Loans and Allowance for Loan Losses

The following table presents the composition of the loan portfolio.



	March 31, 2018		December 31, 2017
	(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	26,359,127	$	25,749,949
Real estate – construction	2,156,856		2,273,539
Commercial real estate – mortgage	11,528,287		11,724,158
Total commercial loans	40,044,270		39,747,646
Consumer loans:
Residential real estate – mortgage	13,306,987		13,365,747
Equity lines of credit	2,657,860		2,653,105
Equity loans	344,537		363,264
Credit card	657,030		639,517
Consumer direct	1,856,443		1,690,383
Consumer indirect	3,340,734		3,164,106
Total consumer loans	22,163,591		21,876,122
Total loans	$	62,207,861	$	61,623,768

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, 2018
Allowance for loan losses:
Beginning balance	$	420,635		$	118,133		$	109,856		$	194,136		$	—		$	842,760
Provision (credit) for loan losses	(14,097		)	3,667			(2,531		)	69,990			—			57,029
Loans charged-off	(10,132		)	(203		)	(4,582		)	(68,384		)	—			(83,301		)
Loan recoveries	1,737			178			3,111			10,557			—			15,583
Net (charge-offs) recoveries	(8,395		)	(25		)	(1,471		)	(57,827		)	—			(67,718		)
Ending balance	$	398,143		$	121,775		$	105,854		$	206,299		$	—		$	832,071
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


(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)		Total
	(In Thousands)
March 31, 2018
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	52,896	$	11,568	$	27,916	$	2,817	$	95,197
Collectively evaluated for impairment	345,247		110,207		77,938		203,482		736,874
Total allowance for loan losses	$	398,143	$	121,775	$	105,854	$	206,299	$	832,071
Ending balance of loans:
Individually evaluated for impairment	$	256,162	$	96,297	$	161,299	$	3,325	$	517,083
Collectively evaluated for impairment	26,102,965		13,588,846		16,148,085		5,850,882		61,690,778
Total loans	$	26,359,127	$	13,685,143	$	16,309,384	$	5,854,207	$	62,207,861

December 31, 2017
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	61,705	$	9,864	$	30,613	$	2,203	$	104,385
Collectively evaluated for impairment	358,930		108,269		79,243		191,933		738,375
Total allowance for loan losses	$	420,635	$	118,133	$	109,856	$	194,136	$	842,760
Ending balance of loans:
Individually evaluated for impairment	$	307,680	$	85,180	$	172,857	$	3,577	$	569,294
Collectively evaluated for impairment	25,442,269		13,912,517		16,209,259		5,490,429		61,054,474
Total loans	$	25,749,949	$	13,997,697	$	16,382,116	$	5,494,006	$	61,623,768


(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, 2018
	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	$	145,794	$	181,112	$	—	$	110,368	$	127,306	$	52,896
Real estate – construction	2,797		2,835		—		9,157		9,157		1,584
Commercial real estate – mortgage	35,675		37,261		—		48,668		56,974		9,984
Residential real estate – mortgage	—		—		—		107,217		107,217		8,434
Equity lines of credit	—		—		—		18,410		18,415		15,383
Equity loans	—		—		—		35,672		36,560		4,099
Credit card	—		—		—		—		—		—
Consumer direct	—		—		—		2,499		2,499		2,036
Consumer indirect	—		—		—		826		826		781
Total loans	$	184,266	$	221,208	$	—	$	332,817	$	358,954	$	95,197



	December 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	$	142,908	$	175,743	$	—	$	164,772	$	175,512	$	61,705
Real estate – construction	2,849		2,858		—		130		130		7
Commercial real estate – mortgage	35,140		36,415		—		47,061		55,122		9,857
Residential real estate – mortgage	—		—		—		117,751		117,751		10,214
Equity lines of credit	—		—		—		19,183		19,188		16,021
Equity loans	—		—		—		35,923		36,765		4,378
Credit card	—		—		—		—		—		—
Consumer direct	—		—		—		2,545		2,545		1,254
Consumer indirect	—		—		—		1,032		1,032		949
Total loans	$	180,897	$	215,016	$	—	$	388,397	$	408,045	$	104,385

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



	Three Months Ended March 31, 2018				Three Months Ended March 31, 2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
Commercial, financial and agricultural	$	256,249	$	136	$	598,126	$	404
Real estate – construction	5,978		2		334		2
Commercial real estate – mortgage	83,733		211		49,265		284
Residential real estate – mortgage	111,057		680		116,979		646
Equity lines of credit	18,756		194		23,338		229
Equity loans	35,701		303		40,570		344
Credit card	—		—		—		—
Consumer direct	3,851		11		707		6
Consumer indirect	897		2		2,064		3
Total loans	$	516,222	$	1,539	$	831,383	$	1,918

Detailed information on the Company's allowance for loan losses methodology and the Company's impaired loan policy are included in the Notes to the Company's Consolidated Financial Statements for the year ended December 31, 2017.

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, illustrate the credit quality indicators associated with the Company’s loans, by loan class.



	Commercial
	March 31, 2018
	Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage
	(In Thousands)
Pass	$	25,012,256	$	2,133,741	$	11,143,691
Special Mention	561,816		7,288		167,165
Substandard	664,839		15,827		202,099
Doubtful	120,216		—		15,332
	$	26,359,127	$	2,156,856	$	11,528,287



	December 31, 2017
	Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage
	(In Thousands)
Pass	$	24,387,737	$	2,257,659	$	11,309,484
Special Mention	614,006		12,401		215,076
Substandard	623,672		3,479		187,049
Doubtful	124,534		—		12,549
	$	25,749,949	$	2,273,539	$	11,724,158



	Consumer
	March 31, 2018
	Residential Real Estate – Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)
Performing	$	13,130,644	$	2,619,139	$	332,619	$	645,185	$	1,844,303	$	3,321,621
Nonperforming	176,343		38,721		11,918		11,845		12,140		19,113
	$	13,306,987	$	2,657,860	$	344,537	$	657,030	$	1,856,443	$	3,340,734



	December 31, 2017
	Residential Real Estate -Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)
Performing	$	13,182,760	$	2,616,825	$	350,531	$	627,588	$	1,681,246	$	3,147,223
Nonperforming	182,987		36,280		12,733		11,929		9,137		16,883
	$	13,365,747	$	2,653,105	$	363,264	$	639,517	$	1,690,383	$	3,164,106

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



	March 31, 2018
	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	$	15,427	$	12,230	$	5,420	$	284,699	$	5,231	$	323,007	$	26,036,120	$	26,359,127
Real estate – construction	450		240		1,918		14,183		129		16,920		2,139,936		2,156,856
Commercial real estate – mortgage	8,552		3,220		2,229		115,285		4,182		133,468		11,394,819		11,528,287
Residential real estate – mortgage	73,335		33,993		5,975		169,778		62,171		345,252		12,961,735		13,306,987
Equity lines of credit	12,063		4,611		2,371		36,350		236		55,631		2,602,229		2,657,860
Equity loans	4,495		983		379		11,429		29,546		46,832		297,705		344,537
Credit card	6,438		5,089		11,845		—		—		23,372		633,658		657,030
Consumer direct	16,919		8,569		7,929		4,211		490		38,118		1,818,325		1,856,443
Consumer indirect	77,153		21,092		7,838		11,275		—		117,358		3,223,376		3,340,734
Total loans	$	214,832	$	90,027	$	45,904	$	647,210	$	101,985	$	1,099,958	$	61,107,903	$	62,207,861



	December 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	$	14,804	$	3,753	$	18,136	$	310,059	$	1,213	$	347,965	$	25,401,984	$	25,749,949
Real estate – construction	12,293		70		1,560		5,381		101		19,405		2,254,134		2,273,539
Commercial real estate – mortgage	10,473		3,270		927		111,982		4,155		130,807		11,593,351		11,724,158
Residential real estate – mortgage	69,474		34,440		8,572		173,843		64,898		351,227		13,014,520		13,365,747
Equity lines of credit	10,956		7,556		2,259		34,021		237		55,029		2,598,076		2,653,105
Equity loans	4,170		657		995		11,559		30,105		47,486		315,778		363,264
Credit card	6,710		4,804		11,929		—		—		23,443		616,074		639,517
Consumer direct	19,766		7,020		6,712		2,425		534		36,457		1,653,926		1,690,383
Consumer indirect	92,017		26,460		7,288		9,595		—		135,360		3,028,746		3,164,106
Total loans	$	240,663	$	88,030	$	58,378	$	658,865	$	101,243	$	1,147,179	$	60,476,589	$	61,623,768

Policies related to the Company's nonaccrual and past due loans are included in the Company's Consolidated Financial Statements for the year ended December 31, 2017.

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, 2018, $3.3 million of TDR modifications included an interest rate concession and $4.0 million of TDR modifications resulted from modifications to the loan’s structure. 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.

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, 2018			Three Months Ended March 31, 2017
	Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)
Commercial, financial and agricultural	2	$	490	10	$	80,790
Real estate – construction	1	32		—	—
Commercial real estate – mortgage	1	1,383		—	—
Residential real estate – mortgage	17	4,119		13	2,772
Equity lines of credit	—	—		17	546
Equity loans	7	1,271		10	408
Credit card	—	—		—	—
Consumer direct	—	—		—	—
Consumer indirect	—	—		10	168
Covered loans	—	—		2	103

Charge-offs and changes to the allowance related to modifications classified as TDRs were not material for the three months ended March 31, 2018 and March 31, 2017.

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, 2018			Three Months Ended March 31, 2017
	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	80		1	505
Equity lines of credit	—	—		—	—
Equity loans	2	132		—	—
Credit card	—	—		—	—
Consumer direct	—	—		—	—
Consumer indirect	—	—		1	22
Covered loans	—	—		—	—

All commercial and consumer loans modified in a TDR are considered to be impaired, even if they maintain their accrual status.

At March 31, 2018 and December 31, 2017, there were $13.9 million and $15.9 million, respectively, of commitments to lend additional funds to borrowers whose terms have been modified in a TDR.

Foreclosure Proceedings

OREO totaled $16 million and $17 million at March 31, 2018 and December 31, 2017, respectively. OREO included $11 million and $12 million of foreclosed residential real estate properties at March 31, 2018 and December 31, 2017, respectively. As of March 31, 2018 and December 31, 2017, there were $73 million and $57 million, respectively, of residential real estate loans secured by residential real estate properties for which formal foreclosure proceedings were in process.