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

6 Months Ended

Jun. 30, 2013

Disclosure Text Block Supplement [Abstract]

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 June 30, 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
June 30, 2013
Commercial and industrial	$	1,720,522	$	10,911	$	11,706	$	22,617	$	1,743,139	$	28,157	$	425
Agricultural		287,789		167		676		843		288,632		786		-
Commercial real estate:
Office, retail, and industrial		1,297,720		1,477		20,652		22,129		1,319,849		24,428		160
Multi-family		304,304		570		1,308		1,878		306,182		2,068		131
Residential construction		47,259		-		3,125		3,125		50,384		3,331		-
Commercial construction		112,218		2,965		1,933		4,898		117,116		3,878		-
Other commercial real estate		746,039		3,000		10,328		13,328		759,367		13,022		99
Total commercial real estate		2,507,540		8,012		37,346		45,358		2,552,898		46,727		390
Total corporate loans		4,515,851		19,090		49,728		68,818		4,584,669		75,670		815
Home equity		362,492		4,574		7,340		11,914		374,406		6,377		2,222
1-4 family mortgages		284,672		1,841		5,257		7,098		291,770		5,064		767
Installment		34,289		348		2,083		2,431		36,720		2,082		28
Total consumer loans		681,453		6,763		14,680		21,443		702,896		13,523		3,017
Total loans, excluding covered loans		5,197,304		25,853		64,408		90,261		5,287,565		89,193		3,832
Covered loans		122,129		6,573		43,159		49,732		171,861		28,468		27,700
Total loans	$	5,319,433	$	32,426	$	107,567	$	139,993	$	5,459,426	$	117,661	$	31,532

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		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 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			Reserve for Unfunded Commitments		Total Allowance
Quarter ended June 30, 2013
Beginning balance	$	36,544		$	10,695		$	3,704		$	4,667		$	17,757		$	11,997		$	12,227		$	2,866	$	100,457
Charge-offs		(3,116	)		(1,453	)		(213	)		(850	)		(547	)		(2,523	)		(1,980	)		-		(10,682	)
Recoveries		573			35			30			5			329			413			3			-		1,388
Net charge-offs		(2,543	)		(1,418	)		(183	)		(845	)		(218	)		(2,110	)		(1,977	)		-		(9,294	)
Provision for loan and covered loan losses and other		(2,259	)		2,580			(97	)		348			(1,370	)		2,480			4,131			-		5,813
Ending balance	$	31,742		$	11,857		$	3,424		$	4,170		$	16,169		$	12,367		$	14,381		$	2,866	$	96,976

Quarter ended June 30, 2012
Beginning balance	$	44,715		$	17,556		$	5,082		$	14,095		$	20,848		$	12,975		$	993		$	2,500	$	118,764
Charge-offs		(6,423	)		(2,570	)		(344	)		(3,598	)		(5,568	)		(2,744	)		(2,434	)		-		(23,681	)
Recoveries		535			307			31			-			18			250			-			-		1,141
Net charge-offs		(5,888	)		(2,263	)		(313	)		(3,598	)		(5,550	)		(2,494	)		(2,434	)		-		(22,540	)
Provision for loan and covered loan losses and other		4,583			3,060			20			2,235			7,935			2,202			2,423			-		22,458
Ending balance	$	43,410		$	18,353		$	4,789		$	12,732		$	23,233		$	12,683		$	982		$	2,500	$	118,682

Six months ended June 30, 2013
Beginning balance	$	36,761		$	11,432		$	3,575		$	5,242		$	17,512		$	12,862		$	12,062		$	3,366		$	102,812
Charge-offs		(6,291	)		(2,715	)		(378	)		(1,415	)		(3,082	)		(4,887	)		(2,686	)		-			(21,454	)
Recoveries		2,662			37			35			5			1,361			520			11			-			4,631
Net charge-offs		(3,629	)		(2,678	)		(343	)		(1,410	)		(1,721	)		(4,367	)		(2,675	)		-			(16,823	)
Provision for loan and covered loan losses and other		(1,390	)		3,103			192			338			378			3,872			4,994			(500	)		10,987
Ending balance	$	31,742		$	11,857		$	3,424		$	4,170		$	16,169		$	12,367		$	14,381		$	2,866		$	96,976

Six months ended June 30, 2012
Beginning balance	$	46,017		$	16,012		$	5,067		$	14,423		$	22,823		$	14,131		989		$	2,500	$	121,962
Charge-offs		(14,613	)		(5,237	)		(484	)		(4,281	)		(13,922	)		(5,122	)	(2,708	)		-		(46,367	)
Recoveries		1,251			309			162			220			25			452		-			-		2,419
Net charge-offs		(13,362	)		(4,928	)		(322	)		(4,061	)		(13,897	)		(4,670	)	(2,708	)		-		(43,948	)
Provision for loan and covered loan losses and other		10,755			7,269			44			2,370			14,307			3,222		2,701			-		40,668
Ending balance	$	43,410		$	18,353		$	4,789		$	12,732		$	23,233		$	12,683		982		$	2,500	$	118,682

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
June 30, 2013
Commercial, industrial, and agricultural	$	25,127	$	2,004,771	$	1,873	$	2,031,771	$	3,687	$	28,055	$	-	$	31,742
Commercial real estate:
Office, retail, and industrial		22,895		1,296,954		-		1,319,849		1,081		10,776		-		11,857
Multi-family		1,047		305,007		128		306,182		157		3,267		-		3,424
Residential construction		2,902		47,482		-		50,384		59		4,111		-		4,170
Other commercial real estate		15,303		857,164		4,016		876,483		636		15,533		-		16,169
Total commercial real estate		42,147		2,506,607		4,144		2,552,898		1,933		33,687		-		35,620
Total corporate loans		67,274		4,511,378		6,017		4,584,669		5,620		61,742		-		67,362
Consumer		-		692,601		10,295		702,896		-		12,367		-		12,367
Total loans, excluding covered loans		67,274		5,203,979		16,312		5,287,565		5,620		74,109		-		79,729
Covered loans:
Purchased impaired loans		-		-		133,675		133,675		-		-		13,545		13,545
Other loans		-		38,186		-		38,186		-		836		-		836
Total covered loans		-		38,186		133,675		171,861		-		836		13,545		14,381
Reserve for unfunded commitments		-		-		-		-		-		2,866		-		2,866
Total loans	$	67,274	$	5,242,165	$	149,987	$	5,459,426	$	5,620	$	77,811	$	13,545	$	96,976

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		-		5,242		-		5,242
Other commercial real estate		16,160		877,749		4,166		898,075		1,247		16,265		-		17,512
Total commercial real estate		42,578		2,531,344		4,287		2,578,209		2,218		35,543		-		37,761
Total corporate loans		66,309		4,405,808		6,184		4,478,301		11,622		62,900		-		74,522
Consumer		-		699,361		12,014		711,375		-		12,862		-		12,862
Total loans, excluding covered loans		66,309		5,105,169		18,198		5,189,676		11,622		75,762		-		87,384
Covered loans:
Purchased impaired loans		-		-		154,762		154,762		-		-		11,134		11,134
Other loans		-		43,132		-		43,132		-		928		-		928
Total covered loans		-		43,132		154,762		197,894		-		928		11,134		12,062
Reserve for unfunded commitments		-		-		-		-		-		3,366		-		3,366
Total loans	$	66,309	$	5,148,301	$	172,960	$	5,387,570	$	11,622	$	80,056	$	11,134	$	102,812

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 June 30, 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)

	June 30, 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	$	20,635	$	4,492	$	40,989	$	3,687	$	5,636	$	18,095	$	39,834	$	9,404
Agricultural		-		-		-		-		-		-		-		-
Commercial real estate:
Office, retail, and industrial		19,133		3,762		31,736		1,081		14,504		7,232		29,631		971
Multi-family		902		145		3,045		157		642		-		2,406		-
Residential construction		2,032		870		7,200		59		4,040		-		10,741		-
Commercial construction		3,881		-		4,247		-		-		876		1,242		90
Other commercial real estate		8,588		2,834		15,479		636		5,218		10,066		23,907		1,157
Total commercial real estate		34,536		7,611		61,707		1,933		24,404		18,174		67,927		2,218
Total impaired loans individually evaluated for impairment	$	55,171	$	12,103	$	102,696	$	5,620	$	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 June 30,
	2013				2012
	Average Recorded Balance		Interest Income Recognized ⁽¹⁾		Average Recorded Balance		Interest Income Recognized ⁽¹⁾
Commercial and industrial	$	25,757	$	1	$	55,623	$	-
Agricultural		-		-		932		-
Commercial real estate:
Office, retail, and industrial		23,662		6		35,348		-
Multi-family		1,009		-		9,424		-
Residential construction		4,018		-		19,912		-
Commercial construction		2,379		-		20,353		-
Other commercial real estate		13,762		5		40,127		6
Total commercial real estate		44,830		11		125,164		6
Total impaired loans	$	70,587	$	12	$	181,719	$	6

	Six Months Ended June 30,
	2013				2012
	Average Recorded Balance		Interest Income Recognized ⁽¹⁾		Average Recorded Balance		Interest Income Recognized ⁽¹⁾
Commercial and industrial	$	24,429	$	3	$	50,626	$	9
Agricultural		-		-		927		-
Commercial real estate:
Office, retail, and industrial		22,316		10		32,015		-
Multi-family		845		-		7,976		-
Residential construction		3,471		-		18,493		-
Commercial construction		2,379		-		21,554		-
Other commercial real estate		13,353		8		45,985		6
Total commercial real estate		42,364		18		126,023		6
Total impaired loans	$	66,793	$	21	$	177,576	$	15

⁽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 June 30, 2013						As of December 31, 2012
	Accruing		Non-accrual ⁽¹⁾		Total		Accruing		Non-accrual ⁽¹⁾		Total
Commercial and industrial	$	695	$	15,699	$	16,394	$	519	$	2,545	$	3,064
Agricultural		-		-		-		-		-		-
Commercial real estate:
Office, retail, and industrial		628		365		993		-		2,407		2,407
Multi-family		1,053		264		1,317		-		150		150
Residential construction		500		-		500		-		-		-
Commercial construction		-		-		-		-		-		-
Other commercial real estate		4,300		1,003		5,303		5,206		4,649		9,855
Total commercial real estate		6,481		1,632		8,113		5,206		7,206		12,412
Total corporate loans		7,176		17,331		24,507		5,725		9,751		15,476
Home equity		160		220		380		40		234		274
1-4 family mortgages		951		899		1,850		1,102		939		2,041
Installment		-		-		-		-		-		-
Total consumer loans		1,111		1,119		2,230		1,142		1,173		2,315
Total loans	$	8,287	$	18,450	$	26,737	$	6,867	$	10,924	$	17,791

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

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 $2.2 million as of June 30, 2013 and $2.8 million as of December 31, 2012.

The following table presents a summary of loans that were restructured during the quarters and six months ended June 30, 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		Charge-offs		Post- Modification Recorded Investment
Quarter ended June 30, 2013
Commercial and industrial		2	$	13,354	$	-	$	-	$	-	$	13,354
Office, retail, and industrial		3		386		-		-		-		386
Multi-family		5		1,275		-		57		-		1,332
Residential construction		-		-		-		-		-		-
Other commercial real estate		5		564		-		-		-		564
Home equity		1		125		-		-		-		125
1-4 family mortgages		-		-		-		-		-		-
Total TDRs restructured during the period		16	$	15,704	$	-	$	57	$	-	$	15,761

Quarter ended June 30, 2012
Commercial and industrial	1	$	252	$	-	$	-	$	170	$	82
Office, retail, and industrial	1		625		-		-		-		625
Other commercial real estate	7		11,906		-		-		652		11,254
1-4 family mortgages	1		133		-		-		-		133
Total TDRs restructured during the period	10	$	12,916	$	-	$	-	$	822	$	12,094

Six months ended June 30, 2013
Commercial and industrial	4	$	14,070	$	-	$	2	$	-	$	14,072
Office, retail, and industrial	4		601		30		-		-		631
Multi-family	5		1,275		-		57		-		1,332
Residential construction	2		508		-		-		-		508
Other commercial real estate	5		564		-		-		-		564
Home equity	1		125		-		-		-		125
1-4 family mortgages	1		132		-		4		-		136
Total TDRs restructured during the period	22	$	17,275	$	30	$	63	$	-	$	17,368

Six months ended June 30, 2012
Commercial and industrial	1	$	252	$	-	$	-	$	170	$	82
Office, retail, and industrial	1		625		-		-		-		625
Other commercial real estate	7		11,906		-		-		652		11,254
1-4 family mortgages	4		563		-		4		-		567
Total TDRs restructured during the period	13	$	13,346	$	-	$	4	$	822	$	12,528

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 six months ended June 30, 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								Six Months Ended
	June 30, 2013				June 30, 2012				June 30, 2013				June 30, 2012
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment		Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
Commercial and industrial		-	$	-		-	$	-		1	$	350		-	$	-
Office, retail, and industrial		-		-		1		220		-		-		1		220
Other commercial real estate		1		198		-		-		3		354		-		-
1-4 family mortgages		-		-		-		-		-		-		1		62
Total		1	$	198		1	$	220		4	$	704		2	$	282

For TDRs to be removed from TDR status, the loans must (i) have an interest rate and terms that reflect market conditions 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 and $16.6 million for the six months ended June 30, 2013 and 2012, respectively. For the quarter ended June 30, 2013, no TDRs were returned to performing status compared to $576,000 for the quarter ended June 30, 2012.

There were no commitments to lend additional funds to borrowers with TDRs as of June 30, 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
June 30, 2013
Commercial and industrial	$	1,674,784	$	31,029	$	9,169	$	28,157	$	1,743,139
Agricultural		287,846		-		-		786		288,632
Commercial real estate:
Office, retail, and industrial		1,219,337		53,574		22,510		24,428		1,319,849
Multi-family		301,406		1,921		787		2,068		306,182
Residential construction		29,104		10,029		7,920		3,331		50,384
Commercial construction		85,638		8,747		18,853		3,878		117,116
Other commercial real estate		717,192		9,875		19,278		13,022		759,367
Total commercial real estate		2,352,677		84,146		69,348		46,727		2,552,898
Total corporate loans	$	4,315,307	$	115,175	$	78,517	$	75,670	$	4,584,669

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
June 30, 2013
Home equity	$	368,029	$	6,377	$	374,406
1-4 family mortgages		286,706		5,064		291,770
Installment		34,638		2,082		36,720
Total consumer loans	$	689,373	$	13,523	$	702,896

December 31, 2012
Home equity	$	383,844	$	6,189	$	390,033
1-4 family mortgages		278,074		4,874		282,948
Installment		38,394		-		38,394
Total consumer loans	$	700,312	$	11,063	$	711,375