Allowance for Credit Losses and Credit Quality

3 Months Ended

Mar. 31, 2016

Receivables [Abstract]

Allowance for Credit Losses and Credit Quality

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

Allowance for Credit Losses Activity

A summary of changes in the allowance for credit losses for the three months ended March 31 is as follows:

	2016
(Dollars in thousands)	Legacy Loans			Acquired Loans			Total
Allowance for credit losses
Allowance for loan losses at beginning of period	$	93,808		$	44,570		$	138,378
Provision for (Reversal of) loan losses before benefit attributable to FDIC loss share agreements	15,908			(1,261		)	14,647
Adjustment attributable to FDIC loss share arrangements	—			258			258
Net provision for loan losses	15,908			(1,003		)	14,905
Adjustment attributable to FDIC loss share arrangements	—			(258		)	(258		)
Transfer of balance to OREO	—			(109		)	(109		)
Loans charged-off	(5,389		)	(2,521		)	(7,910		)
Recoveries	1,247			304			1,551
Allowance for loan losses at end of period	$	105,574		$	40,983		$	146,557
Reserve for unfunded commitments at beginning of period	14,145			—			14,145
Provision for (Reversal of) unfunded lending commitments	(112		)	—			(112		)
Reserve for unfunded commitments at end of period	$	14,033		$	—		$	14,033
Allowance for credit losses at end of period	$	119,607		$	40,983		$	160,590

	2015
(Dollars in thousands)	Legacy Loans			Acquired Loans			Total
Allowance for credit losses
Allowance for loan losses at beginning of period	$	76,174		$	53,957		$	130,131
Provision for (Reversal of) loan losses before benefit attributable to FDIC loss share agreements	4,177			(684		)	3,493
Adjustment attributable to FDIC loss share arrangements	—			1,852			1,852
Net provision for loan losses	4,177			1,168			5,345
Adjustment attributable to FDIC loss share arrangements	—			(1,852		)	(1,852		)
Transfer of balance to OREO	—			(26		)	(26		)
Loans charged-off	(2,669		)	(3,859		)	(6,528		)
Recoveries	1,091			152			1,243
Allowance for loan losses at end of period	$	78,773		$	49,540		$	128,313
Reserve for unfunded commitments at beginning of period	11,801			—			11,801
Provision for unfunded lending commitments	1,048			—			1,048
Reserve for unfunded commitments at end of period	$	12,849		$	—		$	12,849
Allowance for credit losses at end of period	$	91,622		$	49,540		$	141,162

A summary of changes in the allowance for credit losses for legacy loans, by loan portfolio type, for the three months ended March 31 is as follows:

	2016
	Commercial Real Estate			Commercial and Industrial			Energy-related			Residential Mortgage
(Dollars in thousands)													Consumer			Total
Allowance for loan losses at beginning of period	$	24,658		$	23,283		$	23,863		$	3,947		$	18,057		$	93,808
Provision for (Reversal of) loan losses	1,297			(2,431		)	14,533			(115		)	2,624			15,908
Loans charged off	(1,738		)	(225		)	—			(14		)	(3,412		)	(5,389		)
Recoveries	487			30			—			18			712			1,247
Allowance for loan losses at end of period	$	24,704		$	20,657		$	38,396		$	3,836		$	17,981		$	105,574
Reserve for unfunded commitments at beginning of period	$	4,160		$	3,448		$	2,665		$	830		$	3,042		$	14,145
Provision for (Reversal of) unfunded commitments	(297		)	1,952			(1,766		)	(24		)	23			(112		)
Reserve for unfunded commitments at end of period	$	3,863		$	5,400		$	899		$	806		$	3,065		$	14,033
Allowance on loans individually evaluated for impairment	$	695		$	488		$	10,918		$	72		$	809		$	12,982
Allowance on loans collectively evaluated for impairment	24,009			20,169			27,478			3,764			17,172			92,592
Loans, net of unearned income:
Balance at end of period	$	4,771,690		$	2,926,686		$	728,778		$	730,621		$	2,370,922		$	11,528,697
Balance at end of period individually evaluated for impairment	26,608			23,302			79,417			2,724			5,909			137,960
Balance at end of period collectively evaluated for impairment	4,745,082			2,903,384			649,361			727,897			2,365,013			11,390,737

	2015
	Commercial Real Estate			Commercial and Industrial			Energy-related		Residential Mortgage
(Dollars in thousands)												Consumer			Total
Allowance for loan losses at beginning of period	$	26,752		$	24,455		$	5,949	$	2,678		$	16,340		$	76,174
Provision for (Reversal of) loan losses	(1,231		)	460			1,722		1,563			1,663			4,177
Loans charged off	—			(460		)	—		(48		)	(2,161		)	(2,669		)
Recoveries	173			49			—		12			857			1,091
Allowance for loan losses at end of period	$	25,694		$	24,504		$	7,671	$	4,205		$	16,699		$	78,773
Reserve for unfunded commitments at beginning of period	$	3,370		$	3,733		$	1,596	$	168		$	2,934		$	11,801
Provision for (Reversal of) unfunded commitments	125			(347		)	534		660			76			1,048
Reserve for unfunded commitments at end of period	$	3,495		$	3,386		$	2,130	$	828		$	3,010		$	12,849
Allowance on loans individually evaluated for impairment	$	21		$	749		$	—	$	—		$	3		$	773
Allowance on loans collectively evaluated for impairment	25,673			23,755			7,671		4,205			16,696			78,000
Loans, net of unearned income:
Balance at end of period	$	3,845,551		$	2,496,258		$	815,281	$	553,815		$	2,183,964		$	9,894,869
Balance at end of period individually evaluated for impairment	20,077			12,593			—		—			693			33,363
Balance at end of period collectively evaluated for impairment	3,825,474			2,483,665			815,281		553,815			2,183,271			9,861,506

A summary of changes in the allowance for credit losses for acquired loans, by loan portfolio type, for the three months ended March 31 is as follows:

	2016
	Commercial Real Estate			Commercial and Industrial			Energy-related			Residential Mortgage
(Dollars in thousands)													Consumer			Total
Allowance for loan losses at beginning of period	$	25,979		$	2,819		$	125		$	7,841		$	7,806		$	44,570
Provision for (Reversal of) loan losses	(598		)	194			(25		)	662			(1,236		)	(1,003		)
Increase (Decrease) in FDIC loss share receivable	2			(34		)	—			(35		)	(191		)	(258		)
Transfer of balance to OREO	(15		)	(21		)	—			(45		)	(28		)	(109		)
Loans charged off	(1,808		)	(244		)	—			—			(469		)	(2,521		)
Recoveries	304			—			—			—			—			304
Allowance for loan losses at end of period	$	23,864		$	2,714		$	100		$	8,423		$	5,882		$	40,983
Allowance on loans individually evaluated for impairment	$	41		$	5		$	—		$	—		$	50		$	96
Allowance on loans collectively evaluated for impairment	23,823			2,709			100			8,423			5,832			40,887
Loans, net of unearned income:
Balance at end of period	$	1,458,938		$	447,696		$	2,884		$	477,770		$	535,259		$	2,922,547
Balance at end of period individually evaluated for impairment	911			1,582			34			—			4,718			7,245
Balance at end of period collectively evaluated for impairment	1,088,713			409,561			2,850			340,278			414,902			2,256,304
Balance at end of period acquired with deteriorated credit quality	369,314			36,553			—			137,492			115,639			658,998

	2015
	Commercial Real Estate			Commercial and Industrial			Energy-related			Residential Mortgage
(Dollars in thousands)													Consumer			Total
Allowance for loans losses at beginning of period	$	29,949		$	3,265		$	51		$	6,484		$	14,208		$	53,957
Provision for (Reversal of) loan losses	242			47			(16		)	75			820			1,168
(Decrease) Increase in FDIC loss share receivable	(22		)	(8		)	—			24			(1,846		)	(1,852		)
Transfer of balance to OREO	(4		)	(1		)	—			14			(35		)	(26		)
Loans charged off	(3,445		)	(105		)	—			(22		)	(287		)	(3,859		)
Recoveries	—			—			—			8			144			152
Allowance for loans losses at end of period	$	26,720		$	3,198		35			$	6,583		$	13,004		$	49,540
Allowance on loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—
Allowance on loans collectively evaluated for impairment	26,720			3,198			35			6,583			13,004			49,540
Loans, net of unearned income:
Balance at end of period	$	1,277,395		$	471,048		$	4,130		$	610,471		$	615,548		$	2,978,592
Balance at end of period individually evaluated for impairment	—			—			—			—			—			—
Balance at end of period collectively evaluated for impairment	790,520			413,972			4,130			448,220			484,112			2,140,954
Balance at end of period acquired with deteriorated credit quality	486,875			57,076			—			162,251			131,436			837,638

Portfolio Segment Risk Factors

Commercial real estate loans include loans to commercial customers for long-term financing of land and buildings or for land development or construction of a building. These loans are repaid through revenues from operations of the businesses, rents of properties and refinances. Commercial and industrial loans represent loans to commercial customers to finance general working capital needs, equipment purchases and other projects where repayment is derived from cash flows resulting from business operations. The Company originates commercial business loans on a secured and, to a lesser extent, unsecured basis.

Residential mortgage loans consist of loans to consumers to finance a primary residence. The vast majority of the residential mortgage loan portfolio is comprised of one-to-four family mortgage loans secured by properties located in the Company's market areas and originated under terms and documentation that permit sale in the secondary market.

Consumer loans are offered by the Company in order to provide a full range of retail financial services to its customers and include home equity, indirect automobile, credit card and other direct consumer installment loans. The Company originates substantially all of its consumer loans in its primary market areas. Loans in the consumer segment are sensitive to unemployment and other key consumer economic measures.

Credit Quality

The Company utilizes an asset risk classification system in accordance with guidelines established by the Federal Reserve Board as part of its efforts to monitor commercial asset quality. "Special mention" loans are defined as loans where known information about possible credit problems of the borrower cause management to have some doubt as to the ability of these borrowers to comply with the present loan repayment terms and which may result in future disclosures of these loans as non-performing. For assets with identified credit issues, the Company has two primary classifications for problem assets: "substandard" and "doubtful".

Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of the substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full satisfaction of the loan balance outstanding questionable, which makes probability of loss based on currently existing facts, conditions, and values higher. Loans classified as "Pass" do not meet the criteria set forth for special mention, substandard, or doubtful classification and are not considered criticized. Asset risk classifications are determined at origination or acquisition and reviewed on an ongoing basis. Risk classifications are changed if, in the opinion of management, the risk profile of the customer has changed since the last review of the loan relationship.

The Company’s investment in loans by credit quality indicator is presented in the following tables. The tables below further segregate the Company’s loans between loans that were originated by the Company (legacy loans) and acquired loans. Loan premiums/discounts in the tables below represent the adjustment of non-covered acquired loans to fair value at the acquisition date, as adjusted for income accretion and changes in cash flow estimates in subsequent periods. Asset risk classifications for commercial loans reflect the classification as of March 31, 2016 and December 31, 2015. Credit quality information in the tables below includes loans acquired at the gross loan balance, prior to the application of premiums/discounts, at March 31, 2016 and December 31, 2015.

Loan delinquency is the primary credit quality indicator that the Company utilizes to monitor consumer asset quality.

	Legacy loans
	March 31, 2016												December 31, 2015
(Dollars in thousands)	Pass		Special Mention		Sub-standard		Doubtful		Loss		Total		Pass		Special Mention		Sub-standard		Doubtful		Total
Commercial real estate - Construction	$	613,804	$	125	$	42	$	—	$	—	$	613,971	$	634,889	$	160	$	1,432	$	—	$	636,481
Commercial real estate - Other	4,098,025		18,736		40,644		314		—		4,157,719		3,806,528		21,877		37,001		2,175		3,867,581
Commercial and industrial	2,871,108		26,940		25,857		2,781		—		2,926,686		2,911,396		14,826		19,888		5,992		2,952,102
Energy-related	372,507		68,883		284,104		3,284		—		728,778		531,657		67,937		74,272		3,311		677,177
Total	$	7,955,444	$	114,684	$	350,647	$	6,379	$	—	$	8,427,154	$	7,884,470	$	104,800	$	132,593	$	11,478	$	8,133,341

	Legacy loans
	March 31, 2016						December 31, 2015
(Dollars in thousands)	Current		30+ Days Past Due		Total		Current		30+ Days Past Due		Total
Residential mortgage	$	713,420	$	17,201	$	730,621	$	676,347	$	17,676	$	694,023
Consumer - Home equity	1,615,227		10,585		1,625,812		1,565,596		10,047		1,575,643
Consumer - Indirect automobile	209,814		3,327		213,141		242,328		3,886		246,214
Consumer - Credit card	75,514		733		76,247		76,360		901		77,261
Consumer - Other	452,276		3,446		455,722		460,594		3,444		464,038
Total	$	3,066,251	$	35,292	$	3,101,543	$	3,021,225	$	35,954	$	3,057,179

	Acquired loans
	March 31, 2016															December 31, 2015
(Dollars in thousands)	Pass		Special Mention		Sub- standard		Doubtful		Loss		Discount			Total		Pass		Special Mention		Sub- standard		Doubtful		Loss		Discount			Total
Commercial real estate-Construction	$	101,850	$	621	$	8,421	$	770	$	—	$	14,943		$	126,605	$	116,539	$	1,681	$	8,803	$	771	$	—	$	(2,368	)	$	125,426
Commercial real estate - Other	1,312,852		22,392		63,735		3,748		—		(70,394		)	1,332,333		1,383,409		26,080		79,119		6,124		111		(50,820		)	1,444,023
Commercial and industrial	429,631		6,776		14,709		1,159		—		(4,579		)	447,696		473,241		8,376		16,510		1,206		43		(6,900		)	492,476
Energy-related	2,750		53		81		—		—		—			2,884		2,166		55		170		1,198		—		—			3,589
Total	$	1,847,083	$	29,842	$	86,946	$	5,677	$	—	$	(60,030	)	$	1,909,518	$	1,975,355	$	36,192	$	104,602	$	9,299	$	154	$	(60,088	)	$	2,065,514

	Acquired loans
	March 31, 2016									December 31, 2015
(Dollars in thousands)	Current		30+ Days Past Due		Premium (discount)			Total		Current		30+ Days Past Due		Premium (discount)			Total
Residential mortgage	$	486,566	$	22,430	$	(31,226	)	$	477,770	$	506,103	$	24,752	$	(29,559	)	$	501,296
Consumer - Home equity	478,837		14,381		(27,516		)	465,702		503,635		16,381		(29,492		)	490,524
Consumer - Indirect automobile	66		5		(33		)	38		72		12		—			84
Consumer - Other	69,457		1,209		(1,147		)	69,519		79,732		1,475		(1,717		)	79,490
Total	$	1,034,926	$	38,025	$	(59,922	)	$	1,013,029	$	1,089,542	$	42,620	$	(60,768	)	$	1,071,394

Legacy Impaired Loans

Information on the Company’s investment in legacy impaired loans, which include all TDRs and all other non-accrual loans, is presented in the following tables as of and for the periods indicated. Legacy non-accrual mortgage and consumer loans, and commercial loans below the Company's specific threshold, are included for purposes of this disclosure although such loans are generally not evaluated or measured individually for impairment for purposes of determining the allowance for loan losses.

	March 31, 2016							December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance			Recorded Investment		Unpaid Principal Balance		Related Allowance
(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	15,978	$	15,978	$	—		$	16,145	$	16,145	$	—
Commercial business	20,153		20,153		—			14,340		14,340		—
Energy-related	58,155		58,155		—			—		—		—
Residential mortgage	1,279		1,279		—			—		—		—
Consumer - Home equity	—		—		—			730		730		—
Consumer -Other	—		—		—			66		66		—
With an allowance recorded:
Commercial real estate	10,884		11,584		(700		)	12,500		13,753		(1,253		)
Commercial and industrial	3,011		3,504		(493		)	5,985		6,262		(277		)
Energy-related	10,759		21,681		(10,922		)	11,319		13,444		(2,125		)
Residential mortgage	13,709		13,834		(125		)	13,679		13,743		(64		)
Consumer - Home equity	10,089		10,793		(704		)	8,196		8,559		(363		)
Consumer - Indirect automobile	1,098		1,150		(52		)	1,171		1,181		(10		)
Consumer - Credit card	458		468		(10		)	386		394		(8		)
Consumer - Other	1,166		1,265		(99		)	876		899		(23		)
Total	$	146,739	$	159,844	$	(13,105	)	$	85,393	$	89,516	$	(4,123	)
Total commercial loans	$	118,940	$	131,055	$	(12,115	)	$	60,289	$	63,944	$	(3,655	)
Total mortgage loans	14,988		15,113		(125		)	13,679		13,743		(64		)
Total consumer loans	12,811		13,676		(865		)	11,425		11,829		(404		)

	Three Months Ended   March 31, 2016				Three Months Ended   March 31, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	16,167	$	38	$	16,608	$	7
Commercial and industrial	27,540		286		1,690		18
Energy-related	53,920		513		—		—
Residential mortgage	1,289		16		—		—
Consumer - Home equity	—		—		679		7
With an allowance recorded:
Commercial real estate	12,236		84		2,987		—
Commercial and industrial	9,311		143		12,374		—
Energy-related	21,712		225		27		—
Residential mortgage	13,911		20		15,331		—
Consumer - Home equity	10,453		61		9,720		—
Consumer - Indirect automobile	1,353		8		1,658		—
Consumer - Credit card	453		—		1,194		—
Consumer - Other	1,420		20		971		—
Total	$	169,765	$	1,414	$	63,239	$	32
Total commercial loans	$	140,886	$	1,289	$	33,686	$	25
Total mortgage loans	15,200		36		15,331		—
Total consumer loans	13,679		89		14,222		7

As of March 31, 2016 and December 31, 2015, the Company was not committed to lend a material amount of additional funds to any customer whose loan was classified as impaired or as a troubled debt restructuring.