Loans

6 Months Ended

Jun. 30, 2011

Loans [Abstract]

Loans

Note 4: Loans

Loan portfolio segments are defined as the level at which an entity develops and documents a systematic methodology to determine its allowance. The Corporation has two loan portfolio segments (commercial loans and consumer loans) which it uses in determining the allowance. Both quantitative and qualitative factors are used by management at the loan portfolio segment level in determining the adequacy of the allowance for the Corporation. Classes of loans are a disaggregation of an entity’s loan portfolio segments. Classes of loans are defined as a group of loans which share similar initial measurement attributes, risk characteristics, and methods for monitoring and assessing credit risk. The Corporation has seven classes of loans, which are set forth below.

Commercial — Loans to varying types of businesses, including municipalities, school districts and nonprofit organizations, for the purpose of supporting working capital, operational needs and term financing of equipment. Repayment of such loans is generally provided through operating cash flows of the business. Commercial loans are predominately secured by equipment, inventory, accounts receivable, personal guarantees of the owner and other sources of repayment, although the Corporation may also secure commercial loans with real estate.

Real estate commercial — Loans secured by real estate occupied by the borrower for ongoing operations, non-owner occupied real estate leased to one or more tenants and vacant land that has been acquired for investment or future land development.

Real estate construction — Secured loans for the construction of business properties. Real estate construction loans often convert to a real estate commercial loan at the completion of the construction period.

Land development — Secured development loans are made to borrowers for the purpose of infrastructure improvements to vacant land to create finished marketable residential and commercial lots/land. Most land development loans are originated with the intention that the loans will be paid through the sale of developed lots/land by the developers within twelve months of the completion date. Land development loans at June 30, 2011 were primarily comprised of loans to develop residential properties.

Real estate residential — Loans secured by one- to four-family residential properties generally with fixed interest rates of fifteen years or less. The loan-to-value ratio at the time of origination is generally 80% or less. Real estate residential loans with a loan-to-value ratio of more than 80% generally require private mortgage insurance.

Consumer installment — Loans to consumers primarily for the purpose of home improvements and acquiring automobiles, recreational vehicles and boats. These loans consist of relatively small amounts that are spread across many individual borrowers.

Home equity — Loans whereby consumers utilize equity in their personal residence, generally through a second mortgage, as collateral to secure the loan.

Commercial, real estate commercial, real estate construction and land development loans are referred to as the Corporation’s commercial loan portfolio, while real estate residential, consumer installment and home equity loans are referred to as the Corporation’s consumer loan portfolio.

A summary of loans follows:

	June 30,		December 31,		June 30,
	2011		2010		2010
	(In thousands)
Commercial loan portfolio:
Commercial	$	842,404	$	818,997	$	769,287
Real estate commercial		1,065,606		1,076,971		1,081,860
Real estate construction		91,152		89,234		119,449
Land development		51,199		53,386		59,555
Subtotal		2,050,361		2,038,588		2,030,151
Consumer loan portfolio:
Real estate residential		825,860		798,046		768,156
Consumer installment		517,405		503,132		509,508
Home equity		354,384		341,896		340,146
Subtotal		1,697,649		1,643,074		1,617,810
Total loans	$	3,748,010	$	3,681,662	$	3,647,961

Credit Quality Monitoring

The Corporation maintains loan policies and credit underwriting standards as part of the process of managing credit risk. These standards include making loans generally only within the Corporation’s market areas. The Corporation’s lending markets generally consist of communities across the middle to southern and western sections of the lower peninsula of Michigan. The Corporation’s lending market areas do not include the southeastern portion of Michigan. The Corporation has no foreign loans.

The Corporation has a loan approval process involving underwriting and individual and group loan approval authorities to consider credit quality and loss exposure at loan origination. The loans in the Corporation’s commercial loan portfolio are risk rated at origination based on the grading system set forth below. The approval authority of relationship managers is established based on experience levels, with credit decisions greater than $1.0 million requiring group loan authority approval, except for four executive and senior officers who have varying limits exceeding $1.0 million and up to $2.5 million. With respect to the group loan authorities, the Corporation has a loan committee, consisting of certain executive and senior officers, that meets weekly to consider loans in the amount of $1.0 million to $2.5 million. A directors’ loan committee, consisting of ten members of the board of directors, including the chief executive officer, and the senior credit officer, meets regularly to consider loans in the amount of $2.5 million to $10 million. Loans over $10 million require the approval of the board of directors.

The majority of the Corporation’s consumer loan portfolio is comprised of secured loans that are relatively small and are evaluated at origination on a centralized basis against standardized underwriting criteria. The ongoing measurement of credit quality of the consumer loan portfolio is largely done on an exception basis. If payments are made on schedule, as agreed, then no further monitoring is performed. However, if delinquency occurs, the delinquent loans are turned over to the Corporation’s collection department for resolution, which generally occurs fairly rapidly and often through repossession and foreclosure. Credit quality for the entire consumer loan portfolio is measured by the periodic delinquency rate, nonaccrual amounts and actual losses incurred.

Loans in the commercial loan portfolio tend to be larger and more complex than those in the consumer loan portfolio, and therefore, are subject to more intensive monitoring. All loans in the commercial loan portfolio have an assigned relationship manager, and most borrowers provide periodic financial and operating information that allows the relationship managers to stay abreast of credit quality during the life of the loans. The risk ratings of loans in the commercial loan portfolio are reassessed at least annually, with loans below an acceptable risk rating reassessed more frequently and reviewed by various loan committees within the Corporation at least quarterly.

The Corporation maintains a centralized independent loan review function that monitors the approval process and on-going asset quality of the loan portfolio, including the accuracy of loan grades. The Corporation also maintains an independent appraisal review function that participates in the review of all appraisals obtained by the Corporation.

Credit Quality Indicators

The Corporation uses a nine grade risk rating system to monitor the ongoing credit quality of its commercial loan portfolio. These loan grades rank the credit quality of a borrower by measuring liquidity, debt capacity, coverage and payment behavior as shown in the borrower’s financial statements. The loan grades also measure the quality of the borrower’s management and the repayment support offered by any guarantors. A summary of the Corporation’s loan grades (or, characteristics of the loans within each grade) follows:

Risk Grades 1-5 (Acceptable Credit Quality) — All loans in risk grades 1-5 are considered to be acceptable credit risks by the Corporation and are grouped for purposes of allowance for loan loss considerations and financial reporting. The five grades essentially represent a ranking of loans that are all viewed to be of acceptable credit quality, taking into consideration the various factors mentioned above, but with varying degrees of financial strength, debt coverage, management and factors that could impact credit quality. Business credits within risk grades 1 — 5 range from Risk Grade 1: Prime Quality (factors include: excellent business credit; excellent debt capacity and coverage; outstanding management; strong guarantors; superior liquidity and net worth; favorable loan-to-value ratios; debt secured by cash or equivalents, or backed by the full faith and credit of the U.S. Government) to Risk Grade 5: Acceptable Quality With Care (factors include: acceptable business credit, but with added risk due to specific industry or internal situations).

Risk Grade 6 (Watch) — A business credit that is not acceptable within the Corporation’s loan origination criteria; cash flow may not be adequate or is continually inconsistent to service current debt; financial condition has deteriorated as company trends/management have become inconsistent; the company is slow in furnishing quality financial information; working capital needs of the company are reliant on short-term borrowings; personal guarantees are weak and/or with little or no liquidity; the net worth of the company has deteriorated after recent or continued losses; the loan requires constant monitoring and attention from the Corporation; payment delinquencies becoming more serious; if left uncorrected, these potential weaknesses may, at some future date, result in deterioration of repayment prospects.

Risk Grade 7 (Substandard — Accrual) — A business credit that is inadequately protected by the current financial net worth and paying capacity of the obligor or of the collateral pledged, if any; management has deteriorated or has become non-existent; quality financial information is unattainable; a high level of maintenance is required by the Corporation; cash flow can no longer support debt requirements; loan payments are continually and/or severely delinquent; negative net worth; personal guaranty has become insignificant; a credit that has a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. The Corporation still expects a full recovery of all contractual principal and interest payments; however, a possibility exists that the Corporation will sustain some loss if deficiencies are not corrected.

Risk Grade 8 (Substandard — Nonaccrual) — A business credit accounted for on a nonaccrual basis that has all the weaknesses inherent in a loan classified as risk grade 7 with the added characteristic that the weaknesses are so pronounced that, on the basis of current financial information, conditions, and values, collection in full is highly questionable; a partial loss is possible and interest is no longer being accrued. This loan meets the definition of an impaired loan. The risk of loss requires analysis to determine whether a valuation allowance needs to be established.

Risk Grade 9 (Substandard — Doubtful) — A business credit that has all the weaknesses inherent in a loan classified as risk grade 8 and interest is no longer being accrued, but additional deficiencies make it highly probable that liquidation will not satisfy the majority of the obligation; the primary source of repayment is nonexistent and there is doubt as to the value of the secondary source of repayment; the possibility of loss is likely, but current pending factors could strengthen the credit. This loan meets the definition of an impaired loan. A loan charge-off is recorded when management deems an amount uncollectible; however, the Corporation will establish a valuation allowance for probable losses, if required.

The Corporation considers all loans graded 1-5 as acceptable credit risks and structures and manages such relationships accordingly. Periodic financial and operating data combined with regular loan officer interactions are deemed adequate to monitor borrower performance. Loans with risk grades of 6 and 7 are considered “watch credits” and the frequency of loan officer contact and receipt of financial data is increased to stay abreast of borrower performance. Loans with risk grades of 8 and 9 are considered problematic and require special care. Further, loans with risk grades of 6-9 are managed and monitored regularly through a number of processes, procedures and committees, including oversight by a loan administration committee comprised of executive and senior management of the Corporation, which includes highly structured reporting of financial and operating data, intensive loan officer intervention and strategies to exit, as well as potential management by the Corporation’s special assets group.

The following schedule presents the recorded investment of loans in the commercial loan portfolio by risk rating categories at June 30, 2011 and December 31, 2010:

	Commercial Loan Portfolio Credit Exposure
	Credit Risk Profile by Creditworthiness Category
			Real Estate		Real Estate		Land
	Commercial		Commercial		Construction		Development		Total
	(In thousands)
June 30, 2011:
Originated Portfolio:
Risk Grades 1-5	$	637,709	$	673,117	$	69,609	$	15,684	$	1,396,119
Risk Grade 6		26,240		22,354		290		7,842		56,726
Risk Grade 7		20,766		49,993		182		651		71,592
Risk Grade 8		12,955		53,494		—		6,844		73,293
Risk Grade 9		1,431		3,830		—		2,089		7,350
Subtotal		699,101		802,788		70,081		33,110		1,605,080
Acquired Portfolio:
Risk Grades 1-5		121,952		236,604		20,918		11,405		390,879
Risk Grade 6		7,127		11,126		—		1,749		20,002
Risk Grade 7		7,904		10,881		—		653		19,438
Risk Grade 8		6,285		4,207		153		4,282		14,927
Risk Grade 9		35		—		—		—		35
Subtotal		143,303		262,818		21,071		18,089		445,281
Total	$	842,404	$	1,065,606	$	91,152	$	51,199	$	2,050,361
December 31, 2010:
Originated Portfolio:
Risk Grades 1-5	$	619,150	$	656,471	$	67,907	$	15,797	$	1,359,325
Risk Grade 6		22,173		39,653		737		8,935		71,498
Risk Grade 7		16,480		35,471		551		983		53,485
Risk Grade 8		16,061		57,287		—		6,537		79,885
Risk Grade 9		607		3,271		—		2,430		6,308
Subtotal		674,471		792,153		69,195		34,682		1,570,501
Acquired Portfolio:
Risk Grades 1-5		119,943		249,495		19,796		12,667		401,901
Risk Grade 6		10,236		18,202		—		—		28,438
Risk Grade 7		6,050		14,896		—		457		21,403
Risk Grade 8		8,282		2,225		243		5,580		16,330
Risk Grade 9		15		—		—		—		15
Subtotal		144,526		284,818		20,039		18,704		468,087
Total	$	818,997	$	1,076,971	$	89,234	$	53,386	$	2,038,588

The Corporation evaluates the credit quality of loans in the consumer loan portfolio, based primarily on the aging status of the loan and payment activity. The following schedule presents the recorded investment of loans in the consumer loan portfolio based on the credit risk profile of loans in a performing status and loans in a nonperforming status at June 30, 2011 and December 31, 2010:

	Consumer Loan Portfolio Credit Exposure
	Credit Risk Profile Based on
	Aging Status and Payment Activity
	Real Estate		Consumer				Total
	Residential		Installment		Home Equity		Consumer
	(In thousands)
June 30, 2011:
Originated Loans:
Performing	$	771,086	$	509,114	$	300,828	$	1,581,028
Nonperforming		30,930		3,215		4,926		39,071
Subtotal		802,016		512,329		305,754		1,620,099
Acquired Loans:
Performing		22,750		5,076		48,245		76,071
Nonperforming		1,094		—		385		1,479
Subtotal		23,844		5,076		48,630		77,550
Total	$	825,860	$	517,405	$	354,384	$	1,697,649
December 31, 2010:
Originated Loans:
Performing	$	733,461	$	495,203	$	286,854	$	1,515,518
Nonperforming		37,638		1,846		3,895		43,379
Subtotal		771,099		497,049		290,749		1,558,897
Acquired Loans:
Performing		25,406		6,083		50,873		82,362
Nonperforming		1,541		—		274		1,815
Subtotal		26,947		6,083		51,147		84,177
Total	$	798,046	$	503,132	$	341,896	$	1,643,074

Nonperforming Loans

A summary of nonperforming loans follows:

	June 30,		December 31,		June 30,
	2011		2010		2010
	(In thousands)
Nonaccrual loans:
Commercial	$	14,386	$	16,668	$	21,643
Real estate commercial		57,324		60,558		57,085
Real estate construction and land development		8,933		8,967		13,397
Real estate residential		17,809		12,083		12,499
Consumer installment and home equity		6,898		4,686		3,357
Total nonaccrual loans		105,350		102,962		107,981
Accruing loans contractually past due 90 days or more as to interest or principal payments:
Commercial		629		530		2,108
Real estate commercial		143		1,350		2,030
Real estate construction and land development		—		1,220		436
Real estate residential		1,729		3,253		2,842
Consumer installment and home equity		1,243		1,055		885
Total accruing loans contractually past due 90 days or more as to interest or principal payments		3,744		7,408		8,301
TDRs:
Commercial and real estate commercial		15,443		15,057		7,791
Real estate residential		11,392		22,302		18,856
Total nonperforming TDRs		26,835		37,359		26,647
Total nonperforming loans	$	135,929	$	147,729	$	142,929

Impaired Loans

The following schedule presents impaired loans by classes of loans at June 30, 2011:

			Unpaid		Related
	Recorded		Principal		Valuation
	Investment		Balance		Allowance
	(In thousands)
Impaired loans with a valuation allowance:
Commercial	$	7,278	$	9,096	$	2,127
Real estate commercial		29,681		31,417		8,227
Land development		2,225		2,234		522
Real estate residential		22,156		22,156		745
Subtotal		61,340		64,903		11,621
Impaired loans with no related valuation allowance:
Commercial		22,315		29,976		—
Real estate commercial		43,258		57,680		—
Real estate construction		152		1,124		—
Land development		11,872		17,625		—
Real estate residential		17,809		17,809		—
Consumer installment		3,205		3,205		—
Home equity		3,693		3,693		—
Subtotal		102,304		131,112		—
Total impaired loans:
Commercial		29,593		39,072		2,127
Real estate commercial		72,939		89,097		8,227
Real estate construction		152		1,124		—
Land development		14,097		19,859		522
Real estate residential		39,965		39,965		745
Consumer installment		3,205		3,205		—
Home equity		3,693		3,693		—
Total	$	163,644	$	196,015	$	11,621

The following schedule presents information related to impaired loans for the three and six months ended June 30, 2011:

	Three months ended June 30, 2011				Six months ended June 30, 2011
			Interest Income				Interest Income
	Average		Recognized		Average		Recognized
	Recorded		While on		Recorded		While on
	Investment		Impaired Status		Investment		Impaired Status
	(In thousands)
Commercial	$	29,814	$	216	$	31,279	$	541
Real estate commercial		71,050		152		72,464		396
Real estate construction		196		15		216		30
Land development		13,750		107		14,203		196
Real estate residential		39,369		248		37,777		485
Consumer installment		3,032		—		2,808		—
Home equity		3,384		—		3,091		—
Total	$	160,595	$	738	$	161,838	$	1,648

The following schedule presents impaired loans by classes of loans at December 31, 2010:

			Unpaid		Related
	Recorded		Principal		Valuation
	Investment		Balance		Allowance
	(In thousands)
Impaired loans with a valuation allowance:
Commercial	$	8,289	$	8,675	$	2,947
Real estate commercial		34,681		35,744		11,356
Land development		1,881		1,984		663
Real estate residential		22,302		22,302		806
Subtotal		67,153		68,705		15,772
Impaired loans with no related valuation allowance:
Commercial		28,597		39,927		—
Real estate commercial		38,689		51,722		—
Land development		10,498		15,039		—
Real estate residential		12,083		12,083		—
Consumer installment		1,751		1,751		—
Home equity		2,935		2,935		—
Subtotal		94,553		123,457		—
Total impaired loans:
Commercial		36,886		48,602		2,947
Real estate commercial		73,370		87,466		11,356
Land development		12,379		17,023		663
Real estate residential		34,385		34,385		806
Consumer installment		1,751		1,751		—
Home equity		2,935		2,935		—
Total	$	161,706	$	192,162	$	15,772

The difference between an impaired loan’s recorded investment and the unpaid principal balance represents either (i) for originated loans, a partial charge-off resulting from a confirmed loss due to the value of the collateral securing the loan being below the loan balance and management’s assessment that full collection of the loan balance is not likely or (ii) for acquired loans that meet the definition of an impaired loan, fair value adjustments recognized at the acquisition date attributable to expected credit losses and the discounting of expected cash flows at market interest rates. The difference between the recorded investment and the unpaid principal balance of $32.4 million and $30.5 million at June 30, 2011 and December 31, 2010, respectively, includes confirmed losses (partial charge-offs) of $22.6 million and $19.8 million, respectively, and fair value discount adjustments of $9.8 million and $10.7 million, respectively. At June 30, 2011 and December 31, 2010, there was no valuation allowance required for acquired loans, as no material changes in expected cash flows had occurred since the acquisition date.

The following schedule presents a summary of impaired loans between those with and without a valuation allowance at June 30, 2010:

			Related
	Recorded		Valuation
	Investment		Allowance
	(In thousands)
Impaired loans with a valuation allowance:
Commercial, real estate commercial, real estate construction and land development	$	45,014	$	14,459
Real estate residential		18,856		991
Subtotal		63,870		15,450
Impaired loans with no valuation allowance:
Commercial, real estate commercial, real estate construction and land development		63,725		—
Real estate residential		12,499		—
Consumer installment and home equity		3,357		—
Subtotal		79,581		—
Total	$	143,451	$	15,450

Impaired loans include $18.6 million, $21.4 million and $10.1 million at June 30, 2011, December 31, 2010 and June 30, 2010, respectively, of acquired loans that were not performing in accordance with original contractual terms as a market yield adjustment was recognized on these loans in interest income. Impaired loans also include $12.9 million at June 30, 2011 of performing TDRs.

The following schedule presents the aging status of the recorded investment in loans by classes of loans at June 30, 2011 and December 31, 2010:

					Accruing
					Loans
	31-60		61-89		Past Due
	Days		Days		90 Days		Nonaccrual		Total				Total
	Past Due		Past Due		or More		Loans		Past Due		Current		Loans
							(In thousands)
June 30, 2011
Originated Portfolio:
Commercial	$	6,480	$	2,888	$	629	$	14,386	$	24,383	$	674,718	$	699,101
Real estate commercial		11,256		3,479		143		57,324		72,202		730,586		802,788
Real estate construction		—		290		—		—		290		69,791		70,081
Land development		209		—		—		8,933		9,142		23,968		33,110
Real estate residential		7,284		226		1,729		17,809		27,048		774,968		802,016
Consumer installment		4,302		1,056		—		3,205		8,563		503,766		512,329
Home equity		2,635		702		1,243		3,693		8,273		297,481		305,754
Total	$	32,166	$	8,641	$	3,744	$	105,350	$	149,901	$	3,075,278	$	3,225,179
Acquired Portfolio:
Commercial	$	18	$	—	$	7,659	$	—	$	7,677	$	135,626	$	143,303
Real estate commercial		368		—		4,235		—		4,603		258,215		262,818
Real estate construction		—		—		152		—		152		20,919		21,071
Land development		—		—		5,045		—		5,045		13,044		18,089
Real estate residential		128		—		1,094		—		1,222		22,622		23,844
Consumer installment		168		62		—		—		230		4,846		5,076
Home equity		370		107		385		—		862		47,768		48,630
Total	$	1,052	$	169	$	18,570	$	—	$	19,791	$	503,040	$	522,831
December 31, 2010
Originated Portfolio:
Commercial	$	6,788	$	3,645	$	530	$	16,668	$	27,631	$	646,840	$	674,471
Real estate commercial		9,960		4,139		1,350		60,558		76,007		716,146		792,153
Real estate construction		689		—		—		—		689		68,506		69,195
Land development		—		119		1,220		8,967		10,306		24,376		34,682
Real estate residential		1,126		6,610		3,253		12,083		23,072		748,027		771,099
Consumer installment		6,179		1,741		95		1,751		9,766		487,283		497,049
Home equity		3,046		825		960		2,935		7,766		282,983		290,749
Total	$	27,788	$	17,079	$	7,408	$	102,962	$	155,237	$	2,974,161	$	3,129,398
Acquired Portfolio:
Commercial	$	131	$	64	$	10,445	$	—	$	10,640	$	133,886	$	144,526
Real estate commercial		993		—		3,302		—		4,295		280,523		284,818
Real estate construction		736		—		243		—		979		19,060		20,039
Land development		2,697		—		5,580		—		8,277		10,427		18,704
Real estate residential		685		—		1,541		—		2,226		24,721		26,947
Consumer installment		19		43		—		—		62		6,021		6,083
Home equity		85		34		274		—		393		50,754		51,147
Total	$	5,346	$	141	$	21,385	$	—	$	26,872	$	525,392	$	552,264

Allowance for Loan Losses

Changes in the allowance were as follows for the three and six months ended June 30, 2011 and 2010:

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
				(In thousands)
Balance at beginning of period	$	89,674		$	84,155		$	89,530		$	80,841
Provision for loan losses		7,000			12,700			14,500			26,700
Loan charge-offs		(8,306	)		(8,297	)		(16,948	)		(20,195	)
Loan recoveries		1,365			944			2,651			2,156
Net loan charge-offs		(6,941	)		(7,353	)		(14,297	)		(18,039	)
Balance at end of period	$	89,733		$	89,502		$	89,733		$	89,502

The following schedule presents, by loan portfolio segment, the changes in the allowance for the three and six months ended June 30, 2011 and details regarding the balance in the allowance and the recorded investment in loans at June 30, 2011 by impairment evaluation method.

	Commercial			Consumer
	Loan			Loan
	Portfolio			Portfolio			Unallocated			Total
				(In thousands)
Changes in allowance for loan losses for the three months ended June 30, 2011:
Beginning balance	$	57,526		$	27,417		$	4,731		$	89,674
Provision for loan losses		5,395			4,458			(2,853	)		7,000
Charge-offs		(5,276	)		(3,030	)		—			(8,306	)
Recoveries		927			438			—			1,365
Ending balance	$	58,572		$	29,283		$	1,878		$	89,733
Changes in allowance for loan losses for the six months ended June 30, 2011:
Beginning balance	$	59,443		$	27,338		$	2,749		$	89,530
Provision for loan losses		9,090			6,281			(871	)		14,500
Charge-offs		(11,190	)		(5,758	)		—			(16,948	)
Recoveries		1,229			1,422			—			2,651
Ending balance	$	58,572		$	29,283		$	1,878		$	89,733
Allowance for loan losses balance at June 30, 2011 attributable to:
Loans individually evaluated for impairment	$	10,876		$	745		$	—		$	11,621
Loans collectively evaluated for impairment		47,696			28,538			1,878			78,112
Loans acquired with deteriorated credit quality(1)		—			—			—			—
Total	$	58,572		$	29,283		$	1,878		$	89,733
Recorded investment (loan balance) at June 30, 2011:
Loans individually evaluated for impairment	$	98,211		$	22,156		$	—		$	120,367
Loans collectively evaluated for impairment		1,506,869			1,597,943			—			3,104,812
Loans acquired with deteriorated credit quality(1)		445,281			77,550			—			522,831
Total	$	2,050,361		$	1,697,649		$	—		$	3,748,010

The following presents, by loan portfolio segment, details regarding the balance in the allowance and the recorded investment in loans at December 31, 2010 by impairment evaluation method.

	Commercial		Consumer
	Loan		Loan
	Portfolio		Portfolio		Unallocated		Total
			(In thousands)
Allowance for loan losses balance at December 31, 2010 attributable to:
Loans individually evaluated for impairment	$	14,966	$	806	$	—	$	15,772
Loans collectively evaluated for impairment		44,477		26,532		2,749		73,758
Loans acquired with deteriorated credit quality(1)		—		—		—		—
Total	$	59,443	$	27,338	$	2,749	$	89,530
Recorded investment (loan balance) at December 31, 2010:
Loans individually evaluated for impairment	$	101,250	$	22,302	$	—	$	123,552
Loans collectively evaluated for impairment		1,469,251		1,536,595		—		3,005,846
Loans acquired with deteriorated credit quality(1)		468,087		84,177		—		552,264
Total	$	2,038,588	$	1,643,074	$	—	$	3,681,662

(1) Loans acquired with deteriorated credit quality and loans to which the Corporation elected to apply ASC 310-30 by analogy were originally recorded at fair value at the acquisition date and the risk of credit loss was recognized at that date based on estimates of expected cash flows. There have been no material changes in expected cash flows since the acquisition date.

An allowance related to acquired loans was not required at June 30, 2011, December 31, 2010 and June 30, 2010 due to no material changes in expected cash flows since the date of acquisition.