Note 6 - Past Due Loans, Allowance For Credit Losses, and Impaired Loans

3 Months Ended

Mar. 31, 2013

Allowance for Credit Losses [Text Block]

6.  PAST DUE LOANS, ALLOWANCE FOR CREDIT LOSSES, AND IMPAIRED LOANS

Past Due and Non-accrual Loans

The following table presents an aging analysis of the Company’s past due loans as of March 31, 2013 and December 31, 2012. The aging is determined without regard to accrual status. The table also presents non-performing loans, consisting of non-accrual loans (the majority of which are past due) and loans 90 days or more past due and still accruing interest, as of each balance sheet date.

Aging Analysis of Past Due Loans and Non-Performing Loans by Class

(Dollar amounts in thousands)

	Aging Analysis (Accruing and Non-accrual)										Non-performing Loans
	Current		30-89 Days Past Due		90 Days or More Past Due		Total Past Due		Total Loans		Non- accrual Loans		90 Days Past Due Loans, Still Accruing Interest
March 31, 2013
Commercial and industrial	$	1,639,420	$	8,088	$	12,364	$	20,452	$	1,659,872	$	29,625	$	688
Agricultural		274,094		78		819		897		274,991		655		242
Commercial real estate:
Office, retail, and industrial		1,316,430		4,949		22,877		27,826		1,344,256		26,438		-
Multi-family		295,596		953		1,568		2,521		298,117		1,766		136
Residential construction		48,560		129		5,343		5,472		54,032		5,552		-
Commercial construction		120,277		1,060		873		1,933		122,210		873		-
Other commercial real estate		726,886		3,066		13,124		16,190		743,076		17,532		1,108
Total commercial real estate		2,507,749		10,157		43,785		53,942		2,561,691		52,161		1,244
Total corporate loans		4,421,263		18,323		56,968		75,291		4,496,554		82,441		2,174
Home equity		366,769		5,311		7,272		12,583		379,352		6,354		2,025
1-4 family mortgages		256,120		1,744		5,422		7,166		263,286		4,680		1,315
Installment loans		33,820		299		1,960		2,259		36,079		1,922		38
Total consumer loans		656,709		7,354		14,654		22,008		678,717		12,956		3,378
Total loans, excluding covered loans		5,077,972		25,677		71,622		97,299		5,175,271		95,397		5,552
Covered loans		131,933		10,753		44,001		54,754		186,687		20,912		24,934
Total loans	$	5,209,905	$	36,430	$	115,623	$	152,053	$	5,361,958	$	116,309	$	30,486
December 31, 2012
Commercial and industrial	$	1,614,167	$	4,883	$	12,424	$	17,307	$	1,631,474	$	25,941	$	2,138
Agricultural		267,077		79		1,462		1,541		268,618		1,173		375
Commercial real estate:
Office, retail, and industrial		1,306,526		4,130		22,535		26,665		1,333,191		23,224		823
Multi-family		283,634		761		1,086		1,847		285,481		1,434		153
Residential construction		57,009		-		4,453		4,453		61,462		4,612		-
Commercial construction		124,081		-		873		873		124,954		873		-
Other commercial real estate		755,103		1,053		16,965		18,018		773,121		16,214		1,534
Total commercial real estate		2,526,353		5,944		45,912		51,856		2,578,209		46,357		2,510
Total corporate loans		4,407,597		10,906		59,798		70,704		4,478,301		73,471		5,023
Home equity		376,801		6,482		6,750		13,232		390,033		6,189		1,651
1-4 family mortgages		272,270		4,472		6,206		10,678		282,948		4,874		1,947
Installment loans		35,936		2,390		68		2,458		38,394		-		68
Total consumer loans		685,007		13,344		13,024		26,368		711,375		11,063		3,666
Total loans, excluding covered loans		5,092,604		24,250		72,822		97,072		5,189,676		84,534		8,689
Covered loans		147,462		6,517		43,915		50,432		197,894		14,182		31,447
Total loans	$	5,240,066	$	30,767	$	116,737	$	147,504	$	5,387,570	$	98,716	$	40,136

Allowance for Credit Losses

The Company maintains an allowance for credit losses at a level deemed adequate by management to absorb probable losses inherent in the loan portfolio. Refer to Note 1, “Summary of Significant Accounting Policies,” for the accounting policy for the allowance for credit losses.

Allowance for Credit Losses

(Dollar amounts in thousands)

	Quarters Ended March 31,
	2013			2012
Beginning balance	$	102,812		$	121,962
Charge-offs		(10,772	)		(22,686	)
Recoveries of charge-offs		3,243			1,278
Net charge-offs		(7,529	)		(21,408	)
Provision for loan and covered loan losses and other (1)		5,174			18,210
Ending balance	$	100,457		$	118,764
Allowance for loan and covered loan losses	$	97,591		$	116,264
Reserve for unfunded commitments		2,866			2,500
Total allowance for credit losses	$	100,457		$	118,764

(1) Includes a $500,000 reduction in the reserve for unfunded commitments, which is included in other noninterest expense in the Consolidated Statements of Income.

Allowance for Credit Losses by Portfolio Segment

(Dollar amounts in thousands)

	Commercial, Industrial, and Agricultural			Office, Retail, and Industrial			Multi- Family			Residential Construction			Other Commercial Real Estate			Consumer			Covered Loans			Total Allowance
Quarter ended March 31, 2013
Beginning balance	$	36,761		$	11,432		$	3,575		$	6,260		$	18,680		$	14,042		$	12,062		$	102,812
Charge-offs		(3,076	)		(1,262	)		(165	)		(565	)		(2,634	)		(2,364	)		(706	)		(10,772	)
Recoveries of charge-offs		2,089			2			5			-			1,032			107			8			3,243
Net charge-offs		(987	)		(1,260	)		(160	)		(565	)		(1,602	)		(2,257	)		(698	)		(7,529	)
Provision for loan and covered loan losses and other (1)		770			523			289			(68	)		1,655			1,142			863			5,174
Ending balance	$	36,544		$	10,695		$	3,704		$	5,627		$	18,733		$	12,927		$	12,227		$	100,457
Quarter ended March 31, 2012
Beginning balance	$	46,017		$	16,012		$	5,067		$	14,563		$	24,471		$	14,843		$	989		$	121,962
Charge-offs		(8,190	)		(2,667	)		(140	)		(683	)		(8,354	)		(2,378	)		(274	)		(22,686	)
Recoveries of charge-offs		716			2			131			220			7			202			-			1,278
Net charge-offs		(7,474	)		(2,665	)		(9	)		(463	)		(8,347	)		(2,176	)		(274	)		(21,408	)
Provision for loan and covered loan losses		6,172			4,209			24			163			6,325			1,039			278			18,210
Ending balance	$	44,715		$	17,556		$	5,082		$	14,263		$	22,449		$	13,706		$	993		$	118,764

(1) Includes a $500,000 reduction in the reserve for unfunded commitments, which is included in other noninterest expense in the Consolidated Statements of Income.

The table below provides a breakdown of loans and the related allowance for credit losses by portfolio segment.

Loans and Related Allowance for Credit Losses by Portfolio Segment

(Dollar amounts in thousands)

	Loans								Allowance For Credit Losses
	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Acquired with Deteriorated Credit Quality		Total		Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Acquired with Deteriorated Credit Quality		Total
March 31, 2013
Commercial, industrial, and agricultural	$	26,386	$	1,906,585	$	1,892	$	1,934,863	$	9,569	$	26,975	$	-	$	36,544
Commercial real estate:
Office, retail, and industrial		24,429		1,319,827		-		1,344,256		508		10,187		-		10,695
Multi-family		971		297,020		126		298,117		-		3,704		-		3,704
Residential construction		5,133		48,899		-		54,032		10		5,617		-		5,627
Other commercial real estate		16,978		843,821		4,487		865,286		1,319		17,414		-		18,733
Total commercial real estate		47,511		2,509,567		4,613		2,561,691		1,837		36,922		-		38,759
Total corporate loans		73,897		4,416,152		6,505		4,496,554		11,406		63,897		-		75,303
Consumer		-		667,945		10,772		678,717		-		12,927		-		12,927
Total loans, excluding covered loans		73,897		5,084,097		17,277		5,175,271		11,406		76,824		-		88,230
Covered home equity lines of credit (1)		-		40,064		-		40,064		-		855		-		855
Other covered loans		-		-		146,623		146,623		-		-		11,372		11,372
Total covered loans		-		40,064		146,623		186,687		-		855		11,372		12,227
Total loans	$	73,897	$	5,124,161	$	163,900	$	5,361,958	$	11,406	$	77,679	$	11,372	$	100,457
December 31, 2012
Commercial, industrial, and agricultural	$	23,731	$	1,874,464	$	1,897	$	1,900,092	$	9,404	$	27,357	$	-	$	36,761
Commercial real estate:
Office, retail, and industrial		21,736		1,311,455		-		1,333,191		971		10,461		-		11,432
Multi-family		642		284,718		121		285,481		-		3,575		-		3,575
Residential construction		4,040		57,422		-		61,462		-		6,260		-		6,260
Other commercial real estate		16,160		877,749		4,166		898,075		1,247		17,433		-		18,680
Total commercial real estate		42,578		2,531,344		4,287		2,578,209		2,218		37,729		-		39,947
Total corporate loans		66,309		4,405,808		6,184		4,478,301		11,622		65,086		-		76,708
Consumer		-		699,361		12,014		711,375		-		14,042		-		14,042
Total loans, excluding covered loans		66,309		5,105,169		18,198		5,189,676		11,622		79,128		-		90,750
Covered home equity lines of credit (1)		-		43,132		-		43,132		-		928		-		928
Other covered loans		-		-		154,762		154,762		-		-		11,134		11,134
Total covered loans		-		43,132		154,762		197,894		-		928		11,134		12,062
Total loans	$	66,309	$	5,148,301	$	172,960	$	5,387,570	$	11,622	$	80,056	$	11,134	$	102,812

(1) These are open-end consumer loans that are not categorized as purchased impaired loans.

Loans Individually Evaluated for Impairment

Corporate non-accrual loans exceeding a fixed dollar amount are individually evaluated for impairment when the internal risk rating is at or below a certain level. The following table presents loans individually evaluated for impairment by class of loan as of March 31, 2013 and December 31, 2012. Loans acquired with deteriorated credit quality are excluded from this disclosure.

Impaired Loans Individually Evaluated by Class

(Dollar amounts in thousands)

	March 31, 2013								December 31, 2012
	Recorded Investment In								Recorded Investment In
	Loans with No Specific Reserve		Loans with a Specific Reserve		Unpaid Principal Balance		Specific Reserve		Loans with No Specific Reserve		Loans with a Specific Reserve		Unpaid Principal Balance		Specific Reserve
Commercial and industrial	$	6,849	$	19,537	$	44,543	$	9,569	$	5,636	$	18,095	$	39,834	$	9,404
Agricultural		-		-		-		-		-		-		-		-
Commercial real estate:
Office, retail, and industrial		21,854		2,575		33,447		508		14,504		7,232		29,631		971
Multi-family		971		-		2,742		-		642		-		2,406		-
Residential construction		4,752		381		12,051		10		4,040		-		10,741		-
Commercial construction		876		-		1,242		-		-		876		1,242		90
Other commercial real estate		3,807		12,295		25,156		1,319		5,218		10,066		23,907		1,157
Total commercial real estate		32,260		15,251		74,638		1,837		24,404		18,174		67,927		2,218
Total impaired loans individually evaluated for impairment	$	39,109	$	34,788	$	119,181	$	11,406	$	30,040	$	36,269	$	107,761	$	11,622

Average Recorded Investment and Interest Income Recognized on Impaired Loans by Class

(Dollar amounts in thousands)

	Quarters Ended
	March 31, 2013				March 31, 2012
	Average Recorded Balance		Interest Income Recognized (1)		Average Recorded Balance		Interest Income Recognized (1)
Commercial and industrial	$	26,937	$	2	$	45,630	$	9
Agricultural		1,048		-		922		-
Commercial real estate:
Office, retail, and industrial		24,275		4		28,683		-
Multi-family		1,534		-		6,528		-
Residential construction		4,663		-		17,074		-
Commercial construction		873		-		22,755		-
Other commercial real estate		16,109		3		51,842		-
Total commercial real estate		47,454		7		126,882		-
Total impaired loans	$	75,439	$	9	$	173,434	$	9

(1) Recorded using the cash basis of accounting.

TDRs

TDRs are generally performed at the request of the individual borrower and may include forgiveness of principal, reduction in interest rates, changes in payments, and maturity date extensions. A discussion of our accounting policies for TDRs can be found in Note 1, “Summary of Significant Accounting Policies.”

TDRs by Class

(Dollar amounts in thousands)

	As of March 31, 2013						As of December 31, 2012
	Accruing		Non-accrual (1)		Total		Accruing		Non-accrual (1)		Total
Commercial and industrial	$	712	$	2,492	$	3,204	$	519	$	2,545	$	3,064
Agricultural		-		-		-		-		-		-
Commercial real estate:
Office, retail, and industrial		244		2,156		2,400		-		2,407		2,407
Multi-family		-		-		-		-		150		150
Residential construction		504		-		504		-		-		-
Commercial construction		-		-		-		-		-		-
Other commercial real estate		-		4,746		4,746		5,206		4,649		9,855
Total commercial real estate		748		6,902		7,650		5,206		7,206		12,412
Total corporate loans		1,460		9,394		10,854		5,725		9,751		15,476
Home equity		38		232		270		40		234		274
1-4 family mortgages		1,089		779		1,868		1,102		939		2,041
Installment loans		-		-		-		-		-		-
Total consumer loans		1,127		1,011		2,138		1,142		1,173		2,315
Total loans	$	2,587	$	10,405	$	12,992	$	6,867	$	10,924	$	17,791

(1) These loans are included in non-accrual loans in the preceding tables.

The following table presents a summary of loans that were restructured during the quarters ended March 31, 2013 and 2012.

TDRs Restructured During the Period

(Dollar amounts in thousands)

	Number of Loans		Pre- Modification Recorded Investment		Funds Disbursed		Interest and Escrow Capitalized		Post- Modification Recorded Investment
Quarter ended March 31, 2013
Commercial and industrial		2	$	716	$	-	$	2	$	718
Office, retail, and industrial		1		215		30		-		245
Residential construction		2		508		-		-		508
1-4 family mortgages		1		132		-		4		136
Total TDRs restructured during the period		6	$	1,571	$	30	$	6	$	1,607
Quarter ended March 31, 2012
1-4 family mortgages		3	$	430	$	-	$	4	$	434
Total TDRs restructured during the period		3	$	430	$	-	$	4	$	434

TDRs are included in the calculation of the allowance for credit losses in the same manner as impaired loans. TDRs had related specific reserves totaling $2.5 million as of March 31, 2013 and $2.8 million as of December 31, 2012.

Accruing TDRs that have payment defaults and do not perform in accordance with their modified terms are transferred to non-accrual. The following table presents TDRs that had payment defaults during the quarters ended March 31, 2013 and 2012 where the default occurred within twelve months of the restructure date.

TDRs That Defaulted Within Twelve Months of the Restructure Date

(Dollar amounts in thousands)

	Quarters Ended
	March 31, 2013				March 31, 2012
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
Commercial and industrial		1	$	350		-	$	-
Other commercial real estate		2		156		-		-
1-4 family mortgages		-		-		1		62
Total		3	$	506		1	$	62

For TDRs to be removed from TDR status, the loans must (i) have a market rate of interest at the time of restructuring and (ii) be in compliance with the modified loan terms. TDRs that were returned to performing status totaled $5.0 million for the quarter ended March 31, 2013 and $16.0 million for the quarter ended March 31, 2012.

There were no commitments to lend additional funds to borrowers with TDRs as of March 31, 2013 or December 31, 2012.

Credit Quality Indicators

Corporate loans and commitments are assessed for credit risk and assigned ratings based on various characteristics, such as the borrower’s cash flow, leverage, and collateral. Ratings for commercial credits are reviewed periodically. On a quarterly basis, consumer loans are assessed for credit quality based on the accrual status of the loan.

Corporate Credit Quality Indicators by Class, Excluding Covered Loans

 (Dollar amounts in thousands)

	Pass		Special Mention (1)		Substandard (2)		Non-accrual (3)		Total
March 31, 2013
Commercial and industrial	$	1,588,733	$	31,258	$	10,256	$	29,625	$	1,659,872
Agricultural		274,336		-		-		655		274,991
Commercial real estate:
Office, retail, and industrial		1,245,339		55,086		17,393		26,438		1,344,256
Multi-family		293,816		2,535		-		1,766		298,117
Residential construction		30,822		9,215		8,443		5,552		54,032
Commercial construction		87,714		13,767		19,856		873		122,210
Other commercial real estate		689,394		9,928		26,222		17,532		743,076
Total commercial real estate		2,347,085		90,531		71,914		52,161		2,561,691
Total corporate loans	$	4,210,154	$	121,789	$	82,170	$	82,441	$	4,496,554
December 31, 2012
Commercial and industrial	$	1,558,932	$	37,833	$	8,768	$	25,941	$	1,631,474
Agricultural		267,114		331		-		1,173		268,618
Commercial real estate:
Office, retail, and industrial		1,235,950		57,271		16,746		23,224		1,333,191
Multi-family		282,126		1,921		-		1,434		285,481
Residential construction		33,392		11,870		11,588		4,612		61,462
Commercial construction		95,567		14,340		14,174		873		124,954
Other commercial real estate		712,702		14,056		30,149		16,214		773,121
Total commercial real estate		2,359,737		99,458		72,657		46,357		2,578,209
Total corporate loans	$	4,185,783	$	137,622	$	81,425	$	73,471	$	4,478,301

(1)	Loans categorized as special mention exhibit potential weaknesses that require the close attention of management since these potential weaknesses may result in the deterioration of repayment prospects at some future date.
(2)	Loans categorized as substandard exhibit a well-defined weakness or weaknesses that may jeopardize the liquidation of the debt. These loans continue to accrue interest because they are well secured and collection of principal and interest is expected within a reasonable time.
(3)	Loans categorized as non-accrual exhibit a well-defined weakness or weaknesses that may jeopardize the liquidation of the debt and are characterized by the distinct possibility that the Company could sustain some loss if the deficiencies are not corrected.

Consumer Credit Quality Indicators by Class, Excluding Covered Loans

 (Dollar amounts in thousands)

	Performing		Non-accrual		Total
March 31, 2013
Home equity	$	372,998	$	6,354	$	379,352
1-4 family mortgages		258,606		4,680		263,286
Installment loans		34,157		1,922		36,079
Total consumer loans	$	665,761	$	12,956	$	678,717
December 31, 2012
Home equity	$	383,844	$	6,189	$	390,033
1-4 family mortgages		278,074		4,874		282,948
Installment loans		38,394		-		38,394
Total consumer loans	$	700,312	$	11,063	$	711,375