Loans

9 Months Ended

Sep. 30, 2011

Loans [Abstract]

Loans

4.   Loans

The loan portfolio is comprised of the following:

	September 30,			December 31,
	2011			2010
Real Estate:
Commercial	$	817,998		$	796,253
Construction		145,682			174,369
Residential		812,203			467,326
Commercial & Industrial		221,208			245,263
Individuals & lease financing		42,750			49,040
Total loans		2,039,841			1,732,251
Deferred loan fees		(4,033	)		(4,115	)
Allowance for loan losses		(42,150	)		(38,949	)
Loans, net	$	1,993,658		$	1,689,187

The following table presents the allowance for loan losses and the recorded investment in loans by portfolio segment for the three and nine month periods ended September 30, 2011 and 2010 (in thousands):

	Three Months Ended September 30, 2011
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	41,889		$	17,112		$	6,440		$	13,161		$	4,246		$	930
Charge-offs		(2,802	)		(69	)		(11	)		(2,263	)		(453	)		(6	)
Recoveries		527			44			28			336			112			7
Net Charge-offs		(2,275	)		(25	)		17			(1,927	)		(341	)		1
Provision for loan losses		2,536			(716	)		(231	)		3,115			387			(19	)
Net change during the period		261			(741	)		(214	)		1,188			46			(18	)
Balance at end of period	$	42,150		$	16,371		$	6,226		$	14,349		$	4,292		$	912

	Nine Months Ended September 30, 2011
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	38,949		$	16,736		$	7,140		$	9,851		$	4,290		$	932
Charge-offs		(9,429	)		(225	)		(867	)		(5,276	)		(2,997	)		(64	)
Recoveries		3,097			730			603			1,355			388			21
Net Charge-offs		(6,332	)		505			(264	)		(3,921	)		(2,609	)		(43	)
Provision for loan losses		9,533			(870	)		(650	)		8,419			2,611			23
Net change during the period		3,201			(365	)		(914	)		4,498			2			(20	)
Balance at end of period	$	42,150		$	16,371		$	6,226		$	14,349		$	4,292		$	912

	Three Months Ended September 30, 2010
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	47,127		$	20,491		$	8,406		$	11,388		$	6,648		$	194
Charge-offs		(17,434	)		(5,708	)		(6,838	)		(3,233	)		(1,645	)		(10	)
Recoveries		621			54			—			469			98			—
Net Charge-offs		(16,813	)		(5,654	)		(6,838	)		(2,764	)		(1,547	)		(10	)
Provision for loan losses		6,572			1,366			4,403			871			(117	)		49
Net change during the period		(10,241	)		(4,288	)		(2,435	)		(1,893	)		(1,664	)		39
Balance at end of period	$	36,886		$	16,203		$	5,971		$	9,495		$	4,984		$	233

	Nine Months Ended September 30, 2010
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	38,645		$	15,273		$	5,802		$	9,706		$	7,326		$	538
Charge-offs		(43,404	)		(12,394	)		(14,311	)		(13,310	)		(3,345	)		(44	)
Recoveries		943			54			11			478			400			—
Net Charge-offs		(42,461	)		(12,340	)		(14,300	)		(12,832	)		(2,945	)		(44	)
Provision for loan losses		40,702			13,270			14,469			12,621			603			(261	)
Net change during the period		(1,759	)		930			169			(211	)		(2,342	)		(305	)
Balance at end of period	$	36,886		$	16,203		$	5,971		$	9,495		$	4,984		$	233

Impaired loans as of September 30, 2011 and December 31, 2010 were as follows (in thousands):

	September 30, 2011						December 31, 2010
	Unpaid				Allowance for		Unpaid				Allowance for
	Principal		Recorded		Loan Losses		Principal		Recorded		Loan Losses
	Balance		Investment		Allocated		Balance		Investment		Allocated
With no related allowance recorded:
Commercial	$	44,895	$	43,510		—	$	22,714	$	21,166		—
Construction		13,619		12,507		—		16,985		11,868		—
Residential		18,066		13,405		—		11,476		7,223		—
Commercial & industrial		9,876		8,171		—		5,543		4,538		—
Lease financing & other		499		241		—		651		393		—
With an allowance recorded:
Commercial		—		—		—		—		—		—
Construction		5,310		5,310	$	863		3,821		3,821	$	850
Residential		—		—		—		521		521		17
Commercial & industrial		25		25		25		25		25		25
Lease financing & other		—		—		—		—		—		—
Total loans	$	92,290	$	83,169	$	888	$	61,736	$	49,555	$	892

The Company classifies all loans considered to be troubled debt restructurings (“TDRs”) as impaired. Impaired loans as of September 30, 2011 and December 31, 2010 included $40.9 million and $17.2 million, respectively, of loans considered to be TDR’s. The carrying value of impaired loans was determined using either the fair value of the underlying collateral of the loan or by an analysis of the expected cash flows related to the loan.

The following tables present the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011
											Lease
			Commercial				Residential		Commercial &		Financing
	Total		Real Estate		Construction		Real Estate		Industrial		& Other
Allowance for loan losses:
Ending balance attributed to loans:
Collectively evaluated for impairment	$	41,262	$	16,371	$	5,363	$	14,349	$	4,267	$	912
Individually evaluated for impairment		888		—		863		—		25		—
Total ending balance of allowance	$	42,150	$	16,371	$	6,226	$	14,349	$	4,292	$	912
Total loans:
Ending balance of loans:
Collectively evaluated for impairment	$	1,956,672	$	774,487	$	127,866	$	798,798	$	213,012	$	42,509
Individually evaluated for impairment		83,169		43,511		17,816		13,405		8,196		241
Total ending balance of loans	$	2,039,841	$	817,998	$	145,682	$	812,203	$	221,208	$	42,750

	December 31, 2010
											Lease
			Commercial				Residential		Commercial &		Financing
	Total		Real Estate		Construction		Real Estate		Industrial		& Other
Allowance for loan losses:
Ending balance attributed to loans:
Collectively evaluated for impairment	$	38,057	$	16,736	$	6,290	$	9,834	$	4,265	$	932
Individually evaluated for impairment		892		—		850		17		25		—
Total ending balance of allowance	$	38,949	$	16,736	$	7,140	$	9,851	$	4,290	$	932
Total loans:
Ending balance of loans:
Collectively evaluated for impairment	$	1,682,696	$	775,087	$	158,680	$	459,582	$	240,700	$	48,647
Individually evaluated for impairment		49,555		21,166		15,689		7,744		4,563	$	393
Total ending balance of loans	$	1,732,251	$	796,253	$	174,369	$	467,326	$	245,263	$	49,040

The following table presents the recorded investment in non-accrual loans and loans past due 90 days and still accruing by class of loans as of September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011				December 31, 2010
			Past Due				Past Due
			90 Days and				90 Days and
	Non-Accrual		Still Accruing		Non-Accrual		Still Accruing
Loans:
Commercial Real Estate:
Owner occupied	$	5,814		—	$	1,942	$	292
Non owner occupied		14,800		—		13,353		—
Construction:
Commercial		7,237		—		4,477		1,323
Residential		10,000		—		11,212		—
Residential:
Multifamily		3,924		—		1,437		—
1-4 family		4,705		—		4,649		—
Home equity		3,619		—		1,658		10
Commercial & industrial		8,196		—		4,563		—
Other:
Lease financing and other		241		—		393		—
Overdrafts		—		—		0		—
Total	$	58,536		—	$	43,684	$	1,625

The following table presents the aging of the recorded investment in loans (including past due and non-accrual loans) as of September 30, 2011 and December 31, 2010 by class of loans (in thousands):

	September 30, 2011
							90 Days
			31-59 Days		60-89 Days		Or More		Total
	Total		Past Due		Past Due		Past Due		Past Due		Current
Loans:
Commercial Real Estate:
Owner occupied	$	317,584		—	$	394	$	5,814	$	6,208	$	311,376
Non owner occupied		500,414		—		2,546		14,800		17,346		483,068
Construction:
Commercial		83,361		—		3,481		7,236		10,717		72,644
Residential		62,321		—		—		10,000		10,000		52,321
Residential:
Multifamily		507,145		—		—		3,924		3,924		503,221
1-4 family		186,872	$	120		583		4,705		5,408		181,464
Home equity		118,186		363		944		3,619		4,926		113,260
Commercial & industrial		221,208		—		4,178		4,264		8,442		212,766
Other:
Lease financing and other		41,171		1		59		241		301		40,870
Overdrafts		1,579		—		—		—		—		1,579
Total	$	2,039,841	$	484	$	12,185	$	54,603	$	67,272	$	1,972,569

The Company had no allocation of specific reserves for the three month period ended September 30, 2011 and allocated $0.8 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings for the nine month period ended September 30, 2011. The Company has not committed to lend any additional amounts for the three and nine month periods ended September 30, 2011 to customers with outstanding loans that are classified as troubled debt restructurings.

During the period ending September 30, 2011, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

Modifications involving a reduction of the stated interest rate of the loan were for periods ranging from 6 months to 15 years. Modifications involving an extension of the maturity date were for periods ranging from 6 months to 3 years.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three and nine month periods ended September 30, 2011:

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2011						September 30, 2011
			Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number		Recorded		Recorded		Number		Recorded		Recorded
	of Loans		Investment		Investment		of Loans		Investment		Investment
Loans:
Commercial Real Estate:
Owner occupied		3	$	10,701	$	10,701		3	$	10,701	$	10,701
Non owner occupied		2		6,328		6,328		5		8,640		8,640
Construction:
Commercial		1		579		579		1		579		579
Residential		—		—		—		—		—		—
Residential:
Multifamily		—		—		—		3		1,132		1,132
1-4 family		2		1,223		909		2		1,223		909
Home equity		—		—		—		—		—		—
Commercial & industrial		2		1,832		1,832		4		3,970		3,970
Other:
Lease financing and other		—		—		—		—		—		—
Overdrafts		—		—		—		—		—		—
Total		10	$	20,663	$	20,349		18	$	26,245	$	25,931

For both the three and nine month periods ended September 30, 2011, seven TDR’s with carrying amounts of $18.1 million were on accrual status and performing in accordance with their modified terms. All other TDR’s for the three and nine month periods ended September 30, 2011 were on nonaccrual status. The troubled debt restructurings described above resulted in no charge offs for the three period ended September 30, 2011 and $0.2 million during the nine month period ended September 30, 2011.

For the three and nine month periods ended September 30, 2011, there were no troubled debt restructurings in which there were payment defaults within twelve months following the modification. The Company’s policy states that a loan is considered to be in payment default once it is 45 days contractually past due under the modified terms.

The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as; value of underlying collateral, current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes non-homogeneous loans individually and classifies them as to credit risk. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

Special Mention — Loans classified as special mention have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of repayment prospects for the asset or in the institution’s credit position at some future date.

Substandard — Loans classified as substandard asset are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected.

Doubtful — Loans classified as doubtful have all the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable.

Loans not meeting the above criteria that are analyzed individually as part of the above described process are considered to be pass rated loans.

The following table presents the risk category by class of loans as of September 30, 2011 and December 31, 2010 of non-homogeneous loans individually classified as to credit risk as of the most recent analysis performed (in thousands):

	September 30, 2011
					Special
	Total		Pass		Mention		Substandard		Doubtful
Commercial Real Estate:
Owner occupied	$	317,584	$	235,430	$	30,019	$	52,135		—
Non owner occupied		500,414		421,506		31,337		47,571		—
Construction:
Commercial		83,361		53,664		15,485		14,212		—
Residential		62,321		41,131		1,273		19,917		—
Residential:
Multifamily		507,145		497,307		4,201		5,637		—
1-4 family		101,153		79,782		7,329		14,042		—
Home equity		9,970		—		—		9,970		—
Commercial & Industrial		221,208		201,390		5,308		14,510		—
Other:
Lease Financing & Other		39,677		38,790		244		643		—
Total loans	$	1,842,833	$	1,569,000	$	95,196	$	178,637		—

	December 31, 2010
					Special
	Total		Pass		Mention		Substandard		Doubtful
Commercial Real Estate:
Owner occupied	$	317,926	$	247,210	$	25,164	$	45,552		—
Non owner occupied		478,327		406,949		42,552		25,826	$	3,000
Construction:
Commercial		104,466		79,861		5,426		19,179		—
Residential		69,903		48,777		—		21,126		—
Residential:
Multifamily		152,295		139,725		2,620		9,950		—
1-4 family		91,761		67,401		12,342		12,018		—
Home equity		12,135		6,715		249		5,171		—
Commercial & Industrial		245,262		218,088		11,559		15,615		—
Other:
Lease Financing & Other		43,570		41,502		332		1,736		—
Total loans	$	1,515,645	$	1,256,228	$	100,244	$	156,173	$	3,000

Loans not individually rated, primarily consisting of certain 1-4 family residential mortgages and home equity lines of credit, are evaluated for risk in groups of homogeneous loans. The primary risk characteristic evaluated on these pools is delinquency.

The following table presents the delinquency categories by class of loans as of September 30, 2011 and December 31, 2010 for loans evaluated for risk in groups of homogeneous loans (in thousands):

	September 30, 2011
							90 Days
			31-59 Days		60-89 Days		Or More		Total
	Total		Past Due		Past Due		Past Due		Past Due		Current
Residential:
1-4 family	$	85,719	$	133	$	115		—	$	248	$	85,471
Home equity		108,216		363		—		—		363		107,853
Other:
Other loans		1,494		1		—		—		1		1,493
Overdrafts		1,579		—		—		—		—		1,579
Total loans	$	197,008	$	497	$	115		—	$	612	$	196,396

	December 31, 2010
							90 Days
			31-59 Days		60-89 Days		Or More		Total
	Total		Past Due		Past Due		Past Due		Past Due		Current
Residential:
1-4 family	$	95,968	$	1,090	$	413		—	$	1,503	$	94,465
Home equity		115,167		342		—		—		342		114,825
Other:
Other loans		1,527		—		—		—		—		1,527
Overdrafts		3,944		—		—		—		—		3,944
Total loans	$	216,606	$	1,432	$	413		—	$	1,845	$	214,761

The following table presents the average recorded investment in impaired loans by portfolio segment and interest recognized on impaired loans for the three and nine month periods ended September 30, 2011 and 2010 (in thousands):

											Lease
			Commercial				Residential		Commercial &		Financing
	Total		Real Estate		Construction		Real Estate		Industrial		& Other
Three months ended September 30, 2011:
Average recorded investment in impaired loans	$	81,776	$	43,526	$	15,802	$	13,580	$	8,623	$	245
Interest Income recognized during impairment	$	271	$	239	$	—	$	32	$	—	$	—
Three months ended September 30, 2010:
Average recorded investment in impaired loans	$	68,902	$	27,644	$	23,012	$	15,003	$	1,504	$	1,739
Interest Income recognized during impairment	$	60	$	60	$	—	$	—	$	—	$	—
Nine months ended September 30, 2011:
Average recorded investment in impaired loans	$	69,017	$	33,645	$	15,281	$	12,692	$	7,081	$	318
Interest Income recognized during impairment	$	389	$	357	$	—	$	32	$	—	$	—
Nine months ended September 30, 2010:
Average recorded investment in impaired loans	$	69,630	$	28,596	$	20,439	$	16,851	$	1,985	$	1,759
Interest Income recognized during impairment	$	141	$	141	$	—	$	—	$	—	$	—

Gross interest income that would have been recorded if these borrowers had been current in accordance with their original loan terms was $2,466 and $1,710, respectively, for the nine month periods ended September 30, 2011 and 2010.