Loans and Allowance for Loan Losses

The following table presents the composition of the loan portfolio.



	March 31, 2017		December 31, 2016
	(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	24,660,668	$	25,122,002
Real estate – construction	2,227,405		2,125,316
Commercial real estate – mortgage	11,398,821		11,210,660
Total commercial loans	38,286,894		38,457,978
Consumer loans:
Residential real estate – mortgage	13,117,776		13,259,994
Equity lines of credit	2,560,495		2,543,778
Equity loans	420,362		445,709
Credit card	570,311		604,881
Consumer direct	1,329,242		1,254,641
Consumer indirect	3,078,748		3,134,948
Total consumer loans	21,076,934		21,243,951
Covered loans	341,939		359,334
Total loans	$	59,705,767	$	60,061,263

At March 31, 2017, the Company considered its energy lending portfolio as a concentration due to the impact of oil prices which reached historically low levels in 2015 and 2016 on the portfolio. Total energy exposure, including unused commitments to extend credit and letters of credit was $7.9 billion and $8.1 billion at March 31, 2017 and December 31, 2016, respectively. The funded amount of the Company's energy lending portfolio was approximately $2.9 billion and $3.2 billion at March 31, 2017 and December 31, 2016, respectively, and is reported in total commercial, financial and agricultural in the table above. The decline in oil prices negatively impacted the financial results of many borrowers in the energy lending portfolio, leading to internal risk rating downgrades. If oil prices resume their decline, the energy-related portfolio may be subject to additional pressure on credit quality metrics including past due, criticized, and nonperforming loans, as well as net charge-offs.

Allowance for Loan Losses and Credit Quality

The following table, which excludes loans held for sale, presents a summary of the activity in the allowance for loan losses. The portion of the allowance that has not been identified by the Company as related to specific loan categories has been allocated to the individual loan categories on a pro rata basis for purposes of the table below:



	Commercial, Financial and Agricultural			Commercial Real Estate (1)			Residential Real Estate (2)			Consumer (3)			Covered			Total
	(In Thousands)
Three months ended March 31, 2017
Allowance for loan losses:
Beginning balance	$	458,580		$	116,937		$	119,484		$	143,292		$	—		$	838,293
Provision (credit) for loan losses	40,045			(3,128		)	(330		)	43,583			(31		)	80,139
Loans charged off	(42,908		)	(114		)	(6,338		)	(52,828		)	—			(102,188		)
Loan recoveries	3,497			912			3,129			10,293			31			17,862
Net (charge-offs) recoveries	(39,411		)	798			(3,209		)	(42,535		)	31			(84,326		)
Ending balance	$	459,214		$	114,607		$	115,945		$	144,340		$	—		$	834,106
Three months ended March 31, 2016
Allowance for loan losses:
Beginning balance	$	402,113		$	122,068		$	132,104		$	104,948		$	1,440		$	762,673
Provision (credit) for loan losses	83,582			(6,417		)	(3,149		)	39,273			(44		)	113,245
Loans charged off	(19,806		)	(689		)	(6,201		)	(39,953		)	(249		)	(66,898		)
Loan recoveries	1,749			969			2,419			8,283			—			13,420
Net (charge-offs) recoveries	(18,057		)	280			(3,782		)	(31,670		)	(249		)	(53,478		)
Ending balance	$	467,638		$	115,931		$	125,173		$	112,551		$	1,147		$	822,440


(1)	Includes commercial real estate – mortgage and real estate – construction loans.


(2)	Includes residential real estate – mortgage, equity lines of credit and equity loans.


(3)	Includes credit card, consumer direct and consumer indirect loans.

The table below provides a summary of the allowance for loan losses and related loan balances by portfolio.



	Commercial, Financial and Agricultural		Commercial Real Estate (1)		Residential Real Estate (2)		Consumer (3)		Covered		Total
	(In Thousands)
March 31, 2017
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	96,429	$	7,225	$	31,746	$	1,951	$	—	$	137,351
Collectively evaluated for impairment	362,785		107,382		84,199		142,389		—		696,755
Purchased loans	—		—		—		—		—		—
Total allowance for loan losses	$	459,214	$	114,607	$	115,945	$	144,340	$	—	$	834,106
Ending balance of loans:
Individually evaluated for impairment	$	553,976	$	61,172	$	176,269	$	2,670	$	—	$	794,087
Collectively evaluated for impairment	24,082,230		13,553,116		15,922,100		4,971,678		—		58,529,124
Purchased loans	24,462		11,938		264		3,953		341,939		382,556
Total loans	$	24,660,668	$	13,626,226	$	16,098,633	$	4,978,301	$	341,939	$	59,705,767

December 31, 2016
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	99,932	$	4,037	$	32,016	$	2,223	$	—	$	138,208
Collectively evaluated for impairment	358,648		112,900		87,468		141,069		—		700,085
Purchased loans	—		—		—		—		—		—
Total allowance for loan losses	$	458,580	$	116,937	$	119,484	$	143,292	$	—	$	838,293
Ending balance of loans:
Individually evaluated for impairment	$	719,468	$	44,258	$	186,338	$	3,042	$	—	$	953,106
Collectively evaluated for impairment	24,377,200		13,275,968		16,062,554		4,987,208		—		58,702,930
Purchased loans	25,334		15,750		589		4,220		359,334		405,227
Total loans	$	25,122,002	$	13,335,976	$	16,249,481	$	4,994,470	$	359,334	$	60,061,263


(1)	Includes commercial real estate – mortgage and real estate – construction loans.


(2)	Includes residential real estate – mortgage, equity lines of credit and equity loans.


(3)	Includes credit card, consumer direct and consumer indirect loans.

The following tables present information on individually evaluated impaired loans, by loan class.



	March 31, 2017
	Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance
	Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance
	(In Thousands)
Commercial, financial and agricultural	$	200,288	$	216,689	$	—	$	353,688	$	394,842	$	96,429
Real estate – construction	—		—		—		328		371		234
Commercial real estate – mortgage	21,640		22,704		—		39,204		39,504		6,991
Residential real estate – mortgage	—		—		—		113,680		113,680		9,759
Equity lines of credit	—		—		—		22,912		23,037		16,945
Equity loans	—		—		—		39,677		40,446		5,042
Credit card	—		—		—		—		—		—
Consumer direct	—		—		—		691		691		49
Consumer indirect	—		—		—		1,979		1,979		1,902
Total loans	$	221,928	$	239,393	$	—	$	572,159	$	614,550	$	137,351



	December 31, 2016
	Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance
	Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance
	(In Thousands)
Commercial, financial and agricultural	$	375,957	$	396,294	$	—	$	343,511	$	371,085	$	99,932
Real estate – construction	—		—		—		344		459		344
Commercial real estate – mortgage	19,235		20,177		—		24,679		24,865		3,693
Residential real estate – mortgage	—		—		—		119,986		119,986		7,529
Equity lines of credit	—		—		—		24,591		25,045		19,083
Equity loans	—		—		—		41,761		42,561		5,404
Credit card	—		—		—		—		—		—
Consumer direct	—		—		—		745		745		59
Consumer indirect	—		—		—		2,297		2,297		2,164
Total loans	$	395,192	$	416,471	$	—	$	557,914	$	587,043	$	138,208

The following table presents information on individually evaluated impaired loans, by loan class.



	Three Months Ended March 31, 2017				Three Months Ended March 31, 2016
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
Commercial, financial and agricultural	$	598,126	$	404	$	343,028	$	320
Real estate – construction	334		2		3,999		2
Commercial real estate – mortgage	49,265		284		60,504		413
Residential real estate – mortgage	116,979		646		108,918		636
Equity lines of credit	23,338		229		27,912		281
Equity loans	40,570		344		45,947		373
Credit card	—		—		—		—
Consumer direct	707		6		904		8
Consumer indirect	2,064		3		1,859		2
Total loans	$	831,383	$	1,918	$	593,071	$	2,035

The table above does not include Purchased Impaired Loans, Purchased Nonimpaired Loans or loans held for sale.

Detailed information on the Company's allowance for loan losses methodology and the Company's impaired loan policy are included in the Company's Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016.

The Company monitors the credit quality of its commercial portfolio using an internal dual risk rating, which considers both the obligor and the facility. The obligor risk ratings are defined by ranges of default probabilities of the borrowers, through internally assigned letter grades (AAA through D2) and the facility risk ratings are defined by ranges of the loss given default. The combination of those two approaches results in the assessment of the likelihood of loss and it is mapped to the regulatory classifications. The Company assigns internal risk ratings at loan origination and at regular intervals subsequent to origination. Loan review intervals are dependent on the size and risk grade of the loan, and are generally conducted at least annually. Additional reviews are conducted when information affecting the loan’s risk grade becomes available. The general characteristics of the risk grades are as follows:

•

The Company’s internally assigned letter grades “AAA” through “B-” correspond to the regulatory classification “Pass.” These loans do not have any identified potential or well-defined weaknesses and have a high likelihood of orderly repayment. Exceptions exist when either the facility is fully secured by a CD and held at the Company or the facility is secured by properly margined and controlled marketable securities.

•

Internally assigned letter grades “CCC+” through “CCC” correspond to the regulatory classification “Special Mention.” Loans within this classification have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position at some future date. Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

•

Internally assigned letter grades “CCC-” through “D1” correspond to the regulatory classification “Substandard.” A loan classified as substandard is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the loan. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.


•	The internally assigned letter grade “D2” corresponds to the regulatory classification “Doubtful.” Loans classified as doubtful have all the weaknesses inherent in a loan classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable or improbable.

The Company considers payment history as the best indicator of credit quality for the consumer portfolio. Nonperforming loans in the tables below include loans classified as nonaccrual, loans 90 days or more past due and loans modified in a TDR 90 days or more past due.

The following tables, which exclude loans held for sale and covered loans, illustrate the credit quality indicators associated with the Company’s loans, by loan class.



	Commercial
	March 31, 2017
	Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage
	(In Thousands)
Pass	$	22,819,424	$	2,181,799	$	11,107,996
Special Mention	713,760		41,654		148,639
Substandard	957,263		3,889		121,427
Doubtful	170,221		63		20,759
	$	24,660,668	$	2,227,405	$	11,398,821



	December 31, 2016
	Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage
	(In Thousands)
Pass	$	23,142,975	$	2,055,483	$	10,898,877
Special Mention	758,417		60,826		187,182
Substandard	1,081,439		9,007		106,183
Doubtful	139,171		—		18,418
	$	25,122,002	$	2,125,316	$	11,210,660



	Consumer
	March 31, 2017
	Residential Real Estate – Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)
Noncovered loans:
Performing	$	12,973,925	$	2,526,342	$	407,031	$	557,858	$	1,323,731	$	3,063,330
Nonperforming	143,851		34,153		13,331		12,453		5,511		15,418
	$	13,117,776	$	2,560,495	$	420,362	$	570,311	$	1,329,242	$	3,078,748



	December 31, 2016
	Residential Real Estate -Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)
Noncovered loans:
Performing	$	13,115,936	$	2,507,375	$	431,417	$	593,927	$	1,249,370	$	3,121,825
Nonperforming	144,058		36,403		14,292		10,954		5,271		13,123
	$	13,259,994	$	2,543,778	$	445,709	$	604,881	$	1,254,641	$	3,134,948

The following tables present an aging analysis of the Company’s past due loans, excluding loans classified as held for sale.



	March 31, 2017
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Total Past Due and Impaired		Not Past Due or Impaired		Total
	(In Thousands)
Commercial, financial and agricultural	$	22,472	$	11,804	$	4,405	$	540,407	$	31,644	$	610,732	$	24,049,936	$	24,660,668
Real estate – construction	487		25		3,640		1,028		114		5,294		2,222,111		2,227,405
Commercial real estate – mortgage	13,872		1,226		4,602		89,908		4,821		114,429		11,284,392		11,398,821
Residential real estate – mortgage	61,234		22,337		2,653		140,342		58,867		285,433		12,832,343		13,117,776
Equity lines of credit	9,144		3,619		1,478		32,675		—		46,916		2,513,579		2,560,495
Equity loans	5,105		1,592		376		12,626		33,635		53,334		367,028		420,362
Credit card	6,262		4,719		12,453		—		—		23,434		546,877		570,311
Consumer direct	12,025		4,866		4,874		637		662		23,064		1,306,178		1,329,242
Consumer indirect	68,851		16,161		7,463		7,955		—		100,430		2,978,318		3,078,748
Covered loans	6,448		3,479		23,673		410		—		34,010		307,929		341,939
Total loans	$	205,900	$	69,828	$	65,617	$	825,988	$	129,743	$	1,297,076	$	58,408,691	$	59,705,767



	December 31, 2016
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Total Past Due and Impaired		Not Past Due or Impaired		Total
	(In Thousands)
Commercial, financial and agricultural	$	23,788	$	6,581	$	2,891	$	596,454	$	8,726	$	638,440	$	24,483,562	$	25,122,002
Real estate – construction	918		50		2,007		1,239		2,393		6,607		2,118,709		2,125,316
Commercial real estate – mortgage	3,791		3,474		—		71,921		4,860		84,046		11,126,614		11,210,660
Residential real estate – mortgage	57,359		28,450		3,356		140,303		59,893		289,361		12,970,633		13,259,994
Equity lines of credit	7,922		4,583		2,950		33,453		—		48,908		2,494,870		2,543,778
Equity loans	5,615		1,843		467		13,635		34,746		56,306		389,403		445,709
Credit card	6,411		5,042		10,954		—		—		22,407		582,474		604,881
Consumer direct	13,338		4,563		4,482		789		704		23,876		1,230,765		1,254,641
Consumer indirect	85,198		22,833		7,197		5,926		—		121,154		3,013,794		3,134,948
Covered loans	7,311		1,351		27,238		730		—		36,630		322,704		359,334
Total loans	$	211,651	$	78,770	$	61,542	$	864,450	$	111,322	$	1,327,735	$	58,733,528	$	60,061,263

Policies related to the Company's nonaccrual and past due loans are included in the Company's Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016.

It is the Company’s policy to classify TDRs that are not accruing interest as nonaccrual loans. It is also the Company’s policy to classify TDR past due loans that are accruing interest as TDRs and not according to their past due status. The tables above reflect this policy.

Modifications to borrowers' loan agreements are considered TDRs if a concession is granted for economic or legal reasons related to a borrower’s financial difficulties that otherwise would not be considered. Within each of the Company’s loan classes, TDRs typically involve modification of the loan interest rate to a below market rate or an extension or deferment of the loan. During the three months ended March 31, 2017, $465 thousand of TDR modifications included an interest rate concession and $84.3 million of TDR modifications resulted from modifications to the loan’s structure. During the three months ended March 31, 2016, $1.9 million of TDR modifications included an interest rate concession and $7.0 million of TDR modifications resulted from modifications to the loan’s structure.

The following table presents an analysis of the types of loans that were restructured and classified as TDRs, excluding loans classified as held for sale.



	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
	Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)
Commercial, financial and agricultural	10	$	80,790	3	$	262
Real estate – construction	—	—		1	3,392
Commercial real estate – mortgage	—	—		3	1,275
Residential real estate – mortgage	13	2,772		17	2,338
Equity lines of credit	17	546		8	977
Equity loans	10	408		3	103
Credit card	—	—		—	—
Consumer direct	—	—		—	—
Consumer indirect	10	168		30	515
Covered loans	2	103		—	—

For the three months ended March 31, 2017 and 2016, charge-offs and changes to the allowance related to modifications classified as TDRs were not material.

The Company considers TDRs aged 90 days or more past due, charged off or classified as nonaccrual subsequent to modification, where the loan was not classified as a nonperforming loan at the time of modification, as subsequently defaulted.

The following table provides a summary of initial subsequent defaults that occurred within one year of the restructure date. The table excludes loans classified as held for sale as of period-end and includes loans no longer in default as of period-end.



	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
	Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default
	(Dollars in Thousands)
Commercial, financial and agricultural	—	$	—	—	$	—
Real estate – construction	—	—		—	—
Commercial real estate – mortgage	—	—		—	—
Residential real estate – mortgage	1	505		—	—
Equity lines of credit	—	—		—	—
Equity loans	—	—		—	—
Credit card	—	—		—	—
Consumer direct	—	—		—	—
Consumer indirect	1	22		—	—
Covered loans	—	—		—	—

The Company’s allowance for loan losses is largely driven by updated risk ratings assigned to commercial loans, updated borrower credit scores on consumer loans, and borrower delinquency history in both commercial and consumer portfolios. As such, the provision for loan losses is impacted primarily by changes in borrower payment performance rather than TDR classification. In addition, all commercial and consumer loans modified in a TDR are considered to be impaired, even if they maintain their accrual status.

At March 31, 2017 and December 31, 2016, there were $25.9 million and $12.6 million, respectively, of commitments to lend additional funds to borrowers whose terms have been modified in a TDR.

Foreclosure Proceedings

OREO totaled $25 million and $21 million at March 31, 2017 and December 31, 2016, respectively. OREO included $22 million and $18 million of foreclosed residential real estate properties at March 31, 2017 and December 31, 2016, respectively. As of March 31, 2017 and December 31, 2016, there were $49 million and $48 million, respectively, of residential real estate loans secured by residential real estate properties for which formal foreclosure proceedings were in process.