Loans and Allowance for Credit Losses

12 Months Ended

Dec. 31, 2012

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Note 2: Loans and Allowance for Credit Losses

Wachovia Funding obtains participation interests in loans originated or purchased by the Bank. In order to maintain Wachovia Funding's status as a REIT, the composition of the loans underlying the participation interests are highly concentrated in real estate. Underlying loans are concentrated primarily in Florida, New Jersey, Pennsylvania, California and North Carolina. These markets include approximately 53% of Wachovia Funding's total loan balance at December 31, 2012.

The following table presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include a total net reduction of $472.9 million and $604.4 million at December 31, 2012 and 2011, respectively, for unearned income, net deferred loan fees, and unamortized discounts and premiums.


					December 31,
(in thousands)					2012	2011	2010	2009	2008
Commercial:
	Commercial and industrial			$	99,207	287,174	209,818	287,578	386,780
	Real estate mortgage				2,499,527	1,015,087	1,267,350	1,518,849	1,864,050
	Real estate construction				34,537	45,887	76,033	185,306	273,202
		Total commercial			2,633,271	1,348,148	1,553,201	1,991,733	2,524,032
Consumer:
	Real estate 1-4 family first mortgage				8,137,597	7,945,746	9,886,833	9,133,283	8,351,320
	Real estate 1-4 family junior lien mortgage				2,779,606	3,249,882	4,066,530	5,276,588	6,606,153
		Total consumer			10,917,203	11,195,628	13,953,363	14,409,871	14,957,473
			Total loans	$	13,550,474	12,543,776	15,506,564	16,401,604	17,481,505

The following table summarizes the proceeds paid (including accrued interest receivable of $8.9 million in 2012 and $1.9 million in 2011) or received from the Bank for purchases and sales of loans, respectively.


	2012					2011
(in thousands)	Commercial		Consumer	Total	Commercial		Consumer	Total
Year ended December 31,
Purchases	$	1,812,416	2,585,396	4,397,812		-	648,845	648,845
Sales		(2,069)	(56,306)	(58,375)		(1,005)	(84,091)	(85,096)

Commitments to Lend

The contract or notional amount of commercial loan commitments to extend credit at December 31, 2012 and 2011 was $312.5 million and $329.6 million, respectively. See Note 3 for additional information.

Allowance for Credit Losses (ACL)

The allowance for credit losses consists of the allowance for loan losses and the allowance for unfunded credit commitments. Changes in the allowance for credit losses were:


							Year ended December 31,
(in thousands)							2012		2011	2010
Balance, beginning of year						$	313,928		403,555	337,871
Provision for credit losses							224,407		131,251	354,025
Interest income on certain impaired loans (1)							(7,463)		(6,160)	(3,437)
Loan charge-offs:
	Commercial:
		Commercial and industrial					-		-	-
		Real estate mortgage					(1,717)		(901)	(2,935)
		Real estate construction					(318)		(212)	(168)
			Total commercial				(2,035)		(1,113)	(3,103)
	Consumer:
		Real estate 1-4 family first mortgage					(83,014)		(79,258)	(91,980)
		Real estate 1-4 family junior lien mortgage					(150,088)		(146,744)	(197,282)
			Total consumer (2)				(233,102)		(226,002)	(289,262)
				Total loan charge-offs			(235,137)		(227,115)	(292,365)
Loan recoveries:
	Commercial:
		Commercial and industrial					-		166	158
		Real estate mortgage					1,466		121	-
		Real estate construction					10		81	-
			Total commercial				1,476		368	158
	Consumer:
		Real estate 1-4 family first mortgage					2,636		2,734	1,252
		Real estate 1-4 family junior lien mortgage					9,757		9,295	6,051
			Total consumer				12,393		12,029	7,303
				Total loan recoveries			13,869		12,397	7,461
					Net loan charge-offs		(221,268)		(214,718)	(284,904)
Balance, end of year						$	309,604		313,928	403,555
Components:
	Allowance for loan losses					$	309,220		313,762	402,960
	Allowance for unfunded credit commitments						384		166	595
		Allowance for credit losses				$	309,604		313,928	403,555
Net loan charge-offs as a percentage of average total loans							1.79	%	1.58	1.80
Allowance for loan losses as a percentage of total loans							2.28		2.50	2.60
Allowance for credit losses as a percentage of total loans							2.28		2.50	2.60

Certain impaired loans with an allowance calculated by discounting expected cash flows using the loan's effective interest rate over the remaining life of the loan
recognize reductions in allowance as interest income.
The year ended December 31, 2012, includes $46.1 million resulting from the OCC guidance issued in third quarter 2012, which requires consumer loans discharged in bankruptcy to be placed on nonaccrual status and written down to net realizable collateral value, regardless of their delinquency status.

The following table summarizes the activity in the allowance for credit losses by our commercial and consumer portfolio segments.


				Year ended December 31,
(in thousands)			Commercial		Consumer	Total
2012
Balance, beginning of year			$	23,091	290,837	313,928
	Provision for credit losses			3,514	220,893	224,407
	Interest income on certain impaired loans			-	(7,463)	(7,463)

	Loan charge-offs			(2,035)	(233,102)	(235,137)
	Loan recoveries			1,476	12,393	13,869
		Net loan charge-offs		(559)	(220,709)	(221,268)
Balance, end of year			$	26,046	283,558	309,604

2011
Balance, beginning of year			$	26,413	377,142	403,555
	Provision (reversal of provision) for credit losses			(2,577)	133,828	131,251
	Interest income on certain impaired loans			-	(6,160)	(6,160)

	Loan charge-offs			(1,113)	(226,002)	(227,115)
	Loan recoveries			368	12,029	12,397
		Net loan charge-offs		(745)	(213,973)	(214,718)
Balance, end of year			$	23,091	290,837	313,928

The following table disaggregates our allowance for credit losses and recorded investment in loans by impairment methodology.


			Allowance for credit losses			Recorded investment in loans
(in thousands)			Commercial	Consumer	Total	Commercial	Consumer	Total

December 31, 2012

Collectively evaluated (1)		$	16,219	181,107	197,326	2,611,746	10,368,082	12,979,828
Individually evaluated (2)			9,827	102,451	112,278	15,434	500,852	516,286
Purchased credit-impaired (PCI) (3)			-	-	-	6,091	48,269	54,360
	Total	$	26,046	283,558	309,604	2,633,271	10,917,203	13,550,474

December 31, 2011

Collectively evaluated (1)		$	12,487	188,604	201,091	1,320,845	10,815,112	12,135,957
Individually evaluated (2)			10,436	102,233	112,669	20,198	324,605	344,803
PCI (3)			168	-	168	7,105	55,911	63,016
	Total	$	23,091	290,837	313,928	1,348,148	11,195,628	12,543,776

Represents loans collectively evaluated for impairment in accordance with ASC 450-20, Loss Contingencies (formerly FAS 5), and pursuant to amendments by ASU 2010-20 regarding allowance for unimpaired loans.
Represents loans individually evaluated for impairment in accordance with ASC 310-10, Receivables (formerly FAS 114), and pursuant to amendments by ASU 2010-20 regarding allowance for impaired loans.
Represents the allowance and related loan carrying value determined in accordance with ASC 310-30, Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality (formerly SOP 03-3) and pursuant to amendments by ASU 2010-20 regarding allowance for PCI loans.

Credit Quality

We monitor credit quality by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the allowance for credit losses. The following sections provide the credit quality indicators we most closely monitor. The majority of credit quality indicators are based on December 31, 2012, information, with the exception of updated Fair Isaac Corporation (FICO) scores and updated loan-to-value (LTV)/combined LTV (CLTV), which are obtained at least quarterly. Generally, these indicators are updated in the second month of each quarter, with updates no older than September 30, 2012.

Commercial Credit Quality Indicators In addition to monitoring commercial loan concentration risk, we manage a consistent process for assessing commercial loan credit quality. Generally commercial loans are subject to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to Pass and Criticized categories. The Criticized category includes Special Mention, Substandard, and Doubtful categories which are defined by bank regulatory agencies.

The table below provides a breakdown of outstanding commercial loans by risk category.


			Commercial		Real	Real
				and	estate	estate
(in thousands)				industrial	mortgage	construction	Total

December 31, 2012

By risk category:
	Pass		$	98,395	2,381,068	31,501	2,510,964
	Criticized			812	118,459	3,036	122,307
		Total commercial loans	$	99,207	2,499,527	34,537	2,633,271

December 31, 2011

By risk category:
	Pass		$	286,228	852,464	35,705	1,174,397
	Criticized			946	162,623	10,182	173,751
		Total commercial loans	$	287,174	1,015,087	45,887	1,348,148

In addition, while we monitor past due status, we do not consider it a key driver of our credit risk management practices for commercial loans. The following table provides past due information for commercial loans.


			Commercial		Real	Real
				and	estate	estate
(in thousands)				industrial	mortgage	construction	Total

December 31, 2012

By delinquency status:
	Current-29 days past due (DPD) and still accruing		$	99,207	2,478,087	34,437	2,611,731
	30-89 DPD and still accruing			-	715	100	815
	90+ DPD and still accruing			-	4,455	-	4,455
	Nonaccrual loans			-	16,270	-	16,270
		Total commercial loans	$	99,207	2,499,527	34,537	2,633,271

December 31, 2011

By delinquency status:
	Current-29 DPD and still accruing		$	282,703	943,712	45,636	1,272,051
	30-89 DPD and still accruing			4,471	48,320	-	52,791
	90+ DPD and still accruing			-	1,923	-	1,923
	Nonaccrual loans			-	21,132	251	21,383
		Total commercial loans	$	287,174	1,015,087	45,887	1,348,148

Consumer Credit Quality Indicators We have various classes of consumer loans that present respective unique risks. Loan delinquency, FICO credit scores and LTV/CLTV for loan types are common credit quality indicators that we monitor and utilize in our evaluation of the appropriateness of the allowance for credit losses for the consumer portfolio segment.

The majority of our loss estimation techniques used for the allowance for credit losses rely on delinquency matrix models or delinquency roll rate models. Therefore, delinquency is an important indicator of credit quality and the establishment of our allowance for credit losses.

The following table provides the outstanding balances of our consumer portfolio by delinquency status.


				Real estate	Real estate
				1-4 family	1-4 family
				first	junior lien
(in thousands)				mortgage	mortgage	Total

December 31, 2012

By delinquency status:
	Current - 29 DPD		$	7,828,564	2,661,528	10,490,092
	30-59 DPD			71,969	36,427	108,396
	60-89 DPD			40,411	22,331	62,742
	90-119 DPD			29,805	14,476	44,281
	120-179 DPD			30,645	22,085	52,730
	180+ DPD			146,293	23,517	169,810
Remaining PCI accounting adjustments				(10,090)	(758)	(10,848)
		Total consumer loans	$	8,137,597	2,779,606	10,917,203

December 31, 2011

By delinquency status:
	Current - 29 DPD		$	7,645,674	3,098,012	10,743,686
	30-59 DPD			80,409	48,886	129,295
	60-89 DPD			42,387	27,824	70,211
	90-119 DPD			34,471	21,434	55,905
	120-179 DPD			39,314	28,939	68,253
	180+ DPD			120,819	28,874	149,693
Remaining PCI accounting adjustments				(17,328)	(4,087)	(21,415)
		Total consumer loans	$	7,945,746	3,249,882	11,195,628

The following table provides a breakdown of our consumer portfolio by updated FICO. We obtain FICO scores at loan origination and the scores are updated at least quarterly. FICO is not available for certain loan types and may not be obtained if we deem it unnecessary due to strong collateral and other borrower attributes.


				Real estate	Real estate
				1-4 family	1-4 family
				first	junior lien
(in thousands)				mortgage	mortgage	Total

December 31, 2012

By updated FICO:
	< 600		$	491,057	313,648	804,705
	600-639			325,524	173,130	498,654
	640-679			611,895	302,895	914,790
	680-719			1,221,513	452,768	1,674,281
	720-759			1,630,309	575,418	2,205,727
	760-799			2,446,778	636,079	3,082,857
	800+			1,271,774	310,009	1,581,783
No FICO available				148,837	16,417	165,254
Remaining PCI accounting adjustments				(10,090)	(758)	(10,848)
		Total consumer loans	$	8,137,597	2,779,606	10,917,203

December 31, 2011

By updated FICO:
	< 600		$	537,949	387,232	925,181
	600-639			321,284	195,122	516,406
	640-679			572,899	331,988	904,887
	680-719			1,128,538	514,089	1,642,627
	720-759			1,542,772	634,491	2,177,263
	760-799			2,324,799	757,186	3,081,985
	800+			1,338,881	384,579	1,723,460
No FICO available				195,952	49,282	245,234
Remaining PCI accounting adjustments				(17,328)	(4,087)	(21,415)
		Total consumer loans	$	7,945,746	3,249,882	11,195,628

LTV refers to the ratio comparing the loan's recorded investment to the property's collateral value. CLTV refers to the combination of first mortgage and junior lien mortgage ratios. LTVs and CLTVs are updated quarterly using a cascade approach which first uses values provided by automated valuation models (AVMs) for the property. If an AVM is not available, then the value is estimated using the original appraised value adjusted by the change in Home Price Index (HPI) for the property location. If an HPI is not available, the original appraised value is used. The HPI value is normally the only method considered for high value properties, generally with an original value of $1 million or more, as the AVM values have proven less accurate for these properties.

The following table shows the most updated LTV and CLTV distribution of the real estate 1-4 family first and junior lien mortgage loan portfolios. In recent years, the residential real estate markets experienced significant declines in property values and several markets, particularly California and Florida, experienced more significant declines than the national decline. These trends are considered in the way that we monitor credit risk and establish our allowance for credit losses. LTV does not necessarily reflect the likelihood of performance of a given loan, but does provide an indication of collateral value. In the event of a default, any loss should be limited to the portion of the loan amount in excess of the net realizable value of the underlying real estate collateral value. Certain loans do not have an LTV or CLTV primarily due to industry data availability and portfolios acquired from or serviced by other institutions.


				Real estate	Real estate
				1-4 family	1-4 family
				first	junior lien
				mortgage	mortgage
(in thousands)				by LTV	by CLTV	Total

December 31, 2012

By LTV/CLTV:
	0-60%		$	3,420,971	579,292	4,000,263
	60.01-80%			2,642,888	591,307	3,234,195
	80.01-100%			1,338,223	639,891	1,978,114
	100.01-120% (1)			441,791	498,614	940,405
	> 120% (1)			244,398	434,238	678,636
No LTV/CLTV available				59,416	37,022	96,438
Remaining PCI accounting adjustments				(10,090)	(758)	(10,848)
		Total consumer loans	$	8,137,597	2,779,606	10,917,203

December 31, 2011

By LTV/CLTV:
	0-60%		$	3,764,740	676,585	4,441,325
	60.01-80%			2,273,111	599,394	2,872,505
	80.01-100%			1,098,818	812,647	1,911,465
	100.01-120% (1)			473,691	614,633	1,088,324
	> 120% (1)			303,808	545,323	849,131
No LTV/CLTV available				48,906	5,387	54,293
Remaining PCI accounting adjustments				(17,328)	(4,087)	(21,415)
		Total consumer loans	$	7,945,746	3,249,882	11,195,628

Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV.

Nonaccrual Loans The following table provides loans on nonaccrual status. PCI loans are excluded from this table due to the existence of the accretable yield.


						December 31,
(in thousands)						2012	2011
Commercial:
	Commercial and industrial				$	-	-
	Real estate mortgage					16,270	21,132
	Real estate construction					-	251
		Total commercial				16,270	21,383
Consumer:
	Real estate 1-4 family first mortgage					306,922	228,363
	Real estate 1-4 family junior lien
		mortgage (1)				129,251	99,347
		Total consumer (2)				436,173	327,710
			Total nonaccrual loans
				(excluding PCI)	$	452,443	349,093

(1)	Includes $32.3 million at December 31, 2012, resulting from the Interagency Guidance issued in 2012, which requires performing junior liens to be classified as nonaccrual if the related first mortgage is nonaccruing.
(2)	Includes $77.8 million at December 31, 2012, consisting of $61.1 million of first mortgages and $16.7 million of junior liens, resulting from the OCC guidance issued in third quarter 2012, which requires performing consumer loans discharged in bankruptcy to be placed on nonaccrual status and written down to net realizable collateral value, regardless of their delinquency status.

LOANS 90 Days OR MORE Past Due and Still Accruing Certain loans 90 days or more past due as to interest or principal are still accruing, because they are (1) well-secured and in the process of collection or (2) real estate 1-4 family mortgage loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. PCI loans of $7.0 million at December 31, 2012, and $7.6 million at December 31, 2011, are excluded from this disclosure even though they are 90 days or more contractually past due. These PCI loans are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments.

The following table shows non-PCI loans 90 days or more past due and still accruing.


					December 31,
(in thousands)					2012	2011
Commercial:
	Commercial and industrial			$	-	-
	Real estate mortgage				4,455	1,596
	Real estate construction				-	-
		Total commercial			4,455	1,596
Consumer:
	Real estate 1-4 family first mortgage				18,382	21,008
	Real estate 1-4 family junior lien
		mortgage (1)			6,940	15,492
		Total consumer			25,322	36,500
			Total past due (excluding PCI)	$	29,777	38,096

(1)	The balance at December 31, 2012, reflects the impact from the transfer of certain 1-4 family junior lien mortgages to nonaccrual loans in accordance with the Interagency Guidance issued on January 31, 2012.

Impaired Loans The table below summarizes key information for impaired loans. Our impaired loans predominantly include loans on nonaccrual status in the commercial portfolio segment and loans modified in a TDR, whether on accrual or nonaccrual status. These impaired loans generally have estimated losses which are included in the allowance for credit losses. Impaired loans exclude PCI loans. Based on clarifying guidance from the Securities and Exchange Commission (SEC) received in December 2011, we now classify trial modifications as TDRs at the beginning of the trial period. The table below includes trial modifications that totaled $20.2 million at December 31, 2012, and $21.4 million at December 31, 2011.


						Recorded investment
							Impaired loans
					Unpaid		with related	Related
					principal	Impaired	allowance for	allowance for
(in thousands)					balance	loans	credit losses	credit losses

December 31, 2012

Commercial:
	Commercial and industrial			$	-	-	-	-
	Real estate mortgage				18,697	15,434	15,434	9,827
	Real estate construction				-	-	-	-
		Total commercial			18,697	15,434	15,434	9,827
Consumer:
	Real estate 1-4 family first mortgage				439,213	361,162	262,803	53,539
	Real estate 1-4 family junior lien mortgage				156,186	139,690	119,078	48,912
		Total consumer			595,399	500,852	381,881	102,451
			Total impaired loans (excluding PCI)	$	614,096	516,286	397,315	112,278

December 31, 2011

Commercial:
	Commercial and industrial			$	-	-	-	-
	Real estate mortgage				25,684	19,947	19,947	10,330
	Real estate construction				264	251	251	106
		Total commercial			25,948	20,198	20,198	10,436
Consumer:
	Real estate 1-4 family first mortgage				245,837	207,447	207,447	50,853
	Real estate 1-4 family junior lien mortgage				124,974	117,158	117,158	51,380
		Total consumer			370,811	324,605	324,605	102,233
			Total impaired loans (excluding PCI)	$	396,759	344,803	344,803	112,669

The following table provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans by portfolio segment and class.


				Year ended December 31,
				2012			2011		2010
					Average	Recognized	Average	Recognized	Average	Recognized
					recorded	interest	recorded	interest	recorded	interest
(in thousands)					investment	income	investment	income	investment	income
Commercial:
	Commercial and industrial			$	-	-	69	-	-	-
	Real estate mortgage				19,316	1,021	22,341	91	14,489	236
	Real estate construction				68	-	424	-	350	6
		Total commercial			19,384	1,021	22,834	91	14,839	242
Consumer:
	Real estate 1-4 family first mortgage				247,481	13,277	173,907	9,509	88,533	3,979
	Real estate 1-4 family junior lien mortgage				121,441	5,116	106,471	5,349	67,065	3,352
		Total consumer			368,922	18,393	280,378	14,858	155,598	7,331
			Total impaired loans	$	388,306	19,414	303,212	14,949	170,437	7,573

Interest income:
	Cash basis of accounting			$		4,449		826		874
	Other (1)					14,965		14,123		6,699
		Total interest income		$		19,414		14,949		7,573

Includes interest recognized on accruing TDRs and interest recognized related to the passage of time on certain impaired loans. See footnote 1 to the table of changes in the allowance for credit losses.

Troubled Debt Resrtucturings (TDRs) When, for economic or legal reasons related to a borrower's financial difficulties, we grant a concession for other than an insignificant period of time to a borrower that we would not otherwise consider, the related loan is classified as a TDR. We do not consider any loans modified through a loan resolution such as foreclosure or short sale to be a TDR.

We may require some borrowers experiencing financial difficulty to make trial payments generally for a period of three to four months, according to the terms of a planned permanent modification, to determine if they can perform according to those terms. Based on clarifying guidance from the SEC in December 2011, these arrangements represent trial modifications, which we classify and account for as TDRs. While loans are in trial payment programs, their original terms are not considered modified and they continue to advance through delinquency status and accrue interest according to their original terms. The planned modifications for these arrangements predominantly involve interest rate reductions or other interest rate concessions, however, the exact concession type and resulting financial effect are usually not finalized and do not take effect until the loan is permanently modified. The trial period terms are developed in accordance with our proprietary programs or the U.S. Treasury's Making Homes Affordable programs for real estate 1-4 family first lien (i.e. Home Affordable Modification Program – HAMP) and junior lien (i.e. Second Lien Modification Program – 2MP) mortgage loans.

At December 31, 2012, the loans in trial modification period were $8.8 million under HAMP, $2.2 million under 2MP and $9.2 million under proprietary programs, compared with $8.7 million, $3.1 million and $9.6 million at December 31, 2011, respectively. Trial modifications with a recorded investment of $9.2 million at December 31, 2012, and $12.1 million at December 31, 2011, were accruing loans and $11.0 million and $9.3 million, respectively, were nonaccruing loans. Our recent experience is that most of the mortgages that enter a trial payment period program are successful in completing the program requirements and are then permanently modified at the end of the trial period. As previously discussed, our allowance process considers the impact of those modifications that are probable to occur including the associated credit cost and related re-default risk.

The following table summarizes our TDR modifications for the periods presented by primary modification type and includes the financial effects of these modifications.


					Primary modification type (1)				Financial effects of modifications
										Weighted			Recorded
							Other			average			investment
						Interest	Interest			interest			related to
						rate	rate		Charge-	rate			interest rate
(in thousands)					Principal (2)	reduction	concessions (3)	Total	offs (4)	reduction		reduction (5)
Year ended December 31, 2012
Commercial:
	Commercial and industrial			$	-	-	-	-	-	-	%	$	-
	Real estate mortgage				-	-	3,811	3,811	-	-			-
	Real estate construction				-	-	-	-	-	-			-
		Total commercial			-	-	3,811	3,811	-	-			-
Consumer:
	Real estate 1-4 family first mortgage				17,077	55,554	158,558	231,189	12,750	3.10			69,920
	Real estate 1-4 family
		junior lien mortgage			3,797	18,548	50,631	72,976	38,071	5.39			21,513
	Trial modifications (6)				-	-	16,819	16,819	-	-			-
		Total consumer			20,874	74,102	226,008	320,984	50,821	3.64			91,433
			Total	$	20,874	74,102	229,819	324,795	50,821	3.64	%	$	91,433

Year ended December 31, 2011
Commercial:
	Commercial and industrial			$	-	-	-	-	-	-	%	$	-
	Real estate mortgage				-	-	158	158	-	-			-
	Real estate construction				-	-	-	-	-	-			-
		Total commercial			-	-	158	158	-	-			-
Consumer:
	Real estate 1-4 family first mortgage				17,565	56,136	30,028	103,729	5,980	3.47			72,590
	Real estate 1-4 family junior lien mortgage				4,952	49,576	11,913	66,441	1,299	5.58			56,166
	Trial modifications				-	-	21,369	21,369	-	-			-
		Total consumer			22,517	105,712	63,310	191,539	7,279	4.39			128,756
			Total	$	22,517	105,712	63,468	191,697	7,279	4.39	%	$	128,756

(1)	Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs with multiple types of concessions are presented only once in the table in the first category type based on the order presented.
(2)	Principal modifications include principal forgiveness at the time of the modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with a zero percent contractual interest rate.
(3)	Other interest rate concessions include loans modified to an interest rate that is not commensurate with the credit risk, even though the rate may have been increased. These modifications would include renewals, term extensions and other interest adjustments, but exclude modifications that also forgive principal and/or reduce the interest rate. Year ended December 31, 2012, includes $132.0 million of consumer loans, consisting of $100.8 million of first mortgages and $31.2 million of junior liens, resulting from the OCC guidance issued in third quarter 2012, which requires consumer loans discharged in bankruptcy to be classified as TDRs, as well as written down to net realizable collateral value.
(4)	Charge-offs include write-downs of the investment in the loan in the period it is contractually modified. The amount of charge-off will differ from the modification terms if the loan has been charged down prior to the modification based on our policies. In addition, there may be cases where we have a charge-off/down with no legal principal modification. Modifications resulted in legally forgiving principal (actual, contingent or deferred) of $6.9 million and $5.0 million for the years ended December 31, 2012 and 2011, respectively. Year ended December 31, 2012, includes $46.1 million in charge-offs on consumer loans resulting from the OCC guidance discussed above.
(5)	Reflects the effect of reduced interest rates to loans with a principal or interest rate reduction primary modification type.
(6)	Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through delinquency status and accrue interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions; however, the exact concession type and resulting financial effect are usually not known until the loan is permanently modified. Trial modifications for the period are presented net of any trial modifications that successfully complete the program requirements. Such successful modifications are included as an addition to the appropriate loan category in the period they successfully complete the program requirements.

The table below summarizes permanent modification TDRs that have defaulted in the current period within 12 months of their permanent modification date. We report these defaulted TDRs based on a payment default definition of 90 days past due for the commercial portfolio segment and 60 days past due for the consumer portfolio segment.

					Recorded investment of defaults
					Year ended December 31,
(in thousands)					2012	2011
Commercial:
	Commercial and industrial			$	-	-
	Real estate mortgage				950	2,556
	Real estate construction				-	-
		Total commercial			950	2,556
Consumer:
	Real estate 1-4 family first mortgage				13,030	19,379
	Real estate 1-4 family junior lien mortgage				3,043	8,734
		Total consumer			16,073	28,113
			Total	$	17,023	30,669

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

+ References

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Reference 8: http://www.xbrl.org/2003/role/presentationRef

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+ Details

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