Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

(Mark One)

 

x    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2011

 

or

 

o     Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from                to              

 

Commission File Number: 1-6887

 

BANK OF HAWAII CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

 

99-0148992

(State of incorporation)

 

(I.R.S. Employer Identification No.)

 

 

 

130 Merchant Street, Honolulu, Hawaii

 

96813

(Address of principal executive offices)

 

(Zip Code)

 

1-888-643-3888

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x   No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x  No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer x

 

Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)

 

Smaller reporting company o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o  No x

 

As of July 18, 2011, there were 47,119,416 shares of common stock outstanding.

 

 

 



Table of Contents

 

Bank of Hawaii Corporation

Form 10-Q

Index

 

 

Page

 

 

Part I - Financial Information

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

 

 

 

 

Consolidated Statements of Income –
Three and six months ended June 30, 2011 and 2010

2

 

 

 

 

Consolidated Statements of Condition –
June 30, 2011 and December 31, 2010

3

 

 

 

 

Consolidated Statements of Shareholders’ Equity –
Six months ended June 30, 2011 and 2010

4

 

 

 

 

Consolidated Statements of Cash Flows –
Six months ended June 30, 2011 and 2010

5

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

6

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

31

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

55

 

 

 

Item 4.

Controls and Procedures

55

 

 

Part II - Other Information

 

 

 

Item 1.

Legal Proceedings

56

 

 

 

Item 1A.

Risk Factors

56

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

56

 

 

 

Item 6.

Exhibits

56

 

 

Signatures

57

 

1



Table of Contents

 

Bank of Hawaii Corporation and Subsidiaries

Consolidated Statements of Income (Unaudited)

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

June 30,

 

June 30,

 

 

(in thousands, except per share and share amounts)

 

2011

 

2010

 

2011

 

2010

 

 

Interest Income

 

 

 

 

 

 

 

 

 

 

Interest and Fees on Loans and Leases

 

$

65,542

 

$

71,997

 

$

132,135

 

$

149,268

 

 

Income on Investment Securities

 

 

 

 

 

 

 

 

 

 

Available-for-Sale

 

23,490

 

44,989

 

61,159

 

88,830

 

 

Held-to-Maturity

 

20,553

 

1,700

 

28,186

 

3,563

 

 

Deposits

 

2

 

3

 

-

 

16

 

 

Funds Sold

 

297

 

396

 

548

 

705

 

 

Other

 

279

 

277

 

558

 

554

 

 

Total Interest Income

 

110,163

 

119,362

 

222,586

 

242,936

 

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

Deposits

 

4,792

 

7,930

 

10,024

 

16,237

 

 

Securities Sold Under Agreements to Repurchase

 

7,338

 

6,472

 

14,379

 

12,901

 

 

Funds Purchased

 

5

 

6

 

11

 

13

 

 

Long-Term Debt

 

529

 

1,026

 

976

 

2,204

 

 

Total Interest Expense

 

12,664

 

15,434

 

25,390

 

31,355

 

 

Net Interest Income

 

97,499

 

103,928

 

197,196

 

211,581

 

 

Provision for Credit Losses

 

3,600

 

15,939

 

8,291

 

36,650

 

 

Net Interest Income After Provision for Credit Losses

 

93,899

 

87,989

 

188,905

 

174,931

 

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

Trust and Asset Management

 

11,427

 

11,457

 

23,233

 

23,165

 

 

Mortgage Banking

 

2,661

 

3,752

 

5,783

 

7,216

 

 

Service Charges on Deposit Accounts

 

9,375

 

14,856

 

19,307

 

28,670

 

 

Fees, Exchange, and Other Service Charges

 

16,662

 

15,806

 

31,607

 

30,310

 

 

Investment Securities Gains, Net

 

-

 

14,951

 

6,084

 

34,972

 

 

Insurance

 

3,210

 

2,291

 

5,981

 

5,006

 

 

Other

 

6,128

 

5,761

 

11,390

 

11,317

 

 

Total Noninterest Income

 

49,463

 

68,874

 

103,385

 

140,656

 

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

Salaries and Benefits

 

46,800

 

47,500

 

93,582

 

92,064

 

 

Net Occupancy

 

10,476

 

10,154

 

20,803

 

20,298

 

 

Net Equipment

 

4,741

 

4,366

 

9,439

 

8,924

 

 

Professional Fees

 

2,294

 

2,091

 

4,452

 

4,083

 

 

FDIC Insurance

 

2,010

 

3,107

 

5,254

 

6,207

 

 

Other

 

27,453

 

18,700

 

46,326

 

36,048

 

 

Total Noninterest Expense

 

93,774

 

85,918

 

179,856

 

167,624

 

 

Income Before Provision for Income Taxes

 

49,588

 

70,945

 

112,434

 

147,963

 

 

Provision for Income Taxes

 

14,440

 

24,381

 

34,926

 

48,663

 

 

Net Income

 

$

35,148

 

$

46,564

 

$

77,508

 

$

99,300

 

 

Basic Earnings Per Share

 

$

0.74

 

$

0.97

 

$

1.63

 

$

2.07

 

 

Diluted Earnings Per Share

 

$

0.74

 

$

0.96

 

$

1.62

 

$

2.05

 

 

Dividends Declared Per Share

 

$

0.45

 

$

0.45

 

$

0.90

 

$

0.90

 

 

Basic Weighted Average Shares

 

47,428,718

 

48,080,485

 

47,638,752

 

47,997,996

 

 

Diluted Weighted Average Shares

 

47,607,814

 

48,415,602

 

47,837,778

 

48,352,082

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements (Unaudited).

 

2



Table of Contents

 

Bank of Hawaii Corporation and Subsidiaries

Consolidated Statements of Condition (Unaudited)

 

 

 

 

June 30,

 

December 31,

 

 

(dollars in thousands)

 

2011

 

2010

 

 

Assets

 

 

 

 

 

 

Interest-Bearing Deposits

 

$

4,796

 

$

3,472

 

 

Funds Sold

 

449,042

 

438,327

 

 

Investment Securities

 

 

 

 

 

 

Available-for-Sale

 

4,112,601

 

6,533,874

 

 

Held-to-Maturity (Fair Value of $2,566,621 and $134,028)

 

2,512,024

 

127,249

 

 

Loans Held for Sale

 

13,157

 

17,564

 

 

Loans and Leases

 

5,351,473

 

5,335,792

 

 

Allowance for Loan and Lease Losses

 

(144,976

)

(147,358

)

 

Net Loans and Leases

 

5,206,497

 

5,188,434

 

 

Total Earning Assets

 

12,298,117

 

12,308,920

 

 

Cash and Noninterest-Bearing Deposits

 

203,326

 

165,748

 

 

Premises and Equipment

 

105,785

 

108,170

 

 

Customers’ Acceptances

 

882

 

437

 

 

Accrued Interest Receivable

 

40,957

 

41,151

 

 

Foreclosed Real Estate

 

2,590

 

1,928

 

 

Mortgage Servicing Rights

 

25,072

 

25,379

 

 

Goodwill

 

31,517

 

31,517

 

 

Other Assets

 

452,958

 

443,537

 

 

Total Assets

 

$

13,161,204

 

$

13,126,787

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

Noninterest-Bearing Demand

 

$

2,507,358

 

$

2,447,713

 

 

Interest-Bearing Demand

 

2,023,937

 

1,871,718

 

 

Savings

 

4,413,390

 

4,526,893

 

 

Time

 

1,034,349

 

1,042,671

 

 

Total Deposits

 

9,979,034

 

9,888,995

 

 

Funds Purchased

 

9,882

 

9,478

 

 

Short-Term Borrowings

 

6,800

 

6,200

 

 

Securities Sold Under Agreements to Repurchase

 

1,873,286

 

1,901,084

 

 

Long-Term Debt

 

30,714

 

32,652

 

 

Banker’s Acceptances

 

882

 

437

 

 

Retirement Benefits Payable

 

30,588

 

30,885

 

 

Accrued Interest Payable

 

5,457

 

5,007

 

 

Taxes Payable and Deferred Taxes

 

106,244

 

121,517

 

 

Other Liabilities

 

114,867

 

119,399

 

 

Total Liabilities

 

12,157,754

 

12,115,654

 

 

Shareholders’ Equity

 

 

 

 

 

 

Common Stock ($.01 par value; authorized 500,000,000 shares; issued / outstanding:
June 30, 2011 - 57,132,830 / 47,225,303 and December 31, 2010 - 57,115,287 / 48,097,672)

 

571

 

570

 

 

Capital Surplus

 

502,777

 

500,888

 

 

Accumulated Other Comprehensive Income

 

27,778

 

26,965

 

 

Retained Earnings

 

964,420

 

932,629

 

 

Treasury Stock, at Cost (Shares: June 30, 2011 - 9,907,527 and December 31, 2010 - 9,017,615)

 

(492,096

)

(449,919

)

 

Total Shareholders’ Equity

 

1,003,450

 

1,011,133

 

 

Total Liabilities and Shareholders’ Equity

 

$

13,161,204

 

$

13,126,787

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements (Unaudited).

 

3



Table of Contents

 

Bank of Hawaii Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Equity (Unaudited)

 

 

 

 

 

 

 

 

 

 

Accum.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compre-

 

 

 

 

 

Compre-

 

 

 

 

 

 

Common

 

Capital

 

hensive

 

Retained

 

Treasury

 

hensive

 

 

(dollars in thousands)

 

Total

 

Stock

 

Surplus

 

Income

 

Earnings

 

Stock

 

Income

 

 

Balance as of December 31, 2010

 

$

1,011,133

 

$

570

 

$

500,888

 

$

26,965

 

$

932,629

 

$

(449,919)

 

 

 

 

Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

77,508

 

-

 

-

 

-

 

77,508

 

-

 

$

77,508

 

 

Other Comprehensive Income, Net of Tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Unrealized Losses on Investment Securities,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net of Reclassification Adjustment

 

(235

)

-

 

-

 

(235

)

-

 

-

 

(235

)

 

Amortization of Net Losses Related to Defined
Benefit Plans

 

1,048

 

-

 

-

 

1,048

 

-

 

-

 

1,048

 

 

Total Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

78,321

 

 

Share-Based Compensation

 

1,360

 

-

 

1,360

 

-

 

-

 

-

 

 

 

 

Common Stock Issued under Purchase and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Plans and Related Tax Benefits
(237,619 shares)

 

7,829

 

1

 

529

 

-

 

(2,752

)

10,051

 

 

 

 

Common Stock Repurchased (1,109,988 shares)

 

(52,228

)

-

 

-

 

-

 

-

 

(52,228)

 

 

 

 

Cash Dividends Paid ($0.90 per share)

 

(42,965

)

-

 

-

 

-

 

(42,965

)

-

 

 

 

 

Balance as of June 30, 2011

 

$

1,003,450

 

$

571

 

$

502,777

 

$

27,778

 

$

964,420

 

$

(492,096)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2009

 

$

895,973

 

$

569

 

$

494,318

 

$

6,925

 

$

843,521

 

$

(449,360)

 

 

 

 

Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

99,300

 

-

 

-

 

-

 

99,300

 

-

 

$

99,300

 

 

Other Comprehensive Income, Net of Tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Unrealized Gains on Investment Securities,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net of Reclassification Adjustment

 

53,534

 

-

 

-

 

53,534

 

-

 

-

 

53,534

 

 

Amortization of Net Losses Related to Defined
Benefit Plans

 

761

 

-

 

-

 

761

 

-

 

-

 

761

 

 

Total Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

153,595

 

 

Share-Based Compensation

 

1,545

 

-

 

1,545

 

-

 

-

 

-

 

 

 

 

Common Stock Issued under Purchase and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Plans and Related Tax Benefits
(312,707 shares)

 

8,532

 

1

 

1,219

 

-

 

(3,902

)

11,214

 

 

 

 

Common Stock Repurchased (67,493 shares)

 

(3,280

)

-

 

-

 

-

 

-

 

(3,280)

 

 

 

 

Cash Dividends Paid ($0.90 per share)

 

(43,354

)

-

 

-

 

-

 

(43,354

)

-

 

 

 

 

Balance as of June 30, 2010

 

$

1,013,011

 

$

570

 

$

497,082

 

$

61,220

 

$

895,565

 

$

(441,426)

 

 

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements (Unaudited).

 

4



Table of Contents

 

Bank of Hawaii Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

 

 

 

 

Six Months Ended

 

 

 

 

June 30,

 

 

(dollars in thousands)

 

2011

 

2010

 

 

Operating Activities

 

 

 

 

 

 

Net Income

 

$

77,508

 

$

99,300

 

 

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

 

 

 

 

 

 

Provision for Credit Losses

 

8,291

 

36,650

 

 

Depreciation and Amortization

 

7,076

 

6,702

 

 

Amortization of Deferred Loan and Lease Fees

 

(1,330

)

(1,147

)

 

Amortization and Accretion of Premiums/Discounts on Investment Securities, Net

 

25,416

 

17,964

 

 

Share-Based Compensation

 

1,360

 

1,545

 

 

Benefit Plan Contributions

 

(651

)

(2,184

)

 

Deferred Income Taxes

 

(12,455

)

(4,975

)

 

Net Gains on Sales of Leases

 

(602

)

(1,614

)

 

Net Gains on Investment Securities

 

(6,084

)

(34,972

)

 

Proceeds from Sales of Loans Held for Sale

 

234,984

 

232,574

 

 

Originations of Loans Held for Sale

 

(222,022

)

(220,497

)

 

Tax Benefits from Share-Based Compensation

 

(633

)

(1,585

)

 

Net Change in Other Assets and Other Liabilities

 

(15,030

)

(31,441

)

 

Net Cash Provided by Operating Activities

 

95,828

 

96,320

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

Investment Securities Available-for-Sale:

 

 

 

 

 

 

Proceeds from Prepayments and Maturities

 

490,602

 

846,480

 

 

Proceeds from Sales

 

682,283

 

618,108

 

 

Purchases

 

(982,759

)

(2,006,953

)

 

Investment Securities Held-to-Maturity:

 

 

 

 

 

 

Proceeds from Prepayments and Maturities

 

110,989

 

27,731

 

 

Purchases

 

(281,936

)

-

 

 

Net Change in Loans and Leases

 

(36,718

)

279,973

 

 

Premises and Equipment, Net

 

(4,691

)

(4,120

)

 

Net Cash Used in Investing Activities

 

(22,230

)

(238,781

)

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

Net Change in Deposits

 

90,039

 

(85,017

)

 

Net Change in Short-Term Borrowings

 

(26,794

)

463,720

 

 

Repayments of Long-Term Debt

 

-

 

(50,000

)

 

Tax Benefits from Share-Based Compensation

 

633

 

1,585

 

 

Proceeds from Issuance of Common Stock

 

7,334

 

7,207

 

 

Repurchase of Common Stock

 

(52,228

)

(3,280

)

 

Cash Dividends Paid

 

(42,965

)

(43,354

)

 

Net Cash Provided by (Used in) Financing Activities

 

(23,981

)

290,861

 

 

 

 

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

49,617

 

148,400

 

 

Cash and Cash Equivalents at Beginning of Period

 

607,547

 

555,067

 

 

Cash and Cash Equivalents at End of Period

 

$

657,164

 

$

703,467

 

 

Supplemental Information

 

 

 

 

 

 

Cash Paid for Interest

 

$

24,279

 

$

33,303

 

 

Cash Paid for Income Taxes

 

48,057

 

89,949

 

 

Non-Cash Investing and Financing Activities:

 

 

 

 

 

 

Reduction In Lease Financing Receivables

 

2,582

 

-

 

 

Reduction In Long-Term Non-Recourse Debt

 

1,920

 

-

 

 

Transfer from Investment Securities Available-For-Sale to Investment Securities Held-To-Maturity

 

2,220,814

 

-

 

 

Transfer from Loans to Foreclosed Real Estate

 

1,159

 

60

 

 

Transfers from Loans to Loans Held for Sale

 

8,555

 

8,713

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements (Unaudited).

 

5



Table of Contents

 

Bank of Hawaii Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

 

Note 1.  Summary of Significant Accounting Policies

 

Basis of Presentation

 

Bank of Hawaii Corporation (the “Parent”) is a Delaware corporation and a bank holding company headquartered in Honolulu, Hawaii.  Bank of Hawaii Corporation and its Subsidiaries (collectively, the “Company”) provide a broad range of financial products and services to customers in Hawaii, Guam, and other Pacific Islands.  The Parent’s principal and only operating subsidiary is Bank of Hawaii (the “Bank”).  All significant intercompany accounts and transactions have been eliminated in consolidation.

 

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and accompanying notes required by GAAP for complete financial statements.  In the opinion of management, the consolidated financial statements reflect normal recurring adjustments necessary for a fair presentation of the results for the interim periods.

 

Certain prior period information has been reclassified to conform to the current period presentation.

 

These statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.  Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

 

Use of Estimates in the Preparation of Financial Statements

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes.  Actual results may differ from those estimates and such differences could be material to the financial statements.

 

Investment Securities

 

Transfers of debt securities from the available-for-sale category to the held-to-maturity category are made at fair value at the date of transfer.  The unrealized holding gain or loss at the date of transfer remains in accumulated other comprehensive income and in the carrying value of the held-to-maturity investment security.  Premiums or discounts on investment securities are amortized or accreted as an adjustment of yield using the interest method over the estimated life of the security.  Unrealized holding gains or losses that remain in accumulated other comprehensive income are also amortized or accreted over the estimated life of the security as an adjustment of yield, offsetting the related amortization of the premium or accretion of the discount.

 

Realized gains and losses are recorded in noninterest income using the specific identification method.

 

Goodwill

 

In December 2010, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.”  Under GAAP, the evaluation of goodwill impairment is a two-step test.  In Step 1, an entity must assess whether the carrying amount of a reporting unit exceeds its fair value.  If it does, an entity must perform Step 2 of the goodwill impairment test to determine whether goodwill has been impaired and to calculate the amount of that impairment.  The provisions of this ASU modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts.  For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists.  The Company adopted the provisions of this ASU in preparing the Consolidated Financial Statements for the period ended March 31, 2011.  As of March 31, 2011, the Company had no reporting units with zero or negative carrying amounts or reporting units where there was a reasonable possibility of failing Step 1 of the goodwill impairment test.  As a result, the adoption of this ASU had no impact on the Company’s statements of income and condition.

 

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Fair Value Measurements and Disclosures

 

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures About Fair Value Measurements,” which added disclosure requirements about transfers into and out of Levels 1, 2, and 3, clarified existing fair value disclosure requirements about the appropriate level of disaggregation, and clarified that a description of the valuation technique (e.g., market approach, income approach, or cost approach) and inputs used to measure fair value was required for recurring, nonrecurring, and Level 2 and 3 fair value measurements.  The Company adopted these provisions of this ASU in preparing the Consolidated Financial Statements for the period ended March 31, 2010.  This ASU also requires that Level 3 activity about purchases, sales, issuances, and settlements be presented on a gross basis rather than as a net number as previously permitted.  The Company adopted this provision of the ASU in preparing the Consolidated Financial Statements for the period ended March 31, 2011.  As this provision amends only the disclosure requirements related to Level 3 activity, the adoption of this provision of the ASU had no impact on the Company’s statements of income and condition.  See Note 12 to the Consolidated Financial Statements for the disclosures required by this ASU.

 

Future Application of Accounting Pronouncements

 

In January 2011, the FASB issued ASU No. 2011-01, “Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20.”  The provisions of ASU No. 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses” required the disclosure of more granular information on the nature and extent of troubled debt restructurings and their effect on the allowance for loan and lease losses effective for the Company’s reporting period ended March 31, 2011.  The amendments in ASU No. 2011-01 deferred the effective date related to these disclosures, enabling creditors to provide such disclosures after the FASB completed their project clarifying the guidance for determining what constitutes a troubled debt restructuring.  As the provisions of ASU No. 2011-01 only defer the effective date of disclosure requirements related to troubled debt restructurings, the adoption had no impact on the Company’s statements of income and condition.

 

In April 2011, the FASB issued ASU No. 2011-02, “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.”  The provisions of ASU No. 2011-02 provide additional guidance related to determining whether a creditor has granted a concession, include factors and examples for creditors to consider in evaluating whether a restructuring results in a delay in payment that is insignificant, prohibit creditors from using the borrower’s effective rate test to evaluate whether a concession has been granted to the borrower, and adds factors for creditors to use in determining whether a borrower is experiencing financial difficulties.  A provision in ASU No. 2011-02 also ends the FASB’s deferral of the additional disclosures related to troubled debt restructurings as required by ASU No. 2010-20.  The provisions of ASU No. 2011-02 are effective for the Company’s reporting period ending September 30, 2011.  The adoption of ASU No. 2011-02 is not expected to have a material impact on the Company’s statements of income and condition.

 

In April 2011, the FASB issued ASU No. 2011-03, “Reconsideration of Effective Control for Repurchase Agreements.”  ASU No. 2011-03 modifies the criteria for determining when repurchase agreements would be accounted for as a secured borrowing rather than as a sale.  Currently, an entity that maintains effective control over transferred financial assets must account for the transfer as a secured borrowing rather than as a sale.  The provisions of ASU No. 2011-03 removes from the assessment of effective control the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee.  The FASB believes that contractual rights and obligations determine effective control and that there does not need to be a requirement to assess the ability to exercise those rights.  ASU No. 2011-03 does not change the other existing criteria used in the assessment of effective control.  The provisions of ASU No. 2011-03 are effective prospectively for transactions, or modifications of existing transactions, that occur on or after January 1, 2012.  As the Company accounts for all of its repurchase agreements as collateralized financing arrangements, the adoption of this ASU is not expected to have a material impact on the Company’s statements of income and condition.

 

In May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.”  ASU No. 2011-04 results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and International Financial Reporting Standards (“IFRS”).  The changes to U.S. GAAP as a result of ASU No. 2011-04 are as follows:  (1) The concepts of highest and best use and valuation premise are only relevant when measuring the fair value of nonfinancial assets (that is, it does not apply to financial assets or any liabilities); (2) U.S. GAAP currently prohibits application of a blockage factor in valuing financial instruments with quoted prices in active markets.  ASU No. 2011-04 extends that prohibition to all fair value measurements; (3) An exception is provided to the basic fair value measurement principles for an entity that holds a group of financial assets and financial liabilities with offsetting positions in market risks or counterparty credit risk that are managed on the basis of the entity’s net exposure to either of those risks.  This exception allows the entity, if certain criteria are met, to measure the fair value of the net asset or liability position in a manner consistent with how market participants would price the net risk position; (4) Aligns the fair value measurement of instruments classified within an entity’s shareholders’ equity with the guidance for liabilities; and (5) Disclosure requirements have been enhanced for recurring Level 3 fair value measurements to disclose quantitative information about unobservable inputs and assumptions used, to

 

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describe the valuation processes used by the entity, and to describe the sensitivity of fair value measurements to changes in unobservable inputs and interrelationships between those inputs.  In addition, entities must report the level in the fair value hierarchy of items that are not measured at fair value in the statement of condition but whose fair value must be disclosed.  The provisions of ASU No. 2011-04 are effective for the Company’s interim reporting period beginning on or after December 15, 2011.  The adoption of ASU No. 2011-04 is not expected to have a material impact on the Company’s statements of income and condition.

 

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income.”  The provisions of ASU No. 2011-05 allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income.  The statement(s) are required to be presented with equal prominence as the other primary financial statements.  ASU No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity but does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.  The provisions of ASU No. 2011-05 are effective for the Company’s interim reporting period beginning on or after December 15, 2011, with retrospective application required.  The adoption of ASU No. 2011-05 is expected to result in presentation changes to the Company’s statements of income and the addition of a statement of comprehensive income.  The adoption of ASU No. 2011-05 will have no impact on the Company’s statements of condition.

 

Note 2.  Investment Securities

 

The amortized cost, gross unrealized gains and losses, and fair value of the Company’s investment securities as of June 30, 2011 and December 31, 2010 were as follows:

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

(dollars in thousands)

 

Cost

 

Gains

 

Losses

 

Value

 

June 30, 2011

 

 

 

 

 

 

 

 

 

Available-for-Sale:

 

 

 

 

 

 

 

 

 

Debt Securities Issued by the U.S. Treasury and Government Agencies

 

$

1,016,715

 

$

7,855

 

$

(817)

 

$

1,023,753

 

Debt Securities Issued by States and Political Subdivisions

 

127,790

 

3,174

 

(280)

 

130,684

 

Debt Securities Issued by Corporations

 

43,063

 

135

 

(1)

 

43,197

 

Mortgage-Backed Securities Issued by

 

 

 

 

 

 

 

 

 

Government Agencies

 

2,783,398

 

55,866

 

(4,213)

 

2,835,051

 

U.S. Government-Sponsored Enterprises

 

76,385

 

3,531

 

-

 

79,916

 

Total Mortgage-Backed Securities

 

2,859,783

 

59,397

 

(4,213)

 

2,914,967

 

Total

 

$

4,047,351

 

$

70,561

 

$

(5,311)

 

$

4,112,601

 

Held-to-Maturity:

 

 

 

 

 

 

 

 

 

Debt Securities Issued by the U.S. Treasury and Government Agencies

 

$

179,489

 

$

3,579

 

$

-

 

$

183,068

 

Mortgage-Backed Securities Issued by

 

 

 

 

 

 

 

 

 

Government Agencies

 

2,270,256

 

47,694

 

(1)

 

2,317,949

 

U.S. Government-Sponsored Enterprises

 

62,279

 

3,325

 

-

 

65,604

 

Total Mortgage-Backed Securities

 

2,332,535

 

51,019

 

(1)

 

2,383,553

 

Total

 

$

2,512,024

 

$

54,598

 

$

(1)

 

$

2,566,621

 

 

 

 

 

 

 

 

 

 

 

December 31, 2010

 

 

 

 

 

 

 

 

 

Available-for-Sale:

 

 

 

 

 

 

 

 

 

Debt Securities Issued by the U.S. Treasury and Government Agencies

 

$

536,770

 

$

19,131

 

$

(45)

 

$

555,856

 

Debt Securities Issued by States and Political Subdivisions

 

113,715

 

1,477

 

(1,583)

 

113,609

 

Debt Securities Issued by U.S. Government-Sponsored Enterprises

 

500

 

5

 

-

 

505

 

Mortgage-Backed Securities Issued by

 

 

 

 

 

 

 

 

 

Government Agencies

 

5,696,907

 

84,008

 

(30,887)

 

5,750,028

 

U.S. Government-Sponsored Enterprises

 

109,259

 

4,617

 

-

 

113,876

 

Total Mortgage-Backed Securities

 

5,806,166

 

88,625

 

(30,887)

 

5,863,904

 

Total

 

$

6,457,151

 

$

109,238

 

$

(32,515)

 

$

6,533,874

 

Held-to-Maturity:

 

 

 

 

 

 

 

 

 

Mortgage-Backed Securities Issued by

 

 

 

 

 

 

 

 

 

Government Agencies

 

$

47,368

 

$

2,959

 

$

-

 

$

50,327

 

U.S. Government-Sponsored Enterprises

 

79,881

 

3,820

 

-

 

83,701

 

Total

 

$

127,249

 

$

6,779

 

$

-

 

$

134,028

 

 

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During the three months ended March 31, 2011, the Company reclassified at fair value approximately $2.2 billion in available-for-sale investment securities to the held-to-maturity category.  The related unrealized after-tax gains of approximately $8.2 million remained in accumulated other comprehensive income to be amortized over the estimated remaining life of the securities as an adjustment of yield, offsetting the related amortization of the premium or accretion of the discount on the transferred securities.  No gains or losses were recognized at the time of reclassification.  Management considers the held-to-maturity classification of these investment securities to be appropriate as the Company has the positive intent and ability to hold these securities to maturity.

 

The table below presents an analysis of the contractual maturities of the Company’s investment securities as of June 30, 2011.  Mortgage-backed securities are disclosed separately in the table below as these investment securities may prepay prior to their scheduled contractual maturity dates.

 

 

 

Amortized

 

 

 

(dollars in thousands)

 

Cost

 

Fair Value

 

Available-for-Sale:

 

 

 

 

 

Due in One Year or Less

 

$

256,617

 

$

257,384

 

Due After One Year Through Five Years

 

746,982

 

754,351

 

Due After Five Years Through Ten Years

 

80,904

 

82,104

 

Due After Ten Years

 

103,065

 

103,795

 

 

 

1,187,568

 

1,197,634

 

Mortgage-Backed Securities Issued by

 

 

 

 

 

Government Agencies

 

2,783,398

 

2,835,051

 

U.S. Government-Sponsored Enterprises

 

76,385

 

79,916

 

Total Mortgage-Backed Securities

 

2,859,783

 

2,914,967

 

Total

 

$

4,047,351

 

$

4,112,601

 

 

 

 

 

 

 

Held-to-Maturity:

 

 

 

 

 

Due After One Year Through Five Years

 

$

179,489

 

$

183,068

 

Mortgage-Backed Securities Issued by

 

 

 

 

 

Government Agencies

 

2,270,256

 

2,317,949

 

U.S. Government-Sponsored Enterprises

 

62,279

 

65,604

 

Total Mortgage-Backed Securities

 

2,332,535

 

2,383,553

 

Total

 

$

2,512,024

 

$

2,566,621

 

 

Investment securities with carrying values of $3.2 billion as of June 30, 2011 and December 31, 2010 were pledged to secure deposits of governmental entities and securities sold under agreements to repurchase.  As of June 30, 2011 and December 31, 2010, the Company did not have any investment securities pledged where the secured party had the right to sell or repledge the collateral.

 

There were no sales of investment securities for the three months ended June 30, 2011.  Gross gains on the sales of investment securities were $15.0 million for the three months ended June 30, 2010 and $10.3 million and $35.0 million for the six months ended June 30, 2011 and 2010, respectively.  Gross losses on the sales of investment securities were $4.2 million for the six months ended June 30, 2011 and were not material for the three and six months ended June 30, 2010.  The Company’s sales of available-for-sale investment securities during the six months ended June 30, 2011 were primarily due to management’s ongoing evaluation of the investment securities portfolio in response to established asset/liability management objectives.

 

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The Company’s investment securities in an unrealized loss position, segregated by continuous length of impairment, were as follows:

 

 

 

 

Less Than 12 Months

 

 

12 Months or Longer

 

 

Total

 

 

 

 

 

Gross

 

 

 

Gross

 

 

 

Gross

 

 

 

 

 

 

Unrealized

 

 

 

Unrealized

 

 

 

Unrealized

 

 

(dollars in thousands)

 

Fair Value

 

Losses

 

Fair Value

 

Losses

 

Fair Value

 

Losses

 

 

June 30, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt Securities Issued by
the U.S. Treasury and Government Agencies

 

$

69,999

 

$

(813)

 

$

1,065

 

$

(4

)

$

71,064

 

$

(817)

 

 

Debt Securities Issued by
States and Political Subdivisions

 

28,745

 

(280)

 

-

 

-

 

28,745

 

(280)

 

 

Debt Securities Issued by Corporations

 

5,049

 

(1)

 

-

 

-

 

5,049

 

(1)

 

 

Mortgage-Backed Securities Issued by
Government Agencies

 

479,590

 

(4,193)

 

1,527

 

(21

)

481,117

 

(4,214)

 

 

Total

 

$

583,383

 

$

(5,287)

 

$

2,592

 

$

(25

)

$

585,975

 

$

(5,312)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt Securities Issued by
the U.S. Treasury and Government Agencies

 

$

1,366

 

$

(36)

 

$

1,204

 

$

(9

)

$

2,570

 

$

(45)

 

 

Debt Securities Issued by
States and Political Subdivisions

 

67,754

 

(1,583)

 

-

 

-

 

67,754

 

(1,583)

 

 

Mortgage-Backed Securities Issued by
Government Agencies

 

1,662,897

 

(30,887)

 

-

 

-

 

1,662,897

 

(30,887)

 

 

Total

 

$

1,732,017

 

$

(32,506)

 

$

1,204

 

$

(9

)

$

1,733,221

 

$

(32,515)

 

 

The Company does not believe that the investment securities that were in an unrealized loss position as of June 30, 2011, which was comprised of 62 securities, represent an other-than-temporary impairment.  Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities.  The Company does not intend to sell the investment securities that were in an unrealized loss position and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost bases, which may be at maturity.

 

As of June 30, 2011, the gross unrealized losses reported for mortgage-backed securities related to investment securities issued by the Government National Mortgage Association.

 

As of June 30, 2011, the carrying value of the Company’s Federal Home Loan Bank stock and Federal Reserve Bank stock was $61.3 million and $18.6 million, respectively.  These securities do not have a readily determinable fair value as their ownership is restricted and there is no market for these securities.  These securities can only be redeemed or sold at their par value and only to the respective issuing government supported institution or to another member institution.  The Company records these non-marketable equity securities as a component of other assets and periodically evaluates these securities for impairment.  Management considers these non-marketable equity securities to be long-term investments.  Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than by recognizing temporary declines in value.

 

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Note 3.    Loans and Leases and the Allowance for Loan and Lease Losses

 

Loans and Leases

 

The Company’s loan and lease portfolio was comprised of the following as of June 30, 2011 and December 31, 2010:

 

 

 

June 30,

 

December 31,

 

(dollars in thousands)

 

2011

 

2010

 

Commercial

 

 

 

 

 

Commercial and Industrial

 

$

815,912

 

$

772,624

 

Commercial Mortgage

 

872,283

 

863,385

 

Construction

 

81,432

 

80,325

 

Lease Financing

 

316,776

 

334,997

 

Total Commercial

 

2,086,403

 

2,051,331

 

Consumer

 

 

 

 

 

Residential Mortgage

 

2,130,335

 

2,094,189

 

Home Equity

 

783,582

 

807,479

 

Automobile

 

191,739

 

209,008

 

Other 1

 

159,414

 

173,785

 

Total Consumer

 

3,265,070

 

3,284,461

 

Total Loans and Leases

 

$

5,351,473

 

$

5,335,792

 

 

1  Comprised of other revolving credit, installment, and lease financing.

 

Allowance for Loan and Lease Losses (the “Allowance”)

 

The following presents by portfolio segment, the activity in the Allowance for the three and six months ended June 30, 2011.  The following also presents by portfolio segment, the balance in the Allowance disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans and leases as of June 30, 2011.

 

(dollars in thousands)

 

Commercial

 

Consumer

 

Total

 

Three Months Ended June 30, 2011

 

 

 

 

 

 

 

Allowance for Loan and Lease Losses:

 

 

 

 

 

 

 

Balance at Beginning of Period

 

$

87,533

 

$

59,825

 

$

147,358

 

Loans and Leases Charged-Off

 

(1,507

)

(7,514

)

(9,021

)

Recoveries on Loans and Leases Previously Charged-Off

 

443

 

2,596

 

3,039

 

Net Loans and Leases Charged-Off

 

(1,064

)

(4,918

)

(5,982

)

Provision for Credit Losses

 

2,516

 

1,084

 

3,600

 

Balance at End of Period

 

$

88,985

 

$

55,991

 

$

144,976

 

Six Months Ended June 30, 2011

 

 

 

 

 

 

 

Allowance for Loan and Lease Losses:

 

 

 

 

 

 

 

Balance at Beginning of Period

 

$

80,977

 

$

66,381

 

$

147,358

 

Loans and Leases Charged-Off

 

(3,164

)

(13,217

)

(16,381

)

Recoveries on Loans and Leases Previously Charged-Off

 

1,065

 

4,643

 

5,708

 

Net Loans and Leases Charged-Off

 

(2,099

)

(8,574

)

(10,673

)

Provision for Credit Losses

 

10,107

 

(1,816

)

8,291

 

Balance at End of Period

 

$

88,985

 

$

55,991

 

$

144,976

 

As of June 30, 2011

 

 

 

 

 

 

 

Allowance for Loan and Lease Losses:

 

 

 

 

 

 

 

Individually Evaluated for Impairment

 

$

-

 

$

3,875

 

$

3,875

 

Collectively Evaluated for Impairment

 

88,985

 

52,116

 

141,101

 

Total

 

$

88,985

 

$

55,991

 

$

144,976

 

Recorded Investment in Loans and Leases:

 

 

 

 

 

 

 

Individually Evaluated for Impairment

 

$

5,109

 

$

24,348

 

$

29,457

 

Collectively Evaluated for Impairment

 

2,081,294

 

3,240,722

 

5,322,016

 

Total

 

$

2,086,403

 

$

3,265,070

 

$

5,351,473

 

 

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Table of Contents

 

Credit Quality Indicators

 

The Company uses several credit quality indicators to manage credit risk in an ongoing manner.  The Company uses an internal credit risk rating system that categorizes loans and leases into pass, special mention, or classified categories.  Credit risk ratings are applied individually to those classes of loans and leases that have significant or unique credit characteristics that benefit from a case-by-case evaluation.  These are typically loans and leases to businesses or individuals in the classes which comprise the commercial portfolio segment.  Groups of loans and leases that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk-rated and monitored collectively.  These are typically loans and leases to individuals in the classes which comprise the consumer portfolio segment.

 

The following are the definitions of the Company’s credit quality indicators:

 

Pass:                                                                                            Loans and leases in all classes within the commercial and consumer portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan or lease agreement.  Management believes that there is a low likelihood of loss related to those loans and leases that are considered pass.

 

Special Mention:                              Loans and leases in the classes within the commercial portfolio segment that have potential weaknesses that deserve management’s close attention.  If not addressed, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease.  The special mention credit quality indicator is not used for classes of loans and leases that are included in the consumer portfolio segment.  Management believes that there is a moderate likelihood of some loss related to those loans and leases that are considered special mention.

 

Classified:                                                                 Loans and leases in the classes within the commercial portfolio segment that are inadequately protected by the sound worth and paying capacity of the borrower or of the collateral pledged, if any.  Classified loans and leases are also those in the classes within the consumer portfolio segment that are past due 90 days or more as to principal or interest.   Residential mortgage and home equity loans that are past due 90 days or more as to principal or interest may be considered pass if the Company is in the process of collection and the current loan-to-value ratio is 60% or less.  Residential mortgage and home equity loans may be current as to principal and interest, but may be considered classified for a period of up to six months following a loan modification.  Following a period of demonstrated performance in accordance with the modified contractual terms, the loan may be removed from classified status.  Management believes that there is a distinct possibility that the Company will sustain some loss if the deficiencies related to classified loans and leases are not corrected in a timely manner.

 

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Table of Contents

 

The Company’s credit quality indicators are periodically updated on a case-by-case basis.  The following presents by class and by credit quality indicator, the recorded investment in the Company’s loans and leases as of June 30, 2011 and December 31, 2010.

 

 

 

June 30, 2011

 

(dollars in thousands)

 

Commercial
and Industrial

 

Commercial
Mortgage

 

Construction

 

Lease Financing

 

Total
Commercial

 

Pass

 

$

776,973

 

$

796,615

 

$

63,255

 

$

287,876

 

$

1,924,719

 

Special Mention

 

11,742

 

26,902

 

592

 

24,835

 

64,071

 

Classified

 

27,197

 

48,766

 

17,585

 

4,065

 

97,613

 

Total

 

$

815,912

 

$

872,283

 

$

81,432

 

$

316,776

 

$

2,086,403

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

Residential
Mortgage

 

Home
Equity

 

Automobile

 

Other 1

 

Total
Consumer

 

Pass

 

$

2,101,968

 

$

780,280

 

$

191,572

 

$

158,536

 

$

3,232,356

 

Classified

 

28,367

 

3,302

 

167

 

878

 

32,714

 

Total

 

$

2,130,335

 

$

783,582

 

$

191,739

 

$

159,414

 

$

3,265,070

 

Total Recorded Investment in Loans and Leases

 

 

 

 

 

 

 

 

 

$

5,351,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2010

 

(dollars in thousands)

 

Commercial
and Industrial

 

Commercial
Mortgage

 

Construction

 

Lease Financing

 

Total
Commercial

 

Pass

 

$

720,618

 

$

775,938

 

$

61,598

 

$

305,967

 

$

1,864,121

 

Special Mention

 

18,096

 

32,055

 

1,975

 

26,767

 

78,893

 

Classified

 

33,910

 

55,392

 

16,752

 

2,263

 

108,317

 

Total

 

$

772,624

 

$

863,385

 

$

80,325

 

$

334,997

 

$

2,051,331

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

Residential
Mortgage

 

Home
Equity

 

Automobile

 

Other 1

 

Total
Consumer

 

Pass

 

$

2,059,012

 

$

804,158

 

$

208,598

 

$

172,762

 

$

3,244,530

 

Classified

 

35,177

 

3,321

 

410

 

1,023

 

39,931

 

Total

 

$

2,094,189

 

$

807,479

 

$

209,008

 

$

173,785

 

$

3,284,461

 

Total Recorded Investment in Loans and Leases

 

 

 

 

 

 

 

 

 

$

5,335,792

 

 

1 Comprised of other revolving credit, installment, and lease financing.

 

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Table of Contents

 

Aging Analysis of Accruing and Non-Accruing Loans and Leases

 

The following presents by class, an aging analysis of the Company’s accruing and non-accruing loans and leases as of June 30, 2011 and December 31, 2010.

 

(dollars in thousands)

 

30 - 59
Days
Past Due

 

60 - 89
Days
Past Due

 

Past Due
90 Days
or More

 

Non-
Accrual

 

Total Past
Due and
Non-Accrual

 

Current

 

Total
Loans and
Leases

 

Non-Accrual
Loans and
Leases that
are Current 
2

 

June 30, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

$    1,332

 

$      718

 

$          -

 

$    1,839

 

$    3,889

 

$     812,023

 

$     815,912

 

$       283

 

Commercial Mortgage

 

-

 

-

 

-

 

3,290

 

3,290

 

868,993

 

872,283

 

2,284

 

Construction

 

-

 

-

 

-

 

288

 

288

 

81,144

 

81,432

 

-

 

Lease Financing

 

265

 

-

 

-

 

8

 

273

 

316,503

 

316,776

 

8

 

Total Commercial

 

1,597

 

718

 

-

 

5,425

 

7,740

 

2,078,663

 

2,086,403

 

2,575

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

11,215

 

6,080

 

5,854

 

23,970

 

47,119

 

2,083,216

 

2,130,335

 

3,067

 

Home Equity

 

3,493

 

1,852

 

1,147

 

2,155

 

8,647

 

774,935

 

783,582

 

468

 

Automobile

 

4,223

 

522

 

167

 

-

 

4,912

 

186,827

 

191,739

 

-

 

Other 1

 

2,874

 

845

 

604

 

16

 

4,339

 

155,075

 

159,414

 

-

 

Total Consumer

 

21,805

 

9,299

 

7,772

 

26,141

 

65,017

 

3,200,053

 

3,265,070

 

3,535

 

Total

 

$  23,402

 

$  10,017

 

$   7,772

 

$  31,566

 

$  72,757

 

$  5,278,716

 

$  5,351,473

 

$    6,110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

$    1,807

 

$    1,341

 

$          -

 

$    1,642

 

$    4,790

 

$     767,834

 

$     772,624

 

$    1,564

 

Commercial Mortgage

 

2,100

 

-

 

-

 

3,503

 

5,603

 

857,782

 

863,385

 

2,415

 

Construction

 

-

 

-

 

-

 

288

 

288

 

80,037

 

80,325

 

-

 

Lease Financing

 

82

 

-

 

-

 

19

 

101

 

334,896

 

334,997

 

19

 

Total Commercial

 

3,989

 

1,341

 

-

 

5,452

 

10,782

 

2,040,549

 

2,051,331

 

3,998

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

8,389

 

9,045

 

5,399

 

28,152

 

50,985

 

2,043,204

 

2,094,189

 

7,891

 

Home Equity

 

4,248

 

2,420

 

1,067

 

2,254

 

9,989

 

797,490

 

807,479

 

1,041

 

Automobile

 

6,046

 

1,004

 

410

 

-

 

7,460

 

201,548

 

209,008

 

-

 

Other 1

 

1,962

 

1,145

 

707

 

-

 

3,814

 

169,971

 

173,785

 

-

 

Total Consumer

 

20,645

 

13,614

 

7,583

 

30,406

 

72,248

 

3,212,213

 

3,284,461

 

8,932

 

Total

 

$  24,634

 

$  14,955

 

$  7,583

 

$  35,858

 

$  83,030

 

$  5,252,762

 

$  5,335,792

 

$  12,930

 

 

1  Comprised of other revolving credit, installment, and lease financing.

2  Represents nonaccrual loans that are not past due 30 days or more; however, full payment of principal and interest is still not expected.

 

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Table of Contents

 

Impaired Loans

 

The following presents by class, information related to the Company’s impaired loans as of June 30, 2011 and December 31, 2010.

 

(dollars in thousands)

 

Recorded
Investment

 

Unpaid
Principal
Balance

 

Related
Allowance for
Loan Losses

 

June 30, 2011

 

 

 

 

 

 

 

Impaired Loans with No Related Allowance Recorded:

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

Commercial and Industrial

 

$

1,601

 

$

5,451

 

$

-

 

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