Net loans increased $23.9 million, or 1%, compared to December 31, 2011. This increase included growth of $44.9 million, or 2%, in total commercial loans, partially offset by reductions of $28.1 million in residential mortgage loans. The year-over-year comparison was impacted by the Company's successful dispositions of a significant amount of problem loans during the year, including the second quarter of 2012 Asset Strategies initiative.
The following table summarizes current loan balances and composition compared to prior periods.
|(Dollars in thousands)||December 31, 2012||September 30, 2012||December 31, 2011|
|Commercial & industrial||$1,474,653||54%||$1,449,200||54%||$1,460,184||54%|
|Commercial real estate||625,755||23||604,556||23||622,300||23|
|Total commercial loans||2,233,287||82||2,167,933||81||2,188,409||81|
|Allowance for loan losses||(43,922)||(2)||(45,598)||(2)||(53,080)||(2)|
|(1) Includes $28.3 million of commercial, $54.2 million of residential and $50.4 million of owner-occupied construction loans at December 31, 2012.|
Asset quality continues to fundamentally improve
The Bank's ratio of classified assets to total Tier 1 capital plus the allowance for loan losses ("ALLL") was 36.8%, a continued improvement from 43.4% at September 30, 2012 and 52.2% at December 31, 2011. Total problem loans (all criticized, classified and nonperforming loans) improved during the quarter to 52.5% of Tier 1 capital plus ALLL compared to 59.7% at September 30, 2012 and 84.8% at December 31, 2011. These improvements reflect positive loan risk-rating migration, continued problem asset disposition efforts and prudent credit management.
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