Loans

9 Months Ended

Sep. 30, 2011

Loans

Loans

(6) Loans

The following table shows the Company's loan portfolio by category as of the dates shown:

(Dollars in thousands)	September 30, 2011			December 31, 2010			September 30, 2010
Balance:
Commercial	$	2,337,098		$	2,049,326		$	1,952,791
Commercial real-estate		3,465,321			3,338,007			3,331,498
Home equity		879,180			914,412			919,824
Residential real-estate		326,207			353,336			342,009
Premium finance receivables - commercial		1,417,572			1,265,500			1,323,934
Premium finance receivables - life insurance		1,671,443			1,521,886			1,434,994
Indirect consumer		62,452			51,147			56,575
Consumer and other		113,438			106,272			99,530
Total loans, net of unearned income, excluding covered loans	$	10,272,711		$	9,599,886		$	9,461,155
Covered loans		680,075			334,353			353,840
Total loans	$	10,952,786		$	9,934,239		$	9,814,995
Mix:
Commercial		21	%		21	%		20	%
Commercial real-estate		32			34			34
Home equity		8			9			9
Residential real-estate		3			3			3
Premium finance receivables - commercial		13			13			13
Premium finance receivables - life insurance		15			15			15
Indirect consumer		1			1			1
Consumer and other		1			1			1
Total loans, net of unearned income, excluding covered loans		94	%		97	%		96	%
Covered loans		6			3			4
Total loans		100	%		100	%		100	%

Certain premium finance receivables are recorded net of unearned income. The unearned income portions of such premium finance receivables were $36.4 million at September 30, 2011, $32.3 million at December 31, 2010 and $34.8 million at September 30, 2010. Certain life insurance premium finance receivables attributable to the life insurance premium finance loan acquisition in 2009 as well as the covered loans acquired in the FDIC-assisted acquisitions during 2010 and 2011 are recorded net of credit discounts. See "Acquired Loan Information at Acquisition" below.

Indirect consumer loans include auto, boat and other indirect consumer loans. Total loans, excluding loans acquired with evidence of credit quality deterioration since origination, include net deferred loan fees and costs and fair value purchase accounting adjustments totaling $13.5 million at September 30, 2011, $12.5 million at December 31, 2010 and $12.6 million at September 30, 2010.

The Company's loan portfolio is generally comprised of loans to consumers and small to medium-sized businesses located within the geographic market areas that the Company serves. The premium finance receivables portfolios are made to customers on a national basis and the majority of the indirect consumer loans were generated through a network of local automobile dealers. As a result, the Company strives to maintain a loan portfolio that is diverse in terms of loan type, industry, borrower and geographic concentrations. Such diversification reduces the exposure to economic downturns that may occur in different segments of the economy or in different industries.

It is the policy of the Company to review each prospective credit in order to determine the appropriateness and, when required, the adequacy of security or collateral necessary to obtain when making a loan. The type of collateral, when required, will vary from liquid assets to real estate. The Company seeks to ensure access to collateral, in the event of default, through adherence to state lending laws and the Company's credit monitoring procedures.

Acquired Loan Information at Acquisition — Loans with evidence of credit quality deterioration since origination

As part of our acquisition of a portfolio of life insurance premium finance loans in 2009 as well as the bank acquisitions in 2010 and 2011, we acquired loans for which there was evidence of credit quality deterioration since origination and we determined that it was probable that the Company would be unable to collect all contractually required principal and interest payments.

The following table presents the unpaid principal balance and carrying value for these acquired loans:

	September 30, 2011				December 31, 2010
(Dollars in thousands)	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Bank acquisitions		978,920		603,374		432,566		331,295
Life insurance premium finance loans acquisition		672,999		635,776		752,129		695,587

For the loans acquired as a result of acquisitions during the nine months ended September 30, 2011, the following table provides estimated details on these loans at the date of each acquisition:

(Dollars in thousands)	The Bank of Commerce		Community First Bank - Chicago		First Chicago		Elgin State Bank
Contractually required payments including interest	$	127,122	$	22,178	$	564,346	$	79,303
Less: Nonaccretable difference		56,257		6,313		321,117		12,733
Cash flows expected to be collected (1)		70,865		15,865		243,229		66,570
Less: Accretable yield		4,414		688		20,132		4,563
Fair value of loans acquired with evidence of credit quality deterioration since origination	$	66,451	$	15,177	$	223,097	$	62,007

(1) Represents undiscounted expected principal and interest cash flows at acquisition.

See Note 7 – Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans for further discussion regarding the allowance for loan losses associated with the covered loan portfolio at September 30, 2011.

Accretable Yield Activity

Changes in expected cash flows may vary from period to period as the Company periodically updates its cash flow model assumptions. The factors that most significantly affect the estimates of gross cash flows expected to be collected, and accordingly the accretable yield, include changes in the benchmark interest rate indices for variable-rate products and changes in prepayment assumptions. The following table provides activity for the accretable yield of loans acquired with evidence of credit quality deterioration since origination:

	Three Months Ended September 30, 2011						Nine Months Ended September 30, 2011
(Dollars in thousands)	Bank Acquisitions			Life Insurance Premium Finance Loans			Bank Acquisitions			Life Insurance Premium Finance Loans
Accretable yield, beginning balance	$	80,748		$	24,891		$	39,809		$	33,315
Acquisitions		24,695			—			31,802			—
Accretable yield amortized to interest income		(14,187	)		(5,127	)		(41,914	)		(19,301	)
Reclassification from non-accretable difference		2,145			—			52,820			3,857
Increases (decreases) in interest cash flows due to payments and changes in interest rates		(6,904	)		432			3,980			2,325
Accretable yield, ending balance	$	86,497		$	20,196		$	86,497		$	20,196