PAST DUE LOANS, ALLOWANCE FOR CREDIT LOSSES, IMPAIRED LOANS, AND TDRS

Past Due and Non-accrual Loans

The following table presents an aging analysis of the Company’s past due loans as of September 30, 2014 and December 31, 2013. 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
September 30, 2014
Commercial and industrial	$	2,197,785	$	6,216	$	4,165	$	10,381	$	2,208,166	$	19,696	$	1,256
Agricultural	347,179		—		332		332		347,511		361		—
Commercial real estate:
Office, retail, and industrial	1,401,990		1,842		18,690		20,532		1,422,522		16,963		3,840
Multi-family	557,852		641		1,196		1,837		559,689		1,536		—
Construction	186,363		—		7,082		7,082		193,445		7,082		—
Other commercial real estate	861,061		4,461		6,303		10,764		871,825		7,912		150
Total commercial real estate	3,007,266		6,944		33,271		40,215		3,047,481		33,493		3,990
Total corporate loans	5,552,230		13,160		37,768		50,928		5,603,158		53,550		5,246
Home equity	509,530		3,525		4,391		7,916		517,446		5,834		587
1-4 family mortgages	234,672		1,935		1,565		3,500		238,172		3,235		126
Installment	66,997		428		2,003		2,431		69,428		1,909		103
Total consumer loans	811,199		5,888		7,959		13,847		825,046		10,978		816
Total loans, excluding covered loans	6,363,429		19,048		45,727		64,775		6,428,204		64,528		6,062
Covered loans	73,370		954		16,551		17,505		90,875		10,905		7,031
Total loans	$	6,436,799	$	20,002	$	62,278	$	82,280	$	6,519,079	$	75,433	$	13,093
December 31, 2013
Commercial and industrial	$	1,814,660	$	6,872	$	9,106	$	15,978	$	1,830,638	$	11,767	$	393
Agricultural	321,156		134		412		546		321,702		519		—
Commercial real estate:
Office, retail, and industrial	1,335,027		2,620		16,038		18,658		1,353,685		17,076		1,315
Multi-family	330,960		318		1,595		1,913		332,873		1,848		—
Construction	180,083		23		6,091		6,114		186,197		6,297		—
Other commercial real estate	795,462		5,365		6,244		11,609		807,071		8,153		258
Total commercial real estate	2,641,532		8,326		29,968		38,294		2,679,826		33,374		1,573
Total corporate loans	4,777,348		15,332		39,486		54,818		4,832,166		45,660		1,966
Home equity	415,791		4,830		6,399		11,229		427,020		6,864		1,102
1-4 family mortgages	268,912		2,046		5,034		7,080		275,992		5,198		548
Installment	42,350		330		2,147		2,477		44,827		2,076		92
Total consumer loans	727,053		7,206		13,580		20,786		747,839		14,138		1,742
Total loans, excluding covered loans	5,504,401		22,538		53,066		75,604		5,580,005		59,798		3,708
Covered loans	94,211		2,232		37,912		40,144		134,355		20,942		18,081
Total loans	$	5,598,612	$	24,770	$	90,978	$	115,748	$	5,714,360	$	80,740	$	21,789

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. A rollforward of the allowance for credit losses by portfolio segment for the quarters and nine months ended September 30, 2014 and 2013 is presented in the table below.

Allowance for Credit Losses by Portfolio Segment

(Dollar amounts in thousands)



	Commercial, Industrial, and Agricultural			Office, Retail, and Industrial			Multi- Family			Construction			Other Commercial Real Estate			Consumer			Covered Loans			Reserve for Unfunded Commitments			Total Allowance
Quarter ended September 30, 2014
Beginning balance	$	29,194		$	11,831		$	2,048		$	4,885		$	8,585		$	12,440		$	9,343		$	1,616		$	79,942
Charge-offs	(9,763		)	(2,514		)	(26		)	(157		)	(1,363		)	(3,148		)	(135		)	—			(17,106		)
Recoveries	716			55			—			—			108			150			130			—			1,159
Net charge-offs	(9,047		)	(2,459		)	(26		)	(157		)	(1,255		)	(2,998		)	(5		)	—			(15,947		)
Provision for loan and covered loan losses and other	10,458			265			(65		)	(3,130		)	189			3,699			(689		)	—			10,727
Ending balance	$	30,605		$	9,637		$	1,957		$	1,598		$	7,519		$	13,141		$	8,649		$	1,616		$	74,722
Quarter ended September 30, 2013
Beginning balance	$	31,742		$	11,857		$	3,424		$	4,170		$	16,169		$	12,367		$	14,381		$	2,866		$	96,976
Charge-offs	(2,719		)	(987		)	(112		)	(470		)	(889		)	(2,482		)	(1,636		)	—			(9,295		)
Recoveries	521			31			—			57			253			374			7			—			1,243
Net charge-offs	(2,198		)	(956		)	(112		)	(413		)	(636		)	(2,108		)	(1,629		)	—			(8,052		)
Provision for loan and covered loan losses and other	2,452			938			(31		)	(100		)	(1,218		)	2,425			304			(480		)	4,290
Ending balance	$	31,996		$	11,839		$	3,281		$	3,657		$	14,315		$	12,684		$	13,056		$	2,386		$	93,214
Nine months ended September 30, 2014
Beginning balance	$	30,381		$	10,405		$	2,017		$	6,316		$	10,817		$	13,010		$	12,559		$	1,616		$	87,121
Charge-offs	(15,542		)	(7,108		)	(383		)	(1,052		)	(3,695		)	(7,005		)	(659		)	—			(35,444		)
Recoveries	3,135			403			3			160			341			502			992			—			5,536
Net charge-offs	(12,407		)	(6,705		)	(380		)	(892		)	(3,354		)	(6,503		)	333			—			(29,908		)
Provision for loan and covered loan losses and other	12,631			5,937			320			(3,826		)	56			6,634			(4,243		)	—			17,509
Ending balance	$	30,605		$	9,637		$	1,957		$	1,598		$	7,519		$	13,141		$	8,649		$	1,616		$	74,722
Nine months ended September 30, 2013
Beginning balance	$	36,761		$	11,432		$	3,575		$	5,242		$	17,512		$	12,862		$	12,062		$	3,366		$	102,812
Charge-offs	(9,010		)	(3,702		)	(490		)	(1,885		)	(3,971		)	(7,369		)	(4,322		)	—			(30,749		)
Recoveries	3,183			68			35			62			1,614			894			18			—			5,874
Net charge-offs	(5,827		)	(3,634		)	(455		)	(1,823		)	(2,357		)	(6,475		)	(4,304		)	—			(24,875		)
Provision for loan and covered loan losses and other	1,062			4,041			161			238			(840		)	6,297			5,298			(980		)	15,277
Ending balance	$	31,996		$	11,839		$	3,281		$	3,657		$	14,315		$	12,684		$	13,056		$	2,386		$	93,214

The table below provides a breakdown of loans and the related allowance for credit losses by portfolio segment as of September 30, 2014 and December 31, 2013.

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		PCI		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		PCI		Total
September 30, 2014
Commercial, industrial, and agricultural	$	18,547	$	2,535,395	$	1,735	$	2,555,677	$	3,599	$	27,006	$	—	$	30,605
Commercial real estate:
Office, retail, and industrial	16,140		1,406,307		75		1,422,522		—		9,637		—		9,637
Multi-family	1,141		554,814		3,734		559,689		—		1,942		15		1,957
Construction	6,859		186,586		—		193,445		—		1,598		—		1,598
Other commercial real estate	4,719		860,410		6,696		871,825		—		7,519		—		7,519
Total commercial real estate	28,859		3,008,117		10,505		3,047,481		—		20,696		15		20,711
Total corporate loans	47,406		5,543,512		12,240		5,603,158		3,599		47,702		15		51,316
Consumer	—		816,349		8,697		825,046		—		12,588		553		13,141
Total loans, excluding covered loans	47,406		6,359,861		20,937		6,428,204		3,599		60,290		568		64,457
Covered loans	—		26,860		64,015		90,875		—		578		8,071		8,649
Reserve for unfunded commitments	—		—		—		—		—		1,616		—		1,616
Total loans	$	47,406	$	6,386,721	$	84,952	$	6,519,079	$	3,599	$	62,484	$	8,639	$	74,722
December 31, 2013
Commercial, industrial, and agricultural	$	13,178	$	2,137,440	$	1,722	$	2,152,340	$	4,046	$	26,335	$	—	$	30,381
Commercial real estate:
Office, retail, and industrial	26,348		1,327,337		—		1,353,685		214		10,191		—		10,405
Multi-family	1,296		331,445		132		332,873		18		1,999		—		2,017
Construction	5,712		180,485		—		186,197		178		6,138		—		6,316
Other commercial real estate	9,298		793,703		4,070		807,071		704		10,113		—		10,817
Total commercial real estate	42,654		2,632,970		4,202		2,679,826		1,114		28,441		—		29,555
Total corporate loans	55,832		4,770,410		5,924		4,832,166		5,160		54,776		—		59,936
Consumer	—		738,155		9,684		747,839		—		13,010		—		13,010
Total loans, excluding covered loans	55,832		5,508,565		15,608		5,580,005		5,160		67,786		—		72,946
Covered loans	—		30,830		103,525		134,355		—		702		11,857		12,559
Reserve for unfunded commitments	—		—		—		—		—		1,616		—		1,616
Total loans	$	55,832	$	5,539,395	$	119,133	$	5,714,360	$	5,160	$	70,104	$	11,857	$	87,121

Loans Individually Evaluated for Impairment

The following table presents loans individually evaluated for impairment by class of loan as of September 30, 2014 and December 31, 2013. PCI loans are excluded from this disclosure.

Impaired Loans Individually Evaluated by Class

(Dollar amounts in thousands)



	September 30, 2014								December 31, 2013
	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	$	2,524	$	16,023	$	40,067	$	2,968	$	10,047	$	3,131	$	25,887	$	4,046
Agricultural	—		—		—		—		—		—		—		—
Commercial real estate:
Office, retail, and industrial	16,140		—		25,614		—		23,872		2,476		35,868		214
Multi-family	1,141		—		1,268		—		1,098		198		1,621		18
Construction	6,859		—		8,412		—		4,586		1,126		10,037		178
Other commercial real estate	4,719		—		6,979		—		7,553		1,745		11,335		704
Total commercial real estate	28,859		—		42,273		—		37,109		5,545		58,861		1,114
Total impaired loans individually evaluated for impairment	$	31,383	$	16,023	$	82,340	$	2,968	$	47,156	$	8,676	$	84,748	$	5,160

The following table presents the average recorded investment and interest income recognized on impaired loans by class for the quarters and nine months ended September 30, 2014 and 2013. PCI loans are excluded from this disclosure.

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

(Dollar amounts in thousands)



	Quarters Ended September 30,
	2014				2013
	Average Recorded Investment		Interest Income Recognized ⁽¹⁾		Average Recorded Investment		Interest Income Recognized ⁽¹⁾
Commercial and industrial	$	20,137	$	57	$	20,665	$	195
Agricultural	—		—		—		—
Commercial real estate:
Office, retail, and industrial	15,873		3		25,747		5
Multi-family	1,155		—		1,337		—
Construction	5,792		—		6,511		—
Other commercial real estate	5,234		22		12,511		16
Total commercial real estate	28,054		25		46,106		21
Total impaired loans	$	48,191	$	82	$	66,771	$	216

	Nine Months Ended September 30,
	2014				2013
	Average Recorded Investment		Interest Income Recognized ⁽¹⁾		Average Recorded Investment		Interest Income Recognized ⁽¹⁾
Commercial and industrial	$	15,222	$	204	$	22,862	$	198
Agricultural	—		—		—		—
Commercial real estate:
Office, retail, and industrial	20,671		150		24,415		15
Multi-family	1,321		—		1,071		—
Construction	5,537		—		5,987		—
Other commercial real estate	6,701		137		14,102		24
Total commercial real estate	34,230		287		45,575		39
Total impaired loans	$	49,452	$	491	$	68,437	$	237


⁽¹⁾	Recorded using the cash basis of accounting.

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. The following tables present credit quality indicators by class for corporate and consumer loans, excluding covered loans, as of September 30, 2014 and December 31, 2013.

Corporate Credit Quality Indicators by Class, Excluding Covered Loans

(Dollar amounts in thousands)



	Pass		Special Mention ^{(1) (4)}		Substandard ^{(2) (4)}		Non-accrual ⁽³⁾		Total

September 30, 2014
Commercial and industrial	$	2,094,453	$	66,429	$	27,588	$	19,696	$	2,208,166
Agricultural	346,851		299		—		361		347,511
Commercial real estate:
Office, retail, and industrial	1,343,833		28,586		33,140		16,963		1,422,522
Multi-family	545,419		5,916		6,818		1,536		559,689
Construction	162,527		7,229		16,607		7,082		193,445
Other commercial real estate	816,679		22,824		24,410		7,912		871,825
Total commercial real estate	2,868,458		64,555		80,975		33,493		3,047,481
Total corporate loans	$	5,309,762	$	131,283	$	108,563	$	53,550	$	5,603,158
December 31, 2013
Commercial and industrial	$	1,780,194	$	23,806	$	14,871	$	11,767	$	1,830,638
Agricultural	320,839		344		—		519		321,702
Commercial real estate:
Office, retail, and industrial	1,284,394		28,677		23,538		17,076		1,353,685
Multi-family	326,901		3,214		910		1,848		332,873
Construction	153,949		8,309		17,642		6,297		186,197
Other commercial real estate	761,465		14,877		22,576		8,153		807,071
Total commercial real estate	2,526,709		55,077		64,666		33,374		2,679,826
Total corporate loans	$	4,627,742	$	79,227	$	79,537	$	45,660	$	4,832,166


⁽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 in the future.


⁽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 or result in a loss if the deficiencies are not corrected.


⁽⁴⁾	Total special mention and substandard loans includes accruing TDRs of $3.5 million as of September 30, 2014 and $2.8 million as of December 31, 2013.

Consumer Credit Quality Indicators by Class, Excluding Covered Loans

(Dollar amounts in thousands)



	Performing		Non-accrual		Total
September 30, 2014
Home equity	$	511,612	$	5,834	$	517,446
1-4 family mortgages	234,937		3,235		238,172
Installment	67,519		1,909		69,428
Total consumer loans	$	814,068	$	10,978	$	825,046
December 31, 2013
Home equity	$	420,156	$	6,864	$	427,020
1-4 family mortgages	270,794		5,198		275,992
Installment	42,751		2,076		44,827
Total consumer loans	$	733,701	$	14,138	$	747,839

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. The table below presents TDRs by class as of September 30, 2014 and December 31, 2013. 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 September 30, 2014						As of December 31, 2013
	Accruing		Non-accrual ⁽¹⁾		Total		Accruing		Non-accrual ⁽¹⁾		Total
Commercial and industrial	$	2,163	$	15,806	$	17,969	$	6,538	$	2,121	$	8,659
Agricultural	—		—		—		—		—		—
Commercial real estate:
Office, retail, and industrial	592		—		592		10,271		—		10,271
Multi-family	616		237		853		1,038		253		1,291
Construction	—		—		—		—		—		—
Other commercial real estate	441		186		627		4,326		291		4,617
Total commercial real estate	1,649		423		2,072		15,635		544		16,179
Total corporate loans	3,812		16,229		20,041		22,173		2,665		24,838
Home equity	752		513		1,265		787		512		1,299
1-4 family mortgages	885		235		1,120		810		906		1,716
Installment	—		—		—		—		—		—
Total consumer loans	1,637		748		2,385		1,597		1,418		3,015
Total loans	$	5,449	$	16,977	$	22,426	$	23,770	$	4,083	$	27,853


⁽¹⁾	These TDRs 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. There were $2.6 million in specific reserves related to TDRs as of September 30, 2014 and there were $2.0 million in specific reserves related to TDRs as of December 31, 2013.

The following table presents a summary of loans that were restructured during the quarters and nine months ended September 30, 2014 and 2013.

Loans 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 September 30, 2014
Commercial and industrial	5	$	23,015	$	—	$	—	$	—	$	23,015
Office, retail, and industrial	1	417		—		—		—		417
Total TDRs restructured during the period	6	$	23,432	$	—	$	—	$	—	$	23,432
Quarter ended September 30, 2013
Commercial and industrial	3	$	369	$	—	$	—	$	—	$	369
Office, retail, and industrial	2	1,674		—		—		—		1,674
Other commercial real estate	1	10		—		—		—		10
Home equity	8	822		—		—		—		822
Total TDRs restructured during the period	14	$	2,875	$	—	$	—	$	—	$	2,875
Nine months ended September 30, 2014
Commercial and industrial	5	$	23,015	$	—	$	—	$	—	$	23,015
Office, retail, and industrial	1	417		—		—		—		417
Home equity	1	75		—		—		—		75
Total TDRs restructured during the period	7	$	23,507	$	—	$	—	$	—	$	23,507
Nine months ended September 30, 2013
Commercial and industrial	7	$	14,439	$	—	$	2	$	—	$	14,441
Office, retail, and industrial	6	2,275		30		—		—		2,305
Multi-family	5	1,275		—		57		—		1,332
Construction	2	508		—		—		—		508
Other commercial real estate	5	526		—		—		—		526
Home equity	9	947		—		—		—		947
1-4 family mortgages	1	132		—		4		—		136
Total TDRs restructured during the period	35	$	20,102	$	30	$	63	$	—	$	20,195

Accruing TDRs that 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 and nine months ended September 30, 2014 and 2013 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 September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment		Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
Commercial and industrial	—	$	—	—	$	—	2	$	125	1	$	350
Other commercial real estate	—	—		—	—		—	—		3	354
Home equity	1	77		—	—		1	77		—	—
Total	1	$	77	—	$	—	3	$	202	4	$	704

A rollforward of the carrying value of TDRs for the quarters and nine months ended September 30, 2014 and 2013 is presented in the following table.

TDR Rollforward

(Dollar amounts in thousands)



	Quarters Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Accruing
Beginning balance	$	5,697		$	8,287		$	23,770		$	6,867
Additions	417			1,128			492			4,606
Net payments received	(109		)	(248		)	(1,219		)	(415		)
Returned to performing status	—			—			(18,821		)	(5,037		)
Net transfers from non-accrual	(556		)	15,162			1,227			18,308
Ending balance	5,449			24,329			5,449			24,329
Non-accrual
Beginning balance	1,700			18,450			4,083			10,924
Additions	23,015			1,747			23,015			15,589
Net payments received	(135		)	(201		)	(292		)	(735		)
Charge-offs	(8,159		)	(62		)	(8,345		)	(1,850		)
Transfers to OREO	—			(35		)	(257		)	(77		)
Loans sold	—			—			—			(806		)
Net transfers to accruing	556			(15,162		)	(1,227		)	(18,308		)
Ending balance	16,977			4,737			16,977			4,737
Total TDRs	$	22,426		$	29,066		$	22,426		$	29,066

For TDRs to be removed from TDR status in the calendar year after the restructuring, 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 terms. TDRs that were returned to performing status totaled $18.8 million and $5.0 million for the nine months ended September 30, 2014 and 2013, respectively. Loans that were not restructured at market rates and terms, that are not in compliance with the modified terms, or for which there is a concern about the future ability of the borrower to meet its obligations under the modified terms, continue to be separately reported as restructured until paid in full or charged-off.

There were no material commitments to lend additional funds to borrowers with TDRs as of September 30, 2014 and December 31, 2013.