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Loans and Allowances for Credit Losses
 6 Months Ended
Jun. 30, 2012
Loans Receivable, Net [Abstract]  
Loans
Loans and Allowances for Credit Losses

Loans are either secured or unsecured based on the type of loan and the financial condition of the borrower. Repayment is generally expected from cash flow or proceeds from the sale of selected assets of the borrower. BOK Financial is exposed to risk of loss on loans due to the borrower’s difficulties, which may arise from any number of factors, including problems within the respective industry or local economic conditions. Access to collateral, in the event of borrower default, is reasonably assured through adherence to applicable lending laws and through sound lending standards and credit review procedures.

Performing loans may be renewed under then current collateral value, debt service ratio and other underwriting standards. Nonperforming loans may be renewed and will remain on nonaccrual status. Nonperforming loans renewed will be evaluated and may be charged off if the loan balance is no longer covered by the paying capacity of the borrower based on an evaluation of available cash resources and collateral value.

Interest is accrued at the applicable interest rate on the principal amount outstanding. Loans are placed on nonaccrual status when, in the opinion of management, full collection of principal or interest is uncertain. Internally risk graded loans are individually evaluated for nonaccrual status quarterly. Non-risk graded loans are generally placed on nonaccrual status when more than 90 days past due. Interest previously accrued but not collected is charged against interest income when the loan is placed on nonaccrual status. Payments on nonaccrual loans are applied to principal or reported as interest income, according to management’s judgment as to the collectability of principal. Loans may be returned to accruing status when, in the opinion of management, full collection of principal and interest, including principal previously charged off, is probable based on improvements in the borrower’s financial condition or a sustained period of performance.

All distressed commercial and commercial real estate loans are placed on nonaccrual status. Modifications of nonaccruing loans to distressed borrowers generally consists of extension of payment terms, renewal of matured nonaccruing loans or interest rate concession. Principal and accrued but unpaid interest is not forgiven. Renewed or modified nonaccruing loans are charged off when the loan balance is no longer covered by the paying capacity of the borrower based on a quarterly evaluation of cash resources and collateral value. Renewed or modified nonperforming loans generally remain on nonaccrual status until full collection of principal and interest in accordance with original terms, including principal previously charged off, is probable. Consumer loans to troubled borrowers are not voluntarily modified.

Residential mortgage loans are modified in accordance with U.S. government agency guidelines by reducing interest rates and extending the number of payments. No unpaid principal or interest is forgiven. Interest guaranteed by U.S. government agencies under residential mortgage loan programs continues to accrue based on the modified terms of the loan. Renegotiated loans may be sold after a period of satisfactory performance. If it becomes probable that all amounts due according to the modified loan terms will not be collected, the loan is placed on nonaccrual status and included in nonaccrual loans.

Loan origination and commitment fees and direct loan acquisition and origination costs are deferred and amortized as an adjustment to yield over the life of the loan or over the commitment period, as applicable.

Certain residential mortgage loans originated by the Company are held for sale and are carried at fair value based on sales commitments or market quotes and reported separately in the Consolidated Balance Sheets. Changes in fair value are recorded in other operating revenue – mortgage banking revenue in the Consolidated Statements of Earnings.

Loans are disaggregated into portfolio segments and further disaggregated into classes. The portfolio segment is the level at which the Company develops and documents a systematic method for determining its allowance for credit losses. Classes are a further disaggregation of portfolio segments based on the risk characteristics of the loans and the Company’s method for monitoring and assessing credit risk. 

Portfolio segments of the loan portfolio are as follows (in thousands):

 
 
June 30, 2012
 
December 31, 2011
 
 
Fixed
Rate
 
Variable
Rate
 
Non-accrual
 
Total
 
Fixed
Rate
 
Variable
Rate
 
Non-accrual
 
Total
Commercial
 
$
3,536,199

 
$
3,481,816

 
$
34,529

 
$
7,052,544

 
$
3,261,344

 
$
3,224,915

 
$
68,811

 
$
6,555,070

Commercial real estate
 
864,077

 
1,181,923

 
80,214

 
2,126,214

 
896,820

 
1,295,290

 
99,193

 
2,291,303

Residential mortgage
 
1,708,252

 
274,118

 
22,727

 
2,005,097

 
1,646,554

 
298,206

 
29,767

 
1,974,527

Consumer
 
200,897

 
184,667

 
7,012

 
392,576

 
245,711

 
199,617

 
3,515

 
448,843

Total
 
$
6,309,425

 
$
5,122,524

 
$
144,482

 
$
11,576,431

 
$
6,050,429

 
$
5,018,028

 
$
201,286

 
$
11,269,743

Accruing loans past due (90 days)1
 
 

 
 

 
 

 
$
691

 
 

 
 

 
 

 
$
2,496

 
 
June 30, 2011
 
 
Fixed
Rate
 
Variable
Rate
 
Non-accrual
 
Total
Commercial
 
$
2,847,559

 
$
3,269,321

 
$
53,365

 
$
6,170,245

Commercial real estate
 
868,513

 
1,209,155

 
110,363

 
2,188,031

Residential mortgage
 
1,517,676

 
322,585

 
31,693

 
1,871,954

Consumer
 
296,595

 
205,970

 
4,749

 
507,314

Total
 
$
5,530,343

 
$
5,007,031

 
$
200,170

 
$
10,737,544

Accruing loans past due (90 days)1
 
 

 
 

 
 

 
$
2,341

1 
Excludes residential mortgage loans guaranteed by agencies of the U.S. government

At June 30, 2012, $5.3 billion or 46% of the total loan portfolio is to businesses and individuals in Oklahoma and $3.5 billion or 30% of our total loan portfolio is to businesses and individuals in Texas. These geographic concentrations subject the loan portfolio to the general economic conditions within these areas.

Commercial

Commercial loans represent loans for working capital, facilities acquisition or expansion, purchases of equipment and other needs of commercial customers primarily located within our geographical footprint.  Commercial loans are underwritten individually and represent on-going relationships based on a thorough knowledge of the customer, the customer’s industry and market.  While commercial loans are generally secured by the customer’s assets including real property, inventory, accounts receivable, operating equipment, interest in mineral rights and other property and may also include personal guarantees of the owners and related parties, the primary source of repayment of the loans is the on-going cash flow from operations of the customer’s business.  Inherent lending risk is centrally monitored on a continuous basis from underwriting throughout the life of the loan for compliance with commercial lending policies.

At June 30, 2012, commercial loans to businesses in Oklahoma totaled $3.1 billion or 44% of the commercial loan portfolio segment and loans to businesses in Texas totaled $2.4 billion or 34% of the commercial loan portfolio segment. The commercial loan portfolio segment is further divided into loan classes. The energy loan class totaled $2.2 billion or 20% of total loans at June 30, 2012, including $2.0 billion of outstanding loans to energy producers. Approximately 55% of committed production loans are secured by properties primarily producing oil and 45% are secured by properties producing natural gas. The services loan class totaled $1.9 billion at June 30, 2012. Approximately $1.0 billion of loans in the services category consists of loans with individual balances of less than $10 million.  Businesses included in the services class include community foundations, communications, education, gaming and transportation.

Commercial Real Estate

Commercial real estate loans are for the construction of buildings or other improvements to real estate and property held by borrowers for investment purposes primarily within our geographical footprint. We require collateral values in excess of the loan amounts, demonstrated cash flows in excess of expected debt service requirements, equity investment in the project and a portion of the project already sold, leased or permanent financing already secured. The expected cash flows from all significant new or renewed income producing property commitments are stress tested to reflect the risks in varying interest rates, vacancy rates and rental rates. As with commercial loans, inherent lending risks are centrally monitored on a continuous basis from underwriting throughout the life of the loan for compliance with applicable lending policies.

At June 30, 2012, 32% of commercial real estate loans are secured by properties primarily located in the Dallas and Houston areas of Texas. An additional 30% of commercial real estate loans are secured by properties located primarily in the Tulsa and Oklahoma City metropolitan areas of Oklahoma. 

Residential Mortgage and Consumer

Residential mortgage loans provide funds for our customers to purchase or refinance their primary residence or to borrow against the equity in their home. Residential mortgage loans are secured by a first or second-mortgage on the customer’s primary residence. Consumer loans include direct loans secured by and for the purchase of automobiles, recreational and marine equipment as well as other unsecured loans. Consumer loans also include indirect automobile loans made through primary dealers. Residential mortgage and consumer loans are made in accordance with underwriting policies we believe to be conservative and are fully documented. Credit scoring is assessed based on significant credit characteristics including credit history, residential and employment stability. Residential mortgage loans retained in the Company’s portfolio are primarily composed of various mortgage programs to support customer relationships including jumbo mortgage loans, non-builder construction loans and special loan programs for high net worth individuals and certain professionals. Jumbo loans may be fixed or variable rate and are fully amortizing. Jumbo loans generally conform to government sponsored entity standards, except that the loan size exceeds maximums required under these standards. These loans generally require a minimum FICO score of 720 and a maximum debt-to-income ratio (“DTI”) of 38%.  Loan-to-value (“LTV”) ratios are tiered from 60% to 100%, depending on the market.  Special mortgage programs include fixed and variable fully amortizing loans tailored to the needs of certain healthcare professionals.  Variable rate loans are fully indexed at origination and may have fixed rates for three to ten years, then adjust annually thereafter. 

At June 30, 2012, residential mortgage loans included $168 million of loans guaranteed by U.S. government agencies previously sold into GNMA mortgage pools. These loans either have been repurchased or are eligible to be repurchased by the Company when certain defined delinquency criteria are met. Although payments on these loans generally are past due more than 90 days, interest continues to accrue based on the government guarantee.

Home equity loans totaled $696 million at June 30, 2012. Approximately, 39% of the home equity portfolio is comprised of junior lien loans and 61% of the home equity loan portfolio is comprised of first lien loans. Junior lien loans are distributed 79% to amortizing term loans and 21% to revolving lines of credit. Home equity loans generally require a minimum FICO score of 700 and a maximum DTI of 40%. The maximum loan amount available for our home equity loan products is generally $400 thousand.

Credit Commitments
 
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. At June 30, 2012, outstanding commitments totaled $6.1 billion. Because some commitments are expected to expire before being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. BOK Financial uses the same credit policies in making commitments as it does loans.

The amount of collateral obtained, if deemed necessary, is based upon management’s credit evaluation of the borrower.

Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Because the credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan commitments, BOK Financial uses the same credit policies in evaluating the creditworthiness of the customer. Additionally, BOK Financial uses the same evaluation process in obtaining collateral on standby letters of credit as it does for loan commitments. The term of these standby letters of credit is defined in each commitment and typically corresponds with the underlying loan commitment. At June 30, 2012, outstanding standby letters of credit totaled $449 million. Commercial letters of credit are used to facilitate customer trade transactions with the drafts being drawn when the underlying transaction is consummated. At June 30, 2012, outstanding commercial letters of credit totaled $8 million.

Allowances for Credit Losses

BOK Financial maintains an allowance for loan losses and an accrual for off-balance sheet credit risk related to commitments to extend credit and standby letters of credit. As discussed in greater detail in Note 5, the Company also has separate accruals related to off-balance sheet credit risk related to residential mortgage loans previously sold with full or partial recourse and for residential mortgage loans sold to government sponsored agencies under standard representations and warranties.

The appropriateness of the allowance for loan losses and accrual for off-balance sheet credit losses is assessed by management based on an on-going quarterly evaluation of the probable estimated losses inherent in the portfolio, including probable losses on both outstanding loans and unused commitments.

The allowance for loan losses consists of specific allowances attributed to impaired loans that have not yet been charged down to amounts we expect to recover, general allowances for unimpaired loans based on estimated loss rates by loan class and nonspecific allowances based on general economic conditions, risk concentration and related factors. There have been no material changes in the approach or techniques utilized in developing the allowance for loan losses and the accrual for off-balance sheet credit losses for the three and six months ended June 30, 2012.

Internally risk graded loans are evaluated individually for impairment. Substantially all commercial and commercial real estate loans and certain residential mortgage and consumer loans are risk graded based on evaluation of the borrowers' ability to repay. Certain commercial loans and most residential mortgage and consumer loans are small balance, homogeneous pools of loans that are not risk graded.

Loans are considered to be impaired when it becomes probable that BOK Financial will be unable to collect all amounts due according to the contractual terms of the loan agreements. This is substantially the same criteria used to determine when a loan should be placed on nonaccrual status. All commercial and commercial real estate loans that have been modified in a troubled debt restructuring are considered to be impaired and remain classified as nonaccrual. Specific allowances for impaired loans are measured by an evaluation of estimated future cash flows discounted at the loans’ initial effective interest rate or the fair value of collateral for certain collateral dependent loans. Collateral value of real property is generally based on third party appraisals that conform to Uniform Standards of Professional Appraisal Practice, less estimated selling costs. Appraised values are on an "as-is" basis and are not adjusted by the Company. Collateral value of mineral rights is generally determined by our internal staff of engineers based on projected cash flows under current market conditions. Collateral values and available cash resources that support impaired loans are evaluated quarterly. Updated appraisals are obtained at least annually or more frequently if market conditions indicate collateral values have declined. Historical statistics may be used in limited situations to assist in estimating future cash flows or collateral values, such as when an impaired collateral dependent loan is identified at the end of a reporting period. Historical statistics are a practical way to estimate impairment until an updated appraisal of collateral value is received or a full assessment of future cash flows is completed. Estimates of future cash flows and collateral values require significant judgments and are subject to volatility.

General allowances for unimpaired loans are based on estimated loss rates by loan class. For risk-graded loans, loss rates are developed using historical gross loss rates, as adjusted for changes in risk grading and inherent risks identified by loan class. Loss rates for each loan class are determined by the current loss rate based on the most recent twelve months or a long-term gross loss rate that most appropriately represents the current economic environment. For each loan class, current average risk grades are compared to long-term average risk grades to determine if risk is increasing or decreasing. Loss rates are accordingly adjusted upward or downward in proportion to increasing or decreasing risk. Historical loss rates may be further adjusted for inherent risks identified for the given loan class which have not yet been captured in the actual gross loss rates or risk gradings.

Nonspecific allowances are maintained for risks beyond factors specific to a particular loan or loan class. These factors include trends in the economy in our primary lending areas, concentrations in loans with large balances and other relevant factors.
An accrual for off-balance sheet credit losses is included in Other liabilities in the Consolidated Balance Sheets. The appropriateness of this accrual is determined in the same manner as the allowance for loan losses. Changes in the accrual for off-balance sheet credit losses are recognized through the provision for credit losses in the Consolidated Statements of Earnings.

The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the three months ended June 30, 2012 is summarized as follows (in thousands):

 
 
Commercial
 
Commercial Real Estate
 
Residential Mortgage
 
Consumer
 
Nonspecific allowance
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
85,972

 
$
62,742

 
$
41,628

 
$
9,517

 
$
44,350

 
$
244,209

Provision for loan losses
 
(2,526
)
 
(6,264
)
 
4,371

 
212

 
(3,492
)
 
(7,699
)
Loans charged off
 
(4,094
)
 
(1,216
)
 
(4,061
)
 
(2,172
)
 
—

 
(11,543
)
Recoveries
 
4,125

 
544

 
750

 
1,283

 
—

 
6,702

Ending balance
 
$
83,477

 
$
55,806

 
$
42,688

 
$
8,840

 
$
40,858

 
$
231,669

Allowance for off-balance sheet credit losses:
 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
8,362

 
$
1,575

 
$
82

 
$
29

 
$
—

 
$
10,048

Provision for off-balance sheet credit losses
 
(138
)
 
(150
)
 
(2
)
 
(11
)
 
—

 
(301
)
Ending balance
 
$
8,224

 
$
1,425

 
$
80

 
$
18

 
$
—

 
$
9,747

 
 
 
 
 
 
 
 
 
 
 
 
 
Total provision for credit losses
 
$
(2,664
)
 
$
(6,414
)
 
$
4,369

 
$
201

 
$
(3,492
)
 
$
(8,000
)

The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the six months ended June 30, 2012 is summarized as follows (in thousands):

 
 
Commercial
 
Commercial Real Estate
 
Residential Mortgage
 
Consumer
 
Nonspecific allowance
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
83,443

 
$
67,034

 
$
46,476

 
$
10,178

 
$
46,350

 
$
253,481

Provision for loan losses
 
991

 
(5,143
)
 
898

 
260

 
(5,492
)
 
(8,486
)
Loans charged off
 
(7,028
)
 
(7,941
)
 
(5,847
)
 
(4,401
)
 
—

 
(25,217
)
Recoveries
 
6,071

 
1,856

 
1,161

 
2,803

 
—

 
11,891

Ending balance
 
$
83,477

 
$
55,806

 
$
42,688

 
$
8,840

 
$
40,858

 
$
231,669

Allowance for off-balance sheet credit losses:
 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
7,906

 
$
1,250

 
$
91

 
$
14

 
$
—

 
$
9,261

Provision for off-balance sheet credit losses
 
318

 
175

 
(11
)
 
4

 
—

 
486

Ending balance
 
$
8,224

 
$
1,425

 
$
80

 
$
18

 
$
—

 
$
9,747

 
 
 
 
 
 
 
 
 
 
 
 
 
Total provision for credit losses
 
$
1,309

 
$
(4,968
)
 
$
887

 
$
264

 
$
(5,492
)
 
$
(8,000
)

The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the three months ended June 30, 2011 is summarized as follows (in thousands):

 
 
Commercial
 
Commercial Real Estate
 
Residential Mortgage
 
Consumer
 
Nonspecific allowance
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
113,706

 
$
94,535

 
$
45,649

 
$
10,410

 
$
25,249

 
$
289,549

Provision for loan losses
 
980

 
289

 
2,721

 
(286
)
 
1,876

 
5,580

Loans charged off
 
(3,302
)
 
(3,380
)
 
(3,381
)
 
(2,711
)
 
—

 
(12,774
)
Recoveries
 
2,187

 
306

 
254

 
1,509

 
—

 
4,256

Ending balance
 
$
113,571

 
$
91,750

 
$
45,243

 
$
8,922

 
$
27,125

 
$
286,611

Allowance for off-balance sheet credit losses:
 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
12,256

 
$
875

 
$
155

 
$
339

 
$
—

 
$
13,625

Provision for off-balance sheet credit losses
 
(3,020
)
 
145

 
25

 
(30
)
 
—

 
(2,880
)
Ending balance
 
$
9,236

 
$
1,020

 
$
180

 
$
309

 
$
—

 
$
10,745

 
 
 
 
 
 
 
 
 
 
 
 
 
Total provision for credit losses
 
$
(2,040
)
 
$
434

 
$
2,746

 
$
(316
)
 
$
1,876

 
$
2,700


The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the six months ended June 30, 2011 is summarized as follows (in thousands):

 
 
Commercial
 
Commercial Real Estate
 
Residential Mortgage
 
Consumer
 
Nonspecific allowance
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
104,631

 
$
98,709

 
$
50,281

 
$
12,614

 
$
26,736

 
$
292,971

Provision for loan losses
 
10,836

 
2,665

 
(45
)
 
(1,369
)
 
389

 
12,476

Loans charged off
 
(5,654
)
 
(10,273
)
 
(6,329
)
 
(5,750
)
 
—

 
(28,006
)
Recoveries
 
3,758

 
649

 
1,336

 
3,427

 
—

 
9,170

Ending balance
 
$
113,571

 
$
91,750

 
$
45,243

 
$
8,922

 
$
27,125

 
$
286,611

Allowance for off-balance sheet credit losses:
 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
 
$
13,456

 
$
443

 
$
131

 
$
241

 
$
—

 
$
14,271

Provision for off-balance sheet credit losses
 
(4,220
)
 
577

 
49

 
68

 
—

 
(3,526
)
Ending balance
 
$
9,236

 
$
1,020

 
$
180

 
$
309

 
$
—

 
$
10,745

 
 
 
 
 
 
 
 
 
 
 
 
 
Total provision for credit losses
 
$
6,616

 
$
3,242

 
$
4

 
$
(1,301
)
 
$
389

 
$
8,950


A provision for credit losses is charged against earnings in amounts necessary to maintain an appropriate allowance for loan and accrual for off-balance sheet credit losses. All loans are charged off when the loan balance or a portion of the loan balance is no longer covered by the paying capacity of the borrower based on an evaluation of available cash resources and collateral value. Internally risk graded loans are evaluated quarterly and charge-offs are taken in the quarter in which the loss is identified. Non-risk graded loans are generally charged off when payments are between 90 days and 180 days past due, depending on loan class. Recoveries of loans previously charged off are added to the allowance.

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at June 30, 2012 is as follows (in thousands):

 
 
Collectively Measured
for Impairment
 
Individually Measured
for Impairment
 
Total
 
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related
Allowance
Commercial
 
$
7,018,115

 
$
83,199

 
$
34,429

 
$
278

 
$
7,052,544

 
$
83,477

Commercial real estate
 
2,046,006

 
54,526

 
80,208

 
1,280

 
2,126,214

 
55,806

Residential mortgage
 
1,997,887

 
42,453

 
7,210

 
235

 
2,005,097

 
42,688

Consumer
 
388,106

 
8,798

 
4,470

 
42

 
392,576

 
8,840

Total
 
11,450,114

 
188,976

 
126,317

 
1,835

 
11,576,431

 
190,811

 
 
 
 
 
 
 
 
 
 
 
 
 
Nonspecific allowance
 
—

 
—

 
—

 
—

 
—

 
40,858

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
11,450,114

 
$
188,976

 
$
126,317

 
$
1,835

 
$
11,576,431

 
$
231,669


The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at December 31, 2011 is as follows (in thousands):

 
 
Collectively Measured
for Impairment
 
Individually Measured
for Impairment
 
Total
 
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related
Allowance
Commercial
 
$
6,486,311

 
$
81,907

 
$
68,759

 
$
1,536

 
$
6,555,070

 
$
83,443

Commercial real estate
 
2,192,110

 
63,092

 
99,193

 
3,942

 
2,291,303

 
67,034

Residential mortgage
 
1,967,086

 
46,178

 
7,441

 
298

 
1,974,527

 
46,476

Consumer
 
447,747

 
10,178

 
1,096

 
—

 
448,843

 
10,178

Total
 
11,093,254

 
201,355

 
176,489

 
5,776

 
11,269,743

 
207,131

 
 
 
 
 
 
 
 
 
 
 
 
 
Nonspecific allowance
 
—

 
—

 
—

 
—

 
—

 
46,350

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
11,093,254

 
$
201,355

 
$
176,489

 
$
5,776

 
$
11,269,743

 
$
253,481


The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at June 30, 2011 is as follows (in thousands):

 
 
Collectively Measured
for Impairment
 
Individually Measured
for Impairment
 
Total
 
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related
Allowance
Commercial
 
$
6,117,083

 
$
111,131

 
$
53,162

 
$
2,440

 
$
6,170,245

 
$
113,571

Commercial real estate
 
2,077,668

 
88,611

 
110,363

 
3,139

 
2,188,031

 
91,750

Residential mortgage
 
1,861,069

 
44,254

 
10,885

 
989

 
1,871,954

 
45,243

Consumer
 
505,393

 
8,807

 
1,921

 
115

 
507,314

 
8,922

Total
 
10,561,213

 
252,803

 
176,331

 
6,683

 
10,737,544

 
259,486

 
 
 
 
 
 
 
 
 
 
 
 
 
Nonspecific allowance
 
—

 
—

 
—

 
—

 
—

 
27,125

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
10,561,213

 
$
252,803

 
$
176,331

 
$
6,683

 
$
10,737,544

 
$
286,611


Credit Quality Indicators

The Company utilizes loan class and risk grading as a primary credit quality indicator. Substantially all commercial and commercial real estate loans and certain residential mortgage and consumer loans are risk graded based on a quarterly evaluation of the borrowers’ ability to repay the loans. Certain commercial loans and most residential mortgage and consumer loans are small, homogeneous pools that are not risk graded. 

The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at June 30, 2012 is as follows (in thousands):

 
 
Internally Risk Graded
 
Non-Graded
 
Total
 
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related
Allowance
Commercial
 
$
7,034,934

 
$
82,357

 
$
17,610

 
$
1,120

 
$
7,052,544

 
$
83,477

Commercial real estate
 
2,126,208

 
55,806

 
6

 
—

 
2,126,214

 
55,806

Residential mortgage
 
283,031

 
6,987

 
1,722,066

 
35,701

 
2,005,097

 
42,688

Consumer
 
201,044

 
1,895

 
191,532

 
6,945

 
392,576

 
8,840

Total
 
9,645,217

 
147,045

 
1,931,214

 
43,766

 
11,576,431

 
190,811

 
 
 
 
 
 
 
 
 
 
 
 
 
Nonspecific allowance
 
—

 
—

 
—

 
—

 
—

 
40,858

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
9,645,217

 
$
147,045

 
$
1,931,214

 
$
43,766

 
$
11,576,431

 
$
231,669

 
The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at December 31, 2011 is as follows (in thousands):

 
 
Internally Risk Graded
 
Non-Graded
 
Total
 
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related
Allowance
Commercial
 
$
6,536,602

 
$
82,263

 
$
18,468

 
$
1,180

 
$
6,555,070

 
$
83,443

Commercial real estate
 
2,291,303

 
67,034

 
—

 
—

 
2,291,303

 
67,034

Residential mortgage
 
317,798

 
8,262

 
1,656,729

 
38,214

 
1,974,527

 
46,476

Consumer
 
217,195

 
2,527

 
231,648

 
7,651

 
448,843

 
10,178

Total
 
9,362,898

 
160,086

 
1,906,845

 
47,045

 
11,269,743

 
207,131

 
 
 
 
 
 
 
 
 
 
 
 
 
Nonspecific allowance
 
—

 
—

 
—

 
—

 
—

 
46,350

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
9,362,898

 
$
160,086

 
$
1,906,845

 
$
47,045

 
$
11,269,743

 
$
253,481


The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at June 30, 2011 is as follows (in thousands):

 
 
Internally Risk Graded
 
Non-Graded
 
Total
 
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related Allowance
 
Recorded Investment
 
Related
Allowance
Commercial
 
$
6,151,384

 
$
111,392

 
$
18,861

 
$
2,179

 
$
6,170,245

 
$
113,571

Commercial real estate
 
2,188,031

 
91,750

 
—

 
—

 
2,188,031

 
91,750

Residential mortgage
 
355,102

 
7,911

 
1,516,852

 
37,332

 
1,871,954

 
45,243

Consumer
 
220,300

 
1,877

 
287,014

 
7,045

 
507,314

 
8,922

Total
 
8,914,817

 
212,930

 
1,822,727

 
46,556

 
10,737,544

 
259,486

 
 
 
 
 
 
 
 
 
 
 
 
 
Nonspecific allowance
 
—

 
—

 
—

 
—

 
—

 
27,125

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
8,914,817

 
$
212,930

 
$
1,822,727

 
$
46,556

 
$
10,737,544

 
$
286,611



Loans are considered to be performing if they are in compliance with the original terms of the agreement which is consistent with the regulatory guideline of “pass.” Performing also includes loans considered to be “other loans especially mentioned” by regulatory guideline. Other loans especially mentioned are in compliance with the original terms of the agreement but may have a weakness that deserves management’s close attention. Performing loans also include past due residential mortgages that are guaranteed by agencies of the U.S. government.

The risk grading process identified certain criticized loans as potential problem loans. These loans have a well-defined weakness (e.g. inadequate debt service coverage or liquidity or marginal capitalization; repayment may depend on collateral or other risk mitigation) that may jeopardize liquidation of the debt and represent a greater risk due to deterioration in the financial condition of the borrower. This is consistent with the regulatory guideline for “substandard.” Because the borrowers are still performing in accordance with the original terms of the loan agreements, these loans were not placed in nonaccrual status. Known information does, however, cause concern as to the borrowers’ continued compliance with current repayment terms. Nonaccrual loans represent loans for which full collection of principal and interest is uncertain. This is substantially the same criteria used to determine whether a loan is impaired and includes certain loans considered “substandard” and all loans considered “doubtful” by regulatory guidelines.

The following table summarizes the Company’s loan portfolio at June 30, 2012 by the risk grade categories (in thousands): 
 
 
Internally Risk Graded
 
Non-Graded
 
 
 
 
Performing
 
Potential Problem
 
Nonaccrual
 
Performing
 
Nonaccrual
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
$
2,264,290

 
$
10,959

 
$
3,087

 
$
—

 
$
—

 
$
2,278,336

Services
 
1,881,143

 
40,254

 
10,123

 
—

 
—

 
1,931,520

Wholesale/retail
 
944,412

 
11,597

 
4,175

 
—

 
—

 
960,184

Manufacturing
 
340,815

 
9,832

 
12,230

 
—

 
—

 
362,877

Healthcare
 
1,004,773

 
1,045

 
3,310

 
—

 
—

 
1,009,128

Integrated food services
 
216,282

 
696

 
—

 
—

 
—

 
216,978

Other commercial and industrial
 
274,082

 
325

 
1,504

 
17,510

 
100

 
293,521

Total commercial
 
6,925,797

 
74,708

 
34,429

 
17,510

 
100

 
7,052,544

 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
 
214,263

 
26,746

 
46,050

 
—

 
—

 
287,059

Retail
 
476,179

 
8,290

 
7,908

 
—

 
—

 
492,377

Office
 
361,451

 
12,352

 
10,589

 
—

 
—

 
384,392

Multifamily
 
352,269

 
6,677

 
3,219

 
—

 
—

 
362,165

Industrial
 
230,760

 
273

 
—

 
—

 
—

 
231,033

Other commercial real estate
 
342,815

 
13,925

 
12,442

 
—

 
6

 
369,188

Total commercial real estate
 
1,977,737

 
68,263

 
80,208

 
—

 
6

 
2,126,214

 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
262,423

 
13,398

 
7,210

 
847,414

 
10,926

 
1,141,371

Permanent mortgages guaranteed by U.S. government agencies
 
—

 
—

 
—

 
168,059

 
—

 
168,059

Home equity
 
—

 
—

 
—

 
691,076

 
4,591

 
695,667

Total residential mortgage
 
262,423

 
13,398

 
7,210

 
1,706,549

 
15,517

 
2,005,097

 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer:
 
 

 
 

 
 

 
 

 
 

 
 

Indirect automobile
 
—

 
—

 
—

 
60,667

 
2,257

 
62,924

Other consumer
 
193,521

 
3,053

 
4,470

 
128,323

 
285

 
329,652

Total consumer
 
193,521

 
3,053

 
4,470

 
188,990

 
2,542

 
392,576

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
9,359,478

 
$
159,422

 
$
126,317

 
$
1,913,049

 
$
18,165

 
$
11,576,431


The following table summarizes the Company’s loan portfolio at December 31, 2011 by the risk grade categories (in thousands): 
 
 
Internally Risk Graded
 
Non-Graded
 
 
 
 
Performing
 
Potential Problem
 
Nonaccrual
 
Performing
 
Nonaccrual
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
$
2,003,288

 
$
1,417

 
$
336

 
$
—

 
$
—

 
$
2,005,041

Services
 
1,713,232

 
31,338

 
16,968

 
—

 
—

 
1,761,538

Wholesale/retail
 
912,090

 
34,156

 
21,180

 
—

 
—

 
967,426

Manufacturing
 
311,292

 
2,390

 
23,051

 
—

 
—

 
336,733

Healthcare
 
969,260

 
3,414

 
5,486

 
—

 
—

 
978,160

Integrated food services
 
203,555

 
756

 
—

 
—

 
—

 
204,311

Other commercial and industrial
 
281,645

 
10

 
1,738

 
18,416

 
52

 
301,861

Total commercial
 
6,394,362

 
73,481

 
68,759

 
18,416

 
52

 
6,555,070

 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
 
252,936

 
27,244

 
61,874

 
—

 
—

 
342,054

Retail
 
499,295

 
3,244

 
6,863

 
—

 
—

 
509,402

Office
 
381,918

 
12,548

 
11,457

 
—

 
—

 
405,923

Multifamily
 
357,436

 
8,079

 
3,513

 
—

 
—

 
369,028

Industrial
 
277,906

 
280

 
—

 
—

 
—

 
278,186

Other commercial real estate
 
355,381

 
15,843

 
15,486

 
—

 
—

 
386,710

Total commercial real estate
 
2,124,872

 
67,238

 
99,193

 
—

 
—

 
2,291,303

 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
294,478

 
15,879

 
7,441

 
817,921

 
17,925

 
1,153,644

Permanent mortgages guaranteed by U.S. government agencies
 
—

 
—

 
—

 
188,462

 
—

 
188,462

Home equity
 
—

 
—

 
—

 
628,020

 
4,401

 
632,421

Total residential mortgage
 
294,478

 
15,879

 
7,441

 
1,634,403

 
22,326

 
1,974,527

 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer:
 
 

 
 

 
 

 
 

 
 

 
 

Indirect automobile
 
—

 
—

 
—

 
102,955

 
2,194

 
105,149

Other consumer
 
212,150

 
3,949

 
1,096

 
126,274

 
225

 
343,694

Total consumer
 
212,150

 
3,949

 
1,096

 
229,229

 
2,419

 
448,843

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
9,025,862

 
$
160,547

 
$
176,489

 
$
1,882,048

 
$
24,797

 
$
11,269,743

The following table summarizes the Company’s loan portfolio at June 30, 2011 by the risk grade categories (in thousands): 
 
 
Internally Risk Graded
 
Non-Graded
 
 
 
 
Performing
 
Potential Problem
 
Nonaccrual
 
Performing
 
Nonaccrual
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
$
1,705,073

 
$
4,688

 
$
345

 
$
—

 
$
—

 
$
1,710,106

Services
 
1,675,545

 
33,490

 
16,254

 
—

 
—

 
1,725,289

Wholesale/retail
 
988,076

 
40,935

 
25,138

 
—

 
—

 
1,054,149

Manufacturing
 
360,221

 
2,827

 
4,366

 
—

 
—

 
367,414

Healthcare
 
846,790

 
2,992

 
5,962

 
—

 
—

 
855,744

Integrated food services
 
186,573

 
1,260

 
—

 
—

 
—

 
187,833

Other commercial and industrial
 
246,342

 
3,410

 
1,097

 
18,658

 
203

 
269,710

Total commercial
 
6,008,620

 
89,602

 
53,162

 
18,658

 
203

 
6,170,245

 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
 
280,210

 
15,750

 
76,265

 
—

 
—

 
372,225

Retail
 
438,129

 
7,013

 
4,642

 
—

 
—

 
449,784

Office
 
459,507

 
14,751

 
11,473

 
—

 
—

 
485,731

Multifamily
 
323,964

 
5,860

 
4,717

 
—

 
—

 
334,541

Industrial
 
159,518

 
288

 
—

 
—

 
—

 
159,806

Other commercial real estate
 
351,640

 
21,038

 
13,266

 
—

 
—

 
385,944

Total commercial real estate
 
2,012,968

 
64,700

 
110,363

 
—

 
—

 
2,188,031

 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
330,464

 
13,752

 
10,885

 
783,084

 
17,106

 
1,155,291

Permanent mortgages guaranteed by U.S. government agencies
 
—

 
—

 
—

 
134,458

 
—

 
134,458

Home equity
 
—

 
—

 
—

 
578,503

 
3,702

 
582,205

Total residential mortgage
 
330,464

 
13,752

 
10,885

 
1,496,045

 
20,808

 
1,871,954

 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer:
 
 

 
 

 
 

 
 

 
 

 
 

Indirect automobile
 
—

 
—

 
—

 
159,771

 
2,729

 
162,500

Other consumer
 
215,056

 
3,245

 
1,921

 
124,493

 
99

 
344,814

Total consumer
 
215,056

 
3,245

 
1,921

 
284,264

 
2,828

 
507,314

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
8,567,108

 
$
171,299

 
$
176,331

 
$
1,798,967

 
$
23,839

 
$
10,737,544




Impaired Loans

Loans are considered to be impaired when it is probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement.
 
A summary of risk-graded impaired loans follows (in thousands):

 
As of
 
For the
 
For the
 
June 30, 2012
 
Three Months Ended
 
Six Months Ended
 
 
 
Recorded Investment
 
 
 
June 30, 2012
 
June 30, 2012
 
Unpaid
Principal
Balance
 
Total
 
With No
Allowance
 
With Allowance
 
Related Allowance
 
Average Recorded
Investment
 
Interest Income Recognized
 
Average Recorded
Investment
 
Interest Income Recognized
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
$
3,297

 
$
3,087

 
$
3,087

 
$
—

 
$
—

 
$
1,712

 
$
—

 
$
1,712

 
$
—

Services
18,858

 
10,123

 
9,996

 
127

 
127

 
11,507

 
—

 
13,546

 
—

Wholesale/retail
5,763

 
4,175

 
4,096

 
79

 
20

 
9,782

 
—

 
12,678

 
—

Manufacturing
15,864

 
12,230

 
12,230

 
—

 
—

 
17,816

 
—

 
17,641

 
—

Healthcare
4,400

 
3,310

 
2,069

 
1,241

 
131

 
5,628

 
—

 
4,398

 
—

Integrated food services
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Other commercial and industrial
9,003

 
1,504

 
1,504

 
—

 
—

 
1,609

 
—

 
1,621

 
—

Total commercial
57,185

 
34,429

 
32,982

 
1,447

 
278

 
48,054

 
—

 
51,596

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
78,447

 
46,050

 
45,477

 
573

 
155

 
49,233

 
—

 
53,962

 
—

Retail
9,395

 
7,908

 
5,541

 
2,367

 
905

 
7,051

 
—

 
7,386

 
—

Office
13,744

 
10,589

 
10,364

 
225

 
21

 
10,661

 
—

 
11,023

 
—

Multifamily
3,333

 
3,219

 
3,219

 
—

 
—

 
3,317

 
—

 
3,366

 
—

Industrial
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Other real estate loans
14,744

 
12,442

 
11,518

 
924

 
199

 
13,081

 
—

 
13,964

 
—

Total commercial real estate
119,663

 
80,208

 
76,119

 
4,089

 
1,280

 
83,343

 
—

 
89,701

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Permanent mortgage
8,421

 
7,210

 
6,593

 
617

 
235

 
7,361

 
—

 
7,326

 
—

Home equity
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total residential mortgage
8,421

 
7,210

 
6,593

 
617

 
235

 
7,361

 
—

 
7,326

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Indirect automobile
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Other consumer
5,056

 
4,470

 
4,428

 
42

 
42

 
4,621

 
—

 
2,784

 
—

Total consumer
5,056

 
4,470

 
4,428

 
42

 
42

 
4,621

 
—

 
2,784

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
$
190,325

 
$
126,317

 
$
120,122

 
$
6,195

 
$
1,835

 
$
143,379

 
$
—

 
$
151,407

 
$
—


Generally, no interest income is recognized on impaired loans until all principal balances, including amounts charged-off, have been recovered.

A summary of risk-graded impaired loans at December 31, 2011 follows (in thousands): 
 
 
 
 
Recorded Investment
 
 
 
 
Unpaid
Principal
Balance
 
Total
 
With No
Allowance
 
With Allowance
 
Related Allowance
Commercial:
 
 
 
 
 
 
 
 
 
 
Energy
 
$
336

 
$
336

 
$
336

 
$
—

 
$
—

Services
 
26,916

 
16,968

 
16,200

 
768

 
360

Wholesale/retail
 
24,432

 
21,180

 
19,702

 
1,478

 
1,102

Manufacturing
 
26,186

 
23,051

 
23,051

 
—

 
—

Healthcare
 
6,825

 
5,486

 
5,412

 
74

 
74

Integrated food services
 
—

 
—

 
—

 
—

 
—

Other commercial and industrial
 
9,237

 
1,738

 
1,738

 
—

 
—

Total commercial
 
93,932

 
68,759

 
66,439

 
2,320

 
1,536

 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 

 
 

 
 

Construction and land development
 
98,053

 
61,874

 
56,740

 
5,134

 
1,777

Retail
 
8,645

 
6,863

 
4,373

 
2,490

 
1,062

Office
 
14,588

 
11,457

 
9,567

 
1,890

 
291

Multifamily
 
3,512

 
3,513

 
3,513

 
—

 
—

Industrial
 
—

 
—

 
—

 
—

 
—

Other real estate loans
 
16,702

 
15,486

 
7,887

 
7,599

 
812

Total commercial real estate
 
141,500

 
99,193

 
82,080

 
17,113

 
3,942

 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
8,697

 
7,441

 
4,980

 
2,461

 
298

Home equity
 
—

 
—

 
—

 
—

 
—

Total residential mortgage
 
8,697

 
7,441

 
4,980

 
2,461

 
298

 
 
 
 
 
 
 
 
 
 
 
Consumer:
 
 

 
 

 
 

 
 

 
 

Indirect automobile
 
—

 
—

 
—

 
—

 
—

Other consumer
 
1,727

 
1,096

 
1,096

 
—

 
—

Total consumer
 
1,727

 
1,096

 
1,096

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
Total
 
$
245,856

 
$
176,489

 
$
154,595

 
$
21,894

 
$
5,776


A summary of risk-graded impaired loans follows (in thousands):

 
As of
 
For the
 
For the
 
June 30, 2011
 
Three Months Ended
 
Six Months Ended
 
 
 
Recorded Investment
 
 
 
June 30, 2011
 
June 30, 2011
 
Unpaid
Principal
Balance
 
Total
 
With No
Allowance
 
With Allowance
 
Related Allowance
 
Average Recorded
Investment
 
Interest Income Recognized
 
Average Recorded
Investment
 
Interest Income Recognized
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
$
345

 
$
345

 
$
345

 
$
—

 
$
—

 
$
380

 
$
—

 
$
405

 
$
—

Services
26,441

 
16,254

 
15,525

 
729

 
273

 
15,987

 
—

 
17,758

 
—

Wholesale/retail
31,770

 
25,138

 
22,751

 
2,387

 
1,742

 
27,775

 
—

 
16,812

 
—

Manufacturing
9,259

 
4,366

 
2,012

 
2,354

 
259

 
4,456

 
—

 
3,241

 
—

Healthcare
7,659

 
5,962

 
5,103

 
859

 
166

 
4,268

 
—

 
4,748

 
—

Integrated food services
—

 
—

 
—

 
—

 
—

 
3

 
—

 
7

 
—

Other commercial and industrial
8,596

 
1,097

 
1,097

 
—

 
—

 
2,363

 
—

 
2,772

 
—

Total commercial
84,070

 
53,162

 
46,833

 
6,329

 
2,440

 
55,232

 
—

 
45,743

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 

Construction and land development
115,337

 
76,265

 
65,094

 
11,171

 
1,966

 
83,486

 
—

 
87,922

 
—

Retail
5,652

 
4,642

 
1,855

 
2,787

 
612

 
4,959

 
—

 
4,810

 
—

Office
14,749

 
11,473

 
9,713

 
1,760

 
207

 
13,051

 
—

 
15,564

 
—

Multifamily
5,381

 
4,717

 
4,717

 
—

 
—

 
3,309

 
—

 
5,721

 
—

Industrial
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2,044

 
—

Other real estate loans
15,203

 
13,266

 
11,755

 
1,511

 
354

 
13,130

 
—

 
14,305

 
—

Total commercial real estate
156,322

 
110,363

 
93,134

 
17,229

 
3,139

 
117,935

 
—

 
130,366

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 

Permanent mortgage
12,122

 
10,885

 
5,016

 
5,869

 
989

 
11,479

 
—

 
11,475

 
—

Home equity
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total residential mortgage
12,122

 
10,885

 
5,016

 
5,869

 
989

 
11,479

 
—

 
11,475

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 

Indirect automobile
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Other consumer
2,449

 
1,921

 
1,348

 
573

 
115

 
2,244

 
—

 
1,836

 
—

Total consumer
2,449

 
1,921

 
1,348

 
573

 
115

 
2,244

 
—

 
1,836

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
$
254,963

 
$
176,331

 
$
146,331

 
$
30,000

 
$
6,683

 
$
186,890

 
$
—

 
$
189,420

 
$
—




Troubled Debt Restructurings

Troubled debt restructurings of internally risk graded impaired loans at June 30, 2012 were as follows (in thousands):

 
 
As of
 
Amounts Charged-off
 
 
June 30, 2012
 
During:
 
 
Recorded
Investment
 
Performing in Accordance With Modified Terms
 
Not
Performing in Accordance With Modified Terms
 
Specific
Allowance
 
Three months ended
June 30, 2012
 
Six months ended
June 30, 2012
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Services
 
2,700

 
1,381

 
1,319

 
—

 
—

 
—

Wholesale/retail
 
1,612

 
1,428

 
184

 
20

 
—

 
—

Manufacturing
 
—

 
—

 
—

 
—

 
—

 
—

Healthcare
 
77

 
77

 
—

 
—

 
—

 
—

Integrated food services
 
—

 
—

 
—

 
—

 
—

 
—

Other commercial and industrial
 
779

 
—

 
779

 
—

 
—

 
—

Total commercial
 
5,168

 
2,886

 
2,282

 
20

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
 
18,217

 
4,238

 
13,979

 
76

 
769

 
2,579

Retail
 
3,618

 
3,618

 
—

 
—

 
—

 
—

Office
 
3,387

 
2,489

 
898

 
—

 
—

 
269

Multifamily
 
—

 
—

 
—

 
—

 
—

 
—

Industrial
 
—

 
—

 
—

 
—

 
—

 
—

Other real estate loans
 
5,730

 
1,933

 
3,797

 
103

 
—

 
2,182

Total commercial real estate
 
30,952

 
12,278

 
18,674

 
179

 
769

 
5,030

 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
4,646

 
4,327

 
319

 
54

 
121

 
145

Home equity
 
—

 
—

 
—

 
—

 
—

 
—

Total residential mortgage
 
4,646

 
4,327

 
319

 
54

 
121

 
145

 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer:
 
 

 
 

 
 

 
 

 
 

 
 

Indirect automobile
 
—

 
—

 
—

 
—

 
—

 
—

Other consumer
 
3,502

 
3,502

 
—

 
—

 
—

 
—

Total consumer
 
3,502

 
3,502

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
44,268

 
$
22,993

 
$
21,275

 
$
253

 
$
890

 
$
5,175


The financial impact of troubled debt restructurings primarily consist of specific allowances for credit losses and principal amounts charged off. Internally risk graded loans that have been modified in troubled debt restructurings generally remain classified as nonaccruing. Other financial impacts, such as foregone interest, are not material to the financial statements.

In addition to risk graded loans discussed above, non-risk graded residential mortgage loans may be modified in troubled debt restructurings primarily consist of loans that are guaranteed by U.S. government agencies. At June 30, 2012, approximately $11 million of the renegotiated residential mortgage loans are currently performing in accordance with the modified terms, $7.0 million are 30 to 89 days past due and $10 million are past due 90 days or more. Restructured residential mortgage loans guaranteed by agencies of the U.S. government in accordance with agency guidelines represent $25 million of our $28 million portfolio of renegotiated loans. All renegotiated loans past due 90 days or more are guaranteed by U.S. government agencies. 

Troubled debt restructurings of internally risk graded impaired loans at December 31, 2011 were as follows (in thousands):

 
 
As of
 
 
December 31, 2011
 
 
Recorded
Investment
 
Performing in Accordance With Modified Terms
 
Not
Performing in Accordance With Modified Terms
 
Specific
Allowance
Commercial:
 
 
 
 
 
 
 
 
Energy
 
$
—

 
$
—

 
$
—

 
$
—

Services
 
3,529

 
1,907

 
1,622

 
—

Wholesale/retail
 
1,739

 
961

 
778

 
24

Manufacturing
 
—

 
—

 
—

 
—

Healthcare
 
—

 
—

 
—

 
—

Integrated food services
 
—

 
—

 
—

 
—

Other commercial and industrial
 
960

 
—

 
960

 
—

Total commercial
 
6,228

 
2,868

 
3,360

 
24

 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 

 
 

Construction and land development
 
25,890

 
3,585

 
22,305

 
1,577

Retail
 
1,070

 
—

 
1,070

 
—

Office
 
2,496

 
1,134

 
1,362

 
215

Multifamily
 
—

 
—

 
—

 
—

Industrial
 
—

 
—

 
—

 
—

Other real estate loans
 
8,171

 
387

 
7,784

 
662

Total commercial real estate
 
37,627

 
5,106

 
32,521

 
2,454

 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 

 
 

Permanent mortgage
 
4,103

 
1,396

 
2,707

 
282

Home equity
 
—

 
—

 
—

 
—

Total residential mortgage
 
4,103

 
1,396

 
2,707

 
282

 
 
 
 
 
 
 
 
 
Consumer:
 
 

 
 

 
 

 
 

Indirect automobile
 
—

 
—

 
—

 
—

Other consumer
 
168

 
168

 
—

 
—

Total consumer
 
168

 
168

 
—

 
—

 
 
 
 
 
 
 
 
 
Total
 
$
48,126

 
$
9,538

 
$
38,588

 
$
2,760


At December 31, 2011, approximately $13 million of the renegotiated residential mortgage loans are currently performing in accordance with the modified terms, $5.8 million are 30 to 89 days past due and $14 million are past due 90 days or more. Restructured residential mortgage loans guaranteed by agencies of the U.S. government in accordance with agency guidelines represent $29 million of our $33 million portfolio of renegotiated loans. All renegotiated loans past due 90 days or more are guaranteed by U.S. government agencies. 

Nonaccrual & Past Due Loans

Past due status for all loan classes is based on the actual number of days since the last payment was due according to the contractual terms of the loans.

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of June 30, 2012 is as follows (in thousands):
 
 
 
 
Past Due
 
 
 
 
 
 
Current
 
30 to 89
Days
 
90 Days
or More
 
Nonaccrual
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
Energy
 
$
2,272,989

 
$
2,260

 
$
—

 
$
3,087

 
$
2,278,336

Services
 
1,917,655

 
3,705

 
37

 
10,123

 
1,931,520

Wholesale/retail
 
954,475

 
1,534

 
—

 
4,175

 
960,184

Manufacturing
 
350,647

 
—

 
—

 
12,230

 
362,877

Healthcare
 
1,005,538

 
180

 
100

 
3,310

 
1,009,128

Integrated food services
 
212,075

 
4,903

 
—

 
—

 
216,978

Other commercial and industrial
 
291,328

 
589

 
—

 
1,604

 
293,521

Total commercial
 
7,004,707

 
13,171

 
137

 
34,529

 
7,052,544

 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 

 
 

 
 

Construction and land development
 
240,208

 
801

 
—

 
46,050

 
287,059

Retail
 
478,843

 
5,626

 
—

 
7,908

 
492,377

Office
 
373,278

 
525

 
—

 
10,589

 
384,392

Multifamily
 
358,204

 
742

 
—

 
3,219

 
362,165

Industrial
 
230,641

 
392

 
—

 
—

 
231,033

Other real estate loans
 
353,412

 
3,328

 
—

 
12,448

 
369,188

Total commercial real estate
 
2,034,586

 
11,414

 
—

 
80,214

 
2,126,214

 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
1,107,610

 
15,130

 
495

 
18,136

 
1,141,371

Permanent mortgages guaranteed by U.S. government agencies
 
26,460

 
14,473

 
127,126

 
—

 
168,059

Home equity
 
688,821

 
2,211

 
44

 
4,591

 
695,667

Total residential mortgage
 
1,822,891

 
31,814

 
127,665

 
22,727

 
2,005,097

 
 
 
 
 
 
 
 
 
 
 
Consumer:
 
 

 
 

 
 

 
 

 
 

Indirect automobile
 
58,895

 
1,771

 
1

 
2,257

 
62,924

Other consumer
 
324,165

 
718

 
14

 
4,755

 
329,652

Total consumer
 
383,060

 
2,489

 
15

 
7,012

 
392,576

 
 
 
 
 
 
 
 
 
 
 
Total
 
$
11,245,244

 
$
58,888

 
$
127,817

 
$
144,482

 
$
11,576,431


A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of December 31, 2011 is as follows (in thousands):

 
 
 
 
Past Due
 
 
 
 
 
 
Current
 
30 to 89
Days
 
90 Days
or More
 
Nonaccrual
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
Energy
 
$
2,003,192

 
$
1,065

 
$
448

 
$
336

 
$
2,005,041

Services
 
1,729,775

 
13,608

 
1,187

 
16,968

 
1,761,538

Wholesale/retail
 
945,776

 
470

 
—

 
21,180

 
967,426

Manufacturing
 
313,028

 
654

 
—

 
23,051

 
336,733

Healthcare
 
971,265

 
1,362

 
47

 
5,486

 
978,160

Integrated food services
 
204,306

 
—

 
5

 
—

 
204,311

Other commercial and industrial
 
298,105

 
1,966

 
—

 
1,790

 
301,861

Total commercial
 
6,465,447

 
19,125

 
1,687

 
68,811

 
6,555,070

 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 

 
 

 
 

Construction and land development
 
278,901

 
1,279

 
—

 
61,874

 
342,054

Retail
 
502,167

 
372

 
—

 
6,863

 
509,402

Office
 
394,227

 
239

 
—

 
11,457

 
405,923

Multifamily
 
365,477

 
38

 
—

 
3,513

 
369,028

Industrial
 
278,186

 
—

 
—

 
—

 
278,186

Other real estate loans
 
367,643

 
3,444

 
137

 
15,486

 
386,710

Total commercial real estate
 
2,186,601

 
5,372

 
137

 
99,193

 
2,291,303

 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
1,110,418

 
17,259

 
601

 
25,366

 
1,153,644

Permanent mortgages guaranteed by U.S. government agencies
 
20,998

 
12,163

 
155,301

 
—

 
188,462

Home equity
 
624,942

 
3,036

 
42

 
4,401

 
632,421

Total residential mortgage
 
1,756,358

 
32,458

 
155,944

 
29,767

 
1,974,527

 
 
 
 
 
 
 
 
 
 
 
Consumer:
 
 

 
 

 
 

 
 

 
 

Indirect automobile
 
98,345

 
4,581

 
29

 
2,194

 
105,149

Other consumer
 
340,087

 
2,286

 
—

 
1,321

 
343,694

Total consumer
 
438,432

 
6,867

 
29

 
3,515

 
448,843

 
 
 
 
 
 
 
 
 
 
 
Total
 
$
10,846,838

 
$
63,822

 
$
157,797

 
$
201,286

 
$
11,269,743

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of June 30, 2011 is as follows (in thousands):

 
 
 
 
Past Due
 
 
 
 
 
 
Current
 
30 to 89
Days
 
90 Days
or More
 
Nonaccrual
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
Energy
 
$
1,709,608

 
$
153

 
$
—

 
$
345

 
$
1,710,106

Services
 
1,703,683

 
3,759

 
1,593

 
16,254

 
1,725,289

Wholesale/retail
 
1,027,827

 
697

 
487

 
25,138

 
1,054,149

Manufacturing
 
363,048

 
—

 
—

 
4,366

 
367,414

Healthcare
 
849,605

 
177

 
—

 
5,962

 
855,744

Integrated food services
 
187,833

 
—

 
—

 
—

 
187,833

Other commercial and industrial
 
268,161

 
192

 
57

 
1,300

 
269,710

Total commercial
 
6,109,765

 
4,978

 
2,137

 
53,365

 
6,170,245

 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 

 
 

 
 

Construction and land development
 
293,627

 
2,333

 
—

 
76,265

 
372,225

Retail
 
442,231

 
2,911

 
—

 
4,642

 
449,784

Office
 
471,938

 
2,320

 
—

 
11,473

 
485,731

Multifamily
 
329,824

 
—

 
—

 
4,717

 
334,541

Industrial
 
159,422

 
384

 
—

 
—

 
159,806

Other real estate loans
 
370,110

 
2,393

 
175

 
13,266

 
385,944

Total commercial real estate
 
2,067,152

 
10,341

 
175

 
110,363

 
2,188,031

 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
1,108,565

 
18,735

 
—

 
27,991

 
1,155,291

Permanent mortgages guaranteed by U.S. government agencies
 
8,426

 
3,728

 
122,304

 
—

 
134,458

Home equity
 
576,045

 
2,450

 
8

 
3,702

 
582,205

Total residential mortgage
 
1,693,036

 
24,913

 
122,312

 
31,693

 
1,871,954

 
 
 
 
 
 
 
 
 
 
 
Consumer:
 
 

 
 

 
 

 
 

 
 

Indirect automobile
 
152,496

 
7,256

 
19

 
2,729

 
162,500

Other consumer
 
341,761

 
1,031

 
2

 
2,020

 
344,814

Total consumer
 
494,257

 
8,287

 
21

 
4,749

 
507,314

 
 
 
 
 
 
 
 
 
 
 
Total
 
$
10,364,210

 
$
48,519

 
$
124,645

 
$
200,170

 
$
10,737,544