Note 4: Loans

Geographic distributions of loans were as follows:

	March 31, 2013
	Illinois		Florida		Indiana		Total
	(dollars in thousands)

Commercial	$	392,171	$	11,959	$	21,792	$	425,922
Commercial real estate	776,674		147,501		68,794		992,969
Real estate construction	69,263		17,040		2,875		89,178
Retail real estate	421,790		107,254		10,383		539,427
Retail other	12,677		398		109		13,184
Total	$	1,672,575	$	284,152	$	103,953	$	2,060,680

Less held for sale(1)							30,833
							$	2,029,847

Less allowance for loan losses							47,773
Net loans							$	1,982,074

(1)Loans held for sale are included in retail real estate.

	December 31, 2012
	Illinois		Florida		Indiana		Total
	(dollars in thousands)

Commercial	$	399,300	$	10,861	$	23,527	$	433,688
Commercial real estate	777,752		138,170		65,210		981,132
Real estate construction	67,152		15,972		2,977		86,101
Retail real estate	435,911		112,052		11,873		559,836
Retail other	11,831		409		113		12,353
Total	$	1,691,946	$	277,464	$	103,700	$	2,073,110

Less held for sale(1)							40,003
							$	2,033,107

Less allowance for loan losses							48,012
Net loans							$	1,985,095

(1) Loans held for sale are included in retail real estate.

Net deferred loan origination costs included in the tables above were $0.7 million and $0.8 million as of March 31, 2013 and December 31, 2012, respectively.

The Company believes that sound loans are a necessary and desirable means of employing funds available for investment. Recognizing the Company’s obligations to its stockholders, depositors, and to the communities it serves, authorized personnel are expected to seek to develop and make sound, profitable loans that resources permit and that opportunity affords. The Company maintains lending policies and procedures designed to focus lending efforts on the types, locations and duration of loans most appropriate for its business model and markets. While not specifically limited, the Company attempts to focus its lending on short to intermediate-term (0-7 years) loans in geographies within 125 miles of its lending offices. The Company attempts to utilize government assisted lending programs, such as the Small Business Administration and United States Department of Agriculture lending programs, when prudent. Generally, loans are collateralized by assets, primarily real estate, of the borrowers and guaranteed by individuals. The loans are expected to be repaid primarily from cash flows of the borrowers, or from proceeds from the sale of selected assets of the borrowers.

Management reviews and approves the Company’s lending policies and procedures on a routine basis. Management routinely (at least quarterly) reviews the Company’s allowance for loan losses and reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. The Company’s underwriting standards are designed to encourage relationship banking rather than transactional banking. Relationship banking implies a primary banking relationship with the borrower that includes, at a minimum, an active deposit banking relationship in addition to the lending relationship. The integrity and character of the borrower are significant factors in the Company’s loan underwriting. As a part of underwriting, tangible positive or negative evidence of the borrower’s integrity and character are sought out. Additional significant underwriting factors beyond location, duration, a sound and profitable cash flow basis and the borrower’s character are the quality of the borrower’s financial history, the liquidity of the underlying collateral and the reliability of the valuation of the underlying collateral.

Total borrowing relationships, including direct and indirect debt, are generally limited to $20 million, which is significantly less than the Company’s regulatory lending limit. Borrowing relationships exceeding $20 million are reviewed by the Company’s board of directors at least annually and more frequently by management. At no time is a borrower’s total borrowing relationship permitted to exceed the Company’s regulatory lending limit. Loans to related parties, including executive officers and the Company’s various directorates, are reviewed for compliance with regulatory guidelines and by the Company’s board of directors at least annually.

The Company maintains an independent loan review department that reviews the loans for compliance with the Company’s loan policy on a periodic basis. In addition to compliance with this policy, the loan review process reviews the risk assessments made by the Company’s credit department, lenders and loan committees. Results of these reviews are presented to management and the audit committee at least quarterly.

The Company’s lending can be summarized into five primary areas: commercial loans, commercial real estate loans, real estate construction loans, retail real estate loans, and other retail loans. A description of each of the lending areas can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The significant majority of the lending activity occurs in the Company’s Illinois and Indiana markets, with the remainder in the Florida market. Due to the small scale of the Indiana loan portfolio and its geographical proximity to the Illinois portfolio, the Company believes that quantitative or qualitative segregation between Illinois and Indiana is not material or warranted.

The Company utilizes a loan grading scale to assign a risk grade to all of its loans. Loans are graded on a scale of 1 through 10 with grades 2, 4 & 5 unused. A description of the general characteristics of the grades is as follows:

· Grades 1, 3, 6 — These grades include loans which are all considered strong credits, with grade 1 being investment or near investment grade. A grade 3 loan is comprised of borrowers that exhibit credit fundamentals that exceed industry standards and loan policy guidelines. A grade 6 loan is comprised of borrowers that exhibit acceptable credit fundamentals.

· Grade 7- This grade includes loans on management’s “Watch List” and is intended to be utilized on a temporary basis for a pass grade borrower where a significant risk-modifying action is anticipated in the near future.

· Grade 8- This grade is for “Other Assets Especially Mentioned” loans that have potential weaknesses which may, if not checked or corrected, weaken the asset or inadequately protect the Company’s credit position at some future date.

· Grade 9- This grade includes “Substandard” loans, in accordance with regulatory guidelines, for which the accrual of interest has not been stopped. Assets so classified must have well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

· Grade 10- This grade includes “Doubtful” loans that have all the characteristics of a substandard loan with additional factors that make collection in full highly questionable and improbable. Such loans are placed on non-accrual status and may be dependent on collateral having a value that is difficult to determine.

All loans are graded at the inception of the loan. All commercial and commercial real estate loans above $0.5 million with a grading of 7 are reviewed annually and grade changes are made as necessary. All real estate construction loans above $0.5 million, regardless of the grade, are reviewed annually and grade changes are made as necessary. Interim grade reviews may take place if circumstances of the borrower warrant a more timely review. All loans above $0.5 million which are graded 8 are reviewed quarterly. Further, all loans graded 9 or 10 are reviewed at least quarterly.

Loans in the highest grades, represented by grades 1, 3, 6 and 7, totaled $1.8 billion at March 31, 2013 which remained steady with balances at December 31, 2012. Loans in the lowest grades, represented by grades 8, 9 and 10, totaled $222.6 million at March 31, 2013, a slight decline from $228.1 million at December 31, 2012. The positive change in mix of loan grades began in 2012 and indicates a declining level of overall risk in the total loan portfolio.

The following table presents weighted average risk grades segregated by class of loans (excluding held-for-sale, non-posted and clearings) and geography:

	March 31, 2013
	Weighted Avg. Risk Grade	Grades 1,3,6		Grade 7		Grade 8		Grade 9		Grade 10
	(dollars in thousands)
Illinois/Indiana
Commercial	4.76	$	329,298	$	57,158	$	6,729	$	18,863	$	1,915
Commercial real estate	5.55	653,077		106,607		46,839		30,933		8,012
Real estate construction	7.13	33,937		7,606		13,485		13,931		3,179
Retail real estate	3.63	378,713		6,352		6,241		7,188		3,148
Retail other	3.40	12,420		359		—		7		—
Total Illinois/Indiana		$	1,407,445	$	178,082	$	73,294	$	70,922	$	16,254

Florida
Commercial	5.70	$	7,437	$	308	$	3,375	$	839	$	—
Commercial real estate	6.37	87,297		24,374		11,203		20,665		3,962
Real estate construction	6.98	5,058		8,055		2,946		981		—
Retail real estate	3.96	79,209		8,414		12,395		2,929		2,785
Retail other	2.44	381		—		17		—		—
Total Florida		$	179,382	$	41,151	$	29,936	$	25,414	$	6,747
Total		$	1,586,827	$	219,233	$	103,230	$	96,336	$	23,001

	December 31, 2012
	Weighted Avg. Risk Grade	Grades 1,3,6		Grade 7		Grade 8		Grade 9		Grade 10
	(dollars in thousands)
Illinois/Indiana
Commercial	4.68	$	346,536	$	46,201	$	12,374	$	15,677	$	2,039
Commercial real estate	5.53	644,695		110,012		50,305		28,655		9,295
Real estate construction	7.21	30,710		7,809		14,162		14,084		3,364
Retail real estate	3.62	385,949		6,729		7,806		5,874		2,855
Retail other	3.34	11,563		372		—		9		—
Total Illinois/Indiana		$	1,419,453	$	171,123	$	84,647	$	64,299	$	17,553

Florida
Commercial	5.91	$	6,359	$	3,544	$	162	$	796	$	—
Commercial real estate	6.36	80,232		20,667		13,238		19,279		4,754
Real estate construction	6.97	4,137		7,721		3,172		942		—
Retail real estate	3.98	83,578		6,369		13,225		3,265		2,797
Retail other	2.80	391		—		18		—		—
Total Florida		$	174,697	$	38,301	$	29,815	$	24,282	$	7,551
Total		$	1,594,150	$	209,424	$	114,462	$	88,581	$	25,104

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of the principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

An age analysis of past due loans still accruing and non-accrual loans is as follows:

	March 31, 2013
	Loans past due, still accruing
	30-59 Days		60-89 Days		90+Days		Non-accrual Loans
	(dollars in thousands)
Illinois/Indiana
Commercial	$	1,181	$	459	$	—	$	1,915
Commercial real estate	4,138		309		193		8,012
Real estate construction	—		—		—		3,179
Retail real estate	571		276		11		3,148
Retail other	10		—		—		—
Total Illinois/Indiana	$	5,900	$	1,044	$	204	$	16,254

Florida
Commercial	$	—	$	—	$	—	$	—
Commercial real estate	172		—		—		3,962
Real estate construction	—		—		—		—
Retail real estate	16		—		—		2,785
Retail other	—		—		—		—
Total Florida	$	188	$	—	$	—	$	6,747
Total	$	6,088	$	1,044	$	204	$	23,001

	December 31, 2012
	Loans past due, still accruing
	30-59 Days		60-89 Days		90+Days		Non-accrual Loans
	(dollars in thousands)
Illinois/Indiana
Commercial	$	111	$	80	$	19	$	2,039
Commercial real estate	216		59		139		9,295
Real estate construction	—		—		—		3,364
Retail real estate	1,154		294		46		2,855
Retail other	2		2		—		—
Total Illinois/Indiana	$	1,483	$	435	$	204	$	17,553

Florida
Commercial	$	—	$	—	$	—	$	—
Commercial real estate	—		—		—		4,754
Real estate construction	—		—		—		—
Retail real estate	364		—		52		2,797
Retail other	—		3		—		—
Total Florida	$	364	$	3	$	52	$	7,551
Total	$	1,847	$	438	$	256	$	25,104

A loan is impaired when, based on current information and events, it is probable the Company will be unable to collect scheduled principal and interest payments when due according to the terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. The following loans are assessed for impairment by the Company: loans 60 days or more past due and over $0.25 million, loans graded 8 over $0.5 million and loans graded 9 or below.

Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogenous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment disclosures unless such loans are the subject of a restructuring agreement.

The gross interest income that would have been recorded in the three months ended March 31, 2013 if impaired loans had been current in accordance with their original terms was $0.4 million. The amount of interest collected on those loans and recognized on a cash basis that was included in interest income was insignificant for the three months ended March 31, 2013.

The Company’s loan portfolio includes certain loans that have been modified in a troubled debt restructuring (“TDR”), where concessions have been granted to borrowers who have experienced financial difficulties. The Company will restructure loans for its customers who appear to be able to meet the terms of their loan over the long term, but who may be unable to meet the terms of the loan in the near term due to individual circumstances.

The Company considers the customer’s past performance, previous and current credit history, the individual circumstances surrounding the current difficulties and the customer’s plan to meet the terms of the loan in the future prior to restructuring the terms of the loan. Generally, all five primary areas of lending are restructured through short-term interest rate relief, short-term principal payment relief, short-term principal and interest payment relief, or forbearance (debt forgiveness). Once a restructured loan has gone 90+ days past due or is placed on non-accrual status, it is included in the non-performing loan totals. A summary of restructured loans as of March 31, 2013 and December 31, 2012 is as follows:

	March 31, 2013		December 31, 2012
	(dollars in thousands)
Restructured loans:
In compliance with modified terms	$	18,973	$	22,023
30 – 89 days past due	—		28
Included in non-performing loans	8,347		6,458
Total	$	27,320	$	28,509

All TDRs are considered to be impaired for purposes of assessing the adequacy of the allowance for loan losses and for financial reporting purposes. When the Company modifies a loan in a TDR, it evaluates any possible impairment similar to other impaired loans based on present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. If the Company determines that the value of the TDR is less than the recorded investment in the loan, impairment is recognized through an allowance estimate in the period of the modification and in periods subsequent to the modification.

Performing loans classified as TDRs, segregated by class and geography, are shown below:

	Three Months Ended March 31, 2013			Three Months Ended March 31, 2012
	Number of contracts	Recorded investment		Number of contracts	Recorded investment
	(dollars in thousands)
Illinois/Indiana
Commercial	—	$	—	2	$	1,280
Commercial real estate	—	—		—	—
Real estate construction	—	—		1	3,019
Retail real estate	—	—		—	—
Retail other	—	—		—	—
Total Illinois/Indiana	—	$	—	3	$	4,299

Florida
Commercial	—	$	—	—	$	—
Commercial real estate	—	—		—	—
Real estate construction	—	—		—	—
Retail real estate	—	—		—	—
Retail other	—	—		—	—
Total Florida	—	$	—	—	$	—
Total	—	$	—	3	$	4,299

The commercial TDRs for the three months ended March 31, 2012 involve short-term principal payment relief. The real estate construction TDR for the three months ended March 31, 2012 involve a forbearance agreement.

The gross interest income that would have been recorded in the three months ended March 31, 2013 and 2012 if performing TDRs had been in accordance with their original terms instead of modified terms was insignificant.

TDRs that were classified as non-performing and had payment defaults (a default occurs when a loan is 90 days or more past due or transferred to non-accrual), segregated by class and geography, are shown below:

	Three Months Ended March 31, 2013			Three Months Ended March 31, 2012
	Number of contracts	Recorded investment		Number of contracts	Recorded investment
	(dollars in thousands)
Illinois/Indiana
Commercial	—	$	—	—	$	—
Commercial real estate	1	1,700		1	4,068
Real estate construction	—	—		—	—
Retail real estate	—	—		—	—
Retail other	—	—		—	—
Total Illinois/Indiana	1	$	1,700	1	$	4,068

Florida
Commercial	—	$	—	—	$	—
Commercial real estate	—	—		—	—
Real estate construction	—	—		1	657
Retail real estate	3	407		1	143
Retail other	—	—		—	—
Total Florida	3	$	407	2	$	800
Total	4	$	2,107	3	$	4,868

The following tables provide details of impaired loans, segregated by category and geography. The unpaid contractual principal balance represents the recorded balance prior to any partial charge-offs. The recorded investment represents customer balances net of any partial charge-offs recognized on the loan. The average recorded investment is calculated using the most recent four quarters.

	March 31, 2013
	Unpaid Contractual Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(dollars in thousands)
Illinois/Indiana
Commercial	$	9,250	$	4,605	$	589	$	5,194	$	589	$	8,352
Commercial real estate	14,929		10,358		1,702		12,060		847		13,138
Real estate construction	9,203		5,952		2,794		8,746		1,050		8,958
Retail real estate	6,413		5,308		30		5,338		30		5,142
Retail other	—		—		—		—		—		10
Total Illinois/Indiana	$	39,795	$	26,223	$	5,115	$	31,338	$	2,516	$	35,600

Florida
Commercial	$	—	$	—	$	—	$	—	$	—	$	157
Commercial real estate	8,751		5,770		—		5,770		—		6,355
Real estate construction	2,593		2,593		—		2,593		—		3,460
Retail real estate	13,949		11,681		95		11,776		25		14,057
Retail other	—		—		—		—		—		—
Total Florida	$	25,293	$	20,044	$	95	$	20,139	$	25	$	24,029
Total	$	65,088	$	46,267	$	5,210	$	51,477	$	2,541	$	59,629

	December 31, 2012
	Unpaid Contractual Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(dollars in thousands)
Illinois/Indiana
Commercial	$	11,557	$	7,214	$	265	$	7,479	$	265	$	10,109
Commercial real estate	17,656		12,020		1,288		13,308		634		14,607
Real estate construction	6,851		6,394		—		6,394		—		8,625
Retail real estate	6,251		4,666		530		5,196		140		5,206
Retail other	—		—		—		—		—		24
Total Illinois/Indiana	$	42,315	$	30,294	$	2,083	$	32,377	$	1,039	$	38,571

Florida
Commercial	$	—	$	—	$	—	$	—	$	—	$	271
Commercial real estate	9,533		5,988		585		6,573		235		6,506
Real estate construction	2,597		2,597		—		2,597		—		3,989
Retail real estate	16,518		12,673		1,373		14,046		483		15,254
Retail other	—		—		—		—		—		—
Total Florida	$	28,648	$	21,258	$	1,958	$	23,216	$	718	$	26,020
Total	$	70,963	$	51,552	$	4,041	$	55,593	$	1,757	$	64,591

Management’s opinion as to the ultimate collectability of loans is subject to estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers.

Allowance for Loan Losses

The allowance for loan losses represents an estimate of the amount of losses believed inherent in the Company’s loan portfolio at the balance sheet date. The allowance for loan losses is evaluated geographically, by class of loans. The allowance calculation involves a high degree of estimation that management attempts to mitigate through the use of objective historical data where available. Loan losses are charged against the allowance for loan losses when management believes the uncollectibility of the loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Overall, the Company believes the allowance methodology is consistent with prior periods and the balance was adequate to cover the estimated losses in the Company’s loan portfolio at March 31, 2013 and December 31, 2012.

The general portion of the Company’s allowance contains two components: (i) a component for historical loss ratios, and (ii) a component for adversely graded loans. The historical loss ratio component is an annualized loss rate calculated using a sum-of-years digits weighted 20 quarter historical average.

The Company’s component for adversely graded loans attempts to quantify the additional risk of loss inherent in the grade 8 and grade 9 portfolios. The grade 9 portfolio has an additional allocation placed on those loans determined by a one-year charge-off percentage for the respective loan type/geography. The minimum additional reserve on a grade 9 loan was 3.00% as of March 31, 2013 and December 31, 2012, which is an estimate of the additional loss inherent in these loan grades based upon a review of overall historical charge-offs. As of March 31, 2013, the Company believed this minimum reserve remained adequate.

Grade 8 loans have an additional allocation placed on them determined by the trend difference of the respective loan type/geography’s rolling 12 and 20 quarter historical loss trends. If the rolling 12 quarter average is higher (more current information) than the rolling 20 quarter average, the Company adds the additional amount to the allocation. The minimum additional amount for grade 8 loans was 1.00% as of March 31, 2013 and December 31, 2012, based upon a review of the differences between the rolling 12 and 20 quarter historical loss averages by region. As of March 31, 2013, the Company believed this minimum additional amount remained adequate.

The specific portion of the Company’s allowance relates to loans that are impaired, which includes non-performing loans, TDRs and other loans determined to be impaired. The impaired loans are subtracted from the general loans and are allocated specific reserves as discussed above.

Impaired loans are reported at the fair value of the underlying collateral, less estimated costs to sell, if repayment is expected solely from the collateral. Collateral values are estimated using a combination of observable inputs, including recent appraisals discounted for collateral specific changes and current market conditions, and unobservable inputs based on customized discounting criteria.

The general quantitative allocation based upon historical charge off rates is adjusted for qualitative factors based on current general economic conditions and other qualitative risk factors both internal and external to the Company. In general, such valuation allowances are determined by evaluating, among other things: (i) Management & Staff; (ii) Loan Underwriting, Policy and Procedures; (iii) Internal/External Audit & Loan Review; (iv) Valuation of Underlying Collateral; (v) Macro and Local Economic Factor; (vi) Impact of Competition, Legal & Regulatory Issues; (vii) Nature and Volume of Loan Portfolio; (viii) Concentrations of Credit; (ix) Net Charge-Off Trend; and (x) Non-Accrual, Past Due and Classified Trend. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. Based on each component’s risk factor, a qualitative adjustment to the reserve may be applied to the appropriate loan categories.

During the first quarter of 2013, the Company did not adjust any qualitative factors. The Company bases its assessment on several sources and will continue to monitor its qualitative factors on a quarterly basis.

The following table details activity on the allowance for loan losses. Allocation of a portion of the allowance to one category does not preclude its availability to absorb losses in other categories.

	For the Three Months Ended March 31, 2013
	Commercial			Commercial Real Estate			Real Estate Construction			Retail Real Estate			Retail Other			Total
	(dollars in thousands)
Illinois/Indiana
Beginning balance	$	6,597		$	15,023		$	2,527		$	8,110		$	322		$	32,579
Provision for loan loss	238			490			737			(404		)	(6		)	1,055
Charged-off	(183		)	(847		)	—			(272		)	(136		)	(1,438		)
Recoveries	15			125			182			28			178			528
Ending Balance	$	6,667		$	14,791		$	3,446		$	7,462		$	358		$	32,724

Florida
Beginning balance	$	1,437		$	6,062		$	2,315		$	5,614		$	5		$	15,433
Provision for loan loss	23			270			29			629			(6		)	945
Charged-off	—			(245		)	(35		)	(1,178		)	(2		)	(1,460		)
Recoveries	25			19			17			63			7			131
Ending Balance	$	1,485		$	6,106		$	2,326		$	5,128		$	4		$	15,049

	For the Three Months Ended March 31, 2012
	Commercial			Commercial Real Estate			Real Estate Construction			Retail Real Estate			Retail Other			Total
	(dollars in thousands)
Illinois/Indiana
Beginning balance	$	9,143		$	18,605		$	4,352		$	6,473		$	464		$	39,037
Provision for loan loss	(1,973		)	7,660			(317		)	(262		)	(51		)	5,057
Charged-off	(279		)	(8,424		)	(288		)	(861		)	(146		)	(9,998		)
Recoveries	91			269			162			164			78			764
Ending Balance	$	6,982		$	18,110		$	3,909		$	5,514		$	345		$	34,860

Florida
Beginning balance	$	1,939		$	8,413		$	2,936		$	6,160		$	21		$	19,469
Provision for loan loss	(563		)	45			(400		)	877			(16		)	(57		)
Charged-off	(40		)	(216		)	(69		)	(764		)	—			(1,089		)
Recoveries	405			35			73			132			7			652
Ending Balance	$	1,741		$	8,277		$	2,540		$	6,405		$	12		$	18,975

The following table presents the allowance for loan losses and recorded investments in loans by category and geography:

	As of March 31, 2013
	Commercial		Commercial Real Estate		Real Estate Construction		Retail Real Estate		Retail Other		Total
	(dollars in thousands)
Illinois/Indiana
Amount allocated to:
Loans individually evaluated for impairment	$	589	$	847	$	1,050	$	30	$	—	$	2,516
Loans collectively evaluated for impairment	6,078		13,944		2,396		7,432		358		30,208
Ending Balance	$	6,667	$	14,791	$	3,446	$	7,462	$	358	$	32,724

Loans:
Loans individually evaluated for impairment	$	5,194	$	12,060	$	8,746	$	5,338	$	—	$	31,338
Loans collectively evaluated for impairment	408,769		833,408		63,392		397,524		12,786		1,715,879
Ending Balance	$	413,963	$	845,468	$	72,138	$	402,862	$	12,786	$	1,747,217

Florida
Amount allocated to:
Loans individually evaluated for impairment	$	—	$	—	$	—	$	25	$	—	$	25
Loans collectively evaluated for impairment	1,485		6,106		2,326		5,103		4		15,024
Ending Balance	$	1,485	$	6,106	$	2,326	$	5,128	$	4	$	15,049

Loans:
Loans individually evaluated for impairment	$	—	$	5,770	$	2,593	$	11,776	$	—	$	20,139
Loans collectively evaluated for impairment	11,959		141,731		14,447		93,956		398		262,491
Ending Balance	$	11,959	$	147,501	$	17,040	$	105,732	$	398	$	282,630

	As of December 31, 2012
	Commercial		Commercial Real Estate		Real Estate Construction		Retail Real Estate		Retail Other		Total
	(dollars in thousands)
Illinois/Indiana
Amount allocated to:
Loans individually evaluated for impairment	$	265	$	634	$	—	$	140	$	—	$	1,039
Loans collectively evaluated for impairment	6,332		14,389		2,527		7,970		322		31,540
Ending Balance	$	6,597	$	15,023	$	2,527	$	8,110	$	322	$	32,579

Loans:
Loans individually evaluated for impairment	$	7,479	$	13,308	$	6,394	$	5,196	$	—	$	32,377
Loans collectively evaluated for impairment	415,348		829,654		63,735		404,867		11,944		1,725,548
Ending Balance	$	422,827	$	842,962	$	70,129	$	410,063	$	11,944	$	1,757,925

Florida
Amount allocated to:
Loans individually evaluated for impairment	$	—	$	235	$	—	$	483	$	—	$	718
Loans collectively evaluated for impairment	1,437		5,827		2,315		5,131		5		14,715
Ending Balance	$	1,437	$	6,062	$	2,315	$	5,614	$	5	$	15,433

Loans:
Loans individually evaluated for impairment	$	—	$	6,573	$	2,597	$	14,046	$	—	$	23,216
Loans collectively evaluated for impairment	10,861		131,597		13,375		95,724		409		251,966
Ending Balance	$	10,861	$	138,170	$	15,972	$	109,770	$	409	$	275,182