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LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Tables)
 12 Months Ended
Dec. 31, 2012
Loans, Allowance for Loan Losses and Credit Quality [Abstract]  
Schedule of Allowance for Loan Losses
The following table summarizes changes in the allowance for loan losses by loan category and bifurcates the amount of allowance allocated to each loan category based on collective impairment analysis and loans evaluated individually for impairment:

 
December 31, 2012
 

Commercial
and
Industrial
 
Commercial
Real Estate
 
Commercial
Construction
 
Small
Business
 
Residential
Real
Estate
 
Home
Equity
 
Consumer
Other
 
Total
 
 
(Dollars in thousands)
 
Allowance for loan losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
11,682

 
$
23,514

 
$
2,076

 
$
1,896

 
$
3,113

 
$
4,597

 
$
1,382

 
$
48,260

  
Charge-offs
(6,191
)
 
(4,348
)
 
—

 
(616
)
 
(1,094
)
 
(3,178
)
 
(1,165
)
 
(16,592
)
  
Recoveries
963

 
188

 
—

 
134

 
151

 
93

 
581

 
2,110

  
Provision
7,007

 
3,244

 
735

 
110

 
760

 
6,191

 
9

 
18,056

  
Ending balance
$
13,461

 
$
22,598

 
$
2,811

 
$
1,524

 
$
2,930

 
$
7,703

 
$
807

 
$
51,834

  
Ending balance: individually evaluated for impairment
$
1,084

 
$
516

 
$
—

 
$
353

 
$
1,302

 
$
35

 
$
130

 
$
3,420

  
Ending balance: collectively evaluated for impairment
$
12,377

 
$
22,082

 
$
2,811

 
$
1,171

 
$
1,628

 
$
7,668

 
$
677

 
$
48,414

  
Financing receivables
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: total loans by group
$
687,511

 
$
2,122,153

 
$
188,768

 
$
78,594

 
$
612,881

 
$
802,149

 
$
26,955

 
$
4,519,011

(1)
Ending balance: individually evaluated for impairment
$
8,575

 
$
33,868

 
$
—

 
$
2,279

 
$
15,373

 
$
4,435

 
$
2,129

 
$
66,659

  
Ending balance: collectively evaluated for impairment
$
678,936

 
$
2,088,285

 
$
188,768

 
$
76,315

 
$
597,508

 
$
797,714

 
$
24,826

 
$
4,452,352

  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2011
 

Commercial
and
Industrial
 
Commercial
Real Estate
 
Commercial
Construction
 
Small
Business
 
Residential
Real
Estate
 
Home
Equity
 
Consumer
Other
 
Total
 
Allowance for loan losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
10,423

 
$
21,939

 
$
2,145

 
$
3,740

 
$
2,915

 
$
3,369

 
$
1,724

 
$
46,255

  
Charge-offs
(2,888
)
 
(2,631
)
 
(769
)
 
(1,190
)
 
(559
)
 
(1,626
)
 
(1,678
)
 
(11,341
)
  
Recoveries
420

 
97

 
500

 
160

 
—

 
52

 
635

 
1,864

  
Provision
$
3,727

 
$
4,109

 
$
200

 
$
(814
)
 
$
757

 
$
2,802

 
$
701

 
$
11,482

  
Ending balance
$
11,682

 
$
23,514

 
$
2,076

 
$
1,896

 
$
3,113

 
$
4,597

 
$
1,382

 
$
48,260

  
Ending balance: individually evaluated for impairment
$
562

 
$
457

 
$
—

 
$
148

 
$
1,245

 
$
31

 
$
239

 
$
2,682

  
Ending balance: collectively evaluated for impairment
$
11,120

 
$
23,057

 
$
2,076

 
$
1,748

 
$
1,868

 
$
4,566

 
$
1,143

 
$
45,578

  
Financing receivables
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: total loans by group
$
575,716

 
$
1,847,654

 
$
128,904

 
$
78,509

 
$
426,201

 
$
696,063

 
$
41,343

 
$
3,794,390

(1)
Ending balance: individually evaluated for impairment
$
5,608

 
$
37,476

 
$
843

 
$
2,326

 
$
12,984

 
$
326

 
$
2,138

 
$
61,701

  
Ending balance: collectively evaluated for impairment
$
570,108

 
$
1,810,178

 
$
128,061

 
$
76,183

 
$
413,217

 
$
695,737

 
$
39,205

 
$
3,732,689

  
 
December 31, 2010
 

Commercial
and
Industrial
 
Commercial
Real Estate
 
Commercial
Construction
 
Small
Business
 
Residential
Real
Estate
 

Home
Equity
 
Consumer
Other
 
Total
 
Allowance for loan losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
7,545

 
$
19,451

 
$
2,457

 
$
3,372

 
$
2,840

 
$
3,945

 
$
2,751

 
$
42,361

  
Charge-offs
(5,170
)
 
(3,448
)
 
(1,716
)
 
(2,279
)
 
(557
)
 
(939
)
 
(2,078
)
 
(16,187
)
  
Recoveries
361

 
1

 
—

 
217

 
59

 
131

 
657

 
1,426

  
Provision
7,687

 
5,935

 
1,404

 
2,430

 
573

 
232

 
394

 
18,655

  
Ending balance
$
10,423

 
$
21,939

 
$
2,145

 
$
3,740

 
$
2,915

 
$
3,369

 
$
1,724

 
$
46,255

  
Ending balance: individually evaluated for impairment
$
511

 
$
411

 
$
151

 
$
221

 
$
991

 
$
17

 
$
245

 
$
2,547

  
Ending balance: collectively evaluated for impairment
$
9,912

 
$
21,528

 
$
1,994

 
$
3,519

 
$
1,924

 
$
3,352

 
$
1,479

 
$
43,708

  
Financing receivables
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: total loans by group
$
502,952

 
$
1,717,118

 
$
129,421

 
$
80,026

 
$
478,111

 
$
579,278

 
$
68,773

 
$
3,555,679

(1)
Ending balance: individually evaluated for impairment
$
3,823

 
$
26,665

 
$
1,999

 
$
2,494

 
$
9,963

 
$
428

 
$
2,014

 
$
47,386

  
Ending balance: collectively evaluated for impairment
$
499,129

 
$
1,690,453

 
$
127,422

 
$
77,532

 
$
468,148

 
$
578,850

 
$
66,759

 
$
3,508,293

  
(1)
The amount of deferred fees included in the ending balance was $3.1 million, $2.9 million, and $2.8 million at December 31, 2012, 2011, and 2010, respectively.
Schedule of Internal Risk-Rating Categories for the Company's Commercial Portfolio
The following table details the internal risk-rating categories for the Company’s commercial portfolio:

 
 
 
December 31, 2012
Category
Risk
Rating
 
Commercial and
Industrial
 
Commercial Real
Estate
 
Commercial
Construction
 
Small Business
 
Total
 
 
 
(Dollars in thousands)
Pass
1 - 6
 
$
647,984

 
$
1,928,148

 
$
177,693

 
$
71,231

 
$
2,825,056

Potential weakness
7
 
16,420

 
92,651

 
6,195

 
3,213

 
118,479

Definite weakness
8
 
21,979

 
98,688

 
4,880

 
4,080

 
129,627

Partial loss probable
9
 
1,128

 
2,666

 
—

 
70

 
3,864

Definite loss
10
 
—

 
—

 
—

 
—

 
—

Total
 
 
$
687,511

 
$
2,122,153

 
$
188,768

 
$
78,594

 
$
3,077,026

 
 
 
December 31, 2011
Category
Risk
Rating
 
Commercial and
Industrial
 
Commercial Real
Estate
 
Commercial
Construction
 
Small Business
 
Total
 
 
 
(Dollars in thousands)
Pass
1 - 6
 
$
528,798

 
$
1,626,745

 
$
114,633

 
$
70,543

 
$
2,340,719

Potential weakness
7
 
33,313

 
124,661

 
7,859

 
4,041

 
169,874

Definite weakness
8
 
12,683

 
93,438

 
6,412

 
3,762

 
116,295

Partial loss probable
9
 
922

 
2,810

 
—

 
163

 
3,895

Definite loss
10
 
—

 
—

 
—

 
—

 
—

Total
 
 
$
575,716

 
$
1,847,654

 
$
128,904

 
$
78,509

 
$
2,630,783
Schedule of Weighted Average FICO Scores and Weighted Average Combined LTV Ratio
The following table shows the weighted average FICO scores and the weighted average combined LTV ratio, exclusive of loans acquired from Central, for the periods indicated below:

 
December 31
 
2012
 
2011
Residential portfolio
 
 
 
FICO score (re-scored)(1)
727

 
731

LTV (re-valued)(2)
67.0
%
 
67.0
%
Home equity portfolio
 
 
 
FICO score (re-scored)(1)
763

 
762

LTV (re-valued)(2)
54.0
%
 
55.0
%
(1)
The average FICO scores above are based upon rescores available from November and actual score data for loans booked between December 1 and December 31, for the years indicated.
(2)
The LTV ratios are based upon updated automated valuations as of November 30, 2011 for the years indicated, if applicable.
Schedule of Nonaccrual Loans
The following table shows nonaccrual loans at the dates indicated:

 
December 31
 
2012
 
2011
 
(Dollars in thousands)
Commercial and industrial
$
2,666

 
$
1,883

Commercial real estate
6,574

 
12,829

Commercial construction
—

 
280

Small business
570

 
542

Residential real estate
11,472

 
9,867

Home equity
7,311

(1)
3,130

Consumer — other
121

 
381

Total nonaccrual loans(2)
$
28,714

 
$
28,912

(1)
The increase in nonaccrual home equity loans was driven by regulatory guidance issued during 2012, pertaining to income recognition practices on performing junior lien mortgages. While the loans are currently performing they are placed on nonaccrual as a result of delinquency with respect to the first position, which is held by another financial institution.
(2)
Included in these amounts were $6.6 million and $9.2 million nonaccruing TDRs at December 31, 2012 and 2011, respectively.
Schedule of the Age Analysis of Past Due Financing Receivables
The following table shows the age analysis of past due financing receivables as of the dates indicated:

 
December 31, 2012
 
30-59 days
 
60-89 days
 
90 days or more
 
Total Past Due
 
Current
 
Total
Financing
Receivables
 
Recorded
Investment
>90 Days
and Accruing
 
Number
of Loans
 
Principal
Balance
 
Number
of Loans
 
Principal
Balance
 
Number
of Loans
 
Principal
Balance
 
Number
of Loans
 
Principal
Balance
 
 
(Dollars in thousands)
Commercial and industrial
14

 
$
1,305

 
7

 
$
336

 
23

 
$
1,875

 
44

 
$
3,516

 
$
683,995

 
$
687,511

 
$
—

Commercial real estate
19

 
5,028

 
8

 
2,316

 
31

 
6,054

 
58

 
13,398

 
2,108,755

 
2,122,153

 
—

Commercial construction
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
188,768

 
188,768

 
—

Small business
20

 
750

 
8

 
94

 
10

 
320

 
38

 
1,164

 
77,430

 
78,594

 
—

Residential real estate
17

 
3,053

 
7

 
1,848

 
40

 
7,501

 
64

 
12,402

 
592,266

 
604,668

 
—

Residential construction
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
8,213

 
8,213

 
—

Home equity
32

 
2,756

 
10

 
632

 
17

 
1,392

 
59

 
4,780

 
797,369

 
802,149

 
—

Consumer — other
208

 
1,217

 
32

 
224

 
28

 
153

 
268

 
1,594

 
25,361

 
26,955

 
52

Total
310

 
$
14,109

 
72

 
$
5,450

 
149

 
$
17,295

 
531

 
$
36,854

 
$
4,482,157

 
$
4,519,011

 
$
52

 
December 31, 2011
 
30-59 days
 
60-89 days
 
90 days or more
 
Total Past Due
 
Current
 
Total
Financing
Receivables
 
Recorded
Investment
>90 Days
and Accruing
 
Number
of Loans
 
Principal
Balance
 
Number
of Loans
 
Principal
Balance
 
Number
of Loans
 
Principal
Balance
 
Number
of Loans
 
Principal
Balance
 
 
(Dollars in thousands)
Commercial and industrial
21

 
$
2,143

 
10

 
$
2,709

 
20

 
$
1,279

 
51

 
$
6,131

 
$
569,585

 
$
575,716

 
$
—

Commercial real estate
7

 
3,684

 
7

 
2,522

 
29

 
6,737

 
43

 
12,943

 
1,834,711

 
1,847,654

 
—

Commercial construction
—

 
—

 
—

 
—

 
3

 
280

 
3

 
280

 
128,624

 
128,904

 
—

Small business
19

 
320

 
3

 
21

 
12

 
148

 
34

 
489

 
78,020

 
78,509

 
—

Residential real estate
14

 
2,770

 
10

 
3,208

 
31

 
6,065

 
55

 
12,043

 
404,527

 
416,570

 
—

Residential construction
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
9,631

 
9,631

 
—

Home equity
28

 
1,483

 
19

 
1,139

 
19

 
1,502

 
66

 
4,124

 
691,939

 
696,063

 
—

Consumer — other
260

 
1,821

 
57

 
303

 
58

 
374

 
375

 
2,498

 
38,845

 
41,343

 
41

Total
349

 
$
12,221

 
106

 
$
9,902

 
172

 
$
16,385

 
627

 
$
38,508

 
$
3,755,882

 
$
3,794,390

 
$
41
Schedule of Troubled Debt Restructuring and Other Pertinent Information
The following table shows the Company’s total TDRs and other pertinent information as of the dates indicated:

 
December 31
 
2012
 
2011
 
(Dollars in thousands)
TDRs on accrual status
$
46,764

 
$
37,151

TDRs on nonaccrual status
6,554

 
9,230

Total TDR’s
$
53,318

 
$
46,381

Amount of specific reserves included in the allowance for loan loss associated with TDRs:
$
3,049

 
$
1,887

Additional commitments to lend to a borrower who has been a party to a TDR:
$
1,847

 
$
693
Schedule of Troubled Debt Restructuring Modifications
The following table shows the modifications which occurred during the periods indicated and the change in the recorded investment subsequent to the modifications occurring:

 
Troubled Debt Restructurings
 
Years Ended December 31
 
2012
 
Number
of Contracts
 
Pre-Modification
Outstanding Recorded
Investment
 
Post-Modification
Outstanding Recorded
Investment(1)
 
(Dollars in thousands)

 
 
 
 
 
Commercial & industrial
18

 
$
3,372

 
$
3,372

Commercial real estate
15

 
7,121

 
7,121

Small business
14

 
621

 
621

Residential real estate
20

 
3,495

 
3,499

Home equity
20

 
1,195

 
1,198

Consumer — other
33

 
328

 
329

Total
120

 
$
16,132

 
$
16,140

 
 
 
 
 
 

2011
Commercial & industrial
11

 
$
1,165

 
$
1,165

Commercial real estate
17

 
8,707

 
8,707

Small business
37

 
1,270

 
1,270

Residential real estate
16

 
3,460

 
3,536

Home equity
2

 
101

 
101

Consumer — other
89

 
985

 
985

Total
172

 
$
15,688

 
$
15,764


 
 
 
 
 
 
2010
Commercial & industrial
11

 
$
1,286

 
$
1,286

Commercial real estate
14

 
12,491

 
12,491

Small business
47

 
1,514

 
1,514

Residential real estate
19

 
5,797

 
5,938

Home equity
4

 
292

 
296

Consumer — other
108

 
1,405

 
1,405

Total
203

 
$
22,785

 
$
22,930

(1)
The post-modification balances represent the balance of the loan on the date of modification. These amounts may show an increase when modifications include a capitalization of interest.
Schedule of Post-Modification Balance of Troubled Debt Restructuring by Type of Modification
The following table shows the Company’s post-modification balance of TDRs listed by type of modification as of the periods indicated:
 
Years Ended December 31
 
2012
 
2011
 
2010
 
(Dollars in thousands)
Extended maturity
$
5,867

 
$
5,216

 
$
10,691

Adjusted interest rate
2,182

 
1,746

 
52

Combination rate & maturity
5,007

 
8,802

 
12,187

Court ordered concession
3,084

 
—

 
—

Total
$
16,140

 
$
15,764

 
$
22,930
Schedule of Troubled Debt Restructurings Which Have Subsequently Defaulted
The following table shows the loans that have been modified during the past twelve months which have subsequently defaulted during the periods indicated. The Company considers a loan to have defaulted when it reaches 90 days past due.
 
Years Ended December 31
 
2012
 
2011
 
2010
 
Number
of Contracts
 
Recorded
Investment
 
Number
of Contracts
 
Recorded
Investment
 
Number
of Contracts
 
Recorded
Investment
 
(Dollars in thousands)
Troubled debt restructurings that subsequently defaulted
 
 
 
 
 
 
 
 
 
 
 
Commercial & industrial
1

 
$
231

 
—

 
$
—

 
—

 
$
—

Commercial real estate
3

 
696

 
—

 
—

 
1

 
263

Small business
—

 
—

 
5

 
75

 
—

 
—

Residential real estate
1

 
238

 
—

 
—

 
2

 
500

Home equity
—

 
—

 
—

 
—

 
—

 
—

Consumer — other
—

 
—

 
1

 
22

 
2

 
18

Subtotal
5

 
$
1,165

 
6

 
$
97

 
5

 
$
781
Schedule of Impaired Loans by Loan Portfolio
The table below sets forth information regarding the Company’s impaired loans as of the dates indicated:


 
Years Ended December 31
 
2012
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
(Dollars in thousands)
With no related allowance recorded
 
 
 
 
 
 
 
 
 
Commercial & industrial
$
5,849

 
$
7,343

 
$
—

 
$
6,993

 
$
391

Commercial real estate
12,999

 
13,698

 
—

 
13,984

 
952

Commercial construction
—

 
—

 
—

 
—

 
—

Small business
1,085

 
1,147

 
—

 
1,217

 
80

Residential real estate
2,545

 
2,630

 
—

 
2,589

 
118

Home equity
4,119

 
4,166

 
—

 
4,190

 
195

Consumer — other
700

 
705

 
—

 
858

 
72

Subtotal
27,297

 
29,689

 
—

 
29,831

 
1,808

With an allowance recorded
 
 
 
 
 
 
 
 
 
Commercial & industrial
$
2,726

 
$
2,851

 
$
1,084

 
$
2,883

 
$
143

Commercial real estate
20,869

 
21,438

 
516

 
21,678

 
1,340

Commercial construction
—

 
—

 
—

 
—

 
—

Small business
1,194

 
1,228

 
353

 
1,255

 
77

Residential real estate
12,828

 
13,601

 
1,302

 
13,014

 
560

Home equity
316

 
389

 
35

 
324

 
23

Consumer — other
1,429

 
1,453

 
130

 
1,610

 
60

Subtotal
39,362

 
40,960

 
3,420

 
40,764

 
2,203

Total
$
66,659

 
$
70,649

 
$
3,420

 
$
70,595

 
$
4,011

 
2011
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
(Dollars in thousands)
With no related allowance recorded
 
 
 
 
 
 
 
 
 
Commercial & industrial
$
3,380

 
$
4,365

 
$
—

 
$
4,672

 
$
300

Commercial real estate
19,433

 
20,010

 
—

 
19,760

 
1,365

Commercial construction
843

 
843

 
—

 
839

 
59

Small business
1,131

 
1,193

 
—

 
1,199

 
84

Residential real estate
—

 
—

 
—

 
—

 
—

Home equity
22

 
22

 
—

 
22

 
1

Consumer — other
31

 
32

 
—

 
35

 
3

Subtotal
24,840

 
26,465

 
—

 
26,527

 
1,812

With an allowance recorded
 
 
 
 
 
 
 
 
 
Commercial & industrial
$
2,228

 
$
2,280

 
$
562

 
$
2,244

 
$
99

Commercial real estate
18,043

 
19,344

 
457

 
19,951

 
1,173

Commercial construction
—

 
—

 
—

 
—

 
—

Small business
1,195

 
1,218

 
148

 
1,292

 
73

Residential real estate
12,984

 
13,651

 
1,245

 
13,059

 
512

Home equity
304

 
349

 
31

 
316

 
19

Consumer — other
2,107

 
2,125

 
239

 
1,928

 
73

Subtotal
36,861

 
38,967

 
2,682

 
38,790

 
1,949

Total
$
61,701

 
$
65,432

 
$
2,682

 
$
65,317

 
$
3,761

 
2010
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
(Dollars in thousands)
With no related allowance recorded
 
 
 
 
 
 
 
 
 
Commercial & industrial
$
2,451

 
$
2,917

 
$
—

 
$
2,539

 
$
171

Commercial real estate
19,538

 
20,280

 
—

 
20,223

 
1,394

Commercial construction
230

 
230

 
—

 
248

 
13

Small business
1,541

 
1,656

 
—

 
1,689

 
122

Residential real estate
205

 
205

 
—

 
205

 
10

Home equity
—

 
—

 
—

 
—

 
—

Consumer — other
10

 
10

 
—

 
7

 
—

Subtotal
23,975

 
25,298

 
—

 
24,911

 
1,710

With an allowance recorded
 
 
 
 
 
 
 
 
 
Commercial & industrial
$
1,372

 
$
1,373

 
$
511

 
$
1,384

 
$
94

Commercial real estate
7,127

 
7,379

 
411

 
7,346

 
438

Commercial construction
1,769

 
1,769

 
151

 
1,762

 
76

Small business
953

 
954

 
221

 
956

 
63

Residential real estate
9,758

 
10,146

 
991

 
9,836

 
396

Home equity
428

 
435

 
17

 
432

 
21

Consumer — other
2,004

 
2,035

 
245

 
1,364

 
58

Subtotal
23,411

 
24,091

 
2,547

 
23,080

 
1,146

Total
$
47,386

 
$
49,389

 
$
2,547

 
$
47,991

 
$
2,856
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Table Text Block]
The following is a summary of these PCI loans associated with the acquisition:
 
 
(Dollars in thousands)
Contractually required principal and interest at acquisition
 
$
47,548

Contractual cash flows not expected to be collected
 
(8,733
)
Expected cash flows at acquisition
 
38,815

Interest component of expected cash flows
 
(3,095
)
Basis in PCI loans at acquisition - estimated fair value
 
$
35,720

The following table displays certain information pertaining to purchased credit impaired loans at the dates indicated:
 
 
At
 
 
 
Acquisition
 
 
 
November 9, 2012
 
 
 
(Dollars in thousands)
 
Contractually required principal and interest payments receivable
(1)
$
47,548

 
Less: expected cash flows
(1)
38,815

 
Initial nonaccretable difference
 
$
8,733

 
 
 
 
 
Expected cash flows
(1)
$
38,815

 
Less: fair value (initial carrying amount)
 
35,720

 
Accretable Yield
 
$
3,095

 
 
 
 
 
 
 
November 9, 2012
December 31, 2012
 
 
(Dollars in thousands)
Outstanding balance
 
$
40,799

$
36,278

Carrying amount
 
$
35,720

$
32,054

(1) Reflective of anticipated prepayments.
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Table Text Block]
The following table summarizes activity in the accretable yield for the PCI loan portfolio:
 
 
Year Ended December 31, 2012
 
 
(Dollars in thousands)
Balance at the beginning of the period
 
$
—

Acquisition
 
3,095

Accretion
 
(903
)
Reclassification from nonaccretable difference for loans with improved cash flows (1)
 
272

Balance at end of period
 
$
2,464

(1)
Results in increased interest income during the period in which the loan paid off.
Schedule of Loans to Insiders
Annual activity consists of the following at the periods indicated:
 
2012
 
2011
 
(Dollars in thousands)
Principal balance of loans outstanding as of January 1,
$
41,184

 
$
29,986

Loan advances
89,666

 
68,512

Loan payments/payoffs (1)
(82,991
)
 
(57,314
)
Principal balance of loans outstanding as of December 31,
$
47,859

 
$
41,184

(1)
Includes the removal of $900,000 related to a director who retired during 2012, and no longer considered an insider. Amount does not reflect an actual payoff of a loan.