Loans and Leases and the Allowance for Credit Losses

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

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:

	June 30,		December 31,
	2013		2012
	(in thousands)
Outstanding principal balance	$	5,690,165		6,705,120
Carrying amount:
Commercial, financial, leasing, etc.		752,761		928,107
Commercial real estate		2,102,757		2,567,050
Residential real estate		641,734		707,309
Consumer		1,417,358		1,637,887
	$	4,914,610		5,840,353

Purchased impaired loans included in the table above totaled $395 million at June 30, 2013 and $447 million at December 31, 2012, representing less than 1% of the Company’s assets as of each date. A summary of changes in the accretable yield for acquired loans for the three months and six months ended June 30, 2013 and 2012 follows:

	Three months ended June 30
	2013						2012
	Purchased impaired			Other acquired			Purchased impaired			Other acquired
	(in thousands)
Balance at beginning of period	$	33,728			577,609		$	22,565			747,466
Interest income		(9,747	)		(67,539	)		(9,621	)		(80,249	)
Reclassifications from (to) nonaccretable balance, net		31,168			111,702			42,655			97,165
Other (a)		—			321			—			(31,221	)
Balance at end of period	$	55,149			622,093		$	55,599			733,161

	Six months ended June 30
	2013						2012
	Purchased			Other			Purchased			Other
	impaired			acquired			impaired			acquired
	(in thousands)
Balance at beginning of period	$	42,252			638,272		$	30,805			807,960
Interest income		(18,451	)		(129,286	)		(17,285	)		(153,972	)
Reclassifications from (to) nonaccretable balance, net		31,348			122,519			42,079			98,165
Other (a)		—			(9,412	)		—			(18,992	)
Balance at end of period	$	55,149			622,093		$	55,599			733,161

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

A summary of current, past due and nonaccrual loans as of June 30, 2013 and December 31, 2012 were as follows:

	Current		30-89 Days past due		90 Days or more past due and accruing				Purchased impaired (b)		Nonaccrual		Total
					Non- acquired		Acquired (a)
	(in thousands)
June 30, 2013
Commercial, financial, leasing, etc.	$	17,803,206		41,516		5,701		9,902		16,734		144,753	$	18,021,812
Real estate:
Commercial		21,646,755		132,454		14,397		43,916		110,026		197,987		22,145,535
Residential builder and developer		796,756		15,226		3,291		11,343		151,369		132,621		1,110,606
Other commercial construction		2,709,159		17,789		79		16,339		78,373		38,514		2,860,253
Residential		9,039,263		298,767		312,703		46,900		35,534		254,033		9,987,200
Residential Alt-A		305,693		21,464		—		—		—		85,392		412,549
Consumer:
Home equity lines and loans		6,039,668		33,205		—		26,615		2,661		70,488		6,172,637
Automobile		2,467,882		32,752		—		168		—		20,533		2,521,335
Other		2,678,668		35,887		4,296		503		—		20,585		2,739,939
Total	$	63,487,050		629,060		340,467		155,686		394,697		964,906	$	65,971,866

	Current		30-89 Days past due		90 Days or more past due and accruing				Purchased impaired (b)		Nonaccrual		Total
					Non- acquired		Acquired (a)
	(in thousands)
December 31, 2012
Commercial, financial, leasing, etc.	$	17,511,052		62,479		23,490		10,587		17,437		151,908	$	17,776,953
Real estate:
Commercial		21,759,997		118,249		13,111		54,995		132,962		193,859		22,273,173
Residential builder and developer		757,311		35,419		3,258		23,909		187,764		181,865		1,189,526
Other commercial construction		2,379,953		35,274		509		9,572		68,971		36,812		2,531,091
Residential		9,811,956		337,969		313,184		45,124		36,769		249,314		10,794,316
Residential Alt-A		331,021		19,692		—		—		—		95,808		446,521
Consumer:
Home equity lines and loans		6,199,591		40,759		—		20,318		3,211		58,071		6,321,950
Automobile		2,442,502		40,461		—		251		—		25,107		2,508,321
Other		2,661,432		40,599		4,845		1,798		—		20,432		2,729,106
Total	$	63,854,815		730,901		358,397		166,554		447,114		1,013,176	$	66,570,957

(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.

One-to-four family residential mortgage loans originated for sale were $809 million and $1.2 billion at June 30, 2013 and December 31, 2012, respectively. Additionally, approximately $1.0 billion of one-to-four family residential mortgage loans in the Company’s loan portfolio at June 30, 2013 are anticipated to be securitized with Ginnie Mae in the third quarter of 2013 with the Company retaining the substantial majority of such securities. Commercial mortgage loans held for sale were $133 million at June 30, 2013 and $200 million at December 31, 2012. In the third quarter of 2013, the Company anticipates securitizing up to approximately $1.5 billion of consumer loans through securitization transactions.

Changes in the allowance for credit losses for the three months ended June 30, 2013 were as follows:

	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated			Total
	(in thousands)
Beginning balance	$	257,851			328,016			90,122			176,793			74,335		$	927,117
Provision for credit losses		55,647			(10,913	)		(1,438	)		13,707			(3	)		57,000
Net charge-offs
Charge-offs		(46,312	)		(4,204	)		(5,092	)		(21,018	)		—			(76,626	)
Recoveries		1,681			11,365			1,719			4,809			—			19,574
Net charge-offs		(44,631	)		7,161			(3,373	)		(16,209	)		—			(57,052	)
Ending balance	$	268,867			324,264			85,311			174,291			74,332		$	927,065

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

	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total
	(in thousands)
Beginning balance	$	239,273			356,554			97,301			142,912			72,966	$	909,006
Provision for credit losses		19,103			(3,309	)		5,587			38,427			192		60,000
Net charge-offs
Charge-offs		(16,078	)		(13,056	)		(11,407	)		(23,621	)		—		(64,162	)
Recoveries		2,430			1,332			1,788			6,634			—		12,184
Net charge-offs		(13,648	)		(11,724	)		(9,619	)		(16,987	)		—		(51,978	)
Ending balance	$	244,728			341,521			93,269			164,352			73,158	$	917,028

Changes in the allowance for credit losses for the six months ended June 30, 2013 were as follows:

	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total
	(in thousands)
Beginning balance	$	246,759			337,101			88,807			179,418			73,775	$	925,860
Provision for credit losses		73,527			(11,225	)		3,598			28,543			557		95,000
Net charge-offs
Charge-offs		(55,856	)		(13,792	)		(13,263	)		(42,663	)		—		(125,574	)
Recoveries		4,437			12,180			6,169			8,993			—		31,779
Net charge-offs		(51,419	)		(1,612	)		(7,094	)		(33,670	)		—		(93,795	)
Ending balance	$	268,867			324,264			85,311			174,291			74,332	$	927,065

Changes in the allowance for credit losses for the six months ended June 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		29,224			(5,569	)		21,817			61,965			1,563		109,000
Net charge-offs
Charge-offs		(24,115	)		(23,596	)		(24,125	)		(52,602	)		—		(124,438	)
Recoveries		5,597			3,049			3,662			11,868			—		24,176
Net charge-offs		(18,518	)		(20,547	)		(20,463	)		(40,734	)		—		(100,262	)
Ending balance	$	244,728			341,521			93,269			164,352			73,158	$	917,028

Despite the above allocation, the allowance for credit losses is general in nature and is available to absorb losses from any loan or lease type.

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 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 any time. 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 or more. 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 June 30, 2013 and December 31, 2012 and for the three months and six months ended June 30, 2013 and June 30, 2012:

	June 30, 2013						December 31, 2012
	Recorded investment		Unpaid principal balance		Related allowance		Recorded investment		Unpaid principal balance		Related allowance
	(in thousands)
With an allowance recorded:
Commercial, financial, leasing, etc.	$	125,204		170,473		36,451		127,282		149,534		33,829
Real estate:
Commercial		120,882		145,010		20,373		121,542		143,846		23,641
Residential builder and developer		67,993		110,390		9,153		115,306		216,218		25,661
Other commercial construction		75,076		78,138		3,085		73,544		76,869		6,836
Residential		104,150		122,430		6,647		103,451		121,819		3,521
Residential Alt-A		119,247		132,105		16,000		128,891		141,940		17,000
Consumer:
Home equity lines and loans		12,524		13,708		2,387		12,360		13,567		2,254
Automobile		43,702		43,702		12,246		49,210		49,210		14,273
Other		15,698		15,698		5,833		14,408		14,408		5,667
		684,476		831,654		112,175		745,994		927,411		132,682
With no related allowance recorded:
Commercial, financial, leasing, etc.		26,986		38,026		—		32,631		42,199		—
Real estate:
Commercial		83,364		105,406		—		78,380		100,337		—
Residential builder and developer		72,367		113,350		—		74,307		105,438		—
Other commercial construction		21,188		21,836		—		23,018		23,532		—
Residential		81,832		92,676		—		86,342		96,448		—
Residential Alt-A		30,813		57,558		—		31,354		58,768		—
		316,550		428,852		—		326,032		426,722		—
Total:
Commercial, financial, leasing, etc.		152,190		208,499		36,451		159,913		191,733		33,829
Real estate:
Commercial		204,246		250,416		20,373		199,922		244,183		23,641
Residential builder and developer		140,360		223,740		9,153		189,613		321,656		25,661
Other commercial construction		96,264		99,974		3,085		96,562		100,401		6,836
Residential		185,982		215,106		6,647		189,793		218,267		3,521
Residential Alt-A		150,060		189,663		16,000		160,245		200,708		17,000
Consumer:
Home equity lines and loans		12,524		13,708		2,387		12,360		13,567		2,254
Automobile		43,702		43,702		12,246		49,210		49,210		14,273
Other		15,698		15,698		5,833		14,408		14,408		5,667
Total	$	1,001,026		1,260,506		112,175		1,072,026		1,354,133		132,682

	Three months ended June 30, 2013						Three months ended June 30, 2012
			Interest income recognized						Interest income recognized
	Average recorded investment		Total		Cash basis		Average recorded investment		Total		Cash basis
	(in thousands)
Commercial, financial, leasing, etc.	$	183,544		3,408		3,408		161,311		743		743
Real estate:
Commercial		201,236		409		409		180,199		1,238		1,238
Residential builder and developer		162,567		518		384		262,254		385		252
Other commercial construction		97,975		2,479		2,479		109,037		4,840		4,840
Residential		185,751		1,934		1,401		127,258		1,315		810
Residential Alt-A		151,977		1,670		516		174,181		1,753		527
Consumer:
Home equity lines and loans		12,619		165		39		11,237		164		46
Automobile		44,641		740		131		52,200		871		190
Other		15,564		156		49		9,877		106		47
Total	$	1,055,874		11,479		8,816		1,087,554		11,415		8,693
	Six months ended June 30, 2013						Six months ended June 30, 2012
			Interest income recognized						Interest income recognized
	Average recorded investment		Total		Cash basis		Average recorded investment		Total		Cash basis
	(in thousands)
Commercial, financial, leasing, etc.	$	172,637		5,842		5,842		164,779		1,152		1,152
Real estate:
Commercial		197,546		712		712		179,213		1,556		1,556
Residential builder and developer		173,535		658		449		271,903		726		431
Other commercial construction		98,160		3,114		3,114		107,151		5,010		5,010
Residential		186,582		3,404		2,323		126,880		2,657		1,688
Residential Alt-A		154,461		3,410		1,107		177,623		3,596		1,073
Consumer:
Home equity lines and loans		12,544		332		78		10,593		330		88
Automobile		46,134		1,516		277		52,799		1,769		368
Other		15,261		307		103		9,080		199		86
Total	$	1,056,860		19,295		14,005		1,100,021		16,995		11,452

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.

			Real Estate
	Commercial, Financial, Leasing, etc.		Commercial		Residential Builder and Developer		Other Commercial Construction
	(in thousands)
June 30, 2013
Pass	$	17,177,447		21,237,559		889,978		2,761,618
Criticized accrual		699,612		709,989		88,007		60,121
Criticized nonaccrual		144,753		197,987		132,621		38,514
Total	$	18,021,812		22,145,535		1,110,606		2,860,253
December 31, 2012
Pass	$	16,889,753		21,275,182		922,141		2,307,436
Criticized accrual		735,292		804,132		85,520		186,843
Criticized nonaccrual		151,908		193,859		181,865		36,812
Total	$	17,776,953		22,273,173		1,189,526		2,531,091

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 and 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 the Company’s Credit Department. In arriving at such forecasts, the Company 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 the original balance 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.

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)
June 30, 2013
Individually evaluated for impairment	$	36,451		31,798		22,628		20,466	$	111,343
Collectively evaluated for impairment		230,309		291,365		60,989		152,602		735,265
Purchased impaired		2,107		1,101		1,694		1,223		6,125
Allocated	$	268,867		324,264		85,311		174,291		852,733
Unallocated										74,332
Total									$	927,065
December 31, 2012
Individually evaluated for impairment	$	33,669		55,291		20,502		22,194	$	131,656
Collectively evaluated for impairment		212,930		280,789		66,684		156,661		717,064
Purchased impaired		160		1,021		1,621		563		3,365
Allocated	$	246,759		337,101		88,807		179,418		852,085
Unallocated										73,775
Total									$	925,860

The recorded investment in loans and leases 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)
June 30, 2013
Individually evaluated for impairment	$	152,190		434,945		335,481		71,924	$	994,540
Collectively evaluated for impairment		17,852,888		25,341,681		10,028,734		11,359,326		64,582,629
Purchased impaired		16,734		339,768		35,534		2,661		394,697
Total	$	18,021,812		26,116,394		10,399,749		11,433,911	$	65,971,866
December 31, 2012
Individually evaluated for impairment	$	159,761		480,335		349,477		75,978	$	1,065,551
Collectively evaluated for impairment		17,599,755		25,123,758		10,854,591		11,480,188		65,058,292
Purchased impaired		17,437		389,697		36,769		3,211		447,114
Total	$	17,776,953		25,993,790		11,240,837		11,559,377	$	66,570,957

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 June 30, 2013 and 2012:

			Recorded investment				Financial effects of modification
Three months ended June 30, 2013	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		15	$	4,870	$	4,822	$	(48	)	$	—
Other		1		1,460		1,657		197			—
Combination of concession types		2		1,490		980		(510	)		—
Real estate:
Commercial
Principal deferral		5		15,549		15,530		(19	)		—
Residential builder and developer
Principal deferral		7		17,496		16,722		(774	)		—
Other		1		4,039		3,888		(151	)		—
Combination of concession types		2		13,879		13,823		(56	)		(535	)
Other commercial construction
Principal deferral		2		364		363		(1	)		—
Residential
Principal deferral		8		1,216		1,358		142			—
Combination of concession types		18		69,210		65,890		(3,320	)		(186	)
Residential Alt-A
Principal deferral		1		99		102		3			—
Combination of concession types		8		1,187		1,294		107			(278	)
Consumer:
Home equity lines and loans
Principal deferral		2		101		103		2			—
Interest rate reduction		1		99		99		—			(8	)
Other		1		106		106		—			—
Combination of concession types		8		406		406		—			(64	)
Automobile
Principal deferral		117		1,629		1,629		—			—
Interest rate reduction		7		104		104		—			(10	)
Other		28		73		73		—			—
Combination of concession types		62		1,044		1,044		—			(87	)
Other
Principal deferral		14		185		185		—			—
Interest rate reduction		1		12		12		—			(2	)
Combination of concession types		30		707		707		—			(234	)
Total		341	$	135,325	$	130,897	$	(4,428	)	$	(1,404	)

(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 June 30, 2012	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		9	$	10,392	$	9,061	$	(1,331	)	$	—
Other		2		1,995		1,954		(41	)		—
Real estate:
Commercial
Principal deferral		1		2,011		1,999		(12	)		—
Interest rate reduction		1		383		430		47			(89	)
Combination of concession types		4		1,210		1,231		21			(256	)
Residential builder and developer
Principal deferral		3		2,503		2,503		—			—
Other commercial construction
Principal deferral		3		60,888		60,898		10			—
Residential
Principal deferral		7		1,059		1,087		28			—
Combination of concession types		11		2,049		2,098		49			(65	)
Residential Alt-A
Principal deferral		1		153		158		5			—
Combination of concession types		7		1,509		1,543		34			(44	)
Consumer:
Home equity lines and loans
Principal deferral		9		734		734		—			—
Combination of concession types		4		480		480		—			(123	)
Automobile
Principal deferral		196		2,700		2,700		—			—
Interest rate reduction		3		20		20		—			(1	)
Other		21		152		152		—			—
Combination of concession types		77		1,170		1,170		—			(110	)
Other
Principal deferral		7		134		134		—			—
Combination of concession types		18		142		142		—			(22	)
Total		384	$	89,684	$	88,494	$	(1,190	)	$	(710	)

(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 six months ended June 30, 2013 and 2012:

			Recorded investment				Financial effects of modification
Six months ended June 30, 2013	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		39	$	6,876	$	6,804	$	(72	)	$	—
Other		2		48,660		48,857		197			—
Combination of concession types		3		1,832		1,322		(510	)		—
Real estate:
Commercial
Principal deferral		13		34,027		33,893		(134	)		—
Combination of concession types		2		582		581		(1	)		(56	)
Residential builder and developer
Principal deferral		15		18,853		18,062		(791	)		—
Other		1		4,039		3,888		(151	)		—
Combination of concession types		3		15,580		15,514		(66	)		(535	)
Other commercial construction
Principal deferral		2		364		363		(1	)		—
Residential
Principal deferral		15		1,782		1,965		183			—
Other		1		195		195		—			—
Combination of concession types		38		71,659		68,426		(3,233	)		(557	)
Residential Alt-A
Principal deferral		1		99		102		3			—
Combination of concession types		13		2,094		2,219		125			(388	)
Consumer:
Home equity lines and loans
Principal deferral		4		180		182		2			—
Interest rate reduction		1		99		99		—			(8	)
Other		1		106		106		—			—
Combination of concession types		10		617		617		—			(97	)
Automobile
Principal deferral		238		3,215		3,215		—			—
Interest rate reduction		9		140		140		—			(15	)
Other		45		232		232		—			—
Combination of concession types		123		1,597		1,597		—			(129	)
Other
Principal deferral		20		230		230		—			—
Interest rate reduction		1		12		12		—			(2	)
Other		1		12		12		—			—
Combination of concession types		72		1,924		1,924		—			(501	)
Total		673	$	215,006	$	210,557	$	(4,449	)	$	(2,288	)

(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
Six months ended June 30, 2012	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		18	$	13,204	$	12,015	$	(1,189	)	$	—
Other		3		2,967		3,052		85			—
Combination of concession types		1		45		44		(1	)		(33	)
Real estate:
Commercial
Principal deferral		3		4,436		4,404		(32	)		—
Interest rate reduction		1		383		430		47			(89	)
Combination of concession types		4		1,210		1,231		21			(256	)
Residential builder and developer
Principal deferral		8		9,325		8,537		(788	)		—
Combination of concession types		2		2,350		2,726		376			—
Other commercial construction
Principal deferral		3		60,888		60,898		10			—
Residential
Principal deferral		22		2,564		2,675		111			—
Combination of concession types		29		4,985		5,105		120			(265	)
Residential Alt-A
Principal deferral		4		550		565		15			—
Combination of concession types		15		2,869		2,937		68			(49	)
Consumer:
Home equity lines and loans
Principal deferral		10		851		851		—			—
Interest rate reduction		1		144		144		—			(6	)
Combination of concession types		6		715		715		—			(147	)
Automobile
Principal deferral		349		4,585		4,585		—			—
Interest rate reduction		7		77		77		—			(5	)
Other		31		171		171		—			—
Combination of concession types		189		2,779		2,779		—			(282	)
Other
Principal deferral		59		781		781		—			—
Interest rate reduction		3		23		23		—			(3	)
Other		9		49		49		—			—
Combination of concession types		52		361		361		—			(58	)
Total		829	$	116,312	$	115,155	$	(1,157	)	$	(1,193	)

(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. Charge-offs may also be recognized on troubled debt restructurings that have subsequently defaulted. Loans that were modified as troubled debt restructurings during the twelve months ended June 30, 2013 and 2012 and for which there was a subsequent payment default during the six-month periods ended June 30, 2013 and 2012 were $24 million (largely commercial real estate loans) and $11 million (largely residential builder and developer loans), respectively.