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Net Interest Income After Provision for Loan Losses

1,199

(1,309)

(2,714)

87,987

80,950

77,700

NON-INTEREST INCOME

Service charges on deposit accounts

12,673

12,406

12,389

Interchange income

8,023

7,938

8,481

Net gains on assets

Mortgage loans

11,762

10,566

7,448

Securities

260

563

Mortgage loan servicing, net

1,647

2,222

1,751

Net gain on branch sale

1,193

Other

8,168

8,603

8,848

Total Non-Interest Income

42,533

42,298

40,130

NON-INTEREST EXPENSE

Compensation and employee benefits

55,089

49,579

48,186

Occupancy, net

8,102

8,023

8,369

Data processing

7,657

7,952

7,944

Furniture, fixtures and equipment

3,870

3,912

3,892

Communications

2,684

3,142

2,957

Loan and collection

2,230

2,512

3,609

Advertising

1,905

1,856

2,121

Legal and professional

1,892

1,742

2,013

Interchange expense

1,156

1,111

1,125

FDIC deposit insurance

894

1,049

1,366

Credit card and bank service fees

529

791

797

Merger related expense

284

Net (gains) losses on other real estate and repossessed assets

(606)

250

(180)

Litigation settlement expense

2,300

Loss on sale of payment plan business

320

Other

6,396

5,808

6,251

Total Non-interest Expense

92,082

90,347

88,450

Income Before Income Tax

38,438

32,901

29,380

Income tax expense

17,963

10,135

9,363

Net Income

$ 20,475

$ 22,766

$ 20,017

Net income per common share

Basic (in dollars per share)

^[1]

$ 0.96

$ 1.06

$ 0.88

Diluted (in dollars per share)

0.95

1.05

0.86

Cash dividends declared and paid per common share (in dollars per share)

$ 0.42

$ 0.34

$ 0.26

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Net income	$ 20,475	$ 22,766	$ 20,017
Securities available for sale
Unrealized gain (loss) arising during period	4,065	(4,465)	(540)
Change in unrealized gains and losses for which a portion of other than temporary impairment has been recognized in earnings	186	40	0
Reclassification adjustments for gains included in earnings	(215)	(301)	(75)
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale	4,036	(4,726)	(615)
Income tax expense (benefit)	1,413	(1,654)	(215)
Unrealized gains (losses) recognized in other comprehensive income (loss) on securities available for sale, net of tax	2,623	(3,072)	(400)
Derivative instruments
Unrealized gain arising during period	324	0	0
Reclassification adjustment for expense recognized in earnings	18	0	0
Unrealized gains recognized in other comprehensive income (loss) on derivative instruments	342	0	0
Income tax expense	120	0	0
Unrealized gains recognized in other comprehensive income (loss) on derivative instruments, net of tax	222	0	0
Other comprehensive income (loss)	2,845	(3,072)	(400)
Comprehensive income	$ 23,320	$ 19,694	$ 19,617

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Balance at beginning of period at Dec. 31, 2014	$ 352,462	$ (96,455)	$ (5,636)	$ 250,371
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	20,017	0	20,017
Cash dividends declared	0	(5,896)	0	(5,896)
Repurchase of common stock	(13,498)	0	0	(13,498)
Issuance of common stock	112	0	0	112
Share based compensation	1,477	0	0	1,477
Share based compensation withholding obligation	(1,091)	0	0	(1,091)
Other comprehensive income (loss)	0	0	(400)	(400)
Balances at end of the period at Dec. 31, 2015	339,462	(82,334)	(6,036)	251,092
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of change in accounting	62	1,185	0	1,247
Balance at beginning of period, as adjusted at Dec. 31, 2015	339,524	(81,149)	(6,036)	252,339
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	22,766	0	22,766
Cash dividends declared	0	(7,274)	0	(7,274)
Repurchase of common stock	(16,854)	0	0	(16,854)
Issuance of common stock	82	0	0	82
Share based compensation	1,620	0	0	1,620
Share based compensation withholding obligation	(627)	0	0	(627)
Other comprehensive income (loss)	0	0	(3,072)	(3,072)
Balances at end of the period at Dec. 31, 2016	323,745	(65,657)	(9,108)	248,980
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of change in accounting	0	52	300	352
Balance at beginning of period, as adjusted at Dec. 31, 2016	323,745	(65,605)	(8,808)	249,332
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	20,475	0	20,475
Cash dividends declared	0	(8,960)	0	(8,960)
Issuance of common stock	72	0	0	72
Share based compensation	1,748	0	0	1,748
Share based compensation withholding obligation	(579)	0	0	(579)
Reclassification of certain deferred tax effects	0	36	(36)	0
Other comprehensive income (loss)	0	0	2,845	2,845
Balances at end of the period at Dec. 31, 2017	$ 324,986	$ (54,054)	$ (5,999)	$ 264,933

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY [Abstract]
Declared (in dollars per share)	$ 0.42	$ 0.34	$ 0.26
Repurchase of shares of common stock (in shares)		1,153,136	967,199
Issuance of shares of common stock (in shares)	27,046	21,402	39,610
Share based compensation, common stock (in shares)	71,256	180,380	299,263
Share based compensation withholding obligation, common stock (in shares)	22,525	41,927	77,624

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract]
Net income	$ 20,475	$ 22,766	$ 20,017
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FROM OPERATING ACTIVITIES
Proceeds from sales of loans held for sale	434,682	324,828	288,852
Disbursements for loans held for sale	(426,410)	(322,342)	(285,608)
Provision for loan losses	1,199	(1,309)	(2,714)
Deferred income tax expense	16,009	9,718	9,212
Deferred loan fees and costs	(5,159)	(1,911)	(1,234)
Net depreciation, amortization of intangible assets and premiums and accretion of discounts on securities, loans and interest bearing deposits - time	6,957	5,216	4,553
Net gains on mortgage loans	(11,762)	(10,566)	(7,448)
Net gains on securities	(260)	(563)	(20)
Net (gains) losses on other real estate and repossessed assets	(606)	250	(180)
Share based compensation	1,748	1,620	1,477
Litigation settlement expense	0	2,300	0
Loss on sale of payment plan business	0	320	0
Net gain on branch sale	0	0	(1,193)
Increase in accrued income and other assets	(3,708)	(7,182)	(1,483)
Increase (decrease) in accrued expenses and other liabilities	5,442	559	(1,376)
Total Adjustments	18,132	938	2,838
Net Cash From Operating Activities	38,607	23,704	22,855
CASH FLOW USED IN INVESTING ACTIVITIES
Proceeds from the sale of securities available for sale	17,308	64,103	12,037
Proceeds from maturities, prepayments and calls of securities available for sale	173,723	203,029	167,040
Purchases of securities available for sale	(100,584)	(297,925)	(234,693)
Purchases of interest bearing deposits - time	0	0	(4,595)
Proceeds from the maturity of interest bearing deposits - time	2,850	6,253	6,222
Redemption of Federal Home Loan Bank and Federal Reserve Bank stock	0	371	4,906
Purchase of Federal Reserve Bank stock	0	(443)	(458)
Net increase in portfolio loans (loans originated, net of principal payments)	(406,859)	(107,472)	(74,343)
Purchase of portfolio loans	0	(15,000)	(32,872)
Cash received from the sale of Mepco Finance Corporation assets, net	33,446	0	0
Net cash paid for branch sale	0	0	(7,229)
Proceeds from the collection of vehicle service contract counterparty receivables	528	4,786	1,092
Proceeds from the sale of other real estate and repossessed assets	5,703	4,251	6,179
Proceeds from bank-owned life insurance	523	2,235	0
Proceeds from the sale of property and equipment	26	416	555
Capital expenditures	(4,242)	(3,459)	(4,354)
Net Cash Used in Investing Activities	(277,578)	(138,855)	(160,513)
CASH FLOW FROM FINANCING ACTIVITIES
Net increase in total deposits	174,815	139,756	170,314
Net increase (decrease) in other borrowings	6,754	0	(1)
Proceeds from Federal Home Loan Bank advances	622,000	0	100
Payments of Federal Home Loan Bank Advances	(583,587)	(2,521)	(615)
Dividends paid	(8,960)	(7,274)	(5,896)
Proceeds from issuance of common stock	72	82	112
Repurchase of common stock	0	(16,854)	(13,498)
Share based compensation withholding obligation	(579)	(627)	(1,091)
Net Cash From Financing Activities	210,515	112,562	149,425
Net Increase (Decrease) in Cash and Cash Equivalents	(28,456)	(2,589)	11,767
Cash and Cash Equivalents at Beginning of Year	83,194	85,783	74,016
Cash and Cash Equivalents at End of Year	54,738	83,194	85,783
Cash paid during the year for
Interest	9,163	6,416	5,769
Income taxes	1,970	563	295
Transfers to other real estate and repossessed assets	1,735	2,355	6,694
Transfer of payment plan receivables to vehicle service contract counterparty receivables	0	200	1,203
Purchase of securities available for sale and interest bearing deposits - time not yet settled	1,000	1,582	0
Transfers to payment plan receivables and other assets held for sale	0	33,360	0
Transfers to other liabilities held for sale	$ 0	$ 718	$ 0

ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2017

LOANS AND PAYMENT PLAN RECEIVABLES [Abstract]

ACCOUNTING POLICIES

NOTE 1 – ACCOUNTING POLICIES

The accounting and reporting policies and practices of Independent Bank Corporation and subsidiaries (“IBCP”) conform to accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. Our critical accounting policies include the determination of the allowance for loan losses (“AFLL”), the valuation of capitalized mortgage loan servicing rights and the valuation of deferred tax assets. We are required to make material estimates and assumptions that are particularly susceptible to changes in the near term as we prepare the consolidated financial statements and report amounts for each of these items. Actual results may vary from these estimates.

Our subsidiary Independent Bank (“Bank”) transacts business in the single industry of commercial banking. Our Bank’s activities cover traditional phases of commercial banking, including checking and savings accounts, commercial lending, direct and indirect consumer financing and mortgage lending. Our principal markets are the rural and suburban communities across Lower Michigan and Ohio that are served by our Bank’s branches and loan production offices. Through April, 2017 we also purchased payment plans from companies (which we referred to as “counterparties”) that provided vehicle service contracts and similar products to consumers, through our wholly owned subsidiary, Mepco Finance Corporation (“Mepco”) which was sold effective May 1, 2017. See note #26. At December 31, 2017, 73.9% of our Bank’s loan portfolio was secured by real estate.

PRINCIPLES OF CONSOLIDATION — The consolidated financial statements include the accounts of Independent Bank Corporation and its subsidiaries. The income, expenses, assets and liabilities of the subsidiaries are included in the respective accounts of the consolidated financial statements, after elimination of all material intercompany accounts and transactions.

STATEMENTS OF CASH FLOWS — For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, interest bearing deposits and federal funds sold. Generally, federal funds are sold for one-day periods. We report net cash flows for customer loan and deposit transactions, for short-term borrowings and for vehicle service contract counterparty payables prior to the sale of Mepco.

INTEREST BEARING DEPOSITS — Interest bearing deposits consist of overnight deposits with the Federal Reserve Bank.

INTEREST BEARING DEPOSITS - TIME — Interest bearing deposits - time consist of deposits with original maturities of 3 months or more.

LOANS HELD FOR SALE — Mortgage loans originated and intended for sale in the secondary market are carried at fair value. Fair value adjustments, as well as realized gains and losses, are recorded in current earnings.

PAYMENT PLAN RECEIVABLES AND OTHER ASSETS HELD FOR SALE — On December 30, 2016 Mepco executed an Asset Purchase Agreement (the “APA”) with Seabury Asset Management LLC (“Seabury”). Pursuant to the terms of the APA, Mepco sold its payment plan processing business, payment plan receivables, commercial loans and certain other assets to Seabury, who also assumed certain liabilities of Mepco effective May 1, 2017. These assets and liabilities are categorized as “held for sale” in our December 31, 2016 Consolidated Statement of Financial Condition. There were no fair value adjustments recorded in 2017 related to the sale of Mepco. See note #26.

OPERATING SEGMENTS — While chief decision-makers monitor the revenue streams of our various products and services, operations are managed and financial performance is evaluated as one single unit. Discrete financial information is not available other than on a consolidated basis for material lines of business. Prior to 2016, we reported on two segments: Independent Bank and Mepco. However, given the significant reduction in the size of Mepco’s business and its relative immateriality, we eliminated any separate segment reporting on Mepco during 2016.

CAPITALIZED MORTGAGE LOAN SERVICING RIGHTS — During the first quarter of 2017, we adopted the fair value method of accounting for our capitalized mortgage loan servicing rights pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification topic 860 – “Transfers and Servicing”. Prior to January 1, 2017, we were accounting for our capitalized mortgage loan servicing rights under the amortization method. We adopted the fair value method using a modified retrospective adjustment to beginning accumulated deficit. The impact of the adoption of the fair value method is summarized in the table below under Adoption of New Accounting Standards. The adjustments below reflect the recording of a $0.54 million increase in the fair value of our capitalized mortgage loan servicing rights with a $0.19 million reduction in deferred tax assets, net for a net impact on accumulated deficit and total equity of $0.35 million.

We recognize as separate assets the rights to service mortgage loans for others. The fair value of capitalized mortgage loan servicing rights has been determined based upon fair value indications for similar servicing. Under the fair value method we measure capitalized mortgage loan servicing rights at fair value at each reporting date and report changes in fair value of capitalized mortgage loan servicing rights in earnings in the period in which the changes occur and are included in mortgage loan servicing, net in the Consolidated Statements of Operations. The fair values of capitalized mortgage loan servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. Prior to January 1, 2017, capitalized mortgage loan servicing rights were amortized in proportion to and over the period of estimated net loan servicing income. We assessed capitalized mortgage loan servicing rights for impairment based on the fair value of those rights. For purposes of measuring impairment, the characteristics used included interest rate, term and type. Amortization of and changes in the impairment reserve on capitalized mortgage loan servicing rights were included in mortgage loan servicing, net in the Consolidated Statements of Operations.

Mortgage loan servicing income is recorded for fees earned for servicing loans previously sold. The fees are generally based on a contractual percentage of the outstanding principal and are recorded as income when earned. Mortgage loan servicing fees, excluding fair value changes or amortization of and changes in the impairment reserve on capitalized mortgage loan servicing rights, totaled $4.4 million, $4.1 million and $4.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. Late fees and ancillary fees related to loan servicing are not material.

TRANSFERS OF FINANCIAL ASSETS — Transfers of financial assets are accounted for as sales when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from us, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and we do not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

SECURITIES — We classify our securities as trading, held to maturity or available for sale. Trading securities are bought and held principally for the purpose of selling them in the near term and are reported at fair value with realized and unrealized gains and losses included in earnings. Securities held to maturity represent those securities for which we have the positive intent and ability to hold until maturity and are reported at cost, adjusted for amortization of premiums and accretion of discounts computed on the level-yield method. We did not have any securities held to maturity at December 31, 2017 and 2016. Securities available for sale represent those securities not classified as trading or held to maturity and are reported at fair value with unrealized gains and losses, net of applicable income taxes reported in other comprehensive income (loss).

We evaluate securities for other than temporary impairment (“OTTI”) at least on a quarterly basis and more frequently when economic or market conditions warrant such an evaluation. In performing this evaluation, 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). The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis.

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.

FEDERAL HOME LOAN BANK (“FHLB”) STOCK — Our Bank subsidiary is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income in interest income-other investments on the Consolidated Statements of Operations.

FEDERAL RESERVE BANK (“FRB”) STOCK — Our Bank subsidiary is a member of its regional Federal Reserve Bank. FRB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income in interest income-other investments on the Consolidated Statements of Operations.

LOAN REVENUE RECOGNITION — Interest on loans is accrued based on the principal amounts outstanding. In general, the accrual of interest income is discontinued when a loan becomes 90 days past due for commercial loans and installment loans and when a loan misses four consecutive payments for mortgage loans and the borrower’s capacity to repay the loan and collateral values appear insufficient for each loan class. However, loans may be placed on non-accrual status regardless of whether or not such loans are considered past due if, in management’s opinion, the borrower is unable to meet payment obligations as they become due or as required by regulatory provisions. All interest accrued but not received for all loans placed on non-accrual is reversed from interest income. Payments on such loans are generally applied to the principal balance until qualifying to be returned to accrual status. A non-accrual loan may be restored to accrual status when interest and principal payments are current and the loan appears otherwise collectible. Delinquency status for all classes in the commercial and installment loan segments is based on the actual number of days past due as required by the contractual terms of the loan agreement while delinquency status for mortgage loan segment classes is based on the number of payments past due.

Certain loan fees and direct loan origination costs are deferred and recognized as an adjustment of yield generally over the contractual life of the related loan. Fees received in connection with loan commitments are deferred until the loan is advanced and are then recognized generally over the contractual life of the loan as an adjustment of yield. Fees on commitments that expire unused are recognized at expiration. Fees received for letters of credit are recognized as revenue over the life of the commitment.

PAYMENT PLAN RECEIVABLE REVENUE RECOGNITION — Payment plan receivables were acquired by Mepco at a discount which was accreted into interest and fees on loans in the Consolidated Statements of Operations over the life of the receivable computed on a level-yield method.

ALLOWANCE FOR LOAN LOSSES — Portfolios are disaggregated into segments for purposes of determining the allowance for loan losses (“AFLL”) which include commercial, mortgage and installment loans. These segments are further disaggregated into classes for purposes of monitoring and assessing credit quality based on certain risk characteristics. Classes within the commercial loan segment include (i) income producing – real estate, (ii) land, land development and construction – real estate and (iii) commercial and industrial. Classes within the mortgage loan segment include (i) 1-4 family, (ii) resort lending, (iii) home equity – 1^st lien, (iv) home equity – 2^nd lien and beginning in 2015 (v) purchased loans. Classes within the installment loan segment include (i) home equity – 1^st lien, (ii) home equity – 2^nd lien, (iii) boat lending, (iv) recreational vehicle lending, and (v) other. Commercial loans are subject to adverse market conditions which may impact the borrower’s ability to make repayment on the loan or could cause a decline in the value of the collateral that secures the loan. Mortgage and installment loans are subject to adverse employment conditions in the local economy which could increase default rates. In addition, mortgage loans and real estate based installment loans are subject to adverse market conditions which could cause a decline in the value of collateral that secures the loan. For an analysis of the AFLL by portfolio segment and credit quality information by class, see note #4.

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 allocations based on subjective factors, including local and general economic business factors and trends, portfolio concentrations and changes in the size and/or the general terms of the loan portfolios.

The first AFLL element (specific allocations) reflects our estimate of probable incurred losses based upon our systematic review of specific loans. These estimates are based upon a number of objective 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 allowance amounts using this first element. The second AFLL element (other adversely rated commercial loans) reflects the application of our 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 reasonably 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 (and payment plan receivables prior to the sale of Mepco) when they are deemed uncollectible or reach a predetermined number of days past due based on loan 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.

A loan is impaired when full payment under the loan terms is not expected. Generally, those loans included in each commercial loan class that are rated substandard, classified as non-performing or were classified as non-performing in the preceding quarter, are evaluated for impairment. Those loans included in each mortgage loan or installment loan class whose terms have been modified and considered a troubled debt restructuring are also impaired. Loans which have been modified resulting in a concession, and which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (“TDR”) and classified as impaired. We measure our investment in an impaired loan based on one of three methods: the loan’s observable market price, the fair value of the collateral or the present value of expected future cash flows discounted at the loan’s effective interest rate. Large groups of smaller balance homogeneous loans, such as those loans included in each installment and mortgage loan class (and each payment plan receivable class prior to the sale of Mepco), are collectively evaluated for impairment and accordingly, they are not separately identified for impairment disclosures. TDR loans are measured at the present value of estimated future cash flows using the loan’s effective interest rate at inception of the loan. If a TDR is considered to be a collateral dependent loan, the loan is reported net, at the fair value of collateral. A loan can be removed from TDR status if it is subsequently restructured and the borrower is no longer experiencing financial difficulties and the newly restructured agreement does not contain any concessions to the borrower. The new agreement must specify market terms, including a contractual interest rate not less than a market interest rate for new debt with similar credit risk characteristics, and other terms no less favorable to us than those we would offer for similar new debt.

PROPERTY AND EQUIPMENT — Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the related assets. Buildings are generally depreciated over a period not exceeding 39 years and equipment is generally depreciated over periods not exceeding 7 years. Leasehold improvements are depreciated over the shorter of their estimated useful life or lease period.

BANK OWNED LIFE INSURANCE — We have purchased a group flexible premium non-participating variable life insurance contract on approximately 266 lives (who were salaried employees at the time we purchased the contract) in order to recover the cost of providing certain employee benefits. Bank owned life insurance is recorded at its cash surrender value or the amount that can be currently realized.

OTHER REAL ESTATE AND REPOSSESSED ASSETS — Other real estate at the time of acquisition is recorded at fair value, less estimated costs to sell, which becomes the property’s new basis. Fair value is typically determined by a third party appraisal of the property. Any write-downs at date of acquisition are charged to the AFLL. Expense incurred in maintaining other real estate and subsequent write-downs to reflect declines in value and gains or losses on the sale of other real estate are recorded in the Consolidated Statements of Operations. Non-real estate repossessed assets are treated in a similar manner.

OTHER INTANGIBLES — Other intangible assets consist of core deposits. They are initially measured at fair value and then are amortized on both straight-line and accelerated methods over their estimated useful lives, which range from 10 to 15 years.

INCOME TAXES — We employ the asset and liability method of accounting for income taxes. This method establishes deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of our assets and liabilities at tax rates expected to be in effect when such amounts are realized or settled. Under this method, the effect of a change in tax rates is recognized in the period that includes the enactment date. The deferred tax asset is subject to a valuation allowance for that portion of the asset for which it is more likely than not that it will not be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination.

We recognize interest and/or penalties related to income tax matters in income tax expense.

We file a consolidated federal income tax return. Intercompany tax liabilities are settled as if each subsidiary filed a separate return.

COMMITMENTS TO EXTEND CREDIT AND RELATED FINANCIAL INSTRUMENTS — Financial instruments may include commitments to extend credit and standby letters of credit. Financial instruments involve varying degrees of credit and interest-rate risk in excess of amounts reflected in the Consolidated Statements of Financial Condition. Exposure to credit risk in the event of non-performance by the counterparties to the financial instruments for loan commitments to extend credit and letters of credit is represented by the contractual amounts of those instruments. In general, we use a similar methodology to estimate our liability for these off-balance sheet credit exposures as we do for our AFLL. For commercial related commitments, we estimate liability using our loan rating system and for mortgage and installment commitments we estimate liability principally upon historical loss experience. Our estimated liability for off balance sheet commitments is included in accrued expenses and other liabilities in our Consolidated Statements of Financial Condition and any charge or recovery is recorded in non-interest expense - other in our Consolidated Statements of Operations.

DERIVATIVE FINANCIAL INSTRUMENTS — We record derivatives on our 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.

At the inception of the derivative we designate the derivative as one of three types based on our intention and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“Fair Value Hedge”), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“Cash Flow Hedge”), or (3) an instrument with no hedging designation. For a Fair Value Hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a Cash Flow Hedge, the gain or loss on the derivative is reported in other comprehensive income (loss) and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. We did not have any Fair Value Hedges at December 31, 2017 or 2016. For both types of hedges, changes in the fair value of derivatives that are not highly effective in hedging the changes in fair value or expected cash flows of the hedged item are recognized immediately in current earnings. For instruments with no hedging designation, the gain or loss on the derivative is reported in earnings. These free standing instruments currently consist of (i) mortgage banking related derivatives and include rate-lock loan commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and mandatory forward commitments for the future delivery of these mortgage loans, (ii) certain pay-fixed and pay-variable interest rate swap agreements related to commercial loan customers and (iii) certain purchased and written options related to a time deposit product. 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. We enter into mandatory forward commitments for the future delivery of mortgage loans generally when interest rate locks are entered into in order to hedge the change in interest rates resulting from our commitments to fund the loans. Changes in the fair values of these derivatives are included in net gains on mortgage loans in the Consolidated Statements of Operations. Fair values of the pay-fixed and pay-variable interest rate swap agreements are derived from proprietary models which utilize current market data and are included in net interest income in the Consolidated Statements of Operations. Fair values of the purchased and written options are based on prices of financial instruments with similar characteristics and are included in net interest income in the Consolidated Statements of Operations.

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest expense in the Consolidated Statements of Operations. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income (mortgage banking related derivatives) or net interest income (interest rate swap agreements and options) in the Consolidated Statements of Operations. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

We formally document the relationship between derivatives and hedged items, as well as the risk- management objective and the strategy for undertaking hedge transactions, at the inception of the hedging relationship. This documentation includes linking Fair Value or Cash Flow Hedges to specific assets and liabilities on the Consolidated Statements of Financial Condition or to specific firm commitments or forecasted transactions. We also assess, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items. We discontinue hedge accounting when it is determined that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded in earnings. When a Fair Value Hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a Cash Flow Hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive loss are amortized into earnings over the same periods which the hedged transactions will affect earnings.

COMPREHENSIVE INCOME — Comprehensive income consists of net income and unrealized gains and losses, net of tax, on securities available for sale and derivative instruments classified as cash flow hedges.

NET INCOME PER COMMON SHARE — Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period and participating share awards. All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities for this calculation. For diluted net income per common share, net income is divided by the weighted average number of common shares outstanding during the period plus the assumed exercise of stock options, restricted stock units, performance share units and stock units for a deferred compensation plan for non-employee directors.

SHARE BASED COMPENSATION — Cost is recognized for non-vested share awards issued to employees based on the fair value of these awards at the date of grant. A simulation analysis which considers potential outcomes for a large number of independent scenarios is utilized to estimate the fair value of performance share units and the market price of our common stock at the date of grant is used for other non-vested share awards. Cost is recognized over the required service period, generally defined as the vesting period. Cost is also recognized for stock issued to non-employee directors. These shares vest immediately and cost is recognized during the period they are issued.

COMMON STOCK — At December 31, 2017, 0.1 million shares of common stock were reserved for issuance under the dividend reinvestment plan and 0.5 million shares of common stock were reserved for issuance under our long-term incentive plans.

RECLASSIFICATION — Certain amounts in the 2016 and 2015 consolidated financial statements have been reclassified to conform to the 2017 presentation.

ADOPTION OF NEW ACCOUNTING STANDARDS — In March 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20) Premium Amortization on Purchased Callable Debt Securities” (“ASU 2017-08”). This ASU shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be accreted to maturity. This amended guidance is effective for us on January 1, 2019, with early adoption permitted. We adopted this amended guidance during the first quarter of 2017 using a modified retrospective approach. The impact of this adoption was to adjust our January 1, 2017 Consolidated Statement of Financial Position to reflect cumulative effect adjustments as summarized in the table below. The adjustments below reflect the recording of $0.46 million ($0.30 million, net of tax) of additional premium amortization on securities available for sale and a $0.30 million decrease in accumulated other comprehensive loss to reflect the decrease in after tax unrealized losses on securities available for sale as of January 1, 2017 as a result of adopting this amended guidance. After January 1, 2017, premium amortization on certain callable debt securities is now amortized to the first call date.

The impact of the adoption of the fair value method of accounting for our capitalized mortgage loan servicing rights and the adoption of ASU 2017-08 follows:

	January 1, 2017 Originally Presented			Cumulative Retrospective Adjustments			January 1, 2017 Adjusted
	(In thousands)
Deferred tax assets, net	$	32,818		$	(190	)⁽¹⁾	$	32,628
Capitalized mortgage loan servicing rights	$	13,671		$	542	⁽¹⁾	$	14,213
Total assets	$	2,548,950		$	352		$	2,549,302
Accumulated deficit	$	(65,657	)	$	352	⁽¹⁾
				$	(300	)⁽²⁾	$	(65,605	)
Accumulated other comprehensive loss	$	(9,108	)	$	300	⁽²⁾	$	(8,808	)
Total Shareholders’ Equity	$	248,980		$	352		$	249,332
Total Liabilities and Shareholders’ Equity	$	2,548,950		$	352		$	2,549,302

(1)

Represents adjustment to capitalized mortgage loan servicing rights, deferred tax assets, net, and accumulated deficit to reflect the adoption of the fair value method of accounting for our capitalized mortgage loan servicing rights.

(2)

Represents adjustment to accumulated deficit and accumulated other comprehensive loss to reflect the adoption of ASU 2017-08.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. This ASU supersedes and replaces nearly all existing revenuerecognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis fordeciding when revenue is recognized over time or at a point in time, provides new and more guidance on specific topics and expands and improvesdisclosures about revenue. In addition, this ASU specifies the accounting for some costs to obtain or fulfill a contract with a customer. This amended guidance was effective for us on January 1, 2018, and did not have a material impact on our consolidated operating results or financial condition. We adopted this ASU using the modified retrospective approach with no material impact to our accumulated deficit at January 1, 2018. Financial instruments for the most part and related contractual rights and obligations which are the sources of the majority of our operating revenue are excluded from the scope of this amended guidance. In addition, for those operating revenue streams that are included in the scope of this amended guidance, based upon our review of these sources of income they are not expected to be materially impacted by this amended guidance.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities”. This ASU amends existing guidance related to the accounting for certain financial assets and liabilities. These amendments, among other things, requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This amended guidance is effective for us on January 1, 2018. We have reviewed the types of financial instruments impacted by this amended guidance, including certain equity investments and liabilities measured under the fair value election, and have determined that we do not currently own any such instruments. The balance of this amended guidance is expected to impact certain disclosure items but is not expected to have any impact on our consolidated operating results or financial condition.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. This ASU amends existing guidance related to the accounting for leases. These amendments, among other things, requires lessees to account for most leases on the balance sheet while recognizing expense on the income statement in a manner similar to existing guidance. For lessors the guidance modifies the classification criteria and the accounting for sales-type and direct finance leases. This amended guidance is effective for us on January 1, 2019 and is not expected to have a material impact on our consolidated operating results or financial condition. Based on a review of our operating leases that we currently have in place (see note #18) we do not expect a material change in the recognition, measurement and presentation of lease expense or impact on cash flow. While the primary impact will be the recognition of certain operating leases on our Consolidated Statements of Financial Condition, this impact is not expected to be material.

In June 2016, the FASB issued 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 will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For securities available for sale, allowances will be recorded rather than reducing the carrying amount as is done under the current other-than-temporary impairment model. This ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. This amended guidance is effective for us on January 1, 2020. We began evaluating this ASU in 2016 and have formed a committee that includes personnel from various areas of the Bank that meets regularly to discuss the implementation of the ASU. We are currently in the process of gathering data and reviewing loss methodologies and have engaged third party resources that will assist us in the implementation of this ASU. While we have not yet determined what the impact will be on our consolidated operating results or financial condition by the nature of the implementation of an expected loss model compared to an incurred loss approach, we would expect our allowance for loan losses to increase under this ASU.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805), Clarifying the Definition of a Business”. This new ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses which distinction determines whether goodwill is recorded or not. This amended guidance was effective for us on January 1, 2018, and did not have a material impact on our consolidated operating results or financial condition.

In January 2017, the FASB issued ASU 2017-4, “Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment”. This new ASU amends the requirement that entities compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a result, entities should perform their annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment if the carrying amount exceeds the reporting unit’s fair value. This amended guidance is effective for us on January 1, 2020 with early application permitted. Due to our pending acquisition (see note #27) and expectations this ASU will be relevant to us in 2018 we elected to adopt this amended guidance as of January 1, 2018. The adoption of this ASU did not have a material impact on our consolidated operating results or financial condition.

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

In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. This new ASU allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. As a result, this amended guidance eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. This amended guidance is effective for us on January 1, 2019, with early application permitted in any period for which financial statements have not yet been issued. We elected to adopt this amended guidance during the fourth quarter of 2017 and it resulted in a $0.04 million reclassification between accumulated other comprehensive loss and accumulated deficit.

RESTRICTIONS ON CASH AND DUE FROM BANKS	12 Months Ended
RESTRICTIONS ON CASH AND DUE FROM BANKS	Dec. 31, 2017
RESTRICTIONS ON CASH AND DUE FROM BANKS [Abstract]
RESTRICTIONS ON CASH AND DUE FROM BANKS	NOTE 2 – RESTRICTIONS ON CASH AND DUE FROM BANKS Our Bank is required to maintain reserve balances in the form of vault cash and non-interest earning balances with the FRB. The average reserve balances to be maintained during 2017 and 2016 were $5.2 million and $4.0 million, respectively. We do not maintain compensating balances with correspondent banks. We are also required to maintain reserve balances related primarily to our merchant payment processing operations and for certain investment security transactions. These balances are held at unrelated financial institutions and totaled $0.7 million and $2.4 million at December 31, 2017 and 2016, respectively.

SECURITIES

12 Months Ended

Dec. 31, 2017

SECURITIES [Abstract]

SECURITIES

NOTE 3 – SECURITIES

Securities available for sale consist of the following at December 31:

	Amortized Cost		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(In thousands)
2017
U.S. Treasury	$	898	$	—	$	—	$	898
U.S. agency		25,667		82		67		25,682
U.S. agency residential mortgage-backed		137,785		1,116		983		137,918
U.S. agency commercial mortgage-backed		9,894		36		170		9,760
Private label mortgage-backed		29,011		428		330		29,109
Other asset backed		93,811		202		115		93,898
Obligations of states and political subdivisions		174,073		755		1,883		172,945
Corporate		47,365		578		90		47,853
Trust preferred		2,929		—		127		2,802
Foreign government		2,087		—		27		2,060
Total	$	523,520	$	3,197	$	3,792	$	522,925

2016
U.S. agency	$	28,909	$	159	$	80	$	28,988
U.S. agency residential mortgage-backed		156,053		1,173		937		156,289
U.S. agency commercial mortgage-backed		12,799		28		195		12,632
Private label mortgage-backed		35,035		216		524		34,727
Other asset backed		146,829		271		391		146,709
Obligations of states and political subdivisions		175,180		478		4,759		170,899
Corporate		56,356		223		399		56,180
Trust preferred		2,922		—		343		2,579
Foreign government		1,626		—		13		1,613
Total	$	615,709	$	2,548	$	7,641	$	610,616

We adopted ASU 2017-08 during the first quarter of 2017 using a modified retrospective approach. As a result, the amortized cost of securities as of January 1, 2017 was adjusted lower by $0.46 million (see note #1).

Total OTTI recognized in accumulated other comprehensive loss for securities available for sale was zero at both December 31, 2017 and 2016, respectively.

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, at December 31 follows:

	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
2017
U.S. agency	$	5,466	$	26	$	5,735	$	41	$	11,201	$	67
U.S. agency residential mortgage-backed		22,198		229		40,698		754		62,896		983
U.S. agency commercial mortgage-backed		2,181		34		3,994		136		6,175		170
Private label mortgage-backed		11,390		92		4,396		238		15,786		330
Other asset backed		20,352		40		16,648		75		37,000		115
Obligations of states and political subdivisions		76,574		936		28,246		947		104,820		1,883
Corporate		14,440		33		3,943		57		18,383		90
Trust preferred		—		—		2,802		127		2,802		127
Foreign government		489		10		1,571		17		2,060		27
Total	$	153,090	$	1,400	$	108,033	$	2,392	$	261,123	$	3,792

	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
2016
U.S. agency	$	4,179	$	41	$	8,217	$	39	$	12,396	$	80
U.S. agency residential mortgage-backed		62,524		732		20,857		205		83,381		937
U.S. agency commercial mortgage-backed		6,079		194		143		1		6,222		195
Private label mortgage-backed		20,545		281		1,413		243		21,958		524
Other asset backed		52,958		172		17,763		219		70,721		391
Obligations of states and political subdivisions		113,078		4,014		14,623		745		127,701		4,759
Corporate		25,546		292		2,810		107		28,356		399
Trust preferred		—		—		2,579		343		2,579		343
Foreign government		1,613		13		—		—		1,613		13
Total	$	286,522	$	5,739	$	68,405	$	1,902	$	354,927	$	7,641

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 December 31, 2017, we had 34 U.S. agency, 128 U.S. agency residential mortgage-backed and 12 U.S. agency commercial mortgage-backed securities whose fair market value is less than amortized cost. The unrealized losses are largely attributed to increases in interest rates since acquisition and widening spreads to Treasury bonds. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Private label mortgage backed securities — at December 31, 2017, we had 20 of this type of security whose fair value is less than amortized cost. Unrealized losses are primarily due to credit spread widening and increases in interest rates since their acquisition.

Six private label mortgage-backed securities (including the three securities discussed further below) were reviewed for other than temporary impairment (“OTTI”) utilizing a cash flow projection. The cash flow analysis forecasts cash flow from the underlying loans in each transaction and then applies these cash flows to the bonds in the securitization. Our cash flow analysis forecasts complete recovery of our cost basis for all of these securities whose fair value is less than amortized cost. See further discussion below.

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

Other asset backed — at December 31, 2017, we had 68 other asset backed securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Obligations of states and political subdivisions — at December 31, 2017, we had 334 municipal securities whose fair value is less than amortized cost. The unrealized losses are primarily due to wider benchmark pricing spreads and

increases in interest rates since acquisition. Tax exempt securities have been negatively impacted by lower federal tax rates signed into law in December, 2017. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Corporate — at December 31, 2017, we had 18 corporate securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Trust preferred securities — at December 31, 2017, we had three trust preferred securities whose fair value is less than amortized cost. All 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.

Two of the three securities are rated by two major rating agencies 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 $0.9 million as of December 31, 2017, continues to have satisfactory credit metrics and make interest payments.

The following table breaks out our trust preferred securities in further detail as of December 31:

	2017					2016
	Fair Value		Net Unrealized Loss			Fair Value		Net Unrealized Loss
	(In thousands)
Trust preferred securities
Rated issues	$	1,882	$	(69	)	$	1,800	$	(123	)
Unrated issues		920		(58	)		779		(220	)

Foreign government — at December 31, 2017, we had two foreign government securities whose fair value is less than amortized cost. The unrealized losses are primarily due to increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

We recorded zero credit related OTTI charges in the Consolidated Statements of Operations on securities available for sale during 2017, 2016, and 2015.

At December 31, 2017, three private label mortgage-backed securities had credit related OTTI and are summarized as follows:

	Senior Security		Super Senior Security		Senior Support Security		Total
	(In thousands)
As of December 31, 2017
Fair value	$	1,033	$	966	$	61	$	2,060
Amortized cost		891		800		—		1,691
Non-credit unrealized loss		—		—		—		—
Unrealized gain		142		166		61		369
Cumulative credit related OTTI		757		457		380		1,594

Each of these securities is receiving principal and interest payments similar to principal reductions in the underlying collateral. All three of these securities have unrealized gains at December 31, 2017. The original amortized cost for each of these securities has been permanently adjusted downward for previously recorded credit related OTTI. The unrealized loss (based on original amortized cost) for these securities is now less than previously recorded credit related OTTI amounts.

A roll forward of credit losses recognized in earnings on securities available for sale for the years ending December 31 follow:

	2017		2016		2015
	(In thousands)
Balance at beginning of year	$	1,594	$	1,594	$	1,844
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		—		—		—
Decrease to credit losses on securities for which OTTI was previously recognized as a result of disposal		—		—		(250	)
Total	$	1,594	$	1,594	$	1,594

The amortized cost and fair value of securities available for sale at December 31, 2017, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	31,572	$	31,589
Maturing after one year but within five years		93,867		93,687
Maturing after five years but within ten years		73,967		74,150
Maturing after ten years		53,613		52,814
		253,019		252,240
U.S. agency residential mortgage-backed		137,785		137,918
U.S. agency commercial mortgage-backed		9,894		9,760
Private label mortgage-backed		29,011		29,109
Other asset backed		93,811		93,898
Total	$	523,520	$	522,925

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.

A summary of proceeds from the sale of securities available for sale and gains and losses for the years ended December 31 follow:

	Proceeds		Realized Gains		Losses
	(In thousands)
2017	$	17,308	$	218	$	3
2016		64,103		354		53
2015		12,037		75		—

During 2017, 2016 and 2015, our trading securities consisted of various preferred stocks. During each of those years, we recognized gains (losses) on trading securities of $0.05 million, $0.26 million and $(0.06) million, respectively, that are included in net gains on securities in the Consolidated Statements of Operations. All of these amounts relate to gains (losses) recognized on trading securities still held at December 31, 2017 and 2016.

Securities available for sale with a book value of $0.9 million and $2.4 million at December 31, 2017 and 2016, respectively, were pledged to secure borrowings, derivatives, public deposits and for other purposes as required by law. There were no investment obligations of state and political subdivisions that were payable from or secured by the same source of revenue or taxing authority that exceeded 10% of consolidated shareholders’ equity at December 31, 2017 or 2016.

LOANS AND PAYMENT PLAN RECEIVABLES

12 Months Ended

Dec. 31, 2017

LOANS AND PAYMENT PLAN RECEIVABLES

NOTE 4 – LOANS AND PAYMENT PLAN RECEIVABLES

Our loan portfolios at December 31 follow:

	2017		2016
	(In thousands)
Real estate (1)
Residential first mortgages	$	672,592	$	453,348
Residential home equity and other junior mortgages		136,560		105,550
Construction and land development		143,188		77,287
Other (2)		538,880		525,748
Consumer		291,091		234,632
Commercial		231,786		206,607
Agricultural		4,720		5,076
Total loans	$	2,018,817	$	1,608,248

(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.

Loans include net deferred loan costs of $9.3 million and $4.1 million at December 31, 2017 and 2016, respectively.

In August 2016 and December 2015, we purchased $15.0 million and $32.6 million, respectively of single-family residential fixed rate jumbo mortgage loans from two separate Michigan-based financial institutions. These mortgage loans were all on properties located in Michigan, had weighted average interest rates (after a 0.25% servicing fee) of 3.65% and 3.94%, respectively and weighted average remaining contractual maturities of 332 months and 344 months, respectively. We did not purchase any loans during 2017.

An analysis of the allowance for loan losses by portfolio segment for the years ended December 31 follows:

	Commercial			Mortgage			Installment			Payment Plan Receivables			Subjective Allocation			Total
	(In thousands)
2017
Balance at beginning of period	$	4,880		$	8,681		$	1,011		$	—		$	5,662		$	20,234
Additions (deductions)
Provision for loan losses		(327	)		(567	)		360			—			1,733			1,199
Recoveries credited to allowance		1,497			1,741			967			—			—			4,205
Loans charged against the allowance		(455	)		(1,122	)		(1,474	)		—			—			(3,051	)
Balance at end of period	$	5,595		$	8,733		$	864		$	—		$	7,395		$	22,587

2016
Balance at beginning of period	$	5,670		$	10,391		$	1,181		$	56		$	5,272		$	22,570
Additions (deductions)
Provision for loan losses		(1,945	)		(158	)		401			(4	)		397			(1,309	)
Recoveries credited to allowance		2,472			1,047			1,100			—			—			4,619
Loans charged against the allowance		(1,317	)		(2,599	)		(1,671	)		—			—			(5,587	)
Reclassification to loans held for sale		—			—			—			(52	)		(7	)		(59	)
Balance at end of period	$	4,880		$	8,681		$	1,011		$	—		$	5,662		$	20,234

2015
Balance at beginning of period	$	5,445		$	13,444		$	1,814		$	64		$	5,223		$	25,990
Additions (deductions)
Provision for loan losses		(737	)		(1,744	)		(274	)		(8	)		49			(2,714	)
Recoveries credited to allowance		2,656			1,258			1,108			—			—			5,022
Loans charged against the allowance		(1,694	)		(2,567	)		(1,467	)		—			—			(5,728	)
Balance at end of period	$	5,670		$	10,391		$	1,181		$	56		$	5,272		$	22,570

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

	Commercial		Mortgage		Installment		Subjective Allocation		Total
	(In thousands)
2017
Allowance for loan losses:
Individually evaluated for impairment	$	837	$	5,725	$	277	$	—	$	6,839
Collectively evaluated for impairment		4,758		3,008		587		7,395		15,748
Total ending allowance balance	$	5,595	$	8,733	$	864	$	7,395	$	22,587

Loans
Individually evaluated for impairment	$	8,420	$	53,179	$	3,945			$	65,544
Collectively evaluated for impairment		847,140		799,629		313,005				1,959,774
Total loans recorded investment		855,560		852,808		316,950				2,025,318
Accrued interest included in recorded investment		2,300		3,278		923				6,501
Total loans	$	853,260	$	849,530	$	316,027			$	2,018,817

2016
Allowance for loan losses:
Individually evaluated for impairment	$	2,244	$	6,579	$	329	$	—	$	9,152
Collectively evaluated for impairment		2,636		2,102		682		5,662		11,082
Total ending allowance balance	$	4,880	$	8,681	$	1,011	$	5,662	$	20,234

Loans
Individually evaluated for impairment	$	15,767	$	59,151	$	4,913			$	79,831
Collectively evaluated for impairment		790,228		481,828		261,474				1,533,530
Total loans recorded investment		805,995		540,979		266,387				1,613,361
Accrued interest included in recorded investment		1,978		2,364		771				5,113
Total loans	$	804,017	$	538,615	$	265,616			$	1,608,248

Non-performing loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. If these loans had continued to accrue interest in accordance with their original terms, approximately $0.4 million, $0.5 million and $0.6 million of interest income would have been recognized in 2017, 2016 and 2015, respectively. Interest income recorded on these loans was approximately zero during the years ended 2017, 2016 and 2015.

Loans on non-accrual status and past due more than 90 days (“Non-performing Loans”) at December 31 follow:

	90+ and Still Accruing		Non- Accrual		Total Non- Performing Loans
	(In thousands)
2017
Commercial
Income producing - real estate	$	—	$	30	$	30
Land, land development and construction - real estate		—		9		9
Commercial and industrial		—		607		607
Mortgage
1-4 family		—		5,130		5,130
Resort lending		—		1,223		1,223
Home equity - 1st lien		—		326		326
Home equity - 2nd lien		—		316		316
Purchased loans		—		—		—
Installment
Home equity - 1st lien		—		141		141
Home equity - 2nd lien		—		159		159
Boat lending		—		100		100
Recreational vehicle lending		—		25		25
Other		—		118		118
Total recorded investment	$	—	$	8,184	$	8,184
Accrued interest included in recorded investment	$	—	$	—	$	—
2016
Commercial
Income producing - real estate	$	—	$	628	$	628
Land, land development and construction - real estate		—		105		105
Commercial and industrial		—		4,430		4,430
Mortgage
1-4 family		—		5,248		5,248
Resort lending		—		1,507		1,507
Home equity - 1st lien		—		222		222
Home equity - 2nd lien		—		317		317
Purchased loans		—		—		—
Installment
Home equity - 1st lien		—		266		266
Home equity - 2nd lien		—		289		289
Boat lending		—		219		219
Recreational vehicle lending		—		21		21
Other		—		112		112
Total recorded investment	$	—	$	13,364	$	13,364
Accrued interest included in recorded investment	$	—	$	—	$	—

An aging analysis of loans by class at December 31 follows:

	Loans Past Due								Loans not Past Due		Total Loans
	30-59 days		60-89 days		90+ days		Total		Loans not Past Due		Total Loans
	(In thousands)
2017
Commercial
Income producing - real estate	$	—	$	—	$	30	$	30	$	290,466	$	290,496
Land, land development and construction - real estate		9		—		—		9		70,182		70,191
Commercial and industrial		60		—		44		104		494,769		494,873
Mortgage
1-4 family		1,552		802		5,130		7,484		625,638		633,122
Resort lending		713		—		1,223		1,936		88,620		90,556
Home equity - 1st lien		308		38		326		672		34,689		35,361
Home equity - 2nd lien		353		155		316		824		58,834		59,658
Purchased loans		7		—		—		7		34,104		34,111
Installment
Home equity - 1st lien		90		11		141		242		9,213		9,455
Home equity - 2nd lien		217		94		159		470		9,001		9,471
Boat lending		59		36		100		195		129,777		129,972
Recreational vehicle lending		28		20		25		73		92,737		92,810
Other		275		115		118		508		74,734		75,242
Total recorded investment	$	3,671	$	1,271	$	7,612	$	12,554	$	2,012,764	$	2,025,318
Accrued interest included in recorded investment	$	43	$	22	$	—	$	65	$	6,436	$	6,501

2016
Commercial
Income producing - real estate	$	—	$	—	$	383	$	383	$	287,255	$	287,638
Land, land development and construction - real estate		74		—		31		105		51,670		51,775
Commercial and industrial		100		1,385		66		1,551		465,031		466,582
Mortgage
1-4 family		2,361		869		5,248		8,478		306,063		314,541
Resort lending		—		—		1,507		1,507		101,541		103,048
Home equity - 1st lien		149		—		222		371		28,645		29,016
Home equity - 2nd lien		470		218		317		1,005		54,232		55,237
Purchased loans		13		2		—		15		39,122		39,137
Installment
Home equity - 1st lien		311		48		266		625		12,025		12,650
Home equity - 2nd lien		238		41		289		568		13,390		13,958
Boat lending		184		33		219		436		102,489		102,925
Recreational vehicle lending		68		33		21		122		74,413		74,535
Other		289		30		112		431		61,888		62,319
Total recorded investment	$	4,257	$	2,659	$	8,681	$	15,597	$	1,597,764	$	1,613,361
Accrued interest included in recorded investment	$	45	$	19	$	—	$	64	$	5,049	$	5,113

Impaired loans are as follows :

	December 31,
	2017		2016
	(In thousands)
Impaired loans with no allocated allowance
TDR	$	349	$	1,782
Non - TDR		175		1,107
Impaired loans with an allocated allowance
TDR - allowance based on collateral		2,482		3,527
TDR - allowance based on present value cash flow		62,113		72,613
Non - TDR - allowance based on collateral		148		491
Total impaired loans	$	65,267	$	79,520

Amount of allowance for loan losses allocated
TDR - allowance based on collateral	$	684	$	1,868
TDR - allowance based on present value cash flow		6,089		7,146
Non - TDR - allowance based on collateral		66		138
Total amount of allowance for loan losses allocated	$	6,839	$	9,152

Impaired loans by class as of December 31 are as follows (1):

	2017						2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
With no related allowance recorded:
Commercial
Income producing - real estate	$	—	$	—	$	—	$	517	$	768	$	—
Land, land development & construction-real estate		—		—		—		31		709		—
Commercial and industrial		524		549		—		2,341		3,261		—
Mortgage
1-4 family		2		469		—		2		387		—
Resort lending		—		—		—		—		—		—
Home equity - 1st lien		—		—		—		—		—		—
Home equity - 2nd lien		—		—		—		—		—		—
Installment
Home equity - 1st lien		1		69		—		—		66		—
Home equity - 2nd lien		—		—		—		—		—		—
Boat lending		—		—		—		—		—		—
Recreational vehicle lending		—		—		—		—		—		—
Other		—		—		—		—		—		—
		527		1,087		—		2,891		5,191		—

	2017						2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
With an allowance recorded:
Commercial
Income producing - real estate		5,195		5,347		347		7,737		7,880		554
Land, land development & construction-real estate		166		194		9		239		244		36
Commercial and industrial		2,535		2,651		481		4,902		5,246		1,654
Mortgage
1-4 family		36,848		38,480		3,454		41,701		43,479		4,100
Resort lending		15,978		16,046		2,210		16,898		16,931		2,453
Home equity - 1st lien		173		236		43		235		242		10
Home equity - 2nd lien		178		213		18		315		398		16
Installment
Home equity - 1st lien		1,667		1,804		108		1,994		2,117		118
Home equity - 2nd lien		1,793		1,805		140		2,415		2,443		182
Boat lending		1		5		1		1		6		1
Recreational vehicle lending		90		90		5		109		108		6
Other		393		418		23		394		426		22
		65,017		67,289		6,839		76,940		79,520		9,152
Total
Commercial
Income producing - real estate		5,195		5,347		347		8,254		8,648		554
Land, land development & construction-real estate		166		194		9		270		953		36
Commercial and industrial		3,059		3,200		481		7,243		8,507		1,654
Mortgage
1-4 family		36,850		38,949		3,454		41,703		43,866		4,100
Resort lending		15,978		16,046		2,210		16,898		16,931		2,453
Home equity - 1st lien		173		236		43		235		242		10
Home equity - 2nd lien		178		213		18		315		398		16
Installment
Home equity - 1st lien		1,668		1,873		108		1,994		2,183		118
Home equity - 2nd lien		1,793		1,805		140		2,415		2,443		182
Boat lending		1		5		1		1		6		1
Recreational vehicle lending		90		90		5		109		108		6
Other		393		418		23		394		426		22
Total	$	65,544	$	68,376	$	6,839	$	79,831	$	84,711	$	9,152
Accrued interest included in recorded investment	$	277					$	311

(1)

There were no impaired purchased mortgage loans at December 31, 2017 or 2016.

Average recorded investment in and interest income earned (of which the majority of these amounts were received in cash and related primarily to performing TDR’s) on impaired loans by class for the years ended December 31 follows (1):

	2017				2016				2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
With no related allowance recorded:
Commercial
Income producing - real estate	$	177	$	—	$	609	$	2	$	4,520	$	387
Land, land development & construction-real estate		6		—		330		7		952		79
Commercial and industrial		751		22		961		54		2,125		257
Mortgage
1-4 family		52		21		10		16		19		11
Resort lending		—		—		—		—		12		—
Home equity - 1st lien		—		—		—		—		—		—
Home equity - 2nd lien		—		—		—		—		—		—
Installment
Home equity - 1st lien		1		6		—		5		—		5
Home equity - 2nd lien		—		—		3		—		—		—
Boat lending		—		—		—		—		—		—
Recreational vehicle lending		—		—		—		—		—		—
Other		—		—		—		—		—		—
		987		49		1,913		84		7,628		739
With an allowance recorded:
Commercial
Income producing - real estate		7,059		369		8,069		427		12,677		439
Land, land development & construction-real estate		183		8		1,129		31		2,219		54
Commercial and industrial		3,298		132		5,723		189		6,663		104
Mortgage
1-4 family		39,143		1,774		44,923		1,918		50,421		2,140
Resort lending		16,383		616		17,544		619		18,448		670
Home equity - 1st lien		209		5		226		10		161		8
Home equity - 2nd lien		209		7		248		14		172		13
Installment
Home equity - 1st lien		1,832		128		2,185		147		2,539		176
Home equity - 2nd lien		2,126		112		2,661		162		3,055		193
Boat lending		1		1		2		1		3		1
Recreational vehicle lending		100		5		115		6		127		7
Other		377		25		433		28		533		30
		70,920		3,182		83,258		3,552		97,018		3,835

	2017				2016				2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Total
Commercial
Income producing - real estate		7,236		369		8,678		429		17,197		826
Land, land development & construction-real estate		189		8		1,459		38		3,171		133
Commercial and industrial		4,049		154		6,684		243		8,788		361
Mortgage
1-4 family		39,195		1,795		44,933		1,934		50,440		2,151
Resort lending		16,383		616		17,544		619		18,460		670
Home equity - 1st lien		209		5		226		10		161		8
Home equity - 2nd lien		209		7		248		14		172		13
Installment
Home equity - 1st lien		1,833		134		2,185		152		2,539		181
Home equity - 2nd lien		2,126		112		2,664		162		3,055		193
Boat lending		1		1		2		1		3		1
Recreational vehicle lending		100		5		115		6		127		7
Other		377		25		433		28		533		30
Total	$	71,907	$	3,231	$	85,171	$	3,636	$	104,646	$	4,574

(1)

There were no impaired payment plan receivables or purchased mortgage loans during the years ending December 31, 2017, 2016 and 2015.

Troubled debt restructurings at December 31 follow:

	2017
	Commercial		Retail (1)			Total
	(In thousands)
Performing TDR's	$	7,748	$	52,367		$	60,115
Non-performing TDR's (2)		323		4,506	⁽³⁾		4,829
Total	$	8,071	$	56,873		$	64,944

	2016
	Commercial		Retail (1)			Total
	(In thousands)
Performing TDR's	$	10,560	$	59,726		$	70,286
Non-performing TDR's (2)		3,565		4,071	⁽³⁾		7,636
Total	$	14,125	$	63,797		$	77,922

(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 have allocated $6.8 million and $9.0 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of December 31, 2017 and 2016, respectively. We have committed to lend additional amounts totaling up to $0.04 million at both December 31, 2017 and 2016, respectively, to customers with outstanding loans that are classified as troubled debt restructurings.

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

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

Loans that have been classified as troubled debt restructurings during the years ended December 31 follow (1):

	Number of Contracts		Pre-modification Recorded Balance		Post-modification Recorded Balance
	(Dollars in thousands)
2017
Commercial
Income producing - real estate		—	$	—	$	—
Land, land development & construction-real estate		—		—		—
Commercial and industrial		15		925		925
Mortgage
1-4 family		6		456		462
Resort lending		1		189		189
Home equity - 1st lien		—		—		—
Home equity - 2nd lien		—		—		—
Installment
Home equity - 1st lien		3		86		90
Home equity - 2nd lien		10		391		394
Boat lending		—		—		—
Recreational vehicle lending		—		—		—
Other		2		74		75
Total		37	$	2,121	$	2,135
2016
Commercial
Income producing - real estate		4	$	290	$	290
Land, land development & construction-real estate		—		—		—
Commercial and industrial		9		2,044		2,027
Mortgage
1-4 family		9		927		1,004
Resort lending		1		116		117
Home equity - 1st lien		1		107		78
Home equity - 2nd lien		2		77		78
Installment
Home equity - 1st lien		6		141		145
Home equity - 2nd lien		6		154		157
Boat lending		—		—		—
Recreational vehicle lending		—		—		—
Other		2		46		46
Total		40	$	3,902	$	3,942

	Number of Contracts		Pre-modification Recorded Balance		Post-modification Recorded Balance
	(Dollars in thousands)
2015
Commercial
Income producing - real estate		2	$	229	$	227
Land, land development & construction-real estate		—		—		—
Commercial and industrial		17		3,188		2,960
Mortgage
1-4 family		8		1,345		1,128
Resort lending		1		313		307
Home equity - 1st lien		1		20		20
Home equity - 2nd lien		1		27		27
Installment
Home equity - 1st lien		6		220		186
Home equity - 2nd lien		8		228		217
Boat lending		—		—		—
Recreational vehicle lending		—		—		—
Other		2		19		25
Total		46	$	5,589	$	5,097

(1)

There were no payment plan receivables or purchased mortgage loans classified as troubled debt restructurings during the years ending December 31, 2017, 2016 and 2015.

The troubled debt restructurings described above increased (decreased) the AFLL by $0.1 million, $(0.1) million and $0.4 million during the years ended December 31, 2017, 2016 and 2015, respectively and resulted in charge offs of zero, $0.53 million and $0.16 million during the years ended December 31, 2017, 2016 and 2015, respectively.

Loans that have been classified as troubled debt restructured during the past twelve months and that have subsequently defaulted during the years ended December 31 follows:

	Number of Contracts		Recorded Balance
	(Dollars in thousands)
2017
Commercial
Income producing - real estate		—	$	—
Land, land development & construction-real estate		—		—
Commercial and industrial		6		164
Mortgage
1-4 family		—		—
Resort lending		—		—
Home equity - 1st lien		—		—
Home equity - 2nd lien		—		—
Installment
Home equity - 1st lien		1		13
Home equity - 2nd lien		—		—
Boat lending		—		—
Recreational vehicle lending		—		—
Other		—		—
Total		7	$	177

	Number of Contracts		Recorded Balance
	(Dollars in thousands)

2016
Commercial
Income producing - real estate		—	$	—
Land, land development & construction-real estate		—		—
Commercial and industrial		1		1,767
Mortgage
1-4 family		—		—
Resort lending		—		—
Home equity - 1st lien		—		—
Home equity - 2nd lien		—		—
Installment
Home equity - 1st lien		—		—
Home equity - 2nd lien		—		—
Boat lending		—		—
Recreational vehicle lending		—		—
Other		—		—
Total		1	$	1,767

2015
Commercial
Income producing - real estate		—	$	—
Land, land development & construction-real estate		—		—
Commercial and industrial		2		157
Mortgage
1-4 family		2		73
Resort lending		—		—
Home equity - 1st lien		—		—
Home equity - 2nd lien		—		—
Installment
Home equity - 1st lien		—		—
Home equity - 2nd lien		—		—
Boat lending		—		—
Recreational vehicle lending		—		—
Other		1		4
Total		5	$	234

A loan is generally considered to be in payment default once it is 90 days contractually past due under the modified terms for commercial loans and installment loans and when four consecutive payments are missed for mortgage loans.

The troubled debt restructurings that subsequently defaulted described above increased (decreased) the AFLL by $0.04 million, $(0.17) million and $(0.03) million during the years ended December 31, 2017, 2016 and 2015, respectively and resulted in charge offs of $0.05 million, $0.51 million, and zero during the years ended December 31, 2017, 2016 and 2015, respectively.

The terms of certain other loans were modified during the years ending December 31, 2017, 2016 and 2015 that did not meet the definition of a troubled debt restructuring. The modification of these loans could have included modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant.

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

Credit Quality Indicators – As part of our on 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 at December 31:

	Commercial
	Non-watch 1-6		Watch 7-8		Substandard Accrual 9		Non- Accrual 10-11		Total
	(In thousands)
2017
Income producing - real estate	$	288,869	$	1,293	$	304	$	30	$	290,496
Land, land development and construction - real estate		70,122		60		—		9		70,191
Commercial and industrial		463,570		28,351		2,345		607		494,873
Total	$	822,561	$	29,704	$	2,649	$	646	$	855,560
Accrued interest included in total	$	2,198	$	94	$	8	$	—	$	2,300

	Commercial
	Non-watch 1-6		Watch 7-8		Substandard Accrual 9		Non- Accrual 10-11		Total
	(In thousands)
2016
Income producing - real estate	$	282,886	$	3,787	$	337	$	628	$	287,638
Land, land development and construction - real estate		51,603		67		—		105		51,775
Commercial and industrial		449,365		9,788		2,998		4,431		466,582
Total	$	783,854	$	13,642	$	3,335	$	5,164	$	805,995
Accrued interest included in total	$	1,915	$	52	$	11	$	—	$	1,978

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 at December 31:

	Mortgage (1)
	1-4 Family		Resort Lending		Home Equity 1st Lien		Home Equity 2nd Lien		Purchased Loans		Total
	(In thousands)
2017
800 and above	$	70,540	$	11,625	$	6,169	$	7,842	$	7,983	$	104,159
750-799		265,907		36,015		16,561		24,126		17,651		360,260
700-749		146,302		22,099		7,317		15,012		7,937		198,667
650-699		83,695		12,145		2,793		7,420		426		106,479
600-649		25,087		3,025		1,189		2,512		—		31,813
550-599		15,136		2,710		518		1,118		—		19,482
500-549		9,548		1,009		397		1,156		—		12,110
Under 500		2,549		269		260		385		—		3,463
Unknown		14,358		1,659		157		87		114		16,375
Total	$	633,122	$	90,556	$	35,361	$	59,658	$	34,111	$	852,808
Accrued interest included in total	$	2,361	$	371	$	157	$	294	$	95	$	3,278

2016
800 and above	$	36,534	$	10,484	$	6,048	$	8,392	$	8,462	$	69,920
750-799		102,382		41,999		10,006		20,113		20,984		195,484
700-749		69,337		24,727		5,706		12,360		9,115		121,245
650-699		50,621		13,798		4,106		8,167		437		77,129
600-649		25,270		5,769		1,674		3,067		—		35,780
550-599		13,747		3,030		455		1,699		—		18,931
500-549		9,215		1,438		486		981		—		12,120
Under 500		5,145		92		255		279		—		5,771
Unknown		2,290		1,711		280		179		139		4,599
Total	$	314,541	$	103,048	$	29,016	$	55,237	$	39,137	$	540,979
Accrued interest included in total	$	1,466	$	450	$	111	$	226	$	111	$	2,364

(1)

Credit scores have been updated within the last twelve months.

	Installment (1)
	Home Equity 1st Lien		Home Equity 2nd Lien		Boat Lending		Recreational Vehicle Lending		Other		Total
	(In thousands)
2017
800 and above	$	815	$	825	$	15,531	$	16,754	$	7,060	$	40,985
750-799		1,912		1,952		73,251		52,610		28,422		158,147
700-749		1,825		2,142		28,922		17,993		20,059		70,941
650-699		1,840		2,036		9,179		4,270		9,258		26,583
600-649		1,567		1,065		2,052		754		2,402		7,840
550-599		950		1,028		640		305		871		3,794
500-549		499		303		281		83		475		1,641
Under 500		32		88		57		6		194		377
Unknown		15		32		59		35		6,501		6,642
Total	$	9,455	$	9,471	$	129,972	$	92,810	$	75,242	$	316,950
Accrued interest included in total	$	39	$	43	$	346	$	254	$	241	$	923

2016
800 and above	$	1,354	$	1,626	$	21,422	$	23,034	$	8,911	$	56,347
750-799		2,478		3,334		50,508		35,827		21,918		114,065
700-749		1,920		2,686		20,045		11,049		13,183		48,883
650-699		2,852		2,541		7,559		3,205		8,913		25,070
600-649		1,691		1,775		1,846		821		2,269		8,402
550-599		1,231		1,063		882		280		833		4,289
500-549		981		692		440		189		511		2,813
Under 500		114		220		73		16		211		634
Unknown		29		21		150		114		5,570		5,884
Total	$	12,650	$	13,958	$	102,925	$	74,535	$	62,319	$	266,387
Accrued interest included in total	$	54	$	59	$	264	$	203	$	191	$	771

(1)

Credit scores have been updated within the last twelve months.

Mortgage loans serviced for others are not reported as assets on the Consolidated Statements of Financial Condition. The principal balances of these loans at December 31 follow:

	2017		2016
	(In thousands)
Mortgage loans serviced for:
Fannie Mae	$	1,001,388	$	944,703
Freddie Mac		637,204		622,885
Ginnie Mae		130,284		85,290
FHLB		47,527		6,031
Other		34		84
Total	$	1,816,437	$	1,658,993

Custodial deposit accounts maintained in connection with mortgage loans serviced for others totaled $20.7 million and $18.9 million, at December 31, 2017 and 2016, respectively.

If we do not remain well capitalized for regulatory purposes (see note #20), meet certain minimum capital levels or certain profitability requirements or if we incur a rapid decline in net worth, we could lose our ability to sell and/or service loans to these investors. This could impact our ability to generate gains on the sale of loans and generate servicing income. A forced liquidation of our servicing portfolio could also impact the value that could be recovered on this asset. Fannie Mae has the most stringent eligibility requirements covering capital levels, profitability and decline in net worth. Fannie Mae requires seller/servicers to be well capitalized for regulatory purposes. For the profitability requirement, we cannot record four or more consecutive quarterly losses and experience a 30% decline in net worth over the same period. Our net worth cannot decline by more than 25% in one quarter or more than 40% over two consecutive quarters. The highest level of capital we are required to maintain is at least $2.5 million plus 0.25% of all loans serviced for others.

An analysis of capitalized mortgage loan servicing rights for the years ended December 31 follows:

	2017			2016			2015
	(In thousands)
Balance at beginning of period	$	13,671		$	12,436		$	12,106
Change in accounting (see note #1)		542			—			—
Balance at beginning of period, as adjusted	$	14,213		$	12,436		$	12,106
Originated servicing rights capitalized		4,230			3,119			2,697
Amortization		—			(2,850	)		(2,868	)
Change in valuation allowance		—			966			501
Change in fair value due to price		(718	)		—			—
Change in fair value due to pay downs		(2,026	)		—			—
Balance at end of year	$	15,699		$	13,671		$	12,436
Valuation allowance	$	—		$	2,306		$	3,272
Loans sold and serviced that have had servicing rights capitalized	$	1,815,668		$	1,657,996		$	1,643,086

The fair value of capitalized mortgage loan servicing rights was $15.7 million and $14.2 million at December 31, 2017 and 2016, respectively. Fair value was determined using an average coupon rate of 4.17%, average servicing fee of 0.258%, average discount rate of 10.11% and an average Public Securities Association (“PSA”) prepayment rate of 169 for December 31, 2017; and an average coupon rate of 4.20%, average servicing fee of 0.256%, average discount rate of 10.07% and an average PSA prepayment rate of 175 for December 31, 2016.

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

OTHER REAL ESTATE

12 Months Ended

Dec. 31, 2017

OTHER REAL ESTATE [Abstract]

OTHER REAL ESTATE

NOTE 5 – OTHER REAL ESTATE

A summary of other real estate activity for the years ended December 31 follows (1):

	2017			2016			2015
	(In thousands)
Balance at beginning of year, net of valuation allowance	$	4,956		$	7,070		$	6,370
Loans transferred to other real estate		1,735			2,355			6,694
Sales of other real estate		(4,737	)		(3,596	)		(5,502	)
Additions to valuation allowance charged to expense		(326	)		(873	)		(492	)
Balance at end of year, net of valuation allowance	$	1,628		$	4,956		$	7,070

(1)

Table excludes other repossessed assets totaling $0.02 and $0.05 million at December 31, 2017 and 2016, respectively.

We periodically review our real estate properties and establish valuation allowances on these properties if values have declined since the date of acquisition. An analysis of our valuation allowance for other real estate follows:

	2017			2016			2015
	(In thousands)
Balance at beginning of year	$	793		$	1,692		$	2,511
Additions charged to expense		326			873			492
Direct write-downs upon sale		(996	)		(1,772	)		(1,311	)
Balance at end of year	$	123		$	793		$	1,692

At December 31, 2017 and 2016, the balance of other real estate includes $1.6 million and $1.9 million of foreclosed residential real estate properties. Retail mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements totaled $0.8 million and $1.0 million at December 31, 2017 and 2016, respectively.

Other real estate and repossessed assets totaling $1.6 million and $5.0 million at December 31, 2017 and 2016, respectively, are presented net of the valuation allowance on the Consolidated Statements of Financial Condition.

COMMITMENTS AND CONTINGENT LIABILITIES [Abstract]

The entire disclosure for real estate owned (as defined). Generally, the largest component of real estate owned by lenders is assets taken in settlement of troubled loans through surrender or foreclosure. Real estate investments, real estate loans that qualify as investments in real estate, and premises that are no longer used in operations may also be included in real estate owned.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 40
-Section 40
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=84176060&loc=d3e18551-111553

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 40
-Section 40
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=84176060&loc=d3e18511-111553

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 45
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=82891408&loc=d3e4437-111522

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 35
-Paragraph 17
-URI http://asc.fasb.org/extlink&oid=29634951&loc=d3e1424-110224

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 10
-Section S99
-Paragraph 6
-Subparagraph (SX 210.5-04(c)(Schedule III))
-URI http://asc.fasb.org/extlink&oid=27047687&loc=d3e5864-122674

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-03(10)(4))
-URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 970
-SubTopic 360
-Section S99
-Paragraph 1
-Subparagraph (SX 210.12-28)
-URI http://asc.fasb.org/extlink&oid=6590653&loc=d3e638233-123024

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 35
-Paragraph 43
-URI http://asc.fasb.org/extlink&oid=29634951&loc=d3e1739-110224

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-03(8))
-URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878

+ Details

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2017

PROPERTY AND EQUIPMENT [Abstract]

PROPERTY AND EQUIPMENT

NOTE 6 – PROPERTY AND EQUIPMENT

A summary of property and equipment at December 31 follows:

	2017			2016
	(In thousands)
Land	$	16,199		$	15,486
Buildings		55,434			54,656
Equipment		69,604			72,090
		141,237			142,232
Accumulated depreciation and amortization		(102,088	)		(102,057	)
Property and equipment, net	$	39,149		$	40,175

Depreciation expense was $5.3 million, $5.8 million and $6.6 million in 2017, 2016 and 2015, respectively.

INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2017

INTANGIBLE ASSETS [Abstract]

INTANGIBLE ASSETS

NOTE 7 – INTANGIBLE ASSETS

Intangible assets, net of amortization, at December 31 follows:

	2017				2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Amortized intangible assets - core deposits	$	6,118	$	4,532	$	6,118	$	4,186

Intangible amortization expense was $0.3 million in each of 2017, 2016 and 2015, respectively.

A summary of estimated core deposit intangible amortization at December 31, 2017, follows:

	(In thousands)
2018	$	346
2019		346
2020		346
2021		346
2022		202
Total	$	1,586

DEPOSITS

12 Months Ended

Dec. 31, 2017

DEPOSITS [Abstract]

DEPOSITS

NOTE 8 – DEPOSITS

A summary of interest expense on deposits for the years ended December 31 follows:

	2017		2016		2015
	(In thousands)
Savings and interest bearing checking	$	1,530	$	1,115	$	1,056
Time deposits under $100,000		1,594		1,628		1,586
Time deposits of $100,000 or more		3,651		2,198		1,367
Total	$	6,775	$	4,941	$	4,009

Aggregate time deposits in denominations of $250,000 or more amounted to $92.2 million and $174.6 million at December 31, 2017 and 2016, respectively.

A summary of the maturity of time deposits at December 31, 2017, follows:

	(In thousands)
2018	$	446,835
2019		65,810
2020		15,595
2021		17,275
2022		8,761
2023 and thereafter		542
Total	$	554,818

Reciprocal 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.

A summary of reciprocal deposits at December 31 follows:

	2017		2016
	(In thousands)
Demand	$	10,146	$	3,055
Money market		2,846		4,350
Time		37,987		31,252
Total	$	50,979	$	38,657

OTHER BORROWINGS

12 Months Ended

Dec. 31, 2017

OTHER BORROWINGS [Abstract]

OTHER BORROWINGS

NOTE 9 – OTHER BORROWINGS

A summary of other borrowings at December 31 follows:

	2017		2016
	(In thousands)
Advances from the FHLB	$	47,841	$	9,428
Federal funds purchased		6,750		—
Other		9		5
Total	$	54,600	$	9,433

Advances from the FHLB are secured by unencumbered qualifying mortgage and home equity loans with a market value equal to at least 132% to 165%, respectively, of outstanding advances. Advances are also secured by FHLB stock that we own, which totaled $7.8 million at December 31, 2017. Unused borrowing capacity with the

FHLB (subject to the FHLB’s credit requirements and policies) was $304.5 million at December 31, 2017. Interest expense on advances amounted to $0.9 million, $0.8 million and $0.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. No FHLB advances were terminated during 2017, 2016 or 2015.

As a member of the FHLB, we must own FHLB stock equal to the greater of 0.75% of the unpaid principal balance of residential mortgage loans or 4.5% of our outstanding advances. At December 31, 2017, we were in compliance with the FHLB stock ownership requirements.

The maturity dates and weighted average interest rates of FHLB advances at December 31 follow:

	2017					2016
	Amount		Rate			Amount		Rate
	(Dollars in thousands)
Fixed-rate advances
2017						$	1,192		7.04	%
2018	$	19,910		2.43	%		5,183		5.99
2019		10,000		1.60			—
2020		7,931		3.80			3,053		7.49
Total fixed-rate advances		37,841		2.50			9,428		6.61
Variable-rate advances - 2018		10,000		1.67			—
Total advances	$	47,841		2.33	%	$	9,428		6.61	%

A summary of contractually required repayments of FHLB advances at December 31, 2017 follow:

	(In thousands)
2018	$	30,042
2019		10,143
2020		7,656
Total	$	47,841

Borrowings with the FRB at December 31, 2017 and 2016 were zero. Average borrowings with the FRB during the years ended December 31, 2017, 2016 and 2015 totaled $0.05 million, zero and zero. We had unused borrowing capacity with the FRB (subject to the FRB’s credit requirements and policies) of $441.2 million at December 31, 2017. Collateral for FRB borrowings are certain commercial loans.

Interest expense on federal funds purchased totaled $0.1 million, zero and zero for the years ended December 31, 2017, 2016 and 2015.

Assets, consisting of FHLB stock and loans, pledged to secure other borrowings and unused borrowing capacity totaled $1.184 billion at December 31, 2017.

SUBORDINATED DEBENTURES

12 Months Ended

Dec. 31, 2017

SUBORDINATED DEBENTURES [Abstract]

SUBORDINATED DEBENTURES

NOTE 10 – SUBORDINATED DEBENTURES

We have formed various special purpose entities (the “trusts”) for the purpose of issuing trust preferred securities in either public or pooled offerings or in private placements. Independent Bank Corporation owns all of the common stock of each trust and has issued subordinated debentures to each trust in exchange for all of the proceeds from the issuance of the common stock and the trust preferred securities. Trust preferred securities totaling $34.5 million at both December 31, 2017 and 2016, respectively, qualified as Tier 1 regulatory capital.

These trusts are not consolidated with Independent Bank Corporation and accordingly, we report the common securities of the trusts held by us in accrued income and other assets and the subordinated debentures that we have issued to the trusts in the liability section of our Consolidated Statements of Financial Condition.

Summary information regarding subordinated debentures as of December 31 follows:

		2017 and 2016
Entity Name	Issue Date	Subordinated Debentures		Trust Preferred Securities Issued		Common Stock Issued
		(In thousands)
IBC Capital Finance III	May 2007	$	12,372	$	12,000	$	372
IBC Capital Finance IV	September 2007		15,465		15,000		465
Midwest Guaranty Trust I	November 2002		7,732		7,500		232
		$	35,569	$	34,500	$	1,069

Other key terms for the subordinated debentures and trust preferred securities that were outstanding at December 31, 2017 and 2016 follow:

Entity Name	Maturity Date	Interest Rate	First Permitted Redemption Date
IBC Capital Finance III	July 30, 2037	3 month LIBOR plus 1.60%	July 30, 2012
IBC Capital Finance IV	September 15, 2037	3 month LIBOR plus 2.85%	September 15, 2012
Midwest Guaranty Trust I	November 7, 2032	3 month LIBOR plus 3.45%	November 7, 2007

The subordinated debentures and trust preferred securities are cumulative and have a feature that permits us to defer distributions (payment of interest) from time to time for a period not to exceed 20 consecutive quarters. Interest is payable quarterly on each of the subordinated debentures and trust preferred securities and no distributions were deferred at December 31, 2017 and 2016.

We have the right to redeem the subordinated debentures and trust preferred securities (at par) in whole or in part from time to time on or after the first permitted redemption date specified above or upon the occurrence of specific events defined within the trust indenture agreements.

Issuance costs have been capitalized and are being amortized on a straight- line basis over a period not exceeding 30 years and are included in interest expense in the Consolidated Statements of Operations. Distributions (payment of interest) on the trust preferred securities are also included in interest expense – other borrowings and subordinated debentures in the Consolidated Statements of Operations.

COMMITMENTS AND CONTINGENT LIABILITIES

12 Months Ended

Dec. 31, 2017

COMMITMENTS AND CONTINGENT LIABILITIES

NOTE 11 – COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business, we enter into financial instruments with off-balance sheet risk to meet the financing needs of customers or to reduce exposure to fluctuations in interest rates. These financial instruments may include commitments to extend credit and standby letters of credit. Financial instruments involve varying degrees of credit and interest-rate risk in excess of amounts reflected in the Consolidated Statements of Financial Condition. Exposure to credit risk in the event of non-performance by the counterparties to the financial instruments for loan commitments to extend credit and standby letters of credit is represented by the contractual amounts of those instruments. We do not, however, anticipate material losses as a result of these financial instruments.

A summary of financial instruments with off-balance sheet risk at December 31 follows:

	2017		2016
	(In thousands)
Financial instruments whose risk is represented by contract amounts
Commitments to extend credit	$	439,663	$	364,270
Standby letters of credit		4,596		3,140

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and generally require payment of a fee. Since commitments may expire without being drawn upon, the commitment amounts do not represent future cash requirements. Commitments are issued subject to similar underwriting standards, including collateral requirements, as are generally involved in the extension of credit facilities.

Standby letters of credit are written conditional commitments issued to guarantee the performance of a customer to a third party. The credit risk involved in such transactions is essentially the same as that involved in extending loan facilities and, accordingly, standby letters of credit are issued subject to similar underwriting standards, including collateral requirements, as are generally involved in the extension of credit facilities. The majority of the standby letters of credit are to corporations, have variable rates that range from 3.75% to 7.50% and mature through 2019.

In the fourth quarter of 2016, we reached a tentative settlement regarding litigation initiated against the Bank in Wayne County, Michigan Circuit Court. The Court issued a preliminary approval of this settlement in the first quarter of 2017 and a final approval of this settlement in January 2018. This litigation concerned the Bank’s checking account transaction sequencing during a period from February 2009 to June 2011. Under the terms of the settlement, we agreed to pay $2.2 million and we are also responsible for class notification costs and certain other expenses which are estimated to total approximately $0.1 million. The $2.2 million was paid in January 2018. We recorded a $2.3 million expense in the fourth quarter of 2016 for this settlement. Although, we deny any liability associated with this matter and believe we have meritorious defenses to the allegations in the complaint, given the costs and uncertainty of litigation, we determined that this settlement was in the best interests of the organization.

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

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

In connection with the sale of Mepco (see notes #1 and #26), we agreed to contractually indemnify the purchaser from certain losses it may incur, including as a result of its failure to collect certain receivables it purchased as part of the business as well as breaches of representations and warranties we made in the sale agreement, subject to various limitations. We have not accrued any liability related to these indemnification requirements in our December 31, 2017 Consolidated Statement of Financial Condition because we believe the likelihood of having to pay any amount as a result of these indemnification obligations is remote. However, if the purchaser is unable to collect the receivables it purchased from Mepco or otherwise encounters difficulties in operating the business, it is possible it could make one or more claims against us pursuant to the sale agreement. In that event, we may incur expenses in defending any such claims and/or amounts paid to such purchaser to resolve such claims. As of December 31, 2017 these receivables balances had declined to $13.7 million and to date, the purchaser has made no claims for indemnification.

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 FHLB). 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 (credit) of $0.17 million, $0.03 million and $(0.06) million for the years ended December 31, 2017, 2016 and 2015, respectively. The reserve for loss reimbursements on sold mortgage loans totaled $0.7 million and $0.6 million at December 31, 2017 and 2016, respectively. This reserve is included in accrued expenses and other liabilities in our 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.

totaled $0.7 million and $0.6 million at December 31, 2017 and 2016, respectively. This reserve is included in accrued expenses and other liabilities in our 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.

SHAREHOLDERS' EQUITY AND INCOME PER COMMON SHARE

12 Months Ended

Dec. 31, 2017

SHAREHOLDERS' EQUITY AND INCOME PER COMMON SHARE [Abstract]

SHAREHOLDERS' EQUITY AND INCOME PER COMMON SHARE

NOTE 12 – SHAREHOLDERS’ EQUITY AND INCOME PER COMMON SHARE

In January, 2017, 2016 and 2015, our Board of Directors authorized share repurchase plans to buy back up to 5% of our outstanding common stock through the end of each respective year. In addition, on April 26, 2016 our Board of Directors authorized a $5.0 million expansion of the 2016 repurchase plan. During 2017, 2016 and 2015 repurchases were made through open market transactions and totaled zero, 1,153,136 and 967,199 shares of common stock, respectively for an aggregate purchase price of zero, $16.9 million and $13.5 million, respectively.

A reconciliation of basic and diluted net income per common share for the years ended December 31 follows:

	2017		2016		2015
	(In thousands, except per share amounts)
Net income	$	20,475	$	22,766	$	20,017

Weighted average shares outstanding (1)		21,327		21,378		22,716
Effect of stock options		142		151		119
Stock units for deferred compensation plan for non-employee directors		121		115		112
Performance share units		60		48		—
Restricted stock units		—		35		233
Weighted average shares outstanding for calculation of diluted earnings per share		21,650		21,727		23,180

Net income per common share
Basic (1)	$	0.96	$	1.06	$	0.88
Diluted	$	0.95	$	1.05	$	0.86

(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 totaled zero, zero and 0.03 million for 2017, 2016 and 2015, respectively.

INCOME TAX

12 Months Ended

Dec. 31, 2017

INCOME TAX [Abstract]

INCOME TAX

NOTE 13 – INCOME TAX

The composition of income tax expense for the years ended December 31 follows:

	2017		2016		2015
	(In thousands)
Current expense	$	1,927	$	362	$	200
Deferred expense		10,071		9,756		9,128
Change in statutory rate		5,965		—		—
Valuation allowance - change in estimate		—		17		35
Income tax expense	$	17,963	$	10,135	$	9,363

The deferred income tax expense of $10.1 million in 2017 can be primarily attributed to the utilization of our net operating loss (“NOL”) carryfoward while the deferred income tax expense of $9.8 million and $9.1 million during 2016 and 2015, respectively can be primarily attributed to the utilization of our NOL carryfoward and decrease in our AFLL.

On December 22, 2017, President Donald Trump signed into law “H.R. 1”, also known as the “Tax Cuts and Jobs Act”, which among other things, reduced the federal corporate income tax rate to 21% effective January 1, 2018. As a result, we concluded that our deferred tax assets, net had to be remeasured. Our deferred tax assets, net represents expected corporate tax benefits anticipated to be realized in the future. The reduction in the federal corporate income tax rate reduces these anticipated future benefits. The remeasurement of our deferred tax assets, net at December 31, 2017 resulted in a reduction of these net assets and a corresponding increase in income tax expense of $6.0 million that was recorded in the fourth quarter of 2017.

A reconciliation of income tax expense to the amount computed by applying the statutory federal income tax rate of 35% in each year presented to the income before income tax for the years ended December 31 follows:

	2017			2016			2015
	(In thousands)
Statutory rate applied to income before income tax	$	13,453		$	11,515		$	10,283
Change in statutory rate		5,965			—			—
Tax-exempt income		(777	)		(534	)		(434	)
Bank owned life insurance		(372	)		(477	)		(449	)
Share-based compensation		(287	)		(348	)		—
Unrecognized tax benefit		(123	)		(155	)		(135	)
Non-deductible meals, entertainment and memberships		64			46			43
Net change in valuation allowance		—			17			35
Other, net		40			71			20
Income tax expense	$	17,963		$	10,135		$	9,363

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31 follow:

	2017		2016
	(In thousands)
Deferred tax assets
Alternative minimum tax credit carry forward	$	6,113	$	4,064
Allowance for loan losses		4,743		7,104
Loss carryforwards		3,752		17,131
Property and equipment		1,686		3,143
Purchase premiums, net		699		1,460
Share based payments		677		1,011
Litigation settlement		477		805
Unrealized loss on trading securities		283		486
Reserve for unfunded lending commitments		236		228
Deferred compensation		229		375
Other than temporary impairment charge on securities available for sale		210		400
Non accrual loan interest income		176		246
Loss reimbursement on sold loans reserve		140		196
Unrealized loss on securities available for sale		125		1,782
Vehicle service contract counterparty contingency reserve		117		500
Valuation allowance on other real estate		26		277
Other		123		1
Gross deferred tax assets		19,812		39,209
Valuation allowance		—		(1,071	)
Gross deferred tax assets net of valuation allowance		19,812		38,138

	2017		2016
	(In thousands)
Deferred tax liabilities
Capitalized mortgage loan servicing rights		3,297		4,785
Deferred loan fees		1,327		490
Unrealized gain on derivative financial instruments		72		—
Federal Home Loan Bank stock		27		45
Gross deferred tax liabilities		4,723		5,320
Deferred tax assets, net	$	15,089	$	32,818

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 December 31, 2017 and 2016, that the realization of substantially all of our deferred tax assets continues to be more likely than not.

We had maintained a valuation allowance against our deferred tax assets of approximately $1.1 million at December 31, 2016. This valuation allowance on our deferred tax assets related to state income taxes at Mepco. In this instance, we determined that the future realization of these particular deferred tax assets was not more likely than not. That conclusion was based on the pending sale of Mepco’s payment plan business. After accounting for the May 2017 sale of our payment plan business, all that remained of these deferred tax assets were loss carryforwards that we wrote off against the related valuation allowance during the second quarter of 2017 as we will no longer be doing business in those states.

Because of our NOL and tax credit carryforwards, we are still subject to the rules of Section 382 of the Internal Revenue Code of 1986, as amended. An ownership change, as defined by these rules, would negatively affect our ability to utilize our NOL carryforwards and other deferred tax assets in the future. If such an ownership change were to occur, we may suffer higher-than-anticipated tax expense, and consequently lower net income and cash flow, in those future years.

At December 31, 2017, we had federal NOL carryforwards of approximately $17.9 million which, if not used against taxable income, will expire in 2032. In addition to this amount we also had $6.1 million of alternative minimum tax credit carryforwards with indefinite lives at December 31, 2017.

Changes in unrecognized tax benefits for the years ended December 31 follow:

	2017			2016			2015
	(In thousands)
Balance at beginning of year	$	840		$	976		$	1,091
Additions based on tax positions related to the current year		7			19			20
Reductions due to the statute of limitations		(123	)		(155	)		(135	)
Reductions due to settlements		—			—			—
Balance at end of year	$	724		$	840		$	976

If recognized, the entire amount of unrecognized tax benefits, net of $0.15 million of federal tax on state benefits, would affect our effective tax rate. We do not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months. No amounts were expensed for interest and penalties for the years ended December 31, 2017, 2016 and 2015. No amounts were accrued for interest and penalties at December 31, 2017, 2016 or 2015. At December 31, 2017, U.S. Federal tax years 2014 through the present remain open to examination.

SHARE BASED COMPENSATION AND BENEFIT PLANS

12 Months Ended

Dec. 31, 2017

SHARE BASED COMPENSATION AND BENEFIT PLANS [Abstract]

SHARE BASED COMPENSATION AND BENEFIT PLANS

NOTE 14 – SHARE BASED COMPENSATION AND BENEFIT PLANS

We maintain share based payment plans that include a non-employee director stock purchase plan and a long-term incentive plan that permits the issuance of share based compensation, including stock options and non-vested share awards. The long-term incentive plan, which is shareholder approved, permits the grant of additional share based awards for up to 0.5 million shares of common stock as of December 31, 2017. The non-employee director stock purchase plan permits the grant of additional share based payments for up to 0.2 million shares of common stock as of December 31, 2017. Share based awards and payments are measured at fair value at the date of grant and are expensed over the requisite service period. Common shares issued upon exercise of stock options come from currently authorized but unissued shares.

During 2017, 2016 and 2015 pursuant to our long-term incentive plan, we granted 0.05 million, 0.10 million and 0.07 million shares, respectively of restricted stock and 0.02 million, 0.05 million and 0.03 million performance stock units (“PSUs”), respectively to certain officers. The shares of restricted stock issued during 2017 and 2015 cliff vest after a period of three years and the shares of restricted stock issued during 2016 cliff vest after periods ranging from one to four years. The PSUs issued during 2017 and 2015 cliff vest after a period of three years and the PSUs issued during 2016 cliff vest after periods ranging from three to five years. The performance feature of the PSUs is based on a comparison of our total shareholder return over the vesting 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 at least a portion of their quarterly cash retainer fees in the form of common stock (either on a current basis or on a deferred basis) pursuant to the non-employee director stock purchase plan referenced above. Shares equal in value to that portion of each director’s fees that he or she has elected to receive in stock are issued each quarter and vest immediately. We issued 0.01 million shares to directors during each of the years ending 2017, 2016 and 2015 and expensed their value during those same periods.

Total compensation expense recognized for grants pursuant to our long-term incentive plan was $1.6 million, $1.5 million and $1.4 million in 2017, 2016 and 2015, respectively. The corresponding tax benefit relating to this expense was $0.6 million, $0.5 million and $0.5 million in 2017, 2016 and 2015, respectively. Total expense recognized for non-employee director share based payments was $0.2 million, $0.1 million and $0.1 million in 2017, 2016 and 2015, respectively. The corresponding tax benefit relating to this expense was $0.06 million, $0.04 million and $0.03 million in 2017, 2016 and 2015, respectively.

At December 31, 2017, the total expected compensation cost related to non-vested restricted stock and PSUs not yet recognized was $1.9 million. The weighted-average period over which this amount will be recognized is 2.1 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, 2017		211,018		$	5.05
Granted		—
Exercised		(34,963	)		4.07
Forfeited		—
Expired		—
Outstanding at December 31, 2017		176,055		$	5.24		4.07	$	3,012
Vested and expected to vest at
December 31, 2017		176,055		$	5.24		4.07	$	3,012
Exercisable at December 31, 2017		176,055		$	5.24		4.07	$	3,012

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

	Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2017		296,422		$	14.52
Granted		68,473			21.07
Vested		(63,799	)		14.91
Forfeited		(10,569	)		15.66
Outstanding at December 31, 2017		290,527		$	15.88

Certain information regarding options exercised during the periods ending December 31 follows:

	2017		2016		2015
	(In thousands)
Intrinsic value	$	623	$	254	$	444
Cash proceeds received	$	142	$	85	$	137
Tax benefit realized	$	218	$	89	$	155

We maintain 401(k) and employee stock ownership plans covering substantially all of our full-time employees. During 2017, 2016 and 2015, we matched 50% of employee contributions to the 401(k) plan up to a maximum of 6%, 6% and 4% of participating employees’ eligible wages, respectively. Contributions to the employee stock ownership plan are determined annually and require approval of our Board of Directors. The maximum contribution is 6% of employees’ eligible wages. Contributions to the employee stock ownership plan were 2% for 2017, 2016 and 2015. Amounts expensed for these retirement plans were $1.6 million, $1.4 million, and $1.2 million in 2017, 2016 and 2015, respectively.

Our employees participate in various performance-based compensation plans. Amounts expensed for all incentive plans totaled $8.0 million, $6.2 million and $5.7 million, in 2017, 2016 and 2015, respectively.

We also provide certain health care and life insurance programs to substantially all full-time employees. Amounts expensed for these programs totaled $4.0 million, $3.5 million and $3.6 million in 2017, 2016 and 2015 respectively. These insurance programs are also available to retired employees at their own expense.

OTHER NON-INTEREST INCOME

12 Months Ended

Dec. 31, 2017

OTHER NON-INTEREST INCOME [Abstract]

OTHER NON-INTEREST INCOME

NOTE 15 – OTHER NON-INTEREST INCOME

Other non-interest income for the years ended December 31 follows:

	2017		2016		2015
	(In thousands)
Investment and insurance commissions	$	1,968	$	1,647	$	1,827
ATM fees		1,446		1,496		1,551
Bank owned life insurance		1,061		1,124		1,282
Other		3,693		4,336		4,188
Total other non-interest income	$	8,168	$	8,603	$	8,848

DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2017

DERIVATIVE FINANCIAL INSTRUMENTS [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 16 – DERIVATIVE FINANCIAL INSTRUMENTS

We are required to record derivatives on our 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 at December 31 follow:

	2017
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	15,000		3.7	$	245
Interest rate cap agreements		45,000		3.5		976
Total	$	60,000		3.6	$	1,221

No hedge designation
Rate-lock mortgage loan commitments	$	25,032		0.1	$	530
Mandatory commitments to sell mortgage loans		56,127		0.1		37
Pay-fixed interest rate swap agreements		75,990		6.2		292
Pay-variable interest rate swap agreements		75,990		6.2		(292	)
Purchased options		3,119		3.5		322
Written options		3,119		3.5		(322	)
Total	$	239,377		4.1	$	567

	2016
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
No hedge designation
Rate-lock mortgage loan commitments	$	26,658		0.1	$	646
Mandatory commitments to sell mortgage loans		61,954		0.1		630
Pay-fixed interest rate swap agreements		46,121		8.6		249
Pay-variable interest rate swap agreements		46,121		8.6		(249	)
Purchased options		3,119		4.5		238
Written options		3,119		4.5		(238	)
Total	$	187,092		4.4	$	1,276

We have established management objectives and strategies that include interest-rate risk parameters for maximum fluctuations in net interest income and market value of portfolio equity. We monitor our interest rate risk position via simulation modeling reports. The goal of our asset/liability management efforts is to maintain profitable financial leverage within established risk parameters.

To meet our asset/liability management objectives, we may periodically enter into derivative financial instruments to mitigate exposure to fluctuations in cash flows resulting from changes in interest rates (“Cash Flow Hedges”). Cash Flow Hedges included certain pay-fixed interest rate swaps and interest rate cap agreements. Pay-fixed interest rate swaps convert the variable-rate cash flows on debt obligations to fixed-rates. Under interest-rate cap agreements, we will receive cash if interest rates rise above a predetermined level. As a result, we effectively have variable-rate debt with an established maximum rate. We pay an upfront premium on interest rate caps which is recognized in earnings in the same period in which the hedged item affects earnings. Unrecognized premiums from interest rate caps aggregated to $0.9 million at December 31, 2017.

It is anticipated that $0.10 million, net of tax, of unrealized gains on Cash Flow Hedges at December 31, 2017, will be reclassified into earnings over the next twelve months. The maximum term of any Cash Flow Hedge at December 31, 2017 is 3.9 years.

Certain derivative financial instruments have not been designated as hedges. The fair value of these derivative financial instruments has been recorded on our 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 earnings.

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 the 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.

We currently offer to our deposit customers an equity linked time deposit product (“Altitude CD”). The Altitude CD is 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 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 Consolidated Statements of Operations. All of the interest rate swap agreements with no hedge designation in the table above relate to this program.

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

Fair Values of Derivative Instruments

	Asset Derivatives						Liability Derivatives
	December 31,						December 31,
	2017			2016			2017			2016
	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	$	245	Other assets	$	—	Other liabilities	$	—	Other liabilities	$	—
Interest rate cap agreements	Other assets		976	Other assets		—	Other liabilities		—	Other liabilities		—
			1,221			—			—			—
Derivatives not designated as hedging instruments
Rate-lock mortgage loan commitments	Other assets		530	Other assets		646	Other liabilities		—	Other liabilities		—
Mandatory commitments to sell mortgage loans	Other assets		37	Other assets		630	Other liabilities		—	Other liabilities		—
Pay-fixed interest rate swap agreements	Other assets		631	Other assets		493	Other liabilities		339	Other liabilities		244
Pay-variable interest rate swap agreements	Other assets		339	Other assets		244	Other liabilities		631	Other liabilities		493
Purchased options	Other assets		322	Other assets		238	Other liabilities		—	Other liabilities		—
Written options	Other assets		—	Other assets		—	Other liabilities		322	Other liabilities		238
			1,859			2,251			1,292			975
Total derivatives		$	3,080		$	2,251		$	1,292		$	975

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

	Year Ended December 31,
	Gain Recognized in Other Comprehensive Income (Loss) (Effective Portion)						Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)							Location of Gain (Loss) Recognized in Income (1)	Gain (Loss) Recognized in Income (1)
	2017		2016		2015			2017			2016		2015			2017			2016			2015
	(In thousands)
Cash Flow Hedges
Interest rate cap agreements	$	108	$	—	$	—		$	—		$	—	$	—		$	—		$	—		$	—
Pay-fixed interest rate swap agreements		216		—		—	Interest expense		(18	)		—		—	Interest expense		(12	)		—			—
Total	$	324	$	—	$	—		$	(18	)	$	—	$	—		$	(12	)	$	—		$	—
No hedge designation
Rate-lock mortgage loan commitments															Net gains on mortgage loans	$	(116	)	$	96		$	113
Mandatory commitments to sell mortgage loans															Net gains on mortgage loans		(593	)		561			253
Pay-fixed interest rate swap agreements															Interest income		43			746			(315	)
Pay-variable interest rate swap agreements															Interest income		(43	)		(746	)		315
Purchased options															Interest expense		84			116			122
Written options															Interest expense		(84	)		(116	)		(122	)
Total																$	(709	)	$	657		$	366

(1)

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

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2017

RELATED PARTY TRANSACTIONS

NOTE 17 – RELATED PARTY TRANSACTIONS

Certain of our directors and executive officers, including companies in which they are officers or have significant ownership, were loan and deposit customers during 2017 and 2016.

A summary of loans to our directors and executive officers whose borrowing relationship (which includes loans to entities in which the individual owns a 10% or more voting interest) exceeds $60,000 for the years ended December 31 follows:

	2017			2016
	(In thousands)
Balance at beginning of year	$	415		$	190
New loans and advances		2,945			594
Repayments		(791	)		(369	)
Balance at end of year	$	2,569		$	415

Deposits held by us for directors and executive officers totaled $1.4 million and $1.0 million at December 31, 2017 and 2016, respectively.

LEASES

12 Months Ended

Dec. 31, 2017

LEASES [Abstract]

LEASES

NOTE 18 – LEASES

We have non-cancelable operating leases for certain office facilities, some of which include renewal options and escalation clauses.

A summary of future minimum lease payments under non-cancelable operating leases at December 31, 2017, follows:

	(In thousands)
2018	$	1,310
2019		974
2020		849
2021		460
2022		112
2023 and thereafter		387
Total	$	4,092

Rental expense on operating leases totaled $1.4 million, $1.2 million and $1.2 million in 2017, 2016 and 2015, respectively.

CONCENTRATIONS OF CREDIT RISK	12 Months Ended
CONCENTRATIONS OF CREDIT RISK	Dec. 31, 2017
CONCENTRATIONS OF CREDIT RISK [Abstract]
CONCENTRATIONS OF CREDIT RISK	NOTE 19 – CONCENTRATIONS OF CREDIT RISK Credit risk is the risk to earnings and capital arising from an obligor’s failure to meet the terms of any contract with our organization or otherwise fail to perform as agreed. Credit risk can occur outside of our traditional lending activities and can exist in any activity where success depends on counterparty, issuer or borrower performance. Concentrations of credit risk (whether on- or off-balance sheet) arising from financial instruments can exist in relation to individual borrowers or groups of borrowers, certain types of collateral, certain types of industries or certain geographic regions. Credit risk associated with these concentrations could arise when a significant amount of loans or other financial instruments, related by similar characteristics, are simultaneously impacted by changes in economic or other conditions that cause their probability of repayment or other type of settlement to be adversely affected. Our major concentrations of credit risk arise by collateral type and by industry. The significant concentrations by collateral type at December 31, 2017, include $809.2 million of loans secured by residential real estate and $143.2 million of construction and development loans. Additionally, within our commercial real estate and commercial loan portfolio, we had significant standard industry classification concentrations in the following categories as of December 31, 2017: Lessors of Nonresidential Real Estate ($263.5 million); Lessors of Residential Real Estate ($99.6 million); Construction ($71.4 million) and Manufacturing ($62.9 million). A geographic concentration arises because we primarily conduct our lending activities in the State of Michigan.

REGULATORY MATTERS

12 Months Ended

Dec. 31, 2017

REGULATORY MATTERS [Abstract]

REGULATORY MATTERS

NOTE 20 – 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 December 31, 2017, the Bank had positive undivided profits of $17.4 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 consolidated financial statements. Under capital adequacy guidelines, we must meet specific capital requirements that involve quantitative measures as well as qualitative judgments by the regulators. The most recent regulatory filings as of December 31, 2017 and 2016, 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.

On July 2, 2013, the Federal Reserve approved a final rule that establishes an integrated regulatory capital framework (the “New Capital Rules”). The rule implements in the United States the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Act. In general, under the New Capital Rules, minimum requirements have increased for both the quantity and quality of capital held by banking organizations. Consistent with the international Basel framework, the New Capital Rules include a new minimum ratio of common equity Tier 1 capital to risk-weighted assets of 4.5% and a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets that applies to all supervised financial institutions. The capital conservation buffer began to phase in on January 1, 2016 with 1.25% and 0.625% added to the minimum ratio for adequately capitalized institutions for 2017 and 2016, respectively and 0.625% will be added each subsequent year until fully phased in during 2019. This capital conservation buffer is not reflected in the table that follows. To avoid limits on capital distributions and certain discretionary bonus payments we must meet the minimum ratio for adequately capitalized institutions plus the phased in buffer. The rule also raises the minimum ratio of Tier 1 capital to risk-weighted assets from 4% to 6% and includes a minimum leverage ratio of 4% for all banking organizations. As to the quality of capital, the New Capital Rules emphasize common equity Tier 1 capital, the most loss-absorbing form of capital, and implement strict eligibility criteria for regulatory capital instruments. The New Capital Rules also change the methodology for calculating risk-weighted assets to enhance risk sensitivity.

Our actual capital amounts and ratios at December 31 follow:

	Actual					Minimum for Adequately Capitalized Institutions					Minimum for Well-Capitalized Institutions
	Amount		Ratio			Amount		Ratio			Amount	Ratio
	(Dollars in thousands)
2017
Total capital to risk-weighted assets
Consolidated	$	312,163		15.16	%	$	164,782		8.00	%	NA		NA
Independent Bank		290,188		14.10			164,675		8.00		$205,843		10.00	%

Tier 1 capital to risk-weighted assets
Consolidated	$	288,451		14.00	%	$	123,586		6.00	%	NA		NA
Independent Bank		266,476		12.95			123,506		6.00		$164,675		8.00	%

Common equity tier 1 capital to risk-weighted assets
Consolidated	$	255,934		12.43	%	$	92,690		4.50	%	NA		NA
Independent Bank		266,476		12.95			92,630		4.50		$133,798		6.50	%

Tier 1 capital to average assets
Consolidated	$	288,451		10.57	%	$	109,209		4.00	%	NA		NA
Independent Bank		266,476		9.78			109,041		4.00		$136,301		5.00	%

2016
Total capital to risk-weighted assets
Consolidated	$	286,289		15.86	%	$	144,413		8.00	%	NA		NA
Independent Bank		270,855		15.02			144,223		8.00		$180,279		10.00	%

Tier 1 capital to risk-weighted assets
Consolidated	$	265,405		14.70	%	$	108,309		6.00	%	NA		NA
Independent Bank		249,971		13.87			108,167		6.00		$144,223		8.00	%

Common equity tier 1 capital to risk-weighted assets
Consolidated	$	238,996		13.24	%	$	81,232		4.50	%	NA		NA
Independent Bank		249,971		13.87			81,126		4.50		$117,181		6.50	%

Tier 1 capital to average assets
Consolidated	$	265,405		10.50	%	$	101,112		4.00	%	NA		NA
Independent Bank		249,971		9.90			101,019		4.00		$126,274		5.00	%

NA - Not applicable

The components of our regulatory capital are as follows:

	Consolidated						Independent Bank
	December 31,						December 31,
	2017			2016			2017			2016
	(In thousands)
Total shareholders' equity	$	264,933		$	248,980		$	269,481		$	258,814
Add (deduct)
Accumulated other comprehensive loss for regulatory purposes		201			3,310			201			3,310
Intangible assets		(1,269	)		(1,159	)		(1,269	)		(1,159	)
Disallowed deferred tax assets		(7,931	)		(12,135	)		(1,937	)		(10,994	)
Common equity tier 1 capital		255,934			238,996			266,476			249,971
Qualifying trust preferred securities		34,500			34,500			—			—
Disallowed deferred tax assets		(1,983	)		(8,091	)		—			—
Tier 1 capital		288,451			265,405			266,476			249,971
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		23,712			20,884			23,712			20,884
Total risk-based capital	$	312,163		$	286,289		$	290,188		$	270,855

The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1G
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958577-112826

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1C
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958572-112826

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1E
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958574-112826

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
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-Section 50
-Paragraph 1H
-URI http://asc.fasb.org/extlink&oid=84167132&loc=d3e65071-112826

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 505
-Section 50
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958569-112826

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958570-112826

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1F
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958575-112826

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958568-112826

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1D
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958573-112826

+ Details

FAIR VALUE DISCLOSURES

12 Months Ended

Dec. 31, 2017

FAIR VALUE DISCLOSURES [Abstract]

FAIR VALUE DISCLOSURES

NOTE 21 – 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 (trading or available for sale) are classified as Level 1 of the valuation hierarchy. Level 1 securities include certain preferred stocks included in our trading portfolio for which there are quoted prices in active markets. 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 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 AFLL is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. We measure our investment in an impaired loan based on one of three methods: the loan’s observable market price, the fair value of the collateral or the present value of expected future cash flows discounted at the loan’s effective interest rate. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At December 31, 2017 and 2016, all of our total impaired loans were evaluated based on either the fair value of the collateral or the present value of expected future cash flows discounted at the loan’s effective interest rate. When the fair value of the collateral is based on an appraised value or when an appraised value is not available we record the impaired loan as nonrecurring Level 3. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments can be significant and thus will typically result in a Level 3 classification of the inputs for determining fair value.

Other real estate: At the time of acquisition, other real estate is recorded at fair value, less estimated costs to sell, which becomes the property’s new basis. Subsequent write-downs to reflect declines in value since the time of acquisition may occur from time to time and are recorded in net (gains) losses on other real estate and repossessed assets in the 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/ORE 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 nonrecurring Level 3. Management evaluates the third party valuation for reasonableness each quarter as part of our financial reporting control processes. Prior to January 1, 2017, capitalized mortgage loan servicing rights were accounted for using the amortization method of accounting and were measured at fair value on a non-recurring basis. During the first quarter of 2017, we adopted the fair value method of accounting for our capitalized mortgage loan servicing rights (see note #1) and are now measured at fair value on a recurring basis.

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)
December 31, 2017:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	455	$	455	$	—	$	—
Securities available for sale
U.S. treasury		898		898		—		—
U.S. agency		25,682		—		25,682		—
U.S. agency residential mortgage-backed		137,918		—		137,918		—
U.S. agency commercial mortgage-backed		9,760		—		9,760		—
Private label mortgage-backed		29,109		—		29,109		—
Other asset backed		93,898		—		93,898		—
Obligations of states and political subdivisions		172,945		—		172,945		—
Corporate		47,853		—		47,853		—
Trust preferred		2,802		—		2,802		—
Foreign government		2,060		—		2,060		—
Loans held for sale		39,436		—		39,436		—
Capitalized mortgage loan servicing rights		15,699		—		—		15,699
Derivatives (1)		3,080		—		3,080		—
Liabilities
Derivatives (2)		1,292		—		1,292		—

Measured at Fair Value on a Non-recurring basis:
Assets
Impaired loans (3)
Commercial
Income producing - real estate		274		—		—		274
Land, land development & construction-real estate		9		—		—		9
Commercial and industrial		1,051		—		—		1,051
Mortgage
1-4 family		339		—		—		339
Resort lending		207		—		—		207
Other real estate (4)
Mortgage
1-4 family		186		—		—		186
Resort lending		65		—		—		65

(1)

Included in accrued income and other assets.

(2)

Included in accrued expenses and other liabilities.

(3)

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

(4)

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

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
December 31, 2016:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	410	$	410	$	—	$	—
Securities available for sale
U.S. agency		28,988		—		28,988		—
U.S. agency residential mortgage-backed		156,289		—		156,289		—
U.S. agency commercial mortgage-backed		12,632		—		12,632		—
Private label mortgage-backed		34,727		—		34,727		—
Other asset backed		146,709		—		146,709		—
Obligations of states and political subdivisions		170,899		—		170,899		—
Corporate		56,180		—		56,180		—
Trust preferred		2,579		—		2,579		—
Foreign government		1,613		—		1,613		—
Loans held for sale		35,946		—		35,946		—
Derivatives (1)		2,251		—		2,251		—
Liabilities
Derivatives (2)		975		—		975		—

Measured at Fair Value on a Non-recurring basis:
Assets
Capitalized mortgage loan servicing rights (3)		8,163		—		—		8,163
Impaired loans (4)
Commercial
Income producing - real estate		255		—		—		255
Land, land development & construction-real estate		54		—		—		54
Commercial and industrial		1,342		—		—		1,342
Mortgage
1-4 family		361		—		—		361
Other real estate (5)
Commercial
Income producing - real estate (6)		2,863		—		2,863		—
Land, land development & construction-real estate		176		—		—		176
Mortgage
1-4 family		98		—		—		98
Resort lending		133		—		—		133

(1)

Included in accrued income and other assets.

(2)

Included in accrued expenses and other liabilities.

(3)

Only includes servicing rights that are carried at fair value due to recognition of a valuation allowance.

(4)

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

(5)

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

(6)

Level 2 valuation is based on a signed purchase agreement.

There were no transfers between Level 1 and Level 2 during the years ended December 31, 2017 and 2016.

Changes in fair values of financial assets for which we have elected the fair value option for the years ended December 31 were as follows:

	Net Gains (Losses) on Assets						Mortgage Loan Servicing, net			Total Change in Fair Values Included in Current Period Earnings
	Securities			Mortgage Loans			Mortgage Loan Servicing, net
	(In thousands)
2017
Trading securities	$	45		$	—		$	—		$	45
Loans held for sale		—			407			—			407
Capitalized mortgage loan servicing rights		—			—			(2,744	)		(2,744	)

2016
Trading securities	$	262		$	—		$	—		$	262
Loans held for sale		—			(277	)		—			(277	)

2015
Trading securities	$	(55	)	$	—		$	—		$	(55	)
Loans held for sale		—			90			—			90

For those items measured at fair value pursuant to our election of the fair value option, interest income is recorded within the 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 years ended December 31, 2017, 2016 and 2015 relating to assets measured at fair value on a non-recurring basis:

•

Capitalized mortgage loan servicing rights, whose individual strata are measured at fair value, had a carrying amount of $8.2 million, which is net of a valuation allowance of $2.3 million, at December 31, 2016. A recovery of $1.0 million and $0.5 million was included in our results of operations for the years ending December 31, 2016 and 2015, respectively.

•

Loans which are measured for impairment using the fair value of collateral for collateral dependent loans had a carrying amount of $2.6 million, with a valuation allowance of $0.7 million at December 31, 2017, and had a carrying amount of $4.0 million, with a valuation allowance of $2.0 million at December 31, 2016. An additional provision for loan losses relating to impaired loans of $0.5 million, $0.2 million and $1.1 million was included in our results of operations for the years ending December 31, 2017, 2016 and 2015, respectively.

•

Other real estate, which is measured using the fair value of the property, had a carrying amount of $0.3 million which is net of a valuation allowance of $0.1 million at December 31, 2017, and a carrying amount of $3.2 million, which is net of a valuation allowance of $0.8 million, at December 31, 2016. An additional charge relating to other real estate measured at fair value of $0.1 million, $0.6 million and $0.3 million was included in our results of operations during the years ended December 31, 2017, 2016 and 2015, respectively.

A reconciliation for all assets and (liabilities) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31 follows:

	Capitalized Mortgage Loan Servicing Rights
	2017			2016		2015
	(In thousands)
Beginning balance	$	—		$	—	$	—
Change in accounting		14,213			—		—
Beginning balance, as adjusted		14,213			—		—
Total losses realized and unrealized:
Included in results of operations		(2,744	)		—		—
Included in other comprehensive income		—			—		—
Purchases, issuances, settlements, maturities and calls		4,230			—		—
Transfers in and/or out of Level 3		—			—		—
Ending balance	$	15,699		$	—	$	—

Amount of total losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at December 31	$	(2,744	)	$	—	$	—

As discussed above we changed the accounting for capitalized mortgage loan servicing rights during the first quarter of 2017 (see note #1) and are now measuring valuation on a recurring basis. The fair value of our capitalized mortgage loan servicing rights has been determined based on a valuation model used by an independent third party as discussed above. The significant unobservable inputs used in the fair value measurement of the capitalized mortgage loan servicing rights are discount rate, cost to service, ancillary income and float rate. Significant changes in all four of these assumptions in isolation would result in significant changes to the value of our capitalized mortgage loan servicing rights. Quantitative information about our Level 3 fair value measurements measured on a recurring basis follows:

	Asset Fair Value	Valuation Technique	Unobservable Inputs	Range	Weighted Average
	(In thousands)
Capitalized mortgage loan servicing rights	$15,699	Present value of net servicing revenue	Discount rate Cost to service Ancillary income Float rate	9.88% to 11.00% $66 to $216 20 to 36 2.24% to 2.24%	10.11% $81 23 2.24%

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)

2017

Impaired loans

Commercial

$1,334

Sales comparison approach

Adjustment for differences between comparable sales

(32.5)% to 25.0%

(4.5

Mortgage

546

Sales comparison approach

Adjustment for differences between comparable sales

(21.1) to 34.1

(2.7

)

Other real estate-Mortgage

251

Sales comparison approach

Adjustment for differences between comparable sales

(33.0) to 44.5

(1.0

)

2016

Capitalized mortgage loan
servicing rights

$ 8,163

Present value of net servicing revenue

Discount rate

Cost to service

Ancillary income

Float rate

10.00% to 11.00%
$66 to $168
20 to 40
1.97% to 1.97%

10.07%
$ 83
24
1.97 %

Impaired loans

Commercial (1)

1,446

Sales comparison approach

Adjustment for differences between comparable sales

(25.0)% to 17.0%

(1.5) %

Mortgage

361

Sales comparison approach

Adjustment for differences between comparable sales

(23.2) to 19.4

(4.7)

Other real estate

Commercial

176

Sales comparison approach

Adjustment for differences between comparable sales

(35.0) to 0.0

(22.5)

Mortgage and installment

231

Sales comparison approach

Adjustment for differences between comparable sales

(26.8) to 2.8

(5.1)

(1)

In addition to the valuation techniques and unobservable inputs discussed above, at December 31, 2016, we had an impaired collateral dependent commercial relationship that totaled $0.2 million that was primarily secured by collateral other than real estate. Collateral securing this relationship primarily included machinery and equipment and inventory at December 31, 2016. Valuation techniques at December 31, 2016, included appraisals and discounting restructuring firm valuations based on estimates of value recovery of each particular asset type. Discount rates used ranged from 0% to 100% of stated values.

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 at December 31.

	Aggregate Fair Value		Difference		Contractual Principal
	(In thousands)
Loans held for sale
2017	$	39,436	$	844	$	38,592
2016		35,946		437		35,509
2015		27,866		714		27,152

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

FAIR VALUES OF FINANCIAL INSTRUMENTS [Abstract]

FAIR VALUES OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2017

FAIR VALUES OF FINANCIAL INSTRUMENTS

NOTE 22 – 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. Fair value methodologies discussed below do not necessarily represent an exit price in the determination of the fair value of these financial instruments.

Cash and due from banks and interest bearing deposits: The recorded book balance of cash and due from banks and interest bearing deposits approximate fair value and are classified as Level 1.

Interest bearing deposits - time: Interest bearing deposits - time have been valued based on a model using a benchmark yield curve plus a base spread and are classified as Level 2.

Securities: Financial instrument assets actively traded in a secondary market have been valued using quoted market prices. Trading securities and U.S. treasury securities available for sale are classified as Level 1 while all other securities available for sale are classified as Level 2 as described in note #21.

Federal Home Loan Bank and Federal Reserve Bank Stock: It is not practicable to determine the fair value of FHLB and FRB Stock due to restrictions placed on transferability.

Net loans and loans held for sale: The fair value of loans is calculated by discounting estimated future cash flows using estimated market discount rates that reflect credit and interest-rate risk inherent in the loans and do not necessarily represent an exit price. Loans are classified as Level 3. Impaired loans are valued at the lower of cost or fair value as described in note #21. Loans held for sale are classified as Level 2 as described in note #21. Payment plan receivables held for sale are also classified as Level 2 based on a signed APA as described in note #1.

Accrued interest receivable and payable: The recorded book balance of accrued interest receivable and payable approximate fair value and are classified at the same Level as the asset and liability they are associated with.

Derivative financial instruments: The fair value of rate-lock mortgage loan commitments is based on agency cash window loan pricing for comparable assets, the fair value of mandatory commitments to sell mortgage loans is based on mortgage backed security pricing for comparable assets, the fair value of interest rate swap and interest rate cap agreements is derived from proprietary models which utilize current market data whose significant fair value inputs can generally be observed in the market place and do not typically involve judgment by management and 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. Each of these instruments has been classified as Level 2 as described in note #21.

Deposits: Deposits without a stated maturity, including demand deposits, savings, NOW and money market accounts, have a fair value equal to the amount payable on demand. Each of these instruments is classified as Level 1. Deposits with a stated maturity, such as time deposits, have generally been valued based on the discounted value of contractual cash flows using a discount rate approximating current market rates for liabilities with a similar maturity resulting in a Level 2 classification.

Other borrowings: Other borrowings have been valued based on the discounted value of contractual cash flows using a discount rate approximating current market rates for liabilities with a similar maturity resulting in a Level 2 classification.

Subordinated debentures: Subordinated debentures have generally been valued based on a quoted market price of similar instruments resulting in a Level 2 classification.

The estimated recorded book balances and fair values at December 31 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)
2017
Assets
Cash and due from banks	$	36,994	$	36,994	$	36,994	$	—	$	—
Interest bearing deposits		17,744		17,744		17,744		—		—
Interest bearing deposits - time		2,739		2,740		—		2,740		—
Trading securities		455		455		455		—		—
Securities available for sale		522,925		522,925		898		522,027		—
Federal Home Loan Bank and Federal Reserve Bank Stock		15,543		NA		NA		NA		NA
Net loans and loans held for sale		2,035,666		1,962,937		—		39,436		1,923,501
Accrued interest receivable		8,609		8,609		1		2,192		6,416
Derivative financial instruments		3,080		3,080		—		3,080		—
Liabilities
Deposits with no stated maturity (1)	$	1,845,716	$	1,845,716	$	1,845,716	$	—	$	—
Deposits with stated maturity (1)		554,818		551,489		—		551,489		—
Other borrowings		54,600		54,918		—		54,918		—
Subordinated debentures		35,569		29,946		—		29,946		—
Accrued interest payable		892		892		48		844		—
Derivative financial instruments		1,292		1,292		—		1,292		—
2016
Assets
Cash and due from banks	$	35,238	$	35,238	$	35,238	$	—	$	—
Interest bearing deposits		47,956		47,956		47,956		—		—
Interest bearing deposits - time		5,591		5,611		—		5,611		—
Trading securities		410		410		410		—		—
Securities available for sale		610,616		610,616		—		610,616		—
Federal Home Loan Bank and Federal Reserve Bank Stock		15,543		NA		NA		NA		NA
Net loans and loans held for sale (2)		1,655,335		1,629,587		—		67,321		1,562,266
Accrued interest receivable		7,316		7,316		5		2,364		4,947
Derivative financial instruments		2,251		2,251		—		2,251		—
Liabilities
Deposits with no stated maturity (1)	$	1,740,601	$	1,740,601	$	1,740,601	$	—	$	—
Deposits with stated maturity (1)		485,118		483,469		—		483,469		—
Other borrowings		9,433		10,371		—		10,371		—
Subordinated debentures		35,569		25,017		—		25,017		—
Accrued interest payable		932		932		21		911		—
Derivative financial instruments		975		975		—		975		—

(1)

Deposits with no stated maturity include reciprocal deposits with a recorded book balance of $13.0 million and $7.4 million at December 31, 2017 and 2016, respectively. Deposits with a stated maturity include reciprocal deposits with a recorded book balance of $38.0 million and $31.3 million at December 31, 2017 and 2016, respectively.

(2)

Net loans and loans held for sale at December 31, 2016 include $31.4 million of payment plan receivables and commercial loans held for sale.

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.

ACCUMULATED OTHER COMPREHENSIVE LOSS

12 Months Ended

Dec. 31, 2017

ACCUMULATED OTHER COMPREHENSIVE LOSS [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

NOTE 23 – ACCUMULATED OTHER COMPREHENSIVE LOSS

A summary of changes in accumulated other comprehensive loss (“AOCL”), net of tax during the years ended December 31 follows:

	Unrealized Gains (Losses) on Securities Available for Sale			Dispropor- tionate Tax Effects from Securities Available for Sale			Unrealized Gains on Cash Flow Hedges		Dispropor- tionate Tax Effects from Cash Flow Hedges			Total
2017
Balances at beginning of period	$	(3,310	)	$	(5,798	)	$	—	$	—		$	(9,108	)
Cumulative effect of change in accounting		300			—			—		—			300
Balances at beginning of period, as adjusted		(3,010	)		(5,798	)		—		—			(8,808	)
Other comprehensive income before reclassifications		2,763			—			210		—			2,973
Amounts reclassified from AOCL		(140	)		—			12		—			(128	)
Net current period other comprehensive income		2,623			—			222		—			2,845
Disproportionate tax effects due to change in tax rate		(83	)		83			47		(47	)		—
Reclassification of certain deferred tax effects (1)		—			(83	)		—		47			(36	)
Balances at end of period	$	(470	)	$	(5,798	)	$	269	$	—		$	(5,999	)
2016
Balances at beginning of period	$	(238	)	$	(5,798	)	$	—	$	—		$	(6,036	)
Other comprehensive loss before reclassifications		(2,876	)		—			—		—			(2,876	)
Amounts reclassified from AOCL		(196	)		—			—		—			(196	)
Net current period other comprehensive loss		(3,072	)		—			—		—			(3,072	)
Balances at end of period	$	(3,310	)	$	(5,798	)	$	—	$	—		$	(9,108	)
2015
Balances at beginning of period	$	162		$	(5,798	)	$	—	$	—		$	(5,636	)
Other comprehensive loss before reclassifications		(351	)		—			—		—			(351	)
Amounts reclassified from AOCL		(49	)		—			—		—			(49	)
Net current period other comprehensive loss		(400	)		—			—		—			(400	)
Balances at end of period	$	(238	)	$	(5,798	)	$	—	$	—		$	(6,036	)

(1)

Amounts reclassified to accumulated deficit due to early adoption of ASU 2018-02. See note #1.

The disproportionate tax effects from securities available for sale arose primarily 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 insubstantial portfolio of securities available for sale.

A summary of reclassifications out of each component of AOCL for the years ended December 31 follows:

AOCL Component	Reclassified From AOCL		Affected Line Item in Consolidated Statements of Operations
	(In thousands)
2017
Unrealized gains (losses) on securities available for sale
	$	215	Net gains on securities
		—	Net impairment loss recognized in earnings
		215	Total reclassifications before tax
		75	Income tax expense
	$	140	Reclassifications, net of tax

Unrealized gains on cash flow hedges
	$	18	Interest expense
		6	Income tax expense
	$	12	Reclassification, net of tax
	$	128	Total reclassifications for the period, net of tax


2016
Unrealized gains (losses) on securities available for sale
	$	301	Net gains on securities
		—	Net impairment loss recognized in earnings
		301	Total reclassifications before tax
		105	Income tax expense
	$	196	Reclassifications, net of tax


2015
Unrealized gains (losses) on securities available for sale
	$	75	Net gains on securities
		—	Net impairment loss recognized in earnings
		75	Total reclassifications before tax
		26	Income tax expense
	$	49	Reclassifications, net of tax

INDEPENDENT BANK CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION

12 Months Ended

Dec. 31, 2017

INDEPENDENT BANK CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION [Abstract]

INDEPENDENT BANK CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION

NOTE 24 – INDEPENDENT BANK CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION

Presented below are condensed financial statements for our parent company.

CONDENSED STATEMENTS OF FINANCIAL CONDITION

	December 31,
	2017		2016
	(In thousands)
ASSETS
Cash and due from banks	$	16,454	$	9,515
Interest bearing deposits - time		5,000		5,000
Investment in subsidiaries		271,315		259,883
Accrued income and other assets		8,375		10,489
Total Assets	$	301,144	$	284,887

LIABILITIES AND SHAREHOLDERS’ EQUITY
Subordinated debentures	$	35,569	$	35,569
Accrued expenses and other liabilities		500		379
Shareholders’ equity		265,075		248,939
Total Liabilities and Shareholders’ Equity	$	301,144	$	284,887

CONDENSED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2017		2016			2015
	(In thousands)
OPERATING INCOME
Dividends from subsidiary	$	16,000	$	5,000		$	—
Interest income		29		27			72
Other income		41		153			31
Total Operating Income		16,070		5,180			103

OPERATING EXPENSES
Interest expense		1,347		1,167			1,021
Administrative and other expenses		714		554			560
Total Operating Expenses		2,061		1,721			1,581
Income (Loss) Before Income Tax and Equity in Undistributed Net Income of Subsidiaries		14,009		3,459			(1,478	)
Income tax expense (benefit)		1,587		(615	)		(542	)
Income (Loss) Before Equity in Undistributed Net Income of Subsidiaries		12,422		4,074			(936	)
Equity in undistributed net income of subsidiaries		8,053		18,692			20,953
Net Income	$	20,475	$	22,766		$	20,017

CONDENSED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Net Income	$	20,475		$	22,766		$	20,017
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FROM (USED) IN OPERATING ACTIVITIES
Deferred income tax expense (benefit)		2,146			(615	)		(542	)
Share based compensation		45			29			21
(Increase) decrease in accrued income and other assets		(32	)		246			5
Increase (decrease) in accrued expenses and other liabilities		121			1			(6	)
Equity in undistributed net income of subsidiaries		(8,053	)		(18,692	)		(20,953	)
Total Adjustments		(5,773	)		(19,031	)		(21,475	)
Net Cash From (Used) in Operating Activities		14,702			3,735			(1,458	)

CASH FLOW FROM INVESTING ACTIVITIES
Purchases of interest bearing deposits - time		(10,000	)		(7,500	)		(5,000	)
Maturity of interest bearing deposits - time		10,000			7,500			12,500
Return of capital from subsidiary		—			18,000			18,500
Net Cash From Investing Activities		—			18,000			26,000

CASH FLOW USED IN FINANCING ACTIVITIES
Dividends paid		(8,960	)		(7,274	)		(5,896	)
Proceeds from issuance of common stock		1,776			1,735			1,569
Share based compensation withholding obligation		(579	)		(627	)		(1,091	)
Repurchase of common stock		—			(16,854	)		(13,498	)
Net Cash Used in Financing Activities		(7,763	)		(23,020	)		(18,916	)
Net Increase (Decrease) in Cash and Cash Equivalents		6,939			(1,285	)		5,626
Cash and Cash Equivalents at Beginning of Year		9,515			10,800			5,174
Cash and Cash Equivalents at End of Year	$	16,454		$	9,515		$	10,800

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

BRANCH SALE	12 Months Ended
BRANCH SALE	Dec. 31, 2017
BRANCH SALE [Abstract]
BRANCH SALE	NOTE 25 – BRANCH SALE On April 29, 2015 we entered into a Purchase and Assumption Agreement (“PAA”) with Isabella Bank (based in Mt. Pleasant, Michigan). Pursuant to the PAA, on August 28, 2015, we sold the fixed assets, real property and certain other assets of our bank branch located in Midland, Michigan (the “Midland Branch”) to Isabella Bank. The deposit liabilities of the Midland Branch were assumed by Isabella Bank which totaled $8.7 million on the date of sale. Under the terms of the PAA, Isabella Bank paid a premium of $0.6 million (which was equal to 6.0% of the average deposit liabilities of $9.7 million based on the 20-day average ending two business days prior to the closing date of August 28, 2015) and $0.85 million for the real property and fixed assets (including the ATM). The real property and the fixed assets had a net book value of approximately $0.2 million as of August 28, 2015. We recorded a net gain of $1.2 million in the third quarter of 2015 on the sale of the Midland Branch.

MEPCO SALE

12 Months Ended

Dec. 31, 2017

MEPCO SALE [Abstract]

MEPCO SALE

NOTE 26 – MEPCO SALE

On December 30, 2016, Mepco, entered into an APA with Seabury Asset Management LLC (“Seabury”). Pursuant to the terms of the APA, we sold our payment plan processing business, payment plan receivables, and certain other assets to Seabury, who also assumed certain liabilities of Mepco. These assets and liabilities were categorized as “held for sale” in the December 31, 2016 Consolidated Statement of Financial Condition. We also recorded a $0.32 million loss related to the sale of these assets in the fourth quarter of 2016.

This transaction closed on May 18, 2017, with an effective date of May 1, 2017. As a result of the closing, Mepco sold $33.1 million of net payment plan receivables, $0.5 million of commercial loans, $0.2 million of furniture and equipment and $1.6 million of other assets to Seabury, who also assumed $2.0 million of specified liabilities. We received cash totaling $33.4 million and recorded no gain or loss in 2017 as the assets were sold and the liabilities were assumed at book value.

Assets sold and liabilities assumed were as follows:

	May 1, 2017		December 31, 2016
	(In thousands)
Assets sold
Payment plan receivables	$	33,128	$	30,582
Commercial loans		525		794
Other assets		1,765		1,984
Total assets	$	35,418	$	33,360

Liabilities assumed	$	1,972	$	718

PENDING ACQUISITION	12 Months Ended
PENDING ACQUISITION	Dec. 31, 2017
PENDING ACQUISITION [Abstract]
PENDING ACQUISITION	NOTE 27 – PENDING ACQUISITION On December 4, 2017, we entered into an Agreement and Plan of Merger with TCSB Bancorp, Inc. (“TCSB”) (the “Merger Agreement”) providing for a business combination of IBCP and TCSB. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, TCSB will be merged with and into IBCP, with IBCP as the surviving corporation (the “Merger”). In addition, IBCP intends to consolidate Traverse City State Bank, TCSB’s wholly-owned subsidiary bank, with and into the Bank (with the Bank as the surviving institution). Subject to the terms and conditions of the Merger Agreement, we will pay aggregate Merger consideration of approximately $63.2 million in IBCP common stock or stock options for all of the shares of TCSB common stock and TCSB stock options issued and outstanding immediately before the effective time of the Merger. The Merger consideration is subject to adjustment in certain limited circumstances, as set forth in the Merger Agreement. Completion of the Merger is subject to certain closing conditions. These include, among others, (i) in the case of both parties, receipt of the requisite approval of TCSB’s shareholders, receipt of required regulatory approvals, the absence of any law or order prohibiting completion of the Merger and the absence of a material adverse effect (as defined in the Merger Agreement), and (ii) in the case of IBCP, the consolidated shareholders’ equity of TCSB must be at least $33 million (subject to adjustment as provided in the Merger Agreement) as of the final statement date (as defined in the Merger Agreement). The Merger Agreement provides certain termination rights for both IBCP and TCSB and further provides that, upon termination of the Merger Agreement under certain circumstances, TCSB will be obligated to pay IBCP a termination fee of approximately $2.5 million. The proposed transaction has been approved by both the Federal Reserve Bank of Chicago and the Michigan Department of Insurance and Financial Services. A meeting of the TCSB shareholders has been scheduled for March 14, 2018 to consider and vote upon a proposal to approve the merger agreement between IBCP and TSCB. Assuming requisite TCSB shareholder approval and satisfaction of other closing conditions, the merger of IBCP and TCSB is currently expected to be effective on April 1, 2018. Our 2017 non-interest expenses include $0.3 million of costs incurred through December 31, 2017 related to the Merger. As of December 31, 2017, TCSB Bancorp, Inc. had total assets of $338.5 million, total loans of $291.5 million, total deposits of $280.5 million, and total shareholders’ equity of $34.5 million.

ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2017

PRINCIPLES OF CONSOLIDATION

STATEMENTS OF CASH FLOWS

INTEREST BEARING DEPOSITS

INTEREST BEARING DEPOSITS — Interest bearing deposits consist of overnight deposits with the Federal Reserve Bank.

INTEREST BEARING DEPOSITS - TIME — Interest bearing deposits - time consist of deposits with original maturities of 3 months or more.

LOANS HELD FOR SALE

PAYMENT PLAN RECEIVABLES AND OTHER ASSETS HELD FOR SALE

OPERATING SEGMENTS

CAPITALIZED MORTGAGE LOAN SERVICING RIGHTS

TRANSFERS OF FINANCIAL ASSETS

SECURITIES

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.

FEDERAL HOME LOAN BANK ("FHLB") STOCK

FEDERAL RESERVE BANK ("FRB") STOCK

LOAN REVENUE RECOGNITION

PAYMENT PLAN RECEIVABLE REVENUE RECOGNITION

ALLOWANCE FOR LOAN LOSSES

PROPERTY AND EQUIPMENT

BANK OWNED LIFE INSURANCE

OTHER REAL ESTATE AND REPOSSESSED ASSETS

OTHER INTANGIBLES

INCOME TAXES

We recognize interest and/or penalties related to income tax matters in income tax expense.

We file a consolidated federal income tax return. Intercompany tax liabilities are settled as if each subsidiary filed a separate return.

COMMITMENTS TO EXTEND CREDIT AND RELATED FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

COMPREHENSIVE INCOME

NET INCOME PER COMMON SHARE

SHARE BASED COMPENSATION

COMMON STOCK

RECLASSIFICATION

RECLASSIFICATION — Certain amounts in the 2016 and 2015 consolidated financial statements have been reclassified to conform to the 2017 presentation.

ADOPTION OF NEW ACCOUNTING STANDARDS

The impact of the adoption of the fair value method of accounting for our capitalized mortgage loan servicing rights and the adoption of ASU 2017-08 follows:

	January 1, 2017 Originally Presented			Cumulative Retrospective Adjustments			January 1, 2017 Adjusted
	(In thousands)
Deferred tax assets, net	$	32,818		$	(190	)⁽¹⁾	$	32,628
Capitalized mortgage loan servicing rights	$	13,671		$	542	⁽¹⁾	$	14,213
Total assets	$	2,548,950		$	352		$	2,549,302
Accumulated deficit	$	(65,657	)	$	352	⁽¹⁾
				$	(300	)⁽²⁾	$	(65,605	)
Accumulated other comprehensive loss	$	(9,108	)	$	300	⁽²⁾	$	(8,808	)
Total Shareholders’ Equity	$	248,980		$	352		$	249,332
Total Liabilities and Shareholders’ Equity	$	2,548,950		$	352		$	2,549,302

(1)

(2)

Represents adjustment to accumulated deficit and accumulated other comprehensive loss to reflect the adoption of ASU 2017-08.

ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2017

Condensed consolidated statement of financial position to reflect cumulative effect of adjustments

The impact of the adoption of the fair value method of accounting for our capitalized mortgage loan servicing rights and the adoption of ASU 2017-08 follows:

	January 1, 2017 Originally Presented			Cumulative Retrospective Adjustments			January 1, 2017 Adjusted
	(In thousands)
Deferred tax assets, net	$	32,818		$	(190	)⁽¹⁾	$	32,628
Capitalized mortgage loan servicing rights	$	13,671		$	542	⁽¹⁾	$	14,213
Total assets	$	2,548,950		$	352		$	2,549,302
Accumulated deficit	$	(65,657	)	$	352	⁽¹⁾
				$	(300	)⁽²⁾	$	(65,605	)
Accumulated other comprehensive loss	$	(9,108	)	$	300	⁽²⁾	$	(8,808	)
Total Shareholders’ Equity	$	248,980		$	352		$	249,332
Total Liabilities and Shareholders’ Equity	$	2,548,950		$	352		$	2,549,302

(1)

(2)

Represents adjustment to accumulated deficit and accumulated other comprehensive loss to reflect the adoption of ASU 2017-08.

SECURITIES (Tables)

12 Months Ended

Dec. 31, 2017

SECURITIES [Abstract]

Investments in a continuous unrealized loss position

Securities available for sale consist of the following at December 31:

	Amortized Cost		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(In thousands)
2017
U.S. Treasury	$	898	$	—	$	—	$	898
U.S. agency		25,667		82		67		25,682
U.S. agency residential mortgage-backed		137,785		1,116		983		137,918
U.S. agency commercial mortgage-backed		9,894		36		170		9,760
Private label mortgage-backed		29,011		428		330		29,109
Other asset backed		93,811		202		115		93,898
Obligations of states and political subdivisions		174,073		755		1,883		172,945
Corporate		47,365		578		90		47,853
Trust preferred		2,929		—		127		2,802
Foreign government		2,087		—		27		2,060
Total	$	523,520	$	3,197	$	3,792	$	522,925

2016
U.S. agency	$	28,909	$	159	$	80	$	28,988
U.S. agency residential mortgage-backed		156,053		1,173		937		156,289
U.S. agency commercial mortgage-backed		12,799		28		195		12,632
Private label mortgage-backed		35,035		216		524		34,727
Other asset backed		146,829		271		391		146,709
Obligations of states and political subdivisions		175,180		478		4,759		170,899
Corporate		56,356		223		399		56,180
Trust preferred		2,922		—		343		2,579
Foreign government		1,626		—		13		1,613
Total	$	615,709	$	2,548	$	7,641	$	610,616

	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
2017
U.S. agency	$	5,466	$	26	$	5,735	$	41	$	11,201	$	67
U.S. agency residential mortgage-backed		22,198		229		40,698		754		62,896		983
U.S. agency commercial mortgage-backed		2,181		34		3,994		136		6,175		170
Private label mortgage-backed		11,390		92		4,396		238		15,786		330
Other asset backed		20,352		40		16,648		75		37,000		115
Obligations of states and political subdivisions		76,574		936		28,246		947		104,820		1,883
Corporate		14,440		33		3,943		57		18,383		90
Trust preferred		—		—		2,802		127		2,802		127
Foreign government		489		10		1,571		17		2,060		27
Total	$	153,090	$	1,400	$	108,033	$	2,392	$	261,123	$	3,792

	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
2016
U.S. agency	$	4,179	$	41	$	8,217	$	39	$	12,396	$	80
U.S. agency residential mortgage-backed		62,524		732		20,857		205		83,381		937
U.S. agency commercial mortgage-backed		6,079		194		143		1		6,222		195
Private label mortgage-backed		20,545		281		1,413		243		21,958		524
Other asset backed		52,958		172		17,763		219		70,721		391
Obligations of states and political subdivisions		113,078		4,014		14,623		745		127,701		4,759
Corporate		25,546		292		2,810		107		28,356		399
Trust preferred		—		—		2,579		343		2,579		343
Foreign government		1,613		13		—		—		1,613		13
Total	$	286,522	$	5,739	$	68,405	$	1,902	$	354,927	$	7,641

Trust preferred securities

The following table breaks out our trust preferred securities in further detail as of December 31:

	2017					2016
	Fair Value		Net Unrealized Loss			Fair Value		Net Unrealized Loss
	(In thousands)
Trust preferred securities
Rated issues	$	1,882	$	(69	)	$	1,800	$	(123	)
Unrated issues		920		(58	)		779		(220	)

Private label residential mortgage backed securities below investment grade

At December 31, 2017, three private label mortgage-backed securities had credit related OTTI and are summarized as follows:

	Senior Security		Super Senior Security		Senior Support Security		Total
	(In thousands)
As of December 31, 2017
Fair value	$	1,033	$	966	$	61	$	2,060
Amortized cost		891		800		—		1,691
Non-credit unrealized loss		—		—		—		—
Unrealized gain		142		166		61		369
Cumulative credit related OTTI		757		457		380		1,594

Credit losses recognized in earnings on securities available for sale

A roll forward of credit losses recognized in earnings on securities available for sale for the years ending December 31 follow:

	2017		2016		2015
	(In thousands)
Balance at beginning of year	$	1,594	$	1,594	$	1,844
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		—		—		—
Decrease to credit losses on securities for which OTTI was previously recognized as a result of disposal		—		—		(250	)
Total	$	1,594	$	1,594	$	1,594

Amortized cost and fair value of securities available for sale by contractual maturity

The amortized cost and fair value of securities available for sale at December 31, 2017, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	31,572	$	31,589
Maturing after one year but within five years		93,867		93,687
Maturing after five years but within ten years		73,967		74,150
Maturing after ten years		53,613		52,814
		253,019		252,240
U.S. agency residential mortgage-backed		137,785		137,918
U.S. agency commercial mortgage-backed		9,894		9,760
Private label mortgage-backed		29,011		29,109
Other asset backed		93,811		93,898
Total	$	523,520	$	522,925

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 years ended December 31 follow:

	Proceeds		Realized Gains		Losses
	(In thousands)
2017	$	17,308	$	218	$	3
2016		64,103		354		53
2015		12,037		75		—

LOANS AND PAYMENT PLAN RECEIVABLES (Tables)

12 Months Ended

Dec. 31, 2017

LOANS AND PAYMENT PLAN RECEIVABLES [Abstract]

Loan portfolios

Our loan portfolios at December 31 follow:

	2017		2016
	(In thousands)
Real estate (1)
Residential first mortgages	$	672,592	$	453,348
Residential home equity and other junior mortgages		136,560		105,550
Construction and land development		143,188		77,287
Other (2)		538,880		525,748
Consumer		291,091		234,632
Commercial		231,786		206,607
Agricultural		4,720		5,076
Total loans	$	2,018,817	$	1,608,248

(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.

Analysis of allowance for loan losses by portfolio segment

An analysis of the allowance for loan losses by portfolio segment for the years ended December 31 follows:

	Commercial			Mortgage			Installment			Payment Plan Receivables			Subjective Allocation			Total
	(In thousands)
2017
Balance at beginning of period	$	4,880		$	8,681		$	1,011		$	—		$	5,662		$	20,234
Additions (deductions)
Provision for loan losses		(327	)		(567	)		360			—			1,733			1,199
Recoveries credited to allowance		1,497			1,741			967			—			—			4,205
Loans charged against the allowance		(455	)		(1,122	)		(1,474	)		—			—			(3,051	)
Balance at end of period	$	5,595		$	8,733		$	864		$	—		$	7,395		$	22,587

2016
Balance at beginning of period	$	5,670		$	10,391		$	1,181		$	56		$	5,272		$	22,570
Additions (deductions)
Provision for loan losses		(1,945	)		(158	)		401			(4	)		397			(1,309	)
Recoveries credited to allowance		2,472			1,047			1,100			—			—			4,619
Loans charged against the allowance		(1,317	)		(2,599	)		(1,671	)		—			—			(5,587	)
Reclassification to loans held for sale		—			—			—			(52	)		(7	)		(59	)
Balance at end of period	$	4,880		$	8,681		$	1,011		$	—		$	5,662		$	20,234

2015
Balance at beginning of period	$	5,445		$	13,444		$	1,814		$	64		$	5,223		$	25,990
Additions (deductions)
Provision for loan losses		(737	)		(1,744	)		(274	)		(8	)		49			(2,714	)
Recoveries credited to allowance		2,656			1,258			1,108			—			—			5,022
Loans charged against the allowance		(1,694	)		(2,567	)		(1,467	)		—			—			(5,728	)
Balance at end of period	$	5,670		$	10,391		$	1,181		$	56		$	5,272		$	22,570

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)
2017
Allowance for loan losses:
Individually evaluated for impairment	$	837	$	5,725	$	277	$	—	$	6,839
Collectively evaluated for impairment		4,758		3,008		587		7,395		15,748
Total ending allowance balance	$	5,595	$	8,733	$	864	$	7,395	$	22,587

Loans
Individually evaluated for impairment	$	8,420	$	53,179	$	3,945			$	65,544
Collectively evaluated for impairment		847,140		799,629		313,005				1,959,774
Total loans recorded investment		855,560		852,808		316,950				2,025,318
Accrued interest included in recorded investment		2,300		3,278		923				6,501
Total loans	$	853,260	$	849,530	$	316,027			$	2,018,817

2016
Allowance for loan losses:
Individually evaluated for impairment	$	2,244	$	6,579	$	329	$	—	$	9,152
Collectively evaluated for impairment		2,636		2,102		682		5,662		11,082
Total ending allowance balance	$	4,880	$	8,681	$	1,011	$	5,662	$	20,234

Loans
Individually evaluated for impairment	$	15,767	$	59,151	$	4,913			$	79,831
Collectively evaluated for impairment		790,228		481,828		261,474				1,533,530
Total loans recorded investment		805,995		540,979		266,387				1,613,361
Accrued interest included in recorded investment		1,978		2,364		771				5,113
Total loans	$	804,017	$	538,615	$	265,616			$	1,608,248

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”) at December 31 follow:

	90+ and Still Accruing		Non- Accrual		Total Non- Performing Loans
	(In thousands)
2017
Commercial
Income producing - real estate	$	—	$	30	$	30
Land, land development and construction - real estate		—		9		9
Commercial and industrial		—		607		607
Mortgage
1-4 family		—		5,130		5,130
Resort lending		—		1,223		1,223
Home equity - 1st lien		—		326		326
Home equity - 2nd lien		—		316		316
Purchased loans		—		—		—
Installment
Home equity - 1st lien		—		141		141
Home equity - 2nd lien		—		159		159
Boat lending		—		100		100
Recreational vehicle lending		—		25		25
Other		—		118		118
Total recorded investment	$	—	$	8,184	$	8,184
Accrued interest included in recorded investment	$	—	$	—	$	—
2016
Commercial
Income producing - real estate	$	—	$	628	$	628
Land, land development and construction - real estate		—		105		105
Commercial and industrial		—		4,430		4,430
Mortgage
1-4 family		—		5,248		5,248
Resort lending		—		1,507		1,507
Home equity - 1st lien		—		222		222
Home equity - 2nd lien		—		317		317
Purchased loans		—		—		—
Installment
Home equity - 1st lien		—		266		266
Home equity - 2nd lien		—		289		289
Boat lending		—		219		219
Recreational vehicle lending		—		21		21
Other		—		112		112
Total recorded investment	$	—	$	13,364	$	13,364
Accrued interest included in recorded investment	$	—	$	—	$	—

Aging analysis of loans by class

An aging analysis of loans by class at December 31 follows:

	Loans Past Due								Loans not Past Due		Total Loans
	30-59 days		60-89 days		90+ days		Total		Loans not Past Due		Total Loans
	(In thousands)
2017
Commercial
Income producing - real estate	$	—	$	—	$	30	$	30	$	290,466	$	290,496
Land, land development and construction - real estate		9		—		—		9		70,182		70,191
Commercial and industrial		60		—		44		104		494,769		494,873
Mortgage
1-4 family		1,552		802		5,130		7,484		625,638		633,122
Resort lending		713		—		1,223		1,936		88,620		90,556
Home equity - 1st lien		308		38		326		672		34,689		35,361
Home equity - 2nd lien		353		155		316		824		58,834		59,658
Purchased loans		7		—		—		7		34,104		34,111
Installment
Home equity - 1st lien		90		11		141		242		9,213		9,455
Home equity - 2nd lien		217		94		159		470		9,001		9,471
Boat lending		59		36		100		195		129,777		129,972
Recreational vehicle lending		28		20		25		73		92,737		92,810
Other		275		115		118		508		74,734		75,242
Total recorded investment	$	3,671	$	1,271	$	7,612	$	12,554	$	2,012,764	$	2,025,318
Accrued interest included in recorded investment	$	43	$	22	$	—	$	65	$	6,436	$	6,501

2016
Commercial
Income producing - real estate	$	—	$	—	$	383	$	383	$	287,255	$	287,638
Land, land development and construction - real estate		74		—		31		105		51,670		51,775
Commercial and industrial		100		1,385		66		1,551		465,031		466,582
Mortgage
1-4 family		2,361		869		5,248		8,478		306,063		314,541
Resort lending		—		—		1,507		1,507		101,541		103,048
Home equity - 1st lien		149		—		222		371		28,645		29,016
Home equity - 2nd lien		470		218		317		1,005		54,232		55,237
Purchased loans		13		2		—		15		39,122		39,137
Installment
Home equity - 1st lien		311		48		266		625		12,025		12,650
Home equity - 2nd lien		238		41		289		568		13,390		13,958
Boat lending		184		33		219		436		102,489		102,925
Recreational vehicle lending		68		33		21		122		74,413		74,535
Other		289		30		112		431		61,888		62,319
Total recorded investment	$	4,257	$	2,659	$	8,681	$	15,597	$	1,597,764	$	1,613,361
Accrued interest included in recorded investment	$	45	$	19	$	—	$	64	$	5,049	$	5,113

Impaired loans

Impaired loans are as follows :

	December 31,
	2017		2016
	(In thousands)
Impaired loans with no allocated allowance
TDR	$	349	$	1,782
Non - TDR		175		1,107
Impaired loans with an allocated allowance
TDR - allowance based on collateral		2,482		3,527
TDR - allowance based on present value cash flow		62,113		72,613
Non - TDR - allowance based on collateral		148		491
Total impaired loans	$	65,267	$	79,520

Amount of allowance for loan losses allocated
TDR - allowance based on collateral	$	684	$	1,868
TDR - allowance based on present value cash flow		6,089		7,146
Non - TDR - allowance based on collateral		66		138
Total amount of allowance for loan losses allocated	$	6,839	$	9,152

Impaired loans by class as of December 31 are as follows (1):

	2017						2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
With no related allowance recorded:
Commercial
Income producing - real estate	$	—	$	—	$	—	$	517	$	768	$	—
Land, land development & construction-real estate		—		—		—		31		709		—
Commercial and industrial		524		549		—		2,341		3,261		—
Mortgage
1-4 family		2		469		—		2		387		—
Resort lending		—		—		—		—		—		—
Home equity - 1st lien		—		—		—		—		—		—
Home equity - 2nd lien		—		—		—		—		—		—
Installment
Home equity - 1st lien		1		69		—		—		66		—
Home equity - 2nd lien		—		—		—		—		—		—
Boat lending		—		—		—		—		—		—
Recreational vehicle lending		—		—		—		—		—		—
Other		—		—		—		—		—		—
		527		1,087		—		2,891		5,191		—

	2017						2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
With an allowance recorded:
Commercial
Income producing - real estate		5,195		5,347		347		7,737		7,880		554
Land, land development & construction-real estate		166		194		9		239		244		36
Commercial and industrial		2,535		2,651		481		4,902		5,246		1,654
Mortgage
1-4 family		36,848		38,480		3,454		41,701		43,479		4,100
Resort lending		15,978		16,046		2,210		16,898		16,931		2,453
Home equity - 1st lien		173		236		43		235		242		10
Home equity - 2nd lien		178		213		18		315		398		16
Installment
Home equity - 1st lien		1,667		1,804		108		1,994		2,117		118
Home equity - 2nd lien		1,793		1,805		140		2,415		2,443		182
Boat lending		1		5		1		1		6		1
Recreational vehicle lending		90		90		5		109		108		6
Other		393		418		23		394		426		22
		65,017		67,289		6,839		76,940		79,520		9,152
Total
Commercial
Income producing - real estate		5,195		5,347		347		8,254		8,648		554
Land, land development & construction-real estate		166		194		9		270		953		36
Commercial and industrial		3,059		3,200		481		7,243		8,507		1,654
Mortgage
1-4 family		36,850		38,949		3,454		41,703		43,866		4,100
Resort lending		15,978		16,046		2,210		16,898		16,931		2,453
Home equity - 1st lien		173		236		43		235		242		10
Home equity - 2nd lien		178		213		18		315		398		16
Installment
Home equity - 1st lien		1,668		1,873		108		1,994		2,183		118
Home equity - 2nd lien		1,793		1,805		140		2,415		2,443		182
Boat lending		1		5		1		1		6		1
Recreational vehicle lending		90		90		5		109		108		6
Other		393		418		23		394		426		22
Total	$	65,544	$	68,376	$	6,839	$	79,831	$	84,711	$	9,152
Accrued interest included in recorded investment	$	277					$	311

(1)

There were no impaired purchased mortgage loans at December 31, 2017 or 2016.

Average recorded investment in and interest income earned on impaired loans by class

	2017				2016				2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
With no related allowance recorded:
Commercial
Income producing - real estate	$	177	$	—	$	609	$	2	$	4,520	$	387
Land, land development & construction-real estate		6		—		330		7		952		79
Commercial and industrial		751		22		961		54		2,125		257
Mortgage
1-4 family		52		21		10		16		19		11
Resort lending		—		—		—		—		12		—
Home equity - 1st lien		—		—		—		—		—		—
Home equity - 2nd lien		—		—		—		—		—		—
Installment
Home equity - 1st lien		1		6		—		5		—		5
Home equity - 2nd lien		—		—		3		—		—		—
Boat lending		—		—		—		—		—		—
Recreational vehicle lending		—		—		—		—		—		—
Other		—		—		—		—		—		—
		987		49		1,913		84		7,628		739
With an allowance recorded:
Commercial
Income producing - real estate		7,059		369		8,069		427		12,677		439
Land, land development & construction-real estate		183		8		1,129		31		2,219		54
Commercial and industrial		3,298		132		5,723		189		6,663		104
Mortgage
1-4 family		39,143		1,774		44,923		1,918		50,421		2,140
Resort lending		16,383		616		17,544		619		18,448		670
Home equity - 1st lien		209		5		226		10		161		8
Home equity - 2nd lien		209		7		248		14		172		13
Installment
Home equity - 1st lien		1,832		128		2,185		147		2,539		176
Home equity - 2nd lien		2,126		112		2,661		162		3,055		193
Boat lending		1		1		2		1		3		1
Recreational vehicle lending		100		5		115		6		127		7
Other		377		25		433		28		533		30
		70,920		3,182		83,258		3,552		97,018		3,835

	2017				2016				2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Total
Commercial
Income producing - real estate		7,236		369		8,678		429		17,197		826
Land, land development & construction-real estate		189		8		1,459		38		3,171		133
Commercial and industrial		4,049		154		6,684		243		8,788		361
Mortgage
1-4 family		39,195		1,795		44,933		1,934		50,440		2,151
Resort lending		16,383		616		17,544		619		18,460		670
Home equity - 1st lien		209		5		226		10		161		8
Home equity - 2nd lien		209		7		248		14		172		13
Installment
Home equity - 1st lien		1,833		134		2,185		152		2,539		181
Home equity - 2nd lien		2,126		112		2,664		162		3,055		193
Boat lending		1		1		2		1		3		1
Recreational vehicle lending		100		5		115		6		127		7
Other		377		25		433		28		533		30
Total	$	71,907	$	3,231	$	85,171	$	3,636	$	104,646	$	4,574

(1)

There were no impaired payment plan receivables or purchased mortgage loans during the years ending December 31, 2017, 2016 and 2015.

Troubled debt restructurings

Troubled debt restructurings at December 31 follow:

	2017
	Commercial		Retail (1)			Total
	(In thousands)
Performing TDR's	$	7,748	$	52,367		$	60,115
Non-performing TDR's (2)		323		4,506	⁽³⁾		4,829
Total	$	8,071	$	56,873		$	64,944

	2016
	Commercial		Retail (1)			Total
	(In thousands)
Performing TDR's	$	10,560	$	59,726		$	70,286
Non-performing TDR's (2)		3,565		4,071	⁽³⁾		7,636
Total	$	14,125	$	63,797		$	77,922

(1)

Retail loans include mortgage and installment loan segments.

(2)

Included in non-performing loans table above.

(3)

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

Troubled debt restructuring during the period

Loans that have been classified as troubled debt restructurings during the years ended December 31 follow (1):

	Number of Contracts		Pre-modification Recorded Balance		Post-modification Recorded Balance
	(Dollars in thousands)
2017
Commercial
Income producing - real estate		—	$	—	$	—
Land, land development & construction-real estate		—		—		—
Commercial and industrial		15		925		925
Mortgage
1-4 family		6		456		462
Resort lending		1		189		189
Home equity - 1st lien		—		—		—
Home equity - 2nd lien		—		—		—
Installment
Home equity - 1st lien		3		86		90
Home equity - 2nd lien		10		391		394
Boat lending		—		—		—
Recreational vehicle lending		—		—		—
Other		2		74		75
Total		37	$	2,121	$	2,135
2016
Commercial
Income producing - real estate		4	$	290	$	290
Land, land development & construction-real estate		—		—		—
Commercial and industrial		9		2,044		2,027
Mortgage
1-4 family		9		927		1,004
Resort lending		1		116		117
Home equity - 1st lien		1		107		78
Home equity - 2nd lien		2		77		78
Installment
Home equity - 1st lien		6		141		145
Home equity - 2nd lien		6		154		157
Boat lending		—		—		—
Recreational vehicle lending		—		—		—
Other		2		46		46
Total		40	$	3,902	$	3,942

	Number of Contracts		Pre-modification Recorded Balance		Post-modification Recorded Balance
	(Dollars in thousands)
2015
Commercial
Income producing - real estate		2	$	229	$	227
Land, land development & construction-real estate		—		—		—
Commercial and industrial		17		3,188		2,960
Mortgage
1-4 family		8		1,345		1,128
Resort lending		1		313		307
Home equity - 1st lien		1		20		20
Home equity - 2nd lien		1		27		27
Installment
Home equity - 1st lien		6		220		186
Home equity - 2nd lien		8		228		217
Boat lending		—		—		—
Recreational vehicle lending		—		—		—
Other		2		19		25
Total		46	$	5,589	$	5,097

(1)

There were no payment plan receivables or purchased mortgage loans classified as troubled debt restructurings during the years ending December 31, 2017, 2016 and 2015.

Troubled debt restructuring during the past twelve months that subsequently defaulted

Loans that have been classified as troubled debt restructured during the past twelve months and that have subsequently defaulted during the years ended December 31 follows:

	Number of Contracts		Recorded Balance
	(Dollars in thousands)
2017
Commercial
Income producing - real estate		—	$	—
Land, land development & construction-real estate		—		—
Commercial and industrial		6		164
Mortgage
1-4 family		—		—
Resort lending		—		—
Home equity - 1st lien		—		—
Home equity - 2nd lien		—		—
Installment
Home equity - 1st lien		1		13
Home equity - 2nd lien		—		—
Boat lending		—		—
Recreational vehicle lending		—		—
Other		—		—
Total		7	$	177

	Number of Contracts		Recorded Balance
	(Dollars in thousands)

2016
Commercial
Income producing - real estate		—	$	—
Land, land development & construction-real estate		—		—
Commercial and industrial		1		1,767
Mortgage
1-4 family		—		—
Resort lending		—		—
Home equity - 1st lien		—		—
Home equity - 2nd lien		—		—
Installment
Home equity - 1st lien		—		—
Home equity - 2nd lien		—		—
Boat lending		—		—
Recreational vehicle lending		—		—
Other		—		—
Total		1	$	1,767

2015
Commercial
Income producing - real estate		—	$	—
Land, land development & construction-real estate		—		—
Commercial and industrial		2		157
Mortgage
1-4 family		2		73
Resort lending		—		—
Home equity - 1st lien		—		—
Home equity - 2nd lien		—		—
Installment
Home equity - 1st lien		—		—
Home equity - 2nd lien		—		—
Boat lending		—		—
Recreational vehicle lending		—		—
Other		1		4
Total		5	$	234

Summary of loan ratings by loan class

The following table summarizes loan ratings by loan class for our commercial loan segment at December 31:

	Commercial
	Non-watch 1-6		Watch 7-8		Substandard Accrual 9		Non- Accrual 10-11		Total
	(In thousands)
2017
Income producing - real estate	$	288,869	$	1,293	$	304	$	30	$	290,496
Land, land development and construction - real estate		70,122		60		—		9		70,191
Commercial and industrial		463,570		28,351		2,345		607		494,873
Total	$	822,561	$	29,704	$	2,649	$	646	$	855,560
Accrued interest included in total	$	2,198	$	94	$	8	$	—	$	2,300

	Commercial
	Non-watch 1-6		Watch 7-8		Substandard Accrual 9		Non- Accrual 10-11		Total
	(In thousands)
2016
Income producing - real estate	$	282,886	$	3,787	$	337	$	628	$	287,638
Land, land development and construction - real estate		51,603		67		—		105		51,775
Commercial and industrial		449,365		9,788		2,998		4,431		466,582
Total	$	783,854	$	13,642	$	3,335	$	5,164	$	805,995
Accrued interest included in total	$	1,915	$	52	$	11	$	—	$	1,978

	Mortgage (1)
	1-4 Family		Resort Lending		Home Equity 1st Lien		Home Equity 2nd Lien		Purchased Loans		Total
	(In thousands)
2017
800 and above	$	70,540	$	11,625	$	6,169	$	7,842	$	7,983	$	104,159
750-799		265,907		36,015		16,561		24,126		17,651		360,260
700-749		146,302		22,099		7,317		15,012		7,937		198,667
650-699		83,695		12,145		2,793		7,420		426		106,479
600-649		25,087		3,025		1,189		2,512		—		31,813
550-599		15,136		2,710		518		1,118		—		19,482
500-549		9,548		1,009		397		1,156		—		12,110
Under 500		2,549		269		260		385		—		3,463
Unknown		14,358		1,659		157		87		114		16,375
Total	$	633,122	$	90,556	$	35,361	$	59,658	$	34,111	$	852,808
Accrued interest included in total	$	2,361	$	371	$	157	$	294	$	95	$	3,278

2016
800 and above	$	36,534	$	10,484	$	6,048	$	8,392	$	8,462	$	69,920
750-799		102,382		41,999		10,006		20,113		20,984		195,484
700-749		69,337		24,727		5,706		12,360		9,115		121,245
650-699		50,621		13,798		4,106		8,167		437		77,129
600-649		25,270		5,769		1,674		3,067		—		35,780
550-599		13,747		3,030		455		1,699		—		18,931
500-549		9,215		1,438		486		981		—		12,120
Under 500		5,145		92		255		279		—		5,771
Unknown		2,290		1,711		280		179		139		4,599
Total	$	314,541	$	103,048	$	29,016	$	55,237	$	39,137	$	540,979
Accrued interest included in total	$	1,466	$	450	$	111	$	226	$	111	$	2,364

(1)

Credit scores have been updated within the last twelve months.

	Installment (1)
	Home Equity 1st Lien		Home Equity 2nd Lien		Boat Lending		Recreational Vehicle Lending		Other		Total
	(In thousands)
2017
800 and above	$	815	$	825	$	15,531	$	16,754	$	7,060	$	40,985
750-799		1,912		1,952		73,251		52,610		28,422		158,147
700-749		1,825		2,142		28,922		17,993		20,059		70,941
650-699		1,840		2,036		9,179		4,270		9,258		26,583
600-649		1,567		1,065		2,052		754		2,402		7,840
550-599		950		1,028		640		305		871		3,794
500-549		499		303		281		83		475		1,641
Under 500		32		88		57		6		194		377
Unknown		15		32		59		35		6,501		6,642
Total	$	9,455	$	9,471	$	129,972	$	92,810	$	75,242	$	316,950
Accrued interest included in total	$	39	$	43	$	346	$	254	$	241	$	923

2016
800 and above	$	1,354	$	1,626	$	21,422	$	23,034	$	8,911	$	56,347
750-799		2,478		3,334		50,508		35,827		21,918		114,065
700-749		1,920		2,686		20,045		11,049		13,183		48,883
650-699		2,852		2,541		7,559		3,205		8,913		25,070
600-649		1,691		1,775		1,846		821		2,269		8,402
550-599		1,231		1,063		882		280		833		4,289
500-549		981		692		440		189		511		2,813
Under 500		114		220		73		16		211		634
Unknown		29		21		150		114		5,570		5,884
Total	$	12,650	$	13,958	$	102,925	$	74,535	$	62,319	$	266,387
Accrued interest included in total	$	54	$	59	$	264	$	203	$	191	$	771

(1)

Credit scores have been updated within the last twelve months.

Other mortgage loans service's principal balances

Mortgage loans serviced for others are not reported as assets on the Consolidated Statements of Financial Condition. The principal balances of these loans at December 31 follow:

	2017		2016
	(In thousands)
Mortgage loans serviced for:
Fannie Mae	$	1,001,388	$	944,703
Freddie Mac		637,204		622,885
Ginnie Mae		130,284		85,290
FHLB		47,527		6,031
Other		34		84
Total	$	1,816,437	$	1,658,993

Schedule of capitalized mortgage loan servicing rights

An analysis of capitalized mortgage loan servicing rights for the years ended December 31 follows:

	2017			2016			2015
	(In thousands)
Balance at beginning of period	$	13,671		$	12,436		$	12,106
Change in accounting (see note #1)		542			—			—
Balance at beginning of period, as adjusted	$	14,213		$	12,436		$	12,106
Originated servicing rights capitalized		4,230			3,119			2,697
Amortization		—			(2,850	)		(2,868	)
Change in valuation allowance		—			966			501
Change in fair value due to price		(718	)		—			—
Change in fair value due to pay downs		(2,026	)		—			—
Balance at end of year	$	15,699		$	13,671		$	12,436
Valuation allowance	$	—		$	2,306		$	3,272
Loans sold and serviced that have had servicing rights capitalized	$	1,815,668		$	1,657,996		$	1,643,086

OTHER REAL ESTATE (Tables)

12 Months Ended

Dec. 31, 2017

OTHER REAL ESTATE [Abstract]

Summary of other real estate activity

A summary of other real estate activity for the years ended December 31 follows (1):

	2017			2016			2015
	(In thousands)
Balance at beginning of year, net of valuation allowance	$	4,956		$	7,070		$	6,370
Loans transferred to other real estate		1,735			2,355			6,694
Sales of other real estate		(4,737	)		(3,596	)		(5,502	)
Additions to valuation allowance charged to expense		(326	)		(873	)		(492	)
Balance at end of year, net of valuation allowance	$	1,628		$	4,956		$	7,070

(1)

Table excludes other repossessed assets totaling $0.02 and $0.05 million at December 31, 2017 and 2016, respectively.

Valuation allowance for other real estate owned

An analysis of our valuation allowance for other real estate follows:

	2017			2016			2015
	(In thousands)
Balance at beginning of year	$	793		$	1,692		$	2,511
Additions charged to expense		326			873			492
Direct write-downs upon sale		(996	)		(1,772	)		(1,311	)
Balance at end of year	$	123		$	793		$	1,692

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2017

PROPERTY AND EQUIPMENT [Abstract]

Summary of property and equipment

A summary of property and equipment at December 31 follows:

	2017			2016
	(In thousands)
Land	$	16,199		$	15,486
Buildings		55,434			54,656
Equipment		69,604			72,090
		141,237			142,232
Accumulated depreciation and amortization		(102,088	)		(102,057	)
Property and equipment, net	$	39,149		$	40,175

INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2017

INTANGIBLE ASSETS [Abstract]

Other intangible assets, net of amortization

Intangible assets, net of amortization, at December 31 follows:

	2017				2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Amortized intangible assets - core deposits	$	6,118	$	4,532	$	6,118	$	4,186

Estimated amortization of other intangible assets

A summary of estimated core deposit intangible amortization at December 31, 2017, follows:

	(In thousands)
2018	$	346
2019		346
2020		346
2021		346
2022		202
Total	$	1,586

DEPOSITS (Tables)

12 Months Ended

Dec. 31, 2017

DEPOSITS [Abstract]

Summary of interest expense on deposits

A summary of interest expense on deposits for the years ended December 31 follows:

	2017		2016		2015
	(In thousands)
Savings and interest bearing checking	$	1,530	$	1,115	$	1,056
Time deposits under $100,000		1,594		1,628		1,586
Time deposits of $100,000 or more		3,651		2,198		1,367
Total	$	6,775	$	4,941	$	4,009

Summary of maturity of time deposits

A summary of the maturity of time deposits at December 31, 2017, follows:

	(In thousands)
2018	$	446,835
2019		65,810
2020		15,595
2021		17,275
2022		8,761
2023 and thereafter		542
Total	$	554,818

Summary of reciprocal deposits

A summary of reciprocal deposits at December 31 follows:

	2017		2016
	(In thousands)
Demand	$	10,146	$	3,055
Money market		2,846		4,350
Time		37,987		31,252
Total	$	50,979	$	38,657

OTHER BORROWINGS (Tables)

12 Months Ended

Dec. 31, 2017

OTHER BORROWINGS [Abstract]

Summary of other borrowings

A summary of other borrowings at December 31 follows:

	2017		2016
	(In thousands)
Advances from the FHLB	$	47,841	$	9,428
Federal funds purchased		6,750		—
Other		9		5
Total	$	54,600	$	9,433

Schedule of maturity dates and weighted average interest rates FHLB

The maturity dates and weighted average interest rates of FHLB advances at December 31 follow:

	2017					2016
	Amount		Rate			Amount		Rate
	(Dollars in thousands)
Fixed-rate advances
2017						$	1,192		7.04	%
2018	$	19,910		2.43	%		5,183		5.99
2019		10,000		1.60			—
2020		7,931		3.80			3,053		7.49
Total fixed-rate advances		37,841		2.50			9,428		6.61
Variable-rate advances - 2018		10,000		1.67			—
Total advances	$	47,841		2.33	%	$	9,428		6.61	%

Schedule of repayments of federal home loan bank advances

A summary of contractually required repayments of FHLB advances at December 31, 2017 follow:

	(In thousands)
2018	$	30,042
2019		10,143
2020		7,656
Total	$	47,841

SUBORDINATED DEBENTURES (Tables)

12 Months Ended

Dec. 31, 2017

SUBORDINATED DEBENTURES [Abstract]

Schedule of information regarding subordinated debentures

Summary information regarding subordinated debentures as of December 31 follows:

		2017 and 2016
Entity Name	Issue Date	Subordinated Debentures		Trust Preferred Securities Issued		Common Stock Issued
		(In thousands)
IBC Capital Finance III	May 2007	$	12,372	$	12,000	$	372
IBC Capital Finance IV	September 2007		15,465		15,000		465
Midwest Guaranty Trust I	November 2002		7,732		7,500		232
		$	35,569	$	34,500	$	1,069

Schedule of subordinated debentures and trust preferred securities

Other key terms for the subordinated debentures and trust preferred securities that were outstanding at December 31, 2017 and 2016 follow:

Entity Name	Maturity Date	Interest Rate	First Permitted Redemption Date
IBC Capital Finance III	July 30, 2037	3 month LIBOR plus 1.60%	July 30, 2012
IBC Capital Finance IV	September 15, 2037	3 month LIBOR plus 2.85%	September 15, 2012
Midwest Guaranty Trust I	November 7, 2032	3 month LIBOR plus 3.45%	November 7, 2007

COMMITMENTS AND CONTINGENT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2017

COMMITMENTS AND CONTINGENT LIABILITIES [Abstract]

Financial instruments with off-balance sheet risk

A summary of financial instruments with off-balance sheet risk at December 31 follows:

	2017		2016
	(In thousands)
Financial instruments whose risk is represented by contract amounts
Commitments to extend credit	$	439,663	$	364,270
Standby letters of credit		4,596		3,140

SHAREHOLDERS' EQUITY AND INCOME PER COMMON SHARE (Tables)

12 Months Ended

Dec. 31, 2017

SHAREHOLDERS' EQUITY AND INCOME PER COMMON SHARE [Abstract]

Reconciliation of basic and diluted loss per share

A reconciliation of basic and diluted net income per common share for the years ended December 31 follows:

	2017		2016		2015
	(In thousands, except per share amounts)
Net income	$	20,475	$	22,766	$	20,017

Weighted average shares outstanding (1)		21,327		21,378		22,716
Effect of stock options		142		151		119
Stock units for deferred compensation plan for non-employee directors		121		115		112
Performance share units		60		48		—
Restricted stock units		—		35		233
Weighted average shares outstanding for calculation of diluted earnings per share		21,650		21,727		23,180

Net income per common share
Basic (1)	$	0.96	$	1.06	$	0.88
Diluted	$	0.95	$	1.05	$	0.86

(1)

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

INCOME TAX (Tables)

12 Months Ended

Dec. 31, 2017

INCOME TAX [Abstract]

Composition of income tax expense

The composition of income tax expense for the years ended December 31 follows:

	2017		2016		2015
	(In thousands)
Current expense	$	1,927	$	362	$	200
Deferred expense		10,071		9,756		9,128
Change in statutory rate		5,965		—		—
Valuation allowance - change in estimate		—		17		35
Income tax expense	$	17,963	$	10,135	$	9,363

Reconciliation of income tax expense computed by applying the statutory federal income tax rate

	2017			2016			2015
	(In thousands)
Statutory rate applied to income before income tax	$	13,453		$	11,515		$	10,283
Change in statutory rate		5,965			—			—
Tax-exempt income		(777	)		(534	)		(434	)
Bank owned life insurance		(372	)		(477	)		(449	)
Share-based compensation		(287	)		(348	)		—
Unrecognized tax benefit		(123	)		(155	)		(135	)
Non-deductible meals, entertainment and memberships		64			46			43
Net change in valuation allowance		—			17			35
Other, net		40			71			20
Income tax expense	$	17,963		$	10,135		$	9,363

Summary of deferred tax assets and deferred tax liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31 follow:

	2017		2016
	(In thousands)
Deferred tax assets
Alternative minimum tax credit carry forward	$	6,113	$	4,064
Allowance for loan losses		4,743		7,104
Loss carryforwards		3,752		17,131
Property and equipment		1,686		3,143
Purchase premiums, net		699		1,460
Share based payments		677		1,011
Litigation settlement		477		805
Unrealized loss on trading securities		283		486
Reserve for unfunded lending commitments		236		228
Deferred compensation		229		375
Other than temporary impairment charge on securities available for sale		210		400
Non accrual loan interest income		176		246
Loss reimbursement on sold loans reserve		140		196
Unrealized loss on securities available for sale		125		1,782
Vehicle service contract counterparty contingency reserve		117		500
Valuation allowance on other real estate		26		277
Other		123		1
Gross deferred tax assets		19,812		39,209
Valuation allowance		—		(1,071	)
Gross deferred tax assets net of valuation allowance		19,812		38,138

	2017		2016
	(In thousands)
Deferred tax liabilities
Capitalized mortgage loan servicing rights		3,297		4,785
Deferred loan fees		1,327		490
Unrealized gain on derivative financial instruments		72		—
Federal Home Loan Bank stock		27		45
Gross deferred tax liabilities		4,723		5,320
Deferred tax assets, net	$	15,089	$	32,818

Schedule of changes in unrecognized tax benefits

Changes in unrecognized tax benefits for the years ended December 31 follow:

	2017			2016			2015
	(In thousands)
Balance at beginning of year	$	840		$	976		$	1,091
Additions based on tax positions related to the current year		7			19			20
Reductions due to the statute of limitations		(123	)		(155	)		(135	)
Reductions due to settlements		—			—			—
Balance at end of year	$	724		$	840		$	976

SHARE BASED COMPENSATION AND BENEFIT PLANS (Tables)

12 Months Ended

Dec. 31, 2017

SHARE BASED COMPENSATION AND BENEFIT PLANS [Abstract]

Summary of 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, 2017		211,018		$	5.05
Granted		—
Exercised		(34,963	)		4.07
Forfeited		—
Expired		—
Outstanding at December 31, 2017		176,055		$	5.24		4.07	$	3,012
Vested and expected to vest at
December 31, 2017		176,055		$	5.24		4.07	$	3,012
Exercisable at December 31, 2017		176,055		$	5.24		4.07	$	3,012

Summary of non-vested restricted stock and stock units and transactions

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

	Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2017		296,422		$	14.52
Granted		68,473			21.07
Vested		(63,799	)		14.91
Forfeited		(10,569	)		15.66
Outstanding at December 31, 2017		290,527		$	15.88

Information regarding options exercised

Certain information regarding options exercised during the periods ending December 31 follows:

	2017		2016		2015
	(In thousands)
Intrinsic value	$	623	$	254	$	444
Cash proceeds received	$	142	$	85	$	137
Tax benefit realized	$	218	$	89	$	155

OTHER NON-INTEREST INCOME (Tables)

12 Months Ended

Dec. 31, 2017

OTHER NON-INTEREST INCOME [Abstract]

Schedule of other non-interest income

Other non-interest income for the years ended December 31 follows:

	2017		2016		2015
	(In thousands)
Investment and insurance commissions	$	1,968	$	1,647	$	1,827
ATM fees		1,446		1,496		1,551
Bank owned life insurance		1,061		1,124		1,282
Other		3,693		4,336		4,188
Total other non-interest income	$	8,168	$	8,603	$	8,848

DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2017

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 at December 31 follow:

	2017
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	15,000		3.7	$	245
Interest rate cap agreements		45,000		3.5		976
Total	$	60,000		3.6	$	1,221

No hedge designation
Rate-lock mortgage loan commitments	$	25,032		0.1	$	530
Mandatory commitments to sell mortgage loans		56,127		0.1		37
Pay-fixed interest rate swap agreements		75,990		6.2		292
Pay-variable interest rate swap agreements		75,990		6.2		(292	)
Purchased options		3,119		3.5		322
Written options		3,119		3.5		(322	)
Total	$	239,377		4.1	$	567

	2016
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
No hedge designation
Rate-lock mortgage loan commitments	$	26,658		0.1	$	646
Mandatory commitments to sell mortgage loans		61,954		0.1		630
Pay-fixed interest rate swap agreements		46,121		8.6		249
Pay-variable interest rate swap agreements		46,121		8.6		(249	)
Purchased options		3,119		4.5		238
Written options		3,119		4.5		(238	)
Total	$	187,092		4.4	$	1,276

Fair value of derivative instruments

Fair Values of Derivative Instruments

	Asset Derivatives						Liability Derivatives
	December 31,						December 31,
	2017			2016			2017			2016
	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	$	245	Other assets	$	—	Other liabilities	$	—	Other liabilities	$	—
Interest rate cap agreements	Other assets		976	Other assets		—	Other liabilities		—	Other liabilities		—
			1,221			—			—			—
Derivatives not designated as hedging instruments
Rate-lock mortgage loan commitments	Other assets		530	Other assets		646	Other liabilities		—	Other liabilities		—
Mandatory commitments to sell mortgage loans	Other assets		37	Other assets		630	Other liabilities		—	Other liabilities		—
Pay-fixed interest rate swap agreements	Other assets		631	Other assets		493	Other liabilities		339	Other liabilities		244
Pay-variable interest rate swap agreements	Other assets		339	Other assets		244	Other liabilities		631	Other liabilities		493
Purchased options	Other assets		322	Other assets		238	Other liabilities		—	Other liabilities		—
Written options	Other assets		—	Other assets		—	Other liabilities		322	Other liabilities		238
			1,859			2,251			1,292			975
Total derivatives		$	3,080		$	2,251		$	1,292		$	975

Effect of derivative financial instruments on consolidated statement of operation

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

	Year Ended December 31,
	Gain Recognized in Other Comprehensive Income (Loss) (Effective Portion)						Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)							Location of Gain (Loss) Recognized in Income (1)	Gain (Loss) Recognized in Income (1)
	2017		2016		2015			2017			2016		2015			2017			2016			2015
	(In thousands)
Cash Flow Hedges
Interest rate cap agreements	$	108	$	—	$	—		$	—		$	—	$	—		$	—		$	—		$	—
Pay-fixed interest rate swap agreements		216		—		—	Interest expense		(18	)		—		—	Interest expense		(12	)		—			—
Total	$	324	$	—	$	—		$	(18	)	$	—	$	—		$	(12	)	$	—		$	—
No hedge designation
Rate-lock mortgage loan commitments															Net gains on mortgage loans	$	(116	)	$	96		$	113
Mandatory commitments to sell mortgage loans															Net gains on mortgage loans		(593	)		561			253
Pay-fixed interest rate swap agreements															Interest income		43			746			(315	)
Pay-variable interest rate swap agreements															Interest income		(43	)		(746	)		315
Purchased options															Interest expense		84			116			122
Written options															Interest expense		(84	)		(116	)		(122	)
Total																$	(709	)	$	657		$	366

(1)

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

RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2017

Summary of loans to directors and executive officers

	2017			2016
	(In thousands)
Balance at beginning of year	$	415		$	190
New loans and advances		2,945			594
Repayments		(791	)		(369	)
Balance at end of year	$	2,569		$	415

LEASES (Tables)

12 Months Ended

Dec. 31, 2017

LEASES [Abstract]

Summary of future minimum lease payments under non-cancelable operating leases

A summary of future minimum lease payments under non-cancelable operating leases at December 31, 2017, follows:

	(In thousands)
2018	$	1,310
2019		974
2020		849
2021		460
2022		112
2023 and thereafter		387
Total	$	4,092

REGULATORY MATTERS (Tables)

12 Months Ended

Dec. 31, 2017

REGULATORY MATTERS [Abstract]

Actual capital amounts and ratios

Our actual capital amounts and ratios at December 31 follow:

	Actual					Minimum for Adequately Capitalized Institutions					Minimum for Well-Capitalized Institutions
	Amount		Ratio			Amount		Ratio			Amount	Ratio
	(Dollars in thousands)
2017
Total capital to risk-weighted assets
Consolidated	$	312,163		15.16	%	$	164,782		8.00	%	NA		NA
Independent Bank		290,188		14.10			164,675		8.00		$205,843		10.00	%

Tier 1 capital to risk-weighted assets
Consolidated	$	288,451		14.00	%	$	123,586		6.00	%	NA		NA
Independent Bank		266,476		12.95			123,506		6.00		$164,675		8.00	%

Common equity tier 1 capital to risk-weighted assets
Consolidated	$	255,934		12.43	%	$	92,690		4.50	%	NA		NA
Independent Bank		266,476		12.95			92,630		4.50		$133,798		6.50	%

Tier 1 capital to average assets
Consolidated	$	288,451		10.57	%	$	109,209		4.00	%	NA		NA
Independent Bank		266,476		9.78			109,041		4.00		$136,301		5.00	%

2016
Total capital to risk-weighted assets
Consolidated	$	286,289		15.86	%	$	144,413		8.00	%	NA		NA
Independent Bank		270,855		15.02			144,223		8.00		$180,279		10.00	%

Tier 1 capital to risk-weighted assets
Consolidated	$	265,405		14.70	%	$	108,309		6.00	%	NA		NA
Independent Bank		249,971		13.87			108,167		6.00		$144,223		8.00	%

Common equity tier 1 capital to risk-weighted assets
Consolidated	$	238,996		13.24	%	$	81,232		4.50	%	NA		NA
Independent Bank		249,971		13.87			81,126		4.50		$117,181		6.50	%

Tier 1 capital to average assets
Consolidated	$	265,405		10.50	%	$	101,112		4.00	%	NA		NA
Independent Bank		249,971		9.90			101,019		4.00		$126,274		5.00	%

NA - Not applicable

Components of regulatory capital

The components of our regulatory capital are as follows:

	Consolidated						Independent Bank
	December 31,						December 31,
	2017			2016			2017			2016
	(In thousands)
Total shareholders' equity	$	264,933		$	248,980		$	269,481		$	258,814
Add (deduct)
Accumulated other comprehensive loss for regulatory purposes		201			3,310			201			3,310
Intangible assets		(1,269	)		(1,159	)		(1,269	)		(1,159	)
Disallowed deferred tax assets		(7,931	)		(12,135	)		(1,937	)		(10,994	)
Common equity tier 1 capital		255,934			238,996			266,476			249,971
Qualifying trust preferred securities		34,500			34,500			—			—
Disallowed deferred tax assets		(1,983	)		(8,091	)		—			—
Tier 1 capital		288,451			265,405			266,476			249,971
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		23,712			20,884			23,712			20,884
Total risk-based capital	$	312,163		$	286,289		$	290,188		$	270,855

FAIR VALUE DISCLOSURES (Tables)

12 Months Ended

Dec. 31, 2017

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)
December 31, 2017:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	455	$	455	$	—	$	—
Securities available for sale
U.S. treasury		898		898		—		—
U.S. agency		25,682		—		25,682		—
U.S. agency residential mortgage-backed		137,918		—		137,918		—
U.S. agency commercial mortgage-backed		9,760		—		9,760		—
Private label mortgage-backed		29,109		—		29,109		—
Other asset backed		93,898		—		93,898		—
Obligations of states and political subdivisions		172,945		—		172,945		—
Corporate		47,853		—		47,853		—
Trust preferred		2,802		—		2,802		—
Foreign government		2,060		—		2,060		—
Loans held for sale		39,436		—		39,436		—
Capitalized mortgage loan servicing rights		15,699		—		—		15,699
Derivatives (1)		3,080		—		3,080		—
Liabilities
Derivatives (2)		1,292		—		1,292		—

Measured at Fair Value on a Non-recurring basis:
Assets
Impaired loans (3)
Commercial
Income producing - real estate		274		—		—		274
Land, land development & construction-real estate		9		—		—		9
Commercial and industrial		1,051		—		—		1,051
Mortgage
1-4 family		339		—		—		339
Resort lending		207		—		—		207
Other real estate (4)
Mortgage
1-4 family		186		—		—		186
Resort lending		65		—		—		65

(1)

Included in accrued income and other assets.

(2)

Included in accrued expenses and other liabilities.

(3)

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

(4)

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

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
December 31, 2016:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	410	$	410	$	—	$	—
Securities available for sale
U.S. agency		28,988		—		28,988		—
U.S. agency residential mortgage-backed		156,289		—		156,289		—
U.S. agency commercial mortgage-backed		12,632		—		12,632		—
Private label mortgage-backed		34,727		—		34,727		—
Other asset backed		146,709		—		146,709		—
Obligations of states and political subdivisions		170,899		—		170,899		—
Corporate		56,180		—		56,180		—
Trust preferred		2,579		—		2,579		—
Foreign government		1,613		—		1,613		—
Loans held for sale		35,946		—		35,946		—
Derivatives (1)		2,251		—		2,251		—
Liabilities
Derivatives (2)		975		—		975		—

Measured at Fair Value on a Non-recurring basis:
Assets
Capitalized mortgage loan servicing rights (3)		8,163		—		—		8,163
Impaired loans (4)
Commercial
Income producing - real estate		255		—		—		255
Land, land development & construction-real estate		54		—		—		54
Commercial and industrial		1,342		—		—		1,342
Mortgage
1-4 family		361		—		—		361
Other real estate (5)
Commercial
Income producing - real estate (6)		2,863		—		2,863		—
Land, land development & construction-real estate		176		—		—		176
Mortgage
1-4 family		98		—		—		98
Resort lending		133		—		—		133

(1)

Included in accrued income and other assets.

(2)

Included in accrued expenses and other liabilities.

(3)

Only includes servicing rights that are carried at fair value due to recognition of a valuation allowance.

(4)

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

(5)

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

(6)

Level 2 valuation is based on a signed purchase agreement.

Changes in fair value for financial assets

Changes in fair values of financial assets for which we have elected the fair value option for the years ended December 31 were as follows:

	Net Gains (Losses) on Assets						Mortgage Loan Servicing, net			Total Change in Fair Values Included in Current Period Earnings
	Securities			Mortgage Loans			Mortgage Loan Servicing, net
	(In thousands)
2017
Trading securities	$	45		$	—		$	—		$	45
Loans held for sale		—			407			—			407
Capitalized mortgage loan servicing rights		—			—			(2,744	)		(2,744	)

2016
Trading securities	$	262		$	—		$	—		$	262
Loans held for sale		—			(277	)		—			(277	)

2015
Trading securities	$	(55	)	$	—		$	—		$	(55	)
Loans held for sale		—			90			—			90

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

A reconciliation for all assets and (liabilities) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31 follows:

	Capitalized Mortgage Loan Servicing Rights
	2017			2016		2015
	(In thousands)
Beginning balance	$	—		$	—	$	—
Change in accounting		14,213			—		—
Beginning balance, as adjusted		14,213			—		—
Total losses realized and unrealized:
Included in results of operations		(2,744	)		—		—
Included in other comprehensive income		—			—		—
Purchases, issuances, settlements, maturities and calls		4,230			—		—
Transfers in and/or out of Level 3		—			—		—
Ending balance	$	15,699		$	—	$	—

Amount of total losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at December 31	$	(2,744	)	$	—	$	—

Quantitative information about Level 3 fair value measurements measured on a 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)
Capitalized mortgage loan servicing rights	$15,699	Present value of net servicing revenue	Discount rate Cost to service Ancillary income Float rate	9.88% to 11.00% $66 to $216 20 to 36 2.24% to 2.24%	10.11% $81 23 2.24%

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)

2017

Impaired loans

Commercial

$1,334

Sales comparison approach

Adjustment for differences between comparable sales

(32.5)% to 25.0%

(4.5

Mortgage

546

Sales comparison approach

Adjustment for differences between comparable sales

(21.1) to 34.1

(2.7

)

Other real estate-Mortgage

251

Sales comparison approach

Adjustment for differences between comparable sales

(33.0) to 44.5

(1.0

)

2016

Capitalized mortgage loan
servicing rights

$ 8,163

Present value of net servicing revenue

Discount rate

Cost to service

Ancillary income

Float rate

10.00% to 11.00%
$66 to $168
20 to 40
1.97% to 1.97%

10.07%
$ 83
24
1.97 %

Impaired loans

Commercial (1)

1,446

Sales comparison approach

Adjustment for differences between comparable sales

(25.0)% to 17.0%

(1.5) %

Mortgage

361

Sales comparison approach

Adjustment for differences between comparable sales

(23.2) to 19.4

(4.7)

Other real estate

Commercial

176

Sales comparison approach

Adjustment for differences between comparable sales

(35.0) to 0.0

(22.5)

Mortgage and installment

231

Sales comparison approach

Adjustment for differences between comparable sales

(26.8) to 2.8

(5.1)

(1)

Aggregate fair value and aggregate remaining contractual principal balance for loans held for sale

	Aggregate Fair Value		Difference		Contractual Principal
	(In thousands)
Loans held for sale
2017	$	39,436	$	844	$	38,592
2016		35,946		437		35,509
2015		27,866		714		27,152

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

FAIR VALUES OF FINANCIAL INSTRUMENTS [Abstract]

FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2017

Estimated fair values and recorded book balances

The estimated recorded book balances and fair values at December 31 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)
2017
Assets
Cash and due from banks	$	36,994	$	36,994	$	36,994	$	—	$	—
Interest bearing deposits		17,744		17,744		17,744		—		—
Interest bearing deposits - time		2,739		2,740		—		2,740		—
Trading securities		455		455		455		—		—
Securities available for sale		522,925		522,925		898		522,027		—
Federal Home Loan Bank and Federal Reserve Bank Stock		15,543		NA		NA		NA		NA
Net loans and loans held for sale		2,035,666		1,962,937		—		39,436		1,923,501
Accrued interest receivable		8,609		8,609		1		2,192		6,416
Derivative financial instruments		3,080		3,080		—		3,080		—
Liabilities
Deposits with no stated maturity (1)	$	1,845,716	$	1,845,716	$	1,845,716	$	—	$	—
Deposits with stated maturity (1)		554,818		551,489		—		551,489		—
Other borrowings		54,600		54,918		—		54,918		—
Subordinated debentures		35,569		29,946		—		29,946		—
Accrued interest payable		892		892		48		844		—
Derivative financial instruments		1,292		1,292		—		1,292		—
2016
Assets
Cash and due from banks	$	35,238	$	35,238	$	35,238	$	—	$	—
Interest bearing deposits		47,956		47,956		47,956		—		—
Interest bearing deposits - time		5,591		5,611		—		5,611		—
Trading securities		410		410		410		—		—
Securities available for sale		610,616		610,616		—		610,616		—
Federal Home Loan Bank and Federal Reserve Bank Stock		15,543		NA		NA		NA		NA
Net loans and loans held for sale (2)		1,655,335		1,629,587		—		67,321		1,562,266
Accrued interest receivable		7,316		7,316		5		2,364		4,947
Derivative financial instruments		2,251		2,251		—		2,251		—
Liabilities
Deposits with no stated maturity (1)	$	1,740,601	$	1,740,601	$	1,740,601	$	—	$	—
Deposits with stated maturity (1)		485,118		483,469		—		483,469		—
Other borrowings		9,433		10,371		—		10,371		—
Subordinated debentures		35,569		25,017		—		25,017		—
Accrued interest payable		932		932		21		911		—
Derivative financial instruments		975		975		—		975		—

(1)

(2)

Net loans and loans held for sale at December 31, 2016 include $31.4 million of payment plan receivables and commercial loans held for sale.

ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

12 Months Ended

Dec. 31, 2017

ACCUMULATED OTHER COMPREHENSIVE LOSS [Abstract]

Schedule of accumulated other comprehensive loss (AOCL), net of tax

A summary of changes in accumulated other comprehensive loss (“AOCL”), net of tax during the years ended December 31 follows:

	Unrealized Gains (Losses) on Securities Available for Sale			Dispropor- tionate Tax Effects from Securities Available for Sale			Unrealized Gains on Cash Flow Hedges		Dispropor- tionate Tax Effects from Cash Flow Hedges			Total
2017
Balances at beginning of period	$	(3,310	)	$	(5,798	)	$	—	$	—		$	(9,108	)
Cumulative effect of change in accounting		300			—			—		—			300
Balances at beginning of period, as adjusted		(3,010	)		(5,798	)		—		—			(8,808	)
Other comprehensive income before reclassifications		2,763			—			210		—			2,973
Amounts reclassified from AOCL		(140	)		—			12		—			(128	)
Net current period other comprehensive income		2,623			—			222		—			2,845
Disproportionate tax effects due to change in tax rate		(83	)		83			47		(47	)		—
Reclassification of certain deferred tax effects (1)		—			(83	)		—		47			(36	)
Balances at end of period	$	(470	)	$	(5,798	)	$	269	$	—		$	(5,999	)
2016
Balances at beginning of period	$	(238	)	$	(5,798	)	$	—	$	—		$	(6,036	)
Other comprehensive loss before reclassifications		(2,876	)		—			—		—			(2,876	)
Amounts reclassified from AOCL		(196	)		—			—		—			(196	)
Net current period other comprehensive loss		(3,072	)		—			—		—			(3,072	)
Balances at end of period	$	(3,310	)	$	(5,798	)	$	—	$	—		$	(9,108	)
2015
Balances at beginning of period	$	162		$	(5,798	)	$	—	$	—		$	(5,636	)
Other comprehensive loss before reclassifications		(351	)		—			—		—			(351	)
Amounts reclassified from AOCL		(49	)		—			—		—			(49	)
Net current period other comprehensive loss		(400	)		—			—		—			(400	)
Balances at end of period	$	(238	)	$	(5,798	)	$	—	$	—		$	(6,036	)

(1)

Amounts reclassified to accumulated deficit due to early adoption of ASU 2018-02. See note #1.

Summary of reclassifications out of each component of AOCL

A summary of reclassifications out of each component of AOCL for the years ended December 31 follows:

AOCL Component	Reclassified From AOCL		Affected Line Item in Consolidated Statements of Operations
	(In thousands)
2017
Unrealized gains (losses) on securities available for sale
	$	215	Net gains on securities
		—	Net impairment loss recognized in earnings
		215	Total reclassifications before tax
		75	Income tax expense
	$	140	Reclassifications, net of tax

Unrealized gains on cash flow hedges
	$	18	Interest expense
		6	Income tax expense
	$	12	Reclassification, net of tax
	$	128	Total reclassifications for the period, net of tax


2016
Unrealized gains (losses) on securities available for sale
	$	301	Net gains on securities
		—	Net impairment loss recognized in earnings
		301	Total reclassifications before tax
		105	Income tax expense
	$	196	Reclassifications, net of tax


2015
Unrealized gains (losses) on securities available for sale
	$	75	Net gains on securities
		—	Net impairment loss recognized in earnings
		75	Total reclassifications before tax
		26	Income tax expense
	$	49	Reclassifications, net of tax

INDEPENDENT BANK CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION (Tables)

12 Months Ended

Dec. 31, 2017

INDEPENDENT BANK CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION [Abstract]

CONDENSED STATEMENTS OF FINANCIAL CONDITION

	December 31,
	2017		2016
	(In thousands)
ASSETS
Cash and due from banks	$	16,454	$	9,515
Interest bearing deposits - time		5,000		5,000
Investment in subsidiaries		271,315		259,883
Accrued income and other assets		8,375		10,489
Total Assets	$	301,144	$	284,887

LIABILITIES AND SHAREHOLDERS’ EQUITY
Subordinated debentures	$	35,569	$	35,569
Accrued expenses and other liabilities		500		379
Shareholders’ equity		265,075		248,939
Total Liabilities and Shareholders’ Equity	$	301,144	$	284,887

CONDENSED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2017		2016			2015
	(In thousands)
OPERATING INCOME
Dividends from subsidiary	$	16,000	$	5,000		$	—
Interest income		29		27			72
Other income		41		153			31
Total Operating Income		16,070		5,180			103

OPERATING EXPENSES
Interest expense		1,347		1,167			1,021
Administrative and other expenses		714		554			560
Total Operating Expenses		2,061		1,721			1,581
Income (Loss) Before Income Tax and Equity in Undistributed Net Income of Subsidiaries		14,009		3,459			(1,478	)
Income tax expense (benefit)		1,587		(615	)		(542	)
Income (Loss) Before Equity in Undistributed Net Income of Subsidiaries		12,422		4,074			(936	)
Equity in undistributed net income of subsidiaries		8,053		18,692			20,953
Net Income	$	20,475	$	22,766		$	20,017

CONDENSED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Net Income	$	20,475		$	22,766		$	20,017
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FROM (USED) IN OPERATING ACTIVITIES
Deferred income tax expense (benefit)		2,146			(615	)		(542	)
Share based compensation		45			29			21
(Increase) decrease in accrued income and other assets		(32	)		246			5
Increase (decrease) in accrued expenses and other liabilities		121			1			(6	)
Equity in undistributed net income of subsidiaries		(8,053	)		(18,692	)		(20,953	)
Total Adjustments		(5,773	)		(19,031	)		(21,475	)
Net Cash From (Used) in Operating Activities		14,702			3,735			(1,458	)

CASH FLOW FROM INVESTING ACTIVITIES
Purchases of interest bearing deposits - time		(10,000	)		(7,500	)		(5,000	)
Maturity of interest bearing deposits - time		10,000			7,500			12,500
Return of capital from subsidiary		—			18,000			18,500
Net Cash From Investing Activities		—			18,000			26,000

CASH FLOW USED IN FINANCING ACTIVITIES
Dividends paid		(8,960	)		(7,274	)		(5,896	)
Proceeds from issuance of common stock		1,776			1,735			1,569
Share based compensation withholding obligation		(579	)		(627	)		(1,091	)
Repurchase of common stock		—			(16,854	)		(13,498	)
Net Cash Used in Financing Activities		(7,763	)		(23,020	)		(18,916	)
Net Increase (Decrease) in Cash and Cash Equivalents		6,939			(1,285	)		5,626
Cash and Cash Equivalents at Beginning of Year		9,515			10,800			5,174
Cash and Cash Equivalents at End of Year	$	16,454		$	9,515		$	10,800

MEPCO SALE (Tables)

12 Months Ended

Dec. 31, 2017

MEPCO SALE [Abstract]

Assets sold and liabilities assumed

Assets sold and liabilities assumed were as follows:

	May 1, 2017		December 31, 2016
	(In thousands)
Assets sold
Payment plan receivables	$	33,128	$	30,582
Commercial loans		525		794
Other assets		1,765		1,984
Total assets	$	35,418	$	33,360

Liabilities assumed	$	1,972	$	718

ACCOUNTING POLICIES (Details)
$ in Thousands, shares in Millions

3 Months Ended

12 Months Ended

Dec. 31, 2017

USD ($)

Employee

Payment

Dec. 31, 2017

USD ($)

Employee

Segment

Payment

Dec. 31, 2016

USD ($)

Segment

Dec. 31, 2015

USD ($)

Segment

Dec. 31, 2014

USD ($)

Percentage of loan portfolio secured by real estate

73.90%

Operating Segments [Abstract]

Number of reportable segments | Segment

Mortgage Loan Servicing Rights [Abstract]

Mortgage loan servicing fees

$ 4,400

$ 4,100

Loan Revenue Recognition [Abstract]

Number of past due days for commercial loan, installment loans and payment plan receivables

90 days

Number of consecutive payments for mortgage loans misses | Payment

Bank Owned Life Insurance [Abstract]

Number of lives of group flexible premium non-participating variable life insurance contract | Employee

266

Cumulative Effect Adjustments to Condensed Consolidated Statement of Financial Position [Abstract]

$ 15,089

32,818

15,699

2,789,355

2,548,950

(54,054)

(65,657)

(5,999)

(9,108)

264,933

248,980

$ 251,092

$ 250,371

$ 2,789,355

2,789,355

2,548,950

Originally Presented [Member]

$ 0

Cumulative Effect Adjustments to Condensed Consolidated Statement of Financial Position [Abstract]

32,818

13,671

2,548,950

(65,657)

(9,108)

248,980

Cumulative Retrospective Adjustments [Member]

2,548,950

Cumulative Effect Adjustments to Condensed Consolidated Statement of Financial Position [Abstract]

352

Change in Accounting Method and ASU 2017-08 [Member]

352

Cumulative Effect Adjustments to Condensed Consolidated Statement of Financial Position [Abstract]

249,332

Change in Accounting Method [Member]

2,549,302

Cumulative Effect Adjustments to Condensed Consolidated Statement of Financial Position [Abstract]

32,628

14,213

Change in Accounting Method [Member] | Cumulative Retrospective Adjustments [Member]

2,549,302

Cumulative Effect Adjustments to Condensed Consolidated Statement of Financial Position [Abstract]

^[1]

(190)

^[1]

542

352

Other Intangible Assets [Line Items]

^[1]

352

Minimum [Member]

Other Intangible Assets [Line Items]

10 years

Maximum [Member]

Building [Member] | Maximum [Member]

15 years

Property, Plant and Equipment [Line Items]

Equipment [Member] | Maximum [Member]

39 years

Property, Plant and Equipment [Line Items]

Dividend Reinvestment Plan [Member]

7 years

Stock Reserved [Line Items]

Common stock reserved for issuance (in shares) | shares

0.1

Long-Term Incentive Plans [Member]

Stock Reserved [Line Items]

Common stock reserved for issuance (in shares) | shares

0.5

ASU 2017-08 [Member]

Cumulative Effect Adjustments to Condensed Consolidated Statement of Financial Position [Abstract]

(65,605)

ASU 2017-08 [Member] | Cumulative Retrospective Adjustments [Member]

(8,808)

Cumulative Effect Adjustments to Condensed Consolidated Statement of Financial Position [Abstract]

^[2]

(300)

New Accounting Pronouncement, Effect of Early Adoption [Member] | Additional Premium Amortization on AFS Securities, Pre-tax [Member]

^[2]

300

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Cumulative effect of adjustments

460

New Accounting Pronouncement, Effect of Early Adoption [Member] | Additional Premium Amortization on AFS Securities, Net of Tax [Member]

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Cumulative effect of adjustments

300

New Accounting Pronouncement, Effect of Early Adoption [Member] | AOCI Decrease, Unrealized Losses AFS Securities, After Tax [Member]

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Cumulative effect of adjustments

$ (300)

ASU 2018-02 [Member]

Cumulative Effect Adjustments to Condensed Consolidated Statement of Financial Position [Abstract]

$ 40

[1]	Represents adjustment to capitalized mortgage loan servicing rights, deferred tax assets, net, and accumulated deficit to reflect the adoption of the fair value method of accounting for our capitalized mortgage loan servicing rights.
[2]	Represents adjustment to accumulated deficit and accumulated other comprehensive loss to reflect the adoption of ASU 2017-08.

RESTRICTIONS ON CASH AND DUE FROM BANKS (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
RESTRICTIONS ON CASH AND DUE FROM BANKS [Abstract]
Average reserve balances maintained	$ 5.2	$ 4.0
Reserve balances related to investment security transactions and merchant payment processing operations	$ 0.7	$ 2.4

SECURITIES (Details) $ in Thousands	12 Months Ended
SECURITIES (Details) $ in Thousands	Dec. 31, 2017 USD ($) Security Grade	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 523,520	$ 615,709
Unrealized gains	3,197	2,548
Unrealized losses	3,792	7,641
Fair value	522,925	610,616
OTTI recognized in accumulated other comprehensive loss	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	153,090	286,522
Less Than Twelve Months, Unrealized Losses	1,400	5,739
Twelve Months or More, Fair Value	108,033	68,405
Twelve Months or More, Unrealized Losses	2,392	1,902
Total, Fair value	261,123	354,927
Total, Unrealized Losses	3,792	7,641
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Balance at beginning of period	1,594	1,594	$ 1,844
Additions to credit losses on securities for which no previous OTTI was recognized	0	0	0
Increases to credit losses on securities for which OTTI was previously recognized	0	0	0
Decrease to credit losses on securities for which OTTI was previously recognized as a result of disposal	0	0	(250)
Balance at end of period	1,594	1,594	1,594
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Maturing within one year	31,572
Maturing after one year but within five years	93,867
Maturing after five years but within ten years	73,967
Maturing after ten years	53,613
Available-for-sale securities, debt maturities, amortized cost basis	253,019
U.S. agency residential mortgage-backed	137,785
U.S. agency commercial mortgage-backed	9,894
Private label mortgage-backed	29,011
Other asset backed	93,811
Total	523,520
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Maturing within one year	31,589
Maturing after one year but within five years	93,687
Maturing after five years but within ten years	74,150
Maturing after ten years	52,814
Total available-for-sale securities fair value	252,240
U.S. agency residential mortgage backed	137,918
U.S. agency commercial mortgage-backed	9,760
Private label mortgage-backed	29,109
Other asset backed	93,898
Total	522,925
Gain and losses realized on sale of securities available for sale [Abstract]
Proceeds	17,308	64,103	12,037
Realized gains	218	354	75
Losses	3	53	0
Trading Securities, Realized Gain (Loss)	50	260	(60)
Securities Disclosures [Abstract]
Pledged securities with book value	$ 900	$ 2,400
Shareholder equity threshold not exceeded by revenue or taxing authority amount	10.00%	10.00%
Cumulative Retrospective Adjustments [Member] \| ASU 2017-08 [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Adjustment in amortized cost of available for sale securities		$ (460)
U.S. Treasury [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 898
Unrealized gains	0
Unrealized losses	0
Fair value	898
U.S. Agency [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	25,667	28,909
Unrealized gains	82	159
Unrealized losses	67	80
Fair value	25,682	28,988
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	5,466	4,179
Less Than Twelve Months, Unrealized Losses	26	41
Twelve Months or More, Fair Value	5,735	8,217
Twelve Months or More, Unrealized Losses	41	39
Total, Fair value	11,201	12,396
Total, Unrealized Losses	$ 67	80
Number of securities with market fair value less than amortized cost \| Security	34
U.S. Agency Residential Mortgage-Backed [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 137,785	156,053
Unrealized gains	1,116	1,173
Unrealized losses	983	937
Fair value	137,918	156,289
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	22,198	62,524
Less Than Twelve Months, Unrealized Losses	229	732
Twelve Months or More, Fair Value	40,698	20,857
Twelve Months or More, Unrealized Losses	754	205
Total, Fair value	62,896	83,381
Total, Unrealized Losses	$ 983	937
Number of securities with market fair value less than amortized cost \| Security	128
U.S. Agency Commercial Mortgage-Backed [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 9,894	12,799
Unrealized gains	36	28
Unrealized losses	170	195
Fair value	9,760	12,632
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	2,181	6,079
Less Than Twelve Months, Unrealized Losses	34	194
Twelve Months or More, Fair Value	3,994	143
Twelve Months or More, Unrealized Losses	136	1
Total, Fair value	6,175	6,222
Total, Unrealized Losses	$ 170	195
Number of securities with market fair value less than amortized cost \| Security	12
Private Label Mortgage-Backed [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 29,011	35,035
Unrealized gains	428	216
Unrealized losses	330	524
Fair value	29,109	34,727
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	11,390	20,545
Less Than Twelve Months, Unrealized Losses	92	281
Twelve Months or More, Fair Value	4,396	1,413
Twelve Months or More, Unrealized Losses	238	243
Total, Fair value	15,786	21,958
Total, Unrealized Losses	$ 330	524
Number of securities with market fair value less than amortized cost \| Security	20
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Fair value	$ 2,060
Amortized cost	1,691
Non-credit unrealized loss	0
Unrealized gain	369
Cumulative credit related OTTI	$ 1,594
Number of private label mortgage backed securities complete recovery of cost basis \| Security	6
Number of private label mortgage backed securities currently with OTTI unrealized gains \| Security	3
Senior Security [Member]
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Fair value	$ 1,033
Amortized cost	891
Non-credit unrealized loss	0
Unrealized gain	142
Cumulative credit related OTTI	757
Super Senior Security [Member]
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Fair value	966
Amortized cost	800
Non-credit unrealized loss	0
Unrealized gain	166
Cumulative credit related OTTI	457
Senior Support Security [Member]
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
Fair value	61
Amortized cost	0
Non-credit unrealized loss	0
Unrealized gain	61
Cumulative credit related OTTI	380
Other Asset Backed [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	93,811	146,829
Unrealized gains	202	271
Unrealized losses	115	391
Fair value	93,898	146,709
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	20,352	52,958
Less Than Twelve Months, Unrealized Losses	40	172
Twelve Months or More, Fair Value	16,648	17,763
Twelve Months or More, Unrealized Losses	75	219
Total, Fair value	37,000	70,721
Total, Unrealized Losses	$ 115	391
Number of securities with market fair value less than amortized cost \| Security	68
Obligations of States and Political Subdivisions [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 174,073	175,180
Unrealized gains	755	478
Unrealized losses	1,883	4,759
Fair value	172,945	170,899
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	76,574	113,078
Less Than Twelve Months, Unrealized Losses	936	4,014
Twelve Months or More, Fair Value	28,246	14,623
Twelve Months or More, Unrealized Losses	947	745
Total, Fair value	104,820	127,701
Total, Unrealized Losses	$ 1,883	4,759
Number of securities with market fair value less than amortized cost \| Security	334
Corporate [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 47,365	56,356
Unrealized gains	578	223
Unrealized losses	90	399
Fair value	47,853	56,180
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	14,440	25,546
Less Than Twelve Months, Unrealized Losses	33	292
Twelve Months or More, Fair Value	3,943	2,810
Twelve Months or More, Unrealized Losses	57	107
Total, Fair value	18,383	28,356
Total, Unrealized Losses	$ 90	399
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	$ 2,929	2,922
Unrealized gains	0	0
Unrealized losses	127	343
Fair value	2,802	2,579
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	2,802	2,579
Twelve Months or More, Unrealized Losses	127	343
Total, Fair value	2,802	2,579
Total, Unrealized Losses	$ 127	343
Number of securities with market fair value less than amortized cost \| Security	3
Number of issues rated as investment grade \| Grade	2
Number of major credit rating agencies rating securities with fair value less than amortized cost \| Grade	2
Number of securities not rated \| Security	1
Non-rated securities, amortized cost	$ 1,000
Fair value of non-rated trust preferred securities	900
Rated Issues [Member]
Trust preferred securities [Abstract]
Fair Value	1,882	1,800
Net Unrealized Loss	(69)	(123)
Unrated Issues [Member]
Trust preferred securities [Abstract]
Fair Value	920	779
Net Unrealized Loss	(58)	(220)
Foreign Government [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Amortized cost	2,087	1,626
Unrealized gains	0	0
Unrealized losses	27	13
Fair value	2,060	1,613
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months, Fair Value	489	1,613
Less Than Twelve Months, Unrealized Losses	10	13
Twelve Months or More, Fair Value	1,571	0
Twelve Months or More, Unrealized Losses	17	0
Total, Fair value	2,060	1,613
Total, Unrealized Losses	$ 27	13
Number of securities with market fair value less than amortized cost \| Security	2
Private Label Mortgage Backed Securities Below Investment Grade [Abstract]
OTTI changes recorded in earnings	$ 0	$ 0	$ 0

LOANS AND PAYMENT PLAN RECEIVABLES (Details) - USD ($)
$ in Thousands

1 Months Ended

12 Months Ended

Aug. 31, 2016

Dec. 31, 2015

Dec. 31, 2017

Dec. 31, 2016

Net of deferred loan fees

$ 2,018,817

$ 1,608,248

9,300

4,100

Single-family Residential Loans [Member]

Mortgage loans, servicing fee percentage

Mortgage loans purchased

$ 15,000

$ 32,600

0.25%

Weighted average interest rate

3.65%

3.94%

Weighted average remaining contractual maturity

332 months

344 months

Real Estate [Member] | Residential First Mortgages [Member]

Real Estate [Member] | Residential Home Equity and Other Junior Mortgages [Member]

^[1]

672,592

453,348

Real Estate [Member] | Construction and Land Development [Member]

^[1]

136,560

105,550

Real Estate [Member] | Other [Member]

^[1]

143,188

77,287

^[1],[2]

538,880

525,748

Consumer [Member]

291,091

234,632

231,786

206,607

Agricultural [Member]

Analysis of allowance for loan losses by portfolio segment [Roll Forward]

$ 4,720

$ 5,076

[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.

LOANS AND PAYMENT PLAN RECEIVABLES , Allowance for Loan Losses (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

$ 20,234

$ 22,570

$ 25,990

1,199

(1,309)

(2,714)

4,205

4,619

5,022

(3,051)

(5,587)

(5,728)

(59)

22,587

20,234

22,570

6,839

9,152

15,748

11,082

22,587

20,234

65,544

79,831

1,959,774

1,533,530

2,025,318

1,613,361

6,501

5,113

2,018,817

1,608,248

Analysis of allowance for loan losses by portfolio segment [Roll Forward]

4,880

5,670

5,445

(327)

(1,945)

(737)

1,497

2,472

2,656

(455)

(1,317)

(1,694)

5,595

4,880

5,670

837

2,244

4,758

2,636

5,595

4,880

8,420

15,767

847,140

790,228

855,560

805,995

2,300

1,978

Analysis of allowance for loan losses by portfolio segment [Roll Forward]

853,260

804,017

Mortgage [Member]

8,681

10,391

13,444

(567)

(158)

(1,744)

1,741

1,047

1,258

(1,122)

(2,599)

(2,567)

8,733

8,681

10,391

5,725

6,579

3,008

2,102

8,733

8,681

53,179

59,151

799,629

481,828

852,808

540,979

^[1]

3,278

2,364

Analysis of allowance for loan losses by portfolio segment [Roll Forward]

849,530

538,615

Installment [Member]

1,011

1,181

1,814

360

401

(274)

967

1,100

1,108

(1,474)

(1,671)

(1,467)

864

1,011

1,181

277

329

587

682

864

1,011

3,945

4,913

313,005

261,474

316,950

266,387

^[1]

923

771

Payment Plan Receivables [Member]

316,027

265,616

Analysis of allowance for loan losses by portfolio segment [Roll Forward]

(4)

(8)

(52)

Subjective Allocation [Member]

Analysis of allowance for loan losses by portfolio segment [Roll Forward]

5,662

5,272

5,223

1,733

397

(7)

7,395

5,662

$ 5,272

7,395

5,662

Impaired loan with no allocated allowance [Abstract]

$ 7,395

$ 5,662

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

LOANS AND PAYMENT PLAN RECEIVABLES, Impaired Financing Receivables (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

TDR

$ 349

$ 1,782

Non - TDR

175

1,107

Impaired loans with an allocated allowance [Abstract]

TDR - allowance based on collateral

2,482

3,527

TDR - allowance based on present value cash flow

62,113

72,613

Non - TDR - allowance based on collateral

148

491

Total impaired loans

65,267

79,520

Amount of allowance for loan losses allocated [Abstract]

TDR - allowance based on collateral

684

1,868

TDR - allowance based on present value cash flow

6,089

7,146

Non - TDR - allowance based on collateral

138

Total amount of allowance for loan losses allocated

6,839

9,152

Recorded Investment, with no related allowance recorded

^[1]

527

2,891

Unpaid Principal Balance, with no related allowance recorded

^[1]

1,087

5,191

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

65,017

76,940

^[1]

67,289

79,520

^[1]

65,544

79,831

^[1]

68,376

84,711

^[1]

6,839

9,152

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

277

311

Average Recorded Investment, with No Related Allowance

^[2]

987

1,913

$ 7,628

Interest Income Recognized, with No Related Allowance

^[2]

739

Average Recorded Investment, with Related Allowance

^[2]

70,920

83,258

97,018

^[2]

3,182

3,552

3,835

^[2]

71,907

85,171

104,646

Commercial [Member] | Income Producing - Real Estate [Member]

^[2]

3,231

3,636

4,574

Recorded Investment, with no related allowance recorded

^[1]

517

Unpaid Principal Balance, with no related allowance recorded

^[1]

768

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

5,195

7,737

^[1]

5,347

7,880

^[1]

5,195

8,254

^[1]

5,347

8,648

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

347

554

Average Recorded Investment, with No Related Allowance

^[2]

177

609

4,520

Interest Income Recognized, with No Related Allowance

^[2]

387

Average Recorded Investment, with Related Allowance

^[2]

7,059

8,069

12,677

^[2]

369

427

439

^[2]

7,236

8,678

17,197

Commercial [Member] | Land, Land Development and Construction Real Estate [Member]

^[2]

369

429

826

Recorded Investment, with no related allowance recorded

^[1]

Unpaid Principal Balance, with no related allowance recorded

^[1]

709

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

166

239

^[1]

194

244

^[1]

166

270

^[1]

194

953

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

Average Recorded Investment, with No Related Allowance

^[2]

330

952

Interest Income Recognized, with No Related Allowance

^[2]

Average Recorded Investment, with Related Allowance

^[2]

183

1,129

2,219

^[2]

^[2]

189

1,459

3,171

Commercial [Member] | Commercial and Industrial [Member]

^[2]

133

Recorded Investment, with no related allowance recorded

^[1]

524

2,341

Unpaid Principal Balance, with no related allowance recorded

^[1]

549

3,261

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

2,535

4,902

^[1]

2,651

5,246

^[1]

3,059

7,243

^[1]

3,200

8,507

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

481

1,654

Average Recorded Investment, with No Related Allowance

^[2]

751

961

2,125

Interest Income Recognized, with No Related Allowance

^[2]

257

Average Recorded Investment, with Related Allowance

^[2]

3,298

5,723

6,663

^[2]

132

189

104

^[2]

4,049

6,684

8,788

Mortgage [Member] | 1-4 Family [Member]

^[2]

154

243

361

Recorded Investment, with no related allowance recorded

^[1]

Unpaid Principal Balance, with no related allowance recorded

^[1]

469

387

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

36,848

41,701

^[1]

38,480

43,479

^[1]

36,850

41,703

^[1]

38,949

43,866

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

3,454

4,100

Average Recorded Investment, with No Related Allowance

^[2]

Interest Income Recognized, with No Related Allowance

^[2]

Average Recorded Investment, with Related Allowance

^[2]

39,143

44,923

50,421

^[2]

1,774

1,918

2,140

^[2]

39,195

44,933

50,440

Mortgage [Member] | Resort Lending [Member]

^[2]

1,795

1,934

2,151

Recorded Investment, with no related allowance recorded

^[1]

Unpaid Principal Balance, with no related allowance recorded

^[1]

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

15,978

16,898

^[1]

16,046

16,931

^[1]

15,978

16,898

^[1]

16,046

16,931

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

2,210

2,453

Average Recorded Investment, with No Related Allowance

^[2]

Interest Income Recognized, with No Related Allowance

^[2]

Average Recorded Investment, with Related Allowance

^[2]

16,383

17,544

18,448

^[2]

616

619

670

^[2]

16,383

17,544

18,460

Mortgage [Member] | Home Equity - 1st Lien [Member]

^[2]

616

619

670

Recorded Investment, with no related allowance recorded

^[1]

Unpaid Principal Balance, with no related allowance recorded

^[1]

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

173

235

^[1]

236

242

^[1]

173

235

^[1]

236

242

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

Average Recorded Investment, with No Related Allowance

^[2]

Interest Income Recognized, with No Related Allowance

^[2]

Average Recorded Investment, with Related Allowance

^[2]

209

226

161

^[2]

^[2]

209

226

161

Mortgage [Member] | Home Equity - 2nd Lien [Member]

^[2]

Recorded Investment, with no related allowance recorded

^[1]

Unpaid Principal Balance, with no related allowance recorded

^[1]

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

178

315

^[1]

213

398

^[1]

178

315

^[1]

213

398

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

Average Recorded Investment, with No Related Allowance

^[2]

Interest Income Recognized, with No Related Allowance

^[2]

Average Recorded Investment, with Related Allowance

^[2]

209

248

172

^[2]

^[2]

209

248

172

Installment [Member] | Home Equity - 1st Lien [Member]

^[2]

Recorded Investment, with no related allowance recorded

^[1]

Unpaid Principal Balance, with no related allowance recorded

^[1]

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

1,667

1,994

^[1]

1,804

2,117

^[1]

1,668

1,994

^[1]

1,873

2,183

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

108

118

Average Recorded Investment, with No Related Allowance

^[2]

Interest Income Recognized, with No Related Allowance

^[2]

Average Recorded Investment, with Related Allowance

^[2]

1,832

2,185

2,539

^[2]

128

147

176

^[2]

1,833

2,185

2,539

Installment [Member] | Home Equity - 2nd Lien [Member]

^[2]

134

152

181

Recorded Investment, with no related allowance recorded

^[1]

Unpaid Principal Balance, with no related allowance recorded

^[1]

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

1,793

2,415

^[1]

1,805

2,443

^[1]

1,793

2,415

^[1]

1,805

2,443

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

140

182

Average Recorded Investment, with No Related Allowance

^[2]

Interest Income Recognized, with No Related Allowance

^[2]

Average Recorded Investment, with Related Allowance

^[2]

2,126

2,661

3,055

^[2]

112

162

193

^[2]

2,126

2,664

3,055

Installment [Member] | Boat Lending [Member]

^[2]

112

162

193

Recorded Investment, with no related allowance recorded

^[1]

Unpaid Principal Balance, with no related allowance recorded

^[1]

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

^[1]

^[1]

^[1]

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

Average Recorded Investment, with No Related Allowance

^[2]

Interest Income Recognized, with No Related Allowance

^[2]

Average Recorded Investment, with Related Allowance

^[2]

^[2]

^[2]

Installment [Member] | Recreational Vehicle Lending [Member]

^[2]

Recorded Investment, with no related allowance recorded

^[1]

Unpaid Principal Balance, with no related allowance recorded

^[1]

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

109

^[1]

108

^[1]

109

^[1]

108

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

Average Recorded Investment, with No Related Allowance

^[2]

Interest Income Recognized, with No Related Allowance

^[2]

Average Recorded Investment, with Related Allowance

^[2]

100

115

127

^[2]

^[2]

100

115

127

Installment [Member] | Other [Member]

^[2]

Recorded Investment, with no related allowance recorded

^[1]

Unpaid Principal Balance, with no related allowance recorded

^[1]

^[1]

Unpaid Principal Balance, with an allowance recorded

^[1]

393

394

^[1]

418

426

^[1]

393

394

^[1]

418

426

Average recorded investment in and interest income earned on impaired loans by class [Abstract]

^[1]

Average Recorded Investment, with No Related Allowance

^[2]

Interest Income Recognized, with No Related Allowance

^[2]

Average Recorded Investment, with Related Allowance

^[2]

377

433

533

^[2]

^[2]

377

433

533

Financing Receivable, Modifications [Line Items]

^[2]

$ 25

$ 28

$ 30

[1]	There were no impaired purchased mortgage loans at December 31, 2017 or 2016.
[2]	There were no impaired payment plan receivables or purchased mortgage loans during the years ending December 31, 2017, 2016 and 2015.

LOANS AND PAYMENT PLAN RECEIVABLES, Troubled Debt Restructurings (Details)
$ in Thousands

12 Months Ended

Dec. 31, 2017

USD ($)

Contract

Dec. 31, 2016

USD ($)

Contract

Dec. 31, 2015

USD ($)

Contract

Troubled debt restructuring, specific reserve

$ 64,944

$ 77,922

6,800

9,000

Additional amounts committed to lend as troubled debt restructurings

$ 40

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 2,121

$ 3,902

$ 5,589

Increase (decrease) in allowance for loan losses

^[1]

2,135

3,942

5,097

100

(100)

400

Charge offs due to troubled debt restructurings

$ 0

$ 530

$ 160

Past due period for modified loans

$ 177

$ 1,767

$ 234

90 days

Increase (decrease) in allowance for loan loss due to TDRs that subsequently defaulted

$ 40

(170)

(30)

Charge-offs on TDRs that subsequently defaulted

$ 50

510

$ 0

Minimum [Member]

Financing Receivable, Modifications [Line Items]

Modification of stated interest rate of loans, range of period

9 months

Modifications involving extension of maturity date, period range

1 month

Maximum [Member]

Financing Receivable, Modifications [Line Items]

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 TDR's [Member]

Financing Receivable, Modifications [Line Items]

Non-performing TDR's [Member]

$ 60,115

70,286

Financing Receivable, Modifications [Line Items]

^[2]

4,829

7,636

Financing Receivable, Modifications [Line Items]

Commercial [Member] | Performing TDR's [Member]

8,071

14,125

Financing Receivable, Modifications [Line Items]

Commercial [Member] | Non-performing TDR's [Member]

7,748

10,560

Financing Receivable, Modifications [Line Items]

Commercial [Member] | Income Producing - Real Estate [Member]

^[2]

$ 323

$ 3,565

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 0

$ 290

$ 229

^[1]

$ 0

$ 290

$ 227

Commercial [Member] | Land, Land Development and Construction Real Estate [Member]

$ 0

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 0

^[1]

$ 0

Commercial [Member] | Commercial and Industrial [Member]

$ 0

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 925

$ 2,044

$ 3,188

^[1]

$ 925

$ 2,027

$ 2,960

Mortgage [Member] | 1-4 Family [Member]

$ 164

$ 1,767

$ 157

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 456

$ 927

$ 1,345

^[1]

$ 462

$ 1,004

$ 1,128

Mortgage [Member] | Resort Lending [Member]

$ 0

$ 73

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 189

$ 116

$ 313

^[1]

$ 189

$ 117

$ 307

Mortgage [Member] | Home Equity - 1st Lien [Member]

$ 0

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 0

$ 107

$ 20

^[1]

$ 0

$ 78

$ 20

Mortgage [Member] | Home Equity - 2nd Lien [Member]

$ 0

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 0

$ 77

$ 27

^[1]

$ 0

$ 78

$ 27

Installment [Member] | Home Equity - 1st Lien [Member]

$ 0

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 86

$ 141

$ 220

^[1]

$ 90

$ 145

$ 186

Installment [Member] | Home Equity - 2nd Lien [Member]

$ 13

$ 0

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 391

$ 154

$ 228

^[1]

$ 394

$ 157

$ 217

Installment [Member] | Boat Lending [Member]

$ 0

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 0

^[1]

$ 0

Installment [Member] | Recreational Vehicle Lending [Member]

$ 0

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 0

^[1]

$ 0

Installment [Member] | Other [Member]

$ 0

Loans classified as troubled debt restructurings [Abstract]

^[1]

^[1]

$ 74

$ 46

$ 19

^[1]

$ 75

$ 46

$ 25

Financing Receivable, Modifications [Line Items]

$ 0

$ 4

Retail [Member]

Retail [Member] | Performing TDR's [Member]

^[3]

56,873

63,797

Financing Receivable, Modifications [Line Items]

Retail [Member] | Non-performing TDR's [Member]

^[3]

52,367

59,726

Financing Receivable, Modifications [Line Items]

Loan ratings/credit scores by loan class [Abstract]

^[2],[3],[4]

$ 4,506

$ 4,071

[1]	There were no payment plan receivables or purchased mortgage loans classified as troubled debt restructurings during the years ending December 31, 2017, 2016 and 2015.
[2]	Included in non-performing loans table above.
[3]	Retail loans include mortgage and installment loan segments.
[4]	Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.

LOANS AND PAYMENT PLAN RECEIVABLES, Loan Ratings by Loan Class (Details) - USD ($)
$ in Thousands

Dec. 31, 2017

Dec. 31, 2016

$ 853,260

$ 804,017

6,501

5,113

Loan ratings/credit scores by loan class [Abstract]

855,560

805,995

Commercial [Member] | Non-Watch 1-6 [Member]

2,300

1,978

Loan ratings/credit scores by loan class [Abstract]

822,561

783,854

Commercial [Member] | Watch 7-8 [Member]

2,198

1,915

Loan ratings/credit scores by loan class [Abstract]

29,704

13,642

Commercial [Member] | Substandard Accrual 9 [Member]

Loan ratings/credit scores by loan class [Abstract]

2,649

3,335

Commercial [Member] | Non Accrual 10-11 [Member]

Loan ratings/credit scores by loan class [Abstract]

646

5,164

Commercial [Member] | Income Producing - Real Estate [Member]

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Income Producing - Real Estate [Member] | Non-Watch 1-6 [Member]

290,496

287,638

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Income Producing - Real Estate [Member] | Watch 7-8 [Member]

288,869

282,886

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Income Producing - Real Estate [Member] | Substandard Accrual 9 [Member]

1,293

3,787

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Income Producing - Real Estate [Member] | Non Accrual 10-11 [Member]

304

337

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Land, Land Development and Construction Real Estate [Member]

628

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Land, Land Development and Construction Real Estate [Member] | Non-Watch 1-6 [Member]

70,191

51,775

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Land, Land Development and Construction Real Estate [Member] | Watch 7-8 [Member]

70,122

51,603

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Land, Land Development and Construction Real Estate [Member] | Substandard Accrual 9 [Member]

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Land, Land Development and Construction Real Estate [Member] | Non Accrual 10-11 [Member]

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Commercial and Industrial [Member]

105

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Commercial and Industrial [Member] | Non-Watch 1-6 [Member]

494,873

466,582

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Commercial and Industrial [Member] | Watch 7-8 [Member]

463,570

449,365

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Commercial and Industrial [Member] | Substandard Accrual 9 [Member]

28,351

9,788

Loan ratings/credit scores by loan class [Abstract]

Commercial [Member] | Commercial and Industrial [Member] | Non Accrual 10-11 [Member]

2,345

2,998

Loan ratings/credit scores by loan class [Abstract]

Loan ratings/credit scores by loan class [Abstract]

607

4,431

Mortgage [Member]

^[1]

104,159

69,920

^[1]

360,260

195,484

^[1]

198,667

121,245

^[1]

106,479

77,129

^[1]

31,813

35,780

^[1]

19,482

18,931

^[1]

12,110

12,120

^[1]

3,463

5,771

^[1]

16,375

4,599

^[1]

852,808

540,979

Mortgage [Member] | 1-4 Family [Member]

^[1]

3,278

2,364

Loan ratings/credit scores by loan class [Abstract]

^[1]

70,540

36,534

^[1]

265,907

102,382

^[1]

146,302

69,337

^[1]

83,695

50,621

^[1]

25,087

25,270

^[1]

15,136

13,747

^[1]

9,548

9,215

^[1]

2,549

5,145

^[1]

14,358

2,290

^[1]

633,122

314,541

Mortgage [Member] | Resort Lending [Member]

^[1]

2,361

1,466

Loan ratings/credit scores by loan class [Abstract]

^[1]

11,625

10,484

^[1]

36,015

41,999

^[1]

22,099

24,727

^[1]

12,145

13,798

^[1]

3,025

5,769

^[1]

2,710

3,030

^[1]

1,009

1,438

^[1]

269

^[1]

1,659

1,711

^[1]

90,556

103,048

Mortgage [Member] | Home Equity - 1st Lien [Member]

^[1]

371

450

Loan ratings/credit scores by loan class [Abstract]

^[1]

6,169

6,048

^[1]

16,561

10,006

^[1]

7,317

5,706

^[1]

2,793

4,106

^[1]

1,189

1,674

^[1]

518

455

^[1]

397

486

^[1]

260

255

^[1]

157

280

^[1]

35,361

29,016

Mortgage [Member] | Home Equity - 2nd Lien [Member]

^[1]

157

111

Loan ratings/credit scores by loan class [Abstract]

^[1]

7,842

8,392

^[1]

24,126

20,113

^[1]

15,012

12,360

^[1]

7,420

8,167

^[1]

2,512

3,067

^[1]

1,118

1,699

^[1]

1,156

981

^[1]

385

279

^[1]

179

^[1]

59,658

55,237

Mortgage [Member] | Purchased Loans [Member]

^[1]

294

226

Loan ratings/credit scores by loan class [Abstract]

^[1]

7,983

8,462

^[1]

17,651

20,984

^[1]

7,937

9,115

^[1]

426

437

^[1]

^[1]

^[1]

^[1]

^[1]

114

139

^[1]

34,111

39,137

Loan ratings/credit scores by loan class [Abstract]

^[1]

111

Installment [Member]

^[1]

40,985

56,347

^[1]

158,147

114,065

^[1]

70,941

48,883

^[1]

26,583

25,070

^[1]

7,840

8,402

^[1]

3,794

4,289

^[1]

1,641

2,813

^[1]

377

634

^[1]

6,642

5,884

^[1]

316,950

266,387

Installment [Member] | Home Equity - 1st Lien [Member]

^[1]

923

771

Loan ratings/credit scores by loan class [Abstract]

^[1]

815

1,354

^[1]

1,912

2,478

^[1]

1,825

1,920

^[1]

1,840

2,852

^[1]

1,567

1,691

^[1]

950

1,231

^[1]

499

981

^[1]

114

^[1]

^[1]

9,455

12,650

Installment [Member] | Home Equity - 2nd Lien [Member]

^[1]

Loan ratings/credit scores by loan class [Abstract]

^[1]

825

1,626

^[1]

1,952

3,334

^[1]

2,142

2,686

^[1]

2,036

2,541

^[1]

1,065

1,775

^[1]

1,028

1,063

^[1]

303

692

^[1]

220

^[1]

^[1]

9,471

13,958

Installment [Member] | Boat Lending [Member]

^[1]

Loan ratings/credit scores by loan class [Abstract]

^[1]

15,531

21,422

^[1]

73,251

50,508

^[1]

28,922

20,045

^[1]

9,179

7,559

^[1]

2,052

1,846

^[1]

640

882

^[1]

281

440

^[1]

^[1]

150

^[1]

129,972

102,925

Installment [Member] | Recreational Vehicle Lending [Member]

^[1]

346

264

Loan ratings/credit scores by loan class [Abstract]

^[1]

16,754

23,034

^[1]

52,610

35,827

^[1]

17,993

11,049

^[1]

4,270

3,205

^[1]

754

821

^[1]

305

280

^[1]

189

^[1]

^[1]

114

^[1]

92,810

74,535

Installment [Member] | Other [Member]

^[1]

254

203

Loan ratings/credit scores by loan class [Abstract]

^[1]

7,060

8,911

^[1]

28,422

21,918

^[1]

20,059

13,183

^[1]

9,258

8,913

^[1]

2,402

2,269

^[1]

871

833

^[1]

475

511

^[1]

194

211

^[1]

6,501

5,570

^[1]

75,242

62,319

Balance at beginning of year, net of valuation allowance

^[1]

$ 241

$ 191

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

LOANS AND PAYMENT PLAN RECEIVABLES, Loans Serviced for Others (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) Quarter PSARate	Dec. 31, 2016 USD ($) PSARate	Dec. 31, 2015 USD ($)
Mortgage loans serviced for others [Abstract]
Mortgage loans serviced	$ 1,816,437	$ 1,658,993
Custodial deposit accounts	$ 20,700	18,900
Maximum number of consecutive quarterly losses recorded for profitability requirement \| Quarter	4
Percentage of decline in net worth during the period	30.00%
Maximum percentage of decline in net worth for one consecutive quarter	25.00%
Maximum percentage of decline in net worth for two consecutive quarters	40.00%
Highest level of capital, Amount	$ 2,500
Highest level of capital	0.25%
Analysis of capitalized mortgage loan servicing rights [Abstract]
Balance at beginning of period	$ 13,671	12,436	$ 12,106
Change in accounting (see note #1)	542	0	0
Balance at beginning of period, as adjusted	14,213	12,436	12,106
Originated servicing rights capitalized	4,230
Originated servicing rights capitalized		3,119	2,697
Amortization	0	(2,850)	(2,868)
Change in valuation allowance	0
Change in valuation allowance		966	501
Change in fair value due to price	(718)	0	0
Change in fair value due to pay downs	(2,026)	0	0
Balance at end of year		13,671	12,436
Balance at end of year	15,699
Valuation allowance	0	2,306	3,272
Loans sold and serviced that have had servicing rights capitalized	$ 1,815,668	$ 1,657,996	$ 1,643,086
Average coupon rate	4.17%	4.20%
Average servicing fee	0.258%	0.256%
Average discount rate	10.11%	10.07%
Average PSA Rate \| PSARate	169	175
Fannie Mae [Member]
Mortgage loans serviced for others [Abstract]
Mortgage loans serviced	$ 1,001,388	$ 944,703
Freddie Mac [Member]
Mortgage loans serviced for others [Abstract]
Mortgage loans serviced	637,204	622,885
Ginnie Mae [Member]
Mortgage loans serviced for others [Abstract]
Mortgage loans serviced	130,284	85,290
FHLB [Member]
Mortgage loans serviced for others [Abstract]
Mortgage loans serviced	47,527	6,031
Other [Member]
Mortgage loans serviced for others [Abstract]
Mortgage loans serviced	$ 34	$ 84

OTHER REAL ESTATE (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

Other Real Estate [Roll Forward]

^[1]

$ 4,956

$ 7,070

$ 6,370

Loans transferred to other real estate

^[1]

1,735

2,355

6,694

Sales of other real estate

^[1]

(4,737)

(3,596)

(5,502)

Additions to valuation allowance charged to expense

^[1]

(326)

(873)

(492)

Balance at end of year, net of valuation allowance

^[1]

1,628

4,956

7,070

Other repossessed assets

Real Estate Owned Valuation Allowance [Roll Forward]

Balance at beginning of year

793

1,692

2,511

Additions charged to expense

326

873

492

Direct write-downs upon sale

(996)

(1,772)

(1,311)

Balance at end of year

123

793

$ 1,692

Foreclosed residential real estate

1,600

1,900

Mortgage loans in process of foreclosure

800

1,000

Other real estate and repossessed assets

$ 1,643

$ 5,004

[1]	Table excludes other repossessed assets totaling $0.02 and $0.05 million at December 31, 2017 and 2016, respectively.

PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	12 Months Ended
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 141,237	$ 142,232
Accumulated depreciation and amortization	(102,088)	(102,057)
Property and equipment, net	39,149	40,175
Depreciation expense	5,300	5,800	$ 6,600
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	16,199	15,486
Buildings [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	55,434	54,656
Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 69,604	$ 72,090

INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	12 Months Ended
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Amortized intangible assets - core deposits [Abstract]
Gross Carrying Amount	$ 6,118	$ 6,118
Accumulated Amortization	4,532	4,186
Intangible amortization expense	300	$ 300	$ 300
Summary of estimated core deposit intangible amortization [Abstract]
2018	346
2019	346
2020	346
2021	346
2022	202
Total	$ 1,586

DEPOSITS (Details) - USD ($)	12 Months Ended
DEPOSITS (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Summary of interest expense on deposits [Abstract]
Savings and interest bearing checking	$ 1,530,000	$ 1,115,000	$ 1,056,000
Time deposits under $100,000	1,594,000	1,628,000	1,586,000
Time deposits of $100,000 or more	3,651,000	2,198,000	1,367,000
Total	6,775,000	4,941,000	$ 4,009,000
Aggregate amount of time deposits of $250,000 or more	92,200,000	174,600,000
Time Deposits denominations amount	250,000	250,000
Summary of the maturity of time deposits [Abstract]
2018	446,835,000
2019	65,810,000
2020	15,595,000
2021	17,275,000
2022	8,761,000
2023 and thereafter	542,000
Total	554,818,000
Summary of reciprocal deposits [Abstract]
Demand	10,146,000	3,055,000
Money market	2,846,000	4,350,000
Time	37,987,000	31,252,000
Total	$ 50,979,000	$ 38,657,000

OTHER BORROWINGS (Details) - USD ($) $ in Thousands	12 Months Ended
OTHER BORROWINGS (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Summary of other borrowings [Abstract]
Advances from the FHLB	$ 47,841	$ 9,428
Federal funds purchased	6,750	0
Other	9	5
Total	54,600	9,433
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Federal home loan bank stock	7,800
Unused borrowing capacity with FHLB	304,500
Interest expense on FHLB advances	900	800	$ 800
FHLB advances terminated	$ 0	0	0
FHLB stock as percentages of outstanding advances	4.50%
Federal Home Loan Bank, Advances, Fiscal Year Maturity [Abstract]
Total FHLB advances, Amount	$ 47,841	$ 9,428
Federal Home Loan Bank, Advances, Maturities Summary, Average Interest Rate of Amounts Due [Abstract]
Total FHLB advances, Rate	2.33%	6.61%
Short-term Debt [Line Items]
Interest expense on federal funds purchased	$ 100	$ 0	0
Available for sale and loans, pledged to secure other borrowings	$ 1,184,000
Minimum [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Federal home loan bank, advances, interest rate	132.00%
FHLB stock as percentages of unpaid principal balance	0.75%
Maximum [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Federal home loan bank, advances, interest rate	165.00%
Fixed-Rate Advances [Member]
Federal Home Loan Bank, Advances, Fiscal Year Maturity [Abstract]
2017, Amount		1,192
2018, Amount	$ 19,910	5,183
2019, Amount	10,000	0
2020, Amount	7,931	3,053
Total fixed-rate advances, amount	$ 37,841	$ 9,428
Federal Home Loan Bank, Advances, Maturities Summary, Average Interest Rate of Amounts Due [Abstract]
2017, Rate		7.04%
2018, Rate	2.43%	5.99%
2019, Rate	1.60%
2020, Rate	3.80%	7.49%
Total fixed-rate advances, Rate	2.50%	6.61%
Variable-Rate Advances [Member]
Federal Home Loan Bank, Advances, Fiscal Year Maturity [Abstract]
Variable-rate advances - 2018, amount	$ 10,000	$ 0
Federal Home Loan Bank, Advances, Maturities Summary, Average Interest Rate of Amounts Due [Abstract]
Variable-rate advances - 2018, Rate	1.67%
Federal Reserve Bank Advances [Member]
Short-term Debt [Line Items]
Borrowings	$ 0	0
Average borrowings	50	$ 0	$ 0
Unused borrowing capacity	441,200
Advances from Federal Home Loan Bank ("FHLB") [Member]
Summary of repayments of FHLB Advances [Abstract]
2018	30,042
2019	10,143
2020	7,656
Total	$ 47,841

SUBORDINATED DEBENTURES (Details) $ in Thousands	12 Months Ended
SUBORDINATED DEBENTURES (Details) $ in Thousands	Dec. 31, 2017 USD ($) Quarter	Dec. 31, 2016 USD ($)
SUBORDINATED DEBENTURES [Abstract]
Trust preferred securities	$ 34,500	$ 34,500
Summary of information regarding subordinated debentures [Abstract]
Subordinated Debentures	$ 35,569	$ 35,569
Summary of subordinated debentures and trust preferred securities [Abstract]
Distribution deferral period, maximum quarters \| Quarter	20
Maximum period within which issuance costs have been capitalized and amortized on straight line basis	30 years
IBC Capital Finance III [Member]
Summary of information regarding subordinated debentures [Abstract]
Issue Date	May 30, 2007	May 30, 2007
Summary of subordinated debentures and trust preferred securities [Abstract]
Maturity Date	Jul. 30, 2037	Jul. 30, 2037
Interest Rate	3 month LIBOR plus 1.60%	3 month LIBOR plus 1.60%
First Permitted Redemption Date	Jul. 30, 2012	Jul. 30, 2012
Interest Rate Spread	1.60%	1.60%
IBC Capital Finance IV [Member]
Summary of information regarding subordinated debentures [Abstract]
Issue Date	Sep. 30, 2007	Sep. 30, 2007
Summary of subordinated debentures and trust preferred securities [Abstract]
Maturity Date	Sep. 15, 2037	Sep. 15, 2037
Interest Rate	3 month LIBOR plus 2.85%	3 month LIBOR plus 2.85%
First Permitted Redemption Date	Sep. 15, 2012	Sep. 15, 2012
Interest Rate Spread	2.85%	2.85%
Midwest Guaranty Trust I [Member]
Summary of information regarding subordinated debentures [Abstract]
Issue Date	Nov. 30, 2002	Nov. 30, 2002
Summary of subordinated debentures and trust preferred securities [Abstract]
Maturity Date	Nov. 07, 2032	Nov. 07, 2032
Interest Rate	3 month LIBOR plus 3.45%	3 month LIBOR plus 3.45%
First Permitted Redemption Date	Nov. 07, 2007	Nov. 07, 2007
Interest Rate Spread	3.45%	3.45%
Subordinated Debentures Subject to Mandatory Redemption [Member]
Summary of information regarding subordinated debentures [Abstract]
Subordinated Debentures	$ 35,569	$ 35,569
Subordinated Debentures Subject to Mandatory Redemption [Member] \| IBC Capital Finance III [Member]
Summary of information regarding subordinated debentures [Abstract]
Subordinated Debentures	12,372	12,372
Subordinated Debentures Subject to Mandatory Redemption [Member] \| IBC Capital Finance IV [Member]
Summary of information regarding subordinated debentures [Abstract]
Subordinated Debentures	15,465	15,465
Subordinated Debentures Subject to Mandatory Redemption [Member] \| Midwest Guaranty Trust I [Member]
Summary of information regarding subordinated debentures [Abstract]
Subordinated Debentures	7,732	7,732
Trust Preferred Securities Subject to Mandatory Redemption [Member]
Summary of information regarding subordinated debentures [Abstract]
Trust Preferred Securities Issued	34,500	34,500
Trust Preferred Securities Subject to Mandatory Redemption [Member] \| IBC Capital Finance III [Member]
Summary of information regarding subordinated debentures [Abstract]
Trust Preferred Securities Issued	12,000	12,000
Trust Preferred Securities Subject to Mandatory Redemption [Member] \| IBC Capital Finance IV [Member]
Summary of information regarding subordinated debentures [Abstract]
Trust Preferred Securities Issued	15,000	15,000
Trust Preferred Securities Subject to Mandatory Redemption [Member] \| Midwest Guaranty Trust I [Member]
Summary of information regarding subordinated debentures [Abstract]
Trust Preferred Securities Issued	7,500	7,500
Common Stock Subject to Mandatory Redemption [Member]
Summary of information regarding subordinated debentures [Abstract]
Common Stock Issued	1,069	1,069
Common Stock Subject to Mandatory Redemption [Member] \| IBC Capital Finance III [Member]
Summary of information regarding subordinated debentures [Abstract]
Common Stock Issued	372	372
Common Stock Subject to Mandatory Redemption [Member] \| IBC Capital Finance IV [Member]
Summary of information regarding subordinated debentures [Abstract]
Common Stock Issued	465	465
Common Stock Subject to Mandatory Redemption [Member] \| Midwest Guaranty Trust I [Member]
Summary of information regarding subordinated debentures [Abstract]
Common Stock Issued	$ 232	$ 232

COMMITMENTS AND CONTINGENT LIABILITIES (Details) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
	Jan. 31, 2018	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Notification costs and other estimated expenses		$ 100
Litigation settlement expense		2,300	$ 0	$ 2,300	$ 0
Receivables balance decline			13,700
Loss reimbursement on sold loans			170	30	$ (60)
Reserve for loss reimbursements on sold mortgage loans		600	700	600
Subsequent Event [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Payment for litigation settlement	$ 2,200
Commitments to Extend Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments risk represented by contract amounts		364,270	439,663	364,270
Standby Letters of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments risk represented by contract amounts		$ 3,140	$ 4,596	$ 3,140
Standby Letters of Credit [Member] \| Minimum [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Variable interest rate			3.75%
Standby Letters of Credit [Member] \| Maximum [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Variable interest rate			7.50%

SHAREHOLDERS' EQUITY AND INCOME PER COMMON SHARE (Details) - USD ($)
$ / shares in Units, $ in Thousands

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

Jan. 21, 2017

Apr. 26, 2016

Jan. 21, 2016

Jan. 21, 2015

Class of Stock [Line Items]

Stock repurchased (in shares)

1,153,136

967,199

Stock repurchased

$ 16,854

$ 13,498

Earnings Per Share Reconciliation [Abstract]

Net income

$ 20,475

$ 22,766

$ 20,017

Weighted average shares outstanding (in shares)

^[1]

21,327,000

21,378,000

22,716,000

Effect of stock options (in shares)

142,000

151,000

119,000

Stock units for deferred compensation plan for non-employee directors (in shares)

121,000

115,000

112,000

Performance share units (in shares)

60,000

48,000

Restricted stock units (in shares)

35,000

233,000

Weighted average shares outstanding for calculation of diluted earnings per share (in shares)

21,650,000

21,727,000

23,180,000

Net income per common share [Abstract]

Basic (in dollars per share)

^[1]

$ 0.96

$ 1.06

$ 0.88

Diluted (in dollars per share)

$ 0.95

$ 1.05

$ 0.86

Common Stock [Member]

Class of Stock [Line Items]

Stock repurchase program percentage of shares authorized to be repurchased

5.00%

Stock repurchase program, additional authorized amount

$ 5,000

Stock repurchased (in shares)

1,153,136

967,199

Stock repurchased

$ 0

$ 16,900

$ 13,500

Stock Options [Member]

Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]

Antidilutive shares excluded from computation of diluted loss per share (in shares)

30,000

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

INCOME TAX (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
INCOME TAX (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income tax expense (benefit) [Abstract]
Current expense			$ 1,927	$ 362	$ 200
Deferred expense			10,071	9,756	9,128
Change in statutory rate			5,965	0	0
Valuation allowance - change in estimate			0	17	35
Income tax expense			$ 17,963	10,135	9,363
Income Tax Disclosure [Line Items]
Statutory federal income tax rate			35.00%
Increase in income tax expense	$ 6,000
Reconciliation of income tax expense [Abstract]
Statutory rate applied to income before income tax			$ 13,453	11,515	10,283
Change in statutory rate			5,965	0	0
Tax-exempt income			(777)	(534)	(434)
Bank owned life insurance			(372)	(477)	(449)
Share-based compensation			(287)	(348)	0
Unrecognized tax benefit			(123)	(155)	(135)
Non-deductible meals, entertainment and memberships			64	46	43
Net change in valuation allowance			0	17	35
Other, net			40	71	20
Income tax expense			17,963	10,135	9,363
Deferred tax assets [Abstract]
Alternative minimum tax credit carry forward	6,113		6,113	4,064
Allowance for loan losses	4,743		4,743	7,104
Loss carryforwards	3,752		3,752	17,131
Property and equipment	1,686		1,686	3,143
Purchase premiums, net	699		699	1,460
Share based payments	677		677	1,011
Litigation settlement	477		477	805
Unrealized loss on trading securities	283		283	486
Reserve for unfunded lending commitments	236		236	228
Deferred compensation	229		229	375
Other than temporary impairment charge on securities available for sale	210		210	400
Non accrual loan interest income	176		176	246
Loss reimbursement on sold loans reserve	140		140	196
Unrealized loss on securities available for sale	125		125	1,782
Vehicle service contract counterparty contingency reserve	117		117	500
Valuation allowance on other real estate	26		26	277
Other	123		123	1
Gross deferred tax assets	19,812		19,812	39,209
Valuation allowance	0		0	(1,071)
Gross deferred tax assets net of valuation allowance	19,812		19,812	38,138
Deferred tax liabilities [Abstract]
Capitalized mortgage loan servicing rights	3,297		3,297	4,785
Deferred loan fees	1,327		1,327	490
Unrealized gain on derivative financial instruments	72		72	0
Federal Home Loan Bank stock	27		27	45
Gross deferred tax liabilities	4,723		4,723	5,320
Deferred tax assets, net	15,089		15,089	32,818
Operating loss carryforwards amount	17,900		$ 17,900
Operating loss carryforwards amount, expiration date			Dec. 31, 2032
Minimum tax credit carryforwards with indefinite lives	6,100		$ 6,100
Changes in unrecognized tax benefits [Roll Forward]
Balance at beginning of year		$ 724	840	976	1,091
Additions based on tax positions related to the current year			7	19	20
Reductions due to the statute of limitations			(123)	(155)	(135)
Reductions due to settlements			0	0	0
Balance at end of year	724		724	840	976
Unrecognized tax benefits of effective tax rate	150		150
Penalties and interest expense			0	0	0
Penalties and interest accrued	$ 0		$ 0	$ 0	$ 0
Open tax year			2014
Plan [Member]
Income Tax Disclosure [Line Items]
Statutory federal income tax rate		21.00%

SHARE BASED COMPENSATION AND BENEFIT PLANS (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of additional shares approved for grant (in shares)	500,000
Total compensation cost not yet recognized	$ 1,900
Total compensation cost not yet recognized, period for recognition	2 years 1 month 6 days
Number of Shares [Roll Forward]
Outstanding, beginning balance (in shares)	296,422
Granted (in shares)	68,473
Vested (in shares)	(63,799)
Forfeited (in shares)	(10,569)
Outstanding, ending balance (in shares)	290,527	296,422
Weighted-Average Grant Date Fair Value [Roll Forward]
Outstanding, beginning balance (in dollars per share)	$ 14.52
Granted (in dollars per share)	21.07
Vested (in dollars per share)	14.91
Forfeited (in dollars per share)	15.66
Outstanding, ending balance (in dollars per share)	$ 15.88	$ 14.52
Information regarding options exercised [Abstract]
Intrinsic value	$ 623	$ 254	$ 444
Cash proceeds received	142	85	137
Tax benefit realized	$ 218	$ 89	$ 155
Employee matching contribution, percentage	50.00%	50.00%	50.00%
Maximum contribution of employees' eligible wages	6.00%	6.00%	4.00%
Maximum matching contribution, percent	6.00%
Employee stock ownership plan (ESOP), contributions	2.00%	2.00%	2.00%
401(k) and employee stock ownership plans amount expensed	$ 1,600	$ 1,400	$ 1,200
Performance-based compensation expense	8,000	6,200	5,700
Health care and life insurance expense	4,000	3,500	3,600
Long-term incentive plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total compensation expense recognized	1,600	1,500	1,400
Tax benefit relating to compensation expense recognized	$ 600	$ 500	$ 500
Stock Options [Member]
Number of Shares [Roll Forward]
Outstanding, beginning balance (in shares)	211,018
Granted (in shares)	0
Exercised (in shares)	(34,963)
Forfeited (in shares)	0
Expired (in shares)	0
Outstanding, ending balance (in shares)	176,055	211,018
Vested and expected to vest, period end (in shares)	176,055
Exercisable, period end (in shares)	176,055
Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share)	$ 5.05
Exercised (in dollars per share)	4.07
Outstanding, ending balance (in dollars per share)	5.24	$ 5.05
Vested and expected to vest, period end (in dollars per share)	5.24
Exercisable, period end (in dollars per share)	$ 5.24
Weighted-Average Remaining Contractual Term [Abstract]
Outstanding, weighted-average remaining contractual term	4 years 25 days
Vested and expected to vest, weighted-average remaining contractual term	4 years 25 days
Exercisable, weighted-average remaining contractual term	4 years 25 days
Aggregate Intrinsic Value [Abstract]
Outstanding, aggregate intrinsic value	$ 3,012
Vested and expected to vest, aggregate intrinsic value	3,012
Exercisable, aggregate intrinsic value	$ 3,012
Executive Officers [Member] \| Restricted Stock [Member] \| Long-term incentive plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock units issued to executive officers (in shares)	50,000	100,000	70,000
Vesting period	3 years		3 years
Executive Officers [Member] \| Restricted Stock [Member] \| Long-term incentive plan [Member] \| Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		1 year
Executive Officers [Member] \| Restricted Stock [Member] \| Long-term incentive plan [Member] \| Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		4 years
Executive Officers [Member] \| Performance stock units [Member] \| Long-term incentive plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock units issued to executive officers (in shares)	20,000	50,000	30,000
Vesting period	3 years		3 years
Executive Officers [Member] \| Performance stock units [Member] \| Long-term incentive plan [Member] \| Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		3 years
Executive Officers [Member] \| Performance stock units [Member] \| Long-term incentive plan [Member] \| Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		5 years
Non-Employee Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of additional shares approved for grant (in shares)	200,000
Total compensation expense recognized	$ 200	$ 100	$ 100
Tax benefit relating to compensation expense recognized	$ 60	$ 40	$ 30
Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issues as retainer fees (in shares)	10,000	10,000	10,000

OTHER NON-INTEREST INCOME (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
OTHER NON-INTEREST INCOME [Abstract]
Investment and insurance commissions	$ 1,968	$ 1,647	$ 1,827
ATM fees	1,446	1,496	1,551
Bank owned life insurance	1,061	1,124	1,282
Other	3,693	4,336	4,188
Total other non-interest income	$ 8,168	$ 8,603	$ 8,848

DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Derivative financial instrument according to type of hedge[ Abstract]
Unrealized gain on cash flow hedges, net of tax	$ 100
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	3,080	$ 2,251
Liability Derivatives	1,292	975
Interest-Rate Cap Agreements [Member]
Derivative financial instrument according to type of hedge[ Abstract]
Unrecognized premiums	$ 900
Maximum [Member]
Derivative financial instrument according to type of hedge[ Abstract]
Term of cash flow hedge	3 years 10 months 24 days
Cash Flow Hedge Designation [Member]
Derivative financial instrument according to type of hedge[ Abstract]
Notional Amount	$ 60,000
Average Maturity	3 years 7 months 6 days
Fair Value	$ 1,221
Cash Flow Hedge Designation [Member] \| Interest-Rate Cap Agreements [Member]
Derivative financial instrument according to type of hedge[ Abstract]
Notional Amount	$ 45,000
Average Maturity	3 years 6 months
Fair Value	$ 976
Designated as Hedging Instrument [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	1,221	0
Liability Derivatives	0	0
No Hedge Designation [Member]
Derivative financial instrument according to type of hedge[ Abstract]
Notional Amount	$ 239,377	$ 187,092
Average Maturity	4 years 1 month 6 days	4 years 4 months 24 days
Fair Value	$ 567	$ 1,276
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	1,859	2,251
Liability Derivatives	1,292	975
No Hedge Designation [Member] \| Rate-Lock Mortgage Loan Commitments [Member]
Derivative financial instrument according to type of hedge[ Abstract]
Notional Amount	$ 25,032	$ 26,658
Average Maturity	1 month 6 days	1 month 6 days
Fair Value	$ 530	$ 646
No Hedge Designation [Member] \| Mandatory Commitments to Sell Mortgage Loans [Member]
Derivative financial instrument according to type of hedge[ Abstract]
Notional Amount	$ 56,127	$ 61,954
Average Maturity	1 month 6 days	1 month 6 days
Fair Value	$ 37	$ 630
No Hedge Designation [Member] \| Purchased Options [Member]
Derivative financial instrument according to type of hedge[ Abstract]
Notional Amount	$ 3,119	$ 3,119
Average Maturity	3 years 6 months	4 years 6 months
Fair Value	$ 322	$ 238
No Hedge Designation [Member] \| Written Options [Member]
Derivative financial instrument according to type of hedge[ Abstract]
Notional Amount	$ 3,119	$ 3,119
Average Maturity	3 years 6 months	4 years 6 months
Fair Value	$ (322)	$ (238)
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	$ 15,000
Average Maturity	3 years 8 months 12 days
Fair Value	$ 245
Fixed Income Interest Rate [Member] \| No Hedge Designation [Member] \| Interest Rate Swap [Member]
Derivative financial instrument according to type of hedge[ Abstract]
Notional Amount	$ 75,990	$ 46,121
Average Maturity	6 years 2 months 12 days	8 years 7 months 6 days
Fair Value	$ 292	$ 249
Variable Income Interest Rate [Member] \| No Hedge Designation [Member] \| Interest Rate Swap [Member]
Derivative financial instrument according to type of hedge[ Abstract]
Notional Amount	$ 75,990	$ 46,121
Average Maturity	6 years 2 months 12 days	8 years 7 months 6 days
Fair Value	$ (292)	$ (249)
Other Assets [Member] \| Designated as Hedging Instrument [Member] \| Interest-Rate Cap Agreements [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	976	0
Other Assets [Member] \| No Hedge Designation [Member] \| Rate-Lock Mortgage Loan Commitments [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	530	646
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	37	630
Other Assets [Member] \| No Hedge Designation [Member] \| Purchased Options [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	322	238
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	245	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	631	493
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	339	244
Other Liabilities [Member] \| Designated as Hedging Instrument [Member] \| Interest Rate Swap [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	0	0
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	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	322	238
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	339	244
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	$ 631	$ 493

DERIVATIVE FINANCIAL INSTRUMENTS, Effect on Statement of Operations (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

Cash Flow Hedge Designation [Member]

Effect of derivative financial instruments on the consolidated financial statements of operations [Abstract]

Gain Recognized in Other Comprehensive Income (Loss) (Effective Portion)

$ 324

$ 0

Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(18)

Cash Flow Hedge Designation [Member] | Interest-Rate Cap Agreements [Member]

^[1]

(12)

Effect of derivative financial instruments on the consolidated financial statements of operations [Abstract]

Gain Recognized in Other Comprehensive Income (Loss) (Effective Portion)

108

Cash Flow Hedge Designation [Member] | Interest-Rate Cap Agreements [Member] | Interest Expense [Member]

Effect of derivative financial instruments on the consolidated financial statements of operations [Abstract]

Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

Cash Flow Hedge Designation [Member] | Fixed Income Interest Rate [Member] | Interest Rate Swap [Member]

^[1]

Effect of derivative financial instruments on the consolidated financial statements of operations [Abstract]

Gain Recognized in Other Comprehensive Income (Loss) (Effective Portion)

216

Cash Flow Hedge Designation [Member] | Fixed Income Interest Rate [Member] | Interest Rate Swap [Member] | Interest Expense [Member]

Effect of derivative financial instruments on the consolidated financial statements of operations [Abstract]

Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(18)

No Hedge Designation [Member]

^[1]

(12)

Effect of derivative financial instruments on the consolidated financial statements of operations [Abstract]

No Hedge Designation [Member] | Rate-Lock Mortgage Loan Commitments [Member] | Mortgage Loan Gains [Member]

^[1]

(709)

657

366

Effect of derivative financial instruments on the consolidated financial statements of operations [Abstract]

No Hedge Designation [Member] | Mandatory Commitments to Sell Mortgage Loans [Member] | Mortgage Loan Gains [Member]

^[1]

(116)

113

Effect of derivative financial instruments on the consolidated financial statements of operations [Abstract]

No Hedge Designation [Member] | Purchased Options [Member] | Interest Expense [Member]

^[1]

(593)

561

253

Effect of derivative financial instruments on the consolidated financial statements of operations [Abstract]

No Hedge Designation [Member] | Written Options [Member] | Interest Expense [Member]

^[1]

116

122

Effect of derivative financial instruments on the consolidated financial statements of operations [Abstract]

No Hedge Designation [Member] | Fixed Income Interest Rate [Member] | Interest Rate Swap [Member] | Interest Income [Member]

^[1]

(84)

(116)

(122)

Effect of derivative financial instruments on the consolidated financial statements of operations [Abstract]

No Hedge Designation [Member] | Variable Income Interest Rate [Member] | Interest Rate Swap [Member] | Interest Income [Member]

^[1]

746

(315)

Effect of derivative financial instruments on the consolidated financial statements of operations [Abstract]

^[1]

$ (43)

$ (746)

$ 315

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

RELATED PARTY TRANSACTIONS (Details) - USD ($)	12 Months Ended
RELATED PARTY TRANSACTIONS (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Borrowing relationship exceeds level	$ 60,000
Summary of loans and leases receivable [Roll Forward]
Balance at beginning of year	415,000	$ 190,000
New loans and advances	2,945,000	594,000
Repayments	(791,000)	(369,000)
Balance at end of year	2,569,000	415,000
Directors and executive officers deposit	$ 1,400,000	$ 1,000,000
Minimum [Member]
Related Party Transaction [Line Items]
Related party entity ownership percentage	10.00%

LEASES (Details) - USD ($) $ in Thousands	12 Months Ended
LEASES (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Summary of future minimum lease payments under non-cancelable operating leases [Abstract]
2018	$ 1,310
2019	974
2020	849
2021	460
2022	112
2023 and thereafter	387
Total	4,092
Rental expense on operating leases	$ 1,400	$ 1,200	$ 1,200

CONCENTRATIONS OF CREDIT RISK (Details) $ in Millions	Dec. 31, 2017 USD ($)
Residential Real Estate [Member]
Concentration Risk [Line Items]
Concentration of risk loans receivable	$ 809.2
Construction and Development Loans [Member]
Concentration Risk [Line Items]
Concentration of risk loans receivable	143.2
Lessors of Nonresidential Real Estate [Member]
Concentration Risk [Line Items]
Concentration of risk loans receivable	263.5
Lessors of Residential Real Estate [Member]
Concentration Risk [Line Items]
Concentration of risk loans receivable	99.6
Construction [Member]
Concentration Risk [Line Items]
Concentration of risk loans receivable	71.4
Manufacturing [Member]
Concentration Risk [Line Items]
Concentration of risk loans receivable	$ 62.9

REGULATORY MATTERS (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
REGULATORY MATTERS [Abstract]
Undivided profits	$ 17,400
Components of regulatory capital [Abstract]
Total shareholders' equity	264,933	$ 248,980	$ 251,092	$ 250,371
Add (deduct) [Abstract]
Accumulated other comprehensive loss for regulatory purposes	(5,999)	(9,108)
Intangible assets	(1,586)	(1,932)
Consolidated [Member]
Total capital to risk-weighted assets [Abstract]
Total risk-based capital	$ 312,163	$ 286,289
Actual, Ratio	15.16%	15.86%
Minimum for Adequately Capitalized Institutions, Amount	$ 164,782	$ 144,413
Minimum for Adequately Capitalized Institutions, Ratio	8.00%	8.00%
Tier 1 capital to risk-weighted assets [Abstract]
Actual, Amount	$ 288,451	$ 265,405
Actual, Ratio	14.00%	14.70%
Minimum for Adequately Capitalized Institutions, Amount	$ 123,586	$ 108,309
Minimum for Adequately Capitalized Institutions, Ratio	6.00%	6.00%
Common equity tier 1 capital to risk-weighted assets [Abstract]
Actual, Amount	$ 255,934	$ 238,996
Actual, Ratio	12.43%	13.24%
Minimum for Adequately Capitalized Institutions, Amount	$ 92,690	$ 81,232
Minimum for Adequately Capitalized Institutions, Ratio	4.50%	4.50%
Tier 1 capital to average assets [Abstract]
Tier 1 capital	$ 288,451	$ 265,405
Actual, Ratio	10.57%	10.50%
Minimum for Adequately Capitalized Institutions, Amount	$ 109,209	$ 101,112
Minimum for Adequately Capitalized Institutions, Ratio	4.00%	4.00%
Components of regulatory capital [Abstract]
Total shareholders' equity	$ 264,933	$ 248,980
Add (deduct) [Abstract]
Accumulated other comprehensive loss for regulatory purposes	201	3,310
Intangible assets	(1,269)	(1,159)
Disallowed deferred tax assets	(7,931)	(12,135)
Common equity tier 1 capital	255,934	238,996
Qualifying trust preferred securities	34,500	34,500
Disallowed deferred tax assets	(1,983)	(8,091)
Tier 1 capital	288,451	265,405
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets	23,712	20,884
Total risk-based capital	312,163	286,289
Independent Bank [Member]
Total capital to risk-weighted assets [Abstract]
Total risk-based capital	$ 290,188	$ 270,855
Actual, Ratio	14.10%	15.02%
Minimum for Adequately Capitalized Institutions, Amount	$ 164,675	$ 144,223
Minimum for Adequately Capitalized Institutions, Ratio	8.00%	8.00%
Minimum for Well Capitalized Institutions, Amount	$ 205,843	$ 180,279
Minimum for Well-Capitalized Institutions, Ratio	10.00%	10.00%
Tier 1 capital to risk-weighted assets [Abstract]
Actual, Amount	$ 266,476	$ 249,971
Actual, Ratio	12.95%	13.87%
Minimum for Adequately Capitalized Institutions, Amount	$ 123,506	$ 108,167
Minimum for Adequately Capitalized Institutions, Ratio	6.00%	6.00%
Minimum for Well-Capitalized Institutions, Amount	$ 164,675	$ 144,223
Minimum for Well Capitalized Institutions, Ratio	8.00%	8.00%
Common equity tier 1 capital to risk-weighted assets [Abstract]
Actual, Amount	$ 266,476	$ 249,971
Actual, Ratio	12.95%	13.87%
Minimum for Adequately Capitalized Institutions, Amount	$ 92,630	$ 81,126
Minimum for Adequately Capitalized Institutions, Ratio	4.50%	4.50%
Minimum for Well-Capitalized Institutions, Amount	$ 133,798	$ 117,181
Minimum for Well Capitalized Institutions, Ratio	6.50%	6.50%
Tier 1 capital to average assets [Abstract]
Tier 1 capital	$ 266,476	$ 249,971
Actual, Ratio	9.78%	9.90%
Minimum for Adequately Capitalized Institutions, Amount	$ 109,041	$ 101,019
Minimum for Adequately Capitalized Institutions, Ratio	4.00%	4.00%
Minimum for Well-Capitalized Institutions, Amount	$ 136,301	$ 126,274
Minimum for Well-Capitalized Institutions, Ratio	5.00%	5.00%
Components of regulatory capital [Abstract]
Total shareholders' equity	$ 269,481	$ 258,814
Add (deduct) [Abstract]
Accumulated other comprehensive loss for regulatory purposes	201	3,310
Intangible assets	(1,269)	(1,159)
Disallowed deferred tax assets	(1,937)	(10,994)
Common equity tier 1 capital	266,476	249,971
Qualifying trust preferred securities	0	0
Disallowed deferred tax assets	0	0
Tier 1 capital	266,476	249,971
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets	23,712	20,884
Total risk-based capital	$ 290,188	$ 270,855

FAIR VALUE DISCLOSURES, Significant Assumptions (Details)
$ in Thousands

12 Months Ended

Dec. 31, 2017

USD ($)

Transfer

Dec. 31, 2016

USD ($)

Dec. 31, 2015

USD ($)

$ 455

$ 410

522,925

610,616

$ 39,436

35,946

$ 27,866

Number of transfers, Level 1 to Level 2 | Transfer

Number of transfers, Level 2 to Level 1 | Transfer

U.S. Treasury [Member]

$ 898

U.S. Agency [Member]

U.S. Agency Residential Mortgage-Backed [Member]

25,682

28,988

U.S. Agency Commercial Mortgage-Backed [Member]

137,918

156,289

Private Label Mortgage-Backed [Member]

9,760

12,632

Other Asset Backed [Member]

29,109

34,727

Obligations of States and Political Subdivisions [Member]

93,898

146,709

172,945

170,899

Corporate [Member]

47,853

56,180

Trust Preferred [Member]

Foreign Government [Member]

2,802

2,579

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]

2,060

1,613

455

410

898

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member]

455

410

^[1]

^[2]

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Treasury [Member]

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency [Member]

898

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency Residential Mortgage-Backed [Member]

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency Commercial Mortgage-Backed [Member]

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Private Label Mortgage-Backed [Member]

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Other Asset Backed [Member]

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Obligations of States and Political Subdivisions [Member]

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Corporate [Member]

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Trust Preferred [Member]

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Foreign Government [Member]

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member]

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member]

^[3]

Land, land development & construction - real estate

^[4]

^[4]

^[4]

^[4]

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Other Real Estate [Member]

^[4]

Land, land development & construction - real estate

^[5],[6]

^[6]

^[6]

Significant Other Observable Inputs (Level 2) [Member]

^[6]

522,027

610,616

3,080

2,251

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member]

1,292

975

39,436

35,946

^[1]

3,080

2,251

^[2]

1,292

975

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Treasury [Member]

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency [Member]

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency Residential Mortgage-Backed [Member]

25,682

28,988

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency Commercial Mortgage-Backed [Member]

137,918

156,289

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Private Label Mortgage-Backed [Member]

9,760

12,632

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Other Asset Backed [Member]

29,109

34,727

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Obligations of States and Political Subdivisions [Member]

93,898

146,709

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Corporate [Member]

172,945

170,899

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Trust Preferred [Member]

47,853

56,180

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Foreign Government [Member]

2,802

2,579

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member]

2,060

1,613

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member]

^[3]

Land, land development & construction - real estate

^[4]

^[4]

^[4]

^[4]

Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Other Real Estate [Member]

^[4]

Land, land development & construction - real estate

^[5],[6]

2,863

^[6]

^[6]

Significant Unobservable Inputs (Level 3) [Member]

^[6]

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member]

15,699

8,163

^[1]

^[2]

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Treasury [Member]

15,699

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency [Member]

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency Residential Mortgage-Backed [Member]

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency Commercial Mortgage-Backed [Member]

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Private Label Mortgage-Backed [Member]

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Other Asset Backed [Member]

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Obligations of States and Political Subdivisions [Member]

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Corporate [Member]

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Trust Preferred [Member]

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Foreign Government [Member]

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member]

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member]

^[3]

8,163

Land, land development & construction - real estate

^[4]

274

255

^[4]

^[4]

1,051

1,342

^[4]

339

361

Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Other Real Estate [Member]

^[4]

207

Land, land development & construction - real estate

^[5],[6]

^[6]

176

^[6]

186

Fair Value Measurements [Member]

^[6]

133

455

410

522,925

610,616

3,080

2,251

Fair Value Measurements [Member] | Fair Value, Measurements, Recurring [Member]

1,292

975

455

410

39,436

35,946

^[1]

3,080

2,251

^[2]

1,292

975

Fair Value Measurements [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Treasury [Member]

15,699

Fair Value Measurements [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency [Member]

898

Fair Value Measurements [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency Residential Mortgage-Backed [Member]

25,682

28,988

Fair Value Measurements [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Agency Commercial Mortgage-Backed [Member]

137,918

156,289

Fair Value Measurements [Member] | Fair Value, Measurements, Recurring [Member] | Private Label Mortgage-Backed [Member]

9,760

12,632

Fair Value Measurements [Member] | Fair Value, Measurements, Recurring [Member] | Other Asset Backed [Member]

29,109

34,727

Fair Value Measurements [Member] | Fair Value, Measurements, Recurring [Member] | Obligations of States and Political Subdivisions [Member]

93,898

146,709

Fair Value Measurements [Member] | Fair Value, Measurements, Recurring [Member] | Corporate [Member]

172,945

170,899

Fair Value Measurements [Member] | Fair Value, Measurements, Recurring [Member] | Trust Preferred [Member]

47,853

56,180

Fair Value Measurements [Member] | Fair Value, Measurements, Recurring [Member] | Foreign Government [Member]

2,802

2,579

Fair Value Measurements [Member] | Fair Value, Measurements, Nonrecurring [Member]

2,060

1,613

Fair Value Measurements [Member] | Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member]

^[3]

8,163

Land, land development & construction - real estate

^[4]

274

255

^[4]

^[4]

1,051

1,342

^[4]

339

361

Fair Value Measurements [Member] | Fair Value, Measurements, Nonrecurring [Member] | Other Real Estate [Member]

^[4]

207

Land, land development & construction - real estate

^[5],[6]

2,863

^[6]

176

^[6]

186

Impaired Loans Commercial [Member]

^[6]

$ 65

$ 133

[1]	Included in accrued income and other assets.
[2]	Included in accrued expenses and other liabilities.
[3]	Only includes servicing rights that are carried at fair value due to recognition of a valuation allowance.
[4]	Only includes impaired loans with specific loss allocations based on collateral value.
[5]	Level 2 valuation is based on a signed purchase agreement.
[6]	Only includes other real estate with subsequent write downs to fair value.

FAIR VALUE DISCLOSURES, Changes in Fair Value for Financial Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Impairment charges recognized [Abstract]
Capitalized mortgage loan servicing rights, carrying amount		$ 8,200
Capitalized mortgage loan servicing rights, valuation allowance	$ 0	2,306	$ 3,272
Capitalized mortgage loan servicing rights recoveries		1,000	500
Collateral dependent loans, carrying amount	2,600	4,000
Collateral dependent loans, valuation allowance	700	2,000
Additional provision for loan losses on impaired loans	500	200	1,100
Other real estate, carrying amount	300	3,200
Other real estate, valuation allowance	123	793	1,692	$ 2,511
Other real estate, additional charge	100	600	300
Trading Securities [Member]
Changes in fair value for financial assets [Abstract]
Net Gains (Losses) on Assets	45	262	(55)
Total Change in Fair Values Included in Current Period Earnings	45	262	(55)
Loans Held For Sale [Member]
Changes in fair value for financial assets [Abstract]
Net Gains (Losses) on Assets	407	(277)	90
Total Change in Fair Values Included in Current Period Earnings	407	$ (277)	$ 90
Capitalized Mortgage Loan Servicing Rights [Member]
Changes in fair value for financial assets [Abstract]
Mortgage Loan Servicing, net	(2,744)
Total Change in Fair Values Included in Current Period Earnings	$ (2,744)

FAIR VALUE DISCLOSURES, Reconciliation for all Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) (Details) - Capitalized Mortgage Loan Servicing Rights [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) [Roll Forward]
Beginning balance	$ 0	$ 0	$ 0
Change in accounting	14,213	0	0
Total losses realized and unrealized [Abstract]
Included in results of operations	(2,744)	0	0
Included in other comprehensive income	0	0	0
Purchases, issuances, settlements, maturities and calls	4,230	0	0
Transfers in and/or out of Level 3	0	0	0
Ending balance	15,699	0	0
Amount of total losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at December 31	(2,744)	0	0
As Adjusted [Member]
Reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) [Roll Forward]
Beginning balance	$ 14,213	0	0
Total losses realized and unrealized [Abstract]
Ending balance		$ 14,213	$ 0

FAIR VALUE DISCLOSURES, Quantitative Information About Level 3 (Details) - USD ($)

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Unobservable Inputs Weighted Average [Abstract]

Total impaired collateral value

$ 200,000

Impaired Loans Commercial [Member] | Minimum [Member]

Unobservable Inputs Weighted Average [Abstract]

Impaired Loans Commercial [Member] | Maximum [Member]

0.00%

Unobservable Inputs Weighted Average [Abstract]

Significant Unobservable Inputs (Level 3) [Member]

100.00%

Asset (Liability) Fair Value [Abstract]

$ 15,699,000

$ 8,163,000

Impaired loan [Abstract]

1,334,000

1,446,000

^[1]

Mortgage

546,000

361,000

Other real-estate [Abstract]

Present Value of Net Servicing Revenue [Member] | Minimum [Member]

176,000

Mortgage

$ 251,000

Mortgage and Installment

$ 231,000

Unobservable Inputs Weighted Average [Abstract]

Present Value of Net Servicing Revenue [Member] | Maximum [Member]

9.88%

10.00%

Cost to service

$ 66

Ancillary income

$ 20

Float rate

2.24%

1.97%

Unobservable Inputs Weighted Average [Abstract]

Present Value of Net Servicing Revenue [Member] | Weighted Average [Member]

11.00%

Cost to service

$ 216

$ 168

Ancillary income

$ 36

$ 40

Float rate

2.24%

1.97%

Unobservable Inputs Weighted Average [Abstract]

Sales Comparison Approach [Member] | Impaired Loans Commercial [Member] | Minimum [Member]

10.11%

10.07%

Cost to service

$ 81

$ 83

Ancillary income

$ 23

$ 24

Float rate

2.24%

1.97%

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

(32.50%)

(25.00%)

^[1]

Sales Comparison Approach [Member] | Impaired Loans Commercial [Member] | Maximum [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

25.00%

17.00%

^[1]

Sales Comparison Approach [Member] | Impaired Loans Commercial [Member] | Weighted Average [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

(4.50%)

(1.50%)

^[1]

Sales Comparison Approach [Member] | Impaired Loans Mortgage [Member] | Minimum [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

(21.10%)

(23.20%)

Sales Comparison Approach [Member] | Impaired Loans Mortgage [Member] | Maximum [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

34.10%

19.40%

Sales Comparison Approach [Member] | Impaired Loans Mortgage [Member] | Weighted Average [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

(2.70%)

(4.70%)

Sales Comparison Approach [Member] | Other Real Estate Commercial [Member] | Minimum [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

(35.00%)

Sales Comparison Approach [Member] | Other Real Estate Commercial [Member] | Maximum [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

0.00%

Sales Comparison Approach [Member] | Other Real Estate Commercial [Member] | Weighted Average [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

(22.50%)

Sales Comparison Approach [Member] | Other Real Estate Mortgage [Member] | Minimum [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

(33.00%)

Sales Comparison Approach [Member] | Other Real Estate Mortgage [Member] | Maximum [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

44.50%

Sales Comparison Approach [Member] | Other Real Estate Mortgage [Member] | Weighted Average [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

(1.00%)

Sales Comparison Approach [Member] | Other Real Estate Mortgage and Installment [Member] | Minimum [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

(26.80%)

Sales Comparison Approach [Member] | Other Real Estate Mortgage and Installment [Member] | Maximum [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

2.80%

Sales Comparison Approach [Member] | Other Real Estate Mortgage and Installment [Member] | Weighted Average [Member]

Unobservable Inputs Weighted Average [Abstract]

Adjustment for differences between comparable sales

(5.10%)

[1]

FAIR VALUE DISCLOSURES, Difference Between Aggregate Fair value and Aggregate Remaining Contractual Principal (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Fair value option - Loans held for sale [Abstract]
Loans held for sale	$ 39,436	$ 35,946	$ 27,866
Difference	844	437	714
Contractual Principal	$ 38,592	$ 35,509	$ 27,152

FAIR VALUES OF FINANCIAL INSTRUMENTS (Details) - USD ($)
$ in Thousands

Dec. 31, 2017

Dec. 31, 2016

$ 2,739

$ 5,591

455

410

Federal Home Loan Bank and Federal Reserve Bank Stock

522,925

610,616

15,543

554,818

54,600

9,433

Payment plan receivables and commercial loans held for sale

35,569

31,400

Reciprocal deposits included in deposits with no stated maturity

13,000

7,400

Reciprocal deposits included in deposits with stated maturity

38,000

31,300

Recorded Book Balance [Member]

36,994

35,238

17,744

47,956

2,739

5,591

455

410

Federal Home Loan Bank and Federal Reserve Bank Stock

522,925

610,616

15,543

2,035,666

1,655,335

^[1]

8,609

7,316

3,080

2,251

^[2]

1,845,716

1,740,601

^[2]

554,818

485,118

54,600

9,433

35,569

892

932

1,292

975

Fair Value [Member]

36,994

35,238

17,744

47,956

2,740

5,611

455

410

522,925

610,616

1,962,937

1,629,587

^[1]

8,609

7,316

3,080

2,251

^[2]

1,845,716

1,740,601

^[2]

551,489

483,469

54,918

10,371

29,946

25,017

892

932

Quoted Prices in Active Markets for Identical Assets, (Level 1) [Member]

1,292

975

36,994

35,238

17,744

47,956

455

410

898

^[1]

^[2]

1,845,716

1,740,601

^[2]

Significant Other Observable Inputs, (Level 2) [Member]

2,740

5,611

522,027

610,616

39,436

67,321

^[1]

2,192

2,364

3,080

2,251

^[2]

^[2]

551,489

483,469

54,918

10,371

29,946

25,017

844

911

Significant Unobservable Inputs, (Level 3) [Member]

1,292

975

1,923,501

1,562,266

^[1]

6,416

4,947

^[2]

^[2]

Accumulated Other Comprehensive Income (Loss) [Line Items]

$ 0

[1]	Net loans and loans held for sale at December 31, 2016 include $31.4 million of payment plan receivables and commercial loans held for sale.
[2]	Deposits with no stated maturity include reciprocal deposits with a recorded book balance of $13.0 million and $7.4 million at December 31, 2017 and 2016, respectively. Deposits with a stated maturity include reciprocal deposits with a recorded book balance of $38.0 million and $31.3 million at December 31, 2017 and 2016, respectively.

ACCUMULATED OTHER COMPREHENSIVE LOSS, Summary of Changes (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

$ 248,980

$ 251,092

$ 250,371

352

1,247

Other comprehensive income (loss) before reclassifications

249,332

252,339

2,973

(2,876)

(351)

(128)

(196)

(49)

Disproportionate tax effects due to change in tax rate

2,845

(3,072)

(400)

^[1]

(36)

Accumulated Other Comprehensive Loss [Member]

264,933

248,980

251,092

Accumulated Other Comprehensive Income (Loss) [Line Items]

(9,108)

(6,036)

(5,636)

300

(8,808)

(6,036)

2,845

(3,072)

(400)

Unrealized Gains (Losses) on Securities Available For Sale [Member]

(5,999)

(9,108)

(6,036)

Accumulated Other Comprehensive Income (Loss) [Line Items]

(3,310)

(238)

162

300

Other comprehensive income (loss) before reclassifications

(3,010)

2,763

(2,876)

(351)

(140)

(196)

(49)

Disproportionate tax effects due to change in tax rate

2,623

(3,072)

(400)

(83)

^[1]

Disproportionate Tax Effects from Securities Available for Sale [Member]

(470)

(3,310)

(238)

Accumulated Other Comprehensive Income (Loss) [Line Items]

(5,798)

Other comprehensive income (loss) before reclassifications

(5,798)

Disproportionate tax effects due to change in tax rate

^[1]

(83)

Unrealized Gains on Cash Flow Hedges [Member]

(5,798)

Accumulated Other Comprehensive Income (Loss) [Line Items]

Other comprehensive income (loss) before reclassifications

210

Disproportionate tax effects due to change in tax rate

222

^[1]

Disproportionate Tax Effects from Cash Flow Hedges [Member]

269

Accumulated Other Comprehensive Income (Loss) [Line Items]

Other comprehensive income (loss) before reclassifications

Disproportionate tax effects due to change in tax rate

(47)

^[1]