Loans

3 Months Ended

Mar. 31, 2012

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 and lines of credit 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 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 March 31, 2012 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 acquiring automobiles, recreational vehicles and boats. These loans consist of relatively small amounts that are spread across many individual borrowers.

Home equity — Loans and lines of credit 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:

	March 31, 2012		December 31, 2011		March 31, 2011
	(In thousands)
Commercial loan portfolio:
Commercial	$	903,935	$	895,150	$	821,115
Real estate commercial		1,095,793		1,071,999		1,074,842
Real estate construction		56,906		73,355		88,916
Land development		44,251		44,821		50,523
Subtotal		2,100,885		2,085,325		2,035,396
Consumer loan portfolio:
Real estate residential		861,301		861,716		809,085
Consumer installment		480,622		484,058		495,837
Home equity		400,290		400,186		342,198
Subtotal		1,742,213		1,745,960		1,647,120
Total loans	$	3,843,098	$	3,831,285	$	3,682,516

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 commercial loan portfolio 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 $1.5 million and up to $3.5 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 ranging in amounts from $1.0 million to $5.0 million, depending on risk rating and credit action required. A directors’ loan committee, consisting of ten members of the board of directors, including the chief executive officer, and the senior credit officer, meets bi-weekly to consider loans ranging in amounts from $5.0 million to $10.0 million, and certain loans under $5.0 million depending on a loan’s risk rating and credit action required. Loans over $10.0 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. The Corporation’s consumer loan portfolio has a centralized approval process which utilizes 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; resulting in repossession or foreclosure if payments are not brought current. 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 ongoing 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 for loans in the commercial loan portfolio.

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 through 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 through 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 not available; 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 through 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 higher-risk credits than loans graded 1 through 5 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 through 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 March 31, 2012, December 31, 2011 and March 31, 2011:

	Commercial		Real Estate Commercial		Real Estate Construction		Land Development		Total
	(In thousands)
March 31, 2012
Originated Portfolio:
Risk Grades 1-5	$	715,244	$	729,709	$	38,133	$	16,782	$	1,499,868
Risk Grade 6		23,995		31,818		—		4,119		59,932
Risk Grade 7		23,119		41,963		539		6,799		72,420
Risk Grade 8		10,836		43,319		61		2,426		56,642
Risk Grade 9		607		3,551		—		1,322		5,480
Subtotal		773,801		850,360		38,733		31,448		1,694,342
Acquired Portfolio:
Risk Grades 1-5		109,109		219,944		18,173		9,304		356,530
Risk Grade 6		11,529		14,149		—		—		25,678
Risk Grade 7		2,559		10,284		—		412		13,255
Risk Grade 8		6,937		1,056		—		3,087		11,080
Risk Grade 9		—		—		—		—		—
Subtotal		130,134		245,433		18,173		12,803		406,543
Total	$	903,935	$	1,095,793	$	56,906	$	44,251	$	2,100,885
December 31, 2011
Originated Portfolio:
Risk Grades 1-5	$	706,040	$	692,193	$	54,029	$	14,791	$	1,467,053
Risk Grade 6		20,531		29,788		287		6,874		57,480
Risk Grade 7		26,238		48,648		—		2,400		77,286
Risk Grade 8		9,828		40,130		—		4,593		54,551
Risk Grade 9		898		4,308		—		1,597		6,803
Subtotal		763,535		815,067		54,316		30,255		1,663,173
Acquired Portfolio:
Risk Grades 1-5		111,846		231,669		18,883		8,358		370,756
Risk Grade 6		9,990		14,346		—		1,277		25,613
Risk Grade 7		3,101		8,556		—		596		12,253
Risk Grade 8		6,678		2,361		156		4,335		13,530
Risk Grade 9		—		—		—		—		—
Subtotal		131,615		256,932		19,039		14,566		422,152
Total	$	895,150	$	1,071,999	$	73,355	$	44,821	$	2,085,325
March 31, 2011
Originated Portfolio:
Risk Grades 1-5	$	616,142	$	664,937	$	66,440	$	15,457	$	1,362,976
Risk Grade 6		26,058		28,772		53		8,046		62,929
Risk Grade 7		18,413		47,186		196		314		66,109
Risk Grade 8		15,329		58,032		—		6,993		80,354
Risk Grade 9		343		1,899		—		2,421		4,663
Subtotal		676,285		800,826		66,689		33,231		1,577,031
Acquired Portfolio:
Risk Grades 1-5		123,985		247,395		22,003		12,383		405,766
Risk Grade 6		6,552		12,548		—		—		19,100
Risk Grade 7		7,893		10,688		—		570		19,151
Risk Grade 8		6,368		3,385		224		4,339		14,316
Risk Grade 9		32		—		—		—		32
Subtotal		144,830		274,016		22,227		17,292		458,365
Total	$	821,115	$	1,074,842	$	88,916	$	50,523	$	2,035,396

The Corporation evaluates the credit quality of loans in the consumer loan portfolio based on the performing or nonperforming status of the loan. Loans in the consumer loan portfolio that are performing in accordance with original contractual terms and are less than 90 days past due and accruing interest are considered to be in a performing status, while those that are not performing in accordance with original contractual terms and are more than 90 days past due are considered to be in a nonperforming status. Loans in the consumer loan portfolio that are reported as TDRs are considered in a nonperforming status until they meet the Corporation’s definition of a performing TDR, at which time they are considered in a performing status. The following schedule presents the recorded investment of loans in the consumer loan portfolio based on loans in a performing status and loans in a nonperforming status at March 31, 2012, December 31, 2011 and March 31, 2011:

	Real  Estate Residential		Consumer Installment		Home Equity		Total Consumer
	(In thousands)
March 31, 2012
Originated Loans:
Performing	$	824,323	$	476,610	$	350,916	$	1,651,849
Nonperforming		18,511		1,278		4,299		24,088
Subtotal		842,834		477,888		355,215		1,675,937
Acquired Loans:
Performing		17,459		2,734		44,571		64,764
Nonperforming		1,008		—		504		1,512
Subtotal		18,467		2,734		45,075		66,276
Total	$	861,301	$	480,622	$	400,290	$	1,742,213
December 31, 2011
Originated Loans:
Performing	$	818,044	$	479,237	$	349,850	$	1,647,131
Nonperforming		22,708		1,707		3,783		28,198
Subtotal		840,752		480,944		353,633		1,675,329
Acquired Loans:
Performing		19,387		3,114		46,091		68,592
Nonperforming		1,577		—		462		2,039
Subtotal		20,964		3,114		46,553		70,631
Total	$	861,716	$	484,058	$	400,186	$	1,745,960
March 31, 2011
Originated Loans:
Performing	$	745,580	$	487,014	$	289,137	$	1,521,731
Nonperforming		37,862		2,784		4,081		44,727
Subtotal		783,442		489,798		293,218		1,566,458
Acquired Loans:
Performing		24,903		6,039		48,695		79,637
Nonperforming		740		—		285		1,025
Subtotal		25,643		6,039		48,980		80,662
Total	$	809,085	$	495,837	$	342,198	$	1,647,120

Nonperforming Loans

A summary of nonperforming loans follows:

	March 31, 2012		December 31, 2011		March 31, 2011
	(In thousands)
Nonaccrual loans:
Commercial	$	11,443	$	10,726	$	15,672
Real estate commercial		46,870		44,438		59,931
Real estate construction and land development		3,809		6,190		9,414
Real estate residential		12,687		12,573		15,505
Consumer installment and home equity		4,344		4,467		5,774
Total nonaccrual loans		79,153		78,394		106,296
Accruing loans contractually past due 90 days or more as to interest or principal payments:
Commercial		1,005		1,381		455
Real estate commercial		75		374		459
Real estate construction and land development		—		287		—
Real estate residential		333		752		191
Consumer installment and home equity		1,233		1,023		1,091
Total accruing loans contractually past due 90 days or more as to interest or principal payments		2,646		3,817		2,196
Nonperforming TDRs:
Commercial loan portfolio		11,258		14,675		15,201
Consumer loan portfolio		5,491		9,383		22,166
Total nonperforming TDRs		16,749		24,058		37,367
Total nonperforming loans	$	98,548	$	106,269	$	145,859

The Corporation’s nonaccrual loans at March 31, 2012, December 31, 2011 and March 31, 2011 included $38.6 million, $41.8 million and $58.7 million, respectively, of modified loans that were not reported as TDRs.

Impaired Loans

The following schedule presents impaired loans by classes of loans at March 31, 2012, December 31, 2011 and March 31, 2011:

	Recorded Investment		Unpaid Principal Balance		Related Valuation Allowance
	(In thousands)
March 31, 2012
Impaired loans with a valuation allowance:
Commercial	$	7,039	$	7,980	$	1,936
Real estate commercial		22,714		23,450		6,913
Land development		1,158		1,164		328
Real estate residential		24,147		24,147		710
Subtotal		55,058		56,741		9,887
Impaired loans with no related valuation allowance:
Commercial		19,832		28,011		—
Real estate commercial		38,884		52,659		—
Real estate construction		61		61		—
Land development		7,708		12,739		—
Real estate residential		12,687		12,687		—
Consumer installment		1,278		1,278		—
Home equity		3,066		3,066		—
Subtotal		83,516		110,501		—
Total impaired loans:
Commercial		26,871		35,991		1,936
Real estate commercial		61,598		76,109		6,913
Real estate construction		61		61		—
Land development		8,866		13,903		328
Real estate residential		36,834		36,834		710
Consumer installment		1,278		1,278		—
Home equity		3,066		3,066		—
Total	$	138,574	$	167,242	$	9,887
December 31, 2011
Impaired loans with a valuation allowance:
Commercial	$	6,362	$	7,650	$	1,480
Real estate commercial		20,050		21,370		6,775
Land development		902		934		327
Real estate residential		25,012		25,012		704
Subtotal		52,326		54,966		9,286
Impaired loans with no related valuation allowance:
Commercial		19,559		29,349		—
Real estate commercial		40,953		54,249		—
Real estate construction		156		934		—
Land development		10,187		15,788		—
Real estate residential		12,573		12,573		—
Consumer installment		1,707		1,707		—
Home equity		2,760		2,760		—
Subtotal		87,895		117,360		—
Total impaired loans:
Commercial		25,921		36,999		1,480
Real estate commercial		61,003		75,619		6,775
Real estate construction		156		934		—
Land development		11,089		16,722		327
Real estate residential		37,585		37,585		704
Consumer installment		1,707		1,707		—
Home equity		2,760		2,760		—
Total	$	140,221	$	172,326	$	9,286
March 31, 2011
Impaired loans with a valuation allowance:
Commercial	$	7,657	$	8,425	$	2,205
Real estate commercial		28,133		30,505		8,029
Land development		2,133		2,150		942
Real estate residential		22,166		22,166		770
Subtotal		60,089		63,246		11,946
Impaired loans with no related valuation allowance:
Commercial		23,179		33,812		—
Real estate commercial		45,020		59,765		—
Real estate construction		224		1,339		—
Land development		11,620		17,190		—
Real estate residential		15,505		15,505		—
Consumer installment		2,784		2,784		—
Home equity		2,990		2,990		—
Subtotal		101,322		133,385		—
Total impaired loans:
Commercial		30,836		42,237		2,205
Real estate commercial		73,153		90,270		8,029
Real estate construction		224		1,339		—
Land development		13,753		19,340		942
Real estate residential		37,671		37,671		770
Consumer installment		2,784		2,784		—
Home equity		2,990		2,990		—
Total	$	161,411	$	196,631	$	11,946

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 $28.7 million, $32.1 million and $35.2 million at March 31, 2012, December 31, 2011 and March 31, 2011, respectively, includes confirmed losses (partial charge-offs) of $19.9 million, $21.7 million and $23.3 million, respectively, and fair value discount adjustments of $8.8 million, $10.4 million and $11.9 million, respectively.

The following schedule presents information related to impaired loans for the three months ended March 31, 2012 and 2011:

	Three Months Ended March 31, 2012				Three Months Ended March 31, 2011
	Average Recorded Investment		Interest  Income Recognized While on Impaired Status		Average Recorded Investment		Interest  Income Recognized While on Impaired Status
	(In thousands)
Commercial	$	26,096	$	174	$	32,745	$	325
Real estate commercial		62,015		228		74,332		244
Real estate construction		64		—		236		15
Land development		7,727		72		14,201		89
Real estate residential		37,629		393		36,185		237
Consumer installment		1,538		—		2,584		—
Home equity		2,824		—		2,799		—
Total	$	137,893	$	867	$	163,082	$	910

Impaired loans included $15.5 million, $17.4 million and $17.7 million at March 31, 2012, December 31, 2011 and March 31, 2011, respectively, of acquired loans that were not performing in accordance with original contractual terms. These loans are not reported as nonperforming loans, as a market yield adjustment was recognized on these loans at acquisition that is being amortized into interest income. Impaired loans also include $27.2 million and $20.4 million at March 31, 2012 and December 31, 2011, respectively, of performing TDRs.

The following schedule presents the aging status of the recorded investment in loans by classes of loans at March 31, 2012, December 31, 2011 and March 31, 2011:

	31-60 Days Past Due		61-89 Days Past Due		Accruing Loans Past Due 90 Days or More		Nonaccrual Loans		Total Past Due		Current		Total Loans
	(In thousands)
March 31, 2012
Originated Portfolio:
Commercial	$	3,655	$	1,793	$	1,005	$	11,443	$	17,896	$	755,905	$	773,801
Real estate commercial		4,632		4,436		75		46,870		56,013		794,347		850,360
Real estate construction		—		—		—		61		61		38,672		38,733
Land development		—		—		—		3,748		3,748		27,700		31,448
Real estate residential		2,039		1,314		333		12,687		16,373		826,461		842,834
Consumer installment		2,519		410		—		1,278		4,207		473,681		477,888
Home equity		1,514		305		1,233		3,066		6,118		349,097		355,215
Total	$	14,359	$	8,258	$	2,646	$	79,153	$	104,416	$	3,265,863	$	3,370,279
Acquired Portfolio:
Commercial	$	—	$	150	$	7,147	$	—	$	7,297	$	122,837	$	130,134
Real estate commercial		—		—		3,474		—		3,474		241,959		245,433
Real estate construction		—		—		—		—		—		18,173		18,173
Land development		—		—		3,362		—		3,362		9,441		12,803
Real estate residential		85		—		1,008		—		1,093		17,374		18,467
Consumer installment		17		3		—		—		20		2,714		2,734
Home equity		98		43		504		—		645		44,430		45,075
Total	$	200	$	196	$	15,495	$	—	$	15,891	$	456,928	$	472,819
December 31, 2011
Originated Portfolio:
Commercial	$	5,207	$	6,268	$	1,381	$	10,726	$	23,582	$	739,953	$	763,535
Real estate commercial		9,967		3,241		374		44,438		58,020		757,047		815,067
Real estate construction		—		—		287		—		287		54,029		54,316
Land development		—		—		—		6,190		6,190		24,065		30,255
Real estate residential		5,591		76		752		12,573		18,992		821,760		840,752
Consumer installment		3,449		1,174		—		1,707		6,330		474,614		480,944
Home equity		2,038		408		1,023		2,760		6,229		347,404		353,633
Total	$	26,252	$	11,167	$	3,817	$	78,394	$	119,630	$	3,218,872	$	3,338,502
Acquired Portfolio:
Commercial	$	394	$	—	$	7,808	$	—	$	8,202	$	123,413	$	131,615
Real estate commercial		1,820		—		2,592		—		4,412		252,520		256,932
Real estate construction		—		—		156		—		156		18,883		19,039
Land development		—		—		4,780		—		4,780		9,786		14,566
Real estate residential		288		—		1,577		—		1,865		19,099		20,964
Consumer installment		49		11		—		—		60		3,054		3,114
Home equity		641		262		462		—		1,365		45,188		46,553
Total	$	3,192	$	273	$	17,375	$	—	$	20,840	$	471,943	$	492,783
March 31, 2011
Originated Portfolio:
Commercial	$	6,630	$	1,783	$	455	$	15,672	$	24,540	$	651,745	$	676,285
Real estate commercial		9,637		4,430		459		59,931		74,457		726,369		800,826
Real estate construction		292		—		—		—		292		66,397		66,689
Land development		—		—		—		9,414		9,414		23,817		33,231
Real estate residential		7,602		3,619		191		15,505		26,917		756,525		783,442
Consumer installment		4,973		1,043		—		2,784		8,800		480,998		489,798
Home equity		2,682		1,229		1,091		2,990		7,992		285,226		293,218
Total	$	31,816	$	12,104	$	2,196	$	106,296	$	152,412	$	2,991,077	$	3,143,489
Acquired Portfolio:
Commercial	$	70	$	—	$	8,319	$	—	$	8,389	$	136,441	$	144,830
Real estate commercial		314		—		3,840		—		4,154		269,862		274,016
Real estate construction		—		—		224		—		224		22,003		22,227
Land development		—		—		4,339		—		4,339		12,953		17,292
Real estate residential		480		160		740		—		1,380		24,263		25,643
Consumer installment		182		—		—		—		182		5,857		6,039
Home equity		202		—		285		—		487		48,493		48,980
Total	$	1,248	$	160	$	17,747	$	—	$	19,155	$	519,872	$	539,027

Loans Modified Under Troubled Debt Restructurings (TDRs)

The following schedule presents the Corporation’s TDRs at March 31, 2012, December 31, 2011 and March 31, 2011:

	Performing		Nonperforming		Total
	(In thousands)
March 31, 2012
Commercial loan portfolio	$	8,521	$	11,258	$	19,779
Consumer loan portfolio		18,656		5,491		24,147
Total	$	27,177	$	16,749	$	43,926
December 31, 2011
Commercial loan portfolio	$	4,765	$	14,675	$	19,440
Consumer loan portfolio		15,629		9,383		25,012
Total	$	20,394	$	24,058	$	44,452
March 31, 2011
Commercial loan portfolio	$	—	$	15,201	$	15,201
Consumer loan portfolio		—		22,166		22,166
Total	$	—	$	37,367	$	37,367

The following schedule provides information on loans reported as performing and nonperforming TDRs that were modified during the three months ended March 31, 2012 and 2011:

	Three Months Ended March 31, 2012						Three Months Ended March 31, 2011
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
	(Dollars in thousands)
Commercial loan portfolio:
Commercial		5	$	1,262	$	1,262		7	$	1,572	$	1,572
Real estate commercial		5		1,529		1,529		4		1,058		1,058
Land development		1		1,638		1,638		—		—		—
Subtotal — commercial loan portfolio		11		4,429		4,429		11		2,630		2,630
Consumer loan portfolio (real estate residential)		20		3,154		3,061		27		2,154		2,095
Total		31	$	7,583	$	7,490		38	$	4,784	$	4,725

The pre-modification and post-modification recorded investment represents amounts as of the date of loan modification. The difference between the pre-modification and post-modification recorded investment of real estate residential TDRs represents impairment recognized by the Corporation through the provision for loan losses computed based on a loan’s post-modification present value of expected future cash flows discounted at the loan’s original effective interest rate. No provision for loan losses was recognized related to TDRs in the commercial loan portfolio as the Corporation does not expect to incur a loss on these loans based on its assessment of the borrower’s expected cash flows.

The following schedule includes performing and nonperforming TDRs at March 31, 2012, and TDRs that were transferred to nonaccrual status during the three months ended March 31, 2012, for which there was a payment default during the three months ended March 31, 2012, whereby the borrower was past due with respect to principal and/or interest for 90 days or more, and the loan became a TDR during the twelve-month period prior to the default:

	Number  of Loans		Principal Balance  at March 31, 2012
	(Dollars in thousands)
Commercial loan portfolio:
Commercial		1	$	60
Real estate commercial		1		768
Subtotal — commercial loan portfolio		2		828
Consumer loan portfolio (real estate residential)		2		214
Total		4	$	1,042

Allowance for Loan Losses

The following schedule presents, by loan portfolio segment, the changes in the allowance for the three months ended March 31, 2012 and details regarding the balance in the allowance and the recorded investment in loans at March 31, 2012 by impairment evaluation method.

	Commercial Loan Portfolio			Consumer Loan Portfolio			Unallocated		Total
	(In thousands)
Changes in allowance for loan losses for the three months ended March 31, 2012:
Beginning balance	$	55,645		$	29,166		$	3,522	$	88,333
Provision for loan losses		2,037			1,343			1,620		5,000
Charge-offs		(3,379	)		(3,168	)		—		(6,547	)
Recoveries		614			385			—		999
Ending balance	$	54,917		$	27,726		$	5,142	$	87,785
Allowance for loan losses balance at March 31, 2012 attributable to:
Loans individually evaluated for impairment	$	9,177		$	710		$	—	$	9,887
Loans collectively evaluated for impairment		44,140			26,416			5,142		75,698
Loans acquired with deteriorated credit quality		1,600			600			—		2,200
Total	$	54,917		$	27,726		$	5,142	$	87,785
Recorded investment (loan balance) at March 31, 2012:
Loans individually evaluated for impairment	$	81,901		$	24,147		$	—	$	106,048
Loans collectively evaluated for impairment		1,612,441			1,651,790			—		3,264,231
Loans acquired with deteriorated credit quality		406,543			66,276			—		472,819
Total	$	2,100,885		$	1,742,213		$	—	$	3,843,098

The following presents, by loan portfolio segment, details regarding the balance in the allowance and the recorded investment in loans at December 31, 2011 by impairment evaluation method.

	Commercial Loan Portfolio		Consumer Loan Portfolio		Unallocated		Total
	(In thousands)
Allowance for loan losses balance at December 31, 2011 attributable to:
Loans individually evaluated for impairment	$	8,582	$	704	$	—	$	9,286
Loans collectively evaluated for impairment		45,863		28,062		3,522		77,447
Loans acquired with deteriorated credit quality		1,200		400		—		1,600
Total	$	55,645	$	29,166	$	3,522	$	88,333
Recorded investment (loan balance) at December 31, 2011:
Loans individually evaluated for impairment	$	80,794	$	25,012	$	—	$	105,806
Loans collectively evaluated for impairment		1,582,379		1,650,317		—		3,232,696
Loans acquired with deteriorated credit quality		422,152		70,631		—		492,783
Total	$	2,085,325	$	1,745,960	$	—	$	3,831,285

The following schedule presents, by loan portfolio segment, the changes in the allowance for the three months ended March 31, 2011 and details regarding the balance in the allowance and the recorded investment in loans at March 31, 2011 by impairment evaluation method.

	Commercial Loan Portfolio			Consumer Loan Portfolio			Unallocated		Total
	(In thousands)
Changes in allowance for loan losses for the three months ended March 31, 2011:
Beginning balance	$	59,443		$	27,338		$	2,749	$	89,530
Provision for loan losses		3,695			1,823			1,982		7,500
Charge-offs		(5,914	)		(2,728	)		—		(8,642	)
Recoveries		302			984			—		1,286
Ending balance	$	57,526		$	27,417		$	4,731	$	89,674
Allowance for loan losses balance at March 31, 2011 attributable to:
Loans individually evaluated for impairment	$	11,176		$	770		$	—	$	11,946
Loans collectively evaluated for impairment		46,350			26,647			4,731		77,728
Loans acquired with deteriorated credit quality		—			—			—		—
Total	$	57,526		$	27,417		$	4,731	$	89,674
Recorded investment (loan balance) at March 31, 2011:
Loans individually evaluated for impairment	$	100,218		$	22,166		$	—	$	122,384
Loans collectively evaluated for impairment		1,476,813			1,544,292			—		3,021,105
Loans acquired with deteriorated credit quality		458,365			80,662			—		539,027
Total	$	2,035,396		$	1,647,120		$	—	$	3,682,516

At March 31, 2012 and December 31, 2011, the $2.2 million and $1.6 million, respectively, allowance attributable to acquired loans was primarily attributable to one of the acquired loan pools experiencing a decline in expected cash flows. There were no material changes in expected cash flows for the remaining acquired loan pools at March 31, 2012 or December 31, 2011. An allowance related to acquired loans was not required at March 31, 2011 due to no material changes in expected cash flows since the date of acquisition as of that date.