EVER-9.30.2012-10Q
Table of Contents



 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
 
 
ý
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2012
or
 
o
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from                to             
EverBank Financial Corp
(Exact name of registrant as specified in its charter)
Delaware
 
001-35533
 
52-2024090
(State of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)
 
 
 
501 Riverside Ave., Jacksonville, FL
 
 
 
32202
(Address of principal executive offices)
 
 
 
(Zip Code)
904-281-6000
(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 ý    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 ý  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 o
  
Accelerated filer o
 
Non-accelerated filer ý (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 ý
As of October 31, 2012, there were 120,637,400 shares of common stock outstanding.
 

Table of Contents



EverBank Financial Corp
Form 10-Q
Index
Part I - Financial Information
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
Part II - Other Information
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 5.
 
 
 
Item 6.

Table of Contents



Part I. Financial Information
Item 1. Financial Statements (unaudited)
EverBank Financial Corp and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(Dollars in thousands, except per share data)
 
September 30,
2012
 
December 31,
2011
Assets
 
 
 
Cash and due from banks
$
53,357

 
$
31,441

Interest-bearing deposits in banks
1,566,612

 
263,540

Total cash and cash equivalents
1,619,969

 
294,981

Investment securities:
 
 
 
Available for sale, at fair value
1,722,556

 
1,903,922

Held to maturity (fair value of $177,228 and $194,350 as of September 30, 2012 and December 31, 2011, respectively)
170,804

 
189,518

Other investments
126,151

 
98,392

Total investment securities
2,019,511

 
2,191,832

Loans held for sale (includes $1,025,467 and $777,280 carried at fair value as of September 30, 2012 and December 31, 2011, respectively)
1,403,205

 
2,725,286

Loans and leases held for investment:
 
 
 
Covered by loss share or indemnification agreements
671,420

 
841,146

Not covered by loss share or indemnification agreements
9,385,306

 
5,678,135

Loans and leases held for investment, net of unearned income
10,056,726

 
6,519,281

Allowance for loan and lease losses
(76,469
)
 
(77,765
)
Total loans and leases held for investment, net
9,980,257

 
6,441,516

Equipment under operating leases, net
55,532

 
56,399

Mortgage servicing rights (MSR), net
381,773

 
489,496

Deferred income taxes, net
183,943

 
151,634

Premises and equipment, net
64,789

 
43,738

Other assets
800,461

 
646,796

Total Assets
$
16,509,440

 
$
13,041,678

Liabilities
 
 
 
Deposits:
 
 
 
Noninterest-bearing
$
1,475,204

 
$
1,234,615

Interest-bearing
10,340,722

 
9,031,148

Total deposits
11,815,926

 
10,265,763

Other borrowings
2,823,927

 
1,257,879

Trust preferred securities
103,750

 
103,750

Accounts payable and accrued liabilities
507,815

 
446,621

Total Liabilities
15,251,418

 
12,074,013

Commitments and Contingencies (Note 15)
 
 
 
Shareholders’ Equity
 
 
 
Series A 6% Cumulative Convertible Preferred Stock, $0.01 par value (1,000,000 shares authorized and 186,744 shares issued and outstanding at December 31, 2011; no shares authorized, issued or outstanding at September 30, 2012) (Note 10)
—

 
2

Series B 4% Cumulative Convertible Preferred Stock, $0.01 par value (liquidation preference of $1,000 per share; 1,000,000 shares authorized inclusive of Series A Preferred Stock and 136,544 shares issued and outstanding at December 31, 2011; no shares authorized, issued or outstanding at September 30, 2012) (Note 10)
—

 
1

Common Stock, $0.01 par value (500,000,000 and 150,000,000 shares authorized at September 30, 2012 and December 31, 2011, respectively; 120,624,500 and 75,094,375 issued and outstanding at September 30, 2012 and December 31, 2011, respectively)
1,206

 
751

Additional paid-in capital
812,823

 
561,247

Retained earnings
550,724

 
513,413

Accumulated other comprehensive income (loss) (AOCI)
(106,731
)
 
(107,749
)
Total Shareholders’ Equity
1,258,022

 
967,665

Total Liabilities and Shareholders’ Equity
$
16,509,440

 
$
13,041,678

See notes to unaudited condensed consolidated financial statements.

3
Table of Contents
EverBank Financial Corp and Subsidiaries
Condensed Consolidated Statements of Income (unaudited)
(Dollars in thousands, except per share data)


 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2012
 
2011
 
2012
 
2011
Interest Income
 
 
 
 
 
 
 
Interest and fees on loans and leases
$
140,230

 
$
116,899

 
$
400,824

 
$
358,419

Interest and dividends on investment securities
20,879

 
27,201

 
62,127

 
82,778

Other interest income
152

 
197

 
338

 
1,312

Total Interest Income
161,261

 
144,297

 
463,289

 
442,509

Interest Expense
 
 
 
 
 
 
 
Deposits
22,491

 
23,959

 
63,884

 
75,559

Other borrowings
12,576

 
9,469

 
32,604

 
29,478

Total Interest Expense
35,067

 
33,428

 
96,488

 
105,037

Net Interest Income
126,194

 
110,869

 
366,801

 
337,472

Provision for Loan and Lease Losses
4,359

 
12,258

 
21,471

 
39,292

Net Interest Income after Provision for Loan and Lease Losses
121,835

 
98,611

 
345,330

 
298,180

Noninterest Income
 
 
 
 
 
 
 
Loan servicing fee income
42,341

 
48,390

 
130,380

 
144,023

Amortization and impairment of mortgage servicing rights
(54,521
)
 
(44,053
)
 
(163,281
)
 
(88,270
)
Net loan servicing income (loss)
(12,180
)
 
4,337

 
(32,901
)
 
55,753

Gain on sale of loans
85,748

 
20,921

 
203,851

 
39,854

Loan production revenue
10,528

 
6,518

 
27,817

 
18,513

Deposit fee income
4,671

 
7,803

 
16,738

 
19,398

Other lease income
7,103

 
7,095

 
24,588

 
22,163

Other
1,429

 
6,683

 
4,522

 
16,461

Total Noninterest Income
97,299

 
53,357

 
244,615

 
172,142

Noninterest Expense
 
 
 
 
 
 
 
Salaries, commissions and other employee benefits expense
85,399

 
57,757

 
228,266

 
171,451

Equipment expense
17,574

 
13,608

 
50,411

 
36,077

Occupancy expense
6,619

 
5,237

 
17,985

 
14,808

General and administrative expense
74,377

 
62,983

 
221,911

 
184,199

Total Noninterest Expense
183,969

 
139,585

 
518,573

 
406,535

Income before Provision for Income Taxes
35,165

 
12,383

 
71,372

 
63,787

Provision for Income Taxes
12,987

 
4,625

 
26,176

 
24,818

Net Income
$
22,178

 
$
7,758

 
$
45,196

 
$
38,969

Less: Net Income Allocated to Participating Preferred Stock
—

 
(1,598
)
 
(8,564
)
 
(8,420
)
Net Income Allocated to Common Shareholders
$
22,178

 
$
6,160

 
$
36,632

 
$
30,549

Basic Earnings Per Share
$
0.19

 
$
0.08

 
$
0.37

 
$
0.41

Diluted Earnings Per Share
$
0.19

 
$
0.08

 
$
0.37

 
$
0.40

Dividends Declared Per Share
$
0.02

 
$
—

 
$
0.02

 
$
—

See notes to unaudited condensed consolidated financial statements.

4
Table of Contents
EverBank Financial Corp and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (unaudited)
(Dollars in thousands)

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2012
 
2011
 
2012
 
2011
Net Income
$
22,178

 
$
7,758

 
$
45,196

 
$
38,969

Unrealized Gains (Losses) on Debt Securities
 
 
 
 
 
 
 
Reclassification of unrealized gains to earnings
—

 
(4,662
)
 
—

 
(7,401
)
Unrealized gains (losses) due to changes in fair value
18,662

 
(14,254
)
 
32,367

 
(24,804
)
Other-than-temporary impairment (OTTI) (noncredit portion), net of accretion
—

 
—

 
—

 
502

Tax effect
(7,094
)
 
6,626

 
(12,240
)
 
11,322

Change in unrealized gains (losses) on debt securities
11,568

 
(12,290
)
 
20,127

 
(20,381
)
Interest Rate Swaps
 
 
 
 
 
 
 
Net unrealized losses due to changes in fair value
(11,509
)
 
(82,910
)
 
(37,813
)
 
(105,739
)
Reclassification of unrealized losses to earnings
3,112

 
1,801

 
6,786

 
5,598

Tax effect
3,191

 
30,824

 
11,918

 
38,275

Change in interest rate swaps
(5,206
)
 
(50,285
)
 
(19,109
)
 
(61,866
)
Other Comprehensive Income (Loss)
6,362

 
(62,575
)
 
1,018

 
(82,247
)
Comprehensive Income (Loss)
$
28,540

 
$
(54,817
)
 
$
46,214

 
$
(43,278
)

See notes to unaudited condensed consolidated financial statements.

5
Table of Contents
EverBank Financial Corp and Subsidiaries
Condensed Consolidated Statements of Shareholders' Equity (unaudited)
(Dollars in thousands)

 
Shareholders’ Equity
 
 
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax
 
Total
Equity
Balance, January 1, 2012
$
3

 
$
751

 
$
561,247

 
$
513,413

 
$
(107,749
)
 
$
967,665

Net income
—

 
—

 
—

 
45,196

 
—

 
45,196

Other comprehensive income
—

 
—

 
—

 
—

 
1,018

 
1,018

Conversion of preferred stock
(3
)
 
188

 
(185
)
 
—

 
—

 
—

Issuance of common stock, net of issue costs
—

 
267

 
247,503

 
—

 
—

 
247,770

Repurchase of common stock
—

 
—

 
(442
)
 
—

 
—

 
(442
)
Share-based grants (including income tax benefits)
—

 
—

 
4,700

 
—

 
—

 
4,700

Cash dividends on common stock
—

 
—

 
—

 
(2,330
)
 
—

 
(2,330
)
Cash dividends on preferred stock
—

 
—

 
—

 
(5,555
)
 
—

 
(5,555
)
Balance, September 30, 2012
$
—

 
$
1,206

 
$
812,823

 
$
550,724

 
$
(106,731
)
 
$
1,258,022

 
 
 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2011
$
3

 
$
747

 
$
556,001

 
$
461,503

 
$
(5,056
)
 
$
1,013,198

Net income
—

 
—

 
—

 
38,969

 
—

 
38,969

Other comprehensive loss
—

 
—

 
—

 
—

 
(82,247
)
 
(82,247
)
Issuance of common stock
—

 
4

 
1,089

 
—

 
—

 
1,093

Repurchase of common stock
—

 
(1
)
 
(2,312
)
 
—

 
—

 
(2,313
)
Share-based grants (including income tax benefits)
—

 
—

 
5,178

 
—

 
—

 
5,178

Cash dividends on preferred stock
—

 
—

 
—

 
(170
)
 
—

 
(170
)
Paid-in-kind dividends on Series B Preferred Stock
—

 
—

 
591

 
(591
)
 
—

 
—

Balance, September 30, 2011
$
3

 
$
750

 
$
560,547

 
$
499,711

 
$
(87,303
)
 
$
973,708


See notes to unaudited condensed consolidated financial statements.

6
Table of Contents
EverBank Financial Corp and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Dollars in thousands)


 
Nine Months Ended
 
September 30,
 
2012
 
2011
Operating Activities:
 
 
 
Net income
$
45,196

 
$
38,969

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Amortization of premiums on investments
6,390

 
9,024

Depreciation and amortization of tangible and intangible assets
27,011

 
16,373

Amortization of loss on settlement of interest rate swaps
6,786

 
5,598

Amortization and impairment of mortgage servicing rights
163,281

 
88,270

Deferred income taxes
(32,631
)
 
56,670

Provision for loan and lease losses
21,471

 
39,292

Loss on other real estate owned (OREO)
7,910

 
11,942

Share-based compensation expense
3,302

 
2,928

Payments for settlement of forward interest rate swaps
(41,386
)
 
(2,796
)
Other operating activities
(4,249
)
 
(2,767
)
Changes in operating assets and liabilities:
 
 
 
Loans held for sale, including proceeds from sales and repayments
(942,081
)
 
72,307

Other assets
89,245

 
(135,379
)
Accounts payable and accrued liabilities
60,194

 
22,686

Net cash provided by (used in) operating activities
(589,561
)
 
223,117

Investing Activities:
 
 
 
Investment securities available for sale:
 
 
 
Purchases
(210,717
)
 
(1,062,031
)
Proceeds from sales
—

 
231,842

Proceeds from prepayments and maturities
419,500

 
471,460

Investment securities held to maturity:
 
 
 
Purchases
(14,917
)
 
(155,885
)
Proceeds from prepayments and maturities
32,810

 
8,958

Purchases of other investments
(70,782
)
 
(2,552
)
Proceeds from sales of other investments
43,008

 
50,895

Net change in loans and leases held for investment
(1,400,765
)
 
(1,126,555
)
Cash paid for acquisition
(351,071
)
 
—

Purchases of premises and equipment, including equipment under operating leases
(39,453
)
 
(40,398
)
Proceeds related to sale or settlement of other real estate owned
30,311

 
35,549

Proceeds from insured foreclosure claims
115,040

 
164,237

Other investing activities
1,923

 
(8,803
)
Net cash used in investing activities
(1,445,113
)
 
(1,433,283
)
Financing Activities:
 
 
 
Net increase in nonmaturity deposits
1,085,006

 
520,003

Net increase in time deposits
459,775

 
91,844

Net change in repurchase agreements
484,565

 
—

Decrease in short-term Federal Home Loan Bank (FHLB) advances
(470,000
)
 
(25,000
)
Proceeds from long-term FHLB advances
1,886,000

 
6,158

Repayments of long-term FHLB advances
(333,500
)
 
(85,013
)
Proceeds from issuance of common stock
256,522

 
1,093

Other financing activities
(8,706
)
 
(8,862
)
Net cash provided by financing activities
3,359,662

 
500,223

Net change in cash and cash equivalents
1,324,988

 
(709,943
)
Cash and cash equivalents at beginning of period
294,981

 
1,169,221

Cash and cash equivalents at end of period
$
1,619,969

 
$
459,278


See Note 1 for disclosures related to supplemental noncash information.
See notes to unaudited condensed consolidated financial statements.

7
Table of Contents



EverBank Financial Corp and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(Dollars in thousands, except per share data)

1.  Organization and Basis of Presentation
a) Organization — EverBank Financial Corp (the Company) is a thrift holding company with one direct subsidiary, EverBank (EB). EB is a federally chartered thrift institution with its home office located in Jacksonville, Florida. In addition, its direct banking services are offered nationwide. EB operates financial centers in Florida and retail lending centers across the United States. EB (a) accepts deposits from the general public; (b) originates, purchases, services and sells residential real estate mortgage loans; (c) originates, services, and sells commercial real estate loans; (d) originates consumer, home equity, and commercial loans and leases; and (e) offers full-service securities brokerage and investment advisory services.
EB’s subsidiaries are:
•AMC Holding, Inc., the parent of CustomerOne Financial Network, Inc.;
•Tygris Commercial Finance Group, Inc. (Tygris), the parent of EverBank Commercial Finance, Inc.;
•EverInsurance, Inc.;
•Elite Lender Services, Inc.; and
•EverBank Wealth Management, Inc. (EWM).
On January 31, 2012, as part of a tax-free reorganization, the assets, liabilities and business activities of EWM were transferred to EB.
b) Reincorporation — In September 2010, EverBank Financial Corp, a Florida corporation (EverBank Florida), formed EverBank Financial Corp, a Delaware corporation (EverBank Delaware). Subsequent to its formation, EverBank Delaware held no assets, had no subsidiaries and did not engage in any business or other activities except in connection with its formation. In May 2012, EverBank Delaware completed an initial public offering with its common stock listed on the New York Stock Exchange LLC (NYSE) under the symbol “EVER”. Immediately preceding the consummation of that offering, EverBank Florida merged with and into EverBank Delaware, with EverBank Delaware continuing as the surviving corporation and succeeding to all of the assets, liabilities and business of EverBank Florida. The merger resulted in the following:
•
All of the outstanding shares of common stock of EverBank Florida were converted into approximately 77,994,699 shares of EverBank Delaware common stock;
•
All of the outstanding shares of Series B Preferred Stock of EverBank Florida were converted into 15,964,644 shares of EverBank Delaware common stock;
•
As a result of the reincorporation of EverBank Florida in Delaware, the Company is now governed by the laws of the State of Delaware.
Reincorporation of EverBank Florida in Delaware did not result in any change of the business, management, fiscal year, assets, liabilities or location of the principal facilities of the Company.
c) Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information or footnotes necessary for a complete presentation of financial position, results of operations, comprehensive income, and cash flows in conformity with generally accepted accounting principles. These interim financial statements should be read in conjunction with the audited financial statements and note disclosures as of and for the years ended December 31, 2011, 2010 and 2009, which are included in the Company’s registration statement on Form S-1 filed with the SEC on May 2, 2012.
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. In management’s opinion, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position, results of operations, comprehensive income, and changes in cash flows have been made.
GAAP requires management to make estimates that affect the reported amounts and disclosures of contingencies in the consolidated financial statements. Estimates by their nature are based on judgment and available information. Material estimates relate to the Company’s allowance for loan and lease losses, loans and leases acquired with evidence of credit deterioration, repurchase obligations, lease residuals, contingent liabilities, and the fair values of investment securities, loans held for sale, MSR, share-based compensation and derivative instruments. Because of the inherent uncertainties associated with any estimation process and future changes in market and economic conditions, it is possible that actual results could differ significantly from these estimates.











8

d) Supplemental Cash Flow Information - Noncash investing and financing activities are presented in the following table:
 
Nine Months Ended
 
September 30,
 
2012
 
2011
Supplemental Schedules of Noncash Investing Activities:
 
 
 
Loans transferred to foreclosure claims from loans held for investment
$
146,480

 
$
172,805

Loans transferred to foreclosure claims from loans held for sale
203,764

 
13,536

Loans transferred to other real estate owned from loans held for investment
32,100

 
50,251

Loans transferred from held for sale to held for investment
1,928,519

 
11,254

Loans transferred from held for investment to held for sale
94,650

 
779,190

Additions of originated mortgage servicing assets for loans sold
58,061

 
38,194

 
 
 
 
Supplemental Schedules of Noncash Financing Activities:
 
 
 
Conversion of preferred stock
$
135,585

 
$
—

2.  Recent Accounting Pronouncements and Updates to Significant Accounting Policies
Recent Accounting Pronouncements
Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements — In May 2011, the Financial Accounting Standards Board (FASB) issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (Topic 820)—Fair Value Measurement, to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for level 3 fair value measurements. ASU 2011-04 was effective for the first quarter of 2012 and was applied prospectively. Adoption of this standard resulted in additional disclosures as presented in Note 14 but did not have any impact on the Company’s results of operations.
Presentation of Comprehensive Income — In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220)—Presentation of Comprehensive Income, to require an entity 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. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. ASU 2011-05 is effective for the first quarter of 2012 and should be applied retrospectively. Adoption of this standard resulted in the presentation of a new statement of comprehensive income separate from the statement of shareholders’ equity but did not have any impact on the Company’s results of operations. In December 2011, the FASB issued ASU 2011-12,Comprehensive Income (Topic 220)- Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05, to allow time to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. Adoption of this ASU did not have any impact on the Company’s consolidated financial statements or results of operations.
Intangibles - Goodwill & Other — In September 2011, the FASB issued ASU 2011-08, Intangibles - Goodwill and Other (Topic 350)  —Testing Goodwill for Impairment, which affects all entities that have goodwill reported in their financial statements. The amendments in ASU 2011-08 permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350. The more likely than not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, an entity determines that it is more likely than not that the fair value of a reporting unit is more than its carrying amount, then performing the two-step impairment test is not required. Under the amendments in this update, an entity is no longer permitted to carry forward its detailed calculation of a reporting unit's fair value from a prior year as previously permitted under ASC Topic 350. This guidance was adopted in conjunction with the performance of the Company's annual goodwill impairment test performed during the second quarter of 2012. Adoption of this standard did not have any impact on the Company's consolidated financial statements or results of operations.
Updates to Significant Accounting Policies
Goodwill and Intangible Assets - Goodwill, core deposit premiums and other intangible assets are included in other assets in the consolidated balance sheets.
Goodwill is not amortized and is evaluated for potential impairment on an annual basis or when events or circumstances indicate a potential impairment at the reporting unit level. Reporting units are first evaluated qualitatively to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is believed that it is more likely than not that a reporting unit's fair value is less than its carrying value, the Company will estimate the reporting unit's fair market value to determine whether carrying value exceeds fair market value. If carrying value exceeds fair market value, goodwill is written down.
The Company may use judgment in assessing goodwill and intangible assets for impairment. Estimates of fair value are based on projections of revenues, operating costs and cash flows of each reporting unit considering historical and anticipated future results, general economic and market conditions as well as the impact of planned business or operational strategies. The valuations employ a combination of present value techniques to measure fair value and take into consideration relevant market factors. Additionally, judgment is used in determining the useful lives of finite-lived intangible assets. Changes in judgments and projections could result in a significantly different estimate of the fair value of the reporting units and could result in an impairment of goodwill.
Core deposit premiums are amortized over the estimated life of the acquired deposits using the straight-line method. Core deposit premiums are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Other identifiable intangible assets were recognized through business combinations. These intangible assets are amortized over their estimated life. No residual value was assigned to any of these intangible assets.

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Fair Value Hedges - As part of its asset and liability management activities, the Company enters into forward interest rate swaps as a fair value hedge for financial instruments that create fixed cash flows. The fair value of such instruments will appreciate or depreciate as a result of fluctuations within the current interest rate environment. When effectively hedged, this appreciation or depreciation will generally be offset by fluctuations in the fair value of the derivative instruments that are linked to the hedged financial instruments.
For derivative instruments that are designated and qualify as fair value hedges, the change in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item attributable to the hedged risk, is recorded in the related interest income or expense, as applicable. Payments and proceeds related to the settlement of these derivatives are included in the operating activities section of the consolidated statements of cash flows. All gains or losses on these derivatives are included in the assessment of hedge effectiveness.
For both cash flow hedges and fair value hedges, hedge accounting is discontinued prospectively when (1) a derivative is no longer highly effective in offsetting changes in the fair value or cash flow of a hedged item, (2) a derivative expires or is sold, (3) a derivative is de-designated as a hedge, because it is unlikely that a forecasted transaction will occur, or (4) it is determined that designation of a derivative as a hedge is no longer appropriate.
3.  Acquisition Activities
On April 2, 2012, the Company completed its acquisition of 100% of the net assets of the Warehouse Lending Division of MetLife Bank, N.A. pursuant to the asset purchase agreement dated February 8, 2012 between the Company and MetLife Bank, N.A.  The acquisition was funded entirely by cash with the transaction accounted for using the purchase method. Based on the purchase method of accounting, the consideration paid was allocated to the acquired assets and liabilities. No identifiable intangible assets or goodwill were recognized in the transaction. Information regarding the acquisition is as follows:
Recognized amounts of identifiable assets acquired and liabilities assumed:
 
Loans
$
350,997

Accrued interest and fees
617

Total Assets Acquired
351,614

Other liabilities
543

Total Liabilities Assumed
543

Total Identifiable Net Assets
$
351,071

Under the purchase method of accounting, the measurement period for a transaction is to extend for a period necessary to obtain all available information to facilitate a complete and accurate recording of the transaction as of the acquisition date. This period, however, may not extend beyond a period of one year from the date of acquisition. In the event information not currently available is obtained during the measurement period that would affect the recording of this transaction, any applicable adjustments will be performed retrospectively adjusting the initial recording of this acquisition.
See Note 17 for information related to the acquisition of the Business Property Lending, Inc. (BPL), a wholly owned subsidiary of General Electric Capital Corporation.


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4.  Investment Securities
The amortized cost and fair value of investment securities with gross unrealized gains and losses were as follows as of September 30, 2012 and December 31, 2011:
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Carrying
Amount
September 30, 2012
 
 
 
 
 
 
 
 
 
Available for sale:
 
 
 
 
 
 
 
 
 
Residential collateralized mortgage obligations (CMO) securities - agency
$
67

 
$
6

 
$
—

 
$
73

 
$
73

Residential CMO securities - nonagency
1,705,372

 
24,172

 
15,340

 
1,714,204

 
1,714,204

Residential mortgage-backed securities (MBS) - agency
246

 
17

 
—

 
263

 
263

Asset-backed securities (ABS)
10,551

 
—

 
2,775

 
7,776

 
7,776

Equity securities
77

 
163

 
—

 
240

 
240

Total available for sale securities
$
1,716,313

 
$
24,358

 
$
18,115

 
$
1,722,556

 
$
1,722,556

Held to maturity:
 
 
 
 
 
 
 
 
 
Residential CMO securities - agency
$
132,946

 
$
6,117

 
$
—

 
$
139,063

 
$
132,946

Residential MBS - agency
32,871

 
2,339

 
—

 
35,210

 
32,871

Corporate securities
4,987

 
—

 
2,032

 
2,955

 
4,987

Total held to maturity securities
$
170,804

 
$
8,456

 
$
2,032

 
$
177,228

 
$
170,804

December 31, 2011
 
 

 
 
 
 
 
 
Available for sale:
 
 
 
 
 
 
 
 
 
Residential CMO securities - agency
$
96

 
$
8

 
$
—

 
$
104

 
$
104

Residential CMO securities - nonagency
1,919,046

 
17,609

 
40,837

 
1,895,818

 
1,895,818

Residential MBS - agency
317

 
21

 
—

 
338

 
338

Asset-backed securities
10,573

 
—

 
3,096

 
7,477

 
7,477

Equity securities
77

 
108

 
—

 
185

 
185

Total available for sale securities
$
1,930,109

 
$
17,746

 
$
43,933

 
$
1,903,922

 
$
1,903,922

Held to maturity:
 
 
 
 
 
 
 
 
 
Residential CMO securities - agency
$
159,882

 
$
6,029

 
$
78

 
$
165,833

 
$
159,882

Residential MBS - agency
19,132

 
1,464

 
—

 
20,596

 
19,132

Corporate securities
10,504

 
—

 
2,583

 
7,921

 
10,504

Total held to maturity securities
$
189,518

 
$
7,493

 
$
2,661

 
$
194,350

 
$
189,518

At September 30, 2012 and December 31, 2011, investment securities with a carrying value of $1,049,695 and $543,705, respectively, were pledged to secure other borrowings, public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law.
For the nine months ended September 30, 2012, no gross gains or gross losses were realized on available for sale investments. For the nine months ended September 30, 2011, gross gains of $7,401 and gross losses of $0 were realized on available for sale investments in other noninterest income. The cost of investments sold is calculated using the specific identification method.














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Table of Contents


The gross unrealized losses and fair value of the Company’s investments with unrealized losses, aggregated by investment category and the length of time individual securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011 are as follows:
 
Less Than 12 Months
 
12 Months or Greater
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
September 30, 2012
 
 
 
 
 
 
 
 
 
 
 
Debt securities:
 
 
 
 
 
 
 
 
 
 
 
Residential CMO securities - nonagency
$
239,470

 
$
4,422

 
$
458,717

 
$
10,918

 
$
698,187

 
$
15,340

Asset-backed securities
—

 
—

 
7,776

 
2,775

 
7,776

 
2,775

Corporate securities
—

 
—

 
2,955

 
2,032

 
2,955

 
2,032

Total debt securities
$
239,470

 
$
4,422

 
$
469,448

 
$
15,725

 
$
708,918

 
$
20,147

December 31, 2011
 
 
 
 
 
 
 
 
 
 
 
Debt securities:
 
 
 
 
 
 
 
 
 
 
 
Residential CMO securities - nonagency
$
573,928

 
$
16,646

 
$
226,507

 
$
24,191

 
$
800,435

 
$
40,837

Residential CMO securities - agency
6,224

 
78

 
—

 
—

 
6,224

 
78

Asset-backed securities
—

 
—

 
7,477

 
3,096

 
7,477

 
3,096

Corporate securities
—

 
—

 
2,404

 
2,583

 
2,404

 
2,583

Total debt securities
$
580,152

 
$
16,724

 
$
236,388

 
$
29,870

 
$
816,540

 
$
46,594

The Company had unrealized losses at September 30, 2012 and December 31, 2011 on residential CMO securities, ABS and corporate securities. These unrealized losses are primarily attributable to weak market conditions. Based on the nature of impairment, these unrealized losses are considered temporary. The Company does not intend to sell nor is it more likely than not that it will be required to sell these investments before their anticipated recovery.
At September 30, 2012, the Company had 56 debt securities in an unrealized loss position. A total of 10 were in an unrealized loss position for less than 12 months, all of which were residential CMO securities. Of these, 100% in amortized cost attained credit ratings of A or better. The remaining 46 debt securities were in an unrealized loss position for 12 months or longer. These 46 securities consisted of three ABS, one corporate security and 42 nonagency residential CMO securities. Of these 46 debt securities in an unrealized loss position, 72% in amortized cost had credit ratings of A or better.
At December 31, 2011, the Company had 71 debt securities in an unrealized loss position. A total of 42 were in an unrealized loss position for less than 12 months, all of which were residential CMO securities. Of these, 84% in amortized cost had credit ratings of A or better. The remaining 29 debt securities were in an unrealized loss position for 12 months or longer. These 29 securities consisted of three ABS, one corporate security and 25 nonagency residential CMO securities. Of these 25 nonagency securities, 68% in amortized cost had credit ratings of A or better.
When certain qualitative triggers indicate the likelihood of an OTTI, the Company performs cash flow analyses that project prepayments, default rates and loss severities on the collateral supporting each security. If the net present value of the investment is less than the amortized cost, the difference is recognized in earnings as a credit-related impairment, while the remaining difference between the fair value and the amortized cost is recognized in AOCI. The Company recognized credit-related OTTI losses of $685 in other noninterest income for the nine months ended September 30, 2011 primarily due to a continued decline in the collateral value of a corporate security.
There were no OTTI losses recognized on available for sale or held to maturity securities during the nine months ended September 30, 2012 or for the three months ended September 30, 2011. Information regarding impairment related to credit loss recognized on securities in other noninterest income and impairment related to all other factors recognized in AOCI for the nine months ended September 30, 2011 are as follows:
Debt securities:
Impairment
Related to
Credit
Loss
 
Impairment
Related to
All Other
Factors
 
Total      
Impairment
Balance, January 1, 2011
$
3,354

 
$
502

 
$
3,856

Additional charges on securities for which OTTI was previously recognized
685

 
(499
)
 
186

Reduction for securities on which a reduction in value was taken against earnings (1)
(4,039
)
 
—

 
(4,039
)
Accretion of impairment related to all other factors
—

 
(3
)
 
(3
)
Balance, September 30, 2011
$
—

 
$
—

 
$
—

(1)
The value of these securities for which impairment is related to credit loss was written down to a zero value during 2011 reflecting that the Company does not anticipate the ability to collect cash flows on these investments at any point in the future. This reduction in value was taken through earnings and thus, is reflected in the rollforward as a reduction of the credit loss balance to zero.




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During the three and nine months ended September 30, 2012 and 2011, interest and dividend income on investment securities was comprised of the following:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2012
 
2011
 
2012
 
2011
Interest income on available for sale securities
$
17,875

 
$
25,498

 
$
55,474

 
$
78,583

Interest income on held to maturity securities
2,504

 
1,552

 
5,313

 
3,561

Other interest and dividend income
500

 
151

 
1,340

 
634

 
$
20,879

 
$
27,201

 
$
62,127

 
$
82,778

All investment interest income recognized by the Company during the three and nine months ended September 30, 2012 and 2011 was fully taxable.
5.  Loans Held for Sale
Loans held for sale as of September 30, 2012 and December 31, 2011, consist of the following:
 
September 30,
2012

December 31,
2011
Government insured pool buyouts
$
68,533


$
1,939,114

Mortgage warehouse (carried at fair value)
1,025,467


761,818

Other
309,205


24,354

Total loans held for sale
$
1,403,205


$
2,725,286

The Company sells loans to various financial institutions, government agencies, government-sponsored enterprises, and individual investors. Currently, the Company sells a concentration of loans to government-sponsored entities. The Company does not originate, acquire or sell subprime mortgage loans.
The Company securitizes a portion of its residential mortgage loan originations through government agencies. The following is a summary of cash flows between the Company and the agencies for securitized loans for the three and nine months ended September 30, 2012 and 2011:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2012
 
2011
 
2012
 
2011
Proceeds received from new securitizations
$
2,476,812

 
$
1,218,760

 
$
6,267,169

 
$
3,271,796

Net fees paid to agencies
14,741

 
8,182

 
42,403

 
25,903

Servicing fees collected
4,883

 
2,266

 
8,086

 
4,301

Repurchased loans
2,616

 
4,419

 
6,132

 
7,769

During the nine months ended September 30, 2012, the Company transferred $440,886 of conforming residential mortgages to Ginnie Mae (GNMA) in exchange for mortgage-backed securities.  As of September 30, 2012, the Company retained $68,377 of these securities backed by the transferred loans and maintained effective control over these pools of transferred assets. Accordingly, the Company has not recorded these transfers as sales. These transferred assets are recorded in the condensed consolidated balance sheet as loans held for sale. The remaining $372,509 in securities were sold to unrelated third parties during the nine months ended September 30, 2012, and have been recorded as sales.
During the three and nine months ended September 30, 2012, the Company transferred $1,899,527 and $1,928,519 in residential mortgage and commercial loans from loans held for sale to loans held for investment at lower of cost or market. A majority of these loans are mortgage pool buyouts. For certain mortgage pool buyouts that meet the pooling and collateral eligibility requirements, the Company is able to securitize and sell the pools in the secondary market. The Company transferred loans that do not meet eligibility requirements to loans held for investment. The Company has the positive intent to hold these loans for the foreseeable future. Additionally, upon acquisition of mortgage pool buyouts from the Company's servicing portfolio or from third parties, the Company expects to hold the loans through liquidation or for the foreseeable future. When a decision is made to sell a loan, the Company will reclassify the loan to the held for sale portfolio.
During the three and nine months ended September 30, 2012, the Company transferred $93,043 and $94,650 of loans to held for sale at lower of cost or market. The majority of these loans are preferred products initially originated for the held for investment portfolio. The Company executed a forward sales contract to sell these and other newly originated loans during the third quarter of 2012; however, delivery is expected during the fourth quarter of 2012. As of September 30, 2012, the contract is accounted for as a derivative. See Note 13 for derivative financial instruments.


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Table of Contents


6.  Loans and Leases Held for Investment, Net
Loans and leases held for investment as of September 30, 2012 and December 31, 2011 are comprised of the following:
 
September 30, 2012
 
December 31, 2011
Residential mortgages
$
6,807,399

 
$
4,556,841

Commercial and commercial real estate
2,315,494

 
1,165,384

Lease financing receivables
742,332

 
588,501

Home equity lines
183,692

 
200,112

Consumer and credit card
7,809

 
8,443

Total loans and leases held for investment, net of discounts
10,056,726

 
6,519,281

Allowance for loan and lease losses
(76,469
)
 
(77,765
)
Total loans and leases held for investment, net
$
9,980,257

 
$
6,441,516

As of September 30, 2012 and December 31, 2011, the carrying values presented above include net purchase loan and lease discounts and net deferred loan and lease origination costs as follows:
 
September 30, 2012
 
December 31, 2011
Net purchased loan and lease discounts
$
188,924

 
$
237,170

Net deferred loan and lease origination costs
22,282

 
19,057

Acquired Credit Impaired (ACI) Loans and Leases — At acquisition, the Company estimates the fair value of acquired loans and leases by segregating the portfolio into pools with similar risk characteristics. Fair value estimates for acquired loans and leases require estimates of the amounts and timing of expected future principal, interest and other cash flows. For each pool, the Company uses certain loan and lease information, including outstanding principal balance, probability of default and the estimated loss in the event of default to estimate the expected future cash flows for each loan and lease pool.
Acquisition date details of loans and leases acquired with evidence of credit deterioration during the nine months ended September 30, 2012 and 2011 are as follows:
 
 
September 30, 2012
 
September 30, 2011
Contractual payments receivable for acquired loans and leases at acquisition
 
$
218,750

 
$
424,176

Expected cash flows for acquired loans and leases at acquisition
 
133,627

 
235,795

Basis in acquired loans and leases at acquisition
 
117,579

 
218,500

Information pertaining to the ACI portfolio as of September 30, 2012 and December 31, 2011 is as follows:
 
Bank of
Florida
 
Other
Acquired
Loans
 
Total
September 30, 2012
 
 
 
 
 
Carrying value, net of allowance
$
523,654

 
$
584,508

 
$
1,108,162

Outstanding unpaid principal balance or contractual net investment
576,200

 
607,979

 
1,184,179

Allowance for loan and lease losses, beginning of year
11,638

 
4,351

 
15,989

Allowance for loan and lease losses, end of period
16,006

 
5,175

 
21,181

 
Bank of
Florida  
 
Tygris
 
Other
Acquired
Loans
 
Total
December 31, 2011
 
 
 
 
 
 
 
Carrying value, net of allowance
$
621,116

 
$
—

 
$
522,071

 
$
1,143,187

Outstanding unpaid principal balance or contractual net investment
685,967

 
—

 
543,240

 
1,229,207

Allowance for loan and lease losses, beginning of year
6,189

 
97

 
3,695

 
9,981

Allowance for loan and lease losses, end of year
11,638

 
—

 
4,351

 
15,989

The Company recorded $863 and $954 in provision for loan and lease losses for the ACI portfolio for the three months ended September 30, 2012 and 2011 and $5,192 and $2,047 in provision for loan and lease losses for the ACI portfolio for the nine months ended September 30, 2012 and 2011, respectively. The increase in provision is the result of a decrease in expected cash flows on ACI loans.




14
Table of Contents


The following is a summary of the accretable yield activity for the ACI loans during the nine months ended September 30, 2012 and 2011:
September 30, 2012
 
 
Bank of
Florida
 
Other
Acquired
Loans
 
Total
Balance, beginning of period
 
 
$
141,750

 
$
65,973

 
$
207,723

Additions
 
 
—

 
16,048

 
16,048

Accretion
 
 
(26,943
)
 
(18,391
)
 
(45,334
)
Reclassifications from accretable yield
 
 
(9,441
)
 
(620
)
 
(10,061
)
Balance, end of period
 
 
$
105,366

 
$
63,010

 
$
168,376

 
 
 
 
 
 
 
 
September 30, 2011
Bank of
Florida
 
Tygris
 
Other
Acquired
Loans
 
Total
Balance, beginning of period
$
198,633

 
$
9,745

 
$
44,603

 
$
252,981

Additions
—

 
—

 
17,295

 
17,295

Accretion
(35,423
)
 
(2,976
)
 
(8,292
)
 
(46,691
)
Reclassifications (from) to accretable yield
(8,246
)
 
2,567

 
294

 
(5,385
)
Transfer from loans held for investment to loans held for sale
—

 
—

 
(7,707
)
 
(7,707
)
Transfer to cost recovery
—

 
(6,678
)
 
—

 
(6,678
)
Balance, end of period
$
154,964

 
$
2,658

 
$
46,193

 
$
203,815

Covered Loans and Leases — Covered loans and leases are acquired and recorded at fair value at acquisition, exclusive of the loss share agreements with the FDIC and the indemnification agreement with former shareholders of Tygris. All loans acquired through the loss share agreement with the FDIC and all loans and leases acquired in the purchase of Tygris are considered covered during the applicable indemnification period.
The following is a summary of the recorded investment of major categories of covered loans and leases outstanding as of September 30, 2012 and December 31, 2011:
 
Bank of
Florida
 
Tygris
 
Total
September 30, 2012
 
 
 
 
 
Residential mortgages
$
65,319

 
$
—

 
$
65,319

Commercial and commercial real estate
485,910

 
—

 
485,910

Lease financing receivables
—

 
100,399

 
100,399

Home equity lines
18,101

 
—

 
18,101

Consumer and credit card
1,691

 
—

 
1,691

Total recorded investment of covered loans and leases
$
571,021

 
$
100,399

 
$
671,420

December 31, 2011
 
 
 
 
 
Residential mortgages
$
74,580

 
$
—

 
$
74,580

Commercial and commercial real estate
569,014

 
—

 
569,014

Lease financing receivables
—

 
176,125

 
176,125

Home equity lines
19,082

 
—

 
19,082

Consumer and credit card
2,345

 
—

 
2,345

Total recorded investment of covered loans and leases
$
665,021

 
$
176,125

 
$
841,146



15
Table of Contents


7.  Allowance for Loan and Lease Losses
Changes in the allowance for loan and lease losses for the three and nine months ended September 30, 2012 and 2011 are as follows:
 
Three Months Ended September 30, 2012
 
Residential      
Mortgages
 
Commercial
and
Commercial     
Real Estate
 
Lease
Financing
Receivables    
 
Home
Equity    
Lines
 
Consumer    
and
Credit
Card
 
Total    
Balance, beginning of period
$
37,719

 
$
32,050

 
$
4,160

 
$
3,288

 
$
176

 
$
77,393

Provision for loan and lease losses
(1,277
)
 
3,271

 
917

 
1,400

 
48

 
4,359

Charge-offs
(3,868
)
 
(2,636
)
 
(805
)
 
(1,215
)
 
(61
)
 
(8,585
)
Recoveries
52

 
3,023

 
159

 
52

 
16

 
3,302

Balance, end of period
$
32,626

 
$
35,708

 
$
4,431

 
$
3,525

 
$
179

 
$
76,469

 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2011
 
Residential      
Mortgages
 
Commercial
and
Commercial     
Real Estate
 
Lease
Financing
Receivables    
 
Home
Equity    
Lines
 
Consumer    
and
Credit
Card
 
Total
Balance, beginning of period
$
54,472

 
$
28,295

 
$
1,806

 
$
4,612

 
$
24

 
$
89,209

Transfers to loans held for sale
(387
)
 
—

 
—

 
—

 
—

 
(387
)
Provision for loan and lease losses
9,538

 
844

 
1,943

 
(273
)
 
206

 
12,258

Charge-offs
(9,778
)
 
(6,058
)
 
(1,473
)
 
(763
)
 
(41
)
 
(18,113
)
Recoveries
12

 
792

 
38

 
2

 
16

 
860

Balance, end of period
$
53,857

 
$
23,873

 
$
2,314

 
$
3,578

 
$
205

 
$
83,827

 
Nine Months Ended September 30, 2012
 
Residential      
Mortgages
 
Commercial
and
Commercial     
Real Estate
 
Lease
Financing
Receivables    
 
Home
Equity    
Lines
 
Consumer    
and
Credit
Card
 
Total    
Balance, beginning of period
$
43,454

 
$
28,209

 
$
3,766

 
$
2,186

 
$
150

 
$
77,765

Provision for loan and lease losses
3,516

 
10,537

 
3,344

 
3,978

 
96

 
21,471

Charge-offs
(14,701
)
 
(6,640
)
 
(2,903
)
 
(2,807
)
 
(112
)
 
(27,163
)
Recoveries
357

 
3,602

 
224

 
168

 
45

 
4,396

Balance, end of period
$
32,626

 
$
35,708

 
$
4,431

 
$
3,525

 
$
179

 
$
76,469

 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2011
 
Residential      
Mortgages
 
Commercial
and
Commercial     
Real Estate
 
Lease
Financing
Receivables    
 
Home
Equity    
Lines
 
Consumer    
and
Credit
Card
 
Total
Balance, beginning of period
$
46,584

 
$
33,490

 
$
2,454

 
$
10,907

 
$
254

 
$
93,689

Change in estimate
10,154

 
(682
)
 
(802
)
 
(6,323
)
 
(440
)
 
1,907

Transfers to loans held for sale
(387
)
 
—

 
—

 
—

 
—

 
(387
)
Provision for loan and lease losses
21,905

 
6,657

 
5,212

 
3,060

 
551

 
37,385

Charge-offs
(24,422
)
 
(16,971
)
 
(4,601
)
 
(4,079
)
 
(181
)
 
(50,254
)
Recoveries
23

 
1,379

 
51

 
13

 
21

 
1,487

Balance, end of period
$
53,857

 
$
23,873

 
$
2,314

 
$
3,578

 
$
205

 
$
83,827







16
Table of Contents


The following tables provide a breakdown of the allowance for loan and lease losses and the recorded investment in loans and leases based on the method for determining the allowance as of September 30, 2012 and December 31, 2011:
 
Allowance for Loan and Lease Losses
 
Individually
Evaluated for  
Impairment
 
Collectively
Evaluated for  
Impairment
 
ACI Loans
 
Total
September 30, 2012
 
 
 
 
 
 
 
Residential mortgages
$
8,145

 
$
19,306

 
$
5,175

 
$
32,626

Commercial and commercial real estate
4,822

 
14,880

 
16,006

 
35,708

Lease financing receivables
—

 
4,431

 
—

 
4,431

Home equity lines
—

 
3,525

 
—

 
3,525

Consumer and credit card
—

 
179

 
—

 
179

Total allowance for loan and lease losses
$
12,967

 
$
42,321

 
$
21,181

 
$
76,469

 
Loans and Leases Held for Investment at Recorded Investment
 
Individually
Evaluated for
Impairment
 
Collectively
Evaluated for
Impairment
 
ACI Loans
 
Total
September 30, 2012
 
 
 
 
 
 
 
Residential mortgages
$
87,571

 
$
6,057,996

 
$
661,832

 
$
6,807,399

Commercial and commercial real estate
101,955

 
1,746,028

 
467,511

 
2,315,494

Lease financing receivables
—

 
742,332

 
—

 
742,332

Home equity lines
—

 
183,692

 
—

 
183,692

Consumer and credit card
—

 
7,809

 
—

 
7,809

Total loans and leases held for investment
$
189,526

 
$
8,737,857

 
$
1,129,343

 
$
10,056,726

 
 
 
 
 
 
 
 
 
Allowance for Loan and Lease Losses
 
Individually
Evaluated for
Impairment
 
Collectively
Evaluated for
Impairment
 
ACI Loans
 
Total
December 31, 2011
 
 
 
 
 
 
 
Residential mortgages
$
7,436

 
$
30,554

 
$
5,464

 
$
43,454

Commercial and commercial real estate
6,021

 
11,663

 
10,525

 
28,209

Lease financing receivables
—

 
3,766

 
—

 
3,766

Home equity lines
—

 
2,186

 
—

 
2,186

Consumer and credit card
—

 
150

 
—

 
150

Total allowance for loan and lease losses
$
13,457

 
$
48,319

 
$
15,989

 
$
77,765

 
 
 
 
 
 
 
 
 
Loans and Leases Held for Investment at Recorded Investment
 
Individually
Evaluated for
Impairment
 
Collectively
Evaluated for
Impairment
 
ACI Loans
 
Total
December 31, 2011
 
 
 
 
 
 
 
Residential mortgages
$
90,927

 
$
3,852,119

 
$
613,795

 
$
4,556,841

Commercial and commercial real estate
142,360

 
477,643

 
545,381

 
1,165,384

Lease financing receivables
—

 
588,501

 
—

 
588,501

Home equity lines
—

 
200,112

 
—

 
200,112

Consumer and credit card
—

 
8,443

 
—