Note 4: Loans

Geographic distributions of loans were as follows:

	March 31, 2014
	Illinois		Florida		Indiana		Total
	(dollars in thousands)
Commercial	$	482,926	$	27,514	$	21,405	$	531,845
Commercial real estate	790,038		162,673		124,015		1,076,726
Real estate construction	54,610		10,994		9,382		74,986
Retail real estate	427,936		101,254		11,430		540,620
Retail other	7,848		519		88		8,455
Total	$	1,763,358	$	302,954	$	166,320	$	2,232,632

Less held for sale(1)							7,046
							$	2,225,586

Less allowance for loan losses							47,426
Net loans							$	2,178,160

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

	December 31, 2013
	Illinois		Florida		Indiana		Total
	(dollars in thousands)
Commercial	$	530,174	$	20,536	$	29,902	$	580,612
Commercial real estate	800,568		160,255		131,450		1,092,273
Real estate construction	55,190		17,426		6,239		78,855
Retail real estate	419,801		103,104		11,588		534,493
Retail other	8,422		552		93		9,067
Total	$	1,814,155	$	301,873	$	179,272	$	2,295,300

Less held for sale(1)							13,840
							$	2,281,460

Less allowance for loan losses							47,567
Net loans							$	2,233,893

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

Net deferred loan origination costs included in the tables above were $0.1 million as of March 31, 2014 and insignificant as of December 31, 2013.

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, 2013. 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 Specially 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 $2.1 billion at March 31, 2014 and December 31, 2013. Loans in the lowest grades, represented by grades 8, 9 and 10, totaled $151.5 million at March 31, 2014, a decline of $10.4 million from $161.9 million at December 31, 2013.

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

	March 31, 2014
	Weighted Avg. Risk Grade	Grades 1,3,6		Grade 7		Grade 8		Grade 9		Grade 10
	(dollars in thousands)
Illinois/Indiana
Commercial	4.66	$	439,328	$	43,161	$	9,724	$	10,514	$	1,604
Commercial real estate	5.57	792,255		70,087		26,888		20,261		4,562
Real estate construction	7.06	24,562		16,792		11,695		7,567		3,376
Retail real estate	3.44	410,802		9,359		5,012		3,999		1,633
Retail other	2.63	7,868		65		—		3		—
Total Illinois/Indiana		$	1,674,815	$	139,464	$	53,319	$	42,344	$	11,175

Florida
Commercial	5.78	$	23,559	$	79	$	3,186	$	680	$	10
Commercial real estate	6.05	112,870		23,344		10,849		12,992		2,618
Real estate construction	6.29	9,442		—		724		828		—
Retail real estate	3.82	76,137		12,155		9,758		2,507		537
Retail other	1.57	519		—		—		—		—
Total Florida		$	222,527	$	35,578	$	24,517	$	17,007	$	3,165
Total		$	1,897,342	$	175,042	$	77,836	$	59,351	$	14,340

	December 31, 2013
	Weighted Avg. Risk Grade	Grades 1,3,6		Grade 7		Grade 8		Grade 9		Grade 10
	(dollars in thousands)
Illinois/Indiana
Commercial	4.66	$	487,587	$	46,992	$	15,986	$	8,536	$	975
Commercial real estate	5.55	799,117		79,371		19,327		29,606		4,597
Real estate construction	7.11	21,585		16,376		11,920		7,686		3,862
Retail real estate	3.53	393,299		9,285		5,392		4,408		3,936
Retail other	2.64	8,451		60		—		4		—
Total Illinois/Indiana		$	1,710,039	$	152,084	$	52,625	$	50,240	$	13,370

Florida
Commercial	5.89	$	16,460	$	174	$	3,218	$	684	$	—
Commercial real estate	6.02	116,741		16,470		11,250		12,721		3,073
Real estate construction	6.64	7,886		7,961		743		836		—
Retail real estate	3.85	77,116		12,052		9,417		3,050		721
Retail other	1.72	552		—		—		—		—
Total Florida		$	218,755	$	36,657	$	24,628	$	17,291	$	3,794
Total		$	1,928,794	$	188,741	$	77,253	$	67,531	$	17,164

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, 2014
	Loans past due, still accruing						Non-accrual
	30-59 Days		60-89 Days		90+Days		Loans
	(dollars in thousands)
Illinois/Indiana
Commercial	$	541	$	1,524	$	—	$	1,604
Commercial real estate	896		12		—		4,562
Real estate construction	—		48		—		3,376
Retail real estate	964		—		—		1,633
Retail other	20		—		—		—
Total Illinois/Indiana	$	2,421	$	1,584	$	—	$	11,175

Florida
Commercial	$	—	$	—	$	—	$	10
Commercial real estate	—		—		—		2,618
Real estate construction	—		—		—		—
Retail real estate	—		—		—		537
Retail other	—		—		—		—
Total Florida	$	—	$	—	$	—	$	3,165
Total	$	2,421	$	1,584	$	—	$	14,340

	December 31, 2013
	Loans past due, still accruing						Non-accrual
	30-59 Days		60-89 Days		90+Days		Loans
	(dollars in thousands)
Illinois/Indiana
Commercial	$	906	$	279	$	92	$	975
Commercial real estate	567		3,736		—		4,597
Real estate construction	—		—		—		3,862
Retail real estate	483		123		103		3,936
Retail other	20		—		—		—
Total Illinois/Indiana	$	1,976	$	4,138	$	195	$	13,370

Florida
Commercial	$	—	$	—	$	—	$	—
Commercial real estate	—		—		—		3,073
Real estate construction	—		—		—		—
Retail real estate	—		—		—		721
Retail other	—		—		—		—
Total Florida	$	—	$	—	$	—	$	3,794
Total	$	1,976	$	4,138	$	195	$	17,164

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 10.

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, 2014 if impaired loans had been current in accordance with their original terms was $0.3 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, 2014.

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, 2014 and December 31, 2013 is as follows:

	March 31,		December 31,
	2014		2013
	(dollars in thousands)
Restructured loans:
In compliance with modified terms	$	11,651	$	11,511
30 – 89 days past due	—		380
Included in non-performing loans	4,630		5,919
Total	$	16,281	$	17,810

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.

The following table shows performing loans, segregated by category and geography, modified as TDRs that occurred during the three months ended March 31, 2014 and 2013:

	Three Months Ended			Three Months Ended
	March 31, 2014			March 31, 2013
	Number of contracts	Recorded investment		Number of contracts	Recorded investment
	(dollars in thousands)
Illinois/Indiana
Commercial	—	$	—	—	$	—
Commercial real estate	—	—		—	—
Real estate construction	—	—		—	—
Retail real estate	1	25		—	—
Retail other	—	—		—	—
Total Illinois/Indiana	1	$	25	—	$	—

Florida
Commercial	—	$	—	—	$	—
Commercial real estate	—	—		—	—
Real estate construction	—	—		—	—
Retail real estate	—	—		—	—
Retail other	—	—		—	—
Total Florida	—	$	—	—	$	—
Total	1	$	25	—	$	—

The retail real estate TDR for the three months ended March 31, 2014 consisted of a modification for short-term interest rate relief.

The gross interest income that would have been recorded in the three months ended March 31, 2014 and 2013 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 category and geography, are shown below:

	Three Months Ended			Three Months Ended
	March 31, 2014			March 31, 2013
	Number of contracts	Recorded investment		Number of contracts	Recorded investment
	(dollars in thousands)
Illinois/Indiana
Commercial	—	$	—	—	$	—
Commercial real estate	—	—		1	1,700
Real estate construction	—	—		—	—
Retail real estate	—	—		—	—
Retail other	—	—		—	—
Total Illinois/Indiana	—	$	—	1	$	1,700

Florida
Commercial	—	$	—	—	$	—
Commercial real estate	—	—		—	—
Real estate construction	—	—		—	—
Retail real estate	—	—		3	407
Retail other	—	—		—	—
Total Florida	—	$	—	3	$	407
Total	—	$	—	4	$	2,107

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, 2014
	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	$	3,763	$	1,815	$	940	$	2,755	$	805	$	3,224
Commercial real estate	8,933		4,115		3,236		7,351		1,798		9,144
Real estate construction	3,376		1,810		1,566		3,376		464		5,285
Retail real estate	2,942		2,106		632		2,738		183		4,805
Retail other	—		—		—		—		—		—
Total Illinois/Indiana	$	19,014	$	9,846	$	6,374	$	16,220	$	3,250	$	22,458

Florida
Commercial	$	30	$	10	$	—	$	10	$	—	$	2
Commercial real estate	4,880		3,485		1,308		4,793		405		6,306
Real estate construction	414		414		—		414		—		857
Retail real estate	9,929		8,764		537		9,301		337		10,130
Retail other	—		—		—		—		—		—
Total Florida	$	15,253	$	12,673	$	1,845	$	14,518	$	742	$	17,295
Total	$	34,267	$	22,519	$	8,219	$	30,738	$	3,992	$	39,753

	December 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	$	2,825	$	1,684	$	602	$	2,286	$	485	$	4,169
Commercial real estate	8,866		3,671		3,740		7,411		1,977		10,335
Real estate construction	4,932		2,292		1,570		3,862		468		5,889
Retail real estate	5,583		3,267		2,010		5,277		604		5,296
Retail other	—		—		—		—		—		—
Total Illinois/Indiana	$	22,206	$	10,914	$	7,922	$	18,836	$	3,534	$	25,689

Florida
Commercial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate	7,108		3,946		1,319		5,265		416		6,662
Real estate construction	417		417		—		417		—		1,294
Retail real estate	10,346		9,005		537		9,542		337		11,079
Retail other	—		—		—		—		—		—
Total Florida	$	17,871	$	13,368	$	1,856	$	15,224	$	753	$	19,035
Total	$	40,077	$	24,282	$	9,778	$	34,060	$	4,287	$	44,724

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, 2014 and December 31, 2013.

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, 2014 and December 31, 2013, 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, 2014, 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, 2014 and December 31, 2013, based upon a review of the differences between the rolling 12 and 20-quarter historical loss averages by region. As of March 31, 2014, 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 2014, the Company adjusted Illinois/Indiana and Florida qualitative factors relating to Net Charge-Off Trend. Adjustments to increase this qualitative factor were made to offset decreasing quantitative factors and represent management’s evaluation of risk. The adjustment of this factor increased our allowance requirements by $1.1 million at March 31, 2014 compared to the method used for December 31, 2013. The Company 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, 2014
	Commercial			Commercial Real Estate			Real Estate Construction			Retail Real Estate			Retail Other			Total
	(dollars in thousands)
Illinois/Indiana
Beginning balance	$	8,452		$	16,379		$	2,540		$	6,862		$	216		$	34,449
Provision for loan loss	69			(617		)	(553		)	3,545			42			2,486
Charged-off	(674		)	(284		)	—			(1,275		)	(101		)	(2,334		)
Recoveries	70			20			474			60			56			680
Ending Balance	$	7,917		$	15,498		$	2,461		$	9,192		$	213		$	35,281

Florida
Beginning balance	$	1,926		$	5,733		$	1,168		$	4,287		$	4		$	13,118
Provision for loan loss	256			(275		)	(952		)	(509		)	(6		)	(1,486		)
Charged-off	(20		)	—			—			(20		)	—			(40		)
Recoveries	129			271			17			130			6			553
Ending Balance	$	2,291		$	5,729		$	233		$	3,888		$	4		$	12,145

	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

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

	As of March 31, 2014
	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	$	805	$	1,798	$	464	$	183	$	—	$	3,250
Loans collectively evaluated for impairment	7,112		13,700		1,997		9,009		213		32,031
Ending Balance	$	7,917	$	15,498	$	2,461	$	9,192	$	213	$	35,281

Loans:
Loans individually evaluated for impairment	$	2,755	$	7,351	$	3,376	$	2,738	$	—	$	16,220
Loans collectively evaluated for impairment	501,576		906,702		60,616		429,742		7,936		1,906,572
Ending Balance	$	504,331	$	914,053	$	63,992	$	432,480	$	7,936	$	1,922,792

Florida
Amount allocated to:
Loans individually evaluated for impairment	$	—	$	405	$	—	$	337	$	—	$	742
Loans collectively evaluated for impairment	2,291		5,324		233		3,551		4		11,403
Ending Balance	$	2,291	$	5,729	$	233	$	3,888	$	4	$	12,145

Loans:
Loans individually evaluated for impairment	$	10	$	4,793	$	414	$	9,301	$	—	$	14,518
Loans collectively evaluated for impairment	27,504		157,880		10,580		91,793		519		288,276
Ending Balance	$	27,514	$	162,673	$	10,994	$	101,094	$	519	$	302,794

	As of December 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	$	485	$	1,977	$	468	$	604	$	—	$	3,534
Loans collectively evaluated for impairment	7,967		14,402		2,072		6,258		216		30,915
Ending Balance	$	8,452	$	16,379	$	2,540	$	6,862	$	216	$	34,449

Loans:
Loans individually evaluated for impairment	$	2,286	$	7,411	$	3,862	$	5,277	$	—	$	18,836
Loans collectively evaluated for impairment	557,790		924,607		57,567		413,020		8,515		1,961,499
Ending Balance	$	560,076	$	932,018	$	61,429	$	418,297	$	8,515	$	1,980,335

Florida
Amount allocated to:
Loans individually evaluated for impairment	$	—	$	416	$	—	$	337	$	—	$	753
Loans collectively evaluated for impairment	1,926		5,317		1,168		3,950		4		12,365
Ending Balance	$	1,926	$	5,733	$	1,168	$	4,287	$	4	$	13,118

Loans:
Loans individually evaluated for impairment	$	—	$	5,265	$	417	$	9,542	$	—	$	15,224
Loans collectively evaluated for impairment	20,536		154,990		17,009		92,814		552		285,901
Ending Balance	$	20,536	$	160,255	$	17,426	$	102,356	$	552	$	301,125