Loans Receivable and Allowance for Loan Losses

12 Months Ended

Dec. 31, 2013

Receivables [Abstract]

Loans Receivable and Allowance for Loan Losses

NOTE 7 – LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

The following table presents loans receivable as of December 31, 2013 and 2012:

	December 31,
	2013			2012
	(in thousands)
Construction	$	14,627		$	27,792
Commercial real estate		24,258			44,901
Commercial and industrial		5,814			11,153
Residential real estate		18,733			19,952
Manufactured housing		3,293			3,728
Total loans receivable covered under FDIC loss sharing agreements (1)		66,725			107,526
Construction		36,901			28,897
Commercial real estate		1,835,186			835,488
Commercial and industrial		239,509			75,118
Mortgage warehouse		866			9,565
Manufactured housing		139,471			154,703
Residential real estate		145,188			109,430
Consumer		2,144			2,061
Total loans receivable not covered under FDIC loss sharing agreements		2,399,265			1,215,262
Total loans receivable		2,465,990			1,322,788
Deferred (fees) costs, net		(912	)		1,679
Allowance for loan losses		(23,998	)		(25,837	)
Loans receivable, net	$	2,441,080		$	1,298,630

(1) Loans that were acquired in the two FDIC assisted transactions and are covered under loss sharing agreements with the FDIC are referred to as “covered” loans throughout these financial statements.

Non-Covered Loans

The following table summarizes non-covered loans by class and performance status as of December 31, 2013 and 2012:

	December 31, 2013
	30-89 Days Past Due (1)		90 Or More Days Past Due (1)		Total Past Due Still Accruing (1)		Non- Accrual		Current (2)		Purchased- Credit- Impaired Loans (3)		Total Loans (4)
	(in thousands)
Commercial and industrial	$	10	$	0	$	10	$	123	$	237,453	$	1,923	$	239,509
Commercial real estate		0		0		0		9,924		1,788,144		37,118		1,835,186
Construction		0		0		0		2,049		33,922		930		36,901
Residential real estate		555		0		555		969		133,158		10,506		145,188
Consumer		0		0		0		0		1,728		416		2,144
Mortgage warehouse		0		0		0		0		866		0		866
Manufactured housing (5)		7,921		3,772		11,693		448		122,416		4,914		139,471
Total	$	8,486	$	3,772	$	12,258	$	13,513	$	2,317,687	$	55,807	$	2,399,265

	December 31, 2012
	30-89 Days Past Due (1)		90 Or More Days Past Due (1)		Total Past Due Still Accruing (1)		Non- Accrual		Current (2)		Purchased- Credit- Impaired Loans (3)		Total Loans (4)
	(in thousands)
Commercial and industrial	$	38	$	0	$	38	$	288	$	72,715	$	2,077	$	75,118
Commercial real estate		1,437		0		1,437		17,770		770,508		45,773		835,488
Construction		0		0		0		2,423		25,022		1,452		28,897
Residential real estate		381		0		381		1,669		95,396		11,984		109,430
Consumer		0		0		0		56		1,486		519		2,061
Mortgage warehouse		0		0		0		0		9,565		0		9,565
Manufactured housing (5)		9,234		1,966		11,200		141		135,924		7,438		154,703
Total	$	11,090	$	1,966	$	13,056	$	22,347	$	1,110,616	$	69,243	$	1,215,262

(1) Includes past due loans that are accruing interest because collection is considered probable.

(2) Loans where next payment due is less than 30 days from the report date.

(3) Purchased-credit-impaired loans that were aggregated into a pool are accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, and the past due status of the pools, or that of the individual loans within the pools, is not meaningful. Because the Bank recognizes interest income on each pool of loans, they are considered to be performing. Purchased-credit-impaired loans that are not in pools accrete interest when the timing and amount of their expected cash flows are reasonably estimable, and are reported as performing loans. For additional information about purchased-credit-impaired loans, refer to refer to NOTE 3 “SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION – Purchased Loans.”

(4) Amounts exclude deferred costs and fees and the allowance for loan losses.

(5) Manufactured housing loans purchased in 2010 are subject to cash reserves held at the Bank that are used to fund past-due payments when the loan becomes 90 days or more delinquent. Subsequent purchases are subject to varying provisions in the event of borrowers’ delinquencies.

Covered Loans

The following table summarizes covered loans by class and performance status as of December 31, 2013 and 2012:

	December 31, 2013
	30-89 Days Past Due (1)		90 Days Or More Past Due (1)		Total Past Due Still Accruing (1)		Non- Accrual		Current (2)		Purchased- Credit- Impaired Loans (3)		Total Loans (4)
	(in thousands)
Commercial and industrial	$	295	$	0	$	295	$	2	$	3,172	$	2,345	$	5,814
Commercial real estate		245		0		245		1,691		13,586		8,736		24,258
Construction		0		0		0		3,382		1,967		9,278		14,627
Residential real estate		90		0		90		564		14,108		3,971		18,733
Manufactured housing		56		0		56		11		3,081		145		3,293
Total	$	686	$	0	$	686	$	5,650	$	35,914	$	24,475	$	66,725

	December 31, 2012
	30- 89 Days Past Due (1)		90 Days Or More Past Due (1)		Total Past Due Still Accruing (1)		Non- Accrual		Current (2)		Purchased- Credit- Impaired Loans (3)		Total Loans (4)
	(in thousands)
Commercial and industrial	$	220	$	0	$	220	$	100	$	8,404	$	2,429	$	11,153
Commercial real estate		0		0		0		3,712		20,859		20,330		44,901
Construction		0		0		0		5,244		6,472		16,076		27,792
Residential real estate		0		0		0		1,358		14,226		4,368		19,952
Manufactured housing		48		0		48		90		3,527		63		3,728
Total	$	268	$	0	$	268	$	10,504	$	53,488	$	43,266	$	107,526

(1) Includes past due loans that are accruing interest because collection is considered probable.

(2) Purchased loans from the FDIC with no evidence of credit deterioration since origination.

(3) Purchased-credit-impaired loans aggregated into a pool are accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past due status of the pools, or that of the individual loans within the pools, is not meaningful. Because the Bank recognizes interest income on each pool of loans, they are considered to be performing. Purchased-credit-impaired loans that are not in pools accrete interest when the timing and amount of their expected cash flows are reasonably estimable, and are reported as performing loans. For additional information about purchased-credit-impaired loans, refer to refer to NOTE 3 “SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION – Purchased Loans” .

(4) Amounts exclude deferred costs and fees and allowance for loan losses.

Allowance for Loan Losses and FDIC Loss Sharing Receivable

Prospective losses incurred on covered loans are eligible for partial reimbursement by the FDIC. Subsequent to the purchase date, the expected cash flows on the covered loans are subject to evaluation. Decreases in the present value of expected cash flows are recognized by recording an allowance for loan losses with the related provision for loan losses reduced for the amount reimbursable by the FDIC. If the expected cash flows on the covered loans increase such that a previously recorded impairment can be reversed, the Bancorp records a reduction in the allowance for loan losses with a related reduction in losses reimbursable by the FDIC. Increases in expected cash flows of purchased loans and decreases in expected cash flows of the FDIC loss sharing receivable, when there are no previously recorded impairments, are considered together and recognized over the remaining life of the loans as interest income.

The following table presents changes in the allowance for loans losses and the FDIC sharing receivable for the years ended December 31, 3013, 2012 and 2011.

	Allowance for Loan Losses For The Years Ended December 31,
	2013			2012			2011
	(in thousands)
Beginning Balance	$	25,837		$	15,032		$	15,129
Provision for loan losses (1)		5,055			16,271			9,450
Charge-offs		(7,338	)		(6,166	)		(9,661	)
Recoveries		444			700			114
Ending Balance	$	23,998		$	25,837		$	15,032

	FDIC Loss Sharing Receivable For The Years Ended December 31,
	2013			2012			2011
	(in thousands)
Beginning Balance	$	12,343		$	13,077		$	16,702
Increased estimated cash flows (2)		2,819			2,001			1,955
Other activity, net (3)		1,610			3,838			1,965
Cash receipts from FDIC		(6,726	)		(6,573	)		(7,545	)
Ending Balance	$	10,046		$	12,343		$	13,077
(1)    Provision for loan losses	$	5,055		$	16,271		$	9,450
(2)    Benefit attributable to FDIC loss share arrangements		(2,819	)		(2,001	)		(1,955	)
Net amount reported as provision for loan losses	$	2,236		$	14,270		$	7,495

(3) Includes external costs, such as legal fees, real estate taxes and appraisal expenses, that qualify for reimbursement under loss share arrangements. For 2012, includes change in accounting estimate as described in “NOTE 3—SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION.”

Impaired Loans – Covered and Non-Covered

The following tables present a summary of impaired loans as of the years ended December 31, 2013 and 2012. Purchased-credit-impaired loans are considered to be performing and are not included in the tables below.

	December 31, 2013
	Recorded Investment Net of Charge Offs		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(in thousands)
With no related allowance recorded:
Commercial and industrial	$	13,097	$	13,159	$		$	9,953	$	35
Commercial real estate		14,397		15,249				22,475		158
Construction		2,777		4,046				6,408		0
Consumer		0		0				90		0
Residential real estate		2,831		2,831				2,523		898
With an allowance recorded:
Commercial and industrial		2,469		3,739		829		1,616		25
Commercial real estate		2,261		3,167		946		7,497		82
Construction		1,132		1,132		351		5,054		0
Consumer		64		64		17		48		5
Residential real estate		252		252		199		875		254
Total	$	39,280	$	43,639	$	2,342	$	56,539	$	1,457

	December 31, 2012
	Recorded Investment Net of Charge Offs		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(in thousands)
With no related allowance recorded:
Commercial and industrial	$	3,844	$	3,844	$		$	4,922	$	209
Commercial real estate		26,626		27,477				23,089		1,247
Construction		6,588		6,618				7,420		9
Consumer		101		101				130		1
Residential real estate		3,188		3,188				2,543		63
With an allowance recorded:
Commercial and industrial		374		374		295		673		12
Commercial real estate		8,708		10,022		2,505		8,998		149
Construction		5,116		6,022		1,541		6,545		205
Consumer		100		100		14		43		6
Residential real estate		1,331		1,331		270		1,040		13
Total	$	55,976	$	59,077	$	4,625	$	55,403	$	1,914

Troubled Debt Restructurings

At December 31, 2013 and 2012, there were $4.6 million and $6.1 million, respectively, in loans categorized as troubled debt restructurings (“TDRs”). TDRs are reported as impaired loans in the calendar year of their restructuring and are evaluated to determine whether they should be placed on non-accrual status. In subsequent years, a TDR may be returned to accrual status if it satisfies a minimum six-month performance requirement; however, it will remain classified as impaired. Generally, the Bancorp requires sustained performance for nine months before returning a TDR to accrual status.

Modification of purchased-credit-impaired loans that are accounted for within loan pools in accordance with the accounting standards for purchased-credit-impaired loans do not result in the removal of these loans from the pool even if modifications would otherwise be considered a TDR. Accordingly, as each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, modifications of loans within such pools are not TDRs.

The following is an analysis of loans modified in a troubled debt restructuring by type of concession at December 31, 2013 and 2012. There were no modifications that involved forgiveness of debt.

	December 31, 2013
	TDRs in Compliance with Their Modified Terms and Accruing Interest		TDRs in Compliance with Their Modified Terms and Not Accruing Interest		Total
	(in thousands)
Extended under forbearance	$	0	$	0	$	0
Multiple extensions resulting from financial difficulty		0		0		0
Interest-rate reductions		790		448		1,238
Total	$	790	$	448	$	1,238

	December 31, 2012
	TDRs in Compliance with Their Modified Terms and Accruing Interest		TDRs in Compliance with Their Modified Terms and Not Accruing Interest		Total
	(in thousands)
Extended under forbearance	$	0	$	514	$	514
Multiple extensions resulting from financial difficulty		47		0		47
Interest rate reductions		792		141		933
Total	$	839	$	655	$	1,494

The following tables provide by class the number of loans modified in troubled debt restructurings and recorded investments at December 31, 2013 and 2012.

	December 31, 2013
	TDRs in Compliance with Their Modified Terms and Accruing Interest				TDRs in Compliance with Their Modified Terms and Not Accruing Interest
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Commercial and industrial		0	$	0		0	$	0
Commercial real estate		0		0		0		0
Construction		0		0		0		0
Manufactured housing		8		758		5		448
Residential real estate		0		0		0		0
Consumer		1		32		0		0
Total loans		9	$	790		5	$	448

	December 31, 2012
	TDRs in Compliance with Their Modified Terms and Accruing Interest				TDRs in Compliance with Their Modified Terms and Not Accruing Interest
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(dollars in thousands)
Commercial and industrial		0	$	0		0	$	0
Commercial real estate		0		0		0		0
Construction		0		0		0		0
Manufactured housing		4		223		3		141
Residential real estate		1		564		1		67
Consumer		1		52		1		447
Total loans		6	$	839		5	$	655

As of December 31, 2013 and 2012, there were no commitments to lend additional funds to debtors whose terms have been modified in TDRs.

For the year ended December 31, 2013, the recorded investment of loans determined to be TDRs was $1.2 million, both before and after restructuring. For the year ended December 31, 2012, the recorded investment of loans determined to be TDRs was $1.5 million, both before and after restructuring. During the year period ending December 31, 2013, five TDR loans defaulted with a recorded investment of $0.4 million. During the year end December 31, 2012, three TDR loans defaulted with a recorded investment of $0.3 million. Since these loans were included in the loan portfolio that is subject to the cash reserve, they will be removed from the loan portfolio when they become ninety days past due.

Loans modified in troubled debt restructurings are evaluated for impairment. The nature and extent of impairment of TDRs, including those which have experienced a subsequent default, is considered in the determination of an appropriate level of allowance for credit losses. There were no specific allowances resulting from TDR modifications during 2013, compared to specific allowances of $0.1 million for 2012.

Credit Quality Indicators

Commercial and industrial, commercial real estate, residential real estate and construction loans are based on an internally assigned risk rating system which are assigned at the loan origination and reviewed on a periodic or on an “as needed” basis. Consumer, mortgage warehouse and manufactured housing loans are evaluated based on the payment activity of the loan.

To facilitate the monitoring of credit quality within the commercial and industrial, commercial real estate, construction, and residential real estate classes, and for purposes of analyzing historical loss rates used in the determination of the allowance for loan losses for the respective portfolio class, the Bank utilizes the following categories of risk ratings: pass/satisfactory (includes risk rating 1 through 6), special mention, substandard, doubtful, and loss. The risk rating categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. Pass/satisfactory ratings, which are assigned to those borrowers who do not have identified potential or well-defined weaknesses and for whom there is a high likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other categories are updated on a quarterly basis during the month preceding the end of the calendar quarter. Consumer loans are not assigned to a risk rating. While assigning risk ratings involves judgment, the risk-rating process allows management to identify riskier credits in a timely manner and allocate the appropriate resources to managing the loans.

The risk rating grades are defined as follows:

“1” – Pass/Excellent

Loans rated 1 represent a credit extension of the highest quality. The borrower’s historic (at least five years) cash flows manifest extremely large and stable margins of coverage. Balance sheets are conservative, well capitalized, and liquid. After considering debt service for proposed and existing debt, projected cash flows continue to be strong and provide ample coverage. The borrower typically reflects broad geographic and product diversification and has access to alternative financial markets.

“2” – Pass/Superior

Loans rated 2 are those for which the borrower has a strong financial condition, balance sheet, operations, cash flow, debt capacity and coverage with ratios better than industry norms. The borrowers of these loans exhibit a limited leverage position, borrowers are virtually immune to local economies in stable growing industries, and where management is well respected and the company has ready access to public markets.

“3” – Pass/Strong

Loans rated 3 are those loans for which the borrower has above average financial condition and flexibility; more than satisfactory debt service coverage, balance sheet and operating ratios are consistent with or better than industry peers, have little industry risk, move in diversified markets and are experienced and competent in their industry. These borrowers access to capital markets is limited mostly to private sources, often secured, but the borrower typically has access to a wide range of refinancing alternatives.

“4” – Pass/Good

Loans rated 4 have a sound primary and secondary source of repayment. The borrower may have access to alternative sources of financing, bust sources are not as widely available as they are to a higher grade borrower. These loans carry a normal level of risk, with very low loss exposure. The borrower has the ability to perform according to the terms of the credit facility. The margins of cash flow coverage are satisfactory but vulnerable to more rapid deterioration than the higher quality loans.

“5” – Satisfactory

Loans rated 5 are extended to borrowers who are determined to be a reasonable credit risk and demonstrate the ability to repay the debt from normal business operations. Risk factors may include reliability of margins and cash flows, liquidity, dependence on a single product or industry, cyclical trends, depth of management, or limited access to alternative financing sources. The borrower’s historical financial information may indicate erratic performance, but current trends are positive and the quality of financial information is adequate, but is not as detailed and sophisticated as information found on higher grad loans. If adverse circumstances arise, the impact on the borrower may be significant.

“6” – Satisfactory/Bankable with Care

Loans rated 6 are those for which the borrower has higher than normal credit risk; however cash flow and asset values are generally intact. These borrowers may exhibit declining financial characteristics, which increasing leverage and decreasing liquidity and may have limited resources and access to financial alternatives. Signs of weakness in these borrowers may include delinquent taxes, trade slowness and eroding profit margins.

“7” – Special Mention

Loans rated Special Mention are credit facilities that may have potential developing weaknesses and deserve extra attention from the account manager and other management personnel. In the event that potential weaknesses are not corrected or mitigated, deterioration in the ability of the borrower to repay the debt in the future may occur. This grade is not assigned to loans that bear certain peculiar risks normally associated with the type of financing involved, unless circumstances have caused the risk to increase to a level higher than would have been acceptable with the credit was originally approved. Loans where significant actual, not potential, weaknesses or problems are clearly evident are graded in the category below.

“8” – Substandard

Loans are classified Substandard when the loans are inadequately protected by the current sound worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the Company will sustain some loss if the weaknesses are not corrected.

“9” – Doubtful

The Bank assigns a doubtful rating to loans that have all the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans.

“10” – Loss

The Bank assigns a loss rating to loans considered uncollectible and of such little value that their continuance as an active asset is not warranted. Loss estimates in excess of 30% will result in a loss classification. Amounts classified as loss are immediately charged off.

Risk ratings are not established for home equity loans, consumer loans, and installment loans, mainly because these portfolios consist of a larger number of homogenous loans with smaller balances. Instead, these portfolios are evaluated for risk mainly based upon aggregate payment history through the monitoring of delinquency levels and trends and are classified as performing and nonperforming.

The following presents the credit quality tables as of December 31, 2013 and 2012 for the non-covered loan portfolio.

	December 31, 2013
	Commercial and Industrial		Commercial Real Estate		Construction		Residential Real Estate
	(in thousands)
Pass/Satisfactory	$	228,748	$	1,808,804	$	34,822	$	142,588
Special Mention		10,314		12,760		29		940
Substandard		447		13,622		2,050		1,660
Doubtful		0		0		0		0
Total	$	239,509	$	1,835,186	$	36,901	$	145,188

	Consumer		Mortgage Warehouse		Manufactured Housing
	(in thousands)
Performing	$	2,144	$	866	$	127,330
Non-performing (1)		0		0		12,141
Total	$	2,144	$	866	$	139,471

	December 31, 2012
	Commercial and Industrial		Commercial Real Estate		Construction		Residential Real Estate
	(in thousands)
Pass/Satisfactory	$	70,955	$	794,187	$	26,020	$	105,490
Special Mention		3,836		18,737		454		1,017
Substandard		327		21,801		1,971		2,919
Doubtful		0		763		452		4
Total	$	75,118	$	835,488	$	28,897	$	109,430

	Consumer		Mortgage Warehouse		Manufactured Housing
	(in thousands)
Performing	$	2,005	$	9,565	$	154,562
Non-performing (1)		56		0		141
Total	$	2,061	$	9,565	$	154,703

(1) Includes loans that are on non-accrual status at December 31, 2013 and 2012.

The following presents the credit quality tables as of December 31, 2013 and 2012 for the covered loan portfolio.

	December 31, 2013
	Commercial and Industrial		Commercial Real Estate		Construction		Residential Real Estate
	(in thousands)
Pass/Satisfactory	$	3,688	$	14,330	$	1,967	$	14,137
Special Mention		223		2,989		0		455
Substandard		1,903		6,939		12,660		4,141
Doubtful		0		0		0		0
Total	$	5,814	$	24,258	$	14,627	$	18,733

	Manufactured Housing
	(in thousands)
Performing	$	3,226
Non-performing (1)		67
Total	$	3,293

	December 31, 2012
	Commercial and Industrial		Commercial Real Estate		Construction		Residential Real Estate
	(in thousands)
Pass/Satisfactory	$	8,888	$	26,195	$	2,434	$	14,021
Special Mention		51		225		4,038		455
Substandard		2,214		18,481		21,320		5,476
Doubtful		0		0		0		0
Total	$	11,153	$	44,901	$	27,792	$	19,952

	Manufactured Housing
	(in thousands)
Performing	$	3,638
Non-performing (1)		90
Total	$	3,728

(1) Includes loans that are on non-accrual status at December 31, 2013 and 2012.

The changes in the allowance for loan losses for the years ended December 31, 2013 and 2012 and the loans and allowance for loan losses by class and impairment method as of December 31, are presented in the tables below. The amounts presented below for the provision for loan losses do not include expected benefits resulting from the FDIC loss share arrangements for the covered loans.

Twelve months ended December 31, 2013	Commercial and Industrial			Commercial Real Estate			Construction			Residential Real Estate			Manufactured Housing			Consumer			Mortgage Warehouse			Residual Reserve			Total
	(in thousands)
Beginning Balance, January 1, 2013	$	1,477		$	15,439		$	3,991		$	3,233		$	750		$	154		$	71		$	722		$	25,837
Charge-offs		(1,387	)		(3,358	)		(2,096	)		(410	)		0			(87	)		0			0			(7,338	)
Recoveries		391			42			0			2			0			9			0			0			444
Provision for loan losses		2,157			3,582			490			(335	)		(136	)		54			(35	)		(722	)		5,055
Ending Balance, December 31, 2013	$	2,638		$	15,705		$	2,385		$	2,490		$	614		$	130		$	36		$	0		$	23,998
Loans:
Individually evaluated for impairment	$	15,566		$	16,658		$	3,909		$	3,083		$	0		$	64		$	0					$	39,280
Collectively evaluated for impairment		225,489			1,796,932			37,411			146,361			137,705			1,664			866						2,346,428
Loans acquired with credit deterioration		4,268			45,854			10,208			14,477			5,059			416			0						80,282
	$	245,323		$	1,859,444		$	51,528		$	163,921		$	142,764		$	2,144		$	866					$	2,465,990
Allowance for loan losses:
Individually evaluated for impairment	$	829		$	946		$	351		$	199		$	0		$	17		$	0		$	0		$	2,342
Collectively evaluated for impairment		1,574			9,642			267			767			84			38			36			0			12,408
Loans acquired with credit deterioration		235			5,117			1,767			1,524			530			75			0			0			9,248
	$	2,638		$	15,705		$	2,385		$	2,490		$	614		$	130		$	36		$	0		$	23,998

Twelve months ended December 31, 2012	Commercial and Industrial			Commercial Real Estate			Construction			Residential Real Estate			Manufactured Housing		Consumer			Mortgage Warehouse			Residual Reserve		Total
	(in thousands)
Beginning Balance, January 1, 2012	$	1,441		$	7,029		$	4,656		$	844		$	18	$	61		$	929		$	54	$	15,032
Charge-offs		(522	)		(2,462	)		(2,507	)		(649	)		0		(26	)		0			0		(6,166	)
Recoveries		514			63			4			5			0		114			0			0		700
Provision for loan losses		44			10,809			1,838			3,033			732		5			(858	)		668		16,271
Ending Balance, December 31, 2012	$	1,477		$	15,439		$	3,991		$	3,233		$	750	$	154		$	71		$	722	$	25,837
Loans:
Individually evaluated for impairment	$	4,218		$	35,334		$	11,704		$	4,519		$	0	$	201		$	0				$	55,976
Collectively evaluated for impairment		77,547			778,952			27,457			108,511			150,930		1,341			9,565					1,154,303
Loans acquired with credit deterioration		4,506			66,103			17,528			16,352			7,501		519			0					112,509
	$	86,271		$	880,389		$	56,689		$	129,382		$	158,431	$	2,061		$	9,565				$	1,322,788
Allowance for loan losses:
Individually evaluated for impairment	$	295		$	2,505		$	1,541		$	270		$	0	$	14		$	0		$	0	$	4,625
Collectively evaluated for impairment		731			7,048			350			917			63		55			71			722		9,957
Loans acquired with credit deterioration		451			5,886			2,100			2,046			687		85			0			0		11,255
	$	1,477		$	15,439		$	3,991		$	3,233		$	750	$	154		$	71		$	722	$	25,837

The non-covered manufactured housing portfolio was purchased in August 2010. A portion of the purchase price may be used to reimburse the Bank under the specified terms in the Purchase Agreement for defaults of the underlying borrower and other specified items. At December 31, 2013 and 2012, funds available for reimbursement, if necessary, were $3.1 million and $3.5 million, respectively. Each quarter, these funds are evaluated to determine if they would be sufficient to absorb probable losses within the manufactured housing portfolio.

The following table presents the changes in accretable yield related to purchased-credit-impaired loans:

	December 31,
	2013			2012			2011
	(in thousands)
Accretable yield balance, beginning of period	$	32,174		$	45,358		$	7,176
Additions resulting from acquisition		0			0			41,306
Accretion to interest income		(6,213	)		(11,723	)		(3,556	)
Reclassification from nonaccretable difference and disposals, net		(3,404	)		(1,461	)		432
Accretable yield balance, end of period	$	22,557		$	32,174		$	45,358