,353
Total ending allowance for loan losses balance		7,416		8,216
Loans [Abstract]
Individually evaluated for impairment		42,440		43,574
Collectively evaluated for impairment		1,030,996		1,058,917
Total loans recorded investment		1,074,003		1,103,066
Accrued interest included in recorded investment	[1]	4,036		4,155
Total loans		1,069,967		1,098,911
Mortgage [Member] | Loans Acquired with Deteriorated Credit Quality [Member]
Allowance for loan losses [Abstract]
Loans acquired with deteriorated credit quality		0		0
Loans [Abstract]
Loans acquired with deteriorated credit quality		567		575
Installment [Member]
Analysis of allowance for loan losses by portfolio segment [Roll Forward]
Balance at beginning of period		1,283	895
Additions (deductions) [Abstract]
Provision for loan losses		129	523
Recoveries credited to the allowance		174	217
Loans charged against the allowance		(328)	(384)
Balance at end of period		1,258	1,251
Allowance for loan losses [Abstract]
Individually evaluated for impairment		280		261
Collectively evaluated for impairment		978		1,022
Total ending allowance for loan losses balance		1,258		1,283
Loans [Abstract]
Individually evaluated for impairment		2,813		2,925
Collectively evaluated for impairment		464,633		457,370
Total loans recorded investment		467,757		460,611
Accrued interest included in recorded investment	[1]	1,208		1,194
Total loans		466,549		459,417
Installment [Member] | Loans Acquired with Deteriorated Credit Quality [Member]
Allowance for loan losses [Abstract]
Loans acquired with deteriorated credit quality		0		0
Loans [Abstract]
Loans acquired with deteriorated credit quality		311		316
Subjective Allocation [Member]
Analysis of allowance for loan losses by portfolio segment [Roll Forward]
Balance at beginning of period		8,727	8,925
Additions (deductions) [Abstract]
Provision for loan losses		4,882	(852)
Recoveries credited to the allowance		0	0
Loans charged against the allowance		0	0
Balance at end of period		13,609	$ 8,073
Allowance for loan losses [Abstract]
Individually evaluated for impairment		0		0
Collectively evaluated for impairment		13,609		8,727
Total ending allowance for loan losses balance		13,609		8,727
Subjective Allocation [Member] | Loans Acquired with Deteriorated Credit Quality [Member]
Allowance for loan losses [Abstract]
Loans acquired with deteriorated credit quality		$ 0		$ 0

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

XML

Loans, Troubled Debt Restructurings (Details) $ in Thousands		3 Months Ended
		Mar. 31, 2020 USD ($) Payment Contract	Mar. 31, 2019 USD ($) Contract	Dec. 31, 2019 USD ($)
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring		$ 50,536		$ 50,722
Number of consecutive timely payments required | Payment		6
Troubled debt restructuring, specific reserve		$ 5,200		5,200
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		7	4
Pre-modification recorded balance		$ 1,617	$ 390
Post-modification recorded balance		1,618	391
Increase in allowance for loan losses		270	10
Charge offs due to troubled debt restructurings		$ 0	0
Past due period for modified loans		90 days
Charge-offs on TDRs that subsequently defaulted		$ 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		$ 48,177		47,575
Non-performing TDRs [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring	[1]	2,359		3,147
Commercial [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring		9,188		8,514
Commercial [Member] | Performing TDRs [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring		8,924		7,974
Commercial [Member] | Non-performing TDRs [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring	[1]	$ 264		540
Commercial [Member] | Commercial and Industrial [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		1	1
Pre-modification recorded balance		$ 99	$ 49
Post-modification recorded balance		$ 99	$ 49
Commercial [Member] | Commercial Real Estate [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		3	0
Pre-modification recorded balance		$ 1,177	$ 0
Post-modification recorded balance		$ 1,177	$ 0
Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		1	0
Pre-modification recorded balance		$ 281	$ 0
Post-modification recorded balance		$ 281	$ 0
Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	1
Pre-modification recorded balance		$ 0	$ 281
Post-modification recorded balance		$ 0	$ 281
Mortgage [Member] | 1-4 Non-owner Occupied [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	0
Pre-modification recorded balance		$ 0	$ 0
Post-modification recorded balance		$ 0	$ 0
Mortgage [Member] | 1-4 Family - 2nd Lien [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	0
Pre-modification recorded balance		$ 0	$ 0
Post-modification recorded balance		$ 0	$ 0
Mortgage [Member] | Resort Lending [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	0
Pre-modification recorded balance		$ 0	$ 0
Post-modification recorded balance		$ 0	$ 0
Installment [Member] | Boat Lending [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	0
Pre-modification recorded balance		$ 0	$ 0
Post-modification recorded balance		$ 0	$ 0
Installment [Member] | Recreational Vehicle Lending [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		0	0
Pre-modification recorded balance		$ 0	$ 0
Post-modification recorded balance		$ 0	$ 0
Installment [Member] | Other [Member]
Loans classified as troubled debt restructurings [Abstract]
Number of contracts | Contract		2	2
Pre-modification recorded balance		$ 60	$ 60
Post-modification recorded balance		61	$ 61
Retail [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring	[2]	41,348		42,208
Retail [Member] | Performing TDRs [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring	[2]	39,253		39,601
Retail [Member] | Non-performing TDRs [Member]
Troubled Debt Restructuring [Abstract]
Troubled debt restructuring	[1],[2],[3]	$ 2,095		$ 2,607

[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.