UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

or

¨ 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 001-12307

ZIONS BANCORPORATION

(Exact name of registrant as specified in its charter)

UTAH	87-0227400
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One South Main, 15th Floor Salt Lake City, Utah	84133
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (801) 844-7637

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  ¨

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 (§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  ¨

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	ý	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, without par value, outstanding at April 30, 2015 203,209,100 shares

ZIONS BANCORPORATION AND SUBSIDIARIES

INDEX

		Page
PART  I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Shareholders’ Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	51
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	88
Item 4.	Controls and Procedures	88
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	89
Item 1A.	Risk Factors	89
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	89
Item 6.	Exhibits	89
Signatures		90

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(In thousands, except shares)	March 31, 2015			December 31, 2014
	(Unaudited)
ASSETS
Cash and due from banks	$	720,858		$	841,942
Money market investments:
Interest-bearing deposits	6,791,762			7,178,097
Federal funds sold and security resell agreements	1,519,352			1,386,291
Investment securities:
Held-to-maturity, at amortized cost (approximate fair value $602,355 and $677,196)	590,950			647,252
Available-for-sale, at fair value	4,450,502			3,844,248
Trading account, at fair value	71,392			70,601
	5,112,844			4,562,101
Loans held for sale	128,946			132,504
Loans and leases, net of unearned income and fees	40,180,114			40,063,658
Less allowance for loan losses	620,013			604,663
Loans, net of allowance	39,560,101			39,458,995
Other noninterest-bearing investments	870,125			865,950
Premises and equipment, net	844,900			829,809
Goodwill	1,014,129			1,014,129
Core deposit and other intangibles	23,162			25,520
Other real estate owned	17,256			18,916
Other assets	952,496			894,620
	$	57,555,931		$	57,208,874
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	20,854,630		$	20,529,124
Interest-bearing:
Savings and money market	24,540,927			24,583,636
Time	2,344,818			2,406,924
Foreign	382,985			328,391
	48,123,360			47,848,075
Federal funds and other short-term borrowings	203,597			244,223
Long-term debt	1,089,321			1,092,282
Reserve for unfunded lending commitments	82,287			81,076
Other liabilities	603,068			573,688
Total liabilities	50,101,633			49,839,344
Shareholders’ equity:
Preferred stock, without par value, authorized 4,400,000 shares	1,004,032			1,004,011
Common stock, without par value; authorized 350,000,000 shares; issued and outstanding 203,192,991 and 203,014,903 shares	4,728,556			4,723,855
Retained earnings	1,836,619			1,769,705
Accumulated other comprehensive income (loss)	(114,909		)	(128,041		)
Total shareholders’ equity	7,454,298			7,369,530
	$	57,555,931		$	57,208,874

See accompanying notes to consolidated financial statements.

3

ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)	Three Months Ended March 31,
	2015			2014
Interest income:
Interest and fees on loans	$	415,755		$	434,350
Interest on money market investments	5,218			5,130
Interest on securities	27,473			28,094
Total interest income	448,446			467,574
Interest expense:
Interest on deposits	12,104			12,779
Interest on short- and long-term borrowings	18,996			38,324
Total interest expense	31,100			51,103
Net interest income	417,346			416,471
Provision for loan losses	(1,494		)	(610		)
Net interest income after provision for loan losses	418,840			417,081
Noninterest income:
Service charges and fees on deposit accounts	41,194			41,199
Other service charges, commissions and fees	47,486			44,250
Wealth management income	7,615			7,077
Loan sales and servicing income	7,706			7,096
Capital markets and foreign exchange	5,501			5,043
Dividends and other investment income	9,372			7,864
Fair value and nonhedge derivative loss	(1,088		)	(8,539		)
Equity securities gains, net	3,353			912
Fixed income securities gains (losses), net	(239		)	30,914
Impairment losses on investment securities	—			(27		)
Less amounts recognized in other comprehensive income	—			—
Net impairment losses on investment securities	—			(27		)
Other	922			2,524
Total noninterest income	121,822			138,313
Noninterest expense:
Salaries and employee benefits	243,519			233,402
Occupancy, net	29,339			28,305
Furniture, equipment and software	29,713			27,944
Other real estate expense	374			1,607
Credit-related expense	5,939			6,947
Provision for unfunded lending commitments	1,211			(1,012		)
Professional and legal services	11,483			10,995
Advertising	6,975			6,398
FDIC premiums	8,119			7,922
Amortization of core deposit and other intangibles	2,358			2,882
Other	58,431			72,673
Total noninterest expense	397,461			398,063
Income before income taxes	143,201			157,331
Income taxes	51,176			56,121
Net income	92,025			101,210
Dividends on preferred stock	(16,746		)	(25,020		)
Net earnings applicable to common shareholders	$	75,279		$	76,190
Weighted average common shares outstanding during the period:
Basic shares	202,603			184,440
Diluted shares	202,944			185,123
Net earnings per common share:
Basic	$	0.37		$	0.41
Diluted	0.37			0.41

See accompanying notes to consolidated financial statements.

4

ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
	Three Months Ended March 31,
(In thousands)	2015			2014
Net income for the period	$	92,025		$	101,210
Other comprehensive income, net of tax:
Net unrealized holding gains on investment securities	486			73,907
Reclassification of HTM securities to AFS securities	10,938			—
Reclassification to earnings for realized net fixed income securities losses (gains)	148			(24,840		)
Reclassification to earnings for net credit-related impairment losses on investment securities	—			17
Accretion of securities with noncredit-related impairment losses not expected to be sold	—			286
Net unrealized losses on other noninterest-bearing investments	(364		)	(2,841		)
Net unrealized holding gains on derivative instruments	2,553			320
Reclassification adjustment for increase in interest income recognized in earnings on derivative instruments	(629		)	(210		)
Other comprehensive income	13,132			46,639
Comprehensive income	$	105,157		$	147,849

See accompanying notes to consolidated financial statements.

5

ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
(In thousands, except shares and per share amounts)	Preferred stock		Common stock				Retained earnings			Accumulated other comprehensive income (loss)				Total shareholders’ equity
			Shares	Amount
Balance at December 31, 2014	$	1,004,011	203,014,903	$	4,723,855		$	1,769,705			$	(128,041	)	$	7,369,530
Net income for the period							92,025							92,025
Other comprehensive income, net of tax											13,132			13,132
Subordinated debt converted to preferred stock	21			(6		)								15
Net activity under employee plans and related tax benefits			178,088	4,707										4,707
Dividends on preferred stock							(16,746		)					(16,746		)
Dividends on common stock, $0.04 per share							(8,176		)					(8,176		)
Change in deferred compensation							(189		)					(189		)
Balance at March 31, 2015	$	1,004,032	203,192,991	$	4,728,556		$	1,836,619			$	(114,909	)	$	7,454,298
Balance at December 31, 2013	$	1,003,970	184,677,696	$	4,179,024		$	1,473,670			$	(192,101	)	$	6,464,563
Net income for the period							101,210							101,210
Other comprehensive income, net of tax											46,639			46,639
Net activity under employee plans and related tax benefits			217,486	6,489										6,489
Dividends on preferred stock							(25,020		)					(25,020		)
Dividends on common stock, $0.04 per share							(7,436		)					(7,436		)
Change in deferred compensation							(229		)					(229		)
Balance at March 31, 2014	$	1,003,970	184,895,182	$	4,185,513		$	1,542,195			$	(145,462	)	$	6,586,216

See accompanying notes to consolidated financial statements.

6

ZIONS BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)	Three Months Ended March 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period	$	92,025		$	101,210
Adjustments to reconcile net income to net cash provided by operating activities:
Net impairment losses on investment securities	—			27
Provision for credit losses	(283		)	(1,622		)
Depreciation and amortization	34,169			32,404
Fixed income securities losses (gains), net	239			(30,914		)
Deferred income tax expense	3,402			78,278
Net increase in trading securities	(1,021		)	(21,862		)
Net decrease in loans held for sale	3,517			44,984
Change in other liabilities	25,566			(77,796		)
Change in other assets	(65,248		)	3,226
Other, net	(3,549		)	2,336
Net cash provided by operating activities	88,817			130,271
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in money market investments	253,274			(80,851		)
Proceeds from maturities and paydowns of investment securities held-to-maturity	39,323			18,935
Purchases of investment securities held-to-maturity	(22,576		)	(35,750		)
Proceeds from sales, maturities, and paydowns of investment securities available-for-sale	228,894			847,288
Purchases of investment securities available-for-sale	(784,856		)	(452,123		)
Net change in loans and leases	(100,442		)	(166,415		)
Net purchases of premises and equipment	(33,533		)	(76,916		)
Proceeds from sales of other real estate owned	3,401			11,825
Other, net	3,351			5,617
Net cash provided by (used in) investing activities	(413,164		)	71,610
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits	275,285			170,422
Net change in short-term funds borrowed	(40,626		)	(60,511		)
Repayments of long-term debt	(8,185		)	(124,755		)
Proceeds from the issuance of common stock	962			2,880
Dividends paid on common and preferred stock	(23,234		)	(23,741		)
Other, net	(939		)	(303		)
Net cash provided by (used in) financing activities	203,263			(36,008		)
Net increase (decrease) in cash and due from banks	(121,084		)	165,873
Cash and due from banks at beginning of period	841,942			1,173,057
Cash and due from banks at end of period	$	720,858		$	1,338,930
Cash paid for interest	$	22,119		$	40,849
Net refunds received for income taxes	(500		)	(81		)

See accompanying notes to consolidated financial statements.

7

ZIONS BANCORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2015

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Zions Bancorporation (“the Parent”) and its majority-owned subsidiaries (collectively “the Company,” “Zions,” “we,” “our,” “us”) 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 Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. References to GAAP, including standards promulgated by the Financial Accounting Standards Board (“FASB”) are made according to sections of the Accounting Standards Codification (“ASC”) and to Accounting Standards Updates (“ASU”), which include consensus issues of the Emerging Issues Task Force (“EITF”). In certain cases, ASUs are issued jointly with International Financial Reporting Standards (“IFRS”). Certain prior period amounts have been reclassified to conform with the current period presentation. These reclassifications did not affect net income.

Operating results for the three months endedMarch 31, 2015 and 2014 are not necessarily indicative of the results that may be expected in future periods. The consolidated balance sheet at December 31, 2014 is from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s 2014 Annual Report on Form 10-K.

The Company provides a full range of banking and related services through subsidiary banks in 11 Western and Southwestern states as follows: Zions First National Bank (“Zions Bank”), in Utah, Idaho and Wyoming; California Bank & Trust (“CB&T”); Amegy Corporation (“Amegy”) and its subsidiary, Amegy Bank, in Texas; National Bank of Arizona (“NBAZ”); Nevada State Bank (“NSB”); Vectra Bank Colorado (“Vectra”), in Colorado and New Mexico; The Commerce Bank of Washington (“TCBW”); and The Commerce Bank of Oregon (“TCBO”). Effective April 1, 2015, TCBO was merged into TCBW. The Parent and its subsidiary banks also own and operate certain nonbank subsidiaries that engage in financial services.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Standard	Description	Date of adoption	Effect on the financial statements or other significant matters
Standards not yet adopted by the Company
ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (Subtopic 350-40)	The standard provides guidance to determine whether an arrangement includes a software license. If it does, the customer accounts for it the same way as for other software licenses. If no software license is included, the customer accounts for it as a service contract. Adoption may be retrospective or prospective. Early adoption is permitted.	January 1, 2016	We are currently evaluating the impact this new guidance may have on the Company’s financial statements.
ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30)	The standard requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the associated debt liability, consistent with debt discounts. Adoption is retrospective and early adoption is permitted.	January 1, 2016	We currently include debt issuance costs in other assets. The amount to be reclassified to the debt liability is not material to the Company’s financial statements.

8

ZIONS BANCORPORATION AND SUBSIDIARIES

Standard	Description	Date of adoption	Effect on the financial statements or other significant matters
Standards not yet adopted by the Company (continued)
ASU 2015-02, Amendments to the Consolidation Analysis (Topic 810)	The new standard changes certain criteria in the variable interest model and the voting model to determine whether certain legal entities are variable interest entities (“VIEs”) and whether they should be consolidated. Additional disclosures are required regarding entities not currently considered VIEs, but may become VIEs under the new guidance and may be subject to consolidation. Adoption may be retrospective or modified retrospective with a cumulative effect adjustment. Early adoption is permitted.	January 1, 2016	We currently do not consolidate any VIEs and do not expect this new guidance will have a material impact on the Company’s financial statements.
ASU 2014-09, Revenue from Contracts with Customers (Topic 606)	The core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The banking industry does not expect significant changes because major sources of revenue are from financial instruments that have been excluded from the scope of the new standard, (including loans, derivatives, debt and equity securities, etc.). However, the new standard affects other fees charged by banks, such as asset management fees, credit card interchange fees, deposit account fees, etc. Adoption may be made on a full retrospective basis with practical expedients, or on a modified retrospective basis with a cumulative effect adjustment. Early adoption is not permitted.	January 1, 2017 (FASB voted on April 1, 2015 to propose to defer effective date by one year from the above date).	While we currently do not expect this standard will have a significant impact on the Company’s financial statements, we are still in process of conducting our evaluation.
Standards adopted by the Company
ASU 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure (Subtopic 310-40)	The standard addresses the classification of certain foreclosed mortgage loans fully or partially guaranteed under government programs. Under certain such programs, qualifying creditors can extend mortgage loans with a guarantee entitling the creditor to recover all or a portion of the unpaid principal balance from the government if the borrower defaults. A separate other receivable is established that is measured based on the amount of the loans expected to be recovered.	January 1, 2015	Our adoption of this standard had no impact on the accompanying financial statements.
ASU 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (Subtopic 310-40)	The standard clarifies that a creditor should be considered to have physical possession of a residential real estate property collateralizing a residential mortgage loan and thus would reclassify the loan to other real estate owned when certain conditions are satisfied. Additional financial statement disclosures will be required.	January 1, 2015	Our adoption of this standard added a nominal amount of additional disclosure to Note 6.
ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects (Topic 323)	The standard revised conditions an entity must meet to elect the effective yield method when accounting for qualified affordable housing project investments. The EITF final consensus changed the method of amortizing a Low-Income Housing Tax Credit (“LIHTC”) investment from the effective yield method to a proportional amorti-zation method. Amortization would be proportional to the tax credits and tax benefits received but, under a practical expedient available in certain circumstances, amortization could be proportional to only the tax credits. Reporting entities that invest in LIHTC investments through a limited liability entity could elect the proportional amortization method if certain conditions are met.	January 1, 2015	Our adoption of this standard did not have a significant effect on the accompanying financial statements.

9

ZIONS BANCORPORATION AND SUBSIDIARIES

3. SUPPLEMENTAL CASH FLOW INFORMATION

Noncash activities are summarized as follows:

(In thousands)	Three Months Ended March 31,
	2015		2014
Loans and leases transferred to other real estate owned	$	3,568	$	6,338
Loans held for sale reclassified as loans and leases	13,138		3,789
Amortized cost of HTM securities reclassified as AFS securities	79,276		—

4. OFFSETTING ASSETS AND LIABILITIES

Gross and net information for selected financial instruments in the balance sheet is as follows:

	March 31, 2015
(In thousands)							Gross amounts not offset in the balance sheet
Description	Gross amounts recognized		Gross amounts offset in the balance sheet		Net amounts presented in the balance sheet		Financial instruments			Cash collateral received/pledged			Net amount
Assets:
Federal funds sold and security resell agreements	$	1,519,352	$	—	$	1,519,352	$	—		$	—		$	1,519,352
Derivatives (included in other assets)	83,978		—		83,978		(5,121		)	—			78,857
	$	1,603,330	$	—	$	1,603,330	$	(5,121	)	$	—		$	1,598,209
Liabilities:
Federal funds and other short-term borrowings	$	203,597	$	—	$	203,597	$	—		$	—		$	203,597
Derivatives (included in other liabilities)	81,123		—		81,123		(5,121		)	(38,833		)	37,169
	$	284,720	$	—	$	284,720	$	(5,121	)	$	(38,833	)	$	240,766

	December 31, 2014
(In thousands)							Gross amounts not offset in the balance sheet
Description	Gross amounts recognized		Gross amounts offset in the balance sheet		Net amounts presented in the balance sheet		Financial instruments			Cash collateral received/pledged			Net amount
Assets:
Federal funds sold and security resell agreements	$	1,386,291	$	—	$	1,386,291	$	—		$	—		$	1,386,291
Derivatives (included in other assets)	66,420		—		66,420		(3,755		)				62,665
	$	1,452,711	$	—	$	1,452,711	$	(3,755	)	$	—		$	1,448,956
Liabilities:
Federal funds and other short-term borrowings	$	244,223	$	—	$	244,223	$	—		$	—		$	244,223
Derivatives (included in other liabilities)	66,064		—		66,064		(3,755		)	(31,968		)	30,341
	$	310,287	$	—	$	310,287	$	(3,755	)	$	(31,968	)	$	274,564

Security resell and repurchase agreements are offset, when applicable, in the balance sheet according to master netting agreements. Security repurchase agreements are included with “Federal funds and other short-term borrowings.” Derivative instruments may be offset under their master netting agreements; however, for accounting purposes, we present these items on a gross basis in the Company’s balance sheet. See Note 7 for further information regarding derivative instruments.

10

ZIONS BANCORPORATION AND SUBSIDIARIES

5. INVESTMENTS

Investment Securities

Investment securities are summarized below. Note 10 discusses the process to estimate fair value for investment securities.

	March 31, 2015
(In thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Held-to-maturity
Municipal securities	$	590,950	$	12,208	$	803	$	602,355
Available-for-sale
U.S. Government agencies and corporations:
Agency securities	631,603		1,406		7,139		625,870
Agency guaranteed mortgage-backed securities	1,417,843		16,441		614		1,433,670
Small Business Administration loan-backed securities	1,588,562		15,677		8,558		1,595,681
Municipal securities	175,017		1,282		689		175,610
Asset-backed securities:
Trust preferred securities – banks and insurance	611,836		99		150,418		461,517
Other	5,229		235		—		5,464
	4,430,090		35,140		167,418		4,297,812
Mutual funds and other	153,235		101		646		152,690
	4,583,325		35,241		168,064		4,450,502
Total	$	5,174,275	$	47,449	$	168,867	$	5,052,857

	December 31, 2014
			Recognized in OCI 1						Not recognized in OCI
(In thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Carrying value		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Held-to-maturity
Municipal securities	$	607,675	$	—	$	—	$	607,675	$	13,018	$	804	$	619,889
Asset-backed securities:
Trust preferred securities – banks and insurance	79,276		—		39,699		39,577		18,393		663		57,307
	686,951		—		39,699		647,252		31,411		1,467		677,196
Available-for-sale
U.S. Government agencies and  corporations:
Agency securities	607,523		1,572		8,343		600,752						600,752
Agency guaranteed mortgage-backed securities	935,164		12,132		2,105		945,191						945,191
Small Business Administration loan-backed securities	1,544,710		16,446		8,891		1,552,265						1,552,265
Municipal securities	189,059		1,143		945		189,257						189,257
Asset-backed securities:
Trust preferred securities – banks and insurance	537,589		103		121,984		415,708						415,708
Other	5,252		207		7		5,452						5,452
	3,819,297		31,603		142,275		3,708,625						3,708,625
Mutual funds and other	136,591		76		1,044		135,623						135,623
	3,955,888		31,679		143,319		3,844,248						3,844,248
Total	$	4,642,839	$	31,679	$	183,018	$	4,491,500					$	4,521,444

¹  Other comprehensive income

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During the first quarter of 2015, we reclassified all of the remaining held-to-maturity (“HTM”) collateralized debt obligation (“CDO”) securities, or approximately $79 million at amortized cost, to available-for-sale (“AFS”) securities. The reclassification reduced existing unrealized losses in OCI of $40 million on HTM securities by approximately $18 million pretax. These existing unrealized losses resulted from a previous reclassification of AFS securities to HTM, and from OTTI. We took this action as a result of the most recent Dodd-Frank Act stress test results and the treatment of the CDO securities under the new Basel III capital and risk weighting rules that became effective January 1, 2015. The reclassification provides the Company with greater flexibility in the management of these securities. Current accounting guidance allows for the reclassification of HTM to AFS securities, without calling into question the entity’s intent to hold other debt securities to maturity, when there has been a significant increase in the risk weights of debt securities used for regulatory risk-based capital purposes. No gain or loss was recognized in the statement of income at the time of reclassification.

The amortized cost and estimated fair value of investment debt securities are shown subsequently as of March 31, 2015 by contractual maturity, except for CDOs, Small Business Administration (“SBA”) loan-backed securities, agency guaranteed mortgage-backed securities, and certain agency and municipal securities, where expected maturity is used. Actual maturities may differ from contractual or expected maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Held-to-maturity				Available-for-sale
(In thousands)	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
Due in one year or less	$	96,220	$	97,409	$	639,077	$	638,407
Due after one year through five years	188,507		191,799		1,719,501		1,718,550
Due after five years through ten years	158,244		164,415		1,155,325		1,146,764
Due after ten years	147,979		148,732		916,187		794,091
	$	590,950	$	602,355	$	4,430,090	$	4,297,812

The following is a summary of the amount of gross unrealized losses for investment securities and the estimated fair value by length of time the securities have been in an unrealized loss position:
	March 31, 2015
	Less than 12 months				12 months or more				Total
(In thousands)	Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value
Held-to-maturity
Municipal securities	$	722	$	93,203	$	81	$	3,831	$	803	$	97,034
Available-for-sale
U.S. Government agencies and corporations:
Agency securities	2,631		139,038		4,508		287,134		7,139		426,172
Agency guaranteed mortgage-backed securities	438		178,832		176		12,750		614		191,582
Small Business Administration loan-backed securities	4,551		460,629		4,007		264,312		8,558		724,941
Municipal securities	129		28,134		560		2,916		689		31,050
Asset-backed securities:
Trust preferred securities – banks and insurance	—		—		150,418		446,038		150,418		446,038
	7,749		806,633		159,669		1,013,150		167,418		1,819,783
Mutual funds and other	646		72,296		—		—		646		72,296
	8,395		878,929		159,669		1,013,150		168,064		1,892,079
Total	$	9,117	$	972,132	$	159,750	$	1,016,981	$	168,867	$	1,989,113

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	December 31, 2014
	Less than 12 months				12 months or more				Total
(In thousands)	Gross unrealized losses		Estimated  fair  value		Gross unrealized losses		Estimated  fair  value		Gross unrealized losses		Estimated  fair  value
Held-to-maturity
Municipal securities	$	527	$	62,762	$	277	$	14,003	$	804	$	76,765
Asset-backed securities:
Trust preferred securities – banks and insurance	53		122		40,309		57,186		40,362		57,308
	580		62,884		40,586		71,189		41,166		134,073
Available-for-sale
U.S. Government agencies and corporations:
Agency securities	4,510		295,694		3,833		101,188		8,343		396,882
Agency guaranteed mortgage-backed securities	1,914		425,114		191		12,124		2,105		437,238
Small Business Administration loan-backed securities	5,869		495,817		3,022		175,523		8,891		671,340
Municipal securities	258		36,551		687		4,616		945		41,167
Asset-backed securities:
Trust preferred securities – banks and insurance	—		—		121,984		405,605		121,984		405,605
Other	7		1,607		—		—		7		1,607
	12,558		1,254,783		129,717		699,056		142,275		1,953,839
Mutual funds and other	1,044		71,907		—		—		1,044		71,907
	13,602		1,326,690		129,717		699,056		143,319		2,025,746
Total	$	14,182	$	1,389,574	$	170,303	$	770,245	$	184,485	$	2,159,819

At March 31, 2015 and December 31, 2014, respectively, 188 and 153 HTM and 433 and 458 AFS investment securities were in an unrealized loss position.

Other-Than-Temporary Impairment

Ongoing Policy

We conduct a formal review of investment securities on a quarterly basis for the presence of other-than-temporary impairment (“OTTI”). We assess whether OTTI is present when the fair value of a debt security is less than its amortized cost basis at the balance sheet date (the vast majority of the investment portfolio are debt securities). Under these circumstances, OTTI is considered to have occurred if (1) we have formed a documented intent to sell identified securities or initiated such sales; (2) it is “more likely than not” we will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not sufficient to recover the entire amortized cost basis.

Noncredit-related OTTI in securities we intend to sell is recognized in earnings as is any credit-related OTTI in securities, regardless of our intent. Noncredit-related OTTI on AFS securities not expected to be sold is recognized in OCI. The amount of noncredit-related OTTI in a security is quantified as the difference in a security’s amortized cost after adjustment for credit impairment, and its lower fair value. Presentation of OTTI is made in the statement of income on a gross basis with an offset for the amount of OTTI recognized in OCI.

CDO Sales and Paydowns

During the first quarter of 2015, sales, paydowns and payoffs of CDO securities, along with net gains/losses, were not significant. During the first quarter of 2014, we recorded a total of $993 million par amount of sales and paydowns of CDO securities, resulting in net gains of approximately $31 million. These sales were made in part as a result of the Volcker Rule.

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OTTI Conclusions

Our 2014 Annual Report on Form 10-K describes in more detail our OTTI evaluation process. The following summarizes the conclusions from our OTTI evaluation by each security type that has significant gross unrealized losses at March 31, 2015:

OTTI – Asset-Backed Securities

Trust preferred securities – banks and insurance: These CDO securities are interests in variable rate pools of trust preferred securities issued by trusts related to bank holding companies and insurance companies (“collateral issuers”). They are rated by one or more Nationally Recognized Statistical Rating Organizations (“NRSROs”), which are rating agencies registered with the Securities and Exchange Commission (“SEC”). The more junior securities were purchased generally at par, while the senior securities were purchased from Lockhart Funding LLC (“Lockhart”), a previously consolidated qualifying special-purpose entity securities conduit, at their carrying values (generally par) and then adjusted to their lower fair values.

The primary driver of unrealized losses on CDOs with bank only or bank and insurance collateral are market yield requirements for bank and bank and insurance CDO securities. The financial crisis and economic downturn resulted in significant utilization of both the unique five-year deferral option, which each collateral issuer maintains during the life of the CDO, and the payment in kind (“PIK”) feature of junior priority securities. The PIK feature provides that upon the CDO reaching certain levels of collateral default or deferral, certain junior CDO tranches will not receive current interest but will instead have the unpaid interest amount capitalized. The rate of return demanded by the market for trust preferred CDOs remains substantially higher than the contractual interest rates. CDO tranches backed by bank trust preferred securities continue to be characterized by uncertainty surrounding collateral behavior, specifically including but not limited to, prepayments; the future number, size and timing of bank failures; holding company bankruptcies; and allowed deferrals and subsequent resumption of payment or default due to nonpayment of contractual interest.

Our ongoing review of these securities determined that no OTTI should be recorded in the first quarter of 2015.

OTTI – U.S. Government Agencies and Corporations

Agency securities: These securities were issued by the Federal Agricultural Mortgage Corporation (“FAMC”) and the Export-Import Bank of the U.S. These securities are floating rate and were purchased at premiums or discounts. They have maturity dates from 1 to 25 years and have contractual cash flows guaranteed by agencies of the U.S. Government. Unrealized losses relate to changes in interest rates subsequent to purchase and are not attributable to credit. At March 31, 2015, we did not have an intent to sell identified securities with unrealized losses or initiate such sales, and we believe it is more likely than not we would not be required to sell such securities before recovery of their amortized cost basis. Therefore, we did not record OTTI for these securities during the first quarter of 2015.

Small Business Administration Loan-Backed Securities: These securities were generally purchased at premiums with maturities from 5 to 25 years and have principal cash flows guaranteed by the SBA. Unrealized losses relate to changes in interest rates subsequent to purchase and are not attributable to credit. At March 31, 2015, we did not have an intent to sell identified SBA securities with unrealized losses or initiate such sales, and we believe it is more likely than not we would not be required to sell such securities before recovery of their amortized cost basis. Therefore, we did not record OTTI for these securities during the first quarter of 2015.

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The following is a tabular rollforward of the total amount of credit-related OTTI:

(In thousands)	Three Months Ended March 31, 2015									Three Months Ended March 31, 2014
	HTM			AFS			Total			HTM			AFS			Total
Balance of credit-related OTTI at beginning of period	$	(9,079	)	$	(95,472	)	$	(104,551	)	$	(9,052	)	$	(176,833	)	$	(185,885	)
Additional credit-related OTTI on securities previously impaired	—			—			—			(27		)	—			(27		)
Reductions for securities sold or paid off during the period	—			1,313			1,313			—			12,919			12,919
Reclassification of securities from HTM to AFS	9,079			(9,079		)	—			—			—			—
Balance of credit-related OTTI at end of period	$	—		$	(103,238	)	$	(103,238	)	$	(9,079	)	$	(163,914	)	$	(172,993	)

To determine the credit component of OTTI for all security types, we utilize projected cash flows. These cash flows are credit adjusted using, among other things, assumptions for default probability and loss severity. Certain other unobservable inputs such as prepayment rate assumptions are utilized. In addition, certain internal and external models may be utilized. See Note 10 for further discussion. To determine the credit-related portion of OTTI in accordance with applicable accounting guidance, we use the security-specific effective interest rate when estimating the present value of cash flows.

The following summarizes gains and losses, including OTTI, that were recognized in the statement of income:

	Three Months Ended
	March 31, 2015					March 31, 2014
(In thousands)	Gross gains		Gross losses			Gross gains		Gross losses
Investment securities:
Held-to-maturity	$	1	$	—		$	—	$	27
Available-for-sale	958		1,198			72,561		41,647
Other noninterest-bearing investments	3,595		242			912		—
	4,554		1,440			73,473		41,674
Net gains			$	3,114				$	31,799
Statement of income information:
Net impairment losses on investment securities			$	—				$	(27	)
Equity securities gains, net			3,353					912
Fixed income securities gains (losses), net			(239		)			30,914
Net gains			$	3,114				$	31,799

Interest income by security type is as follows:

(In thousands)	Three Months Ended March 31, 2015						Three Months Ended March 31, 2014
	Taxable		Nontaxable		Total		Taxable		Nontaxable		Total
Investment securities:
Held-to-maturity	$	3,592	$	2,862	$	6,454	$	3,828	$	2,836	$	6,664
Available-for-sale	19,768		653		20,421		20,424		524		20,948
Trading	598		—		598		482		—		482
	$	23,958	$	3,515	$	27,473	$	24,734	$	3,360	$	28,094

Investment securities with a carrying value of $1.3 billion at March 31, 2015 and $1.4 billion at December 31, 2014 were pledged to secure public and trust deposits, advances, and for other purposes as required by law. Securities are also pledged as collateral for security repurchase agreements.

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Private Equity Investments

Effect of Volcker Rule (“VR”)

The VR, as published pursuant to the Dodd-Frank Act in December 2013 and amended in January 2014, significantly restricted certain activities by covered bank holding companies, including restrictions on certain types of securities, proprietary trading, and private equity investing. As of December 31, 2014, the only prohibited investments under the VR requiring divestiture by the Company were certain of its private equity investments (“PEIs”). Of the recorded PEIs of $132 million at March 31, 2015 (consisting of Small Business Investment Companies (“SBICs”) and non-SBICs), approximately $33 million were prohibited by the VR.

As discussed in Note 11, we have $35 million of unfunded commitments for PEIs, of which approximately $8 million relate to prohibited PEIs. Until we dispose of the prohibited PEIs, we expect to fund these commitments if and as the capital calls are made, as allowed under the VR.

During the first quarter of 2015, we recorded approximately $5 million in sales of PEIs resulting in insignificant amounts of net realized gains. All of these sales related to prohibited PEIs. During 2014 since the final issuance of the VR, we have sold approximately $8.3 million of prohibited PEIs. We anticipate disposing of the remainder of these prohibited PEIs before the required deadline. However, the required deadline has been extended to July 21, 2016 from July 21, 2015 and the Federal Reserve has announced its intention to act in 2015 to grant an additional one-year extension to July 21, 2017. See other discussions in Notes 10 and 11.

6. LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans and Loans Held for Sale

Loans are summarized as follows according to major portfolio segment and specific loan class:

(In thousands)	March 31, 2015		December 31, 2014
Loans held for sale	$	128,946	$	132,504
Commercial:
Commercial and industrial	$	13,264,092	$	13,162,955
Leasing	407,137		408,974
Owner occupied	7,309,639		7,351,548
Municipal	555,122		520,887
Total commercial	21,535,990		21,444,364
Commercial real estate:
Construction and land development	2,044,641		1,986,408
Term	8,088,430		8,126,600
Total commercial real estate	10,133,071		10,113,008
Consumer:
Home equity credit line	2,314,806		2,321,150
1-4 family residential	5,212,963		5,200,882
Construction and other consumer real estate	373,335		370,542
Bankcard and other revolving plans	406,723		401,352
Other	203,226		212,360
Total consumer	8,511,053		8,506,286
Total loans	$	40,180,114	$	40,063,658

Loan balances are presented net of unearned income and fees, which amounted to $142.8 million at March 31, 2015 and $144.7 million at December 31, 2014.

Owner occupied and commercial real estate (“CRE”) loans include unamortized premiums of approximately $33.7 million at March 31, 2015 and $36.5 million at December 31, 2014.

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Municipal loans generally include loans to municipalities with the debt service being repaid from general funds or pledged revenues of the municipal entity, or to private commercial entities or 501(c)(3) not-for-profit entities utilizing a pass-through municipal entity to achieve favorable tax treatment.

Land development loans included in the construction and land development loan class were $462.7 million at March 31, 2015 and $484.9 million at December 31, 2014.

Loans with a carrying value of approximately $22.6 billion at March 31, 2015 and $22.5 billion at December 31, 2014 have been pledged at the Federal Reserve and various Federal Home Loan Banks (“FHLBs”) as collateral for current and potential borrowings. Note 8 presents the balance of FHLB advances made to the Company against this pledged collateral.

We sold loans with a carrying value of $300.4 million and $337.6 million for the three months endedMarch 31, 2015 and 2014, respectively, that were classified as loans held for sale. The sold loans were derecognized from the balance sheet. Loans classified as loans held for sale primarily consist of conforming residential mortgages and the guaranteed portion of SBA loans. The principal balance of sold loans for which we retain servicing was approximately $1.2 billion at both March 31, 2015 and December 31, 2014.

Amounts added to loans held for sale during these periods were $309.7 millionand $295.5 million, respectively. Income from loans sold, excluding servicing, for these same periods was $4.6 million and $3.5 million.

Since 2009, CB&T and NSB have had loss sharing agreements with the Federal Deposit Insurance Corporation (“FDIC”), which provided indemnification for credit losses of acquired loans and foreclosed assets up to specified thresholds. The last of the agreements for commercial loans, which comprised the major portion of the acquired portfolio, expired as of September 30, 2014. The agreements for 1-4 family residential loans will expire in 2019. In previous periods, the FDIC-supported loan balances were presented separately in this footnote and in other disclosures, and included purchased credit-impaired (“PCI”) loans, as subsequently discussed in Purchased Loans. Due to declining balances, for all periods presented herein, the FDIC-supported/PCI loans have been reclassified to their respective loan segments and classes.

Allowance for Credit Losses

The allowance for credit losses (“ACL”) consists of the allowance for loan and lease losses (“ALLL”) (also referred to as the allowance for loan losses) and the reserve for unfunded lending commitments (“RULC”).

Allowance for Loan and Lease Losses

The ALLL represents our estimate of probable and estimable losses inherent in the loan and lease portfolio as of the balance sheet date. Losses are charged to the ALLL when recognized. Generally, commercial loans are charged off or charged down when they are determined to be uncollectible in whole or in part, or when 180 days past due unless the loan is well secured and in the process of collection. Consumer loans are either charged off or charged down to net realizable value no later than the month in which they become 180 days past due. Closed-end consumer loans that are not secured by residential real estate are either charged off or charged down to net realizable value no later than the month in which they become 120 days past due. We establish the amount of the ALLL by analyzing the portfolio at least quarterly, and we adjust the provision for loan losses so the ALLL is at an appropriate level at the balance sheet date.

We determine our ALLL as the best estimate within a range of estimated losses. The methodologies we use to estimate the ALLL depend upon the impairment status and portfolio segment of the loan. The methodology for impaired loans is discussed subsequently. For the commercial and CRE segments, we use a comprehensive loan grading system to assign probability of default (“PD”) and loss given default (“LGD”) grades to each loan. The credit quality indicators discussed subsequently are based on this grading system. In addition, loan officers utilize their experience and judgment in assigning PD and LGD grades, subject to confirmation of the PD and LGD by either credit risk or credit examination. We create groupings of these grades for each subsidiary bank and loan class

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and calculate historic loss rates using a loss migration analysis that attributes historic realized losses to these loan grade groupings over the period of January 2008 through the most recent full quarter.

For the consumer loan segment, we use roll rate models to forecast probable inherent losses. Roll rate models measure the rate at which consumer loans migrate from one delinquency category to the next worse delinquency category, and eventually to loss. We estimate roll rates for consumer loans using recent delinquency and loss experience by segmenting our consumer loan portfolio into separate pools based on common risk characteristics and separately calculating historical delinquency and loss experience for each pool. These roll rates are then applied to current delinquency levels to estimate probable inherent losses. Roll rates incorporate housing market trends inasmuch as these trends manifest themselves in charge-offs and delinquencies. In addition, our qualitative and environmental factors discussed subsequently incorporate the most recent housing market trends.

The current status and historical changes in qualitative and environmental factors may not be reflected in our quantitative models. Thus, after applying historical loss experience, as described above, we review the quantitatively derived level of ALLL for each segment using qualitative criteria and use those criteria to determine our estimate within the range. We track various risk factors that influence our judgment regarding the level of the ALLL across the portfolio segments. These factors primarily include:

• Asset quality trends

• Risk management and loan administration practices

• Risk identification practices

• Effect of changes in the nature and volume of the portfolio

• Existence and effect of any portfolio concentrations

• National economic and business conditions

• Regional and local economic and business conditions

• Data availability and applicability

• Effects of other external factors

The magnitude of the impact of these factors on our qualitative assessment of the ALLL changes from quarter to quarter according to changes made by management in its assessment of these factors, the extent these factors are already reflected in historic loss rates, and the extent changes in these factors diverge from one to another. We also consider the uncertainty inherent in the estimation process when evaluating the ALLL.

Reserve for Unfunded Lending Commitments

We also estimate a reserve for potential losses associated with off-balance sheet commitments, including standby letters of credit. We determine the RULC using the same procedures and methodologies that we use for the ALLL. The loss factors used in the RULC are the same as the loss factors used in the ALLL, and the qualitative adjustments used in the RULC are the same as the qualitative adjustments used in the ALLL. We adjust the Company’s unfunded lending commitments that are not unconditionally cancelable to an outstanding amount equivalent using credit conversion factors, and we apply the loss factors to the outstanding equivalents.

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Changes in the allowance for credit losses are summarized as follows:
	Three Months Ended March 31, 2015
(In thousands)	Commercial			Commercial real estate			Consumer			Total
Allowance for loan losses:
Balance at beginning of period	$	412,514		$	145,009		$	47,140		$	604,663
Additions:
Provision for loan losses	24,934			(26,887		)	459			(1,494		)
Adjustment for FDIC-supported/PCI loans	(38		)							(38		)
Deductions:
Gross loan and lease charge-offs	(15,951		)	(626		)	(3,611		)	(20,188		)
Recoveries	20,613			14,119			2,338			37,070
Net loan and lease charge-offs	4,662			13,493			(1,273		)	16,882
Balance at end of period	$	442,072		$	131,615		$	46,326		$	620,013
Reserve for unfunded lending commitments:
Balance at beginning of period	$	58,931		$	21,517		$	628		$	81,076
Provision charged (credited) to earnings	3,844			(2,580		)	(53		)	1,211
Balance at end of period	$	62,775		$	18,937		$	575		$	82,287
Total allowance for credit losses at end of period:
Allowance for loan losses	$	442,072		$	131,615		$	46,326		$	620,013
Reserve for unfunded lending commitments	62,775			18,937			575			82,287
Total allowance for credit losses	$	504,847		$	150,552		$	46,901		$	702,300

	Three Months Ended March 31, 2014
(In thousands)	Commercial	Commercial real estate	Consumer	Total