Allowance for Loan Losses and Credit Quality of Loans (Tables)

6 Months Ended

Jun. 30, 2013

Allowance for Loan Losses and Credit Quality of Loans [Abstract]

Allowance for loan losses by portfolio

The following tables illustrate the changes in the allowance for loan losses by our portfolio segments for the three and six months ended June 30, 2013 and 2012:

							Residential
Three months ended June 30	Commercial			Consumer			Real Estate
	Loans			Loans			Mortgages			Unallocated			Total
Balance as of March 31, 2013	$	35,358		$	26,285		$	6,708		$	383		$	68,734
Charge-offs		(1,198	)		(3,653	)		(302	)		-			(5,153	)
Recoveries		416			696			89			-			1,201
Provision		3,128			3,128			311			(165	)		6,402
Ending Balance as of June 30, 2013	$	37,704		$	26,456		$	6,806		$	218		$	71,184
Balance as of March 31, 2012	$	37,787		$	26,790		$	6,520		$	237		$	71,334
Charge-offs		(1,653	)		(3,735	)		(292	)		-			(5,680	)
Recoveries		303			667			7			-			977
Provision		1,058			3,513			(292	)		(176	)		4,103
Ending Balance as of June 30, 2012	$	37,495		$	27,235		$	5,943		$	61		$	70,734

							Residential
Six months ended June 30	Commercial			Consumer			Real Estate
	Loans			Loans			Mortgages			Unallocated			Total
Balance as of December 31, 2012	$	35,624		$	27,162		$	6,252		$	296		$	69,334
Charge-offs		(4,520	)		(7,376	)		(973	)		-			(12,869	)
Recoveries		883			1,673			103			-			2,659
Provision		5,717			4,997			1,424			(78	)		12,060
Ending Balance as of June 30, 2013	$	37,704		$	26,456		$	6,806		$	218		$	71,184
Balance as of December 31, 2011	$	38,831		$	26,049		$	6,249		$	205		$	71,334
Charge-offs		(2,783	)		(7,787	)		(650	)		-			(11,220	)
Recoveries		688			1,342			16			-			2,046
Provision		759			7,631			328			(144	)		8,574
Ending Balance as of June 30, 2012	$	37,495		$	27,235		$	5,943		$	61		$	70,734

For acquired loans, to the extent that we experience deterioration in borrower credit quality resulting in a decrease in our expected cash flows subsequent to acquisition of the loans, an allowance for loan losses would be established based on our estimate of future credit losses over the remaining life of the loans.  As of June 30, 2013 and 2012, there was no allowance for loan losses for the acquired loan portfolio. Net charge-offs related to acquired loans totaled $0.2 million and $0.4 million during the three and six months ended June 30, 2013, respectively, and are included in the table above.

The following tables illustrate the allowance for loan losses and the recorded investment by portfolio segments as of June 30, 2013 and December 31, 2012:

Allowance for Loan Losses and Recorded Investment in Loans
(in thousands)
					Residential
	Commercial		Consumer		Real Estate
	Loans		Loans		Mortgages		Unallocated		Total
As of June 30, 2013
Allowance for loan losses	$	37,704	$	26,456	$	6,806	$	218	$	71,184
Allowance for loans individually evaluated for impairment	$	2,032	$	-	$	-			$	2,032
Allowance for loans collectively evaluated for impairment	$	35,672	$	26,456	$	6,806	$	218	$	69,152
Ending balance of loans	$	2,368,897	$	1,920,171	$	1,001,642			$	5,290,710
Ending balance of loans individually evaluated for impairment	$	12,887	$	-	$	-			$	12,887
Ending balance of acquired loans	$	460,995	$	269,151	$	338,750			$	1,068,896
Ending balance of loans collectively evaluated for impairment	$	1,895,015	$	1,651,020	$	662,892			$	4,208,927

As of December 31, 2012
Allowance for loan losses	$	35,624	$	27,162	$	6,252	$	296	$	69,334
Allowance for loans individually evaluated for impairment	$	2,848	$	-	$	-			$	2,848
Allowance for loans collectively evaluated for impairment	$	32,776	$	27,162	$	6,252	$	296	$	66,486
Ending balance of loans	$	2,003,371	$	1,623,138	$	651,107			$	4,277,616
Ending balance of loans individually evaluated for impairment	$	11,972	$	-	$	-			$	11,972
Ending balance of loans collectively evaluated for impairment	$	1,991,399	$	1,623,138	$	651,107			$	4,265,644

Past due and nonperforming loans by loan class

The following table illustrates the Company’s nonaccrual loans by loan class:

Loans on Nonaccrual Status as of:

(In thousands)	June 30, 2013		December 31, 2012
ORIGINATED
Commercial Loans
Commercial	$	2,622	$	4,985
Commercial Real Estate		10,716		7,977
Agricultural		595		699
Agricultural Real Estate		968		1,038
Business Banking		5,658		6,738
		20,559		21,437
Consumer Loans
Indirect		1,301		1,557
Home Equity		6,583		7,247
Direct		128		266
		8,012		9,070
Residential Real Estate Mortgages		6,414		9,169
	$	34,985	$	39,676
ACQUIRED
Commercial Loans
Commercial	$	446
Commercial Real Estate		-
Business Banking		1,593
		2,039
Consumer Loans
Indirect		139
Home Equity		425
Direct		74
		638
Residential Real Estate Mortgages		2,863
	$	5,540
Total nonaccrual loans	$	40,525	$	39,676

The following tables set forth information with regard to past due and nonperforming loans by loan class as of June 30, 2013 and December 31, 2012:

Age Analysis of Past Due Financing Receivables

As of June 30, 2013

(in thousands)

					Greater Than								Recorded
	31-60 Days		61-90 Days		90 Days		Total						Total
	Past Due		Past Due		Past Due		Past Due						Loans and
	Accruing		Accruing		Accruing		Accruing		Non-Accrual		Current		Leases
ORIGINATED
Commercial Loans
Commercial	$	195	$	20	$	-	$	215	$	2,622	$	583,101	$	585,938
Commercial Real Estate		1,692		-		-		1,692		10,716		875,555		887,963
Agricultural		154		20		-		174		595		63,834		64,603
Agricultural Real Estate		349		-		-		349		968		30,894		32,211
Business Banking		2,176		590		-		2,766		5,658		328,763		337,187
		4,566		630		-		5,196		20,559		1,882,147		1,907,902
Consumer Loans
Indirect		10,749		2,259		832		13,840		1,301		1,033,903		1,049,044
Home Equity		6,475		1,198		704		8,377		6,583		525,429		540,389
Direct		611		210		45		866		128		60,593		61,587
		17,835		3,667		1,581		23,083		8,012		1,619,925		1,651,020
Residential Real Estate Mortgages		487		1,085		358		1,930		6,414		654,548		662,892
	$	22,888	$	5,382	$	1,939	$	30,209	$	34,985	$	4,156,620	$	4,221,814
ACQUIRED
Commercial Loans
Commercial	$	473	$	5	$	-	$	478	$	446	$	137,215	$	138,139
Commercial Real Estate		-		-		-		-		-		242,322		242,322
Agricultural		-		-		-		-		-		25		25
Business Banking		74		-		-		74		1,593		78,842		80,509
		547		5		-		552		2,039		458,404		460,995
Consumer Loans
Indirect		751		162		23		936		139		164,267		165,342
Home Equity		307		754		38		1,099		425		93,370		94,894
Direct		38		30		4		72		74		8,769		8,915
		1,096		946		65		2,107		638		266,406		269,151
Residential Real Estate Mortgages		2,292		230		-		2,522		2,863		333,365		338,750
	$	3,935	$	1,181	$	65	$	5,181	$	5,540	$	1,058,175	$	1,068,896
Total Loans	$	26,823	$	6,563	$	2,004	$	35,390	$	40,525	$	5,214,795	$	5,290,710

As of December 31, 2012

(in thousands)

					Greater Than
	31-60 Days		61-90 Days		90 Days		Total						Recorded
	Past Due		Past Due		Past Due		Past Due						Total
	Accruing		Accruing		Accruing		Accruing		Non-Accrual		Current		Loans
Commercial Loans
Commercial	$	-	$	-	$	-	$	-	$	4,985	$	556,496	$	561,481
Commercial Real Estate		126		-		-		126		7,977		966,692		974,795
Agricultural		22		-		-		22		699		63,037		63,758
Agricultural Real Estate		108		-		103		211		1,038		36,128		37,377
Business Banking		3,019		708		45		3,772		6,738		355,450		365,960
		3,275		708		148		4,131		21,437		1,977,803		2,003,371
Consumer Loans
Indirect		10,956		2,477		1,205		14,638		1,557		964,802		980,997
Home Equity		6,065		1,223		681		7,969		7,247		560,066		575,282
Direct		717		144		84		945		266		65,648		66,859
		17,738		3,844		1,970		23,552		9,070		1,590,516		1,623,138
Residential Real Estate Mortgages		1,839		725		330		2,894		9,169		639,044		651,107
	$	22,852	$	5,277	$	2,448	$	30,577	$	39,676	$	4,207,363	$	4,277,616

Impaired loans and specific reserve allocations

The following table provides information on impaired loans and specific reserve allocations as of June 30, 2013 and December 31, 2012:

	June 30, 2013						December 31, 2012
	Recorded		Unpaid				Recorded		Unpaid
	Investment		Principal				Investment		Principal
	Balance		Balance		Related		Balance		Balance		Related
(in thousands)	(Book)		(Legal)		Allowance		(Book)		(Legal)		Allowance
With no related allowance recorded:
Commercial Loans
Commercial	$	4,067	$	5,337			$	1,651	$	1,710
Commercial Real Estate		4,347		5,134				8,709		9,553
Agricultural		616		917				940		1,286
Agricultural Real Estate		1,634		1,955				1,713		2,026
Business Banking		7,534		10,213				7,048		9,579
Total Commercial Loans		18,198		23,556				20,061		24,154
Consumer Loans
Home Equity		2,971		3,156				2,553		2,657
Residential Real Estate Mortgages		2,018		2,360				2,011		2,308
	$	23,187	$	29,072			$	24,625	$	29,119
With an allowance recorded:
Commercial Loans
Commercial	$	-	$	-	$	-	$	4,335	$	4,340	$	2,241
Commercial Real Estate		7,302		8,924		2,032		4,068		5,689		607
Agricultural		-		-		-		-		-		-
Agricultural Real Estate		-		-		-		-		-		-
		7,302		8,924		2,032		8,403		10,029		2,848
Total:	$	30,489	$	37,996	$	2,032	$	33,028	$	39,148	$	2,848

The following tables summarize the average recorded investments on impaired loans and the interest income recognized for the three and six months ended June 30, 2013 and 2012:

	For the three months ended
	June 30, 2013				June 30, 2012
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(in thousands)	Investment		Recognized		Investment		Recognized
Commercial Loans
Commercial	$	2,822	$	15	$	1,128	$	46
Commercial Real Estate		8,616		11		7,140		-
Agricultural		770		-		2,876		5
Agricultural Real Estate		1,123		12		1,876		53
Business Banking		7,843		16		6,572		8
Consumer Loans
Home Equity		2,907		6		1,828		2
Residential Real Estate Mortgages		1,990		15		1,055		-
Total:	$	26,071	$	75	$	22,475	$	114

	For the six months ended
	June 30, 2013				June 30, 2012
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(in thousands)	Investment		Recognized		Investment		Recognized
Commercial Loans
Commercial	$	4,430	$	30	$	1,551	$	69
Commercial Real Estate		10,614		72		6,481		-
Agricultural		887		3		2,997		36
Agricultural Real Estate		1,482		24		1,926		53
Business Banking		8,016		30		7,151		12
Consumer Loans
Home Equity		2,775		12		1,869		3
Residential Real Estate Mortgages		1,989		27		1,043		-
Total:	$	30,193	$	198	$	23,018	$	173

Financing receivable credit quality by loan class

The following tables illustrate the Company’s credit quality by loan class as of June 30, 2013 and December 31, 2012:

Credit Quality Indicators

As of June 30, 2013

ORIGINATED
Commercial Credit Exposure			Commercial				Agricultural
By Internally Assigned Grade:	Commercial		Real Estate		Agricultural		Real Estate		Total
Pass	$	566,686	$	855,687	$	59,026	$	28,722	$	1,510,121
Special Mention		1,899		11,657		78		3		13,637
Substandard		16,850		19,856		5,476		3,486		45,668
Doubtful		503		763		23		-		1,289
Total	$	585,938	$	887,963	$	64,603	$	32,211	$	1,570,715
Business Banking Credit Exposure
By Internally Assigned Grade:	Small Business								Total
Non-classified	$	317,362							$	317,362
Classified		19,825								19,825
Total	$	337,187							$	337,187
Consumer Credit Exposure
By Payment Activity:	Indirect		Home Equity		Direct				Total
Performing	$	1,046,911	$	533,102	$	61,414			$	1,641,427
Nonperforming		2,133		7,287		173				9,593
Total	$	1,049,044	$	540,389	$	61,587			$	1,651,020
Residential Mortgage Credit Exposure	Residential
By Payment Activity:	Mortgage								Total
Performing	$	656,120							$	656,120
Nonperforming		6,772								6,772
Total	$	662,892							$	662,892

Credit Quality Indicators

As of June 30, 2013

ACQUIRED
Commercial Credit Exposure			Commercial
By Internally Assigned Grade:	Commercial		Real Estate		Agricultural		Total
Pass	$	121,901	$	220,131	$	25	$	342,057
Special Mention		8,323		8,822		-		17,145
Substandard		7,915		13,369		-		21,284
Doubtful		-		-		-		-
Total	$	138,139	$	242,322	$	25	$	380,486
Business Banking Credit Exposure
By Internally Assigned Grade:	Small Business						Total
Non-classified	$	75,418					$	75,418
Classified		5,091						5,091
Total	$	80,509					$	80,509
Consumer Credit Exposure
By Payment Activity:	Indirect		Home Equity		Direct		Total
Performing	$	165,180	$	94,006	$	8,763	$	267,949
Nonperforming		162		888		152		1,202
Total	$	165,342	$	94,894	$	8,915	$	269,151
Residential Mortgage Credit Exposure	Residential
By Payment Activity:	Mortgage						Total
Performing	$	335,887					$	335,887
Nonperforming		2,863						2,863
Total	$	338,750					$	338,750

Credit Quality Indicators

As of December 31, 2012

Commercial Credit Exposure			Commercial				Agricultural
By Internally Assigned Grade:	Commercial		Real Estate		Agricultural		Real Estate		Total
Pass	$	522,985	$	901,928	$	57,347	$	33,472	$	1,515,732
Special Mention		18,401		32,135		13		3		50,552
Substandard		17,351		40,732		6,362		3,902		68,347
Doubtful		2,744		-		36		-		2,780
Total	$	561,481	$	974,795	$	63,758	$	37,377	$	1,637,411
Business Banking. Credit Exposure
By Internally Assigned Grade:	Small Business								Total
Non-classified	$	342,528							$	342,528
Classified		23,432								23,432
Total	$	365,960							$	365,960
Consumer Credit Exposure
By Payment Activity:	Indirect		Home Equity		Direct				Total
Performing	$	978,235	$	567,354	$	66,509			$	1,612,098
Nonperforming		2,762		7,928		350				11,040
Total	$	980,997	$	575,282	$	66,859			$	1,623,138
Residential Mortgage Credit Exposure	Residential
By Payment Activity:	Mortgage								Total
Performing	$	641,608							$	641,608
Nonperforming		9,499								9,499
Total	$	651,107							$	651,107