Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2012

The composition of loans, net of unearned income of $67.7 million and $60.2 million at June 30, 2012 and December 31, 2011, respectively, is presented in the following table:


(Dollars in thousands)	June 30, 2012		December 31, 2011
Commercial loans:
Software	$	2,752,500	$	2,492,849
Hardware		1,086,973		952,303
Venture capital/private equity		1,403,801		1,117,419
Life science		917,723		863,737
Premium wine (1)		120,043		130,245
Other		371,195		342,147

Commercial loans		6,652,235		5,898,700

Real estate secured loans:
Premium wine (1)		373,658		345,988
Consumer loans (2)		554,266		534,001

Real estate secured loans		927,924		879,989

Construction loans		33,063		30,256
Consumer loans		176,530		161,137

Total loans, net of unearned income (3)	$	7,789,752	$	6,970,082

(1)	Included in our premium wine portfolio are gross construction loans of $147.9 million and $110.8 million at June 30, 2012 and December 31, 2011, respectively.

(2)	Consumer loans secured by real estate at June 30, 2012 and December 31, 2011 were comprised of the following:


(Dollars in thousands)	June 30, 2012		December 31, 2011
Loans for personal residence	$	369,780	$	350,359
Loans to eligible employees		103,824		99,704
Home equity lines of credit		80,662		83,938

Consumer loans secured by real estate	$	554,266	$	534,001

(3)	Included within our total loan portfolio are credit card loans of $58.3 million and $49.7 million at June 30, 2012 and December 31, 2011, respectively.

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 and class of financing receivable as of June 30, 2012 and December 31, 2011, is as follows:


(Dollars in thousands)	June 30, 2012		December 31, 2011
Commercial loans:
Software	$	2,752,500	$	2,492,849
Hardware		1,086,973		952,303
Venture capital/private equity		1,403,801		1,117,419
Life science		917,723		863,737
Premium wine		493,701		476,233
Other		404,258		372,403

Total commercial loans		7,058,956		6,274,944

Consumer loans:
Real estate secured loans		554,266		534,001
Other consumer loans		176,530		161,137

Total consumer loans		730,796		695,138

Total loans, net of unearned income	$	7,789,752	$	6,970,082

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 June 30, 2012 and December 31, 2011:


(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

June 30, 2012:
Commercial loans:
Software	$	3,541	$	66	$	25	$	3,632	$	2,773,398	$	25
Hardware		32		-		-		32		1,083,630		-
Venture capital/private equity		75,349		-		-		75,349		1,342,366		-
Life science		35		124		-		159		926,735		-
Premium wine		-		-		-		-		493,107		-
Other		73		-		-		73		405,037		-

Total commercial loans		79,030		190		25		79,245		7,024,273		25

Consumer loans:
Real estate secured loans		-		-		-		-		551,539		-
Other consumer loans		21		5,896		-		5,917		169,423		-

Total consumer loans		21		5,896		-		5,917		720,962		-

Total gross loans excluding impaired loans		79,051		6,086		25		85,162		7,745,235		25

Impaired loans		16		1,411		3,724		5,151		21,920		-

Total gross loans	$	79,067	$	7,497	$	3,749	$	90,313	$	7,767,155	$	25


December 31, 2011:
Commercial loans:
Software	$	415	$	1,006	$	-	$	1,421	$	2,515,327	$	-
Hardware		1,951		45		-		1,996		954,690		-
Venture capital/private equity		45		-		-		45		1,128,475		-
Life science		398		78		-		476		871,626		-
Premium wine		1		174		-		175		475,406		-
Other		15		-		-		15		370,539		-

Total commercial loans		2,825		1,303		-		4,128		6,316,063		-

Consumer loans:
Real estate secured loans		-		-		-		-		515,534		-
Other consumer loans		590		-		-		590		157,389		-

Total consumer loans		590		-		-		590		672,923		-

Total gross loans excluding impaired loans		3,415		1,303		-		4,718		6,988,986		-

Impaired loans		1,350		1,794		6,613		9,757		26,860		-

Total gross loans	$	4,765	$	3,097	$	6,613	$	14,475	$	7,015,846	$	-

Impaired Loans and 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 June 30, 2012 and December 31, 2011:


(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

June 30, 2012:
Commercial loans:
Software	$	2,558	$	418	$	2,976	$	4,749
Hardware		13,074		1,099		14,173		17,616
Life Science		-		-		-		-
Premium wine		-		3,123		3,123		3,325
Other		1,905		1,051		2,956		6,824

Total commercial loans		17,537		5,691		23,228		32,514

Consumer loans:
Real estate secured loans		122		2,432		2,554		7,460
Other consumer loans		1,289		-		1,289		1,406

Total consumer loans		1,411		2,432		3,843		8,866

Total	$	18,948	$	8,123	$	27,071	$	41,380


December 31, 2011:
Commercial loans:
Software	$	1,142	$	-	$	1,142	$	1,540
Hardware		4,754		429		5,183		8,843
Life science		-		311		311		523
Premium wine		-		3,212		3,212		3,341
Other		4,303		1,050		5,353		9,104

Total commercial loans		10,199		5,002		15,201		23,351

Consumer loans:
Real estate secured loans		-		18,283		18,283		22,410
Other consumer loans		3,133		-		3,133		3,197

Total consumer loans		3,133		18,283		21,416		25,607

Total	$	13,332	$	23,285	$	36,617	$	48,958

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 six months ended June 30, 2012 and 2011:


	Three months ended June 30,				Six months ended June 30,

(Dollars in thousands)	2012		2011		2012		2011
Average impaired loans:
Commercial loans:
Software	$	1,896	$	2,620	$	1,716	$	2,697
Hardware		21,468		6,662		16,865		5,594
Life science		88		1,170		117		1,834
Premium wine		3,527		1,396		3,455		2,540
Other		3,506		3,588		4,075		2,878

Total commercial loans		30,485		15,436		26,228		15,543

Consumer loans:
Real estate secured loans		2,645		19,557		7,746		19,841
Other consumer loans		2,170		-		2,595		-

Total consumer loans		4,815		19,557		10,341		19,841

Total average impaired loans	$	35,300	$	34,993	$	36,569	$	35,384

Activity in 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 six months ended June 30, 2012 and 2011, broken out by portfolio segment:


Three months ended June 30, 2012 (dollars in thousands)	Beginning Balance March 31, 2012		Charge-offs		Recoveries		Provision for (Reduction of)		Ending Balance June 30, 2012
Commercial loans:
Software	$	35,425	$	(2,118)	$	1,329	$	3,345	$	37,981
Hardware		30,348		(10,413)		329		2,368		22,632
Venture capital/private equity		7,214		-		-		2,438		9,652
Life science		10,292		(122)		92		1,398		11,660
Premium wine		3,738		(584)		187		55		3,396
Other		4,802		(286)		1,107		(681)		4,942

Total commercial loans		91,819		(13,523)		3,044		8,923		90,263

Consumer loans		9,103		(607)		331		(924)		7,903

Total allowance for loan losses	$	100,922	$	(14,130)	$	3,375	$	7,999	$	98,166


Six months ended June 30, 2012 (dollars in thousands)	Beginning Balance December 31, 2011		Charge-offs		Recoveries		Provision for (Reduction of)		Ending Balance June 30, 2012
Commercial loans:
Software	$	38,263	$	(2,977)	$	4,088	$	(1,393)	$	37,981
Hardware		16,810		(14,261)		434		19,649		22,632
Venture capital/private equity		7,319		-		-		2,333		9,652
Life science		10,243		(235)		313		1,339		11,660
Premium wine		3,914		(584)		265		(199)		3,396
Other		5,817		(2,456)		1,151		430		4,942

Total commercial loans		82,366		(20,513)		6,251		22,159		90,263

Consumer loans		7,581		(607)		560		369		7,903

Total allowance for loan losses	$	89,947	$	(21,120)	$	6,811	$	22,528	$	98,166


Three months ended June 30, 2011 (dollars in thousands)	Beginning Balance March 31, 2011		Charge-offs		Recoveries		Provision for (Reduction of)		Ending Balance June 30, 2011
Commercial loans:
Software	$	30,479	$	(518)	$	2,639	$	(727)	$	31,873
Hardware		15,840		-		32		170		16,042
Venture capital/private equity		7,432		-		-		875		8,307
Life science		8,097		(471)		505		(906)		7,225
Premium wine		4,504		(449)		590		(636)		4,009
Other		6,433		(2,855)		337		1,954		5,869

Total commercial loans		72,785		(4,293)		4,103		730		73,325

Consumer loans		9,266		-		160		(596)		8,830

Total allowance for loan losses	$	82,051	$	(4,293)	$	4,263	$	134	$	82,155


Six months ended June 30, 2011 (dollars in thousands)	Beginning Balance December 31, 2010		Charge-offs		Recoveries		Provision for (Reduction of)		Ending Balance June 30, 2011
Commercial loans:
Software	$	29,288	$	(1,622)	$	7,920	$	(3,713)	$	31,873
Hardware		14,688		(15)		312		1,057		16,042
Venture capital/private equity		8,241		-		-		66		8,307
Life science		9,077		(3,662)		1,128		682		7,225
Premium wine		5,492		(449)		730		(1,764)		4,009
Other		5,318		(2,867)		407		3,011		5,869

Total commercial loans		72,104		(8,615)		10,497		(661)		73,325

Consumer loans		10,523		-		559		(2,252)		8,830

Total allowance for loan losses	$	82,627	$	(8,615)	$	11,056	$	(2,913)	$	82,155

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 June 30, 2012 and December 31, 2011, broken out by portfolio segment:


	June 30, 2012				December 31, 2011
(Dollars in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Commercial loans:
Software	$	845	$	37,136	$	526	$	37,737
Hardware		4,225		18,407		1,261		15,549
Venture capital/private equity		-		9,652		-		7,319
Life science		-		11,660		-		10,243
Premium wine		-		3,396		-		3,914
Other		47		4,895		1,180		4,637

Total commercial loans		5,117		85,146		2,967		79,399

Consumer loans		548		7,355		740		6,841

Total allowance for loan losses	$	5,665	$	92,501	$	3,707	$	86,240

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 June 30, 2012 and December 31, 2011:


(Dollars in thousands)	Pass		Performing (Criticized)		Impaired		Total

June 30, 2012:
Commercial loans:
Software	$	2,573,437	$	203,593	$	2,976	$	2,780,006
Hardware		951,026		132,636		14,173		1,097,835
Venture capital/private equity		1,417,715		-		-		1,417,715
Life science		820,392		106,502		-		926,894
Premium wine		481,162		11,945		3,123		496,230
Other		376,158		28,952		2,956		408,066

Total commercial loans		6,619,890		483,628		23,228		7,126,746

Consumer loans:
Real estate secured loans		530,017		21,522		2,554		554,093
Other consumer loans		163,390		11,950		1,289		176,629

Total consumer loans		693,407		33,472		3,843		730,722

Total gross loans	$	7,313,297	$	517,100	$	27,071	$	7,857,468


December 31, 2011:
Commercial loans:
Software	$	2,290,497	$	226,251	$	1,142	$	2,517,890
Hardware		839,230		117,456		5,183		961,869
Venture capital/private equity		1,120,373		8,147		-		1,128,520
Life science		748,129		123,973		311		872,413
Premium wine		434,309		41,272		3,212		478,793
Other		353,434		17,120		5,353		375,907

Total commercial loans		5,785,972		534,219		15,201		6,335,392

Consumer loans:
Real estate secured loans		497,060		18,474		18,283		533,817
Other consumer loans		151,101		6,878		3,133		161,112

Total consumer loans		648,161		25,352		21,416		694,929

Total gross loans	$	6,434,133	$	559,571	$	36,617	$	7,030,321

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 at June 30, 2012 and December 31, 2011:


(Dollars in thousands)	June 30, 2012		December 31, 2011
Loans modified in TDRs:
Commercial loans:
Software	$	769	$	1,142
Hardware		15,272		5,183
Premium wine		2,135		1,949
Other		3,491		4,934

Total commercial loans		21,667		13,208

Consumer loans:
Real estate secured loans		2,522		17,934
Other consumer loans		1,289		3,133

Total consumer loans		3,811		21,067

Total	$	25,478	$	34,275

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 six months ended June 30, 2012 and 2011:


	Three months ended June 30,				Six months ended June 30,
(Dollars in thousands)	2012		2011		2012		2011
Loans modified in TDRs during the period:
Commercial loans:
Software	$	-	$	605	$	100	$	605
Hardware		12,747		3,321		13,198		3,321
Premium wine		-		-		275		-
Other		535		-		2,440		-

Total commercial loans		13,282		3,926		16,013		3,926

Consumer loans:
Real estate secured loans		289		-		411		-

Total consumer loans		289		-		411		-

Total loans modified in TDR’s during the period (1)	$	13,571	$	3,926	$	16,424	$	3,926

(1)	During the three and six months ended June 30, 2012, we had partial charge-offs of $10.0 million and $10.9 million, respectively, on loans classified as TDRs. There were no partial charge-offs on loans classified as TDRs during the three and six months ended June 30, 2011.

Recorded Investment in Loans Modified in TDRs within Previous 12 months 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 six months ended June 30, 2012 and 2011, broken out by portfolio segment and class of financing receivable:


	Three months ended June 30,				Six months ended June 30,
(Dollars in thousands)	2012		2011		2012		2011
TDRs modified within the previous 12 months that defaulted during the period:
Commercial loans:
Software	$	-	$	-	$	100	$	-
Hardware		452		3,321		452		3,321
Premium wine		1,859		-		1,859		-

Total commercial loans		2,311		3,321		2,411		3,321

Consumer loans:
Other consumer loans		1,289		-		1,289		-

Total consumer loans		1,289		-		1,289		-

Total TDRs modified within the previous 12 months that defaulted in the period	$	3,600	$	3,321	$	3,700	$	3,321