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Allowance for Loan Losses and Credit Quality of Loans (Tables)
 9 Months Ended
Sep. 30, 2012
Allowance for Loan Losses and Credit Quality of Loans [Abstract]  
Allowance for loan and lease losses by portfolio
After a thorough consideration of the factors discussed above, any required additions or reductions to the allowance for loan losses are made periodically by charges or credits to the provision for loan losses. These charges or credits are necessary to maintain the allowance at a level which management believes is reasonably reflective of overall inherent risk of probable loss in the portfolio. While management uses available information to recognize losses on loans, additions and reductions of the allowance may fluctuate from one reporting period to another. These fluctuations are reflective of changes in risk associated with portfolio content and/or changes in management's assessment of any or all of the determining factors discussed above. The following table illustrates the changes in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2012 and September 30, 2011:
 
Allowance for Loan Losses
(in thousands)
 
 
       
Residential
       
   
Commercial
  
Consumer
  
Real Estate
       
   
Loans
  
Loans
  
Mortgages
  
Unallocated
  
Total
 
Balance as of June 30, 2012
 $37,495  $27,235  $5,943  $61  $70,734 
Charge-offs
  (1,904)  (3,446)  (480)  -   (5,830)
Recoveries
  492   574   9   -   1,075 
Provision
  1,734   2,213   809   (1)  4,755 
Ending Balance as of September 30, 2012
 $37,817  $26,576  $6,281  $60  $70,734 
                      
Balance as of June 30, 2011
 $39,147  $25,718  $5,373  $246  $70,484 
Charge-offs
  (1,694)  (3,526)  (45)  -   (5,265)
Recoveries
  367   571   2   -   940 
Provision
  1,073   3,533   588   (19)  5,175 
Ending Balance as of September 30, 2011
 $38,893  $26,296  $5,918  $227  $71,334 

      
 
  
Residential
       
   
Commercial
  
Consumer
  
Real Estate
  
 
  
 
 
   
Loans
  
Loans
  
Mortgages
  
Unallocated
  
Total
 
Balance as of December 31, 2011
 $38,831  $26,049  $6,249  $205  $71,334 
Charge-offs
  (4,685)  (11,237)  (1,130)  -   (17,052)
Recoveries
  1,180   1,918   25   -   3,123 
Provision
  2,491   9,846   1,137   (145)  13,329 
Ending Balance as of September 30, 2012
 $37,817  $26,576  $6,281  $60  $70,734 
                      
Balance as of December 31, 2010
 $40,101  $26,126  $4,627  $380  $71,234 
Charge-offs
  (7,153)  (10,420)  (558)  -   (18,131)
Recoveries
  1,262   1,803   5   -   3,070 
Provision
  4,683   8,787   1,844   (153)  15,161 
Ending Balance as of September 30, 2011
 $38,893  $26,296  $5,918  $227  $71,334 
 
The following tables illustrate the allowance for loan losses and the recorded investment by portfolio segment as of September 30, 2012 and December 31, 2011:
 
Allowance for Loan Losses and Recorded Investment in Loans
(in thousands)
 
      
 
  
Residential
       
   
Commercial
  
Consumer
  
Real Estate
  
 
  
 
 
   
Loans
  
Loans
  
Mortgages
  
Unallocated
  
Total
 
As of September 30, 2012
               
                
Allowance for loan losses
 $37,817  $26,576  $6,281  $60  $70,734 
                      
Allowance for loans individually evaluated for impairment
  2,720   -   -       2,720 
                      
Allowance for loans collectively evaluated for impairment
 $35,097  $26,576  $6,281  $60  $68,014 
                      
Ending balance of loans
 $1,992,891  $1,607,780  $650,448      $4,251,119 
                      
Ending balance of loans individually evaluated for impairment
  13,017   -   -       13,017 
                      
Ending balance of loans collectively evaluated for impairment
 $1,979,874  $1,607,780  $650,448      $4,238,102 
                      
As of December 31, 2011
                    
                     
Allowance for loan losses
 $38,831  $26,049  $6,249  $205  $71,334 
                      
Allowance for loans individually evaluated for impairment
  175   -   -       175 
                      
Allowance for loans collectively evaluated for impairment
 $38,656  $26,049  $6,249  $205  $71,159 
                      
Ending balance of loans
 $1,702,577  $1,516,115  $581,511      $3,800,203 
                      
Ending balance of loans individually evaluated for impairment
  6,219   -   -       6,219 
                      
Ending balance of loans collectively evaluated for impairment
 $1,696,358  $1,516,115  $581,511      $3,793,984 
Past due and nonperforming loans by loan class
The following table illustrates the Company's nonaccrual loans by loan class:
 
Loans on Nonaccrual Status
 
As of September 30, 2012
 
        
(In thousands)
 
September 30,
2012
  
December 31,
2011
 
Commercial Loans
      
Commercial
 $6,915  $1,699 
Commercial Real Estate
  6,432   4,868 
Agricultural
  2,587   3,307 
Agricultural Real Estate
  1,195   2,067 
Business Banking
  5,921   7,446 
    23,050   19,387 
Consumer Loans
        
Indirect
  1,703   1,550 
Home Equity
  8,126   7,931 
Direct
  257   378 
    10,086   9,859 
          
Residential Real Estate Mortgages
  9,525   9,044 
          
Total Nonaccrual
 $42,661  $38,290 

The increase in nonaccrual commercial and commercial real estate loans from December 31, 2011 to September 30, 2012 was due primarily to one commercial relationship which moved to nonaccrual status during the first quarter. This relationship has been reviewed quarterly and as a result was specifically reserved for by the Company during the first and second quarters of 2012.
 
The following tables set forth information with regard to past due and nonperforming loans by loan class as of September 30, 2012 and December 31, 2011:
 
Age Analysis of Past Due Financing Receivables
As of September 30, 2012
(in thousands)
 
 
       
Greater Than
           
 
 
   
31-60 Days
  
61-90 Days
  
90 Days
  
Total
        
Recorded
 
   
Past Due
  
Past Due
  
Past Due
  
Past Due
        
Total
 
   
Accruing
  
Accruing
  
Accruing
  
Accruing
  
Non-Accrual
  
Current
  
Loans
 
Commercial Loans
                     
Commercial
 $707  $149  $-  $856  $6,915  $594,775  $602,546 
Commercial Real Estate
  1,455   138   -   1,593   6,432   1,012,695   1,020,720 
Agricultural
  -   -   -   -   2,587   64,187   66,774 
Agricultural Real Estate
  -   -   -   -   1,195   35,348   36,543 
Business Banking
  1,114   555   80   1,749   5,921   258,638   266,308 
    3,276   842   80   4,198   23,050   1,965,643   1,992,891 
                              
Consumer Loans
                            
Indirect
  9,406   1,729   978   12,113   1,703   948,803   962,619 
Home Equity
  5,478   888   573   6,939   8,126   561,143   576,208 
Direct
  705   130   47   882   257   67,814   68,953 
    15,589   2,747   1,598   19,934   10,086   1,577,760   1,607,780 
                              
Residential Real Estate Mortgages
  2,240   170   1,285   3,695   9,525   637,228   650,448 
   $21,105  $3,759  $2,963  $27,827  $42,661  $4,180,631  $4,251,119 
 
 
Age Analysis of Past Due Financing Receivables
As of December 31, 2011
(in thousands)

 
       
Greater Than
             
   
31-60 Days
  
61-90 Days
  
90 Days
  
Total
        
Recorded
 
   
Past Due
  
Past Due
  
Past Due
  
Past Due
        
Total
 
   
Accruing
  
Accruing
  
Accruing
  
Accruing
  
Non-Accrual
  
Current
  
Loans
 
Commercial Loans
                     
Commercial
 $663  $50  $-  $713  $1,699  $508,662  $511,074 
Commercial Real Estate
  1,942   -   -   1,942   4,868   828,089   834,899 
Agricultural
  77   13   -   90   3,307   63,140   66,537 
Agricultural Real Estate
  -   -   50   50   2,067   31,809   33,926 
Business Banking
  1,871   1,024   -   2,895   7,446   245,800   256,141 
    4,553   1,087   50   5,690   19,387   1,677,500   1,702,577 
                              
Consumer Loans
                            
Indirect
  12,141   2,584   1,283   16,008   1,550   855,545   873,103 
Home Equity
  5,823   1,277   954   8,054   7,931   553,660   569,645 
Direct
  831   191   140   1,162   378   71,827   73,367 
    18,795   4,052   2,377   25,224   9,859   1,481,032   1,516,115 
                              
Residential Real Estate Mortgages
  2,003   139   763   2,905   9,044   569,562   581,511 
   $25,351  $5,278  $3,190  $33,819  $38,290  $3,728,094  $3,800,203 
Impaired loans and specific reserve allocations
The following table provides additional information on impaired loans and specific reserve allocations as of September 30, 2012 and December 31, 2011:

   
September 30, 2012
  
December 31, 2011
 
   
Recorded
  
Unpaid
     
Recorded
  
Unpaid
    
   
Investment
  
Principal
     
Investment
  
Principal
    
   
Balance
  
Balance
  
Related
  
Balance
  
Balance
  
Related
 
(in thousands)
 
(Book)
  
(Legal)
  
Allowance
  
(Book)
  
(Legal)
  
Allowance
 
With no related allowance recorded:
                  
Commercial Loans
                  
Commercial
 $851  $1,257     $1,243  $2,723    
Commercial Real Estate
  6,432   8,396      4,868   7,165    
Agricultural
  2,587   3,567      3,307   4,166    
Agricultural Real Estate
  1,195   1,382      2,067   2,288    
Business Banking
  5,921   8,078      7,446   9,976    
Total Commercial Loans
  16,986   22,680      18,931   26,318    
                        
Consumer Loans
                      
Home Equity
  1,777   1,879      2,000   2,103    
                        
Residential Real Estate Mortgages
  1,105   1,275      1,040   1,125    
   $19,868  $25,834     $21,971  $29,546    
                        
With an allowance recorded:
                      
Commercial Loans
                      
Commercial
 $6,064  $6,113  $2,720  $456  $808  $175 
Commercial Real Estate
  -   -   -   -   -   - 
Agricultural
  -   -   -   -   -   - 
Agricultural Real Estate
  -   -   -   -   -   - 
    6,064   6,113   2,720   456   808   175 
                          
Total:
 $25,932  $31,947  $2,720  $22,427  $30,354  $175 

The increase in commercial loans with a related allowance recorded from December 31, 2011 to September 30, 2012 is primarily due to the impairment of two commercial relationships during the nine months ended September 30, 2012.
 
The following table summarizes the average recorded investments on impaired loans and the interest income recognized for the three months ended September 30, 2012 and September 30, 2011:

   
For the three months ended
 
   
September 30, 2012
  
September 30, 2011
 
   
Average
  
Interest Income
  
Average
  
Interest Income
 
   
Recorded
  
Recognized
  
Recorded
  
Recognized
 
(in thousands)
 
Investment
  
Accrual
  
Cash
  
Investment
  
Accrual
  
Cash
 
With no related allowance recorded:
                  
Commercial Loans
                  
Commercial
 $854  $9  $9  $1,794  $3  $3 
Commercial Real Estate
  6,732   16   16   6,106   14   14 
Agricultural
  2,627   51   51   3,516   59   59 
Agricultural Real Estate
  1,348   3   3   1,874   34   34 
Business Banking
  6,169   70   70   7,655   101   101 
Consumer Loans
                        
Home Equity
  1,783   18   18   2,312   26   26 
Residential Real Estate Mortgages
  1,111   17   17   1,059   26   26 
   $20,624  $184  $184  $24,316  $263  $263 
                          
With an allowance recorded:
                        
Commercial Loans
                        
Commercial
 $6,091  $34  $34  $520  $19  $19 
Commercial Real Estate
  -   -   -   -   -   - 
Agricultural
  -   -   -   23   1   1 
Agricultural Real Estate
  -   -   -   -   -   - 
   $6,091  $34  $34  $543  $20  $20 
                          
Total:
 $26,715  $218  $218  $24,859  $283  $283 
 
The following table summarizes the average recorded investments on impaired loans and the interest income recognized for the nine months ended September 30, 2012 and September 30, 2011:

   
For the nine months ended
 
   
September 30, 2012
  
September 30, 2011
 
   
Average
  
Interest Income
  
Average
  
Interest Income
 
   
Recorded
  
Recognized
  
Recorded
  
Recognized
 
(in thousands)
 
Investment
  
Accrual
  
Cash
  
Investment
  
Accrual
  
Cash
 
With no related allowance recorded:
                  
Commercial Loans
                  
Commercial
 $1,319  $23  $23  $2,625  $76  $76 
Commercial Real Estate
  6,564   48   48   4,728   59   59 
Agricultural
  2,873   159   159   2,903   104   104 
Agricultural Real Estate
  1,734   13   13   1,622   72   72 
Business Banking
  6,824   166   166   5,662   203   203 
Consumer Loans
                        
Home Equity
  1,840   66   66   1,851   84   84 
Residential Real Estate Mortgages
  1,066   73   73   887   53   53 
   $22,220  $548  $548  $20,278  $651  $651 
                          
With an allowance recorded:
                        
Commercial Loans
                        
Commercial
 $4,178  $43  $43  $991  $68  $68 
Commercial Real Estate
  -   -   -   382   -   - 
Agricultural
  -   -   -   1,055   68   68 
Agricultural Real Estate
  -   -   -   475   18   18 
   $4,178  $43  $43  $2,903  $154  $154 
                          
Total:
 $26,397  $591  $591  $23,181  $805  $805 
Financing receivable credit quality by loan class
The following tables illustrate the Company's credit quality by loan class as of September 30, 2012 and December 31, 2011:
 
Credit Quality Indicators
As of September 30, 2012

  
 
     
 
       
Commercial Credit Exposure
By Internally Assigned Grade:
 
Commercial
  
Commercial
Real Estate
  
Agricultural
  
Agricultural
Real Estate
  
Total
 
Pass
 $565,546  $948,966  $59,545  $32,213  $1,606,270 
Special Mention
  11,371   23,967   13   3   35,354 
Substandard
  22,656   47,787   7,168   4,327   81,938 
Doubtful
  2,973   -   48   -   3,021 
Total
 $602,546  $1,020,720  $66,774  $36,543  $1,726,583 
                      
Business Banking Credit Exposure
                    
By Internally Assigned Grade:
 
Business
Banking
              
Total
 
Non-classified
 $251,284              $251,284 
Classified
  15,024               15,024 
Total
 $266,308              $266,308 
 
Consumer Credit Exposure
By Payment Activity:
 
Indirect
  
Home Equity
  
Direct
      
Total
 
Performing
 $959,938  $567,509  $68,649      $1,596,096 
Nonperforming
  2,681   8,699   304       11,684 
Total
 $962,619  $576,208  $68,953      $1,607,780 
 
Residential Mortgage Credit Exposure
 
Residential
                 
By Payment Activity:
 
Mortgage
              
Total
 
Performing
 $639,638              $639,638 
Nonperforming
  10,810               10,810 
Total
 $650,448              $650,448 
 

Credit Quality Indicators
As of December 31, 2011

Commercial Credit Exposure
 
 
  
Commercial
  
 
  
Agricultural
    
By Internally Assigned Grade:
 
Commercial
  
Real Estate
  
Agricultural
  
Real Estate
  
Total
 
Pass
 $470,332  $758,673  $58,481  $28,927  $1,316,413 
Special Mention
  10,346   24,478   42   10   34,876 
Substandard
  29,940   51,748   7,945   4,989   94,622 
Doubtful
  456   -   69   -   525 
Total
 $511,074  $834,899  $66,537  $33,926  $1,446,436 
 
Business Banking Credit Exposure
 
Business
                 
By Internally Assigned Grade:
 
Banking
              
Total
 
Non-classified
 $237,887              $237,887 
Classified
  18,254               18,254 
Total
 $256,141              $256,141 
 
Consumer Credit Exposure
                    
By Payment Activity:
 
Indirect
  
Home Equity
  
Direct
      
Total
 
Performing
 $870,270  $560,760  $72,849      $1,503,879 
Nonperforming
  2,833   8,885   518       12,236 
Total
 $873,103  $569,645  $73,367      $1,516,115 
 
Residential Mortgage Credit Exposure
 
Residential
                 
By Payment Activity:
 
Mortgage
              
Total
 
Performing
 $571,704              $571,704 
Nonperforming
  9,807               9,807 
Total
 $581,511              $581,511