Loans And Allowance For Loan Losses

3 Months Ended

Mar. 31, 2012

Loans And Allowance For Loan Losses [Abstract]

Loans And Allowance For Loan Losses

2. Loans and Allowance for Loan Losses

Major classifications within the Company's held to maturity loan portfolio at March 31, 2012 and December 31, 2011 are as follows:

(In thousands)	Mar. 31, 2012		Dec. 31, 2011
Commercial:
Business	$	2,920,237	$	2,808,265
Real estate – construction and land	376,642		386,598
Real estate – business	2,203,686		2,180,100
Personal Banking:
Real estate – personal	1,458,467		1,428,777
Consumer	1,113,481		1,114,889
Revolving home equity	448,169		463,587
Consumer credit card	723,759		788,701
Overdrafts	3,530		6,561
Total loans	$	9,247,971	$	9,177,478

At March 31, 2012, loans of $3.1 billion were pledged at the Federal Home Loan Bank as collateral for borrowings and letters of credit obtained to secure public deposits. Additional loans of $1.2 billion were pledged at the Federal Reserve Bank as collateral for discount window borrowings.

Allowance for loan losses    

A summary of the activity in the allowance for loan losses during the three months ended March 31, 2012 and 2011 follows:

	For the Three Months Ended March 31, 2012							For the Three Months Ended March 31, 2011
(In thousands)	Commercial			Personal Banking		Total		Commercial		Personal Banking		Total
Balance at January 1	$	122,497		$	62,035	$	184,532	$	119,946	$	77,592	$	197,538
Provision	(3,198		)	11,363		8,165		13,465		2,324		15,789
Deductions:
Loans charged off	2,528			13,389		15,917		6,364		17,025		23,389
Less recoveries on loans	703			4,049		4,752		1,304		3,296		4,600
Net loans charged off	1,825			9,340		11,165		5,060		13,729		18,789
Balance at March 31	$	117,474		$	64,058	$	181,532	$	128,351	$	66,187	$	194,538

The following table shows the balance in the allowance for loan losses and the related loan balance at March 31, 2012 and December 31, 2011, disaggregated on the basis of impairment methodology. Impaired loans evaluated under ASC 310-10-35 include loans on non-accrual status, which are individually evaluated for impairment, and other impaired loans discussed below and deemed to have similar risk characteristics, which are collectively evaluated. All other loans are collectively evaluated for impairment under ASC 450-20.

(In thousands)	Commercial		Personal    Banking		Total
March 31, 2012
Allowance for loan losses:
Impaired loans	$	5,221	$	4,751	$	9,972
All other loans	112,253		59,307		171,560
Loans outstanding:
Impaired loans	102,005		30,686		132,691
All other loans	5,398,560		3,716,720		9,115,280
December 31, 2011
Allowance for loan losses:
Impaired loans	$	6,668	$	4,090	$	10,758
All other loans	115,829		57,945		173,774
Loans outstanding:
Impaired loans	108,167		31,088		139,255
All other loans	5,266,796		3,771,427		9,038,223

Impaired loans

The table below shows the Company's investment in impaired loans at March 31, 2012 and December 31, 2011. These loans consist of loans on non-accrual status and other restructured loans whose terms have been modified and classified as troubled debt restructurings under ASC 310-40. The restructured loans have been extended to borrowers who are experiencing financial difficulty and who have been granted a concession. They are largely comprised of certain business, construction and business real estate loans classified as substandard. Upon maturity, the loans renewed at interest rates judged not to be market rates for new debt with similar risk, and as a result were classified as troubled debt restructurings. These loans totaled $41.3 million at both March 31, 2012 and December 31, 2011. These restructured loans are performing in accordance with their modified terms, and because the Company believes it probable that all amounts due under the modified terms of the agreements will be collected, interest on these loans is being recognized on an accrual basis. Troubled debt restructurings also include certain credit card loans under various debt management and assistance programs, which totaled $22.5 million at March 31, 2012 and $22.4 million at December 31, 2011.

(In thousands)	Mar. 31, 2012		Dec. 31, 2011
Non-accrual loans	$	68,875	$	75,482
Restructured loans (accruing)	63,816		63,773
Total impaired loans	$	132,691	$	139,255

The following table provides additional information about impaired loans held by the Company at March 31, 2012 and December 31, 2011, segregated between loans for which an allowance for credit losses has been provided and loans for which no allowance has been provided.

(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
March 31, 2012
With no related allowance recorded:
Business	$	16,179	$	20,555	$	—
Real estate – construction and land	18,303		40,607		—
Real estate – business	11,705		14,747		—
Real estate – personal	770		782		—
	$	46,957	$	76,691	$	—
With an allowance recorded:
Business	$	16,833	$	20,030	$	1,566
Real estate – construction and land	25,948		27,629		2,540
Real estate – business	13,037		18,147		1,115
Real estate – personal	7,448		10,194		617
Consumer credit card	22,468		22,468		4,134
	$	85,734	$	98,468	$	9,972
Total	$	132,691	$	175,159	$	9,972
December 31, 2011
With no related allowance recorded:
Business	$	19,759	$	22,497	$	—
Real estate – construction and land	8,391		22,746		—
Real estate – business	6,853		9,312		—
Real estate – personal	793		793		—
	$	35,796	$	55,348	$	—
With an allowance recorded:
Business	$	15,604	$	19,286	$	1,500
Real estate – construction and land	37,387		47,516		2,580
Real estate – business	20,173		24,799		2,588
Real estate – personal	7,867		10,671		795
Consumer credit card	22,428		22,428		3,295
	$	103,459	$	124,700	$	10,758
Total	$	139,255	$	180,048	$	10,758

Total average impaired loans for the three month periods ending March 31, 2012 and 2011 are shown in the table below.

(In thousands)	Commercial		Personal Banking		Total
Average impaired loans:
For the Three Months Ended March 31, 2012
Non-accrual loans	$	67,564	$	7,409	$	74,973
Restructured loans (accruing)	40,226		23,554		63,780
Total	$	107,790	$	30,963	$	138,753
For the Three Months Ended March 31, 2011
Non-accrual loans	$	75,302	$	7,027	$	82,329
Restructured loans (accruing)	42,936		20,528		63,464
Total	$	118,238	$	27,555	$	145,793

The table below shows interest income recognized during the three month periods ending March 31, 2012 and 2011 for impaired loans held at the end of each respective period. This interest relates to accruing restructured loans, as discussed above.

	For the Three Months Ended March 31
(In thousands)	2012		2011
Interest income recognized on impaired loans:
Business	$	105	$	101
Real estate - construction and land	250		260
Real estate - business	54		96
Real estate - personal	14		18
Consumer credit card	326		395
Total	$	749	$	870

Delinquent and non-accrual loans

The following table provides aging information on the Company's past due and accruing loans, in addition to the balances of loans on non-accrual status, at March 31, 2012 and December 31, 2011.

(In thousands)	Current or Less Than 30 Days Past Due		30 – 89 Days Past Due		90 Days Past Due and Still Accruing		Non-accrual		Total
March 31, 2012
Commercial:
Business	$	2,893,883	$	5,430	$	782	$	20,142	$	2,920,237
Real estate – construction and land	341,369		14,068		150		21,055		376,642
Real estate – business	2,168,501		12,892		1,638		20,655		2,203,686
Personal Banking:
Real estate – personal	1,437,273		11,020		3,151		7,023		1,458,467
Consumer	1,101,279		10,511		1,691		—		1,113,481
Revolving home equity	445,990		911		1,268		—		448,169
Consumer credit card	707,328		8,683		7,748		—		723,759
Overdrafts	3,223		307		—		—		3,530
Total	$	9,098,846	$	63,822	$	16,428	$	68,875	$	9,247,971
December 31, 2011
Commercial:
Business	$	2,777,578	$	4,368	$	595	$	25,724	$	2,808,265
Real estate – construction and land	362,592		1,113		121		22,772		386,598
Real estate – business	2,151,822		8,875		29		19,374		2,180,100
Personal Banking:
Real estate – personal	1,406,449		11,671		3,045		7,612		1,428,777
Consumer	1,096,742		15,917		2,230		—		1,114,889
Revolving home equity	461,941		1,003		643		—		463,587
Consumer credit card	769,922		10,484		8,295		—		788,701
Overdrafts	6,173		388		—		—		6,561
Total	$	9,033,219	$	53,819	$	14,958	$	75,482	$	9,177,478

Credit quality

The following table provides information about the credit quality of the Commercial loan portfolio, using the Company's internal rating system as an indicator. The internal rating system is a series of grades reflecting management's risk assessment, based on its analysis of the borrower's financial condition. The "pass" category consists of a range of loan grades that reflect increasing, though still acceptable, risk. Movement of risk through the various grade levels in the "pass" category is monitored for early identification of credit deterioration. The "special mention" rating is attached to loans where the borrower exhibits negative financial trends due to borrower specific or systemic conditions that, if left uncorrected, threaten its capacity to meet its debt obligations. The borrower is believed to have sufficient financial flexibility to react to and resolve its negative financial situation. It is a transitional grade that is closely monitored for improvement or deterioration. The "substandard" rating is applied to loans where the borrower exhibits well-defined weaknesses that jeopardize its continued performance and are of a severity that the distinct possibility of default exists. Loans are placed on "non-accrual" when management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment.

Commercial Loans
(In thousands)	Business		Real  Estate-Construction		Real Estate- Business		Total
March 31, 2012
Pass	$	2,781,156	$	300,425	$	2,033,726	$	5,115,307
Special mention	65,202		6,525		56,097		127,824
Substandard	53,737		48,637		93,208		195,582
Non-accrual	20,142		21,055		20,655		61,852
Total	$	2,920,237	$	376,642	$	2,203,686	$	5,500,565
December 31, 2011
Pass	$	2,669,868	$	304,408	$	1,994,391	$	4,968,667
Special mention	37,460		4,722		52,683		94,865
Substandard	75,213		54,696		113,652		243,561
Non-accrual	25,724		22,772		19,374		67,870
Total	$	2,808,265	$	386,598	$	2,180,100	$	5,374,963

The credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided in the table in the above Delinquency section. In addition, FICO scores are obtained and updated on a quarterly basis for most of the loans in the Personal Banking portfolio. This is a published credit score designed to measure the risk of default by taking into account various factors from a person's financial history. The bank normally obtains a FICO score at the loan's origination and renewal dates, and updates are obtained on a quarterly basis. Excluded from the table below are approximately $221.0 million in personal real estate loans and $140.2 million in consumer loans, or 9.6% of the Personal Banking portfolio, for which FICO scores are not obtained because they are related to commercial activity. For the remainder of loans in the Personal Banking portfolio, the table below shows the percentage of balances outstanding at March 31, 2012 by FICO score.

Personal Banking Loans
	% of Loan Category
	Real Estate - Personal		Consumer		Revolving Home Equity		Consumer Credit Card
March 31, 2012
FICO score:
Under 600	3.3	%	8.5	%	2.5	%	5.2	%
600 - 659	4.7		11.6		5.2		12.2
660 - 719	11.7		23.8		17.8		33.0
720 - 780	31.1		25.6		29.3		28.1
Over 780	49.2		30.5		45.2		21.5
Total	100.0	%	100.0	%	100.0	%	100.0	%

Troubled debt restructurings

As mentioned above, the Company's impaired loans include loans which have been classified as troubled debt restructurings. The majority of troubled debt restructurings are classified as such upon renewal when the contractual interest rate of the new loan, which may be greater or less than the rate on the previous loan, was not judged to be a market rate for debt with similar risk. As a result, the financial effects of the modifications cannot readily be quantified. Restructured loans are placed on non-accrual status if the Company does not believe it probable that amounts due under the modified terms will be collected. Other restructured loans consist mainly of performing commercial loans and consumer credit loans under debt management programs, as mentioned above. The table below shows the outstanding balances at March 31, 2012 of loans classified as troubled debt restructurings, in addition to the outstanding balances of these restructured loans which the Company considers to have been in default at any time during the previous twelve months. For purposes of this disclosure, the Company considers "default" to mean 90 days or more past due as to interest or principal.

(In thousands)	March 31, 2012		Balance 90 days past due at any time during previous 12 months
Commercial:
Business	$	22,586	$	—
Real estate - construction and land	38,439		9,506
Real estate - business	8,216		1,595
Personal Banking:
Real estate - personal	3,164		—
Consumer credit card	22,468		6,698
Total restructured loans	$	94,873	$	17,799

The determination of the allowance for loan losses related to troubled debt restructurings depends on the collectability of principal and interest, according to the repayment terms. As mentioned above, the majority of troubled debt restructurings were classified as such when the loans were renewed at an interest rate not judged to be market, and as such, the modified terms did not change estimated collectability under the terms of the contract. The allowance for loan losses for troubled debt restructurings on non-accrual status is determined by individual evaluation using the same process as loans on non-accrual status which are not classified as troubled debt restructurings. Those restructured loans which management expects to collect under contractual terms, and which are maintained on accruing status, are generally risk-rated as substandard. The allowance for loan losses related to accruing restructured loans is determined by collective evaluation because the loans have similar risk characteristics. Collective evaluation, which is the same process used for other substandard loans, considers historical loss experience and current economic factors.

If a troubled debt restructuring defaults and is already on non-accrual status, the allowance for loan loss continues to be determined based on individual evaluation, using discounted expected cash flows or the fair value of collateral. If a substandard, accruing,

troubled debt restructuring defaults, the loan's risk rating is downgraded to non-accrual status and the loan's related allowance for loan loss is determined based on individual evaluation.

The Company had commitments of $5.8 million at March 31, 2012 to lend additional funds to borrowers with restructured loans.

Loans held for sale

In addition to the portfolio of loans which are intended to be held to maturity, the Company has, in previous periods, originated loans intended to be sold in secondary markets. These historically consisted of student loans and certain fixed rate residential mortgage loans. Under statutory requirements effective mid-2010, the Company was prohibited from originating new federally guaranteed student loans, and the balance below represents the remaining unsold portion of these loans. Also, the Company recently chose to retain fixed rate mortgages, and currently does not hold these types of loans for sale.

The following table presents information about loans held for sale, including an impairment valuation allowance resulting from declines in fair value below cost, which is further discussed in Note 12 on Fair Value Measurements.

(In thousands)	Mar. 31, 2012			Dec. 31, 2011
Balance outstanding:
Student loans, at cost	$	9,844		$	28,706
Residential mortgage loans, at cost	—			2,545
Valuation allowance on student loans	(171		)	(175		)
Total loans held for sale, at lower of cost or fair value	$	9,673		$	31,076
	For the Three Months Ended March 31
(In thousands)	2012			2011
Net gains on sales:
Student loans	$	309		$	68
Residential mortgage loans	49			503
Total gains on sales of loans held for sale, net	$	358		$	571

The Company's holdings of foreclosed real estate totaled $18.6 million and $18.3 million at March 31, 2012 and December 31, 2011, respectively. Personal property acquired in repossession, generally autos and marine and recreational vehicles, totaled $3.5 million and $4.2 million at March 31, 2012 and December 31, 2011, respectively. These assets are carried at the lower of the amount recorded at acquisition date or the current fair value less estimated costs to sell.