Loan and Lease Finance Receivables and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2013

Summary of Components of Loan and Lease Finance Receivables

The following tables provide a summary of the components of loan and lease finance receivables:


	September 30, 2013
	Non-Covered Loans			Covered Loans			Total
	(Dollars in thousands)
Commercial and industrial	$	510,566		$	20,825		$	531,391
Real estate:
Commercial real estate		2,126,415			147,289			2,273,704
Construction		47,648			661			48,309
SFR mortgage		192,130			327			192,457
Dairy & livestock and agribusiness		261,638			3,659			265,297
Municipal lease finance receivables		99,188			—			99,188
Consumer and other loans		52,886			5,102			57,988

Gross loans		3,290,471			177,863			3,468,334
Less:
Purchase accounting discount		—			(14,529	)		(14,529	)
Deferred loan fees, net		(9,119	)		—			(9,119	)

Gross loans, net of deferred loan fees and discount		3,281,352			163,334			3,444,686
Less: Allowance for loan losses		(80,713	)		—			(80,713	)

Net loans	$	3,200,639		$	163,334		$	3,363,973


	December 31, 2012
	Non-Covered Loans			Covered Loans			Total
	(Dollars in thousands)
Commercial and industrial	$	547,422		$	26,149		$	573,571
Real estate:
Commercial real estate		1,990,107			179,428			2,169,535
Construction		59,721			1,579			61,300
SFR mortgage		159,288			1,415			160,703
Dairy & livestock and agribusiness		336,660			5,651			342,311
Municipal lease finance receivables		105,767			—			105,767
Consumer and other loans		60,273			6,337			66,610

Gross loans		3,259,238			220,559			3,479,797
Less:
Purchase accounting discount		—			(25,344	)		(25,344	)
Deferred loan fees, net		(6,925	)		—			(6,925	)

Gross loans, net of deferred loan fees and discount		3,252,313			195,215			3,447,528
Less: Allowance for loan losses		(92,441	)		—			(92,441	)

Net loans	$	3,159,872		$	195,215		$	3,355,087

Summary of Internal Risk Grouping by Loan Class

The following table summarizes our internal risk grouping by loan class as of September 30, 2013 and December 31, 2012:

Credit Quality Indicators


	September 30, 2013
	Pass		Watch List		Special Mention		Substandard		Doubtful & Loss		Total
	(Dollars in thousands)
Commercial and industrial	$	308,271	$	131,118	$	53,972	$	16,730	$	475	$	510,566
Real estate:
Commercial real estate
Owner occupied		441,739		128,887		89,475		65,455		—		725,556
Non-owner occupied		1,040,758		217,822		85,784		56,495		—		1,400,859
Construction
Speculative		7,568		—		1,538		18,020		—		27,126
Non-speculative		6,408		4,895		—		9,219		—		20,522
SFR mortgage		152,169		20,960		4,319		14,682		—		192,130
Dairy & livestock and agribusiness		44,735		39,360		102,464		72,879		2,200		261,638
Municipal lease finance receivables		51,935		19,540		21,283		6,430		—		99,188
Consumer and other loans		41,555		6,379		3,410		1,539		3		52,886

Total non-covered loans		2,095,138		568,961		362,245		261,449		2,678		3,290,471
Covered loans		35,125		67,347		23,477		51,914		—		177,863

Total gross loans	$	2,130,263	$	636,308	$	385,722	$	313,363	$	2,678	$	3,468,334


	December 31, 2012
	Pass		Watch List		Special Mention		Substandard		Doubtful & Loss		Total
	(Dollars in thousands)
Commercial and industrial	$	347,275	$	131,186	$	44,466	$	22,901	$	1,594	$	547,422
Real estate:
Commercial real estate
Owner occupied		382,111		159,653		78,087		84,116		—		703,967
Non-owner occupied		888,777		214,901		105,121		77,341		—		1,286,140
Construction
Speculative		1,417		—		15,163		21,314		—		37,894
Non-speculative		9,841		2,767		—		9,219		—		21,827
SFR mortgage		129,730		10,215		3,107		16,236		—		159,288
Dairy & livestock and agribusiness		72,113		111,393		75,316		77,721		117		336,660
Municipal lease finance receivables		72,432		20,237		11,124		1,974		—		105,767
Consumer and other loans		49,321		6,763		2,714		1,421		54		60,273

Total non-covered loans		1,953,017		657,115		335,098		312,243		1,765		3,259,238
Covered loans		52,637		72,803		31,689		63,354		76		220,559

Total gross loans	$	2,005,654	$	729,918	$	366,787	$	375,597	$	1,841	$	3,479,797

Summary of Allowance for Loan Losses and Recorded Investment in Held-For-Investment Loans by Portfolio Segment

The following table presents the balance and activity in the allowance for loan losses; and the recorded investment in held-for-investment loans by portfolio segment and based upon our impairment method as of September 30, 2013, and 2012:

Allowance for Loan losses and Recorded Investment in Financing Receivables


	As of and For the Three and Nine Months Ended September 30, 2013
				Real Estate
	Commercial and Industrial			Commercial Real Estate			Construction			SFR Mortgage			Dairy & Livestock and Agribusiness			Municipal Lease Finance Receivables		Consumer and Other Loans			Covered Loans (1)		Unallocated			Total
	(Dollars in thousands)
Beginning balance, July 1, 2013	$	12,586		$	44,392		$	1,172		$	3,715		$	14,225		$	2,369	$	1,052		$	—	$	5,946		$	85,457
Charge-offs		(1,235	)		—			—			(110	)		—			—		(39	)		—		—			(1,384	)
Recoveries		315			34			15			—			14			—		12			—		—			390
Provision / reallocation of ALLL		(1,022	)		(1,007	)		412			(144	)		(2,152	)		69		25			—		69			(3,750	)

Ending balance, September 30, 2013	$	10,644		$	43,419		$	1,599		$	3,461		$	12,087		$	2,438	$	1,050		$	—	$	6,015		$	80,713

Beginning balance, January 1, 2013	$	11,652		$	47,457		$	2,291		$	3,448		$	18,696		$	1,588	$	1,170		$	—	$	6,139		$	92,441
Charge-offs		(2,339	)		—			—			(252	)		—			—		(108	)		—		—			(2,699	)
Recoveries		523			100			83			133			42			—		40			—		—			921
Provision / reallocation of ALLL		808			(4,138	)		(775	)		132			(6,651	)		850		(52	)		—		(124	)		(9,950	)

Ending balance, September 30, 2013	$	10,644		$	43,419		$	1,599		$	3,461		$	12,087		$	2,438	$	1,050		$	—	$	6,015		$	80,713

Allowance for loan losses:
Individually evaluated for impairment	$	387		$	1		$	144		$	290		$	2,658		$	—	$	5		$	—	$	—		$	3,485
Collectively evaluated for impairment	$	10,257		$	43,418		$	1,455		$	3,171		$	9,429		$	2,438	$	1,045		$	—	$	6,015		$	77,228
Loans and financing receivables (2):
Balance, September 30, 2013	$	510,566		$	2,126,415		$	47,648		$	192,130		$	261,638		$	99,188	$	52,886		$	163,334	$	—		$	3,453,805
Individually evaluated for impairment	$	4,983		$	38,999		$	27,239		$	12,805		$	24,494		$	—	$	159		$	—	$	—		$	108,679
Collectively evaluated for impairment	$	505,583		$	2,087,416		$	20,409		$	179,325		$	237,144		$	99,188	$	52,727		$	—	$	—		$	3,181,792
Acquired loans with deteriorated credit quality, net of discount	$	—		$	—		$	—		$	—		$	—		$	—	$	—		$	163,334	$	—		$	163,334

(1)	Represents the allowance and related loan balances in accordance with ASC 310-30.

(2)	Net of purchase accounting discount.


	As of and For the Three and Nine Months Ended September 30, 2012
				Real Estate
	Commercial and Industrial			Commercial Real Estate			Construction			SFR Mortgage			Dairy & Livestock and Agribusiness			Municipal Lease Finance Receivables			Consumer and Other Loans			Covered Loans (1)			Unallocated			Total
	(Dollars in thousands)
Beginning balance, July 1, 2012	$	12,332		$	45,319		$	3,029		$	3,039		$	16,976		$	1,656		$	1,401		$	—		$	8,140		$	91,892
Charge-offs		(294	)		(358	)		—			(168	)		—			—			(66	)		—			—			(886	)
Recoveries		106			134			77			4			9			—			3			728			—			1,061
Provision / reallocation of ALLL		(13	)		(280	)		265			366			2,861			(110	)		(52	)		(728	)		(2,309	)		—

Ending balance, September 30, 2012	$	12,131		$	44,815		$	3,371		$	3,241		$	19,846		$	1,546		$	1,286		$	—		$	5,831		$	92,067

Beginning balance, January 1, 2012	$	10,654		$	47,841		$	4,947		$	4,032		$	17,278		$	2,403		$	1,590		$	—		$	5,219		$	93,964
Charge-offs		(977	)		(1,840	)		—			(642	)		(1,150	)		—			(154	)		(81	)		—			(4,844	)
Recoveries		694			481			1,129			(108	)		11			—			12			728			—			2,947
Provision / reallocation of ALLL		1,760			(1,667	)		(2,705	)		(41	)		3,707			(857	)		(162	)		(647	)		612			—

Ending balance, September 30, 2012	$	12,131		$	44,815		$	3,371		$	3,241		$	19,846		$	1,546		$	1,286		$	—		$	5,831		$	92,067

Allowance for loan losses:
Individually evaluated for impairment	$	481		$	25		$	—		$	348		$	1,043		$	—		$	113		$	—		$	—		$	2,010
Collectively evaluated for impairment	$	11,650		$	44,790		$	3,371		$	2,893		$	18,803		$	1,546		$	1,173		$	—		$	5,831		$	90,057
Loans and financing receivables (2):
Balance, September 30, 2012	$	525,801		$	2,012,119		$	70,740		$	158,074		$	297,932		$	109,005		$	60,071		$	207,307		$	—		$	3,441,049
Individually evaluated for impairment	$	4,457		$	41,955		$	37,794		$	13,852		$	18,708		$	471		$	364		$	—		$	—		$	117,601
Collectively evaluated for impairment	$	521,344		$	1,970,164		$	32,946		$	144,222		$	279,224		$	108,534		$	59,707		$	—		$	—		$	3,116,141
Acquired loans with deteriorated credit quality, net of discount	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	207,307		$	—		$	207,307

(1)	Represents the allowance and related loan balances in accordance with ASC 310-30.

(2)	Net of purchase accounting discount.

Schedule of Recorded Investment in Non-Covered Past Due and Nonaccrual Loans and Loans Past Due by Class of Loans

The following table presents the recorded investment in non-covered past due and nonaccrual loans and loans past due by class of loans as of September 30, 2013, and December 31, 2012:

Non-Covered Past Due and Nonaccrual Loans


	September 30, 2013
	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due and Accruing		Total Past Due and Accruing		Nonaccrual (1)		Current		Total Loans and Financing Receivables
	(Dollars in thousands)
Commercial and industrial	$	417	$	—	$	—	$	417	$	3,734	$	506,415	$	510,566
Real estate:
Commercial real estate
Owner occupied		—		—		—		—		4,180		721,376		725,556
Non-owner occupied		772		243		—		1,015		13,649		1,386,195		1,400,859
Construction
Speculative		—		—		—		—		10,368		16,758		27,126
Non-speculative		—		—		—		—		—		20,522		20,522
SFR mortgage		—		—		—		—		10,421		181,709		192,130
Dairy & livestock and agribusiness		—		—		—		—		6,973		254,665		261,638
Municipal lease finance receivables		—		—		—		—		—		99,188		99,188
Consumer and other loans		4		251		—		255		159		52,472		52,886

Total non-covered gross loans	$	1,193	$	494	$	—	$	1,687	$	49,484	$	3,239,300	$	3,290,471

(1)	As of September 30, 2013, $23.7 million of nonaccruing loans were current, $0.5 million were 30-59 days past due, and $25.3 million were 90+ days past due.


	December 31, 2012
	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due and Accruing		Total Past Due and Accruing		Nonaccrual (1)		Current		Total Loans and Financing Receivables
	(Dollars in thousands)
Commercial and industrial	$	233	$	457	$	—	$	690	$	3,136	$	543,596	$	547,422
Real estate:
Commercial real estate
Owner occupied		—		—		—		—		5,415		698,552		703,967
Non-owner occupied		—		—		—		—		15,624		1,270,516		1,286,140
Construction
Speculative		—		—		—		—		10,663		27,231		37,894
Non-speculative		—		—		—		—		—		21,827		21,827
SFR mortgage		107		—		—		107		13,102		146,079		159,288
Dairy & livestock and agribusiness		—		—		—		—		9,842		326,818		336,660
Municipal lease finance receivables		—		—		—		—		—		105,767		105,767
Consumer and other loans		82		8		—		90		215		59,968		60,273

Total non-covered gross loans	$	422	$	465	$	—	$	887	$	57,997	$	3,200,354	$	3,259,238

(1)	As of December 31, 2012, $40.1 million of nonaccruing loans were current, $2.6 million were 30-59 days past due, and $15.3 million were 90+ days past due.

Schedule of Held-for-Investment and Held-for-Sale Loans, Individually Evaluated for Impairment by Class of Loans

The following table presents held-for-investment, individually evaluated for impairment by class of loans, as of September 30, 2013 and December 31, 2012:

Non-Covered Impaired Loans


	September 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	4,595	$	6,020	$	—	$	5,131	$	161
Real estate:
Commercial real estate
Owner occupied		13,361		14,412		—		13,635		494
Non-owner occupied		25,631		36,851		—		26,838		553
Construction
Speculative		10,369		10,956		—		10,522		—
Non-speculative		9,219		9,219		—		9,219		428
SFR mortgage		10,156		11,838		—		9,487		75
Dairy & livestock and agribusiness		17,553		18,515		—		19,308		445
Municipal lease finance receivables		—		—		—		—		—
Consumer and other loans		142		214		—		149		—

Total		91,026		108,025		—		94,289		2,156
With a related allowance recorded:
Commercial and industrial		388		408		387		417		—
Real estate:
Commercial real estate
Owner occupied		7		9		1		11		—
Non-owner occupied		—		—		—		—		—
Construction
Speculative		7,651		7,651		144		7,651		232
Non-speculative		—		—		—		—		—
SFR mortgage		2,649		2,764		290		2,636		5
Dairy & livestock and agribusiness		6,941		7,654		2,658		7,571		—
Municipal lease finance receivables		—		—		—		—		—
Consumer and other loans		17		19		5		19		—

Total		17,653		18,505		3,485		18,305		237

Total non-covered impaired loans	$	108,679	$	126,530	$	3,485	$	112,594	$	2,393


	December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	3,385	$	4,215	$	—	$	3,766	$	43
Real estate:
Commercial real estate
Owner occupied		13,478		14,569		—		14,459		397
Non-owner occupied		28,639		38,633		—		29,801		670
Construction
Speculative		21,314		21,607		—		21,650		311
Non-speculative		9,219		9,219		—		9,219		574
SFR mortgage		11,079		14,342		—		11,292		54
Dairy & livestock and agribusiness		12,406		13,756		—		11,834		173
Municipal lease finance receivables		263		263		—		443		5
Consumer and other loans		142		196		—		145		—

Total		99,925		116,800		—		102,609		2,227
With a related allowance recorded:
Commercial and industrial		304		327		289		387		—
Real estate:
Commercial real estate
Owner occupied		19		19		2		28		—
Non-owner occupied		—		—		—		—		—
Construction
Speculative		—		—		—		—		—
Non-speculative		—		—		—		—		—
SFR mortgage		3,766		4,071		434		3,363		—
Dairy & livestock and agribusiness		4,303		4,340		1,596		4,017		73
Municipal lease finance receivables		—		—		—		—		—
Consumer and other loans		73		74		11		75		—

Total		8,465		8,831		2,332		7,870		73

Total non-covered impaired loans	$	108,390	$	125,631	$	2,332	$	110,479	$	2,300

Schedule of Activity Related to Troubled Debt Restructurings

The following tables provide a summary of the activity related to TDRs for the three and nine months ended September 30, 2013, and 2012:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Performing TDRs:
Beginning balance	$	61,566		$	45,243		$	50,392		$	38,554
New modifications		—			9,506			21,364			20,106
Payoffs and payments, net		(2,481	)		(480	)		(13,820	)		(2,384	)
TDRs returned to accrual status		110			—			1,259			517
TDRs placed on nonaccrual status		—			(2,656	)		—			(5,180	)

Ending balance	$	59,195		$	51,613		$	59,195		$	51,613


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Nonperforming TDRs:
Beginning balance	$	26,497		$	31,753		$	31,309		$	23,844
New modifications		3,676			1,612			3,804			14,563
Charge-offs		(68	)		—			(68	)		—
Payoffs and payments, net		(1,950	)		(2,922	)		(5,741	)		(9,971	)
TDRs returned to accrual status		(110	)		—			(1,259	)		(517	)
TDRs placed on nonaccrual status		—			2,656			—			5,180

Ending balance	$	28,045		$	33,099		$	28,045		$	33,099

Loans Modified as Troubled Debt Restructurings

The following tables summarize loans modified as troubled debt restructurings during the three and nine months ended September 30, 2013, and 2012.

Modifications (1)


	For the Three Months Ended September 30, 2013
	Number of Loans		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Outstanding Recorded Investment at September 30, 2013		Financial Effect Resulting From Modifications (2)
	(Dollars in thousands)
Commercial and industrial:
Interest rate reduction		—	$	—	$	—	$	—	$	—
Change in amortization period or maturity		1		34		34		34		—
Real estate:
Commercial real estate:
Owner occupied
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		—		—		—		—		—
Dairy & livestock and agribusiness:
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		2		3,642		3,642		3,556		—

Total non-covered loans		3		3,676		3,676		3,590		—

Covered loans		—		—		—		—		—

Total gross loans		3	$	3,676	$	3,676	$	3,590	$	—


	For the Nine Months Ended September 30, 2013
	Number of Loans		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Outstanding Recorded Investment at September 30, 2013		Financial Effect Resulting From Modifications (2)
	(Dollars in thousands)
Commercial and industrial:
Interest rate reduction		—	$	—	$	—	$	—	$	—
Change in amortization period or maturity		4		265		265		223		122
Real estate:
Commercial real estate:
Owner occupied
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		1		168		168		143		—
Dairy & livestock and agribusiness:
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		7		18,848		18,848		16,068		—

Total non-covered loans		12		19,281		19,281		16,434		122

Covered loans		—		—		—		—		—

Total gross loans		12	$	19,281	$	19,281	$	16,434	$	122

(1)	The tables exclude modified loans that were paid off prior to the end of the period.

(2)	Financial effects resulting from modifications represent charge-offs and specific allowance recorded at modification date.


	For the Three Months Ended September 30, 2012
	Number of Loans		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Outstanding Recorded Investment at September 30, 2012		Financial Effect Resulting From Modifications (2)
	(Dollars in thousands)
Commercial and industrial:
Interest rate reduction		—	$	—	$	—	$	—	$	—
Change in amortization period or maturity		2		268		135		121		102
Real estate:
Commercial real estate:
Owner occupied
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		1		853		853		853		—
Non-owner occupied
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		2		2,631		2,631		2,588		—
Construction:
Speculative
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		—		—		—		—		—
Dairy & livestock and agribusiness:
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		4		5,060		5,560		6,797		—
Municipal lease finance receivables
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		2		519		519		472		—

Total non-covered loans		11		9,331		9,698		10,831		102

Covered loans		—		—		—		—		—

Total gross loans		11	$	9,331	$	9,698	$	10,831	$	102


	For the Nine Months Ended September 30, 2012
	Number of Loans		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Outstanding Recorded Investment at September 30, 2012		Financial Effect Resulting From Modifications (2)
	(Dollars in thousands)
Commercial and industrial:
Interest rate reduction		1	$	80	$	80	$	74	$	—
Change in amortization period or maturity		8		1,890		1,757		1,270		105
Real estate:
Commercial real estate:
Owner occupied
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		4		3,921		3,921		3,916		—
Non-owner occupied
Interest rate reduction		2		3,891		3,891		3,865		—
Change in amortization period or maturity		2		2,766		2,766		2,325		—
Construction:
Speculative
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		1		10,966		10,966		10,618		—
Dairy & livestock and agribusiness:
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		8		9,447		9,947		10,804		—
Municipal lease finance receivables
Interest rate reduction		—		—		—		—		—
Change in amortization period or maturity		2		519		519		472		—

Total non-covered loans		28		33,480		33,847		33,344		105

Covered loans		—		—		—		—		—

Total gross loans		28	$	33,480	$	33,847	$	33,344	$	105

(1)	The tables exclude modified loans that were paid off prior to the end of the period.

(2)	Financial effects resulting from modifications represent charge-offs and specific allowance recorded at modification date.