View Filing Data

$ 8,347

$ 8,538

Loan ratings/credit scores by loan class [Abstract]

^[1]

141,630

121,012

^[1]

474,044

476,484

^[1]

281,835

252,126

^[1]

119,052

114,460

^[1]

47,236

41,748

^[1]

17,061

17,301

^[1]

13,499

9,789

^[1]

3,972

3,155

^[1]

4,737

10,912

^[1]

1,103,066

1,046,987

Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]

^[1]

4,155

4,097

Loan ratings/credit scores by loan class [Abstract]

^[1]

48,486

33,337

^[1]

198,491

167,992

^[1]

106,609

69,018

^[1]

31,553

28,637

^[1]

13,230

9,911

^[1]

514

2,034

^[1]

1,519

^[1]

641

647

^[1]

510

1,762

^[1]

401,553

313,338

Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]

^[1]

1,139

851

Loan ratings/credit scores by loan class [Abstract]

^[1]

43,848

46,509

^[1]

111,521

136,105

^[1]

95,064

96,378

^[1]

51,174

48,663

^[1]

21,938

19,139

^[1]

12,308

9,619

^[1]

7,940

7,463

^[1]

2,208

1,181

^[1]

1,259

2,898

^[1]

347,260

367,955

Mortgage [Member] | 1-4 Non-owner Occupied [Member]

^[1]

1,662

1,789

Loan ratings/credit scores by loan class [Abstract]

^[1]

24,315

19,191

^[1]

84,656

79,837

^[1]

34,839

36,103

^[1]

13,995

15,854

^[1]

5,897

5,533

^[1]

1,863

2,396

^[1]

1,870

1,338

^[1]

533

802

^[1]

1,569

3,192

^[1]

169,537

164,246

^[1]

586

550

Loan ratings/credit scores by loan class [Abstract]

^[1]

13,905

11,077

^[1]

50,012

56,008

^[1]

30,697

33,345

^[1]

14,267

11,361

^[1]

4,097

4,077

^[1]

1,703

1,385

^[1]

1,281

882

^[1]

511

382

^[1]

1,150

^[1]

116,542

119,667

^[1]

502

544

Loan ratings/credit scores by loan class [Abstract]

^[1]

11,076

10,898

^[1]

29,364

36,542

^[1]

14,626

17,282

^[1]

8,063

9,945

^[1]

2,074

3,088

^[1]

673

1,867

^[1]

889

106

^[1]

143

^[1]

1,330

1,910

^[1]

68,174

81,781

^[1]

266

363

Loan ratings/credit scores by loan class [Abstract]

^[1]

60,122

48,026

^[1]

244,127

208,972

^[1]

99,749

87,978

^[1]

41,269

28,162

^[1]

8,135

7,668

^[1]

3,422

3,360

^[1]

1,968

1,775

^[1]

615

548

^[1]

1,204

9,690

^[1]

460,611

396,179

^[1]

1,194

1,030

Loan ratings/credit scores by loan class [Abstract]

^[1]

28,041

20,767

^[1]

118,380

100,191

^[1]

41,490

35,455

^[1]

11,485

10,581

^[1]

2,254

1,657

^[1]

946

652

^[1]

377

286

^[1]

309

266

^[1]

^[1]

203,282

169,894

Installment [Member] | Recreational Vehicle Lending [Member]

^[1]

490

403

Loan ratings/credit scores by loan class [Abstract]

^[1]

24,470

20,197

^[1]

88,164

74,154

^[1]

31,055

24,890

^[1]

7,267

4,918

^[1]

1,411

992

^[1]

592

453

^[1]

464

225

^[1]

^[1]

^[1]

153,445

125,836

^[1]

378

311

Loan ratings/credit scores by loan class [Abstract]

^[1]

7,611

7,062

^[1]

37,583

34,627

^[1]

27,204

27,633

^[1]

22,517

12,663

^[1]

4,470

5,019

^[1]

1,884

2,255

^[1]

1,127

1,264

^[1]

284

275

^[1]

1,204

9,651

^[1]

103,884

100,449

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

^[1]

$ 326

$ 316

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract]
Net income	$ 46,435	$ 39,839	$ 20,475
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FROM OPERATING ACTIVITIES
Proceeds from the sale of equity securities at fair value	560	0	0
Proceeds from sales of loans held for sale	642,537	463,699	434,682
Disbursements for loans held for sale	(647,606)	(457,077)	(426,410)
Provision for loan losses	824	1,503	1,199
Deferred income tax expense	1,088	9,294	16,009
Deferred loan fees and costs	(2,936)	(4,044)	(5,159)
Net depreciation, amortization of intangible assets and premiums and accretion of discounts on securities, loans and interest bearing deposits - time	6,059	6,033	6,957
Net gains on mortgage loans	(19,978)	(10,597)	(11,762)
Net gains on securities	(307)	(138)	(260)
Net gains on other real estate and repossessed assets	(90)	(672)	(606)
Share based compensation	1,854	1,731	1,748
Increase in accrued income and other assets	(6,573)	(4,890)	(3,708)
Increase in accrued expenses and other liabilities	12,113	240	5,442
Total Adjustments	(12,455)	5,082	18,132
Net Cash From Operating Activities	33,980	44,921	38,607
CASH FLOW USED IN INVESTING ACTIVITIES
Proceeds from the sale of securities available for sale	68,716	48,736	17,308
Proceeds from maturities, prepayments and calls of securities available for sale	153,938	160,627	173,723
Purchases of securities available for sale	(237,672)	(103,493)	(100,584)
Proceeds from the sale of interest bearing deposits - time	0	2,474	0
Proceeds from the maturity of interest bearing deposits - time	250	3,728	2,850
Purchase of Federal Reserve Bank stock	0	(2,038)	0
Net increase in portfolio loans (loans originated, net of principal payments)	(215,276)	(344,330)	(406,859)
Proceeds from the sale of portfolio loans	50,516	27,658	0
Cash received in the acquisition of TCSB Bancorp Inc.	0	23,516	0
Cash received from the sale of Mepco Finance Corporation assets, net	0	0	33,446
Proceeds from the collection of vehicle service contract counterparty receivables	512	511	528
Proceeds from the sale of other real estate and repossessed assets	1,766	2,526	5,703
Proceeds from bank-owned life insurance	470	474	523
Proceeds from the sale of property and equipment	74	106	26
Capital expenditures	(4,936)	(3,862)	(4,242)
Net Cash Used in Investing Activities	(181,642)	(183,367)	(277,578)
CASH FLOW FROM FINANCING ACTIVITIES
Net increase in total deposits	123,299	225,185	174,815
Net increase (decrease) in other borrowings	25,002	(6,600)	6,754
Proceeds from Federal Home Loan Bank advances	111,000	1,272,000	622,000
Payments of Federal Home Loan Bank advances	(73,143)	(1,308,697)	(583,587)
Dividends paid	(16,554)	(14,055)	(8,960)
Proceeds from issuance of common stock	284	267	72
Repurchase of common stock	(26,284)	(12,681)	0
Share based compensation withholding obligation	(882)	(1,467)	(579)
Net Cash From Financing Activities	142,722	153,952	210,515
Net Increase (Decrease) in Cash and Cash Equivalents	(4,940)	15,506	(28,456)
Cash and Cash Equivalents at Beginning of Year	70,244	54,738	83,194
Cash and Cash Equivalents at End of Year	65,304	70,244	54,738
Cash paid during the year for
Interest	26,697	16,737	9,163
Income taxes	9,534	120	1,970
Operating leases	2,201	0	0
Transfers to other real estate and repossessed assets	2,242	1,510	1,735
Transfer of mortgage loans to held for sale	36,622	41,471	0
Securitization of portfolio loans	65,070	10,869	0
Right of use assets obtained in exchange for lease obligations	9,906	0	0
Purchase of securities available for sale and interest bearing deposits - time not yet settled	0	0	1,000
Common stock and stock options issued in TCSB Bancorp, Inc. acquisition	$ 0	$ 64,536	$ 0

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

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

$ 24,888

$ 22,587

$ 20,234

824

1,503

1,199

3,961

4,622

4,205

(3,525)

(3,824)

(3,051)

26,148

24,888

22,587

6,155

6,310

19,993

18,578

26,148

24,888

55,892

58,461

2,675,193

2,530,084

2,733,370

2,591,058

8,347

8,538

Loans Acquired with Deteriorated Credit Quality [Member]

2,725,023

2,582,520

2,285

2,513

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

7,090

5,595

4,880

(651)

(946)

(327)

2,165

2,889

1,497

(682)

(448)

(455)

7,922

7,090

5,595

1,031

1,305

6,891

5,785

7,922

7,090

9,393

8,697

1,158,906

1,137,586

1,169,693

1,147,892

2,998

3,411

Commercial [Member] | Loans Acquired with Deteriorated Credit Quality [Member]

1,166,695

1,144,481

1,394

1,609

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

7,978

8,733

8,681

526

457

(567)

933

734

1,741

(1,221)

(1,946)

(1,122)

8,216

7,978

8,733

4,863

4,799

3,353

3,179

8,216

7,978

43,574

46,394

1,058,917

1,000,038

1,103,066

1,046,987

^[1]

4,155

4,097

Mortgage [Member] | Loans Acquired with Deteriorated Credit Quality [Member]

1,098,911

1,042,890

575

555

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

895

864

1,011

1,147

462

360

863

999

967

(1,622)

(1,430)

(1,474)

1,283

895

864

261

206

1,022

689

1,283

895

2,925

3,370

457,370

392,460

460,611

396,179

^[1]

1,194

1,030

Installment [Member] | Loans Acquired with Deteriorated Credit Quality [Member]

459,417

395,149

Subjective Allocation [Member]

316

349

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

8,925

7,395

5,662

(198)

1,530

1,733

8,727

8,925

$ 7,395

8,727

8,925

Subjective Allocation [Member] | Loans Acquired with Deteriorated Credit Quality [Member]

8,727

8,925

SHARE BASED COMPENSATION AND BENEFIT PLANS [Abstract]

$ 0

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

GOODWILL AND OTHER INTANGIBLES (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Amortized intangible assets - core deposits [Abstract]
Gross Carrying Amount	$ 11,916	$ 11,916
Accumulated Amortization	6,590	5,501
Unamortized intangible assets - goodwill [Abstract]
Gross Carrying Amount	28,300	28,300
Intangible amortization expense	1,100	$ 1,000	$ 300
Summary of estimated core deposit intangible amortization [Abstract]
2020	1,020
2021	970
2022	785
2023	547
2024	516
2025 and thereafter	1,488
Total	$ 5,326

SHARE BASED COMPENSATION AND BENEFIT PLANS (Tables)

12 Months Ended

Dec. 31, 2019

Outstanding Stock Option Grants and Transactions

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

	Number of Shares			Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregated Intrinsic Value
								(In thousands)
Outstanding at January 1, 2019		211,421		$	6.48
Granted		-
Exercised		(71,799	)		9.84
Forfeited		-
Expired		(1,116	)		22.35
Outstanding at December 31, 2019		138,506		$	4.62		3.01	$	2,498

Vested and expected to vest at
December 31, 2019		138,506		$	4.62		3.01	$	2,498
Exercisable at December 31, 2019		138,506		$	4.62		3.01	$	2,498

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

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

	Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2019		258,419		$	19.00
Granted		86,283			22.87
Vested		(85,978	)		14.57
Forfeited		(12,998	)		22.85
Outstanding at December 31, 2019		245,726		$	21.72

Information Regarding Options Exercised

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

	2019		2018		2017
	(In thousands)
Intrinsic value	$	897	$	2,333	$	623
Cash proceeds received	$	706	$	1,420	$	142
Tax benefit realized	$	188	$	490	$	218

GOODWILL AND OTHER INTANGIBLES

12 Months Ended

Dec. 31, 2019

Goodwill and Other Intangibles [Abstract]

GOODWILL AND OTHER INTANGIBLES

NOTE 7 – GOODWILL AND OTHER INTANGIBLES

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

	2019				2018
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(In thousands)

Amortized intangible assets - core deposits	$	11,916	$	6,590	$	11,916	$	5,501
Unamortized intangible assets - goodwill	$	28,300			$	28,300

At December 31, 2019, the Bank (our reporting unit) had positive equity and we elected to perform a qualitative assessment to determine if it was more likely than not that the fair value of the Bank exceeds its carrying value, including goodwill. The qualitative assessment indicated that it was more likely than not that the fair value of the Bank exceeded its carrying value, resulting in no impairment.

Intangible amortization expense was $1.1 million, $1.0 million and $0.3 million during the years ended 2019, 2018 and 2017, respectively.

A summary of estimated core deposit intangible amortization at December 31, 2019, follows:

	(In thousands)

2020	$	1,020
2021		970
2022		785
2023		547
2024		516
2025 and thereafter		1,488
Total	$	5,326

SECURITIES, Gains and Losses Realized on Sale of Securities Available for Sale (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Gain and losses realized on sale of securities available for sale [Abstract]

Proceeds

$ 68,716

$ 48,736

$ 17,308

Realized gains

^[1]

248

192

218

Losses

108

136

Trading Securities, Realized Gain (Loss)

170

(60)

Gains (losses) related to preferred stock held for sale

(60)

$ 50

Pledged securities with book value

$ 8,700

$ 0

Shareholder equity threshold not exceeded by revenue or taxing authority amount

10.00%

VISA Class B Common Stock [Member]

Gain and losses realized on sale of securities available for sale [Abstract]

Realized gains

$ 144

Number securities sold (in shares)

1,000

[1]	2018 excludes a $0.144 million gain on the sale of 1,000 VISA Class B shares.

INCOME TAX (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
INCOME TAX (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income tax expense [Abstract]
Current expense		$ 10,237	$ 0	$ 1,927
Deferred expense		1,088	9,294	10,071
Change in statutory rate		0	0	5,965
Income tax expense		$ 11,325	$ 9,294	$ 17,963
Increase in income tax expense	$ 6,000
Statutory federal income tax rate		21.00%	21.00%	35.00%
Reconciliation of income tax expense [Abstract]
Statutory rate applied to income before income tax		$ 12,130	$ 10,318	$ 13,453
Tax-exempt income		(375)	(383)	(777)
Bank owned life insurance		(233)	(229)	(372)
Share-based compensation		(204)	(367)	(287)
Unrecognized tax benefit		(134)	(162)	(123)
Non-deductible meals, entertainment and memberships		86	85	64
Change in statutory rate		0	0	5,965
Other, net		55	32	40
Income tax expense		11,325	9,294	17,963
Deferred tax assets [Abstract]
Allowance for loan losses		5,355	5,052
Lease liabilities		1,744	0
Property and equipment		1,528	1,569
Share based compensation		808	900
Unrealized loss on derivative financial instruments		459	33
Reserve for unfunded lending commitments		324	272
Deferred compensation		285	253
Loss reimbursement on sold loans reserve		185	165
Non accrual loan interest income		173	179
Other than temporary impairment charge on securities available for sale		147	187
Vehicle service contract counterparty contingency reserve		38	70
Alternative minimum tax credit carry forward		0	1,686
Unrealized loss on securities available for sale		0	1,113
Unrealized loss on equity securities		0	295
Purchase premiums, net		0	71
Other		0	161
Gross deferred tax assets		11,046	12,006
Deferred tax liabilities [Abstract]
Capitalized mortgage loan servicing rights		4,026	4,494
Deferred loan fees		1,852	1,706
Lease right of use asset		1,739	0
Unrealized gain on securities available for sale		994	0
Purchase premiums, net		293	0
Federal Home Loan Bank stock		27	27
Other		43	0
Gross deferred tax liabilities		8,974	6,227
Deferred tax assets, net		2,072	5,779
Changes in unrecognized tax benefits [Roll Forward]
Balance at beginning of year		588	724	840
Additions based on tax positions related to the current year		20	26	7
Reductions due to the statute of limitations		(170)	(162)	(123)
Reductions due to settlements		0	0	0
Balance at end of year	724	438	588	724
Unrecognized tax benefits of effective tax rate		100
Penalties and interest expense		0	0	0
Penalties and interest accrued	$ 0	$ 0	$ 0	$ 0
Open tax year		2016

OTHER NON-INTEREST INCOME (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
OTHER NON-INTEREST INCOME [Abstract]
Investment and insurance commissions	$ 1,658	$ 1,971	$ 1,968
ATM fees	1,403	1,457	1,446
Bank owned life insurance	1,111	970	1,061
Other	5,110	4,362	3,693
Total	$ 9,282	$ 8,760	$ 8,168

SUBORDINATED DEBENTURES (Details) $ in Thousands	12 Months Ended
SUBORDINATED DEBENTURES (Details) $ in Thousands	Dec. 31, 2019 USD ($) Quarter	Dec. 31, 2018 USD ($)	Mar. 31, 2018 USD ($)
SUBORDINATED DEBENTURES [Abstract]
Trust preferred securities	$ 38,200	$ 38,200
Summary of information regarding subordinated debentures [Abstract]
Subordinated Debentures	$ 39,456	39,388
Summary of subordinated debentures and trust preferred securities [Abstract]
Distribution deferral period, maximum quarters \| Quarter	20
Subordinated Debentures Subject to Mandatory Redemption [Member]
Summary of information regarding subordinated debentures [Abstract]
Subordinated Debentures	$ 39,456	39,388
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
Subordinated Debentures Subject to Mandatory Redemption [Member] \| TCSB Statutory Trust I [Member]
Summary of information regarding subordinated debentures [Abstract]
Subordinated Debentures	5,155	5,155
Discount	(1,268)	(1,336)	$ (1,400)
Trust Preferred Securities Subject to Mandatory Redemption [Member]
Summary of information regarding subordinated debentures [Abstract]
Trust Preferred Securities Issued	38,232	38,164
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
Trust Preferred Securities Subject to Mandatory Redemption [Member] \| TCSB Statutory Trust I [Member]
Summary of information regarding subordinated debentures [Abstract]
Trust Preferred Securities Issued	5,000	5,000
Discount	(1,268)	(1,336)
Common Stock Subject to Mandatory Redemption [Member]
Summary of information regarding subordinated debentures [Abstract]
Common Stock Issued	1,224	1,224
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
Common Stock Subject to Mandatory Redemption [Member] \| TCSB Statutory Trust I [Member]
Summary of information regarding subordinated debentures [Abstract]
Common Stock Issued	155	155
Discount	$ 0	$ 0
2019 [Member] \| IBC Capital Finance III [Member]
Summary of information regarding subordinated debentures [Abstract]
Issue Date	May 30, 2007
Summary of subordinated debentures and trust preferred securities [Abstract]
Maturity Date	Jul. 30, 2037
Interest Rate	3 month LIBOR plus 1.60%
First Permitted Redemption Date	Jul. 30, 2012
Interest Rate Spread	1.60%
2019 [Member] \| IBC Capital Finance IV [Member]
Summary of information regarding subordinated debentures [Abstract]
Issue Date	Sep. 30, 2007
Summary of subordinated debentures and trust preferred securities [Abstract]
Maturity Date	Sep. 15, 2037
Interest Rate	3 month LIBOR plus 2.85%
First Permitted Redemption Date	Sep. 15, 2012
Interest Rate Spread	2.85%
2019 [Member] \| Midwest Guaranty Trust I [Member]
Summary of information regarding subordinated debentures [Abstract]
Issue Date	Nov. 30, 2002
Summary of subordinated debentures and trust preferred securities [Abstract]
Maturity Date	Nov. 07, 2032
Interest Rate	3 month LIBOR plus 3.45%
First Permitted Redemption Date	Nov. 07, 2007
Interest Rate Spread	3.45%
2019 [Member] \| TCSB Statutory Trust I [Member]
Summary of information regarding subordinated debentures [Abstract]
Issue Date	Mar. 31, 2005
Summary of subordinated debentures and trust preferred securities [Abstract]
Maturity Date	Mar. 17, 2035
Interest Rate	3 month LIBOR plus 2.20%
First Permitted Redemption Date	Mar. 17, 2010
Interest Rate Spread	2.20%
2018 [Member] \| IBC Capital Finance III [Member]
Summary of information regarding subordinated debentures [Abstract]
Issue Date	May 30, 2007
Summary of subordinated debentures and trust preferred securities [Abstract]
Maturity Date	Jul. 30, 2037
Interest Rate	3 month LIBOR plus 1.60%
First Permitted Redemption Date	Jul. 30, 2012
Interest Rate Spread	1.60%
2018 [Member] \| IBC Capital Finance IV [Member]
Summary of information regarding subordinated debentures [Abstract]
Issue Date	Sep. 30, 2007
Summary of subordinated debentures and trust preferred securities [Abstract]
Maturity Date	Sep. 15, 2037
Interest Rate	3 month LIBOR plus 2.85%
First Permitted Redemption Date	Sep. 15, 2012
Interest Rate Spread	2.85%
2018 [Member] \| Midwest Guaranty Trust I [Member]
Summary of information regarding subordinated debentures [Abstract]
Issue Date	Nov. 30, 2002
Summary of subordinated debentures and trust preferred securities [Abstract]
Maturity Date	Nov. 07, 2032
Interest Rate	3 month LIBOR plus 3.45%
First Permitted Redemption Date	Nov. 07, 2007
Interest Rate Spread	3.45%
2018 [Member] \| TCSB Statutory Trust I [Member]
Summary of information regarding subordinated debentures [Abstract]
Issue Date	Mar. 31, 2005
Summary of subordinated debentures and trust preferred securities [Abstract]
Maturity Date	Mar. 17, 2035
Interest Rate	3 month LIBOR plus 2.20%
First Permitted Redemption Date	Mar. 17, 2010
Interest Rate Spread	2.20%

LEASES (Tables)

12 Months Ended

Dec. 31, 2019

LEASES [Abstract]

Components of Operating Leases

The cost components of our operating leases follows:

	2019
	(In thousands)
Operating lease cost	$	2,217
Variable lease cost		142
Short-term lease cost		19
Total	$	2,378

Supplemental Balance Sheet Information Related to Operating Leases

Supplemental balance sheet information related to our operating leases follows:

	2019
	(In thousands)
Lease right of use asset (1)	$	8,282
Lease liabilities (2)	$	8,304

Weighted average remaining lease term (years)		7.47
Weighted average discount rate		2.8	%

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

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

Maturity Analysis of Lease Liabilities

Maturity analysis of our lease liabilities at December 31, 2019 based on required contractual payments follows:

	(In thousands)

2020	$	1,681
2021		1,418
2022		1,322
2023		1,186
2024		802
2025 and thereafter		2,792
Total lease payments		9,201
Less imputed interest		(897	)
Total	$	8,304

LOANS AND PAYMENT PLAN RECEIVABLES, Aging Analysis of Loans by Class (Details) - USD ($)
$ in Thousands

Dec. 31, 2019

Dec. 31, 2018

$ 14,476

$ 12,795

2,718,894

2,578,263

2,733,370

2,591,058

Loans Past Due, 30-59 days [Member]

8,347

8,538

7,449

4,960

Loans Past Due, 60-89 days [Member]

2,936

820

Loans Past Due, 90+ days [Member]

4,091

7,015

Loans Past Due Total [Member]

Loans Not Past Due [Member]

108

8,239

8,483

1,169,693

1,147,892

Commercial [Member] | Commercial and Industrial [Member]

2,998

3,411

391

1,582

564,480

580,935

Commercial [Member] | Commercial and Industrial [Member] | Loans Past Due, 30-59 days [Member]

564,871

582,517

Commercial [Member] | Commercial and Industrial [Member] | Loans Past Due, 60-89 days [Member]

1,582

Commercial [Member] | Commercial and Industrial [Member] | Loans Past Due, 90+ days [Member]

289

Commercial [Member] | Commercial Real Estate [Member]

102

912

603,910

565,375

Commercial [Member] | Commercial Real Estate [Member] | Loans Past Due, 30-59 days [Member]

604,822

565,375

Commercial [Member] | Commercial Real Estate [Member] | Loans Past Due, 60-89 days [Member]

177

Commercial [Member] | Commercial Real Estate [Member] | Loans Past Due, 90+ days [Member]

735

1,103,066

1,046,987

Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]

^[1]

4,155

4,097

2,794

184

398,759

313,154

401,553

313,338

Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member] | Loans Past Due, 30-59 days [Member]

^[1]

1,139

851

Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member] | Loans Past Due, 60-89 days [Member]

1,757

Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member] | Loans Past Due, 90+ days [Member]

1,037

Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]

184

4,911

5,188

342,349

362,767

347,260

367,955

Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member] | Loans Past Due, 30-59 days [Member]

^[1]

1,662

1,789

Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member] | Loans Past Due, 60-89 days [Member]

2,672

1,519

Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member] | Loans Past Due, 90+ days [Member]

852

145

Mortgage [Member] | 1-4 Non-owner Occupied [Member]

1,387

3,524

1,454

1,573

168,083

162,673

169,537

164,246

Mortgage [Member] | 1-4 Non-owner Occupied [Member] | Loans Past Due, 30-59 days [Member]

^[1]

586

550

Mortgage [Member] | 1-4 Non-owner Occupied [Member] | Loans Past Due, 60-89 days [Member]

695

265

Mortgage [Member] | 1-4 Non-owner Occupied [Member] | Loans Past Due, 90+ days [Member]

136

623

1,259

1,385

1,039

115,157

118,628

116,542

119,667

Mortgage [Member] | 1-4 Family - 2nd Lien [Member] | Loans Past Due, 30-59 days [Member]

^[1]

502

544

Mortgage [Member] | 1-4 Family - 2nd Lien [Member] | Loans Past Due, 60-89 days [Member]

909

446

Mortgage [Member] | 1-4 Family - 2nd Lien [Member] | Loans Past Due, 90+ days [Member]

100

386

493

982

1,007

67,192

80,774

68,174

81,781

Mortgage [Member] | Resort Lending [Member] | Loans Past Due, 30-59 days [Member]

^[1]

266

363

Mortgage [Member] | Resort Lending [Member] | Loans Past Due, 60-89 days [Member]

364

252

Mortgage [Member] | Resort Lending [Member] | Loans Past Due, 90+ days [Member]

565

755

460,611

396,179

^[1]

1,194

1,030

532

777

202,750

169,117

203,282

169,894

Installment [Member] | Boat Lending [Member] | Loans Past Due, 30-59 days [Member]

^[1]

490

403

Installment [Member] | Boat Lending [Member] | Loans Past Due, 60-89 days [Member]

337

316

Installment [Member] | Boat Lending [Member] | Loans Past Due, 90+ days [Member]

107

295

Installment [Member] | Recreational Vehicle Lending [Member]

166

261

153,184

125,780

153,445

125,836

Installment [Member] | Recreational Vehicle Lending [Member] | Loans Past Due, 30-59 days [Member]

^[1]

378

311

Installment [Member] | Recreational Vehicle Lending [Member] | Loans Past Due, 60-89 days [Member]

161

Installment [Member] | Recreational Vehicle Lending [Member] | Loans Past Due, 90+ days [Member]

854

1,389

103,030

99,060

103,884

100,449

Installment [Member] | Other [Member] | Loans Past Due, 30-59 days [Member]

^[1]

326

316

Installment [Member] | Other [Member] | Loans Past Due, 60-89 days [Member]

377

552

Installment [Member] | Other [Member] | Loans Past Due, 90+ days [Member]

275

210

DERIVATIVE FINANCIAL INSTRUMENTS [Abstract]

$ 202

$ 627

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

DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2019

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:

	2019
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Fair value hedge designation - Pay-fixed interest rate swap agreements	$	7,117		9.4	$	(242	)

Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		1.6	$	(174	)
Interest rate cap agreements		150,000		2.6		214
Total	$	175,000		2.5	$	40

No hedge designation
Rate-lock mortgage loan commitments	$	49,268		0.1	$	1,412
Mandatory commitments to sell mortgage loans		95,363		0.1		(150	)
Pay-fixed interest rate swap agreements - commercial		153,946		5.5		(3,641	)
Pay-variable interest rate swap agreements - commercial		153,946		5.5		3,641
Purchased options		2,908		1.5		141
Written options		2,848		1.5		(139	)
Total	$	458,279		3.7	$	1,264

	2018
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		2.6	$	280
Interest rate cap agreements		150,000		3.6		2,245
Total	$	175,000		3.5	$	2,525

No hedge designation
Rate-lock mortgage loan commitments	$	32,473		0.1	$	687
Mandatory commitments to sell mortgage loans		57,583		0.1		(383	)
Pay-fixed interest rate swap agreements - commercial		94,451		5.5		405
Pay-variable interest rate swap agreements - commercial		94,451		5.5		(405	)
Purchased options		3,095		2.5		116
Written options		3,095		2.5		(116	)
Total	$	285,148		3.7	$	304

We 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 $2.2 million and $2.7 million at December 31, 2019 and 2018, respectively.

It is anticipated that $0.05 million, net of tax, of unrealized losses on Cash Flow Hedges at December 31, 2019, will be reclassified into earnings over the next twelve months. The maximum term of any Cash Flow Hedge at December 31, 2019 is 3.8 years.

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

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.

In prior periods we offered to our deposit customers an equity linked time deposit product (‘‘Altitude CD’’). The Altitude CD was a time deposit that provided 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 tha 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,
	2019			2018			2019			2018
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In thousands)
Derivatives designated as hedging instruments
Pay-fixed interest rate swap agreements	Other assets	$	-	Other assets	$	280	Other liabilities	$	416	Other liabilities	$	-
Interest rate cap agreements	Other assets		214	Other assets		2,245	Other liabilities		-	Other liabilities		-
			214			2,525			416			-
Derivatives not designated as hedging instruments
Rate-lock mortgage loan commitments	Other assets		1,412	Other assets		687	Other liabilities	$	-	Other liabilities		-
Mandatory commitments to sell mortgage loans	Other assets		-	Other assets		-	Other liabilities		150	Other liabilities		383
Pay-fixed interest rate swap agreements - commercial	Other assets		28	Other assets		1,116	Other liabilities		3,669	Other liabilities		711
Pay-variable interest rate swap agreements - commercial	Other assets		3,669	Other assets		711	Other liabilities		28	Other liabilities		1,116
Purchased options	Other assets		141	Other assets		116	Other liabilities		-	Other liabilities		-
Written options	Other assets		-	Other assets		-	Other liabilities		139	Other liabilities		116
			5,250			2,630			3,986			2,326
Total derivatives		$	5,464		$	5,155		$	4,402		$	2,326

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

Year Ended December 31,
	Gain (loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)								Location Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)							Location of Gain (Loss) Recognized	Gain (Loss) Recognized in Income(1)
	2019			2018			2017			2019		2018		2017			in Income (1)	2019			2018			2017
	(In thousands)
Fair Value Hedges
Pay-fixed interest rate swapagreements																	Non-interest income-other	$	(242	)	$	-		$	-
Cash Flow Hedges
Interest rate cap agreements	$	(1,211	)	$	(340	)	$	108	Interest expense	$	363	$	206	$	-		Interest expense	$	-		$	-		$	-
Pay-fixed interest rate swapagreements		(392	)		78			216	Interest expense		62		31		(18	)	Interest expense		-			(12	)		(12	)
Total	$	(1,603	)	$	(262	)	$	324		$	425	$	237	$	(18	)		$	-		$	(12	)	$	(12	)

No hedge designation

Rate-lock mortgage loan commitments																	Net gains on mortgage loans	$	725		$	157		$	(116	)
Mandatory commitments to sell mortgage loans																	Net gains on mortgage loans		233			(420	)		(593	)
Pay-fixed interest rate swap agreements - commercial																	Interest income		(4,046	)		113			43
Pay-variable interest rate swap agreements -commercial																	Interest income		4,046			(113	)		(43	)
Purchased options																	Interest expense		25			(206	)		84
Written options																	Interest expense		(23	)		206			(84	)
Total																		$	960		$	(263	)	$	(709	)

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

SUBORDINATED DEBENTURES (Tables)

12 Months Ended

Dec. 31, 2019

SUBORDINATED DEBENTURES [Abstract]

Information Regarding Subordinated Debentures

Summary information regarding subordinated debentures as of December 31 follows:

		2019
		Subordinated Debentures			Trust Preferred Securities Issued			Common Stock Issued
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
TCSB Statutory Trust I	March 2005		5,155			5,000			155
Discount on TCSB Statutory Trust I			(1,268	)		(1,268	)		-
		$	39,456		$	38,232		$	1,224

		2018
Entity Name	Issue Date
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
TCSB Statutory Trust I	March 2005		5,155			5,000			155
Discount on TCSB Statutory Trust I			(1,336	)		(1,336	)		-
		$	39,388		$	38,164		$	1,224

Subordinated Debentures and Trust Preferred Securities

Other key terms for the subordinated debentures and trust preferred securities that were outstanding at December 31, 2019 and 2018 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
TCSB Statutory Trust I	March 17, 2035	3 month LIBOR plus 2.20%	March 17, 2010

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

3 Months Ended

12 Months Ended

Dec. 31, 2019

Sep. 30, 2019

Mar. 31, 2019

Dec. 31, 2018

Sep. 30, 2018

Mar. 31, 2018

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Net of deferred loan costs

$ 2,725,023

$ 2,582,520

$ 2,725,023

$ 2,582,520

16,300

13,300

16,300

13,300

50,516

27,658

$ 0

Transfer of Portfolio Loans and Leases to Held-for-sale

19,978

10,597

11,762

36,622

41,471

$ 0

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

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

^[1]

843,746

811,719

843,746

811,719

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

^[1]

166,735

177,574

166,735

177,574

Real Estate [Member] | Other [Member]

^[1]

249,747

180,286

249,747

180,286

^[1],[2]

693,580

707,347

693,580

707,347

Consumer [Member]

448,297

379,607

448,297

379,607

318,504

319,058

318,504

319,058

Agricultural [Member]

4,414

6,929

4,414

6,929

Mortgage [Member] | Residential Adjustable Rate Mortgage [Member]

1,098,911

1,042,890

$ 1,098,911

$ 1,042,890

$ 40,600

Mortgage [Member] | Residential Fixed Rate Mortgage [Member]

35,300

29,800

10,900

Transfer of Portfolio Loans and Leases to Held-for-sale

$ 1,200

$ 530

$ (100)

$ 36,600

Mortgage [Member] | Residential Mortgage Fixed and Adjustable Rate Mortgage [Member]

9,900

$ 11,100

$ 16,500

OTHER NON-INTEREST INCOME [Abstract]

$ 70

$ (10)

$ 50

[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.

OTHER NON-INTEREST INCOME

12 Months Ended

Dec. 31, 2019

OTHER NON-INTEREST INCOME

NOTE 15 – OTHER NON-INTEREST INCOME

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

	2019		2018		2017
	(In thousands)

Investment and insurance commissions	$	1,658	$	1,971	$	1,968
ATM fees		1,403		1,457		1,446
Bank owned life insurance		1,111		970		1,061
Other		5,110		4,362		3,693
Total other non-interest income	$	9,282	$	8,760	$	8,168

OTHER NON-INTEREST INCOME (Tables)

12 Months Ended

Dec. 31, 2019

OTHER NON-INTEREST INCOME [Abstract]

Other Non-interest Income

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

	2019		2018		2017
	(In thousands)

Investment and insurance commissions	$	1,658	$	1,971	$	1,968
ATM fees		1,403		1,457		1,446
Bank owned life insurance		1,111		970		1,061
Other		5,110		4,362		3,693
Total other non-interest income	$	9,282	$	8,760	$	8,168

FAIR VALUE DISCLOSURES (Tables)

12 Months Ended

Dec. 31, 2019

FAIR VALUE DISCLOSURES [Abstract]

Assets and Liabilities Measured at Fair Value

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

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
December 31, 2019:
Measured at Fair Value on a Recurring Basis
Assets
Securities available for sale
U.S. agency	$	14,661	$	-	$	14,661	$	-
U.S. agency residential mortgage-backed		227,762		-		227,762		-
U.S. agency commercial mortgage-backed		10,756		-		10,756		-
Private label mortgage-backed		39,693		-		39,693		-
Other asset backed		93,886		-		93,886		-
Obligations of states and political subdivisions		96,102		-		96,102		-
Corporate		33,195		-		33,195		-
Trust preferred		1,843		-		1,843		-
Foreign government		502		-		502		-
Loans held for sale, carried at fair value		69,800		-		69,800		-
Capitalized mortgage loan servicing rights		19,171		-		-		19,171
Derivatives (1)		5,464		-		5,464		-
Liabilities
Derivatives (2)		4,402		-		4,402		-

Measured at Fair Value on a Non-recurring Basis:
Assets
Impaired loans (3)
Commercial
Commercial and industrial		655		-		-		655
Commercial real estate		316		-		-		316
Mortgage
1-4 family owner occupied - jumbo		987		-		-		987
1-4 family owner occupied - non-jumbo		470		-		-		470
1-4 family non-owner occupied		281		-		-		281
1-4 family - 2nd lien		294		-		-		294
Resort lending		245		-		-		245
Installment
Boat lending		67		-		-		67
Recreational vehicle lending		2		-		-		2
Other		121		-		-		121
Other real estate (4)
Mortgage - 1-4 family owner occupied - non-jumbo		31		-		-		31
Installment - other		28		-		-		28

(1) Included in accrued income and other assets in the Consolidated Statements of Financial Condition.

(2) Included in accrued expenses and other liabilities in the Consolidated Statements of Financial Condition.

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

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

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
December 31, 2018:
Measured at Fair Value on a Recurring Basis
Assets
Equity securities at fair value Securities available for sale	$	393	$	393	$	-	$	-
U.S. agency		20,014		-		20,014		-
U.S. agency residential mortgage-backed		123,751		-		123,751		-
U.S. agency commercial mortgage-backed		5,726		-		5,726		-
Private label mortgage-backed		29,419		-		29,419		-
Other asset backed		83,319		-		83,319		-
Obligations of states and political subdivisions		127,555		-		127,555		-
Corporate		34,309		-		34,309		-
Trust preferred		1,819		-		1,819		-
Foreign government		2,014		-		2,014		-
Loans held for sale, carried at fair value		44,753		-		44,753		-
Capitalized mortgage loan servicing rights		21,400		-		-		21,400
Derivatives (1)		5,155		-		5,155		-
Liabilities
Derivatives (2)		2,326		-		2,326		-

Measured at Fair Value on a Non-recurring Basis:
Assets
Loans held for sale, carried at the lower of cost or fair value		41,471		41,471		-		-
Impaired loans (3)
Commercial
Commercial and industrial		2,243		-		-		2,243
Commercial real estate		323		-		-		323
Mortgage
1-4 family owner occupied - non-jumbo		316		-		-		316
1-4 family non-owner occupied		17		-		-		17
Resort lending		572		-		-		572
Other real estate (4)
Mortgage
1-4 family owner occupied - non-jumbo		95		-		-		95
1-4 family - 2nd lien		59		-		-		59

(1) Included in accrued income and other assets in the Consolidated Statements of Financial Condition.

(2) Included in accrued expenses and other liabilities in the Consolidated Statements of Financial Condition.

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

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

Changes in Fair Value for Financial Assets

Changes in fair values 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			Total Change in Fair Values Included in Current
	Securities			Mortgage Loans		Loan Servicing, net			Period Earnings
	(In thousands)

2019
Equity securities at fair value	$	167		$	-	$	-		$	167
Loans held for sale		-			637		-			637
Capitalized mortgage loan servicing rights		-			-		(9,532	)		(9,532	)

2018
Trading securities	$	(62	)	$	-	$	-		$	(62	)
Loans held for sale		-			413		-			413
Capitalized mortgage loan servicing rights		-			-		(2,323	)		(2,323	)

2017
Trading securities	$	45		$	-	$	-		$	45
Loans held for sale		-			407		-			407
Capitalized mortgage loan servicing rights		-			-		(2,744	)		(2,744	)

Reconciliation for all Assets 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
	2019			2018			2017
	(In thousands)
Beginning balance	$	21,400		$	15,699		$	-
Change in accounting		-			-			14,213
Beginning balance, as adjusted		21,400			15,699			14,213
Total losses realized and unrealized:
Included in results of operations		(9,532	)		(2,323	)		(2,744	)
Included in other comprehensive income (loss)		-			-			-
Purchases, issuances, settlements, maturities and calls		7,303			8,024			4,230
Transfers in and/or out of Level 3		-			-			-
Ending balance	$	19,171		$	21,400		$	15,699

Amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at December 31	$	(9,532	)	$	(2,323	)	$	(2,744	)

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

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

	Asset Fair Value		Valuation Technique	Unobservable Inputs	Range				Weighted Average
	(In thousands)
2019
Capitalized mortgage loan servicing rights	$	19,171	Present value of net	Discount rate	10.00% to 13.00			%		10.14	%
			servicing revenue	Cost to service		$	66 to $316		$	81
				Ancillary income	20 to 37					22
				Float rate			1.73	%		1.73	%
				Prepayment rate	7.01% to 69.34			%		14.96

2018
Capitalized mortgage loan servicing rights	$	21,400	Present value of net	Discount rate	10.00% to 13.00			%		10.15	%
			servicing revenue	Cost to service		$	68 to $216		$	81
				Ancillary income	20 to 36					23
				Float rate			2.57	%		2.57	%
				Prepayment rate	6.68% to 78.78			%		10.54

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)

2019

Impaired loans

Commercial

971

Sales comparison

Adjustment for differences

approach

between comparable sales

(48.0)% to 19.2

(5.6

Mortgage and Installment(1)

2,467

Sales comparison

Adjustment for differences

approach

between comparable sales

(25.2) to 49.2

11.5

Other real estate

Mortgage and Installment

Sales comparison

Adjustment for differences

approach

between comparable sales

(11.6) to 5.0

(5.1

)

2018

Impaired loans

Commercial(2)

2,566

Sales comparison

Adjustment for differences

approach

between comparable sales

(32.5)% to 60.0

(1.9

Mortgage

905

Sales comparison

Adjustment for differences

approach

between comparable sales

(40.1) to 25.6

0.7

Other real estate

Mortgage

154

Sales comparison

Adjustment for differences

approach

between comparable sales

0.0 to 34.1

11.2

(1)

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

(2)

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

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

The following table reflects the difference between the aggregate fair value and the aggregate remaining contractual principal balance outstanding for loans held for sale for which the fair value option has been elected at December 31:

	Aggregate Fair Value		Difference		Contractual Principal
	(In thousands)
Loans held for sale
2019	$	69,800	$	1,894	$	67,906
2018		44,753		1,257		43,496
2017		39,436		844		38,592

FAIR VALUES OF FINANCIAL INSTRUMENTS [Abstract]

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.

+ References + Details

CONCENTRATIONS OF CREDIT RISK (Details) $ in Millions	Dec. 31, 2019 USD ($)
Residential Real Estate [Member]
Concentration of Risk [Abstract]
Concentration of risk loans receivable	$ 1,010.0
Construction and Development Loans [Member]
Concentration of Risk [Abstract]
Concentration of risk loans receivable	249.7
Lessors of Nonresidential Real Estate [Member]
Concentration of Risk [Abstract]
Concentration of risk loans receivable	379.9
Lessors of Residential Real Estate [Member]
Concentration of Risk [Abstract]
Concentration of risk loans receivable	142.0
Construction [Member]
Concentration of Risk [Abstract]
Concentration of risk loans receivable	97.3
Accommodation and Food Services [Member]
Concentration of Risk [Abstract]
Concentration of risk loans receivable	76.6
Manufacturing [Member]
Concentration of Risk [Abstract]
Concentration of risk loans receivable	74.6
Health Care and Social Assistance [Member]
Concentration of Risk [Abstract]
Concentration of risk loans receivable	$ 58.9

FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2019

Estimated Fair Values and Recorded Book Balances

The estimated recorded book balances and fair values at December 31 follow:

	Recorded Book Balance		Fair Value			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)
2019
Assets
Cash and due from banks	$	53,295		$	53,295		$	53,295		$	-		$	-
Interest bearing deposits		12,009			12,009			12,009			-			-
Interest bearing deposits - time		350			350			-			350			-
Securities available for sale		518,400			518,400			-			518,400			-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA			NA			NA			NA
Net loans and loans held for sale		2,768,675			2,768,817			-			69,800			2,699,017
Accrued interest receivable		10,108			10,108			8			1,752			8,348
Derivative financial instruments		5,464			5,464			-			5,464			-

Liabilities
Deposits with no stated maturity (1)	$	2,427,190		$	2,427,190		$	2,427,190		$	-		$	-
Deposits with stated maturity (1)		609,537			610,235			-			610,235			-
Other borrowings		88,646			88,680			-			88,680			-
Subordinated debentures		39,456			33,149			-			33,149			-
Accrued interest payable		1,296			1,296			97			1,199			-
Derivative financial instruments		4,402			4,402			-			4,402			-

2018
Assets
Cash and due from banks	$	23,350		$	23,350		$	23,350		$	-		$	-
Interest bearing deposits		46,894			46,894			46,894			-			-
Interest bearing deposits - time		595			594			-			594			-
Equity securities at fair value		393			393			393			-			-
Securities available for sale		427,926			427,926			-			427,926			-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA			NA			NA			NA
Net loans and loans held for sale		2,643,856			2,606,256			41,471			44,753			2,520,032
Accrued interest receivable		10,164			10,164			22			1,789			8,353
Derivative financial instruments		5,155			5,155			-			5,155			-

Liabilities
Deposits with no stated maturity (1)	$	2,197,494		$	2,197,494		$	2,197,494		$	-		$	-
Deposits with stated maturity (1)		715,934			711,312			-			711,312			-
Other borrowings		25,700			25,706			-			25,706			-
Subordinated debentures		39,388			35,021			-			35,021			-
Accrued interest payable		1,646			1,646			114			1,532			-
Derivative financial instruments		2,326			2,326			-			2,326			-

NA – Not applicable

(1)

Deposits with no stated maturity include reciprocal deposits with a recorded book balance of $388.369 million and $123.080 million at December 31, 2019 and 2018, respectively. Deposits with a stated maturity include reciprocal deposits with a recorded book balance of $42.658 million and $58.992 million at December 31, 2019 and 2018, respectively.

SHAREHOLDERS' EQUITY AND INCOME PER COMMON SHARE (Tables)

12 Months Ended

Dec. 31, 2019

SHAREHOLDERS' EQUITY AND INCOME PER COMMON SHARE [Abstract]

Reconciliation of Basic and Diluted Net Income Per Share

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

	2019		2018		2017
	(In thousands, except per share amounts)

Net income	$	46,435	$	39,839	$	20,475

Weighted average shares outstanding (1)		22,894		23,412		21,327
Stock units for deferred compensation plan for non-employee directors		132		128		121
Effect of stock options		115		176		142
Performance share units		42		53		60
Weighted average shares outstanding for calculation of diluted earnings per share		23,183		23,769		21,650

Net income per common share
Basic (1)	$	2.03	$	1.70	$	0.96
Diluted	$	2.00	$	1.68	$	0.95

(1)

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

ACCOUNTING POLICIES, Adoption of New Accounting Standards (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Right of use asset

^[1]

$ 8,282

Lease liability

^[2]

$ 8,304

ASU 2016-02 [Member]

Right of use asset

$ 7,700

Lease liability

$ 7,700

ASU 2016-13 [Member]

Allowance for loan losses forecast period

2 years

ASU 2016-13 [Member] | Minimum [Member]

Expected increase in the allowance for loan losses

$ 8,000

Expected increase to the allowance for losses related to unfunded loan commitments

1,000

ASU 2016-13 [Member] | Maximum [Member]

Expected increase in the allowance for loan losses

10,000

Expected increase to the allowance for losses related to unfunded loan commitments

$ 2,000

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

LOANS AND PAYMENT PLAN RECEIVABLES, Loan Ratings by Loan Class, Commercial (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Loan ratings/credit scores by loan class [Abstract]
Loans	$ 2,733,370	$ 2,591,058
Accrued interest included in total	8,347	8,538
Commercial [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	1,169,693	1,147,892
Accrued interest included in total	2,998	3,411
Commercial [Member] \| Non-Watch 1-6 [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	1,096,471	1,082,510
Accrued interest included in total	2,763	3,107
Commercial [Member] \| Watch 7-8 [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	67,420	57,184
Accrued interest included in total	205	174
Commercial [Member] \| Substandard Accrual 9 [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	4,502	5,777
Accrued interest included in total	30	130
Commercial [Member] \| Non Accrual 10-11 [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	1,300	2,421
Accrued interest included in total	0	0
Commercial [Member] \| Commercial and Industrial [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	564,871	582,517
Commercial [Member] \| Commercial and Industrial [Member] \| Non-Watch 1-6 [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	515,955	551,441
Commercial [Member] \| Commercial and Industrial [Member] \| Watch 7-8 [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	44,384	23,910
Commercial [Member] \| Commercial and Industrial [Member] \| Substandard Accrual 9 [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	3,967	5,577
Commercial [Member] \| Commercial and Industrial [Member] \| Non Accrual 10-11 [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	565	1,589
Commercial [Member] \| Commercial Real Estate [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	604,822	565,375
Commercial [Member] \| Commercial Real Estate [Member] \| Non-Watch 1-6 [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	580,516	531,069
Commercial [Member] \| Commercial Real Estate [Member] \| Watch 7-8 [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	23,036	33,274
Commercial [Member] \| Commercial Real Estate [Member] \| Substandard Accrual 9 [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	535	200
Commercial [Member] \| Commercial Real Estate [Member] \| Non Accrual 10-11 [Member]
Loan ratings/credit scores by loan class [Abstract]
Loans	$ 735	$ 832

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

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

$ 338,994

$ 264,933

$ 249,332

Other comprehensive income (loss) before reclassifications

300

6,769

(3,878)

2,973

(447)

(231)

(128)

Disproportionate tax effects due to change in tax rate

6,322

(4,109)

2,845

^[1]

(36)

Accumulated Other Comprehensive Loss [Member]

350,169

338,994

264,933

(10,108)

(5,999)

(8,808)

(9,108)

6,322

(4,109)

2,845

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

(3,786)

(10,108)

(5,999)

(4,185)

(470)

(3,010)

(4,185)

(3,310)

Other comprehensive income (loss) before reclassifications

300

8,035

(3,671)

2,763

(111)

(44)

(140)

Disproportionate tax effects due to change in tax rate

7,924

(3,715)

2,623

(83)

^[1]

Disproportionate Tax Effects from Securities Available for Sale [Member]

3,739

(4,185)

(470)

(5,798)

(5,798)

Other comprehensive income (loss) before reclassifications

Disproportionate tax effects due to change in tax rate

^[1]

(83)

Unrealized Gains (Losses) on Cash Flow Hedges [Member]

(5,798)

(125)

269

Other comprehensive income (loss) before reclassifications

(1,266)

(207)

210

(336)

(187)

Disproportionate tax effects due to change in tax rate

(1,602)

(394)

222

^[1]

Disproportionate Tax Effects from Cash Flow Hedges [Member]

(1,727)

(125)

269

Other comprehensive income (loss) before reclassifications

Disproportionate tax effects due to change in tax rate

(47)

^[1]

Fair value of equity issued under merger agreement

$ 0

[1]	Amounts reclassified to accumulated deficit due to adoption of ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" during the fourth quarter of 2017.

SUBORDINATED DEBENTURES

12 Months Ended

Dec. 31, 2019

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 $38.2 million at both December 31, 2019 and 2018, 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.

As a result of our acquisition of TCSB (see note #26) we acquired TCSB Statutory Trust I as summarized in the tables below at a discount. The discount at acquisition totaled $1.4 million and is being amortized through its maturity date and is included in interest expense – other borrowings and subordinated debentures in the Consolidated Statements of Operations.

Summary information regarding subordinated debentures as of December 31 follows:

		2019
		Subordinated Debentures			Trust Preferred Securities Issued			Common Stock Issued
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
TCSB Statutory Trust I	March 2005		5,155			5,000			155
Discount on TCSB Statutory Trust I			(1,268	)		(1,268	)		-
		$	39,456		$	38,232		$	1,224

		2018
Entity Name	Issue Date
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
TCSB Statutory Trust I	March 2005		5,155			5,000			155
Discount on TCSB Statutory Trust I			(1,336	)		(1,336	)		-
		$	39,388		$	38,164		$	1,224

Other key terms for the subordinated debentures and trust preferred securities that were outstanding at December 31, 2019 and 2018 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
TCSB Statutory Trust I	March 17, 2035	3 month LIBOR plus 2.20%	March 17, 2010

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, 2019 and 2018.

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.

Distributions (payment of interest) on the trust preferred securities are included in interest expense – other borrowings and subordinated debentures in the Consolidated Statements of Operations.

COMMITMENTS AND CONTINGENT LIABILITIES (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) shares	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Feb. 27, 2020 $ / shares
Fair Value, Off-balance Sheet Risks [Abstract]
Loss reimbursement on sold loans	$ 230	$ 10	$ 170
Loss reimbursement reserve on sold mortgage loans	$ 900	800
VISA Class A Common Stock [Member]
Investment Owned [Abstract]
Current conversion ratio	1.6228
VISA Class B Common Stock [Member]
Investment Owned [Abstract]
Number of shares owned (in shares) \| shares	12,566
Current value of shares owned	$ 3,700
VISA Class B Common Stock [Member] \| Subsequent Event [Member]
Investment Owned [Abstract]
Closing price (in dollars per share) \| $ / shares				$ 180.01
Commitments to Extend Credit [Member]
Fair Value, Off-balance Sheet Risks [Abstract]
Financial instruments risk represented by contract amounts	582,457	505,421
Standby Letters of Credit [Member]
Fair Value, Off-balance Sheet Risks [Abstract]
Financial instruments risk represented by contract amounts	$ 7,207	$ 4,998
Standby Letters of Credit [Member] \| Minimum [Member]
Fair Value, Off-balance Sheet Risks [Abstract]
Variable interest rate	3.75%
Standby Letters of Credit [Member] \| Maximum [Member]
Fair Value, Off-balance Sheet Risks [Abstract]
Variable interest rate	10.75%

RECENT ACQUISITION (Details) - USD ($)
$ in Thousands

3 Months Ended

12 Months Ended

Apr. 01, 2018

Sep. 30, 2018

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Mar. 31, 2018

Recent Acquisition [Abstract]

$ 0

$ 64,536

$ 0

Non-interest expense amount

3,465

284

Valuation of the assets acquired and liabilities assumed [Abstract]

Goodwill

28,300

TCSB Bancorp, Inc. [Member]

Recent Acquisition [Abstract]

Equity interest issued to each holder of common stock under merger agreement (in shares)

1.1166

Total value of common stock and cash paid in lieu of fractional shares

$ 5

Equity issued under merger agreement (in shares)

2,710,000

Options issued under merger agreement (in shares)

190,000

Fair value of equity issued under merger agreement

$ 64,500

Non-interest expense amount

$ 0

$ 3,500

$ 300

Valuation of the assets acquired and liabilities assumed [Abstract]

Cash and cash equivalents

$ 23,521

4,054

Federal Home Loan Bank stock

6,066

778

Loans, net

295,799

Property and equipment, net

1,067

Capitalized mortgage loan servicing rights

3,047

Accrued income and other assets

3,362

Other intangibles

^[1]

5,798

Total assets acquired

343,492

Deposits

287,710

14,345

Accrued expenses and other liabilities

3,768

1,429

Total liabilities assumed

307,252

Net assets acquired

36,240

Goodwill

28,300

Purchase price (fair value of consideration)

64,540

Decrease in goodwill

$ (700)

Fair value of acquired receivables

292,900

Gross contractual amounts receivable

$ 298,600

TCSB Bancorp, Inc. [Member] | Core Deposits [Member]

Valuation of the assets acquired and liabilities assumed [Abstract]

Estimated fair value of intangible assets

$ 5,800

Estimated useful life

10 years

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

INCOME TAX (Tables)

12 Months Ended

Dec. 31, 2019

INCOME TAX [Abstract]

Composition of Income Tax Expense

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

	2019		2018		2017
	(In thousands)
Current expense	$	10,237	$	-	$	1,927
Deferred expense		1,088		9,294		10,071
Change in statutory rate		-		-		5,965
Income tax expense	$	11,325	$	9,294	$	17,963

Reconciliation of Income Tax Expense Computed by Applying the Statutory Federal Income Tax Rate

A reconciliation of income tax expense to the amount computed by applying the statutory federal income tax rate of 21% for 2019 and 2018 and 35% for 2017 to the income before income tax for the years ended December 31 follows:

	2019			2018			2017
	(In thousands)
Statutory rate applied to income before income tax	$	12,130		$	10,318		$	13,453
Tax-exempt income		(375	)		(383	)		(777	)
Bank owned life insurance		(233	)		(229	)		(372	)
Share-based compensation		(204	)		(367	)		(287	)
Unrecognized tax benefit		(134	)		(162	)		(123	)
Non-deductible meals, entertainment and memberships		86			85			64
Change in statutory rate		-			-			5,965
Other, net		55			32			40
Income tax expense	$	11,325		$	9,294		$	17,963

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:

	2019		2018
	(In thousands)
Deferred tax assets
Allowance for loan losses	$	5,355	$	5,052
Lease liabilities		1,744		-
Property and equipment		1,528		1,569
Share-based compensation		808		900
Unrealized loss on derivative financial instruments		459		33
Reserve for unfunded lending commitments		324		272
Deferred compensation		285		253
Loss reimbursement on sold loans reserve		185		165
Non accrual loan interest income		173		179
Other than temporary impairment charge on securities available for sale		147		187
Vehicle service contract counterparty contingency reserve		38		70
Alternative minimum tax credit carry forward		-		1,686
Unrealized loss on securities available for sale		-		1,113
Unrealized loss on equity securities		-		295
Purchase premiums, net		-		71
Other		-		161
Gross deferred tax assets		11,046		12,006
Deferred tax liabilities
Capitalized mortgage loan servicing rights		4,026		4,494
Deferred loan fees		1,852		1,706
Lease right of use asset		1,739		-
Unrealized gain on securities available for sale		994		-
Purchase premiums, net		293		-
Federal Home Loan Bank stock		27		27
Other		43		-
Gross deferred tax liabilities		8,974		6,227
Deferred tax assets, net	$	2,072	$	5,779

Changes in Unrecognized Tax Benefits

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

	2019			2018			2017
	(In thousands)

Balance at beginning of year	$	588		$	724		$	840
Additions based on tax positions related to the current year		20			26			7
Reductions due to the statute of limitations		(170	)		(162	)		(123	)
Reductions due to settlements		-			-			-
Balance at end of year	$	438		$	588		$	724

SHARE BASED COMPENSATION AND BENEFIT PLANS, Outstanding Stock Option Grants and Related Transactions (Details) - Stock Options [Member] $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) $ / shares shares
Number of Shares [Roll Forward]
Outstanding, beginning balance (in shares)	211,421
Granted (in shares)	0
Exercised (in shares)	(71,799)
Forfeited (in shares)	0
Expired (in shares)	(1,116)
Outstanding, ending balance (in shares)	138,506
Vested and expected to vest, period end (in shares)	138,506
Exercisable, period end (in shares)	138,506
Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share) \| $ / shares	$ 6.48
Exercised (in dollars per share) \| $ / shares	9.84
Expired (in dollars per share) \| $ / shares	22.35
Outstanding, ending balance (in dollars per share) \| $ / shares	4.62
Vested and expected to vest, period end (in dollars per share) \| $ / shares	4.62
Exercisable, period end (in dollars per share) \| $ / shares	$ 4.62
Weighted-Average Remaining Contractual Term [Abstract]
Outstanding, weighted-average remaining contractual term	3 years 4 days
Vested and expected to vest, weighted-average remaining contractual term	3 years 4 days
Exercisable, weighted-average remaining contractual term	3 years 4 days
Aggregate Intrinsic Value [Abstract]
Outstanding, aggregate intrinsic value \| $	$ 2,498
Vested and expected to vest, aggregate intrinsic value \| $	2,498
Exercisable, aggregate intrinsic value \| $	$ 2,498

LEASES (Details)
$ in Thousands

12 Months Ended

Dec. 31, 2019

USD ($)

Components of operating leases [Abstract]

Operating lease cost

$ 2,217

Variable lease cost

142

Short-term lease cost

Supplemental balance sheet information related to operating leases [Abstract]

2,378

Lease right of use asset

$ 8,282

^[1]

Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]

us-gaap:OtherAssets

Lease liabilities

$ 8,304

^[2]

Operating Lease, Liability, Statement of Financial Position [Extensible List]

us-gaap:OtherLiabilities

Weighted average remaining lease term (years)

7 years 5 months 19 days

Weighted average discount rate

2.80%

Maturities of lease liabilities [Abstract]

$ 1,681

1,418

1,322

1,186

802

2,792

9,201

Less imputed interest

(897)

Balance at beginning of year, net of valuation allowance

$ 8,304

^[2]

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

OTHER REAL ESTATE

12 Months Ended

Dec. 31, 2019

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):

	2019			2018			2017
	(In thousands)
Balance at beginning of year, net of valuation allowance	$	1,178		$	1,628		$	4,956
Loans transferred to other real estate		2,242			1,510			1,735
Sales of other real estate		(1,438	)		(1,822	)		(4,737	)
Additions to valuation allowance charged to expense		(267	)		(138	)		(326	)
Balance at end of year, net of valuation allowance	$	1,715		$	1,178		$	1,628

(1)

Table excludes other repossessed assets totaling $0.15 million and $0.12 million at December 31, 2019 and 2018, 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:

	2019			2018			2017
	(In thousands)
Balance at beginning of year	$	144		$	123		$	793
Additions charged to expense		267			138			326
Direct write-downs upon sale		(319	)		(117	)		(996	)
Balance at end of year	$	92		$	144		$	123

At both December 31, 2019 and 2018, the balance of other real estate includes $1.2 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 $0.7 million and $0.3 million at December 31, 2019 and 2018, respectively.

Other real estate and repossessed assets totaling $1.9 million and $1.3 million at December 31, 2019 and 2018, respectively, are presented net of the valuation allowance on the Consolidated Statements of Financial Condition.

SHARE BASED COMPENSATION AND BENEFIT PLANS, Outstanding Non-vested Stock and Related Transactions (Details) - Non-vested Restricted Stock and PSU's [Member]	12 Months Ended
	Dec. 31, 2019 $ / shares shares
Number of Shares [Roll Forward]
Outstanding, beginning balance (in shares) \| shares	258,419
Granted (in shares) \| shares	86,283
Vested (in shares) \| shares	(85,978)
Forfeited (in shares) \| shares	(12,998)
Outstanding, ending balance (in shares) \| shares	245,726
Weighted-Average Grant Date Fair Value [Roll Forward]
Outstanding, beginning balance (in dollars per share) \| $ / shares	$ 19.00
Granted (in dollars per share) \| $ / shares	22.87
Vested (in dollars per share) \| $ / shares	14.57
Forfeited (in dollars per share) \| $ / shares	22.85
Outstanding, ending balance (in dollars per share) \| $ / shares	$ 21.72

OTHER BORROWINGS (Details) - USD ($) $ in Thousands	12 Months Ended
OTHER BORROWINGS (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Summary of other borrowings [Abstract]
Advances from the FHLB	$ 63,640	$ 25,696
Federal funds purchased	25,000	0
Other	6	4
Total	88,646	25,700
Federal Home Loan Banks [Abstract]
Federal home loan bank stock	8,600
Unused borrowing capacity with FHLB	836,500
Interest expense on FHLB advances	700	1,000	$ 900
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	$ 63,640	$ 25,696
Federal Home Loan Bank, Advances, Maturities Summary, Average Interest Rate of Amounts Due [Abstract]
Total FHLB advances, Rate	1.47%	2.28%
Short-term Debt [Abstract]
Interest expense on federal funds purchased	$ 100	$ 100	100
Available for sale and loans, pledged to secure other borrowings	$ 1,900,000
Minimum [Member]
Federal Home Loan Banks [Abstract]
Federal home loan bank, advances, interest rate	132.00%
FHLB stock as percentages of unpaid principal balance	0.75%
Maximum [Member]
Federal Home Loan Banks [Abstract]
Federal home loan bank, advances, interest rate	165.00%
Fixed-Rate Advances [Member]
Federal Home Loan Bank, Advances, Fiscal Year Maturity [Abstract]
2019		10,000
2020	$ 28,645	10,762
2022	4,995	$ 4,934
2025 and thereafter	$ 30,000
Federal Home Loan Bank, Advances, Maturities Summary, Average Interest Rate of Amounts Due [Abstract]
2019, Rate		1.60%
2020, Rate	2.19%	3.18%
2022, Rate	1.69%	1.69%
2025 and thereafter, Rate	0.74%
Federal Reserve Bank Advances [Member]
Short-term Debt [Abstract]
Borrowings	$ 0	$ 0
Average borrowings	305	$ 3	$ 47
Unused borrowing capacity	$ 348,600

INCOME TAX

12 Months Ended

Dec. 31, 2019

INCOME TAX [Abstract]

INCOME TAX

NOTE 13 – INCOME TAX

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

	2019		2018		2017
	(In thousands)
Current expense	$	10,237	$	-	$	1,927
Deferred expense		1,088		9,294		10,071
Change in statutory rate		-		-		5,965
Income tax expense	$	11,325	$	9,294	$	17,963

The deferred income tax expense of $1.1 million in 2019 can be primarily attributed to the utilization of our alternative minimum tax credit carryforward while the deferred income tax expense of $9.3 million during 2018 can be primarily attributed to the utilization of our net operating loss (‘‘NOL’’) carryfoward and alternative minimum tax credit carryforward while the deferred income tax expense of $10.1 million during 2017 can be primarily attributed to the utilization of our NOL carryfoward.

On December 22, 2017, ‘‘H.R. 1’’, also known as the ‘‘Tax Cuts and Jobs Act’’, was signed into law. H.R.1, 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.

	2019			2018			2017
	(In thousands)
Statutory rate applied to income before income tax	$	12,130		$	10,318		$	13,453
Tax-exempt income		(375	)		(383	)		(777	)
Bank owned life insurance		(233	)		(229	)		(372	)
Share-based compensation		(204	)		(367	)		(287	)
Unrecognized tax benefit		(134	)		(162	)		(123	)
Non-deductible meals, entertainment and memberships		86			85			64
Change in statutory rate		-			-			5,965
Other, net		55			32			40
Income tax expense	$	11,325		$	9,294		$	17,963

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:

	2019		2018
	(In thousands)
Deferred tax assets
Allowance for loan losses	$	5,355	$	5,052
Lease liabilities		1,744		-
Property and equipment		1,528		1,569
Share-based compensation		808		900
Unrealized loss on derivative financial instruments		459		33
Reserve for unfunded lending commitments		324		272
Deferred compensation		285		253
Loss reimbursement on sold loans reserve		185		165
Non accrual loan interest income		173		179
Other than temporary impairment charge on securities available for sale		147		187
Vehicle service contract counterparty contingency reserve		38		70
Alternative minimum tax credit carry forward		-		1,686
Unrealized loss on securities available for sale		-		1,113
Unrealized loss on equity securities		-		295
Purchase premiums, net		-		71
Other		-		161
Gross deferred tax assets		11,046		12,006
Deferred tax liabilities
Capitalized mortgage loan servicing rights		4,026		4,494
Deferred loan fees		1,852		1,706
Lease right of use asset		1,739		-
Unrealized gain on securities available for sale		994		-
Purchase premiums, net		293		-
Federal Home Loan Bank stock		27		27
Other		43		-
Gross deferred tax liabilities		8,974		6,227
Deferred tax assets, net	$	2,072	$	5,779

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, 2019 and 2018, that the realization of substantially all of our deferred tax assets continues to be more likely than not.

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

	2019			2018			2017
	(In thousands)

Balance at beginning of year	$	588		$	724		$	840
Additions based on tax positions related to the current year		20			26			7
Reductions due to the statute of limitations		(170	)		(162	)		(123	)
Reductions due to settlements		-			-			-
Balance at end of year	$	438		$	588		$	724

If recognized, the entire amount of unrecognized tax benefits, net of $0.1 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, 2019, 2018 and 2017. No amounts were accrued for interest and penalties at December 31, 2019, 2018 and 2017. At December 31, 2019, U.S. Federal tax years 2016 through the present remain open to examination.

DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Derivative financial instrument according to type of hedge [Abstract]
Unrealized losses on cash flow hedges, net of tax	$ 50
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	5,464	$ 5,155
Liability Derivatives	4,402	2,326
Interest-Rate Cap Agreements [Member]
Derivative financial instrument according to type of hedge [Abstract]
Unrecognized premiums	$ 2,200	2,700
Maximum [Member]
Derivative financial instrument according to type of hedge [Abstract]
Term of cash flow hedge	3 years 9 months 18 days
Cash Flow Hedge Designation [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 175,000	$ 175,000
Average Maturity	2 years 6 months	3 years 6 months
Fair Value	$ 40	$ 2,525
Cash Flow Hedge Designation [Member] \| Interest-Rate Cap Agreements [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 150,000	$ 150,000
Average Maturity	2 years 7 months 6 days	3 years 7 months 6 days
Fair Value	$ 214	$ 2,245
Designated as Hedging Instrument [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	214	2,525
Liability Derivatives	416	0
No Hedge Designation [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 458,279	$ 285,148
Average Maturity	3 years 8 months 12 days	3 years 8 months 12 days
Fair Value	$ 1,264	$ 304
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	5,250	2,630
Liability Derivatives	3,986	2,326
No Hedge Designation [Member] \| Rate-Lock Mortgage Loan Commitments [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 49,268	$ 32,473
Average Maturity	1 month 6 days	1 month 6 days
Fair Value	$ 1,412	$ 687
No Hedge Designation [Member] \| Mandatory Commitments to Sell Mortgage Loans [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 95,363	$ 57,583
Average Maturity	1 month 6 days	1 month 6 days
Fair Value	$ (150)	$ (383)
No Hedge Designation [Member] \| Purchased Options [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 2,908	$ 3,095
Average Maturity	1 year 6 months	2 years 6 months
Fair Value	$ 141	$ 116
No Hedge Designation [Member] \| Written Options [Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 2,848	$ 3,095
Average Maturity	1 year 6 months	2 years 6 months
Fair Value	$ (139)	$ (116)
Fixed Income Interest Rate [Member] \| Fair Value Hedge Designation [Member] \| Interest Rate Swap Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 7,117
Average Maturity	9 years 4 months 24 days
Fair Value	$ (242)
Fixed Income Interest Rate [Member] \| Cash Flow Hedge Designation [Member] \| Interest Rate Swap Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 25,000	$ 25,000
Average Maturity	1 year 7 months 6 days	2 years 7 months 6 days
Fair Value	$ (174)	$ 280
Fixed Income Interest Rate [Member] \| No Hedge Designation [Member] \| Interest Rate Swap Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 153,946	$ 94,451
Average Maturity	5 years 6 months	5 years 6 months
Fair Value	$ (3,641)	$ 405
Variable Income Interest Rate [Member] \| No Hedge Designation [Member] \| Interest Rate Swap Member]
Derivative financial instrument according to type of hedge [Abstract]
Notional Amount	$ 153,946	$ 94,451
Average Maturity	5 years 6 months	5 years 6 months
Fair Value	$ 3,641	$ (405)
Other Assets [Member] \| Designated as Hedging Instrument [Member] \| Interest-Rate Cap Agreements [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	214	2,245
Other Assets [Member] \| No Hedge Designation [Member] \| Rate-Lock Mortgage Loan Commitments [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	1,412	687
Other Assets [Member] \| No Hedge Designation [Member] \| Mandatory Commitments to Sell Mortgage Loans [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	0	0
Other Assets [Member] \| No Hedge Designation [Member] \| Purchased Options [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	141	116
Other Assets [Member] \| No Hedge Designation [Member] \| Written Options [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	0	0
Other Assets [Member] \| Fixed Income Interest Rate [Member] \| Designated as Hedging Instrument [Member] \| Interest Rate Swap Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	0	280
Other Assets [Member] \| Fixed Income Interest Rate [Member] \| No Hedge Designation [Member] \| Interest Rate Swap Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	28	1,116
Other Assets [Member] \| Variable Income Interest Rate [Member] \| No Hedge Designation [Member] \| Interest Rate Swap Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Asset Derivatives	3,669	711
Other Liabilities [Member] \| Designated as Hedging Instrument [Member] \| Interest Rate Swap Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	416	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	150	383
Other Liabilities [Member] \| No Hedge Designation [Member] \| Purchased Options [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	0	0
Other Liabilities [Member] \| No Hedge Designation [Member] \| Written Options [Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	139	116
Other Liabilities [Member] \| Fixed Income Interest Rate [Member] \| No Hedge Designation [Member] \| Interest Rate Swap Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	3,669	711
Other Liabilities [Member] \| Variable Income Interest Rate [Member] \| No Hedge Designation [Member] \| Interest Rate Swap Member]
Fair value of derivative instruments, balance sheet location [Abstract]
Liability Derivatives	$ 28	$ 1,116

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2019

PROPERTY AND EQUIPMENT [Abstract]

PROPERTY AND EQUIPMENT

NOTE 6 – PROPERTY AND EQUIPMENT

A summary of property and equipment at December 31 follows:

	2019			2018
	(In thousands)
Land and land improvements	$	17,478		$	16,843
Buildings		57,363			56,385
Equipment		71,194			70,039
		146,035			143,267
Accumulated depreciation and amortization		(107,624	)		(104,490	)
Property and equipment, net	$	38,411		$	38,777

Depreciation expense was $5.2 million, $5.1 million and $5.3 million in 2019, 2018 and 2017, respectively.

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

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Other Real Estate [Roll Forward]

^[1]

$ 1,178

$ 1,628

$ 4,956

Loans transferred to other real estate

^[1]

2,242

1,510

1,735

Sales of other real estate

^[1]

(1,438)

(1,822)

(4,737)

Additions to valuation allowance charged to expense

^[1]

(267)

(138)

(326)

Balance at end of year, net of valuation allowance

^[1]

1,715

1,178

1,628

Other repossessed assets

150

120

Real Estate Owned Valuation Allowance [Roll Forward]

Balance at beginning of year

144

123

793

Additions charged to expense

267

138

326

Direct write-downs upon sale

(319)

(117)

(996)

Balance at end of year

144

$ 123

Foreclosed residential real estate

1,200

Mortgage loans in process of foreclosure

700

300

Other real estate and repossessed assets

$ 1,865

$ 1,299

[1]	Table excludes other repossessed assets totaling $0.15 million and $0.12 million at December 31, 2019 and 2018, respectively.

REGULATORY MATTERS (Tables)

12 Months Ended

Dec. 31, 2019

REGULATORY MATTERS [Abstract]

Actual Capital Amounts and Ratios and Components of Regulatory Capital

Our actual capital amounts and ratios at December 31 follow(1):

	Actual					Minimum for Adequately Capitalized Institutions					Minimum for Well-Capitalized Institutions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)

2019
Total capital to risk-weighted assets
Consolidated	$	380,454		13.74	%	$	221,562		8.00	%	NA		NA
Independent Bank		358,914		12.96			221,482		8.00		$	276,852		10.00	%

Tier 1 capital to risk-weighted assets
Consolidated	$	352,764		12.74	%	$	166,171		6.00	%	NA		NA
Independent Bank		331,224		11.96			166,111		6.00		$	221,482		8.00	%

Common equity tier 1 capital to risk-weighted assets
Consolidated	$	314,532		11.36	%	$	124,628		4.50	%	NA		NA
Independent Bank		331,224		11.96			124,583		4.50		$	179,954		6.50	%

Tier 1 capital to average assets
Consolidated	$	352,764		10.11	%	$	139,632		4.00	%	NA		NA
Independent Bank		331,224		9.49			139,615		4.00		$	174,519		5.00	%

2018
Total capital to risk-weighted assets
Consolidated	$	371,603		14.25	%	$	208,572		8.00	%	NA		NA
Independent Bank		337,227		12.94			208,456		8.00		$	260,569		10.00	%

Tier 1 capital to risk-weighted assets
Consolidated	$	345,419		13.25	%	$	156,429		6.00	%	NA		NA
Independent Bank		311,043		11.94			156,342		6.00		$	208,456		8.00	%

Common equity tier 1 capital to risk-weighted assets
Consolidated	$	307,255		11.79	%	$	117,322		4.50	%	NA		NA
Independent Bank		311,043		11.94			117,256		4.50		$	169,370		6.50	%

Tier 1 capital to average assets
Consolidated	$	345,419		10.47	%	$	131,930		4.00	%	NA		NA
Independent Bank		311,043		9.44			131,778		4.00		$	164,723		5.00	%

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

NA - Not applicable

The components of our regulatory capital are as follows:

	Consolidated						Independent Bank
	December 31,						December 31,
	2019			2018			2019			2018
	(In thousands)
Total shareholders' equity	$	350,169		$	338,994		$	366,861		$	341,496
Add (deduct)
Accumulated other comprehensive loss for regulatory purposes		(2,011	)		4,311			(2,011	)		4,311
Goodwill and other intangibles		(33,626	)		(34,715	)		(33,626	)		(34,715	)
Disallowed deferred tax assets		-			(1,335	)		-			(49	)
Common equity tier 1 capital		314,532			307,255			331,224			311,043
Qualifying trust preferred securities		38,232			38,164			-			-
Disallowed deferred tax assets		-			-			-			-
Tier 1 capital		352,764			345,419			331,224			311,043
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		27,690			26,184			27,690			26,184
Total risk-based capital	$	380,454		$	371,603		$	358,914		$	337,227

OTHER REAL ESTATE (Tables)

12 Months Ended

Dec. 31, 2019

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):

	2019			2018			2017
	(In thousands)
Balance at beginning of year, net of valuation allowance	$	1,178		$	1,628		$	4,956
Loans transferred to other real estate		2,242			1,510			1,735
Sales of other real estate		(1,438	)		(1,822	)		(4,737	)
Additions to valuation allowance charged to expense		(267	)		(138	)		(326	)
Balance at end of year, net of valuation allowance	$	1,715		$	1,178		$	1,628

(1)

Table excludes other repossessed assets totaling $0.15 million and $0.12 million at December 31, 2019 and 2018, respectively.

Valuation Allowance for Other Real Estate Owned

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

	2019			2018			2017
	(In thousands)
Balance at beginning of year	$	144		$	123		$	793
Additions charged to expense		267			138			326
Direct write-downs upon sale		(319	)		(117	)		(996	)
Balance at end of year	$	92		$	144		$	123

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

Dec. 31, 2019

Dec. 31, 2018

$ 350

$ 595

393

Federal Home Loan Bank and Federal Reserve Bank Stock

518,400

427,926

18,359

609,537

88,646

25,700

Reciprocal deposits included in deposits with no stated maturity

39,456

39,388

388,369

123,080

Reciprocal deposits included in deposits with stated maturity

42,658

58,992

Recorded Book Balance [Member]

53,295

23,350

12,009

46,894

350

595

393

Federal Home Loan Bank and Federal Reserve Bank Stock

518,400

427,926

18,359

2,768,675

2,643,856

10,108

10,164

5,464

5,155

^[1]

2,427,190

2,197,494

^[1]

609,537

715,934

88,646

25,700

39,456

39,388

1,296

1,646

4,402

2,326

Fair Value [Member]

53,295

23,350

12,009

46,894

350

594

393

518,400

427,926

2,768,817

2,606,256

10,108

10,164

5,464

5,155

2,427,190

2,197,494

610,235

711,312

88,680

25,706

33,149

35,021

1,296

1,646

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

4,402

2,326

53,295

23,350

12,009

46,894

393

41,471

2,427,190

2,197,494

114

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

350

594

518,400

427,926

69,800

44,753

1,752

1,789

5,464

5,155

610,235

711,312

88,680

25,706

33,149

35,021

1,199

1,532

Significant Unobservable Inputs, (Level 3) [Member]

4,402

2,326

2,699,017

2,520,032

8,348

8,353

Stock repurchased (in shares)

$ 0

[1]

RECENT ACQUISITION

12 Months Ended

Dec. 31, 2019

RECENT ACQUISITION [Abstract]

RECENT ACQUISITION

NOTE 26 – RECENT ACQUISITION

Effective April 1, 2018, we completed the acquisition of all of the issued and outstanding shares of common stock of TCSB through a merger of TCSB into Independent Bank Corporation (‘‘IBCP’’), with IBCP as the surviving corporation (the ‘‘Merger’’). On that same date we also consolidated Traverse City State Bank, TCSB’s wholly-owned subsidiary bank, into Independent Bank (with Independent Bank as the surviving institution). Under the terms of the merger agreement each holder of TCSB common stock received 1.1166 shares of IBCP common stock plus cash in lieu of fractional shares totaling $0.005 million. TCSB option holders had their options converted into IBCP stock options. As a result we issued 2.71 million shares of common stock and 0.19 million stock options with a fair value of approximately $64.5 million to the shareholders and option holders of TCSB. The fair value of common stock and stock options issued as the consideration paid for TCSB was determined using the closing price of our common stock on the acquisition date. This acquisition was accounted for under the acquisition method of accounting. Accordingly, we recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values. TCSB results of operations are included in our results beginning April 1, 2018. Non-interest expense includes zero, $3.5 million and $0.3 million of costs incurred during the years ended December 31, 2019, 2018 and 2017, respectively related to the Merger.

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

	(In thousands)
Cash and cash equivalents	$	23,521
Interest bearing deposits - time		4,054
Securities available for sale		6,066
Federal Home Loan Bank stock		778
Loans, net		295,799
Property and equipement, net		1,067
Capitalized mortgage loan servicing rights		3,047
Accrued income and other assets		3,362
Other intangibles (1)		5,798
Total assets acquired		343,492

Deposits		287,710
Other borrowings		14,345
Subordinated debentures		3,768
Accrued expenses and other liabilities		1,429
Total liabilities assumed		307,252
Net assets acquired		36,240
Goodwill		28,300
Purchase price (fair value of consideration)	$	64,540

(1)

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

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

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

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

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

ACCUMULATED OTHER COMPREHENSIVE LOSS, Reclassification Out of Each Component (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reclassifications out of AOCL [Abstract]
Total reclassifications before tax	$ 57,760	$ 49,133	$ 38,438
Interest expense	26,347	17,491	9,123
Income tax expense	11,325	9,294	17,963
Total reclassifications for the period, net of tax	46,435	39,839	20,475
Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassifications out of AOCL [Abstract]
Total reclassifications for the period, net of tax	447	231	128
Unrealized Gains (Losses) on Securities Available for Sale [Member] \| Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassifications out of AOCL [Abstract]
Net gains on securities	140	56	215
Net impairment loss recognized in earnings	0	0	0
Total reclassifications before tax	140	56	215
Income tax expense	29	12	75
Total reclassifications for the period, net of tax	111	44	140
Unrealized Gains (Losses) on Cash Flow Hedges [Member] \| Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassifications out of AOCL [Abstract]
Interest expense	(425)	(237)	18
Income tax expense	(89)	(50)	6
Total reclassifications for the period, net of tax	$ (336)	$ (187)	$ 12

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

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Jun. 30, 2019

Jan. 21, 2019

Jan. 21, 2018

Jan. 21, 2017

Share Repurchase Plan [Abstract]

1,204,688

587,969

Stock repurchased

$ 26,284

$ 12,681

Earnings Per Share Reconciliation [Abstract]

Net income

$ 46,435

$ 39,839

$ 20,475

Weighted average shares outstanding (in shares)

^[1]

22,894,000

23,412,000

21,327,000

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

132,000

128,000

121,000

Effect of stock options (in shares)

115,000

176,000

142,000

Performance share units (in shares)

42,000

53,000

60,000

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

23,183,000

23,769,000

21,650,000

Net income per common share [Abstract]

Basic (in dollars per share)

^[1]

$ 2.03

$ 1.70

$ 0.96

Diluted (in dollars per share)

$ 2.00

$ 1.68

$ 0.95

Common Stock [Member]

Share Repurchase Plan [Abstract]

Share repurchase plan percentage of shares authorized to be repurchased

5.00%

Number of shares authorized for repurchase (in shares)

300,000

Stock repurchased (in shares)

1,204,688

587,969

Stock repurchased

$ 26,284

$ 12,681

$ 0

Stock Options [Member]

Antidilutive Securities [Abstract]

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

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

FAIR VALUE DISCLOSURES, Difference Between Aggregate Fair value and Aggregate Remaining Contractual Principal (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Loans held for sale [Abstract]
Aggregate Fair Value	$ 69,800	$ 44,753	$ 39,436
Difference	1,894	1,257	844
Contractual Principal	$ 67,906	$ 43,496	$ 38,592

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, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) [Roll Forward]
Beginning balance	$ 21,400	$ 15,699	$ 0
Change in accounting	0	0	14,213
Total losses realized and unrealized [Abstract]
Included in results of operations	(9,532)	(2,323)	(2,744)
Included in other comprehensive income (loss)	0	0	0
Purchases, issuances, settlements, maturities and calls	7,303	8,024	4,230
Transfers in and/or out of Level 3	0	0	0
Ending balance	19,171	21,400	15,699
Amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at December 31	(9,532)	(2,323)	(2,744)
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	$ 21,400	15,699	14,213
Total losses realized and unrealized [Abstract]
Ending balance		$ 21,400	$ 15,699

GOODWILL AND OTHER INTANGIBLES (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill and Other Intangibles [Abstract]

Other Intangible Assets, Net of Amortization

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

	2019				2018
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(In thousands)

Amortized intangible assets - core deposits	$	11,916	$	6,590	$	11,916	$	5,501
Unamortized intangible assets - goodwill	$	28,300			$	28,300

Estimated Amortization of Other Intangible Assets

A summary of estimated core deposit intangible amortization at December 31, 2019, follows:

	(In thousands)

2020	$	1,020
2021		970
2022		785
2023		547
2024		516
2025 and thereafter		1,488
Total	$	5,326

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2019	Mar. 04, 2020	Jun. 30, 2019
Cover [Abstract]
Entity Registrant Name	INDEPENDENT BANK CORP /MI/
Entity Central Index Key	0000039311
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Public Float			$ 479,616,359
Entity Common Stock, Shares Outstanding		22,109,669
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Entity Address, State or Province	MI

ACCUMULATED OTHER COMPREHENSIVE LOSS

12 Months Ended

Dec. 31, 2019

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 (Losses) on Cash Flow Hedges			Dispropor- tionate Tax Effects from Cash Flow Hedges			Total

2019
Balances at beginning of period	$	(4,185	)	$	(5,798	)	$	(125	)	$	-		$	(10,108	)
Other comprehensive income (loss) before reclassifications		8,035			-			(1,266	)		-			6,769
Amounts reclassified from AOCL		(111	)		-			(336	)		-			(447	)
Net current period other comprehensive income (loss)		7,924			-			(1,602	)		-			6,322
Balances at end of period	$	3,739		$	(5,798	)	$	(1,727	)	$	-		$	(3,786	)

2018
Balances at beginning of period	$	(470	)	$	(5,798	)	$	269		$	-		$	(5,999	)
Other comprehensive loss before reclassifications		(3,671	)		-			(207	)		-			(3,878	)
Amounts reclassified from AOCL		(44	)		-			(187	)		-			(231	)
Net current period other comprehensive loss		(3,715	)		-			(394	)		-			(4,109	)
Balances at end of period	$	(4,185	)	$	(5,798	)	$	(125	)	$	-		$	(10,108	)

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	)

(1) Amounts reclassified to accumulated deficit due to adoption of ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” during the fourth quarter of 2017.

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 inconsequential 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)

2019
Unrealized gains (losses) on securities available for sale	$	140		Net gains on securities
		-		Net impairment loss recognized in earnings
		140		Total reclassifications before tax
		29		Income tax expense
	$	111		Reclassifications, net of tax


Unrealized gains (losses) on cash flow hedges	$	(425	)	Interest expense
		(89	)	Income tax expense
	$	(336	)	Reclassification, net of tax

	$	447		Total reclassifications for the period, net of tax

2018
Unrealized gains (losses) on securities available for sale	$	56		Net gains on securities
		-		Net impairment loss recognized in earnings
		56		Total reclassifications before tax
		12		Income tax expense
	$	44		Reclassifications, net of tax

Unrealized gains (losses) on cash flow hedges	$	(237	)	Interest expense
		(50	)	Income tax expense
	$	(187	)	Reclassification, net of tax

	$	231		Total reclassifications for the period, net of tax

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 (losses) 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

SHAREHOLDERS' EQUITY AND INCOME PER COMMON SHARE

12 Months Ended

Dec. 31, 2019

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, 2019, 2018 and 2017, 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, in June, 2019 our Board of Directors authorized a 300,000 share expansion of the 2019 repurchase plan. During 2019, 2018 and 2017 repurchases were made through open market and negotiated transactions and totaled 1,204,688, 587,969 and zero shares of common stock, respectively for an aggregate purchase price of $26.3 million, $12.7 million and zero, respectively.

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

	2019		2018		2017
	(In thousands, except per share amounts)

Net income	$	46,435	$	39,839	$	20,475

Weighted average shares outstanding (1)		22,894		23,412		21,327
Stock units for deferred compensation plan for non-employee directors		132		128		121
Effect of stock options		115		176		142
Performance share units		42		53		60
Weighted average shares outstanding for calculation of diluted earnings per share		23,183		23,769		21,650

Net income per common share
Basic (1)	$	2.03	$	1.70	$	0.96
Diluted	$	2.00	$	1.68	$	0.95

(1)

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

Weighted average stock options outstanding that were not considered in computing diluted net income per common share because they were anti-dilutive were zero for each year ended 2019, 2018 and 2017, respectively.

PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	12 Months Ended
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment, Net [Abstract]
Property and equipment, gross	$ 146,035	$ 143,267
Accumulated depreciation and amortization	(107,624)	(104,490)
Property and equipment, net	38,411	38,777
Depreciation expense	5,200	5,100	$ 5,300
Land and Land Improvements [Member]
Property, Plant and Equipment, Net [Abstract]
Property and equipment, gross	17,478	16,843
Buildings [Member]
Property, Plant and Equipment, Net [Abstract]
Property and equipment, gross	57,363	56,385
Equipment [Member]
Property, Plant and Equipment, Net [Abstract]
Property and equipment, gross	$ 71,194	$ 70,039

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Shareholders' Equity
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	200,000	200,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	22,481,643	23,579,725
Common stock, shares outstanding (in shares)	22,481,643	23,579,725

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY [Abstract]
Cash dividends declared (in dollars per share)	$ 0.72	$ 0.60	$ 0.42
Repurchase of shares of common stock (in shares)	1,204,688	587,969
Issuance of shares of common stock (in shares)	71,799	152,549	27,046
Share based compensation, common stock (in shares)	92,275	80,028	71,256
Share based compensation withholding obligation, common stock (in shares)	57,468	108,185	22,525

LOANS AND PAYMENT PLAN RECEIVABLES (Tables)

12 Months Ended

Dec. 31, 2019

LOANS AND PAYMENT PLAN RECEIVABLES [Abstract]

Loan Portfolios

Our loan portfolios at December 31 follow:

	2019		2018
	(In thousands)
Real estate(1)
Residential first mortgages	$	843,746	$	811,719
Residential home equity and other junior mortgages		166,735		177,574
Construction and land development		249,747		180,286
Other(2)		693,580		707,347
Consumer		448,297		379,607
Commercial		318,504		319,058
Agricultural		4,414		6,929
Total loans	$	2,725,023	$	2,582,520

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

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

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			Subjective Allocation			Total
	(In thousands)
2019
Balance at beginning of period	$	7,090		$	7,978		$	895		$	8,925		$	24,888
Additions (deductions)
Provision for loan losses		(651	)		526			1,147			(198	)		824
Recoveries credited to allowance		2,165			933			863			-			3,961
Loans charged against the allowance		(682	)		(1,221	)		(1,622	)		-			(3,525	)
Balance at end of period	$	7,922		$	8,216		$	1,283		$	8,727		$	26,148

2018
Balance at beginning of period	$	5,595		$	8,733		$	864		$	7,395		$	22,587
Additions (deductions)
Provision for loan losses		(946	)		457			462			1,530			1,503
Recoveries credited to allowance		2,889			734			999			-			4,622
Loans charged against the allowance		(448	)		(1,946	)		(1,430	)		-			(3,824	)
Balance at end of period	$	7,090		$	7,978		$	895		$	8,925		$	24,888

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

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

Allowance for loan losses and recorded investment in loans by portfolio segment at December 31 follows:

	Commercial		Mortgage		Installment		Subjective Allocation		Total
	(In thousands)
2019
Allowance for loan losses:
Individually evaluated for impairment	$	1,031	$	4,863	$	261	$	-	$	6,155
Collectively evaluated for impairment		6,891		3,353		1,022		8,727		19,993
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	7,922	$	8,216	$	1,283	$	8,727	$	26,148

Loans
Individually evaluated for impairment	$	9,393	$	43,574	$	2,925			$	55,892
Collectively evaluated for impairment		1,158,906		1,058,917		457,370				2,675,193
Loans acquired with deteriorated credit quality		1,394		575		316				2,285
Total loans recorded investment		1,169,693		1,103,066		460,611				2,733,370
Accrued interest included in recorded investment		2,998		4,155		1,194				8,347
Total loans	$	1,166,695	$	1,098,911	$	459,417			$	2,725,023

2018
Allowance for loan losses:
Individually evaluated for impairment	$	1,305	$	4,799	$	206	$	-	$	6,310
Collectively evaluated for impairment		5,785		3,179		689		8,925		18,578
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	7,090	$	7,978	$	895	$	8,925	$	24,888

Loans
Individually evaluated for impairment	$	8,697	$	46,394	$	3,370			$	58,461
Collectively evaluated for impairment		1,137,586		1,000,038		392,460				2,530,084
Loans acquired with deteriorated credit quality		1,609		555		349				2,513
Total loans recorded investment		1,147,892		1,046,987		396,179				2,591,058
Accrued interest included in recorded investment		3,411		4,097		1,030				8,538
Total loans	$	1,144,481	$	1,042,890	$	395,149			$	2,582,520

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

Loans on non-accrual status and past due more than 90 days (‘‘Non-performing Loans’’) at December 31 follow⁽¹⁾:

	90+ and Still Accruing		Non- Accrual		Total Non- Performing Loans
	(In thousands)
2019
Commercial
Commercial and industrial (2)	$	-	$	565	$	565
Commercial real estate		-		735		735
Mortgage
1-4 family owner occupied - jumbo		-		1,179		1,179
1-4 family owner occupied - non-jumbo (3)		-		3,540		3,540
1-4 family non-owner occupied		-		1,039		1,039
1-4 family - 2nd lien		-		979		979
Resort lending		-		690		690
Installment
Boat lending		-		332		332
Recreational vehicle lending		-		3		3
Other		-		470		470
Total recorded investment	$	-	$	9,532	$	9,532
Accrued interest included in recorded investment	$	-	$	-	$	-
2018
Commercial
Commercial and industrial (2)	$	-	$	1,345	$	1,345
Commercial real estate		-		778		778
Mortgage
1-4 family owner occupied - jumbo		-		184		184
1-4 family owner occupied - non-jumbo (3)		5		2,974		2,979
1-4 family non-owner occupied		-		1,259		1,259
1-4 family - 2nd lien		-		493		493
Resort lending		-		755		755
Installment
Boat lending		-		166		166
Recreational vehicle lending		-		7		7
Other		-		608		608
Total recorded investment	$	5	$	8,569	$	8,574
Accrued interest included in recorded investment	$	-	$	-	$	-

(1)

Non-performing loans exclude purchase credit impaired loans.

Aging Analysis of Loans by Class

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

	Loans Past Due								Loans not		Total
	30-59 days		60-89 days		90+ days		Total		Past Due		Loans
	(In thousands)
2019
Commercial
Commercial and industrial	$	-	$	289	$	102	$	391	$	564,480	$	564,871
Commercial real estate		177		-		735		912		603,910		604,822
Mortgage
1-4 family owner occupied - jumbo		1,757		1,037		-		2,794		398,759		401,553
1-4 family owner occupied - non-jumbo		2,672		852		1,387		4,911		342,349		347,260
1-4 family non-owner occupied		695		136		623		1,454		168,083		169,537
1-4 family - 2nd lien		909		90		386		1,385		115,157		116,542
Resort lending		364		53		565		982		67,192		68,174
Installment
Boat lending		337		107		88		532		202,750		203,282
Recreational vehicle lending		161		97		3		261		153,184		153,445
Other		377		275		202		854		103,030		103,884
Total recorded investment	$	7,449	$	2,936	$	4,091	$	14,476	$	2,718,894	$	2,733,370
Accrued interest included in recorded investment	$	74	$	34	$	-	$	108	$	8,239	$	8,347

2018
Commercial
Commercial and industrial	$	1,582	$	-	$	-	$	1,582	$	580,935	$	582,517
Commercial real estate		-		-		-		-		565,375		565,375
Mortgage
1-4 family owner occupied - jumbo		-		-		184		184		313,154		313,338
1-4 family owner occupied - non-jumbo		1,519		145		3,524		5,188		362,767		367,955
1-4 family non-owner occupied		265		49		1,259		1,573		162,673		164,246
1-4 family - 2nd lien		446		100		493		1,039		118,628		119,667
Resort lending		252		-		755		1,007		80,774		81,781
Installment
Boat lending		316		295		166		777		169,117		169,894
Recreational vehicle lending		28		21		7		56		125,780		125,836
Other		552		210		627		1,389		99,060		100,449
Total recorded investment	$	4,960	$	820	$	7,015	$	12,795	$	2,578,263	$	2,591,058
Accrued interest included in recorded investment	$	44	$	11	$	-	$	55	$	8,483	$	8,538

Impaired Loans

Impaired loans are as follows:

	December 31,
	2019		2018
Impaired loans with no allocated allowance for loan losses	(In thousands)
TDR	$	337	$	-
Non - TDR		1,550		-
Impaired loans with an allocated allowance for loan losses
TDR - allowance based on collateral		1,587		2,787
TDR - allowance based on present value cash flow		48,798		53,258
Non - TDR - allowance based on collateral		3,365		2,145
Total impaired loans	$	55,637	$	58,190

Amount of allowance for loan losses allocated
TDR - allowance based on collateral	$	542	$	769
TDR - allowance based on present value cash flow		4,641		4,849
Non - TDR - allowance based on collateral		972		692
Total amount of allowance for loan losses allocated	$	6,155	$	6,310

Impaired loans by class as of December 31 are as follows:

	2019						2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance for Loan Losses		Recorded Investment		Unpaid Principal Balance		Related Allowance for Loan Losses
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Commercial and industrial	$	257	$	257	$	-	$	-	$	-	$	-
Commercial real estate		796		796		-		-		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-		-		-		-		-
1-4 family owner occupied - non-jumbo		212		217		-		3		474		-
1-4 family non-owner occupied		214		366		-		-		-		-
1-4 family - 2nd lien		407		438		-		-		-		-
Resort lending		-		-		-		-		-		-
Installment
Boat lending		-		-		-		-		5		-
Recreational vehicle lending		-		-		-		-		-		-
Other		1		41		-		1		137		-
		1,887		2,115		-		4		616		-
With an allowance for loan losses recorded:
Commercial
Commercial and industrial		1,655		1,706		453		3,637		3,735		967
Commercial real estate		6,685		6,661		578		5,060		5,047		338
Mortgage
1-4 family owner occupied - jumbo		1,447		1,445		91		1,348		1,649		151
1-4 family owner occupied - non-jumbo		10,163		10,695		1,031		25,877		26,737		2,203
1-4 family non-owner occupied		4,962		5,542		572		5,565		5,988		507
1-4 family - 2nd lien		14,059		15,243		1,695		273		272		11
Resort lending		12,110		12,263		1,474		13,328		13,354		1,927
Installment
Boat lending		-		-		-		-		-		-
Recreational vehicle lending		-		-		-		79		79		4
Other		2,924		3,153		261		3,290		3,421		202
		54,005		56,708		6,155		58,457		60,282		6,310
Total
Commercial
Commercial and industrial		1,912		1,963		453		3,637		3,735		967
Commercial real estate		7,481		7,457		578		5,060		5,047		338
Mortgage
1-4 family owner occupied - jumbo		1,447		1,445		91		1,348		1,649		151
1-4 family owner occupied - non-jumbo		10,375		10,912		1,031		25,880		27,211		2,203
1-4 family non-owner occupied		5,176		5,908		572		5,565		5,988		507
1-4 family - 2nd lien		14,466		15,681		1,695		273		272		11
Resort lending		12,110		12,263		1,474		13,328		13,354		1,927
Installment
Boat lending		-		-		-		-		5		-
Recreational vehicle lending		-		-		-		79		79		4
Other		2,925		3,194		261		3,291		3,558		202
Total	$	55,892	$	58,823	$	6,155	$	58,461	$	60,898	$	6,310

Accrued interest included in recorded investment	$	255					$	271

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

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:

	2019				2018				2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Commercial and industrial	$	51	$	-	$	378	$	20	$	751	$	22
Commercial real estate		278		5		961		-		183		-
Mortgage
1-4 family owner occupied - jumbo		-		-		41		-		-		-
1-4 family owner occupied - non-jumbo		201		-		15		27		52		21
1-4 family non-owner occupied		123		-		-		-		-		-
1-4 family - 2nd lien		136		7		-		-		-		-
Resort lending		-		-		-		-		-		-
Installment
Boat lending		-		-		-		-		-		-
Recreational vehicle lending		-		-		-		-		-		-
Other		-		1		1		11		1		6
		789		13		1,396		58		987		49
With an allowance for loan losses recorded:
Commercial
Commercial and industrial		2,256		72		2,641		127		3,298		132
Commercial real estate		5,778		315		5,199		288		7,242		377
Mortgage
1-4 family owner occupied - jumbo		995		39		1,335		69		2,425		67
1-4 family owner occupied - non-jumbo		15,183		594		28,183		1,408		31,468		1,439
1-4 family non-owner occupied		2,874		291		5,475		314		5,362		269
1-4 family - 2nd lien		13,383		809		284		12		306		11
Resort lending		11,697		669		14,687		606		16,383		616
Installment
Boat lending		54		-		1		-		1		1
Recreational vehicle lending		22		-		84		4		100		5
Other		3,186		189		3,640		224		4,335		265
		55,428		2,978		61,529		3,052		70,920		3,182
Total
Commercial
Commercial and industrial		2,307		72		3,019		147		4,049		154
Commercial real estate		6,056		320		6,160		288		7,425		377
Mortgage
1-4 family owner occupied - jumbo		995		39		1,376		69		2,425		67
1-4 family owner occupied - non-jumbo		15,384		594		28,198		1,435		31,520		1,460
1-4 family non-owner occupied		2,997		291		5,475		314		5,362		269
1-4 family - 2nd lien		13,519		816		284		12		306		11
Resort lending		11,697		669		14,687		606		16,383		616
Installment
Boat lending		54		-		1		-		1		1
Recreational vehicle lending		22		-		84		4		100		5
Other		3,186		190		3,641		235		4,336		271
Total	$	56,217	$	2,991	$	62,925	$	3,110	$	71,907	$	3,231

Troubled Debt Restructurings

Troubled debt restructurings at December 31 follow:

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

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

(1) Retail loans include mortgage and installment loan portfolio 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:

	Number of Contracts		Pre-modification Recorded Balance		Post-modification Recorded Balance
2019	(Dollars in thousands)
Commercial
Commercial and industrial		8	$	1,609	$	1,609
Commercial real estate		3		1,479		1,479
Mortgage
1-4 family owner occupied - jumbo		-		-		-
1-4 family owner occupied - non-jumbo		2		478		483
1-4 family non-owner occupied		1		507		505
1-4 family - 2nd lien		3		75		75
Resort lending		-		-		-
Installment
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		7		188		191
Total		24	$	4,336	$	4,342
2018
Commercial
Commercial and industrial		7	$	652	$	652
Commercial real estate		2		204		204
Mortgage
1-4 family owner occupied - jumbo		1		419		419
1-4 family owner occupied - non-jumbo		9		991		994
1-4 family non-owner occupied		-		-		-
1-4 family - 2nd lien		-		-		-
Resort lending		1		115		114
Installment
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		14		708		709
Total		34	$	3,089	$	3,092
2017
Commercial
Commercial and industrial		15	$	925	$	925
Commercial real estate		-		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-		-
1-4 family owner occupied - non-jumbo		5		423		429
1-4 family non-owner occupied		1		33		33
1-4 family - 2nd lien		-		-		-
Resort lending		1		189		189
Installment
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		15		551		559
Total		37	$	2,121	$	2,135

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
2019	(Dollars in thousands)
Commercial
Commercial and industrial		1	$	19
Commercial real estate		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-
1-4 family owner occupied - non-jumbo		1		12
1-4 family non-owner occupied		-		-
1-4 family - 2nd lien		-		-
Resort lending		-		-
Installment
Boat lending		-		-
Recreational vehicle lending		-		-
Other		-		-
Total		2	$	31

2018
Commercial
Commercial and industrial		-	$	-
Commercial real estate		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-
1-4 family owner occupied - non-jumbo		-		-
1-4 family non-owner occupied		-		-
1-4 family - 2nd lien		-		-
Resort lending		-		-
Installment
Boat lending		-		-
Recreational vehicle lending		-		-
Other		1		13
Total		1	$	13

2017
Commercial
Commercial and industrial		6	$	164
Commercial real estate		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-
1-4 family owner occupied - non-jumbo		-		-
1-4 family non-owner occupied		-		-
1-4 family - 2nd lien		-		-
Resort lending		-		-
Installment
Boat lending		-		-
Recreational vehicle lending		-		-
Other		1		13
Total		7	$	177

Loan Ratings by Loan Class

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

	Commercial
	Non-watch 1-6		Watch 7-8		Substandard Accrual 9		Non- Accrual 10-11		Total
					(In thousands)
2019
Commercial and industrial	$	515,955	$	44,384	$	3,967	$	565	$	564,871
Commercial real estate		580,516		23,036		535		735		604,822
Total	$	1,096,471	$	67,420	$	4,502	$	1,300	$	1,169,693
Accrued interest included in total	$	2,763	$	205	$	30	$	-	$	2,998

2018
Commercial and industrial	$	551,441	$	23,910	$	5,577	$	1,589	$	582,517
Commercial real estate		531,069		33,274		200		832		565,375
Total	$	1,082,510	$	57,184	$	5,777	$	2,421	$	1,147,892
Accrued interest included in total	$	3,107	$	174	$	130	$	-	$	3,411

For each of our mortgage and installment portfolio 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 portfolio segments at December 31:

	Mortgage (1)
	1-4 Family Owner Occupied - Jumbo		1-4 Family Owner Occupied - Non-jumbo		1-4 Family Non-owner Occupied		1-4 Family 2nd Lien		Resort Lending		Total
	(In thousands)
2019
800 and above	$	48,486	$	43,848	$	24,315	$	13,905	$	11,076	$	141,630
750-799		198,491		111,521		84,656		50,012		29,364		474,044
700-749		106,609		95,064		34,839		30,697		14,626		281,835
650-699		31,553		51,174		13,995		14,267		8,063		119,052
600-649		13,230		21,938		5,897		4,097		2,074		47,236
550-599		514		12,308		1,863		1,703		673		17,061
500-549		1,519		7,940		1,870		1,281		889		13,499
Under 500		641		2,208		533		511		79		3,972
Unknown		510		1,259		1,569		69		1,330		4,737
Total	$	401,553	$	347,260	$	169,537	$	116,542	$	68,174	$	1,103,066
Accrued interest included in total	$	1,139	$	1,662	$	586	$	502	$	266	$	4,155

2018
800 and above	$	33,337	$	46,509	$	19,191	$	11,077	$	10,898	$	121,012
750-799		167,992		136,105		79,837		56,008		36,542		476,484
700-749		69,018		96,378		36,103		33,345		17,282		252,126
650-699		28,637		48,663		15,854		11,361		9,945		114,460
600-649		9,911		19,139		5,533		4,077		3,088		41,748
550-599		2,034		9,619		2,396		1,385		1,867		17,301
500-549		-		7,463		1,338		882		106		9,789
Under 500		647		1,181		802		382		143		3,155
Unknown		1,762		2,898		3,192		1,150		1,910		10,912
Total	$	313,338	$	367,955	$	164,246	$	119,667	$	81,781	$	1,046,987
Accrued interest included in total	$	851	$	1,789	$	550	$	544	$	363	$	4,097

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

	Installment(1)
	Boat Lending		Recreational Vehicle Lending		Other		Total
	(In thousands)
2019
800 and above	$	28,041	$	24,470	$	7,611	$	60,122
750-799		118,380		88,164		37,583		244,127
700-749		41,490		31,055		27,204		99,749
650-699		11,485		7,267		22,517		41,269
600-649		2,254		1,411		4,470		8,135
550-599		946		592		1,884		3,422
500-549		377		464		1,127		1,968
Under 500		309		22		284		615
Unknown		-		-		1,204		1,204
Total	$	203,282	$	153,445	$	103,884	$	460,611
Accrued interest included in total	$	490	$	378	$	326	$	1,194

2018
800 and above	$	20,767	$	20,197	$	7,062	$	48,026
750-799		100,191		74,154		34,627		208,972
700-749		35,455		24,890		27,633		87,978
650-699		10,581		4,918		12,663		28,162
600-649		1,657		992		5,019		7,668
550-599		652		453		2,255		3,360
500-549		286		225		1,264		1,775
Under 500		266		7		275		548
Unknown		39		-		9,651		9,690
Total	$	169,894	$	125,836	$	100,449	$	396,179
Accrued interest included in total	$	403	$	311	$	316	$	1,030

(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:

	2019		2018
	(In thousands)
Mortgage loans serviced for :
Fannie Mae	$	1,449,935	$	1,350,703
Freddie Mac		852,123		712,740
Ginnie Mae		180,941		165,467
FHLB		69,149		78,687
Other		29,018		26,148
Total	$	2,581,166	$	2,333,745

Analysis of Capitalized Mortgage Loan Servicing Rights

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

	2019			2018			2017
	(In thousands)
Balance at beginning of period	$	21,400		$	15,699		$	13,671
Change in accounting (see note #1)		-			-			542
Balance at beginning of period, as adjusted	$	21,400		$	15,699		$	14,213
Originated servicing rights capitalized		7,303			4,977			4,230
Servicing rights acquired		-			3,047			-
Change in fair value due to price		(6,408	)		191			(718	)
Change in fair value due to pay downs		(3,124	)		(2,514	)		(2,026	)
Balance at end of year	$	19,171		$	21,400		$	15,699
Loans sold and serviced that have had servicing rights capitalized	$	2,580,705		$	2,333,081		$	1,815,668

Purchase Credit Impaired (PCI) Loans

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

	December 31,
	2019		2018
	(In thousands)
Commercial	$	1,394	$	1,609
Mortgage		575		555
Installment		316		349
Total carrying amount		2,285		2,513
Allowance for loan losses		-		-
Carrying amount, net of allowance for loan losses	$	2,285	$	2,513

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

	Year ended December 31,
	2019			2018
	(In thousands)

Balance at beginning of period	$	462		$	-
New loans purchased		-			568
Accretion of income		(187	)		(106	)
Reclassification from (to) nonaccretable difference		365			-
Displosals/other adjustments		-			-
Balance at end of period	$	640		$	462

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2019

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 2019 and 2018.

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

	2019			2018
	(In thousands)

Balance at beginning of year	$	14,205		$	2,621
New loans and advances		713			13,572
Repayments		(1,841	)		(1,988	)
Balance at end of year	$	13,077		$	14,205

Deposits held by us for directors and executive officers totaled $2.0 million and $1.5 million at December 31, 2019 and 2018, respectively.

REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Dec. 31, 2019

REVENUE FROM CONTRACTS WITH CUSTOMERS [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

NOTE 25 – REVENUE FROM CONTRACTS WITH CUSTOMERS

We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. We derive the majority of our revenue from financial instruments and their related contractual rights and obligations which for the most part are excluded from the scope of this topic. These sources of revenue that are excluded from the scope of this topic include interest income, net gains on mortgage loans, net gains on securities, mortgage loan servicing, net and bank owned life insurance and were approximately 84.9% and 82.9% of total revenues at December 31, 2019 and 2018, respectively.

Material sources of revenue that are included in the scope of ASC Topic 606 include service charges on deposits, other deposit related income, interchange income and investment and insurance commissions and are discussed in the following paragraphs. Generally these sources of revenue are earned at the time the service is delivered or over the course of a monthly period and do not result in any contract asset or liability balance at any given period end. As a result, there were no contract assets or liabilities recorded as of December 31, 2019.

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

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

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

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

Disaggregation of our revenue sources by attribute for the years ended December 31 follow:

2019
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	7,590	$	-	$	-	$	-	$	7,590
Account service charges		2,103		-		-		-		2,103
ATM fees		-		1,368		-		-		1,368
Other		-		965		-		-		965
Business
Overdraft fees		1,515		-		-		-		1,515
ATM fees		-		35		-		-		35
Other		-		422		-		-		422
Interchange income		-		-		10,297		-		10,297
Asset management revenue		-		-		-		1,123		1,123
Transaction based revenue		-		-		-		535		535

Total	$	11,208	$	2,790	$	10,297	$	1,658	$	25,953

Reconciliation to Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	2,790
Investment and insurance commissions										1,658
Bank owned life insurance										1,111
Other										3,723
Total									$	9,282

2018
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	8,285	$	-	$	-	$	-	$	8,285
Account service charges		2,406		-		-		-		2,406
ATM fees		-		1,423		-		-		1,423
Other		-		941		-		-		941
Business
Overdraft fees		1,567		-		-		-		1,567
ATM fees		-		34		-		-		34
Other		-		594		-		-		594
Interchange income		-		-		9,905		-		9,905
Asset management revenue		-		-		-		1,100		1,100
Transaction based revenue		-		-		-		871		871

Total	$	12,258	$	2,992	$	9,905	$	1,971	$	27,126

Reconciliation to Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	2,992
Investment and insurance commissions										1,971
Bank owned life insurance										970
Other										2,827
Total									$	8,760

OTHER BORROWINGS

12 Months Ended

Dec. 31, 2019

OTHER BORROWINGS [Abstract]

OTHER BORROWINGS

NOTE 9 – OTHER BORROWINGS

A summary of other borrowings at December 31 follows:

	2019		2018
	(In thousands)
Advances from the FHLB	$	63,640	$	25,696
Federal funds purchased		25,000		-
Other		6		4
Total	$	88,646	$	25,700

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 $8.6 million at December 31, 2019. Unused borrowing capacity with the FHLB (subject to the FHLB’s credit requirements and policies) was $836.5 million at December 31, 2019. Interest expense on advances amounted to $0.7 million, $1.0 million and $0.9 million for the years ended December 31, 2019, 2018 and 2017, respectively. No FHLB advances were terminated during 2019, 2018 or 2017.

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 assets or 4.5% of our outstanding advances. At December 31, 2019, we were in compliance with the FHLB stock ownership requirements.

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

	2019					2018
	Amount		Rate			Amount		Rate
	(Dollars in thousands)
Fixed-rate advances
2019						$	10,000		1.60	%
2020	$	28,645		2.19	%		10,762		3.18
2022		4,995		1.69			4,934		1.69
2025 and thereafter		30,000		0.74
Total advances	$	63,640		1.47	%	$	25,696		2.28	%

Borrowings with the FRB at December 31, 2019 and 2018 were zero. Average borrowings with the FRB during the years ended December 31, 2019, 2018 and 2017 totaled $0.305 million, $0.003 million and $0.047 million. We had unused borrowing capacity with the FRB (subject to the FRB’s credit requirements and policies) of $348.6 million at December 31, 2019. Collateral for FRB borrowings are certain commercial and installment loans.

Interest expense on federal funds purchased totaled $0.1 million for each of the years ended December 31, 2019, 2018 and 2017.

Assets, consisting of FHLB stock and loans, pledged to secure other borrowings and unused borrowing capacity totaled $1.9 billion at December 31, 2019.

LEASES

12 Months Ended

Dec. 31, 2019

LEASES [Abstract]

LEASES

NOTE 18 – LEASES

We have entered into leases in the normal course of business primarily for office facilities, some of which include renewal options and escalation clauses. Certain leases also include both lease components (fixed payments including rent, taxes and insurance costs) and non-lease components (common area or other maintenance costs) which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components together for all leases. We have also elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on our Consolidated Statements of Financial Condition. Most of our leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion and are included in our ROU assets and lease liabilities if they are reasonably certain of exercise.

Leases are classified as operating or finance leases at the lease commencement date (we did not have any finance leases as of December 31, 2019). Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. The ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of the lease payment over the lease term.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

The cost components of our operating leases follows:

	2019
	(In thousands)
Operating lease cost	$	2,217
Variable lease cost		142
Short-term lease cost		19
Total	$	2,378

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

Supplemental balance sheet information related to our operating leases follows:

	2019
	(In thousands)
Lease right of use asset (1)	$	8,282
Lease liabilities (2)	$	8,304

Weighted average remaining lease term (years)		7.47
Weighted average discount rate		2.8	%

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

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

Maturity analysis of our lease liabilities at December 31, 2019 based on required contractual payments follows:

	(In thousands)

2020	$	1,681
2021		1,418
2022		1,322
2023		1,186
2024		802
2025 and thereafter		2,792
Total lease payments		9,201
Less imputed interest		(897	)
Total	$	8,304

DEPOSITS

12 Months Ended

Dec. 31, 2019

DEPOSITS [Abstract]

DEPOSITS

NOTE 8 – DEPOSITS

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

	2019		2018		2017
	(In thousands)
Savings and interest-bearing checking	$	5,371	$	4,146	$	1,530
Reciprocal		6,024		1,292		342
Time		7,148		5,343		4,288
Brokered time		4,882		3,697		615
Total	$	23,425	$	14,478	$	6,775

Aggregate time deposits in denominations of $0.25 million or more amounted to $71.5 million and $74.0 million at December 31, 2019 and 2018, respectively.

A summary of the maturity of time deposits at December 31, 2019, follows:

	(In thousands)

2020	$	501,609
2021		73,398
2022		13,929
2023		15,136
2024		5,020
2025 and thereafter		445
Total	$	609,537

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:

	2019		2018
	(In thousands)
Demand	$	383,953	$	114,503
Money market		4,416		8,577
Time		42,658		58,992
Total	$	431,027	$	182,072

SHARE BASED COMPENSATION AND BENEFIT PLANS

12 Months Ended

Dec. 31, 2019

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, 2019. 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, 2019. Share based awards and payments are measured at fair value at the date of grant and are expensed over the requisite service period. Common shares issued upon exercise of stock options come from currently authorized but unissued shares.

During 2019, 2018 and 2017 pursuant to our long-term incentive plan, we granted 0.06 million, 0.05 million and 0.05 million shares, respectively of restricted stock and 0.02 million, 0.02 million and 0.02 million performance stock units (‘‘PSUs’’), respectively to certain officers. Except for 0.010 million shares and 0.002 million shares of restricted stock issued in 2019 and 2018, respectively that vest ratably over three years, all shares of restricted stock and PSUs cliff vest after a period of three years. The performance feature of the PSUs is based on a comparison of our total shareholder return over the vesting period starting on the grant date to the total shareholder return over that period for a banking index of our peers. We have not issued stock options since 2013, other than in connection with the Merger (see note #26).

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 on a current basis are issued each quarter and vest immediately. Shares issued on a deferred basis are credited at the rate of 90% of the current value and vest immediately. We issued 0.01 million shares to directors during each of the years ending 2019, 2018 and 2017 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 $1.6 million in 2019, 2018 and 2017, respectively. The corresponding tax benefit relating to this expense was $0.3 million, $0.3 million and $0.6 million in 2019, 2018 and 2017, respectively. Total expense recognized for non-employee director share based payments was $0.3 million, $0.2 million and $0.2 million in 2019, 2018 and 2017, respectively. The corresponding tax benefit relating to this expense was $0.05 million, $0.04 million and $0.06 million in 2019, 2018 and 2017, respectively.

At December 31, 2019, the total expected compensation cost related to non-vested restricted stock and PSUs not yet recognized was $2.1 million. The weighted-average period over which this amount will be recognized is 1.8 years.

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

	Number of Shares			Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregated Intrinsic Value
								(In thousands)
Outstanding at January 1, 2019		211,421		$	6.48
Granted		-
Exercised		(71,799	)		9.84
Forfeited		-
Expired		(1,116	)		22.35
Outstanding at December 31, 2019		138,506		$	4.62		3.01	$	2,498

Vested and expected to vest at
December 31, 2019		138,506		$	4.62		3.01	$	2,498
Exercisable at December 31, 2019		138,506		$	4.62		3.01	$	2,498

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

	Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2019		258,419		$	19.00
Granted		86,283			22.87
Vested		(85,978	)		14.57
Forfeited		(12,998	)		22.85
Outstanding at December 31, 2019		245,726		$	21.72

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

	2019		2018		2017
	(In thousands)
Intrinsic value	$	897	$	2,333	$	623
Cash proceeds received	$	706	$	1,420	$	142
Tax benefit realized	$	188	$	490	$	218

We maintain 401(k) and employee stock ownership plans covering substantially all of our full-time employees. During 2019, 2018 and 2017, we matched 50% of employee contributions to the 401(k) plan up to a maximum of 8%, 8% and 6% 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 2019, 2018 and 2017. Amounts expensed for these retirement plans were $2.6 million, $2.3 million and $1.6 million in 2019, 2018 and 2017, respectively.

Our employees participate in various performance-based compensation plans. Amounts expensed for all incentive plans totaled $9.5 million, $9.8 million and $8.0 million in 2019, 2018 and 2017, respectively.

We also provide certain health care and life insurance programs to substantially all full-time employees. Amounts expensed for these programs totaled $5.7 million, $5.2 million and $4.0 million in 2019, 2018 and 2017 respectively. These insurance programs are also available to retired employees at their own expense.

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

INTEREST INCOME

Interest and fees on loans

$ 133,883

$ 116,865

$ 84,281

Interest on securities

Taxable

11,842

10,874

10,928

Tax-exempt

1,342

1,743

2,000

Other investments

1,861

1,291

1,100

Total Interest Income

148,928

130,773

98,309

INTEREST EXPENSE

Deposits

23,425

14,478

6,775

Other borrowings and subordinated debentures

2,922

3,013

2,348

Total Interest Expense

26,347

17,491

9,123

Net Interest Income

122,581

113,282

89,186

Net Interest Income After Provision for Loan Losses

824

1,503

1,199

121,757

111,779

87,987

NON-INTEREST INCOME

Service charges on deposit accounts

11,208

12,258

12,673

Interchange income

10,297

9,905

8,023

Net gains on assets

Mortgage loans

19,978

10,597

11,762

Securities

307

138

260

Mortgage loan servicing, net

(3,336)

3,157

1,647

Other

9,282

8,760

8,168

Total Non-Interest Income

47,736

44,815

42,533

NON-INTEREST EXPENSE

Compensation and employee benefits

67,501

62,078

55,089

Occupancy, net

9,013

8,912

8,102

Data processing

8,905

8,262

7,657

Furniture, fixtures and equipment

4,113

4,080

3,870

Interchange expense

3,215

2,702

1,156

Communications

2,947

2,848

2,684

Loan and collection

2,685

2,682

2,230

Advertising

2,450

2,155

1,905

Legal and professional

1,814

1,839

1,892

FDIC deposit insurance

685

1,081

894

Net gains on other real estate and repossessed assets

(90)

(672)

(606)

Merger related expenses

3,465

284

Other

8,495

8,029

6,925

Total Non-interest Expense

111,733

107,461

92,082

Income Before Income Tax

57,760

49,133

38,438

Income tax expense

11,325

9,294

17,963

Net Income

$ 46,435

$ 39,839

$ 20,475

Net income per common share

Basic (in dollars per share)

^[1]

$ 2.03

$ 1.70

$ 0.96

Diluted (in dollars per share)

$ 2.00

$ 1.68

$ 0.95

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

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

12 Months Ended

Dec. 31, 2019

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

Condensed Statements of Financial Condition

CONDENSED STATEMENTS OF FINANCIAL CONDITION
	December 31,
	2019		2018
	(In thousands)
ASSETS
Cash and due from banks	$	10,505	$	7,624
Interest bearing deposits - time		10,000		25,000
Investment in subsidiaries		369,861		343,872
Accrued income and other assets		463		2,857
Total Assets	$	390,829	$	379,353

LIABILITIES AND SHAREHOLDERS’ EQUITY
Subordinated debentures	$	39,456	$	39,388
Accrued expenses and other liabilities		575		530
Shareholders’ equity		350,798		339,435
Total Liabilities and Shareholders’ Equity	$	390,829	$	379,353

Condensed Statements of Operations

CONDENSED STATEMENTS OF OPERATIONS
	Year Ended December 31,
	2019			2018			2017
	(In thousands)
OPERATING INCOME
Dividends from subsidiary	$	29,000		$	33,500		$	16,000
Interest income		230			160			29
Other income		61			56			41
Total Operating Income		29,291			33,716			16,070

OPERATING EXPENSES
Interest expense		2,104			1,924			1,347
Administrative and other expenses		655			748			714
Total Operating Expenses		2,759			2,672			2,061
Income Before Income Tax and Equity in Undistributed Net Income of Subsidiaries		26,532			31,044			14,009
Income tax expense (benefit)		(423	)		(515	)		1,587
Income Before Equity in Undistributed Net Income of Subsidiaries		26,955			31,559			12,422
Equity in undistributed net income of subsidiaries		19,480			8,280			8,053
Net Income	$	46,435		$	39,839		$	20,475

Condensed Statements of Cash Flows

CONDENSED STATEMENTS OF CASH FLOWS
	Year Ended December 31,
	2019			2018			2017
	(In thousands)
Net Income	$	46,435		$	39,839		$	20,475
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FROM OPERATING ACTIVITIES
Deferred income tax expense		1,503			6,620			2,146
Share based compensation		65			53			45
Accretion of discount on subordinated debentures		68			51			-
(Increase) decrease in accrued income and other assets		891			(1,307	)		(32	)
Increase in accrued expenses and other liabilities		45			21			121
Equity in undistributed net income of subsidiaries		(19,480	)		(8,280	)		(8,053	)
Total Adjustments		(16,908	)		(2,842	)		(5,773	)
Net Cash From Operating Activities		29,527			36,997			14,702

CASH FLOW FROM (USED IN) INVESTING ACTIVITIES
Purchases of interest bearing deposits - time		(20,000	)		(30,000	)		(10,000	)
Maturity of interest bearing deposits - time		35,000			10,000			10,000
Acquisition of business, less cash received		-			431			-
Net Cash From (Used In) Investing Activities		15,000			(19,569	)		-

CASH FLOW USED IN FINANCING ACTIVITIES
Dividends paid		(16,554	)		(14,055	)		(8,960	)
Proceeds from issuance of common stock		2,074			1,945			1,776
Share based compensation withholding obligation		(882	)		(1,467	)		(579	)
Repurchase of common stock		(26,284	)		(12,681	)		-
Net Cash Used in Financing Activities		(41,646	)		(26,258	)		(7,763	)
Net Increase (Decrease) in Cash and Cash Equivalents		2,881			(8,830	)		6,939
Cash and Cash Equivalents at Beginning of Year		7,624			16,454			9,515
Cash and Cash Equivalents at End of Year	$	10,505		$	7,624		$	16,454

LOANS AND PAYMENT PLAN RECEIVABLES, Purchase Credit Impaired ("PCI") Loans (Details) - TCSB Bancorp, Inc. [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Carrying amount of loans that meet the criteria of ASC 310-30 treatment [Abstract]
Total carrying amount	$ 2,285	$ 2,513
Allowance for loan losses	0	0
Carrying amount, net of allowance for loan losses	2,285	2,513
Accretable yield of PCI loans, or income expected to be collected [Roll Forward]
Balance at beginning of period	462	0
New loans purchased	0	568
Accretion of income	(187)	(106)
Reclassification from (to) nonaccretable difference	365	0
Disposals/other adjustments	0	0
Balance at end of period	640	462
Commercial [Member]
Carrying amount of loans that meet the criteria of ASC 310-30 treatment [Abstract]
Total carrying amount	1,394	1,609
Mortgage [Member]
Carrying amount of loans that meet the criteria of ASC 310-30 treatment [Abstract]
Total carrying amount	575	555
Installment [Member]
Carrying amount of loans that meet the criteria of ASC 310-30 treatment [Abstract]
Total carrying amount	$ 316	$ 349

LOANS AND PAYMENT PLAN RECEIVABLES, Impaired Financing Receivables (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Impaired loan with no allocated allowance for loan losses [Abstract]
TDR	$ 337	$ 0
Non - TDR	1,550	0
Impaired loans with an allocated allowance for loan losses [Abstract]
TDR - allowance based on collateral	1,587	2,787
TDR - allowance based on present value cash flow	48,798	53,258
Non - TDR - allowance based on collateral	3,365	2,145
Total impaired loans	55,637	58,190
Amount of allowance for loan losses allocated [Abstract]
TDR - allowance based on collateral	542	769
TDR - allowance based on present value cash flow	4,641	4,849
Non - TDR - allowance based on collateral	972	692
Total amount of allowance for loan losses allocated	6,155	6,310
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	1,887	4
Unpaid Principal Balance, with no related allowance for loan losses recorded	2,115	616
With no related allowance for loan losses recorded	0	0
Recorded Investment, with an allowance for loan losses recorded	54,005	58,457
Unpaid Principal Balance, with an allowance for loan losses recorded	56,708	60,282
Recorded Investment	55,892	58,461
Unpaid Principal Balance	58,823	60,898
Related Allowance	6,155	6,310
Accrued interest included in recorded investment	255	271
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	789	1,396	$ 987
Interest Income Recognized, with no related allowance for loan losses recorded	13	58	49
Average Recorded Investment, with an allowance for loan losses recorded	55,428	61,529	70,920
Interest Income Recognized, with an allowance for loan losses recorded	2,978	3,052	3,182
Average Recorded Investment	56,217	62,925	71,907
Interest Income Recognized	2,991	3,110	3,231
Commercial [Member] \| Commercial and Industrial [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	257	0
Unpaid Principal Balance, with no related allowance for loan losses recorded	257	0
With no related allowance for loan losses recorded	0	0
Recorded Investment, with an allowance for loan losses recorded	1,655	3,637
Unpaid Principal Balance, with an allowance for loan losses recorded	1,706	3,735
Recorded Investment	1,912	3,637
Unpaid Principal Balance	1,963	3,735
Related Allowance	453	967
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	51	378	751
Interest Income Recognized, with no related allowance for loan losses recorded	0	20	22
Average Recorded Investment, with an allowance for loan losses recorded	2,256	2,641	3,298
Interest Income Recognized, with an allowance for loan losses recorded	72	127	132
Average Recorded Investment	2,307	3,019	4,049
Interest Income Recognized	72	147	154
Commercial [Member] \| Commercial Real Estate [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	796	0
Unpaid Principal Balance, with no related allowance for loan losses recorded	796	0
With no related allowance for loan losses recorded	0	0
Recorded Investment, with an allowance for loan losses recorded	6,685	5,060
Unpaid Principal Balance, with an allowance for loan losses recorded	6,661	5,047
Recorded Investment	7,481	5,060
Unpaid Principal Balance	7,457	5,047
Related Allowance	578	338
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	278	961	183
Interest Income Recognized, with no related allowance for loan losses recorded	5	0	0
Average Recorded Investment, with an allowance for loan losses recorded	5,778	5,199	7,242
Interest Income Recognized, with an allowance for loan losses recorded	315	288	377
Average Recorded Investment	6,056	6,160	7,425
Interest Income Recognized	320	288	377
Mortgage [Member] \| 1-4 Family Owner Occupied - Jumbo [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0	0
Unpaid Principal Balance, with no related allowance for loan losses recorded	0	0
With no related allowance for loan losses recorded	0	0
Recorded Investment, with an allowance for loan losses recorded	1,447	1,348
Unpaid Principal Balance, with an allowance for loan losses recorded	1,445	1,649
Recorded Investment	1,447	1,348
Unpaid Principal Balance	1,445	1,649
Related Allowance	91	151
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	41	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	995	1,335	2,425
Interest Income Recognized, with an allowance for loan losses recorded	39	69	67
Average Recorded Investment	995	1,376	2,425
Interest Income Recognized	39	69	67
Mortgage [Member] \| 1-4 Family Owner Occupied - Non-jumbo [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	212	3
Unpaid Principal Balance, with no related allowance for loan losses recorded	217	474
With no related allowance for loan losses recorded	0	0
Recorded Investment, with an allowance for loan losses recorded	10,163	25,877
Unpaid Principal Balance, with an allowance for loan losses recorded	10,695	26,737
Recorded Investment	10,375	25,880
Unpaid Principal Balance	10,912	27,211
Related Allowance	1,031	2,203
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	201	15	52
Interest Income Recognized, with no related allowance for loan losses recorded	0	27	21
Average Recorded Investment, with an allowance for loan losses recorded	15,183	28,183	31,468
Interest Income Recognized, with an allowance for loan losses recorded	594	1,408	1,439
Average Recorded Investment	15,384	28,198	31,520
Interest Income Recognized	594	1,435	1,460
Mortgage [Member] \| 1-4 Non-owner Occupied [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	214	0
Unpaid Principal Balance, with no related allowance for loan losses recorded	366	0
With no related allowance for loan losses recorded	0	0
Recorded Investment, with an allowance for loan losses recorded	4,962	5,565
Unpaid Principal Balance, with an allowance for loan losses recorded	5,542	5,988
Recorded Investment	5,176	5,565
Unpaid Principal Balance	5,908	5,988
Related Allowance	572	507
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	123	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	2,874	5,475	5,362
Interest Income Recognized, with an allowance for loan losses recorded	291	314	269
Average Recorded Investment	2,997	5,475	5,362
Interest Income Recognized	291	314	269
Mortgage [Member] \| 1-4 Family - 2nd Lien [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	407	0
Unpaid Principal Balance, with no related allowance for loan losses recorded	438	0
With no related allowance for loan losses recorded	0	0
Recorded Investment, with an allowance for loan losses recorded	14,059	273
Unpaid Principal Balance, with an allowance for loan losses recorded	15,243	272
Recorded Investment	14,466	273
Unpaid Principal Balance	15,681	272
Related Allowance	1,695	11
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	136	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	7	0	0
Average Recorded Investment, with an allowance for loan losses recorded	13,383	284	306
Interest Income Recognized, with an allowance for loan losses recorded	809	12	11
Average Recorded Investment	13,519	284	306
Interest Income Recognized	816	12	11
Mortgage [Member] \| Resort Lending [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0	0
Unpaid Principal Balance, with no related allowance for loan losses recorded	0	0
With no related allowance for loan losses recorded	0	0
Recorded Investment, with an allowance for loan losses recorded	12,110	13,328
Unpaid Principal Balance, with an allowance for loan losses recorded	12,263	13,354
Recorded Investment	12,110	13,328
Unpaid Principal Balance	12,263	13,354
Related Allowance	1,474	1,927
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	11,697	14,687	16,383
Interest Income Recognized, with an allowance for loan losses recorded	669	606	616
Average Recorded Investment	11,697	14,687	16,383
Interest Income Recognized	669	606	616
Installment [Member] \| Boat Lending [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0	0
Unpaid Principal Balance, with no related allowance for loan losses recorded	0	5
With no related allowance for loan losses recorded	0	0
Recorded Investment, with an allowance for loan losses recorded	0	0
Unpaid Principal Balance, with an allowance for loan losses recorded	0	0
Recorded Investment	0	0
Unpaid Principal Balance	0	5
Related Allowance	0	0
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	54	1	1
Interest Income Recognized, with an allowance for loan losses recorded	0	0	1
Average Recorded Investment	54	1	1
Interest Income Recognized	0	0	1
Installment [Member] \| Recreational Vehicle Lending [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	0	0
Unpaid Principal Balance, with no related allowance for loan losses recorded	0	0
With no related allowance for loan losses recorded	0	0
Recorded Investment, with an allowance for loan losses recorded	0	79
Unpaid Principal Balance, with an allowance for loan losses recorded	0	79
Recorded Investment	0	79
Unpaid Principal Balance	0	79
Related Allowance	0	4
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	0	0
Interest Income Recognized, with no related allowance for loan losses recorded	0	0	0
Average Recorded Investment, with an allowance for loan losses recorded	22	84	100
Interest Income Recognized, with an allowance for loan losses recorded	0	4	5
Average Recorded Investment	22	84	100
Interest Income Recognized	0	4	5
Installment [Member] \| Other [Member]
Impaired Loans by class [Abstract]
Recorded Investment, with no related allowance for loan losses recorded	1	1
Unpaid Principal Balance, with no related allowance for loan losses recorded	41	137
With no related allowance for loan losses recorded	0	0
Recorded Investment, with an allowance for loan losses recorded	2,924	3,290
Unpaid Principal Balance, with an allowance for loan losses recorded	3,153	3,421
Recorded Investment	2,925	3,291
Unpaid Principal Balance	3,194	3,558
Related Allowance	261	202
Average recorded investment in and interest income earned on impaired loans by class [Abstract]
Average Recorded Investment, with no related allowance for loan losses recorded	0	1	1
Interest Income Recognized, with no related allowance for loan losses recorded	1	11	6
Average Recorded Investment, with an allowance for loan losses recorded	3,186	3,640	4,335
Interest Income Recognized, with an allowance for loan losses recorded	189	224	265
Average Recorded Investment	3,186	3,641	4,336
Interest Income Recognized	$ 190	$ 235	$ 271

COMMITMENTS AND CONTINGENT LIABILITIES

12 Months Ended

Dec. 31, 2019

COMMITMENTS AND CONTINGENT LIABILITIES [Abstract]

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:

	2019		2018
	(In thousands)
Financial instruments whose risk is represented by contract amounts
Commitments to extend credit	$	582,457	$	505,421
Standby letters of credit		7,207		4,998

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 on-demand with no stated maturity date and have variable rates that range from 3.75% to 10.75%.

We are also involved in various litigation matters in the ordinary course of business. At the present time, we do not believe any of these matters will have a significant impact on our consolidated financial position or results of operations. The aggregate amount we have accrued for losses we consider probable as a result of 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, however, we have excluded such matters from the disclosure contained in the preceding paragraph in all cases where we believe the possibility of us paying damages to any opposing party is remote.

The provision for loss reimbursement on sold loans represents our estimate of incurred losses related to mortgage loans that we have sold to investors (primarily Fannie Mae, Freddie Mac, Ginnie Mae and the 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 of $0.23 million, $0.01 million and $0.17 million for the years ended December 31, 2019, 2018 and 2017, respectively. The reserve for loss reimbursements on sold mortgage loans totaled $0.9 million and $0.8 million at December 31, 2019 and 2018, 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.

We own 12,566 shares of VISA Class B common stock. At the present time, these shares can only be sold to other Class B shareholders. As a result, there has generally been limited transfer activity in private transactions between buyers and sellers. Given the limited activity that we have become aware of and the continuing uncertainty regarding the likelihood, ultimate timing and eventual exchange rate for Class B shares into Class A shares, we continue to carry these shares at zero, representing cost basis less impairment. However, given the current conversion ratio of 1.6228 to Class A shares and the closing price of VISA Class A shares on February 27, 2020 of $180.01 per share, our 12,566 Class B shares would have a current “value” of approximately $3.7 million. We continue to monitor Class B trading activity and the status of the resolution of certain litigation matters at VISA that would trigger the conversion of Class B common shares into Class A common shares that would have no trading restrictions.

RECENT ACQUISITION (Tables)

12 Months Ended

Dec. 31, 2019

RECENT ACQUISITION [Abstract]

Final Valuation of Assets Acquired and Liabilities Assumed

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

	(In thousands)
Cash and cash equivalents	$	23,521
Interest bearing deposits - time		4,054
Securities available for sale		6,066
Federal Home Loan Bank stock		778
Loans, net		295,799
Property and equipement, net		1,067
Capitalized mortgage loan servicing rights		3,047
Accrued income and other assets		3,362
Other intangibles (1)		5,798
Total assets acquired		343,492

Deposits		287,710
Other borrowings		14,345
Subordinated debentures		3,768
Accrued expenses and other liabilities		1,429
Total liabilities assumed		307,252
Net assets acquired		36,240
Goodwill		28,300
Purchase price (fair value of consideration)	$	64,540

(1)

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

REGULATORY MATTERS

12 Months Ended

Dec. 31, 2019

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, 2019, the Bank had positive undivided profits of $44.7 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. In addition, capital adequacy rules include a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets that applies to all supervised financial institutions. To avoid limits on capital distributions and certain discretionary bonus payments we must meet the minimum ratio for adequately capitalized institutions plus the buffer. Under capital adequacy guidelines, we must meet specific capital requirements that involve quantitative measures as well as qualitative judgments by the regulators. The most recent regulatory filings as of December 31, 2019 and 2018, categorized our Bank as well capitalized. Management is not aware of any conditions or events that would have changed the most recent Federal Deposit Insurance Corporation (‘‘FDIC’’) categorization.

Our actual capital amounts and ratios at December 31 follow(1):

	Actual					Minimum for Adequately Capitalized Institutions					Minimum for Well-Capitalized Institutions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)

2019
Total capital to risk-weighted assets
Consolidated	$	380,454		13.74	%	$	221,562		8.00	%	NA		NA
Independent Bank		358,914		12.96			221,482		8.00		$	276,852		10.00	%

Tier 1 capital to risk-weighted assets
Consolidated	$	352,764		12.74	%	$	166,171		6.00	%	NA		NA
Independent Bank		331,224		11.96			166,111		6.00		$	221,482		8.00	%

Common equity tier 1 capital to risk-weighted assets
Consolidated	$	314,532		11.36	%	$	124,628		4.50	%	NA		NA
Independent Bank		331,224		11.96			124,583		4.50		$	179,954		6.50	%

Tier 1 capital to average assets
Consolidated	$	352,764		10.11	%	$	139,632		4.00	%	NA		NA
Independent Bank		331,224		9.49			139,615		4.00		$	174,519		5.00	%

2018
Total capital to risk-weighted assets
Consolidated	$	371,603		14.25	%	$	208,572		8.00	%	NA		NA
Independent Bank		337,227		12.94			208,456		8.00		$	260,569		10.00	%

Tier 1 capital to risk-weighted assets
Consolidated	$	345,419		13.25	%	$	156,429		6.00	%	NA		NA
Independent Bank		311,043		11.94			156,342		6.00		$	208,456		8.00	%

Common equity tier 1 capital to risk-weighted assets
Consolidated	$	307,255		11.79	%	$	117,322		4.50	%	NA		NA
Independent Bank		311,043		11.94			117,256		4.50		$	169,370		6.50	%

Tier 1 capital to average assets
Consolidated	$	345,419		10.47	%	$	131,930		4.00	%	NA		NA
Independent Bank		311,043		9.44			131,778		4.00		$	164,723		5.00	%

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

NA - Not applicable

The components of our regulatory capital are as follows:

	Consolidated						Independent Bank
	December 31,						December 31,
	2019			2018			2019			2018
	(In thousands)
Total shareholders' equity	$	350,169		$	338,994		$	366,861		$	341,496
Add (deduct)
Accumulated other comprehensive loss for regulatory purposes		(2,011	)		4,311			(2,011	)		4,311
Goodwill and other intangibles		(33,626	)		(34,715	)		(33,626	)		(34,715	)
Disallowed deferred tax assets		-			(1,335	)		-			(49	)
Common equity tier 1 capital		314,532			307,255			331,224			311,043
Qualifying trust preferred securities		38,232			38,164			-			-
Disallowed deferred tax assets		-			-			-			-
Tier 1 capital		352,764			345,419			331,224			311,043
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		27,690			26,184			27,690			26,184
Total risk-based capital	$	380,454		$	371,603		$	358,914		$	337,227

REVENUE FROM CONTRACTS WITH CUSTOMERS [Abstract]

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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-SubTopic 505
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Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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-SubTopic 505
-Section 50
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-URI http://asc.fasb.org/extlink&oid=117337116&loc=d3e65071-112826

+ Details

ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2019

ACCOUNTING POLICIES [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’’) and the valuation of capitalized mortgage loan servicing rights. 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 #27. At December 31, 2019, 71.7% 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 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 and for short-term borrowings.

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. All of these deposits are FDIC insured.

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. Certain portfolio loans were reclassified to held for sale as of December 31, 2018, were carried at the lower of cost or fair value on an aggregate loan basis and were sold during the first quarter of 2019.

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.

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.

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.

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 of capitalized mortgage loan servicing rights, totaled $6.2 million, $5.5 million and $4.4 million for the years ended December 31, 2019, 2018 and 2017, 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 equity, trading, held to maturity or available for sale. Equity securities are investments in certain preferred stocks and are reported at fair value with realized and unrealized gains and losses included in earnings. 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. We did not have any trading securities at December 31, 2019 and 2018. 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, 2019 and 2018. Securities available for sale represent those securities not classified as equity, 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 income – 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) commercial and industrial and (ii) commercial real estate. Classes within the mortgage loan segment include (i) 1-4 family owner occupied - jumbo, (ii) 1-4 family owner occupied - non-jumbo, (iii) 1-4 family non-owner occupied (iv) 1-4 family - 2nd lien and (v) resort lending. Classes within the installment loan segment include (i) boat lending, (ii) recreational vehicle lending, and (iii) 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 AFLL 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.

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

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 a new loan with similar credit risk characteristics, and other terms no less favorable to us than those we would offer for a similar new loan.

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 265 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 non-interest expense 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.

GOODWILL — Goodwill arises from business combinations and is generally determined as the excess of the fair value of the consideration transferred over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill acquired in a purchase business combination and determined to have an indefinite useful life is not amortized, but tested for impairment at least annually or more frequently if events and circumstances exists that indicate that a goodwill impairment test should be performed. We have selected December 31 as the date to perform the annual impairment test. Goodwill is the only intangible asset with an indefinite life on our Consolidated Statements of Financial Condition.

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 in the Consolidated Statements of Operations.

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 non-interest income – other in our Consolidated Statements of Operations. 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. 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 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 income (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. Forfeitures are recognized as they occur. 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, 2019, 0.1 million shares of common stock were reserved for issuance under the dividend reinvestment plan and 0.7 million shares of common stock were reserved for issuance under our long-term incentive plans.

RECLASSIFICATION — Certain amounts in the 2018 and 2017 consolidated financial statements have been reclassified to conform to the 2019 presentation.

ADOPTION OF NEW ACCOUNTING STANDARDS — In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”. This ASU amends existing guidance related to the accounting for leases. These amendments, among other things, require lessees to account for most leases on the balance sheet while recognizing expense on the income statement in a manner similar to existing guidance. For lessors the guidance modifies the classification criteria and the accounting for sales-type and direct finance leases. This amended guidance was effective for us on January 1, 2019 and did not have a material impact on our consolidated operating results or financial condition. Based on our operating leases that we had in place at the date of adoption we did not have a material change in the recognition, measurement and presentation of lease expense or impact on cash flow. The primary impact was the recognition of certain operating leases on our Consolidated Statements of Financial Condition which resulted in the recording of right of use (“ROU”) assets and offsetting lease liabilities each totaling approximately $7.7 million at January 1, 2019. See note #18.

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

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:

•

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

•

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

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

•

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

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

We began evaluating this ASU in 2016 and established a company-wide, cross-discipline governance structure, which provides implementation oversight. We continued to test and refine our current expected credit loss models that satisfied the requirements of this ASU. Oversight and testing, as well as efforts to meet expanded disclosure requirements, extended through the end of 2019. We currently estimate losses over approximately a two year forecast period using the Federal Open Market Committee median economic projections as well as considering other economic forecast sources, and then revert to longer term historical loss experience to estimate losses over more extended periods. This amended guidance was effective for us on January 1, 2020. We have not completed finalizing the results of our current expected credit loss (‘‘CECL’’) estimate as of year-end. The required financial reporting disclosures are being further refined and internally validated. We are in the process of finalizing the review of our model and assumptions including qualitative adjustments and economic forecasts. During the first quarter of 2020, we expect to finalize our model and all assumptions as well as obtain formal approval from all internal committees and governance processes related to CECL.

We expect to recognize a one-time cumulative effect adjustment increasing the allowance for loan losses. Because we do not have final approval from our oversight and governance committees, we are estimating an increase to the allowance for loan losses to be in the range of $8.0 million to $10.0 million primarily driven by the longer contractual maturities of our mortgage and consumer installment loan segments. In addition, we currently expect this ASU to increase the allowance for losses related to unfunded loan commitments between $1.0 million and $2.0 million. The ultimate impact of adopting this ASU, and at each subsequent reporting period, is highly dependent on credit quality, economic forecasts and conditions, composition of our loan portfolios and securities available for sale, along with other management judgements. The transition adjustment to record the allowance for credit losses may fall outside of our estimated increase based on the finalization of assumptions including qualitative adjustments and the economic forecast used in calculating the allowance for credit losses upon the adoption of CECL.

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

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

MEPCO SALE (Details) - USD ($) $ in Thousands	12 Months Ended
MEPCO SALE (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	May 01, 2017
Asset Purchase Agreement [Abstract]
Loans	$ 2,725,023	$ 2,582,520
Cash proceeds from sale of assets	0	0	$ 33,446
Commercial [Member]
Asset Purchase Agreement [Abstract]
Loans	$ 1,166,695	$ 1,144,481
Mepco [Member]
Asset Purchase Agreement [Abstract]
Net payment plan receivables				$ 33,100
Furniture and equipment				200
Other assets				1,600
Liabilities assumed				2,000
Cash proceeds from sale of assets			33,400
Gain (loss) on sale of assets			$ 0
Mepco [Member] \| Commercial [Member]
Asset Purchase Agreement [Abstract]
Loans				$ 500

SECURITIES

12 Months Ended

Dec. 31, 2019

SECURITIES [Abstract]

SECURITIES

NOTE 3 – SECURITIES

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

	Amortized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
2019
U.S. agency	$	14,591	$	89	$	19	$	14,661
U.S. agency residential mortgage-backed		226,130		1,910		278		227,762
U.S. agency commercial mortgage-backed		10,671		113		28		10,756
Private label mortgage-backed		39,248		544		99		39,693
Other asset backed		94,158		103		375		93,886
Obligations of states and political subdivisions		94,499		1,724		121		96,102
Corporate		31,904		1,296		5		33,195
Trust preferred		1,968		-		125		1,843
Foreign government		499		3		-		502
Total	$	513,668	$	5,782	$	1,050	$	518,400

2018
U.S. agency	$	20,198	$	9	$	193	$	20,014
U.S. agency residential mortgage-backed		124,777		817		1,843		123,751
U.S. agency commercial mortgage-backed		5,909		1		184		5,726
Private label mortgage-backed		29,735		321		637		29,419
Other asset backed		83,481		86		248		83,319
Obligations of states and political subdivisions		130,244		257		2,946		127,555
Corporate		34,866		29		586		34,309
Trust preferred		1,964		-		145		1,819
Foreign government		2,050		-		36		2,014
Total	$	433,224	$	1,520	$	6,818	$	427,926

Total OTTI recognized in accumulated other comprehensive loss for securities available for sale was zero at both December 31, 2019 and 2018, 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)

2019
U.S. agency	$	2,782	$	8	$	2,712	$	11	$	5,494	$	19
U.S. agency residential mortgage-backed		56,377		126		13,551		152		69,928		278
U.S. agency commercial mortgage-backed		3,284		24		659		4		3,943		28
Private label mortgage-backed		16,387		55		343		44		16,730		99
Other asset backed		34,027		233		13,839		142		47,866		375
Obligations of states and political subdivisions		15,666		84		5,396		37		21,062		121
Corporate		2,125		5		-		-		2,125		5
Trust preferred		-		-		1,843		125		1,843		125
Total	$	130,648	$	535	$	38,343	$	515	$	168,991	$	1,050

2018
U.S. agency	$	7,150	$	46	$	11,945	$	147	$	19,095	$	193
U.S. agency residential mortgage-backed		18,374		180		48,184		1,663		66,558		1,843
U.S. agency commercial mortgage-backed		566		3		5,094		181		5,660		184
Private label mortgage-backed		8,273		57		16,145		580		24,418		637
Other asset backed		53,043		160		10,235		88		63,278		248
Obligations of states and political subdivisions		25,423		262		80,701		2,684		106,124		2,946
Corporate		17,758		343		9,222		243		26,980		586
Trust preferred		939		61		880		84		1,819		145
Foreign government		-		-		2,014		36		2,014		36
Total	$	131,526	$	1,112	$	184,420	$	5,706	$	315,946	$	6,818

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

U.S. agency, U.S. agency residential mortgage-backed securities and U.S. agency commercial mortgage backed securities — at December 31, 2019, we had 29 U.S. agency, 111 U.S. agency residential mortgage-backed and 9

U.S. agency commercial mortgage-backed securities whose fair 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..

Private label mortgage backed, other asset backed and corporate securities — at December 31, 2019, we had 22 private label mortgage backed, 58 other asset backed and two corporate securities whose fair value is less than amortized cost. Unrealized losses are primarily due to credit spread widening and increases in interest rates since their acquisition.

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

Obligations of states and political subdivisions — at December 31, 2019, we had 42 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.

Trust preferred securities — at December 31, 2019, we had two trust preferred securities whose fair value is less than amortized cost. Both of our trust preferred securities are single issue securities issued by a trust subsidiary of a bank holding company. The pricing of trust preferred securities has suffered from credit spread widening. One of the securities is rated by a major rating agency as investment grade while the other one is non-rated. The non-rated issue is a relatively small bank and was never rated. The issuer of this non-rated trust preferred security, which had a total amortized cost of $1.0 million and total fair value of $0.91 million as of December 31, 2019, continues to have satisfactory credit metrics and make interest payments.

As management does not intend to liquidate any of the securities discussed above and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines discussed above (other than certain declines related to the two private label mortgage-backed securities currently being reviewed for OTTI) are deemed to be other than temporary.

We recorded zero credit related OTTI charges in the Consolidated Statements of Operations on securities available for sale during 2019, 2018, and 2017.

At December 31, 2019, two private label mortgage-backed securities had credit related OTTI and are summarized as follows:

	Senior Security		Super Senior Security		Total
	(In thousands)

As of December 31, 2019
Fair value	$	601	$	603	$	1,204
Amortized cost		511		442		953
Non-credit unrealized loss		-		-		-
Unrealized gain		90		161		251
Cumulative credit related OTTI		757		457		1,214

Both of these securities are receiving principal and interest payments similar to principal reductions in the underlying collateral and have unrealized gains at December 31, 2019. The original amortized cost (current amortized cost excluding cumulative credit related OTTI) for each of these securities has been permanently adjusted downward for previously recorded credit related OTTI. The unrealized loss (based on original amortized cost) for these securities is now less than previously recorded credit related OTTI amounts.

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

	2019			2018		2017
				(In thousands)
Balance at beginning of year	$	1,594		$	1,594	$	1,594
Additions to credit losses on securities for which no previous OTTI was recognized		-			-		-
Increases to credit losses on securities for which OTTI was previously recognized		-			-		-
Reduction(1)		(380	)		-		-
Total	$	1,214		$	1,594	$	1,594

⁽¹⁾During 2019 one security with previously recorded OTTI was settled and balance is now zero.

The amortized cost and fair value of securities available for sale at December 31, 2019, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	10,737	$	10,761
Maturing after one year but within five years		50,035		50,839
Maturing after five years but within ten years		47,634		49,070
Maturing after ten years		35,055		35,633
		143,461		146,303
U.S. agency residential mortgage-backed		226,130		227,762
U.S. agency commercial mortgage-backed		10,671		10,756
Private label mortgage-backed		39,248		39,693
Other asset backed		94,158		93,886
Total	$	513,668	$	518,400

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:

			Realized
	Proceeds		Gains (1)		Losses
	(In thousands)
2019	$	68,716	$	248	$	108
2018		48,736		192		136
2017		17,308		218		3

(1)	2018 excludes a $0.144 million gain on the sale of 1,000 VISA Class B shares.

Certain preferred stocks which were all sold during the first quarter of 2019 had been classified as equity securities at fair value in our Consolidated Statement of Financial Condition. During 2019, 2018 and 2017, we recognized gains (losses) on these preferred stocks of $0.17 million, $(0.06) million and $0.05 million, respectively, that are included in net gains on securities in the Consolidated Statements of Operations. Zero, $(0.06) million and $0.05 million of these amounts relate to gains (losses) recognized on preferred stock still held at each respective year end.

Securities available for sale with a book value of $8.7 million and zero at December 31, 2019 and 2018, 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 total shareholders’ equity at December 31, 2019 or 2018.

REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

12 Months Ended

Dec. 31, 2019

Disaggregation of Revenue Sources by Attribute

Disaggregation of our revenue sources by attribute for the years ended December 31 follow:

2019
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	7,590	$	-	$	-	$	-	$	7,590
Account service charges		2,103		-		-		-		2,103
ATM fees		-		1,368		-		-		1,368
Other		-		965		-		-		965
Business
Overdraft fees		1,515		-		-		-		1,515
ATM fees		-		35		-		-		35
Other		-		422		-		-		422
Interchange income		-		-		10,297		-		10,297
Asset management revenue		-		-		-		1,123		1,123
Transaction based revenue		-		-		-		535		535

Total	$	11,208	$	2,790	$	10,297	$	1,658	$	25,953

Reconciliation to Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	2,790
Investment and insurance commissions										1,658
Bank owned life insurance										1,111
Other										3,723
Total									$	9,282

2018
	Service Charges on Deposit Accounts		Other Deposit Related Income		Interchange Income		Investment and Insurance Commissions		Total
	(In thousands)
Retail
Overdraft fees	$	8,285	$	-	$	-	$	-	$	8,285
Account service charges		2,406		-		-		-		2,406
ATM fees		-		1,423		-		-		1,423
Other		-		941		-		-		941
Business
Overdraft fees		1,567		-		-		-		1,567
ATM fees		-		34		-		-		34
Other		-		594		-		-		594
Interchange income		-		-		9,905		-		9,905
Asset management revenue		-		-		-		1,100		1,100
Transaction based revenue		-		-		-		871		871

Total	$	12,258	$	2,992	$	9,905	$	1,971	$	27,126

Reconciliation to Consolidated Statement of Operations:
Non-interest income - other:
Other deposit related income									$	2,992
Investment and insurance commissions										1,971
Bank owned life insurance										970
Other										2,827
Total									$	8,760

RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Summary of loans and leases receivable [Roll Forward]
Balance at beginning of year	$ 14,205	$ 2,621
New loans and advances	713	13,572
Repayments	(1,841)	(1,988)
Balance at end of year	13,077	14,205
Directors and executive officers deposit	$ 2,000	$ 1,500
Minimum [Member]
Related Party Transaction [Abstract]
Related party entity ownership percentage	10.00%

COMMITMENTS AND CONTINGENT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2019

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:

	2019		2018
	(In thousands)
Financial instruments whose risk is represented by contract amounts
Commitments to extend credit	$	582,457	$	505,421
Standby letters of credit		7,207		4,998

FAIR VALUE DISCLOSURES

12 Months Ended

Dec. 31, 2019

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

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

Impaired loans with specific loss allocations based on collateral value: From time to time, certain loans are considered impaired and an 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, 2019 and 2018, 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 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 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 Level 3. Management evaluates the third party valuation for reasonableness each quarter as part of our financial reporting control processes.

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

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

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
December 31, 2019:
Measured at Fair Value on a Recurring Basis
Assets
Securities available for sale
U.S. agency	$	14,661	$	-	$	14,661	$	-
U.S. agency residential mortgage-backed		227,762		-		227,762		-
U.S. agency commercial mortgage-backed		10,756		-		10,756		-
Private label mortgage-backed		39,693		-		39,693		-
Other asset backed		93,886		-		93,886		-
Obligations of states and political subdivisions		96,102		-		96,102		-
Corporate		33,195		-		33,195		-
Trust preferred		1,843		-		1,843		-
Foreign government		502		-		502		-
Loans held for sale, carried at fair value		69,800		-		69,800		-
Capitalized mortgage loan servicing rights		19,171		-		-		19,171
Derivatives (1)		5,464		-		5,464		-
Liabilities
Derivatives (2)		4,402		-		4,402		-

Measured at Fair Value on a Non-recurring Basis:
Assets
Impaired loans (3)
Commercial
Commercial and industrial		655		-		-		655
Commercial real estate		316		-		-		316
Mortgage
1-4 family owner occupied - jumbo		987		-		-		987
1-4 family owner occupied - non-jumbo		470		-		-		470
1-4 family non-owner occupied		281		-		-		281
1-4 family - 2nd lien		294		-		-		294
Resort lending		245		-		-		245
Installment
Boat lending		67		-		-		67
Recreational vehicle lending		2		-		-		2
Other		121		-		-		121
Other real estate (4)
Mortgage - 1-4 family owner occupied - non-jumbo		31		-		-		31
Installment - other		28		-		-		28

(1) Included in accrued income and other assets in the Consolidated Statements of Financial Condition.

(2) Included in accrued expenses and other liabilities in the Consolidated Statements of Financial Condition.

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

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

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
December 31, 2018:
Measured at Fair Value on a Recurring Basis
Assets
Equity securities at fair value Securities available for sale	$	393	$	393	$	-	$	-
U.S. agency		20,014		-		20,014		-
U.S. agency residential mortgage-backed		123,751		-		123,751		-
U.S. agency commercial mortgage-backed		5,726		-		5,726		-
Private label mortgage-backed		29,419		-		29,419		-
Other asset backed		83,319		-		83,319		-
Obligations of states and political subdivisions		127,555		-		127,555		-
Corporate		34,309		-		34,309		-
Trust preferred		1,819		-		1,819		-
Foreign government		2,014		-		2,014		-
Loans held for sale, carried at fair value		44,753		-		44,753		-
Capitalized mortgage loan servicing rights		21,400		-		-		21,400
Derivatives (1)		5,155		-		5,155		-
Liabilities
Derivatives (2)		2,326		-		2,326		-

Measured at Fair Value on a Non-recurring Basis:
Assets
Loans held for sale, carried at the lower of cost or fair value		41,471		41,471		-		-
Impaired loans (3)
Commercial
Commercial and industrial		2,243		-		-		2,243
Commercial real estate		323		-		-		323
Mortgage
1-4 family owner occupied - non-jumbo		316		-		-		316
1-4 family non-owner occupied		17		-		-		17
Resort lending		572		-		-		572
Other real estate (4)
Mortgage
1-4 family owner occupied - non-jumbo		95		-		-		95
1-4 family - 2nd lien		59		-		-		59

(1) Included in accrued income and other assets in the Consolidated Statements of Financial Condition.

(2) Included in accrued expenses and other liabilities in the Consolidated Statements of Financial Condition.

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

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

There were no transfers between Level 1 and Level 2 during the years ended December 31, 2019 and 2018.

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			Total Change in Fair Values Included in Current
	Securities			Mortgage Loans		Loan Servicing, net			Period Earnings
	(In thousands)

2019
Equity securities at fair value	$	167		$	-	$	-		$	167
Loans held for sale		-			637		-			637
Capitalized mortgage loan servicing rights		-			-		(9,532	)		(9,532	)

2018
Trading securities	$	(62	)	$	-	$	-		$	(62	)
Loans held for sale		-			413		-			413
Capitalized mortgage loan servicing rights		-			-		(2,323	)		(2,323	)

2017
Trading securities	$	45		$	-	$	-		$	45
Loans held for sale		-			407		-			407
Capitalized mortgage loan servicing rights		-			-		(2,744	)		(2,744	)

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, 2019, 2018 and 2017 relating to assets measured at fair value on a non-recurring basis:

•

Loans which are measured for impairment using the fair value of collateral for collateral dependent loans had a carrying amount of $3.4 million, which is net of a valuation allowance of $1.5 million at December 31, 2019, and had a carrying amount of $3.5 million, which is net of a valuation allowance of $1.5 million at December 31, 2018. An additional provision for loan losses relating to these impaired loans of $1.3 million, $1.3 million and $0.5 million was included in our results of operations for the years ending December 31, 2019, 2018 and 2017, respectively.

•

Other real estate, which is measured using the fair value of the property, had a carrying amount of $0.06 million which is net of a valuation allowance of $0.09 million at December 31, 2019, and a carrying amount of $0.15 million which is net of a valuation allowance of $0.14 million, at December 31, 2018. An additional charge relating to other real estate measured at fair value of $0.03 million, $0.09 million and $0.08 million was included in our results of operations during the years ended December 31, 2019, 2018 and 2017, 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
	2019			2018			2017
	(In thousands)
Beginning balance	$	21,400		$	15,699		$	-
Change in accounting		-			-			14,213
Beginning balance, as adjusted		21,400			15,699			14,213
Total losses realized and unrealized:
Included in results of operations		(9,532	)		(2,323	)		(2,744	)
Included in other comprehensive income (loss)		-			-			-
Purchases, issuances, settlements, maturities and calls		7,303			8,024			4,230
Transfers in and/or out of Level 3		-			-			-
Ending balance	$	19,171		$	21,400		$	15,699

Amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at December 31	$	(9,532	)	$	(2,323	)	$	(2,744	)

The fair value of our capitalized mortgage loan servicing rights has been determined based on a valuation model used by an independent third party as discussed above. The significant unobservable inputs used in the fair value measurement of the capitalized mortgage loan servicing rights are discount rate, cost to service, ancillary income, float rate and prepayment rate. Significant changes in all five 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)
2019
Capitalized mortgage loan servicing rights	$	19,171	Present value of net	Discount rate	10.00% to 13.00			%		10.14	%
			servicing revenue	Cost to service		$	66 to $316		$	81
				Ancillary income	20 to 37					22
				Float rate			1.73	%		1.73	%
				Prepayment rate	7.01% to 69.34			%		14.96

2018
Capitalized mortgage loan servicing rights	$	21,400	Present value of net	Discount rate	10.00% to 13.00			%		10.15	%
			servicing revenue	Cost to service		$	68 to $216		$	81
				Ancillary income	20 to 36					23
				Float rate			2.57	%		2.57	%
				Prepayment rate	6.68% to 78.78			%		10.54

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)

2019

Impaired loans

Commercial

971

Sales comparison

Adjustment for differences

approach

between comparable sales

(48.0)% to 19.2

(5.6

Mortgage and Installment(1)

2,467

Sales comparison

Adjustment for differences

approach

between comparable sales

(25.2) to 49.2

11.5

Other real estate

Mortgage and Installment

Sales comparison

Adjustment for differences

approach

between comparable sales

(11.6) to 5.0

(5.1

)

2018

Impaired loans

Commercial(2)

2,566

Sales comparison

Adjustment for differences

approach

between comparable sales

(32.5)% to 60.0

(1.9

Mortgage

905

Sales comparison

Adjustment for differences

approach

between comparable sales

(40.1) to 25.6

0.7

Other real estate

Mortgage

154

Sales comparison

Adjustment for differences

approach

between comparable sales

0.0 to 34.1

11.2

(1)

(2)

	Aggregate Fair Value		Difference		Contractual Principal
	(In thousands)
Loans held for sale
2019	$	69,800	$	1,894	$	67,906
2018		44,753		1,257		43,496
2017		39,436		844		38,592

ACCUMULATED OTHER COMPREHENSIVE LOSS [Abstract]

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.

+ References + Details

REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) Asset	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
REVENUE FROM CONTRACTS WITH CUSTOMERS [Abstract]
Percentage of revenues excluded from ASC Topic 606	84.90%	82.90%
Contract assets	$ 0
Contract liabilities	$ 0
Number of real estate assets sold during the period \| Asset	0
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	$ 25,953	$ 27,126
Bank owned life insurance	1,111	970	$ 1,061
Other	3,723	2,827
Total	9,282	8,760	$ 8,168
Service Charges on Deposit Accounts
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	11,208	12,258
Overdraft Fees [Member] \| Retail [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	7,590	8,285
Overdraft Fees [Member] \| Business [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	1,515	1,567
Account Service Charges [Member] \| Retail [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	2,103	2,406
Other Deposit Related Income [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	2,790	2,992
ATM Fees [Member] \| Retail [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	1,368	1,423
ATM Fees [Member] \| Business [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	35	34
Other [Member] \| Retail [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	965	941
Other [Member] \| Business [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	422	594
Interchange Income [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	10,297	9,905
Investment and Insurance Commissions [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	1,658	1,971
Asset Management Revenue [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	1,123	1,100
Transaction Based Revenue [Member]
Disaggregation of Revenue Sources by Attributes [Abstract]
Revenue from contracts with customers	$ 535	$ 871

ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

12 Months Ended

Dec. 31, 2019

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 (Losses) on Cash Flow Hedges			Dispropor- tionate Tax Effects from Cash Flow Hedges			Total

2019
Balances at beginning of period	$	(4,185	)	$	(5,798	)	$	(125	)	$	-		$	(10,108	)
Other comprehensive income (loss) before reclassifications		8,035			-			(1,266	)		-			6,769
Amounts reclassified from AOCL		(111	)		-			(336	)		-			(447	)
Net current period other comprehensive income (loss)		7,924			-			(1,602	)		-			6,322
Balances at end of period	$	3,739		$	(5,798	)	$	(1,727	)	$	-		$	(3,786	)

2018
Balances at beginning of period	$	(470	)	$	(5,798	)	$	269		$	-		$	(5,999	)
Other comprehensive loss before reclassifications		(3,671	)		-			(207	)		-			(3,878	)
Amounts reclassified from AOCL		(44	)		-			(187	)		-			(231	)
Net current period other comprehensive loss		(3,715	)		-			(394	)		-			(4,109	)
Balances at end of period	$	(4,185	)	$	(5,798	)	$	(125	)	$	-		$	(10,108	)

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	)

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)

2019
Unrealized gains (losses) on securities available for sale	$	140		Net gains on securities
		-		Net impairment loss recognized in earnings
		140		Total reclassifications before tax
		29		Income tax expense
	$	111		Reclassifications, net of tax


Unrealized gains (losses) on cash flow hedges	$	(425	)	Interest expense
		(89	)	Income tax expense
	$	(336	)	Reclassification, net of tax

	$	447		Total reclassifications for the period, net of tax

2018
Unrealized gains (losses) on securities available for sale	$	56		Net gains on securities
		-		Net impairment loss recognized in earnings
		56		Total reclassifications before tax
		12		Income tax expense
	$	44		Reclassifications, net of tax

Unrealized gains (losses) on cash flow hedges	$	(237	)	Interest expense
		(50	)	Income tax expense
	$	(187	)	Reclassification, net of tax

	$	231		Total reclassifications for the period, net of tax

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 (losses) 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

CONCENTRATIONS OF CREDIT RISK	12 Months Ended
CONCENTRATIONS OF CREDIT RISK	Dec. 31, 2019
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, 2019, include $1.010 billion of loans secured by residential real estate and $249.7 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, 2019: Lessors of Nonresidential Real Estate ($379.9 million); Lessors of Residential Real Estate ($142.0 million); Construction ($97.3 million); Accommodation and Food Services ($76.6 million); Manufacturing ($74.6 million) and Health Care and Social Assistance ($58.9 million). A geographic concentration arises because we primarily conduct our lending activities in the State of Michigan.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock [Member]	Retained Earnings (Accumulated Deficit) [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Balance at beginning of period at Dec. 31, 2016	$ 323,745	$ (65,605)	$ (8,808)	$ 249,332
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		20,475		20,475
Cash dividends declared	0	(8,960)	0	(8,960)
Repurchase of common stock	0
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 period at Dec. 31, 2017	324,986	(54,054)	(5,999)	264,933
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		39,839		39,839
Cash dividends declared	0	(14,055)	0	(14,055)
Repurchase of common stock	(12,681)	0	0	(12,681)
Acquisition of TCSB Bancorp, Inc.	64,536	0	0	64,536
Issuance of common stock	267	0	0	267
Share based compensation	1,731	0	0	1,731
Share based compensation withholding obligation	(1,467)	0	0	(1,467)
Other comprehensive income (loss)	0	0	(4,109)	(4,109)
Balances at end of period at Dec. 31, 2018	377,372	(28,270)	(10,108)	338,994
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		46,435		46,435
Cash dividends declared	0	(16,554)	0	(16,554)
Repurchase of common stock	(26,284)	0	0	(26,284)
Issuance of common stock	284	0	0	284
Share based compensation	1,854	0	0	1,854
Share based compensation withholding obligation	(882)	0	0	(882)
Other comprehensive income (loss)	0	0	6,322	6,322
Balances at end of period at Dec. 31, 2019	$ 352,344	$ 1,611	$ (3,786)	$ 350,169

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2019

PROPERTY AND EQUIPMENT [Abstract]

Summary of Property and Equipment

A summary of property and equipment at December 31 follows:

	2019			2018
	(In thousands)
Land and land improvements	$	17,478		$	16,843
Buildings		57,363			56,385
Equipment		71,194			70,039
		146,035			143,267
Accumulated depreciation and amortization		(107,624	)		(104,490	)
Property and equipment, net	$	38,411		$	38,777

INDEPENDENT BANK CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION

12 Months Ended

Dec. 31, 2019

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,
	2019		2018
	(In thousands)
ASSETS
Cash and due from banks	$	10,505	$	7,624
Interest bearing deposits - time		10,000		25,000
Investment in subsidiaries		369,861		343,872
Accrued income and other assets		463		2,857
Total Assets	$	390,829	$	379,353

LIABILITIES AND SHAREHOLDERS’ EQUITY
Subordinated debentures	$	39,456	$	39,388
Accrued expenses and other liabilities		575		530
Shareholders’ equity		350,798		339,435
Total Liabilities and Shareholders’ Equity	$	390,829	$	379,353

CONDENSED STATEMENTS OF OPERATIONS
	Year Ended December 31,
	2019			2018			2017
	(In thousands)
OPERATING INCOME
Dividends from subsidiary	$	29,000		$	33,500		$	16,000
Interest income		230			160			29
Other income		61			56			41
Total Operating Income		29,291			33,716			16,070

OPERATING EXPENSES
Interest expense		2,104			1,924			1,347
Administrative and other expenses		655			748			714
Total Operating Expenses		2,759			2,672			2,061
Income Before Income Tax and Equity in Undistributed Net Income of Subsidiaries		26,532			31,044			14,009
Income tax expense (benefit)		(423	)		(515	)		1,587
Income Before Equity in Undistributed Net Income of Subsidiaries		26,955			31,559			12,422
Equity in undistributed net income of subsidiaries		19,480			8,280			8,053
Net Income	$	46,435		$	39,839		$	20,475

CONDENSED STATEMENTS OF CASH FLOWS
	Year Ended December 31,
	2019			2018			2017
	(In thousands)
Net Income	$	46,435		$	39,839		$	20,475
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FROM OPERATING ACTIVITIES
Deferred income tax expense		1,503			6,620			2,146
Share based compensation		65			53			45
Accretion of discount on subordinated debentures		68			51			-
(Increase) decrease in accrued income and other assets		891			(1,307	)		(32	)
Increase in accrued expenses and other liabilities		45			21			121
Equity in undistributed net income of subsidiaries		(19,480	)		(8,280	)		(8,053	)
Total Adjustments		(16,908	)		(2,842	)		(5,773	)
Net Cash From Operating Activities		29,527			36,997			14,702

CASH FLOW FROM (USED IN) INVESTING ACTIVITIES
Purchases of interest bearing deposits - time		(20,000	)		(30,000	)		(10,000	)
Maturity of interest bearing deposits - time		35,000			10,000			10,000
Acquisition of business, less cash received		-			431			-
Net Cash From (Used In) Investing Activities		15,000			(19,569	)		-

CASH FLOW USED IN FINANCING ACTIVITIES
Dividends paid		(16,554	)		(14,055	)		(8,960	)
Proceeds from issuance of common stock		2,074			1,945			1,776
Share based compensation withholding obligation		(882	)		(1,467	)		(579	)
Repurchase of common stock		(26,284	)		(12,681	)		-
Net Cash Used in Financing Activities		(41,646	)		(26,258	)		(7,763	)
Net Increase (Decrease) in Cash and Cash Equivalents		2,881			(8,830	)		6,939
Cash and Cash Equivalents at Beginning of Year		7,624			16,454			9,515
Cash and Cash Equivalents at End of Year	$	10,505		$	7,624		$	16,454

INDEPENDENT BANK CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
ASSETS [Abstract]
Cash and due from banks	$ 53,295	$ 23,350
Interest bearing deposits - time	350	595
Accrued income and other assets	42,751	34,870
Total Assets	3,564,694	3,353,281
LIABILITIES AND SHAREHOLDERS' EQUITY [Abstract]
Subordinated debentures	39,456	39,388
Accrued expenses and other liabilities	49,696	35,771
Shareholders' equity	350,169	338,994	$ 264,933	$ 249,332
Total Liabilities and Shareholders' Equity	3,564,694	3,353,281
OPERATING INCOME [Abstract]
Interest income	148,928	130,773	98,309
OPERATING EXPENSES [Abstract]
Interest expense	26,347	17,491	9,123
Income Before Income Tax	57,760	49,133	38,438
Income tax expense (benefit)	11,325	9,294	17,963
Net Income	46,435	39,839	20,475
CONDENSED STATEMENTS OF CASH FLOWS [Abstract]
Net income	46,435	39,839	20,475
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FROM OPERATING ACTIVITIES [Abstract]
Deferred income tax expense	1,088	9,294	16,009
Share based compensation	1,854	1,731	1,748
(Increase) decrease in accrued income and other assets	(6,573)	(4,890)	(3,708)
Increase in accrued expenses and other liabilities	12,113	240	5,442
Total Adjustments	(12,455)	5,082	18,132
Net Cash From Operating Activities	33,980	44,921	38,607
CASH FLOW FROM (USED IN) INVESTING ACTIVITIES [Abstract]
Maturity of interest bearing deposits - time	250	3,728	2,850
Acquisition of business, less cash received	0	23,516	0
Net Cash Used in Investing Activities	(181,642)	(183,367)	(277,578)
CASH FLOW USED IN FINANCING ACTIVITIES [Abstract]
Dividends paid	(16,554)	(14,055)	(8,960)
Proceeds from issuance of common stock	284	267	72
Share based compensation withholding obligation	(882)	(1,467)	(579)
Repurchase of common stock	(26,284)	(12,681)	0
Net Cash From Financing Activities	142,722	153,952	210,515
Cash and Cash Equivalents at Beginning of Year	70,244
Cash and Cash Equivalents at End of Year	65,304	70,244
Parent Company [Member]
ASSETS [Abstract]
Cash and due from banks	10,505	7,624
Interest bearing deposits - time	10,000	25,000
Investment in subsidiaries	369,861	343,872
Accrued income and other assets	463	2,857
Total Assets	390,829	379,353
LIABILITIES AND SHAREHOLDERS' EQUITY [Abstract]
Subordinated debentures	39,456	39,388
Accrued expenses and other liabilities	575	530
Shareholders' equity	350,798	339,435
Total Liabilities and Shareholders' Equity	390,829	379,353
OPERATING INCOME [Abstract]
Dividends from subsidiary	29,000	33,500	16,000
Interest income	230	160	29
Other income	61	56	41
Total Operating Income	29,291	33,716	16,070
OPERATING EXPENSES [Abstract]
Interest expense	2,104	1,924	1,347
Administrative and other expenses	655	748	714
Total Operating Expenses	2,759	2,672	2,061
Income Before Income Tax	26,532	31,044	14,009
Income tax expense (benefit)	(423)	(515)	1,587
Income Before Equity in Undistributed Net Income of Subsidiaries	26,955	31,559	12,422
Equity in undistributed net income of subsidiaries	19,480	8,280	8,053
Net Income	46,435	39,839	20,475
CONDENSED STATEMENTS OF CASH FLOWS [Abstract]
Net income	46,435	39,839	20,475
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FROM OPERATING ACTIVITIES [Abstract]
Deferred income tax expense	1,503	6,620	2,146
Share based compensation	65	53	45
Accretion of discount on subordinated debentures	68	51	0
(Increase) decrease in accrued income and other assets	891	(1,307)	(32)
Increase in accrued expenses and other liabilities	45	21	121
Equity in undistributed net income of subsidiaries	(19,480)	(8,280)	(8,053)
Total Adjustments	(16,908)	(2,842)	(5,773)
Net Cash From Operating Activities	29,527	36,997	14,702
CASH FLOW FROM (USED IN) INVESTING ACTIVITIES [Abstract]
Purchases of interest bearing deposits - time	(20,000)	(30,000)	(10,000)
Maturity of interest bearing deposits - time	35,000	10,000	10,000
Acquisition of business, less cash received	0	431	0
Net Cash Used in Investing Activities	15,000	(19,569)	0
CASH FLOW USED IN FINANCING ACTIVITIES [Abstract]
Dividends paid	(16,554)	(14,055)	(8,960)
Proceeds from issuance of common stock	2,074	1,945	1,776
Share based compensation withholding obligation	(882)	(1,467)	(579)
Repurchase of common stock	(26,284)	(12,681)	0
Net Cash From Financing Activities	(41,646)	(26,258)	(7,763)
Net Increase (Decrease) in Cash and Cash Equivalents	2,881	(8,830)	6,939
Cash and Cash Equivalents at Beginning of Year	7,624	16,454	9,515
Cash and Cash Equivalents at End of Year	$ 10,505	$ 7,624	$ 16,454

SHARE BASED COMPENSATION AND BENEFIT PLANS (Details) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share Based Compensation [Abstract]
Number of additional shares approved for grant (in shares)	500
Shares issued on deferral basis credited percentage of current value	90.00%
Total compensation cost not yet recognized	$ 2,100
Total compensation cost not yet recognized, period for recognition	1 year 9 months 18 days
Long-Term Incentive Plan [Member]
Share Based Compensation [Abstract]
Total compensation expense recognized	$ 1,600	$ 1,500	$ 1,600
Tax benefit relating to compensation expense recognized	$ 300	$ 300	600
Restricted Stock [Member] \| Long-Term Incentive Plan [Member]
Share Based Compensation [Abstract]
Number of restricted stock units issued to executive officers (in shares)	10	2
Vesting period	3 years	3 years
Non-Employee Directors [Member]
Share Based Compensation [Abstract]
Number of additional shares approved for grant (in shares)	200
Total compensation expense recognized	$ 300	$ 200	200
Tax benefit relating to compensation expense recognized	$ 50	$ 40	$ 60
Executive Officers [Member] \| Restricted Stock [Member] \| Long-Term Incentive Plan [Member]
Share Based Compensation [Abstract]
Number of restricted stock units issued to executive officers (in shares)	60	50	50
Vesting period	3 years	3 years
Executive Officers [Member] \| Performance Stock Units [Member] \| Long-Term Incentive Plan [Member]
Share Based Compensation [Abstract]
Number of restricted stock units issued to executive officers (in shares)	20	20	20
Vesting period	3 years	3 years
Directors [Member]
Share Based Compensation [Abstract]
Shares issues as retainer fees (in shares)	10	10	10

DEPOSITS (Tables)

12 Months Ended

Dec. 31, 2019

DEPOSITS [Abstract]

Summary of Interest Expense on Deposits

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

	2019		2018		2017
	(In thousands)
Savings and interest-bearing checking	$	5,371	$	4,146	$	1,530
Reciprocal		6,024		1,292		342
Time		7,148		5,343		4,288
Brokered time		4,882		3,697		615
Total	$	23,425	$	14,478	$	6,775

Summary of Maturity of Time Deposits

A summary of the maturity of time deposits at December 31, 2019, follows:

	(In thousands)

2020	$	501,609
2021		73,398
2022		13,929
2023		15,136
2024		5,020
2025 and thereafter		445
Total	$	609,537

Summary of Reciprocal Deposits

A summary of reciprocal deposits at December 31 follows:

	2019		2018
	(In thousands)
Demand	$	383,953	$	114,503
Money market		4,416		8,577
Time		42,658		58,992
Total	$	431,027	$	182,072

DEPOSITS (Details) - USD ($)	12 Months Ended
DEPOSITS (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Summary of interest expense on deposits [Abstract]
Savings and interest-bearing checking	$ 5,371,000	$ 4,146,000	$ 1,530,000
Reciprocal	6,024,000	1,292,000	342,000
Time	7,148,000	5,343,000	4,288,000
Brokered time	4,882,000	3,697,000	615,000
Total	23,425,000	14,478,000	$ 6,775,000
Aggregate amount of time deposits of $250,000 or more	71,500,000	74,000,000
Time Deposits denominations amount	250,000	250,000
Summary of the maturity of time deposits [Abstract]
2020	501,609,000
2021	73,398,000
2022	13,929,000
2023	15,136,000
2024	5,020,000
2025 and thereafter	445,000
Total	609,537,000
Summary of reciprocal deposits [Abstract]
Demand	383,953,000	114,503,000
Money market	4,416,000	8,577,000
Time	42,658,000	58,992,000
Total	$ 431,027,000	$ 182,072,000

REGULATORY MATTERS (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

REGULATORY MATTERS [Abstract]

Undivided profits

$ 44,700

Tier 1 capital to average assets [Abstract]

Capital conservation buffer

2.50%

1.875%

Components of regulatory capital [Abstract]

Total shareholders' equity

$ 350,169

$ 338,994

$ 264,933

$ 249,332

Add (deduct) [Abstract]

Accumulated other comprehensive loss for regulatory purposes

(3,786)

(10,108)

Consolidated [Member]

Total capital to risk-weighted assets [Abstract]

^[1]

$ 380,454

$ 371,603

Minimum for Adequately Capitalized Institutions, Amount

^[1]

13.74%

14.25%

^[1]

$ 221,562

$ 208,572

Minimum for Adequately Capitalized Institutions, Ratio

^[1]

8.00%

Tier 1 capital to risk-weighted assets [Abstract]

^[1]

$ 352,764

$ 345,419

Minimum for Adequately Capitalized Institutions, Amount

^[1]

12.74%

13.25%

^[1]

$ 166,171

$ 156,429

Minimum for Adequately Capitalized Institutions, Ratio

^[1]

6.00%

Common equity tier 1 capital to risk-weighted assets [Abstract]

^[1]

$ 314,532

$ 307,255

Minimum for Adequately Capitalized Institutions, Amount

^[1]

11.36%

11.79%

^[1]

$ 124,628

$ 117,322

Minimum for Adequately Capitalized Institutions, Ratio

^[1]

4.50%

Tier 1 capital to average assets [Abstract]

^[1]

$ 352,764

$ 345,419

Minimum for Adequately Capitalized Institutions, Amount

^[1]

10.11%

10.47%

^[1]

$ 139,632

$ 131,930

Minimum for Adequately Capitalized Institutions, Ratio

^[1]

4.00%

Components of regulatory capital [Abstract]

Total shareholders' equity

$ 350,169

$ 338,994

Add (deduct) [Abstract]

Accumulated other comprehensive loss for regulatory purposes

(2,011)

4,311

Goodwill and other intangibles

(33,626)

(34,715)

Common equity tier 1 capital

(1,335)

^[1]

314,532

307,255

Qualifying trust preferred securities

38,232

38,164

Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets

^[1]

352,764

345,419

27,690

26,184

Independent Bank [Member]

^[1]

380,454

371,603

Total capital to risk-weighted assets [Abstract]

^[1]

$ 358,914

$ 337,227

Minimum for Adequately Capitalized Institutions, Amount

^[1]

12.96%

12.94%

^[1]

$ 221,482

$ 208,456

Minimum for Adequately Capitalized Institutions, Ratio

^[1]

8.00%

^[1]

$ 276,852

$ 260,569

Tier 1 capital to risk-weighted assets [Abstract]

^[1]

10.00%

^[1]

$ 331,224

$ 311,043

Minimum for Adequately Capitalized Institutions, Amount

^[1]

11.96%

11.94%

^[1]

$ 166,111

$ 156,342

Minimum for Adequately Capitalized Institutions, Ratio

^[1]

6.00%

^[1]

$ 221,482

$ 208,456

Common equity tier 1 capital to risk-weighted assets [Abstract]

^[1]

8.00%

^[1]

$ 331,224

$ 311,043

Minimum for Adequately Capitalized Institutions, Amount

^[1]

11.96%

11.94%

^[1]

$ 124,583

$ 117,256

Minimum for Adequately Capitalized Institutions, Ratio

^[1]

4.50%

^[1]

$ 179,954

$ 169,370

Tier 1 capital to average assets [Abstract]

^[1]

6.50%

^[1]

$ 331,224

$ 311,043

Minimum for Adequately Capitalized Institutions, Amount

^[1]

9.49%

9.44%

^[1]

$ 139,615

$ 131,778

Minimum for Adequately Capitalized Institutions, Ratio

^[1]

4.00%

^[1]

$ 174,519

$ 164,723

Components of regulatory capital [Abstract]

^[1]

5.00%

Total shareholders' equity

$ 366,861

$ 341,496

Add (deduct) [Abstract]

Accumulated other comprehensive loss for regulatory purposes

(2,011)

4,311

Goodwill and other intangibles

(33,626)

(34,715)

Common equity tier 1 capital

(49)

^[1]

331,224

311,043

Qualifying trust preferred securities

Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets

^[1]

331,224

311,043

27,690

26,184

Available-for-sale Securities, Amortized Cost Basis [Abstract]

^[1]

$ 358,914

$ 337,227

[1]	These ratios do not reflect a capital conservation buffer of 2.50% and 1.875% at December 31, 2019 and 2018, respectively.

SECURITIES (Details)
$ in Thousands

12 Months Ended

Dec. 31, 2019

USD ($)

Security

Grade

Dec. 31, 2018

USD ($)

Dec. 31, 2017

USD ($)

$ 513,668

$ 433,224

5,782

1,520

1,050

6,818

OTTI recognized in accumulated other comprehensive loss

518,400

427,926

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]

130,648

131,526

535

1,112

38,343

184,420

515

5,706

168,991

315,946

Private Label Mortgage Backed Securities Below Investment Grade [Abstract]

1,050

6,818

$ 0

Number of securities settled which were recorded under OTTI | Security

Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]

Additions to credit losses on securities for which no previous OTTI was recognized

$ 1,594

1,594

Increases to credit losses on securities for which OTTI was previously recognized

Reduction

(380)

^[1]

Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]

1,214

1,594

$ 1,594

Maturing within one year

10,737

Maturing after one year but within five years

50,035

Maturing after five years but within ten years

47,634

Maturing after ten years

35,055

U.S. agency residential mortgage-backed

143,461

226,130

U.S. agency commercial mortgage-backed

10,671

Private label mortgage-backed

39,248

Other asset backed

94,158

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

513,668

433,224

Maturing within one year

10,761

Maturing after one year but within five years

50,839

Maturing after five years but within ten years

49,070

Maturing after ten years

35,633

Total available-for-sale securities fair value

146,303

U.S. agency residential mortgage backed

227,762

U.S. agency commercial mortgage-backed

10,756

Private label mortgage-backed

39,693

Other asset backed

93,886

Available-for-sale Securities, Amortized Cost Basis [Abstract]

518,400

427,926

U.S. Agency [Member]

14,591

20,198

193

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]

14,661

20,014

2,782

7,150

2,712

11,945

147

5,494

19,095

Number of securities with market fair value less than amortized cost | Security

$ 19

193

Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

$ 14,591

20,198

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

14,661

20,014

Available-for-sale Securities, Amortized Cost Basis [Abstract]

226,130

124,777

1,910

817

278

1,843

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]

227,762

123,751

56,377

18,374

126

180

13,551

48,184

152

1,663

69,928

66,558

Number of securities with market fair value less than amortized cost | Security

$ 278

1,843

111

Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

$ 226,130

124,777

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

227,762

123,751

Available-for-sale Securities, Amortized Cost Basis [Abstract]

10,671

5,909

113

184

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]

10,756

5,726

3,284

566

659

5,094

181

3,943

5,660

Number of securities with market fair value less than amortized cost | Security

$ 28

184

Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

$ 10,671

5,909

Private Label Mortgage-Backed [Member]

10,756

5,726

Available-for-sale Securities, Amortized Cost Basis [Abstract]

39,248

29,735

544

321

637

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]

39,693

29,419

16,387

8,273

343

16,145

580

16,730

24,418

Number of securities with market fair value less than amortized cost | Security

$ 99

637

Private Label Mortgage Backed Securities Below Investment Grade [Abstract]

$ 1,204

Non-credit unrealized loss

953

Unrealized gain

251

Cumulative credit related OTTI

$ 1,214

Number of securities reviewed for OTTI | Security

Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

$ 39,248

29,735

Private Label Mortgage Backed Securities Below Investment Grade [Abstract]

39,693

29,419

Senior Security [Member]

601

Non-credit unrealized loss

511

Unrealized gain

Cumulative credit related OTTI

757

Super Senior Security [Member]

Private Label Mortgage Backed Securities Below Investment Grade [Abstract]

603

Non-credit unrealized loss

442

Unrealized gain

161

Cumulative credit related OTTI

457

Other Asset Backed [Member]

Available-for-sale Securities, Amortized Cost Basis [Abstract]

94,158

83,481

103

375

248

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]

93,886

83,319

34,027

53,043

233

160

13,839

10,235

142

47,866

63,278

Number of securities with market fair value less than amortized cost | Security

$ 375

248

Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

$ 94,158

83,481

Obligations of States and Political Subdivisions [Member]

93,886

83,319

Available-for-sale Securities, Amortized Cost Basis [Abstract]

94,499

130,244

1,724

257

121

2,946

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]

96,102

127,555

15,666

25,423

262

5,396

80,701

2,684

21,062

106,124

Number of securities with market fair value less than amortized cost | Security

$ 121

2,946

Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

$ 94,499

130,244

Available-for-sale Securities, Amortized Cost Basis [Abstract]

96,102

127,555

Corporate [Member]

31,904

34,866

1,296

586

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]

33,195

34,309

2,125

17,758

343

9,222

243

2,125

26,980

Number of securities with market fair value less than amortized cost | Security

$ 5

586

Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

$ 31,904

34,866

Available-for-sale Securities, Amortized Cost Basis [Abstract]

33,195

34,309

Trust Preferred [Member]

1,968

1,964

125

145

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]

1,843

1,819

939

1,843

880

125

1,843

1,819

Number of securities with market fair value less than amortized cost | Security

$ 125

145

Number of issues rated as investment grade | Grade

Number of securities not rated | Security

Non-rated securities, amortized cost

$ 1,000

Fair value of non-rated trust preferred securities

910

Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

1,968

1,964

Foreign Government [Member]

1,843

1,819

Available-for-sale Securities, Amortized Cost Basis [Abstract]

499

2,050

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]

502

2,014

2,014

2,014

Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]

Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]

499

2,050

PRINCIPLES OF CONSOLIDATION

$ 502

$ 2,014

[1]	During 2019 one security with previously recorded OTTI was settled and balance is now zero.

FAIR VALUE DISCLOSURES, Changes in Fair Value for Financial Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Changes in fair value for financial assets [Abstract]
Equity securities at fair value, net gains (losses)	$ 167
Trading securities, net gains (losses)		$ (62)	$ 45
Loans held for sale, net gains (losses)	637	413	407
Capitalized mortgage loan servicing rights, net gains (losses)	(9,532)	(2,323)	(2,744)
Impairment charges recognized [Abstract]
Collateral dependent loans, carrying amount	3,400	3,500
Collateral dependent loans, valuation allowance	1,500	1,500
Additional provision for loan losses on impaired loans	1,300	1,300	500
Other real estate, carrying amount	60	150
Other real estate, valuation allowance	92	144	123	$ 793
Other real estate, additional charge	30	90	80
Securities [Member]
Changes in fair value for financial assets [Abstract]
Equity securities at fair value, net gains (losses)	167
Trading securities, net gains (losses)		(62)	45
Mortgage Loans [Member]
Changes in fair value for financial assets [Abstract]
Loans held for sale, net gains (losses)	637	413	407
Mortgage Loan Servicing, Net [Member]
Changes in fair value for financial assets [Abstract]
Capitalized mortgage loan servicing rights, net gains (losses)	$ (9,532)	$ (2,323)	$ (2,744)

ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2019

ACCOUNTING POLICIES [Abstract]

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. All of these deposits are FDIC insured.

LOANS 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

GOODWILL

INCOME TAXES

We recognize interest and/or penalties related to income tax matters in income tax expense in the Consolidated Statements of Operations.

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 2018 and 2017 consolidated financial statements have been reclassified to conform to the 2019 presentation.

ADOPTION OF NEW ACCOUNTING STANDARDS

•

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

•

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

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

DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2019

DERIVATIVE FINANCIAL INSTRUMENTS [Abstract]

Derivative Financial Instruments According to Type of Hedge Designation

Our derivative financial instruments according to the type of hedge in which they are designated at December 31 follow:

	2019
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Fair value hedge designation - Pay-fixed interest rate swap agreements	$	7,117		9.4	$	(242	)

Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		1.6	$	(174	)
Interest rate cap agreements		150,000		2.6		214
Total	$	175,000		2.5	$	40

No hedge designation
Rate-lock mortgage loan commitments	$	49,268		0.1	$	1,412
Mandatory commitments to sell mortgage loans		95,363		0.1		(150	)
Pay-fixed interest rate swap agreements - commercial		153,946		5.5		(3,641	)
Pay-variable interest rate swap agreements - commercial		153,946		5.5		3,641
Purchased options		2,908		1.5		141
Written options		2,848		1.5		(139	)
Total	$	458,279		3.7	$	1,264

	2018
	Notional Amount		Average Maturity (years)		Fair Value
	(Dollars in thousands)
Cash flow hedge designation
Pay-fixed interest rate swap agreements	$	25,000		2.6	$	280
Interest rate cap agreements		150,000		3.6		2,245
Total	$	175,000		3.5	$	2,525

No hedge designation
Rate-lock mortgage loan commitments	$	32,473		0.1	$	687
Mandatory commitments to sell mortgage loans		57,583		0.1		(383	)
Pay-fixed interest rate swap agreements - commercial		94,451		5.5		405
Pay-variable interest rate swap agreements - commercial		94,451		5.5		(405	)
Purchased options		3,095		2.5		116
Written options		3,095		2.5		(116	)
Total	$	285,148		3.7	$	304

Fair Value of Derivative Instruments

Fair Values of Derivative Instruments

	Asset Derivatives						Liability Derivatives
	December 31,						December 31,
	2019			2018			2019			2018
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In thousands)
Derivatives designated as hedging instruments
Pay-fixed interest rate swap agreements	Other assets	$	-	Other assets	$	280	Other liabilities	$	416	Other liabilities	$	-
Interest rate cap agreements	Other assets		214	Other assets		2,245	Other liabilities		-	Other liabilities		-
			214			2,525			416			-
Derivatives not designated as hedging instruments
Rate-lock mortgage loan commitments	Other assets		1,412	Other assets		687	Other liabilities	$	-	Other liabilities		-
Mandatory commitments to sell mortgage loans	Other assets		-	Other assets		-	Other liabilities		150	Other liabilities		383
Pay-fixed interest rate swap agreements - commercial	Other assets		28	Other assets		1,116	Other liabilities		3,669	Other liabilities		711
Pay-variable interest rate swap agreements - commercial	Other assets		3,669	Other assets		711	Other liabilities		28	Other liabilities		1,116
Purchased options	Other assets		141	Other assets		116	Other liabilities		-	Other liabilities		-
Written options	Other assets		-	Other assets		-	Other liabilities		139	Other liabilities		116
			5,250			2,630			3,986			2,326
Total derivatives		$	5,464		$	5,155		$	4,402		$	2,326

Effect of Derivative Financial Instruments on Consolidated Statement of Operations

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

Year Ended December 31,
	Gain (loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)								Location Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)							Location of Gain (Loss) Recognized	Gain (Loss) Recognized in Income(1)
	2019			2018			2017			2019		2018		2017			in Income (1)	2019			2018			2017
	(In thousands)
Fair Value Hedges
Pay-fixed interest rate swapagreements																	Non-interest income-other	$	(242	)	$	-		$	-
Cash Flow Hedges
Interest rate cap agreements	$	(1,211	)	$	(340	)	$	108	Interest expense	$	363	$	206	$	-		Interest expense	$	-		$	-		$	-
Pay-fixed interest rate swapagreements		(392	)		78			216	Interest expense		62		31		(18	)	Interest expense		-			(12	)		(12	)
Total	$	(1,603	)	$	(262	)	$	324		$	425	$	237	$	(18	)		$	-		$	(12	)	$	(12	)

No hedge designation

Rate-lock mortgage loan commitments																	Net gains on mortgage loans	$	725		$	157		$	(116	)
Mandatory commitments to sell mortgage loans																	Net gains on mortgage loans		233			(420	)		(593	)
Pay-fixed interest rate swap agreements - commercial																	Interest income		(4,046	)		113			43
Pay-variable interest rate swap agreements -commercial																	Interest income		4,046			(113	)		(43	)
Purchased options																	Interest expense		25			(206	)		84
Written options																	Interest expense		(23	)		206			(84	)
Total																		$	960		$	(263	)	$	(709	)

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

ACCOUNTING POLICIES (Details) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) Employee Segment Payment shares	Dec. 31, 2018 USD ($) Segment	Dec. 31, 2017 USD ($) Segment
ACCOUNTING POLICIES [Abstract]
Percentage of loan portfolio secured by real estate	71.70%
Operating Segments [Abstract]
Number of reportable segments \| Segment	1	1	1
Mortgage Loan Servicing Rights [Abstract]
Mortgage loan servicing fees \| $	$ 6.2	$ 5.5	$ 4.4
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	4
Bank Owned Life Insurance [Abstract]
Number of lives of group flexible premium non-participating variable life insurance contract \| Employee	265
Minimum [Member]
Finite Lived Intangible Asset Useful Life [Abstract]
Estimated useful lives	10 years
Maximum [Member]
Finite Lived Intangible Asset Useful Life [Abstract]
Estimated useful lives	15 years
Building [Member] \| Maximum [Member]
Property, Plant and Equipment, Useful Life [Abstract]
Estimated useful lives	39 years
Equipment [Member] \| Maximum [Member]
Property, Plant and Equipment, Useful Life [Abstract]
Estimated useful lives	7 years
Dividend Reinvestment Plan [Member]
Reserved for Future Issuance [Abstract]
Common stock reserved for issuance (in shares)	0.1
Long-Term Incentive Plans [Member]
Reserved for Future Issuance [Abstract]
Common stock reserved for issuance (in shares)	0.7

RESTRICTIONS ON CASH AND DUE FROM BANKS	12 Months Ended
RESTRICTIONS ON CASH AND DUE FROM BANKS	Dec. 31, 2019
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 balances with the FRB. The average reserve balances to be maintained during 2019 and 2018 were $26.6 million and $9.6 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 $0.01 million and $0.13 million at December 31, 2019 and 2018, respectively.

SECURITIES (Tables)

12 Months Ended

Dec. 31, 2019

SECURITIES [Abstract]

Securities Available for Sale

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

	Amortized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
2019
U.S. agency	$	14,591	$	89	$	19	$	14,661
U.S. agency residential mortgage-backed		226,130		1,910		278		227,762
U.S. agency commercial mortgage-backed		10,671		113		28		10,756
Private label mortgage-backed		39,248		544		99		39,693
Other asset backed		94,158		103		375		93,886
Obligations of states and political subdivisions		94,499		1,724		121		96,102
Corporate		31,904		1,296		5		33,195
Trust preferred		1,968		-		125		1,843
Foreign government		499		3		-		502
Total	$	513,668	$	5,782	$	1,050	$	518,400

2018
U.S. agency	$	20,198	$	9	$	193	$	20,014
U.S. agency residential mortgage-backed		124,777		817		1,843		123,751
U.S. agency commercial mortgage-backed		5,909		1		184		5,726
Private label mortgage-backed		29,735		321		637		29,419
Other asset backed		83,481		86		248		83,319
Obligations of states and political subdivisions		130,244		257		2,946		127,555
Corporate		34,866		29		586		34,309
Trust preferred		1,964		-		145		1,819
Foreign government		2,050		-		36		2,014
Total	$	433,224	$	1,520	$	6,818	$	427,926

Investments in a Continuous Unrealized Loss Position

	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)

2019
U.S. agency	$	2,782	$	8	$	2,712	$	11	$	5,494	$	19
U.S. agency residential mortgage-backed		56,377		126		13,551		152		69,928		278
U.S. agency commercial mortgage-backed		3,284		24		659		4		3,943		28
Private label mortgage-backed		16,387		55		343		44		16,730		99
Other asset backed		34,027		233		13,839		142		47,866		375
Obligations of states and political subdivisions		15,666		84		5,396		37		21,062		121
Corporate		2,125		5		-		-		2,125		5
Trust preferred		-		-		1,843		125		1,843		125
Total	$	130,648	$	535	$	38,343	$	515	$	168,991	$	1,050

2018
U.S. agency	$	7,150	$	46	$	11,945	$	147	$	19,095	$	193
U.S. agency residential mortgage-backed		18,374		180		48,184		1,663		66,558		1,843
U.S. agency commercial mortgage-backed		566		3		5,094		181		5,660		184
Private label mortgage-backed		8,273		57		16,145		580		24,418		637
Other asset backed		53,043		160		10,235		88		63,278		248
Obligations of states and political subdivisions		25,423		262		80,701		2,684		106,124		2,946
Corporate		17,758		343		9,222		243		26,980		586
Trust preferred		939		61		880		84		1,819		145
Foreign government		-		-		2,014		36		2,014		36
Total	$	131,526	$	1,112	$	184,420	$	5,706	$	315,946	$	6,818

Private Label Mortgage Backed Securities Below Investment Grade

At December 31, 2019, two private label mortgage-backed securities had credit related OTTI and are summarized as follows:

	Senior Security		Super Senior Security		Total
	(In thousands)

As of December 31, 2019
Fair value	$	601	$	603	$	1,204
Amortized cost		511		442		953
Non-credit unrealized loss		-		-		-
Unrealized gain		90		161		251
Cumulative credit related OTTI		757		457		1,214

Credit Losses Recognized in Earnings on Securities Available for Sale

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

	2019			2018		2017
				(In thousands)
Balance at beginning of year	$	1,594		$	1,594	$	1,594
Additions to credit losses on securities for which no previous OTTI was recognized		-			-		-
Increases to credit losses on securities for which OTTI was previously recognized		-			-		-
Reduction(1)		(380	)		-		-
Total	$	1,214		$	1,594	$	1,594

⁽¹⁾During 2019 one security with previously recorded OTTI was settled and balance is now zero.

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, 2019, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	10,737	$	10,761
Maturing after one year but within five years		50,035		50,839
Maturing after five years but within ten years		47,634		49,070
Maturing after ten years		35,055		35,633
		143,461		146,303
U.S. agency residential mortgage-backed		226,130		227,762
U.S. agency commercial mortgage-backed		10,671		10,756
Private label mortgage-backed		39,248		39,693
Other asset backed		94,158		93,886
Total	$	513,668	$	518,400

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:

			Realized
	Proceeds		Gains (1)		Losses
	(In thousands)
2019	$	68,716	$	248	$	108
2018		48,736		192		136
2017		17,308		218		3

(1)	2018 excludes a $0.144 million gain on the sale of 1,000 VISA Class B shares.

LOANS AND PAYMENT PLAN RECEIVABLES, Receivables Past Due (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Loans Past Due, 90+ days [Member]

$ 8,347

$ 8,538

Accrued Interest

400

$ 400

Interest Income

$ 0

Commercial and Industrial [Member]

Government guaranteed loans excluded from non-performing loans

1-4 Family Owner Occupied - Non-jumbo [Member]

Government guaranteed loans excluded from non-performing loans

569

363

2,998

3,411

Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]

^[1]

4,155

4,097

Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]

^[1]

1,139

851

Mortgage [Member] | 1-4 Non-owner Occupied [Member]

^[1]

1,662

1,789

^[1]

586

550

^[1]

502

544

^[1]

266

363

^[1]

1,194

1,030

Installment [Member] | Recreational Vehicle Lending [Member]

^[1]

490

403

^[1]

378

311

Non-Performing Loans [Member]

^[1]

326

316

^[2]

^[2]

9,532

8,569

^[2]

9,532

8,574

Non-Performing Loans [Member] | Loans Past Due, 90+ days [Member]

^[2]

Non-Performing Loans [Member] | Commercial [Member] | Commercial and Industrial [Member]

^[2]

^[2],[3]

^[2],[3]

565

1,345

Non-Performing Loans [Member] | Commercial [Member] | Commercial Real Estate [Member]

^[2],[3]

565

1,345

^[2]

^[2]

735

778

Non-Performing Loans [Member] | Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]

^[2]

735

778

^[2]

^[2]

1,179

184

Non-Performing Loans [Member] | Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]

^[2]

1,179

184

^[2],[4]

^[2],[4]

3,540

2,974

Non-Performing Loans [Member] | Mortgage [Member] | 1-4 Non-owner Occupied [Member]

^[2],[4]

3,540

2,979

^[2]

^[2]

1,039

1,259

Non-Performing Loans [Member] | Mortgage [Member] | 1-4 Family - 2nd Lien [Member]

^[2]

1,039

1,259

^[2]

^[2]

979

493

Non-Performing Loans [Member] | Mortgage [Member] | Resort Lending [Member]

^[2]

979

493

^[2]

^[2]

690

755

Non-Performing Loans [Member] | Installment [Member] | Boat Lending [Member]

^[2]

690

755

^[2]

^[2]

332

166

Non-Performing Loans [Member] | Installment [Member] | Recreational Vehicle Lending [Member]

^[2]

332

166

^[2]

^[2]

Non-Performing Loans [Member] | Installment [Member] | Other [Member]

^[2]

^[2]

^[2]

470

608

FAIR VALUES OF FINANCIAL INSTRUMENTS [Abstract]

^[2]

$ 470

$ 608

[1]	Credit scores have been updated within the last twelve months.
[2]	Non-performing loans exclude purchase credit impaired loans.
[3]	Non-performing commercial and industrial loans exclude $0.077 million and $0.097 million of government guaranteed loans at December 31, 2019 and 2018, respectively.
[4]	Non-performing 1-4 family owner occupied - non jumbo loans exclude $0.569 million and $0.363 million of government guaranteed loans at December 31, 2019 and 2018, respectively.

RESTRICTIONS ON CASH AND DUE FROM BANKS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
RESTRICTIONS ON CASH AND DUE FROM BANKS [Abstract]
Average reserve balances maintained	$ 26,600	$ 9,600
Reserve balances related to investment security transactions and merchant payment processing operations	$ 10	$ 130

FAIR VALUES OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2019

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.

The estimated recorded book balances and fair values at December 31 follow:

	Recorded Book Balance		Fair Value			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)
2019
Assets
Cash and due from banks	$	53,295		$	53,295		$	53,295		$	-		$	-
Interest bearing deposits		12,009			12,009			12,009			-			-
Interest bearing deposits - time		350			350			-			350			-
Securities available for sale		518,400			518,400			-			518,400			-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA			NA			NA			NA
Net loans and loans held for sale		2,768,675			2,768,817			-			69,800			2,699,017
Accrued interest receivable		10,108			10,108			8			1,752			8,348
Derivative financial instruments		5,464			5,464			-			5,464			-

Liabilities
Deposits with no stated maturity (1)	$	2,427,190		$	2,427,190		$	2,427,190		$	-		$	-
Deposits with stated maturity (1)		609,537			610,235			-			610,235			-
Other borrowings		88,646			88,680			-			88,680			-
Subordinated debentures		39,456			33,149			-			33,149			-
Accrued interest payable		1,296			1,296			97			1,199			-
Derivative financial instruments		4,402			4,402			-			4,402			-

2018
Assets
Cash and due from banks	$	23,350		$	23,350		$	23,350		$	-		$	-
Interest bearing deposits		46,894			46,894			46,894			-			-
Interest bearing deposits - time		595			594			-			594			-
Equity securities at fair value		393			393			393			-			-
Securities available for sale		427,926			427,926			-			427,926			-
Federal Home Loan Bank and Federal Reserve Bank Stock		18,359	NA			NA			NA			NA
Net loans and loans held for sale		2,643,856			2,606,256			41,471			44,753			2,520,032
Accrued interest receivable		10,164			10,164			22			1,789			8,353
Derivative financial instruments		5,155			5,155			-			5,155			-

Liabilities
Deposits with no stated maturity (1)	$	2,197,494		$	2,197,494		$	2,197,494		$	-		$	-
Deposits with stated maturity (1)		715,934			711,312			-			711,312			-
Other borrowings		25,700			25,706			-			25,706			-
Subordinated debentures		39,388			35,021			-			35,021			-
Accrued interest payable		1,646			1,646			114			1,532			-
Derivative financial instruments		2,326			2,326			-			2,326			-

NA – Not applicable

(1)

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.

LOANS AND PAYMENT PLAN RECEIVABLES

12 Months Ended

Dec. 31, 2019

LOANS AND PAYMENT PLAN RECEIVABLES [Abstract]

LOANS AND PAYMENT PLAN RECEIVABLES

NOTE 4 – LOANS AND PAYMENT PLAN RECEIVABLES

Our loan portfolios at December 31 follow:

	2019		2018
	(In thousands)
Real estate(1)
Residential first mortgages	$	843,746	$	811,719
Residential home equity and other junior mortgages		166,735		177,574
Construction and land development		249,747		180,286
Other(2)		693,580		707,347
Consumer		448,297		379,607
Commercial		318,504		319,058
Agricultural		4,414		6,929
Total loans	$	2,725,023	$	2,582,520

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

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

Loans include net deferred loan costs of $16.3 million and $13.3 million at December 31, 2019 and 2018, respectively.

During the first quarter of 2019, we sold $40.6 million, of residential adjustable rate mortgage loans servicing released (classified on the Consolidated Statements of Financial Condition as held for sale, carried at the lower of cost or fair value at December 31, 2018) to another financial institution and recognized a gain on sale of $0.01 million. During the first quarter of 2019 we also securitized $29.8 million, of portfolio residential fixed rate mortgage loans servicing retained with Freddie Mac and recognized a gain on sale of $0.53 million. During the third quarter of 2019, we sold $9.9 million of residential fixed and adjustable rate portfolio mortgage loans servicing retained to another financial institution and recognized a gain on sale of $0.07 million. During the third quarter of 2019 we also transferred $36.6 million, of portfolio residential fixed rate mortgage loans to loans held for sale, carried at the lower of cost or fair value of which $35.3 million were subsequently securitized in the fourth quarter of 2019 servicing retained with Freddie Mac recognizing a gain on sale of approximately $1.2 million. These transactions were done primarily for asset/liability management purposes.

During the first and third quarters of 2018, we sold $16.5 million and $11.1 million, respectively, of residential fixed and adjustable rate portfolio mortgage loans servicing retained to another financial institution and recognized a gain (loss) on sale of $0.05 million and ($0.01) million, respectively. During the fourth quarter of 2018 we securitized $10.9 million of portfolio residential fixed rate mortgage loans servicing retained with Freddie Mac recognizing a loss on sale of approximately $0.1 million. These transactions were done primarily for asset/liability management purposes.

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

	Commercial			Mortgage			Installment			Subjective Allocation			Total
	(In thousands)
2019
Balance at beginning of period	$	7,090		$	7,978		$	895		$	8,925		$	24,888
Additions (deductions)
Provision for loan losses		(651	)		526			1,147			(198	)		824
Recoveries credited to allowance		2,165			933			863			-			3,961
Loans charged against the allowance		(682	)		(1,221	)		(1,622	)		-			(3,525	)
Balance at end of period	$	7,922		$	8,216		$	1,283		$	8,727		$	26,148

2018
Balance at beginning of period	$	5,595		$	8,733		$	864		$	7,395		$	22,587
Additions (deductions)
Provision for loan losses		(946	)		457			462			1,530			1,503
Recoveries credited to allowance		2,889			734			999			-			4,622
Loans charged against the allowance		(448	)		(1,946	)		(1,430	)		-			(3,824	)
Balance at end of period	$	7,090		$	7,978		$	895		$	8,925		$	24,888

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

Allowance for loan losses and recorded investment in loans by portfolio segment at December 31 follows:

	Commercial		Mortgage		Installment		Subjective Allocation		Total
	(In thousands)
2019
Allowance for loan losses:
Individually evaluated for impairment	$	1,031	$	4,863	$	261	$	-	$	6,155
Collectively evaluated for impairment		6,891		3,353		1,022		8,727		19,993
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	7,922	$	8,216	$	1,283	$	8,727	$	26,148

Loans
Individually evaluated for impairment	$	9,393	$	43,574	$	2,925			$	55,892
Collectively evaluated for impairment		1,158,906		1,058,917		457,370				2,675,193
Loans acquired with deteriorated credit quality		1,394		575		316				2,285
Total loans recorded investment		1,169,693		1,103,066		460,611				2,733,370
Accrued interest included in recorded investment		2,998		4,155		1,194				8,347
Total loans	$	1,166,695	$	1,098,911	$	459,417			$	2,725,023

2018
Allowance for loan losses:
Individually evaluated for impairment	$	1,305	$	4,799	$	206	$	-	$	6,310
Collectively evaluated for impairment		5,785		3,179		689		8,925		18,578
Loans acquired with deteriorated credit quality		-		-		-		-		-
Total ending allowance for loan losses balance	$	7,090	$	7,978	$	895	$	8,925	$	24,888

Loans
Individually evaluated for impairment	$	8,697	$	46,394	$	3,370			$	58,461
Collectively evaluated for impairment		1,137,586		1,000,038		392,460				2,530,084
Loans acquired with deteriorated credit quality		1,609		555		349				2,513
Total loans recorded investment		1,147,892		1,046,987		396,179				2,591,058
Accrued interest included in recorded investment		3,411		4,097		1,030				8,538
Total loans	$	1,144,481	$	1,042,890	$	395,149			$	2,582,520

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 of interest income would have been recognized in each of the years ended 2019, 2018 and 2017. Interest income recorded on these loans was approximately zero during each of the years ended 2019, 2018 and 2017.

Loans on non-accrual status and past due more than 90 days (‘‘Non-performing Loans’’) at December 31 follow⁽¹⁾:

	90+ and Still Accruing		Non- Accrual		Total Non- Performing Loans
	(In thousands)
2019
Commercial
Commercial and industrial (2)	$	-	$	565	$	565
Commercial real estate		-		735		735
Mortgage
1-4 family owner occupied - jumbo		-		1,179		1,179
1-4 family owner occupied - non-jumbo (3)		-		3,540		3,540
1-4 family non-owner occupied		-		1,039		1,039
1-4 family - 2nd lien		-		979		979
Resort lending		-		690		690
Installment
Boat lending		-		332		332
Recreational vehicle lending		-		3		3
Other		-		470		470
Total recorded investment	$	-	$	9,532	$	9,532
Accrued interest included in recorded investment	$	-	$	-	$	-
2018
Commercial
Commercial and industrial (2)	$	-	$	1,345	$	1,345
Commercial real estate		-		778		778
Mortgage
1-4 family owner occupied - jumbo		-		184		184
1-4 family owner occupied - non-jumbo (3)		5		2,974		2,979
1-4 family non-owner occupied		-		1,259		1,259
1-4 family - 2nd lien		-		493		493
Resort lending		-		755		755
Installment
Boat lending		-		166		166
Recreational vehicle lending		-		7		7
Other		-		608		608
Total recorded investment	$	5	$	8,569	$	8,574
Accrued interest included in recorded investment	$	-	$	-	$	-

(1)

Non-performing loans exclude purchase credit impaired loans.

(2)

Non-performing commercial and industrial loans exclude $0.077 million and $0.097 million of government guaranteed loans at December 31, 2019 and 2018, respectively.

(3)

Non-performing 1-4 family owner occupied – non jumbo loans exclude $0.569 million and $0.363 million of government guaranteed loans at December 31, 2019 and 2018, respectively.

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

	Loans Past Due								Loans not		Total
	30-59 days		60-89 days		90+ days		Total		Past Due		Loans
	(In thousands)
2019
Commercial
Commercial and industrial	$	-	$	289	$	102	$	391	$	564,480	$	564,871
Commercial real estate		177		-		735		912		603,910		604,822
Mortgage
1-4 family owner occupied - jumbo		1,757		1,037		-		2,794		398,759		401,553
1-4 family owner occupied - non-jumbo		2,672		852		1,387		4,911		342,349		347,260
1-4 family non-owner occupied		695		136		623		1,454		168,083		169,537
1-4 family - 2nd lien		909		90		386		1,385		115,157		116,542
Resort lending		364		53		565		982		67,192		68,174
Installment
Boat lending		337		107		88		532		202,750		203,282
Recreational vehicle lending		161		97		3		261		153,184		153,445
Other		377		275		202		854		103,030		103,884
Total recorded investment	$	7,449	$	2,936	$	4,091	$	14,476	$	2,718,894	$	2,733,370
Accrued interest included in recorded investment	$	74	$	34	$	-	$	108	$	8,239	$	8,347

2018
Commercial
Commercial and industrial	$	1,582	$	-	$	-	$	1,582	$	580,935	$	582,517
Commercial real estate		-		-		-		-		565,375		565,375
Mortgage
1-4 family owner occupied - jumbo		-		-		184		184		313,154		313,338
1-4 family owner occupied - non-jumbo		1,519		145		3,524		5,188		362,767		367,955
1-4 family non-owner occupied		265		49		1,259		1,573		162,673		164,246
1-4 family - 2nd lien		446		100		493		1,039		118,628		119,667
Resort lending		252		-		755		1,007		80,774		81,781
Installment
Boat lending		316		295		166		777		169,117		169,894
Recreational vehicle lending		28		21		7		56		125,780		125,836
Other		552		210		627		1,389		99,060		100,449
Total recorded investment	$	4,960	$	820	$	7,015	$	12,795	$	2,578,263	$	2,591,058
Accrued interest included in recorded investment	$	44	$	11	$	-	$	55	$	8,483	$	8,538

Impaired loans are as follows:

	December 31,
	2019		2018
Impaired loans with no allocated allowance for loan losses	(In thousands)
TDR	$	337	$	-
Non - TDR		1,550		-
Impaired loans with an allocated allowance for loan losses
TDR - allowance based on collateral		1,587		2,787
TDR - allowance based on present value cash flow		48,798		53,258
Non - TDR - allowance based on collateral		3,365		2,145
Total impaired loans	$	55,637	$	58,190

Amount of allowance for loan losses allocated
TDR - allowance based on collateral	$	542	$	769
TDR - allowance based on present value cash flow		4,641		4,849
Non - TDR - allowance based on collateral		972		692
Total amount of allowance for loan losses allocated	$	6,155	$	6,310

Impaired loans by class as of December 31 are as follows:

	2019						2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance for Loan Losses		Recorded Investment		Unpaid Principal Balance		Related Allowance for Loan Losses
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Commercial and industrial	$	257	$	257	$	-	$	-	$	-	$	-
Commercial real estate		796		796		-		-		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-		-		-		-		-
1-4 family owner occupied - non-jumbo		212		217		-		3		474		-
1-4 family non-owner occupied		214		366		-		-		-		-
1-4 family - 2nd lien		407		438		-		-		-		-
Resort lending		-		-		-		-		-		-
Installment
Boat lending		-		-		-		-		5		-
Recreational vehicle lending		-		-		-		-		-		-
Other		1		41		-		1		137		-
		1,887		2,115		-		4		616		-
With an allowance for loan losses recorded:
Commercial
Commercial and industrial		1,655		1,706		453		3,637		3,735		967
Commercial real estate		6,685		6,661		578		5,060		5,047		338
Mortgage
1-4 family owner occupied - jumbo		1,447		1,445		91		1,348		1,649		151
1-4 family owner occupied - non-jumbo		10,163		10,695		1,031		25,877		26,737		2,203
1-4 family non-owner occupied		4,962		5,542		572		5,565		5,988		507
1-4 family - 2nd lien		14,059		15,243		1,695		273		272		11
Resort lending		12,110		12,263		1,474		13,328		13,354		1,927
Installment
Boat lending		-		-		-		-		-		-
Recreational vehicle lending		-		-		-		79		79		4
Other		2,924		3,153		261		3,290		3,421		202
		54,005		56,708		6,155		58,457		60,282		6,310
Total
Commercial
Commercial and industrial		1,912		1,963		453		3,637		3,735		967
Commercial real estate		7,481		7,457		578		5,060		5,047		338
Mortgage
1-4 family owner occupied - jumbo		1,447		1,445		91		1,348		1,649		151
1-4 family owner occupied - non-jumbo		10,375		10,912		1,031		25,880		27,211		2,203
1-4 family non-owner occupied		5,176		5,908		572		5,565		5,988		507
1-4 family - 2nd lien		14,466		15,681		1,695		273		272		11
Resort lending		12,110		12,263		1,474		13,328		13,354		1,927
Installment
Boat lending		-		-		-		-		5		-
Recreational vehicle lending		-		-		-		79		79		4
Other		2,925		3,194		261		3,291		3,558		202
Total	$	55,892	$	58,823	$	6,155	$	58,461	$	60,898	$	6,310

Accrued interest included in recorded investment	$	255					$	271

	2019				2018				2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance for loan losses recorded:	(In thousands)
Commercial
Commercial and industrial	$	51	$	-	$	378	$	20	$	751	$	22
Commercial real estate		278		5		961		-		183		-
Mortgage
1-4 family owner occupied - jumbo		-		-		41		-		-		-
1-4 family owner occupied - non-jumbo		201		-		15		27		52		21
1-4 family non-owner occupied		123		-		-		-		-		-
1-4 family - 2nd lien		136		7		-		-		-		-
Resort lending		-		-		-		-		-		-
Installment
Boat lending		-		-		-		-		-		-
Recreational vehicle lending		-		-		-		-		-		-
Other		-		1		1		11		1		6
		789		13		1,396		58		987		49
With an allowance for loan losses recorded:
Commercial
Commercial and industrial		2,256		72		2,641		127		3,298		132
Commercial real estate		5,778		315		5,199		288		7,242		377
Mortgage
1-4 family owner occupied - jumbo		995		39		1,335		69		2,425		67
1-4 family owner occupied - non-jumbo		15,183		594		28,183		1,408		31,468		1,439
1-4 family non-owner occupied		2,874		291		5,475		314		5,362		269
1-4 family - 2nd lien		13,383		809		284		12		306		11
Resort lending		11,697		669		14,687		606		16,383		616
Installment
Boat lending		54		-		1		-		1		1
Recreational vehicle lending		22		-		84		4		100		5
Other		3,186		189		3,640		224		4,335		265
		55,428		2,978		61,529		3,052		70,920		3,182
Total
Commercial
Commercial and industrial		2,307		72		3,019		147		4,049		154
Commercial real estate		6,056		320		6,160		288		7,425		377
Mortgage
1-4 family owner occupied - jumbo		995		39		1,376		69		2,425		67
1-4 family owner occupied - non-jumbo		15,384		594		28,198		1,435		31,520		1,460
1-4 family non-owner occupied		2,997		291		5,475		314		5,362		269
1-4 family - 2nd lien		13,519		816		284		12		306		11
Resort lending		11,697		669		14,687		606		16,383		616
Installment
Boat lending		54		-		1		-		1		1
Recreational vehicle lending		22		-		84		4		100		5
Other		3,186		190		3,641		235		4,336		271
Total	$	56,217	$	2,991	$	62,925	$	3,110	$	71,907	$	3,231

Troubled debt restructurings at December 31 follow:

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

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

(1) Retail loans include mortgage and installment loan portfolio 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 $5.2 million and $5.6 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of December 31, 2019 and 2018, respectively. We have committed to lend additional amounts totaling up to $0.05 million and $0.04 million at December 31, 2019 and 2018, 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 a new loan 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:

	Number of Contracts		Pre-modification Recorded Balance		Post-modification Recorded Balance
2019	(Dollars in thousands)
Commercial
Commercial and industrial		8	$	1,609	$	1,609
Commercial real estate		3		1,479		1,479
Mortgage
1-4 family owner occupied - jumbo		-		-		-
1-4 family owner occupied - non-jumbo		2		478		483
1-4 family non-owner occupied		1		507		505
1-4 family - 2nd lien		3		75		75
Resort lending		-		-		-
Installment
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		7		188		191
Total		24	$	4,336	$	4,342
2018
Commercial
Commercial and industrial		7	$	652	$	652
Commercial real estate		2		204		204
Mortgage
1-4 family owner occupied - jumbo		1		419		419
1-4 family owner occupied - non-jumbo		9		991		994
1-4 family non-owner occupied		-		-		-
1-4 family - 2nd lien		-		-		-
Resort lending		1		115		114
Installment
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		14		708		709
Total		34	$	3,089	$	3,092
2017
Commercial
Commercial and industrial		15	$	925	$	925
Commercial real estate		-		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-		-
1-4 family owner occupied - non-jumbo		5		423		429
1-4 family non-owner occupied		1		33		33
1-4 family - 2nd lien		-		-		-
Resort lending		1		189		189
Installment
Boat lending		-		-		-
Recreational vehicle lending		-		-		-
Other		15		551		559
Total		37	$	2,121	$	2,135

The troubled debt restructurings described above increased (decreased) the AFLL by $0.5 million, $(0.2) million and $0.1 million during the years ended December 31, 2019, 2018 and 2017, respectively and resulted in charge offs of zero during each of the years ended December 31, 2019, 2018 and 2017, 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
2019	(Dollars in thousands)
Commercial
Commercial and industrial		1	$	19
Commercial real estate		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-
1-4 family owner occupied - non-jumbo		1		12
1-4 family non-owner occupied		-		-
1-4 family - 2nd lien		-		-
Resort lending		-		-
Installment
Boat lending		-		-
Recreational vehicle lending		-		-
Other		-		-
Total		2	$	31

2018
Commercial
Commercial and industrial		-	$	-
Commercial real estate		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-
1-4 family owner occupied - non-jumbo		-		-
1-4 family non-owner occupied		-		-
1-4 family - 2nd lien		-		-
Resort lending		-		-
Installment
Boat lending		-		-
Recreational vehicle lending		-		-
Other		1		13
Total		1	$	13

2017
Commercial
Commercial and industrial		6	$	164
Commercial real estate		-		-
Mortgage
1-4 family owner occupied - jumbo		-		-
1-4 family owner occupied - non-jumbo		-		-
1-4 family non-owner occupied		-		-
1-4 family - 2nd lien		-		-
Resort lending		-		-
Installment
Boat lending		-		-
Recreational vehicle lending		-		-
Other		1		13
Total		7	$	177

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 zero, zero and $0.04 million during the years ended December 31, 2019, 2018 and 2017, respectively and resulted in charge offs of zero, zero and $0.05 million during the years ended December 31, 2019, 2018 and 2017, respectively.

The terms of certain other loans were modified during the years ending December 31, 2019, 2018 and 2017 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-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 portfolio segment at December 31:

	Commercial
	Non-watch 1-6		Watch 7-8		Substandard Accrual 9		Non- Accrual 10-11		Total
					(In thousands)
2019
Commercial and industrial	$	515,955	$	44,384	$	3,967	$	565	$	564,871
Commercial real estate		580,516		23,036		535		735		604,822
Total	$	1,096,471	$	67,420	$	4,502	$	1,300	$	1,169,693
Accrued interest included in total	$	2,763	$	205	$	30	$	-	$	2,998

2018
Commercial and industrial	$	551,441	$	23,910	$	5,577	$	1,589	$	582,517
Commercial real estate		531,069		33,274		200		832		565,375
Total	$	1,082,510	$	57,184	$	5,777	$	2,421	$	1,147,892
Accrued interest included in total	$	3,107	$	174	$	130	$	-	$	3,411

	Mortgage (1)
	1-4 Family Owner Occupied - Jumbo		1-4 Family Owner Occupied - Non-jumbo		1-4 Family Non-owner Occupied		1-4 Family 2nd Lien		Resort Lending		Total
	(In thousands)
2019
800 and above	$	48,486	$	43,848	$	24,315	$	13,905	$	11,076	$	141,630
750-799		198,491		111,521		84,656		50,012		29,364		474,044
700-749		106,609		95,064		34,839		30,697		14,626		281,835
650-699		31,553		51,174		13,995		14,267		8,063		119,052
600-649		13,230		21,938		5,897		4,097		2,074		47,236
550-599		514		12,308		1,863		1,703		673		17,061
500-549		1,519		7,940		1,870		1,281		889		13,499
Under 500		641		2,208		533		511		79		3,972
Unknown		510		1,259		1,569		69		1,330		4,737
Total	$	401,553	$	347,260	$	169,537	$	116,542	$	68,174	$	1,103,066
Accrued interest included in total	$	1,139	$	1,662	$	586	$	502	$	266	$	4,155

2018
800 and above	$	33,337	$	46,509	$	19,191	$	11,077	$	10,898	$	121,012
750-799		167,992		136,105		79,837		56,008		36,542		476,484
700-749		69,018		96,378		36,103		33,345		17,282		252,126
650-699		28,637		48,663		15,854		11,361		9,945		114,460
600-649		9,911		19,139		5,533		4,077		3,088		41,748
550-599		2,034		9,619		2,396		1,385		1,867		17,301
500-549		-		7,463		1,338		882		106		9,789
Under 500		647		1,181		802		382		143		3,155
Unknown		1,762		2,898		3,192		1,150		1,910		10,912
Total	$	313,338	$	367,955	$	164,246	$	119,667	$	81,781	$	1,046,987
Accrued interest included in total	$	851	$	1,789	$	550	$	544	$	363	$	4,097

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

	Installment(1)
	Boat Lending		Recreational Vehicle Lending		Other		Total
	(In thousands)
2019
800 and above	$	28,041	$	24,470	$	7,611	$	60,122
750-799		118,380		88,164		37,583		244,127
700-749		41,490		31,055		27,204		99,749
650-699		11,485		7,267		22,517		41,269
600-649		2,254		1,411		4,470		8,135
550-599		946		592		1,884		3,422
500-549		377		464		1,127		1,968
Under 500		309		22		284		615
Unknown		-		-		1,204		1,204
Total	$	203,282	$	153,445	$	103,884	$	460,611
Accrued interest included in total	$	490	$	378	$	326	$	1,194

2018
800 and above	$	20,767	$	20,197	$	7,062	$	48,026
750-799		100,191		74,154		34,627		208,972
700-749		35,455		24,890		27,633		87,978
650-699		10,581		4,918		12,663		28,162
600-649		1,657		992		5,019		7,668
550-599		652		453		2,255		3,360
500-549		286		225		1,264		1,775
Under 500		266		7		275		548
Unknown		39		-		9,651		9,690
Total	$	169,894	$	125,836	$	100,449	$	396,179
Accrued interest included in total	$	403	$	311	$	316	$	1,030

(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:

	2019		2018
	(In thousands)
Mortgage loans serviced for :
Fannie Mae	$	1,449,935	$	1,350,703
Freddie Mac		852,123		712,740
Ginnie Mae		180,941		165,467
FHLB		69,149		78,687
Other		29,018		26,148
Total	$	2,581,166	$	2,333,745

Custodial deposit accounts maintained in connection with mortgage loans serviced for others totaled $29.9 million and $22.0 million, at December 31, 2019 and 2018, 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 net gains on mortgage 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:

	2019			2018			2017
	(In thousands)
Balance at beginning of period	$	21,400		$	15,699		$	13,671
Change in accounting (see note #1)		-			-			542
Balance at beginning of period, as adjusted	$	21,400		$	15,699		$	14,213
Originated servicing rights capitalized		7,303			4,977			4,230
Servicing rights acquired		-			3,047			-
Change in fair value due to price		(6,408	)		191			(718	)
Change in fair value due to pay downs		(3,124	)		(2,514	)		(2,026	)
Balance at end of year	$	19,171		$	21,400		$	15,699
Loans sold and serviced that have had servicing rights capitalized	$	2,580,705		$	2,333,081		$	1,815,668

Fair value of capitalized mortgage loan servicing rights was determined using an average coupon rate of 4.22%, average servicing fee of 0.258%, average discount rate of 10.14% and an average Public Securities Association (‘‘PSA’’) prepayment rate of 250 for December 31, 2019; and average coupon rate of 4.23%, average servicing fee of 0.258%, average discount rate of 10.15% and an average PSA prepayment rate of 182 for December 31, 2018.

Purchase Credit Impaired (‘‘PCI’’) Loans

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

As a result of our acquisition of TCSB Bancorp, Inc. (‘‘TCSB’’) (see note #26) we purchased loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. For these loans that meet the criteria of ASC 310-30 treatment, the carrying amount was as follows:

	December 31,
	2019		2018
	(In thousands)
Commercial	$	1,394	$	1,609
Mortgage		575		555
Installment		316		349
Total carrying amount		2,285		2,513
Allowance for loan losses		-		-
Carrying amount, net of allowance for loan losses	$	2,285	$	2,513

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

	Year ended December 31,
	2019			2018
	(In thousands)

Balance at beginning of period	$	462		$	-
New loans purchased		-			568
Accretion of income		(187	)		(106	)
Reclassification from (to) nonaccretable difference		365			-
Displosals/other adjustments		-			-
Balance at end of period	$	640		$	462

OTHER BORROWINGS (Tables)

12 Months Ended

Dec. 31, 2019

OTHER BORROWINGS [Abstract]

Other Borrowings

A summary of other borrowings at December 31 follows:

	2019		2018
	(In thousands)
Advances from the FHLB	$	63,640	$	25,696
Federal funds purchased		25,000		-
Other		6		4
Total	$	88,646	$	25,700

FHLB Advances

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

	2019					2018
	Amount		Rate			Amount		Rate
	(Dollars in thousands)
Fixed-rate advances
2019						$	10,000		1.60	%
2020	$	28,645		2.19	%		10,762		3.18
2022		4,995		1.69			4,934		1.69
2025 and thereafter		30,000		0.74
Total advances	$	63,640		1.47	%	$	25,696		2.28	%

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

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

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

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

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

$ (1,603)

$ (262)

$ 324

Fair Value Hedge Designation [Member] | Fixed Income Interest Rate [Member] | Interest Rate Swap Member] | Non-Interest Income-Other [Member]

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

Cash Flow Hedge Designation [Member]

^[1]

(242)

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

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

(1,603)

(262)

324

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

425

237

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

(1,211)

(340)

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]

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

363

206

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

(392)

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]

Gain (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]

960

(263)

(709)

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]

725

157

(116)

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

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

^[1]

233

(420)

(593)

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

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

^[1]

(206)

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]

(23)

206

(84)

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]

(4,046)

113

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

^[1]

$ 4,046

$ (113)

$ (43)

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

LOANS AND PAYMENT PLAN RECEIVABLES, Loans Serviced for Others (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) Quarter PSARate	Dec. 31, 2018 USD ($) PSARate	Dec. 31, 2017 USD ($)
Mortgage loans serviced for others [Abstract]
Mortgage loans serviced	$ 2,581,166	$ 2,333,745
Custodial deposit accounts	$ 29,900	22,000
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	$ 21,400
Balance at beginning of period		15,699	$ 13,671
Change in accounting (see note #1)	0	0	542
Balance at beginning of period, as adjusted	21,400	15,699	14,213
Originated servicing rights capitalized	7,303	4,977	4,230
Servicing rights acquired	0	3,047	0
Change in fair value due to price	(6,408)	191	(718)
Change in fair value due to pay downs	(3,124)	(2,514)	(2,026)
Balance at end of year			15,699
Balance at end of year	19,171	21,400
Loans sold and serviced that have had servicing rights capitalized	$ 2,580,705	$ 2,333,081	$ 1,815,668
Average coupon rate	4.22%	4.23%
Average servicing fee	0.258%	0.258%
Average discount rate	10.14%	10.15%
Average PSA Rate \| PSARate	250	182
Fannie Mae [Member]
Mortgage loans serviced for others [Abstract]
Mortgage loans serviced	$ 1,449,935	$ 1,350,703
Freddie Mac [Member]
Mortgage loans serviced for others [Abstract]
Mortgage loans serviced	852,123	712,740
Ginnie Mae [Member]
Mortgage loans serviced for others [Abstract]
Mortgage loans serviced	180,941	165,467
FHLB [Member]
Mortgage loans serviced for others [Abstract]
Mortgage loans serviced	69,149	78,687
Other [Member]
Mortgage loans serviced for others [Abstract]
Mortgage loans serviced	$ 29,018	$ 26,148

SHARE BASED COMPENSATION AND BENEFIT PLANS, Options Exercised During the Periods (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Information regarding options exercised [Abstract]
Employee matching contribution, percentage	50.00%	50.00%	50.00%
Maximum contribution of employees' eligible wages	8.00%	8.00%	6.00%
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	$ 2,600	$ 2,300	$ 1,600
Performance-based compensation expense	9,500	9,800	8,000
Health care and life insurance expense	5,700	5,200	4,000
Stock Options [Member]
Information regarding options exercised [Abstract]
Intrinsic value	897	2,333	623
Cash proceeds received	706	1,420	142
Tax benefit realized	$ 188	$ 490	$ 218

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

12 Months Ended

Dec. 31, 2019

USD ($)

Payment

Contract

Dec. 31, 2018

USD ($)

Contract

Dec. 31, 2017

USD ($)

Contract

Number of consecutive timely payments required | Payment

$ 50,722

$ 56,045

Troubled debt restructuring, specific reserve

$ 5,200

5,600

Additional amounts committed to lend as troubled debt restructurings

$ 50

$ 40

Loans classified as troubled debt restructurings [Abstract]

$ 4,336

$ 3,089

$ 2,121

Increase (decrease) in allowance for loan losses

4,342

3,092

2,135

500

(200)

100

Charge offs due to troubled debt restructurings

$ 0

Past due period for modified loans

$ 31

$ 13

$ 177

90 days

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

$ 0

Charge-offs on TDRs that subsequently defaulted

$ 0

$ 50

Minimum [Member]

Modification of stated interest rate of loans, range of period

9 months

Modifications involving extension of maturity date, period range

1 month

Maximum [Member]

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]

Non-performing TDR's [Member]

$ 47,575

53,087

^[1]

3,147

2,958

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

8,514

6,534

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

7,974

6,460

Commercial [Member] | Commercial and Industrial [Member]

^[1]

$ 540

$ 74

Loans classified as troubled debt restructurings [Abstract]

$ 1,609

$ 652

$ 925

$ 1,609

$ 652

$ 925

Commercial [Member] | Commercial Real Estate [Member]

$ 19

$ 0

$ 164

Loans classified as troubled debt restructurings [Abstract]

$ 1,479

$ 204

$ 0

$ 1,479

$ 204

$ 0

Mortgage [Member] | 1-4 Family Owner Occupied - Jumbo [Member]

$ 0

Loans classified as troubled debt restructurings [Abstract]

$ 0

$ 419

$ 0

$ 0

$ 419

$ 0

Mortgage [Member] | 1-4 Family Owner Occupied - Non-jumbo [Member]

$ 0

Loans classified as troubled debt restructurings [Abstract]

$ 478

$ 991

$ 423

$ 483

$ 994

$ 429

Mortgage [Member] | 1-4 Non-owner Occupied [Member]

$ 12

$ 0

Loans classified as troubled debt restructurings [Abstract]

$ 507

$ 0

$ 33

$ 505

$ 0

$ 33

$ 0

Loans classified as troubled debt restructurings [Abstract]

$ 75

$ 0

$ 75

$ 0

$ 0

Loans classified as troubled debt restructurings [Abstract]

$ 0

$ 115

$ 189

$ 0

$ 114

$ 189

$ 0

Loans classified as troubled debt restructurings [Abstract]

$ 0

$ 0

Installment [Member] | Recreational Vehicle Lending [Member]

$ 0

Loans classified as troubled debt restructurings [Abstract]

$ 0

$ 0

$ 0

Loans classified as troubled debt restructurings [Abstract]

$ 188

$ 708

$ 551

$ 191

$ 709

$ 559

$ 0

$ 13

Retail [Member]

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

^[2]

42,208

49,511

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

^[2]

39,601

46,627