4. LOANS AND ALLOWANCE FOR LOAN LOSSES

The composition of the loan portfolio follows:

(in thousands)	June 30, 2013		December 31, 2012

Residential real estate:
Owner occupied	$	1,160,420	$	1,148,354
Non owner occupied	63,707		74,539
Commercial real estate	767,334		698,611
Commercial real estate - purchased whole loans	33,852		33,531
Real estate construction	50,858		80,093
Commercial	114,675		130,768
Warehouse lines of credit	177,690		216,576
Home equity	227,137		241,853
Consumer:
Credit cards	8,656		8,716
Overdrafts	984		955
Other consumer	12,716		16,201

Total loans	2,618,029		2,650,197
Less: Allowance for loan losses	22,491		23,729

Total loans, net	$	2,595,538	$	2,626,468

2012 Acquisitions of Failed Banks

The contractual amount of the loans purchased in the TCB transaction decreased from $79 million as of the acquisition date to $34 million as of June 30, 2013. The carrying value of the loans purchased in the TCB transaction was $57 million as of the acquisition date compared to $27 million as of June 30, 2013.

The contractual amount of the loans purchased in the FCB transaction decreased from $172 million as of the acquisition date to $109 million as of June 30, 2013. The carrying value of the loans purchased in the FCB transaction was $130 million as of the acquisition date compared to $84 million as of June 30, 2013.

The composition of TCB and FCB loans outstanding at June 30, 2013 and December 31, 2012 follows:

	Tennessee		First		Total
	Commerce		Commercial		Acquired
June 30, 2013 (in thousands)	Bank		Bank		Banks

Residential real estate	$	8,859	$	26,676	$	35,535
Commercial real estate	12,106		50,033		62,139
Real estate construction	1,020		2,174		3,194
Commercial	334		5,135		5,469
Home equity	4,199		145		4,344
Consumer:					—
Credit cards	251		—		251
Overdrafts	5		16		21
Other consumer	474		202		676
Total loans	$	27,248	$	84,381	$	111,629

The table above is inclusive of loans originated subsequent to the respective acquisition dates.

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (in thousands)	Bank		Bank		Banks

Residential real estate	$	12,270	$	32,459	$	44,729
Commercial real estate	8,015		61,758		69,773
Real estate construction	4,235		3,301		7,536
Commercial	1,284		9,405		10,689
Home equity	4,183		385		4,568
Consumer:					—
Credit cards	321		—		321
Overdrafts	1		11		12
Other consumer	655		333		988
Total loans	$	30,964	$	107,652	$	138,616

The tables below reconcile the contractually-required and carrying amounts of acquired TCB and FCB loans at June 30, 2013 and December 31, 2012:

	Tennessee			First			Total
	Commerce			Commercial			Acquired
June 30, 2013 (in thousands)	Bank			Bank			Banks

Contractually-required principal	$	33,980		$	109,116		$	143,096
Non-accretable difference	(6,127		)	(23,354		)	(29,481		)
Accretable difference	(605		)	(1,381		)	(1,986		)
Total carrying value of loans	$	27,248		$	84,381		$	111,629

	Tennessee			First			Total
	Commerce			Commercial			Acquired
December 31, 2012 (in thousands)	Bank			Bank			Banks

Contractually-required principal	$	41,677		$	139,156		$	180,833
Non-accretable difference	(10,394		)	(28,870		)	(39,264		)
Accretable difference	(319		)	(2,634		)	(2,953		)
Total carrying value of loans	$	30,964		$	107,652		$	138,616

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 Acquisitions of Failed Banks” in this section of the filing.

Credit Quality Indicators

Based on the Bank’s internal analysis performed, the risk category of loans by class follows:

									Purchased		Purchased
									Credit		Credit
			Special						Impaired		Impaired		Total
June 30, 2013			Mention /				Doubtful /		Loans		Loans		Rated
(in thousands)	Pass		Watch		Substandard		Loss		Group 1*		Group 2**		Loans***

Residential real estate:
Owner occupied	$	—	$	24,796	$	9,065	$	—	$	2,644	$	2,417	$	38,922
Non owner occupied	—		1,358		2,511		—		8,721		1,951		14,541
Commercial real estate	696,233		11,057		17,860		—		39,252		2,932		767,334
Commercial real estate - Purchased whole loans	33,852		—		—		—		—		—		33,852
Real estate construction	46,383		847		1,492		—		2,040		96		50,858
Commercial	109,113		2,003		252		—		2,370		937		114,675
Warehouse lines of credit	177,690		—		—		—		—		—		177,690
Home equity	—		648		1,705		—		—		—		2,353
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		46		57		—		103		—		206

Total rated loans	$	1,063,271	$	40,755	$	32,942	$	—	$	55,130	$	8,333	$	1,200,431

									Purchased		Purchased
									Credit		Credit
			Special						Impaired		Impaired		Total
December 31, 2012			Mention /				Doubtful /		Loans		Loans		Rated
(in thousands)	Pass		Watch		Substandard		Loss		Group 1*		Group 2**		Loans***

Residential real estate:
Owner occupied	$	—	$	25,116	$	8,297	$	—	$	2,277	$	136	$	35,826
Non owner occupied	—		2,484		3,211		—		21,453		323		27,471
Commercial real estate	608,599		16,648		18,953		—		54,071		340		698,611
Commercial real estate - Purchased whole loans	33,531		—		—		—		—		—		33,531
Real estate construction	73,434		894		2,919		—		2,846		—		80,093
Commercial	121,256		2,312		525		—		6,315		360		130,768
Warehouse lines of credit	216,576		—		—		—		—		—		216,576
Home equity	—		648		2,346		—		—		—		2,994
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		356		53		—		71		1		481

Total rated loans	$	1,053,396	$	48,458	$	36,304	$	—	$	87,033	$	1,160	$	1,226,351

* - Purchased Credit Impaired loans - Group 1 (“PCI-1”) are performing in accordance with management’s day-one performance expectations and are considered equivalent to the Bank’s “Special Mention/Watch” classification.

** - Purchased Credit Impaired loans - Group 2 (“PCI-2”) represent former PCI-1 loans downgraded subsequent to day-one. PCI-2 loans are generally considered impaired and could require loan loss provisions.

*** - The above tables exclude all non-classified residential real estate and consumer loans at the respective period ends. The tables also exclude most non classified small commercial and commercial real estate relationships totaling $100,000 or less. These loans are not rated since they are accruing interest and not past due 80 days or more.

Allowance for Loan Losses

Activity in the allowance for loan losses follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands)	2013			2012			2013			2012

Allowance for loan losses at beginning of period	$	23,563		$	23,732		$	23,729		$	24,063

Charge offs - Traditional Banking	(2,562		)	(1,957		)	(3,117		)	(6,224		)
Charge offs - Refund Anticipation Loans	—			(343		)	—			(11,097		)
Total charge offs	(2,562		)	(2,300		)	(3,117		)	(17,321		)

Recoveries - Traditional Banking	445			274			860			709
Recoveries - Refund Anticipation Loans	140			338			739			3,423
Total recoveries	585			612			1,599			4,132

Net loan (charge offs) recoveries - Traditional Banking	(2,117		)	(1,683		)	(2,257		)	(5,515		)
Net loan (charge offs) recoveries - Refund Anticipation Loans	140			(5		)	739			(7,674		)
Net loan (charge offs) recoveries	(1,977		)	(1,688		)	(1,518		)	(13,189		)

Provision for loan losses - Traditional Banking	1,045			831			1,019			3,962
Provision for loan losses - Refund Anticipation Loans	(140		)	(365		)	(739		)	7,674
Total provision for loan losses	905			466			280			11,636

Allowance for loan losses at end of period	$	22,491		$	22,510		$	22,491		$	22,510

The Bank’s allowance calculation has historically included specific allowance allocations for qualitative factors such as:

· Changes in nature, volume and seasoning of the loan portfolio;

· Changes in experience, ability and depth of lending management and other relevant staff;

· Changes in the quality of the Bank’s loan review system;

· Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

· Changes in the volume and severity of past due, non-accrual and classified loans;

· Changes in the value of underlying collateral for collateral-dependent loans;

· Changes in international, national, regional, and local economic and business conditions and developments that affect the collectibility of the loan portfolio, including the condition of various market segments;

· The existence and effect of any concentrations of credit, and changes in the level of such concentrations; and

· The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio.

The following tables present the activity in the allowance for loan losses by portfolio class for the quarters ended June 30, 2013 and 2012:

										Commercial
	Residential Real Estate									Real Estate -		Real						Warehouse
Quarter Ended	Owner			Non Owner			Commercial			Purchased		Estate						Lines of
June 30, 2013 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Construction			Commercial			Credit

Beginning balance	$	6,984		$	924		$	8,781		$	34	$	3,101		$	727		$	433
Provision for loan losses	991			(173		)	572			—		(916		)	244			29
Loans charged off	(512		)	(115		)	(651		)	—		(600		)	(310		)	—
Recoveries	100			6			61			—		2			49			—

Ending balance	$	7,563		$	642		$	8,763		$	34	$	1,587		$	710		$	462

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Total

Beginning balance	$	1,909		$	—		$	326		$	209		$	135		$	23,563
Provision for loan losses	83			(140		)	63			71			81			905
Loans charged off	(93		)	—			(50		)	(130		)	(101		)	(2,562		)
Recoveries	33			140			5			99			90			585

Ending balance	$	1,932		$	—		$	344		$	249		$	205		$	22,491

										Commercial
	Residential Real Estate									Real Estate -		Real						Warehouse
Quarter Ended	Owner			Non Owner			Commercial			Purchased		Estate						Lines of
June 30, 2012 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Construction			Commercial			Credit

Beginning balance	$	6,015		$	1,176		$	8,946		$	—	$	2,402		$	1,068		$	150
Allocation of previously unallocated allowance	1,117			146			47			—		—			—			—
Provision for loan losses	(223		)	(425		)	(440		)	40		1,169			(468		)	73
Loans charged off	(753		)	—			(295		)	—		(501		)	(7		)	—
Recoveries	34			—			13			—		27			10			—

Ending balance	$	6,190		$	897		$	8,271		$	40	$	3,097		$	603		$	223

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Unallocated*			Total

Beginning balance	$	2,720		$	370		$	502		$	115		$	268		$	—		$	23,732
Allocation of previously unallocated allowance*	536			—			47			17			55			(1,965		)	—
Provision for loan losses	(421		)	(365		)	(311		)	6			(134		)	1,965			466
Loans charged off	(199		)	(343		)	(50		)	(100		)	(52		)	—			(2,300		)
Recoveries	55			338			4			87			44			—			612

Ending balance	$	2,691		$	—		$	192		$	125		$	181		$	—		$	22,510

* Allocation was made January 1, 2012 based on a methodology change to the Company’s allowance for loan losses.

The following tables present the activity in the allowance for loan losses by portfolio class for the six months ended June 30, 2013 and 2012:

										Commercial
	Residential Real Estate									Real Estate -		Real						Warehouse
Six Months Ended	Owner			Non Owner			Commercial			Purchased		Estate						Lines of
June 30, 2013 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Construction			Commercial			Credit

Beginning balance	$	7,006		$	1,049		$	8,843		$	34	$	2,769		$	580		$	541
Provision for loan losses	1,071			(263		)	506			—		(620		)	386			(79		)
Loans charged off	(713		)	(158		)	(665		)	—		(600		)	(310		)	—
Recoveries	199			14			79			—		38			54			—

Ending balance	$	7,563		$	642		$	8,763		$	34	$	1,587		$	710		$	462

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Total

Beginning balance	$	2,348		$	—		$	210		$	198		$	151		$	23,729
Provision for loan losses	(352		)	(739		)	184			127			59			280
Loans charged off	(136		)	—			(60		)	(305		)	(170		)	(3,117		)
Recoveries	72			739			10			229			165			1,599

Ending balance	$	1,932		$	—		$	344		$	249		$	205		$	22,491

										Commercial
	Residential Real Estate									Real Estate -		Real						Warehouse
Six Months Ended	Owner			Non Owner			Commercial			Purchased		Estate						Lines of
June 30, 2012 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Construction			Commercial			Credit

Beginning balance	$	5,212		$	1,142		$	7,724		$	—	$	3,042		$	1,025		$	104
Allocation of previously unallocated allowance	1,117			146			47			—		—			—			—
Provision for loan losses	2,046			(367		)	770			40		1,796			(433		)	119
Loans charged off	(2,074		)	(298		)	(316		)	—		(1,796		)	(7		)	—
Recoveries	151			12			46			—		55			18			—

Ending balance	$	6,452		$	635		$	8,271		$	40	$	3,097		$	603		$	223

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Unallocated*			Total

Beginning balance	$	2,984		$	—		$	503		$	135		$	227		$	1,965		$	24,063
Allocation of previously unallocated allowance*	536			—			47			17			55			(1,965		)	—
Provision for loan losses	424			7,674			(304		)	(40		)	(89		)	—			11,636
Loans charged off	(1,314		)	(11,097		)	(78		)	(218		)	(123		)	—			(17,321		)
Recoveries	61			3,423			24			231			111			—			4,132

Ending balance	$	2,691		$	—		$	192		$	125		$	181		$	—		$	22,510

* Allocation was made January 1, 2012 based on a methodology change to the Company’s allowance for loan losses.

Non-performing Loans and Non-performing Assets

Detail of non-performing loans and non-performing assets follows:

(dollars in thousands)	June 30, 2013		December 31, 2012

Loans on non-accrual status(1)	$	21,922	$	18,506
Loans past due 90 days-or-more and still on accrual(2)	2,159		3,173

Total non-performing loans	24,081		21,679
Other real estate owned	15,248		26,203
Total non-performing assets	$	39,329	$	47,882

Credit Quality Ratios:

Non-performing loans to total loans	0.92	%	0.82	%
Non-performing assets to total loans (including OREO)	1.49	%	1.79	%
Non-performing assets to total assets	1.19	%	1.41	%

(1) Loans on non-accrual status include impaired loans.

(2) All loans 90 days past due and still accruing are PCI loans accounted for under ASC 310-30.

Non-performing loans and non-performing asset balances related to the 2012 acquisitions, and included in the tables above at June 30, 2013 and December 31, 2012, are presented below:

	Tennessee		First		Total
	Commerce		Commercial		Acquired
June 30, 2013 (dollars in thousands)	Bank		Bank		Banks

Loans on non-accrual status(1)	$	21	$	—	$	21
Loans past due 90 days-or-more and still on accrual(2)	250		1,909		2,159

Total non-performing loans	271		1,909		2,180
Other real estate owned	590		5,523		6,113
Total non-performing assets	$	861	$	7,432	$	8,293

Credit Quality Ratios - Acquired Banks:
Non-performing loans to total loans	1.95	%
Non-performing assets to total loans (including OREO)	7.04	%
Non-performing assets to total assets	7.04	%

(1) Loans on non-accrual status include impaired loans.

(2) All loans 90 days past due and still accruing are PCI loans accounted for under ASC 310-30.

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (dollars in thousands)	Bank		Bank		Banks

Loans on non-accrual status	$	—	$	—	$	—
Loans past due 90-days-or-more and still on accrual	801		2,372		3,173

Total non-performing loans	801		2,372		3,173
Other real estate owned	2,100		12,398		14,498
Total non-performing assets	$	2,901	$	14,770	$	17,671

Credit Quality Ratios - Acquired Banks:
Non-performing loans to total loans	2.29	%
Non-performing assets to total loans (including OREO)	11.54	%
Non-performing assets to total assets	8.73	%

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 Acquisitions of Failed Banks” in this section of the filing.

The following table presents the recorded investment in non-accrual loans and loans past due over 90 days still on accrual by class of loans:

					Loans Past Due 90-Days-or-More
	Non-Accrual Loans				and Still Accruing Interest
(in thousands)	June 30, 2013		December 31, 2012		June 30, 2013		December 31, 2012

Residential real estate:
Owner occupied	$	8,757	$	9,298	$	111	$	730
Non owner occupied	2,361		1,376		—		—
Commercial real estate	8,742		3,756		441		712
Commercial real estate - purchased whole loans	—		—		—		—
Real estate construction	468		1,777		—		531
Commercial	323		334		1,607		1,200
Warehouse lines of credit	—		—		—		—
Home equity	1,148		1,868		—		—
Consumer:
Credit cards	—		—		—		—
Overdrafts	—		—		—		—
Other consumer	123		97		—		—

Total	$	21,922	$	18,506	$	2,159	$	3,173

Non-accrual loans and loans past due 90-days-or-more and still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. Non-accrual loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and held current for six consecutive months and future payments are reasonably assured. TDRs on non-accrual are reviewed for return to accrual status on an individual basis, with additional consideration given to the modification terms. Loans 90-days-or-more past due and still on accrual are generally only PCI loans accounted for under Accounting Standards Codification (“ASC”) Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality.

Delinquent Loans

The following tables present the aging of the recorded investment in loans by class of loans:

	30 - 59			60 - 89			Greater than			Total			Total
June 30, 2013	Days			Days			90 Days			Loans			Loans Not		Total
(dollars in thousands)	Past Due			Past Due			Past Due *			Past Due			Past Due		Loans

Residential real estate:
Owner occupied	$	2,504		$	1,188		$	3,942		$	7,634		$	1,152,786	$	1,160,420
Non owner occupied	173			1,005			1,094			2,272			61,435		63,707
Commercial real estate	808			67			1,546			2,421			764,913		767,334
Commercial real estate - purchased whole loans	—			—			—			—			33,852		33,852
Real estate construction	96			—			371			467			50,391		50,858
Commercial	—			242			1,639			1,881			112,794		114,675
Warehouse lines of credit	—			—			—			—			177,690		177,690
Home equity	372			25			758			1,155			225,982		227,137
Consumer:
Credit cards	63			25			—			88			8,568		8,656
Overdrafts	167			—			—			167			817		984
Other consumer	79			33			—			112			12,604		12,716

Total	$	4,262		$	2,585		$	9,350		$	16,197		$	2,601,832	$	2,618,029
Delinquent loans to total loans	0.16		%	0.10		%	0.36		%	0.62		%

	30 - 59			60 - 89			Greater than			Total			Total
December 31, 2012	Days			Days			90 Days			Loans			Loans Not		Total
(dollars in thousands)	Past Due			Past Due			Past Due *			Past Due			Past Due		Loans

Residential real estate:
Owner occupied	$	2,210		$	1,978		$	4,712		$	8,900		$	1,139,454	$	1,148,354
Non owner occupied	907			1,128			864			2,899			71,640		74,539
Commercial real estate	103			486			2,051			2,640			695,971		698,611
Commercial real estate - purchased whole loans	—			—			—			—			33,531		33,531
Real estate construction	—			194			1,930			2,124			77,969		80,093
Commercial	222			733			1,307			2,262			128,506		130,768
Warehouse lines of credit	—			—			—			—			216,576		216,576
Home equity	521			251			882			1,654			240,199		241,853
Consumer:
Credit cards	60			5			—			65			8,651		8,716
Overdrafts	167			1			—			168			787		955
Other consumer	102			28			2			132			16,069		16,201

Total	$	4,292		$	4,804		$	11,748		$	20,844		$	2,629,353	$	2,650,197
Delinquent loans to total loans	0.16		%	0.18		%	0.44		%	0.79		%

An aging of the recorded investment in past due loans related to the 2012 acquisitions and included in the preceding tables at June 30, 2013 and December 31, 2012, are presented below:

	30 - 59			60 - 89			Greater than			Total			Total		Total
June 30, 2013	Days			Days			90 Days			Loans			Loans Not		Acquired Bank
(dollars in thousands)	Past Due			Past Due			Past Due *			Past Due			Past Due		Loans

Residential real estate	$	267		$	484		$	111		$	862		$	34,673	$	35,535
Commercial real estate	446			—			441			887			61,252		62,139
Real estate construction	96			—			—			96			3,098		3,194
Commercial	—			—			1,607			1,607			3,862		5,469
Home equity	—			—			—			—			4,344		4,344
Consumer:
Credit cards	—			—			—			—			251		251
Overdrafts	1			—			—			1			20		21
Other consumer	7			6			—			13			663		676

Total	$	817		$	490		$	2,159		$	3,466		$	108,163	$	111,629
Delinquent acquired bank loans to total acquired bank loans	0.73		%	0.44		%	1.93		%	3.10		%

	30 - 59			60 - 89			Greater than			Total			Total		Total
December 31, 2012	Days			Days			90 Days			Loans			Loans Not		Acquired Bank
(dollars in thousands)	Past Due			Past Due			Past Due *			Past Due			Past Due		Loans

Residential real estate	$	159		$	1,430		$	729		$	2,318		$	42,411	$	44,729
Commercial real estate	—			165			698			863			68,910		69,773
Real estate construction	—			194			531			725			6,811		7,536
Commercial	—			732			1,215			1,947			8,742		10,689
Home equity	83			—			—			83			4,485		4,568
Consumer:
Credit cards	—			—			—			—			321		321
Overdrafts	—			—			—			—			12		12
Other consumer	4			27			—			31			957		988

Total	$	246		$	2,548		$	3,173		$	5,967		$	132,649	$	138,616
Delinquent acquired bank loans to total acquried bank loans	0.18		%	1.84		%	2.29		%	4.30		%

* - All loans greater than 90 days past due or more, excluding purchased credit impaired loans, as of June 30, 2013 and December 31, 2012 were on non-accrual status.

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 Acquisitions of Failed Banks” in this section of the filing.

Impaired Loans

The Bank defines impaired loans as follows:

· All loans internally classified as “Substandard,” “Doubtful” or “Loss;”

· All loans on non-accrual status and loans past due over 90 days still on accrual;

· All retail and commercial troubled debt restructurings (“TDRs”). TDRs are loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties;

· All loans classified as PCI-2; and

· Any other situation where the collection of total amount due for a loan is improbable or otherwise meets the definition of impaired.

Information regarding the Bank’s impaired loans follows:

(in thousands)	June 30, 2013		December 31, 2012

Loans with no allocated allowance for loan losses	$	40,312	$	36,325
Loans with allocated allowance for loan losses	69,672		69,382

Total impaired loans	$	109,984	$	105,707

Amount of the allowance for loan losses allocated	$	6,040	$	8,531

Approximately $27 million, or 25%, of impaired loans at June 30, 2013 were loans acquired in the Bank’s 2012 acquisitions. Substantially all of these loans became classified as “impaired” through a modification of the original loan, which the Bank deemed to be a TDR. See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 Acquisitions of Failed Banks” in this section of the filing.

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio class based on impairment method as of June 30, 2013 and December 31, 2012:

							Commercial
	Residential Real Estate						Real Estate -		Real				Warehouse
	Owner		Non Owner		Commercial		Purchased		Estate				Lines of
June 30, 2013 (in thousands)	Occupied		Occupied		Real Estate		Whole Loans		Construction		Commercial		Credit

Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	2,895	$	77	$	1,884	$	—	$	102	$	53	$	—
Collectively evaluated for impairment	4,379		519		6,694		34		1,485		391		462
Acquired with deteriorated credit quality	289		46		185		—		—		266		—

Total ending allowance for loan losses	$	7,563	$	642	$	8,763	$	34	$	1,587	$	710	$	462

Loans:
Impaired loans individually evaluated, excluding PCI loans	$	40,596	$	3,420	$	29,922	$	—	$	2,544	$	4,798	$	—
Loans collectively evaluated for impairment	1,114,763		49,615		695,228		33,852		46,178		106,570		177,690
Loans acquired with deteriorated credit quality	5,061		10,672		42,184		—		2,136		3,307		—

Total ending loan balance	$	1,160,420	$	63,707	$	767,334	$	33,852	$	50,858	$	114,675	$	177,690

(continued)

			Consumer
	Home		Credit				Other
	Equity		Cards		Overdrafts		Consumer		Total

Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	183	$	—	$	—	$	60	$	5,254
Collectively evaluated for impairment	1,749		344		249		145		16,451
Acquired with deteriorated credit quality	—		—		—		—		786

Total ending allowance for loan losses	$	1,932	$	344	$	249	$	205	$	22,491

Loans:
Impaired loans individually evaluated, excluding PCI loans	$	3,204	$	—	$	—	$	149	$	84,633
Loans collectively evaluated for impairment	223,933		8,656		984		12,464		2,469,933
Loans acquired with deteriorated credit quality	—		—		—		103		63,463

Total ending loan balance	$	227,137	$	8,656	$	984	$	12,716	$	2,618,029

							Commercial
	Residential Real Estate						Real Estate -		Real				Warehouse
	Owner		Non Owner		Commercial		Purchased		Estate				Lines of
December 31, 2012 (in thousands)	Occupied		Occupied		Real Estate		Whole Loans		Construction		Commercial		Credit

Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	3,033	$	518	$	2,906	$	—	$	1,157	$	347	$	—
Collectively evaluated for impairment	3,972		527		5,924		34		1,612		232		541
Acquired with deteriorated credit quality	1		4		13		—		—		1		—

Total ending allowance for loan losses	$	7,006	$	1,049	$	8,843	$	34	$	2,769	$	580	$	541

Loans:
Impaired loans individually evaluated, excluding PCI loans	$	42,340	$	4,419	$	30,544	$	—	$	4,000	$	4,578	$	—
Loans collectively evaluated for impairment	1,103,601		48,344		613,656		33,531		73,247		119,515		216,576
Loans acquired with deteriorated credit quality	2,413		21,776		54,411		—		2,846		6,675		—

Total ending loan balance	$	1,148,354	$	74,539	$	698,611	$	33,531	$	80,093	$	130,768	$	216,576

(continued)

			Consumer
	Home		Credit				Other
	Equity		Cards		Overdrafts		Consumer		Total

Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	496	$	—	$	—	$	55	$	8,512
Collectively evaluated for impairment	1,852		210		198		96		15,198
Acquired with deteriorated credit quality	—		—		—		—		19

Total ending allowance for loan losses	$	2,348	$	210	$	198	$	151	$	23,729

Loans:
Impaired loans individually evaluated, excluding PCI loans	$	3,420	$	—	$	—	$	437	$	89,738
Loans collectively evaluated for impairment	238,433		8,716		955		15,692		2,472,266
Loans acquired with deteriorated credit quality	—		—		—		72		88,193

Total ending loan balance	$	241,853	$	8,716	$	955	$	16,201	$	2,650,197

The following tables present loans individually evaluated for impairment by class of loans as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012. The difference between the “Unpaid Principal Balance” and “Recorded Investment” columns represents life-to-date partial write downs/charge offs taken on individual impaired credits.

	Ending Balance
	As of						Three Months Ended				Six Months Ended
	June 30, 2013						June 30, 2013				June 30, 2013
	Unpaid				Allowance for		Average		Interest		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Recorded		Income
(in thousands)	Balance		Investment		Allocated		Investment		Recognized		Investment		Recognized

Impaired loans with no related allowance recorded:
Residential real estate:
Owner occupied	$	9,029	$	9,029	$	—	$	11,625	$	109	$	12,119	$	205
Non owner occupied	1,406		1,245		—		1,778		5		1,450		7
Commercial real estate	22,065		23,248		—		22,676		561		19,881		827
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Real estate construction	2,022		2,022		—		2,292		67		2,223		90
Commercial	1,958		2,542		—		3,295		62		3,568		94
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	2,217		2,152		—		2,313		35		2,057		51
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	73		73		—		248		2		294		2

Impaired loans with an allowance recorded:
Residential real estate:
Owner occupied	34,991		34,619		3,185		33,254		261		32,656		481
Non owner occupied	4,364		4,294		124		3,968		47		3,854		77
Commercial real estate	25,460		24,408		2,067		24,655		497		25,204		768
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Real estate construction	2,005		2,005		102		2,759		49		2,900		73
Commercial	3,481		3,193		319		2,931		81		2,906		124
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,052		1,052		183		1,141		7		1,385		11
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	102		102		60		78		1		80		1
Total impaired loans	$	110,225	$	109,984	$	6,040	$	113,013	$	1,784	$	110,577	$	2,811

	Ending Balance
	As of						Three Months Ended				Six Months Ended
	December 31, 2012						June 30, 2012				June 30, 2012
	Unpaid				Allowance for		Average		Interest		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Recorded		Income
(in thousands)	Balance		Investment		Allocated		Investment		Recognized		Investment		Recognized

Impaired loans with no related allowance recorded:
Residential real estate:
Owner occupied	$	13,299	$	13,107	$	—	$	24,800	$	23	$	21,775	$	23
Non owner occupied	955		794		—		1,636		37		967		37
Commercial real estate	14,293		14,293		—		10,486		545		6,854		574
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Real estate construction	3,090		2,085		—		3,827		72		2,746		72
Commercial	4,206		4,114		—		2,208		69		1,910		69
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,753		1,546		—		859		4		726		4
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	386		386		—		63		—		31		—

Impaired loans with an allowance recorded:
Residential real estate:
Owner occupied	31,709		31,458		3,034		5,829		43		4,805		244
Non owner occupied	3,695		3,625		522		1,916		35		2,040		49
Commercial real estate	26,710		26,300		2,919		27,610		217		23,497		318
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Real estate construction	3,416		3,183		1,157		4,953		—		7,496		—
Commercial	2,858		2,858		348		2,494		22		2,619		45
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,874		1,874		496		1,582		11		1,898		11
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	84		84		55		—		—		—		—
Total impaired loans	$	108,328	$	105,707	$	8,531	$	88,263	$	1,078	$	77,364	$	1,446

Troubled Debt Restructurings

A TDR is the situation where, due to a borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise have considered. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Bank’s internal underwriting policy.

All TDRs are considered “Impaired” loans, including loans acquired in acquisitions of failed banks and subsequently restructured. The majority of the Bank’s commercial related and construction TDRs involve a restructuring of loan terms such as a reduction in the payment amount to require only interest and escrow (if required) and/or extending the maturity date of the loan. The substantial majority of the Bank’s residential real estate TDRs involve reducing the client’s loan payment through a rate reduction for a set period of time based on the borrower’s ability to service the modified loan payment.

Management determines whether to classify a TDR as non-performing based on its accrual status prior to modification. Non-accrual loans modified as TDRs remain on non-accrual status and continue to be reported as non-performing loans for a minimum of six months. Accruing loans modified as TDRs are evaluated for non-accrual status based on a current evaluation of the borrower’s financial condition and ability and willingness to service the modified debt. At June 30, 2013 and December 31, 2012, $14 million and $17 million of TDRs were also non-accrual loans.

Detail of TDRs differentiated by loan type and accrual status follows:

	Troubled Debt		Troubled Debt		Total
	Restructurings on		Restructurings on		Troubled Debt
June 30, 2013 (in thousands)	Non-Accrual Status		Accrual Status		Restructurings

Residential real estate	$	6,757	$	37,869	$	44,626
Commercial real estate	7,016		35,374		42,390
Real estate construction	97		3,434		3,531
Commercial	—		4,588		4,588

Total troubled debt restructurings	$	13,870	$	81,265	$	95,135

	Troubled Debt		Troubled Debt		Total
	Restructurings on		Restructurings on		Troubled Debt
December 31, 2012 (in thousands)	Non-Accrual Status		Accrual Status		Restructurings

Residential real estate	$	7,512	$	36,889	$	44,401
Commercial real estate	5,149		31,864		37,013
Real estate construction	1,595		3,127		4,722
Commercial	2,263		4,604		6,867

Total troubled debt restructurings	$	16,519	$	76,484	$	93,003

The Bank considers a TDR to be performing to its modified terms if the loan is in accrual status and not past due 30 days or more as of the reporting date. A summary of the categories of TDR loan modifications outstanding and respective performance under modified terms at June 30, 2013 and December 31, 2012 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
June 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Interest only payments	$	294	$	906	$	1,200
Rate reduction	24,999		3,055		28,054
Principal deferral	5,871		2,842		8,713
Bankruptcies	4,961		1,698		6,659
Total residential TDRs	36,125		8,501		44,626

Commercial related and construction loans:
Interest only payments	616		—		616
Rate reduction	17,152		6,691		23,843
Principal deferral	25,326		491		25,817
Bankruptcies	—		233		233
Total commercial TDRs	43,094		7,415		50,509
Total troubled debt restructurings	$	79,219	$	15,916	$	95,135

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
December 31, 2012 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Interest only payments	$	813	$	624	$	1,437
Rate reduction	24,779		4,004		28,783
Principal deferral	8,634		2,230		10,864
Bankruptcies	2,224		1,093		3,317
Total residential TDRs	36,450		7,951		44,401

Commercial related and construction loans:
Interest only payments	689		1,742		2,431
Rate reduction	22,918		2,966		25,884
Principal deferral	19,841		194		20,035
Bankruptcies	—		252		252
Total commercial TDRs	43,448		5,154		48,602
Total troubled debt restructurings	$	79,898	$	13,105	$	93,003

As of June 30, 2013 and December 31, 2012, 83% and 86% of the Bank’s TDRs were performing according to their modified terms. The Bank had provided $5 million and $7 million of specific reserve allocations to customers whose loan terms have been modified in TDRs as of June 30, 2013 and December 31, 2012. Specific reserve allocations are generally assessed prior to loans being modified as a TDR, as most of these loans migrate from the Bank’s internal watch list and have been specifically provided for or reserved for as part of the Bank’s normal loan loss provisioning methodology. The Bank had no commitments to lend any additional material amounts to its existing TDR relationships at June 30, 2013 and December 31, 2012.

A summary of the categories of TDR loan modifications that occurred during the six months ended June 30, 2013 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
June 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Interest only	$	64	$	—	$	64
Rate reduction	1,758		641		2,399
Principal deferral	460		293		753
Bankruptcies	2,885		1,243		4,128
Total residential TDRs	5,167		2,177		7,344

Commercial related and construction loans:
Interest only	141		—		141
Principal deferral	8,339		—		8,339
Total commercial TDRs	8,480		—		8,480
Total troubled debt restructurings	$	13,647	$	2,177	$	15,824

The table above is inclusive of loans which were TDRs at the end of the previous year and were re-modified during the current year.

As of June 30, 2013, 86% of the Bank’s TDRs that occurred during 2013 were performing according to their modified terms. The Bank has provided $869,000 in specific reserve allocations to customers whose loan terms were modified in TDRs during 2013. As stated above, specific reserves are generally assessed prior to loans being modified as a TDR, as most of these loans migrate from the Bank’s internal watch list and have been specifically reserved for as part of the Bank’s normal reserving methodology.

There was no change between the pre and post modification loan balances at June 30, 2013 and December 31, 2012.

The following table presents loans by class modified as troubled debt restructurings within the past twelve months for which there was a subsequent payment default:

	Number of	Recorded
(dollars in thousands)	Loans	Investment

Residential real estate:
Owner occupied	40	$	5,649
Non owner occupied	—	—
Commercial real estate	1	302
Commercial real estate - purchased whole loans	—	—
Real estate construction	—	—
Commercial	—	—
Warehouse lines of credit	—	—
Home equity	6	415
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	4	358

Total	51	$	6,724