Loans and leases and the allowance for credit losses

9 Months Ended

Sep. 30, 2012

Loans and leases and the allowance for credit losses

4. Loans and leases and the allowance for credit losses

The outstanding principal balance and the carrying amount of acquired loans that were recorded at fair value at the acquisition date that is included in the consolidated balance sheet is as follows:

	September 30,		December 31,
	2012		2011
	(in thousands)
Outstanding principal balance	$	7,338,476		9,203,366
Carrying amount:
Commercial, financial, leasing, etc.		977,430		1,331,198
Commercial real estate		2,962,899		3,879,518
Residential real estate		742,977		915,371
Consumer		1,700,161		2,033,700
	$	6,383,467		8,159,787

Purchased impaired loans included in the table above totaled $528 million at September 30, 2012 and $653 million at December 31, 2011, representing less than 1% of the Company’s assets as of each date.

Interest income on acquired loans that were recorded at fair value at the acquisition date was $87 million and $259 million for the three months and nine months ended September 30, 2012 and $97 million and $207 million for the three months and nine months ended September 30, 2011, respectively. At December 31, 2010 and September 30, 2011, the accretable yield on acquired loans was $457 million and $944 million, respectively. A summary of changes in the accretable yield for acquired loans for the three months and nine months ended September 30, 2012 follows:

	Three months ended September 30, 2012
	Purchased			Other
	impaired			acquired			Total
	(in thousands)
Balance at beginning of period	$	55,599			733,161			788,760
Interest income		(12,436	)		(74,936	)		(87,372	)
Reclassifications from (to) nonaccretable balance, net		542			—			542
Other (a)		—			1,382			1,382
Balance at end of period	$	43,705			659,607			703,312
	Nine months ended September 30, 2012
	Purchased			Other
	impaired			acquired			Total
	(in thousands)
Balance at beginning of period	$	30,805			807,960			838,765
Interest income		(29,721	)		(228,908	)		(258,629	)
Reclassifications from (to) nonaccretable balance, net		42,621			98,165			140,786
Other (a)		—			(17,610	)		(17,610	)
Balance at end of period	$	43,705			659,607			703,312

(a) Other changes in expected cash flows including changes in interest rates and prepayments.

A summary of current, past due and nonaccrual loans as of September 30, 2012 and December 31, 2011 were as follows:

			30-89 Days past due		90 Days or more past due and accruing				Purchased impaired (b)		Nonaccrual		Total
	Current				Non- acquired		Acquired (a)
					(in thousands)
September 30, 2012
Commercial, financial, leasing, etc.	$	16,496,862		50,980		2,574		14,919		17,434		121,806		16,704,575
Real estate:
Commercial		20,926,702		142,780		12,479		54,329		151,685		172,246		21,460,221
Residential builder and developer		781,007		26,920		5,009		23,870		244,017		225,529		1,306,352
Other commercial construction		2,056,594		36,738		8,077		6,388		69,337		26,709		2,203,843
Residential		9,534,751		270,560		276,314		41,577		41,297		182,217		10,346,716
Residential Alt-A		340,568		25,203		—		—		—		95,733		461,504
Consumer:
Home equity lines and loans		6,300,811		44,791		—		17,799		4,231		56,300		6,423,932
Automobile		2,429,579		40,813		—		345		—		25,537		2,496,274
Other		2,647,950		34,270		4,967		2,197		—		19,154		2,708,538
Total	$	61,514,824		673,055		309,420		161,424		528,001		925,231		64,111,955
December 31, 2011
Commercial, financial, leasing, etc.	$	15,493,803		37,112		7,601		8,560		23,762		163,598		15,734,436
Real estate:
Commercial		19,658,761		172,641		9,983		54,148		192,804		171,111		20,259,448
Residential builder and developer		845,680		49,353		13,603		21,116		297,005		281,576		1,508,333
Other commercial construction		2,393,304		41,049		968		23,582		78,105		106,325		2,643,333
Residential		6,626,182		256,017		250,472		37,982		56,741		172,681		7,400,075
Residential Alt-A		383,834		34,077		—		—		—		105,179		523,090
Consumer:
Home equity lines and loans		6,570,675		43,516		—		15,409		4,635		47,150		6,681,385
Automobile		2,644,330		48,342		—		601		—		26,835		2,720,108
Other		2,551,225		43,547		5,249		2,340		310		23,126		2,625,797
Total	$	57,167,794		725,654		287,876		163,738		653,362		1,097,581		60,096,005

(a) Acquired loans that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are presented separately.

(b) Accruing loans that were impaired at acquisition date and were recorded at fair value.

Changes in the allowance for credit losses for the three months ended September 30, 2012 were as follows:

	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total
	(in thousands)
Beginning balance	$	244,728			341,521			93,269			164,352			73,158		917,028
Provision for credit losses		439			9,891			8,247			26,962			461		46,000
Net charge-offs
Charge-offs		(8,874	)		(7,982	)		(8,687	)		(24,553	)		—		(50,096	)
Recoveries		1,174			1,421			1,139			4,557			—		8,291
Net charge-offs		(7,700	)		(6,561	)		(7,548	)		(19,996	)		—		(41,805	)
Ending balance	$	237,467			344,851			93,968			171,318			73,619		921,223

Changes in the allowance for credit losses for the three months ended September 30, 2011 were as follows:

	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated			Total
	(in thousands)
Beginning balance	$	209,879			401,111			87,341			137,309			71,949			907,589
Provision for credit losses		23,145			(545	)		8,264			27,231			(95	)		58,000
Net charge-offs
Charge-offs		(12,073	)		(13,712	)		(12,135	)		(28,576	)		—			(66,496	)
Recoveries		2,613			839			1,750			4,230			—			9,432
Net charge-offs		(9,460	)		(12,873	)		(10,385	)		(24,346	)		—			(57,064	)
Ending balance	$	223,564			387,693			85,220			140,194			71,854			908,525

Changes in the allowance for credit losses for the nine months ended September 30, 2012 were as follows:

	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total
	(in thousands)
Beginning balance	$	234,022			367,637			91,915			143,121			71,595		908,290
Provision for credit losses		29,663			4,322			30,064			88,927			2,024		155,000
Net charge-offs
Charge-offs		(32,989	)		(31,578	)		(32,812	)		(77,155	)		—		(174,534	)
Recoveries		6,771			4,470			4,801			16,425			—		32,467
Net charge-offs		(26,218	)		(27,108	)		(28,011	)		(60,730	)		—		(142,067	)
Ending balance	$	237,467			344,851			93,968			171,318			73,619		921,223

Changes in the allowance for credit losses for the nine months ended September 30, 2011 were as follows:

	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total
	(in thousands)
Beginning balance	$	212,579			400,562			86,351			133,067			70,382		902,941
Provision for credit losses		44,957			36,965			37,759			74,847			1,472		196,000
Net charge-offs
Charge-offs		(41,023	)		(54,206	)		(44,174	)		(81,837	)		—		(221,240	)
Recoveries		7,051			4,372			5,284			14,117			—		30,824
Net charge-offs		(33,972	)		(49,834	)		(38,890	)		(67,720	)		—		(190,416	)
Ending balance	$	223,564			387,693			85,220			140,194			71,854		908,525

Despite the above allocation, the allowance for credit losses is general in nature and is available to absorb losses from any portfolio segment.

In establishing the allowance for credit losses, the Company estimates losses attributable to specific troubled credits identified through both normal and detailed or intensified credit review processes and also estimates losses inherent in other loans and leases on a collective basis. For purposes of determining the level of the allowance for credit losses, the Company evaluates its loan and lease portfolio by loan type. The amounts of loss components in the Company’s loan and lease portfolios are determined through a loan by loan analysis of larger balance commercial and commercial real estate loans that are in nonaccrual status and by applying loss factors to groups of loan balances based on loan type and management’s classification of such loans under the Company’s loan grading system. Measurement of the specific loss components is typically based on expected future cash flows, collateral values and other factors that may impact the borrower’s ability to pay. In determining the allowance for credit losses, the Company utilizes a loan grading system which is applied to all commercial and commercial real estate credits on an individual loan basis. Loan officers are responsible for continually assigning grades to these loans based on standards outlined in the Company’s Credit Policy. Internal loan grades are also monitored by the Company’s loan review department to ensure consistency and strict adherence to the prescribed standards. Loan grades are assigned loss component factors that reflect the Company’s loss estimate for each group of loans and leases. Factors considered in assigning loan grades and loss component factors include borrower-specific information related to expected future cash flows and operating results, collateral values, geographic location, financial condition and performance, payment status, and other information; levels of and trends in portfolio charge-offs and recoveries; levels of and trends in portfolio delinquencies and impaired loans; changes in the risk profile of specific portfolios; trends in volume and terms of loans; effects of changes in credit concentrations; and observed trends and practices in the banking industry. As updated appraisals are obtained on individual loans or other events in the market place indicate that collateral values have significantly changed, individual loan grades are adjusted as appropriate. Changes in other factors cited may also lead to loan grade changes at anytime. Except for consumer and residential mortgage loans that are considered smaller balance homogenous loans and acquired loans that are evaluated on an aggregated basis, the Company considers a loan to be impaired for purposes of applying GAAP when, based on current information and events, it is probable that the Company will be unable to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days. Regardless of loan type, the Company considers a loan to be impaired if it qualifies as a troubled debt restructuring. Modified loans, including smaller balance homogenous loans, that are considered to be troubled debt restructurings are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows.

The following tables provide information with respect to loans and leases that were considered impaired as of September 30, 2012 and December 31, 2011 and for the three months and nine months ended September 30, 2012 and September 30, 2011.

	September 30, 2012						December 31, 2011
	Recorded investment		Unpaid principal balance		Related allowance		Recorded investment		Unpaid principal balance		Related allowance
	(in thousands)
With an allowance recorded:
Commercial, financial, leasing, etc.	$	106,448		126,156		29,911		118,538		145,510		48,674
Real estate:
Commercial		107,669		135,663		18,734		102,886		128,456		17,651
Residential builder and developer		134,298		260,010		34,228		159,293		280,869		52,562
Other commercial construction		74,306		77,938		7,749		20,234		24,639		3,836
Residential		103,184		121,141		5,027		101,882		119,498		4,420
Residential Alt-A		131,043		143,670		19,000		150,396		162,978		25,000
Consumer:
Home equity lines and loans		12,362		13,635		2,187		9,385		10,670		2,306
Automobile		50,886		50,886		15,012		53,710		53,710		11,468
Other		13,387		13,387		5,254		8,401		8,401		2,084
		733,583		942,486		137,102		724,725		934,731		168,001
With no related allowance recorded:
Commercial, financial, leasing, etc.		23,641		32,211		—		53,104		60,778		—
Real estate:
Commercial		70,667		92,453		—		71,636		91,118		—
Residential builder and developer		95,202		117,478		—		133,156		177,277		—
Other commercial construction		12,153		12,727		—		86,652		89,862		—
Residential		22,752		31,352		—		19,686		25,625		—
Residential Alt-A		34,533		63,703		—		34,356		60,942		—
		258,948		349,924		—		398,590		505,602		—
Total:
Commercial, financial, leasing, etc.		130,089		158,367		29,911		171,642		206,288		48,674
Real estate:
Commercial		178,336		228,116		18,734		174,522		219,574		17,651
Residential builder and developer		229,500		377,488		34,228		292,449		458,146		52,562
Other commercial construction		86,459		90,665		7,749		106,886		114,501		3,836
Residential		125,936		152,493		5,027		121,568		145,123		4,420
Residential Alt-A		165,576		207,373		19,000		184,752		223,920		25,000
Consumer:
Home equity lines and loans		12,362		13,635		2,187		9,385		10,670		2,306
Automobile		50,886		50,886		15,012		53,710		53,710		11,468
Other		13,387		13,387		5,254		8,401		8,401		2,084
Total	$	992,531		1,292,410		137,102		1,123,315		1,440,333		168,001

	Three months ended September 30, 2012						Three months ended September 30, 2011
			Interest income recognized						Interest income recognized
	Average recorded investment		Total		Cash basis		Average recorded investment		Total		Cash basis
	(in thousands)
Commercial, financial, leasing, etc.	$	141,166		1,507		1,507		152,368		1,172		1,166
Real estate:
Commercial		180,009		531		531		195,832		810		808
Residential builder and developer		237,847		476		370		338,897		422		98
Other commercial construction		84,604		9		9		96,482		62		51
Residential		131,114		1,269		765		98,885		1,183		630
Residential Alt-A		167,780		1,836		593		192,609		1,872		494
Consumer:
Home equity lines and loans		11,949		172		48		11,814		174		26
Automobile		51,138		863		185		56,071		957		262
Other		11,996		121		52		5,579		75		32
Total	$	1,017,603		6,784		4,060		1,148,537		6,727		3,567
	Nine months ended September 30, 2012						Nine months ended September 30, 2011
			Interest income recognized						Interest income recognized
	Average recorded investment		Total		Cash basis		Average recorded investment		Total		Cash basis
	(in thousands)
Commercial, financial, leasing, etc.	$	155,627		2,659		2,659		163,005		2,844		2,820
Real estate:
Commercial		179,524		2,087		2,087		191,818		1,705		1,630
Residential builder and developer		260,858		1,202		801		321,386		1,261		338
Other commercial construction		100,242		5,019		5,019		102,978		759		522
Residential		128,646		3,926		2,453		92,918		3,209		1,770
Residential Alt-A		174,390		5,432		1,666		199,066		5,858		1,455
Consumer:
Home equity lines and loans		11,024		502		136		11,989		523		74
Automobile		52,249		2,632		553		57,704		2,925		850
Other		10,097		320		138		4,124		187		51
Total	$	1,072,657		23,779		15,512		1,144,988		19,271		9,510

In accordance with the previously described policies, the Company utilizes a loan grading system that is applied to all commercial loans and commercial real estate loans. Loan grades are utilized to differentiate risk within the portfolio and consider the expectations of default for each loan. Commercial loans and commercial real estate loans with a lower expectation of default are assigned one of ten possible “pass” loan grades and are generally ascribed lower loss factors when determining the allowance for credit losses. Loans with an elevated level of credit risk are classified as “criticized” and are ascribed a higher loss factor when determining the allowance for credit losses. Criticized loans may be classified as “nonaccrual” if the Company no longer expects to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more. All larger balance criticized commercial and commercial real estate loans are individually reviewed by centralized loan review personnel each quarter to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing. Smaller balance criticized loans are analyzed by business line risk management areas to ensure proper loan grade classification. Furthermore, criticized nonaccrual commercial loans and commercial real estate loans are considered impaired and, as a result, specific loss allowances on such loans are established within the allowance for credit losses to the extent appropriate in each individual instance. The following table summarizes the loan grades applied to the various classes of the Company’s commercial and commercial real estate loans as of September 30, 2012 and December 31, 2011.

			Real Estate
	Commercial, Financial, Leasing, etc.		Commercial		Residential Builder and Developer		Other Commercial Construction
	(in thousands)
September 30, 2012
Pass	$	15,823,813		20,373,273		976,233		1,966,097
Criticized accrual		758,956		914,702		104,590		211,037
Criticized nonaccrual		121,806		172,246		225,529		26,709
Total	$	16,704,575		21,460,221		1,306,352		2,203,843
December 31, 2011
Pass	$	14,869,636		19,089,252		1,085,970		2,254,609
Criticized accrual		701,202		999,085		140,787		282,399
Criticized nonaccrual		163,598		171,111		281,576		106,325
Total	$	15,734,436		20,259,448		1,508,333		2,643,333

In determining the allowance for credit losses, residential real estate loans and consumer loans are generally evaluated collectively after considering such factors as payment performance, recent loss experience and trends, which are mainly driven by current collateral values in the market place as well as the amount of loan defaults. Loss rates on such loans are determined by reference to recent charge-off history and are evaluated (and adjusted if deemed appropriate) through consideration of other factors including near-term forecasted loss estimates developed by M&T’s Credit Department. In arriving at such forecasts, M&T considers the current estimated fair value of its collateral based on geographical adjustments for home price depreciation/appreciation and overall borrower repayment performance. With regard to collateral values, the realizability of such values by the Company contemplates repayment of any first lien position prior to recovering amounts on a second lien position. However, residential real estate loans and outstanding balances of home equity loans and lines of credit that are more than 150 days past due are generally evaluated for collectibility on a loan-by-loan basis giving consideration to estimated collateral values.

The Company also measures additional losses for purchased impaired loans when it is probable that the Company will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimates after acquisition. The determination of the allocated portion of the allowance for credit losses is very subjective. Given that inherent subjectivity and potential imprecision involved in determining the allocated portion of the allowance for credit losses, the Company also provides an inherent unallocated portion of the allowance. The unallocated portion of the allowance is intended to recognize probable losses that are not otherwise identifiable and includes management’s subjective determination of amounts necessary to provide for the possible use of imprecise estimates in determining the allocated portion of the allowance. Therefore, the level of the unallocated portion of the allowance is primarily reflective of the inherent imprecision in the various calculations used in determining the allocated portion of the allowance for credit losses. Other factors that could also lead to changes in the unallocated portion include the effects of expansion into new markets for which the Company does not have the same degree of familiarity and experience regarding portfolio performance in changing market conditions, the introduction of new loan and lease product types, and other risks associated with the Company’s loan portfolio that may not be specifically identifiable.

At September 30, 2012 and December 31, 2011, the allocation of the allowance for credit losses summarized on the basis of the Company’s impairment methodology was as follows:

	Commercial, Financial,		Real Estate
	Leasing, etc.		Commercial		Residential		Consumer		Total
	(in thousands)
September 30, 2012
Individually evaluated for impairment	$	29,738		59,794		23,953		22,453	$	135,938
Collectively evaluated for impairment		207,556		283,547		66,724		148,479		706,306
Purchased impaired		173		1,510		3,291		386		5,360
Allocated	$	237,467		344,851		93,968		171,318		847,604
Unallocated										73,619
Total									$	921,223
December 31, 2011
Individually evaluated for impairment	$	48,517		71,784		29,420		15,858	$	165,579
Collectively evaluated for impairment		185,048		291,271		60,742		126,613		663,674
Purchased impaired		457		4,582		1,753		650		7,442
Allocated	$	234,022		367,637		91,915		143,121		836,695
Unallocated										71,595
Total									$	908,290

The recorded investment in loans and leases summarized on the basis of the Company’s impairment methodology as of September 30, 2012 and December 31, 2011 was as follows:

	Commercial, Financial,		Real Estate
	Leasing, etc.		Commercial		Residential		Consumer		Total
	(in thousands)
September 30, 2012
Individually evaluated for impairment	$	129,916		488,493		290,023		76,676	$	985,108
Collectively evaluated for impairment		16,557,225		24,016,884		10,476,900		11,547,837		62,598,846
Purchased impaired		17,434		465,039		41,297		4,231		528,001
Total	$	16,704,575		24,970,416		10,808,220		11,628,744	$	64,111,955
December 31, 2011
Individually evaluated for impairment	$	171,442		561,615		306,320		71,496	$	1,110,873
Collectively evaluated for impairment		15,539,232		23,281,585		7,560,104		11,950,849		58,331,770
Purchased impaired		23,762		567,914		56,741		4,945		653,362
Total	$	15,734,436		24,411,114		7,923,165		12,027,290	$	60,096,005

During the normal course of business, the Company modifies loans to maximize recovery efforts. If the borrower is experiencing financial difficulty and a concession is granted, the Company considers such modifications as troubled debt restructurings and classifies those loans as either nonaccrual loans or renegotiated loans. The types of concessions that the Company grants typically include principal deferrals and interest rate concessions, but may also include other types of concessions.

The tables below summarize the Company’s loan modification activities that were considered troubled debt restructurings for the three months ended September 30, 2012 and 2011:

			Recorded investment				Financial effects of modification
Three months ended September 30, 2012	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
			(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		21	$	7,823	$	7,653	$	(170	)	$	—
Combination of concession types		2		327		322		(5	)		(39	)
Real estate:
Commercial
Principal deferral		8		5,951		6,238		287			—
Combination of concession types		1		214		214		—			(49	)
Residential builder and developer
Principal deferral		11		17,383		16,275		(1,108	)		—
Combination of concession types		1		2,486		2,486		—			—
Other commercial construction
Principal deferral		2		5,429		4,702		(727	)		—
Residential
Principal deferral		5		738		772		34			—
Combination of concession types		18		5,490		5,553		63			(150	)
Residential Alt-A
Principal deferral		1		218		220		2			—
Combination of concession types		13		2,771		2,795		24			—
Consumer:
Home equity lines and loans
Principal deferral		5		434		434		—			—
Combination of concession types		11		976		976		—			(125	)
Automobile
Principal deferral		135		1,721		1,721		—			—
Interest rate reduction		9		157		157		—			(11	)
Other		20		68		68		—			—
Combination of concession types		109		2,329		2,329		—			(319	)
Other
Principal deferral		14		336		336		—			—
Other		1		1		1		—			—
Combination of concession types		22		339		339		—			(97	)
Total		409	$	55,191	$	53,591	$	(1,600	)	$	(790	)

(a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages.

(b) Represents the present value of interest rate concessions discounted at the effective rate of the original loan.

			Recorded investment				Financial effects of modification
Three months ended September 30, 2011	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
			(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		13	$	1,021	$	1,115	$	94		$	—
Real estate:
Commercial
Principal deferral		6		1,361		1,301		(60	)		—
Residential builder and developer
Other		1		1,700		1,350		(350	)		—
Other commercial construction
Principal deferral		2		6,161		6,284		123			—
Residential
Principal deferral		12		2,099		2,124		25			—
Interest rate reduction		1		86		86		—			(7	)
Combination of concession types		22		2,972		3,044		72			(51	)
Residential Alt-A
Principal deferral		1		532		562		30			—
Combination of concession types		8		1,393		1,446		53			(341	)
Consumer:
Home equity lines and loans
Principal deferral		1		50		50		—			—
Other		1		43		43		—			—
Combination of concession types		9		696		697		1			(157	)
Automobile
Principal deferral		159		1,655		1,655		—			—
Interest rate reduction		6		52		52		—			(4	)
Other		26		279		279		—			—
Combination of concession types		96		1,049		1,049		—			(57	)
Other
Principal deferral		7		186		186		—			—
Interest rate reduction		1		9		9		—			(1	)
Other		1		81		81		—			—
Combination of concession types		31		263		263		—			(63	)
Total		404	$	21,688	$	21,676	$	(12	)	$	(681	)

(a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages.

(b) Represents the present value of interest rate concessions discounted at the effective rate of the original loan.

The tables below summarize the Company’s loan modification activities that were considered troubled debt restructurings for the nine months ended September 30, 2012 and 2011:

			Recorded investment				Financial effects of modification
Nine months ended September 30, 2012	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		39	$	21,027	$	19,668	$	(1,359	)	$	—
Other		3		2,967		3,052		85			—
Combination of concession types		3		372		366		(6	)		(72	)
Real estate:
Commercial
Principal deferral		11		10,387		10,642		255			—
Interest rate reduction		1		383		430		47			(89	)
Combination of concession types		5		1,424		1,445		21			(305	)
Residential builder and developer
Principal deferral		19		26,708		24,812		(1,896	)		—
Combination of concession types		3		4,836		5,212		376			—
Other commercial construction
Principal deferral		5		66,317		65,600		(717	)		—
Residential
Principal deferral		27		3,302		3,447		145			—
Combination of concession types		47		10,475		10,658		183			(415	)
Residential Alt-A
Principal deferral		5		768		785		17			—
Combination of concession types		28		5,640		5,732		92			(49	)
Consumer:
Home equity lines and loans
Principal deferral		15		1,285		1,285		—			—
Interest rate reduction		1		144		144		—			(6	)
Combination of concession types		17		1,691		1,691		—			(272	)
Automobile
Principal deferral		484		6,306		6,306		—			—
Interest rate reduction		16		234		234		—			(16	)
Other		51		239		239		—			—
Combination of concession types		298		5,108		5,108		—			(601	)
Other
Principal deferral		73		1,117		1,117		—			—
Interest rate reduction		3		23		23		—			(3	)
Other		10		50		50		—			—
Combination of concession types		74		700		700		—			(155	)
Total		1,238	$	171,503	$	168,746	$	(2,757	)	$	(1,983	)

(a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages.

(b) Represents the present value of interest rate concessions discounted at the effective rate of the original loan.

			Recorded investment				Financial effects of modification
Nine months ended September 30, 2011	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		46	$	8,302	$	8,396	$	94		$	—
Combination of concession types		1		1,945		1,945		—			(641	)
Real estate:
Commercial
Principal deferral		24		13,212		13,041		(171	)		—
Residential builder and developer
Principal deferral		4		18,586		17,661		(925	)		—
Other		6		118,114		110,156		(7,958	)		—
Combination of concession types		1		798		790		(8	)		—
Other commercial construction
Principal deferral		3		8,436		8,553		117			—
Residential
Principal deferral		24		2,869		2,884		15			—
Interest rate reduction		12		1,764		1,804		40			(70	)
Combination of concession types		81		16,066		16,385		319			(864	)
Residential Alt-A
Principal deferral		2		605		638		33			—
Combination of concession types		23		4,255		4,362		107			(572	)
Consumer:
Home equity lines and loans
Principal deferral		2		119		119		—			—
Other		1		43		43		—			—
Combination of concession types		19		1,484		1,486		2			(272	)
Automobile
Principal deferral		580		7,993		7,993		—			—
Interest rate reduction		17		183		183		—			(12	)
Other		83		537		537		—			—
Combination of concession types		318		5,049		5,049		—			(556	)
Other
Principal deferral		20		348		348		—			—
Interest rate reduction		1		9		9		—			(1	)
Other		2		92		92		—			—
Combination of concession types		77		482		482		—			(75	)
Total		1,347	$	211,291	$	202,956	$	(8,335	)	$	(3,063	)

(a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages.

(b) Represents the present value of interest rate concessions discounted at the effective rate of the original loan.

Troubled debt restructurings are considered to be impaired loans and for purposes of establishing the allowance for credit losses are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. Impairment of troubled debt restructurings that have subsequently defaulted may also be measured based on the loan’s observable market price or the fair value of collateral if the loan is collateral-dependent. Loans that were modified as troubled debt restructurings during the twelve months ended September 30, 2012 and 2011 for which there was a subsequent payment default during the three- and nine-month periods ended September 30, 2012 and 2011, respectively, were not material.