Allowance for Loan Losses

The Corporation's Credit Policy Division manages credit risk by establishing common credit policies for its subsidiary bank, participating in approval of its loans, conducting reviews of loan portfolios, providing centralized consumer underwriting, collections and loan operation services, and overseeing loan workouts. The Corporation's objective is to minimize losses from its commercial lending activities and to maintain consumer losses at acceptable levels that are stable and consistent with growth and profitability objectives.

The ALL is Management's estimate of the amount of probable credit losses inherent in a loan portfolio at the balance sheet date. The following describes the distinctions in methodology used to estimate the ALL of originated, acquired and covered loan portfolios as well as certain significant accounting policies relevant to each category.

Allowance for Originated Loan Losses

Management estimates credit losses based on originated individual loans determined to be impaired and on all other loans grouped based on similar risk characteristics. Management also considers internal and external factors such as economic conditions, loan management practices, portfolio monitoring, and other risks, collectively known as qualitative factors, or Q-factors, to estimate credit losses in the loan portfolio. Q-factors are used to reflect changes in the portfolio's collectability characteristics not captured by historical loss data.

The Corporation's historical loss component is the most significant of the ALL components and is based on historical loss experience by credit-risk grade (for commercial loan pools) and payment status (for mortgage and consumer loan pools). The historical loss experience component of the ALL represents the results of migration analysis of historical net charge-offs for portfolios of loans (including groups of commercial loans within each credit-risk grade and groups of consumer loans by payment status). For measuring loss exposure in a pool of loans, the historical net charge-off or migration experience is utilized to estimate expected losses to be realized from the pool of loans.

If a nonperforming, substandard loan has an outstanding balance of $0.3 million or greater or if a doubtful loan has an outstanding balance of $0.1 million or greater, as determined by the Corporation's credit-risk grading process, further analysis is performed to determine the probable loss content and assign a specific allowance to the loan, if deemed appropriate. The ALL relating to originated loans that have become impaired is based on either expected cash flows discounted using the original effective interest rate, the observable market price, or the fair value of the collateral for certain collateral dependent loans.

Loans are generally written off when deemed uncollectible or when they reach a predetermined number of days past due depending upon loan product, terms, and other factors.

The following tables show activity in the originated ALL, by portfolio segment for the three and six months ended June 30, 2014 and 2013, as well as the corresponding recorded investment in originated loans at the end of the period:



As of June 30, 2014
Originated Loans		C&I			CRE			Construction			Leases			Installment			Home Equity Lines			Credit Cards			Residential Mortgages			Total
Three Months Ended
Allowance for originated loan losses, beginning balance		$	40,175		$	13,385		$	1,470		$	1,027		$	11,604		$	13,160		$	6,851		$	4,444		$	92,116
Charge-offs		(361		)	(2,696		)	—			—			(4,076		)	(1,870		)	(1,311		)	(834		)	(11,148		)
Recoveries		372			30			2			372			2,741			966			439			67			4,989
Provision for loan losses		3,070			(1,989		)	(149		)	(371		)	1,974			1,647			1,349			462			5,993
Allowance for originated loan losses, ending balance		$	43,256		$	8,730		$	1,323		$	1,028		$	12,243		$	13,903		$	7,328		$	4,139		$	91,950
Six Months Ended
Allowance for originated loan losses, beginning balance		$	42,981		$	12,265		$	2,810		$	1,081		$	11,935		$	12,900		$	7,740		$	4,772		$	96,484
Charge-offs		(5,435		)	(2,775		)	—			—			(8,660		)	(3,279		)	(2,766		)	(1,393		)	(24,308		)
Recoveries		1,369			34			30			372			5,490			1,870			857			105			10,127
Provision for loan losses		4,341			(794		)	(1,517		)	(425		)	3,478			2,412			1,497			655			9,647
Allowance for originated loan losses, ending balance		$	43,256		$	8,730		$	1,323		$	1,028		$	12,243		$	13,903		$	7,328		$	4,139		$	91,950

Ending allowance for originated loan losses balance attributable to loans:
	Individually evaluated for impairment	$	5,092		$	112		$	9		$	—		$	1,008		$	201		$	361		$	1,019		$	7,802
	Collectively evaluated for impairment	38,164			8,618			1,314			1,028			11,235			13,702			6,967			3,120			84,148
Total ending allowance for originated loan losses balance		$	43,256		$	8,730		$	1,323		$	1,028		$	12,243		$	13,903		$	7,328		$	4,139		$	91,950
Originated loans:
	Originated loans individually evaluated for impairment	$	10,404		$	25,484		$	53		$	—		$	24,394		$	6,956		$	979		$	26,297		$	94,567
	Originated loans collectively evaluated for impairment	4,847,211			2,072,534			409,813			319,795			2,027,193			991,223			150,988			553,869			11,372,626
Total ending originated loan balance		$	4,857,615		$	2,098,018		$	409,866		$	319,795		$	2,051,587		$	998,179		$	151,967		$	580,166		$	11,467,193



As of June 30, 2013
Originated Loans		C&I			CRE			Construction			Leases			Installment			Home Equity Lines			Credit Cards			Residential Mortgages			Total
Three Months Ended
Allowance for originated loan losses, beginning balance		$	40,427		$	18,399		$	2,741		$	1,129		$	9,151		$	14,568		$	7,069		$	5,359		$	98,843
Charge-offs		(2,000		)	(750		)	—			(1,237		)	(3,612		)	(1,497		)	(1,459		)	(414		)	(10,969		)
Recoveries		3,528			203			31			—			2,739			599			469			51			7,620
Provision for loan losses		3,212			(1,029		)	(728		)	1,017			447			(404		)	1,209			(573		)	3,151
Allowance for originated loan losses, ending balance		$	45,167		$	16,823		$	2,044		$	909		$	8,725		$	13,266		$	7,288		$	4,423		$	98,645
Six Months Ended
Allowance for originated loan losses, beginning balance		$	36,209		$	20,126		$	3,821		$	639		$	11,154		$	13,724		$	7,384		$	5,885		$	98,942
Charge-offs		(4,103		)	(803		)	(516		)	(1,237		)	(8,206		)	(3,334		)	(2,862		)	(684		)	(21,745		)
Recoveries		4,583			335			89			89			5,235			1,082			982			94			12,489
Provision for loan losses		8,478			(2,835		)	(1,350		)	1,418			542			1,794			1,784			(872		)	8,959
Allowance for originated loan losses, ending balance		$	45,167		$	16,823		$	2,044		$	909		$	8,725		$	13,266		$	7,288		$	4,423		$	98,645

Ending allowance for originated loan losses balance attributable to loans:
	Individually evaluated for impairment	$	3,169		$	1,010		$	—		$	—		$	557		$	197		$	255		$	1,280		$	6,468
	Collectively evaluated for impairment	41,998			15,813			2,044			909			8,168			13,069			7,033			3,143			92,177
Total ending allowance for originated loan losses balance		$	45,167		$	16,823		$	2,044		$	909		$	8,725		$	13,266		$	7,288		$	4,423		$	98,645
Originated loans:
	Originated loans individually evaluated for impairment	$	9,439		$	24,400		$	1,005		$	—		$	30,140		$	6,819		$	1,262		$	23,221		$	96,286
	Originated loans collectively evaluated for impairment	3,468,751			2,190,457			303,760			188,353			1,466,523			838,232			141,057			439,206			9,036,339
Total ending originated loan balance		$	3,478,190		$	2,214,857		$	304,765		$	188,353		$	1,496,663		$	845,051		$	142,319		$	462,427		$	9,132,625

The following table presents the originated ALL and the recorded investment as of December 31, 2013:



As of December 31, 2013
	Originated Loans	C&I		CRE		Construction		Leases		Installment		Home Equity Lines		Credit Cards		Residential Mortgages		Total
Ending allowance for originated loan losses balance attributable to loans:
	Individually evaluated for impairment	$	3,235	$	229	$	—	$	—	$	1,014	$	223	$	312	$	1,133	$	6,146
	Collectively evaluated for impairment	39,746		12,036		2,810		1,081		10,921		12,677		7,428		3,639		90,338
Total ending allowance for originated loan losses balance		$	42,981	$	12,265	$	2,810	$	1,081	$	11,935	$	12,900	$	7,740	$	4,772	$	96,484
Originated loans:
	Loans individually evaluated for impairment	$	8,053	$	20,616	$	906	$	—	$	27,285	$	6,726	$	1,112	$	23,066	$	87,764
	Loans collectively evaluated for impairment	4,131,514		2,149,171		338,019		239,551		1,700,640		913,340		147,201		506,187		10,125,623
Total ending originated loan balance		$	4,139,567	$	2,169,787	$	338,925	$	239,551	$	1,727,925	$	920,066	$	148,313	$	529,253	$	10,213,387

Allowance for Acquired Loan Losses

In accordance with the acquisition method of accounting, the Citizens' loans were recorded at their fair value as of the Acquisition Date and the prior ALL was eliminated. An ALL for acquired nonimpaired loans is estimated using a methodology similar to that used for originated loans, that is, based on a specific reserve analysis for loans individually evaluated for impairment and based on historical loss rates for loans collectively evaluated for impairment. If the computed ALL is greater than the remaining fair value discount, the excess is added to the ALL through a provision for loan losses. If the computed ALL is less, no additional ALL is recognized. As of June 30, 2014, the computed ALL was less than the remaining fair value discount, therefore, no ALL for acquired nonimpaired loans was required.

Charge-offs and actual losses on an acquired nonimpaired loan first reduce any remaining fair value discount for that loan. Once a loan's discount is depleted, charge-offs and actual losses are applied against the acquired ALL. During the three and six months ended June 30, 2014, provision for loan losses, equal to net charge-offs, of $3.8 million and $9.4 million, respectively, were recorded. Charge-offs on acquired nonimpaired loans were mainly related to consumer loans that were written off in accordance with the Corporation's credit policies based on a predetermined number of days past due.

The ALL for acquired impaired loans is determined by comparing the present value of the cash flows expected to be collected to the carrying amount for a given pool of loans. Management reforecasts the estimated cash flows expected to be collected on acquired impaired loans on a quarterly basis. If the present value of expected cash flows for a pool is less than its carrying value, impairment is recognized in the current period by an increase in the acquired ALL and a charge to the provision for loan losses. If the present value of expected cash flows for a pool is greater than its carrying value, any previously established acquired ALL is reversed and any remaining difference increases the accretable yield which will be taken into interest income over the remaining life of the loan pool. See Note 4 (Loans) for further information on changes in accretable yield.

The following table presents activity in the allowance for acquired impaired loan losses for the three and six months ended June 30, 2014. There was no allowance for acquired impaired loans as of June 30, 2013.



Allowance for Acquired Impaired Loan Losses	Three Months Ended June 30,		Six Months Ended June 30,
(In thousands)	2014		2014
Balance at beginning of the period	$	2,974	$	741
Charge-offs	—		—
Recoveries	—		—
Provision for loan losses	2,003		4,236
Balance at end of the period	$	4,977	$	4,977

Allowance for Covered Loan Losses

The ALL on covered loans is estimated similar to acquired loans as described above except any increase to the ALL and provision for loan losses is partially offset by an increase in the loss share receivable for the portion of the losses recoverable under the loss sharing agreements with the FDIC. Additionally, the Corporation elected to account for all covered loans as impaired except for those loans acquired with revolving privileges, which are outside the scope of impaired loan accounting, and, therefore, are accounted for as covered nonimpaired loans. As of June 30, 2014, the computed ALL was less than the remaining fair value discount, therefore, no ALL for covered nonimpaired loans was recorded.

The following table presents activity in the allowance for covered impaired loan losses for the three and six months ended June 30, 2014 and 2013:



Allowance for Covered Impaired Loan Losses		Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)		2014			2013			2014			2013
Balance at beginning of the period		$	49,970		$	47,945		$	44,027		$	43,255
	Net provision/(recapture) of loan losses before benefit attributable to FDIC loss share agreements	(451		)	6,477			7,428			16,154
	Net (benefit)/recapture attributable to FDIC loss share agreements	3,897			(2,319		)	(927		)	(7,858		)
Net provision for loan losses		3,446			4,158			6,501			8,296
Increase (decrease) in loss share receivable		(3,897		)	2,319			927			7,858
Loans charged-off		(4,410		)	(5,353		)	(6,346		)	(10,340		)
Balance at end of the period		$	45,109		$	49,069		$	45,109		$	49,069

During the three months ended June 30, 2014, $0.5 million of previously recognized losses on covered impaired loans were recaptured with an offsetting decrease of $3.9 million in the loss share receivable. This net provision of $3.4 million compares to $4.2 million in the three months ended June 30, 2013. During the six months ended June 30, 2014, $7.4 million of provision on covered impaired loans was recognized with an offsetting increase of $0.9 million in the loss share receivable. This net provision of $6.5 million compares to $8.3 million in the six months ended June 30, 2013.

An acquired or covered loan may be resolved either through receipt of payment (in full or in part) from the borrower, the sale of the loan to a third party, or foreclosure of the collateral. In the period of resolution of a nonimpaired loan, any remaining unamortized fair value adjustment is recognized as interest income. In the period of resolution of an impaired loan accounted for on an individual basis, the difference between the carrying amount of the loan and the proceeds received is recognized as a gain or loss within noninterest income. The majority of impaired loans are accounted for within a pool of loans which results in any difference between the proceeds received and the loan carrying amount being deferred as part of the carrying amount of the pool. The accretable amount of the pool remains unaffected from the resolution until the subsequent quarterly cash flow re-estimation. Favorable results from removal of the resolved loan from the pool increase the future accretable yield of the pool, while unfavorable results are recorded as impairment in the quarter of the cash flow re-estimation. Acquired or covered impaired loans subject to modification are not removed from a pool even if those loans would otherwise be deemed TDRs as the pool, and not the individual loan, represents the unit of account.

Credit Quality

A loan is considered to be impaired when, based on current events or information, it is probable the Corporation will be unable to collect all amounts due (principal and interest) per the contractual terms of the loan agreement.

Interest income recognized on impaired loans was $20.0 thousand and $123.0 thousand for the three months and six months ended June 30, 2014, respectively, compared to $79.0 thousand and $165.0 thousand for the three months and six months ended June 30, 2013, respectively. Interest income which would have been earned in accordance with the original terms was $0.5 million and $1.3 million for the three months and six months ended June 30, 2014, respectively, compared to $1.1 million and $1.8 million for the three months and six months ended June 30, 2013, respectively.

Loan impairment is measured based on either the present value of expected future cash flows discounted at the loan's effective interest rate, at the observable market price of the loan, or the fair value of the collateral for certain collateral dependent loans. Impaired loans include all nonaccrual commercial, agricultural, construction, and commercial real estate loans, and loans modified as a TDR, regardless of nonperforming status. Acquired and covered impaired loans are not considered or reported as impaired loans. Nonimpaired acquired loans that are subsequently placed on nonaccrual status are reported as impaired loans and included in the tables below. Acquired loans restructured after acquisition are not considered or reported as TDRs if the loans evidenced credit deterioration as of the date of acquisition and are accounted for in pools.

The following tables provide further detail on impaired loans individually evaluated for impairment and the associated ALL. Certain impaired loans do not have a related ALL as the valuation of these impaired loans exceeded the recorded investment.



As of June 30, 2014
Originated Loans				Unpaid				Average
		Recorded		Principal		Related		Recorded
(In thousands)		Investment		Balance		Allowance		Investment
Impaired loans with no related allowance
Commercial
	C&I	$	2,538	$	4,980	$	—	$	3,543
	CRE	20,635		26,026		—		22,249
	Construction	53		76		—		256
Consumer
	Installment	4,510		4,620		—		4,636
	Home equity line	1,041		1,047		—		1,067
	Credit card	34		34		—		48
	Residential mortgages	12,729		15,748		—		12,828
Subtotal		41,540		52,531		—		44,627
Impaired loans with a related allowance
Commercial
	C&I	7,866		11,562		5,092		8,071
	CRE	4,849		4,851		112		829
	Construction	—		—		9		—
Consumer
	Installment	19,884		20,673		1,008		20,498
	Home equity line	5,915		6,145		201		5,995
	Credit card	945		945		361		1,019
	Residential mortgages	13,568		13,678		1,019		13,612
Subtotal		53,027		57,854		7,802		50,024
	Total impaired loans	$	94,567	$	110,385	$	7,802	$	94,651

Note 1: These tables exclude loans fully charged off.

Note 2: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.



As of December 31, 2013
Originated Loans				Unpaid				Average
		Recorded		Principal		Related		Recorded
(In thousands)		Investment		Balance		Allowance		Investment
Impaired loans with no related allowance
Commercial
	C&I	$	2,503	$	6,679	$	—	$	7,256
	CRE	17,871		23,709		—		18,639
	Construction	906		1,179		—		1,035
Consumer
	Installment	2,813		3,978		—		3,338
	Home equity line	1,018		1,347		—		1,079
	Credit card	49		49		—		91
	Residential mortgages	10,250		12,778		—		10,258
Subtotal		35,410		49,719		—		41,696
Impaired loans with a related allowance
Commercial
	C&I	5,551		7,428		3,235		5,009
	CRE	2,744		2,870		229		2,836
	Construction	—		—		—		—
Consumer
	Installment	24,472		24,558		1,014		24,985
	Home equity line	5,707		5,707		223		5,874
	Credit card	1,064		1,064		312		1,238
	Residential mortgages	12,816		12,898		1,133		12,064
Subtotal		52,354		54,525		6,146		52,006
	Total impaired loans	$	87,764	$	104,244	$	6,146	$	93,702

Note 1: These tables exclude loans fully charged off.

Note 2: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.



As of June 30, 2013
Originated Loans				Unpaid				Average
		Recorded		Principal		Related		Recorded
(In thousands)		Investment		Balance		Allowance		Investment
Impaired loans with no related allowance
Commercial
	C&I	$	1,031	$	3,423	$	—	$	3,075
	CRE	17,021		23,892		—		19,143
	Construction	1,005		1,282		—		2,294
Consumer
	Installment	3,464		4,882		—		3,838
	Home equity line	1,158		1,481		—		1,217
	Credit card	57		57		—		76
	Residential mortgages	10,682		13,294		—		10,934
Subtotal		34,418		48,311		—		40,577
Impaired loans with a related allowance
Commercial
	C&I	8,408		11,553		3,169		10,469
	CRE	7,379		7,416		1,010		7,558
	Construction	—		—		—		—
Consumer
	Installment	26,676		26,772		557		27,032
	Home equity line	5,661		5,661		197		5,784
	Credit card	1,205		1,205		255		1,310
	Residential mortgages	12,539		12,611		1,280		12,578
Subtotal		61,868		65,218		6,468		64,731
	Total impaired loans	$	96,286	$	113,529	$	6,468	$	105,308

Note 1: These tables exclude loans fully charged off.

Note 2: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

Troubled Debt Restructurings

In certain circumstances, the Corporation may modify the terms of a loan to maximize the collection of amounts due when a borrower is experiencing financial difficulties or is expected to experience difficulties in the near term. In most cases the modification is either a concessionary reduction in interest rate, extension of the maturity date or modification of the adjustable rate provisions of the loan that would otherwise not be considered; however, forgiveness of principal is rarely granted. Concessionary modifications are classified as TDRs unless the modification is short-term, typically less than 90 days. TDRs accrue interest if the borrower complies with the revised terms and conditions and has demonstrated repayment performance at a level commensurate with the modified terms for a minimum of six consecutive payment cycles after the restructuring date. Acquired loans restructured after acquisition are not considered TDRs if the loans evidenced credit deterioration as of the Acquisition Date and are accounted for in pools.

The substantial majority of the Corporation's residential mortgage TDRs involve reducing the client's loan payment through an interest rate reduction for a set period of time based on the borrower's ability to service the modified loan payment. Modifications of mortgages retained in portfolio are handled using proprietary modification guidelines, or the FDIC's Modification Program for residential first mortgages covered by loss share agreements (agreements between the Bank and the FDIC that afford the Bank significant protection against future losses). The Corporation participates in the U.S. Treasury's Home Affordable Modification Program for originated mortgages sold to and serviced for FNMA and FHLMC.

Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor is often requested. Commercial real estate and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Construction loans modified in a TDR may also involve extending the interest-only payment period. The Corporation has modified certain loans according to provisions in loss share agreements. Losses associated with modifications on these loans, including the economic impact of interest rate reductions, are generally eligible for reimbursement under the loss share agreements.

The following tables provide the number of loans modified in a TDR and the recorded investment and unpaid principal balance by loan portfolio as of June 30, 2014, December 31, 2013, and June 30, 2013.



			As of June 30, 2014
(Dollars in thousands)			Number of Loans	Recorded Investment		Unpaid Principal Balance
Originated loans
	Commercial
		C&I	41	$	7,062	$	13,200
		CRE	60	21,407		25,567
		Construction	31	53		76
		Total originated commercial	132	28,522		38,843
	Consumer
		Installment	1,350	24,394		25,293
		Home equity lines	260	6,956		7,192
		Credit card	253	979		979
		Residential mortgages	326	26,297		29,426
		Total originated consumer	2,189	58,626		62,890
Total originated loans			2,321	$	87,148	$	101,733
Acquired loans
	Commercial
		C&I	1	$	4	$	4
		CRE	1	1,661		1,661
		Total acquired commercial	2	1,665		1,665
	Consumer
		Installment	30	979		1,032
		Home equity lines	90	4,710		4,750
		Residential mortgages	21	1,461		1,635
		Total acquired consumer	141	7,150		7,417
Total acquired loans			143	$	8,815	$	9,082
Covered loans
	Commercial
		C&I	6	$	177	$	1,070
		CRE	24	37,385		54,480
		Construction	10	2,605		21,331
		Total covered commercial	40	40,167		76,881
	Consumer
		Home equity lines	62	8,489		8,489
		Residential mortgages	2	337		337
		Total covered consumer	64	8,826		8,826
Total covered loans			104	$	48,993	$	85,707
Total loans
	Commercial
		C&I	48	$	7,243	$	14,274
		CRE	85	60,453		81,708
		Construction	41	2,658		21,407
		Total commercial	174	70,354		117,389
	Consumer
		Installment	1,380	25,373		26,325
		Home equity lines	412	20,155		20,431
		Credit card	253	979		979
		Residential mortgages	349	28,095		31,398
		Total consumer	2,394	74,602		79,133
Total loans			2,568	$	144,956	$	196,522

Note 1: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.



			As of December 31, 2013
(Dollars in thousands)			Number of Loans	Recorded Investment		Unpaid Principal Balance
Originated loans
	Commercial
		C&I	35	$	4,449	$	7,660
		CRE	52	15,932		20,569
		Construction	30	905		1,179
		Total originated commercial	117	21,286		29,408
	Consumer
		Installment	1,553	27,285		28,536
		Home equity lines	231	6,725		7,054
		Credit card	307	1,113		1,113
		Residential mortgages	301	23,067		25,676
		Total originated consumer	2,392	58,190		62,379
Total originated loans			2,509	$	79,476	$	91,787
Acquired loans
	Commercial
		C&I	1	6		5
		CRE	1	1,730		1,730
		Total acquired commercial	2	1,736		1,735
	Consumer
		Installment	12	505		542
		Home equity lines	8	245		270
		Residential mortgages	7	431		502
		Total acquired consumer	27	1,181		1,314
Total acquired loans			29	$	2,917	$	3,049
Covered loans
	Commercial
		C&I	4	$	1,104	$	2,331
		CRE	24	39,995		57,008
		Construction	10	4,144		24,547
		Total covered commercial	38	45,243		83,886
	Consumer
		Home equity lines	47	5,401		5,421
		Residential Mortgages	1	150		150
		Total covered consumer	48	5,551		5,571
Total covered loans			86	$	50,794	$	89,457
Total loans
	Commercial
		C&I	40	$	5,559	$	9,996
		CRE	77	57,657		79,307
		Construction	40	5,049		25,726
		Total commercial	157	68,265		115,029
	Consumer
		Installment	1,565	27,790		29,078
		Home equity lines	286	12,371		12,745
		Credit card	307	1,113		1,113
		Residential mortgages	309	23,648		26,328
		Total consumer	2,467	64,922		69,264
Total loans			2,624	$	133,187	$	184,293

Note 1: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.



			As of June 30, 2013
(Dollars in thousands)			Number of Loans	Recorded Investment		Unpaid Principal Balance
Originated loans
	Commercial
		C&I	31	$	7,806	$	11,489
		CRE	47	17,361		21,742
		Construction	31	1,005		1,282
		Total originated commercial	109	26,172		34,513
	Consumer
		Installment	1,757	30,140		31,654
		Home equity lines	239	6,819		7,142
		Credit card	329	1,262		1,262
		Residential mortgages	293	23,221		25,905
		Total originated consumer	2,618	61,442		65,963
Total originated loans			2,727	$	87,614	$	100,476
Covered loans
	Commercial
		C&I	3	$	1,635	$	1,880
		CRE	21	46,314		57,021
		Construction	10	6,082		26,155
		Total covered commercial	34	54,031		85,056
	Consumer
		Home equity lines	42	5,562		5,590
Total covered loans			76	$	59,593	$	90,646
Total loans
	Commercial
		C&I	34	$	9,441	$	13,369
		CRE	68	63,675		78,763
		Construction	41	7,087		27,437
		Total commercial	143	80,203		119,569
	Consumer
		Installment	1,757	30,140		31,654
		Home equity lines	281	12,381		12,732
		Credit card	329	1,262		1,262
		Residential mortgages	293	23,221		25,905
		Total consumer	2,660	67,004		71,553
Total loans			2,803	$	147,207	$	191,122

Note 1: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

The pre-modification and post-modification outstanding recorded investments of loans modified as TDRs during the three and six months ended June 30, 2014 and 2013 were not materially different. Post-modification balances may include capitalization of unpaid accrued interest and fees associated with the modification as well as forgiveness of principal. Loans modified as TDRs during the three and six months ended June 30, 2014 and 2013 did not involve the forgiveness of principal, accordingly, the Corporation did not record a charge-off at the modification date. Additionally, capitalization of any unpaid accrued interest and fees assessed to loans modified in the three and six months ended June 30, 2014 and 2013 were not material to the accompanying consolidated financial statements. Specific allowances for loan losses are established for loans whose terms have been modified in a TDR. Specific reserve allocations are generally assessed prior to loans being modified in a TDR, as most of these loans migrate from the Corporation's internal watch list and have been specifically allocated for as part of the Corporation's normal loan loss provisioning methodology. At June 30, 2014, the Corporation had $1.6 million in commitments to lend additional funds to debtors owing receivables whose terms have been modified in a TDR.

The following tables provide a summary of the delinquency status of TDRs along with the specific allowance for loan loss, by loan type, as of June 30, 2014, December 31, 2013, and June 30, 2013, including TDRs that continue to accrue interest and TDRs included in nonperforming assets.



As of June 30, 2014
	Accruing TDRs						Nonaccruing TDRs						Total		Total
(In thousands)	Current		Delinquent		Total		Current		Delinquent		Total		TDRs		Allowance
Originated loans
Commercial
C&I	$	1,659	$	—	$	1,659	$	3,375	$	2,028	$	5,403	$	7,062	$	2,443
CRE	15,387		1,529		16,916		1,419		3,072		4,491		21,407		93
Construction	—		—		—		53		—		53		53		9
Total originated commercial	17,046		1,529		18,575		4,847		5,100		9,947		28,522		2,545
Consumer
Installment	21,404		694		22,098		2,074		222		2,296		24,394		1,008
Home equity lines	5,767		188		5,955		1,001		—		1,001		6,956		201
Credit card	857		86		943		—		36		36		979		361
Residential mortgages	15,256		2,349		17,605		5,335		3,357		8,692		26,297		1,019
Total originated consumer	43,284		3,317		46,601		8,410		3,615		12,025		58,626		2,589
Total originated TDRs	$	60,330	$	4,846	$	65,176	$	13,257	$	8,715	$	21,972	$	87,148	$	5,134
Acquired loans
Commercial
C&I	—		—		—		4		—		4		4		4
CRE	1,661		—		1,661		—		—		—		1,661		182
Total acquired commercial	1,661		—		1,661		4		—		4		1,665		186
Consumer
Installment	702		250		952		27		—		27		979		14
Home equity lines	4,026		576		4,602		108		—		108		4,710		—
Residential mortgages	670		—		670		764		27		791		1,461		—
Total acquired consumer	5,398		826		6,224		899		27		926		7,150		14
Total acquired TDRs	$	7,059	$	826	$	7,885	$	903	$	27	$	930	$	8,815	$	200
Covered loans
Commercial
C&I	$	—	$	177	$	177	$	—	$	—	$	—	$	177	$	—
CRE	4,909		32,476		37,385		—		—		—		37,385		1,129
Construction	666		1,939		2,605		—		—		—		2,605		68
Total covered commercial	5,575		34,592		40,167		—		—		—		40,167		1,197
Consumer
Home equity lines	8,038		115		8,153		336		—		336		8,489		—
Residential mortgages	337		—		337		—		—		—		337		—
Total covered consumer	8,375		115		8,490		336		—		336		8,826		—
Total covered TDRs	$	13,950	$	34,707	$	48,657	$	336	$	—	$	336	$	48,993	$	1,197
Total loans
Commercial
C&I	$	1,659	$	177	$	1,836	$	3,379	$	2,028	$	5,407	$	7,243	$	2,447
CRE	21,957		34,005		55,962		1,419		3,072		4,491		60,453		1,404
Construction	666		1,939		2,605		53		—		53		2,658		77
Total commercial	24,282		36,121		60,403		4,851		5,100		9,951		70,354		3,928
Consumer
Installment	22,106		944		23,050		2,101		222		2,323		25,373		1,022
Home equity lines	17,831		879		18,710		1,445		—		1,445		20,155		201
Credit card	857		86		943		—		36		36		979		361
Residential mortgages	16,263		2,349		18,612		6,099		3,384		9,483		28,095		1,019
Total consumer	57,057		4,258		61,315		9,645		3,642		13,287		74,602		2,603
Total TDRs	$	81,339	$	40,379	$	121,718	$	14,496	$	8,742	$	23,238	$	144,956	$	6,531



As of December 31, 2013
	Accruing TDRs						Nonaccruing TDRs						Total		Total
(In thousands)	Current		Delinquent		Total		Current		Delinquent		Total		TDRs		Allowance
Originated loans
Commercial
C&I	$	1,438	$	879	$	2,317	$	177	$	1,955	$	2,132	$	4,449	$	665
CRE	10,442		382		10,824		1,208		3,900		5,108		15,932		32
Construction	848		—		848		—		57		57		905		—
Total originated commercial	12,728		1,261		13,989		1,385		5,912		7,297		21,286		697
Consumer
Installment	23,342		1,238		24,580		2,483		222		2,705		27,285		1,014
Home equity lines	5,313		194		5,507		1,206		12		1,218		6,725		223
Credit card	1,046		66		1,112		—		1		1		1,113		312
Residential mortgages	12,276		3,327		15,603		4,360		3,104		7,464		23,067		1,133
Total originated consumer	41,977		4,825		46,802		8,049		3,339		11,388		58,190		2,682
Total originated TDRs	$	54,705	$	6,086	$	60,791	$	9,434	$	9,251	$	18,685	$	79,476	$	3,379
Acquired loans
Commercial
C&I	$	—	$	—	$	—	$	6	$	—	$	6	$	6	$	—
CRE	1,730		—		1,730		—		—		—		1,730		—
Total acquired commercial	1,730		—		1,730		6		—		6		1,736		—
Consumer
Installment	369		136		505		—		—		—		505		—
Home equity lines	182		—		182		63		—		63		245		—
Residential mortgages	245		—		245		32		154		186		431		—
Total acquired consumer	796		136		932		95		154		249		1,181		—
Total acquired TDRs	$	2,526	$	136	$	2,662	$	101	$	154	$	255	$	2,917	$	—
Covered loans
Commercial
C&I	$	362	$	742	$	1,104	$	—	$	—	$	—	$	1,104	$	—
CRE	5,259		34,736		39,995		—		—		—		39,995		3,022
Construction	698		3,446		4,144		—		—		—		4,144		800
Total covered commercial	6,319		38,924		45,243		—		—		—		45,243		3,822
Consumer
Home equity lines	5,377		24		5,401		—		—		—		5,401		—
Residential mortgages	150		—		150		—		—		—		150		—
Total covered consumer	5,527		24		5,551		—		—		—		5,551		—
Total covered TDRs	$	11,846	$	38,948	$	50,794	$	—	$	—	$	—	$	50,794	$	3,822
Commercial
C&I	$	1,800	$	1,621	$	3,421	$	183	$	1,955	$	2,138	$	5,559	$	665
CRE	17,431		35,118		52,549		1,208		3,900		5,108		57,657		3,054
Construction	1,546		3,446		4,992		—		57		57		5,049		800
Total commercial	20,777		40,185		60,962		1,391		5,912		7,303		68,265		4,519
Consumer
Installment	23,711		1,374		25,085		2,483		222		2,705		27,790		1,014
Home equity lines	10,872		218		11,090		1,269		12		1,281		12,371		223
Credit card	1,046		66		1,112		—		1		1		1,113		312
Residential mortgages	12,671		3,327		15,998		4,392		3,258		7,650		23,648		1,133
Total consumer	48,300		4,985		53,285		8,144		3,493		11,637		64,922		2,682
Total TDRs	$	69,077	$	45,170	$	114,247	$	9,535	$	9,405	$	18,940	$	133,187	$	7,201



As of June 30, 2013
	Accruing TDRs						Nonaccruing TDRs						Total		Total
(In thousands)	Current		Delinquent		Total		Current		Delinquent		Total		TDRs		Allowance
Originated loans
Commercial
C&I	$	1,021	$	—	$	1,021	$	6,248	$	537	$	6,785	$	7,806	$	2,569
CRE	11,200		—		11,200		1,726		4,435		6,161		17,361		510
Construction	404		537		941		64		—		64		1,005		—
Total originated commercial	12,625		537		13,162		8,038		4,972		13,010		26,172		3,079
Consumer
Installment	25,800		913		26,713		3,227		200		3,427		30,140		557
Home equity lines	5,321		144		5,465		1,354		—		1,354		6,819		197
Credit card	1,222		40		1,262		—		—		—		1,262		255
Residential mortgages	13,514		2,147		15,661		4,518		3,042		7,560		23,221		1,280
Total originated consumer	45,857		3,244		49,101		9,099		3,242		12,341		61,442		2,289
Total originated TDRs	$	58,482	$	3,781	$	62,263	$	17,137	$	8,214	$	25,351	$	87,614	$	5,368
Covered loans
Commercial
C&I	$	897	$	738	$	1,635	$	—	$	—	$	—	$	1,635	$	518
CRE	5,269		41,045		46,314		—		—		—		46,314		3,749
Construction	1,542		4,540		6,082		—		—		—		6,082		900
Total covered commercial	7,708		46,323		54,031		—		—		—		54,031		5,167
Consumer
Home equity lines	5,065		497		5,562		—		—		—		5,562		—
Total covered TDRs	$	12,773	$	46,820	$	59,593	$	—	$	—	$	—	$	59,593	$	5,167
Total loans
Commercial
C&I	$	1,918	$	738	$	2,656	$	6,248	$	537	$	6,785	$	9,441	$	3,087
CRE	16,469		41,045		57,514		1,726		4,435		6,161		63,675		4,259
Construction	1,946		5,077		7,023		64		—		64		7,087		900
Total commercial	20,333		46,860		67,193		8,038		4,972		13,010		80,203		8,246
Consumer
Installment	25,800		913		26,713		3,227		200		3,427		30,140		557
Home equity lines	10,386		641		11,027		1,354		—		1,354		12,381		197
Credit card	1,222		40		1,262		—		—		—		1,262		255
Residential mortgages	13,514		2,147		15,661		4,518		3,042		7,560		23,221		1,280
Total consumer	50,922		3,741		54,663		9,099		3,242		12,341		67,004		2,289
Total TDRs	$	71,255	$	50,601	$	121,856	$	17,137	$	8,214	$	25,351	$	147,207	$	10,535

Loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, the Corporation evaluates the loan for possible further impairment. The ALL may be increased, adjustments may be made in the allocation of the ALL, or partial charge-offs may be taken to further write-down the carrying value of the loan.

On an ongoing basis, the Corporation monitors the performance of modified loans to their restructured terms. In the event of a subsequent default, the ALL continues to be reassessed on the basis on an individual evaluation of the loan.

The following table provides the number of loans modified in a TDR during the previous 12 months that subsequently defaulted during the three months ended June 30, 2014, as well as the recorded investment in these restructured loans as of June 30, 2014.



	As of June 30, 2014
(Dollars in thousands)	Number of Loans	Recorded Investment
Originated loans
Commercial
C&I	1	$	170
CRE	1	363
Construction	—	—
Total originated commercial	2	533
Consumer
Installment	1	3
Home equity lines	—	—
Credit card	7	31
Residential mortgages	1	99
Total originated consumer	9	$	133
Covered loans
Commercial
C&I	—	$	—
CRE	—	—
Construction	—	—
Total covered commercial	—	$	—
Total loans
Commercial
C&I	1	$	170
CRE	1	363
Construction	—	—
Total commercial	2	533
Consumer
Installment	1	3
Home equity lines	—	—
Credit card	7	31
Residential mortgages	1	99
Total consumer	9	133
Total	11	$	666



	As of December 31, 2013
(Dollars in thousands)	Number of Loans	Recorded Investment
Originated loans
Commercial
C&I	4	$	1,773
CRE	6	3,101
Construction	1	231
Total originated commercial	11	5,105
Consumer
Installment	17	170
Home equity lines	—	—
Credit card	33	245
Residential mortgages	1	75
Total originated consumer	51	$	490
Covered loans
Commercial
C&I	—	$	—
CRE	1	—
Construction	1	45
Total covered commercial	2	$	45
Total loans
Commercial
C&I	4	$	1,773
CRE	7	3,101
Construction	2	276
Total commercial	13	5,150
Consumer
Installment	17	170
Home equity lines	—	—
Credit card	33	245
Residential mortgages	1	75
Total consumer	51	490
Total	64	$	5,640



	As of June 30, 2013
(Dollars in thousands)	Number of Loans	Recorded Investment
Originated loans
Commercial
C&I	—	$	—
CRE	1	85
Construction	1	537
Total originated commercial	2	622
Consumer
Installment	2	37
Home equity lines	1	15
Credit card	9	79
Residential mortgages	—	—
Total originated consumer	12	$	131
Covered loans
Commercial
C&I	—	$	—
CRE	—	—
Construction	—	—
Total covered commercial	—	$	—
Total loans
Commercial
C&I	—	$	—
CRE	1	85
Construction	1	537
Total commercial	2	622
Consumer
Installment	2	37
Home equity lines	1	15
Credit card	9	79
Residential mortgages	—	—
Total consumer	12	131
Total	14	$	753