Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2011

Composition of Loans, Net of Unearned Income

The composition of loans, net of unearned income of $53.6 million and $45.5 million at September 30, 2011 and December 31, 2010, respectively, is presented in the following table:

(Dollars in thousands)	September 30, 2011		December 31, 2010
Commercial loans:
Software	$	2,272,443	$	1,820,385
Hardware		577,443		561,610
Clean technology		270,582		159,502
Venture capital/private equity		1,079,215		1,036,077
Life science		686,722		568,739
Premium wine (1)		130,983		144,972
Other		251,412		303,492
Commercial loans (2)		5,268,800		4,594,777
Real estate secured loans:
Premium wine (1)		344,714		312,255
Consumer loans (3)		497,480		361,704
Real estate secured loans		842,194		673,959
Construction loans		35,529		60,178
Consumer loans		182,065		192,823
Total loans, net of unearned income	$	6,328,588	$	5,521,737

(1) Included in our premium wine portfolio are gross construction loans of $113.7 million and $119.0 million at September 30, 2011 and December 31, 2010, respectively.

(2) Included within our commercial loans portfolio are business credit card loans to commercial clients. At September 30, 2011 and December 31, 2010, our business credit card loans portfolio totaled $47.4 million and $32.5 million, respectively.

(3) Consumer loans secured by real estate at September 30, 2011 and December 31, 2010 were comprised of the following:

(Dollars in thousands)	September 30, 2011		December 31, 2010
Loans for personal residence	$	326,111	$	189,039
Loans to eligible employees		93,966		88,510
Home equity lines of credit		77,403		84,155
Consumer loans secured by real estate	$	497,480	$	361,704

Activity in the Allowance for Loan Losses

The activity in the allowance for loan losses for the three and nine months ended September 30, 2011 and 2010 was as follows:

	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2011			2010			2011			2010
Allowance for loan losses, beginning balance	$	82,155		$	71,789		$	82,627		$	72,450
Provision for (reduction of) loan losses		769			10,971			(2,144	)		29,124
Gross loan charge-offs		(8,248	)		(12,289	)		(16,863	)		(40,602	)
Loan recoveries		10,570			3,898			21,626			13,397
Allowance for loan losses, ending balance	$	85,246		$	74,369		$	85,246		$	74,369

Composition of Loans, Net of Unearned Income, Broken out by Portfolio Segment and Class of Financing Receivable

The composition of loans, net of unearned income, broken out by portfolio segment (which we have identified as our commercial and consumer loan categories) and class of financing receivable (which we have identified as our client industry segments of software, hardware, etc.) as of September 30, 2011 and December 31, 2010, is as follows:

(Dollars in thousands)	September 30, 2011		December 31, 2010
Commercial loans:
Software	$	2,299,022	$	1,820,680
Hardware		735,044		641,052
Venture capital/private equity		1,079,255		1,036,201
Life science		708,798		575,944
Premium wine		475,697		457,227
Other		351,227		436,106
Total commercial loans		5,649,043		4,967,210
Consumer loans:
Real estate secured loans		497,480		361,704
Other consumer loans		182,065		192,823
Total consumer loans		679,545		554,527
Total loans, net of unearned income	$	6,328,588	$	5,521,737

Aging of Gross Loans, Broken out by Portfolio Segment and Class of Financing Receivable

The following table summarizes the aging of our gross loans, broken out by portfolio segment and class of financing receivable as of September 30, 2011 and December 31, 2010:

(Dollars in thousands)	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Loans Past Due 90 Days or More Still Accruing Interest
September 30, 2011:
Commercial loans:
Software	$	496	$	38	$	—	$	534	$	2,319,994	$	—
Hardware		7,793		5		—		7,798		729,541		—
Venture capital/private equity		500		—		—		500		1,090,052		—
Life science		125		213		—		338		715,246		—
Premium wine		21		—		—		21		472,123		—
Other		—		48		—		48		348,262		—
Total commercial loans		8,935		304		—		9,239		5,675,218		—
Consumer loans:
Real estate secured loans		1,745		—		—		1,745		476,840		—
Other consumer loans		9,768		—		—		9,768		168,919		—
Total consumer loans		11,513		—		—		11,513		645,759		—
Total gross loans excluding impaired loans		20,448		304		—		20,752		6,320,977		—
Impaired loans		—		—		2,783		2,783		37,723		—
Total gross loans	$	20,448	$	304	$	2,783	$	23,535	$	6,358,700	$	—
December 31, 2010:
Commercial loans:
Software	$	674	$	239	$	17	$	930	$	1,834,897	$	17
Hardware		89		819		27		935		642,786		27
Venture capital/private equity		—		—		—		—		1,046,696		—
Life science		157		—		—		157		578,208		—
Premium wine		—		—		—		—		451,006		—
Other		—		—		—		—		438,345		—
Total commercial loans		920		1,058		44		2,022		4,991,938		44
Consumer loans:
Real estate secured loans		—		—		—		—		341,048		—
Other consumer loans		—		—		—		—		192,771		—
Total consumer loans		—		—		—		—		533,819		—
Total gross loans excluding impaired loans		920		1,058		44		2,022		5,525,757		44
Impaired loans		323		913		7,805		9,041		30,385		—
Total gross loans	$	1,243	$	1,971	$	7,849	$	11,063	$	5,556,142	$	44

Impaired Loans and the Allowance for Loan Losses, Broken out by Portfolio Segment and Class of Financing Receivable

The following table summarizes our impaired loans as they relate to our allowance for loan losses, broken out by portfolio segment and class of financing receivable as of September 30, 2011 and December 31, 2010:

(Dollars in thousands)	Impaired loans for which there is a related allowance for loan losses		Impaired loans for which there is no related allowance for loan losses		Total carrying value of impaired loans		Total unpaid principal of impaired loans
September 30, 2011:
Commercial loans:
Software	$	2,322	$	237	$	2,559	$	3,585
Hardware		5,398		—		5,398		8,579
Life science		633		—		633		825
Premium wine		1,993		1,264		3,257		3,350
Other		5,435		1,158		6,593		9,828
Total commercial loans		15,781		2,659		18,440		26,167
Consumer loans:
Real estate secured loans		18,382		362		18,744		22,535
Other consumer loans		3,322		—		3,322		3,322
Total consumer loans		21,704		362		22,066		25,857
Total	$	37,485	$	3,021	$	40,506	$	52,024
December 31, 2010:
Commercial loans:
Software	$	2,958	$	334	$	3,292	$	5,237
Hardware		3,517		307		3,824		3,931
Life science		2,050		1,362		3,412		4,433
Premium wine		2,995		3,167		6,162		7,129
Other		1,158		1,019		2,177		2,790
Total commercial loans		12,678		6,189		18,867		23,520
Consumer loans:
Real estate secured loans		20,559		—		20,559		23,430
Total consumer loans		20,559		—		20,559		23,430
Total	$	33,237	$	6,189	$	39,426	$	46,950

Average Impaired Loans, Broken out by Portfolio Segment and Class of Financing Receivable

The following table summarizes our average impaired loans, broken out by portfolio segment and class of financing receivable during the three and nine months ended September 30, 2011 and 2010, respectively:

	Three months ended September 30,				Nine months ended September 30,
(Dollars in thousands)	2011		2010		2011		2010
Average impaired loans:
Commercial loans:
Software	$	2,562	$	5,583	$	2,652	$	6,521
Hardware		7,071		10,801		6,086		11,592
Life science		827		4,745		1,498		6,648
Premium wine		1,954		1,190		2,345		485
Other		7,604		2,212		4,453		2,312
Total commercial loans		20,018		24,531		17,034		27,558
Consumer loans:
Real estate secured loans		18,746		20,978		19,476		21,219
Other consumer loans		1,107		14		369		157
Total consumer loans		19,853		20,992		19,845		21,376
Total average impaired loans	$	39,871	$	45,523	$	36,879	$	48,934

Activity in the Allowance for Loan Losses Broken out by Portfolio Segment

The following tables summarize the activity relating to our allowance for loan losses for the three and nine months ended September 30, 2011, broken out by portfolio segment:

Three months ended September 30, 2011 (dollars in thousands)	Beginning Balance June 30, 2011		Charge-offs			Recoveries		Provision for (Reduction of)			Ending Balance September 30, 2011
Commercial loans:
Software	$	31,873	$	(3,125	)	$	2,718	$	4,899		$	36,365
Hardware		16,042		(4,813	)		44		2,304			13,577
Venture capital/private equity		8,307		—			—		(497	)		7,810
Life science		7,225		(310	)		3,359		(2,110	)		8,164
Premium wine		4,009		—			360		(354	)		4,015
Other		5,869		—			64		(359	)		5,574
Total commercial loans		73,325		(8,248	)		6,545		3,883			75,505
Consumer loans		8,830		—			4,025		(3,114	)		9,741
Total allowance for loan losses	$	82,155	$	(8,248	)	$	10,570	$	769		$	85,246
Nine months ended September 30, 2011 (dollars in thousands)	Beginning Balance December 31, 2010		Charge-offs			Recoveries		(Reduction of) Provision for			Ending Balance September 30, 2011
Commercial loans:
Software	$	29,288	$	(4,747	)	$	10,638	$	1,186		$	36,365
Hardware		14,688		(4,828	)		356		3,361			13,577
Venture capital/private equity		8,241		—			—		(431	)		7,810
Life science		9,077		(3,972	)		4,487		(1,428	)		8,164
Premium wine		5,492		(449	)		1,090		(2,118	)		4,015
Other		5,318		(2,867	)		471		2,652			5,574
Total commercial loans		72,104		(16,863	)		17,042		3,222			75,505
Consumer loans		10,523		—			4,584		(5,366	)		9,741
Total allowance for loan losses	$	82,627	$	(16,863	)	$	21,626	$	(2,144	)	$	85,246

Allowance for Loan Losses Individually and Collectively Evaluated for Impairment

The following table summarizes the allowance for loan losses individually and collectively evaluated for impairment as of September 30, 2011 and December 31, 2010, broken out by portfolio segment:

	September 30, 2011				December 31, 2010
(Dollars in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Commercial loans:
Software	$	595	$	35,770	$	986	$	28,302
Hardware		1,750		11,827		1,348		13,340
Venture capital/private equity		—		7,810		—		8,241
Life science		52		8,112		346		8,731
Premium wine		3		4,012		438		5,054
Other		1,011		4,563		122		5,196
Total commercial loans		3,411		72,094		3,240		68,864
Consumer loans		2,568		7,173		3,696		6,827
Total allowance for loan losses	$	5,979	$	79,267	$	6,936	$	75,691

Credit Quality Indicators, Broken out by Portfolio Segment and Class of Financing Receivables

The following table summarizes the credit quality indicators, broken out by portfolio segment and class of financing receivables as of September 30, 2011 and December 31, 2010:

(Dollars in thousands)	Pass		Performing (Criticized)		Impaired		Total
September 30, 2011:
Commercial loans:
Software	$	2,139,282	$	181,246	$	2,559	$	2,323,087
Hardware		677,590		59,749		5,398		742,737
Venture capital/private equity		1,084,298		6,254		—		1,090,552
Life science		609,348		106,236		633		716,217
Premium wine		432,698		39,446		3,257		475,401
Other		335,031		13,279		6,593		354,903
Total commercial loans		5,278,247		406,210		18,440		5,702,897
Consumer loans:
Real estate secured loans		471,426		7,159		18,744		497,329
Other consumer loans		170,172		8,515		3,322		182,009
Total consumer loans		641,598		15,674		22,066		679,338
Total gross loans	$	5,919,845	$	421,884	$	40,506	$	6,382,235
December 31, 2010:
Commercial loans:
Software	$	1,717,309	$	118,518	$	3,292	$	1,839,119
Hardware		575,401		68,320		3,824		647,545
Venture capital/private equity		1,031,373		15,323		—		1,046,696
Life science		520,596		57,769		3,412		581,777
Premium wine		400,519		50,487		6,162		457,168
Other		415,381		22,964		2,177		440,522
Total commercial loans		4,660,579		333,381		18,867		5,012,827
Consumer loans:
Real estate secured loans		337,087		3,961		20,559		361,607
Other consumer loans		181,561		11,210		—		192,771
Total consumer loans		518,648		15,171		20,559		554,378
Total gross loans	$	5,179,227	$	348,552	$	39,426	$	5,567,205

Summary of Loans Modified in Troubled Debt Restructurings ("TDRs") by Portfolio Segment and Class of Financing Receivables

The following table summarizes our loans modified in TDRs, broken out by portfolio segment and class of financing receivables as of September 30, 2011:

(Dollars in thousands)	September 30, 2011
Loans modified in TDRs:
Commercial loans:
Software (1)	$	2,322
Hardware		3,880
Premium wine		1,993
Other		4,384
Total commercial loans		12,579
Consumer loans:
Real estate secured loans		18,382
Other consumer loans		3,322
Total consumer loans		21,704
Total	$	34,283

Recorded Investment in Loans Modified in TDRs

The following table summarizes the recorded investment in loans modified in TDRs, broken out by portfolio segment and class of financing receivable, for modifications made during the three and nine months ended September 30, 2011.

(Dollars in thousands)	Three months  ended September 30, 2011		Nine months  ended September 30, 2011
Loans modified in TDRs during the period:
Commercial loans:
Software (1)	$	381	$	941
Hardware		801		2,674
Premium wine		—		1,993
Other		2,247		2,247
Total commercial loans		3,429		7,855
Consumer loans:
Other consumer loans		—		3,322
Total consumer loans		—		3,322
Total loans modified in TDR’s during the period	$	3,429	$	11,177

(1) During the three and nine months ended September 30, 2011, we had partial charge-offs of $0.6 million on loans classified as TDRs.

Recorded Investment in Loans Modified in TDRs within the Previous 12 months that Subsequently Defaulted

The following table summarizes the recorded investment in loans modified in TDRs within the previous 12 months that subsequently defaulted during the three and nine months ended September 30, 2011, broken out by portfolio segment and class of financing receivable:

(Dollars in thousands)	Three months ended September 30, 2011		Nine months ended September 30, 2011
TDRs modified within the previous 12 months that defaulted during the period:
Commercial loans:
Software	$	64	$	64
Hardware		1,206		3,079
Premium wine		1,993		1,993
Total commercial loans		3,263		5,136
Consumer loans:
Other consumer loans		3,322		3,322
Total consumer loans		3,322		3,322
Total TDRs modified within the previous 12 months that defaulted in the period	$	6,585	$	8,458