Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans

The tables below show the aging of the Company’s loan portfolio at March 31, 2013, December 31, 2012 and March 31, 2012:



As of March 31, 2013			90+ days and still accruing		60-89 days past due		30-59 days past due
(Dollars in thousands)	Nonaccrual								Current		Total Loans
Loan Balances:
Commercial
Commercial and industrial	$	17,717	$	—	$	1,150	$	16,710	$	1,533,999	$	1,569,576
Franchise	125		—		—		76		194,310		194,511
Mortgage warehouse lines of credit	—		—		—		—		131,970		131,970
Community Advantage—homeowners association	—		—		—		—		82,763		82,763
Aircraft	—		—		—		—		14,112		14,112
Asset-based lending	531		—		483		5,518		680,723		687,255
Municipal	—		—		—		—		89,508		89,508
Leases	—		—		—		844		97,186		98,030
Other	—		—		—		—		127		127
Purchased non-covered commercial ⁽¹⁾	—		449		—		—		4,394		4,843
Total commercial	18,373		449		1,633		23,148		2,829,092		2,872,695
Commercial real-estate
Residential construction	3,094		—		945		—		33,044		37,083
Commercial construction	1,086		—		9,521		—		151,751		162,358
Land	17,976		—		—		11,563		104,039		133,578
Office	3,564		—		8,990		4,797		567,333		584,684
Industrial	7,137		—		—		986		587,402		595,525
Retail	7,915		—		6,970		5,953		565,963		586,801
Multi-family	2,088		—		1,036		4,315		505,346		512,785
Mixed use and other	18,947		—		1,573		13,560		1,288,754		1,322,834
Purchased non-covered commercial real-estate ⁽¹⁾	—		1,866		251		3,333		49,367		54,817
Total commercial real-estate	61,807		1,866		29,286		44,507		3,852,999		3,990,465
Home equity	14,891		—		1,370		4,324		738,633		759,218
Residential real-estate	9,606		—		782		8,680		340,751		359,819
Purchased non-covered residential real-estate ⁽¹⁾	—		—		198		—		635		833
Premium finance receivables
Commercial insurance loans	12,068		7,677		4,647		19,323		1,953,445		1,997,160
Life insurance loans	20		2,256		—		1,340		1,250,165		1,253,781
Purchased life insurance loans ⁽¹⁾	—		—		—		—		499,731		499,731
Indirect consumer	95		145		127		221		68,657		69,245
Consumer and other	1,695		—		160		493		92,379		94,727
Purchased non-covered consumer and other ⁽¹⁾	—		—		—		20		2,618		2,638
Total loans, net of unearned income, excluding covered loans	$	118,555	$	12,393	$	38,203	$	102,056	$	11,629,105	$	11,900,312
Covered loans	1,820		115,482		1,454		12,268		387,637		518,661
Total loans, net of unearned income	$	120,375	$	127,875	$	39,657	$	114,324	$	12,016,742	$	12,418,973


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.



As of December 31, 2012			90+ days and still accruing		60-89 days past due		30-59 days past due
(Dollars in thousands)	Nonaccrual								Current		Total Loans
Loan Balances:
Commercial
Commercial and industrial	$	19,409	$	—	$	5,520	$	15,410	$	1,587,864	$	1,628,203
Franchise	1,792		—		—		—		194,603		196,395
Mortgage warehouse lines of credit	—		—		—		—		215,076		215,076
Community Advantage—homeowners association	—		—		—		—		81,496		81,496
Aircraft	—		—		148		—		17,216		17,364
Asset-based lending	536		—		1,126		6,622		564,154		572,438
Municipal	—		—		—		—		91,824		91,824
Leases	—		—		—		896		89,547		90,443
Other	—		—		—		—		16,549		16,549
Purchased non-covered commercial ⁽¹⁾	—		496		432		7		4,075		5,010
Total commercial	21,737		496		7,226		22,935		2,862,404		2,914,798
Commercial real-estate
Residential construction	3,110		—		4		41		37,246		40,401
Commercial construction	2,159		—		885		386		167,525		170,955
Land	11,299		—		632		9,014		113,252		134,197
Office	4,196		—		1,889		3,280		560,346		569,711
Industrial	2,089		—		6,042		4,512		565,294		577,937
Retail	7,792		—		1,372		998		558,734		568,896
Multi-family	2,586		—		3,949		1,040		389,116		396,691
Mixed use and other	16,742		—		6,660		13,349		1,312,503		1,349,254
Purchased non-covered commercial real-estate ⁽¹⁾	—		749		2,663		2,508		50,156		56,076
Total commercial real-estate	49,973		749		24,096		35,128		3,754,172		3,864,118
Home equity	13,423		100		1,592		5,043		768,316		788,474
Residential real-estate	11,728		—		2,763		8,250		343,616		366,357
Purchased non-covered residential real-estate ⁽¹⁾	—		—		200		—		656		856
Premium finance receivables
Commercial insurance loans	9,302		10,008		6,729		19,597		1,942,220		1,987,856
Life insurance loans	25		—		—		5,531		1,205,151		1,210,707
Purchased life insurance loans ⁽¹⁾	—		—		—		—		514,459		514,459
Indirect consumer	55		189		51		442		76,596		77,333
Consumer and other	1,511		32		167		433		99,010		101,153
Purchased non-covered consumer and other ⁽¹⁾	—		66		32		101		2,633		2,832
Total loans, net of unearned income, excluding covered loans	$	107,754	$	11,640	$	42,856	$	97,460	$	11,569,233	$	11,828,943
Covered loans	1,988		122,350		16,108		7,999		411,642		560,087
Total loans, net of unearned income	$	109,742	$	133,990	$	58,964	$	105,459	$	11,980,875	$	12,389,030


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.



As of March 31, 2012			90+ days and still accruing		60-89 days past due		30-59 days past due
(Dollars in thousands)	Nonaccrual								Current		Total Loans
Loan Balances:
Commercial
Commercial and industrial	$	17,392	$	—	$	9,210	$	24,634	$	1,454,783	$	1,506,019
Franchise	1,792		—		—		100		167,385		169,277
Mortgage warehouse lines of credit	—		—		—		—		136,438		136,438
Community Advantage—homeowners association	—		—		—		—		75,786		75,786
Aircraft	260		—		428		1,189		18,014		19,891
Asset-based lending	391		—		926		970		472,524		474,811
Municipal	—		—		—		—		76,885		76,885
Leases	—		—		—		11		77,660		77,671
Other	—		—		—		—		1,733		1,733
Purchased non-covered commercial ⁽¹⁾	—		424		1,063		—		4,458		5,945
Total commercial	19,835		424		11,627		26,904		2,485,666		2,544,456
Commercial real-estate
Residential construction	1,807		—		—		4,469		49,835		56,111
Commercial construction	2,389		—		3,100		—		159,230		164,719
Land	25,306		—		6,606		6,833		145,297		184,042
Office	8,534		—		4,310		5,471		542,393		560,708
Industrial	1,864		—		6,683		10,101		572,255		590,903
Retail	7,323		73		—		8,797		511,884		528,077
Multi-family	3,708		—		1,496		4,691		315,043		324,938
Mixed use and other	11,773		—		17,745		30,689		1,063,733		1,123,940
Purchased non-covered commercial real-estate ⁽¹⁾	—		2,959		301		1,601		47,461		52,322
Total commercial real-estate	62,704		3,032		40,241		72,652		3,407,131		3,585,760
Home equity	12,881		—		2,049		6,576		818,858		840,364
Residential real-estate	5,329		—		453		13,530		341,358		360,670
Purchased non-covered residential real-estate ⁽¹⁾	—		—		—		—		657		657
Premium finance receivables
Commercial insurance loans	7,650		4,619		3,360		17,612		1,479,389		1,512,630
Life insurance loans	—		—		—		389		1,132,970		1,133,359
Purchased life insurance loans ⁽¹⁾	—		—		—		—		560,404		560,404
Indirect consumer	152		257		53		317		66,666		67,445
Consumer and other	121		—		20		1,601		109,723		111,465
Purchased non-covered consumer and other ⁽¹⁾	—		—		—		—		174		174
Total loans, net of unearned income, excluding covered loans	$	108,672	$	8,332	$	57,803	$	139,581	$	10,402,996	$	10,717,384
Covered loans	—		182,011		20,254		28,249		460,706		691,220
Total loans, net of unearned income	$	108,672	$	190,343	$	78,057	$	167,830	$	10,863,702	$	11,408,604


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

Our ability to manage credit risk depends in large part on our ability to properly identify and manage problem loans. To do so, we operate a credit risk rating system under which our credit management personnel assign a credit risk rating (1 to 10 rating) to each loan at the time of origination and review loans on a regular basis.

Each loan officer is responsible for monitoring his or her loan portfolio, recommending a credit risk rating for each loan in his or her portfolio and ensuring the credit risk ratings are appropriate. These credit risk ratings are then ratified by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors including: a borrower’s financial strength, cash flow coverage, collateral protection and guarantees.

The Company’s Problem Loan Reporting system automatically includes all loans with credit risk ratings of 6 through 9. This system is designed to provide an on-going detailed tracking mechanism for each problem loan. Once management determines that a loan has deteriorated to a point where it has a credit risk rating of 6 or worse, the Company’s Managed Asset Division performs an overall credit and collateral review. As part of this review, all underlying collateral is identified and the valuation methodology is analyzed and tracked. As a result of this initial review by the Company’s Managed Asset Division, the credit risk rating is reviewed and a portion of the outstanding loan balance may be deemed uncollectible or an impairment reserve may be established. The Company’s impairment analysis utilizes an independent re-appraisal of the collateral (unless such a third-party evaluation is not possible due to the unique nature of the collateral, such as a closely-held business or thinly traded securities). In the case of commercial real-estate collateral, an independent third party appraisal is ordered by the Company’s Real Estate Services Group to determine if there has been any change in the underlying collateral value. These independent appraisals are reviewed by the Real Estate Services Group and sometimes by independent third party valuation experts and may be adjusted depending upon market conditions.

Through the credit risk rating process, loans are reviewed to determine if they are performing in accordance with the original contractual terms. If the borrower has failed to comply with the original contractual terms, further action may be required by the Company, including a downgrade in the credit risk rating, movement to non-accrual status, a charge-off or the establishment of a specific impairment reserve. If we determine that a loan amount, or portion thereof, is uncollectible, the loan’s credit risk rating is immediately downgraded to an 8 or 9 and the uncollectible amount is charged-off. Any loan that has a partial charge-off continues to be assigned a credit risk rating of an 8 or 9 for the duration of time that a balance remains outstanding. The Company undertakes a thorough and ongoing analysis to determine if additional impairment and/or charge-offs are appropriate and to begin a workout plan for the credit to minimize actual losses.

If, based on current information and events, it is probable that the Company will be unable to collect all amounts due to it according to the contractual terms of the loan agreement, a specific impairment reserve is established. In determining the appropriate charge-off for collateral-dependent loans, the Company considers the results of appraisals for the associated collateral.

Non-performing loans include all non-accrual loans (8 and 9 risk ratings) as well as loans 90 days past due and still accruing interest, excluding loans acquired with evidence of credit quality deterioration since origination. The remainder of the portfolio not classified as non-performing are considered performing under the contractual terms of the loan agreement. The following table presents the recorded investment based on performance of loans by class, excluding covered loans, per the most recent analysis at March 31, 2013, December 31, 2012 and March 31, 2012:



	Performing						Non-performing						Total
(Dollars in thousands)	March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012
Loan Balances:
Commercial
Commercial and industrial	$	1,551,859	$	1,608,794	$	1,488,627	$	17,717	$	19,409	$	17,392	$	1,569,576	$	1,628,203	$	1,506,019
Franchise	194,386		194,603		167,485		125		1,792		1,792		194,511		196,395		169,277
Mortgage warehouse lines of credit	131,970		215,076		136,438		—		—		—		131,970		215,076		136,438
Community Advantage—homeowners association	82,763		81,496		75,786		—		—		—		82,763		81,496		75,786
Aircraft	14,112		17,364		19,631		—		—		260		14,112		17,364		19,891
Asset-based lending	686,724		571,902		474,420		531		536		391		687,255		572,438		474,811
Municipal	89,508		91,824		76,885		—		—		—		89,508		91,824		76,885
Leases	98,030		90,443		77,671		—		—		—		98,030		90,443		77,671
Other	127		16,549		1,733		—		—		—		127		16,549		1,733
Purchased non-covered commercial ⁽¹⁾	4,843		5,010		5,945		—		—		—		4,843		5,010		5,945
Total commercial	2,854,322		2,893,061		2,524,621		18,373		21,737		19,835		2,872,695		2,914,798		2,544,456
Commercial real-estate
Residential construction	33,989		37,291		54,304		3,094		3,110		1,807		37,083		40,401		56,111
Commercial construction	161,272		168,796		162,330		1,086		2,159		2,389		162,358		170,955		164,719
Land	115,602		122,898		158,736		17,976		11,299		25,306		133,578		134,197		184,042
Office	581,120		565,515		552,174		3,564		4,196		8,534		584,684		569,711		560,708
Industrial	588,388		575,848		589,039		7,137		2,089		1,864		595,525		577,937		590,903
Retail	578,886		561,104		520,681		7,915		7,792		7,396		586,801		568,896		528,077
Multi-family	510,697		394,105		321,230		2,088		2,586		3,708		512,785		396,691		324,938
Mixed use and other	1,303,887		1,332,512		1,112,167		18,947		16,742		11,773		1,322,834		1,349,254		1,123,940
Purchased non-covered commercial real-estate⁽¹⁾	54,817		56,076		52,322		—		—		—		54,817		56,076		52,322
Total commercial real-estate	3,928,658		3,814,145		3,522,983		61,807		49,973		62,777		3,990,465		3,864,118		3,585,760
Home equity	744,327		774,951		827,483		14,891		13,523		12,881		759,218		788,474		840,364
Residential real-estate	350,213		354,629		355,341		9,606		11,728		5,329		359,819		366,357		360,670
Purchased non-covered residential real-estate ⁽¹⁾	833		856		657		—		—		—		833		856		657
Premium finance receivables
Commercial insurance loans	1,977,415		1,968,546		1,500,361		19,745		19,310		12,269		1,997,160		1,987,856		1,512,630
Life insurance loans	1,251,505		1,210,682		1,133,359		2,276		25		—		1,253,781		1,210,707		1,133,359
Purchased life insurance loans ⁽¹⁾	499,731		514,459		560,404		—		—		—		499,731		514,459		560,404
Indirect consumer	69,005		77,089		67,036		240		244		409		69,245		77,333		67,445
Consumer and other	93,032		99,610		111,344		1,695		1,543		121		94,727		101,153		111,465
Purchased non-covered consumer and other⁽¹⁾	2,638		2,832		174		—		—		—		2,638		2,832		174
Total loans, net of unearned income, excluding covered loans	$	11,771,679	$	11,710,860	$	10,603,763	$	128,633	$	118,083	$	113,621	$	11,900,312	$	11,828,943	$	10,717,384


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. See Note 6 - Loans for further discussion of these purchased loans.

A summary of activity in the allowance for credit losses by loan portfolio (excluding covered loans) for the three months ended March 31, 2013 and 2012 is as follows:



Three months ended March 31, 2013				Commercial Real-estate						Residential Real-estate			Premium Finance Receivable			Indirect Consumer			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real-estate			Home Equity			Residential Real-estate			Premium Finance Receivable			Indirect Consumer			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	28,794		$	52,135		$	12,734		$	5,560		$	6,096		$	267		$	1,765		$	107,351
Other adjustments	(3		)	(217		)	—			(9		)	—			—			—			(229		)
Reclassification to/from allowance for unfunded lending-related commitments	—			(213		)	—			—			—			—			—			(213		)
Charge-offs	(4,540		)	(3,299		)	(2,397		)	(1,728		)	(1,068		)	(32		)	(97		)	(13,161		)
Recoveries	295			368			162			5			294			15			94			1,233
Provision for credit losses	4,406			7,634			1,623			1,312			749			27			(384		)	15,367
Allowance for loan losses at period end	$	28,952		$	56,408		$	12,122		$	5,140		$	6,071		$	277		$	1,378		$	110,348
Allowance for unfunded lending-related commitments at period end	$	—		$	15,287		$	—		$	—		$	—		$	—		$	—		$	15,287
Allowance for credit losses at period end	$	28,952		$	71,695		$	12,122		$	5,140		$	6,071		$	277		$	1,378		$	125,635
Individually evaluated for impairment	3,682			23,089			1,748			598			—			3			153			29,273
Collectively evaluated for impairment	25,270			48,409			10,374			4,532			6,071			274			1,225			96,155
Loans acquired with deteriorated credit quality	—			197			—			10			—			—			—			207
Loans at period end
Individually evaluated for impairment	$	27,447		$	145,203		$	16,057		$	12,984		$	—		$	58		$	1,805		$	203,554
Collectively evaluated for impairment	2,840,405			3,790,445			743,161			346,835			3,250,941			69,187			92,922			11,133,896
Loans acquired with deteriorated credit quality	4,843			54,817			—			833			499,731			—			2,638			562,862



Three months ended March 31, 2012				Commercial Real-estate						Residential Real-estate			Premium Finance Receivable			Indirect Consumer			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real-estate			Home Equity			Residential Real-estate			Premium Finance Receivable			Indirect Consumer			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	31,237		$	56,405		$	7,712		$	5,028		$	7,214		$	645		$	2,140		$	110,381
Other adjustments	(3		)	(222		)	1			(14		)	—			—			—			(238		)
Reclassification to/from allowance for unfunded lending-related commitments	45			107			—			—			—			—			—			152
Charge-offs	(3,262		)	(8,229		)	(2,590		)	(175		)	(850		)	(51		)	(310		)	(15,467		)
Recoveries	257			131			162			2			298			30			161			1,041
Provision for credit losses	4,945			5,760			2,635			710			1,446			19			(361		)	15,154
Allowance for loan losses at period end	$	33,219		$	53,952		$	7,920		$	5,551		$	8,108		$	643		$	1,630		$	111,023
Allowance for unfunded lending-related commitments at period end	$	—		$	13,078		$	—		$	—		$	—		$	—		$	—		$	13,078
Allowance for credit losses at period end	$	33,219		$	67,030		$	7,920		$	5,551		$	8,108		$	643		$	1,630		$	124,101
Individually evaluated for impairment	$	3,705		$	25,336		$	3,056		$	1,362		$	—		$	7		$	1		$	33,467
Collectively evaluated for impairment	$	29,514		$	41,694		$	4,864		$	4,189		$	8,108		$	636		$	1,629		$	90,634
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Loans at period end
Individually evaluated for impairment	$	29,158		$	197,221		$	14,495		$	10,791		$	—		$	77		$	221		$	251,963
Collectively evaluated for impairment	2,509,353			3,336,217			825,869			349,879			2,645,989			67,368			111,244			9,845,919
Loans acquired with deteriorated credit quality	5,945			52,322			—			657			560,404			—			174			619,502

A summary of activity in the allowance for covered loan losses for the three months ended March 31, 2013 and 2012 is as follows:



	Three Months Ended
	March 31,			March 31,
(Dollars in thousands)	2013			2012
Balance at beginning of period	$	13,454		$	12,977
Provision for covered loan losses before benefit attributable to FDIC loss share agreements	1,600			11,229
Benefit attributable to FDIC loss share agreements	(1,280		)	(8,983		)
Net provision for covered loan losses	320			2,246
Increase in FDIC indemnification asset	1,280			8,983
Loans charged-off	(2,791		)	(6,523		)
Recoveries of loans charged-off	9			52
Net charge-offs	(2,782		)	(6,471		)
Balance at end of period	$	12,272		$	17,735

In conjunction with FDIC-assisted transactions, the Company entered into loss share agreements with the FDIC. Additional expected losses, to the extent such expected losses result in the recognition of an allowance for loan losses, will increase the FDIC indemnification asset. The allowance for loan losses for loans acquired in FDIC-assisted transactions is determined without giving consideration to the amounts recoverable through loss share agreements (since the loss share agreements are separately accounted for and thus presented “gross” on the balance sheet). On the Consolidated Statements of Income, the provision for credit losses related to covered loans is reported net of changes in the amount recoverable under the loss share agreements. Reductions to expected losses, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, will reduce the FDIC indemnification asset. Additions to expected losses will require an increase to the allowance for loan losses, and a corresponding increase to the FDIC indemnification asset. See “FDIC-Assisted Transactions” within Note 3 – Business Combinations for more detail.

Impaired Loans

A summary of impaired loans, including restructured loans, is as follows:



	March 31,		December 31,		March 31,
(Dollars in thousands)	2013		2012		2012
Impaired loans (included in non-performing and restructured loans):
Impaired loans with an allowance for loan loss required ⁽¹⁾	$	101,565	$	89,983	$	137,805
Impaired loans with no allowance for loan loss required	101,989		114,562		114,158
Total impaired loans ⁽²⁾	$	203,554	$	204,545	$	251,963
Allowance for loan losses related to impaired loans	$	14,607	$	13,575	$	20,989
Restructured loans	$	116,345	$	126,473	$	165,046


(1)	These impaired loans require an allowance for loan losses because the estimated fair value of the loans or related collateral is less than the recorded investment in the loans.


(2)	Impaired loans are considered by the Company to be non-accrual loans, restructured loans or loans with principal and/or interest at risk, even if the loan is current with all payments of principal and interest.

The following tables present impaired loans evaluated for impairment by loan class for the periods ended as follows:



							For the Three Months Ended
	As of March 31, 2013						March 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial and industrial	$	12,827	$	14,544	$	3,627	$	13,034	$	230
Franchise	—		—		—		—		—
Mortgage warehouse lines of credit	—		—		—		—		—
Community Advantage—homeowners association	—		—		—		—		—
Aircraft	—		—		—		—		—
Asset-based lending	511		511		55		511		7
Municipal	—		—		—		—		—
Leases	—		—		—		—		—
Other	—		—		—		—		—
Commercial real-estate
Residential construction	1,881		2,007		405		1,976		23
Commercial construction	8,682		8,682		49		8,983		86
Land	17,851		19,070		2,380		17,861		104
Office	5,792		5,996		659		5,853		61
Industrial	4,229		4,286		1,241		4,244		65
Retail	16,734		17,316		674		16,773		194
Multi-family	3,966		4,063		152		4,044		42
Mixed use and other	18,910		20,337		2,863		19,317		232
Home equity	5,160		5,751		1,748		5,488		57
Residential real-estate	4,357		4,974		598		4,365		49
Premium finance receivables
Commercial insurance	—		—		—		—		—
Life insurance	—		—		—		—		—
Purchased life insurance	—		—		—		—		—
Indirect consumer	14		14		3		13		—
Consumer and other	651		651		153		652		8
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial and industrial	$	13,963	$	17,153	$	—	$	14,344	$	226
Franchise	125		1,544		—		1,189		26
Mortgage warehouse lines of credit	—		—		—		—		—
Community Advantage—homeowners association	—		—		—		—		—
Aircraft	—		—		—		—		—
Asset-based lending	21		1,358		—		23		18
Municipal	—		—		—		—		—
Leases	—		—		—		—		—
Other	—		—		—		—		—
Commercial real-estate
Residential construction	3,208		3,579		—		3,708		42
Commercial construction	3,970		4,450		—		4,016		49
Land	11,305		16,304		—		12,048		203
Office	8,283		8,357		—		8,306		95
Industrial	5,541		5,653		—		5,563		74
Retail	14,483		15,095		—		14,628		172
Multi-family	2,200		4,541		—		2,618		54
Mixed use and other	18,168		19,483		—		18,345		269
Home equity	10,897		13,179		—		11,395		131
Residential real-estate	8,627		9,053		—		8,703		94
Premium finance receivables
Commercial insurance	—		—		—		—		—
Life insurance	—		—		—		—		—
Purchased life insurance	—		—		—		—		—
Indirect consumer	44		54		—		48		1
Consumer and other	1,154		1,610		—		1,160		24
Total loans, net of unearned income, excluding covered loans	$	203,554	$	229,615	$	14,607	$	209,208	$	2,636



							For the Twelve Months Ended
	As of December 31, 2012						December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial and industrial	$	11,010	$	12,562	$	1,982	$	13,312	$	881
Franchise	1,792		1,792		1,259		1,792		122
Mortgage warehouse lines of credit	—		—		—		—		—
Community Advantage—homeowners association	—		—		—		—		—
Aircraft	—		—		—		—		—
Asset-based lending	511		511		55		484		26
Municipal	—		—		—		—		—
Leases	—		—		—		—		—
Other	—		—		—		—		—
Commercial real-estate
Residential construction	2,007		2,007		389		2,007		98
Commercial construction	1,865		1,865		70		1,865		78
Land	12,184		12,860		1,414		12,673		483
Office	5,829		5,887		622		5,936		246
Industrial	1,150		1,200		224		1,208		75
Retail	13,240		13,314		343		13,230		584
Multi-family	3,954		3,954		348		3,972		157
Mixed use and other	22,249		23,166		2,989		23,185		1,165
Home equity	7,270		7,313		2,569		7,282		271
Residential real-estate	6,420		6,931		1,169		6,424		226
Premium finance receivables
Commercial insurance	—		—		—		—		—
Life insurance	—		—		—		—		—
Purchased life insurance	—		—		—		—		—
Indirect consumer	—		—		—		—		—
Consumer and other	502		502		142		502		26
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial and industrial	$	20,270	$	27,574	$	—	$	23,877	$	1,259
Franchise	—		—		—		—		—
Mortgage warehouse lines of credit	—		—		—		—		—
Community Advantage—homeowners association	—		—		—		—		—
Aircraft	—		—		—		—		—
Asset-based lending	25		1,362		—		252		76
Municipal	—		—		—		—		—
Leases	—		—		—		—		—
Other	—		—		—		—		—
Commercial real-estate
Residential construction	4,085		4,440		—		4,507		143
Commercial construction	12,263		13,395		—		13,635		540
Land	12,163		17,141		—		14,646		906
Office	8,939		9,521		—		9,432		437
Industrial	3,598		3,776		—		3,741		181
Retail	18,073		18,997		—		19,067		892
Multi-family	2,817		4,494		—		4,120		222
Mixed use and other	15,462		17,210		—		16,122		912
Home equity	7,320		8,758		—		8,164		376
Residential real-estate	8,390		9,189		—		9,069		337
Premium finance receivables
Commercial insurance	—		—		—		—		—
Life insurance	—		—		—		—		—
Purchased life insurance	—		—		—		—		—
Indirect consumer	53		61		—		65		6
Consumer and other	1,104		1,558		—		1,507		94
Total loans, net of unearned income, excluding covered loans	$	204,545	$	231,340	$	13,575	$	222,076	$	10,819



							For the Three Months Ended
	As of March 31, 2012						March 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial and industrial	$	8,610	$	10,151	$	3,270	$	9,121	$	145
Franchise	1,792		1,792		394		1,792		31
Mortgage warehouse lines of credit	—		—		—		—		—
Community Advantage—homeowners association	—		—		—		—		—
Aircraft	—		—		—		—		—
Asset-based lending	258		258		41		266		3
Municipal	—		—		—		—		—
Leases	—		—		—		—		—
Other	—		—		—		—		—
Commercial real-estate
Residential construction	1,807		1,882		390		1,807		24
Commercial construction	4,632		4,632		989		4,572		55
Land	49,766		53,325		4,785		50,889		584
Office	7,974		8,819		2,357		7,857		123
Industrial	460		487		62		467		6
Retail	23,312		23,337		701		22,861		244
Multi-family	6,532		6,532		1,504		6,511		81
Mixed use and other	18,473		19,324		2,070		18,452		224
Home equity	8,409		8,976		3,056		8,480		116
Residential real-estate	5,737		6,156		1,362		5,722		48
Premium finance receivables
Commercial insurance	—		—		—		—		—
Life insurance	—		—		—		—		—
Purchased life insurance	—		—		—		—		—
Indirect consumer	29		29		7		30		1
Consumer and other	14		15		1		15		1
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial and industrial	$	18,105	$	21,708	$	—	$	16,614	$	226
Franchise	—		—		—		—		—
Mortgage warehouse lines of credit	—		—		—		—		—
Community Advantage—homeowners association	—		—		—		—		—
Aircraft	260		260		—		260		5
Asset-based lending	133		1,452		—		622		19
Municipal	—		—		—		—		—
Leases	—		—		—		—		—
Other	—		—		—		—		—
Commercial real-estate
Residential construction	3,031		3,102		—		2,847		27
Commercial construction	9,788		9,788		—		9,790		96
Land	14,649		16,952		—		14,720		196
Office	10,187		11,875		—		10,499		128
Industrial	3,827		4,051		—		3,848		49
Retail	14,421		14,562		—		14,535		191
Multi-family	1,916		1,916		—		1,919		25
Mixed use and other	26,446		28,934		—		27,202		374
Home equity	6,086		7,441		—		6,539		72
Residential real-estate	5,054		5,818		—		5,056		52
Premium finance receivables
Commercial insurance	—		—		—		—		—
Life insurance	—		—		—		—		—
Purchased life insurance	—		—		—		—		—
Indirect consumer	48		60		—		51		1
Consumer and other	207		208		—		208		2
Total loans, net of unearned income, excluding covered loans	$	251,963	$	273,842	$	20,989	$	253,552	$	3,149

Restructured Loans

At March 31, 2013, the Company had $116.3 million in loans with modified terms. The $116.3 million in modified loans represents 167 credits in which economic concessions were granted to certain borrowers to better align the terms of their loans with their current ability to pay.

The Company’s approach to restructuring loans, excluding those acquired with evidence of credit quality deterioration since origination, is built on its credit risk rating system which requires credit management personnel to assign a credit risk rating to each loan. In each case, the loan officer is responsible for recommending a credit risk rating for each loan and ensuring the credit risk ratings are appropriate. These credit risk ratings are then reviewed and approved by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors including a borrower’s financial strength, cash flow coverage, collateral protection and guarantees. The Company’s credit risk rating scale is one through ten with higher scores indicating higher risk. In the case of loans rated six or worse following modification, the Company’s Managed Assets Division evaluates the loan and the credit risk rating and determines that the loan has been restructured to be reasonably assured of repayment and of performance according to the modified terms and is supported by a current, well-documented credit assessment of the borrower’s financial condition and prospects for repayment under the revised terms.

A modification of a loan, excluding those acquired with evidence of credit quality deterioration since origination, with an existing credit risk rating of six or worse or a modification of any other credit which will result in a restructured credit risk rating of six or worse, must be reviewed for possible TDR classification. In that event, our Managed Assets Division conducts an overall credit and collateral review. A modification of these loans is considered to be a TDR if both (1) the borrower is experiencing financial difficulty and (2) for economic or legal reasons, the bank grants a concession to a borrower that it would not otherwise consider. The modification of a loan, excluding those acquired with evidence of credit quality deterioration since origination, where the credit risk rating is five or better both before and after such modification is not considered to be a TDR. Based on the Company’s credit risk rating system, it considers that borrowers whose credit risk rating is five or better are not experiencing financial difficulties and therefore, are not considered TDRs.

TDRs are reviewed at the time of modification and on a quarterly basis to determine if a specific reserve is needed. The carrying amount of the loan is compared to the expected payments to be received, discounted at the loan’s original rate, or for collateral dependent loans, to the fair value of the collateral. Any shortfall is recorded as a specific reserve.

All credits determined to be a TDR will continue to be classified as a TDR in all subsequent periods, unless the borrower has been in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) and the modified interest rate represented a market rate at the time of a restructuring. The Managed Assets Division, in consultation with the respective loan officer, determines whether the modified interest rate represented a current market rate at the time of restructuring. Using knowledge of current market conditions and rates, competitive pricing on recent loan originations, and an assessment of various characteristics of the modified loan (including collateral position and payment history), an appropriate market rate for a new borrower with similar risk is determined. If the modified interest rate meets or exceeds this market rate for a new borrower with similar risk, the modified interest rate represents a market rate at the time of restructuring. Additionally, before removing a loan from TDR classification, a review of the current or previously measured impairment on the loan and any concerns related to future performance by the borrower is conducted. If concerns exist about the future ability of the borrower to meet its obligations under the loans based on a credit review by the Managed Assets Division, the TDR classification is not removed from the loan.

Each restructured loan was reviewed for impairment at March 31, 2013 and approximately $2.6 million of impairment was present and appropriately reserved for through the Company’s normal reserving methodology in the Company’s allowance for loan losses. For restructured loans in which impairment is calculated by the present value of future cash flows, the Company records interest income representing the decrease in impairment resulting from the passage of time during the respective period, which differs from interest income from contractually required interest on these specific loans. During the three months ended March 31, 2013 and 2012, the Company recorded $229,000 and $238,000, respectively, in interest income representing this decrease in impairment.

The tables below present a summary of the post-modification balance of loans restructured during the three months ended March 31, 2013 and 2012, respectively, which represent troubled debt restructurings:



Three months ended March 31, 2013 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest- only Payments ⁽²⁾			Forgiveness of Debt ⁽²⁾
Three months ended March 31, 2013 (Dollars in thousands)	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial and industrial	6	$	708	5	$	573	4	$	553	2	$	185	—	$	—
Commercial real-estate
Commercial construction	—	—		—	—		—	—		—	—		—	—
Land	2	287		2	287		2	287		—	—		1	73
Retail	1	200		1	200		1	200		—	—		—	—
Multi-family	1	705		1	705		1	705		—	—		—	—
Mixed use and other	—	—		—	—		—	—		—	—		—	—
Residential real-estate and other	4	377		2	70		3	361		1	123		—	—
Total loans	14	$	2,277	11	$	1,835	11	$	2,106	3	$	308	1	$	73


(1)	Restructured loans may have more than one modification representing a concession. As such, restructured loans during the period may be represented in more than one of the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.



Three months ended March 31, 2012 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest- only Payments ⁽²⁾			Forgiveness of Debt ⁽²⁾
Three months ended March 31, 2012 (Dollars in thousands)	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial and industrial	3	$	118	1	$	14	—	$	—	2	$	104	—	$	—
Commercial real-estate
Commercial construction	2	622		2	622		2	622		2	622		—	—
Land	14	27,992		14	27,992		12	27,004		11	22,954		—	—
Retail	5	8,633		5	8,633		5	8,633		4	8,244		—	—
Multi-family	—	—		—	—		—	—		—	—		—	—
Mixed use and other	3	1,272		3	1,272		2	1,212		2	1,129		—	—
Residential real-estate and other	4	1,046		3	927		1	118		2	844		—	—
Total loans	31	$	39,683	28	$	39,460	22	$	37,589	23	$	33,897	—	$	—


(1)	Restructured loans may have more than one modification representing a concession. As such, restructured loans during the period may be represented in more than one of the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.

During the three months ended March 31, 2013, 14 loans totaling $2.3 million were determined to be troubled debt restructurings, compared to 31 loans totaling $39.7 million in the same period of 2012. Of these loans extended at below market terms, the weighted average extension had a term of approximately 21 months during the three months ended March 31, 2013 compared to seven months for the same period of 2012. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 153 basis points and 162 basis points during the three months ending March 31, 2013 and 2012, respectively. Interest-only payment terms were approximately eight months and four months during the three months ending March 31, 2013 and 2012, respectively. Additionally, $50,000 in balances were forgiven in the first quarter of 2013 compared to zero balances forgiven during the same period of 2012.

The following table presents a summary of all loans restructured during the twelve months ended March 31, 2013 and 2012, and such loans which were in payment default under the restructured terms during the respective periods below:



(Dollars in thousands)	Three Months Ended March 31, 2013						Three Months Ended March 31, 2012
	Total ⁽¹⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾			Total ⁽¹⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾
	Count	Balance		Count	Balance		Count	Balance		Count		Balance
Commercial
Commercial and industrial	21	$	14,901	6	$	10,377	20	$	5,388	$	6	$	664
Commercial real-estate
Residential construction	3	2,147		—	—		1	1,105		—		—
Commercial construction	—	—		—	—		10	12,762		1		467
Land	5	4,131		1	651		20	34,452		2		1,430
Office	—	—		—	—		6	6,401		2		421
Industrial	1	727		—	—		3	2,110		—		—
Retail	4	5,085		—	—		19	27,746		3		4,299
Multi-family	2	1,085		1	705		6	4,414		—		—
Mixed use and other	12	6,061		4	2,603		35	29,696		7		6,522
Residential real-estate and other	10	969		2	221		19	6,777		3		721
Total loans	58	$	35,106	14	$	14,557	139	$	130,851	$	24	$	14,524


(1)	Total restructured loans represent all loans restructured during the previous twelve months from the date indicated.


(2)	Restructured loans considered to be in payment default are over 30 days past-due subsequent to the restructuring.


(3)	Balances represent the recorded investment in the loan at the time of the restructuring.