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Credit Quality Assessment
 9 Months Ended
Sep. 30, 2012
Credit Quality Assessment [Abstract]  
Credit Quality Assessment

Note 5 – CREDIT QUALITY ASSESSMENT

Allowance for Loan and Lease Losses

Summary information on the allowance for loan and lease loss activity for the period indicated is provided in the following table:

 

  Nine Months Ended September 30,
(In thousands)   2012   2011
Balance at beginning of year   $ 49,426     $ 62,135  
Provision for loan and lease losses     2,481       (854 )
Loan and lease charge-offs     (11,456 )     (12,612 )
Loan and lease recoveries     2,167       1,051  
Net charge-offs     (9,289 )     (11,561 )
Balance at period end   $ 42,618     $ 49,720  

 

The following tables provide information on the activity in the allowance for loan and lease losses by the respective loan portfolio segment for the period indicated:

 

 

    For the Nine Months Ended September 30, 2012
        Commercial Real Estate           Residential Real Estate    
                Commercial                    
    Commercial   Commercial   Commercial   Owner           Residential    Residential    
(Dollars in thousands)   Business   AD&C   Investor R/E   Occupied R/E   Leasing   Consumer   Mortgage   Construction   Total
Balance at beginning of year   $ 6,727     $ 6,664     $ 8,248     $ 7,329     $ 795     $ 4,873     $ 10,583     $ 4,207     $ 49,426  
Provision (credit)     (1,234 )     1,143       4,334       826       (387 )     (142 )     (546 )     (1,513 )     2,481  
Charge-offs     (995 )     (3,257 )     (3,581 )     (1,146 )     (8 )     (866 )     (1,536 )     (67 )     (11,456 )
Recoveries     1,445       257       98       9       23       179       150       6       2,167  
Net charge-offs     450       (3,000 )     (3,483 )     (1,137 )     15       (687 )     (1,386 )     (61 )     (9,289 )
Balance at end of period   $ 5,943     $ 4,807     $ 9,099     $ 7,018     $ 423     $ 4,044     $ 8,651     $ 2,633     $ 42,618  
Total loans and leases   $ 322,087     $ 133,007     $ 447,536     $ 579,711     $ 4,233     $ 353,999     $ 499,806     $ 128,606     $ 2,468,985  
Allowance for loans and leases to total loans and leases ratio     1.85 %     3.61 %     2.03 %     1.21 %     9.99 %     1.14 %     1.73 %     2.05 %     1.73 %
Balance of loans specifically evaluated for impairment   $ 8,420     $ 8,957     $ 12,345     $ 15,258       na.     $ 32     $ 4,660     $ 731     $ 50,403  
Allowance for loans specifically evaluated for impairment   $ 2,123     $ —     $ 112     $ 620       na.       na.     $ 734     $ 157     $ 3,746  
S pecific allowance to specific loans ratio     25.21 %     0.00 %     0.91 %     4.06 %     na.       na.       15.75 %     21.48 %     7.43 %
Balance of loans collectively evaluated   $ 313,667     $ 124,050     $ 435,191     $ 564,453     $ 4,233     $ 353,967     $ 495,146     $ 127,875     $ 2,418,582  
Allowance for loans collectively evaluated   $ 3,820     $ 4,807     $ 8,987     $ 6,398     $ 423     $ 4,044     $ 7,917     $ 2,476     $ 38,872  
Collective allowance to collective loans ratio     1.22 %     3.88 %     2.07 %     1.13 %     9.99 %     1.14 %     1.60 %     1.94 %     1.61 %

 

    For the Year Ended December 31, 2011
        Commercial Real Estate           Residential Real Estate    
                Commercial                    
    Commercial   Commercial   Commercial   Owner           Residential   Residential    
(Dollars in thousands)   Business   AD&C   Investor R/E   Occupied R/E   Leasing   Consumer   Mortgage   Construction   Total
Balance at beginning of year   $ 12,870     $ 18,241     $4,793   $ 8,177     $ 667     $ 4,231     $ 10,396     $ 2,760     $ 62,135  
Provision (credit)     (4,252 )     (11,035 )   4,320     (361 )     1,182       3,173       5,144       3,257       1,428  
Charge-offs     (2,565 )     (1,780 )   (868)     (487 )     (1,072 )     (2,740 )     (5,178 )     (1,815 )     (16,505 )
Recoveries     674       1,238     3     —         18       209       221       5       2,368  
Net charge-offs     (1,891 )     (542 )   (865)     (487 )     (1,054 )     (2,531 )     (4,957 )     (1,810 )     (14,137 )
Balance at end of year   $ 6,727     $ 6,664     $8,248   $ 7,329     $ 795     $ 4,873     $ 10,583     $ 4,207     $ 49,426  
Total loans and leases   $ 260,327     $ 160,946     $371,948   $ 522,076     $ 6,954     $ 360,080     $ 448,662     $ 108,699     $ 2,239,692  
Allowance for loans and leases to total loans and leases ratio     2.58 %     4.14 %   2.22%     1.40 %     11.43 %     1.35 %     2.36 %     3.87 %     2.21 %
Balance of loans specifically evaluated for impairment   $ 9,092     $ 18,701     $16,964   $ 15,416       na.     $ 35     $ 5,108     $ 2,259     $ 67,575  
Allowance for loans specifically evaluated for impairment   $ 1,037     $ 7     $3,380   $ 1,772       na.       na.     $ 769     $ 826     $ 7,791  
Specific allowance to specific loans ratio     11.41 %     0.04 %   19.92%     11.49 %     na.       na.       15.05 %     36.56 %     11.53 %
Balance of loans collectively evaluated   $ 251,235     $ 142,245     $354,984   $ 506,660     $ 6,954     $ 360,045     $ 443,554     $ 106,440     $ 2,172,117  
Allowance for loans collectively evaluated   $ 5,690     $ 6,657     $4,868   $ 5,557     $ 795     $ 4,873     $ 9,814     $ 3,381     $ 41,635  
Collective allowance to collective loans ratio     2.26 %     4.68 %   1.37%     1.10 %     11.43 %     1.35 %     2.21 %     3.18 %     1.92 %

  

The following table provides summary information regarding impaired loans at the dates indicated and for the periods then ended:

 

  September 30,   December 31,
(In thousands)   2012   2011
Impaired loans with a valuation allowance   $ 15,833     $ 36,742  
                 
Impaired loans without a valuation allowance     34,570       30,833  
Total impaired loans   $ 50,403     $ 67,575  
Allowance for loan and lease losses related to impaired loans   $ 3,746     $ 7,791  
                 
Allowance for loan and lease losses related to loans collectively evaluated     38,872       41,635  
Total allowance for loan and lease losses   $ 42,618     $ 49,426  
                 
Average impaired loans for the period   $ 59,353     $ 68,377  
                 
Contractual interest income due on impaired loans during the period   $ 3,168     $ 4,973  
                 
Interest income on impaired loans recognized on a cash basis   $ 927     $ 1,523  
                 
Interest income on impaired loans recognized on an accrual basis   $ 403     $ 325  

 

The following tables present the recorded investment with respect to impaired loans, the associated allowance by the applicable portfolio segment and the principal balance of the impaired loans prior to amounts charged-off at the dates indicated:

 

        At September 30, 2012
Commercial Real Estate		       Total Recorded
                Commercial   All   Investment in
        Commercial   Commercial   Owner   Other   Impaired
(In thousands)   Commercial   AD&C   Investor R/E   Occupied R/E   Loans   Loans
Impaired loans with a specific allowance                        
Non-accruing   $ 2,226     $ —     $ 180     $ 4,254     $ —     $ 6,660  
Restructured accruing     2,591       —       —       1,315       3,441       7,347  
Restructured non-accruing     221       —       176       1,054       375       1,826  
Balance   $ 5,038     $ —     $ 356     $ 6,623     $ 3,816     $ 15,833  
Allowance   $ 2,123     $ —     $ 112     $ 620     $ 891     $ 3,746  
Impaired loans without a specific allowance                                                
Non-accruing   $ 1,616     $ 3,950     $ 11,007     $ 6,282     $ —     $ 22,855  
Restructured accruing     910       —         —       200       820       1,930  
Restructured non-accruing     856       5,007       982       2,153       787       9,785  
Balance   $ 3,382     $ 8,957     $ 11,989     $ 8,635     $ 1,607     $ 34,570  
Total impaired loans                                                
Non-accruing   $ 3,842     $ 3,950     $ 11,187     $ 10,536     $ —     $ 29,515  
Restructured accruing     3,501       —       —       1,515       4,261       9,277  
Restructured non-accruing     1,077       5,007       1,158       3,207       1,162       11,611  
Balance   $ 8,420     $ 8,957     $ 12,345     $ 15,258     $ 5,423     $ 50,403  
Unpaid principal balance in total impaired loans   $ 12,066     $ 22,803     $ 16,321     $ 18,075     $ —     $ 69,265  

 

    For the Nine Months Ended September 30, 2012
        Commercial Real Estate       Total Recorded
                Commercial   All   Investment in
        Commercial   Commercial   Owner   Other   Impaired
(In thousands)   Commercial   AD&C   Investor R/E   Occupied R/E   Loans   Loans
Average impaired loans for the period   $ 8,578     $ 13,754     $ 14,336     $ 16,419     $ 6,265     $ 59,353  
Contractual interest income due on impaired loans during the period   $ 266     $ 936     $ 931     $ 996     $ 39          
Interest income on impaired loans recognized on a cash basis   $ 109     $ 268     $ 162     $ 366     $ 22          
Interest income on impaired loans recognized on an accrual basis   $ 154     $ —     $ —     $ 77     $ 172          

  

  At December 31, 2011
      Commercial Real Estate   Total Recorded
            Commercial   All   Investment in
      Commercial   Commercial   Owner   Other   Impaired
(In thousands)   Commercial   AD&C   Investor R/E   Occupied R/E   Loans   Loans
Impaired loans with a specific allowance                                                
Non-accruing   $ 1,110     $ —     $ 13,812     $ 4,091     $ 1,093     $ 20,106  
Restructured accruing     1,346       —       —       707       3,475       5,528  
Restructured non-accruing     307       6,504       628       3,282       387       11,108  
Balance   $ 2,763     $ 6,504     $ 14,440     $ 8,080     $ 4,955     $ 36,742  
Allowance   $ 1,037     $ 7     $ 3,380     $ 1,772     $ 1,595     $ 7,791  
Impaired loans without a specific allowance                                                
Non-accruing   $ 3,416     $ 7,798     $ 1,883     $ 6,464     $ 800     $ 20,361  
Restructured accruing     520       —       —       —       833       1,353  
Restructured non-accruing     2,393       4,399       641       872       814       9,119  
Balance   $ 6,329     $ 12,197     $ 2,524     $ 7,336     $ 2,447     $ 30,833  
Total impaired loans                                                
Non-accruing   $ 4,526     $ 7,798     $ 15,695     $ 10,555     $ 1,893     $ 40,467  
Restructured accruing     1,866       —       —       707       4,308       6,881  
Restructured non-accruing     2,700       10,903       1,269       4,154       1,201       20,227  
Balance   $ 9,092     $ 18,701     $ 16,964     $ 15,416     $ 7,402     $ 67,575  
Unpaid principal balance in total impaired loans   $ 11,303     $ 37,442     $ 17,389     $ 16,466     $ —     $ 82,600  

  

  For the Year Ended December 31, 2011
      Commercial Real Estate   Total Recorded
            Commercial   All   Investment in
      Commercial   Commercial   Owner   Other   Impaired
(In thousands)   Commercial   AD&C   Investor R/E   Occupied R/E   Loans   Loans
Average impaired loans for the period   $ 9,800     $ 27,005     $ 11,409     $ 13,942     $ 6,221     $ 68,377  
Contractual interest income due on impaired loans during the period   $ 583     $ 1,743     $ 830     $ 800     $ 1,017          
Interest income on impaired loans recognized on a cash basis   $ 267     $ 487     $ 93     $ 471     $ 205          
Interest income on impaired loans recognized on an accrual basis   $ 114     $ —     $ —     $ 45     $ 166          

   

Credit Quality

The following tables provide information on the credit quality of the loan portfolio by segment at the dates indicated:

 

 

    September 30, 2012
        Commercial Real Estate           Residential Real Estate    
                Commercial                    
        Commercial   Commercial   Owner           Residential   Residential    
(In thousands)   Commercial   AD&C   Investor R/E   Occupied R/E   Leasing   Consumer   Mortgage   Construction   Total
Non-performings:                                                                        
Non-accrual loans and leases   $ 4,919     $ 8,957     $ 12,345     $ 13,742     $ 834     $ 1,607     $ 3,644     $ 3,236     $ 49,284  
Loans and leases 90 days past due     44       —       —       —       127       18       116       —       305  
Restructured loans and leases     3,501       —       —       1,515       —       32       4,229       —       9,277  
Total non-performing loans and leases     8,464       8,957       12,345       15,257       961       1,657       7,989       3,236       58,866  
Other real estate owned     1,829       —       462       4,569       —       —       1,551       880       9,291  
Total non-performing assets   $ 10,293     $ 8,957     $ 12,807     $ 19,826     $ 961     $ 1,657     $ 9,540     $ 4,116     $ 68,157  

  

    September 30, 2012
        Commercial Real Estate           Residential Real Estate    
                Commercial                    
        Commercial   Commercial   Owner           Residential   Residential    
(In thousands)   Commercial   AD&C   Investor R/E   Occupied R/E   Leasing   Consumer   Mortgage   Construction   Total
Non-performing loans and assets:                                                                        
Non-accrual loans and leases   $ 7,226     $ 18,702     $ 16,963     $ 14,709     $ 853     $ 1,786     $ 5,722     $ 5,719     $ 71,680  
Loans and leases 90 days past due     —       —       —       —       2       165       167       243       577  
Restructured loans and leases     1,866       —       —       707       —       35       3,579       694       6,881  
Total non-performing loans and leases     9,092       18,702       16,963       15,416       855       1,986       9,468       6,656       79,138  
Other real estate owned     100       —       462       273       —       —       3,395       201       4,431  
Total non-performing assets   $ 9,192     $ 18,702     $ 17,425     $ 15,689     $ 855     $ 1,986     $ 12,863     $ 6,857     $ 83,569  

  

    September 30, 2012
        Commercial Real Estate           Residential Real Estate    
                Commercial                    
        Commercial   Commercial   Owner           Residential   Residential    
(In thousands)   Commercial   AD&C   Investor R/E   Occupied R/E   Leasing   Consumer   Mortgage   Construction   Total
                                     
Past due loans and leases                                                                        
31-60 days   $ 3,400     $ —     $ 328     $ 3,283     $ 22     $ 1,337     $ 4,267     $ —     $ 12,637  
61-90 days     457       —       90       210       2       533       1,977       —       3,269  
> 90 days     44       —       —       —       127       18       116       —       305  
Total past due     3,901       —       418       3,493       151       1,888       6,360       —       16,211  
Non-accrual loans and leases     4,919       8,957       12,345       13,742       834       1,607       3,644       3,236       49,284  
Current loans     313,267       124,050       434,773       562,476       3,248       350,504       489,802       125,370       2,403,490  
Total loans and leases   $ 322,087     $ 133,007     $ 447,536     $ 579,711     $ 4,233     $ 353,999     $ 499,806     $ 128,606     $ 2,468,985  

  

    December 31, 2011
        Commercial Real Estate           Residential Real Estate    
                Commercial                    
        Commercial   Commercial   Owner           Residential   Residential    
(In thousands)   Commercial   AD&C   Investor R/E   Occupied R/E   Leasing   Consumer   Mortgage   Construction   Total
Past due loans and leases                                                                        
31-60 days   $ 1,467     $ 717     $ 10,723     $ 1,677     $ 7     $ 467     $ 5,246     $ 1,732     $ 22,036  
61-90 days     62       —       —       2,537       —       20       1,639       —       4,258  
> 90 days     —       —       —       —       2       165       167       243       577  
Total past due     1,529       717       10,723       4,214       9       652       7,052       1,975       26,871  
Non-accrual loans and leases     7,226       18,702       16,963       14,709       853       1,786       5,722       5,719       71,680  
Current loans     251,572       141,527       344,262       503,153       6,092       357,642       435,888       101,005       2,141,141  
Total loans and leases   $ 260,327     $ 160,946     $ 371,948     $ 522,076     $ 6,954     $ 360,080     $ 448,662     $ 108,699     $ 2,239,692  

 

The following tables provide information by credit risk rating indicators for each segment of the commercial loan portfolio for the dates indicated:

 

    September 30, 2012
        Commercial Real Estate    
                Commercial    
        Commercial   Commercial   Owner    
(In thousands)   Commercial   AD&C   Investor R/E   Occupied R/E   Total
Risk Free to Marginally Acceptable   $ 279,532     $ 120,144     $ 396,627     $ 527,534     $ 1,323,837  
Special Mention     14,945       2,547       30,196       27,043       74,731  
Substandard     25,369       10,316       20,081       24,172       79,938  
Doubtful     2,241       —       632       962       3,835  
Total   $ 322,087     $ 133,007     $ 447,536     $ 579,711     $ 1,482,341  

 

    December 31, 2011
        Commercial Real Estate    
                Commercial    
        Commercial   Commercial   Owner    
(In thousands)   Commercial   AD&C   Investor R/E   Occupied R/E   Total
Risk Free to M arginally Acceptable   $ 225,048     $ 137,181     $ 331,095     $ 469,309     $ 1,162,633  
Special M ention     8,551       2,207       9,592       22,103       42,453  
Substandard     25,720       21,558       31,261       30,664       109,203  
Doubtful     1,008       —       —       —       1,008  
Total   $ 260,327     $ 160,946     $ 371,948     $ 522,076     $ 1,315,297  

  

Homogeneous loan pools do not have individual loans subjected to internal risk ratings therefore, the credit indicator applied to these pools is based on their delinquency status. The following tables provide information by credit risk rating indicators for those remaining segments of the loan portfolio at the dates indicated:

 

    September 30, 2012
            Residential Real Estate    
            Residential   Residential    
(In thousands)   Leasing   Consumer   Mortgage   Construction   Total
Performing   $ 3,272     $ 352,342     $ 491,817     $ 125,370     $ 972,801  
Non-performing:                                        
90 days past due     127       18       116       —       261  
Non-accruing     834       1,607       3,644       3,236       9,321  
Restructured loans and leases     —       32       4,229       —       4,261  
Total   $ 4,233     $ 353,999     $ 499,806     $ 128,606     $ 986,644  

 

 

December 31, 2011

 

         Residential Real Estate  
            Residential   Residential    
(In thousands)   Leasing   Consumer   Mortgage   Construction   Total
Performing   $ 6,099     $ 358,094     $ 439,194     $ 102,043     $ 905,430  
Non-performing:                                        
90 days past due     2       165       167       243       577  
Non-accruing     853       1,786       5,722       5,719       14,080  
Restructured loans and leases     —       35       3,579       694       4,308  
Total   $ 6,954     $ 360,080     $ 448,662     $ 108,699     $ 924,395  

 

During the nine months ended September 30, 2012, the Company restructured $2.8 million in loans. Modifications consisted principally of interest rate concessions. No modifications resulted in the reduction of the recorded investment in the associated loan balances. Restructured loans are subject to periodic credit reviews to determine the necessity and adequacy of a specific loan loss allowance based on the collectability of the recorded investment in the restructured loan. Loans restructured during 2012 have specific reserves of $0.5 million at September 30, 2012. For the year ended December 31, 2011, the Company restructured $10.3 million in loans. Modifications consisted principally of interest rate concessions and no modifications resulted in the reduction of the recorded investment in the associated loan balances. Loans restructured during 2011 had specific reserves of $1.9 million thousand at December 31, 2011.

 

The following table provides the amounts of the restructured loans at the date of restructuring for specific segments of the loan portfolio during the period indicated:

  

    For the Nine Months Ended September 30, 2012
        Commercial Real Estate      
                Commercial   All  
        Commercial   Commercial   Owner   Other  
(In thousands)   Commercial   AD&C   Investor R/E   Occupied R/E   Loans   Total
Troubled debt restructurings                                                
Restructured accruing   $ 1,771     $ —     $ —     $ 1,021     $ —     $ 2,792  
Restructured non-accruing     —       —       —       —       —       —  
Balance   $ 1,771     $ —     $ —     $ 1,021     $ —     $ 2,792  
Specific allowance   $ 319     $ —     $ —     $ 211     $ —     $ 530  
Restructured and subsequently defaulted   $ —     $ —     $ —     $ —     $ —     $ —  

  

    For the Year Ended December 31, 2011
        Commercial Real Estate            
                Commercial   All        
        Commercial   Commercial   Owner   Other        
(In thousands)   Commercial   AD&C   Investor R/E   Occupied R/E   Loans   Total
Troubled debt restructurings                                                
Restructured accruing   $ 1,696     $ —     $ —     $ —     $ 3,590     $ 5,286  
Restructured non-accruing     469       —       1,269       2,475       763       4,976  
Balance   $ 2,165     $ —     $ 1,269     $ 2,475     $ 4,353     $ 10,262  
Specific allowance   $ 254     $ —     $ 93     $ 509     $ 1,027     $ 1,883  
Restructured and subsequently defaulted   $ —     $ —     $ —     $ —     $ 509     $ 509  

   

Changes in the accretable yield related to loans acquired with evidence of deteriorated credit quality are as follows:

 

(In thousands)   Amount
Balance at January 1, 2012   $ —  
CommerceFirst acquisition     754  
Accretion recognized to date     (106 )
Net reclassification from accretable to non-accretable     —  
Balance at September 30, 2012   $ 648  

 

Other Real Estate Owned

Other real estate owned totaled $9.3 million and $4.4 million at September 30, 2012 and December 31, 2011. The increase compared to the prior year end was due primarily to balances added as a result of the CommerceFirst acquisition.