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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments
 12 Months Ended
Dec. 31, 2013
Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments  
Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments

Note 7. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments

        The following is a summary of the major categories of loans:

Loans and Leases

(in thousands)
  December 31,
2013		   December 31,
2012		  

Commercial

   $ 7,404,116   $ 6,211,353  

Commercial real estate mortgages

     3,223,001     2,739,284  

Residential mortgages

     4,554,311     3,962,205  

Real estate construction

     367,004     313,190  

Home equity loans and lines of credit

     709,344     711,750  

Installment

     151,955     142,793  

Lease financing

     760,707     737,720  
           
​ ​ ​ ​ ​ ​ ​ ​

Loans and leases, excluding covered loans

     17,170,438     14,818,295  

Less: Allowance for loan and lease losses

     (302,584 )   (277,888 )
           
​ ​ ​ ​ ​ ​ ​ ​

Loans and leases, excluding covered loans, net

     16,867,854     14,540,407  

Covered loans

     716,911     1,031,004  

Less: Allowance for loan losses

     (15,922 )   (44,781 )
           
​ ​ ​ ​ ​ ​ ​ ​

Covered loans, net

     700,989     986,223  
           
​ ​ ​ ​ ​ ​ ​ ​

Total loans and leases

   $ 17,887,349   $ 15,849,299  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

Total loans and leases, net

   $ 17,568,843   $ 15,526,630  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

        The loan amounts above include unamortized fees, net of deferred costs, of $2.3 million and $5.9 million as of December 31, 2013 and 2012, respectively.

        In the normal course of business, the Bank makes loans to executive officers and directors and to companies and individuals affiliated with or guaranteed by officers and directors of the Company and the Bank. These loans were made in the ordinary course of business at rates and terms no more favorable than those offered to others with a similar credit standing. The aggregate dollar amounts of these loans were $122.4 million and $87.9 million at December 31, 2013 and 2012, respectively. During 2013, new loans and advances totaled $132.0 million and repayments totaled $97.5 million. Interest income recognized on these loans amounted to $3.4 million, $2.2 million and $2.6 million during 2013, 2012 and 2011, respectively. At December 31, 2013, none of these loans was past due or on nonaccrual status. Based on analysis of information presently known to management about the loans to officers and directors and their affiliates, management believes all have the ability to comply with the present loan repayment terms.

        Concentrations of credit risk arise when a number of clients are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although, the Company's lending activities are predominantly in California, and to a lesser extent, New York and Nevada, the Company has various specialty lending businesses that lend to businesses located throughout the United States of America. Excluding covered loans, at December 31, 2013, California represented 76 percent of total loans outstanding and New York and Nevada represented 8 percent and 2 percent, respectively. The remaining 14 percent of total loans outstanding represented other states. Although the Company has a diversified loan portfolio, a substantial portion of the loan portfolio and credit performance depends on the economic stability of Southern California. Credit performance also depends, to a lesser extent, on economic conditions in the San Francisco Bay area, New York and Nevada.

        Within the Company's covered loan portfolio at December 31, 2013, the five states with the largest concentration were California (35 percent), Texas (12 percent), Nevada (7 percent), Arizona (5 percent) and Ohio (5 percent). The remaining 36 percent of total covered loans outstanding represented other states.

        The Company has pledged eligible residential mortgages, multifamily loans, equity lines of credit and commercial loans totaling $6.90 billion as collateral for its borrowing facility at the FHLB.

Covered Loans

        Covered loans represent loans acquired from the FDIC that are subject to loss-sharing agreements. Covered loans were $716.9 million at December 31, 2013 and $1.03 billion at December 31, 2012. Covered loans, net of allowance for loan losses, were $701.0 million at December 31, 2013 and $986.2 million at December 31, 2012.

        The following is a summary of the major categories of covered loans:

(in thousands)
  December 31,
2013		   December 31,
2012		  

Commercial

   $ 10,009   $ 10,561  

Commercial real estate mortgages

     666,628     931,758  

Residential mortgages

     4,976     5,652  

Real estate construction

     31,184     78,554  

Home equity loans and lines of credit

     3,695     3,790  

Installment

     419     689  
           
​ ​ ​ ​ ​ ​ ​ ​

Covered loans

     716,911     1,031,004  

Less: Allowance for loan losses

     (15,922 )   (44,781 )
           
​ ​ ​ ​ ​ ​ ​ ​

Covered loans, net

   $ 700,989   $ 986,223  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

        The following table provides information on covered loans and loss-sharing terms by acquired entity:

(in thousands)
  Imperial
Capital
Bank		   1st Pacific
Bank		   Sun West
Bank		   Nevada
Commerce
Bank		   Total  

Carrying value of covered loans as of:

                                

December 31, 2013

   $ 630,754   $ 40,110   $ 18,761   $ 27,286   $ 716,911  

December 31, 2012

   $ 893,031   $ 70,240   $ 34,803   $ 32,930   $ 1,031,004  

Expiration date of FDIC loss sharing:

    
 		    
 		    
 		    
 		    
 		  

Commercial (1)

     12/31/2016     6/30/2015     6/30/2015     6/30/2016        

Residential

     12/31/2019     5/30/2020     5/30/2020     4/30/2021        

Termination date of FDIC loss-sharing agreements:

    
 		    
 		    
 		    
 		    
 		  

Commercial (1)

     12/19/2017     5/8/2018     5/29/2018     6/30/2019        

Residential

     12/31/2019     5/30/2020     5/30/2020     4/30/2021        
(1)
The Company is subject to sharing 80% of its recoveries with the FDIC up to the termination dates of the commercial loss-sharing agreements.

        The Company evaluated the acquired loans from its FDIC-assisted acquisitions and concluded that all loans, with the exception of a small population of acquired loans, would be accounted for under ASC 310-30. Loans are accounted for under ASC 310-30 when there is evidence of credit deterioration since origination and for which it is probable, at acquisition, that the Company would be unable to collect all contractually required payments. Interest income is recognized on all acquired impaired loans through accretion of the difference between the carrying amount of the loans and their expected cash flows.

        The excess of cash flows expected to be collected over the carrying value of the underlying acquired impaired loans is referred to as the accretable yield. This amount is not reported in the consolidated balance sheets, but is accreted into interest income at a level yield over the remaining estimated lives of the underlying pools of loans. Changes in the accretable yield for acquired impaired loans were as follows for the years ended December 31, 2013 and 2012:

 
   For the year ended
December 31,		  
(in thousands)
  2013   2012  

Balance, beginning of period

   $ 295,813   $ 436,374  

Accretion

     (61,477 )   (79,839 )

Reclassifications from nonaccretable yield

     36,091     11,664  

Disposals and other

     (51,409 )   (72,386 )
           
​ ​ ​ ​ ​ ​ ​ ​

Balance, end of period

   $ 219,018   $ 295,813  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

        The factors that most significantly affect estimates of cash flows expected to be collected, and accordingly the accretable yield balance, include: (i) changes in credit assumptions, including both credit loss amounts and timing; (ii) changes in prepayment assumptions; and (iii) changes in interest rates for variable-rate loans. Reclassifications between accretable yield and nonaccretable yield may vary from period to period as the Company periodically updates its cash flow projections. The reclassification of nonaccretable yield to accretable yield during 2013 was principally driven by positive changes in cash flows, resulting mainly from changes in credit assumptions.

        The Company recorded an indemnification asset related to its FDIC-assisted acquisitions, which represents the present value of the expected reimbursement from the FDIC for expected losses on acquired loans, OREO and unfunded commitments. The FDIC indemnification asset from all FDIC-assisted acquisitions was $89.2 million at December 31, 2013 and $150.0 million at December 31, 2012.

Credit Quality on Loans and Leases, Excluding Covered Loans

Allowance for Loan and Lease Losses and Reserve for Off-Balance Sheet Credit Commitments

        The following is a summary of activity in the allowance for loan and lease losses and period-end recorded investment balances of loans evaluated for impairment, excluding covered loans, for the years ended December 31, 2013 and 2012. Activity is provided by loan portfolio segment which is consistent with the Company's methodology for determining the allowance for loan and lease losses.

(in thousands)
  Commercial (1)   Commercial
Real Estate
Mortgages		   Residential
Mortgages		   Real Estate
Construction		   Home Equity
Loans and
Lines of Credit		   Installment   Unallocated   Total  

Year ended December 31, 2013

                                                  

Allowance for loan and lease losses:

    
 		    
 		    
 		    
 		    
 		    
 		    
 		    
 		  

Beginning balance

   $ 104,731   $ 48,901   $ 10,558   $ 11,784   $ 7,283   $ 1,858   $ 92,773   $ 277,888  

Provision (reduction) for credit losses (2)

     (6,546 )   1,301     941     (18,386 )   (804 )   (1,233 )   15,620     (9,107 )

Charge-offs

     (8,072 )   (1,315 )   (106 )   (100 )   (500 )   (374 )   —     (10,467 )

Recoveries

     26,990     1,791     147     13,053     698     1,591     —     44,270  
                                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net recoveries (charge-offs)

     18,918     476     41     12,953     198     1,217     —     33,803  
                                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Ending balance

   $ 117,103   $ 50,678   $ 11,540   $ 6,351   $ 6,677   $ 1,842   $ 108,393   $ 302,584  
                                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                                   

Ending balance of allowance:

                                                  

Individually evaluated for impairment

   $ 1,961   $ 586   $ 478   $ —   $ —   $ —   $ —   $ 3,025  

Collectively evaluated for impairment

     115,142     50,092     11,062     6,351     6,677     1,842     108,393     299,559  

Loans and leases, excluding covered loans

    
 		    
 		    
 		    
 		    
 		    
 		    
 		    
 		  

Ending balance of loans and leases:

                                                  

Loans and leases, excluding covered loans

   $ 8,164,823   $ 3,223,001   $ 4,554,311   $ 367,004   $ 709,344   $ 151,955   $ —   $ 17,170,438  

Individually evaluated for impairment

     31,857     38,154     9,211     19,097     2,329     16     —     100,664  

Collectively evaluated for impairment

     8,132,966     3,184,847     4,545,100     347,907     707,015     151,939     —     17,069,774  

Year ended December 31, 2012

    
 		    
 		    
 		    
 		    
 		    
 		    
 		    
 		  

Allowance for loan and lease losses:

    
 		    
 		    
 		    
 		    
 		    
 		    
 		    
 		  

Beginning balance

   $ 83,514   $ 48,451   $ 14,122   $ 20,155   $ 8,077   $ 1,972   $ 86,266   $ 262,557  

Provision (reduction) for credit losses (2)

     10,776     534     (1,985 )   (6,911 )   369     (1,030 )   6,507     8,260  

Charge-offs

     (24,407 )   (1,611 )   (2,402 )   (9,769 )   (1,258 )   (1,066 )   —     (40,513 )

Recoveries

     34,848     1,527     823     8,309     95     1,982     —     47,584  
                                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net recoveries (charge-offs)

     10,441     (84 )   (1,579 )   (1,460 )   (1,163 )   916     —     7,071  
                                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Ending balance

   $ 104,731   $ 48,901   $ 10,558   $ 11,784   $ 7,283   $ 1,858   $ 92,773   $ 277,888  
                                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                                   

Ending balance of allowance:

                                                  

Individually evaluated for impairment

   $ 952   $ 1,326   $ 9   $ —   $ 116   $ —   $ —   $ 2,403  

Collectively evaluated for impairment

     103,779     47,575     10,549     11,784     7,167     1,858     92,773     275,485  

Loans and leases, excluding covered loans

    
 		    
 		    
 		    
 		    
 		    
 		    
 		    
 		  

Ending balance of loans and leases:

                                                  

Loans and leases, excluding covered loans

   $ 6,949,073   $ 2,739,284   $ 3,962,205   $ 313,190   $ 711,750   $ 142,793   $ —   $ 14,818,295  

Individually evaluated for impairment

     26,277     53,085     8,810     45,510     4,461     449     —     138,592  

Collectively evaluated for impairment

     6,922,796     2,686,199     3,953,395     267,680     707,289     142,344     —     14,679,703  
(1)
Includes lease financing loans.

(2)
Provision for credit losses in the allowance rollforward for 2013 includes total transfers to the reserve for off-balance sheet credit commitments of $9.1 million. Provision for credit losses in the allowance rollforward for 2012 includes total provision expense of $10.0 million, net of total transfers to the reserve for off-balance sheet credit commitments of $1.7 million.

        Off-balance sheet credit exposures include loan commitments and letters of credit. The following table provides a summary of activity in the reserve for off-balance sheet credit commitments for the years ended December 31, 2013 and 2012:

 
   For the year ended December 31,  
(in thousands)
  2013   2012  

Balance, beginning of the year

   $ 24,837   $ 23,097  

Transfers from allowance for loan and lease losses

     9,107     1,740  
           
​ ​ ​ ​ ​ ​ ​ ​

Balance, end of the year

   $ 33,944   $ 24,837  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

Impaired Loans and Leases

        Information on impaired loans, excluding covered loans, at December 31, 2013 and 2012 is provided in the following tables:

(in thousands)
  Recorded
Investment		   Unpaid
Contractual
Principal
Balance		   Related
Allowance		   Average
Recorded
Investment		   Interest
Income
Recognized		  

Year ended December 31, 2013

                                

With no related allowance recorded:

                                

Commercial

   $ 17,721   $ 18,041   $ —   $ 21,611   $ 1,664  

Commercial real estate mortgages

     32,770     37,555     —     33,002     867  

Residential mortgages:

                                

Fixed

     2,135     2,295     —     2,715     123  

Variable

     5,402     5,783     —     4,330     55  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total residential mortgages

     7,537     8,078     —     7,045     178  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Real estate construction:

                                

Construction

     5,485     6,766     —     15,421     927  

Land

     13,612     26,928     —     15,927     189  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total real estate construction

     19,097     33,694     —     31,348     1,116  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Home equity loans and lines of credit        

     2,329     3,375     —     2,728     —  

Installment:

                                

Consumer

     16     24     —     93     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total installment

     16     24     —     93     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total with no related allowance

   $ 79,470   $ 100,767   $ —   $ 95,827   $ 3,825  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

With an allowance recorded:

                                

Commercial

   $ 14,136   $ 18,156   $ 1,961   $ 8,871   $ 54  

Commercial real estate mortgages

     5,384     5,764     586     9,891     182  

Residential mortgages:

                                

Fixed

     —     —     —     93     —  

Variable

     1,674     1,687     478     1,008     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total residential mortgages

     1,674     1,687     478     1,101     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Real estate construction:

                                

Land

     —     —     —     2,570     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total real estate construction

     —     —     —     2,570     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Home equity loans and lines of credit        

     —     —     —     180     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total with an allowance

   $ 21,194   $ 25,607   $ 3,025   $ 22,613   $ 236  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

Total impaired loans by type:

                                

Commercial

   $ 31,857   $ 36,197   $ 1,961   $ 30,482   $ 1,718  

Commercial real estate mortgages

     38,154     43,319     586     42,893     1,049  

Residential mortgages

     9,211     9,765     478     8,146     178  

Real estate construction

     19,097     33,694     —     33,918     1,116  

Home equity loans and lines of credit        

     2,329     3,375     —     2,908     —  

Installment

     16     24     —     93     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total impaired loans

   $ 100,664   $ 126,374   $ 3,025   $ 118,440   $ 4,061  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       


 

(in thousands)
  Recorded
Investment		   Unpaid
Contractual
Principal
Balance		   Related
Allowance		   Average
Recorded
Investment		   Interest
Income
Recognized		  

Year ended December 31, 2012

                                

With no related allowance recorded:

                                

Commercial

   $ 18,761   $ 24,135   $ —   $ 23,538   $ —  

Commercial real estate mortgages

     42,882     49,110     —     29,190     189  

Residential mortgages:

                                

Fixed

     3,482     3,757     —     3,134     —  

Variable

     4,865     5,437     —     4,981     48  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total residential mortgages

     8,347     9,194     —     8,115     48  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Real estate construction:

                                

Construction

     19,762     33,267     —     27,303     692  

Land

     25,748     41,016     —     23,361     265  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total real estate construction

     45,510     74,283     —     50,664     957  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Home equity loans and lines of credit        

     3,562     4,660     —     4,288     —  

Installment:

                                

Consumer

     449     927     —     531     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total installment

     449     927     —     531     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Lease financing

     —     —     —     6     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total with no related allowance

   $ 119,511   $ 162,309   $ —   $ 116,332   $ 1,194  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

With an allowance recorded:

                                

Commercial

   $ 7,516   $ 8,038   $ 952   $ 10,532   $ —  

Commercial real estate mortgages

     10,203     10,783     1,326     12,765     —  

Residential mortgages:

                                

Fixed

     463     507     9     1,568     —  

Variable

     —     —     —     1,503     4  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total residential mortgages

     463     507     9     3,071     4  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Real estate construction:

                                

Land

     —     —     —     11,760     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total real estate construction

     —     —     —     11,760     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Home equity loans and lines of credit        

     899     965     116     1,112     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total with an allowance

   $ 19,081   $ 20,293   $ 2,403   $ 39,240   $ 4  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

Total impaired loans by type:

                                

Commercial

   $ 26,277   $ 32,173   $ 952   $ 34,070   $ —  

Commercial real estate mortgages

     53,085     59,893     1,326     41,955     189  

Residential mortgages

     8,810     9,701     9     11,186     52  

Real estate construction

     45,510     74,283     —     62,424     957  

Home equity loans and lines of credit        

     4,461     5,625     116     5,400     —  

Installment

     449     927     —     531     —  

Lease financing

     —     —     —     6     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total impaired loans

   $ 138,592   $ 182,602   $ 2,403   $ 155,572   $ 1,198  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

        Effective July 1, 2012, the Company increased the outstanding loan amount under which nonperforming loans are individually evaluated for impairment from $500,000 or greater to $1 million or greater. For borrowers with multiple loans totaling $1 million or more, this threshold is applied at the total relationship level. Loans under $1 million will be measured for impairment using historical loss factors. Loans under $1 million that were previously reported as impaired at June 30, 2012 will continue to be reported as impaired until the collection of principal and interest is no longer in doubt, or the loans are paid or charged-off. At December 31, 2013, impaired loans included $5.1 million of loans previously reported as impaired that are less than $1 million.

        Impaired loans at December 31, 2013 and 2012 included $42.1 million and $48.8 million, respectively, of loans that are on accrual status. With the exception of restructured loans on accrual status and a limited number of loans on cash basis nonaccrual for which the full collection of principal and interest is expected, interest income is not recognized on impaired loans until the principal balance of these loans is paid off.

Troubled Debt Restructured Loans

        The following table provides a summary of loans modified in a troubled debt restructuring during the years ended December 31, 2013 and 2012:

($ in thousands)
  Number of
Contracts		   Pre-Modification
Outstanding
Principal		   Period-End
Outstanding
Principal		   Financial
Effects
(1)		  

Year ended December 31, 2013

                          

Commercial

     14   $ 17,615   $ 9,302   $ 344  

Commercial real estate mortgages

     1     547     524     —  

Residential mortgages:

                          

Fixed

     1     639     628     —  

Home equity loans and lines of credit        

     1     345     —     —  

Installment:

                          

Consumer

     1     24     16     —  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total troubled debt restructured loans

     18   $ 19,170   $ 10,470   $ 344  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Year ended December 31, 2012

                          

Commercial

     20   $ 38,371   $ 19,671   $ 10,528  

Commercial real estate mortgages

     2     15,833     16,287     —  

Residential mortgages:

                          

Fixed

     4     2,233     1,068     485  

Real estate construction:

                          

Construction

     3     14,857     4,633     —  

Land

     1     8,420     7,918     264  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total real estate construction

     4     23,277     12,551     264  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Home equity loans and lines of credit        

     1     256     146     —  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total troubled debt restructured loans

     31   $ 79,970   $ 49,723   $ 11,277  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   
(1)
Financial effects are comprised of charge-offs and specific reserves recognized on TDR loans at modification date.

        The following table provides a summary of TDR loans that subsequently defaulted during the years ended December 31, 2013 and 2012 that had been modified as a troubled debt restructuring during the 12 months prior to their default. A TDR loan is considered to be in default when payments are 90 days or more past due.

 
   Year ended December 31, 2013   Year ended December 31, 2012  
($ in thousands)
  Number of
Contracts		   Period-End
Outstanding
Principal		   Period-End
Specific
Reserve		   Number of
Contracts		   Period-End
Outstanding
Principal		   Period-End
Specific
Reserve		  

Commercial

     4   $ 686   $ —     6   $ 689   $ 300  

Commercial real estate mortgages

     1     524     —     1     13,802     —  

Real estate construction:

                                      

Land

     1     7,002     —     2     420     —  

Home equity loans and lines of credit        

     1     136     —     —     —     —  

Installment:

                                      

Consumer

     1     16     —     —     —     —  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total loans that subsequently defaulted

     8   $ 8,364   $ —     9   $ 14,911   $ 300  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                           

        A restructuring constitutes a troubled debt restructuring when a lender, for reasons related to a borrower's financial difficulties, grants a concession to the borrower it would not otherwise consider. Loans with pre-modification outstanding balances totaling $19.2 million and $80.0 million were modified in troubled debt restructurings during the years ended December 31, 2013 and 2012, respectively. The concessions granted in the restructurings completed in 2013 largely consisted of maturity extensions and interest rate modifications.

        The unpaid principal balance of TDR loans was $52.2 million, before specific reserves of $0.8 million, at December 31, 2013, and $94.9 million, before specific reserves of $1.7 million, at December 31, 2012. The net decrease in TDR loans from the prior year-end was primarily attributable to payments received on existing TDR loans and to the removal of $16.1 million of loans that were restructured in an A/B note structure in 2012 that are no longer reported as TDRs. These decreases were partially offset by the addition of $19.2 million of loans restructured during the year ended December 31, 2013. Loans restructured in an A/B note restructuring are not reported as TDR loans in years after the restructuring if the restructuring agreement specifies an interest rate equal to or greater than the rate the lender was willing to accept at the time of restructuring for a new loan with comparable risk, and the loan is performing based on the terms in the restructuring agreement. In an A/B restructuring, the original note is separated into two notes where the A note represents the portion of the original loan that is expected to be fully paid, and the B note is the portion of the loan that is expected to be uncollectible. The B note is charged-off at the time of restructuring. Loans modified in troubled debt restructurings are impaired loans at the time of restructuring and subject to the same measurement criteria as all other impaired loans.

        During the year ended December 31, 2013, eight loans that had been restructured within the preceding 12 months subsequently defaulted. The defaults were primarily due to missed or late payments. All other TDR loans were performing in accordance with their restructured terms at December 31, 2013. As of December 31, 2013, commitments to lend additional funds on restructured loans totaled $1.1 million.

Past Due and Nonaccrual Loans and Leases

        Loans are considered past due following the date when either interest or principal is contractually due and unpaid. The following tables provide a summary of past due and nonaccrual loans, excluding covered loans, at December 31, 2013 and 2012 based upon the length of time the loans have been past due:

(in thousands)
  30-59 Days
Past Due		   60-89 Days
Past Due		   Greater
Than 90
Days and
Accruing		   Nonaccrual   Total Past
Due and
Nonaccrual
Loans		   Current   Total Loans
and Leases		  

December 31, 2013

                                            

Commercial

   $ 4,450   $ 362   $ —   $ 14,248   $ 19,060   $ 7,385,056   $ 7,404,116  

Commercial real estate mortgages

     1,197     1,633     —     18,449     21,279     3,201,722     3,223,001  

Residential mortgages:

                                            

Fixed

     —     —     379     3,789     4,168     1,436,283     1,440,451  

Variable

     —     —     —     7,872     7,872     3,105,988     3,113,860  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total residential mortgages

     —     —     379     11,661     12,040     4,542,271     4,554,311  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Real estate construction:

                                            

Construction

     —     —     —     5,467     5,467     332,131     337,598  

Land

     —     797     —     13,600     14,397     15,009     29,406  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total real estate construction

     —     797     —     19,067     19,864     347,140     367,004  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Home equity loans and lines of credit

     —     —     74     5,144     5,218     704,126     709,344  

Installment:

                                            

Commercial

     1     —     —     —     1     361     362  

Consumer

     10     7     —     32     49     151,544     151,593  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total installment

     11     7     —     32     50     151,905     151,955  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Lease financing

     2,533     126     —     50     2,709     757,998     760,707  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 8,191   $ 2,925   $ 453   $ 68,651   $ 80,220   $ 17,090,218   $ 17,170,438  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                               

December 31, 2012

                                            

Commercial

   $ 6,207   $ 4,219   $ 602   $ 9,087   $ 20,115   $ 6,191,238   $ 6,211,353  

Commercial real estate mortgages

     16,968     3,249     —     33,198     53,415     2,685,869     2,739,284  

Residential mortgages:

                                            

Fixed

     —     1,969     379     4,902     7,250     1,458,224     1,465,474  

Variable

     —     —     —     4,701     4,701     2,492,030     2,496,731  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total residential mortgages

     —     1,969     379     9,603     11,951     3,950,254     3,962,205  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Real estate construction:

                                            

Construction

     —     —     —     15,067     15,067     239,740     254,807  

Land

     —     859     —     25,815     26,674     31,709     58,383  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total real estate construction

     —     859     —     40,882     41,741     271,449     313,190  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Home equity loans and lines of credit

     3,407     480     —     6,424     10,311     701,439     711,750  

Installment:

                                            

Commercial

     —     —     —     —     —     437     437  

Consumer

     58     35     —     473     566     141,790     142,356  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total installment

     58     35     —     473     566     142,227     142,793  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Lease financing

     2,633     2     —     120     2,755     734,965     737,720  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 29,273   $ 10,813   $ 981   $ 99,787   $ 140,854   $ 14,677,441   $ 14,818,295  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                               

        The following table provides a summary of contractual interest foregone on nonaccrual loans, excluding covered loans, for 2013, 2012 and 2011:

 
   December 31,  
(in thousands)
  2013   2012   2011  

Interest income that would have been recognized had nonaccrual loans performed in accordance with their original terms

   $ 6,013   $ 8,549   $ 15,465  

Less: Interest income recognized on nonaccrual loans on a cash basis

     (1,219 )   (1,446 )   (1,494 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest income foregone on nonaccrual loans

   $ 4,794   $ 7,103   $ 13,971  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

Credit Quality Monitoring

        The Company closely monitors and assesses credit quality and credit risk in the loan and lease portfolio on an ongoing basis. Loan risk classifications are continuously reviewed and updated. The following table provides a summary of the loan and lease portfolio, excluding covered loans, by loan type and credit quality classification as of December 31, 2013 and 2012. Nonclassified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those loans that are classified as substandard or doubtful consistent with regulatory guidelines.

 
   December 31, 2013   December 31, 2012  
(in thousands)
  Nonclassified   Classified   Total   Nonclassified   Classified   Total  

Commercial

   $ 7,258,303   $ 145,813   $ 7,404,116   $ 6,073,459   $ 137,894   $ 6,211,353  

Commercial real estate mortgages

     3,139,707     83,294     3,223,001     2,597,863     141,421     2,739,284  

Residential mortgages:

                                      

Fixed

     1,425,087     15,364     1,440,451     1,449,270     16,204     1,465,474  

Variable

     3,087,636     26,224     3,113,860     2,479,449     17,282     2,496,731  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total residential mortgages

     4,512,723     41,588     4,554,311     3,928,719     33,486     3,962,205  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Real estate construction:

                                      

Construction

     332,131     5,467     337,598     225,577     29,230     254,807  

Land

     15,522     13,884     29,406     28,710     29,673     58,383  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total real estate construction

     347,653     19,351     367,004     254,287     58,903     313,190  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Home equity loans and lines of credit

     687,732     21,612     709,344     685,011     26,739     711,750  

Installment:

                                      

Commercial

     362     —     362     437     —     437  

Consumer

     151,468     125     151,593     141,662     694     142,356  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total installment

     151,830     125     151,955     142,099     694     142,793  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Lease financing

     757,005     3,702     760,707     733,803     3,917     737,720  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 16,854,953   $ 315,485   $ 17,170,438   $ 14,415,241   $ 403,054   $ 14,818,295  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                           

Credit Quality on Covered Loans

        The following is a summary of activity in the allowance for losses on covered loans:

 
   For the year ended December 31,  
(in thousands)
  2013   2012  

Balance, beginning of period

   $ 44,781   $ 64,565  

Provision for losses

     635     45,346  

Net recoveries

     9     —  

Reduction in allowance due to loan removals

     (29,503 )   (65,130 )
           
​ ​ ​ ​ ​ ​ ​ ​

Balance, end of period

   $ 15,922   $ 44,781  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

        The allowance for losses on covered loans was $15.9 million and $44.8 million as of December 31, 2013 and 2012, respectively. The Company recorded provision expense of $0.6 million and $45.3 million on covered loans in 2013 and 2012, respectively. The Company updates its cash flow projections for covered loans accounted for under ASC 310-30 on a quarterly basis, and may recognize provision expense or reversal of its allowance for loan losses as a result of that analysis. The provision expense or reversal of allowance on covered loans is the result of changes in expected cash flows, both amount and timing, due to loan payments and the Company's revised loss and prepayment forecasts. The revisions of the loss forecasts were based on the results of management's review of market conditions, the credit quality of the outstanding covered loans and the analysis of loan performance data since the acquisition of covered loans. The allowance for losses on covered loans is reduced for any loan removals, which occur when a loan has been fully paid-off, fully charged off, sold or transferred to OREO.

        Covered loans accounted for under ASC 310-30 are generally considered accruing and performing loans as the loans accrete interest income over the estimated life of the loan when cash flows are reasonably estimable. Accordingly, acquired impaired loans that are contractually past due are still considered to be accruing and performing loans. If the timing and amount of future cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans and interest income is not recognized until the timing and amount of future cash flows can be reasonably estimated. There were no covered loans that were on nonaccrual status as of December 31, 2013 and December 31, 2012.

        At December 31, 2013, covered loans that were 30 to 89 days delinquent totaled $15.5 million and covered loans that were 90 days or more past due on accrual status totaled $45.7 million. At December 31, 2012, covered loans that were 30 to 89 days delinquent totaled $43.4 million and covered loans that were 90 days or more past due on accrual status totaled $112.4 million.