Loans and the Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Recorded Investment in Loans by Category

The recorded investment in loans is presented in the Consolidated Balance Sheets net of deferred loan fees and costs of $2.8 million and $2.7 million at June 30, 2014 and December 31, 2013, respectively.


	June 30,		December 31,
*(unaudited, in thousands)*	2014		2013
Commercial real estate:
Land and construction	$	255,499	$	263,117
Improved property		1,685,373		1,649,802

Total commercial real estate		1,940,872		1,912,919

Commercial and industrial		578,665		556,249
Residential real estate		898,357		890,804
Home equity		295,127		284,687
Consumer		233,097		250,258

Total portfolio loans		3,946,118		3,894,917

Loans held for sale		10,641		5,855

Total loans	$	3,956,759	$	3,900,772

Summary of Changes in Allowance for Credit Losses

The following tables summarize changes in the allowance for credit losses applicable to each category of the loan portfolio:


	Allowance for Credit Losses By Category For the Six Months Ended June 30, 2014 and 2013
*(unaudited, in thousands)*	Commercial Real Estate - Land and Construction			Commercial Real Estate - Improved Property			Commercial & Industrial			Residential Real Estate			Home Equity			Consumer			Deposit Overdraft			Total
Balance at December 31, 2013:
Allowance for loan losses	$	6,056		$	18,157		$	9,925		$	5,673		$	2,017		$	5,020		$	520		$	47,368
Allowance for loan commitments		301			62			130			5			85			19			—			602

Total beginning allowance for credit losses		6,357			18,219			10,055			5,678			2,102			5,039			520			47,970

Provision for credit losses:
Provision for loan losses		(405	)		(511	)		1,870			575			392			642			551			3,114
Provision for loan commitments		(20	)		(52	)		1			—			5			—			—			(66	)

Total provision for credit losses		(425	)		(563	)		1,871			575			397			642			551			3,048

Charge-offs		—			(728	)		(2,384	)		(1,207	)		(348	)		(1,610	)		(362	)		(6,639	)
Recoveries		—			390			543			248			71			512			134			1,898

Net charge-offs		—			(338	)		(1,841	)		(959	)		(277	)		(1,098	)		(228	)		(4,741	)

Balance at June 30, 2014:
Allowance for loan losses		5,651			17,308			9,954			5,289			2,132			4,564			843			45,741
Allowance for loan commitments		281			10			131			5			90			19			—			536

Total ending allowance for credit losses	$	5,932		$	17,318		$	10,085		$	5,294		$	2,222		$	4,583		$	843		$	46,277


Balance at December 31, 2012:
Allowance for loan losses	$	3,741		$	23,614		$	9,326		$	7,182		$	2,458		$	5,557		$	821		$	52,699
Allowance for loan commitments		27			25			215			6			49			19			—			341

Total beginning allowance for credit losses		3,768			23,639			9,541			7,188			2,507			5,576			821			53,040

Provision for credit losses:
Provision for loan losses		559			1,855			(208	)		87			(32	)		836			50			3,147
Provision for loan commitments		11			(2	)		(77	)		—			44			—			—			(24	)

Total provision for credit losses		570			1,853			(285	)		87			12			836			50			3,123

Charge-offs		(373	)		(1,395	)		(919	)		(1,573	)		(346	)		(2,043	)		(414	)		(7,063	)
Recoveries		10			420			273			113			43			607			132			1,598

Net charge-offs		(363	)		(975	)		(646	)		(1,460	)		(303	)		(1,436	)		(282	)		(5,465	)


Balance at June 30, 2013:
Allowance for loan losses		3,937			24,494			8,472			5,809			2,123			4,957			589			50,381
Allowance for loan commitments		38			23			138			6			93			19			—			317

Total ending allowance for credit losses	$	3,975		$	24,517		$	8,610		$	5,815		$	2,216		$	4,976		$	589		$	50,698

Allowance for Credit Losses and Recorded Investment in Loans

The following tables present the allowance for credit losses and recorded investment in loans by category:


	Allowance for Credit Losses and Recorded Investment in Loans
*(unaudited, in thousands)*	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial and Industrial		Residential Real Estate		Home Equity		Consumer		Over-draft		Total
June 30, 2014
Allowance for credit losses:
Allowance for loans individually evaluated for impairment	$	—	$	39	$	1,029	$	—	$	—	$	—	$	—	$	1,068
Allowance for loans collectively evaluated for impairment		5,651		17,269		8,925		5,289		2,132		4,564		843		44,673
Allowance for loan commitments		281		10		131		5		90		19		—		536

Total allowance for credit losses	$	5,932	$	17,318	$	10,085	$	5,294	$	2,222	$	4,583	$	843	$	46,277


Portfolio loans:
Individually evaluated for impairment ⁽¹⁾	$	—	$	4,264	$	3,084	$	—	$	—	$	—	$	—	$	7,348
Collectively evaluated for impairment		255,499		1,681,109		575,581		898,357		295,127		233,097		—		3,938,770

Total portfolio loans	$	255,499	$	1,685,373	$	578,665	$	898,357	$	295,127	$	233,097	$	—	$	3,946,118


December 31, 2013
Allowance for credit losses:
Allowance for loans individually evaluated for impairment	$	—	$	51	$	681	$	—	$	—	$	—	$	—	$	732
Allowance for loans collectively evaluated for impairment		6,056		18,106		9,244		5,673		2,017		5,020		520		46,636
Allowance for loan commitments		301		62		130		5		85		19		—		602

Total allowance for credit losses	$	6,357	$	18,219	$	10,055	$	5,678	$	2,102	$	5,039	$	520	$	47,970


Portfolio loans:
Individually evaluated for impairment ⁽¹⁾	$	—	$	4,321	$	1,754	$	—	$	—	$	—	$	—	$	6,075
Collectively evaluated for impairment		263,117		1,645,481		554,495		890,804		284,687		250,258		—		3,888,842

Total portfolio loans	$	263,117	$	1,649,802	$	556,249	$	890,804	$	284,687	$	250,258	$	—	$	3,894,917

⁽¹⁾	Commercial loans greater than $1 million that are reported as non-accrual or as a troubled debt restructuring (“TDR”) are individually evaluated for impairment.

Summary of Commercial Loans by Risk Grade

The following tables summarize commercial loans by their assigned risk grade:


	Commerical Loans by Internally Assigned Risk Grade
*(unaudited, in thousands)*	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial & Industrial		Total Commercial Loans
As of June 30, 2014
Excellent - minimal risk	$	—	$	352	$	72,161	$	72,513
Good - desirable risk		23,884		707,407		201,844		933,135
Fair - acceptable risk		222,915		885,735		283,772		1,392,422
Criticized - marginal		6,282		50,934		11,491		68,707
Classified - substandard		2,418		40,945		9,397		52,760
Classified - doubtful		—		—		—		—

Total	$	255,499	$	1,685,373	$	578,665	$	2,519,537


As of December 31, 2013
Excellent - minimal risk	$	—	$	360	$	73,389	$	73,749
Good - desirable risk		39,409		710,137		197,269		946,815
Fair - acceptable risk		213,822		838,283		260,915		1,313,020
Criticized - marginal		6,498		57,983		10,768		75,249
Classified - substandard		3,388		43,039		13,908		60,335
Classified - doubtful		—		—		—		—

Total	$	263,117	$	1,649,802	$	556,249	$	2,469,168

Summary of Age Analysis of Loan Categories

The following tables summarize the age analysis of all categories of loans:


	Age Analysis of Loans
*(unaudited, in thousands)*	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Total Loans		90 Days or More Past Due and Accruing (1)
As of June 30, 2014
Commercial real estate:
Land and construction	$	253,610	$	290	$	1	$	1,598	$	1,889	$	255,499	$	248
Improved property		1,669,880		456		967		14,070		15,493		1,685,373		—

Total commercial real estate		1,923,490		746		968		15,668		17,382		1,940,872		248

Commercial and industrial		574,121		1,594		229		2,721		4,544		578,665		6
Residential real estate		884,456		1,554		2,692		9,655		13,901		898,357		1,843
Home equity		291,075		2,004		666		1,382		4,052		295,127		628
Consumer		229,714		2,492		529		362		3,383		233,097		222

Total portfolio loans		3,902,856		8,390		5,084		29,788		43,262		3,946,118		2,947
Loans held for sale		10,641		—		—		—		—		10,641		—

Total loans	$	3,913,497	$	8,390	$	5,084	$	29,788	$	43,262	$	3,956,759	$	2,947


Impaired loans included above are as follows:
Non-accrual loans	$	6,636	$	1,694	$	1,060	$	26,728	$	29,482	$	36,118
TDRs accruing interest ⁽¹⁾		12,818		167		415		113		695		13,513

Total impaired	$	19,454	$	1,861	$	1,475	$	26,841	$	30,177	$	49,631


As of December 31, 2013
Commercial real estate:
Land and construction	$	261,165	$	2	$	—	$	1,950	$	1,952	$	263,117	$	248
Improved property		1,632,973		2,482		2,346		12,001		16,829		1,649,802		318

Total commercial real estate		1,894,138		2,484		2,346		13,951		18,781		1,912,919		566

Commercial and industrial		552,414		1,112		977		1,746		3,835		556,249		—
Residential real estate		875,192		1,641		4,710		9,261		15,612		890,804		1,289
Home equity		281,004		1,581		470		1,632		3,683		284,687		411
Consumer		245,876		3,223		649		510		4,382		250,258		325

Total portfolio loans		3,848,624		10,041		9,152		27,100		46,293		3,894,917		2,591
Loans held for sale		5,855		—		—		—		—		5,855		—

Total loans	$	3,854,479	$	10,041	$	9,152	$	27,100	$	46,293	$	3,900,772	$	2,591


Impaired loans included above are as follows:
Non-accrual loans	$	9,028	$	588	$	2,722	$	24,295	$	27,605	$	36,633
TDRs accruing interest ⁽¹⁾		13,595		171		881		214		1,266		14,861

Total impaired	$	22,623	$	759	$	3,603	$	24,509	$	28,871	$	51,494

⁽¹⁾	Loans 90 days or more past due and accruing interest exclude TDRs 90 days or more past due and accruing interest.

Summary of Impaired Loans

The following tables summarize impaired loans:


	Impaired Loans
	June 30, 2014						December 31, 2013
*(unaudited, in thousands)*	Unpaid Principal Balance (1)		Recorded Investment		Related Allowance		Unpaid Principal Balance (1)		Recorded Investment		Related Allowance
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	2,050	$	1,950	$	—	$	2,663	$	2,564	$	—
Improved property		19,719		18,455		—		21,421		19,628		—
Commercial and industrial		4,970		4,428		—		3,773		3,249		—
Residential real estate		20,726		18,891		—		22,006		20,090		—
Home equity		2,355		2,118		—		2,675		2,506		—
Consumer		1,317		1,103		—		1,402		1,182		—

Total impaired loans without a specific allowance		51,137		46,945		—		53,940		49,219		—

With a specific allowance recorded:
Commercial real estate:
Improved property		725		725		39		729		729		51
Commercial and industrial		1,961		1,961		1,029		1,546		1,546		681

Total impaired loans with a specific allowance		2,686		2,686		1,068		2,275		2,275		732

Total impaired loans	$	53,823	$	49,631	$	1,068	$	56,215	$	51,494	$	732

⁽¹⁾	The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off.


	Impaired Loans
	For the Three Months Ended								For the Six Months Ended
	June 30, 2014				June 30, 2013				June 30, 2014				June 30, 2013
*(unaudited, in thousands)*	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	2,143	$	13	$	5,704	$	37	$	2,283	$	15	$	5,661	$	97
Improved Property		18,572		133		24,428		185		18,924		153		24,437		316
Commercial and industrial		4,122		57		3,974		28		3,831		89		3,989		61
Residential real estate		18,864		209		19,462		171		19,272		391		19,731		365
Home equity		2,173		16		2,034		15		2,284		35		2,092		30
Consumer		1,135		18		1,433		22		1,150		46		1,461		49

Total impaired loans without a specific allowance		47,009		446		57,035		458		47,744		729		57,371		918

With a specific allowance recorded:
Commercial real estate:
Land and construction		—		—		1,540		9		—		—		1,569		22
Improved Property		727		3		4,168		17		727		4		4,106		32
Commercial and industrial		2,537		29		—		—		2,206		41		—		—

Total impaired loans with a specific allowance		3,264		32		5,708		26		2,933		45		5,675		54

Total impaired loans	$	50,273	$	478	$	62,743	$	484	$	50,677	$	774	$	63,046	$	972

Recorded Investment in Non-Accrual Loans and TDRs

The following tables present the recorded investment in non-accrual loans and TDRs:


	Non-accrual Loans ⁽¹⁾
*(unaudited, in thousands)*	June 30, 2014		December 31, 2013
Commercial real estate:
Land and construction	$	1,950	$	2,564
Improved property		15,946		17,305

Total commercial real estate		17,896		19,869

Commercial and industrial		6,167		4,380
Residential real estate		10,137		10,240
Home equity		1,283		1,604
Consumer		635		540

Total	$	36,118	$	36,633

⁽¹⁾	Total non-accrual loans include loans that are also restructured. Such loans are also set forth in the following table as non-accrual TDRs.


	TDRs
	June 30, 2014						December 31, 2013
*(unaudited, in thousands)*	Accruing		Non- Accrual		Total		Accruing		Non- Accrual		Total
Commercial real estate:
Land and construction	$	—	$	1,008	$	1,008	$	—	$	1,601	$	1,601
Improved property		3,234		1,944		5,178		3,052		3,658		6,710

Total commercial real estate		3,234		2,952		6,186		3,052		5,259		8,311

Commercial and industrial		222		403		625		415		579		994
Residential real estate		8,754		2,414		11,168		9,850		2,991		12,841
Home equity		835		217		1,052		902		289		1,191
Consumer		468		295		763		642		206		848

Total	$	13,513	$	6,281	$	19,794	$	14,861	$	9,324	$	24,185

Loans Identified as TDRs

The following tables present details related to loans identified as TDRs during the three and six months ended June 30, 2014 and June 30, 2013, respectively:


	New TDRs ⁽¹⁾ For the Three Months Ended
	June 30, 2014						June 30, 2013
*(unaudited, dollars in thousands)*	Number of Modifications		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Modifications		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial real estate:
Land and construction		—	$	—	$	—		—	$	—	$	—
Improved Property		1		112		112		3		120		120

Total commercial real estate		1		112		112		3		120		120

Commercial and industrial		—		—		—		—		—		—
Residential real estate		2		70		70		9		673		672
Home equity		—		—		—		1		13		13
Consumer		9		100		93		3		36		35

Total		12	$	282	$	275		16	$	842	$	840

⁽¹⁾	Excludes loans that were either paid off or charged-off by period end. The pre-modification balance represents the balance outstanding at the beginning of the period. The post-modification balance represents the outstanding balance at period end.


	New TDRs ⁽¹⁾
	For the Six Months Ended
	June 30, 2014						June 30, 2013
*(unaudited, dollars in thousands)*	Number of Modifications		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Modifications		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial real estate:
Land and construction		—	$	—	$	—		1	$	299	$	295
Improved Property		2		203		201		8		1,011		836

Total commercial real estate		2		203		201		9		1,310		1,131

Commercial and industrial		—		—		—		6		161		161
Residential real estate		5		189		185		16		1,883		1,819
Home equity		—		—		—		1		14		13
Consumer		11		138		123		8		73		67

Total		18	$	530	$	509		40	$	3,441	$	3,191

⁽¹⁾	Excludes loans that were either paid off or charged-off by period end. The pre-modification balance represents the balance outstanding at the beginning of the period. The post-modification balance represents the outstanding balance at period end.

TDRs Defaulted Later Restructured

The following tables summarize TDRs which defaulted (defined as past due 90 days or more) during the three and six months ended June 30, 2014 and 2013 that were restructured within the last twelve months prior to June 30, 2014 and 2013:


	Defaulted TDRs ⁽¹⁾
	For the Three Months Ended
	June 30, 2014				June 30, 2013
*(unaudited, dollars in thousands)*	Number of Defaults		Recorded Investment		Number of Defaults		Recorded Investment
Commercial real estate:
Land and construction		—	$	—		—	$	—
Improved property		—		—		—		—

Total commercial real estate		—		—		—		—

Commercial and industrial		—		—		—		—
Residential real estate		—		—		5		312
Home equity		—		—		1		21
Consumer		—		—		—		—

Total		—	$	—		6	$	333

⁽¹⁾	Excludes loans that were either charged-off or cured by period end. The recorded investment is as of June 30, 2014 and 2013.


	Defaulted TDRs ⁽¹⁾
	For the Six Months Ended
	June 30, 2014				June 30, 2013
*(unaudited, dollars in thousands)*	Number of Defaults		Recorded Investment		Number of Defaults		Recorded Investment
Commercial real estate:
Land and construction		—	$	—		—	$	—
Improved property		—		—		2		645

Total commercial real estate		—		—		2		645

Commercial and industrial		—		—		3		313
Residential real estate		4		236		19		1,634
Home equity		—		—		6		124
Consumer		—		—		1		32

Total		4	$	236		31	$	2,748

⁽¹⁾	Excludes loans that were either charged-off or cured by period end. The recorded investment is as of June 30, 2014 and 2013.

Summary of Other Real Estate Owned and Repossessed Assets

The following table summarizes other real estate owned and repossessed assets included in other assets:


*(unaudited, in thousands)*	June 30, 2014		December 31, 2013
Other real estate owned	$	4,923	$	4,689
Repossessed assets		183		171

Total other real estate owned and repossessed assets	$	5,106	$	4,860