Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2012

Loans and Allowance for Loan Losses

4. Loans and Allowance for Loan Losses

Loans, net of unearned income, consisted of the following:

	September 30,		December 31,
	2012		2011
	(In thousands)
Originated loans:
Commerical non-real estate	$	2,416,143	$	1,525,409
Construction and land development		628,067		540,806
Commercial real estate		1,421,526		1,259,757
Residential mortgages		757,471		487,147
Consumer		1,357,987		1,074,611
Total originated loans	$	6,581,194	$	4,887,730
Acquired loans:
Commerical non-real estate	$	1,797,827	$	2,236,758
Construction and land development		368,476		603,371
Commercial real estate		1,378,706		1,656,515
Residential mortgages		532,551		734,669
Consumer		219,962		386,540
Total acquired loans	$	4,297,522	$	5,617,853
Covered loans:
Commerical non-real estate	$	21,855	$	38,063
Construction and land development		48,094		118,828
Commercial real estate		106,775		82,651
Residential mortgages		271,618		285,682
Consumer		107,390		146,219
Total covered loans	$	555,732	$	671,443
Total loans:
Commerical non-real estate	$	4,235,825	$	3,800,230
Construction and land development		1,044,637		1,263,005
Commercial real estate		2,907,007		2,998,923
Residential mortgages		1,561,640		1,507,498
Consumer		1,685,339		1,607,370
Total loans	$	11,434,448	$	11,177,026

The following briefly describes the distinction between originated, acquired and covered loans and certain significant accounting policies relevant to each category.

Originated loans

Loans originated for investment are reported at the principal balance outstanding net of unearned income. Interest on loans and accretion of unearned income are computed in a manner that approximates a level yield on recorded principal. Interest on loans is recognized in income as earned. The accrual of interest on originated loans is discontinued when it is determined to be probable that the borrower will not be able to meet payment obligations as they become due. The Company maintains an allowance for loan losses on originated loans that represents management’s estimate of probable losses inherent in this portfolio category. The methodology for estimating the allowance is described in Note 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. As actual losses are incurred, they are charged against the allowance. Subsequent recoveries are added back to the allowance when collected.

Acquired loans

Acquired loans are those purchased in the Whitney Holding Corporation acquisition on June 4, 2011. These loans were recorded at estimated fair value at the acquisition date with no carryover of the related allowance for loan losses. The acquired loans were segregated between those considered to be performing (“acquired performing”) and those with evidence of credit deterioration (“acquired impaired”), and then further segregated into pools using common risk characteristics, such as loan type, geography and risk rating. The fair value estimate for each pool was based on an estimate of cash flows, both principal and interest, expected to be collected from that pool, discounted at prevailing market rates of interest. Each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows.

The difference between the fair value of an acquired performing loan pool and the contractual amounts due at the acquisition date (the “fair value discount”) is accreted into income over the estimated life of the pool. Management estimates an allowance for loan losses for acquired performing loans at each subsequent reporting date using a methodology similar to that used for originated loans. The allowance determined for each loan pool is compared to the remaining fair value discount for that pool. If the allowance is greater, the excess is added to the reported allowance through a provision for loan losses. If the allowance is less, no additional allowance or provision is recognized. Actual losses are first charged against any remaining fair value discount for the loan pool. Once the discount is fully depleted, losses are applied against the allowance established for that pool. Acquired performing loans are considered and reported as nonperforming and past due using the same criteria applied to the originated portfolio. The accrual of interest on acquired performing loans is discontinued when, in management’s opinion, it is probable that the borrower will be unable to meet payment obligations as they become due, as well as when required by regulatory provisions.

The excess of cash flows expected to be collected from an acquired impaired loan pool over the pool’s estimated fair value at acquisition is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the pool. Management updates the estimate of cash flows expected to be collected on each acquired impaired loan pool at each reporting date. If expected cash flows for a pool decrease, an increase in the reported allowance for loan losses is made through a provision for loan losses. If expected cash flows for a pool increase, any previously established allowance for loan losses 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.

Covered loans and the related FDIC loss share indemnification asset

The loans purchased in the 2009 acquisition of Peoples First Community Bank are covered by two loss share agreements between the FDIC and the Company that afford the Company significant loss protection. Covered loans are accounted for as acquired impaired loans as described above. The loss share indemnification asset is measured separately from the related covered loans as it is not contractually embedded in the loans and is not transferable should the loans be sold. The fair value of the indemnification asset at acquisition was estimated by discounting projected cash flows from the loss share agreements based on expected reimbursements for allowable loss claims, including appropriate consideration of possible true-up payments to the FDIC at the expiration of the agreements. The discounted amount is accreted into non-interest income over the remaining life of the covered loan pool or the life of the loss share agreement.

In the following discussion and tables, commercial loans include the commercial non-real estate, construction and land development and commercial real estate loans categories shown in the previous table.

The following schedule shows activity in the allowance for loan losses, by portfolio segment and the corresponding recorded investment in loans, for the nine months ended September 30, 2012 and September 30, 2011.

Originated loans:	Commercial			Residential mortgages			Consumer			Total
(In thousands)	September 30, 2012
Allowance for loan losses:
Beginning balance, January 1, 2012	$	60,211		$	4,894		$	18,141		$	83,246
Charge-offs		(18,036	)		(4,889	)		(11,663	)		(34,588	)
Recoveries		4,225			310			3,060			7,595
Net provision for loan losses		12,618			4,336			6,542			23,496
Increase in indemnification asset		—			—			—			—
Ending balance	$	59,018		$	4,651		$	16,080		$	79,749
Ending balance:
Individually evaluated for impairment	$	8,469		$	133		$	—		$	8,602
Ending balance:
Collectively evaluated for impairment	$	50,549		$	4,518		$	16,080		$	71,147
Loans:
Ending balance:	$	4,465,736		$	757,471		$	1,357,987		$	6,581,194
Ending balance:
Individually evaluated for impairment	$	78,337		$	7,524		$	—		$	85,861
Ending balance:
Collectively evaluated for impairment	$	4,387,399		$	749,947		$	1,357,987		$	6,495,333
Covered loans:	Commercial			Residential mortgages			Consumer			Total
(In thousands)	September 30, 2012
Allowance for loan losses:
Beginning balance, January 1, 2012	$	18,203		$	9,024		$	14,408		$	41,635
Charge-offs		(22,839	)		—			—			(22,839	)
Recoveries		—			—			—			—
Net provision for loan losses (a)		12,744			2,196			(12,295	)		2,645
Increase in indemnification asset (a)		22,650			11,189			562			34,401
Ending balance	$	30,758		$	22,409		$	2,675		$	55,842
Ending balance:
Individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance:
Collectively evaluated for impairment	$	30,758		$	22,409		$	2,675		$	55,842
Loans:
Ending balance:	$	176,724		$	271,618		$	107,390		$	555,732
Ending balance:
Individually evaluated for impairment	$	5,769		$	393		$	—		$	6,162
Ending balance:
Collectively evaluated for impairment	$	170,955		$	271,225		$	107,390		$	549,570
Total loans:	Commercial			Residential mortgages			Consumer			Total
(In thousands)	September 30, 2012
Allowance for loan losses:
Beginning balance, January 1, 2012	$	78,414		$	13,918		$	32,549		$	124,881
Charge-offs		(40,875	)		(4,889	)		(11,663	)		(57,427	)
Recoveries		4,225			310			3,060			7,595
Net provision for loan losses (a)		25,362			6,532			(5,753	)		26,141
Increase in indemnification asset (a)		22,650			11,189			562			34,401
Ending balance	$	89,776		$	27,060		$	18,755		$	135,591
Ending balance:
Individually evaluated for impairment	$	8,469		$	133		$	—		$	8,602
Ending balance:
Collectively evaluated for impairment	$	81,307		$	26,927		$	18,755		$	126,989
Loans:
Ending balance:	$	8,187,469		$	1,561,640		$	1,685,339		$	11,434,448
Ending balance:
Individually evaluated for impairment	$	84,106		$	7,917		$	—		$	92,023
Ending balance:
Collectively evaluated for impairment	$	8,103,363		$	1,553,723		$	1,685,339		$	11,342,425
Ending balance:
Acquired loans (b)	$	3,545,009		$	532,551		$	219,962		$	4,297,522

(a) The Company increased the allowance by $37.0 million for losses related to impairment on certain pools of covered loans. This provision was mostly offset by a $34.4 million increase in the FDIC indemnification asset.

(b) In accordance with purchase accounting rules, the Whitney loans were recorded at their fair value at the time of the acquisition, and the prior allowance for loan losses was eliminated. No allowance has been established on these acquired loans since the acquisition date. These loans are included in the ending balance of loans collectively evaluated for impairment.

Originated loans:	Commercial			Residential mortgages			Consumer			Total
(In thousands)	September 30, 2011
Allowance for loan losses:
Beginning balance, January 1, 2011	$	56,859		$	4,626		$	19,840		$	81,325
Charge-offs		(25,598	)		(1,774	)		(8,855	)		(36,227	)
Recoveries		9,863			1,044			2,813			13,720
Net provision for loan losses		17,514			5,286			2,748			25,548
Increase in indemnification asset		—			—			—			—
Ending balance	$	58,638		$	9,182		$	16,546		$	84,366
Ending balance:
Individually evaluated for impairment	$	5,959		$	641		$	—		$	6,600
Ending balance:
Collectively evaluated for impairment	$	52,679		$	8,541		$	16,546		$	77,766
Loans:
Ending balance:	$	3,119,291		$	412,267		$	1,001,162		$	4,532,720
Ending balance:
Individually evaluated for impairment	$	44,317		$	5,199		$	—		$	49,516
Ending balance:
Collectively evaluated for impairment	$	3,074,974		$	407,068		$	1,001,162		$	4,483,204
Covered loans:	Commercial			Residential mortgages			Consumer			Total
(In thousands)	September 30, 2011
Allowance for loan losses:
Beginning balance, January 1, 2011	$	—		$	—		$	672		$	672
Charge-offs		—			—			(375	)		(375	)
Recoveries		—			—			—			—
Net provision for loan losses (a)		1,328			—			345			1,673
Increase in indemnification asset (a)		19,583			—			12,194			31,777
Ending balance	$	20,911		$	—		$	12,836		$	33,747
Ending balance:
Individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance:
Collectively evaluated for impairment	$	20,911		$	—		$	12,836		$	33,747
Loans:
Ending balance:	$	301,960		$	262,246		$	157,625		$	721,831
Ending balance:
Individually evaluated for impairment	$	32,869		$	1,237		$	—		$	34,106
Ending balance:
Collectively evaluated for impairment	$	269,091		$	261,009		$	157,625		$	687,725
Total loans:	Commercial			Residential mortgages			Consumer			Total
(In thousands)	September 30, 2011
Allowance for loan losses:
Beginning balance, January 1, 2011	$	56,859		$	4,626		$	20,512		$	81,997
Charge-offs		(25,598	)		(1,774	)		(9,230	)		(36,602	)
Recoveries		9,863			1,044			2,813			13,720
Net provision for loan losses (a)		18,842			5,286			3,093			27,221
Increase in indemnification asset (a)		19,583			—			12,194			31,777
Ending balance	$	79,549		$	9,182		$	29,382		$	118,113
Ending balance:
Individually evaluated for impairment	$	5,959		$	641		$	—		$	6,600
Ending balance:
Collectively evaluated for impairment	$	73,590		$	8,541		$	29,382		$	111,513
Loans:
Ending balance:	$	8,075,247		$	1,451,506		$	1,575,516		$	11,102,269
Ending balance:
Individually evaluated for impairment	$	77,186		$	6,436		$	—		$	83,622
Ending balance:
Collectively evaluated for impairment	$	7,998,061		$	1,445,070		$	1,575,516		$	11,018,647
Ending balance:
Acquired loans (b)	$	4,653,996		$	776,993		$	416,729		$	5,847,718

(a) The Company increased the allowance by $33.4 million for losses related to impairment on certain pools of covered loans. This provision was mostly offset by a $31.8 million increase in the FDIC indemnification asset.

(b) In accordance with purchase accounting rules, the Whitney loans were recorded at their fair value at the time of the acquisition, and the prior allowance for loan losses was eliminated. No allowance has been established on these acquired loans since the acquisition date. These loans are included in the ending balance of loans collectively evaluated for impairment.

The following table shows the composition of non-accrual loans by portfolio segment and class. Acquired impaired and certain covered loans are considered to be performing due to the application of the accretion method and are excluded from the table. Covered loans accounted for using the cost recovery method do not have an accretable yield and are disclosed below as non-accrual loans. Acquired performing loans that have subsequently been placed on non-accrual status are also disclosed below.

	September 30,		December 31,
	2012		2011
	(In thousands)
Originated loans:
Commercial	$	112,165	$	55,046
Residential mortgages		11,288		24,406
Consumer		4,588		3,855
Total originated loans	$	128,041	$	83,307
Acquired loans:
Commercial	$	12,838	$	—
Residential mortgages		7,606		—
Consumer		2,480		1,117
Total acquired loans	$	22,924	$	1,117
Covered loans:
Commercial	$	5,769	$	18,209
Residential mortgages		393		637
Consumer		—		—
Total covered loans	$	6,162	$	18,846
Total loans:
Commercial	$	130,772	$	73,255
Residential mortgages		19,287		25,043
Consumer		7,068		4,972
Total loans	$	157,127	$	103,270

The amount of interest that would have been recorded on nonaccrual loans and taken into income for the nine months ended September 30, 2012 was approximately $5.8 million. Interest actually received on nonaccrual loans during the nine months ended September 30, 2012 was $1.4 million.

Included in nonaccrual loans at September 30, 2012 is $21.6 million in restructured commercial loans. Total troubled debt restructurings (TDRs) as of September 30, 2012 were $32.3 million and $18.1 million at December 31, 2011. Modified acquired impaired loans are not removed from their accounting pool and accounted for as TDRs, even if those loans would otherwise be deemed TDRs.

The table below details the troubled debt restructurings (TDR) that occurred for the three and nine months ended September 30, 2012 and 2011 by portfolio segment (dollar amounts in thousands). During these periods, no loan modified as a TDR defaulted within twelve months of its modification date. A reserve analysis is completed on all loans that have been determined to be troubled debt restructurings by management. All troubled debt restructurings are rated substandard and are considered impaired in calculating the allowance for loan losses.

	Three Months Ended
	September 30, 2012						September 30, 2011
Troubled Debt Restructurings:	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number  of Contracts			Pre-Modification Outstanding Recorded Investment			Post-Modification Outstanding Recorded Investment
Originated loans:
Commercial		9	$	11,350	$	11,974		1		$	15,855		$	13,425
Residential mortgages		3		997		847		(2	)		(711	)		(695	)
Consumer		—		—		—		—			—			—
Total originated loans		12	$	12,347	$	12,821		(1	)	$	15,144		$	12,730
Aquired loans:
Commercial		—	$	—	$	—		—		$	—		$	—
Residential mortgages		—		—		—		—			—			—
Consumer		—		—		—		—			—			—
Total acquired loans		—	$	—	$	—		—		$	—		$	—
Covered loans:
Commercial		—	$	—	$	—		—		$	—		$	—
Residential mortgages		—		—		—		—			—			—
Consumer		—		—		—		—			—			—
Total covered loans		—	$	—	$	—		—		$	—		$	—
Total loans:
Commercial		9	$	11,350	$	11,974		1		$	15,855		$	13,425
Residential mortgages		3		997		847		(2	)		(711	)		(695	)
Consumer		—		—		—		—			—			—
Total loans		12	$	12,347	$	12,821		(1	)	$	15,144		$	12,730

	Three Months Ended
	September 30, 2012				September 30, 2011
Troubled Debt Restructurings That Subsequently Defaulted:	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Originated loans:
Commercial		—	$	—		2	$	742
Residential mortgages		—		—		—		—
Consumer		—		—		—		—
Total originated loans		—	$	—		2	$	742
Aquired loans:
Commercial		—	$	—		—	$	—
Residential mortgages		—		—		—		—
Consumer		—		—		—		—
Total acquired loans		—	$	—		—	$	—
Covered loans:
Commercial		—	$	—		—	$	—
Residential mortgages		—		—		—		—
Consumer		—		—		—		—
Total covered loans		—	$	—		—	$	—
Total loans:
Commercial		—	$	—		2	$	742
Residential mortgages		—		—		—		—
Consumer		—		—		—		—
Total loans		—	$	—		2	$	742

	Nine Months Ended
	September 30, 2012						September 30, 2011
Troubled Debt Restructurings:	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts			Pre-Modification Outstanding Recorded Investment			Post-Modification Outstanding Recorded Investment
Originated loans:
Commercial		7	$	14,360	$	13,369		11		$	3,447		$	1,822
Residential mortgages		3		960		825		(1	)		(546	)		(415	)
Consumer		—		—		—		—			—			—
Total originated loans		10	$	15,320	$	14,194		10		$	2,901		$	1,407
Aquired loans:
Commercial		—	$	—	$	—		—		$	—		$	—
Residential mortgages		—		—		—		—			—			—
Consumer		—		—		—		—			—			—
Total acquired loans		—	$	—	$	—		—		$	—		$	—
Covered loans:
Commercial		—	$	—	$	—		—		$	—		$	—
Residential mortgages		—		—		—		—			—			—
Consumer		—		—		—		—			—			—
Total covered loans		—	$	—	$	—		—		$	—		$	—
Total loans:
Commercial		7	$	14,360	$	13,369		11		$	3,447		$	1,822
Residential mortgages		3		960		825		(1	)		(546	)		(415	)
Consumer		—		—		—		—			—			—
Total loans		10	$	15,320	$	14,194		10		$	2,901		$	1,407

	Nine Months Ended
	September 30, 2012				September 30, 2011
Troubled Debt Restructurings That Subsequently Defaulted:	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Originated loans:
Commercial		—	$	—		2	$	742
Residential mortgages		—		—		—		—
Consumer		—		—		—		—
Total originated loans		—	$	—		2	$	742
Aquired loans:
Commercial		—	$	—		—	$	—
Residential mortgages		—		—		—		—
Consumer		—		—		—		—
Total acquired loans		—	$	—		—	$	—
Covered loans:
Commercial		—	$	—		—	$	—
Residential mortgages		—		—		—		—
Consumer		—		—		—		—
Total covered loans		—	$	—		—	$	—
Total loans:
Commercial		—	$	—		2	$	742
Residential mortgages		—		—		—		—
Consumer		—		—		—		—
Total loans		—	$	—		2	$	742

The following table presents impaired loans disaggregated by class at September 30, 2012 and December 31, 2011:

September 30, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Originated loans:
With no related allowance recorded:
Commercial	$	36,994	$	61,108	$	—	$	17,661	$	273
Residential mortgages		6,520		10,862		—		2,863		149
Consumer		—		—		—		—		—
		43,514		71,970		—		20,524		422
With an allowance recorded:
Commercial		41,343		48,853		8,469		39,278		319
Residential mortgages		1,004		1,210		133		5,642		—
Consumer		—		—		—		—		—
		42,347		50,063		8,602		44,920		319
Total:
Commercial		78,337		109,961		8,469		56,939		592
Residential mortgages		7,524		12,072		133		8,505		149
Consumer		—		—		—		—		—
Total originated loans	$	85,861	$	122,033	$	8,602	$	65,444	$	741
Covered loans:
With no related allowance recorded:
Commercial		—		—		—		—		—
Residential mortgages		—		—		—		—		—
Consumer		—		—		—		—		—
		—		—		—		—		—
With an allowance recorded: (a)
Commercial		5,769		13,082		—		9,634		—
Residential mortgages		393		787		—		506		—
Consumer		—		—		—		—		—
		6,162		13,869		—		10,140		—
Total:
Commercial		5,769		13,082		—		9,634		—
Residential mortgages		393		787		—		506		—
Consumer		—		—		—		—		—
Total covered loans	$	6,162	$	13,869	$	—	$	10,140	$	—
Total loans:
With no related allowance recorded:
Commercial		36,994		61,108		—		17,661		273
Residential mortgages		6,520		10,862		—		2,863		149
Consumer		—		—		—		—		—
		43,514		71,970		—		20,524		422
With an allowance recorded:
Commercial		47,112		61,935		8,469		48,912		319
Residential mortgages		1,397		1,997		133		6,148		—
Consumer		—		—		—		—		—
		48,509		63,932		8,602		55,060		319
Total:
Commercial		84,106		123,043		8,469		66,573		592
Residential mortgages		7,917		12,859		133		9,011		149
Consumer		—		—		—		—		—
Total loans	$	92,023	$	135,902	$	8,602	$	75,584	$	741

(a) Impaired Cost Recovery loans generally will not have an allowance as the balance is charged down as the impairment is recognized.

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
December 31, 2011	Investment		Balance		Allowance		Investment		Recognized
	(In thousands)
Originated loans:
With no related allowance recorded:
Commercial	$	10,177	$	24,935	$	—	$	13,992	$	359
Residential mortgages		1,153		1,957		—		1,087		58
Consumer		—		—		—		—		—
		11,330		26,892		—		15,079		417
With an allowance recorded:
Commercial		28,034		33,168		6,988		31,959		254
Residential mortgages		4,090		5,360		551		5,007		7
Consumer		—		—		—		—		—
		32,124		38,528		7,539		36,966		261
Total:
Commercial		38,211		58,103		6,988		45,951		613
Residential mortgages		5,243		7,317		551		6,094		65
Consumer		—		—		—		—		—
Total originated loans	$	43,454	$	65,420	$	7,539	$	52,045	$	678
Covered loans:
With no related allowance recorded:
Commercial		17,874		21,757		—		4,469		—
Residential mortgages		429		845		—		1,847		—
Consumer		—		—		—		—		—
		18,303		22,602		—		6,316		—
With an allowance recorded:
Commercial		335		335		9		27,765		—
Residential mortgages		208		228		19		52		—
Consumer
		543		563		28		27,817		—
Total:
Commercial		18,209		22,092		9		32,234		—
Residential mortgages		637		1,073		19		1,899		—
Consumer		—		—		—		—		—
Total covered loans	$	18,846	$	23,165	$	28	$	34,133	$	—
Total loans:
With no related allowance recorded:
Commercial		28,051		46,692		—		18,461		359
Residential mortgages		1,582		2,802		—		2,934		58
Consumer		—		—		—		—		—
		29,633		49,494		—		21,395		417
With an allowance recorded:
Commercial		28,369		33,503		6,997		59,724		254
Residential mortgages		4,298		5,588		570		5,059		7
Consumer		—		—		—		—		—
		32,667		39,091		7,567		64,783		261
Total:
Commercial		56,420		80,195		6,997		78,185		613
Residential mortgages		5,880		8,390		570		7,993		65
Consumer		—		—		—		—		—
Total loans	$	62,300	$	88,585	$	7,567	$	86,178	$	678

No acquired loans were evaluated individually for impairment at September 30, 2012 or December 31, 2011.

Covered loans and loans acquired with existing credit impairment with an accretable yield are considered to be current in the following delinquency table. Certain covered loans accounted for using the cost recovery method are disclosed according to their contractual payment status below. The following table presents the age analysis of past due loans at September 30, 2012 and December 31, 2011:

													Recorded
					Greater than								investment
	30-59 days		60-89 days		90 days		Total				Total		> 90 days
September 30, 2012	past due		past due		past due		past due		Current		Loans		and accruing
	(In thousands)
Originated loans:
Commercial	$	21,202	$	9,456	$	64,986	$	95,644	$	4,370,092	$	4,465,736	$	4,019
Residential mortgages		118		2,175		9,120		11,413		746,058		757,471		—
Consumer		5,338		1,333		5,014		11,685		1,346,302		1,357,987		2,404
Total	$	26,658	$	12,964	$	79,120	$	118,742	$	6,462,452	$	6,581,194	$	6,423
Acquired loans:
Commercial	$	18,413	$	6,226	$	8,694	$	33,333	$	3,511,676	$	3,545,009	$	1,435
Residential mortgages		2,930		2,346		6,439		11,715		520,836		532,551		1,020
Consumer		625		293		1,939		2,857		217,105		219,962		28
Total	$	21,968	$	8,865	$	17,072	$	47,905	$	4,249,617	$	4,297,522	$	2,483
Covered loans:
Commercial	$	—	$	—	$	5,028	$	5,028	$	171,696	$	176,724	$	—
Residential mortgages		—		—		393		393		271,225		271,618		—
Consumer		—		—		—		—		107,390		107,390		—
Total	$	—	$	—	$	5,421	$	5,421	$	550,311	$	555,732	$	—
Total loans:
Commercial	$	39,615	$	15,682	$	78,708	$	134,005	$	8,053,464	$	8,187,469	$	5,454
Residential mortgages		3,048		4,521		15,952		23,521		1,538,119		1,561,640		1,020
Consumer		5,963		1,626		6,953		14,542		1,670,797		1,685,339		2,432
Total	$	48,626	$	21,829	$	101,613	$	172,068	$	11,262,380	$	11,434,448	$	8,906
													Recorded
					Greater than								investment
	30-59 days		60-89 days		90 days		Total				Total		> 90 days
December 31, 2011	past due		past due		past due		past due		Current		Loans		and accruing
	(In thousands)
Originated loans:
Commercial	$	23,996	$	943	$	58,867	$	83,806	$	3,242,166	$	3,325,972	$	3,821
Residential mortgages		17,884		4,364		25,400		47,648		439,499		487,147		994
Consumer		1,803		2,481		3,911		8,195		1,066,416		1,074,611		56
Total	$	43,683	$	7,788	$	88,178	$	139,649	$	4,748,081	$	4,887,730	$	4,871
Acquired loans:
Commercial	$	—	$	—	$	—	$	—	$	4,496,644	$	4,496,644	$	—
Residential mortgages		—		—		—		—		734,669		734,669		—
Consumer		1,698		430		2,126		4,254		382,286		386,540		1,009
Total	$	1,698	$	430	$	2,126	$	4,254	$	5,613,599	$	5,617,853	$	1,009
Covered loans:
Commercial	$	—	$	—	$	18,209	$	18,209	$	221,333	$	239,542	$	—
Residential mortgages		—		—		637		637		285,045		285,682		—
Consumer		—		—		—		—		146,219		146,219		—
Total	$	—	$	—	$	18,846	$	18,846	$	652,597	$	671,443	$	—
Total loans:
Commercial	$	23,996	$	943	$	77,076	$	102,015	$	7,960,143	$	8,062,158	$	3,821
Residential mortgages		17,884		4,364		26,037		48,285		1,459,213		1,507,498		994
Consumer		3,501		2,911		6,037		12,449		1,594,921		1,607,370		1,065
Total	$	45,381	$	8,218	$	109,150	$	162,749	$	11,014,277	$	11,177,026	$	5,880

The following table presents the credit quality indicators of the Company’s various classes of loans at September 30, 2012 and December 31, 2011. December 31, 2011 commercial-originated and commercial-acquired, pass and substandard grades, were restated due to the correction of a misclassification. Commercial-originated pass was overstated with commercial-originated substandard understated by $91.6 million. Commercial-acquired pass was understated and commercial-acquired substandard was overstated by the same amount. Portfolio totals by risk grade were unchanged.

Commercial Credit Exposure

Credit Risk Profile by Internally Assigned Grade

	September 30, 2012								December 31, 2011
	Commercial -		Commercial -		Commercial -		Total		Commercial -		Commercial -		Commercial -		Total
	originated		acquired		covered		commercial		originated		acquired		covered		commercial
	(In thousands)								(In thousands)
Grade:
Pass	$	4,027,383	$	3,239,019	$	31,170	$	7,297,572	$	3,019,100	$	3,974,463	$	16,843	$	7,010,406
Pass-Watch		85,989		76,231		20,285		182,505		76,393		60,042		13,606		150,041
Special Mention		79,617		42,967		6,720		129,304		35,155		125,852		9,368		170,375
Substandard		272,267		186,541		55,677		514,485		194,900		334,357		124,371		653,628
Doubtful		480		251		62,865		63,596		424		1,930		75,242		77,596
Loss		—		—		7		7		—		—		112		112
Total	$	4,465,736	$	3,545,009	$	176,724	$	8,187,469	$	3,325,972	$	4,496,644	$	239,542	$	8,062,158
Residential Mortgage Credit Exposure Credit Risk Profile by Internally Assigned Grade
	September 30, 2012								December 31, 2011
	Residential		Residential		Residential		Total		Residential		Residential		Residential		Total
	mortgages -		mortgages -		mortgages -		residential		mortgages -		mortgages -		mortgages -		residential
	originated		acquired		covered		mortgages		originated		acquired		covered		mortgages
	(In thousands)								(In thousands)
Grade:
Pass	$	730,385	$	491,450	$	128,240	$	1,350,075	$	460,261	$	673,751	$	120,180	$	1,254,192
Pass-Watch		3,422		3,686		15,000		22,108		7,499		1,773		18,133		27,405
Special Mention		784		5,879		3,050		9,713		542		9,686		3,286		13,514
Substandard		22,880		31,480		107,184		161,544		18,845		48,581		139,643		207,069
Doubtful		—		56		18,144		18,200		—		878		4,440		5,318
Loss		—		—		—		—		—		—		—		—
Total	$	757,471	$	532,551	$	271,618	$	1,561,640	$	487,147	$	734,669	$	285,682	$	1,507,498
Consumer Credit Exposure Credit Risk Profile Based on Payment Activity
	September 30, 2012								December 31, 2011
	Consumer -		Consumer -		Consumer -		Total		Consumer -		Consumer -		Consumer -		Total
	originated		acquired		covered		Consumer		originated		acquired		covered		Consumer
	(In thousands)								(In thousands)
Performing	$	1,353,399	$	217,482	$	107,390	$	1,678,271	$	1,070,756	$	385,423	$	146,219	$	1,602,398
Nonperforming		4,588		2,480		—		7,068		3,855		1,117		—		4,972
Total	$	1,357,987	$	219,962	$	107,390	$	1,685,339	$	1,074,611	$	386,540	$	146,219	$	1,607,370

Loan review uses a risk-focused continuous monitoring program that provides for an independent, objective and timely review of credit risk within the company.

Below are the definitions of the Company’s internally assigned grades:

Commercial:

• Pass - loans properly approved, documented, collateralized, and performing which do not reflect an abnormal credit risk.

• Pass - Watch - Credits in this category are of sufficient risk to cause concern. This category is reserved for credits that display negative performance trends. The “Watch” grade should be regarded as a transition category.

• Special Mention - These credits exhibit some signs of “Watch,” but to a greater magnitude. These credits constitute an undue and unwarranted credit risk, but not to a point of justifying a classification of “Substandard.” They have weaknesses that, if not checked or corrected, weaken the asset or inadequately protect the bank.

• Substandard - These credits constitute an unacceptable risk to the bank. They have recognized credit weaknesses that jeopardize the repayment of the debt. Repayment sources are marginal or unclear.

• Doubtful - A Doubtful credit has all of the weaknesses inherent in one classified “Substandard” with the added characteristic that weaknesses make collection in full highly questionable or improbable.

• Loss - Credits classified as Loss are considered uncollectable and are charged off promptly once so classified.

Consumer:

• Performing – Loans on which payments of principal and interest are less than 90 days past due.

• Non-performing – A non-performing loan is a loan that is in default or close to being in default and there are good reasons to doubt that payments will be made in full. All loans rated as non-accrual are also non-performing.

The Company held $51.1 million and $72.4 million, respectively, in loans held for sale at September 30, 2012 and December 31, 2011. Of the $51.1 million, $4.9 million are problem commercial loans held for sale. The remainder of $46.2 million represents mortgage loans originated for sale, which are carried at the lower of cost or estimated fair value. Residential mortgage loans are originated on a best-efforts basis, whereby a commitment by a third party to purchase the loan has been received concurrent with the Banks’ commitment to the borrower to originate the loan.

Changes in the carrying amount of acquired impaired loans and accretable yield are presented in the following table for the nine months ended September 30, 2012 and the year ended December 31, 2011:

	September 30, 2012												December 31, 2011
	Covered						Non-covered						Covered						Non-covered
	Carrying						Carrying						Carrying						Carrying
	Amount			Accretable			Amount			Accretable			Amount			Accretable			Amount			Accretable
	of Loans			Yield			of Loans			Yield			of Loans			Yield			of Loans			Yield
(In thousands)
Balance at beginning of period	$	671,443		$	153,137		$	339,452		$	130,691		$	809,459		$	107,638		$	—		$	—
Additions		—			—			—			—			—			—			535,489			132,136
Payments received, net		(150,344	)		—			(181,287	)		—			(193,432	)		—			(206,306	)		—
Accretion		34,633			(34,633	)		38,826			(38,826	)		55,416			(55,416	)		10,269			(22,719	)
Decrease in expected cash flows based on actual cash flow and changes in cash flow assumptions		—			(9,807	)		—			(6,180	)		—			(18,930	)		—			(26,630	)
Net transfers from nonaccretable difference to accretable yield		—			18,967			—			95,308			—			119,845			—			47,904
Balance at end of period	$	555,732		$	127,664		$	196,991		$	180,993		$	671,443		$	153,137		$	339,452		$	130,691