5.	LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans and Loans Held for Sale

Loans are summarized as follows according to major portfolio segment and specific loan class:


(In thousands)	March 31, 2012		December 31, 2011
Loans held for sale	$	184,579	$	201,590

Commercial:
Commercial and industrial	$	10,157,262	$	10,334,858
Leasing		393,916		379,709
Owner occupied		7,886,448		8,158,556
Municipal		440,747		441,241

Total commercial		18,878,373		19,314,364

Commercial real estate:
Construction and land development		2,100,344		2,264,909
Term		8,069,966		7,883,434

Total commercial real estate		10,170,310		10,148,343

Consumer:
Home equity credit line		2,167,099		2,187,428
1-4 family residential		3,874,533		3,921,216
Construction and other consumer real estate		316,257		305,873
Bankcard and other revolving plans		273,591		291,018
Other		223,312		225,540

Total consumer		6,854,792		6,931,075

FDIC-supported loans		687,126		750,870

Total loans	$	36,590,601	$	37,144,652

FDIC-supported loans were acquired during 2009 and are indemnified by the Federal Deposit Insurance Corporation ("FDIC") under loss sharing agreements. The FDIC-supported loan balances presented in the accompanying schedules include purchased credit-impaired loans accounted for at their carrying values rather than their outstanding balances. See subsequent discussion under Purchased Loans.

Loan balances are presented net of unearned income and fees, which amounted to $128.7 million at March 31, 2012 and $133.1 million at December 31, 2011.

Owner occupied and commercial real estate loans include unamortized premiums of approximately $69.2 million at March 31, 2012 and $73.4 million at December 31, 2011.

Municipal loans generally include loans to municipalities with the debt service being repaid from general funds or pledged revenues of the municipal entity, or to private commercial entities or 501(c)(3) not-for-profit entities utilizing a pass-through municipal entity to achieve favorable tax treatment.

Loans with a carrying value of approximately $20.7 billion at March 31, 2012 and $21.1 billion at December 31, 2011 have been made available for pledging at the Federal Reserve and various Federal Home Loan Banks as collateral for current and potential borrowings.

We sold loans totaling $426 million and $458 million for the three months ended March 31, 2012 and 2011, respectively, that were previously classified as loans held for sale. Amounts added to loans held for sale during these periods were $408 million and $434 million. Income from loans sold, excluding servicing, for these same periods was $6.0 million and $3.1 million.

Allowance for Credit Losses

The allowance for credit losses ("ACL") consists of the allowance for loan and lease losses ("ALLL," also referred to as the allowance for loan losses) and the reserve for unfunded lending commitments ("RULC").

Allowance for Loan and Lease Losses

The ALLL represents our estimate of probable and estimable losses inherent in the loan and lease portfolio as of the balance sheet date. Losses are charged to the ALLL when recognized. Generally, commercial loans are charged off or charged down at the point at which they are determined to be uncollectible in whole or in part, or when 180 days past due unless the loan is well secured and in the process of collection. Consumer loans are either charged off or charged down to net realizable value no later than the month in which they become 180 days past due. Closed-end loans that are not secured by residential real estate are either charged off or charged down to net realizable value no later than the month in which they become 120 days past due. We establish the amount of the ALLL by analyzing the portfolio at least quarterly, and we adjust the provisions for loan losses so the ALLL is at an appropriate level at the balance sheet date.

We determine our ALLL as the best estimate within a range of estimated losses. The methodologies we use to estimate the ALLL depend upon the impairment status and portfolio segment of the loan. The methodology for impaired loans is discussed subsequently. For the commercial and commercial real estate segments, we use a comprehensive loan grading system to assign probability of default and loss given default grades to each loan. The credit quality indicators discussed subsequently are based on this grading system. Probability of default and loss given default grades are based on both financial and statistical models and loan officers' judgment. We create groupings of these grades for each subsidiary bank and loan class and calculate historic loss rates using a loss migration analysis that attributes historic realized losses to historic loan grades over the most recent 60 months.

For the consumer loan segment, we use roll rate models to forecast probable inherent losses. Roll rate models measure the rate at which consumer loans migrate from one delinquency category to the next worse delinquency category, and eventually to loss. We estimate roll rates for consumer loans using recent delinquency and loss experience. These roll rates are then applied to current delinquency levels to estimate probable inherent losses.

For FDIC-supported loans purchased with evidence of credit deterioration, we determine the ALLL according to separate accounting guidance. The accounting for these loans, including the allowance calculation, is described in the Purchased Loans section following.

After applying historic loss experience, as described above, we review the quantitatively derived level of ALLL for each segment using qualitative criteria. We track various risk factors that influence our judgment regarding the level of the ALLL across the portfolio segments. Primary qualitative and environmental factors that may not be reflected in our quantitative models include:

•

Asset quality trends

•

Risk management and loan administration practices

•

Risk identification practices

•

Effect of changes in the nature and volume of the portfolio

•

Existence and effect of any portfolio concentrations

•

National economic and business conditions

•

Regional and local economic and business conditions

•

Data availability and applicability

We review changes in these factors to ensure that changes in the level of the ALLL are directionally consistent with changes in these factors. The magnitude of the impact of these factors on our qualitative assessment of the ALLL changes from quarter to quarter according to the extent these factors are already reflected in historic loss rates and according to the extent these factors diverge from one another. We also consider the uncertainty inherent in the estimation process when evaluating the ALLL.

Reserve for Unfunded Lending Commitments

The Company also estimates a reserve for potential losses associated with off-balance sheet commitments and standby letters of credit. We determine the RULC using the same procedures and methodologies that we use for the ALLL. The loss factors used in the RULC are the same as the loss factors used in the ALLL, and the qualitative adjustments used in the RULC are the same as the qualitative adjustments used in the ALLL. We adjust the Company's unfunded lending commitments that are not unconditionally cancelable to an outstanding amount equivalent using credit conversion factors and we apply the loss factors to the outstanding equivalents.

Changes in the allowance for credit losses are summarized as follows:


	Three Months Ended March 31, 2012
(In thousands)	Commercial			Commercial real estate			Consumer			FDIC- supported ¹			Total

Allowance for loan losses:
Balance at beginning of period	$	627,825		$	275,546		$	123,115		$	23,472		$	1,049,958
Additions:
Provision for loan losses		27,165			(12,139	)		(48	)		686			15,664
Adjustment for FDIC-supported loans											(1,057	)		(1,057	)
Deductions:
Gross loan and lease charge-offs		(33,477	)		(27,011	)		(17,009	)		(2,517	)		(80,014	)
Recoveries		9,656			12,348			3,043			461			25,508

Net loan and lease charge-offs		(23,821	)		(14,663	)		(13,966	)		(2,056	)		(54,506	)

Balance at end of period	$	631,169		$	248,744		$	109,101		$	21,045		$	1,010,059

Reserve for unfunded lending commitments:
Balance at beginning of period	$	77,232		$	23,572		$	1,618		$	–		$	102,422
Provision charged (credited) to earnings		(5,230	)		2,227			(701	)		–			(3,704	)

Balance at end of period	$	72,002		$	25,799		$	917		$	–		$	98,718

Total allowance for credit losses at end of period:
Allowance for loan losses	$	631,169		$	248,744		$	109,101		$	21,045		$	1,010,059
Reserve for unfunded lending commitments		72,002			25,799			917			–			98,718

Total allowance for credit losses	$	703,171		$	274,543		$	110,018		$	21,045		$	1,108,777

		$18,878,373			$18,878,373			$18,878,373			$18,878,373			$18,878,373
	Three Months Ended March 31, 2011
(In thousands)	Commercial			Commercial real estate			Consumer			FDIC- supported ¹			Total

Allowance for loan losses:
Balance at beginning of period	$	761,107		$	487,235		$	154,326		$	37,673		$	1,440,341
Additions:
Provision for loan losses		(19,725	)		61,862			15,956			1,907			60,000
Adjustment for FDIC-supported loans											(9,048	)		(9,048	)
Deductions:
Gross loan and lease charge-offs		(59,383	)		(73,380	)		(26,321	)		(8,884	)		(167,968	)
Net charge-offs recoverable from FDIC											4,534			4,534
Recoveries		12,091			4,797			4,149			904			21,941

Net loan and lease charge-offs		(47,292	)		(68,583	)		(22,172	)		(3,446	)		(141,493	)

Balance at end of period	$	694,090		$	480,514		$	148,110		$	27,086		$	1,349,800

Reserve for unfunded lending commitments:
Balance at beginning of period	$	83,352		$	26,373		$	1,983		$	–		$	111,708
Provision charged (credited) to earnings		(8,923	)		(73	)		(544	)		–			(9,540	)

Balance at end of period	$	74,429		$	26,300		$	1,439		$	–		$	102,168

Total allowance for credit losses at end of period:
Allowance for loan losses	$	694,090		$	480,514		$	148,110		$	27,086		$	1,349,800
Reserve for unfunded lending commitments		74,429			26,300			1,439			–			102,168

Total allowance for credit losses	$	768,519		$	506,814		$	149,549		$	27,086		$	1,451,968

¹	The Purchased Loans section following contains further discussion related to FDIC-supported loans.

The ALLL and outstanding loan balances according to the Company's impairment method are summarized as follows:

		$18,878,373		$18,878,373		$18,878,373		$18,878,373		$18,878,373
	March 31, 2012
(In thousands)	Commercial		Commercial real estate		Consumer		FDIC- supported		Total

Allowance for loan losses:
Individually evaluated for impairment	$	31,115	$	16,437	$	9,634	$	563	$	57,749
Collectively evaluated for impairment		600,054		232,307		99,467		13,802		945,630
Purchased loans with evidence of credit deterioration		–		–		–		6,680		6,680

Total	$	631,169	$	248,744	$	109,101	$	21,045	$	1,010,059

Outstanding loan balances:
Individually evaluated for impairment	$	383,848	$	572,479	$	104,527	$	2,086	$	1,062,940
Collectively evaluated for impairment		18,494,525		9,597,831		6,750,265		581,369		35,423,990
Purchased loans with evidence of credit deterioration		–		–		–		103,671		103,671

Total	$	18,878,373	$	10,170,310	$	6,854,792	$	687,126	$	36,590,601

		$18,878,373		$18,878,373		$18,878,373		$18,878,373		$18,878,373
	December 31, 2011
(In thousands)	Commercial		Commercial real estate		Consumer		FDIC- supported		Total

Allowance for loan losses:
Individually evaluated for impairment	$	11,456	$	20,971	$	8,995	$	623	$	42,045
Collectively evaluated for impairment		616,369		254,575		114,120		16,830		1,001,894
Purchased loans with evidence of credit deterioration		—		—		—		6,019		6,019

Total	$	627,825	$	275,546	$	123,115	$	23,472	$	1,049,958

Outstanding loan balances:
Individually evaluated for impairment	$	349,662	$	668,022	$	113,798	$	2,701	$	1,134,183
Collectively evaluated for impairment		18,964,702		9,480,321		6,817,277		637,962		35,900,262
Purchased loans with evidence of credit deterioration		—		—		—		110,207		110,207

Total	$	19,314,364	$	10,148,343	$	6,931,075	$	750,870	$	37,144,652

Nonaccrual and Past Due Loans

Loans are generally placed on nonaccrual status when payment in full of principal and interest is not expected, or the loan is 90 days or more past due as to principal or interest, unless the loan is both well secured and in the process of collection. Factors we consider in determining whether a loan is placed on nonaccrual include delinquency status, collateral value, borrower or guarantor financial statement information, bankruptcy status, and other information which would indicate that the full and timely collection of interest and principal is uncertain.

A nonaccrual loan may be returned to accrual status when all delinquent interest and principal become current in accordance with the terms of the loan agreement; the loan, if secured, is well secured; the borrower has paid according to the contractual terms for a minimum of six months; and analysis of the borrower indicates a reasonable assurance of the ability to maintain payments. Payments received on nonaccrual loans are applied as a reduction to the principal outstanding.

Closed-end loans with payments scheduled monthly are reported as past due when the borrower is in arrears for two or more monthly payments. Similarly, open-end credit such as charge-card plans and other revolving credit plans are reported as past due when the minimum payment has not been made for two or more billing cycles. Other multi-payment obligations (i.e., quarterly, semiannual, etc.), single payment, and demand notes are reported as past due when either principal or interest is due and unpaid for a period of 30 days or more.

Nonaccrual loans are summarized as follows:


(In thousands)	March 31, 2012		December 31, 2011
Loans held for sale	$	30	$	18,216

Commercial:
Commercial and industrial	$	149,337	$	126,468
Leasing		1,343		1,546
Owner occupied		245,348		239,203
Municipal		—		—

Total commercial		396,028		367,217
Commercial real estate:
Construction and land development		147,640		219,837
Term		190,272		156,165

Total commercial real estate		337,912		376,002
Consumer:
Home equity credit line		17,425		18,376
1-4 family residential		86,910		90,857
Construction and other consumer real estate		8,060		12,096
Bankcard and other revolving plans		537		346
Other		2,641		2,498

Total consumer loans		115,573		124,173
FDIC-supported loans		22,623		24,267

Total	$	872,136	$	891,659

Past due loans (accruing and nonaccruing) are summarized as follows:


	March 31, 2012
(In thousands)	Current		30-89 days past due		90+days past due		Total past due		Total loans		Accruing loans 90+ days past due		Nonaccrual loans that are current¹
Loans held for sale	$	184,579	$	—	$	—	$	—	$	184,579	$	—	$	30

Commercial:
Commercial and industrial	$	10,005,362	$	75,593	$	76,307	$	151,900	$	10,157,262	$	16,825	$	64,254
Leasing		393,061		783		72		855		393,916		—		1,234
Owner occupied		7,679,180		81,076		126,192		207,268		7,886,448		13,837		101,876
Municipal		440,747		—		—		—		440,747		—		—

Total commercial		18,518,350		157,452		202,571		360,023		18,878,373		30,662		167,364

Commercial real estate:
Construction and land development		2,015,353		17,204		67,787		84,991		2,100,344		1,966		71,841
Term		7,921,052		49,320		99,594		148,914		8,069,966		3,182		78,243

Total commercial real estate		9,936,405		66,524		167,381		233,905		10,170,310		5,148		150,084

Consumer:
Home equity credit line		2,151,906		5,979		9,214		15,193		2,167,099		—		4,888
1-4 family residential		3,793,501		27,789		53,243		81,032		3,874,533		727		28,982
Construction and other consumer real estate		311,639		2,041		2,577		4,618		316,257		184		5,153
Bankcard and other revolving plans		269,570		2,227		1,794		4,021		273,591		1,451		179
Other		220,139		1,004		2,169		3,173		223,312		—		294

Total consumer loans		6,746,755		39,040		68,997		108,037		6,854,792		2,362		39,496

FDIC-supported loans		579,075		15,682		92,369		108,051		687,126		76,945		5,416

Total	$	35,780,585	$	278,698	$	531,318	$	810,016	$	36,590,601	$	115,117	$	362,360


	December 31, 2011
(In thousands)	Current		30-89 days past due		90+days past due		Total past due		Total loans		Accruing loans 90+ days past due		Nonaccrual loans that are current¹
Loans held for sale	$	183,344	$	—	$	18,246	$	18,246	$	201,590	$	30	$	—

Commercial:
Commercial and industrial	$	10,198,434	$	62,153	$	74,271	$	136,424	$	10,334,858	$	4,966	$	47,939
Leasing		377,914		1,634		161		1,795		379,709		—		1,319
Owner occupied		7,953,280		93,763		111,513		205,276		8,158,556		3,230		85,495
Municipal		441,241		—		—		—		441,241		—		—

Total commercial		18,970,869		157,550		185,945		343,495		19,314,364		8,196		134,753

Commercial real estate:
Construction and land development		2,137,544		21,562		105,803		127,365		2,264,909		2,471		107,991
Term		7,770,268		51,592		61,574		113,166		7,883,434		4,170		88,451

Total commercial real estate		9,907,812		73,154		167,377		240,531		10,148,343		6,641		196,442

Consumer:
Home equity credit line		2,169,190		8,669		9,569		18,238		2,187,428		—		5,542
1-4 family residential		3,846,012		18,985		56,219		75,204		3,921,216		2,833		32,067
Construction and other consumer real estate		294,371		5,008		6,494		11,502		305,873		136		4,773
Bankcard and other revolving plans		287,541		1,984		1,493		3,477		291,018		1,309		122
Other		221,575		1,995		1,970		3,965		225,540		—		372

Total consumer loans		6,818,689		36,641		75,745		112,386		6,931,075		4,278		42,876

FDIC-supported loans		634,113		27,791		88,966		116,757		750,870		74,611		6,812

Total	$	36,331,483	$	295,136	$	518,033	$	813,169	$	37,144,652	$	93,726	$	380,883

¹	Represents nonaccrual loans that are not past due more than 30 days; however, full payment of principal and interest is still not expected.

Credit Quality Indicators

In addition to the past due and nonaccrual criteria, we also analyze loans using a loan grading system. We generally assign internal grades to loans with commitments less than $500,000 based on the performance of those loans. Performance-based grades follow our definitions of Pass, Special Mention, Substandard, and Doubtful, which are consistent with published definitions of regulatory risk classifications.

Definitions of Pass, Special Mention, Substandard, and Doubtful are summarized as follows:

Pass: A Pass asset is higher quality and does not fit any of the other categories described below. The likelihood of loss is considered remote.

Special Mention: A Special Mention asset has potential weaknesses that may be temporary or, if left uncorrected, may result in a loss. While concerns exist, the bank is currently protected and loss is considered unlikely and not imminent.

Substandard: A Substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have well defined weaknesses and are characterized by the distinct possibility that the bank may sustain some loss if deficiencies are not corrected.

Doubtful: A Doubtful asset has all the weaknesses inherent in a Substandard asset with the added characteristics that the weaknesses make collection or liquidation in full highly questionable.

We generally assign internal grades to commercial and commercial real estate loans with commitments equal to or greater than $500,000 based on financial/statistical models and loan officer judgment. For these larger loans, we assign one of fourteen probability of default grades (in order of declining credit quality) and one of twelve loss-given-default grades. The first ten of the fourteen probability of default grades indicate a Pass grade. The remaining four grades are: Special Mention, Substandard, Doubtful, and Loss. Loss indicates that the outstanding balance has been charged-off. We evaluate our credit quality information such as risk grades at least quarterly, or as soon as we identify information that might warrant an upgrade or downgrade. Risk grades are then updated as necessary.

For consumer loans, we generally assign internal risk grades similar to those described previously based on payment performance. These are generally assigned with either a Pass or Substandard grade and are reviewed as we identify information that might warrant an upgrade or downgrade.

Outstanding loan balances (accruing and nonaccruing) categorized by these credit quality indicators are summarized as follows:


	March 31, 2012
(In thousands)	Pass		Special Mention		Sub-standard		Doubtful		Total loans		Total allowance
Loans held for sale	$	183,963	$	30	$	586	$	—	$	184,579	$	—

Commercial:
Commercial and industrial	$	9,476,937	$	272,739	$	394,577	$	13,009	$	10,157,262
Leasing		381,236		4,601		8,079		—		393,916
Owner occupied		7,122,814		190,785		562,243		10,606		7,886,448
Municipal		425,387		15,360		—		—		440,747

Total commercial		17,406,374		483,485		964,899		23,615		18,878,373	$	631,169

Commercial real estate:
Construction and land development		1,573,304		199,607		323,423		4,010		2,100,344
Term		7,271,226		256,897		534,762		7,081		8,069,966

Total commercial real estate		8,844,530		456,504		858,185		11,091		10,170,310		248,744

Consumer:
Home equity credit line		2,114,658		101		52,296		44		2,167,099
1-4 family residential		3,737,361		2,632		134,317		223		3,874,533
Construction and other consumer real estate		289,848		12,058		12,699		1,652		316,257
Bankcard and other revolving plans		261,711		3,593		8,287		—		273,591
Other		217,801		—		5,511		—		223,312

Total consumer loans		6,621,379		18,384		213,110		1,919		6,854,792		109,101

FDIC-supported loans		444,230		33,102		209,792		2		687,126		21,045

Total	$	33,316,513	$	991,475	$	2,245,986	$	36,627	$	36,590,601	$	1,010,059


	December 31, 2011
(In thousands)	Pass		Special Mention		Sub-standard		Doubtful		Total loans		Total allowance
Loans held for sale	$	182,626	$	—	$	18,964	$	—	$	201,590	$	—

Commercial:
Commercial and industrial	$	9,612,143	$	271,845	$	442,139	$	8,731	$	10,334,858
Leasing		362,711		5,878		11,120		—		379,709
Owner occupied		7,481,207		184,821		486,584		5,944		8,158,556
Municipal		425,807		15,434		—		—		441,241

Total commercial		17,881,868		477,978		939,843		14,675		19,314,364	$	627,825
Commercial real estate:
Construction and land development		1,647,741		187,323		426,152		3,693		2,264,909
Term		7,243,678		196,377		437,390		5,989		7,883,434

Total commercial real estate		8,891,419		383,700		863,542		9,682		10,148,343		275,546

Consumer:
Home equity credit line		2,136,190		106		51,089		43		2,187,428
1-4 family residential		3,788,958		5,736		126,277		245		3,921,216
Construction and other consumer real estate		274,712		12,206		16,967		1,988		305,873
Bankcard and other revolving plans		278,767		3,832		8,419		—		291,018
Other		221,114		163		4,256		7		225,540

Total consumer loans		6,699,741		22,043		207,008		2,283		6,931,075		123,115

FDIC-supported loans		499,956		35,877		215,031		6		750,870		23,472

Total	$	33,972,984	$	919,598	$	2,225,424	$	26,646	$	37,144,652	$	1,049,958

Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due in accordance with the contractual terms of the loan agreement, including scheduled interest payments. If a nonaccrual loan has a balance greater than $1 million or if a loan is a troubled debt restructuring ("TDR") including TDRs that subsequently default, we evaluate the loan for impairment and estimate a specific reserve for the loan for all portfolio segments under applicable accounting guidance. Smaller nonaccrual loans are pooled for ALLL estimation purposes.

When a loan is impaired, we estimate a specific reserve for the loan based on the projected present value of the loan's future cash flows discounted at the loan's effective interest rate, the observable market price of the loan, or the fair value of the loan's underlying collateral less the cost to sell. The process of estimating future cash flows also incorporates the same determining factors discussed previously under nonaccrual loans. When we base the impairment amount on the fair value of the loan's underlying collateral, we generally charge off the portion of the balance that is impaired, such that these loans do not have a specific reserve in the ALLL. Payments received on impaired loans that are accruing are recognized in interest income, according to the contractual loan agreement. Payments received on impaired loans that are on nonaccrual are not recognized in interest income, but are applied as a reduction to the principal outstanding. Payments are recognized when cash is received.

Information on impaired loans individually evaluated is summarized as follows, including the average recorded investment and interest income recognized for the three months ended March 31, 2012 and 2011:


	March 31, 2012
(In thousands)	Unpaid principal balance		Recorded investment				Total recorded investment		Related allowance
(In thousands)	Unpaid principal balance		with no allowance		with allowance		Total recorded investment		Related allowance

Commercial:
Commercial and industrial	$	232,638	$	60,627	$	116,854	$	177,481	$	24,219
Owner occupied		238,737		123,793		82,574		206,367		6,896

Total commercial		471,375		184,420		199,428		383,848		31,115

Commercial real estate:
Construction and land development		303,480		146,158		88,335		234,493		5,108
Term		404,556		200,648		137,338		337,986		11,329

Total commercial real estate		708,036		346,806		225,673		572,479		16,437

Consumer:
Home equity credit line		1,178		376		710		1,086		147
1-4 family residential		111,985		47,497		46,472		93,969		8,726
Construction and other consumer real estate		8,518		2,551		4,257		6,808		710
Other		2,685		1,223		1,441		2,664		51

Total consumer loans		124,366		51,647		52,880		104,527		9,634

FDIC-supported loans		237,124		25,888		79,869		105,757		7,243

Total	$	1,540,901	$	608,761	$	557,850	$	1,166,611	$	64,429


	Three Months Ended March 31, 2012					Three Months Ended March 31, 2011
(In thousands)	Average recorded investment		Interest income recognized			Average recorded investment		Interest income recognized

Commercial:
Commercial and industrial	$	178,428	$	888		$	210,610	$	563
Owner occupied		204,469		600			321,311		686
Municipal		–		–			1,983		–

Total commercial		382,897		1,488			533,904		1,249

Commercial real estate:
Construction and land development		257,194		1,562			583,756		1,424
Term		346,399		1,973			416,262		1,759

Total commercial real estate		603,593		3,535			1,000,018		3,183

Consumer:
Home equity credit line		1,280		1			1,956		–
1-4 family residential		93,838		320			108,476		481
Construction and other consumer real estate		8,261		42			15,986		10
Bankcard and other revolving plans		–		–			52		–
Other		2,771		–			3,725		–

Total consumer loans		106,150		363			130,195		491

FDIC-supported loans		110,574		8,859	¹		177,961		14,286	¹

Total	$	1,203,214	$	14,245		$	1,842,078	$	19,209

¹	The balance of interest income recognized results primarily from accretion of interest income on impaired FDIC-supported loans.


	December 31, 2011
(In thousands)	Unpaid principal balance		Recorded investment				Total recorded investment		Related allowance
(In thousands)	Unpaid principal balance		with no allowance		with allowance		Total recorded investment		Related allowance

Commercial:
Commercial and industrial	$	212,263	$	69,492	$	66,438	$	135,930	$	6,373
Owner occupied		258,173		135,555		78,177		213,732		5,083

Total commercial		470,436		205,047		144,615		349,662		11,456

Commercial real estate:
Construction and land development		405,499		178,113		136,634		314,747		8,925
Term		414,998		187,345		165,930		353,275		12,046

Total commercial real estate		820,497		365,458		302,564		668,022		20,971

Consumer:
Home equity credit line		1,955		384		1,469		1,853		411
1-4 family residential		116,498		58,392		39,960		98,352		7,555
Construction and other consumer real estate		13,340		4,537		6,188		10,725		1,026
Bankcard and other revolving plans		–		–		–		–		–
Other		2,889		2,840		28		2,868		3

Total consumer loans		134,682		66,153		47,645		113,798		8,995

FDIC-supported loans		353,195		47,736		65,188		112,924		6,642

Total	$	1,778,810	$	684,394	$	560,012	$	1,244,406	$	48,064

Modified and Restructured Loans

Loans may be modified in the normal course of business for competitive reasons or to strengthen the Company's position. Loan modifications and restructurings may also occur when the borrower experiences financial difficulty and needs temporary or permanent relief from the original contractual terms of the loan. These modifications are structured on a loan-by-loan basis, and depending on the circumstances, may include extended payment terms, a modified interest rate, forgiveness of principal, or other concessions. Loans that have been modified to accommodate a borrower who is experiencing financial difficulties, and for which the Company has granted a concession that it would not otherwise consider, are considered a TDR.

We consider many factors in determining whether to agree to a loan modification involving concessions, and seek a solution that will both minimize potential loss to the Company and attempt to help the borrower. We evaluate borrowers' current and forecasted future cash flows, their ability and willingness to make current contractual or proposed modified payments, the value of the underlying collateral (if applicable), the possibility of obtaining additional security or guarantees, and the potential costs related to a repossession or foreclosure and the subsequent sale of the collateral.

TDRs are classified as either accrual or nonaccrual loans. A loan on nonaccrual and restructured as a TDR will remain on nonaccrual status until the borrower has proven the ability to perform under the modified structure for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual at the time of restructuring or after a shorter performance period. If the borrower's ability to meet the revised payment schedule is uncertain, the loan remains classified as a nonaccrual loan. A TDR loan that specifies an interest rate that at the time of the restructuring is greater than or equal to the rate the bank is willing to accept for a new loan with comparable risk may not be reported as a TDR or an impaired loan in the calendar years subsequent to the restructuring if it is in compliance with its modified terms.

Selected information on TDRs that includes the recorded investment on an accruing and nonaccruing basis by loan class and modification type is summarized in the following table. This information reflects all TDRs at March 31, 2012 and December 31, 2011:


	March 31, 2012
	Recorded investment resulting from the following modification types:
(In thousands)	Interest rate below market		Maturity or term extension		Principal forgiveness		Payment deferral		Other¹		Multiple modification types²		Total

Accruing
Commercial:
Commercial and industrial	$	288	$	5,988	$	–	$	3,831	$	28,663	$	20,615	$	59,385
Owner occupied		1,334		14,560		–		5,739		4,350		10,354		36,337

Total commercial		1,622		20,548		–		9,570		33,013		30,969		95,722

Commercial real estate:
Construction and land development		1,055		32,561		–		–		28,557		27,881		90,054
Term		1,897		22,803		3,011		24,879		23,922		88,933		165,445

Total commercial real estate		2,952		55,364		3,011		24,879		52,479		116,814		255,499

Consumer:
Home equity credit line		194		–		–		–		–		28		222
1-4 family residential		2,297		1,945		1,065		–		6,269		36,002		47,578
Construction and other consumer real estate		159		411		–		–		654		1,309		2,533

Total consumer loans		2,650		2,356		1,065		–		6,923		37,339		50,333

Total accruing		7,224		78,268		4,076		34,449		92,415		185,122		401,554


Nonaccruing
Commercial:
Commercial and industrial		3,227		6,126		4,654		588		15,318		13,870		43,783
Leasing		–		–		–		–		–		249		249
Owner occupied		5,487		1,152		700		9,035		10,248		17,094		43,716

Total commercial		8,714		7,278		5,354		9,623		25,566		31,213		87,748

Commercial real estate:
Construction and land development		24,970		8,906		11		–		16,092		32,136		82,115
Term		4,583		44		–		4,884		20,072		55,454		85,037

Total commercial real estate		29,553		8,950		11		4,884		36,164		87,590		167,152

Consumer:
Home equity credit line		–		–		–		–		–		64		64
1-4 family residential		1,368		83		312		–		951		15,721		18,435
Construction and other consumer real estate		16		1,874		–		–		–		1,380		3,270

Total consumer loans		1,384		1,957		312		–		951		17,165		21,769

Total nonaccruing		39,651		18,185		5,677		14,507		62,681		135,968		276,669

Total	$	46,875	$	96,453	$	9,753	$	48,956	$	155,096	$	321,090	$	678,223


	December 31, 2011
	Recorded investment resulting from the following modification types:
(In thousands)	Interest rate below market		Maturity or term extension		Principal forgiveness		Payment deferral		Other¹		Multiple modification types²		Total

Accruing
Commercial:
Commercial and industrial	$	302	$	7,727	$	–	$	1,955	$	27,370	$	4,517	$	41,871
Owner occupied		1,875		15,224		37		1,008		5,504		20,449		44,097

Total commercial		2,177		22,951		37		2,963		32,874		24,966		85,968

Commercial real estate:
Construction and land development		644		33,284		565		–		28,911		34,862		98,266
Term		2,738		33,885		3,027		23,640		54,031		95,868		213,189

Total commercial real estate		3,382		67,169		3,592		23,640		82,942		130,730		311,455

Consumer:
Home equity credit line		–		–		–		–		32		–		32
1-4 family residential		3,270		1,663		525		–		6,103		34,839		46,400
Construction and other consumer real estate		166		1,444		–		–		635		1,981		4,226
Other		–		28		–		–		–		–		28

Total consumer loans		3,436		3,135		525		–		6,770		36,820		50,686

Total accruing		8,995		93,255		4,154		26,603		122,586		192,516		448,109


Nonaccruing
Commercial:
Commercial and industrial		3,526		6,094		–		1,429		8,384		10,202		29,635
Owner occupied		4,464		1,101		715		6,575		17,070		10,300		40,225

Total commercial		7,990		7,195		715		8,004		25,454		20,502		69,860

Commercial real estate:
Construction and land development		15,088		3,348		19		2,060		7,441		94,502		122,458
Term		3,445		50		–		4,250		4,724		65,316		77,785

Total commercial real estate		18,533		3,398		19		6,310		12,165		159,818		200,243

Consumer:
Home equity credit line		195		–		–		–		253		69		517
1-4 family residential		1,386		85		939		718		1,391		18,476		22,995
Construction and other consumer real estate		18		1,837		–		–		–		355		2,210

Total consumer loans		1,599		1,922		939		718		1,644		18,900		25,722

Total nonaccruing		28,122		12,515		1,673		15,032		39,263		199,220		295,825

Total	$	37,117	$	105,770	$	5,827	$	41,635	$	161,849	$	391,736	$	743,934

¹	Includes TDRs that resulted from other modification types including, but not limited to, a legal judgment awarded on different terms, a bankruptcy plan confirmed on different terms, a settlement that includes the delivery of collateral in exchange for debt reduction, etc.

²	Includes TDRs that resulted from a combination of any of the previous modification types.

Unused commitments to extend credit on TDRs amounted to approximately $13 million at March 31, 2012 and $9 million at December 31, 2011.

The total recorded investment of all TDRs in which interest rates were modified below market was $183.8 million at March 31, 2012 and $269.9 million at December 31, 2011. These loans are included in the previous table in the columns for interest rate below market and multiple modification types.

The net financial impact on interest income due to interest rate modifications below market for accruing TDRs is summarized in the following schedule:


(In thousands)	Three Months Ended March 31, 2012			Year Ended December 31, 2011

Commercial:
Commercial and industrial	$	(15	)	$	(46	)
Owner occupied		(377	)		(1,650	)

Total commercial		(392	)		(1,696	)

Commercial real estate:
Construction and land development		(219	)		(244	)
Term		(1,546	)		(7,096	)

Total commercial real estate		(1,765	)		(7,340	)

Consumer:
Home equity credit line		(15	)		–
1-4 family residential		(3,849	)		(10,188	)
Construction and other consumer real estate		(108	)		(406	)

Total consumer loans		(3,972	)		(10,594	)

Total decrease to interest income	$	(6,129	)¹	$	(19,630	)¹

¹	Calculated based on the difference between the modified rate and the pre-modified rate applied to the recorded investment.

On an ongoing basis, we monitor the performance of all TDRs according to their restructured terms. Subsequent payment default is defined in terms of delinquency, when principal or interest payments are past due 90 days or more for commercial loans, or 60 days or more for consumer loans.

The recorded investment of accruing and nonaccruing TDRs that had a payment default during the period (and are still in default at period-end) and are within 12 months or less of being modified as TDRs is as follows:


(In thousands)	March 31, 2012						December 31, 2011
	Accruing		Nonaccruing		Total		Accruing		Nonaccruing		Total

Commercial:
Commercial and industrial	$	–	$	249	$	249	$	35	$	1,700	$	1,735
Owner occupied		–		1,314		1,314		–		441		441

Total commercial		–		1,563		1,563		35		2,141		2,176

Commercial real estate:
Construction and land development		–		–		–		–		11,667		11,667
Term		–		1,555		1,555		–		5,971		5,971

Total commercial real estate		–		1,555		1,555		–		17,638		17,638

Consumer:
1-4 family residential		–		526		526		–		2,745		2,745

Total consumer loans		–		526		526		–		2,745		2,745

Total	$	–	$	3,644	$	3,644	$	35	$	22,524	$	22,559

Note: Total loans modified as TDRs during the 12 months previous to March 31, 2012 were $276.2 million.

Concentrations of Credit Risk

We perform an ongoing analysis of our loan portfolio to evaluate whether there is any significant exposure to an individual borrower or group(s) of borrowers as a result of any concentrations of credit risk. Such credit risks (whether on- or off-balance sheet) may occur when groups of borrowers or counterparties have similar economic characteristics and are similarly affected by changes in economic or other conditions. Credit risk also includes the loss that would be recognized subsequent to the reporting date if counterparties failed to perform as contracted. Our analysis as of March 31, 2012 concluded that no significant exposure exists from such credit risks. See Note 6 for a discussion of counterparty risk associated with the Company's derivative transactions.

Purchased Loans

Background and Accounting

We purchase loans in the ordinary course of business and account for them and the related interest income based on their performing status at the time of acquisition. Purchased credit-impaired ("PCI") loans have evidence of credit deterioration at the time of acquisition and it is probable that not all contractual payments will be collected. Interest income for PCI loans is accounted for on an expected cash flow basis. Certain other loans acquired by the Company that are not credit-impaired include loans with revolving privileges and are excluded from the PCI tabular disclosures following. Interest income for these loans is accounted for on a contractual cash flow basis. Certain acquired loans with similar characteristics such as risk exposure, type, size, etc., are grouped and accounted for in loan pools.

CB&T and NSB acquired failed banks from the FDIC as receiver and entered into loss sharing agreements with the FDIC for the acquired loans and foreclosed assets. The FDIC assumes 80% of credit losses up to a threshold specified for each acquisition and 95% above the threshold for a period of up to ten years. The loans acquired from the FDIC are presented separately in the Company's balance sheet as "FDIC-supported loans," and include both PCI and certain other acquired loans.

During the first quarter of 2011, certain FDIC-supported loans charged off at the time of acquisition were determined to be covered by the FDIC loss sharing agreement. The FDIC remitted $18.9 million to the Company, which was recognized in other noninterest income.

Upon acquisition, in accordance with applicable accounting guidance, the acquired loans were recorded at their fair value without a corresponding ALLL. The acquired foreclosed assets and subsequent real estate foreclosures were included with other real estate owned ("OREO") in the balance sheet and amounted to $28.9 million at March 31, 2012 and $24.3 million at December 31, 2011.

Outstanding Balances and Accretable Yield

The outstanding balances of all required payments and the related carrying amounts for PCI loans are as follows:


(In thousands)	March 31, 2012		December 31, 2011

Commercial	$	307,357	$	321,515
Commercial real estate		486,519		556,197
Consumer		50,496		57,391

Outstanding balance	$	844,372	$	935,103


Carrying amount	$	619,664	$	672,159
ALLL		19,729		21,604

Carrying amount, net	$	599,935	$	650,555

At the time of acquisition of PCI loans, we determine the loan's contractually required payments in excess of all cash flows expected to be collected as an amount that should not be accreted (nonaccretable difference). With respect to the cash flows expected to be collected, the portion representing the excess of the loan's expected cash flows over our initial investment (accretable yield) is accreted into interest income on a level yield basis over the remaining expected life of the loan or pool of loans. The effects of estimated prepayments are considered in estimating the expected cash flows.

Certain PCI loans are not accounted for as previously described because the estimation of cash flows to be collected involves a high degree of uncertainty. Under these circumstances, the accounting guidance provides that interest income is recognized on a cash basis similar to the cost recovery methodology for nonaccrual loans. The net carrying amounts in the preceding schedule also include the amounts for these loans, which were approximately $39.4 million at March 31, 2012 and $42.6 million at December 31, 2011.

Changes in the accretable yield for PCI loans were as follows:


(In thousands)	Three Months Ended March 31,
	2012			2011

Balance at beginning of period	$	184,679		$	277,005
Accretion		(21,533	)		(31,443	)
Reclassification from nonaccretable difference		13,869			23,392
Disposals and other		(3,011	)		2,782

Balance at end of period	$	174,004		$	271,736

Note: Amounts have been adjusted based on refinements to the original estimates of the accretable yield. Because of the estimation process required, we expect that additional adjustments to these amounts may be necessary in future periods.

The primary driver of reclassifications to accretable yield from nonaccretable difference resulted from increases in estimated cash flows for the acquired loans and loan pools. The increased cash flows were due to the enhanced economic status of borrowers whose financial stresses were diminishing or were not as severe as originally evaluated. When these loans were originally acquired, the expected cash flows estimated from the valuations were based on a lower economic outlook and a lower performance expectation.

The majority of acquired loans relate to the Southern California market. At the time of acquisition of these loans, market prices for commercial real estate in this market were falling, many local banks that provided commercial real estate lending were failing, and the economic outlook was uncertain. Although the current economy and commercial real estate prices in this market have not returned to pre-crisis levels, the improvements in the economy have begun to manifest themselves in the borrowers' ability to repay their loans.

Additionally, our credit officers and loan workout professionals assigned to these loans have been effective in resolving problem loans so that the maximum amounts possible, up to the full contractual amounts, are repaid. The efforts of these professionals and the aforementioned economic improvements have resulted in higher than initially expected cash flows and fair values for the acquired loans. These improvements resulted in the balance reclassification from nonaccretable difference to accretable yield.

ALLL Determination

For all acquired loans, the ALLL is only established for credit deterioration subsequent to the date of acquisition and represents our estimate of the inherent losses in excess of the book value of acquired loans. The ALLL for acquired loans is determined without giving consideration to the amounts recoverable from the FDIC through loss sharing agreements. These amounts recoverable are separately accounted for in the FDIC indemnification asset ("IA") and are thus presented "gross" in the balance sheet. The FDIC IA is included in other assets in the balance sheet and is discussed subsequently. The ALLL is included in the overall ALLL in the balance sheet. The provision for loan losses is reported net of changes in the amounts recoverable under the loss sharing agreements.

During the three months ended March 31, 2012 and 2011, we adjusted the ALLL for acquired loans by recording a (decrease) increase on an adjusted gross basis to the provision for loan losses of $(0.4) million in 2012 and $1.9 million in 2011. These amounts are net of the ALLL reversals due to increases in estimated cash flows which are discussed subsequently. As separately discussed and in accordance with the loss sharing agreements, portions of the increases to the provision are recoverable from the FDIC and comprise part of the FDIC IA. Charge-offs, net of recoveries and before FDIC indemnification, were $1.1 million and $3.4 million for the three months ended March 31, 2012 and 2011, respectively.

Changes in the provision for loan losses and related ALLL are driven in large part by the same factors discussed previously for the changes in reclassification from nonaccretable difference to accretable yield.

Changes in Cash Flow Estimates

Over the life of the loan or loan pool, we continue to estimate cash flows expected to be collected. We evaluate at the balance sheet date whether the estimated present value of these loans using the effective interest rates has decreased below their carrying value, and if so, we record a provision for loan losses. The present value of any subsequent increase in these loans' actual or expected cash flows is used first to reverse any existing ALLL. For the three months ended March 31, 2012 and 2011, total reversals to the ALLL, including the impact of increases in estimated cash flows, were $2.7 million and $4.2 million, respectively.

For loans or loan pools with no remaining ALLL, or where an ALLL was never established, that have increases in cash flows expected to be collected, we increase the amount of accretable yield on a prospective basis over the remaining life of the loan and recognize this increase in interest income. Any related decrease to the FDIC IA is recorded through a charge to other noninterest expense.

The impact of increased cash flows for acquired loans with no ALLL was approximately $13.2 million and $19.2 million of additional interest income for the three months ended March 31, 2012 and 2011, respectively, and $10.0 million and $13.1 million of additional noninterest expense for the three months ended March 31, 2012 and 2011, respectively.

FDIC Indemnification Asset

The amount of the FDIC IA was initially recorded at fair value using estimated cash flows based on credit adjustments for each loan or loan pool and the loss sharing reimbursement of 80% or 95%, as appropriate. The timing of the cash flows was adjusted to reflect our expectations to receive the FDIC reimbursements within the estimated loss period. Discount rates were based on U.S. Treasury rates or the AAA composite yield on investment grade bonds of similar maturity. As previously discussed, the amount is adjusted as actual loss experience is developed and estimated losses covered under the loss sharing agreements are updated. Estimated loan losses, if any, in excess of the amounts recoverable are reflected as period expenses through the provision for loan losses.

Changes in the FDIC IA were as follows:


(In thousands)	Three Months Ended March 31,
	2012			2011

Balance at beginning of period	$	133,810		$	195,516
Amounts filed with the FDIC and collected or in process		(1,293	)		(6,507	)
Net change in asset balance due to reestimation of projected cash flows¹		(11,185	)		(16,839	)

Balance at end of period	$	121,332		$	172,170

Note: Beginning in the latter half of 2011, the FDIC changed its reimbursement process to require that submitted expenses must be paid, not just incurred, to qualify for reimbursement.

¹	Negative amounts result from the accretion of loan balances based on increases in cash flow estimates on the underlying indemnified loans.

Any changes to the FDIC IA are recognized immediately in the quarterly period the change in estimated cash flows is determined. All claims submitted to the FDIC have been reimbursed in a timely manner.