ALLOWANCE FOR LOAN AND LEASE LOSSES

Activity in the allowance for loan and lease losses is summarized as follows:



	Noncovered loans			Covered loans			Total
Balance at December 31, 2009	$	168,782		$	3,500		$	172,282
Provision for loan and lease losses	56,647			86,872			143,519
Adoption of change in accounting for QSPE	681			—			681
Loans and leases charged off	(55,783		)	(39,533		)	(95,316		)
Loans and leases recovered	6,190			409			6,599
Net charge-offs	(49,593		)	(39,124		)	(88,717		)
Balance at December 31, 2010	176,517			51,248			227,765
Provision for loan and lease losses	57,799			174,478			232,277
Loans and leases charged off	(59,287		)	(137,553		)	(196,840		)
Loans and leases recovered	5,854			1,088			6,942
Net charge-offs	(53,433		)	(136,465		)	(189,898		)
Balance at December 31, 2011	180,883			89,261			270,144
Provision for loan and lease losses	42,046			100,839			142,885
Loans and leases charged off	(50,208		)	(50,270		)	(100,478		)
Loans and leases recovered	6,325			142			6,467
Net charge-offs	(43,883		)	(50,128		)	(94,011		)
Balance at December 31, 2012	$	179,046		$	139,972		$	319,018

Activity in the allowance for loans and lease losses, ending balances of loans and leases and related allowance by class of loans as of December 31, 2012, and 2011 are summarized as follows:



	Construction and land development - commercial			Commercial mortgage			Other commercial real estate			Commercial and industrial			Lease financing			Other			Residential mortgage			Revolving mortgage			Construction and land development - non-commercial			Consumer			Non- specific		Total
Noncovered loans and leases
Allowance for loan and lease losses:
Balance at January 1, 2012	$	5,467		$	67,486		$	2,169		$	23,723		$	3,288		$	1,315		$	8,879		$	27,045		$	1,427		$	25,962		$	14,122	$	180,883
Charge-offs	(9,546		)	(7,081		)	(254		)	(5,472		)	(361		)	(28		)	(4,790		)	(11,341		)	(1,047		)	(10,288		)	—		(50,208		)
Recoveries	445			1,626			14			781			96			4			529			698			180			1,952			—		6,325
Provision	9,665			8,896			130			4,320			498			(116		)	(782		)	8,783			1,161			7,763			1,728		42,046
Balance at December 31, 2012	$	6,031		$	70,927		$	2,059		$	23,352		$	3,521		$	1,175		$	3,836		$	25,185		$	1,721		$	25,389		$	15,850	$	179,046
Balance at December 31, 2012
ALLL for loans and leases individually evaluated for impairment	$	2,469		$	11,697		$	298		$	2,133		$	202		$	53		$	959		$	1		$	287		$	256		$	—	$	18,355
ALLL for loans and leases collectively evaluated for impairment	3,562			59,230			1,761			21,219			3,319			1,122			2,877			25,184			1,434			25,133			—		144,841
Nonspecific ALLL	—			—			—			—			—			—			—			—			—			—			15,850		15,850
Total allowance for loan and lease losses	$	6,031		$	70,927		$	2,059		$	23,352		$	3,521		$	1,175		$	3,836		$	25,185		$	1,721		$	25,389		$	15,850	$	179,046
Loans and leases:
Balance at December 31, 2012
Loans and leases individually evaluated for impairment	$	17,075		$	133,804		$	3,375		$	22,619		$	804		$	707		$	15,836		$	4,203		$	1,321		$	2,509		$	—	$	202,253
Loans and leases collectively evaluated for impairment	292,115			5,208,035			157,605			1,703,507			329,875			124,974			807,053			2,205,930			130,671			414,097			—		11,373,862
Total loans and leases	$	309,190		$	5,341,839		$	160,980		$	1,726,126		$	330,679		$	125,681		$	822,889		$	2,210,133		$	131,992		$	416,606		$	—	$	11,576,115
Allowance for loan and lease losses:
Balance at January 1, 2011	$	10,512		$	64,772		$	2,200		$	24,089		$	3,384		$	1,473		$	7,009		$	18,016		$	1,751		$	29,448		$	13,863	$	176,517
Charge-offs	(11,189		)	(6,975		)	(24		)	(5,879		)	(579		)	(89		)	(5,566		)	(13,940		)	(2,617		)	(12,429		)	—		(59,287		)
Recoveries	218			945			23			1,025			133			2			989			653			189			1,677			—		5,854
Provision	5,926			8,744			(30		)	4,488			350			(71		)	6,447			22,316			2,104			7,266			259		57,799
Balance at December 31, 2011	$	5,467		$	67,486		$	2,169		$	23,723		$	3,288		$	1,315		$	8,879		$	27,045		$	1,427		$	25,962		$	14,122	$	180,883
Balance at December 31, 2011
ALLL for loans and leases individually evaluated for impairment	$	1,139		$	5,266		$	283		$	640		$	17		$	14		$	411		$	—		$	145		$	47		$	—	$	7,962
ALLL for loans and leases collectively evaluated for impairment	4,328			62,220			1,886			23,083			3,271			1,301			8,468			27,045			1,282			25,915			—		158,799
Nonspecific ALLL	—			—			—			—			—			—			—			—			—			—			14,122		14,122
Total allowance for loan and lease losses	$	5,467		$	67,486		$	2,169		$	23,723		$	3,288		$	1,315		$	8,879		$	27,045		$	1,427		$	25,962		$	14,122	$	180,883
Loans and leases:
Balance at December 31, 2011
Loans and leases individually evaluated for impairment	$	26,782		$	92,872		$	5,686		$	15,996		$	328		$	193		$	9,776		$	—		$	3,676		$	992		$	—	$	156,301
Loans and leases collectively evaluated for impairment	354,381			5,012,121			139,085			1,748,411			312,541			158,176			774,342			2,296,306			133,595			496,378			—		11,425,336
Total loans and leases	$	381,163		$	5,104,993		$	144,771		$	1,764,407		$	312,869		$	158,369		$	784,118		$	2,296,306		$	137,271		$	497,370		$	—	$	11,581,637



	Construction and land development - commercial			Commercial mortgage			Other commercial real estate			Commercial and industrial			Lease financing			Residential mortgage			Revolving mortgage			Construction and land development - non-commercial			Consumer and other			Total
Covered loans and leases
Allowance for loan and lease losses:
Balance at January 1, 2012	$	16,693		$	39,557		$	16,862		$	5,500		$	13		$	5,433		$	77		$	4,652		$	474		$	89,261
Charge-offs	(8,667		)	(23,509		)	(1,256		)	(8,442		)	—			(4,139		)	(1,119		)	(2,885		)	(253		)	(50,270		)
Recoveries	—			—			—			—			—			142			—			—			—			142
Provision	23,160			34,227			(4,372		)	11,839			(13		)	18,401			10,796			6,520			281			100,839
Balance at December 31, 2012	$	31,186		$	50,275		$	11,234		$	8,897		$	—		$	19,837		$	9,754		$	8,287		$	502		$	139,972
Balance at December 31, 2012
ALLL for loans acquired with deteriorated credit quality	$	31,186		$	50,275		$	11,234		$	8,897		$	—		$	19,837		$	9,754		$	8,287		$	502		$	139,972
Loans:
Balance at December 31, 2012
Loans acquired with deteriorated credit quality	237,906			1,054,473			107,119			49,463			—			297,926			38,710			20,793			2,845			1,809,235
Allowance for loan and lease losses:
Balance at January 1, 2011	$	20,654		$	13,199		$	4,148		$	6,828		$	—		$	113		$	676		$	5,607		$	23		$	51,248
Charge-offs	(36,432		)	(49,905		)	(29,063		)	(6,115		)	—			(5,723		)	—			(9,912		)	(403		)	(137,553		)
Recoveries	389			83			479			12			—			94			—			30			1			1,088
Provision	32,082			76,180			41,298			4,775			13			10,949			(599		)	8,927			853			174,478
Balance at December 31, 2011	$	16,693		$	39,557		$	16,862		$	5,500		$	13		$	5,433		$	77		$	4,652		$	474		$	89,261
Balance at December 31, 2011
ALLL for loans acquired with deteriorated credit quality	$	16,693		$	39,557		$	16,862		$	5,500		$	13		$	5,433		$	77		$	4,652		$	474		$	89,261
Loans:
Balance at December 31, 2011
Loans acquired with deteriorated credit quality	338,873			1,260,589			158,394			113,442			57			327,568			51,552			105,536			6,141			2,362,152

The following table provides information on noncovered impaired loans and leases, exclusive of those loans and leases evaluated collectively as a homogeneous group, including interest income recognized in the period during which the loans and leases were considered impaired.



	With a recorded allowance		With no recorded allowance		Total		Unpaid principal balance		Related allowance recorded
December 31, 2012
Noncovered impaired loans and leases
Construction and land development—commercial	$	5,941	$	10,116	$	16,057	$	31,879	$	2,340
Commercial mortgage	39,648		72,160		111,808		114,351		10,628
Other commercial real estate	1,425		1,823		3,248		3,348		279
Commercial and industrial	7,429		11,371		18,800		19,196		1,949
Lease financing	665		81		746		746		194
Other	—		707		707		707		53
Residential mortgage	9,346		4,240		13,586		13,978		832
Revolving mortgage	1,238		2,965		4,203		4,203		1
Construction and land development—noncommercial	1,162		158		1,320		1,321		287
Consumer	1,609		900		2,509		2,509		256
Total impaired noncovered loans and leases	$	68,463	$	104,521	$	172,984	$	192,238	$	16,819
December 31, 2011
Noncovered impaired loans and leases
Construction and land development—commercial	$	24,994	$	—	$	24,994	$	30,756	$	1,027
Commercial mortgage	53,687		11,840		65,527		66,463		3,813
Other commercial real estate	1,558		1,022		2,580		322		114
Commercial and industrial	7,157		7,111		14,268		12,674		549
Lease financing	322		—		322		992		16
Other	—		—		—		—		—
Residential mortgage	9,776		—		9,776		2,580		411
Revolving mortgage	—		—		—		—		—
Construction and land development—noncommercial	3,676		—		3,676		14,268		145
Consumer	992		—		992		3,676		47
Total impaired noncovered loans and leases	$	102,162	$	19,973	$	122,135	$	131,731	$	6,122



	YTD average balance		Interest income recognized YTD
Year ended December 31, 2012
Noncovered impaired loans and leases
Construction and land development - commercial	$	22,493	$	399
Commercial mortgage	96,082		4,630
Other commercial real estate	2,690		142
Commercial and industrial	13,658		788
Lease financing	497		37
Other	424		23
Residential mortgage	14,951		586
Revolving mortgage	2,931		68
Construction and land development - noncommercial	2,850		41
Consumer	1,850		21
Total noncovered impaired loans and leases	$	158,426	$	6,735
Year ended December 31, 2011
Noncovered impaired loans and leases
Construction and land development - commercial	$	26,612	$	56
Commercial mortgage	65,729		1,330
Other commercial real estate	1,368		55
Commercial and industrial	12,984		456
Lease financing	587		21
Other	38		—
Residential mortgage	9,252		300
Construction and land development - noncommercial	2,022		105
Consumer	636		18
Total noncovered impaired loans and leases	$	119,228	$	2,341
Year ended December 31, 2010
Construction and land development - commercial	$	19,235	$	93
Commercial mortgage	25,451		1,193
Other commercial real estate	353		18
Commercial and industrial	3,420		337
Lease financing	281		9
Other	31		3
Residential mortgage	2,314		129
Construction and land development - noncommercial	182		41
Consumer	39		1
Total noncovered impaired loans and leases	$	51,306	$	1,824

At December 31, 2012, covered loans which have had an adverse change in expected cash flows since the date of acquisition equaled $975,920, for which $139,972 in related allowance for loan losses has been recorded. At December 31, 2011, covered loans which have had an adverse change in expected cash flows since the date of acquisition equaled $1,886,929, for which $89,261 in related allowance for loan losses has been recorded. Covered loans of $833,315 at December 31, 2012, and $475,223 at December 31, 2011, that have had no adverse change in expected cash flows since the date of acquisition have no allowance for loan losses recorded.

Troubled Debt Restructurings

The following table provides the types of troubled debt restructurings made for the years ended December 31, 2012 and December 31, 2011, as well as loans restructured during 2012 and 2011 that have experienced payment default subsequent to restructuring.



	Year ended December 31, 2012						Year ended December 31, 2011
	All restructurings			Restructurings with subsequent payment default			All restructurings			Restructurings with subsequent payment default
	Number of loans	Recorded investment		Number of loans	Recorded investment		Number of loans	Recorded investment		Number of loans	Recorded investment
Noncovered loans
Interest only period provided
Construction and land development - commercial	2	$	316	—	$	—	3	$	1,232	3	$	1,232
Commercial mortgage	12	3,891		3	1,440		32	16,473		7	3,684
Commercial and industrial	2	574		—	—		7	2,601		—	—
Lease financing	—	—		—	—		1	71		—	—
Residential mortgage	2	893		2	893		3	592		—	—
Construction and land development - noncommercial	—	—		—	—		2	807		—	—
Consumer	—	—		—	—		1	900		—	—
Total interest only	18	5,674		5	2,333		49	22,676		10	4,916

Loan term extension
Construction and land development - commercial	2	7,667		—	—		5	$	9,262	—	$	—
Commercial mortgage	50	16,818		13	3,456		50	22,471		7	2,771
Other commercial real estate	3	1,318		—	—		5	2,208		1	147
Commercial and industrial	11	1,363		4	169		24	9,818		4	770
Lease financing	3	166		—	—		6	252		—	—
Residential mortgage	9	521		2	155		8	1,923		2	625
Construction and land development - noncommercial	1	158		—	—		1	395		—	—
Consumer	7	1,132		—	—		1	92		1	92
Total loan term extension	86	29,143		19	3,780		100	46,421		15	4,405

Below market interest rate
Construction and land development - commercial	1	227		—	—		7	$	13,800	—	$	—
Commercial mortgage	12	7,333		1	490		21	13,082		4	678
Other commercial real estate	—	—		—	—		1	372		1	372
Commercial and industrial	11	1,584		1	—		4	503		1	28
Residential mortgage	13	1,887		5	828		12	2,572		1	52
Construction and land development - noncommercial	—	—		—	—		2	2,357		1	356
Revolving mortgage	1	48		1	48		—	—		—	—
Consumer	4	17		1	—		—	—		—	—
Total below market interest rate	42	11,096		9	1,366		47	32,686		8	1,486

Other concession
Commercial mortgage	3	1,036		0	—		1	593		—	0
Commercial and industrial	—	—		0	—		2	37		2	37
Residential mortgage	1	384		0	—		0	—		—	—
Total other concession	4	1,420		0	—		3	630		2	37
Total noncovered restructurings	150	$	47,333	33	$	7,479	199	$	102,413	35	$	10,844



	Year ended December 31, 2012						Year ended December 31, 2011
	All restructurings			Restructurings with subsequent payment default			All restructurings			Restructurings with subsequent payment default
	Number of loans	Recorded investment at period end		Number of loans	Recorded investment at period end		Number of loans	Recorded investment at period end		Number of loans	Recorded investment at period end
Covered loans
Interest only period provided
Construction and land development - commercial	2	$	496	1	$	356	6	$	10,481	1	$	3,602
Commercial mortgage	4	10,404		1	234		4	8,331		1	2
Other commercial real estate	1	2,994		—	—		—	—		—	—
Commercial and industrial	1	170		—	—		—	—		—	—
Residential mortgage	1	98		—	—		2	5,361		1	4,287
Total interest only	9	14,162		2	590		12	24,173		3	7,891

Loan term extension
Construction and land development - commercial	9	7,294		1	3,703		7	3,145		3	1,386
Commercial mortgage	4	2,584		—	—		7	7,368		—	—
Other commercial real estate	—	—		—	—		5	9,733		—	—
Commercial and industrial	2	158		—	—		3	291		—	—
Residential mortgage	4	5,111		2	4,629		6	2,188		3	744
Construction and land development - noncommercial	—	—		—	—		1	2,097		1	2,097
Total loan term extension	19	15,147		3	8,332		29	24,822		7	4,227

Below market interest rate
Construction and land development - commercial	13	19,953		5	8,781		21	22,554		5	15,615
Commercial mortgage	18	19,100		6	3,906		21	50,962		2	1,357
Other commercial real estate	2	1,954		—	—		1	684		—	—
Commercial and industrial	5	1,299		2	—		7	2,217		1	809
Residential mortgage	21	4,622		10	490		19	4,392		6	1,409
Construction and land development - noncommercial	1	—		1	—		1	1,678		—	—
Total below market interest rate	60	46,928		24	13,177		70	82,487		14	19,190

Other concession
Residential mortgage	1	54		1	54		1	702		—	—
Total other concession	1	54		1	54		1	702		—	—
Total covered restructurings	89	$	76,291	30	$	22,153	112	$	132,184	24	$	31,308

For the years ended December 31, 2012, and December 31, 2011, the recorded investment in troubled debt restructurings prior to modification was not materially impacted by the modification since forgiveness of principal is not a restructuring option frequently used by BancShares.

Total troubled debt restructurings at December 31, 2012 equaled $333,170, of which, $193,207 were covered and $139,963 were noncovered. Total troubled debt restructurings at December 31, 2011 equaled $323,061, of which, $169,731 were covered and $153,330 were noncovered. Noncovered troubled debt restructurings of $89,133 and $123,796 as of December 31, 2012 and 2011, are considered performing as a result of the loans carrying a market interest rate and exhibiting evidence of sustained performance after restructuring.