Commitments and Contingencies

Obligations Under Noncancelable Leases

The Corporation is obligated under various noncancelable operating leases on branch offices. Minimum future rental payments under noncancelable operating leases at December 31, 2014 are as follows:



(In thousands)
Year Ended December 31,	Lease Commitments
2015	$	13,598
2016	11,167
2017	9,841
2018	8,426
2019	6,459
2020-2031	21,999
Total minimum future rental payments	$	71,490

Commitments to Extend Credit

Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition established in the contract. Loan commitments to originate residential mortgage loans held for sale and forward commitments to sell residential mortgage loans are considered derivative instruments, and the fair value of these commitments is recorded on the consolidated balance sheets. Additional information is provided in Note 18 (Fair Value Measurement). Commitments generally are extended at the then-prevailing interest rates, have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon the total commitment amounts do not necessarily represent future cash requirements. Loan commitments involve credit risk not reflected on the balance sheet. The Corporation mitigates exposure to credit risk with internal controls that guide how applications for credit are reviewed and approved, how credit limits are established and, when necessary, how demands for collateral are made. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties. Management evaluates the creditworthiness of each prospective borrower on a case-by-case basis and, when appropriate, adjusts the allowance for probable credit losses inherent in all commitments. The allowance for unfunded lending commitments at December 31, 2014, was $5.8 million, compared with $7.9 million at December 31, 2013. Additional information pertaining to this allowance is included in Note 5 (Allowance for Loan Losses) and under the heading “Allowance for Originated Loan Losses and Reserve For Unfunded Lending Commitments” within Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation” of this report.

The following table shows the remaining contractual amount of each class of commitments to extend credit as of December 31, 2014 and 2013. This amount represents the Corporation’s maximum exposure to loss if the customer were to draw upon the full amount of the commitment and subsequently default on payment for the total amount of the then outstanding loan.



		At December 31,
(In thousands)		2014		2013
Loan Commitments
	Commercial	$	3,748,690	$	3,367,625
	Consumer	2,387,623		2,179,010
	Total loan commitments	$	6,136,313	$	5,546,635

Guarantees

The Corporation is a guarantor in certain agreements with third parties. The following table shows the types of guarantees the Corporation had outstanding as of December 31, 2014, and 2013.



		At December 31,
(In thousands)		2014		2013
Financial guarantees
	Standby letters of credit	$	242,390	$	196,400
	Loans sold with recourse	45,071		45,082
	Total financial guarantees	$	287,461	$	241,482

Standby letters of credit obligate the Corporation to pay a specified third party when a customer fails to repay an outstanding loan or debt instrument, or fails to perform some contractual nonfinancial obligation. The credit risk involved in issuing letters of credit is essentially the same as involved in extending loan facilities to customers. Collateral held varies, but may include marketable securities, equipment and real estate. Any amounts drawn under standby letters of credit are treated as loans; they bear interest and pose the same credit risk to the Corporation as a loan. Except for short-term guarantees of $176.4 million at December 31, 2014, the remaining guarantees extend in varying amounts through 2019.

Asset Sales

The Corporation regularly sells residential mortgage loans service retained to GSEs as part of its mortgage banking activities. The Corporation provides customary representation and warranties to the GSEs in conjunction with these sales. These representations and warranties generally require the Corporation to repurchase assets if it is subsequently determined that a loan did not meet specified criteria, such as a documentation deficiency or rescission of mortgage insurance. If the Corporation is unable to cure or refute a repurchase request, the Corporation is generally obligated to repurchase the loan or otherwise reimburse the counterparty for losses. The Corporation also sells residential mortgage loans serviced released to other investors which contain early payment default recourse provisions. As of December 31, 2014 and 2013, the Corporation had sold $38.1 million and $34.6 million, respectively, of outstanding residential mortgage loans to GSEs and other investors with recourse provisions. The Corporation had reserved $7.3 million and $8.7 million as of December 31, 2014 and 2013, respectively, for estimated losses from representation and warranty obligations and early payment default recourse provisions.

Due to prior acquisitions, as of December 31, 2014, the Corporation continued to service approximately $3.7 million in manufactured housing loans that were sold with recourse compared to $6.4 million as of December 31, 2013. The Corporation had reserved $1.1 million for estimated losses from these manufactured housing loans at December 31, 2014 and 2013.

The total reserve associated with loans sold with recourse was approximately $8.4 million and $9.9 million as of December 31, 2014 and 2013, respectively, and is included in accrued taxes, expenses and other liabilities on the consolidated balance sheet. As a result of the merger with Citizens, $6.0 million was recorded as a contingent liability to reflect the fair value of the liability associated with the expected commitment to repurchase mortgage loans previously sold by Citizens subject to recourse provisions. The Corporation’s reserve reflects management’s best estimate of losses. The Corporation’s reserving methodology uses current information about investor repurchase requests, and assumptions about repurchase mix and loss severity, based upon the Corporation’s most recent loss trends. The Corporation also considers qualitative factors that may result in anticipated losses differing from historical loss trends, such as loan vintage, underwriting characteristics and macroeconomic trends.

Changes in the amount of the repurchase reserve for the years ended December 31, 2014, and 2013, are as follows:



	Year Ended December 31, 2014
(In thousands)	Reserve on residential mortgage loans			Reserve on manufactured housing loans		Total repurchased reserve
Balance at beginning of period	$	8,737		$	1,114	$	9,851
Net realized losses	(4,528		)	—		(4,528		)
Net increase (decrease) to reserve	3,041			10		3,051
Balance at end of period	$	7,250		$	1,124	$	8,374



	Year Ended December 31, 2013
(In thousands)	Reserve on residential mortgage loans			Reserve on manufactured housing loans			Total repurchased reserve
Balance at beginning of period	$	1,500		$	1,167		$	2,667
Assumed Obligation	6,000			—			6,000
Net realized losses	(5,818		)	—			(5,818		)
Net increase (decrease) to reserve	7,055			(53		)	7,002
Balance at end of period	$	8,737		$	1,114		$	9,851