UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, ~~2015~~2016



¨	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: 000-55106

BBVA Compass Bancshares, Inc.

(Exact name of registrant as specified in its charter)



Texas		20-8948381
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2200 Post Oak Blvd. Houston, Texas		77056
(Address of principal executive offices)		(Zip Code)
	(205) 297-3000
(Registrant’s telephone number, including area code)

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 þ No o

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 þ No o

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 o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o

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

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



Class		Outstanding atas of October 31, ~~2015~~2016
Common Stock (par value $0.01 per share)		222,950,751 shares

Explanatory Note

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this report with certain reduced disclosures as permitted by those instructions.

TABLE OF CONTENTS



		Page

Part I	Financial Information
Item 1.	Financial Statements (Unaudited)	7
	Condensed Consolidated Balance Sheets as of September 30, ~~2015~~2016 and December 31, ~~2014~~2015	7
	Condensed Consolidated Statements of Income for the three and nine months ended September 30, ~~2015~~2016 and ~~2014~~2015	8
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2015~~2016 and ~~2014~~2015	9
	Condensed Consolidated Statements of Shareholder's Equity for the nine months ended September 30, ~~2015~~2016 and ~~2014~~2015	10
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2015~~2016 and ~~2014~~2015	11
	Notes to the September 30, ~~2015~~2016 Condensed Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5962
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	8990
Item 4.	Controls and Procedures	8990

Part II	Other Information
Item 1.	Legal Proceedings	8991
Item 1A.	Risk Factors	9091
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9091
Item 3.	Defaults Upon Senior Securities	9091
Item 4.	Mine Safety Disclosures	9091
Item 5.	Other Information	9091
Item 6.	Exhibits	9293
Signatures		9394

Glossary of Acronyms and Terms

The following listing provides a comprehensive reference of common acronyms and terms used throughout the document:



AFS	Available For Sale
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
Basel III	Global regulatory framework developed by the Basel Committee on Banking Supervision
Bank	Compass Bank
BBVA	Banco Bilbao Vizcaya Argentaria, S.A.
BBVA Compass	Registered trade name of Compass Bank
BBVA Group	BBVA and its consolidated subsidiaries
BOLI	Bank Owned Life Insurance
BSI	BBVA Securities Inc.
Capital Securities	Debentures issued by the Parent
Cash Flow Hedge	A hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability
CD	Certificate of Deposit and/or time deposits
~~CESCE~~	~~Spanish Export Credit Agency~~
CET1	Common Equity Tier 1
CET1 ~~Risk Based~~Risk-Based Capital Ratio	Ratio of Common Equity Tier 1 capital to risk-weighted assets
CFPB	Consumer Financial Protection Bureau
Company	BBVA Compass Bancshares, Inc. and its subsidiaries
Covered Assets	Loans and other real estate owned acquired from the FDIC subject to loss sharing agreements
Covered Loans	Loans acquired from the FDIC subject to loss sharing agreements
CRA	Community Reinvestment Act
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
ERM	Enterprise Risk Management
EVE	Economic Value of Equity
Exchange Act	Securities and Exchange Act of 1934, as amended
Fair Value Hedge	A hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment
FASB	Financial Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
Federal Reserve Board	Board of Governors of the Federal Reserve System
FHLB	Federal Home Loan Bank
FICO	Fair Isaac Corporation
Fitch	Fitch Ratings
FNMA	Federal National Mortgage Association
Guaranty Bank	Collectively, certain assets and liabilities of Guaranty Bank, acquired by the Company in 2009
HTM	Held To Maturity
IRS	Internal Revenue Service
LCR	Liquidity Coverage Ratio
Leverage Ratio	Ratio of Tier 1 capital to quarterly average on-balance sheet assets
Moody's	Moody's Investor Services, Inc.
MRA	Master Repurchase Agreement
MSR	Mortgage Servicing Rights
~~OAS~~	~~Option Adjusted Spread~~



OCC	Office of the Comptroller of the Currency
OREO	Other Real Estate Owned



OTTI	Other-Than-Temporary Impairment
Parent	BBVA Compass Bancshares, Inc.
Potential Problem Loans	~~Noncovered, commercial~~Commercial loans rated substandard or below, which do not meet the definition of nonaccrual, TDR, or 90 days past due and still accruing
Purchased Impaired Loans	Loans with evidence of credit deterioration since acquisition for which it is probable all contractual payments will not be received that are accounted for under ASC Subtopic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality
Purchased Nonimpaired Loans	Acquired loans with a fair value that is lower than the contractual amounts due that are not required to be accounted for in accordance with ASC Subtopic 310-30
SBA	Small Business Administration
SEC	Securities and Exchange Commission
S&P	Standard and Poor's Rating Services
Series A Preferred Stock	Floating Non-Cumulative Perpetual Preferred Stock, Series A
TBA	To be announced
TDR	Troubled Debt Restructuring
Tier 1 Risk-Based Capital Ratio	Ratio of Tier 1 capital to risk-weighted assets
Total Risk-Based Capital Ratio	Ratio of Total capital (the sum of Tier 1 capital and Tier 2 capital) to risk-weighted assets
U.S.	United States of America
U.S. Treasury	United States Department of the Treasury
U.S. Basel III final rule	Final rule to implement the Basel III capital framework in the United States
U.S. GAAP	Accounting principles generally accepted in the ~~United States~~U.S.

~~Table of Contents~~

Unless otherwise specified, the terms “we,” “us,” “our,” and the “Company” are used to refer to BBVA Compass Bancshares, Inc. and its subsidiaries, or any one or more of them, as the context may require. The term “Parent” refers to BBVA Compass Bancshares, Inc. The term “BBVA” refers to Banco Bilbao Vizcaya Argentaria, S.A., the parent company of BBVA Compass Bancshares, Inc.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements about the Company and its industry that involve substantial risks and uncertainties. Statements other than statements of current or historical fact, including statements regarding the Company's future financial condition, results of operations, business plans, liquidity, cash flows, projected costs, and the impact of any laws or regulations applicable to the Company, are forward-looking statements. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Such factors include, but are not limited to, the following:

national, regional and local economic conditions may be less favorable than expected, resulting in, among other things, increased ~~loan~~ charge-offs of loans, higher provisions for credit losses and/or reduced demand for the Company's services;

disruptions to the credit and financial markets, either nationally or globally, including downgrades of the U.S. government's credit rating and the failure of the European Union to stabilize the fiscal condition of member countries;

weakness in the real estate market, including the secondary residential mortgage market, which can affect, among other things, the value of collateral securing mortgage loans, mortgage loan originations and delinquencies, and profits on sales of mortgage loans;

legislative, regulatory or accounting changes, including changes resulting from the adoption and implementation of the Dodd-Frank Act, which may adversely affect our business and/or competitive position, impose additional costs on the Company or cause us to change our business practices;

the Dodd-Frank Act's consumer protection regulations, which could adversely affect the Company's business, financial condition or results of operations;

the CFPB's residential mortgage and other retail lending regulations, which could adversely affect the Company's business, financial condition or results of operations;

~~declining~~further instability of oil prices, which could have a negative impact on the economies and real estate markets of states such as Texas, resulting in, among other things, higher delinquencies and increased charge-offs in the energy lending portfolio as well as other commercial and consumer loan portfolios indirectly impacted by ~~the declining~~changes in oil prices;

the Bank's CRA rating, which ~~has resulted~~could result in certain restrictions on the Company's activities;

disruptions in the Company's ability to access capital markets, which may adversely affect its capital resources and liquidity;

the Company's heavy reliance on communications and information systems to conduct its business and reliance on third parties and affiliates to provide key components of its business infrastructure, any disruptions of which could interrupt the Company's operations or increase the costs of doing business;

that the Company's financial reporting controls and procedures may not prevent or detect all errors or fraud;

the Company is subject to certain risks related to originating and selling mortgages. It may be required to repurchase mortgage loans or indemnify mortgage loan purchases as a result of breaches of representations and warranties, borrower fraud or certain breaches of its servicing agreements, and this could harm the Company's liquidity, results of operations and financial condition;

the Company's dependence on the accuracy and completeness of information about clients and counterparties;

the fiscal and monetary policies of the federal government and its agencies;

the failure to satisfy capital adequacy and liquidity guidelines applicable to the Company;

downgrades to the Company's credit ratings;

changes in interest rates which could affect interest rate spreads and net interest income;

costs and effects of litigation, regulatory investigations or similar matters;

a failure by the Company to effectively manage the risks the Company faces including credit, operational and cyber security risks;

~~Table of Contents~~

increased pressures from competitors (both banks and non-banks) and/or an inability by the Company to remain competitive in the financial services industry, particularly in the markets which the Company serves, and keep pace with technological changes;

unpredictable natural or other disasters, which could impact the Company's customers or operations;

a loss of customer deposits, which could increase the Company's funding costs;

the impact that can result from having loans concentrated by loan type, industry segment, borrower type or location of the borrower or collateral;

changes in the creditworthiness of customers;

increased loan losses or impairment of goodwill and other ~~intangibles;~~intangible assets;

potential changes in interchange fees;

negative public opinion, which could damage the Company's reputation and adversely impact business and revenues;

the Company has in the past and may in the future pursue acquisitions, which could affect costs and from which the Company may not be able to realize anticipated benefits;

the Company depends on the expertise of key personnel, and if these individuals leave or change their roles without effective replacements, operations may suffer;

the Company may not be able to hire or retain additional qualified personnel and recruiting and compensation costs may increase as a result of turnover, both of which may increase costs and reduce profitability and may adversely impact the Company's ability to implement the Company's business strategies; and

changes in the Company's accounting policies or in accounting standards, which could materially affect how the Company reports financial results and condition.

The forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the time they are made and do not necessarily reflect the Company’s outlook at any other point in time. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or for any other reason. However, readers should carefully review the risk factors set forth in other reports or documents the Company files periodically with the SEC.

~~Table of Contents~~

PART I FINANCIAL INFORMATION


Item 1.	Financial Statements (Unaudited)

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

September 30, 2015 December 31, 2014
(In Thousands)
Assets:
Cash and due from banks $ 3,898,257
$ 2,764,345
Federal funds sold, securities purchased under agreements to resell and interest bearing deposits 479,207
624,060
Cash and cash equivalents 4,377,464
3,388,405
Trading account assets 4,193,506
2,834,397
Investment securities available for sale 10,803,660
10,237,275
Investment securities held to maturity (fair value of $1,268,114 and $1,275,963 at September 30, 2015 and December 31, 2014, respectively) 1,357,801
1,348,354
Loans held for sale (includes $122,758 and $154,816 measured at fair value at September 30, 2015 and December 31, 2014, respectively) 634,158
154,816
Loans 60,287,221
57,371,784
Allowance for loan losses (722,122 ) (685,041 )
Net loans 59,565,099
56,686,743
Premises and equipment, net 1,309,009
1,351,479
Bank owned life insurance 697,023
694,335
Goodwill 5,060,197
5,046,847
Other intangible assets 40,701
70,784
Other real estate owned 23,762
20,600
Other assets 1,297,620
1,318,392
Total assets $ 89,360,000
$ 83,152,427
Liabilities:
Deposits:
Noninterest bearing $ 19,060,016
$ 17,169,412
Interest bearing 45,432,380
44,020,304
Total deposits 64,492,396
61,189,716
FHLB and other borrowings 6,216,425
4,809,843
Federal funds purchased and securities sold under agreements to repurchase 639,259
1,129,503
Other short-term borrowings 4,167,897
2,545,724
Accrued expenses and other liabilities 1,463,688
1,474,067
Total liabilities 76,979,665
71,148,853
Shareholder’s Equity:
Preferred stock — $0.01 par value:
Authorized - 30,000,000 shares at September 30, 2015 and none at December 31, 2014
Issued or outstanding — none —
—
Common stock — $0.01 par value:
Authorized — 300,000,000 shares
Issued — 222,950,751 shares at both September 30, 2015 and December 31, 2014 2,230
2,230
Surplus 15,246,072
15,285,991
Accumulated deficit (2,859,770 ) (3,262,181 )
Accumulated other comprehensive loss (37,789 ) (51,357 )
Total BBVA Compass Bancshares, Inc. shareholder’s equity 12,350,743
11,974,683
Noncontrolling interests 29,592
28,891
Total shareholder’s equity 12,380,335
12,003,574
Total liabilities and shareholder’s equity $ 89,360,000
$ 83,152,427

~~See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2015 2014 2015 2014
(In Thousands)
Interest income:
Interest and fees on loans $ 540,517
$ 509,766
$ 1,615,753
$ 1,538,788
Interest on investment securities available for sale 46,646
48,363
143,058
145,706
Interest on investment securities held to maturity 6,953
6,862
20,579
21,111
Interest on federal funds sold, securities purchased under agreements to resell and interest bearing deposits 1,659
47
4,017
136
Interest on trading account assets 14,431
933
37,877
2,027
Total interest income 610,206
565,971
1,821,284
1,707,768
Interest expense:
Interest on deposits 68,282
66,763
203,136
180,880
Interest on FHLB and other borrowings 20,422
16,399
67,068
48,947
Interest on federal funds purchased and securities sold under agreements to repurchase 2,506
447
5,534
1,384
Interest on other short-term borrowings 11,129
394
36,668
516
Total interest expense 102,339
84,003
312,406
231,727
Net interest income 507,867
481,968
1,508,878
1,476,041
Provision for loan losses 29,151
3,869
117,331
86,387
Net interest income after provision for loan losses 478,716
478,099
1,391,547
1,389,654
Noninterest income:
Service charges on deposit accounts 54,917
57,537
161,891
165,886
Card and merchant processing fees 29,024
28,682
83,918
81,459
Retail investment sales 26,055
27,645
77,574
83,053
Investment banking and advisory fees 17,842

18,750

84,975

63,226
Asset management fees 7,918
10,666
24,449
31,959
Corporate and correspondent investment sales 6,047
5,388
20,290
22,016
Mortgage banking income 554
8,498
21,269
18,924
Bank owned life insurance 4,345
4,603
13,527
12,807
Investment securities gains, net 6,736
9,710
66,967
47,608
Gain (loss) on prepayment of FHLB and other borrowings, net —
143
(6,118 ) (315 )
Other 79,938
54,809
192,473
154,581
Total noninterest income 233,376
226,431
741,215
681,204
Noninterest expense:
Salaries, benefits and commissions 268,362
265,334
796,333
791,204
Equipment 58,151
56,355
173,467
165,562
Professional services 54,784
52,463
152,462
148,652
Net occupancy 39,525
39,357
119,187
118,514
FDIC indemnification expense 8,461
18,748
49,669
80,736
Amortization of intangibles 9,507
12,635
30,083
38,800
Securities impairment:
Other-than-temporary impairment —
—
1,385
415
Less: non-credit portion recognized in other comprehensive income —
—
87
235
Total securities impairment —
—
1,298
180
Other 97,460
88,250
256,106
253,623
Total noninterest expense 536,250
533,142
1,578,605
1,597,271
Net income before income tax expense 175,842
171,388
554,157
473,587
Income tax expense 50,110
27,770
150,008
107,467
Net income 125,732
143,618
404,149
366,120
Less: net income attributable to noncontrolling interests 491
815
1,738
1,772
Net income attributable to shareholder $ 125,241
$ 142,803
$ 402,411
$ 364,348

~~See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2015 2014 2015 2014
(In Thousands)
Net income $ 125,732
$ 143,618
$ 404,149
$ 366,120
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) arising during period from securities available for sale 27,493
(11,272 ) 39,270
40,883
Less: reclassification adjustment for net gains on sale of securities available for sale in net income 3,804
6,220
37,816
30,498
Net change in unrealized holding gains (losses) on securities available for sale 23,689
(17,492 ) 1,454
10,385
Change in unamortized net holding losses on investment securities held to maturity 1,066
2,398
4,834
7,183
Less: non-credit related impairment on investment securities held to maturity —
—
49
151
Change in unamortized non-credit related impairment on investment securities held to maturity 290
249
704
732
Net change in unamortized holding losses on securities held to maturity 1,356
2,647
5,489
7,764
Unrealized holding gains (losses) arising during period from cash flow hedge instruments 1,838
(706 ) 4,910
(2,388 )
Change in defined benefit plans —
—
1,715
(1,671 )
Other comprehensive income (loss), net of tax 26,883
(15,551 ) 13,568
14,090
Comprehensive income 152,615
128,067
417,717
380,210
Less: comprehensive income attributable to noncontrolling interests 491
815
1,738
1,772
Comprehensive income attributable to shareholder $ 152,124
$ 127,252
$ 415,979
$ 378,438

~~See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
(Unaudited)

Common Stock Surplus Accumulated Deficit Accumulated Other Comprehensive Loss Non-controlling Interests Total Shareholder’s Equity
(In Thousands)
Balance, January 1, 2014 $ 2,207
$ 15,273,218
$ (3,728,737 ) $ (87,936 ) $ 29,007
$ 11,487,759
Net income —
—
364,348
—
1,772
366,120
Other comprehensive income, net of tax —
—
—
14,090
—
14,090
Issuance of common stock 23
116,977
—
—
—
117,000
Dividends —
(51,000 ) —
—
(1,037 ) (52,037 )
Vesting of restricted stock —
(4,702 ) —
—
—
(4,702 )
Restricted stock retained to cover taxes —
(2,507 ) —
—
—
(2,507 )
Amortization of stock-based deferred compensation —
1,330
—
—
—
1,330
Balance, September 30, 2014 $ 2,230
$ 15,333,316
$ (3,364,389 ) $ (73,846 ) $ 29,742
$ 11,927,053

Balance, January 1, 2015 $ 2,230
$ 15,285,991
$ (3,262,181 ) $ (51,357 ) $ 28,891
$ 12,003,574
Net income —
—
402,411
—
1,738
404,149
Other comprehensive income, net of tax —
—
—
13,568
—
13,568
Dividends —
(35,000 ) —
—
(1,037 ) (36,037 )
Vesting of restricted stock —
(3,720 ) —
—
—
(3,720 )
Restricted stock retained to cover taxes —
(2,984 ) —
—
—
(2,984 )
Amortization of stock-based deferred compensation —
1,785
—
—
—
1,785
Balance, September 30, 2015 $ 2,230
$ 15,246,072
$ (2,859,770 ) $ (37,789 ) $ 29,592
$ 12,380,335

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	September 30, 2016			December 31, 2015
	(In Thousands)
Assets:
Cash and due from banks	$	4,054,423		$	4,165,880
Federal funds sold, securities purchased under agreements to resell and interest bearing deposits	372,268			330,948
Cash and cash equivalents	4,426,691			4,496,828
Trading account assets	4,051,461			4,138,132
Investment securities available for sale	11,516,885			11,050,520
Investment securities held to maturity (fair value of $1,241,234 and $1,244,121 at September 30, 2016 and December 31, 2015, respectively)	1,240,850			1,322,676
Loans held for sale, at fair value	101,843			70,582
Loans	60,211,283			61,324,084
Allowance for loan losses	(862,080		)	(762,673		)
Net loans	59,349,203			60,561,411
Premises and equipment, net	1,287,457			1,322,378
Bank owned life insurance	712,422			700,285
Goodwill	5,043,197			5,043,197
Other intangible assets	19,296			31,576
Other real estate owned	21,670			20,862
Other assets	1,585,863			1,310,091
Total assets	$	89,356,838		$	90,068,538
Liabilities:
Deposits:
Noninterest bearing	$	20,585,598		$	19,291,533
Interest bearing	47,001,739			46,690,233
Total deposits	67,587,337			65,981,766
FHLB and other borrowings	3,671,861			5,438,620
Federal funds purchased and securities sold under agreements to repurchase	165,573			750,154
Other short-term borrowings	3,591,223			4,032,644
Accrued expenses and other liabilities	1,521,654			1,240,645
Total liabilities	76,537,648			77,443,829
Shareholder’s Equity:
Series A Preferred stock — $0.01 par value, liquidation preference $200,000 per share
Authorized - 30,000,000 shares
Issued — 1,150 shares at both September 30, 2016 and December 31, 2015	229,475			229,475
Common stock — $0.01 par value:
Authorized — 300,000,000 shares
Issued — 222,950,751 shares at both September 30, 2016 and December 31, 2015	2,230			2,230
Surplus	15,020,937			15,160,267
Accumulated deficit	(2,416,402		)	(2,696,953		)
Accumulated other comprehensive loss	(46,644		)	(99,336		)
Total BBVA Compass Bancshares, Inc. shareholder’s equity	12,789,596			12,595,683
Noncontrolling interests	29,594			29,026
Total shareholder’s equity	12,819,190			12,624,709
Total liabilities and shareholder’s equity	$	89,356,838		$	90,068,538

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(In Thousands)
Interest income:
Interest and fees on loans	$	557,996	$	540,517	$	1,678,249	$	1,615,753
Interest on investment securities available for sale	48,382		46,646		131,021		143,058
Interest on investment securities held to maturity	6,675		6,953		20,229		20,579
Interest on federal funds sold, securities purchased under agreements to resell and interest bearing deposits	4,563		1,666		13,275		4,027
Interest on trading account assets	12,926		14,431		40,659		37,877
Total interest income	630,542		610,213		1,883,433		1,821,294
Interest expense:
Interest on deposits	76,031		68,282		230,779		203,136
Interest on FHLB and other borrowings	21,315		20,422		58,919		67,068
Interest on federal funds purchased and securities sold under agreements to repurchase	4,934		2,506		16,525		5,534
Interest on other short-term borrowings	13,453		11,129		41,281		36,668
Total interest expense	115,733		102,339		347,504		312,406
Net interest income	514,809		507,874		1,535,929		1,508,888
Provision for loan losses	65,107		29,151		265,025		117,331
Net interest income after provision for loan losses	449,702		478,723		1,270,904		1,391,557
Noninterest income:
Service charges on deposit accounts	55,047		54,917		158,393		161,891
Card and merchant processing fees	31,256		29,024		92,507		83,918
Investment banking and advisory fees	34,385		17,842		86,324		84,975
Money transfer income	25,058		24,868		75,960		68,702
Retail investment sales	30,137		26,055		79,689		77,574
Asset management fees	8,778		7,918		25,969		24,449
Corporate and correspondent investment sales	6,974		6,047		21,490		20,290
Mortgage banking	8,242		554		5,410		21,269
Bank owned life insurance	4,170		4,345		13,041		13,527
Investment securities gains, net	—		6,736		30,037		66,967
Loss on prepayment of FHLB and other borrowings, net	—		—		—		(6,118		)
Other	59,718		82,414		206,396		199,732
Total noninterest income	263,765		260,720		795,216		817,176
Noninterest expense:
Salaries, benefits and commissions	279,132		271,143		836,067		804,828
Equipment	59,697		58,414		179,646		174,311
Professional services	63,628		55,476		178,396		154,134
Net occupancy	41,610		39,706		120,881		119,731
Money transfer expense	16,680		16,514		50,048		44,016
Amortization of intangibles	4,093		9,507		12,280		30,083
Securities impairment:
Other-than-temporary impairment	—		—		281		1,385
Less: non-credit portion recognized in other comprehensive income	—		—		151		87
Total securities impairment	—		—		130		1,298
Other	91,431		106,615		312,004		307,757
Total noninterest expense	556,271		557,375		1,689,452		1,636,158
Net income before income tax expense	157,196		182,068		376,668		572,575
Income tax expense	36,845		52,428		94,548		156,865
Net income	120,351		129,640		282,120		415,710
Less: net income attributable to noncontrolling interests	523		491		1,569		1,738
Net income attributable to BBVA Compass Bancshares, Inc.	119,828		129,149		280,551		413,972
Less: preferred stock dividends	3,476		—		10,148		—
Net income attributable to common shareholder	$	116,352	$	129,149	$	270,403	$	413,972

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

~~Table of Contents~~

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2016			2015		2016		2015
	(In Thousands)
Net income	$	120,351		$	129,640	$	282,120	$	415,710
Other comprehensive income, net of tax:
Unrealized holding (losses) gains arising during period from securities available for sale	(26,076		)	27,493		65,592		39,270
Less: reclassification adjustment for net gains on sale of securities available for sale in net income	—			3,804		19,035		37,816
Net change in unrealized holding gains (losses) on securities available for sale	(26,076		)	23,689		46,557		1,454
Change in unamortized net holding losses on investment securities held to maturity	1,168			1,066		2,924		4,834
Less: non-credit related impairment on investment securities held to maturity	—			—		96		49
Change in unamortized non-credit related impairment on investment securities held to maturity	225			290		648		704
Net change in unamortized holding losses on securities held to maturity	1,393			1,356		3,476		5,489
Unrealized holding (losses) gains arising during period from cash flow hedge instruments	(1,461		)	2,042		1,728		5,322
Change in defined benefit plans	—			—		931		1,715
Other comprehensive (loss) income, net of tax	(26,144		)	27,087		52,692		13,980
Comprehensive income	94,207			156,727		334,812		429,690
Less: comprehensive income attributable to noncontrolling interests	523			491		1,569		1,738
Comprehensive income attributable to BBVA Compass Bancshares, Inc.	$	93,684		$	156,236	$	333,243	$	427,952

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
2015 2014
(In Thousands)
Operating Activities:
Net income $ 404,149
$ 366,120
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 206,552
202,924
Securities impairment 1,298
180
Amortization of intangibles 30,083
38,800
Accretion of discount, loan fees and purchase market adjustments, net (84,168 ) (125,587 )
Net change in FDIC indemnification asset/liability 49,669
80,736
Provision for loan losses 117,331
86,387
Amortization of stock based compensation 1,785
1,330
Net change in trading account assets (153,297 ) (195,206 )
Net change in trading account liabilities 80,378
(20,600 )
Net change in loans held for sale 32,058
(29,644 )
Deferred tax benefit (9,686 ) (37,057 )
Investment securities gains, net (66,967 ) (47,608 )
Loss on prepayment of FHLB and other borrowings, net 6,118
315
Loss on sale of premises and equipment 146
5,162
(Gain) loss on sale of loans (21,086 ) 75
Net (gain) loss on sale of other real estate and other assets 500
(956 )
Loss on disposition —
981
(Increase) decrease in other assets 38,934
(436,361 )
Increase (decrease) in other liabilities (138,963 ) 456,534
Net cash provided by operating activities 494,834
346,525
Investing Activities:
Proceeds from sales of investment securities available for sale 2,877,744
960,744
Proceeds from prepayments, maturities and calls of investment securities available for sale 1,225,031
1,019,919
Purchases of investment securities available for sale (4,662,585 ) (2,992,721 )
Proceeds from prepayments, maturities and calls of investment securities held to maturity 82,163
116,274
Purchases of investment securities held to maturity (82,634 ) (2,654 )
Proceeds from sales of trading securities 2,871,708
—
Purchases of trading securities (4,077,520 ) —
Net change in loan portfolio (3,853,782 ) (4,435,927 )
Purchase of premises and equipment (102,522 ) (58,748 )
Proceeds from sale of premises and equipment 7,979
15,563
Net cash paid in acquisition (12,567 ) (97,566 )
Proceeds from sales of loans 436,242
101,740
Reimbursements from (payments to) FDIC for covered assets 818
(13,863 )
Proceeds from sales of other real estate owned 12,890
21,095
Net cash used in investing activities (5,277,035 ) (5,366,144 )
Financing Activities:
Net increase in demand deposits, NOW accounts and savings accounts 2,527,448
4,914,997
Net increase in time deposits 767,539
910,489
Net decrease in federal funds purchased and securities sold under agreements to repurchase (490,244 ) (43,517 )
Net increase in other short-term borrowings 1,622,173
241,244
Proceeds from FHLB and other borrowings 4,000,000
1,694,297
Repayment of FHLB and other borrowings (2,612,915 ) (1,438,571 )
Vesting of restricted stock (3,720 ) (4,702 )
Restricted stock grants retained to cover taxes (2,984 ) (2,507 )
Issuance of common stock —
117,000
Common dividends paid (35,000 ) (51,000 )
Preferred dividends paid (1,037 ) (1,037 )
Net cash provided by financing activities 5,771,260
6,336,693
Net increase in cash and cash equivalents 989,059
1,317,074
Cash and cash equivalents at beginning of year 3,388,405
3,598,460
Cash and cash equivalents at end of period $ 4,377,464
$ 4,915,534

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (Unaudited)

	Preferred Stock		Common Stock		Surplus			Accumulated Deficit			Accumulated Other Comprehensive Loss			Non-Controlling Interests			Total Shareholder’s Equity
	(In Thousands)
Balance, January 1, 2015	$	—	$	2,230	$	15,277,746		$	(3,202,083	)	$	(51,862	)	$	28,891		$	12,054,922
Net income	—		—		—			413,972			—			1,738			415,710
Other comprehensive income, net of tax	—		—		—			—			13,980			—			13,980
Preferred stock dividends	—		—		—			—			—			(1,037		)	(1,037		)
Common stock dividends	—		—		(35,000		)	—			—			—			(35,000		)
Vesting of restricted stock	—		—		(3,603		)	—			—			—			(3,603		)
Restricted stock retained to cover taxes	—		—		(3,016		)	—			—			—			(3,016		)
Amortization of stock-based deferred compensation	—		—		1,772			—			—			—			1,772
Balance, September 30, 2015	$	—	$	2,230	$	15,237,899		$	(2,788,111	)	$	(37,882	)	$	29,592		$	12,443,728

Balance, January 1, 2016	$	229,475	$	2,230	$	15,160,267		$	(2,696,953	)	$	(99,336	)	$	29,026		$	12,624,709
Net income	—		—		—			280,551			—			1,569			282,120
Other comprehensive income, net of tax	—		—		—			—			52,692			—			52,692
Preferred stock dividends	—		—		(10,148		)	—			—			(1,037		)	(11,185		)
Common stock dividends	—		—		(60,000		)	—			—			—			(60,000		)
Dividend to BBVA Bancomer USA, Inc.	—		—		(69,151		)	—			—			—			(69,151		)
Capital contribution	—		—		—			—			—			36			36
Vesting of restricted stock	—		—		(1,527		)	—			—			—			(1,527		)
Restricted stock retained to cover taxes	—		—		(545		)	—			—			—			(545		)
Restricted stock tax benefit	—		—		(468		)	—			—			—			(468		)
Amortization of stock-based deferred compensation	—		—		2,509			—			—			—			2,509
Balance, September 30, 2016	$	229,475	$	2,230	$	15,020,937		$	(2,416,402	)	$	(46,644	)	$	29,594		$	12,819,190

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Nine Months Ended September 30,
	2016			2015
	(In Thousands)
Operating Activities:
Net income	$	282,120		$	415,710
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	221,975			206,882
Securities impairment	130			1,298
Amortization of intangibles	12,280			30,083
Accretion of discount, loan fees and purchase market adjustments, net	(17,191		)	(84,168		)
Net change in FDIC indemnification liability	4,180			49,669
Provision for loan losses	265,025			117,331
Amortization of stock based compensation	2,509			1,772
Net change in trading account assets	(369,690		)	(153,297		)
Net change in trading account liabilities	210,554			80,378
Net change in loans held for sale	(27,468		)	32,058
Deferred tax benefit	(22,596		)	(9,686		)
Investment securities gains, net	(30,037		)	(66,967		)
Loss on prepayment of FHLB and other borrowings, net	—			6,118
Loss on sale of premises and equipment	5,019			151
Gain on sale of loans	(15,551		)	(21,086		)
Net (gain) loss on sale of other real estate and other assets	(406		)	500
(Increase) decrease in other assets	(260,823		)	20,424
Increase (decrease) in other liabilities	68,043			(125,524		)
Net cash provided by operating activities	328,073			501,646
Investing Activities:
Proceeds from sales of investment securities available for sale	1,785,313			2,877,744
Proceeds from prepayments, maturities and calls of investment securities available for sale	1,629,841			1,225,031
Purchases of investment securities available for sale	(3,848,779		)	(4,662,585		)
Proceeds from prepayments, maturities and calls of investment securities held to maturity	114,689			82,163
Purchases of investment securities held to maturity	(27,104		)	(82,634		)
Proceeds from sales of trading securities	729,218			2,871,708
Purchases of trading securities	(272,857		)	(4,077,520		)
Net change in loan portfolio	(66,962		)	(3,853,782		)
Proceeds from sales of loans	1,022,579			436,242
Purchase of premises and equipment	(112,419		)	(103,165		)
Proceeds from sale of premises and equipment	6,311			7,974
Net cash paid in acquisition	—			(12,567		)
Reimbursements from FDIC for covered assets	878			818
Proceeds from sales of other real estate owned	21,145			12,890
Net cash provided by (used in) investing activities	981,853			(5,277,683		)
Financing Activities:
Net increase in demand deposits, NOW accounts and savings accounts	1,380,456			2,527,448
Net increase in time deposits	215,262			767,539
Net decrease in federal funds purchased and securities sold under agreements to repurchase	(584,581		)	(490,244		)
Net (decrease) increase in other short-term borrowings	(441,421		)	1,622,173
Proceeds from FHLB and other borrowings	1,250,000			4,000,000
Repayment of FHLB and other borrowings	(3,057,407		)	(2,612,915		)
Capital contribution for non-controlling interest	36			—
Vesting of restricted stock	(1,527		)	(3,603		)
Restricted stock grants retained to cover taxes	(545		)	(3,016		)
Dividend paid to BBVA Bancomer USA, Inc.	(69,151		)	—
Common dividends paid	(60,000		)	(35,000		)
Preferred dividends paid	(11,185		)	(1,037		)
Net cash (used in) provided by financing activities	(1,380,063		)	5,771,345
Net (decrease) increase in cash and cash equivalents	(70,137		)	995,308
Cash and cash equivalents at beginning of year	4,496,828			3,432,948
Cash and cash equivalents at end of period	$	4,426,691		$	4,428,256

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

General

The accounting and reporting policies of the Company and the methods of applying those policies that materially affect the consolidated financial statements conform with U.S. GAAP and with general financial services industry practices. The accompanying interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC and, therefore, do not include all information and notes to the consolidated financial statements necessary for a complete presentation of financial position, results of operations, comprehensive income and cash flows in conformity with U.S. GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the condensed consolidated financial statements have been included. Operating results for the three and nine months ended September 30, ~~2015,~~2016, are not necessarily indicative of the results that may be expected for the year ended December 31, ~~2015.~~2016. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2014.~~2015.

The Company has evaluated subsequent events for potential recognition and disclosure through the filing date of this Quarterly Report on Form 10-Q to determine if either recognition or disclosure of significant events or transactions is required.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, the most significant of which relate to the allowance for loan losses, goodwill impairment, fair value measurements and income taxes. Actual results could differ from those estimates.

Recently Issued Accounting Standards

~~Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure~~

In ~~January 2014, the FASB released ASU 2014-04,~~ ~~Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure~~. The amendments in this ASU clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both the amount of foreclosed residential real estate property held by the creditor and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after ~~December 15, 2014~~. The Company elected to adopt the amendments in this ASU using the prospective transition method. The adoption of this standard did not have a material impact on the financial condition or results of operations of the Company. See Note 3, Loans and Allowance for Loan Losses.

Revenue from Contracts with Customers

In May 2014, the FASB released ASU 2014-09, Revenue from Contracts with Customers. The core principle of this codified guidance requires an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ~~guidance provides five steps to be analyzed to accomplish the core principle. The~~ amendments in this ASU were originally effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Subsequently, the FASB issued a one-year deferral for implementation, which results in the new guidance being effective for annual and interim reporting periods beginning after December 15, 2017. The FASB,

~~Table of Contents~~

however, permitted adoption of the new guidance on the original effective date. The Company is currently assessing the impact that the adoption of this standard will have on the financial condition and results of operations of the ~~Company.~~

~~Repurchase-to-Maturity Transactions, Repurchase Financings,~~Company and ~~Disclosures~~

~~In June 2014,~~its selection of transition method. Because the ~~FASB issued ASU 2014-11,~~ ~~Repurchase-to-Maturity Transactions, Repurchase Financings,~~guidance does not apply to revenue associated with financial instruments, including loans and ~~Disclosures~~. The amendments in this ASU change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. In addition, for repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments in this ASU also require disclosures on transferssecurities accounted for ~~as sales in transactions that are economically similar~~under other U.S. GAAP, the Company does not expect the new revenue recognition guidance to repurchase agreements, and provide increased transparency about the types of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The accounting changes in this ASU and disclosures for certain transactions accounted for as a sale are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The disclosures for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014 and for interim periods beginning after March 15, 2015. The adoption of this standard did not have a material impact on the elements of its statement of income most closely associated with financial ~~condition or results of operations of the Company. See Note 6, Securities Financing Activities.~~

~~Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure~~

~~In August 2014, the FASB issued ASU 2014-14,~~ ~~Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure~~.instruments, including securities gains, interest income and interest expense. The amendments in this ASU address the classification and measurement of foreclosed loans which were part of a government-sponsored loan guarantee program. If certain criteria are met, the loan should be derecognized and a separate other receivable should be recorded upon foreclosure at the amount of the loan balance expectedCompany plans to ~~be recovered from the guarantor. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The adoption of~~adopt this standard ~~did not have a material impact on~~in the ~~financial condition or results~~first quarter of ~~operations of the Company.~~2018.

Consolidation

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis. The amendments in this ASU modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership, affect the consolidation analysis of reporting entities that are involved with variable interest entities and provide a scope exception from consolidation guidance for reporting entities with interest in certain investment funds. The amendments in this ASU ~~are~~were effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this standard isdid not ~~expected to~~ have a material impact on the financial condition or results of operations of the Company.

Simplifying the Presentation of Debt Issuance Costs

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in this ASU require debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments in this ASU ~~are~~were effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this standard isdid not ~~expected to~~ have a material impact on the financial condition or results of operations of the Company.

~~Table of Contents~~

Customer's Accounting for Fees Paid in a Cloud Computing Arrangement

In April 2015, the FASB issued ASU 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. The amendments in this ASU provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments in this ASU were effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this standard did not have a material impact on the financial condition or results of operations of the Company.

Recognition and Measurement of Financial Assets and Liabilities

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Liabilities. The amendments in this ASU revise an entity's accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, ~~2015.~~2017. Early adoption is permitted for the presentation of certain fair value changes for financial liabilities measured at fair value. The adoption of this standard is not expected to have a material impact on the financial condition or results of operations of the Company.

Leases

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The FASB issued this ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet by lessees for those leases classified as operating leases under current U.S. GAAP and disclosing key information about leasing arrangements. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early application of this ASU is permitted for all entities. The Company is currently assessing the impact that the adoption of this standard will have on the financial condition and results of operations of the Company.

Stock Compensation

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The FASB issued this ASU to improve the accounting for share-based payment transactions as part of its simplification initiative. The areas for simplification in this ASU involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the financial condition or results of operations of the Company.

Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for AFS debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early application of this ASU is permitted. The Company is currently assessing the impact that the adoption of this standard will have on the financial condition and results of operations of the Company.

Statement of Cash Flows

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments, which provides guidance on eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early application of this ASU is permitted. The Company is currently assessing the impact that the adoption of this standard will have on the Statements of Cash Flows of the Company.

(2) Acquisition Activity

On June 6, 2016, the Parent completed the purchase of four subsidiaries (Bancomer Transfer Services, Bancomer Payment Services, Bancomer Foreign Exchange, and Bancomer Financial Services) from BBVA Bancomer USA, Inc. BBVA Bancomer USA, Inc. is a wholly-owned U.S. subsidiary of BBVA Bancomer, S.A., Mexico City, Mexico and ultimately a wholly-owned subsidiary of BBVA. These four subsidiaries engage in money transmission and foreign exchange services and are subsidiaries of BBVA Compass Payments, Inc., a wholly owned subsidiary of the Parent.

The transaction was structured as a cash purchase totaling $69.2 million. At December 31, 2015, the four subsidiaries had total assets of approximately $103 million. Because the Company and the acquired subsidiaries are under common control of the ultimate parent, BBVA, this transaction was accounted for in a manner similar to the pooling-of-interest method, which requires the merged entities be combined at their historical cost. The difference between the net carrying amount of the four subsidiaries and the total consideration paid to BBVA Bancomer USA, Inc. was recorded as a capital transaction and is reflected as a dividend to BBVA Bancomer USA, Inc. in the Unaudited Condensed Consolidated Statements of Shareholder's Equity. The Company's consolidated financial statements and related footnotes are presented as if the transaction occurred at the beginning of the earliest date presented and the prior periods have been retrospectively adjusted.

The following table summarizes the impact of the acquisition to certain captions within the Company's Unaudited Condensed Consolidated Balance Sheet as of December 31, 2015 and the Company's Unaudited Condensed Consolidated Income Statement for the three and nine months ended September 30, 2015.



Balance Sheet	As Previously Reported		Retrospective Adjustments		As Retrospectively Adjusted
	(In Thousands)
December 31, 2015
Assets:
Cash and cash equivalents	$	4,452,892	$	43,936	$	4,496,828
Premises and equipment, net	1,320,163		2,215		1,322,378
Other assets	1,252,784		57,307		1,310,091
Total assets	89,965,080		103,458		90,068,538
Liabilities:
Deposits	$	65,980,530	$	1,236	$	65,981,766
Accrued expenses and other liabilities	1,185,848		54,797		1,240,645
Total liabilities	77,387,796		56,033		77,443,829
Shareholder’s equity	12,577,284		47,425		12,624,709
Total liabilities and shareholder’s equity	89,965,080		103,458		90,068,538



Income Statement	As Previously Reported		Retrospective Adjustments		As Retrospectively Adjusted
	(In Thousands)
Three Months Ended September 30, 2015
Interest income	$	610,206	$	7	$	610,213
Noninterest income	233,376		27,344		260,720
Noninterest expense	536,250		21,125		557,375
Income tax expense	50,110		2,318		52,428
Net income	125,732		3,908		129,640

Nine Months Ended September 30, 2015
Interest income	$	1,821,284	$	10	$	1,821,294
Noninterest income	741,215		75,961		817,176
Noninterest expense	1,578,605		57,553		1,636,158
Income tax expense	150,008		6,857		156,865
Net income	404,149		11,561		415,710

Additionally, the Unaudited Condensed Consolidated Statements of Comprehensive Income, Shareholder's Equity and Cash Flows along with Footnotes 6, 9, 10, 12, and 13 have been adjusted to reflect these retrospective adjustments.

~~(2)~~(3) Investment Securities Available for Sale and Investment Securities Held to Maturity

The following table presents the adjusted cost and approximate fair value of investment securities available for sale and investment securities held to maturity.


	September 30, 2015								September 30, 2016
			Gross Unrealized								Gross Unrealized
	Amortized Cost		Gains		Losses		Fair Value		Amortized Cost		Gains		Losses		Fair Value
	(In Thousands)								(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	3,007,221	$	23,596	$	8,693	$	3,022,124	$	1,856,178	$	10,178	$	16,126	$	1,850,230
Mortgage-backed securities	4,634,728		37,379		17,571		4,654,536		3,988,469		36,732		19,564		4,005,637
Collateralized mortgage obligations	2,475,968		17,419		7,760		2,485,627		5,207,807		18,842		19,432		5,207,217
States and political subdivisions	81,940		3,455		—		85,395		9,787		288		—		10,075
Other	24,863		307		33		25,137		16,528		356		32		16,852
Equity securities	530,800		41		—		530,841		426,826		48		—		426,874
Total	$	10,755,520	$	82,197	$	34,057	$	10,803,660	$	11,505,595	$	66,444	$	55,154	$	11,516,885
Investment securities held to maturity:
Collateralized mortgage obligations	$	108,422	$	6,088	$	5,968	$	108,542	$	88,611	$	4,733	$	5,460	$	87,884
Asset-backed securities	27,047		2,901		2,039		27,909		17,144		1,959		1,465		17,638
States and political subdivisions	1,156,205		828		92,048		1,064,985		1,070,917		17,667		16,516		1,072,068
Other	66,127		2,744		2,193		66,678		64,178		1,417		1,951		63,644
Total	$	1,357,801	$	12,561	$	102,248	$	1,268,114	$	1,240,850	$	25,776	$	25,392	$	1,241,234

~~Table of Contents~~


	December 31, 2014								December 31, 2015
			Gross Unrealized								Gross Unrealized
	Amortized Cost		Gains		Losses		Fair Value		Amortized Cost		Gains		Losses		Fair Value
	(In Thousands)								(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	2,312,572	$	10,360	$	9,390	$	2,313,542	$	3,232,238	$	4,076	$	24,822	$	3,211,492
Mortgage-backed securities	4,399,706		64,371		40,242		4,423,835		4,624,441		16,548		50,727		4,590,262
Collateralized mortgage obligations	2,475,115		19,385		5,921		2,488,579		2,713,075		8,200		16,019		2,705,256
States and political subdivisions	460,569		8,008		1,262		467,315		15,492		395		—		15,887
Other	44,225		238		22		44,441		23,914		175		44		24,045
Equity securities	499,522		41		—		499,563		503,540		38		—		503,578
Total	$	10,191,709	$	102,403	$	56,837	$	10,237,275	$	11,112,700	$	29,432	$	91,612	$	11,050,520
Investment securities held to maturity:
Collateralized mortgage obligations	$	124,051	$	5,878	$	5,452	$	124,477	$	103,947	$	6,022	$	4,634	$	105,335
Asset-backed securities	39,187		3,568		2,011		40,744		24,011		3,002		1,574		25,439
States and political subdivisions	1,112,415		2,143		79,246		1,035,312		1,128,240		729		82,632		1,046,337
Other	72,701		4,920		2,191		75,430		66,478		2,644		2,112		67,010
Total	$	1,348,354	$	16,509	$	88,900	$	1,275,963	$	1,322,676	$	12,397	$	90,952	$	1,244,121

In the above table, equity securities include $~~531~~427 million and $~~500~~503 million at September 30, ~~2015~~2016 and December 31, ~~2014~~2015, respectively, of FHLB and Federal Reserve stock carried at par.

The investments held within the states and political subdivision caption of investment securities held to maturity relate to private placement transactions underwritten as loans by the Company but that meet the definition of a security within ASC Topic 320, Investments – Debt and Equity Securities.

~~Table of Contents~~

The following table discloses the fair value and the gross unrealized losses of the Company’s available for sale securities and held to maturity securities that were in a loss position at September 30, ~~2015~~2016 and December 31, ~~2014~~2015. This information is aggregated by investment category and the length of time the individual securities have been in an unrealized loss position.


	September 30, 2015												September 30, 2016
	Securities in a loss position for less than 12 months				Securities in a loss position for 12 months or longer				Total				Securities in a loss position for less than 12 months				Securities in a loss position for 12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)												(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	299,978	$	4,133	$	375,491	$	4,560	$	675,469	$	8,693	$	386,626	$	4,012	$	604,317	$	12,114	$	990,943	$	16,126
Mortgage-backed securities	845,311		2,323		1,501,811		15,248		2,347,122		17,571		301,922		2,182		1,502,080		17,382		1,804,002		19,564
Collateralized mortgage obligations	926,611		5,049		104,894		2,711		1,031,505		7,760		2,319,508		13,007		704,501		6,425		3,024,009		19,432
Other	—		—		1,089		33		1,089		33		—		—		1,090		32		1,090		32
Total	$	2,071,900	$	11,505	$	1,983,285	$	22,552	$	4,055,185	$	34,057	$	3,008,056	$	19,201	$	2,811,988	$	35,953	$	5,820,044	$	55,154

Investment securities held to maturity:
Collateralized mortgage obligations	$	22,293	$	478	$	45,527	$	5,490	$	67,820	$	5,968	$	4,099	$	519	$	50,858	$	4,941	$	54,957	$	5,460
Asset-backed securities	277		2		17,229		2,037		17,506		2,039		425		14		9,964		1,451		10,389		1,465
States and political subdivisions	119,336		7,919		783,030		84,129		902,366		92,048		57,577		4,378		325,680		12,138		383,257		16,516
Other	3,909		2,193		—		—		3,909		2,193		16,504		94		3,538		1,857		20,042		1,951
Total	$	145,815	$	10,592	$	845,786	$	91,656	$	991,601	$	102,248	$	78,605	$	5,005	$	390,040	$	20,387	$	468,645	$	25,392


	December 31, 2014												December 31, 2015
	Securities in a loss position for less than 12 months				Securities in a loss position for 12 months or longer				Total				Securities in a loss position for less than 12 months				Securities in a loss position for 12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)												(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	620,794	$	8,220	$	37,220	$	1,170	$	658,014	$	9,390	$	2,081,528	$	16,523	$	460,160	$	8,299	$	2,541,688	$	24,822
Mortgage-backed securities	308,734		862		1,915,494		39,380		2,224,228		40,242		2,623,761		20,380		1,408,069		30,347		4,031,830		50,727
Collateralized mortgage obligations	714,173		3,829		146,806		2,092		860,979		5,921		1,321,121		10,378		393,210		5,641		1,714,331		16,019
States and political subdivisions	—		—		135,825		1,262		135,825		1,262
Other	—		—		1,099		22		1,099		22		—		—		1,078		44		1,078		44
Total	$	1,643,701	$	12,911	$	2,236,444	$	43,926	$	3,880,145	$	56,837	$	6,026,410	$	47,281	$	2,262,517	$	44,331	$	8,288,927	$	91,612

Investment securities held to maturity:
Collateralized mortgage obligations	$	34,400	$	1,099	$	27,389	$	4,353	$	61,789	$	5,452	$	11,066	$	326	$	52,601	$	4,308	$	63,667	$	4,634
Asset-backed securities	—		—		23,374		2,011		23,374		2,011		—		—		15,790		1,574		15,790		1,574
States and political subdivisions	21,688		768		817,570		78,478		839,258		79,246		73,302		6,533		794,489		76,099		867,791		82,632
Other	4,061		2,191		—		—		4,061		2,191		—		—		4,015		2,112		4,015		2,112
Total	$	60,149	$	4,058	$	868,333	$	84,842	$	928,482	$	88,900	$	84,368	$	6,859	$	866,895	$	84,093	$	951,263	$	90,952

As indicated in the previous tables, at September 30, ~~2015,~~2016, the Company held certain investment securities in unrealized loss positions. The Company does not have the intent to sell these securities and believes it is not more likely than not that it will be required to sell these securities before their anticipated recovery.

~~Table of Contents~~

The Company regularly evaluates each available for sale and held to maturity security in a loss position for OTTI. In its evaluation, the Company considers such factors as the length of time and the extent to which the fair value has been below cost, the financial condition of the issuer, the Company’s intent to hold the security to an expected recovery in market value and whether it is more likely than not that the Company will have to sell the security before its fair value recovers. Activity related to the credit loss component of the OTTI is recognized in earnings. The portion of OTTI related to all other factors is recognized in other comprehensive income.

Management does not believe that any individual unrealized loss in the Company’s investment securities available for sale or held to maturity portfolios, presented in the preceding tables, represents an OTTI at either September 30, ~~2015~~2016 or December 31, ~~2014~~2015, other than those noted below.

The following table discloses activity related to credit losses for debt securities where a portion of the OTTI was recognized in other comprehensive income.


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014		2016		2015		2016		2015
	(In Thousands)								(In Thousands)
Balance at beginning of period	$	22,421	$	21,123	$	21,123	$	20,943	$	22,582	$	22,421	$	22,452	$	21,123
Reductions for securities paid off during the period (realized)	—		—		—		—		—		—		—		—
Additions for the credit component on debt securities in which OTTI was not previously recognized	—		—		1,013		—		—		—		—		1,013
Additions for the credit component on debt securities in which OTTI was previously recognized	—		—		285		180		—		—		130		285
Balance at end of period	$	22,421	$	21,123	$	22,421	$	21,123	$	22,582	$	22,421	$	22,582	$	22,421

For both the three months ended September 30, ~~2015~~2016 and ~~2014,~~2015, there was no OTTI recognized on held to maturity securities. For the nine months ended September 30, ~~2015~~2016 and ~~2014,~~2015, there was $130 thousand and $1.3 million, ~~and $180 thousand,~~ respectively of OTTI recognized on held to maturity securities. The investment securities primarily impacted by credit impairment are held to maturity non-agency collateralized mortgage ~~obligations, asset-backed securities and states and political subdivisions.~~obligations.

The contractual maturities of the securities portfolios are presented in the following table.


September 30, 2015	Amortized Cost		Fair Value
September 30, 2016					Amortized Cost		Fair Value
	(In Thousands)				(In Thousands)
Investment securities available for sale:
Maturing within one year	$	43,142	$	43,201	$	91,838	$	91,868
Maturing after one but within five years	700,472		705,328		365,562		369,917
Maturing after five but within ten years	1,180,155		1,197,004		367,002		370,969
Maturing after ten years	1,190,255		1,187,123		1,058,091		1,044,403
	3,114,024		3,132,656		1,882,493		1,877,157
Mortgage-backed securities and collateralized mortgage obligations	7,110,696		7,140,163		9,196,276		9,212,854
Equity securities	530,800		530,841		426,826		426,874
Total	$	10,755,520	$	10,803,660	$	11,505,595	$	11,516,885

Investment securities held to maturity:
Maturing within one year	$	436	$	436	$	67,853	$	68,283
Maturing after one but within five years	320,489		306,843		244,188		243,803
Maturing after five but within ten years	290,719		262,135		260,272		258,962
Maturing after ten years	637,735		590,158		579,926		582,302
	1,249,379		1,159,572		1,152,239		1,153,350
Collateralized mortgage obligations	108,422		108,542		88,611		87,884
Total	$	1,357,801	$	1,268,114	$	1,240,850	$	1,241,234

~~Table of Contents~~

The gross realized gains and losses recognized on sales of investment securities available for sale are shown in the table below.


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014		2016		2015		2016		2015
	(In Thousands)								(In Thousands)
Gross gains	$	8,568	$	9,710	$	68,799	$	47,608	$	—	$	8,568	$	30,037	$	68,799
Gross losses	1,832		—		1,832		—		—		1,832		—		1,832
Net realized gains	$	6,736	$	9,710	$	66,967	$	47,608	$	—	$	6,736	$	30,037	$	66,967

(34) Loans and Allowance for Loan Losses

The following table presents the composition of the loan portfolio.


	September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015
	(In Thousands)				(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	25,636,319	$	23,828,537	$	24,839,068	$	26,022,374
Real estate – construction	2,315,351		2,154,652		2,215,272		2,354,253
Commercial real estate – mortgage	10,624,632		9,877,206		11,361,630		10,453,280
Total commercial loans	38,576,302		35,860,395		38,415,970		38,829,907
Consumer loans:
Residential real estate – mortgage	13,897,723		13,922,656		13,457,435		13,993,285
Equity lines of credit	2,376,408		2,304,784		2,494,468		2,419,815
Equity loans	612,148		634,968		479,375		580,804
Credit card	609,982		630,456		599,862		627,359
Consumer direct	854,989		652,927		1,186,827		936,871
Consumer indirect	2,901,603		2,870,408		3,196,235		3,495,082
Total consumer loans	21,252,853		21,016,199		21,414,202		22,053,216
Covered loans	458,066		495,190		381,111		440,961
Total loans	$	60,287,221	$	57,371,784	$	60,211,283	$	61,324,084

At September 30, 2016, the Company considered its energy lending portfolio as a concentration due to the impact on this portfolio of declining oil prices that began in late 2014 and continued into 2016. Total energy exposure, including unused commitments to extend credit and letters of credit was $8.2 billion and $9.4 billion at September 30, 2016 and December 31, 2015, respectively. The funded amount of the Company's energy lending portfolio was approximately $3.3 billion and $3.8 billion at September 30, 2016 and December 31, 2015, respectively, and is reported in total commercial, financial and agricultural in the table above. The decline in oil prices has negatively impacted the financial results of many borrowers in the energy lending portfolio, leading to internal risk rating downgrades. If oil prices remain unstable or 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.

~~Table of Contents~~

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 Loans			Commercial, Financial and Agricultural			Commercial Real Estate (1)			Residential Real Estate (2)			Consumer (3)			Covered			Total
	(In Thousands)																		(In Thousands)
Three months ended September 30, 2016																			Three months ended September 30, 2016
Allowance for loan losses:
Beginning balance																			$	499,398		$	114,311		$	119,076		$	110,266		$	—		$	843,051
Provision (credit) for loan losses																			20,533			54			528			43,992			—			65,107
Loans charged off																			(13,702		)	(104		)	(4,608		)	(46,472		)	—			(64,886		)
Loan recoveries																			4,766			682			3,429			9,931			—			18,808
Net (charge-offs) recoveries																			(8,936		)	578			(1,179		)	(36,541		)	—			(46,078		)
Ending balance																			$	510,995		$	114,943		$	118,425		$	117,717		$	—		$	862,080
Three months ended September 30, 2015	Three months ended September 30, 2015																		Three months ended September 30, 2015
Allowance for loan losses:
Beginning balance	$	350,879		$	135,152		$	133,995		$	99,559		$	1,886		$	721,471		$	350,879		$	135,152		$	133,995		$	99,559		$	1,886		$	721,471
Provision (credit) for loan losses	16,424			(7,256		)	(577		)	20,091			469			29,151			16,424			(7,256		)	(577		)	20,091			469			29,151
Loans charged off	(9,161		)	(910		)	(5,944		)	(27,567		)	(490		)	(44,072		)	(9,161		)	(910		)	(5,944		)	(27,567		)	(490		)	(44,072		)
Loan recoveries	5,171			899			3,772			5,728			2			15,572			5,171			899			3,772			5,728			2			15,572
Net (charge-offs) recoveries	(3,990		)	(11		)	(2,172		)	(21,839		)	(488		)	(28,500		)	(3,990		)	(11		)	(2,172		)	(21,839		)	(488		)	(28,500		)
Ending balance	$	363,313		$	127,885		$	131,246		$	97,811		$	1,867		$	722,122		$	363,313		$	127,885		$	131,246		$	97,811		$	1,867		$	722,122
Three months ended September 30, 2014

Nine Months Ended September 30, 2016																			Nine Months Ended September 30, 2016
Allowance for loan losses:
Beginning balance	$	317,790		$	142,941		$	153,694		$	88,784		$	11,551		$	714,760		$	402,113		$	122,068		$	132,104		$	104,948		$	1,440		$	762,673
Provision (credit) for loan losses	(6,889		)	(8,180		)	6,963			16,216			(4,241		)	3,869			167,648			(7,393		)	(7,412		)	112,058			124			265,025
Loans charged off	(3,404		)	(555		)	(9,852		)	(20,514		)	(1,124		)	(35,449		)	(66,541		)	(3,555		)	(15,072		)	(125,607		)	(1,565		)	(212,340		)
Loan recoveries	3,818			1,285			3,266			3,909			420			12,698			7,775			3,823			8,805			26,318			1			46,722
Net (charge-offs) recoveries	414			730			(6,586		)	(16,605		)	(704		)	(22,751		)	(58,766		)	268			(6,267		)	(99,289		)	(1,564		)	(165,618		)
Ending balance	$	311,315		$	135,491		$	154,071		$	88,395		$	6,606		$	695,878		$	510,995		$	114,943		$	118,425		$	117,717		$	—		$	862,080

Nine Months Ended September 30, 2015	Nine Months Ended September 30, 2015																		Nine Months Ended September 30, 2015
Allowance for loan losses:
Beginning balance	$	299,482		$	138,233		$	154,627		$	89,891		$	2,808		$	685,041		$	299,482		$	138,233		$	154,627		$	89,891		$	2,808		$	685,041
Provision (credit) for loan losses	74,127			(12,995		)	(13,458		)	69,085			572			117,331			74,127			(12,995		)	(13,458		)	69,085			572			117,331
Loans charged off	(20,706		)	(2,380		)	(20,889		)	(78,957		)	(1,516		)	(124,448		)	(20,706		)	(2,380		)	(20,889		)	(78,957		)	(1,516		)	(124,448		)
Loan recoveries	10,410			5,027			10,966			17,792			3			44,198			10,410			5,027			10,966			17,792			3			44,198
Net (charge-offs) recoveries	(10,296		)	2,647			(9,923		)	(61,165		)	(1,513		)	(80,250		)	(10,296		)	2,647			(9,923		)	(61,165		)	(1,513		)	(80,250		)
Ending balance	$	363,313		$	127,885		$	131,246		$	97,811		$	1,867		$	722,122		$	363,313		$	127,885		$	131,246		$	97,811		$	1,867		$	722,122
Nine Months Ended September 30, 2014
Allowance for loan losses:
Beginning balance	$	292,327		$	158,960		$	155,575		$	90,903		$	2,954		$	700,719
Provision (credit) for loan losses	30,107			(17,959		)	27,675			46,014			550			86,387
Loans charged off	(23,855		)	(10,506		)	(39,421		)	(62,887		)	(2,131		)	(138,800		)
Loan recoveries	12,736			4,996			10,242			14,365			5,233			47,572
Net (charge-offs) recoveries	(11,119		)	(5,510		)	(29,179		)	(48,522		)	3,102			(91,228		)
Ending balance	$	311,315		$	135,491		$	154,071		$	88,395		$	6,606		$	695,878


(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.

~~Table of Contents~~

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 Loans		Commercial, Financial and Agricultural		Commercial Real Estate (1)		Residential Real Estate (2)		Consumer (3)		Covered		Total
	(In Thousands)												(In Thousands)
September 30, 2015
September 30, 2016
Ending balance of allowance attributable to loans:	Ending balance of allowance attributable to loans:												Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	20,252	$	3,899	$	37,772	$	1,950	$	—	$	63,873	$	138,067	$	3,253	$	35,867	$	2,507	$	—	$	179,694
Collectively evaluated for impairment	342,881		123,986		93,474		95,861		—		656,202		372,928		111,690		82,558		115,210		—		682,386
Purchased impaired	—		—		—		—		1,767		1,767
Purchased nonimpaired	180		—		—		—		100		280
Purchased loans													—		—		—		—		—		—
Total allowance for loan losses	$	363,313	$	127,885	$	131,246	$	97,811	$	1,867	$	722,122	$	510,995	$	114,943	$	118,425	$	117,717	$	—	$	862,080
Ending balance of loans:	Ending balance of loans:												Ending balance of loans:
Individually evaluated for impairment	$	131,009	$	92,110	$	178,357	$	2,376	$	—	$	403,852	$	839,679	$	38,967	$	180,308	$	3,393	$	—	$	1,062,347
Collectively evaluated for impairment	25,469,026		12,799,785		16,707,156		4,359,094		—		59,335,061		23,972,927		13,503,337		16,250,039		4,975,230		—		58,701,533
Purchased impaired	—		—		—		—		334,086		334,086
Purchased nonimpaired	36,284		48,088		766		5,104		123,980		214,222
Purchased loans													26,462		34,598		931		4,301		381,111		447,403
Total loans	$	25,636,319	$	12,939,983	$	16,886,279	$	4,366,574	$	458,066	$	60,287,221	$	24,839,068	$	13,576,902	$	16,431,278	$	4,982,924	$	381,111	$	60,211,283

December 31, 2014
December 31, 2015
Ending balance of allowance attributable to loans:	Ending balance of allowance attributable to loans:												Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	11,158	$	8,466	$	42,277	$	1,532	$	—	$	63,433	$	27,486	$	3,725	$	38,126	$	1,880	$	—	$	71,217
Collectively evaluated for impairment	287,105		129,767		112,350		88,037		—		617,259		374,458		118,343		93,978		103,068		—		689,847
Purchased impaired	—		—		—		—		2,066		2,066
Purchased nonimpaired	1,219		—		—		322		742		2,283
Purchased loans													169		—		—		—		1,440		1,609
Total allowance for loan losses	$	299,482	$	138,233	$	154,627	$	89,891	$	2,808	$	685,041	$	402,113	$	122,068	$	132,104	$	104,948	$	1,440	$	762,673
Ending balance of loans:	Ending balance of loans:												Ending balance of loans:
Individually evaluated for impairment	$	48,173	$	105,608	$	195,462	$	1,827	$	—	$	351,070	$	163,201	$	80,123	$	183,473	$	2,789	$	—	$	429,586
Collectively evaluated for impairment	23,745,149		11,896,943		16,665,930		4,145,880		—		56,453,902		25,828,286		12,685,320		16,809,525		5,051,488		—		60,374,619
Purchased impaired	—		—		—		—		361,572		361,572
Purchased nonimpaired	35,215		29,307		1,016		6,084		133,618		205,240
Purchased loans													30,887		42,090		906		5,035		440,961		519,879
Total loans	$	23,828,537	$	12,031,858	$	16,862,408	$	4,153,791	$	495,190	$	57,371,784	$	26,022,374	$	12,807,533	$	16,993,904	$	5,059,312	$	440,961	$	61,324,084


(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.

~~Table of Contents~~

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


	September 30, 2015												September 30, 2016
	Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance						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		Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance
	(In Thousands)												(In Thousands)
Commercial, financial and agricultural	$	6,186	$	13,575	$	—	$	124,823	$	128,517	$	20,252	$	420,005	$	428,688	$	—	$	419,674	$	445,592	$	138,067
Real estate – construction	3,446		3,996		—		642		697		642		—		—		—		707		819		377
Commercial real estate – mortgage	36,385		39,065		—		51,637		54,746		3,257		15,161		15,765		—		23,099		24,498		2,876
Residential real estate – mortgage	—		—		—		103,626		103,626		6,685		—		—		—		111,773		111,773		9,226
Equity lines of credit	—		—		—		27,098		29,046		23,055		—		—		—		25,679		26,069		20,572
Equity loans	—		—		—		47,633		48,232		8,032		—		—		—		42,856		43,563		6,069
Credit card	—		—		—		—		—		—		—		—		—		—		—		—
Consumer direct	—		—		—		501		501		75		—		—		—		797		797		56
Consumer indirect	—		—		—		1,875		1,889		1,875		—		—		—		2,596		2,596		2,451
Total loans	$	46,017	$	56,636	$	—	$	357,835	$	367,254	$	63,873	$	435,166	$	444,453	$	—	$	627,181	$	655,707	$	179,694


	December 31, 2014												December 31, 2015
	Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance						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		Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance
	(In Thousands)												(In Thousands)
Commercial, financial and agricultural	$	—	$	—	$	—	$	48,173	$	61,552	$	11,158	$	45,583	$	53,325	$	—	$	117,618	$	122,148	$	27,486
Real estate – construction	3,492		4,006		—		2,686		2,731		872		3,403		3,986		—		628		689		515
Commercial real estate – mortgage	22,822		23,781		—		76,608		82,005		7,594		24,851		27,486		—		51,241		54,863		3,210
Residential real estate – mortgage	8,795		8,795		—		107,223		107,306		9,236		6,521		6,521		—		102,375		102,375		7,370
Equity lines of credit	—		—		—		25,743		26,124		23,394		—		—		—		28,164		30,302		23,183
Equity loans	—		—		—		53,701		54,038		9,647		—		—		—		46,413		47,245		7,573
Credit card	—		—		—		—		—		—		—		—		—		—		—		—
Consumer direct	—		—		—		337		337		42		—		—		—		935		935		26
Consumer indirect	—		—		—		1,490		1,490		1,490		—		—		—		1,854		1,854		1,854
Total loans	$	35,109	$	36,582	$	—	$	315,961	$	335,583	$	63,433	$	80,358	$	91,318	$	—	$	349,228	$	360,411	$	71,217

~~Table of Contents~~

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


	Three Months Ended September 30, 2015				Three Months Ended September 30, 2014				Three Months Ended September 30, 2016				Three Months Ended September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)								(In Thousands)
Commercial, financial and agricultural	$	133,652	$	204	$	70,256	$	182	$	769,719	$	401	$	133,652	$	204
Real estate – construction	5,360		21		9,054		58		634		2		5,360		21
Commercial real estate – mortgage	87,352		517		108,323		754		36,874		255		87,352		517
Residential real estate – mortgage	107,927		707		112,912		724		110,262		666		107,927		707
Equity lines of credit	27,185		279		24,010		268		26,231		246		27,185		279
Equity loans	48,046		392		54,506		432		43,292		375		48,046		392
Credit card	—		—		—		—		—		—		—		—
Consumer direct	397		4		94		1		803		7		397		4
Consumer indirect	1,749		—		1,276		1		2,505		3		1,749		—
Total loans	$	411,668	$	2,124	$	380,431	$	2,420	$	990,320	$	1,955	$	411,668	$	2,124


	Nine Months Ended September 30, 2015				Nine Months Ended September 30, 2014				Nine Months Ended September 30, 2016				Nine Months Ended September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)								(In Thousands)
Commercial, financial and agricultural	$	98,110	$	909	$	95,116	$	970	$	575,038	$	1,033	$	98,110	$	909
Real estate – construction	5,837		97		9,421		177		2,118		6		5,837		97
Commercial real estate – mortgage	85,862		1,634		122,358		2,531		46,073		932		85,862		1,634
Residential real estate – mortgage	110,790		2,096		113,579		2,168		109,020		1,953		110,790		2,096
Equity lines of credit	26,891		838		23,641		773		27,170		790		26,891		838
Equity loans	50,168		1,197		54,977		1,286		44,629		1,123		50,168		1,197
Credit card	—		—		—		—		—		—		—		—
Consumer direct	686		12		131		3		854		22		686		12
Consumer indirect	1,645		—		1,283		3		2,152		9		1,645		—
Total loans	$	379,989	$	6,783	$	420,506	$	7,911	$	807,054	$	5,868	$	379,989	$	6,783

The tables above do 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, ~~2014.~~2015.

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 D)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.

~~Table of Contents~~

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						Commercial
	September 30, 2015						September 30, 2016
	Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage		Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage
	(In Thousands)						(In Thousands)
Noncovered loans:
Pass	$	24,549,024	$	2,294,904	$	10,285,290	$	22,686,955	$	2,154,286	$	11,031,439
Special Mention	549,038		9,624		179,911		665,237		56,486		209,917
Substandard	511,634		10,803		144,928		1,164,997		4,485		102,879
Doubtful	26,623		20		14,503		321,879		15		17,395
	$	25,636,319	$	2,315,351	$	10,624,632	$	24,839,068	$	2,215,272	$	11,361,630

December 31, 2014
Commercial, Financial and Agricultural Real Estate - Construction Commercial Real Estate - Mortgage
(In Thousands)
Noncovered loans:
Pass $ 23,380,541
$ 2,098,994
$ 9,514,917
Special Mention 280,934
42,176
210,337
Substandard 128,251
13,458
129,435
Doubtful 38,811
24
22,517
$ 23,828,537
$ 2,154,652
$ 9,877,206

~~Table of Contents~~



	December 31, 2015
	Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage
	(In Thousands)
Pass	$	24,823,312	$	2,340,145	$	10,165,630
Special Mention	469,400		5,148		142,124
Substandard	688,427		8,941		133,091
Doubtful	41,235		19		12,435
	$	26,022,374	$	2,354,253	$	10,453,280

Consumer
September 30, 2015
Residential Real Estate – Mortgage Equity Lines of Credit Equity Loans Credit Card Consumer Direct Consumer Indirect
(In Thousands)
Noncovered loans:
Performing $ 13,792,551
$ 2,340,561
$ 595,931
$ 601,660
$ 852,101
$ 2,891,337
Nonperforming 105,172
35,847
16,217
8,322
2,888
10,266
$ 13,897,723
$ 2,376,408
$ 612,148
$ 609,982
$ 854,989
$ 2,901,603


													Consumer
	December 31, 2014												September 30, 2016
	Residential Real Estate -Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect		Residential Real Estate – Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)												(In Thousands)
Noncovered loans:
Performing	$	13,810,857	$	2,269,231	$	614,064	$	621,015	$	649,832	$	2,865,013	$	13,335,843	$	2,459,409	$	465,626	$	589,687	$	1,181,871	$	3,182,146
Nonperforming	111,799		35,553		20,904		9,441		3,095		5,395		121,592		35,059		13,749		10,175		4,956		14,089
	$	13,922,656	$	2,304,784	$	634,968	$	630,456	$	652,927	$	2,870,408	$	13,457,435	$	2,494,468	$	479,375	$	599,862	$	1,186,827	$	3,196,235



	December 31, 2015
	Residential Real Estate -Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)
Noncovered loans:
Performing	$	13,877,592	$	2,381,909	$	564,110	$	617,641	$	932,773	$	3,484,426
Nonperforming	115,693		37,906		16,694		9,718		4,098		10,656
	$	13,993,285	$	2,419,815	$	580,804	$	627,359	$	936,871	$	3,495,082

~~Table of Contents~~

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


	September 30, 2015																September 30, 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		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)																(In Thousands)
Commercial, financial and agricultural	$	15,300	$	3,930	$	5,202	$	130,370	$	9,635	$	164,437	$	25,471,882	$	25,636,319	$	72,328	$	4,400	$	5,320	$	850,075	$	9,283	$	941,406	$	23,897,662	$	24,839,068
Real estate – construction	1,565		117		426		5,712		2,247		10,067		2,305,284		2,315,351		522		1,062		2,782		1,214		3,315		8,895		2,206,377		2,215,272
Commercial real estate – mortgage	4,887		732		5,607		85,975		33,837		131,038		10,493,594		10,624,632		7,614		369		783		63,593		5,141		77,500		11,284,130		11,361,630
Residential real estate – mortgage	47,936		15,450		1,230		103,492		71,102		239,210		13,658,513		13,897,723		56,204		21,200		3,929		117,243		63,008		261,584		13,195,851		13,457,435
Equity lines of credit	8,988		4,675		2,411		33,436		—		49,510		2,326,898		2,376,408		8,173		4,477		2,417		32,642		—		47,709		2,446,759		2,494,468
Equity loans	6,485		1,807		985		15,104		37,785		62,166		549,982		612,148		5,567		1,694		353		13,198		36,053		56,865		422,510		479,375
Credit card	5,949		3,621		8,322		—		—		17,892		592,090		609,982		5,696		4,264		10,175		—		—		20,135		579,727		599,862
Consumer direct	16,433		1,988		2,153		635		469		21,678		833,311		854,989		12,099		4,725		4,191		765		759		22,539		1,164,288		1,186,827
Consumer indirect	60,018		12,901		4,213		6,053		—		83,185		2,818,418		2,901,603		73,045		20,165		7,070		7,019		—		107,299		3,088,936		3,196,235
Covered loans	4,303		3,347		43,039		153		—		50,842		407,224		458,066		4,075		3,844		28,505		269		—		36,693		344,418		381,111
Total loans	$	171,864	$	48,568	$	73,588	$	380,930	$	155,075	$	830,025	$	59,457,196	$	60,287,221	$	245,323	$	66,200	$	65,525	$	1,086,018	$	117,559	$	1,580,625	$	58,630,658	$	60,211,283


	December 31, 2014																December 31, 2015
	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		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)																(In Thousands)
Commercial, financial and agricultural	$	10,829	$	5,765	$	1,610	$	61,157	$	10,127	$	89,488	$	23,739,049	$	23,828,537	$	8,197	$	4,215	$	3,567	$	161,591	$	9,402	$	186,972	$	25,835,402	$	26,022,374
Real estate – construction	1,954		994		477		7,964		2,112		13,501		2,141,151		2,154,652		2,864		91		421		5,908		2,247		11,531		2,342,722		2,354,253
Commercial real estate – mortgage	9,813		4,808		628		89,736		39,841		144,826		9,732,380		9,877,206		3,843		1,461		2,237		69,953		33,904		111,398		10,341,882		10,453,280
Residential real estate – mortgage	45,279		16,510		2,598		108,357		69,408		242,152		13,680,504		13,922,656		47,323		19,540		1,961		113,234		67,343		249,401		13,743,884		13,993,285
Equity lines of credit	9,929		4,395		2,679		32,874		—		49,877		2,254,907		2,304,784		8,263		4,371		2,883		35,023		—		50,540		2,369,275		2,419,815
Equity loans	6,357		3,268		997		19,029		41,197		70,848		564,120		634,968		6,356		2,194		704		15,614		37,108		61,976		518,828		580,804
Credit card	5,692		3,921		9,441		—		—		19,054		611,402		630,456		5,563		4,622		9,718		—		—		19,903		607,456		627,359
Consumer direct	9,542		1,826		2,296		799		298		14,761		638,166		652,927		7,648		3,801		3,537		561		908		16,455		920,416		936,871
Consumer indirect	35,366		7,935		2,771		2,624		—		48,696		2,821,712		2,870,408		73,438		17,167		5,629		5,027		—		101,261		3,393,821		3,495,082
Covered loans	6,678		4,618		47,957		114		—		59,367		435,823		495,190		4,862		3,454		37,972		134		—		46,422		394,539		440,961
Total loans	$	141,439	$	54,040	$	71,454	$	322,654	$	162,983	$	752,570	$	56,619,214	$	57,371,784	$	168,357	$	60,916	$	68,629	$	407,045	$	150,912	$	855,859	$	60,468,225	$	61,324,084

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, ~~2014.~~2015.

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.

~~Table of Contents~~

The following table provides a breakout of TDRs, including nonaccrual loans and covered loans and excluding loans classified as held for sale.


	September 30, 2015														September 30, 2016
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Total Past Due and Nonaccrual		Not Past Due or Nonaccrual		Total		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Total Past Due and Nonaccrual		Not Past Due or Nonaccrual		Total
	(In Thousands)														(In Thousands)
Commercial, financial and agricultural	$	7	$	126	$	—	$	634	$	767	$	9,502	$	10,269	$	33	$	—	$	—	$	28,739	$	28,772	$	9,250	$	38,022
Real estate – construction	—		—		—		503		503		2,247		2,750		—		—		—		585		585		3,315		3,900
Commercial real estate – mortgage	—		—		—		4,094		4,094		33,837		37,931		—		—		—		4,136		4,136		5,141		9,277
Residential real estate – mortgage	3,165		2,726		450		27,847		34,188		64,761		98,949		3,392		389		420		35,562		39,763		58,807		98,570
Equity lines of credit	—		—		—		26,007		26,007		—		26,007		—		—		—		24,507		24,507		—		24,507
Equity loans	1,543		2,212		128		9,848		13,731		33,902		47,633		1,837		766		198		7,066		9,867		33,252		43,119
Credit card	—		—		—		—		—		—		—		—		—		—		—		—		—		—
Consumer direct	—		—		100		30		130		369		499		—		—		—		37		37		759		796
Consumer indirect	—		—		—		1,875		1,875		—		1,875		—		—		—		2,597		2,597		—		2,597
Covered loans	—		—		—		8		8		—		8		—		—		—		27		27		—		27
Total loans	$	4,715	$	5,064	$	678	$	70,846	$	81,303	$	144,618	$	225,921	$	5,262	$	1,155	$	618	$	103,256	$	110,291	$	110,524	$	220,815


	December 31, 2014														December 31, 2015
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Total Past Due and Nonaccrual		Not Past Due or Nonaccrual		Total		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Total Past Due and Nonaccrual		Not Past Due or Nonaccrual		Total
	(In Thousands)														(In Thousands)
Commercial, financial and agricultural	$	11	$	—	$	—	$	2,052	$	2,063	$	10,116	$	12,179	$	—	$	—	$	—	$	131	$	131	$	9,402	$	9,533
Real estate – construction	—		—		—		200		200		2,112		2,312		—		—		—		495		495		2,247		2,742
Commercial real estate – mortgage	371		536		—		7,068		7,975		38,934		46,909		—		—		—		7,205		7,205		33,904		41,109
Residential real estate – mortgage	2,440		2,688		844		32,518		38,490		63,436		101,926		2,188		1,935		498		30,174		34,795		62,722		97,517
Equity lines of credit	—		—		—		24,519		24,519		—		24,519		—		—		—		27,176		27,176		—		27,176
Equity loans	2,182		1,124		878		12,504		16,688		37,013		53,701		1,737		782		376		9,844		12,739		34,213		46,952
Credit card	—		—		—		—		—		—		—		—		—		—		—		—		—		—
Consumer direct	105		—		—		40		145		193		338		—		—		—		27		27		908		935
Consumer indirect	—		—		—		1,490		1,490		—		1,490		—		—		—		1,853		1,853		—		1,853
Covered loans	—		—		—		17		17		—		17		—		—		—		8		8		—		8
Total loans	$	5,109	$	4,348	$	1,722	$	80,408	$	91,587	$	151,804	$	243,391	$	3,925	$	2,717	$	874	$	76,913	$	84,429	$	143,396	$	227,825

Modifications to a borrower’s loan agreement 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 September 30, ~~2015,~~2016, $~~2.0~~1.2 million of TDR modifications included an interest rate concession and $~~4.7~~36.5 million of TDR modifications resulted from modifications to the loan’s structure. During the three months ended September 30, ~~2014, $1.4~~2015, $2.0 million of TDR modifications included an interest rate concession and ~~$19.6~~$4.7 million of TDR modifications resulted from modifications to the loan’s structure. During the nine months ended September 30, ~~2015, $2.9~~2016, $4.2 million of TDR modifications included an interest rate concession and ~~$14.0~~$49.8 million of TDR modifications resulted from modifications to the loan’s structure. During the nine

~~Table of Contents~~

months ended September 30, ~~2014, $8.3~~2015, $2.9 million of TDR modifications included an interest rate concession and ~~$33.0~~$14.0 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 September 30, 2015			Three Months Ended September 30, 2014			Three Months Ended September 30, 2016			Three Months Ended September 30, 2015
	Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)						(Dollars in Thousands)
Commercial, financial and agricultural	2	$	69	2	$	14,118	4	$	31,676	2	$	69
Real estate – construction	—	—		2	405		1	112		—	—
Commercial real estate – mortgage	3	532		—	—		—	—		3	532
Residential real estate – mortgage	14	3,326		18	3,255		21	2,868		14	3,326
Equity lines of credit	27	1,488		32	1,946		30	1,468		27	1,488
Equity loans	8	340		13	920		6	635		8	340
Credit card	—	—		—	—		—	—		—	—
Consumer direct	4	325		—	—		2	15		4	325
Consumer indirect	31	549		21	343		56	917		31	549
Covered loans	1	8		1	3		—	—		1	8


	Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2016			Nine Months Ended September 30, 2015
	Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)						(Dollars in Thousands)
Commercial, financial and agricultural	5	$	380	4	$	14,281	9	$	32,026	5	$	380
Real estate – construction	—	—		2	405		2	3,504		—	—
Commercial real estate – mortgage	4	758		9	6,586		5	1,431		4	758
Residential real estate – mortgage	36	7,571		74	8,373		59	10,654		36	7,571
Equity lines of credit	86	4,752		129	6,426		66	3,237		86	4,752
Equity loans	28	1,836		54	4,237		15	1,129		28	1,836
Credit card	—	—		—	—		—	—		—	—
Consumer direct	21	627		—	—		3	24		21	627
Consumer indirect	53	928		71	1,015		119	1,999		53	928
Covered loans	3	29		1	3		—	—		3	29

For the three and nine months ended September 30, ~~2015~~2016 and ~~2014,~~2015, 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.

~~Table of Contents~~

The following tables provide 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 September 30, 2015			Three Months Ended September 30, 2014			Three Months Ended September 30, 2016			Three Months Ended September 30, 2015
	Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default
	(Dollars in Thousands)						(Dollars in Thousands)
Commercial, financial and agricultural	—	$	—	—	$	—	—	$	—	—	$	—
Real estate – construction	—	—		—	—		—	—		—	—
Commercial real estate – mortgage	—	—		—	—		—	—		—	—
Residential real estate – mortgage	1	119		2	144		—	—		1	119
Equity lines of credit	1	—		—	—		8	204		1	—
Equity loans	1	55		3	381		1	42		1	55
Credit card	—	—		—	—		—	—		—	—
Consumer direct	1	100		—	—		—	—		1	100
Consumer indirect	—	—		—	—		1	13		—	—
Covered loans	1	18		—	—		—	—		1	18


	Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2016			Nine Months Ended September 30, 2015
	Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default
	(Dollars in Thousands)						(Dollars in Thousands)
Commercial, financial and agricultural	—	$	—	—	$	—	—	$	—	—	$	—
Real estate – construction	1	377		—	—		—	—		1	377
Commercial real estate – mortgage	1	178		1	2,198		—	—		1	178
Residential real estate – mortgage	6	862		2	144		—	—		6	862
Equity lines of credit	1	—		3	275		8	204		1	—
Equity loans	3	216		7	763		1	42		3	216
Credit card	—	—		—	—		—	—		—	—
Consumer direct	1	100		—	—		—	—		1	100
Consumer indirect	1	18		—	—		2	32		1	18
Covered loans	2	24		—	—		—	—		2	24

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 September 30, ~~2015~~2016 and December 31, ~~2014~~2015, there were $~~3.8~~21.9 million and $~~1.1~~5.7 million, respectively, of commitments to lend additional funds to borrowers whose terms have been modified in a TDR.

Foreclosure Proceedings

~~Other real estate owned~~OREO totaled ~~$24~~$22 million and $21 million at September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. ~~Other real estate owned~~OREO included ~~$17~~$20 million and ~~$11~~$17 million of foreclosed residential real estate properties at September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. As of September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, there were $29 million and ~~$26~~$30 million, respectively, of residential real estate loans secured by residential real estate properties for which formal foreclosure proceedings were in process.

~~Table of Contents~~

~~(4)~~(5) Loan Sales and Servicing

Loans held for sale were ~~$634~~$102 million and ~~$155~~$71 million at September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. Loans held for sale ~~were comprised of $511 million and $123 million of consumer indirect loans and residential real estate - mortgage loans, respectively,~~ at September 30, ~~2015. Loans held for sale at~~2016 and December 31, ~~2014~~2015 were comprised entirely of residential real estate - mortgage loans.

~~There were $907 million loans transferred from~~The following table summarizes the ~~held for investment portfolio to~~Company's activity in the loans held for sale portfolio ~~during the three~~ and ~~nine months ended September 30, 2015. Loans transferred~~loan sales, excluding activity related to the held for sale portfolio during the three and nine months ended September 30, 2015 were comprised of $396 million of residential real estate - mortgage loans and $511 million of consumer indirect loans. The consumer indirect loans were transferred in preparation of completing a securitization in the fourth quarter of 2015. There were no charge-offs recognized upon transfer of these loans. There were $14 million of loans transferred from the held for investment portfolio to the loans held for sale portfolio during the nine months ended September 30, 2014. The Company recognized charge-offs upon transfer of these loans totaling $4.3 million. There were no loans transferred from the held for investment portfolio to the loans held for sale portfolio during the three months ended September 30, 2014.

As noted above, the Company transferred $511 million of consumer indirect loans to loans held for sale in anticipation of completing a securitization in the fourth quarter of 2015. Due to market conditions that arose in October, the Company chose not to securitize the consumer indirect loans and, accordingly, on October 15, 2015, transferred these loans back to the held for investment portfolio as management determined that it had the ability and intent to hold these loans for the foreseeable future.

~~The Company sold loans and loans held for sale, excluding~~ loans originated for sale in the secondary ~~market, with a recorded balance~~market.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(In Thousands)
Loans transferred from held for investment to held for sale	$	—	$	907,414	$	764,022	$	907,414
Charge-offs on loans recognized at transfer from held for investment to held for sale	—		—		—		—
Loans and loans held for sale sold	121,745		404,674		1,007,096		415,156

The following table summarizes the Company's sales of ~~$405 million and $415 million during the three and nine months ended September 30, 2015. The Company sold loans and loans held for sale, excluding~~ loans originated for sale in the secondary ~~market, with a recorded balance of $1 million and $102 million, during the three and nine months ended September 30, 2014, respectively.~~market.

Sales of residential real estate – mortgage loans originated for sale in the secondary market, including loans originated for sale where the Company retained servicing responsibilities, were $725 million and $1.3 billion for the three and nine months ended September 30, 2015, respectively, and $367 million and $736 million for the three and nine months ended September 30, 2014, respectively. The Company recognized net gains of $11.0 million and $33.0 million on the sale of residential real estate mortgage loans originated for sale during the three and nine months ended September 30, 2015, respectively, and $11.7 million and $22.9 million for the three and nine months ended September 30, 2014, respectively. These gains were recorded in mortgage banking income in the Company’s Unaudited Condensed Consolidated Statements of Income.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(In Thousands)
Residential real estate loans originated for sale in the secondary market sold (1)	$	199,073	$	724,493	$	482,860	$	1,309,035
Net gains recognized on sales of residential real estate loans originated for sale in the secondary market (2)	9,024		11,008		21,705		32,968


(1)	Includes loans originated for sale where the Company retained servicing responsibilities.


(2)	Net gains were recorded in mortgage banking income in the Company's Unaudited Condensed Consolidated Statements of Income.

Residential Real Estate Mortgage Loans Sold with Retained Servicing

~~During~~The following table summarizes the three and nine months ended September 30, 2015, the Company sold $725 million and $1.3 billion, respectively, of residential real estate mortgage loans where the Company retained servicing responsibilities. During the three and nine months ended September 30, 2014, the Company sold $367 million and $736 million, respectively, of residential real estate mortgage loans where the Company retained servicing responsibilities. For these sold loans, there is no recourseCompany's activity related to the Company for the failures of borrowers to pay when due. Residential real estate mortgage loans sold where the Company retained servicing totaled $4.4 billion and $3.3 billion, respectively, at September 30, 2015 and December 31, 2014. These loans are not included in loans on the Company’s Unaudited Condensed Consolidated Balance Sheets.

~~In connection with~~ residential real estate mortgage loans sold with retained servicing.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(In Thousands)
Residential real estate mortgage loans sold with retained servicing (3)	$	199,073	$	724,493	$	798,756	$	1,308,853
Servicing fees recognized (4)	6,710		5,802		19,376		15,741


(3)	There is no recourse to the Company for the failures of borrowers to pay loans when due.


(4)	Recorded as a component of other noninterest income in the Company's Unaudited Condensed Consolidated Statements of Income.

The following table provides the recorded balance of loans sold with retained servicing and the Company receives servicing fees based on a percentage of the outstanding balance. The Company recognized servicing fees of $5.8 million and $15.7 million during the three and nine months ended September 30, 2015, respectively. The Company recognized servicing fees of $4.1 million and $11.4 million during the three and nine months ended September 30, 2014, respectively. These fees were recorded as a component of other noninterest income in the Company’s Unaudited Condensed Consolidated Statements of Income. At September 30, 2015 and December 31, 2014, the Company had recorded $41 million and $35 million of MSRs, respectively, under the fair value method in other assets on the Company’s Unaudited Condensed Consolidated Balance Sheets.related MSRs.



	September 30, 2016		December 31, 2015
	(In Thousands)
Recorded balance of residential real estate mortgage loans sold with retained servicing (5)	$	4,702,178	$	4,444,602
MSRs (6)	39,027		44,541


(5)	These loans are not included in loans on the Company's Unaudited Condensed Consolidated Balance Sheets.


(6)	Recorded under the fair value method and included in other assets on the Company's Unaudited Condensed Consolidated Balance Sheets.

~~Table of Contents~~

The fair value of MSRs is significantly affected by mortgage interest rates available in the marketplace, which influence mortgage loan prepayment speeds. In general, during periods of declining rates, the fair value of MSRs declines due to increasing prepayments attributable to increased mortgage-refinance activity. During periods of rising interest rates, the fair value of MSRs generally increases due to reduced refinance activity. The Company maintains a non-qualifying hedging strategy to manage a portion of the risk associated with changes in the fair value of the MSR portfolio. This strategy includes the purchase of various trading securities. The interest income, mark-to-market adjustments and gain or loss from sale activities associated with these securities are expected to economically hedge a portion of the change in the fair value of the MSR portfolio.

The following table is an analysis of the activity in the Company’s MSRs.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014			2016			2015			2016			2015
	(In Thousands)												(In Thousands)
Carrying value, at beginning of period	$	40,871		$	31,104		$	35,488		$	30,065		$	36,496		$	40,871		$	44,541		$	35,488
Additions	6,844			4,060			13,566			8,066			1,933			6,844			7,583			13,566
Increase (decrease) in fair value:
Due to changes in valuation inputs or assumptions	(5,485		)	367			(5,631		)	(1,427		)	3,250			(5,485		)	(5,391		)	(5,631		)
Due to other changes in fair value ~~(1)~~(7)	(992		)	(639		)	(2,185		)	(1,812		)	(2,652		)	(992		)	(7,706		)	(2,185		)
Carrying value, at end of period	$	41,238		$	34,892		$	41,238		$	34,892		$	39,027		$	41,238		$	39,027		$	41,238


~~(1)~~(7)	Represents the realization of expected net servicing cash flows, expected borrower repayments and the passage of time.

See Note 8, 9, Fair Value of Financial Instruments,, for additional disclosures related to the assumptions and estimates used in determining fair value of MSRs.

At September 30, ~~2015~~2016 and December 31, ~~2014~~,2015, the sensitivity of the current fair value of the residential MSRs to immediate 10% and 20% adverse changes in key economic assumptions are included in the following table:


	September 30, 2015			December 31, 2014			September 30, 2016			December 31, 2015
	(Dollars in Thousands)						(Dollars in Thousands)
Fair value of MSRs	$	41,238		$	35,488		$	39,027		$	44,541
Composition of residential loans serviced for others:
Fixed rate mortgage loans	96.7		%	96.1		%	97.2		%	96.8		%
Adjustable rate mortgage loans	3.3			3.9			2.8			3.2
Total	100.0		%	100.0		%	100.0		%	100.0		%
Weighted average life (in years)	5.6			6.2			4.4			5.4
Prepayment speed:	11.1		%	10.6		%	20.6		%	12.4		%
Effect on fair value of a 10% increase	$	(1,368	)	$	(1,220	)	$	(1,834	)	$	(1,547	)
Effect on fair value of a 20% increase	(2,645		)	(2,375		)	(3,512		)	(2,987		)
Weighted average option adjusted spread/discount rate: (1)	9.0		%	10.1		%
Weighted average option adjusted spread:							8.1		%	9.0		%
Effect on fair value of a 10% increase	$	(1,421	)	$	(1,291	)	$	(1,132	)	$	(1,504	)
Effect on fair value of a 20% increase	(2,750		)	(2,492		)	(2,146		)	(2,911		)


~~(1)~~	During the three months ended September 30, 2015, the Company utilized a new third-party service provider for the valuation of servicing rights. The new service provider utilizes an option-adjusted spread valuation approach instead of a static discount rate approach to discount cash flows. This change did not have a material impact on the value of the mortgage servicing rights.

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one assumption may result in changes into another, which may magnify or counteract the effect of the change.

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~~(5)~~(6) Derivatives and Hedging

The Company is a party to derivative instruments in the normal course of business ~~for trading purposes and for purposes other than trading~~ to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates and foreign currency exchange rates. The

Company has made an accounting policy decision to not offset derivative fair value amounts under master netting agreements. See Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015 for additional information on the Company's accounting policies related to derivative instruments and hedging activities. The following table reflects the notional amount and fair value of derivative instruments included on the Company’s Unaudited Condensed Consolidated Balance Sheets on a gross basis.


	September 30, 2015						December 31, 2014						September 30, 2016						December 31, 2015
			Fair Value						Fair Value						Fair Value						Fair Value
	Notional Amount		Derivative Assets (1)		Derivative Liabilities (2)		Notional Amount		Derivative Assets (1)		Derivative Liabilities (2)		Notional Amount		Derivative Assets (1)		Derivative Liabilities (2)		Notional Amount		Derivative Assets (1)		Derivative Liabilities (2)
	(In Thousands)												(In Thousands)
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate swaps related to long-term debt	$	2,123,950	$	80,083	$	—	$	1,423,950	$	69,700	$	—	$	2,123,950	$	95,671	$	—	$	2,123,950	$	59,975	$	9,405
Total fair value hedges			80,083		—				69,700		—				95,671		—				59,975		9,405
Cash flow hedges:
Interest rate contracts:
Swaps related to commercial loans	2,050,000		10,106		—		1,100,000		1,793		1,023		1,725,000		4,862		—		1,900,000		1,574		782
Swaps related to FHLB advances	320,000		—		14,134		320,000		—		13,474		120,000		—		11,846		320,000		—		10,858
Foreign currency contracts:
Forwards related to currency fluctuations													5,593		—		389		8,318		—		40
Total cash flow hedges			10,106		14,134				1,793		14,497				4,862		12,235				1,574		11,680
Total derivatives designated as hedging instruments			$	90,189	$	14,134			$	71,493	$	14,497			$	100,533	$	12,235			$	61,549	$	21,085

Free-standing derivatives not designated as hedging instruments:	Free-standing derivatives not designated as hedging instruments:												Free-standing derivatives not designated as hedging instruments:
Interest rate contracts:
Forward and option contracts related to held for sale mortgages	$	264,000	$	162	$	2,000	$	189,000	$	18	$	1,576
Forward contracts related to held for sale mortgages													$	225,000	$	107	$	1,005	$	216,500	$	502	$	217
Interest rate lock commitments													220,963		4,532		3		175,002		2,880		6
Equity contracts:
Purchased equity option related to equity-linked CDs	875,030		48,493		—		821,849		76,487		—		839,895		61,157		—		876,649		59,375		—
Written equity option related to equity-linked CDs													783,256		—		57,230		831,480		—		56,559
Foreign exchange contracts:
Forwards and swaps related to commercial loans													393,264		849		1,601		479,072		3,821		752
Spots related to commercial loans													42,694		49		—		54,511		6		372
Swap associated with sale of Visa, Inc. Class B shares	60,988		—		1,525		57,393		—		1,435		72,405		—		1,810		67,896		—		1,697
Foreign exchange contracts:
Forwards related to commercial loans	555,061		5,952		695		602,066		5,529		612
Spots related to commercial loans	69,537		—		86		74,940		41		80
Futures contracts (3)	422,000		—		—		342,000		—		—		210,000		—		—		390,000		—		—
Interest rate lock commitments	196,779		3,768		3		180,822		2,319		1
Written equity option related to equity-linked CDs	835,394		—		46,607		795,467		—		74,319
Trading account assets and liabilities:
Interest rate contracts for customers	23,346,172		386,687		323,285		18,678,390		296,239		236,763		28,597,938		518,406		458,763		23,370,927		303,944		238,611
Commodity contracts for customers	154,853		17,272		17,221		264,491		25,569		25,448		21,692		2,093		2,093		114,336		14,127		14,110
Foreign exchange contracts for customers	294,534		10,333		9,611		425,123		8,268		7,527		900,644		13,027		10,997		425,946		9,899		8,578
Total trading account assets and liabilities			414,292		350,117				330,076		269,738				533,526		471,853				327,970		261,299
Total free-standing derivative instruments not designated as hedging instruments			$	472,667	$	401,033			$	414,470	$	347,761			$	600,220	$	533,502			$	394,554	$	320,902


(1)	Derivative assets, except for trading account assets that are recorded as a component of trading account assets on the Company's Unaudited Condensed Consolidated Balance Sheets, are recorded in other assets on the Company’s Unaudited Condensed Consolidated Balance Sheets.


(2)	Derivative liabilities are recorded in accrued expenses and other liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheets.


(3)	Changes in fair value are cash settled daily; therefore, there is no ending balance at any given reporting period.

Hedging Derivatives

The Company uses derivative instruments to manage the risk of earnings fluctuations caused by interest rate volatility. For those financial instruments that qualify and are designated as a hedging relationship, either a fair value hedge or

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cash flow hedge, the effect of interest rate movements on the hedged assets or liabilities will generally be offset by change in fair value of the derivative instrument.

Fair Value Hedges

The Company enters into fair value hedging relationships using interest rate swaps to mitigate the Company’s exposure to losses in value as interest rates change. Derivative instruments that are used as part of the Company’s interest rate risk management strategy include interest rate swaps that relate to the pricing of specific balance sheet assets and liabilities. Interest rate swaps generally involve the exchange of fixed and variable rate interest payments between two parties, based on a common notional principal amount and maturity date.

Interest rate swaps are used to convert the Company’s fixed rate long-term debt to a variable rate. The critical terms of the interest rate swaps match the terms of the corresponding hedged items. All components of each derivative instrument’s gain or loss are included in the assessment of hedge effectiveness.

The Company recognized no gains or losses for the three and nine months ended September 30, ~~2015~~2016 and ~~2014~~2015 related to hedged firm commitments no longer qualifying as a fair value hedge. At September 30, ~~2015,~~2016, the fair value hedges had a weighted average expected remaining term of ~~5.4~~4.4 years.

The following table reflects the change in fair value for interest rate contracts and the related hedged items as well as other gains and losses related to fair value hedges including gains and losses recognized because of hedge ineffectiveness.

Gain (Loss) for the
Condensed Consolidated Three Months Ended September 30, Nine Months Ended September 30,
Statements of Income Caption 2015 2014 2015 2014
(In Thousands)
Change in fair value of interest rate contracts:
Interest rate swaps hedging long term debt Interest on FHLB and other borrowings $ 40,416
$ (5,391 ) $ 10,383
$ (5,515 )
Hedged long term debt Interest on FHLB and other borrowings (38,634 ) 4,829
(12,511 ) 5,048
Other gains on interest rate contracts:
Interest and amortization related to interest rate swaps on hedged long term debt Interest on FHLB and other borrowings 12,413
6,081
34,157
18,114

~~There were~~ no ~~material fair value hedging gains and losses recognized because of hedge ineffectiveness for the three and nine months ended September 30, 2015 and~~ ~~2014~~.



		Gain (Loss) for the
	Condensed Consolidated	Three Months Ended September 30,						Nine Months Ended September 30,
	Statements of Income Caption	2016			2015			2016			2015
		(In Thousands)
Change in fair value of interest rate contracts:
Interest rate swaps hedging long term debt	Interest on FHLB and other borrowings	$	(20,209	)	$	40,416		$	45,101		$	10,383
Hedged long term debt	Interest on FHLB and other borrowings	19,246			(38,634		)	(39,978		)	(12,511		)
Other gains on interest rate contracts:
Interest and amortization related to interest rate swaps on hedged long term debt	Interest on FHLB and other borrowings	10,489			12,413			31,834			34,157

Cash Flow Hedges

The Company enters into cash flow hedging relationships using interest rate swaps and options, such as caps and floors, to mitigate exposure to the variability in future cash flows or other forecasted transactions associated with its floating rate assets and liabilities. The Company uses interest rate swaps and options to hedge the repricing characteristics of its floating rate commercial loans and FHLB advances. The Company also uses foreign currency forward contracts to hedge its exposure to fluctuations in foreign currency exchange rates due to a portion of the money transfer expense being denominated in foreign currency. All components of each derivative instrument’s gain or loss are included in the assessment of hedge effectiveness. The initial assessment of expected hedge effectiveness is based on regression analysis. The ongoing periodic measures of hedge ineffectiveness are based on the expected change in cash flows of the hedged item caused by changes in the benchmark interest rate. There were no material cash flow hedging gains or losses recognized because of hedge ineffectiveness for the three and nine months ended September 30, ~~2015~~2016 and ~~2014~~2015. There were no gains or losses reclassified from other comprehensive income because of the discontinuance of cash flow hedges related to certain forecasted transactions that are probable of not occurring for the three and nine months ended September 30, ~~2015~~2016 and ~~2014~~2015.

At September 30, ~~2015,~~2016, cash flow hedges not terminated had a net fair value of $~~(4.0)~~(7.4) million and a weighted average life of ~~1.7~~1.1 years. ~~Based on the current interest rate environment,~~Net losses of $~~523 thousand~~1.2 million ~~of losses~~ are expected to be

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reclassified to ~~net interest~~ income over the next 12 months as net settlements occur. The maximum length of time over which the entity is hedging its exposure to the variability in future cash flows for forecasted transactions is ~~5.8~~4.8 years.

The following table presents the effect of derivative instruments designated and qualifying as cash flow hedges on the Company’s Unaudited Condensed Consolidated Balance Sheets and the Company’s Unaudited Condensed Consolidated Statements of Income.

Gain (Loss) for the
Three Months Ended
September 30, Nine Months Ended
September 30,
2015 2014 2015 2014
(In Thousands)
Interest rate contracts:
Net change in amount recognized in other comprehensive income $ 1,838
$ (706 ) $ 4,910
$ (2,388 )
Amount reclassified from accumulated other comprehensive income into net interest income 1,924
(41 ) 4,778
(1,768 )
Amount of ineffectiveness recognized in net interest income —
—
—
—



	Gain (Loss) for the
	Three Months Ended September 30,					Nine Months Ended September 30,
	2016			2015		2016		2015
	(In Thousands)
Interest rate and foreign currency exchange contracts:
Net change in amount recognized in other comprehensive income	$	(1,461	)	$	2,042	$	1,728	$	5,322
Amount reclassified from accumulated other comprehensive income (loss) into net income	702			1,924		1,678		4,778
Amount of ineffectiveness recognized in net income	—			—		—		—

Derivatives Not Designated As Hedges

Derivatives not designated as hedges include those that are entered into as either economic hedges as part of the Company’s overall risk management strategy or to facilitate client needs. Economic hedges are those that do not qualify to be treated as a fair value hedge, cash flow hedge or foreign currency hedge for accounting purposes, but are necessary to economically manage the risk exposure associated with the assets and liabilities of the Company.

The Company also enters into a variety of interest rate contracts, commodity contracts and foreign exchange contracts in its trading activities. The primary purpose for using these derivative instruments in the trading account is to facilitate customer transactions. The ~~trading~~ interest rate contract portfolio classified as trading is actively managed and hedged with similar products to limit market value risk of the portfolio. Changes in the estimated fair value of contracts in the trading account along with the related interest settlements on the contracts are recorded in noninterest income as corporate and correspondent investment sales in the Company's Unaudited Condensed Consolidated Statements of Income.

The Company enters into forward contracts to economically hedge the change in fair value of certain residential mortgage loans held for sale due to changes in interest rates. Revaluation gains and losses from free-standing derivatives related to mortgage banking activity are recorded as a component of mortgage banking income in the Company’s Unaudited Condensed Consolidated Statements of Income.

Interest rate lock commitments issued on residential mortgage loan commitments to be held for resale are also considered free-standing derivative instruments, and the interest rate exposure on these commitments is economically hedged primarily with forward contracts. Revaluation gains and losses from free-standing derivatives related to mortgage banking activity are recorded as a component of mortgage banking income in the Company's Unaudited Condensed Consolidated Statements of Income.

In conjunction with the sale of its Visa, Inc. Class B shares in 2009, the Company entered into a total return swap in which the Company will make or receive payments based on subsequent changes in the conversion rate of the Class B shares into Class A shares. This total return swap is accounted for as a free-standing derivative.

The Company offers its customers equity-linked CDs that have a return linked to individual equities and equity indices. Under appropriate accounting guidance, a CD that pays interest based on changes in an equity index is a hybrid instrument that requires separation into a host contract (the CD) and an embedded derivative contract (written equity call option). The Company has entered into an offsetting derivative contract in order to economically hedge the exposure related to the issuance of equity-linked CDs. Both the embedded derivative and derivative contract entered into by the Company are classified as free-standing derivative instruments that are recorded at fair value with offsetting gains and losses recognized within noninterest expense in the Company's Unaudited Condensed Consolidated Statements of Income.

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The Company also enters into foreign currency contracts to hedge its exposure to fluctuations in foreign currency exchange rates due to its funding of commercial loans in foreign currencies.

The net gains and losses recorded in the Company's Unaudited Condensed Consolidated Statements of Income from free-standing derivative instruments not designated as hedging instruments are summarized in the following table.


		Gain (Loss) for the									Gain (Loss) for the
	Condensed Consolidated	Three Months Ended September 30,				Nine Months Ended September 30,				Condensed Consolidated	Three Months Ended September 30,						Nine Months Ended September 30,
	Statements of Income Caption	2015		2014		2015		2014		Statements of Income Caption	2016			2015			2016			2015
		(In Thousands)									(In Thousands)
Futures contracts	Mortgage banking income and corporate and correspondent investment sales	(248	)	87		(199	)	(146	)	Mortgage banking income and corporate and correspondent investment sales	$	86		$	(248	)	$	(229	)	$	(199	)
Option contracts related to mortgage servicing rights	Mortgage banking income	—		—		(195	)	41		Mortgage banking income	—			—			(264		)	(195		)
Interest rate contracts:
Forward and option contracts related to residential mortgage loans held for sale	Mortgage banking income	(2,317	)	1,558		1,679		(2,549	)
Forward contracts related to residential mortgage loans held for sale										Mortgage banking income	1,094			(2,317		)	(2,027		)	1,679
Interest rate lock commitments	Mortgage banking income	308		(842	)	1,447		2,089		Mortgage banking income	(162		)	308			1,655			1,447
Interest rate contracts for customers	Corporate and correspondent investment sales	4,961		4,800		21,490		13,958		Corporate and correspondent investment sales	5,371			4,961			14,780			21,490
Commodity contracts:
Commodity contracts for customers	Corporate and correspondent investment sales	(2	)	191		7		94		Corporate and correspondent investment sales	(1		)	(2		)	(6		)	7
Equity contracts:
Purchased equity option related to equity-linked CDs	Other expense	(13,960	)	17,979		(27,995	)	24,686		Other expense	(3,716		)	(13,960		)	1,782			(27,995		)
Written equity option related to equity-linked CDs	Other expense	13,652		(17,777	)	27,712		(24,321	)	Other expense	3,625			13,652			(672		)	27,712
Foreign currency contracts:
Forward contracts related to commercial loans	Other income	17,181		44,452		40,265		27,022
Forward and swap contracts related to commercial loans										Other income	(1,517		)	17,181			(5,173		)	40,265
Spot contracts related to commercial loans	Other income	(4,143	)	(4,459	)	(7,663	)	(1,052	)	Other income	1,471			(4,143		)	91			(7,663		)
Foreign currency exchange contracts for customers	Corporate and correspondent investment sales	590		309		1,451		679		Corporate and correspondent investment sales	1,305			590			2,954			1,451

Derivatives Credit and Market Risks

By using derivative instruments, the Company is exposed to credit and market risk. If the counterparty fails to perform, credit risk is equal to the extent of the Company’s fair value gain in a derivative. When the fair value of a derivative instrument contract is positive, this generally indicates that the counterparty owes the Company and, therefore, creates a credit risk for the Company. When the fair value of a derivative instrument contract is negative, the Company owes the counterparty and, therefore, it has no credit risk. The Company minimizes the credit risk in derivative instruments by entering into transactions with high-quality counterparties that are reviewed periodically. Credit losses are also mitigated through collateral agreements and other contract provisions with derivative counterparties.

Market risk is the adverse effect that a change in interest rates or implied volatility rates has on the value of a financial instrument. The Company manages the market risk associated with interest rate contracts by establishing and monitoring limits as to the types and degree of risk that may be undertaken.

The Company’s derivatives activities are monitored by its Asset/Liability Committee as part of its risk-management oversight. The Company’s Asset/Liability Committee is responsible for mandating various hedging strategies that are developed through its analysis of data from financial simulation models and other internal and industry sources. The resulting hedging strategies are then incorporated into the Company’s overall interest rate risk management and trading strategies.

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Entering into interest rate swap agreements and options involves not only the risk of dealing with counterparties and their ability to meet the terms of the contracts but also interest rate risk associated with unmatched positions. At September 30, ~~2015,~~2016, interest rate swap agreements and options classified as trading were substantially matched. The

Company had credit risk of $~~414~~534 million related to derivative instruments in the trading account portfolio, which does not take into consideration master netting arrangements or the value of the collateral. There were $2.6 million and $2.5 million of net credit losses associated with derivative instruments classified as trading for the three and nine months ended September 30, 2016, respectively. There were $15 thousand and $9 thousand ~~respectively, in~~of net credit losses associated with derivative instruments classified as trading for the three and nine months ended September 30, 2015. ~~There were $125 thousand and $851 thousand, respectively, in net credit losses associated with derivative instruments classified as trading for the three and nine months ended September 30, 2014.~~ At September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, there were no material nonperforming derivative positions classified as trading.

The Company’s derivative positions held for hedging purposes are primarily executed in the over-the-counter market. These positions at September 30, ~~2015~~2016 have credit risk of $90101 million, which does not take into consideration master netting arrangements or the value of the collateral.

There were no credit losses associated with derivative instruments classified as nontrading for the three and nine months ended September 30, ~~2015~~2016 and ~~2014~~2015. At September 30, ~~2015~~2016 and December 31, ~~2014~~2015, there were no nonperforming derivative positions classified as nontrading.

As of September 30, ~~2015~~2016 and December 31, ~~2014~~2015, the Company had recorded the right to reclaim cash collateral of $~~194~~295 million and $46162 million, respectively, within other assets on the Company’s Unaudited Condensed Consolidated Balance Sheets and had recorded the obligation to return cash collateral of $4239 million and $6240 million, respectively, within deposits on the Company’s Unaudited Condensed Consolidated Balance Sheets.

Contingent Features

Certain of the Company’s derivative instruments contain provisions that require the Company’s debt to maintain a certain credit rating from each of the major credit rating agencies. If the Company’s debt were to fall below this rating, it would be in violation of these provisions, and the counterparties to the derivative instruments could demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position on September 30, ~~2015~~2016 was $5761 million for which the Company has collateral requirements of $5660 million in the normal course of business. If the credit risk-related contingent features underlying these agreements had been triggered on September 30, ~~2015,~~2016, the Company’s collateral requirements to its counterparties would have increased by $1 million. The aggregate fair value of all derivative instruments with credit risk-related contingent features that were in a liability position on December 31, ~~2014~~2015 was $6546 million for which the Company had collateral requirements of $6245 million in the normal course of business. If the credit risk-related contingent features underlying these agreements had been triggered on December 31, ~~2014~~2015, the Company’s collateral requirements to its counterparties would have increased by $41 million.

Netting of Derivative Instruments

The Company is party to master netting arrangements with its financial institution counterparties for some of its derivative and hedging activities. The Company does not offset assets and liabilities under these master netting arrangements for financial statement presentation purposes. The master netting arrangements provide for single net settlement of all derivative instrument arrangements, as well as collateral, in the event of default, or termination of, any one contract with the respective counterparties. Cash collateral is usually posted by the counterparty with a net liability position in accordance with contract thresholds.

~~Table of Contents~~

The following represents the Company’s total gross derivative instrument assets and liabilities subject to an enforceable master netting arrangement. The derivative instruments the Company has with its customers are not subject to an enforceable master netting arrangement.


	Gross Amounts Recognized		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amount Presented in the Condensed Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Received/ Pledged (1)		Net Amount		Gross Amounts Recognized		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amount Presented in the Condensed Consolidated Balance Sheets		Financial Instruments Collateral Received/Pledged (1)		Cash Collateral Received/ Pledged (1)		Net Amount
	(In Thousands)												(In Thousands)
September 30, 2015
September 30, 2016
Derivative financial assets:
Subject to a master netting arrangement	$	223,580	$	—	$	223,580	$	3,186	$	35,444	$	184,950	$	285,731	$	—	$	285,731	$	109	$	35,882	$	249,740
Not subject to a master netting arrangement	339,276		—		339,276		—		—		339,276		415,022		—		415,022		—		—		415,022
Total derivative financial assets	$	562,856	$	—	$	562,856	$	3,186	$	35,444	$	524,226	$	700,753	$	—	$	700,753	$	109	$	35,882	$	664,762

Derivative financial liabilities:
Subject to a master netting arrangement	$	345,621	$	—	$	345,621	$	23,143	$	189,765	$	132,713	$	476,133	$	—	$	476,133	$	24,862	$	295,448	$	155,823
Not subject to a master netting arrangement	69,546		—		69,546		—		—		69,546		69,604		—		69,604		—		—		69,604
Total derivative financial liabilities	$	415,167	$	—	$	415,167	$	23,143	$	189,765	$	202,259	$	545,737	$	—	$	545,737	$	24,862	$	295,448	$	225,427

December 31, 2014
December 31, 2015
Derivative financial assets:
Subject to a master netting arrangement	$	225,227	$	—	$	225,227	$	—	$	58,309	$	166,918	$	191,061	$	—	$	191,061	$	—	$	33,517	$	157,544
Not subject to a master netting arrangement	260,736		—		260,736		—		—		260,736		265,042		—		265,042		—		—		265,042
Total derivative financial assets	$	485,963	$	—	$	485,963	$	—	$	58,309	$	427,654	$	456,103	$	—	$	456,103	$	—	$	33,517	$	422,586

Derivative financial liabilities:
Subject to a master netting arrangement	$	259,018	$	—	$	259,018	$	29,677	$	44,163	$	185,178	$	269,295	$	—	$	269,295	$	23,856	$	159,594	$	85,845
Not subject to a master netting arrangement	103,240		—		103,240		—		—		103,240		72,692		—		72,692		—		—		72,692
Total derivative financial liabilities	$	362,258	$	—	$	362,258	$	29,677	$	44,163	$	288,418	$	341,987	$	—	$	341,987	$	23,856	$	159,594	$	158,537


(1)	The actual amount of collateral received/pledged is limited to the asset/liability balance and does not include excess collateral received/pledged. When excess collateral exists, the collateral shown in the table above has been allocated based on the percentage of the actual amount of collateral posted.

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(67) Securities Financing Activities

~~Securities Sold Under Agreements to Repurchase~~

Securities sold under agreements to repurchase are accounted for as secured borrowings. The following table presents the Company's related activity, by collateral type and remaining contractual maturity.

September 30, 2015
Remaining Contractual Maturity of the Agreements
Overnight and Continuous Up to 30 days 30 - 90 days Greater Than 90 days Total
(In Thousands)
Securities Sold Under Agreements Repurchase:
U.S. Treasury and other U.S. government agencies $ 3,514,574
$ 220,369
$ —
$ —
$ 3,734,943
Mortgage-backed securities —
—
913,612
—
913,612
Collateralized mortgage obligations —
—
145,888
—
145,888
Total $ 3,514,574
$ 220,369
$ 1,059,500
$ —
$ 4,794,443

In the event of a significant decline in fair value of the collateral pledged for the securities sold under agreements to repurchase, the Company would be required to provide additional collateral. The Company minimizes the risk by monitoring the liquidity and credit quality of the collateral, as well as the maturity profile of the transactions.

At September 30, 2015, the fair value of collateral received related to securities purchased under agreements to resell was $5.1 billion and the fair value of collateral pledged for securities sold under agreements to repurchase was $4.9 billion. At December 31, 2014, the fair value of collateral received related to securities purchased under agreements to resell was $2.6 billion and the fair value of collateral pledged for securities sold under agreements to repurchase was $2.5 billion.

Netting of Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase

The Company has various financial asset and liabilities that are subject to enforceable master netting agreements or similar agreements. The Company's derivatives that are subject to enforceable master netting agreements or similar transactions are discussed in Note 5,6, Derivatives and Hedging. The Company enters into agreements under which it purchases or sells securities subject to an obligation to resell or repurchase the same or similar securities. Securities purchased under agreements to resell and securities sold under agreements to repurchase are generally accounted for as collateralized financing transactions and recorded at the amounts at which the securities were purchased or sold plus accrued interest. The securities pledged as collateral are generally U.S. Treasury and other U.S. government agencies, mortgage-backed securities and collateralized mortgage ~~obligations classified as available for sale.~~obligations.

Securities purchased under agreements to resell and securities sold under agreements to repurchase are governed by a MRA. Under the terms of the MRA, all transactions between the Company and the counterparty constitute a single business relationship such that in the event of default, the nondefaulting party is entitled to set off claims and apply property held by that party in respect of any transaction against obligations owed. Any payments, deliveries, or other transfers may be applied against each other and netted. These amounts are limited to the contract asset/liability balance,

and accordingly, do not include excess collateral received or pledged. The Company offsets the assets and liabilities under netting arrangements for the balance sheet presentation of securities purchased under agreements to resell and securities sold under agreements to repurchase provided certain criteria are met that permit balance sheet netting.

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~~The following represents the Company’s assets/liabilities subject to an enforceable master netting arrangement.~~


	Gross Amounts Recognized		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amount Presented in the Condensed Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Received/ Pledged (1)		Net Amount		Gross Amounts Recognized		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amount Presented in the Condensed Consolidated Balance Sheets		Financial Instruments Collateral Received/Pledged (1)		Cash Collateral Received/ Pledged (1)		Net Amount
	(In Thousands)												(In Thousands)
September 30, 2015
September 30, 2016
Securities purchased under agreements to resell:	Securities purchased under agreements to resell:												Securities purchased under agreements to resell:
Subject to a master netting arrangement	$	5,140,025	$	4,693,819	$	446,206	$	446,206	$	—	$	—	$	4,113,664	$	3,795,800	$	317,864	$	317,864	$	—	$	—

Securities sold under agreements to repurchase:	Securities sold under agreements to repurchase:												Securities sold under agreements to repurchase:
Subject to a master netting arrangement	$	4,794,443	$	4,693,819	$	100,624	$	100,624	$	—	$	—	$	3,881,978	$	3,795,800	$	86,178	$	86,178	$	—	$	—

December 31, 2014
December 31, 2015
Securities purchased under agreements to resell:	Securities purchased under agreements to resell:												Securities purchased under agreements to resell:
Subject to a master netting arrangement	$	3,100,200	$	2,533,661	$	566,539	$	566,539	$	—	$	—	$	5,282,661	$	5,003,555	$	279,106	$	279,106	$	—	$	—

Securities sold under agreements to repurchase:	Securities sold under agreements to repurchase:												Securities sold under agreements to repurchase:
Subject to a master netting arrangement	$	2,969,345	$	2,533,661	$	435,684	$	435,684	$	—	$	—	$	5,080,164	$	5,003,555	$	76,609	$	76,609	$	—	$	—


(1)	The actual amount of collateral received/pledged is limited to the asset/liability balance and does not include excess collateral received/pledged. When excess collateral exists, the collateral shown in the table above has been allocated based on the percentage of the actual amount of collateral posted.

Collateral Associated with Securities Financing Activities



	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 days		30 - 90 days		Greater Than 90 days		Total
	(In Thousands)
September 30, 2016
Securities sold under agreements to repurchase:
U.S. Treasury and other U.S. government agencies	$	1,557,005	$	602,850	$	1,632,513	$	—	$	3,792,368
Mortgage-backed securities	—		—		89,610		—		89,610
Total	$	1,557,005	$	602,850	$	1,722,123	$	—	$	3,881,978

December 31, 2015
Securities sold under agreements to repurchase:
U.S. Treasury and other U.S. government agencies	$	3,214,085	$	232,924	$	518,623	$	—	$	3,965,632
Mortgage-backed securities	—		—		976,449		—		976,449
Collateralized mortgage obligations	—		—		138,083		—		138,083
Total	$	3,214,085	$	232,924	$	1,633,155	$	—	$	5,080,164

At September 30, 2016, the fair value of collateral received related to securities purchased under agreements to resell was $4.0 billion and the fair value of collateral pledged for securities sold under agreements to repurchase was $3.4 billion. At December 31, 2015, the fair value of collateral received related to securities purchased under agreements to resell was $5.2 billion and the fair value of collateral pledged for securities sold under agreements to repurchase was $4.9 billion.

~~(7)~~(8) Commitments, Contingencies and Guarantees

Commitments to Extend Credit & Standby and Commercial Letters of Credit

The following represents the Company’s commitments to extend credit, standby letters of credit and commercial letters of credit:


	September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015
	(In Thousands)				(In Thousands)
Commitments to extend credit	$	28,139,475	$	28,369,666	$	26,736,536	$	27,853,409
Standby and commercial letters of credit	1,745,629		1,871,323		1,406,754		1,709,145

Commitments to extend credit are agreements to lend to customers as long as there is no violation of any condition established in the contract. Commitments generally 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.

Standby and commercial letters of credit are commitments issued by the Company to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions, and expire in decreasing amounts with terms ranging from one to four years.

The credit risk involved in issuing letters of credit and commitments is essentially the same as that involved in extending loan facilities to customers. The fair value of the letters of credit and commitments typically approximates the fee received from the customer for issuing such commitments. These fees are deferred and are recognized over the commitment period. At September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, the recorded amount of these deferred fees was ~~$5.9~~$6.9 million and ~~$5.2~~$6.0 million, respectively. The Company holds various assets as collateral supporting those commitments for which collateral is deemed necessary. At September 30, ~~2015,~~2016, the maximum potential amount of future undiscounted payments the Company could be required to make under outstanding standby letters of credit was ~~$1.7~~$1.4 billion. At September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, the Company had reserves related to letters of credit and

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unfunded commitments recorded in accrued expenses and other liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheet of ~~$90~~$101 million and ~~$94~~$85 million, respectively.

Loan Sale Recourse

The Company has potential recourse related to FNMA securitizations. At both September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, the amount of potential recourse was $19 million ~~and $20 million,~~ of which the Company had reserved ~~$877~~$680 thousand and ~~$655~~$869 thousand, respectively, which is recorded in accrued expenses and other liabilities on the Company's Unaudited Condensed Consolidated Balance Sheets for the respective periods.

The Company also issues standard representations and warranties related to mortgage loan sales to government-sponsored agencies. Although these agreements often do not specify limitations, the Company does not believe that any payments related to these representations and warranties would materially change the financial condition or results of operations of the Company. At ~~both~~ September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, the Company ~~recorded~~had $1 million and $2 million, respectively, of reserves in accrued expenses and other liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheets related to potential losses from loans sold.

Loss Sharing Agreement

In connection with the Guaranty Bank acquisition, the Bank entered into loss sharing agreements with the FDIC that covered approximately $9.7 billion of loans and OREO, excluding the impact of purchase accounting adjustments. In accordance with the terms of the loss sharing agreements, the FDIC’s obligation to reimburse the Bank for losses with respect to the acquired loans and acquired OREO begins with the first dollar of incurred losses, as defined in the loss sharing agreements. The terms of the loss sharing agreements provide that the FDIC will reimburse the Bank for 80% of incurred losses up to $2.3 billion and 95% of incurred losses in excess of $2.3 billion. Gains and recoveries on covered assets offset incurred losses, or are paid to the FDIC, at the applicable loss share percentage at the time of recovery. The loss sharing agreements provide for FDIC loss sharing for five years for commercial loans and 10 years for single family residential loans. The loss sharing agreement for commercial loans expired in the fourth quarter of 2014.

The provisions of the loss sharing agreements may also require a payment by the Bank to the FDIC on October 15, 2019. On that date, the Bank is required to pay the FDIC 60% of the excess, if any, of (i) $457 million over (ii) the sum of (a) 25% of the total net amounts paid to the Bank under both of the loss share agreements plus (b) 20% of the deemed total cost to the Bank of administering the covered assets under the loss sharing agreements. The deemed total cost to the Bank of administering the covered assets is the sum of 2% of the average of the principal amount of covered assets based on the beginning and end of year balances for each of the 10 years during which the loss sharing agreements are in effect. At ~~both~~ September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, the Company estimated the potential amount of payment due to the FDIC in 2019, at the end of the loss sharing agreements, to be $147 million and $145 ~~million.~~million, respectively. The ultimate settlement amount of this payment due to the FDIC is dependent upon the performance of the underlying covered assets, the passage of time and actual claims submitted to the FDIC.

The Company has chosen to net the amounts due from the FDIC and due to the FDIC into the FDIC indemnification liability. At September 30, 2016 and December 31, 2015, the FDIC indemnification liability was $136 million and $131 million, respectively, and was recorded in accrued expenses and other liabilities in the Company's Unaudited Condensed Consolidated Balance Sheets.

Legal and Regulatory Proceedings

In the ordinary course of business, the Company is subject to legal proceedings, including claims, litigation, investigations and administrative proceedings, all of which are considered incidental to the normal conduct of business.

The Company believes it has substantial defenses to the claims asserted against it in its currently outstanding legal proceedings and, with respect to such legal proceedings, intends to continue to defend itself vigorously against such ~~claims.~~legal proceedings.

Set forth below are descriptions of certain of the Company’s legal ~~proceedings:~~proceedings.

In February ~~2015, the Company was named as a defendant in a lawsuit filed in the Superior Court for the State of California, County of San Diego, Morris Cerullo World Evangelism v.~~2011, BBVA Compass and Jack Wilkinson, wherein the plaintiff alleges the Company wrongfully failed to honor a standby letter of credit in the amount of $5.2 million. The plaintiff's allegations in this lawsuit are virtually identical to its allegations in the earlier filed federal court lawsuit. As in that lawsuit, the plaintiff seeks $5.2 million, plus other, unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

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~~In June 2013, the Company~~Securities, Inc. (“BSI”) was named as a defendant in a lawsuit filed in the United States District Court for the Northern District of California, The California Public Employees’ Retirement System v. BBVA Securities, Inc., et al., wherein the claims arise out of securities offerings in which Lehman Brothers was the issuer. BSI was an underwriter. The plaintiff alleges that Lehman Brothers made material misstatements in the offering materials, and that the underwriter defendants failed to conduct appropriate due diligence to discover the alleged misstatements. The plaintiff seeks unspecified monetary relief. The District Court granted the underwriter defendants' motion to dismiss and the plaintiff has appealed. On July 8, 2016, the appellate court affirmed the dismissal of the claims against the underwriter defendants, and on September 22, 2016, the plaintiff filed a petition for writ of certiorari with the United States Supreme Court. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In May 2013, BBVA Compass was named as a counterclaim defendant in a lawsuit filed in the United States District Court for the Southern District of California, BBVA Compass v. Morris Cerullo World Evangelism, wherein the defendant/counterclaim plaintiff alleges that BBVA Compass wrongfully failed to honor a standby letter of credit in the amount of $5.2 million. The defendant/counterclaim plaintiff seeks $5.2 million, plus other, unspecified monetary relief. BBVA Compass obtained a defense verdict following a bench trial and the defendant/counterclaim plaintiff has appealed. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In June 2013, BBVA Compass was named as a defendant in a lawsuit filed in the United States District Court of the Northern District of Alabama, Intellectual Ventures II, LLC v. BBVA Compass Bancshares, Inc. and BBVA Compass, wherein the plaintiff alleges ~~the Company~~that BBVA Compass is infringing five patents owned by the plaintiff and related to the security infrastructure for ~~the Company's~~BBVA Compass’ online banking services. The plaintiff seeks unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In ~~March 2014, the Company~~January 2016, BSI was named as a defendant in a lawsuit filed in the ~~Circuit~~United States District Court for the Southern District of ~~the Fourth Judicial Circuit in Duval County, Florida, Jack C. Demetree, et al. v. BBVA Compass,~~Texas, In re Plains All American Pipeline, L.P. Securities Litigation, wherein the plaintiffs ~~allege that their accountant stole approximately $17.1 million through unauthorized transactions on their accounts from 2009 to 2013,~~challenge statements made in registration materials and ~~that BBVA Compass enabled~~prospectuses filed with the ~~theft.~~Securities and Exchange Commission in connection with eight securities offerings of stock and notes issued by Plains GP Holdings and Plains All American Pipeline. BSI was an underwriter. The plaintiffs seek unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In November 2014, the Company was named as a defendant in a lawsuit filed in the United States District Court for the Western District of Texas, Maxim Integrated Products v. Compass Bank, wherein the plaintiff alleges the Company is infringing three patents owned by the plaintiff and related to data encryption for the Company’s mobile banking applications. The plaintiff seeks unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

The Company (including ~~the Bank)~~its subsidiaries) is or may become involved from time to time in information-gathering requests, reviews, investigations and proceedings (both formal and informal) by various governmental regulatory agencies, law enforcement authorities and self-regulatory bodies regarding the Company’s business. Such matters ~~could develop into administrative, civil, or criminal proceeding or enforcement actions and~~ may result in material adverse consequences, including without limitation adverse judgments, settlements, fines, penalties, orders, injunctions, alterations in the Company’s business practices or other actions, and could result in additional expenses and collateral costs, including reputational damage, which could have a material adverse impact on the Company’s business, consolidated financial position, results of operations or cash flows.

The Company owns all of the outstanding stock of BSI, a registered broker-dealer. Applicable law limits BSI from deriving more than 25 percent of its gross revenues from underwriting or dealing in bank-ineligible securities (“ineligible revenue”). Prior to the contribution of BSI to the Company in April 2013, BSI’s ineligible revenues in certain periods exceeded the 25 percent limit. ItThe Company is ~~possible that~~cooperating with the Federal Reserve Board ~~may take either formal or informal~~as it considers potential enforcement action against BSI and the Company ~~and~~including the imposition of civil money penalties ~~cannot be excluded. At this time, the Company does not know the amount of a potential civil money penalty, if any.~~or other actions.

There are other litigation matters that arise in the normal course of business. The Company assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, the Company

records a liability in its consolidated financial statements. These legal reserves may be increased or decreased to reflect any relevant developments. Where a loss is not probable or the amount of loss is not estimable, the Company does not accrue legal reserves. At September 30, ~~2015,~~2016, the Company had accrued legal reserves in the amount of ~~$13~~$30 million. Additionally, for those matters where a loss is both estimable and reasonably possible, the Company estimates losses that it could incur beyond the accrued legal reserves. Under U.S. GAAP, an event is ~~“reasonably possible”~~"reasonably possible" if ~~“the~~"the chance of the future event or events occurring is more than remote but less than ~~likely”~~likely" and an event is ~~“remote”~~"remote" if ~~“the~~"the chance of the future event or events occurring is slight.”" At September 30, ~~2015,~~2016, there were no such matters where a loss was both estimable and reasonably possible beyond the accrued legal reserve.

While the outcome of legal proceedings and the timing of the ultimate resolution are inherently difficult to predict, based on information currently available, advice of counsel and available insurance coverage, the Company believes that it has established adequate legal reserves. Further, based upon available information, the Company is of the opinion that these legal proceedings, individually or in the aggregate, will not have a material adverse effect on the Company’s financial condition or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to the Company’s results of operations for any particular period, depending, in part, upon the size of the loss or liability imposed and the operating results for the applicable period.

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Income Tax Review

The Company is subject to review and examination from various tax authorities. The Company is currently under examination by ~~the IRS and~~ a number of states, and has received notices of proposed adjustments related to ~~federal and~~ state income taxes due for prior years. Management believes that adequate provisions for income taxes have been recorded.

~~(8)~~(9) Fair Value of Financial Instruments

The Company applies the fair value accounting guidance required under ASC Topic 820 which establishes a framework for measuring fair value. This guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. This guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within this fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. The three levels within the fair value hierarchy are described as follows.

Level 1 – Fair value is based on quoted prices in an active market for identical assets or liabilities.

Level 2 – Fair value is based on quoted market prices for similar instruments traded in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Fair value is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities would include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar pricing techniques based on the Company’s own assumptions about what market participants would use to price the asset or liability.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments under the fair value hierarchy, is set forth below. These valuation methodologies were applied to the Company’s financial assets and financial liabilities carried at fair value. In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use observable market based parameters as inputs. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as other unobservable parameters. Any such valuation adjustments are applied consistently over time. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The Company’s valuation methodologies may produce a fair value

calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and, therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented herein.

Financial Instruments Measured at Fair Value on a Recurring Basis

Trading account assets and liabilities, securities available for sale, certain mortgage loans held for sale, derivative assets and liabilities, and mortgage servicing rights are recorded at fair value on a recurring basis. The following is a description of the valuation methodologies for these assets and liabilities.

Trading account assets and liabilities and investment securities available for sale – Trading account assets and liabilities and investment securities available for sale consist of U.S. Treasury and other U.S. government agencies securities, mortgage-backed securities, collateralized mortgage obligations, debt obligations of state and political subdivisions, other debt and equity securities, and derivative contracts.

U.S. Treasury and other U.S. government agencies securities are valued based on quoted market prices of identical assets on active exchanges (Level 1 measurements) or are valued based on a market approach using

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observable inputs such as benchmark yields, reported trades, broker/dealer quotes, benchmark securities, and bids/offers of government-sponsored enterprise securities (Level 2 measurements).

Mortgage-backed securities are primarily valued using market-based pricing matrices that are based on observable inputs including benchmark To Be Announced security prices, U.S. Treasury yields, U.S. dollar swap yields, and benchmark floating-rate indices. Mortgage-backed securities pricing may also give consideration to pool-specific data such as prepayment history and collateral characteristics. Valuations for mortgage-backed securities are therefore classified as Level 2 measurements.

Collateralized mortgage obligations are valued using market-based pricing matrices that are based on observable inputs including reported trades, bids, offers, dealer quotes, U.S. Treasury yields, U.S. dollar swap yields, market convention prepayment speeds, tranche-specific characteristics, prepayment history, and collateral characteristics. Fair value measurements for collateralized mortgage obligations are classified as Level 2.

Debt obligations of states and political subdivisions are primarily valued using market-based pricing matrices that are based on observable inputs including Municipal Securities Rulemaking Board reported trades, issuer spreads, material event notices, and benchmark yield curves. These valuations are Level 2 measurements.

Other debt and equity securities consist of mutual funds, foreign and corporate debt, and U.S. government agencies equity securities. Mutual funds are valued based on quoted market prices of identical assets trading on active exchanges. These valuations are Level 1 measurements. Foreign and corporate debt valuations are based on information and assumptions that are observable in the market place. The valuations for these securities are therefore classified as Level 2. U.S. government agency equity securities are valued based on quoted market prices of identical assets trading on active exchanges. These valuations thus qualify as Level 1 measurements.

Other derivative assets and liabilities consist primarily of interest rate and commodity contracts. The Company’s interest rate contracts are valued utilizing Level 2 observable inputs (yield curves and volatilities) to determine a current market price for each interest rate contract. Commodity contracts are priced using raw market data, primarily in the form of quotes for fixed and basis swaps with monthly, quarterly, seasonal or calendar-year terms. Proprietary models provided by a third party are used to generate forward curves and volatility surfaces. As a result of the valuation process and observable inputs used, commodity contracts are classified as Level 2 measurements. To validate the reasonableness of these calculations, management compares the assumptions with market information.

Other trading assets primarily consist of interest-only strips which are valued by an independent third-party. The independent third-party values the assets on a loan-by-loan basis using a discounted cash flow analysis that employs prepayment assumptions, discount rate assumptions, and default curves. The prepayment assumptions are created from actual SBA pool prepayment history. The discount rates are derived from actual SBA loan secondary market transactions. The default curves are created using historical observable and

unobservable inputs. As such, interest-only strips are classified as Level 3 measurements. The Company’s SBA department is responsible for ensuring the appropriate application of the valuation, capitalization, and amortization policies of the Company’s interest-only strips. The department performs independent, internal valuations of the interest-only strips on a quarterly basis, which are then reconciled to the third-party valuations to ensure their validity.

Loans held for sale – The Company has elected to apply the fair value option for single family real estate mortgage loans originated for resale in the secondary market. The election allows for a more effective offset of the changes in fair values of the loans and the derivative instruments used to economically hedge them without the burden of complying with the requirements for hedge accounting. The Company has not elected the fair value option for other loans held for sale primarily because they are not economically hedged using derivative instruments.

The fair value of loans held for sale is based on what secondary markets are currently offering for portfolios with similar characteristics. The changes in fair value of these assets are largely driven by changes in interest rates subsequent to loan funding and changes in the fair value of servicing associated with the mortgage loan held for sale. Both the mortgage loans held for sale and the related forward contracts are classified as Level 2.

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At both September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, no material loans held for sale for which the fair value option was elected were 90 days or more past due or were in nonaccrual. Interest income on mortgage loans held for sale is recognized based on contractual rates and is reflected in interest and fees on loans in the Company's Unaudited Condensed Consolidated Statements of Income. Net gains (losses) of ~~$1.4~~$(478) thousand and $1.4 million ~~and~~ ~~$(2.3) million~~ resulting from changes in fair value of these loans were recorded in noninterest income during the three months ended September 30, ~~2015~~2016 and ~~2014,~~2015, respectively. Net gains (losses) ~~gains~~ of $2.1 million and $(651) thousand ~~and $3.8 million~~ resulting from changes in fair value of these loans were recorded in noninterest income during the nine months ended September 30, ~~2015~~2016 and ~~2014,~~2015, respectively.

The Company also had fair value changes on forward contracts related to residential mortgage loans held for sale of approximately ~~$(2.3)~~$1.1 million and ~~$1.8~~$(2.3) million for the three months ended September 30, ~~2015~~2016 and ~~2014~~,2015, respectively. The Company also had fair value changes on forward contracts related to residential mortgage loans held for sale of approximately ~~$1.7~~$(2.0) million and ~~$(2.4)~~$1.7 million for the nine months ended September 30, ~~2015~~2016 and ~~2014,~~2015, respectively. An immaterial portion of these amounts was attributable to changes in instrument-specific credit risk.

The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for residential mortgage loans measured at fair value.


	Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference		Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference
	(In Thousands)						(In Thousands)
September 30, 2015
September 30, 2016
Residential mortgage loans held for sale	$	122,758	$	117,157	$	5,601	$	101,843	$	97,712	$	4,131
December 31, 2014
December 31, 2015
Residential mortgage loans held for sale	$	154,816	$	148,564	$	6,252	$	70,582	$	68,553	$	2,029

Derivative assets and liabilities – Derivative assets and liabilities are measured using models that primarily use market observable inputs, such as quoted security prices, and are accordingly classified as Level 2. The derivative assets and liabilities classified within Level 3 of the fair value hierarchy were comprised of interest rate lock commitments that are valued using third-party software that calculates fair market value considering current quoted TBA and other market based prices and then applies closing ratio assumptions based on software-produced pull through ratios that are generated using the Company’s historical fallout activity. Based upon this process, the fair value measurement obtained for these financial instruments is deemed a Level 3 classification. The Company's Secondary Marketing Committee is responsible for the appropriate application of the valuation policies and procedures surrounding the Company’s interest rate lock commitments. Policies established to govern mortgage pipeline risk management activities must be approved by the Company’s Asset/Liability Committee on an annual basis.

Other assets – Other assets measured at fair value on a recurring basis and classified within Level 3 of the fair value hierarchy were comprised of MSRs that are valued through a discounted cash flow analysis using a third-party

commercial valuation system. The valuation takes into consideration the objective characteristics of the MSR portfolio, such as loan amount, note rate, service fee, loan term, and common industry assumptions, such as servicing costs, ancillary income, prepayment estimates, earning rates, cost of fund rates, option-adjusted spreads, etc. The Company’s portfolio-specific factors are also considered in calculating the fair value of MSRs to the extent one can reasonably assume a buyer would also incorporate these factors. Examples of such factors are geographical concentrations of the portfolio, liquidity consideration, or additional views of risk not inherently accounted for in prepayment assumptions. Product liquidity and these other risks are generally incorporated through adjustment of discount factors applied to forecasted cash flows. Based on this method of pricing MSRs, the fair value measurement obtained for these financial instruments is deemed a Level 3 classification. The value of the MSR is calculated by a third-party firm that specializes in the MSR market and valuation services. Additionally, the Company obtains a valuation from an independent party to compare for reasonableness. During the three months ended September 30, 2015, the Company utilized a new third-party service provider for the valuation of servicing rights. The new service provider utilizes an option-adjusted spread valuation approach instead of a static discount rate approach to discount cash flows. This change did not have a material impact on the value of the MSR. The Company’s Secondary Marketing Committee is responsible for ensuring the appropriate application of valuation, capitalization, and fair value decay policies for the MSR portfolio. The Committee meets at least monthly to review the MSR portfolio.

~~Table of Contents~~

The following tables summarize the financial assets and liabilities measured at fair value on a recurring basis.


			Fair Value Measurements at the End of the Reporting Period Using								Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	September 30, 2015		(Level 1)		(Level 2)		(Level 3)		September 30, 2016		(Level 1)		(Level 2)		(Level 3)
	(In Thousands)								(In Thousands)
Recurring fair value measurements
Assets:
Trading account assets:
U.S. Treasury and other U.S. government agencies	$	3,772,337	$	3,772,337	$	—	$	—	$	3,512,398	$	3,512,398	$	—	$	—
Collateralized mortgage obligations									518		—		518		—
State and political subdivisions	1,161		—		1,161		—		1,183		—		1,183		—
Other debt securities	3,639		—		3,639		—		2,852		—		2,852		—
Interest rate contracts	386,687		—		386,687		—		518,406		—		518,406		—
Commodity contracts	17,272		—		17,272		—		2,093		—		2,093		—
Foreign exchange contracts	10,333		—		10,333		—		13,027		—		13,027		—
Other trading assets	2,077		—		824		1,253		984		—		—		984
Total trading account assets	4,193,506		3,772,337		419,916		1,253		4,051,461		3,512,398		538,079		984
Loans held for sale	122,758		—		122,758		—
Investment securities available for sale:
U.S. Treasury and other U.S. government agencies	3,022,124		1,760,471		1,261,653		—		1,850,230		717,327		1,132,903		—
Mortgage-backed securities	4,654,536		—		4,654,536		—		4,005,637		—		4,005,637		—
Collateralized mortgage obligations	2,485,627		—		2,485,627		—		5,207,217		—		5,207,217		—
States and political subdivisions	85,395		—		85,395		—		10,075		—		10,075		—
Other debt securities	25,137		25,137		—		—		16,852		16,852		—		—
Equity securities (1)	294		44		—		250		344		51		—		293
Total investment securities available for sale	10,273,113		1,785,652		8,487,211		250		11,090,355		734,230		10,355,832		293
Loans held for sale									101,843		—		101,843		—
Derivative assets:
Interest rate contracts	94,119		—		90,351		3,768		105,172		—		100,640		4,532
Equity contracts	48,493		—		48,493		—		61,157		—		61,157		—
Foreign exchange contracts	5,952		—		5,952		—		898		—		898		—
Total derivative assets	148,564		—		144,796		3,768		167,227		—		162,695		4,532
Other assets	41,238		—		—		41,238		39,027		—		—		39,027
Liabilities:
Trading account liabilities:
U.S. Treasury and other U.S. government agencies	$	4,017,897	$	4,017,897	$	—	$	—	$	3,540,472	$	3,540,472	$	—	$	—
Other debt securities									751		—		751		—
Interest rate contracts	323,285		—		323,285		—		458,763		—		458,763		—
Commodity contracts	17,221		—		17,221		—		2,093		—		2,093		—
Foreign exchange contracts	9,611		—		9,611		—		10,997		—		10,997		—
Total trading account liabilities	4,368,014		4,017,897		350,117		—		4,013,076		3,540,472		472,604		—
Derivative liabilities:
Interest rate contracts	16,137		—		16,134		3		12,854		—		12,851		3
Equity contracts	46,607		—		46,607		—		57,230		—		57,230		—
Foreign exchange contracts	781		—		781		—		1,990		—		1,990		—
Total derivative liabilities	63,525		—		63,522		3		72,074		—		72,071		3


(1)	Excludes $~~531~~427 million of FHLB and Federal Reserve stock required to be owned by the Company at September 30, ~~2015.~~2016. These securities are carried at par.

~~Table of Contents~~


			Fair Value Measurements at the End of the Reporting Period Using								Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	December 31, 2014		(Level 1)		(Level 2)		(Level 3)		December 31, 2015		(Level 1)		(Level 2)		(Level 3)
	(In Thousands)								(In Thousands)
Recurring fair value measurements
Assets:
Trading account assets:
U.S. Treasury and other U.S. government agencies	$	2,502,308	$	2,502,308	$	—	$	—	$	3,805,269	$	3,805,269	$	—	$	—
State and political subdivisions									1,275		—		1,275		—
Other debt securities									2,501		—		2,501		—
Interest rate contracts	296,239		—		296,239		—		303,944		—		303,944		—
Commodity contracts	25,569		—		25,569		—		14,127		—		14,127		—
Foreign exchange contracts	8,268		—		8,268		—		9,899		—		9,899		—
Other trading assets	2,013		—		423		1,590		1,117		—		—		1,117
Total trading account assets	2,834,397		2,502,308		330,499		1,590		4,138,132		3,805,269		331,746		1,117
Loans held for sale	154,816		—		154,816		—
Investment securities available for sale:
U.S. Treasury and other U.S. government agencies	2,313,542		1,298,040		1,015,502		—		3,211,492		1,982,408		1,229,084		—
Mortgage-backed securities	4,423,835		—		4,423,835		—		4,590,262		—		4,590,262		—
Collateralized mortgage obligations	2,488,579		—		2,488,579		—		2,705,256		—		2,705,256		—
States and political subdivisions	467,315		—		467,315		—		15,887		—		15,887		—
Other debt securities	44,441		44,441		—		—		24,045		24,045		—		—
Equity securities (1)	48		44		—		4		294		41		—		253
Total investment securities available for sale	9,737,760		1,342,525		8,395,231		4		10,547,236		2,006,494		8,540,489		253
Loans held for sale									70,582		—		70,582		—
Derivative assets:
Interest rate contracts	73,830		—		71,511		2,319		64,931		—		62,051		2,880
Equity contracts	76,487		—		76,487		—		59,375		—		59,375		—
Foreign exchange contracts	5,570		—		5,570		—		3,827		—		3,827		—
Total derivative assets	155,887		—		153,568		2,319		128,133		—		125,253		2,880
Other assets	35,488		—		—		35,488		44,541		—		—		44,541
Liabilities:
Trading account liabilities:
U.S. Treasury and other U.S. government agencies	$	2,545,299	$	2,545,299	$	—	$	—	$	3,881,925	$	3,881,925	$	—	$	—
Other debt securities									719		—		719		—
Interest rate contracts	236,763		—		236,763		—		238,611		—		238,611		—
Commodity contracts	25,448		—		25,448		—		14,110		—		14,110		—
Foreign exchange contracts	7,527		—		7,527		—		8,578		—		8,578		—
Other trading liabilities	425		—		425		—
Total trading account liabilities	2,815,462		2,545,299		270,163		—		4,143,943		3,881,925		262,018		—
Derivative liabilities:
Interest rate contracts	16,074		—		16,073		1		21,268		—		21,262		6
Equity contracts	74,319		—		74,319		—		56,559		—		56,559		—
Foreign exchange contracts	692		—		692		—		1,164		—		1,164		—
Total derivative liabilities	91,085		—		91,084		1		78,991		—		78,985		6


(1)	Excludes $~~500~~503 million of FHLB and Federal Reserve stock required to be owned by the Company at December 31, ~~2014~~2015. These securities are carried at par.

~~Table of Contents~~

There were no transfers between Levels 1 or 2 of the fair value hierarchy for the three and nine months ended September 30, ~~2015~~2016 and ~~2014~~2015. It is the Company’s policy to value any transfers between levels of the fair value hierarchy based on end of period fair values.

The following ~~tables reconcile~~table reconciles the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3).


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)												Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Three Months Ended September 30,	Other Trading Assets			Equity Securities			Interest Rate Contracts, net			Other Assets			Other Trading Assets			Equity Securities			Interest Rate Contracts, net			Other Assets
	(In Thousands)
Balance, July 1, 2014	$	1,709		$	6		$	3,821		$	31,104
Transfers into Level 3	—			—			—			—
Transfers out of Level 3	—			—			—			—
Total gains or losses (realized/unrealized):
Included in earnings (1)	10			—			(842		)	(272		)
Included in other comprehensive income	—			—			—			—
Purchases, issuances, sales and settlements:
Purchases	—			—			—			—
Issuances	—			—			—			4,060
Sales	—			—			—			—
Settlements	—			—			—			—
Balance, September 30, 2014	$	1,719		$	6		$	2,979		$	34,892
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2014	$	10		$	—		$	(842	)	$	(272	)
													(In Thousands)
Balance, July 1, 2015	$	1,400		$	251		$	3,457		$	40,871		$	1,400		$	251		$	3,457		$	40,871
Transfers into Level 3	—			—			—			—			—			—			—			—
Transfers out of Level 3	—			—			—			—			—			—			—			—
Total gains or losses (realized/unrealized):
Included in earnings (1)	(147		)	—			308			(6,477		)	(147		)	—			308			(6,477		)
Included in other comprehensive income	—			—			—			—			—			—			—			—
Purchases, issuances, sales and settlements:
Purchases	—			—			—			—			—			—			—			—
Issuances	—			—			—			6,844			—			—			—			6,844
Sales	—			(1		)	—			—			—			(1		)	—			—
Settlements	—			—			—			—			—			—			—			—
Balance, September 30, 2015	$	1,253		$	250		$	3,765		$	41,238		$	1,253		$	250		$	3,765		$	41,238
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2015	$	(147	)	$	—		$	308		$	(6,477	)	$	(147	)	$	—		$	308		$	(6,477	)

Balance, July 1, 2016													$	1,031		$	294		$	4,691		$	36,496
Transfers into Level 3													—			—			—			—
Transfers out of Level 3													—			—			—			—
Total gains or losses (realized/unrealized):
Included in earnings (1)													(47		)	—			(162		)	598
Included in other comprehensive income													—			—			—			—
Purchases, issuances, sales and settlements:
Purchases													—			—			—			—
Issuances													—			—			—			1,933
Sales													—			(1		)	—			—
Settlements													—			—			—			—
Balance, September 30, 2016													$	984		$	293		$	4,529		$	39,027
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2016													$	(47	)	$	—		$	(162	)	$	598


(1)	Included in noninterest income in the Unaudited Condensed Consolidated Statements of Income.

~~Table of Contents~~


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)											Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Nine Months Ended September 30,	Other Trading Assets			Equity Securities			Interest Rate Contracts, net		Other Assets			Other Trading Assets			Equity Securities			Interest Rate Contracts, net		Other Assets
	(In Thousands)
Balance, January 1, 2014	$	1,645		$	6		$	890	$	30,065
Transfers into Level 3	—			—			—		—
Transfers out of Level 3	—			—			—		—
Total gains or losses (realized/unrealized):
Included in earnings (1)	74			—			2,089		(3,239		)
Included in other comprehensive income	—			—			—		—
Purchases, issuances, sales and settlements:
Purchases	—			—			—		—
Issuances	—			—			—		8,066
Sales	—			—			—		—
Settlements	—			—			—		—
Balance, September 30, 2014	$	1,719		$	6		$	2,979	$	34,892
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2014	$	74		$	—		$	2,089	$	(3,239	)
												(In Thousands)
Balance, January 1, 2015	$	1,590		$	4		$	2,318	$	35,488		$	1,590		$	4		$	2,318	$	35,488
Transfers into Level 3	—			—			—		—			—			—			—		—
Transfers out of Level 3	—			—			—		—			—			—			—		—
Total gains or losses (realized/unrealized):
Included in earnings (1)	(337		)	—			1,447		(7,816		)	(337		)	—			1,447		(7,816		)
Included in other comprehensive income	—			—			—		—			—			—			—		—
Purchases, issuances, sales and settlements:
Purchases	—			247			—		—			—			247			—		—
Issuances	—			—			—		13,566			—			—			—		13,566
Sales	—			(1		)	—		—			—			(1		)	—		—
Settlements	—			—			—		—			—			—			—		—
Balance, September 30, 2015	$	1,253		$	250		$	3,765	$	41,238		$	1,253		$	250		$	3,765	$	41,238
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2015	$	(337	)	$	—		$	1,447	$	(7,816	)	$	(337	)	$	—		$	1,447	$	(7,816	)

Balance, January 1, 2016												$	1,117		$	253		$	2,874	$	44,541
Transfers into Level 3												—			—			—		—
Transfers out of Level 3												—			—			—		—
Total gains or losses (realized/unrealized):
Included in earnings (1)												(133		)	—			1,655		(13,097		)
Included in other comprehensive income												—			—			—		—
Purchases, issuances, sales and settlements:
Purchases												—			41			—		—
Issuances												—			—			—		7,583
Sales												—			(1		)	—		—
Settlements												—			—			—		—
Balance, September 30, 2016												$	984		$	293		$	4,529	$	39,027
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2016												$	(133	)	$	—		$	1,655	$	(13,097	)


(1)	Included in noninterest income in the Unaudited Condensed Consolidated Statements of Income.

~~Table of Contents~~

Assets Measured at Fair Value on a Nonrecurring Basis

Periodically, certain assets may be recorded at fair value on a non-recurring basis. These adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets due to impairment. The following table represents those assets that were subject to fair value adjustments during the three and nine months ended September 30, ~~2015~~2016 and ~~2014~~2015 and still held as of the end of the period, and the related gains and losses from fair value adjustments on assets sold during the period as well as assets still held as of the end of the period.


			Fair Value Measurements at the End of the Reporting Period Using														Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)						Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)
	September 30, 2015		(Level 1)		(Level 2)		(Level 3)		Three Months Ended September 30, 2015			Nine Months Ended September 30, 2015			September 30, 2016		(Level 1)		(Level 2)		(Level 3)		Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
	(In Thousands)														(In Thousands)
Nonrecurring fair value measurements	Nonrecurring fair value measurements														Nonrecurring fair value measurements
Assets:
Investment securities held to maturity	$	15,423	$	—	$	—	$	15,423	$	—		$	(1,298	)	$	2,595	$	—	$	—	$	2,595	$	—		$	(130	)
Impaired loans (1)	169,458		—		—		169,458		(6,836		)	(11,689		)	71,806		—		—		71,806		(9,202		)	(55,922		)
OREO	23,762		—		—		23,762		(1,135		)	(3,317		)	21,670		—		—		21,670		(458		)	(2,777		)

			Fair Value Measurements at the End of the Reporting Period Using														Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)						Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)
	September 30, 2014		(Level 1)		(Level 2)		(Level 3)		Three Months Ended September 30, 2014			Nine Months Ended September 30, 2014			September 30, 2015		(Level 1)		(Level 2)		(Level 3)		Three Months Ended September 30, 2015			Nine Months Ended September 30, 2015
	(In Thousands)														(In Thousands)
Nonrecurring fair value measurements	Nonrecurring fair value measurements														Nonrecurring fair value measurements
Assets:
Investment securities held to maturity	$	3,832	$	—	$	—	$	3,832	$	—		$	(180	)	$	15,423	$	—	$	—	$	15,423	$	—		$	(1,298	)
Impaired loans (1)	137,398		—		—		137,398		(2,362		)	(21,238		)	169,458		—		—		169,458		(6,836		)	(11,689		)
OREO	17,058		—		—		17,058		(758		)	(2,340		)	23,762		—		—		23,762		(1,135		)	(3,317		)


(1)	Total gains (losses) represent charge-offs on impaired loans for which adjustments are based on the appraised value of the collateral.

The following is a description of the methodologies applied for valuing these assets:

Investment securities held to maturity – Nonrecurring fair value adjustments on investment securities held to maturity reflect impairment write-downs which the Company believes are other than temporary. For analyzing these securities, the Company has retained a third-party valuation firm. Impairment is determined through the use of cash flow models that estimate cash flows on the underlying mortgages using security-specific collateral and the transaction structure. The cash flow models incorporate the remaining cash flows which are adjusted for future expected credit losses. Future expected credit losses are determined by using various assumptions such as current default rates, prepayment rates, and loss severities. The Company develops these assumptions through the use of market data published by third-party sources in addition to historical analysis which includes actual delinquency and default information through the current period. The expected cash flows are then discounted at the interest rate used to recognize interest income on the security

~~Table of Contents~~

to arrive at a present value amount. As the fair value measurements are derived using a discounted cash flow modeling approach, the nonrecurring fair value measurements are classified as Level 3.

Impaired Loans – Impaired loans measured at fair value on a non-recurring basis represent the carrying value of impaired loans for which adjustments are based on the appraised value of the collateral. Nonrecurring fair value adjustments to impaired loans reflect full or partial write-downs that are generally based on the fair value of the underlying collateral supporting the loan. Loans subjected to nonrecurring fair value measurements based on the current estimated fair value of the collateral are classified as Level 3.

OREO – OREO is recorded on the Company's Unaudited Condensed Consolidated Balance Sheets at the lower of recorded balance or fair value, which is based on appraisals and third-party price opinions, less estimated costs to sell. The fair value is classified as Level 3.

The table below presents quantitative information about the significant unobservable inputs for material assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring and nonrecurring basis.

Quantitative Information about Level 3 Fair Value Measurements

Fair Value at

Range of Unobservable Inputs

Fair Value at

Range of Unobservable Inputs

September 30, 2015

Valuation Technique

Unobservable Input(s)

(Weighted Average)

September 30, 2016

Valuation Technique

Unobservable Input(s)

(Weighted Average)

(In Thousands)

Recurring fair value measurements:

Other trading assets

1,253

Discounted cash flow

Default rate

9.2%

984

Discounted cash flow

Default rate

9.3%

Prepayment rate

5.9% - 10.4% (7.8%)

Prepayment rate

6.3% - 11.9% (8.5%)

Interest rate contracts

3,765

Discounted cash flow

Closing ratios (pull-through)

8.4% - 99.3% (61.0%)

4,529

Discounted cash flow

Closing ratios (pull-through)

3.7% - 99.4% (62.0%)

Cap grids

0.0% - 2.7% (1.1%)

Cap grids

0.2% - 2.0% (0.9%)

Other assets - MSRs

41,238

Discounted cash flow

Option adjusted spread

6.7% - 18.6% (9.0%)

39,027

Discounted cash flow

Option adjusted spread

6.1% - 18.6% (8.1%)

Constant prepayment rate or life speed

1.2% - 59.8% (11.1%)

Constant prepayment rate or life speed

1.8% - 71.6% (20.6%)

Cost to service

$60 - $1,068 ($80)

Cost to service

$65 - $4,000 ($88)

Nonrecurring fair value measurements:

Investment securities held to maturity

15,423

Discounted cash flow

Prepayment rate

9.6%

2,595

Discounted cash flow

Prepayment rate

10.9%

Default rate

7.5%

Default rate

9.2%

Loss severity

61.2%

Loss severity

63.7%

Expected loss

7.9%

Impaired loans

169,458

Appraised value

0.0% - 100.0% (24.9%)

71,806

Appraised value

0.0% - 80.0% (27.9%)

OREO

23,762

Appraised value

8.0% (1)

21,670

Appraised value

8.0% (1)


(1)	Represents discount to appraised value for estimated costs to sell.

The following provides a description of the sensitivity of the valuation technique to changes in unobservable inputs for recurring fair value measurements.

Recurring Fair Value Measurements Using Significant Unobservable Inputs

Other Trading Assets – Interest-Only Strips

Significant unobservable inputs used in the valuation of the Company’s interest-only strips include default rates and prepayment assumptions. Significant increases in either of these inputs in isolation would result in significantly lower fair value measurements. Generally, a change in the assumption used for the probability of default is accompanied by a directionally opposite change in the assumption used for prepayment rates.

~~Table of Contents~~

Interest Rate Contracts - Interest Rate Lock Commitments

Significant unobservable inputs used in the valuation of interest rate lock commitments are pull-through and cap grids. Increases or decreases in the pull-through or cap grids will have a corresponding impact in the value of interest rate contracts.

Other Assets - MSRs

The significant unobservable inputs used in the fair value measurement of MSRs are option-adjusted spreads, constant prepayment rate or life speed, and cost to service assumptions. The impact of prepayments and changes in the option-adjusted spread are based on a variety of underlying inputs. Increases or decreases to the underlying cash flow inputs will have a corresponding impact on the value of the MSR asset. The impact of the costs to service assumption will have a directionally opposite change in the fair value of the MSR asset.

Fair Value of Financial Instruments

The carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of the Company’s financial instruments, excluding financial instruments measured at fair value on a recurring basis, are as follows:


	September 30, 2015										September 30, 2016
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3		Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In Thousands)										(In Thousands)
Financial Instruments:
Assets:
Cash and cash equivalents	$	4,377,464	$	4,377,464	$	4,377,464	$	—	$	—	$	4,426,691	$	4,426,691	$	4,426,691	$	—	$	—
Investment securities held to maturity	1,357,801		1,268,114		—		—		1,268,114		1,240,850		1,241,234		—		—		1,241,234
Loans and loans held for sale not measured at fair value, net	60,076,499		57,494,082		—		—		57,494,082
Loans, net											59,349,203		55,897,095		—		—		55,897,095
Liabilities:
Deposits	$	64,492,396	$	64,609,174	$	—	$	64,609,174	$	—	$	67,587,337	$	67,754,047	$	—	$	67,754,047	$	—
FHLB and other borrowings	6,216,425		6,186,068		—		6,186,068		—		3,671,861		3,637,982		—		3,637,982		—
Federal funds purchased and securities sold under agreements to repurchase	639,259		639,259		—		639,259		—		165,573		165,573		—		165,573		—
Other short-term borrowings	150,000		150,000		—		150,000		—		50,000		50,000		—		50,000		—


	December 31, 2014										December 31, 2015
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3		Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In Thousands)										(In Thousands)
Financial Instruments:
Assets:
Cash and cash equivalents	$	3,388,405	$	3,388,405	$	3,388,405	$	—	$	—	$	4,496,828	$	4,496,828	$	4,496,828	$	—	$	—
Investment securities held to maturity	1,348,354		1,275,963		—		—		1,275,963		1,322,676		1,244,121		—		—		1,244,121
Loans, net	56,686,743		54,551,442		—		—		54,551,442		60,561,411		57,916,215		—		—		57,916,215
Liabilities:
Deposits	$	61,189,716	$	61,263,812	$	—	$	61,263,812	$	—	$	65,981,766	$	66,090,901	$	—	$	66,090,901	$	—
FHLB and other borrowings	4,809,843		4,786,152		—		4,786,152		—		5,438,620		5,405,386		—		5,405,386		—
Federal funds purchased and securities sold under agreements to repurchase	1,129,503		1,129,503		—		1,129,503		—		750,154		750,154		—		750,154		—
Other short-term borrowings											150,000		150,000		—		150,000		—

~~Table of Contents~~

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments not carried at fair value:

Cash and cash equivalents: Cash and cash equivalents have maturities of three months or less. Accordingly, the carrying amount approximates fair value. Because these amounts generally relate to either currency or highly liquid assets, these are considered a Level 1 measurement.

Investment securities held to maturity: The fair values of securities held to maturity are estimated using a discounted cash flow approach. The discounted cash flow model uses inputs such as estimated prepayment speed, loss rates, and default rates. They are considered a Level 3 measurement as the valuation employs significant unobservable inputs.

Loans: Loans are presented net of the allowance for loan losses and are valued using discounted cash flows. The discount rates used to determine the present value of these loans are based on current market interest rates for loans with similar credit risk and term. They are considered a Level 3 measurement as the valuation employs significant unobservable inputs.

Deposits: The fair values of demand deposits are equal to the carrying amounts. Demand deposits include noninterest bearing demand deposits, savings accounts, NOW accounts and money market demand accounts. Discounted cash flows have been used to value fixed rate term deposits. The discount rate used is based on interest rates currently being offered by the Company on comparable deposits as to amount and term. They are considered a Level 2 measurement as the valuation primarily employs observable inputs for similar instruments.

FHLB and other borrowings: The fair value of the Company’s fixed rate borrowings, which includes the Company’s Capital Securities, are estimated using discounted cash flows, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The carrying amount of the Company’s variable rate borrowings approximates fair value. As such, these borrowings are considered a Level 2 measurement as the valuation primarily employs observable inputs for similar instruments.

Federal ~~funds~~fund purchased, ~~and~~ securities sold under agreements to repurchase and short-term borrowings: ~~The carrying amounts of federal funds purchased and securities sold under agreements to repurchase approximate fair value. They are therefore considered a Level 2 measurement.~~

~~Short-term borrowings:~~ The carrying amounts of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings approximates fair value. They are therefore considered a Level 2 measurement.

~~Table of Contents~~

~~(9)~~(10) Comprehensive Income

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances arising from nonowner sources. The following summarizes the change in the components of other comprehensive ~~income (loss).~~income.


	Three Months Ended September 30,															Three Months Ended September 30,
	2015						2014									2016									2015
	Pretax		Tax Expense/ (Benefit)		After-tax		Pretax			Tax Expense/ (Benefit)			After-tax			Pretax			Tax Expense/ (Benefit)			After-tax			Pretax		Tax Expense/ (Benefit)		After-tax
	(In Thousands)															(In Thousands)
Other comprehensive income (loss):
Other comprehensive income:
Unrealized holding gains (losses) arising during period from securities available for sale	$	48,686	$	21,193	$	27,493	$	(17,597	)	$	(6,325	)	$	(11,272	)	$	(41,149	)	$	(15,073	)	$	(26,076	)	$	48,686	$	21,193	$	27,493
Less: reclassification adjustment for net gains on sale of securities in net income	6,736		2,932		3,804		9,710			3,490			6,220			—			—			—			6,736		2,932		3,804
Net change in unrealized gains (losses) on securities available for sale	41,950		18,261		23,689		(27,307		)	(9,815		)	(17,492		)	(41,149		)	(15,073		)	(26,076		)	41,950		18,261		23,689
Change in unamortized net holding losses on investment securities held to maturity	1,886		820		1,066		3,745			1,347			2,398			1,844			676			1,168			1,886		820		1,066
Less: non-credit related impairment on investment securities held to maturity	—		—		—		—			—			—			—			—			—			—		—		—
Change in unamortized non-credit related impairment on investment securities held to maturity	515		225		290		387			138			249			354			129			225			515		225		290
Net change in unamortized holding losses on securities held to maturity	2,401		1,045		1,356		4,132			1,485			2,647			2,198			805			1,393			2,401		1,045		1,356
Unrealized holding gains (losses) arising during period from cash flow hedge instruments	3,252		1,414		1,838		(1,103		)	(397		)	(706		)	(2,303		)	(842		)	(1,461		)	3,456		1,414		2,042
Change in defined benefit plans	—		—		—		—			—			—			—			—			—			—		—		—
Other comprehensive income (loss)	$	47,603	$	20,720	$	26,883	$	(24,278	)	$	(8,727	)	$	(15,551	)	$	(41,254	)	$	(15,110	)	$	(26,144	)	$	47,807	$	20,720	$	27,087


	Nine Months Ended September 30,															Nine Months Ended September 30,
	2015						2014									2016						2015
	Pretax		Tax Expense/ (Benefit)		After-tax		Pretax			Tax Expense/ (Benefit)			After-tax			Pretax		Tax Expense/ (Benefit)		After-tax		Pretax		Tax Expense/ (Benefit)		After-tax
	(In Thousands)															(In Thousands)
Other comprehensive income:
Unrealized holding gains arising during period from securities available for sale	$	69,541	$	30,271	$	39,270	$	63,819		$	22,936		$	40,883		$	103,507	$	37,915	$	65,592	$	69,541	$	30,271	$	39,270
Less: reclassification adjustment for net gains on sale of securities in net income	66,967		29,151		37,816		47,608			17,110			30,498			30,037		11,002		19,035		66,967		29,151		37,816
Net change in unrealized gains on securities available for sale	2,574		1,120		1,454		16,211			5,826			10,385			73,470		26,913		46,557		2,574		1,120		1,454
Change in unamortized net holding losses on investment securities held to maturity	8,559		3,725		4,834		11,213			4,030			7,183			4,615		1,691		2,924		8,559		3,725		4,834
Less: non-credit related impairment on investment securities held to maturity	87		38		49		235			84			151			151		55		96		87		38		49
Change in unamortized non-credit related impairment on investment securities held to maturity	1,247		543		704		1,141			409			732			1,021		373		648		1,247		543		704
Net change in unamortized holding losses on securities held to maturity	9,719		4,230		5,489		12,119			4,355			7,764			5,485		2,009		3,476		9,719		4,230		5,489
Unrealized holding gains (losses) arising during period from cash flow hedge instruments	8,693		3,783		4,910		(3,729		)	(1,341		)	(2,388		)
Unrealized holding gains arising during period from cash flow hedge instruments																2,734		1,006		1,728		9,105		3,783		5,322
Change in defined benefit plans	2,716		1,001		1,715		(2,672		)	(1,001		)	(1,671		)	1,300		369		931		2,716		1,001		1,715
Other comprehensive income	$	23,702	$	10,134	$	13,568	$	21,929		$	7,839		$	14,090		$	82,989	$	30,297	$	52,692	$	24,114	$	10,134	$	13,980

~~Table of Contents~~

Activity in accumulated other comprehensive income (loss), net of tax was as follows:


	Unrealized Gains (Losses) on Securities Available for Sale and Transferred to Held to Maturity			Accumulated Gains (Losses) on Cash Flow Hedging Instruments			Defined Benefit Plan Adjustment			Unamortized Impairment Losses on Investment Securities Held to Maturity			Total			Unrealized Gains (Losses) on Securities Available for Sale and Transferred to Held to Maturity			Accumulated Gains (Losses) on Cash Flow Hedging Instruments			Defined Benefit Plan Adjustment			Unamortized Impairment Losses on Investment Securities Held to Maturity			Total
	(In Thousands)
Balance, January 1, 2014	$	(31,490	)	$	(5,289	)	$	(41,921	)	$	(9,236	)	$	(87,936	)
Other comprehensive income (loss) before reclassifications	40,883			(3,521		)	—			(151		)	37,211
Amounts reclassified from accumulated other comprehensive income (loss)	(23,315		)	1,133			(1,671		)	732			(23,121		)
Net current period other comprehensive income (loss)	17,568			(2,388		)	(1,671		)	581			14,090
Balance, September 30, 2014	$	(13,922	)	$	(7,677	)	$	(43,592	)	$	(8,655	)	$	(73,846	)
																(In Thousands)
Balance, January 1, 2015	$	4,469		$	(7,189	)	$	(41,121	)	$	(7,516	)	$	(51,357	)	$	4,469		$	(7,694	)	$	(41,121	)	$	(7,516	)	$	(51,862	)
Other comprehensive income (loss) before reclassifications	39,270			7,607			—			(49		)	46,828			39,270			8,019			—			(49		)	47,240
Amounts reclassified from accumulated other comprehensive income (loss)	(32,982		)	(2,697		)	1,715			704			(33,260		)	(32,982		)	(2,697		)	1,715			704			(33,260		)
Net current period other comprehensive income	6,288			4,910			1,715			655			13,568			6,288			5,322			1,715			655			13,980
Balance, September 30, 2015	$	10,757		$	(2,279	)	$	(39,406	)	$	(6,861	)	$	(37,789	)	$	10,757		$	(2,372	)	$	(39,406	)	$	(6,861	)	$	(37,882	)

Balance, January 1, 2016																$	(56,326	)	$	(6,407	)	$	(29,166	)	$	(7,437	)	$	(99,336	)
Other comprehensive income (loss) before reclassifications																65,592			2,787			—			(96		)	68,283
Amounts reclassified from accumulated other comprehensive income (loss)																(16,111		)	(1,059		)	931			648			(15,591		)
Net current period other comprehensive income																49,481			1,728			931			552			52,692
Balance, September 30, 2016																$	(6,845	)	$	(4,679	)	$	(28,235	)	$	(6,885	)	$	(46,644	)

~~Table of Contents~~

The following table presents information on reclassifications out of accumulated other comprehensive ~~income.~~income (loss).


Details About Accumulated Other Comprehensive Income Components	Amounts Reclassified From Accumulated Other Comprehensive Income(1)												Condensed Consolidated Statement of Income Caption
Details About Accumulated Other Comprehensive Income (Loss) Components														Amounts Reclassified From Accumulated Other Comprehensive Income (Loss)(1)												Condensed Consolidated Statement of Income Caption
	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014				2016			2015			2016			2015
	(In Thousands)													(In Thousands)
Unrealized Gains on Securities Available for Sale and Transferred to Held to Maturity	$	6,736		$	9,710		$	66,967		$	47,608		Investment securities gains, net
Unrealized Gains (Losses) on Securities Available for Sale and Transferred to Held to Maturity														$	—		$	6,736		$	30,037		$	66,967		Investment securities gains, net
	(1,886		)	(3,745		)	(8,559		)	(11,213		)	Interest on investment securities held to maturity	(1,844		)	(1,886		)	(4,615		)	(8,559		)	Interest on investment securities held to maturity
	4,850			5,965			58,408			36,395				(1,844		)	4,850			25,422			58,408
	(2,112		)	(2,143		)	(25,426		)	(13,080		)	Income tax expense	676			(2,112		)	(9,311		)	(25,426		)	Income tax (expense) benefit
	$	2,738		$	3,822		$	32,982		$	23,315		Net of tax	$	(1,168	)	$	2,738		$	16,111		$	32,982		Net of tax

Accumulated Gains (Losses) on Cash Flow Hedging Instruments	$	3,646		$	1,727		$	9,985		$	3,551		Interest and fees on loans	$	1,654		$	3,646		$	5,587		$	9,985		Interest and fees on loans
	(1,722		)	(1,768		)	(5,207		)	(5,319		)	Interest and fees on FHLB advances	(952		)	(1,722		)	(3,909		)	(5,207		)	Interest and fees on FHLB advances
	1,924			(41		)	4,778			(1,768		)		702			1,924			1,678			4,778
	(839		)	15			(2,081		)	635			Income tax (expense) benefit	(260		)	(839		)	(619		)	(2,081		)	Income tax expense
	$	1,085		$	(26	)	$	2,697		$	(1,133	)	Net of tax	$	442		$	1,085		$	1,059		$	2,697		Net of tax

Defined Benefit Plan Adjustment	$	—		$	—		$	(2,716	)	$	2,672		(2)	$	—		$	—		$	(1,300	)	$	(2,716	)	(2)
	—			—			1,001			(1,001		)	Income tax (expense) benefit	—			—			369			1,001			Income tax benefit
	$	—		$	—		$	(1,715	)	$	1,671		Net of tax	$	—		$	—		$	(931	)	$	(1,715	)	Net of tax

Unamortized Impairment Losses on Investment Securities Held to Maturity	$	(515	)	$	(387	)	$	(1,247	)	$	(1,141	)	Interest on investment securities held to maturity	$	(354	)	$	(515	)	$	(1,021	)	$	(1,247	)	Interest on investment securities held to maturity
	225			138			543			409			Income tax benefit	129			225			373			543			Income tax benefit
	$	(290	)	$	(249	)	$	(704	)	$	(732	)	Net of tax	$	(225	)	$	(290	)	$	(648	)	$	(704	)	Net of tax


(1)	Amounts in parentheses indicate debits to the consolidated statement of income.


(2)	These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note ~~18,~~19, Benefit Plans, in the Notes to the December 31, ~~2014,~~2015, Consolidated Financial Statements for additional details).

~~Table of Contents~~

~~(10)~~(11) Supplemental Disclosure for Statement of Cash Flows

The following table presents the Company’s supplemental disclosures for statement of cash flows.


	Nine Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2016		2015
	(In Thousands)					(In Thousands)
Supplemental disclosures of cash flow information:
Interest paid	$	277,140	$	202,851		$	339,345	$	277,140
Net income taxes paid	145,056		95,167			94,808		145,056
Supplemental schedule of noncash investing and financing activities:
Transfer of loans and loans held for sale to OREO	$	16,552	$	14,278		$	21,547	$	16,552
Transfer of loans to loans held for sale	906,857		14,129			764,022		906,857
Change in unrealized gain (loss) on available for sale securities	2,574		16,211
Change in unrealized gains (losses) on available for sale securities						73,470		2,574
Issuance of restricted stock, net of cancellations	458		(1,060		)	1,083		458
Business combinations:
Assets acquired	14,327		117,068
Liabilities assumed	977		18,329

(1112) Segment Information

The Company’s operating segments are based on the Company’s organizational structure. Each segment reflects the manner in which financial information is evaluated by management. The operating segment results include certain overhead allocations and intercompany transactions. All intercompany transactions have been eliminated to determine the consolidated balances. The Company operates primarily in the United States, and, accordingly, revenue and assets outside the United States are not material. There are no individual customers whose revenues exceeded 10% of consolidated revenue.

During the first quarter of 2015, the Company reorganized its internal management structure and, accordingly, its segment reporting structure. As a result of this reorganization, the Wealth and Retail and Commercial operating segments were combined into one operating segment, Consumer and Commercial Banking. Prior periods' information has been restated to conform to the current periods' presentation. The Company's reportable operating segments now consist of Consumer and Commercial Banking, Corporate and Investment Banking, Treasury, and Corporate Support and Other.

~~Table of Contents~~

The following tables present the segment information for the Company’s segments.


	Three Months Ended September 30, 2015											Three Months Ended September 30, 2016
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated		Consumer and Commercial Banking		Corporate and Investment Banking		Treasury			Corporate Support and Other			Consolidated
	(In Thousands)											(In Thousands)
Net interest income (expense)	$	508,547	$	42,465	$	6,228	$	(49,373	)	$	507,867	$	562,339	$	26,338	$	(1,512	)	$	(72,356	)	$	514,809
Allocated provision for loan losses	25,698		24,466		—		(21,013		)	29,151		52,358		18,208		—			(5,459		)	65,107
Noninterest income	199,619		30,039		7,879		(4,161		)	233,376		209,131		50,804		7,960			(4,130		)	263,765
Noninterest expense	441,549		38,456		4,656		51,589			536,250		476,830		34,679		5,101			39,661			556,271
Net income (loss) before income tax expense (benefit)	240,919		9,582		9,451		(84,110		)	175,842		242,282		24,255		1,347			(110,688		)	157,196
Income tax expense (benefit)	84,322		3,354		3,308		(40,874		)	50,110		84,799		8,489		471			(56,914		)	36,845
Net income (loss)	156,597		6,228		6,143		(43,236		)	125,732		157,483		15,766		876			(53,774		)	120,351
Less: net income attributable to noncontrolling interests	65		—		426		—			491		107		—		420			(4		)	523
Net income (loss) attributable to shareholder	$	156,532	$	6,228	$	5,717	$	(43,236	)	$	125,241
Net income (loss) attributable to BBVA Compass Bancshares, Inc.												$	157,376	$	15,766	$	456		$	(53,770	)	$	119,828
Average assets	$	54,994,543	$	12,578,903	$	15,085,951	$	7,102,333		$	89,761,730	$	56,486,459	$	10,980,519	$	16,462,880		$	6,970,481		$	90,900,339

Three Months Ended September 30, 2014
Consumer and Commercial Banking Corporate and Investment Banking Treasury Corporate Support and Other Consolidated
(In Thousands)
Net interest income $ 472,822
$ 33,253
$ 4,698
$ (28,805 ) $ 481,968
Allocated provision for loan losses 17,242
(3,795 ) —
(9,578 ) 3,869
Noninterest income 176,740
44,706
16,035
(11,050 ) 226,431
Noninterest expense 434,957
40,968
5,093
52,124
533,142
Net income (loss) before income tax expense (benefit) 197,363
40,786
15,640
(82,401 ) 171,388
Income tax expense (benefit) 73,518
15,193
5,826
(66,767 ) 27,770
Net income (loss) 123,845
25,593
9,814
(15,634 ) 143,618
Less: net income attributable to noncontrolling interests 382
—
433
—
815
Net income (loss) attributable to shareholder $ 123,463
$ 25,593
$ 9,381
$ (15,634 ) $ 142,803
Average assets $ 50,488,226
$ 7,303,466
$ 13,238,660
$ 6,878,735
$ 77,909,087

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	Three Months Ended September 30, 2015
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated
	(In Thousands)
Net interest income (expense)	$	508,900	$	40,505	$	6,228	$	(47,759	)	$	507,874
Allocated provision for loan losses	27,562		24,466		—		(22,877		)	29,151
Noninterest income	221,063		27,514		7,879		4,264			260,720
Noninterest expense	469,335		38,044		4,656		45,340			557,375
Net income (loss) before income tax expense (benefit)	233,066		5,509		9,451		(65,958		)	182,068
Income tax expense (benefit)	81,573		1,928		3,308		(34,381		)	52,428
Net income (loss)	151,493		3,581		6,143		(31,577		)	129,640
Less: net income attributable to noncontrolling interests	65		—		426		—			491
Net income (loss) attributable to BBVA Compass Bancshares, Inc.	$	151,428	$	3,581	$	5,717	$	(31,577	)	$	129,149
Average assets	$	55,341,631	$	12,578,897	$	15,085,951	$	6,879,618		$	89,886,097

Nine Months Ended September 30, 2015
Consumer and Commercial Banking Corporate and Investment Banking Treasury Corporate Support and Other Consolidated
(In Thousands)
Net interest income (expense) $ 1,485,422
$ 121,428
$ 25,026
$ (122,998 ) $ 1,508,878
Allocated provision for loan losses 77,116
41,714
—
(1,499 ) 117,331
Noninterest income 568,548
126,739
71,072
(25,144 ) 741,215
Noninterest expense 1,292,947
116,994
14,683
153,981
1,578,605
Net income (loss) before income tax expense (benefit) 683,907
89,459
81,415
(300,624 ) 554,157
Income tax expense (benefit) 239,367
31,311
28,495
(149,165 ) 150,008
Net income (loss) 444,540
58,148
52,920
(151,459 ) 404,149
Less: net income attributable to noncontrolling interests 448
—
1,290
—
1,738
Net income (loss) attributable to shareholder $ 444,092
$ 58,148
$ 51,630
$ (151,459 ) $ 402,411
Average assets $ 53,748,809
$ 12,459,087
$ 14,288,092
$ 7,092,747
$ 87,588,735


	Nine Months Ended September 30, 2014											Nine Months Ended September 30, 2016
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated		Consumer and Commercial Banking		Corporate and Investment Banking		Treasury			Corporate Support and Other			Consolidated
	(In Thousands)											(In Thousands)
Net interest income	$	1,391,303	$	100,759	$	12,954	$	(28,975	)	$	1,476,041
Net interest income (expense)												$	1,659,588	$	102,050	$	(18,114	)	$	(207,595	)	$	1,535,929
Allocated provision for loan losses	92,115		5,509		—		(11,237		)	86,387		167,559		87,729		—			9,737			265,025
Noninterest income	524,765		137,796		63,803		(45,160		)	681,204		622,523		138,982		47,407			(13,696		)	795,216
Noninterest expense	1,294,095		112,725		12,130		178,321			1,597,271		1,424,343		144,047		15,289			105,773			1,689,452
Net income (loss) before income tax expense (benefit)	529,858		120,321		64,627		(241,219		)	473,587		690,209		9,256		14,004			(336,801		)	376,668
Income tax expense (benefit)	197,372		44,820		24,074		(158,799		)	107,467		241,573		3,239		4,901			(155,165		)	94,548
Net income (loss)	332,486		75,501		40,553		(82,420		)	366,120		448,636		6,017		9,103			(181,636		)	282,120
Less: net income attributable to noncontrolling interests	464		—		1,308		—			1,772		306		—		1,271			(8		)	1,569
Net income (loss) attributable to shareholder	$	332,022	$	75,501	$	39,245	$	(82,420	)	$	364,348
Net income (loss) attributable to BBVA Compass Bancshares, Inc.												$	448,330	$	6,017	$	7,832		$	(181,628	)	$	280,551
Average assets	$	49,140,107	$	7,000,603	$	12,773,686	$	6,859,995		$	75,774,391	$	56,541,683	$	11,960,225	$	16,395,875		$	6,980,644		$	91,878,427



	Nine Months Ended September 30, 2015
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated
	(In Thousands)
Net interest income (expense)	$	1,485,992	$	119,259	$	25,026	$	(121,389	)	$	1,508,888
Allocated provision for loan losses	79,477		41,714		—		(3,860		)	117,331
Noninterest income	627,255		117,131		71,072		1,718			817,176
Noninterest expense	1,361,989		115,572		14,683		143,914			1,636,158
Net income (loss) before income tax expense (benefit)	671,781		79,104		81,415		(259,725		)	572,575
Income tax expense (benefit)	235,123		27,686		28,495		(134,439		)	156,865
Net income (loss)	436,658		51,418		52,920		(125,286		)	415,710
Less: net income attributable to noncontrolling interests	448		—		1,290		—			1,738
Net income (loss) attributable to BBVA Compass Bancshares, Inc.	$	436,210	$	51,418	$	51,630	$	(125,286	)	$	413,972
Average assets	$	54,040,909	$	12,459,085	$	14,288,092	$	6,909,436		$	87,697,522

The financial information presented was derived from the internal profitability reporting system used by management to monitor and manage the financial performance of the Company. This information is based on internal management accounting policies that have been developed to reflect the underlying economics of the businesses. These policies address the methodologies applied and include policies related to funds transfer pricing, cost allocations and capital allocations.

Funds transfer pricing was used in the determination of net interest income earned primarily on loans and deposits. The method employed for funds transfer pricing is a matched funding concept whereby operating segments which are fund providers are credited and those that are fund users are charged based on maturity, prepayment and/or repricing characteristics applied on an instrument level. Costs for centrally managed operations are generally allocated to the ~~lines of business~~operating segment based on the utilization of services provided or other appropriate indicators. Capital is allocated to the ~~lines of business~~operating segments based upon the underlying risks in each business taking into account economic and regulatory capital standards.

The development and application of these methodologies is a dynamic process. Accordingly, prior period financials have been revised to reflect management accounting enhancements and changes in the Company's organizational

~~Table of Contents~~

structure. The ~~2014~~2015 segment information has been revised to conform to the ~~2015~~2016 presentation. In addition, unlike financial accounting, there is no authoritative literature for management accounting similar to U.S. GAAP. Consequently, reported results are not necessarily comparable to those presented by other financial institutions.

~~(12)~~(13) Related Party Transactions

The Company enters into various transactions with BBVA that affect the Company’s business and operations. The following discloses the significant transactions between the Company and BBVA during ~~2015~~2016 and ~~2014~~2015.

The Company believes all of the transactions entered into between the Company and BBVA were transacted on terms that were no more or less beneficial to the Company than similar transactions entered into with unrelated market participants, including interest rates and transaction costs. The Company foresees executing similar transactions with BBVA in the future.

Derivatives

The Company has entered into various derivative contracts as noted below with BBVA as the upstream counterparty. The total notional amount of outstanding derivative contracts between the Company and BBVA are ~~$850 million and $200 million for cash flow hedges and $4.7~~$5.4 billion and ~~$4.2~~$5.3 billion ~~for free-standing derivatives not designated~~ as ~~hedging instruments at~~of September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. The net fair value of outstanding derivative contracts between the Company and BBVA are detailed below.


	September 30, 2015			December 31, 2014		September 30, 2016			December 31, 2015
	(In Thousands)					(In Thousands)
Derivative contracts:
Fair value hedges						$	34,082		$	(9,405	)
Cash flow hedges	$	57		$	1,693	(389		)	(40		)
Free-standing derivatives not designated as hedging instruments	(38,590		)	9,512		(58,934		)	(20,082		)

Securities Purchased Under Agreements to Resell/ Securities Sold Under Agreements to Repurchase

The Company enters into agreements with BBVA as the counterparty under which it purchases/sells securities subject to an obligation to resell/repurchase the same or similar securities. The following represents the amount of securities purchased under agreement to resell and securities sold under agreement to repurchase where BBVA is the counterparty.


	September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015
	(In Thousands)				(In Thousands)
Securities purchased under agreements to resell	$	29,975	$	97,970	$	16,406	$	26,404
Securities sold under agreements to repurchase	—		435,684		82,942		74,049

Borrowings

BSI, a wholly owned subsidiary of the Company, has a $420 million revolving note and cash subordination agreement with BBVA that was executed on March 16, 2012 with a maturity date of March 16, 2018. BSI also has a $150 million line of credit with BBVA that was initiated on August 1, 2014. At September 30, 2016 there was $50 million outstanding on the line of credit agreement and no amount outstanding under the revolving note and cash subordination agreement. At December 31, 2015, there was $150 million outstanding on the line of credit agreement and no amount outstanding under the revolving note and cash subordination agreement. Interest expense related to these agreements was $1.1 million and $587 thousand for the three months ended September 30, 2016 and 2015, respectively, and are included in interest on other short-term borrowings within the Company's Unaudited Condensed Consolidated Statements of Income. Interest expense related to these agreements was $2.7 million and $1.7 million for the nine months ended September 30, 2016 and 2015, respectively, and are included in interest on other short-term borrowings within the Company's Unaudited Condensed Consolidated Statements of Income.

Service and Referral Agreements

The Company and its affiliates entered into or were subject to various service and referral agreements with BBVA and its affiliates. Each of the agreements was done in the ordinary course of business and on market terms. Income associated with these agreements was $6.5 million and $2.7 million for the three months ended September 30, 2016 and 2015, respectively, and is recorded as a component of noninterest income within the Company's Unaudited Condensed Consolidated Statements of Income. Expenses associated with these agreements was $6.6 million and $5.6 million for the three months ended September 30, 2016 and 2015, respectively, and is recorded as a component of noninterest expense within the Company's Unaudited Condensed Consolidated Statements of Income. Income associated with these agreements was $9.3 million for both the nine months ended September 30, 2016 and 2015 and is recorded as a component of noninterest income within the Company's Unaudited Condensed Consolidated Statements of Income. Expenses associated with these agreements were $19.2 million and $17.5 million for the nine months ended September 30, 2016 and 2015, respectively, and is recorded as a component of noninterest expense within the Company's Unaudited Condensed Consolidated Statements of Income.

Series A Preferred Stock

BBVA is the sole holder of the Series A Preferred Stock that the Company issued in December 2015. At ~~December 31, 2014 there were no amounts outstanding under either~~September 30, 2016, the carrying amount of ~~these agreements.~~

~~Table~~the Series A Preferred Stock was approximately $229 million. During the three months ended September 30, 2016, the Company paid $3.5 million of ~~Contents~~preferred stock dividends to BBVA. During the nine months ended September 30, 2016, the Company paid $10.1 million of preferred stock dividends to BBVA.

Loan Sales to Related Parties

During the nine months ended September 30, 2016, the Company sold approximately $444 million of commercial loans to BBVA and recognized a gain on sale of $1.5 million that was recorded as a component of other noninterest income within the Company's Unaudited Condensed Consolidated Statements of Income.


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Prior period financial information has been retrospectively adjusted to include the historical activity of the money transfer service subsidiaries acquired from BBVA Bancomer USA, Inc. in June 2016. See Note 2, Acquisition Activity,in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional disclosures.

Critical Accounting Policies

The accounting principles followed by the Company and the methods of applying these principles conform with accounting principles generally accepted in the United States of America and with general practices within the banking industry. The Company’s critical accounting policies relate to (1) the allowance for loan losses, (2) fair value of financial instruments, (3) income taxes and (4) goodwill impairment. These critical accounting policies require the use of estimates, assumptions and judgments which are based on information available as of the date of the financial statements. Accordingly, as this information changes, future financial statements could reflect the use of different estimates, assumptions and judgments. Certain determinations inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. The Company’s significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in detail in Note 1 in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2014.~~2015. Additional disclosures regarding the effects of new accounting pronouncements are included in Note 1, Basis of Presentation, included herein.

Executive Overview

Financial Performance

Consolidated net income attributable to ~~shareholder~~the Company for the three months ended September 30, ~~2015~~2016 was ~~$125.2~~$119.8 million compared to ~~$142.8~~$129.1 million earned during the three months ended September 30, ~~2014.~~2015. The decrease in net income attributable to ~~shareholder~~the Company was primarily ~~due to~~driven by an increase in provision expense ~~and an increase in income tax expense,~~ offset in part by ~~an increase in noninterest income as well as an increase in~~higher levels of net interest ~~income.~~income and a lower income tax expense.

Net interest income totaled $514.8 million for the three months ended September 30, 2016 compared to $507.9 million for the three months ended September 30, ~~2015 compared to $482.0 million for the three months ended September 30, 2014.~~2015. The net interest margin for the three months ended September 30, ~~2015~~2016 was ~~2.70%~~2.73%, ~~a decline of 31 basis points~~ compared to ~~3.01%~~2.70% for the three months ended September 30, ~~2014.~~2015. The ~~decrease~~increase in net interest ~~margin~~income was primarily the result of an increase in total average interest earning assets, driven by higher levels of average loans as well as a slight decrease in total average interest bearing liabilities due to a decrease in the average balances of FHLB and other borrowings and other short-term borrowings for the three months ended September 30, 2016 compared to the same period in 2015. Net interest income was also positively impacted by the December 2015 ~~was driven by lower yields on earning assets.~~interest rate increase.

The provision for loan losses was ~~$29.2~~$65.1 million for the three months ended September 30, ~~2015~~2016 compared to ~~$3.9~~$29.2 million of provision for loan losses for the three months ended September 30, ~~2014.~~2015. The increase was primarily attributable to a decline in credit quality indicators ~~primarily driven by~~stemming from downgrades in the commercial portfolio and an increase in charge-offs related to energy ~~portfolio~~loans as well as consumer direct and indirect loans during ~~2015.~~the three months ended September 30, 2016. Net charge-offs for the three months ended September 30, ~~2015~~2016 totaled ~~$28.5~~$46.1 million which represented a ~~$5.7~~$17.6 million increase compared to ~~$22.8~~$28.5 million for the three months ended September 30, ~~2014.~~2015. The increase in net charge-offs for the three months ended September 30, 2016 as compared to the corresponding period in 2015 was primarily driven by an $8.5 million increase in net charge-offs related to energy loans as well as a $12.9 million increase in consumer direct and consumer indirect net charge-offs.

Noninterest income was ~~$233.4~~$263.8 million, an increase of ~~$6.9~~$3.0 million compared to the three months ended September 30, ~~2014.~~2015. The increase in noninterest income was largely attributable to a ~~$25.1~~$16.5 million increase in investment banking and advisory fees, a $4.1 million increase in retail investment sales and a $7.7 million increase in mortgage banking. This was offset in part by a $22.7 million decrease in other noninterest income, ~~due to~~primarily as a result of a $21.1 million gain on the sale of mortgage loans not initially originated for sale in the secondary market ~~offset by~~recognized during the three months ended September 30, 2015 and a ~~$7.9~~$6.7 million decrease in ~~mortgage banking income.~~investment securities gains.

Noninterest expense was ~~$536.3~~$556.3 million for the three months ended September 30, ~~2015, an increase of $3.1 million~~2016, relatively flat when compared to $557.4 for the three months ended September 30, 2014. The increase in noninterest expense was primarily attributable to a $9.2 million increase in other noninterest expense primarily due to an increase in provision for unfunded commitments and valuation reserves on loans held for sale offset by a $10.3 million decrease in FDIC indemnification expense.2015.

Income tax expense was ~~$50.1~~$36.8 million for the three months ended September 30, ~~2015~~2016 compared to ~~$27.8~~$52.4 million for the three months ended September 30, ~~2014.~~2015. This resulted in an effective tax rate of ~~28.5%~~23.4% for ~~2015~~2016 and ~~16.2%~~28.8% for ~~2014.~~2015. The ~~increase~~decrease in the effective tax rate ~~for the three months ended September 30, 2015~~ was primarily driven by ~~the release of~~ a ~~valuation allowance on~~decrease in net ~~operating losses of BSI during the three months ended September 30, 2014.~~income before income taxes relative to permanent income tax differences in 2016.

~~Table of Contents~~

The Company's total assets at September 30, ~~2015~~2016 were $89.4 billion, ~~an increase~~a decrease of ~~$6.2 billion~~$712 million from December 31, ~~2014~~2015 levels. Total loans, excluding loans held for sale, were ~~$60.3~~$60.2 billion at September 30, ~~2015, an increase~~2016, a decrease of ~~$2.9~~$1.1 billion or ~~5.1%~~1.8% from year-end December 31, ~~2014~~2015 levels. The ~~growth~~decrease in loans was primarily ~~due to increases~~driven by slight decreases in both commercial and consumer loans. Deposits increased ~~$3.3~~$1.6 billion or ~~5.4%~~2.4% compared to December 31, ~~2014,~~2015, driven by a ~~5.2%~~2.7% increase in transaction accounts and a 1.5% increase in time deposits, which was fueled by an increase in noninterest bearing deposits.

Total shareholder's equity at September 30, ~~2015~~2016 was ~~$12.4~~$12.8 billion, an increase of ~~$377~~$194 million compared to December 31, ~~2014.~~2015.

Capital

~~Beginning January 1, 2015, the Company began the transition period for~~Under the Basel III ~~capital rules. As such, the Company will report Basel III capital ratios under the phase-in provisions for regulatory reporting purposes until fully phased in at January 1, 2019. Under these new~~transitional provisions, the Company's Tier1 and CET1 ratios were ~~10.74%~~11.64% and ~~10.68%~~11.28%, respectively, at September 30, ~~2015 under the phase in provisions.~~2016 compared to 11.08% and 10.70%, respectively, at December 31, 2015.

Liquidity

The Company’s sources of liquidity include customers’ interest-bearing and noninterest-bearing deposit accounts, loan principal and interest payments, investment securities, short-term investments and borrowings. As a bank holding company, the Parent’s primary source of liquidity is dividends from the Bank. Due to the net earnings restrictions on dividend distributions under Alabama law, the Bank was not permitted to pay any dividends at September 30, ~~2015~~2016 and December 31, ~~2014~~2015 without regulatory approval.

Through the first nine months of 2016, the Parent paid common dividends of $60 million to its sole shareholder, BBVA. Any future dividends paid from the Parent must be set forth as capital actions in the Company's capital plan and not objected to by the Federal Reserve Board.

At September 30, 2016, the Company was fully compliant with the liquidity coverage ratio rule. Management believes that the current sources of liquidity are adequate to meet the Company’s requirements and plans for continued growth.

Digital Transformation

As technology advances continue to change the landscape of the financial services industry, customer behaviors are rapidly adapting and adjusting to take advantage of digital and mobile advances. The Company is focused on enhancing its digital capabilities to ensure its products, services and distribution network align with the evolving preferences of its customers. During the first nine months of 2016, the Company has experienced an increase in number of customers utilizing its digital and mobile capabilities. In addition, the Company has also seen an increase in products sold through its digital channels as a percentage of products sold through all channels.

Noteworthy items related to the Company’s digital transformation announced during the first nine months of 2016 included the following:

In January 2016, the Company announced an alliance with industry disrupter FutureAdvisor, a subsidiary of BlackRock, the world’s largest asset manager. The alliance makes sophisticated tools and guidance available to the Company’s digital savvy clients who are not currently taking advantage of its investment services.

In April 2016, Univision Enterprises, the products and services division of Univision Communications Inc., in partnership with Bancomer Transfer Services, Inc. announced the launch of Univision Remesas, an international digital money transfer service for Hispanics.

In May 2016, the Company announced that it had expanded its suite of mobile payment solutions for its cardholders with the integration of Android Pay and Samsung Pay. The release underscores the Company’s drive to provide more and varied ways for customers to bank digitally. They join Apple Pay and the proprietary BBVA Wallet in the Company’s suite of mobile wallet and payment solutions.

In the second quarter of 2016, BBVA Compass began onboading new customers from Simple onto the Bank’s platform. Previously new accounts from Simple were held at another financial institution. In the next few quarters, customer accounts and deposits opened prior to this quarter will be migrated from the other financial institution to BBVA Compass.

Analysis of Results of Operations

Consolidated net income attributable to ~~shareholder~~the Company totaled ~~$125.2~~$119.8 million and ~~$142.8~~$129.1 million for the three months ended September 30, ~~2015~~2016 and ~~2014, respectively. Consolidated net income attributable to shareholder totaled $402.4 million and $364.3 million for the nine months ended September 30,~~ 2015, ~~and 2014,~~ respectively. The Company’s results of operations for the three months ended September 30, ~~2015~~2016 reflected lower net income before income tax expense primarily as a result of higher ~~noninterest income partially due to a $21 million gain on the sale of mortgage loans included~~provision for loan losses offset in ~~other noninterest income offset~~part by higher net interest income ~~tax expense.~~and noninterest income.

Consolidated net income attributable to the Company totaled $280.6 million and $414.0 million for the nine months ended September 30, 2016 and 2015, respectively. The ~~Company's~~Company’s results of operations for the nine months ended September 30, ~~2015~~2016 reflected lower net income before income tax expense primarily as a result of higher provision for loan losses and noninterest expense and lower noninterest income ~~due to~~offset in part by higher levels of investment banking and advisory fees, mortgage banking income and investment securities gains as well as lower noninterest expense primarily due to a decrease in FDIC indemnification expense.net interest income.

Net Interest Income and Net Interest Margin

Net interest income is the principal component of the Company’s income stream and represents the difference, or spread, between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates as well as changes in the volume and mix of earning assets and interest bearing liabilities can impact net interest income. The following discussion of net interest income is presented on a fully taxable equivalent basis, unless otherwise noted, to facilitate performance comparisons among various taxable and tax-exempt assets.

Three Months Ended September 30, ~~2015~~2016 and ~~2014~~2015

Net interest income on a fully taxable equivalent basis totaled ~~$526.9~~$534.7 million for the three months ended September 30, ~~2015~~2016 compared with ~~$500.8~~$527.0 million for the three months ended September 30, ~~2014.~~2015. Net interest income on a fully taxable equivalent basis increased ~~$26.1~~$7.7 million in ~~2015~~2016 compared to ~~2014.~~2015. The increase in net interest income was primarily the result of an increase in total average interest earning assets driven by higher ~~balances~~levels of average loans as well as a slight decrease in ~~loans and trading account securities. Offsetting this increase was an increase in~~ total average interest bearing liabilities due to ~~an increase~~a decrease in the average balances of ~~interest bearing deposits,~~ FHLB and other borrowings and other short-term borrowings for the three months ended September 30, ~~2015~~2016 compared to the same period in ~~2014.~~2015.

~~Table of Contents~~

Net interest margin was 2.73% for the three months ended September 30, 2016 compared to 2.70% for the three months ended September 30, 2015 compared to 3.01% for the three months ended September 30, 2014. The 31 basis point decline in net interest margin primarily reflects the runoff of higher yielding covered loans as well as the impact of lower yields in the AFS investment securities portfolio. In addition, net interest margin has been negatively impacted by a $4.0 billion increase in the average balance of trading account securities and a $4.3 billion increase in the average balance of other short term borrowings due to an increase in U.S. Treasury long and short positions held by BSI.2015.

The fully taxable equivalent yield for the three months ended September 30, ~~2015~~2016 for the loan portfolio was ~~3.64%~~3.74% compared to ~~3.75%~~3.64% for the same period in ~~2014.~~2015. The yield on non-covered loans for the three months ended September 30, 2015 was 3.59% compared to 3.60% for the corresponding period in 2014. The yield on covered loans for the three months ended September 30, 2015 was 10.28% compared to 17.92% for the corresponding period in 2014. The loss sharing agreement for commercial loans expired in the fourth quarter of 2014. Upon expiration, the income associated with these commercial loans is now included in non-covered loans interest income. The decrease in yield on covered loans10 basis point increase was primarily ~~due to~~driven by originations of higher yielding loans as well as the impact of the ~~quarterly reassessment of expected future cash flows.~~rate increase in December 2015.

The fully taxable equivalent yield on the investment securities portfolio was 1.83% for the three months ended September 30, 2016, compared to 1.92% for the three months ended September 30, ~~2015, compared to 2.26% for the three months ended September 30, 2014.~~2015. The 349 basis point decrease was primarily driven by ~~proceeds from~~ the sale of higher yielding investment securities and from prepayments, maturities and calls of investment securities that have been reinvested into investment securities with lower market ~~rates due to a lower rate environment.~~rates.

The yield on trading account securities ~~decreased~~increased to 1.41% for the three months ended September 30, 2016 compared to 1.37% for the three months ended September 30, ~~2015 compared to 2.79% for the three months ended September 30, 2014 due to an increase in U.S. Treasury securities held by BSI.~~2015.

The average rate paid on interest bearing deposits was 0.64% for the three months ended September 30, 2016 compared to 0.61% for the three months ended September 30, ~~2015 compared to 0.62% for the three months ended September 30, 2014.~~2015.

The average rate paid on FHLB and other borrowings for the three months ended September 30, ~~2015~~2016 was ~~1.28%~~2.06% compared to ~~1.70%~~1.28% for the corresponding period in ~~2014.~~2015. The 4278 basis point ~~decrease~~increase was primarily driven by changes in the value of interest rate contracts hedging the value of FHLB and other ~~borrowings offset by the impact of the $1 billion issuance of senior notes in September 2014 and the $700 million issuance of subordinated notes in April 2015 under the Global Bank Note program.~~borrowings.

The average rate on other short-term borrowings decreased 204 basis points to 1.01% for the three months ended September 30, 2015 due to the effect of the increase in U.S. Treasury short positions held by BSI.

Nine Months Ended September 30, ~~2015~~2016 and ~~2014~~2015

Net interest income totaled $1.5 billion for both the nine months ended September 30, ~~2015~~2016 and ~~2014.~~the nine months ended September 30, 2015.

Net interest income on a fully taxable equivalent basis totaled $1.6 billion for both the nine months ended September 30, ~~2015~~2016 and ~~$1.5 billion~~the nine months ended September 30, 2015.

Net interest margin was 2.71% for the nine months ended September 30, ~~2014.~~

~~Net interest margin was~~2016 compared to 2.77% for the nine months ended September 30, ~~2015 compared to 3.18% for the nine months ended September 30, 2014.~~2015. The 416 basis point decline in net interest margin primarily reflects the ~~runoff of higher yielding covered loans as well as the~~ impact of lower yields in the AFS investment securities portfolio. In addition, net interest margin was negatively impacted by the increase in the average balance of trading account securities and the increase in the average balance of other short term borrowings primarily due to an increase in U.S. Treasury long and short positions held by BSI.

The fully taxable equivalent yield for the nine months ended September 30, ~~2015~~2016 for the loan portfolio was ~~3.71%~~3.73% compared to ~~3.93~~3.71 % for the same period in 2014. The yield on non-covered loans for the nine months ended September 30, 2015 was 3.65 % compared to 3.66 % for the corresponding period in 2014. The yield on covered loans for the nine months ended September 30, 2015 was 11.19 % compared to 24.91 % for the corresponding period in 2014. The loss sharing agreement for commercial loans expired in the fourth quarter of 2014. Upon expiration, the income associated with these commercial loans is now included in non-covered loans interest income. The decrease in yield on covered loans was primarily due to the impact of the quarterly reassessment of expected future cash flows.2015.

~~Table of Contents~~

The fully taxable equivalent yield on the investment securities portfolio was 1.71% for the nine months ended September 30, 2016, compared to 2.04% for the nine months ended September 30, ~~2015, compared to 2.35% for the nine months ended September 30, 2014.~~2015. The 3133 basis point decrease was primarily driven by ~~proceeds from~~ the sale of higher yielding investment securities and from prepayments, maturities and calls of investment securities that have been reinvested into investment securities with lower market ~~rates due to a lower rate environment.~~rates.

The yield on trading account securities ~~was~~increased to 1.43% for the nine months ended September 30, 2016 compared to 1.34% for the nine months ended September 30, 2015 ~~compared to 2.71% for the nine months ended September 30, 2014~~ due to an increase in the average balance of U.S. Treasury securities held by BSI.

The average rate paid on interest bearing deposits was 0.65% for the nine months ended September 30, 2016 compared to 0.61% for the nine months ended September 30, ~~2015 compared to 0.59% for the nine months ended September 30, 2014.~~2015.

The average rate paid on FHLB and other borrowings for the nine months ended September 30, ~~2015~~2016 was ~~1.56%~~1.73% compared to ~~1.61%~~1.57% for the corresponding period in ~~2014.~~

2015. The ~~average~~16 basis point increase was primarily driven by changes in the value of interest rate oncontracts hedging the value of FHLB and other ~~short-term borrowing was 1.23% for~~borrowings as well as the ~~nine months ended September 30, 2015 compared to 2.54% for nine months ended September 30, 2014 due to the effect~~impact of the ~~increase~~$700 million issuance of subordinated notes in ~~U.S. Treasury short positions held by BSI.~~April 2015 under the Global Bank Note program.

~~Table of Contents~~

The following table sets forth the major components of net interest income and the related annualized yields and rates, as well as the variances between the periods caused by changes in interest rates versus changes in volumes. Changes attributable to the mix of assets and liabilities have been allocated proportionally between the changes due to yield/rate and the changes due to volume.

Table 1 Consolidated Average Balance and Yield/ Rate Analysis	Table 1 Consolidated Average Balance and Yield/ Rate Analysis														Table 1 Consolidated Average Balance and Yield/ Rate Analysis

	Three Months Ended September 30, 2015							Three Months Ended September 30, 2014							Three Months Ended September 30, 2016							Three Months Ended September 30, 2015
	Average Balance			Income/Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/Rate		Average Balance			Income/Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/Rate
	(Dollars in Thousands)														(Dollars in Thousands)
Assets:
Interest earning assets:
Non-covered loans	$	60,170,975		$	543,762	3.59	%	$	54,756,383		$	497,046	3.60	%
Covered loans	461,329			11,951		10.28		593,266			26,797		17.92
Loans (1) (2) (3)	60,632,304			555,713		3.64		55,349,649			523,843		3.75		61,060,433			574,748		3.74		60,632,304			555,713		3.64
Investment securities – AFS (tax exempt)(3)	193,008			2,044		4.20		488,143			5,119		4.16		9,569			195		8.11		193,008			2,044		4.20
Investment securities – AFS (taxable)	10,314,680			45,316		1.74		8,640,258			45,031		2.07		11,363,752			48,255		1.69		10,314,680			45,316		1.74
Total investment securities – AFS	10,507,688			47,360		1.79		9,128,401			50,150		2.18		11,373,321			48,450		1.69		10,507,688			47,360		1.79
Investment securities – HTM (tax exempt) (3)	1,143,158			9,070		3.15		1,152,622			8,622		2.97		1,059,610			8,672		3.26		1,143,158			9,070		3.15
Investment securities – HTM (taxable)	223,371			1,049		1.86		275,387			1,249		1.80		189,672			1,029		2.16		223,371			1,049		1.86
Total investment securities - HTM	1,366,529			10,119		2.94		1,428,009			9,871		2.74		1,249,282			9,701		3.09		1,366,529			10,119		2.94
Trading account securities (3)	4,167,721			14,431		1.37		133,453			937		2.79		3,637,782			12,927		1.41		4,167,721			14,431		1.37
Other (4) (5)	682,436			1,659		0.96		66,241			47		0.28		632,030			4,563		2.87		685,391			1,666		0.96
Total earning assets	77,356,678			629,282		3.23		66,105,753			584,848		3.51		77,952,848			650,389		3.32		77,359,633			629,289		3.23
Noninterest earning assets:
Cash and due from banks	4,154,979							3,509,394							4,387,844							4,206,639
Allowance for loan losses	(725,871		)					(712,811		)					(848,067		)					(725,871		)
Net unrealized gain (loss) on investment securities available for sale	9,568							37,160
Net unrealized gain on investment securities available for sale															25,595							9,568
Other noninterest earning assets	8,966,376							8,969,591							9,382,119							9,036,128
Total assets	$	89,761,730						$	77,909,087						$	90,900,339						$	89,886,097
Liabilities:
Interest bearing liabilities:
Interest bearing demand deposits	$	6,949,920		2,943		0.17		$	7,079,309		2,971		0.17		$	6,824,519		4,077		0.24		$	6,949,920		2,943		0.17
Savings and money market accounts	24,414,794			22,260		0.36		22,479,532			24,256		0.43		25,663,079			24,395		0.38		24,414,794			22,260		0.36
Certificates and other time deposits	13,158,735			42,990		1.30		12,956,374			39,478		1.21		14,670,360			47,507		1.29		13,158,705			42,990		1.30
Foreign office deposits	177,014			89		0.20		120,989			58		0.19		106,219			52		0.19		165,744			89		0.21
Total interest bearing deposits	44,700,463			68,282		0.61		42,636,204			66,763		0.62		47,264,177			76,031		0.64		44,689,163			68,282		0.61
FHLB and other borrowings	6,331,187			20,422		1.28		3,827,684			16,399		1.70		4,121,742			21,315		2.06		6,331,187			20,422		1.28
Federal funds purchased and securities sold under agreements to repurchase (5)	677,351			2,506		1.47		838,802			447		0.21		232,451			4,934		8.44		677,351			2,506		1.47
Other short-term borrowings	4,370,077			11,129		1.01		51,290			394		3.05		3,737,212			13,453		1.43		4,370,077			11,129		1.01
Total interest bearing liabilities	56,079,078			102,339		0.72		47,353,980			84,003		0.70		55,355,582			115,733		0.83		56,067,778			102,339		0.72
Noninterest bearing deposits	19,311,966							17,039,477							20,715,562							19,312,087
Other noninterest bearing liabilities	2,053,536							1,598,363							2,018,455							2,126,929
Total liabilities	77,444,580							65,991,820							78,089,599							77,506,794
Shareholder’s equity	12,317,150							11,917,267							12,810,740							12,379,303
Total liabilities and shareholder’s equity	$	89,761,730						$	77,909,087						$	90,900,339						$	89,886,097
Net interest income/net interest spread				$	526,943	2.51	%				$	500,845	2.81	%				$	534,656	2.49	%				$	526,950	2.51	%
Net interest margin						2.70	%						3.01	%						2.73	%						2.70	%
Taxable equivalent adjustment				19,076							18,877							19,847							19,076
Net interest income				$	507,867						$	481,968						$	514,809						$	507,874


(1)	Loans include loans held for sale and nonaccrual loans.


(2)	Interest income includes loan fees for rate calculation purposes.


(3)	Yields are stated on a fully taxable equivalent basis assuming the tax rate in effect for each period presented.


(4)	Includes federal funds sold, securities purchased under agreements to resell, interest bearing deposits, and other earning assets.


(5)	Yield/rate reflects impact of balance sheet offsetting. See Note 6,7, Securities Financing Activities.

~~Table of Contents~~

Table 1 Consolidated Average Balance and Yield/ Rate Analysis	Table 1 Consolidated Average Balance and Yield/ Rate Analysis														Table 1 Consolidated Average Balance and Yield/ Rate Analysis

	Nine Months Ended September 30, 2015							Nine Months Ended September 30, 2014							Nine Months Ended September 30, 2016							Nine Months Ended September 30, 2015
	Average Balance			Income/Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/Rate		Average Balance			Income/Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/Rate
	(Dollars in Thousands)														(Dollars in Thousands)
Assets:
Interest earning assets:
Non-covered loans	$	59,261,882		$	1,619,513	3.65	%	$	53,091,001		$	1,454,943	3.66	%
Covered loans	475,305			39,790		11.19		660,487			123,064		24.91
Loans (1) (2) (3)	59,737,187			1,659,303		3.71		53,751,488			1,578,007		3.93		61,867,590			1,727,822		3.73		59,737,187			1,659,303		3.71
Investment securities – AFS (tax exempt)(3)	332,492			10,100		4.06		498,452			15,822		4.24		11,483			668		7.77		332,492			10,100		4.06
Investment securities – AFS (taxable)	9,861,132			136,483		1.85		8,374,817			135,407		2.16		11,246,517			130,585		1.55		9,861,132			136,483		1.85
Total investment securities – AFS	10,193,624			146,583		1.92		8,873,269			151,229		2.28		11,258,000			131,253		1.56		10,193,624			146,583		1.92
Investment securities – HTM (tax exempt) (3)	1,129,784			26,373		3.12		1,172,896			26,355		3.00		1,070,547			25,977		3.24		1,129,784			26,373		3.12
Investment securities – HTM (taxable)	236,515			3,409		1.93		292,503			3,955		1.81		198,614			3,316		2.23		236,515			3,409		1.93
Total investment securities - HTM	1,366,299			29,782		2.91		1,465,399			30,310		2.77		1,269,161			29,293		3.08		1,366,299			29,782		2.91
Trading account securities (3)	3,779,274			37,878		1.34		100,611			2,036		2.71		3,786,156			40,661		1.43		3,779,274			37,878		1.34
Other (4) (5)	601,357			4,017		0.89		37,891			136		0.48		538,977			13,275		3.29		604,319			4,027		0.89
Total earning assets	75,677,741			1,877,563		3.32		64,228,658			1,761,718		3.67		78,719,884			1,942,304		3.30		75,680,703			1,877,573		3.32
Noninterest earning assets:
Cash and due from banks	3,589,289							3,346,640							4,584,803							3,642,765
Allowance for loan losses	(707,459		)					(707,630		)					(823,372		)					(707,459		)
Net unrealized gain (loss) on investment securities available for sale	44,180							40,216
Net unrealized gain on investment securities available for sale															15,061							44,180
Other noninterest earning assets	8,984,984							8,866,507							9,382,051							9,037,333
Total assets	$	87,588,735						$	75,774,391						$	91,878,427						$	87,697,522
Liabilities:
Interest bearing liabilities:
Interest bearing demand deposits	$	7,281,588		8,868		0.16		$	7,269,983		9,066		0.17		$	6,912,147		11,867		0.23		$	7,281,588		8,868		0.16
Savings and money market accounts	23,890,463			70,465		0.39		21,020,159			59,922		0.38		25,861,764			75,896		0.39		23,890,463			70,465		0.39
Certificates and other time deposits	12,832,859			123,546		1.29		12,733,405			111,717		1.17		14,652,400			142,856		1.30		12,832,829			123,546		1.29
Foreign office deposits	171,048			257		0.20		121,212			175		0.19		108,444			160		0.20		167,220			257		0.21
Total interest bearing deposits	44,175,958			203,136		0.61		41,144,759			180,880		0.59		47,534,755			230,779		0.65		44,172,100			203,136		0.61
FHLB and other borrowings	5,742,906			67,068		1.56		4,070,692			48,947		1.61		4,543,350			58,919		1.73		5,742,906			67,068		1.57
Federal funds purchased and securities sold under agreements to repurchase (5)	832,854			5,534		0.89		885,147			1,384		0.21		569,772			16,525		3.87		832,854			5,534		0.89
Other short-term borrowings	3,973,734			36,668		1.23		27,183			516		2.54		3,912,069			41,281		1.41		3,973,734			36,668		1.23
Total interest bearing liabilities	54,725,452			312,406		0.76		46,127,781			231,727		0.67		56,559,946			347,504		0.82		54,721,594			312,406		0.76
Noninterest bearing deposits	18,749,621							16,349,912							20,432,380							18,749,741
Other noninterest bearing liabilities	1,890,692							1,509,944							2,122,640							1,944,942
Total liabilities	75,365,765							63,987,637							79,114,966							75,416,277
Shareholder’s equity	12,222,970							11,786,754							12,763,461							12,281,245
Total liabilities and shareholder’s equity	$	87,588,735						$	75,774,391						$	91,878,427						$	87,697,522
Net interest income/net interest spread				$	1,565,157	2.56	%				$	1,529,991	3.00	%				$	1,594,800	2.48	%				$	1,565,167	2.56	%
Net interest margin						2.77	%						3.18	%						2.71	%						2.77	%
Taxable equivalent adjustment				56,279							53,950							58,871							56,279
Net interest income				$	1,508,878						$	1,476,041						$	1,535,929						$	1,508,888


(1)	Loans include loans held for sale and nonaccrual loans.


(2)	Interest income includes loan fees for rate calculation purposes.


(3)	Yields are stated on a fully taxable equivalent basis assuming the tax rate in effect for each period presented.


(4)	Includes federal funds sold, securities purchased under agreements to resell, interest bearing deposits, and other earning assets.


(5)	Yield/rate reflects impact of balance sheet offsetting. See Note 6,7, Securities Financing Activities.

~~Table of Contents~~

Provision for Loan Losses

The provision for loan losses is the charge to earnings that management determines to be necessary to maintain the allowance for loan losses at a sufficient level reflecting management's estimate of probable incurred losses in the loan portfolio.

Three Months Ended September 30, ~~2015~~2016 and ~~2014~~2015

For the three months ended September 30, ~~2015,~~2016, the Company recorded ~~$29.2~~$65.1 million of provision for loan losses compared to ~~$3.9~~$29.2 million of provision for loan losses for the three months ended September 30, ~~2014.~~2015. The increase in provision for loan losses for the three months ended September 30, ~~2015~~2016 as compared to the same period in ~~2014~~2015 was primarily to a decline in credit quality indicators stemming from downgrades in the commercial portfolio and an increase in charge-offs related to energy loans as well as consumer direct and indirect loans during 2016. The Company recorded net charge-offs of $46.1 million during the three months ended September 30, 2016 compared to $28.5 million during the corresponding period in 2015. Included in net-charge-offs for the three months ended September 30, 2016 was $8.5 million of net charge-offs related to energy loans compared to $2.7 million of charge-offs related to energy loans for the three months ended September 30, 2015. Net charge-offs were 0.30% (or 0.26% excluding net charge-offs on energy loans) of average loans for the three months ended September 30, 2016 compared to 0.19% (or 0.18% excluding net charge-offs on energy loans) of average loans for the three months ended September 30, 2015.

Nine Months Ended September 30, 2016 and 2015

For the nine months ended September 30, 2016, the Company recorded $265.0 million of provision for loan losses compared to $117.3 million of provision for loan losses for the nine months ended September 30, 2015. The increase in provision for loan losses for the nine months ended September 30, 2016 as compared to the same period in 2015 was primarily attributable to a decline in credit quality indicators primarily driven by downgrades in the energy portfolio during ~~2015.~~2016. The Company recorded net charge-offs of $28.5 million during the three months ended September 30, 2015 compared to $22.8 million during the corresponding period in 2014. Net charge-offs were 0.19% of average loans for the three months ended September 30, 2015 compared to 0.16% of average loans for the three months ended September 30, 2014.

~~Nine Months Ended September 30, 2015and 2014~~

For the nine months ended September 30, 2015, the Company recorded $117.3 million of provision for loan losses compared to $86.4 million of provision for loan losses for the nine months ended September 30, 2014. The increase in provision for loan losses for the nine months ended September 30, 2015 as compared to the same period in 2014 was primarily attributable to loan growth as well as a decline in credit quality indicators primarily driven by downgrades in the energy portfolio during 2015.The Company recorded net charge-offs of $80.3$165.6 million during the nine months ended September 30, ~~2015~~2016 compared to ~~$91.2~~$80.3 million during the corresponding period in ~~2014.~~2015. Included in net-charge-offs for the nine months ended September 30, 2016 was $49.4 million of net charge-offs related to energy loans compared to $2.7 million of net charge-offs related to energy loans for the nine months ended September 30, 2015. Net charge-offs were ~~0.18%~~0.36% (or 0.27% excluding net charge-offs on energy loans) of average loans for the nine months ended September 30, ~~2015~~2016 compared to ~~0.23%~~0.18% (or 0.19% excluding net charge-offs on energy loans) of average loans for the nine months ended September 30, ~~2014.~~2015.

For further discussion and analysis of the allowance for loan losses, refer to the discussion of lending activities found later in this section. Also, refer to Note 3, 4, Loans and Allowance for Loan Losses,, in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional disclosures.

Noninterest Income

The following table presents the components of noninterest income.

Table 2 Noninterest Income	Table 2 Noninterest Income										Table 2 Noninterest Income

	Three Months Ended September 30,				Nine Months Ended September 30,						Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015			2014			2016		2015		2016		2015
	(In Thousands)										(In Thousands)
Service charges on deposit accounts	$	54,917	$	57,537	$	161,891		$	165,886		$	55,047	$	54,917	$	158,393	$	161,891
Card and merchant processing fees	29,024		28,682		83,918			81,459			31,256		29,024		92,507		83,918
Investment banking and advisory fees											34,385		17,842		86,324		84,975
Money transfer income											25,058		24,868		75,960		68,702
Retail investment sales	26,055		27,645		77,574			83,053			30,137		26,055		79,689		77,574
Investment banking and advisory fees	17,842		18,750		84,975			63,226
Asset management fees	7,918		10,666		24,449			31,959			8,778		7,918		25,969		24,449
Corporate and correspondent investment sales	6,047		5,388		20,290			22,016			6,974		6,047		21,490		20,290
Mortgage banking income	554		8,498		21,269			18,924
Mortgage banking											8,242		554		5,410		21,269
Bank owned life insurance	4,345		4,603		13,527			12,807			4,170		4,345		13,041		13,527
Investment securities gains, net	6,736		9,710		66,967			47,608			—		6,736		30,037		66,967
Gain (loss) on prepayment of FHLB and other borrowings, net	—		143		(6,118		)	(315		)
Loss on prepayment of FHLB and other borrowings, net											—		—		—		(6,118		)
Other	79,938		54,809		192,473			154,581			59,718		82,414		206,396		199,732
Total noninterest income	$	233,376	$	226,431	$	741,215		$	681,204		$	263,765	$	260,720	$	795,216	$	817,176

~~Table of Contents~~

Three Months Ended September 30, ~~2015~~2016 and ~~2014~~2015

Noninterest income was ~~$233.4~~$263.8 million for the three months ended September 30, 2016 compared to $260.7 million for the three months ended September 30, 2015. The increase in noninterest income was primarily driven by increases in investment banking and advisory fees, retail investment sales and mortgage banking partially offset by a decrease in other noninterest income.

Income from investment banking and advisory fees increased to $34.4 million for the three months ended September 30, 2016, compared to $17.8 million for the three months ended September 30, 2015 due primarily to an increase in structuring and advisory fees and higher bond originations during the third quarter 2016 compared to ~~$226.4 million~~the same period in 2015.

Mortgage banking for the three months ended September 30, ~~2014. The increase in noninterest income~~2016 was ~~largely attributable to~~$8.2 million an increase ~~in other noninterest income which was partially offset by decreases in service charges on deposit accounts, asset management fees, mortgage~~of $7.7 million compared to the three months ended September 30, 2015. Mortgage banking ~~income and investment securities gains.~~

~~Service charges on deposit accounts represent the Company's largest category of noninterest revenue. Service charges on deposit accounts decreased to $54.9 million~~ for the three months ended September 30, ~~2015, compared~~2016 included $7.2 million of origination fees and gains on sales of mortgage loans and gains of $986 thousand related to ~~$57.5 million~~fair value adjustments on mortgage loans held for ~~the three months ended September 30, 2014 due to a decline in consumer overdraft fees.~~

~~Asset management fees for the three months ended September 30, 2015, decreased by $2.7 million from the corresponding period in2014primarily driven by a decrease in assets under management due to the divestiture of one of the Bank's wealth management subsidiaries.~~

sale, mortgage related derivatives and MSRs. Mortgage banking ~~income for the three months ended September 30, 2015 was $554 thousand compared to $8.5 million for the three months ended September 30, 2014. Mortgage banking income~~ for the three months ended September 30, 2015 included $8.3 million of origination fees and gains on sales of mortgage loans as well as losses of $7.0 million related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. ~~Mortgage~~The increase in mortgage banking ~~income~~ for the three months ended September 30, 2014 included $10.3 million of origination fees and gains on sales of mortgage loans as well as losses of $1.7 million related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. The decrease in mortgage banking income for the three months ended September 30, 20152016 compared to the corresponding period in ~~2014~~2015 was primarily driven by ~~the lower interest rate environment~~a decline in rates during the third quarter of 2015 which negatively impacted the valuations of mortgage loans held for sale, mortgage related derivatives, and MSRs.

Investment securities gains, net decreased toby $6.7 million for the three months ended September 30, ~~2015, compared to $9.7 million in~~2016 as there were no sales of AFS securities during the three months ended September 30, ~~2014, see~~2016. See "—Investment Securities" for more information related to the investment securities sales.

Other income is comprised of income recognized that does not typically fit into one of the other noninterest income categories and includes various fees associated with letters of credit, syndications, ATMs and foreign exchange. For the three months ended September 30, ~~2015,~~2016, other income ~~increased~~decreased by ~~$25.1~~$22.7 million primarily ~~attributable to~~as a result of a $21.1 million gain on the sale of mortgage ~~loans. During~~loans not initially originated for sale in the secondary market recognized during the three months ended September 30, ~~2015, the Company transferred to loans held for sale and sold approximately $396 million of mortgage loans.~~2015.

Nine Months Ended September 30, ~~2015~~2016 and ~~2014~~2015

Noninterest income was ~~$741.2~~$795.2 million for the nine months ended September 30, 2016 compared to $817.2 million for the nine months ended September 30, 2015. The decrease in noninterest income was driven by decreases in mortgage banking and investment securities gains partially offset by increases in card and merchant processing fees and money transfer income.

Card and merchant processing fees represent income related to customers' utilization of their debit and credit cards, as well as interchange income and merchants' discounts. Card and merchant processing fees increased to $92.5 million for the nine months ended September 30, 2016, compared to $83.9 million for the nine months ended September 30, 2015 ~~compared~~driven by a $3.4 million increase related to ~~$681.2~~Simple and a $4.0 million increase in debit card interchange and merchant services.

Money transfer income increased to $76.0 million for the nine months ended September 30, ~~2014. The increase in noninterest income was largely attributable~~2016 compared to ~~increases in investment banking and advisory fees, mortgage banking income and other noninterest income.~~

~~Income from investment banking and advisory fees increased to $85.0~~$68.7 million for the nine months ended September 30, 2015 ~~compared~~due to ~~$63.2~~higher transaction volume.

Mortgage banking for the nine months ended September 30, 2016 decreased $15.9 million from $21.3 million for the nine months ended September 30, ~~2014 due primarily to an increase in structuring and advisory fees and higher bond originations during 2015 compared to the same period in 2014.~~

2015. Mortgage banking ~~income~~ for the nine months ended September 30, ~~2015 was $21.3~~2016 included $17.2 million ~~compared~~of origination fees and gains on sales of mortgage loans partially offset by losses of $11.9 million related to ~~$18.9 million~~fair value adjustments on mortgage loans held for ~~the nine months ended September 30, 2014.~~sale, mortgage related derivatives and MSRs. Mortgage banking income for the nine months ended September 30, 2015 included $28.0 million of origination fees and gains on sales of mortgage loans as well as losses of $5.5 million related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. ~~Mortgage~~The decrease in mortgage banking ~~income~~ for the nine months ended September 30, ~~2014 included $18.9 million~~2016 compared to the corresponding period in 2015 was primarily driven by movements in interest rates during the year which negatively impacted the valuations of ~~origination fees and gains on sales of mortgage loans as well as gains of $321 thousand related to fair value adjustments on~~ mortgage loans held for sale, mortgage related derivatives, and MSRs. ~~The increase in~~In addition, mortgage ~~banking income for~~production volume decreased during the nine months ended September 30, ~~2015~~2016 compared to the corresponding period in ~~2014 was primarily driven by higher refinance volume at higher margins compared to the same period in 2014.~~2015.

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Investment securities gains, net ~~increased to $67.0~~were $30.0 million for the nine months ended September 30, ~~2015,~~2016, compared to ~~$47.6~~$67.0 million in the nine months ended September 30, ~~2014, see~~2015. See "—Investment Securities" for more information related to the investment securities sales.

~~For~~During the nine months ended September 30, 2015, ~~other income increased by $37.9~~the Company prepaid approximately $595 million ~~primarily due to~~of FHLB advances resulting in a ~~gain of $21.1~~$6.1 million loss on the ~~sale~~prepayment of ~~mortgage loans. Servicing fees also increased $4.4 million due to an increase in loans sold to FNMA where the Company retained the servicing in 2015 compared to 2014. Trade services fees~~FHLB advances and ~~miscellaneous income also increased $4.7 million and $9.9 million, respectively, for the nine months ended September 30, 2015.~~other borrowings.

Noninterest Expense

The following table presents the components of noninterest expense.

Table 3 Noninterest Expense	Table 3 Noninterest Expense								Table 3 Noninterest Expense

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014		2016		2015		2016		2015
	(In Thousands)								(In Thousands)
Salaries, benefits and commissions	$	268,362	$	265,334	$	796,333	$	791,204	$	279,132	$	271,143	$	836,067	$	804,828
Equipment	58,151		56,355		173,467		165,562		59,697		58,414		179,646		174,311
Professional services	54,784		52,463		152,462		148,652		63,628		55,476		178,396		154,134
Net occupancy	39,525		39,357		119,187		118,514		41,610		39,706		120,881		119,731
FDIC indemnification expense	8,461		18,748		49,669		80,736
Money transfer expense									16,680		16,514		50,048		44,016
Amortization of intangibles	9,507		12,635		30,083		38,800		4,093		9,507		12,280		30,083
Total securities impairment	—		—		1,298		180		—		—		130		1,298
Other	97,460		88,250		256,106		253,623		91,431		106,615		312,004		307,757
Total noninterest expense	$	536,250	$	533,142	$	1,578,605	$	1,597,271	$	556,271	$	557,375	$	1,689,452	$	1,636,158

Three Months Ended September 30, ~~2015~~2016 and ~~2014~~2015

Noninterest expense was ~~$536.3~~$556.3 million for the three months ended September 30, ~~2015~~2016 compared to ~~$533.1~~$557.4 million for the three months ended September 30, ~~2014. The $3.1 million increase in noninterest expense was primarily driven by an increase in salaries, benefits and commissions~~2015.

Professional services represents fees incurred for the various support functions, which includes legal, consulting, outsourcing and other ~~noninterest expense offset by a decrease~~professional related fees. Professional services increased $8.2 million during the three months ended September 30, 2016 to $63.6 million compared to $55.5 million for the corresponding period in ~~FDIC indemnification expense~~2015 due to increases in other professional services, contractor services, and ~~amortization~~credit card processing.

Amortization of ~~intangibles.~~

~~Salaries, benefits and commissions increased to $268.4~~intangibles decreased $5.4 million for the three months ended September 30, 2015 compared to $265.3 million for the three months ended September 30, 2014. The increase was due to $3.0 million of salaries and benefits recognized during the three months ended September 30, 2015 related to Spring Studios which was acquired by the Company during the second quarter of 2015.

FDIC indemnification expense, which represents the amortization of changes in the FDIC indemnification asset and liability stemming from changes in credit expectations of covered loans, was $8.5 million during the three months ended September 30, 2015 compared to $18.7 million for the corresponding period in 2014. The decrease for the three months ended September 30, 2015 was primarily a result of the continued decline in the balance of the covered loan portfolio.

~~Amortization expense decreased by $3.1 million to $9.5 million for the three months ended September 30, 2015~~2016 due to the lower level of intangible assets at September 30, ~~2015 compared to the same period in 2014.~~2016.

Other noninterest expense ~~represents~~includes FDIC insurance, marketing, communications, postage, supplies, subscriptions, FDIC indemnification expense, provision for unfunded commitments and gains and losses on the sales and write-downs of OREO. Other noninterest expense ~~increased for~~decreased $15.2 million during the three months ended September 30, ~~2015~~2016 to ~~$97.5~~$91.4 million compared to ~~$88.3~~$106.6 million for the three months ended September 30, ~~2014~~2015. The decrease was primarily attributable to an $8.5 million decrease in FDIC indemnification expense due to the continued runoff of the covered loan portfolio, as well as a $4.3 million ~~increase~~decrease in the provision for unfunded

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~~commitments and a $4.6 million valuation adjustment related to loans transferred to held for sale during the third quarter of 2015.~~ commitments.

Nine Months Ended September 30, ~~2015~~2016 and ~~2014~~2015

Noninterest expense was $1.7 billion for the nine months ended September 30, 2016 compared to $1.6 billion for the nine months ended September 30, ~~2015,~~2015. The slight increase in noninterest expense was due to increases in professional services and money transfer expense offset, in part, by a decrease in amortization of ~~$18.7~~intangibles.

Professional services increased $24.3 million ~~compared to~~during the nine months ended September 30, ~~2014.The main drivers of~~2016 compared to the ~~decrease were a decrease~~corresponding period in ~~FDIC indemnification expense and amortization of intangibles which was partially offset by~~2015 due to increases in ~~salaries, benefits~~expenses related to other professional services, outsourcing, contractor services and ~~commissions and equipment expense.~~credit card processing.

~~Salaries, benefits and commissions~~Money transfer expense increased to ~~$796.3~~$50.0 million for the nine months ended September 30, ~~2015~~2016 compared to $791.2 million for the nine months ended September 30, 2014. The increase was due to $4.7 million of salaries and benefits recognized during the nine months ended September 30, 2015 related to Spring Studios which was acquired by the Company during the second quarter of 2015.

Equipment expense was $173.5 million during the nine months ended September 30, 2015 compared to $165.6 million for the corresponding period in 2014 due to a $9.8 million increase in software amortization resulting from software additions in 2015 offset by a $2.0 million decrease related to hardware depreciation.

FDIC indemnification expense was $49.7 million during the nine months ended September 30, 2015 compared to $80.7 million for the corresponding period in 2014. The decrease for the nine months ended September 30, 2015 was primarily a result of the continued decline in the balance of the covered loan portfolio.

~~Amortization expense decreased by $8.7 million to $30.1~~$44.0 million for the nine months ended September 30, 2015 due to higher transaction volume.

Amortization of intangibles decreased by $17.8 million to $12.3 million for the nine months ended September 30, 2016 due to the lower level of intangible assets at September 30, ~~2015 compared to the same period in 2014.~~2016.

Income Tax Expense

Three Months Ended September 30, ~~2015~~2016 and ~~2014~~2015

The Company’s income tax expense totaled ~~$50.1~~$36.8 million and ~~$27.8~~$52.4 million for the three months ended September 30, ~~2015~~2016 and ~~2014,~~2015, respectively. The effective tax rate was ~~28.5%~~23.4% for the three months ended September 30, ~~2015~~2016 and ~~16.2%~~28.8% for the three months ended September 30, ~~2014.~~2015. The ~~increase~~decrease in the effective tax rate for the three months ended September 30, ~~2015~~2016 compared to the three months ended September 30, ~~2014~~2015 was primarily driven by ~~the release of~~ a ~~valuation allowance on~~decrease in net ~~operating losses of BSI during the three months ended September 30, 2014.~~income before income taxes relative to permanent income tax differences in 2016.

Nine Months Ended September 30, ~~2015~~2016 and ~~2014~~2015

The Company’s income tax expense totaled ~~$150.0~~$94.5 million and ~~$107.5~~$156.9 million for the nine months ended September 30, ~~2015~~2016 and ~~2014,~~2015, respectively. The effective tax rate was ~~27.1%~~25.1% for the nine months ended September 30, ~~2015~~2016 and ~~22.7%~~27.4% for the nine months ended September 30, ~~2014.~~ 2015.The ~~increase~~decrease in the effective tax rate for the nine months ended September 30, ~~2015~~2016 compared to the ~~nine months ended September 30, 2014~~same period in 2015 was primarily driven by ~~higher~~a decrease in net income before income ~~tax expense~~taxes relative to permanent income tax differences in ~~2015 as compared to the same period in 2014 and the release of a valuation allowance on net operating losses of BSI during the three months ended September 30, 2014.~~2016.

Analysis of Financial Condition

A review of the Company’s major balance sheet categories is presented below.

Trading Account Assets

Trading account assets totaled ~~$4.2~~$4.1 billion at both September 30, ~~2015 compared to $2.8 billion at~~2016 and December 31, ~~2014.~~2015. The ~~$1.4 billion increase~~$87 million decrease in trading account assets was primarily attributable to ~~an increase~~a $293 million decrease in U.S. Treasury securities held by ~~BSI.~~BSI offset by $214 million increase in interest contracts for customers.

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Investment Securities

As of September 30, ~~2015,~~2016, the securities portfolio included ~~$10.8~~$11.5 billion in available for sale securities and ~~$1.4~~$1.2 billion in held to maturity securities for a total investment portfolio of ~~$12.2~~$12.8 billion, an increase of ~~$576~~$385 million compared with December 31, ~~2014.~~2015.

During the ~~three~~nine months ended September 30, ~~2015, as part of the Company's liquidity management strategy and due to upcoming LCR requirements,~~2016, the Company ~~sold approximately $263 million~~received proceeds of ~~state~~$1.8 billion related to the sale of U.S. Treasury and ~~political subdivisions and $287 million of mortgage-backed~~other U.S. government agencies securities ~~and collateralized mortgage obligations~~ classified as available for ~~sale. See the "—Liquidity Management" and Note~~2,~~Investment Securities Available for Sale and Investment Securities Held to Maturity,~~sale which resulted in ~~the~~ ~~Notes to the Unaudited Condensed Consolidated Financial Statements~~ ~~for additional disclosures.~~

net gains of $30.0 million. During the nine months ended September 30, 2015, the Company received proceeds of $2.9 billion ~~related to~~from the sale of U.S. Treasury and other U.S. government agencies, mortgage-backed securities, collateralized mortgage obligations and states and political subdivisions ~~holdings~~ classified as available for sale which resulted in net gains of $67.0 million. During the nine months ended September 30, 2014, the Company received proceeds of $961 million from the sale of mortgage-backed securities and collateralized mortgage obligations classified as available for sale which resulted in net gains of $47.6 million.

Lending Activities

Average loans and loans held for sale ~~net of unearned income,~~ represented ~~78.9%~~78.6% of average ~~interest-earnings~~interest-earning assets at September 30, ~~2015,~~2016, compared to ~~83.0%~~78.9% at December 31, ~~2014.~~2015. The Company groups its loans into portfolio segments based on internal classifications reflecting the manner in which the allowance for loan losses is established and how credit risk is measured, monitored and reported. Commercial loans are comprised of commercial, financial and agricultural, real estate-construction, and commercial real estate–mortgage loans. Consumer loans are comprised of residential real-estate mortgage, equity lines of credit, equity loans, credit cards, consumer direct and consumer indirect loans. The Company also has a portfolio of covered loans that were acquired in the FDIC-assisted acquisition of certain assets and liabilities of Guaranty Bank.

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The following table presents the composition of the loan portfolio.

Table 4 Loan Portfolio	Table 4 Loan Portfolio				Table 4 Loan Portfolio

	September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015
	(In Thousands)				(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	25,636,319	$	23,828,537	$	24,839,068	$	26,022,374
Real estate – construction	2,315,351		2,154,652		2,215,272		2,354,253
Commercial real estate – mortgage	10,624,632		9,877,206		11,361,630		10,453,280
Total commercial loans	$	38,576,302	$	35,860,395	$	38,415,970	$	38,829,907
Consumer loans:
Residential real estate – mortgage	$	13,897,723	$	13,922,656	$	13,457,435	$	13,993,285
Equity lines of credit	2,376,408		2,304,784		2,494,468		2,419,815
Equity loans	612,148		634,968		479,375		580,804
Credit card	609,982		630,456		599,862		627,359
Consumer direct	854,989		652,927		1,186,827		936,871
Consumer indirect	2,901,603		2,870,408		3,196,235		3,495,082
Total consumer loans	$	21,252,853	$	21,016,199	$	21,414,202	$	22,053,216
Covered loans	458,066		495,190		381,111		440,961
Total loans	$	60,287,221	$	57,371,784	$	60,211,283	$	61,324,084
Loans held for sale	634,158		154,816		101,843		70,582
Total loans and loans held for sale	$	60,921,379	$	57,526,600	$	60,313,126	$	61,394,666

Loans and loans held for sale, net of unearned income, totaled ~~$60.9~~$60.3 billion at September 30, ~~2015, an increase~~2016, a decrease of ~~$3.4~~$1.1 billion from December 31, ~~2014.~~2015. The ~~increase~~decrease in total loans was primarily driven by ~~growth~~a decrease in commercial

loans, ~~as well as increases in~~which included the ~~consumer direct and consumer indirect loan portfolios.~~sale of $444 million of commercial loans during the nine months ended September 30, 2016. Additionally, residential real estate-mortgage loans decreased which included the sale of $316 million of residential real estate-mortgage loans during the nine months ended September 30, 2016.

See Note 34, Loans and Allowance for Loan Losses, and Note 4,5, Loan Sales and Servicing, in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional discussion.

Asset Quality

Nonperforming assets, which includes nonaccrual loans, nonaccrual loans held for sale, accruing loans 90 days past due, accruing TDRs 90 days past due, other real estate owned and other repossessed assets, totaled ~~$482 million~~$1.2 billion at September 30, ~~2015~~2016 an increase of $675 million compared to ~~$420~~$506 million at December 31, ~~2014.~~2015. The increase in nonperforming assets was primarily due to a ~~$58~~$679 million increase in nonaccrual loans primarily related to downgrades of certain loans in the energy portfolio. At September 30, 2016, energy nonaccrual loans were $588 million compared to $92 million at December 31, 2015. Excluding energy nonperforming loans, nonperforming assets totaled $593 million at September 30, 2016 compared to $414 million at December 31, 2015. As a percentage of total loans and loans held for sale, ~~and~~ other real estate owned and other repossessed assets, nonperforming assets were ~~0.79%~~1.96% (or 1.04% excluding energy nonperforming loans) at September 30, ~~2015~~2016 compared with ~~0.73%~~0.82% (or 0.72% excluding energy nonperforming loans) at December 31, ~~2014.~~2015.

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The Company defines potential problem loans as commercial ~~noncovered~~ loans rated substandard or doubtful that do not meet the definition of nonaccrual, TDR or 90 days past due and still accruing. See Note 3,4, Loans and Allowance for Loan Losses, in the Notes to the Unaudited Condensed Consolidated Financial Statements for further information on the Company’s credit grade categories, which are derived from standard regulatory rating definitions. The following table provides a summary of potential problem loans.

Potential problem loans increased ~~$317~~$28 million from December 31, ~~2014~~2015 to September 30, ~~2015.~~2016. The increase was primarily attributable to downgrades of loans in the energy portfolio. See "—Concentrations" for additional discussion.

Table 5 Potential Problem Loans	Table 5 Potential Problem Loans				Table 5 Potential Problem Loans

	September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015
	(In Thousands)				(In Thousands)
Commercial, financial and agricultural	$	415,383	$	111,919	$	628,020	$	580,491
Real estate – construction	185		214		241		174
Commercial real estate – mortgage	69,532		55,517		55,211		74,373
	$	485,100	$	167,650	$	683,472	$	655,038

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The following table summarizes asset quality information and includes loans held for sale and purchased impaired loans.

Table 6 Asset Quality	Table 6 Asset Quality				Table 6 Asset Quality

	September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015
	(In Thousands)				(In Thousands)
Nonaccrual loans:
Commercial, financial and agricultural	$	130,370	$	61,157	$	850,075	$	161,591
Real estate – construction	5,712		7,964		1,214		5,908
Commercial real estate – mortgage	85,975		89,736		63,593		69,953
Residential real estate – mortgage	103,492		108,357		117,243		113,234
Equity lines of credit	33,436		32,874		32,642		35,023
Equity loans	15,104		19,029		13,198		15,614
Credit card	—		—		—		—
Consumer direct	635		799		765		561
Consumer indirect	6,053		2,624		7,019		5,027
Covered	153		114		269		134
Total nonaccrual loans	380,930		322,654		1,086,018		407,045
Nonaccrual loans held for sale	—		—		—		—
Total nonaccrual loans and loans held for sale	$	380,930	$	322,654	$	1,086,018	$	407,045
Accruing TDRs: (1)
Commercial, financial and agricultural	$	9,635	$	10,127	$	9,283	$	9,402
Real estate – construction	2,247		2,112		3,315		2,247
Commercial real estate – mortgage	33,837		39,841		5,141		33,904
Residential real estate – mortgage	71,102		69,408		63,008		67,343
Equity lines of credit	—		—		—		—
Equity loans	37,785		41,197		36,053		37,108
Credit card	—		—		—		—
Consumer direct	469		298		759		908
Consumer indirect	—		—		—		—
Covered	—		—		—		—
Total TDRs	155,075		162,983		117,559		150,912
TDRs classified as loans held for sale	—		—		—		—
Total TDRs (loans and loans held for sale)	$	155,075	$	162,983	$	117,559	$	150,912
Loans 90 days past due and accruing:
Commercial, financial and agricultural	$	5,202	$	1,610	$	5,320	$	3,567
Real estate – construction	426		477		2,782		421
Commercial real estate – mortgage	5,607		628		783		2,237
Residential real estate – mortgage	1,230		2,598		3,929		1,961
Equity lines of credit	2,411		2,679		2,417		2,883
Equity loans	985		997		353		704
Credit card	8,322		9,441		10,175		9,718
Consumer direct	2,153		2,296		4,191		3,537
Consumer indirect	4,213		2,771		7,070		5,629
Covered	43,039		47,957		28,505		37,972
Total loans 90 days past due and accruing	73,588		71,454		65,525		68,629
Loans held for sale 90 days past due and accruing	—		—		—		—
Total loans and loans held for sale 90 days past due and accruing	$	73,588	$	71,454	$	65,525	$	68,629
Other real estate	$	23,762	$	20,600
OREO					$	21,670	$	20,862
Other repossessed assets	$	3,331	$	3,920	$	6,900	$	8,774


(1)	TDR totals include accruing loans 90 days past due classified as ~~TDRs.~~TDR.

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Nonperforming assets, which include loans held for sale and purchased impaired loans, are detailed in the following table.

Table 7 Nonperforming Assets	Table 7 Nonperforming Assets				Table 7 Nonperforming Assets

	September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015
	(In Thousands)				(In Thousands)
Nonaccrual loans	$	380,930	$	322,654	$	1,086,018	$	407,045
Loans 90 days or more past due and accruing (1)	73,588		71,454		65,525		68,629
TDRs 90 days or more past due and accruing	678		1,722		618		874
Nonperforming loans	455,196		395,830		1,152,161		476,548
OREO	23,762		20,600		21,670		20,862
Other repossessed assets	3,331		3,920		6,900		8,774
Total nonperforming assets	$	482,289	$	420,350	$	1,180,731	$	506,184


(1)	Excludes loans classified as ~~TDRs.~~TDR.

Table 8 Asset Quality Ratios	Table 8 Asset Quality Ratios				Table 8 Asset Quality Ratios

	September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015
	(In Thousands)				(In Thousands)
Asset Quality Ratios:
Nonperforming loans and loans held for sale as a percentage of loans and loans held for sale (1)	0.75	%	0.69	%	1.91	%	0.78	%
Nonperforming assets as a percentage of loans and loans held for sale, other real estate, and other repossessed assets (2)	0.79	%	0.73	%
Nonperforming assets as a percentage of total loans and loans held for sale, other real estate owned, and other repossessed assets (2)					1.96	%	0.82	%
Allowance for loan losses as a percentage of loans	1.20	%	1.19	%	1.43	%	1.24	%
Allowance for loan losses as a percentage of nonperforming loans (3)	158.64	%	173.06	%	74.82	%	160.04	%


(1)	Nonperforming loans include nonaccrual loans and loans held for sale (including nonaccrual loans classified as ~~TDRs)~~TDR), accruing loans 90 days past due and accruing TDRs 90 days past due.


(2)	Nonperforming assets include nonperforming loans, other real estate owned and other repossessed assets.


(3)	Nonperforming loans include nonaccrual loans (including nonaccrual loans classified as ~~TDRs)~~TDR), accruing loans 90 days past due and accruing TDRs 90 days past due.

The following table provides a rollforward of OREO.

Table 9 Rollforward of Other Real Estate Owned	Table 9 Rollforward of Other Real Estate Owned						Table 9 Rollforward of Other Real Estate Owned

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2016			2015
	(In Thousands)						(In Thousands)
Balance at beginning of period	$	20,600		$	23,228		$	20,862		$	20,600
Transfer of loans and loans held for sale to OREO	16,552			14,278			21,547			16,552
Sales of OREO	(10,073		)	(18,108		)	(17,962		)	(10,073		)
Write-downs of OREO	(3,317		)	(2,340		)	(2,777		)	(3,317		)
Balance at end of period	$	23,762		$	17,058		$	21,670		$	23,762

~~Table of Contents~~

The following table provides a rollforward of nonaccrual loans and loans held for sale, excluding covered loans.

Table 10 Rollforward of Nonaccrual Loans	Table 10 Rollforward of Nonaccrual Loans						Table 10 Rollforward of Nonaccrual Loans

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2016			2015
	(In Thousands)						(In Thousands)
Balance at beginning of period,	$	322,540		$	436,290		$	406,911		$	322,540
Additions	305,310			275,906			1,270,646			305,310
Returns to accrual	(35,663		)	(65,071		)	(43,492		)	(35,663		)
Loan sales	(7,150		)	(69,115		)	(104,372		)	(7,150		)
Payments and paydowns	(65,793		)	(86,865		)	(216,754		)	(65,793		)
Transfers to OREO	(16,134		)	(13,310		)	(16,415		)	(16,134		)
Charge-offs	(122,333		)	(136,670		)	(210,775		)	(122,333		)
Balance at end of period	$	380,777		$	341,165		$	1,085,749		$	380,777

When borrowers are experiencing financial difficulties, the Company, in order to assist the borrowers in repaying the principal and interest owed to the Company, may make certain modifications to the loan agreement. To facilitate this process, a concessionary modification that would not otherwise be considered may be granted resulting in a classification of the loan as a TDR. 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. The financial effects of TDRs are reflected in the components that comprise the allowance for loan losses in either the amount of charge-offs or loan loss provision and period-end allowance levels. All TDRs are considered to be impaired loans. Refer to Note 3,4, Loans and Allowance for Loan Losses, in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information.

The following table provides a rollforward of TDR activity, excluding covered loans and loans held for sale.

Table 11 Rollforward of TDR Activity	Table 11 Rollforward of TDR Activity						Table 11 Rollforward of TDR Activity

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2016			2015
	(In Thousands)						(In Thousands)
Balance at beginning period	$	243,374		$	310,282		$	227,817		$	243,374
New TDRs	16,852			41,322			54,004			16,852
Payments/Payoffs	(27,166		)	(75,631		)	(58,990		)	(27,166		)
Charge-offs	(3,686		)	(5,023		)	(1,428		)	(3,686		)
Loan sales	(1,982		)	(2,098		)	—			(1,982		)
Transfer to OREO	(1,479		)	(3,896		)	(615		)	(1,479		)
Balance at end of period	$	225,913		$	264,956		$	220,788		$	225,913

The Company’s aggregate recorded investment in impaired loans modified through TDRs excluding covered loans decreased to ~~$226~~$221 million at September 30, ~~2015~~2016 from ~~$243~~$228 million at December 31, ~~2014.~~2015. Included in these amounts are ~~$155~~$118 million at September 30, ~~2015~~2016 and ~~$163~~$151 million at December 31, ~~2014~~2015 of accruing TDRs, excluding covered loans. Accruing TDRs are not considered nonperforming because they are performing in accordance with the restructured terms.

The Company's allowance for loan losses is largely driven by 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 ~~credit~~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.

~~Table of Contents~~

Allowance for Loan Losses

Management’s policy is to maintain the allowance for loan losses at a level sufficient to absorb estimated probable incurred losses in the loan portfolio. See Note 3,4, Loans and Allowance for Loan Losses, in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional disclosures regarding the allowance for loan losses. The total allowance for loan losses increased to ~~$722~~$862 million at September 30, ~~2015,~~2016, from ~~$685~~$763 million at December 31, ~~2014.~~2015. The ratio of the allowance for loan losses to total loans was ~~1.20%~~1.43% at September 30, ~~2015~~2016 compared to ~~1.19%~~1.24% at December 31, ~~2014.~~2015. Nonperforming loans were ~~$455 million~~$1.2 billion at September 30, ~~2015~~2016 compared to ~~$396~~$477 million at December 31, ~~2014.~~2015. The allowance attributable to individually impaired loans was ~~$64~~$180 million at September 30, ~~2015~~2016 compared to ~~$63~~$71 million at December 31, ~~2014.~~2015. Loans individually evaluated for impairment may have no allowance recorded if the fair value of the collateral less costs to sell or the present value of the loan's expected future cash flows exceeds the recorded investment of the loan.

Net charge-offs were 0.30% of average loans for the three months ended September 30, 2016 compared to 0.19% of average loans for the three months ended September 30, ~~2015 compared to 0.16% of average loans for the three months ended September 30, 2014.~~2015. The increase in net charge-offs for the three months ended September 30, ~~2015~~2016 as compared to the corresponding period in ~~2014~~2015 was primarily driven by ~~increases~~a $6.7 million increase in ~~commercial,~~consumer direct net-charge-offs and a $6.2 million increase in consumer indirect net charge-offs. Additionally, the increase was driven by charge-offs on energy loans. Commercial, financial and agricultural ~~and consumer indirect portfolios.~~ net charge-offs include $8.5 million of net charge-offs related to energy loans for the three months ended September 30, 2016 compared to $2.7 million of net charge-offs related to energy loans for the three months ended September 30, 2015.

Net charge-offs were 0.36% of average loans for the nine months ended September 30, 2016 compared to 0.18% of average loans for the nine months ended September 30, ~~2015 compared to 0.23% of average loans for the nine months ended September 30, 2014.~~2015. The ~~decrease~~increase in net charge-offs for the nine months ended September 30, ~~2015~~2016 as compared to the corresponding period in ~~2014~~2015 was primarily driven by ~~decreases in the commercial,~~charge-offs on energy loans. Commercial, financial and agricultural ~~commercial and residential real estate - mortgage, equity lines~~net charge-offs include $49.4 million of ~~credit and equity~~net charge-offs related to energy loans ~~portfolios offset~~for the nine months ended September 30, 2016 compared to $2.7 million net charge-offs related to energy loans for the nine months ended September 30, 2015. Additionally, the increase was driven by ~~increases~~a $15.5 million increase in ~~the~~ consumer direct net-charge-offs and a $19.9 million increase in consumer indirect ~~portfolios.~~net charge-offs.

~~Table of Contents~~

The following table sets forth information with respect to the Company’s loans, excluding loans held for sale, and the allowance for loan losses.

Table 12 Summary of Loan Loss Experience	Table 12 Summary of Loan Loss Experience												Table 12 Summary of Loan Loss Experience

	Three Months Ended September 30,						Nine Months Ended September 30,
													Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014			2016			2015			2016			2015
	(Dollars in Thousands)												(Dollars in Thousands)
Average loans outstanding during the period	$	60,513,571		$	55,196,146		$	59,619,979		$	53,635,972		$	60,977,920		$	60,513,571		$	61,786,243		$	59,619,979
Allowance for loan losses, beginning of period	$	721,471		$	714,760		$	685,041		$	700,719		$	843,051		$	721,471		$	762,673		$	685,041
Charge-offs:
Commercial, financial and agricultural	9,161			3,404			20,706			23,855			13,702			9,161			66,541			20,706
Real estate – construction	124			26			199			2,154			21			124			306			199
Commercial real estate – mortgage	786			529			2,181			8,352			83			786			3,249			2,181
Residential real estate – mortgage	1,909			4,461			7,985			15,984			2,043			1,909			6,148			7,985
Equity lines of credit	3,157			3,735			10,154			17,156			2,141			3,157			7,259			10,154
Equity loans	878			1,656			2,750			6,281			424			878			1,665			2,750
Credit card	7,380			8,271			24,138			27,250			9,171			7,380			27,000			24,138
Consumer direct	7,055			5,582			19,686			17,211			13,975			7,055			34,524			19,686
Consumer indirect	13,132			6,661			35,133			18,426			23,326			13,132			64,083			35,133
Covered	490			1,124			1,516			2,131			—			490			1,565			1,516
Total charge-offs	44,072			35,449			124,448			138,800			64,886			44,072			212,340			124,448
Recoveries:
Commercial, financial and agricultural	5,171			3,818			10,410			12,736			4,766			5,171			7,775			10,410
Real estate – construction	550			1,003			4,157			2,976			227			550			1,908			4,157
Commercial real estate – mortgage	349			282			870			2,020			455			349			1,915			870
Residential real estate – mortgage	2,208			1,238			5,870			4,674			1,483			2,208			4,156			5,870
Equity lines of credit	1,070			1,514			2,516			3,893			1,540			1,070			3,589			2,516
Equity loans	494			514			2,580			1,675			406			494			1,060			2,580
Credit card	705			701			2,087			2,144			711			705			2,223			2,087
Consumer direct	861			1,100			3,703			4,716			1,091			861			3,005			3,703
Consumer indirect	4,162			2,108			12,002			7,505			8,129			4,162			21,090			12,002
Covered	2			420			3			5,233			—			2			1			3
Total recoveries	15,572			12,698			44,198			47,572			18,808			15,572			46,722			44,198
Net charge-offs	28,500			22,751			80,250			91,228			46,078			28,500			165,618			80,250
Total provision for loan losses	29,151			3,869			117,331			86,387			65,107			29,151			265,025			117,331
Allowance for loan losses, end of period	$	722,122		$	695,878		$	722,122		$	695,878		$	862,080		$	722,122		$	862,080		$	722,122
Net charge-offs to average loans	0.19		%	0.16		%	0.18		%	0.23		%	0.30		%	0.19		%	0.36		%	0.18		%

Concentrations

The following tables provide further details regarding the Company’s commercial, financial and agricultural, commercial real estate, residential real estate and consumer portfolio segments as of September 30, ~~2015~~2016 and December 31, ~~2014.~~2015.

Commercial, Financial and Agricultural

In accordance with the Company's lending policy, each commercial loan undergoes a detailed underwriting process, which incorporates the Company's risk tolerance, credit policy and procedures. In addition, the Company has a graduated approval process which accounts for the quality, loan type and total exposure of the borrower. The Company has also adopted an internal exposure-based limit which is based on a variety of risk factors, including but not limited to the borrower industry.

The commercial, financial and agricultural portfolio segment totaled ~~$25.6~~$24.8 billion at September 30, ~~2015,~~2016, compared to ~~$23.8~~$26.0 billion at December 31, ~~2014.~~2015. This segment consists primarily of large national and international companies

~~Table of Contents~~

and small to mid-sized companies. This portfolio segment also contains owner occupied commercial real estate loans.

Loans in this portfolio are generally underwritten individually and are secured with the assets of the company, and/or the personal guarantees of the business owners. The Company minimizes the risk associated with this portfolio segment by various means, including maintaining prudent advance rates, financial covenants, and obtaining personal guarantees from the principals of the borrower.

~~Beginning late in 2014, oil prices began~~The following table provides details related to ~~decline~~the commercial, financial, and ~~as a result, the~~agricultural portfolio segment.

Table 13 Commercial, Financial and Agricultural

	September 30, 2016								December 31, 2015
Industry	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)
Autos, Components and Durable Goods	$	623,902	$	55	$	—	$	—	$	627,543	$	83	$	—	$	—
Basic Materials	865,881		65,682		—		—		857,616		99		—		—
Capital Goods & Industrial Services	2,435,761		1,252		48		—		2,587,038		6,520		19		108
Construction & Infrastructure	580,676		41,779		9		1,349		629,869		13,998		50		139
Consumer & Healthcare	3,058,568		3,795		95		424		3,223,674		10,542		424		189
Energy	3,322,139		588,226		30		—		3,840,226		92,467		120		—
Financial Services	1,032,949		28		—		—		1,074,595		131		5		—
General Corporates	1,853,823		41,933		52		2,801		1,410,666		2,092		51		2,534
Institutions	2,387,447		1,923		2,039		—		2,542,284		5,841		8,375		—
Leisure	2,021,592		10,116		45		92		2,118,578		11,077		224		66
Real Estate	1,245,644		9		—		—		1,583,582		146		—		—
Retailers	2,427,159		47,693		102		654		2,374,773		2,671		64		496
Telecoms, Technology & Media	1,475,835		2,015		13		—		1,460,879		15,768		57		35
Transportation	777,991		14,173		—		—		800,413		156		—		—
Utilities	729,701		31,396		6,850		—		890,638		—		13		—
Total Commercial, Financial and Agricultural	$	24,839,068	$	850,075	$	9,283	$	5,320	$	26,022,374	$	161,591	$	9,402	$	3,567

The Company has been closely monitoring the ~~potential~~ impact of lower oil prices on its energy sector lending portfolio. Total energy exposure, including unused commitments to extend credit and letters of credit was $8.2 billion and $9.4 billion at September 30, 2016 and December 31, 2015, respectively. As shown in Table ~~13,~~14, the Company's energy ~~industry~~sector loan balances at September 30, ~~2015~~2016 were approximately ~~$3.7~~$3.3 billion and represented ~~6.2%~~5.5% of the Company's total ~~loan portfolio.~~loans and loans held for sale compared to $3.8 billion and 6.3% of the Company's total loans and loans held for sale as of December 31, 2015. This amount is comprised of loans directly related to energy, such as ~~refining and support,~~ exploration and production, pipeline transportation of natural gas, crude oil and other refined petroleum products, ~~and~~ oil field ~~services. The Company employs a variety of risk management strategies, including the use of concentration limits, underwriting standards~~services, and ~~continuous monitoring. As of September 30, 2015, the Company has observed negative trending of the internal risk ratings~~refining and support as detailed in the ~~energy lending portfolio and a moderate increase in non-accrual loans as indicated in Table 13. Additionally, the Company has continued to observe negative trending subsequent to September 30, 2015.~~following table.

~~The overall level of loans rated special mention or lower in this portfolio at September 30, 2015 is 14.3%, comprised of 4.8% rated special mention and 9.5% rated substandard or lower.~~

Table 14 Energy Portfolio

	September 30, 2016						December 31, 2015
	Recorded Investment		Total Commitment		Nonaccrual		Recorded Investment		Total Commitment		Nonaccrual
	(In Thousands)
Exploration and production	$	1,722,052	4,244,802		$	511,520	$	2,040,748	$	5,186,887	$	91,947
Midstream	1,207,650		3,209,931		11,552		1,355,503		3,293,216		—
Drilling oil and support services	261,748		468,728		64,771		266,871		554,782		—
Refineries and terminals	130,689		254,130		383		137,904		211,258		520
Other	—		—		—		39,200		109,782		—
Total energy portfolio	$	3,322,139	$	8,177,591	$	588,226	$	3,840,226	$	9,355,925	$	92,467



	September 30, 2016				December 31, 2015
	As a % of Energy Loans		As a % of Total Loans and Loans Held for Sale		As a % of Energy Loans		As a % of Total Loans and Loans Held for Sale
Exploration and production	51.8	%	2.9	%	53.2	%	3.4	%
Midstream	36.4		2.0		35.3		2.2
Drilling oil and support services	7.9		0.4		6.9		0.4
Refineries and terminals	3.9		0.2		3.6		0.2
Other	—		—		1.0		0.1
Total energy portfolio	100.0	%	5.5	%	100.0	%	6.3	%

The decline in oil prices has negatively impacted the financial results for many borrowers in the portfolio, leading to internal rating downgrades. The internal rating downgrades reflect the weakened financial performance or financial position of certain borrowers in this portfolio. IfThe overall level of loans rated special mention or lower, including loans classified as nonaccrual, in the energy portfolio at September 30, 2016 was 33.8%, comprised of 7.9% rated special mention and 25.9% rated substandard or lower. At December 31, 2015 the overall level of loans rated special mention or lower in the energy portfolio was 16.3%, comprised of 4.3% rated special mention and 12.0% rated substandard or lower.

The Company employs a variety of risk management strategies, including the use of concentration limits, underwriting standards and continuous monitoring. As of September 30, 2016, the Company has observed negative trending of the internal risk ratings in the energy lending portfolio and an increase in nonaccrual loans from 2015, as indicated in Table 14. Additionally, the Company has continued and may continue to observe negative trending subsequent to September 30, 2016. Currently, the credit quality issues have mostly been isolated to the exploration and production subsector which is the subsector that is most acutely impacted by pricing conditions. At September 30, 2016, approximately 85% of loans rated special mention or lower were in the exploration and production subsector. Within this subsector, many loans are secured and utilize borrowing base features linked to the physical commodity reserves and supported by engineering data. The borrowing bases are refreshed with updated information on a recurring

basis. In the current pricing environment, the Company generally continues to see adequate collateral support of secured energy borrowers, including secured reserve based lines of credit for exploration and production borrowers. The Company's internal valuation methodologies involve independent engineering analysis of a borrower's reserve to calculate the present value of discounted cash flows that secure the loan. In doing so, the Company applies its oil and gas pricing policy, or when needed external market indices for oil and gas prices. Generally, the drilling oil and support services subsector also has a high risk for impact from the pricing environment since their operations are directly impacted by reduced spending by those in the exploration and production sector. However as noted in Table 14, the Company's exposure in this sector is limited.

For the three and nine months ended September 30, 2016, charge-offs on energy loans were approximately $8.5 million and $49.4 million, respectively. Charge-offs in this portfolio have remained low as the majority of classified energy portfolio loans remain well secured. However, if the current level of oil prices stagnates or continues to further decline, this 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.

~~Table of Contents~~

~~The following table provides details related~~ Through its ongoing portfolio credit quality assessment, the Company has and will continue to assess the impact to the ~~commercial, financial,~~allowance for loan losses and ~~agricultural~~make adjustments as appropriate. As of September 30, 2016, the Company's allowance for loan losses attributable to the energy portfolio ~~segment.~~

Table 13
Commercial, Financial and Agricultural
September 30, 2015 December 31, 2014
Industry Recorded Investment Nonaccrual Accruing TDRs Accruing Greater Than 90 Days Past Due Recorded Investment Nonaccrual Accruing TDRs Accruing Greater Than 90 Days Past Due
(In Thousands)
Autos, Components and Durable Goods $ 721,090
$ 14
$ —
$ —
$ 576,185
$ 380
$ —
$ —
Basic Materials 904,518
67
—
1,752
1,006,900
73
—
—
Capital Goods & Industrial Services 2,482,540
6,278
19
—
2,155,565
4,673
19
—
Construction & Infrastructure 686,152
1,840
143
154
726,504
2,627
208
1,567
Consumer & Healthcare 3,192,056
10,904
444
—
2,787,797
4,673
843
2
Energy 3,731,583
42,851
118
—
3,612,145
6,186
—
—
Financial Services 1,089,544
1,126
7
—
1,402,784
223
10
3
General Corporates 1,259,739
2,362
154
2,211
1,202,276
2,899
305
38
Institutions 2,489,273
6,404
8,161
—
2,219,357
9,724
7,175
—
Leisure 2,021,945
12,438
226
—
1,832,870
3,850
248
—
Real Estate 1,711,782
2,056
—
107
1,428,412
45
—
—
Retailers 2,407,989
27,719
83
777
2,333,268
5,172
296
—
Telecoms, Technology & Media 1,362,071
15,925
55
201
1,177,541
19,157
—
—
Transportation 770,893
386
211
—
723,088
1,443
1,005
—
Utilities 805,144
—
14
—
643,845
32
18
—
Total Commercial, Financial and Agricultural $ 25,636,319
$ 130,370
$ 9,635
$ 5,202
$ 23,828,537
$ 61,157
$ 10,127
$ 1,610
totaled approximately 5% of outstanding energy loans.

Commercial Real Estate

The commercial real estate portfolio segment includes the commercial real estate and real estate - construction loan portfolios. Commercial real estate loans totaled ~~$10.6~~$11.4 billion and ~~$9.9~~$10.5 billion at September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively and real estate - construction loans totaled ~~$2.3 billion and~~ $2.2 billion at September 30, ~~2015,~~2016, and $2.4 billion at December 31, ~~2014,~~2015, respectively.

This portfolio segment consists primarily of extensions of credits to real estate developers and investors for the financing of land and buildings, whereby the repayment is generated from the sale of the real estate or the income generated by the real estate property. The Company attempts to minimize risk on commercial real estate properties by various means, including requiring collateral with values that exceed the loan amount, adequate cash flow to service the debt, and the personal guarantees of principals of the borrowers. In order to minimize risk on the construction portfolio, the Company has established an operations group outside of the lending staff which is responsible for loan disbursements during the construction process.

~~Table of Contents~~

The following tables present the geographic distribution for the commercial real estate and real estate - construction portfolios.

Table 14 Commercial Real Estate
Table 15 Commercial Real Estate																	Table 15 Commercial Real Estate

	September 30, 2015								December 31, 2014									September 30, 2016								December 31, 2015
State	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due			Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)																	(In Thousands)
Alabama	$	580,130	$	8,018	$	3,685	$	420	$	623,029	$	9,328	$	3,540	$	—		$	507,245	$	2,377	$	1,614	$	—	$	542,889	$	2,723	$	3,365	$	989
Arizona	821,333		4,424		519		717		807,315		5,757		2,748		—			821,802		6,415		—		—		837,949		4,465		465		—
California	1,205,199		3,814		243		237		1,182,095		2,182		794		—			1,191,846		734		145		—		1,104,368		942		222		—
Colorado	382,603		8,466		11,262		95		464,992		12,996		11,364		—			431,910		5,946		201		—		395,679		8,460		10,210		—
Florida	1,001,666		9,692		157		943		908,329		7,567		168		—			926,300		8,656		81		—		965,365		9,564		138		—
New Mexico	156,528		6,302		26		—		176,896		6,149		31		—			181,612		6,046		86		—		160,840		6,405		22		—
Texas	3,261,678		30,294		2,308		2,916		3,128,072		31,494		2,446		628			3,648,041		24,044		1,885		783		3,269,626		28,956		4,292		1,248
Other	3,215,495		14,965		15,637		279		2,586,478		14,263		18,750		—			3,652,874		9,375		1,129		—		3,176,564		8,438		15,190		—
	$	10,624,632	$	85,975	$	33,837	$	5,607	$	9,877,206	$	89,736	$	39,841	$	628		$	11,361,630	$	63,593	$	5,141	$	783	$	10,453,280	$	69,953	$	33,904	$	2,237

Table 15 Real Estate – Construction
Table 16 Real Estate – Construction																	Table 16 Real Estate – Construction

	September 30, 2015								December 31, 2014									September 30, 2016								December 31, 2015
State	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due			Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)																	(In Thousands)
Alabama	$	31,035	$	338	$	317	$	—	$	67,466	$	117	$	426	$	—		$	17,753	$	118	$	309	$	—	$	27,815	$	389	$	312	$	122
Arizona	107,639		2,338		—		—		155,379		2,852		—		—			88,634		—		—		—		80,713		2,404		—		—
California	304,123		19		23		—		228,284		24		31		—			312,120		6		22		—		326,698		19		22		—
Colorado	95,750		—		—		—		74,526		—		—		—			82,059		—		—		—		92,764		—		—		—
Florida	168,469		—		—		—		161,322		88		—		—			209,672		2		—		200		205,466		—		—		—
New Mexico	10,798		89		52		—		13,977		—		72		207			18,278		—		50		269		13,092		93		51		—
Texas	1,109,488		2,489		1,855		426		1,013,865		4,089		1,583		270			1,033,278		975		2,934		2,313		1,105,252		2,727		1,862		299
Other	488,049		439		—		—		439,833		794		—		—			453,478		113		—		—		502,453		276		—		—
	$	2,315,351	$	5,712	$	2,247	$	426	$	2,154,652	$	7,964	$	2,112	$	477		$	2,215,272	$	1,214	$	3,315	$	2,782	$	2,354,253	$	5,908	$	2,247	$	421

Residential Real Estate

The residential real estate portfolio includes residential real estate - mortgage loans, equity lines of credit and equity loans. The residential real estate portfolio primarily contains loans to individuals, which are secured by single-family residences. Loans of this type are generally smaller in size than commercial real estate loans and are geographically dispersed throughout the Company's market areas, with some guaranteed by government agencies or private mortgage insurers. Losses on residential real estate loans depend, to a large degree, on the level of interest rates, the unemployment rate, economic conditions and collateral values.

~~Table of Contents~~

Residential real estate - mortgage loans totaled ~~$13.9~~$13.5 billion and $14.0 billion at ~~both~~ September 30, ~~2015~~2016 and December 31, ~~2014.~~2015, respectively. Risks associated with residential real estate - mortgage loans are mitigated through rigorous underwriting procedures, collateral values established by independent appraisers and mortgage insurance. In addition, the collateral for this portfolio segment is concentrated in the Company's footprint as indicated in the table below.

Table 16 Residential Real Estate - Mortgage
Table 17 Residential Real Estate - Mortgage																	Table 17 Residential Real Estate - Mortgage

	September 30, 2015								December 31, 2014									September 30, 2016								December 31, 2015
State	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due			Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)																	(In Thousands)
Alabama	$	1,123,185	$	11,322	$	15,355	$	9	$	1,292,303	$	12,905	$	14,824	$	97		$	1,022,754	$	13,587	$	12,578	$	339	$	1,111,987	$	13,868	$	14,528	$	29
Arizona	1,395,907		6,651		11,141		205		1,460,922		8,806		10,229		310			1,299,940		10,707		10,809		811		1,395,539		7,251		11,567		242
California	2,971,404		13,720		2,988		—		2,607,029		12,051		3,475		—			2,973,859		14,447		3,002		73		3,022,425		13,705		2,691		104
Colorado	1,215,632		4,244		4,365		2		1,237,629		3,304		3,557		6			1,147,940		7,971		3,145		—		1,225,818		3,660		3,471		2
Florida	1,659,273		20,271		11,216		192		1,541,425		17,322		11,317		279			1,705,359		24,530		10,559		120		1,708,912		24,595		10,595		134
New Mexico	216,993		1,748		2,253		—		243,755		1,478		2,146		—			215,360		1,851		1,598		—		217,476		1,827		2,149		32
Texas	4,773,332		24,953		20,185		822		5,113,914		27,156		20,425		1,487			4,594,440		27,314		18,107		2,586		4,784,292		25,731		18,908		1,418
Other	541,997		20,583		3,599		—		425,679		25,335		3,435		419			497,783		16,836		3,210		—		526,836		22,597		3,434		—
	$	13,897,723	$	103,492	$	71,102	$	1,230	$	13,922,656	$	108,357	$	69,408	$	2,598		$	13,457,435	$	117,243	$	63,008	$	3,929	$	13,993,285	$	113,234	$	67,343	$	1,961

The following table provides information related to refreshed FICO scores for the Company's residential real estate portfolio.

Table 17 Residential Real Estate - Mortgage
Table 18 Residential Real Estate - Mortgage																	Table 18 Residential Real Estate - Mortgage

	September 30, 2015								December 31, 2014									September 30, 2016								December 31, 2015
FICO Score	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due			Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)																	(In Thousands)
Below 621	$	644,566	$	68,690	$	24,660	$	698	$	569,353	$	68,951	$	25,474	$	1,550		$	635,525	$	78,395	$	22,189	$	1,495	$	631,139	$	72,791	$	20,380	$	1,359
621 – 680	1,360,605		16,030		20,644		80		1,280,517		17,347		22,469		214			1,266,902		20,360		17,068		609		1,351,069		21,000		21,018		52
681 – 720	2,208,883		3,799		10,014		24		2,289,138		12,808		9,747		76			2,047,383		5,792		11,531		574		2,227,263		4,182		12,364		154
Above 720	8,795,364		2,338		13,812		323		8,823,328		2,205		10,573		341			8,709,051		2,874		11,010		194		8,870,080		1,916		12,350		272
Unknown	888,305		12,635		1,972		105		960,320		7,046		1,145		417			798,574		9,822		1,210		1,057		913,734		13,345		1,231		124
	$	13,897,723	$	103,492	$	71,102	$	1,230	$	13,922,656	$	108,357	$	69,408	$	2,598		$	13,457,435	$	117,243	$	63,008	$	3,929	$	13,993,285	$	113,234	$	67,343	$	1,961

~~Table of Contents~~

Equity lines of credit and equity loans totaled $3.0 billion ~~and $2.9 billion~~ at both September 30, ~~2015~~2016 and December 31, ~~2014, respectively.~~2015. Losses in these portfolios generally track overall economic conditions. These loans are underwritten in accordance with the underwriting standards set forth in the Company's policy and procedures. The collateral for this portfolio segment is concentrated within the Company's footprint as indicated in the table below.

Table 18 Equity Loans and Lines
Table 19 Equity Loans and Lines																	Table 19 Equity Loans and Lines

	September 30, 2015								December 31, 2014									September 30, 2016								December 31, 2015
State	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due			Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)																	(In Thousands)
Alabama	$	591,632	$	9,879	$	9,968	$	594	$	635,845	$	9,524	$	10,368	$	911		$	566,873	$	7,820	$	9,416	$	762	$	586,094	$	10,445	$	9,847	$	1,007
Arizona	415,979		9,155		6,488		723		429,133		9,877		6,778		292			402,576		8,711		5,888		551		416,109		8,846		6,267		980
California	277,651		604		65		343		172,193		905		181		145			302,204		893		37		362		292,210		1,676		100		24
Colorado	214,759		5,436		3,201		—		231,088		6,636		3,961		68			198,983		4,700		2,744		257		211,464		4,971		3,045		123
Florida	399,195		8,374		7,275		1,072		415,537		8,178		7,064		470			387,109		9,362		6,875		208		393,931		9,178		7,188		472
New Mexico	55,812		1,832		797		—		57,917		1,387		1,030		509			54,142		1,592		1,064		—		56,148		2,383		1,052		—
Texas	975,010		11,450		8,936		664		951,219		14,298		11,042		1,081			1,009,717		11,135		8,685		630		985,899		11,447		8,665		845
Other	58,518		1,810		1,055		—		46,820		1,098		773		200			52,239		1,627		1,344		—		58,764		1,691		944		136
	$	2,988,556	$	48,540	$	37,785	$	3,396	$	2,939,752	$	51,903	$	41,197	$	3,676		$	2,973,843	$	45,840	$	36,053	$	2,770	$	3,000,619	$	50,637	$	37,108	$	3,587

The following table provides information related to refreshed FICO scores for the Company's equity loans and lines.

Table 19 Equity Loans and Lines
Table 20 Equity Loans and Lines																	Table 20 Equity Loans and Lines

	September 30, 2015								December 31, 2014									September 30, 2016								December 31, 2015
FICO Score	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due			Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)																	(In Thousands)
Below 621	$	224,888	$	20,543	$	11,002	$	224	$	248,517	$	23,910	$	13,684	$	2,958		$	208,948	$	22,203	$	8,862	$	2,420	$	220,476	$	23,367	$	10,923	$	3,125
621 – 680	454,610		17,054		14,562		497		446,053		17,000		15,972		422			409,392		13,487		13,817		174		439,350		15,677		12,812		187
681 – 720	577,135		6,766		7,220		660		554,301		8,057		6,632		66			570,710		7,287		8,380		151		565,476		7,456		8,067		160
Above 720	1,708,525		3,640		4,832		1,990		1,668,734		2,151		4,779		191			1,768,927		2,453		4,847		25		1,752,094		3,641		5,143		115
Unknown	23,398		537		169		25		22,147		785		130		39			15,866		410		147		—		23,223		496		163		—
	$	2,988,556	$	48,540	$	37,785	$	3,396	$	2,939,752	$	51,903	$	41,197	$	3,676		$	2,973,843	$	45,840	$	36,053	$	2,770	$	3,000,619	$	50,637	$	37,108	$	3,587

Other Consumer

The Company also operates a consumer finance unit which purchases loan contracts for indirect automobile and other consumer financing. These loans are centrally underwritten using industry accepted tools and underwriting guidelines. The Company also originates credit card loans and other consumer direct loans that are centrally underwritten and sourced from the Company's ~~branches.~~branches or online. Total credit card, consumer direct and consumer indirect loans at September 30, ~~2015~~2016 were ~~$4.4~~$5.0 billion, or ~~7.2%~~8.3% of the total loan portfolio compared to ~~$4.2~~$5.1 billion, or ~~7.2%~~8.3% of the total loan portfolio at December 31, ~~2014.~~2015.

~~Table of Contents~~

Foreign Exposure

As of September 30, ~~2015,~~2016, foreign exposure risk did not represent a significant concentration of the Company's total portfolio of loans and was substantially represented by borrowers domiciled in Mexico and foreign borrowers currently residing in the United States.

~~Table of Contents~~

Funding Activities

Deposits are the primary source of funds for lending and investing activities and their cost is the largest category of interest expense. The Company also utilizes brokered deposits as a funding source in addition to customer deposits. Scheduled payments, as well as prepayments, and maturities from portfolios of loans and investment securities also provide a stable source of funds. FHLB advances, other secured borrowings, federal funds purchased, securities sold under agreements to repurchase and other short-term borrowed funds, as well as longer-term debt issued through the capital markets, all provide supplemental liquidity sources. The Company’s funding activities are monitored and governed through the Company’s asset/liability management process.

At September 30, ~~2015,~~2016, the Company's and the Bank's credit ratings were as follows:

Table 2021 Credit Ratings

	As of September 30, ~~2015~~2016
	Standard & Poor’s	Moody’s	Fitch
BBVA Compass Bancshares, Inc.
Long-term debt rating	~~BBB~~BBB+	Baa3	BBB+
Short-term debt rating	A-2	—-	F2
Compass Bank
Long-term debt rating	~~BBB~~BBB+	Baa3	BBB+
Long-term bank deposits (1)	N/A	A3	A-
Subordinated debt	~~BBB-~~BBB	Baa3	BBB-
Short-term debt rating	A-2	P-3	F2
Short-term deposit rating (2)	N/A	P-2	F2
Outlook	~~Stable~~Negative	Stable	Stable

(1) S&P does not provide a rating for long-term bank deposits; therefore, the rating is N/A.

(2) S&P does not provide a short-term deposit rating; therefore, the rating is N/A.

The cost and availability of financing to the Company and the Bank are impacted by its credit ratings. A downgrade to the Company’s or Bank’s credit ratings could affect its ability to access the credit markets and increase its borrowing costs, thereby adversely impacting the Company’s financial condition and liquidity. Key factors in maintaining high credit ratings include a stable and diverse earnings stream, strong credit quality, strong capital ratios and diverse funding sources, in addition to disciplined liquidity monitoring procedures. See the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015 for additional information.

A security rating is not a recommendation to buy, sell or hold securities, and the ratings are subject to revision or withdrawal by the assigning rating agency. Each rating should be evaluated independently of any other rating.

~~Table of Contents~~

Deposits

Total deposits increased by ~~$3.3~~$1.6 billion from December 31, ~~2014~~2015 to September 30, ~~2015.~~2016. At September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, total deposits included ~~$5.4~~$6.4 billion and ~~$3.7~~$7.0 billion of brokered deposits, respectively. The following table presents the Company’s deposits segregated by major category:

Table 21 Composition of Deposits
Table 22 Composition of Deposits									Table 22 Composition of Deposits

	September 30, 2015				December 31, 2014				September 30, 2016				December 31, 2015
	Balance		% of Total		Balance		% of Total		Balance		% of Total		Balance		% of Total
	(Dollars in Thousands)								(Dollars in Thousands)
Noninterest-bearing demand deposits	$	19,060,016	29.6	%	$	17,169,412	28.1	%	$	20,585,598	30.4	%	$	19,291,533	29.2	%
Interest-bearing demand deposits	6,915,305		10.7		7,738,682		12.6		7,089,795		10.5		7,378,804		11.2
Savings and money market	24,898,385		38.6		23,438,164		38.3		25,616,692		37.9		25,241,292		38.3
Time deposits	13,464,339		20.9		12,666,959		20.7		14,186,318		21.0		13,977,139		21.2
Foreign office deposits-interest-bearing	154,351		0.2		176,499		0.3		108,934		0.2		92,998		0.1
Total deposits	$	64,492,396	100.0	%	$	61,189,716	100.0	%	$	67,587,337	100.0	%	$	65,981,766	100.0	%

Total deposits increased ~~by $3.3 billion~~ from December 31, ~~2014~~2015 to September 30, ~~2015~~2016 primarily due to growth in noninterest bearing demand deposits, savings and money market and time deposits. Marketing efforts ~~and new product rollouts~~ were the primary drivers of the growth.

Borrowed Funds

In addition to internal deposit generation, the Company also relies on borrowed funds as a supplemental source of funding. Borrowed funds consist of short-term borrowings, FHLB advances, subordinated debentures and other long-term borrowings.

Short-term borrowings are primarily in the form of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings. At both September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, the ~~$539~~$79 million and ~~$694~~$674 million, respectively, of federal funds purchased included in short-term borrowings was primarily a result of customer activity.

~~Table of Contents~~

The short-term borrowings table presents the distribution of the Company’s short-term borrowed funds and the corresponding weighted average interest rates. Also provided are the maximum outstanding amounts of borrowings, the average amounts of borrowings and the average interest rates at period-end.

Table 22 Short-Term Borrowings
Table 23 Short-Term Borrowings											Table 23 Short-Term Borrowings

	Maximum Outstanding at Any Month End		Average Balance		Average Interest Rate		Ending Balance		Average Interest Rate at Period End		Maximum Outstanding at Any Month End		Average Balance		Average Interest Rate		Ending Balance		Average Interest Rate at Period End
	(Dollars in Thousands)										(Dollars in Thousands)
Balance at September 30, 2015
Balance at September 30, 2016
Federal funds purchased	$	975,785	$	703,462	0.25	%	$	538,635	0.26	%	$	766,095	$	478,813	0.50	%	$	79,395	0.32	%
Securities sold under agreements to repurchase	232,605		129,392		0.14		100,624		0.25		148,291		90,959		0.72		86,178		0.76
Other short-term borrowings	4,982,154		3,973,734		1.23		4,167,897		0.42		4,497,354		3,912,069		1.41		3,591,223		1.42
	$	6,190,544	$	4,806,588			$	4,807,156			$	5,411,740	$	4,481,841			$	3,756,796
Balance at December 31, 2014
Balance at December 31, 2015
Federal funds purchased	$	960,935	$	722,753	0.25	%	$	693,819	0.27	%	$	975,785	$	692,737	0.26	%	$	673,545	0.37	%
Securities sold under agreements to repurchase	435,684		212,686		0.23		435,684		0.73		232,605		114,940		0.22		76,609		0.44
Other short-term borrowings	2,545,724		385,461		1.38		2,545,724		1.62		4,982,154		4,006,716		1.31		4,032,644		1.34
	$	3,942,343	$	1,320,900			$	3,675,227			$	6,190,544	$	4,814,393			$	4,782,798

At September 30, 2015, short-term borrowings totaled $4.8 billion, an increase of $1.1 billion, or 30.8% compared to December 31, 2014. The increase in total short-term borrowings was primarily driven by a $1.6 billion increase in other short-term borrowings related to U.S. Treasury short positions held by the Parent's broker dealer subsidiary, BSI.

~~At September 30, 2015~~2016 and December 31, ~~2014,~~2015, FHLB and other borrowings were ~~$6.2~~$3.7 billion and ~~$4.8~~$5.4 billion, respectively. ~~In April 2015, the Bank issued under its Global Bank Note Program $700 million aggregate principal amount of its 3.875% unsecured subordinated notes due 2025.~~ For the nine months ended September 30, ~~2015,~~2016, the Company had ~~total~~$1.3 billion of proceeds ~~of $4.0 billion~~ received from FHLB and other borrowings and repayments were approximately ~~$2.6~~$3.1 billion.

Shareholder’s Equity

Total shareholder's equity was $12.8 billion at September 30, ~~2015 was $12.4 billion~~2016 compared to ~~$12.0~~$12.6 billion at December 31, ~~2014,~~2015, an increase of ~~$377~~$194 million. Shareholder's equity increased ~~$402~~$281 million due to earnings attributable to ~~shareholder~~the Company during the period offset by the payment of preferred and common dividends totaling $70 million as well as a ~~$35~~$69 million ~~common~~ dividend to BBVA Bancomer USA, Inc. for the ~~Company's sole shareholder, BBVA.~~purchase of the four operating subsidiaries from BBVA Bancomer USA, Inc. See Note 2, Acquisition Activity, in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information.

Risk Management

In the normal course of business, the Company encounters inherent risk in its business activities. The Company’s risk management approach includes processes for identifying, assessing, managing, monitoring and reporting risks. Management has grouped the risks facing its operations into the following categories: credit risk, structural interest rate, market and liquidity risk, operational risk, strategic and business risk, cyber risk and reputational risk. Each of these risks is managed through the Company’s ERM program. The ERM program provides the structure and framework necessary to identify, measure, control and manage risk across the organization. ERM is the cornerstone for defining risk tolerance, identifying and monitoring key risk indicators, managing capital and integrating the Company’s capital planning process with on-going risk assessments and related stress testing for major risks.

Market Risk Management

The effective management of market risk is essential to achieving the Company’s strategic financial objectives. As a financial institution, the Company’s most significant market risk exposure is interest rate risk in its balance sheet; however, market risk also includes product liquidity risk, price risk and volatility risk in the Company’s lines of business. The primary objectives of market risk management are to minimize any adverse effect that changes in market risk factors may have on net interest income, and to offset the risk of price changes for certain assets recorded at fair value.

~~Table of Contents~~

Interest Rate Market Risk

The Company’s net interest income and the fair value of its financial instruments are influenced by changes in the level of interest rates. The Company manages its exposure to fluctuations in interest rates through policies established by its Asset/Liability Committee. The Asset/Liability Committee meets regularly and has responsibility for approving asset/liability management policies, formulating strategies to improve balance sheet positioning and/or earnings and reviewing the interest rate sensitivity of the Company.

Management utilizes an interest rate simulation model to estimate the sensitivity of the Company’s net interest income to changes in interest rates. Such estimates are based upon a number of assumptions for each scenario, including the level of balance sheet growth, deposit repricing characteristics and the rate of prepayments.

The estimated impact on the Company’s net interest income sensitivity over a one-year time horizon at September 30, ~~2015,~~2016, is shown in the table below along with comparable prior-period information. Such analysis assumes a gradual and sustained parallel shift in interest rates, expectations of balance sheet growth and composition and the Company’s estimate of how interest-bearing transaction accounts would reprice in each scenario using current yield curves at September 30, ~~2015~~2016 and ~~2014.~~2015.

Table 23 Net Interest Income Sensitivity
Table 24 Net Interest Income Sensitivity					Table 24 Net Interest Income Sensitivity

	Estimated % Change in Net Interest Income				Estimated % Change in Net Interest Income
	September 30, 2015		September 30, 2014		September 30, 2016		September 30, 2015
Rate Change
+ 200 basis points	8.96	%	10.97	%	11.95	%	8.96	%
+ 100 basis points	4.42		5.44		6.06		4.42

The following table shows the effect that the indicated changes in interest rates would have on EVE. Inherent in this calculation are many assumptions used to project lifetime cash flows for every item on the balance sheet that may or may not be realized, such as deposit decay rates, prepayment speeds and spread assumptions. This measurement only values existing business without consideration of new business or potential management actions.

Table 24 Economic Value of Equity
Table 25 Economic Value of Equity					Table 25 Economic Value of Equity

	Estimated % Change in Economic Value of Equity				Estimated % Change in Economic Value of Equity
	September 30, 2015		September 30, 2014		September 30, 2016		September 30, 2015
Rate Change
+ 300 basis points	(3.98)	%	(1.83)	%	(2.07)	%	(3.98)	%
+ 200 basis points	(2.27	)	(0.81	)	(0.75	)	(2.27	)
+ 100 basis points	(0.78	)	(0.14	)	0.31		(0.78	)

The Company is also subject to trading risk. The Company utilizes various tools to measure and manage price risk in its trading portfolios. In addition, the Board of Directors of the Company has established certain limits relative to positions and activities. The level of price risk exposure at any given point in time depends on the market environment and expectation of future price and market movements, and will vary from period to period.

Derivatives

The Company uses derivatives primarily to manage economic risks related to commercial loans, mortgage banking operations, long-term debt and other funding sources. The Company also uses derivatives to facilitate transactions on behalf of its clients. As of September 30, ~~2015,~~2016, the Company had derivative financial instruments outstanding with notional amounts of ~~$31.6~~$36.3 billion. The estimated net fair value of open contracts was in an asset position of ~~$148~~$155 million at September 30, ~~2015.~~2016. For additional information about derivatives, refer to Note 5,6, Derivatives and Hedging, in the Notes to the Unaudited Condensed Consolidated Financial Statements.

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Liquidity Management

Liquidity is the ability of the Company to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Liquidity management involves maintaining the Company’s ability to meet the day-to-day cash flow requirements of its customers, whether they are depositors wishing to withdraw funds or borrowers requiring funds to meet their credit needs. Without proper liquidity management, the Company would not be able to perform the primary function of a financial intermediary and would, therefore, not be able to meet the needs of the communities it serves.

The Company regularly assesses liquidity needs under various scenarios of market conditions, asset growth and changes in credit ratings. The assessment includes liquidity stress testing which measures various sources and uses of funds under the different scenarios. The assessment provides regular monitoring of unused borrowing capacity and available sources of contingent liquidity to prepare for unexpected liquidity needs and to cover unanticipated events that could affect liquidity.

The asset portion of the balance sheet provides liquidity primarily through unencumbered securities available for sale, loan principal and interest payments, maturities and prepayments of investment securities held to maturity and, to a lesser extent, sales of investment securities available for sale and trading account assets. Other short-term investments such as federal funds sold, and securities purchased under agreements to resell, are additional sources of liquidity.

The liability portion of the balance sheet provides liquidity through various customers’ interest-bearing and noninterest-bearing deposit accounts and through FHLB and other borrowings. Brokered deposits, federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings as well as excess borrowing capacity with the FHLB and access to the debt capital markets are additional sources of liquidity and, basically, represent the Company’s incremental borrowing capacity. These sources of liquidity are used as necessary to fund asset growth and meet short-term liquidity needs.

In 2014, the Bank established a Global Bank Note Program under which the Bank may from time to time subject to market conditions, issue senior notes due seven days or more from the date of issue and subordinated notes due five years or more from the date of issue. On April 10, 2015, the Bank completed the sale of $700 million aggregate principal amount of its 3.875% unsecured subordinated notes due 2025.

In addition to the Company’s financial performance and condition, liquidity may be impacted by the Parent’s structure as a bank holding company that is a separate legal entity from the Bank. The Parent requires cash for various operating needs including payment of dividends to its shareholder, the servicing of debt, and the payment of general corporate expenses. The primary source of liquidity for the Parent is dividends paid by the Bank. Applicable federal and state statutes and regulations impose restrictions on the amount of dividends that may be paid by the Bank. In addition to the formal statutes and regulations, regulatory authorities also consider the adequacy of the Bank’s total capital in relation to its assets, deposits and other such items. Due to the net earnings restrictions on dividend distributions under Alabama law, the Bank was not permitted to pay dividends at September 30, ~~2015~~2016 or December 31, ~~2014~~2015 without regulatory approval. Appropriate limits and guidelines are in place to ensure the Parent has sufficient cash to meet operating expenses and other commitments without relying on subsidiaries or capital markets for funding.

~~During the nine months ended September 30, 2015, the Parent paid common dividends totaling $35 million to its sole shareholder, BBVA.~~ Any future dividends paid from the Parent must be set forth as capital actions in the Company's capital plans and not objected to by the Federal Reserve Board.

The Company’s ability to raise funding at competitive prices is affected by the rating agencies’ views of the Company’s credit quality, liquidity, capital and earnings. Management meets with the rating agencies on a routine basis to discuss the current outlook for the Company.

In 2014, the Federal Reserve Board, the OCC, and the FDIC approved a final rule implementing a minimum liquidity coverage ratio requirement for certain large bank holding companies, savings and loan holding companies and depository institutions, and a less stringent LCR requirement for other banking organizations, such as the Company, with $50 billion or more in total consolidated assets. The final rule imposes a monthly reporting requirement. In January 2016,

the minimum phased-in LCR requirement ~~will be~~was 90 percent, followed by 100 percent in January 2017. ~~The~~At September 30, 2016, the Company ~~anticipates being~~was fully compliant with the minimum phased-in LCR requirements ~~upon implementation without having to make any~~

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~~significant changes to its current balance sheet.~~in effect for 2016. However, should the Company's cash position or investment mix change in the future, the Company's ability to meet the LCR requirement may be impacted.

Management believes that the current sources of liquidity are adequate to meet the Company’s requirements and plans for continued growth.

Capital

The Company and the Bank are subject to various regulatory capital requirements administered by federal and state banking regulators. Failure to meet minimum risk-based and leverage capital requirements can subject the Company and the Bank to a series of increasingly restrictive regulatory actions.

The U.S. Basel III final rule revised the minimum regulatory capital ratio thresholds for the Company and the Bank and the well-capitalized thresholds for the Bank. The Federal Reserve Board has not yet adopted well-capitalized standards for bank holding companies under the U.S. Basel III capital framework. The U.S. Basel III capital rule introduces a new capital measure called CET1 capital, specifies that Tier 1 capital consist of CET1 and "Additional Tier 1 capital" instruments meeting specified requirements and expands the scope of the deductions from and adjustments to capital as compared to previously existing regulations.

Under the U.S. Basel III capital rule, the minimum regulatory capital ratios ~~effective as of January 1, 2015~~ are as follows:

•4.5% CET1 Risk-Based Capital Ratio

•6.0% Tier 1 Risk-Based Capital Ratio

•8.0% Total Risk-Based Capital Ratio

•4.0% Tier 1 Leverage Ratio

The U.S. Basel III capital rule also requires a capital conservation buffer that is designed to absorb losses during periods of economic stress and that must be maintained on top of these minimum risk-based capital ratios. The phase in period for the capital conservation buffer began on January 1, 2016, with an initial phase-in amount of 0.625%. When U.S. Basel III is fully phased-in on January 1, 2019, the Company and Bank ~~will~~is expected to be subject to a ~~greater than~~ 2.5% CET1 capital conservation buffer, under which they must maintain a CET1 Risk-Based Capital Ratio of greater than 7.0%, a Tier 1 Risk-Based Capital Ratio of greater than 8.5%, and a Total Risk-Based Capital Ratio of greater than 10.5%. Failure of the Company or the Bank to maintain the buffer will result in restrictions on the ability to make dividend payments, repurchase shares, and pay discretionary bonuses.

The Company regularly performs stress testing on its capital levels and is required annually to submit the Company’s capital plan to the banking regulators. In July 2015, the Federal Reserve released a proposed amendment to the capital plan and stress test rules that would, among other things, require large bank holding companies such as the Company to reflect capital issuances associated with certain planned acquisitions and dividends related to expensed employee compensation in its company-run stress test assumptions. The proposed amendments would be effective beginning with the 2016 capital planning and stress testing cycle.

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The following table sets forth the Company's U.S. Basel III regulatory capital ratios ~~at September 30, 2015~~ subject to transitional provisions at September 30, 2016 and ~~its Basel I regulatory capital ratios at~~ December 31, ~~2014.~~2015.

Table 25
Capital Ratios
September 30, 2015 (1) December 31, 2014 (2)
(Dollars in Thousands)
Capital:
CET1 Capital $ 7,314,615
N/A
Tier 1 Capital $ 7,357,370
$ 7,046,902
Total Capital $ 9,164,629
$ 8,254,184
Ratios:
CET1 Risk-based Capital Ratio 10.68 % N/A
Tier 1 Risk-based Capital Ratio 10.74 % 10.94 %
Total Risk-based Capital Ratio 13.38 % 12.81 %
Leverage Ratio 8.69 % 9.09 %


~~(1)~~	~~Calculated using the Transitional Basel III regulatory capital methodology applicable to the Company during 2015.~~


~~(2)~~	~~Calculated using the Basel I regulatory capital methodology applicable to the Company during 2014.~~

~~N/A = not applicable~~

Table 26 Capital Ratios

	September 30, 2016			December 31, 2015
	(Dollars in Thousands)
Capital:
CET1 Capital	$	7,553,460		$	7,363,961
Tier 1 Capital	$	7,791,860		$	7,631,561
Total Capital	$	9,494,310		$	9,417,750
Ratios:
CET1 Risk-based Capital Ratio	11.28		%	10.70		%
Tier 1 Risk-based Capital Ratio	11.64		%	11.08		%
Total Risk-based Capital Ratio	14.18		%	13.68		%
Leverage Ratio	9.08		%	8.95		%

At September 30, ~~2015,~~2016, the regulatory capital ratios of the Bank exceeded the “well-capitalized” standard for banks based on applicable U.S. regulatory capital requirements. The Company continually monitors these ratios to ensure that the Bank exceeds this standard.


Item 3.	Quantitative and Qualitative Disclosures about Market Risk

Refer to “Market Risk Management” in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, herein.

Item 4. Controls and Procedures

Disclosure Controls and Procedures.

Management of the Company, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures. Based on their evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

Changes In Internal Control Over Financial Reporting.

There have been no changes in the Company’s internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION


Item 1.	Legal Proceedings

See under “Legal and Regulatory Proceedings” in Note 78, Commitments, Contingencies and Guarantees, of the Notes to the Unaudited Condensed Consolidated Financial Statements.

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Item 1A.	Risk Factors

Various risk and uncertainties could affect the Company's business. These risks are described elsewhere in this report and the Company's other filings with the SEC, including the Company's Annual Report on Form 10-K for the year-ended December 31, ~~2014.~~2015.

There have been no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the year-ended December 31, ~~2014.~~2015.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

Omitted pursuant to General Instruction H of Form 10-Q.


Item 3.	Defaults Upon Senior Securities

Omitted pursuant to General Instruction H of Form 10-Q.


Item 4.	Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act

The Company discloses the following information pursuant to Section 13(r) of the Exchange Act, which requires an issuer to disclose whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with natural persons or entities designated by the U.S. government under specified executive orders, including activities not prohibited by U.S. law and conducted outside the United States by non-U.S. affiliates in compliance with local law. In order to comply with this requirement, the Company has requested relevant information from its affiliates globally.

The Company has not knowingly engaged in activities, transactions or dealings relating to Iran or with natural persons or entities designated by the U.S. government under the specified executive orders.

Because the Company is controlled by BBVA, a Spanish corporation, the Company's disclosure includes activities, transactions or dealings conducted outside the United States by non-U.S. affiliates of BBVA and its consolidated subsidiaries that are not controlled by the Company. The BBVA Group has the following activities, transactions and dealings with Iran requiring disclosure.

Legacy contractual obligations related to counter indemnities. Before 2007, the BBVA Group issued certain counter indemnities to its non-Iranian customers in Europe for various business activities relating to Iran in support of guarantees provided by Bank Melli, ~~three~~one of which remained outstanding during the three months ended September 30, ~~2015.~~2016. For the three months ended September 30, ~~2015, no payments or~~2016, revenues of $360 (including fees and/or commissions) have been recorded in connection with these counter indemnities. ~~In addition,~~The BBVA Group does not allocate direct costs to fees and commissions and therefore has not disclosed a separate profit measure. Due to changes in ~~accordance with~~EU Council ~~Regulation (EU) Nr. 267/2012~~Regulations effective January 16, 2016, Bank Melli is no longer included on the EU list of ~~March 23, 2012,~~persons and entities subject to the restrictive measure relating to the freezing of funds and economic resources. Therefore, BBVA is no longer required to block any payments of ~~any~~ amounts due to Bank Melli under ~~these~~the outstanding counter ~~indemnities will be initially blocked~~indemnity and ~~thereafter released upon~~is no longer required to request authorization byfrom the relevant Spanish ~~authorities. The BBVA Group is committed~~authorities to ~~terminating these business relationships as soon as contractually possible and does not intend~~release such funds to ~~enter into new business relationships involving~~ Bank Melli.

~~Letters~~Refund of ~~credit~~funds from Bank Sepah. . During the three months ended September 30, ~~2015,~~2016, Bank Sepah returned to the BBVA Group ~~had credit exposure to Bank Sepah arising from a letter~~funds in the amount of credit issued by Bank Sepah to a non-Iranian client of the BBVA Group in Europe. This letter of credit, which was granted before 2004, was used to secure a loan granted by the BBVA Group to a client in order to finance certain Iran-related activities. This loan was supported by the CESCE. The loan related to the client’s exportation of goods to Iran (consisting of goods relating to a~~pelletizing plant for iron concentration and equipment). For the three months ended September 30, 2015, interest charged~~$4,624 originally transferred by the BBVA Group in connection with this letter of credit totaled $2,828. However, this amount was blocked and is pending release upon authorization by the relevant Spanish authorities. Accordingly, for the three months ended September 30, 2015, no payments or revenues (including fees and/or commissions) have been recorded in connection with this letter of credit. The BBVA Group is committed

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March 2007 to ~~terminating the outstanding business relationship with~~an account at Bank Sepah ~~as soon as contractually possible and does not intend to enter into new business relationships involving Bank Sepah.~~in the name of BBVA’s representative office in Tehran.

Iranian embassy-related activity. The BBVA Group maintains bank accounts in Spain for two employees of the Iranian embassy in Spain. The ~~bank accounts of one additional employee were closed on March 20, 2015. The~~ two employees are Spanish citizens, and one of them has retired. Estimated gross revenues for the three months ended September 30, ~~2015,~~2016, from embassy-related activity, which include fees and/or commissions, did not exceed ~~$253.~~$190. The BBVA Group does not allocate direct costs to fees and commissions and therefore has not disclosed a separate profit measure. The BBVA Group is committed to terminating these business relationships as soon as legally possible.

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Item 6.	Exhibits



Exhibit Number	Description of Documents

2.1	Purchase and Assumption Agreement Whole Bank All Deposits among the Federal Deposit Insurance Corporation, Receiver of Guaranty Bank, Austin, Texas, the Federal Deposit Insurance Corporation and Compass Bank, dated as of August 21, 2009 (incorporated by reference to Exhibit 2.1 of the Company’s Registration Statement on Form 10 filed with the Commission on November 22, 2013, File No. 0-55106).
3.1	~~Amended and~~ Restated Certificate of Formation of BBVA Compass Bancshares, Inc., (incorporated herein by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K filed with the Commission on April 13, 2015 File No. 0-55106 and as amended by the Certificate of Preferences and Rights of the Floating Non-Cumulative Perpetual Preferred Stock, Series A incorporated herein by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Commission on December 3, 2015, File No. 0-55106).
3.2	Bylaws of BBVA Compass Bancshares, Inc. (incorporated herein by reference to Exhibit 3.2 of the Company’s Registration Statement on Form 10 filed with the Commission on November 22, 2013, File No. 0-55106).
31.1	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1	Interactive Data File.

Certain instruments defining rights of holders of long-term debt of the Company and its subsidiaries constituting less than 10% of the Company’s total assets are not filed herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. At the SEC’s request, the Company agrees to furnish the SEC a copy of any such agreement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Date: November ~~10, 2015~~9, 2016	BBVA Compass Bancshares, Inc.
	By:	/s/ Kirk P. Pressley
		Name:	Kirk P. Pressley
		Title:	Senior Executive Vice President, Chief Financial Officer and Duly Authorized Officer

9394

Table 25 Capital Ratios

	September 30, 2015 (1)			December 31, 2014 (2)
	(Dollars in Thousands)
Capital:
CET1 Capital	$	7,314,615		N/A
Tier 1 Capital	$	7,357,370		$	7,046,902
Total Capital	$	9,164,629		$	8,254,184
Ratios:
CET1 Risk-based Capital Ratio	10.68		%	N/A
Tier 1 Risk-based Capital Ratio	10.74		%	10.94		%
Total Risk-based Capital Ratio	13.38		%	12.81		%
Leverage Ratio	8.69		%	9.09		%