UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
xQuarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31,September 30, 2016
or
¨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 as of April 30,October 31, 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
   
 
 
 
 
 
 
 
   
 




Glossary of Acronyms and Terms

The following listing provides a comprehensive reference of common acronyms and terms used throughout the document:
AFSAvailable For Sale
ASCAccounting Standards Codification
ASUAccounting Standards Update
Basel IIIGlobal regulatory framework developed by the Basel Committee on Banking Supervision
BankCompass Bank
BBVABanco Bilbao Vizcaya Argentaria, S.A.
BBVA CompassRegistered trade name of Compass Bank
BBVA GroupBBVA and its consolidated subsidiaries
BOLIBank Owned Life Insurance
BSIBBVA Securities Inc.
Capital SecuritiesDebentures issued by the Parent
Cash Flow HedgeA 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
CET1Common Equity Tier 1
CET1 Risk BasedRisk-Based Capital RatioRatio of Common Equity Tier 1 capital to risk-weighted assets
CFPB    Consumer Financial Protection Bureau
CompanyBBVA Compass Bancshares, Inc. and its subsidiaries
Covered AssetsLoans and other real estate owned acquired from the FDIC subject to loss sharing agreements
Covered LoansLoans acquired from the FDIC subject to loss sharing agreements
CRACommunity Reinvestment Act
Dodd-Frank ActDodd-Frank Wall Street Reform and Consumer Protection Act of 2010
ERMEnterprise Risk Management
EVEEconomic Value of Equity
Exchange ActSecurities and Exchange Act of 1934, as amended
Fair Value HedgeA hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment
FASB    Financial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
Federal Reserve BoardBoard of Governors of the Federal Reserve System
FHLB    Federal Home Loan Bank
FICOFair Isaac Corporation
FitchFitch Ratings
FNMA    Federal National Mortgage Association
Guaranty BankCollectively, certain assets and liabilities of Guaranty Bank, acquired by the Company in 2009
HTMHeld To Maturity
IRSInternal Revenue Service
LCRLiquidity Coverage Ratio
Leverage RatioRatio of Tier 1 capital to quarterly average on-balance sheet assets
Moody'sMoody's Investor Services, Inc.
MRAMaster Repurchase Agreement
MSRMortgage Servicing Rights
OCCOffice of the Comptroller of the Currency
OREOOther Real Estate Owned

OTTI    Other-Than-Temporary Impairment
ParentBBVA Compass Bancshares, Inc.
Potential Problem LoansNoncovered, commercialCommercial 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 LoansAcquired 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
SBASmall Business Administration
SECSecurities and Exchange Commission
S&PStandard and Poor's Rating Services
Series A Preferred StockFloating Non-Cumulative Perpetual Preferred Stock, Series A
TBATo be announced
TDRTroubled Debt Restructuring
Tier 1 Risk-Based Capital RatioRatio of Tier 1 capital to risk-weighted assets
Total Risk-Based Capital RatioRatio 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. TreasuryUnited States Department of the Treasury
U.S. Basel III final ruleFinal rule to implement the Basel III capital framework in the United States
U.S. GAAPAccounting principles generally accepted in the U.S.

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 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 further 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 Federal Reserve Board could object to the Company's annual capital plan on either or both of a qualitative and/or a quantitative level, which could cause the Company to change its strategy with respect to its capital plan;
the CFPB's residential mortgage and other retail lending regulations, which could adversely affect the Company's business, financial condition or results of operations;
further declininginstability 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 changes in oil prices;
the Bank's CRA rating, which 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;

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.




PART I FINANCIAL INFORMATION
Item 1.Financial Statements (Unaudited)
BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

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

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

March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
(In Thousands)(In Thousands)
Assets:      
Cash and due from banks$5,111,422
 $4,121,944
$4,054,423
 $4,165,880
Federal funds sold, securities purchased under agreements to resell and interest bearing deposits233,411
 330,948
372,268
 330,948
Cash and cash equivalents5,344,833
 4,452,892
4,426,691
 4,496,828
Trading account assets4,358,533
 4,138,132
4,051,461
 4,138,132
Investment securities available for sale11,265,797
 11,050,520
11,516,885
 11,050,520
Investment securities held to maturity (fair value of $1,201,832 and $1,244,121 at March 31, 2016 and December 31, 2015, respectively)1,267,953
 1,322,676
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 value96,784
 70,582
101,843
 70,582
Loans62,104,690
 61,324,084
60,211,283
 61,324,084
Allowance for loan losses(822,440) (762,673)(862,080) (762,673)
Net loans61,282,250
 60,561,411
59,349,203
 60,561,411
Premises and equipment, net1,295,095
 1,320,163
1,287,457
 1,322,378
Bank owned life insurance704,254
 700,285
712,422
 700,285
Goodwill5,043,197
 5,043,197
5,043,197
 5,043,197
Other intangible assets27,483
 31,576
19,296
 31,576
Other real estate owned17,877
 20,862
21,670
 20,862
Other assets1,448,204
 1,252,784
1,585,863
 1,310,091
Total assets$92,152,260
 $89,965,080
$89,356,838
 $90,068,538
Liabilities:      
Deposits:      
Noninterest bearing$20,439,114
 $19,290,266
$20,585,598
 $19,291,533
Interest bearing48,508,502
 46,690,264
47,001,739
 46,690,233
Total deposits68,947,616
 65,980,530
67,587,337
 65,981,766
FHLB and other borrowings4,383,454
 5,438,620
3,671,861
 5,438,620
Federal funds purchased and securities sold under agreements to repurchase893,786
 750,154
165,573
 750,154
Other short-term borrowings3,924,781
 4,032,644
3,591,223
 4,032,644
Accrued expenses and other liabilities1,331,690
 1,185,848
1,521,654
 1,240,645
Total liabilities79,481,327
 77,387,796
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 March 31, 2016 and December 31. 2015229,475
 229,475
Issued — 1,150 shares at both September 30, 2016 and December 31, 2015229,475
 229,475
Common stock — $0.01 par value:      
Authorized — 300,000,000 shares      
Issued — 222,950,751 shares at both March 31, 2016 and December 31, 20152,230
 2,230
Issued — 222,950,751 shares at both September 30, 2016 and December 31, 20152,230
 2,230
Surplus15,180,284
 15,188,474
15,020,937
 15,160,267
Accumulated deficit(2,738,664) (2,772,614)(2,416,402) (2,696,953)
Accumulated other comprehensive loss(31,946) (99,307)(46,644) (99,336)
Total BBVA Compass Bancshares, Inc. shareholder’s equity12,641,379
 12,548,258
12,789,596
 12,595,683
Noncontrolling interests29,554
 29,026
29,594
 29,026
Total shareholder’s equity12,670,933
 12,577,284
12,819,190
 12,624,709
Total liabilities and shareholder’s equity$92,152,260
 $89,965,080
$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)

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

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

Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
2016 20152016 2015 2016 2015
(In Thousands)(In Thousands)
Interest income:          
Interest and fees on loans$561,083
 $543,842
$557,996
 $540,517
 $1,678,249
 $1,615,753
Interest on investment securities available for sale46,197
 48,208
48,382
 46,646
 131,021
 143,058
Interest on investment securities held to maturity6,795
 6,702
6,675
 6,953
 20,229
 20,579
Interest on federal funds sold, securities purchased under agreements to resell and interest bearing deposits4,365
 996
4,563
 1,666
 13,275
 4,027
Interest on trading account assets14,321
 9,614
12,926
 14,431
 40,659
 37,877
Total interest income632,761
 609,362
630,542
 610,213
 1,883,433
 1,821,294
Interest expense:          
Interest on deposits77,815
 69,653
76,031
 68,282
 230,779
 203,136
Interest on FHLB and other borrowings18,012
 19,106
21,315
 20,422
 58,919
 67,068
Interest on federal funds purchased and securities sold under agreements to repurchase6,157
 1,326
4,934
 2,506
 16,525
 5,534
Interest on other short-term borrowings13,896
 10,248
13,453
 11,129
 41,281
 36,668
Total interest expense115,880
 100,333
115,733
 102,339
 347,504
 312,406
Net interest income516,881
 509,029
514,809
 507,874
 1,535,929
 1,508,888
Provision for loan losses113,245
 42,031
65,107
 29,151
 265,025
 117,331
Net interest income after provision for loan losses403,636
 466,998
449,702
 478,723
 1,270,904
 1,391,557
Noninterest income:          
Service charges on deposit accounts51,492
 53,284
55,047
 54,917
 158,393
 161,891
Card and merchant processing fees29,742
 26,183
31,256
 29,024
 92,507
 83,918
Investment banking and advisory fees34,385

17,842

86,324

84,975
Money transfer income25,058
 24,868
 75,960
 68,702
Retail investment sales22,567
 25,146
30,137
 26,055
 79,689
 77,574
Investment banking and advisory fees23,604

30,334
Asset management fees8,805
 8,096
8,778
 7,918
 25,969
 24,449
Corporate and correspondent investment sales4,413
 6,259
6,974
 6,047
 21,490
 20,290
Mortgage banking(3,434) 8,159
8,242
 554
 5,410
 21,269
Bank owned life insurance4,416
 4,788
4,170
 4,345
 13,041
 13,527
Investment securities gains, net8,353
 32,832

 6,736
 30,037
 66,967
Loss on prepayment of FHLB and other borrowings, net
 (2,549)
 
 
 (6,118)
Other76,621
 56,738
59,718
 82,414
 206,396
 199,732
Total noninterest income226,579
 249,270
263,765
 260,720
 795,216
 817,176
Noninterest expense:          
Salaries, benefits and commissions278,035
 259,262
279,132
 271,143
 836,067
 804,828
Equipment60,136
 58,141
59,697
 58,414
 179,646
 174,311
Professional services55,694
 46,559
63,628
 55,476
 178,396
 154,134
Net occupancy39,120
 39,280
41,610
 39,706
 120,881
 119,731
FDIC indemnification expense4,710
 28,789
Money transfer expense16,680
 16,514
 50,048
 44,016
Amortization of intangibles4,093
 10,687
4,093
 9,507
 12,280
 30,083
Securities impairment:          
Other-than-temporary impairment
 372

 
 281
 1,385
Less: non-credit portion recognized in other comprehensive income
 87

 
 151
 87
Total securities impairment
 285

 
 130
 1,298
Other131,331
 79,716
91,431
 106,615
 312,004
 307,757
Total noninterest expense573,119
 522,719
556,271
 557,375
 1,689,452
 1,636,158
Net income before income tax expense57,096
 193,549
157,196
 182,068
 376,668
 572,575
Income tax expense22,618
 51,782
36,845
 52,428
 94,548
 156,865
Net income34,478
 141,767
120,351
 129,640
 282,120
 415,710
Less: net income attributable to noncontrolling interests528
 657
523
 491
 1,569
 1,738
Net income attributable to BBVA Compass Bancshares, Inc.33,950
 141,110
119,828
 129,149
 280,551
 413,972
Less: preferred stock dividends3,219
 
3,476
 
 10,148
 
Net income attributable to common shareholder$30,731
 $141,110
$116,352
 $129,149
 $270,403
 $413,972
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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

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

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

Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
2016 20152016 2015 2016 2015
(In Thousands)(In Thousands)
Net income$34,478
 $141,767
$120,351
 $129,640
 $282,120
 $415,710
Other comprehensive income, net of tax:          
Unrealized holding gains arising during period from securities available for sale68,264
 36,588
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 income5,294
 18,540

 3,804
 19,035
 37,816
Net change in unrealized holding gains on securities available for sale62,970
 18,048
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 maturity529
 1,774
1,168
 1,066
 2,924
 4,834
Less: non-credit related impairment on investment securities held to maturity
 49

 
 96
 49
Change in unamortized non-credit related impairment on investment securities held to maturity222
 156
225
 290
 648
 704
Net change in unamortized holding losses on securities held to maturity751
 1,881
1,393
 1,356
 3,476
 5,489
Unrealized holding gains arising during period from cash flow hedge instruments2,709
 2,059
Unrealized holding (losses) gains arising during period from cash flow hedge instruments(1,461) 2,042
 1,728
 5,322
Change in defined benefit plans931
 1,715

 
 931
 1,715
Other comprehensive income, net of tax67,361
 23,703
Other comprehensive (loss) income, net of tax(26,144) 27,087
 52,692
 13,980
Comprehensive income101,839
 165,470
94,207
 156,727
 334,812
 429,690
Less: comprehensive income attributable to noncontrolling interests528
 657
523
 491
 1,569
 1,738
Comprehensive income attributable to BBVA Compass Bancshares, Inc.$101,311
 $164,813
$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 SHAREHOLDER'S EQUITY
(Unaudited)

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

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 EquityPreferred Stock Common Stock Surplus Accumulated Deficit Accumulated Other Comprehensive Loss Non-Controlling Interests Total Shareholder’s Equity
(In Thousands)(In Thousands)
Balance, January 1, 2015$
 $2,230
 $15,285,991
 $(3,262,181) $(51,357) $28,891
 $12,003,574
$
 $2,230
 $15,277,746
 $(3,202,083) $(51,862) $28,891
 $12,054,922
Net income
 
 
 141,110
 
 657
 141,767

 
 
 413,972
 
 1,738
 415,710
Other comprehensive income, net of tax
 
 
 
 23,703
 
 23,703

 
 
 
 13,980
 
 13,980
Preferred stock dividends
 
 
 
 
 (1,037) (1,037)
Common stock dividends
 
 (35,000) 
 
 
 (35,000)
Vesting of restricted stock
 
 (7,662) 
 
 
 (7,662)
 
 (3,603) 
 
 
 (3,603)
Restricted stock retained to cover taxes
 
 (3,016) 
 
 
 (3,016)
Amortization of stock-based deferred compensation
 
 548
 
 
 
 548

 
 1,772
 
 
 
 1,772
Balance, March 31, 2015$
 $2,230
 $15,278,877
 $(3,121,071) $(27,654) $29,548
 $12,161,930
Balance, September 30, 2015$
 $2,230
 $15,237,899
 $(2,788,111) $(37,882) $29,592
 $12,443,728
                          
Balance, January 1, 2016$229,475
 $2,230
 $15,188,474
 $(2,772,614) $(99,307) $29,026
 $12,577,284
$229,475
 $2,230
 $15,160,267
 $(2,696,953) $(99,336) $29,026
 $12,624,709
Net income
 
 
 33,950
 
 528
 34,478

 
 
 280,551
 
 1,569
 282,120
Other comprehensive income, net of tax
 
 
 
 67,361
 
 67,361

 
 
 
 52,692
 
 52,692
Preferred stock dividends
 
 (3,219) 
 
 
 (3,219)
 
 (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
 
 (6,175) 
 
 
 (6,175)
 
 (1,527) 
 
 
 (1,527)
Restricted stock retained to cover taxes
 
 (545) 
 
 
 (545)
Restricted stock tax benefit
 
 (468) 
 
 
 (468)
Amortization of stock-based deferred compensation
 
 1,204
 
 
 
 1,204

 
 2,509
 
 
 
 2,509
Balance, March 31, 2016$229,475
 $2,230
 $15,180,284
 $(2,738,664) $(31,946) $29,554
 $12,670,933
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)
BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,Nine Months Ended September 30,
2016 20152016 2015
(In Thousands)(In Thousands)
Operating Activities:      
Net income$34,478
 $141,767
$282,120
 $415,710
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization71,469
 69,595
221,975
 206,882
Securities impairment
 285
130
 1,298
Amortization of intangibles4,093
 10,687
12,280
 30,083
Accretion of discount, loan fees and purchase market adjustments, net(12,524) (53,747)(17,191) (84,168)
Net change in FDIC indemnification liability4,710
 28,789
4,180
 49,669
Provision for loan losses113,245
 42,031
265,025
 117,331
Amortization of stock based compensation1,204
 548
2,509
 1,772
Net change in trading account assets(272,999) (191,826)(369,690) (153,297)
Net change in trading account liabilities180,253
 76,217
210,554
 80,378
Net change in loans held for sale(22,477) (43,672)(27,468) 32,058
Deferred tax expense11,991
 32,676
Deferred tax benefit(22,596) (9,686)
Investment securities gains, net(8,353) (32,832)(30,037) (66,967)
Loss on prepayment of FHLB and other borrowings, net
 2,549

 6,118
Loss on sale of premises and equipment1,346
 1,627
5,019
 151
(Gain) loss on sale of loans(16,143) 2
Net gain on sale of other real estate and other assets(1,232) (134)
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(204,879) 132,983
(260,823) 20,424
Decrease in other liabilities(35,189) (372,520)
Net cash used in operating activities(151,007) (154,975)
Increase (decrease) in other liabilities68,043
 (125,524)
Net cash provided by operating activities328,073
 501,646
Investing Activities:      
Proceeds from sales of investment securities available for sale561,488
 1,147,705
1,785,313
 2,877,744
Proceeds from prepayments, maturities and calls of investment securities available for sale436,760
 349,624
1,629,841
 1,225,031
Purchases of investment securities available for sale(1,126,225) (1,316,531)(3,848,779) (4,662,585)
Proceeds from prepayments, maturities and calls of investment securities held to maturity57,457
 28,700
114,689
 82,163
Purchases of investment securities held to maturity(1,429) (50,632)(27,104) (82,634)
Proceeds from sales of trading securities173,678
 1,292,110
729,218
 2,871,708
Purchases of trading securities(121,080) (1,946,314)(272,857) (4,077,520)
Net change in loan portfolio(1,591,797) (1,160,570)(66,962) (3,853,782)
Proceeds from sales of loans776,440
 6
1,022,579
 436,242
Purchase of premises and equipment(24,639) (28,831)(112,419) (103,165)
Proceeds from sale of premises and equipment2,337
 778
6,311
 7,974
Reimbursements from (payments to) FDIC for covered assets(124) 908
Net cash paid in acquisition
 (12,567)
Reimbursements from FDIC for covered assets878
 818
Proceeds from sales of other real estate owned10,868
 5,688
21,145
 12,890
Net cash used in investing activities(846,266) (1,677,359)
Net cash provided by (used in) investing activities981,853
 (5,277,683)
Financing Activities:      
Net increase in demand deposits, NOW accounts and savings accounts1,878,886
 1,793,161
1,380,456
 2,527,448
Net increase (decrease) in time deposits1,084,078
 (86,419)
Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase143,632
 (219,820)
Net increase in time deposits215,262
 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(107,863) 831,970
(441,421) 1,622,173
Proceeds from FHLB and other borrowings
 500,000
1,250,000
 4,000,000
Repayment of FHLB and other borrowings(1,100,125) (402,944)(3,057,407) (2,612,915)
Capital contribution for non-controlling interest36
 
Vesting of restricted stock(6,175) (7,662)(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(3,219) 
(11,185) (1,037)
Net cash provided by financing activities1,889,214
 2,408,286
Net increase in cash and cash equivalents891,941
 575,952
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 year4,452,892
 3,388,405
4,496,828
 3,432,948
Cash and cash equivalents at end of period$5,344,833
 $3,964,357
$4,426,691
 $4,428,256
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

11

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 March 31,September 30, 2016, are not necessarily indicative of the results that may be expected for the year ended December 31, 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, 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
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 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, 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.Company and its selection of transition method. Because the guidance does not apply to revenue associated with financial instruments, including loans and securities accounted for under other U.S. GAAP, the Company does not expect the new revenue recognition guidance to have a material impact on the elements of its statement of income most closely associated with financial instruments, including securities gains, interest income and interest expense. The Company plans to adopt this standard in the first quarter of 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 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.

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 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.
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, 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.


(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.
March 31, 2016September 30, 2016
  Gross Unrealized    Gross Unrealized  
Amortized Cost Gains Losses Fair ValueAmortized 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$2,702,503
 $29,519
 $12,676
 $2,719,346
$1,856,178
 $10,178
 $16,126
 $1,850,230
Mortgage-backed securities4,562,638
 31,203
 23,016
 4,570,825
3,988,469
 36,732
 19,564
 4,005,637
Collateralized mortgage obligations3,474,587
 22,901
 11,327
 3,486,161
5,207,807
 18,842
 19,432
 5,207,217
States and political subdivisions14,043
 242
 
 14,285
9,787
 288
 
 10,075
Other19,054
 336
 32
 19,358
16,528
 356
 32
 16,852
Equity securities455,780
 42
 
 455,822
426,826
 48
 
 426,874
Total$11,228,605
 $84,243
 $47,051
 $11,265,797
$11,505,595
 $66,444
 $55,154
 $11,516,885
Investment securities held to maturity:              
Collateralized mortgage obligations$98,642
 $4,435
 $8,111
 $94,966
$88,611
 $4,733
 $5,460
 $87,884
Asset-backed securities21,447
 2,464
 1,657
 22,254
17,144
 1,959
 1,465
 17,638
States and political subdivisions1,081,227
 1,407
 64,644
 1,017,990
1,070,917
 17,667
 16,516
 1,072,068
Other66,637
 2,115
 2,130
 66,622
64,178
 1,417
 1,951
 63,644
Total$1,267,953
 $10,421
 $76,542
 $1,201,832
$1,240,850
 $25,776
 $25,392
 $1,241,234
 December 31, 2015
   Gross Unrealized  
 Amortized Cost Gains Losses Fair Value
 (In Thousands)
Investment securities available for sale:       
Debt securities:       
U.S. Treasury and other U.S. government agencies$3,232,238
 $4,076
 $24,822
 $3,211,492
Mortgage-backed securities4,624,441
 16,548
 50,727
 4,590,262
Collateralized mortgage obligations2,713,075
 8,200
 16,019
 2,705,256
States and political subdivisions15,492
 395
 
 15,887
Other23,914
 175
 44
 24,045
Equity securities503,540
 38
 
 503,578
Total$11,112,700
 $29,432
 $91,612
 $11,050,520
Investment securities held to maturity:       
Collateralized mortgage obligations$103,947
 $6,022
 $4,634
 $105,335
Asset-backed securities24,011
 3,002
 1,574
 25,439
States and political subdivisions1,128,240
 729
 82,632
 1,046,337
Other66,478
 2,644
 2,112
 67,010
Total$1,322,676
 $12,397
 $90,952
 $1,244,121
In the above table, equity securities include $456427 million and $503 million at March 31,September 30, 2016 and December 31, 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.
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 March 31,September 30, 2016 and December 31, 2015. This information is aggregated by investment category and the length of time the individual securities have been in an unrealized loss position.
March 31, 2016September 30, 2016
Securities in a loss position for less than 12 months Securities in a loss position for 12 months or longer TotalSecurities 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 LossesFair 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$267,701
 $2,479
 $566,514
 $10,197
 $834,215
 $12,676
$386,626
 $4,012
 $604,317
 $12,114
 $990,943
 $16,126
Mortgage-backed securities597,351
 3,571
 1,640,437
 19,445
 2,237,788
 23,016
301,922
 2,182
 1,502,080
 17,382
 1,804,002
 19,564
Collateralized mortgage obligations802,835
 6,708
 427,581
 4,619
 1,230,416
 11,327
2,319,508
 13,007
 704,501
 6,425
 3,024,009
 19,432
Other
 
 1,090
 32
 1,090
 32

 
 1,090
 32
 1,090
 32
Total$1,667,887
 $12,758
 $2,635,622
 $34,293
 $4,303,509
 $47,051
$3,008,056
 $19,201
 $2,811,988
 $35,953
 $5,820,044
 $55,154
                      
Investment securities held to maturity:                      
Collateralized mortgage obligations$13,981
 $1,698
 $48,902
 $6,413
 $62,883
 $8,111
$4,099
 $519
 $50,858
 $4,941
 $54,957
 $5,460
Asset-backed securities
 
 13,829
 1,657
 13,829
 1,657
425
 14
 9,964
 1,451
 10,389
 1,465
States and political subdivisions19,569
 2,081
 829,864
 62,563
 849,433
 64,644
57,577
 4,378
 325,680
 12,138
 383,257
 16,516
Other
 
 3,983
 2,130
 3,983
 2,130
16,504
 94
 3,538
 1,857
 20,042
 1,951
Total$33,550
 $3,779
 $896,578
 $72,763
 $930,128
 $76,542
$78,605
 $5,005
 $390,040
 $20,387
 $468,645
 $25,392
 December 31, 2015
 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
 (In Thousands)
Investment securities available for sale:           
Debt securities:           
U.S. Treasury and other U.S. government agencies$2,081,528
 $16,523
 $460,160
 $8,299
 $2,541,688
 $24,822
Mortgage-backed securities2,623,761
 20,380
 1,408,069
 30,347
 4,031,830
 50,727
Collateralized mortgage obligations1,321,121
 10,378
 393,210
 5,641
 1,714,331
 16,019
Other
 
 1,078
 44
 1,078
 44
Total$6,026,410
 $47,281
 $2,262,517
 $44,331
 $8,288,927
 $91,612
            
Investment securities held to maturity:           
Collateralized mortgage obligations$11,066
 $326
 $52,601
 $4,308
 $63,667
 $4,634
Asset-backed securities
 
 15,790
 1,574
 15,790
 1,574
States and political subdivisions73,302
 6,533
 794,489
 76,099
 867,791
 82,632
Other
 
 4,015
 2,112
 4,015
 2,112
Total$84,368
 $6,859
 $866,895
 $84,093
 $951,263
 $90,952

As indicated in the previous tables, at March 31,September 30, 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.
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 March 31,September 30, 2016 or December 31, 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 
 March 31,
Three Months Ended 
 September 30,
 Nine Months Ended 
 September 30,
2016
20152016
2015 2016 2015
(In Thousands)(In Thousands)
Balance at beginning of period$22,452
 $21,123
$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
Additions for the credit component on debt securities in which OTTI was previously recognized
 285

 
 130
 285
Balance at end of period$22,452
 $21,408
$22,582
 $22,421
 $22,582
 $22,421
For both the three months ended March 31,September 30, 2016 and 2015, there was no OTTI recognized on held to maturity securities. For the threenine months ended March 31,September 30, 2016 and 2015, there was $285$130 thousand and $1.3 million, 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 and asset-backed securities.obligations.

The contractual maturities of the securities portfolios are presented in the following table.
March 31, 2016 Amortized Cost Fair Value
September 30, 2016 Amortized Cost Fair Value
 (In Thousands) (In Thousands)
Investment securities available for sale:    
Maturing within one year $136,663
 $136,678
 $91,838
 $91,868
Maturing after one but within five years 1,259,762
 1,281,452
 365,562
 369,917
Maturing after five but within ten years 207,967
 213,414
 367,002
 370,969
Maturing after ten years 1,131,208
 1,121,445
 1,058,091
 1,044,403
 2,735,600
 2,752,989
 1,882,493
 1,877,157
Mortgage-backed securities and collateralized mortgage obligations 8,037,225
 8,056,986
 9,196,276
 9,212,854
Equity securities 455,780
 455,822
 426,826
 426,874
Total $11,228,605
 $11,265,797
 $11,505,595
 $11,516,885
        
Investment securities held to maturity:        
Maturing within one year $
 $
 $67,853
 $68,283
Maturing after one but within five years 328,302
 319,491
 244,188
 243,803
Maturing after five but within ten years 238,245
 217,907
 260,272
 258,962
Maturing after ten years 602,764
 569,468
 579,926
 582,302
 1,169,311
 1,106,866
 1,152,239
 1,153,350
Collateralized mortgage obligations 98,642
 94,966
 88,611
 87,884
Total $1,267,953
 $1,201,832
 $1,240,850
 $1,241,234

The gross realized gains and losses recognized on sales of investment securities available for sale are shown in the table below.
Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
2016 20152016 2015 2016 2015
(In Thousands)(In Thousands)
Gross gains$8,353
 $32,832
$
 $8,568
 $30,037
 $68,799
Gross losses
 

 1,832
 
 1,832
Net realized gains$8,353
 $32,832
$
 $6,736
 $30,037
 $66,967

(34) Loans and Allowance for Loan Losses
The following table presents the composition of the loan portfolio.
March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
(In Thousands)(In Thousands)
Commercial loans:      
Commercial, financial and agricultural$26,864,047
 $26,022,374
$24,839,068
 $26,022,374
Real estate – construction2,407,511
 2,354,253
2,215,272
 2,354,253
Commercial real estate – mortgage10,647,394
 10,453,280
11,361,630
 10,453,280
Total commercial loans39,918,952
 38,829,907
38,415,970
 38,829,907
Consumer loans:      
Residential real estate – mortgage13,590,269
 13,993,285
13,457,435
 13,993,285
Equity lines of credit2,433,370
 2,419,815
2,494,468
 2,419,815
Equity loans547,567
 580,804
479,375
 580,804
Credit card605,305
 627,359
599,862
 627,359
Consumer direct995,652
 936,871
1,186,827
 936,871
Consumer indirect3,589,756
 3,495,082
3,196,235
 3,495,082
Total consumer loans21,761,919
 22,053,216
21,414,202
 22,053,216
Covered loans423,819
 440,961
381,111
 440,961
Total loans$62,104,690
 $61,324,084
$60,211,283
 $61,324,084
At March 31,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 $9.3$8.2 billion and $9.4 billion at March 31,September 30, 2016 and December 31, 2015, respectively. The funded amount of the Company's energy lending portfolio was approximately $4.2$3.3 billion and $3.8 billion at March 31,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 the current level of oil prices stagnatesremain unstable or continues toresume their decline, the energy-related portfolio may be subject to additional pressure on credit quality metrics including past due, criticized, and nonperforming loans, as well as net charge-offs.



Allowance for Loan Losses and Credit Quality
The following table, which excludes loans held for sale, presents a summary of the activity in the allowance for loan losses. The portion of the allowance that has not been identified by the Company as related to specific loan categories has been allocated to the individual loan categories on a pro rata basis for purposes of the table below:
Commercial, Financial and Agricultural Commercial Real Estate (1) Residential Real Estate (2) Consumer (3) Covered Total LoansCommercial, Financial and Agricultural Commercial Real Estate (1) Residential Real Estate (2) Consumer (3) Covered Total
(In Thousands)(In Thousands)
Three months ended March 31, 2016          
Three months ended September 30, 2016Three months ended September 30, 2016          
Allowance for loan losses:                      
Beginning balance$402,113
 $122,068
 $132,104
 $104,948
 $1,440
 $762,673
$499,398
 $114,311
 $119,076
 $110,266
 $
 $843,051
Provision (credit) for loan losses83,582
 (6,417) (3,149) 39,273
 (44) 113,245
20,533
 54
 528
 43,992
 
 65,107
Loans charged off(19,806) (689) (6,201) (39,953) (249) (66,898)(13,702) (104) (4,608) (46,472) 
 (64,886)
Loan recoveries1,749
 969
 2,419
 8,283
 
 13,420
4,766
 682
 3,429
 9,931
 
 18,808
Net (charge-offs) recoveries(18,057) 280
 (3,782) (31,670) (249) (53,478)(8,936) 578
 (1,179) (36,541) 
 (46,078)
Ending balance$467,638
 $115,931
 $125,173
 $112,551
 $1,147
 $822,440
$510,995
 $114,943
 $118,425
 $117,717
 $
 $862,080
Three months ended March 31, 2015          
Three months ended September 30, 2015Three months ended September 30, 2015          
Allowance for loan losses:                      
Beginning balance$299,482
 $138,233
 $154,627
 $89,891
 $2,808
 $685,041
$350,879
 $135,152
 $133,995
 $99,559
 $1,886
 $721,471
Provision (credit) for loan losses28,352
 (185) (6,439) 20,770
 (467) 42,031
16,424
 (7,256) (577) 20,091
 469
 29,151
Loans charged off(6,619) (635) (6,754) (24,545) (873) (39,426)(9,161) (910) (5,944) (27,567) (490) (44,072)
Loan recoveries2,182
 1,858
 3,513
 6,665
 
 14,218
5,171
 899
 3,772
 5,728
 2
 15,572
Net (charge-offs) recoveries(4,437) 1,223
 (3,241) (17,880) (873) (25,208)(3,990) (11) (2,172) (21,839) (488) (28,500)
Ending balance$323,397
 $139,271
 $144,947
 $92,781
 $1,468
 $701,864
$363,313
 $127,885
 $131,246
 $97,811
 $1,867
 $722,122
           
Nine Months Ended September 30, 2016Nine Months Ended September 30, 2016          
Allowance for loan losses:           
Beginning balance$402,113
 $122,068
 $132,104
 $104,948
 $1,440
 $762,673
Provision (credit) for loan losses167,648
 (7,393) (7,412) 112,058
 124
 265,025
Loans charged off(66,541) (3,555) (15,072) (125,607) (1,565) (212,340)
Loan recoveries7,775
 3,823
 8,805
 26,318
 1
 46,722
Net (charge-offs) recoveries(58,766) 268
 (6,267) (99,289) (1,564) (165,618)
Ending balance$510,995
 $114,943
 $118,425
 $117,717
 $
 $862,080
Nine Months Ended September 30, 2015Nine Months Ended September 30, 2015          
Allowance for loan losses:           
Beginning balance$299,482
 $138,233
 $154,627
 $89,891
 $2,808
 $685,041
Provision (credit) for loan losses74,127
 (12,995) (13,458) 69,085
 572
 117,331
Loans charged off(20,706) (2,380) (20,889) (78,957) (1,516) (124,448)
Loan recoveries10,410
 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)
Ending balance$363,313
 $127,885
 $131,246
 $97,811
 $1,867
 $722,122
(1)
Includes commercial real estate – mortgage and real estate – construction loans.
(2)
Includes residential real estate – mortgage, equity lines of credit and equity loans.
(3)
Includes credit card, consumer direct and consumer indirect loans.

The table below provides a summary of the allowance for loan losses and related loan balances by portfolio.
Commercial, Financial and Agricultural Commercial Real Estate (1) Residential Real Estate (2) Consumer (3) Covered Total LoansCommercial, Financial and Agricultural Commercial Real Estate (1) Residential Real Estate (2) Consumer (3) Covered Total
(In Thousands)(In Thousands)
March 31, 2016           
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$59,143
 $3,690
 $35,841
 $1,986
 $
 $100,660
$138,067
 $3,253
 $35,867
 $2,507
 $
 $179,694
Collectively evaluated for impairment408,326
 112,241
 89,332
 110,565
 
 720,464
372,928
 111,690
 82,558
 115,210
 
 682,386
Purchased impaired
 
 
 
 1,093
 1,093
Purchased nonimpaired169
 
 
 
 54
 223
Purchased loans
 
 
 
 
 
Total allowance for loan losses$467,638
 $115,931
 $125,173
 $112,551
 $1,147
 $822,440
$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$561,381
 $52,021
 $176,695
 $2,880
 $
 $792,977
$839,679
 $38,967
 $180,308
 $3,393
 $
 $1,062,347
Collectively evaluated for impairment26,267,226
 12,969,839
 16,393,611
 5,183,210
 
 60,813,886
23,972,927
 13,503,337
 16,250,039
 4,975,230
 
 58,701,533
Purchased impaired
 
 
 
 311,894
 311,894
Purchased nonimpaired35,440
 33,045
 900
 4,623
 111,925
 185,933
Purchased loans26,462
 34,598
 931
 4,301
 381,111
 447,403
Total loans$26,864,047
 $13,054,905
 $16,571,206
 $5,190,713
 $423,819
 $62,104,690
$24,839,068
 $13,576,902
 $16,431,278
 $4,982,924
 $381,111
 $60,211,283
                      
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$27,486
 $3,725
 $38,126
 $1,880
 $
 $71,217
$27,486
 $3,725
 $38,126
 $1,880
 $
 $71,217
Collectively evaluated for impairment374,458
 118,343
 93,978
 103,068
 
 689,847
374,458
 118,343
 93,978
 103,068
 
 689,847
Purchased impaired
 
 
 
 1,340
 1,340
Purchased nonimpaired169
 
 
 
 100
 269
Purchased loans169
 
 
 
 1,440
 1,609
Total allowance for loan losses$402,113
 $122,068
 $132,104
 $104,948
 $1,440
 $762,673
$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$163,201
 $80,123
 $183,473
 $2,789
 $
 $429,586
$163,201
 $80,123
 $183,473
 $2,789
 $
 $429,586
Collectively evaluated for impairment25,828,286
 12,685,320
 16,809,525
 5,051,488
 
 60,374,619
25,828,286
 12,685,320
 16,809,525
 5,051,488
 
 60,374,619
Purchased impaired
 
 
 
 323,092
 323,092
Purchased nonimpaired30,887
 42,090
 906
 5,035
 117,869
 196,787
Purchased loans30,887
 42,090
 906
 5,035
 440,961
 519,879
Total loans$26,022,374
 $12,807,533
 $16,993,904
 $5,059,312
 $440,961
 $61,324,084
$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.

The following table presentstables present information on individually evaluated impaired loans, by loan class.
March 31, 2016September 30, 2016
Individually Evaluated Impaired Loans With No Recorded Allowance Individually Evaluated Impaired Loans With a Recorded AllowanceIndividually 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 AllowanceRecorded Investment Unpaid Principal Balance Allowance Recorded Investment Unpaid Principal Balance Allowance
(In Thousands)(In Thousands)
Commercial, financial and agricultural$365,382
 $376,828
 $
 $195,999
 $213,278
 $59,143
$420,005
 $428,688
 $
 $419,674
 $445,592
 $138,067
Real estate – construction3,374
 3,986
 
 611
 681
 497

 
 
 707
 819
 377
Commercial real estate – mortgage24,243
 26,363
 
 23,793
 25,488
 3,193
15,161
 15,765
 
 23,099
 24,498
 2,876
Residential real estate – mortgage
 
 
 103,362
 103,362
 6,964

 
 
 111,773
 111,773
 9,226
Equity lines of credit
 
 
 27,679
 30,145
 22,286

 
 
 25,679
 26,069
 20,572
Equity loans
 
 
 45,654
 46,365
 6,591

 
 
 42,856
 43,563
 6,069
Credit card
 
 
 
 
 

 
 
 
 
 
Consumer direct
 
 
 889
 889
 28

 
 
 797
 797
 56
Consumer indirect
 
 
 1,991
 1,996
 1,958

 
 
 2,596
 2,596
 2,451
Total loans$392,999
 $407,177
 $
 $399,978
 $422,204
 $100,660
$435,166
 $444,453
 $
 $627,181
 $655,707
 $179,694
 December 31, 2015
 Individually Evaluated Impaired Loans With No Recorded Allowance Individually Evaluated Impaired Loans With a Recorded Allowance
 Recorded Investment Unpaid Principal Balance Allowance Recorded Investment Unpaid Principal Balance Allowance
 (In Thousands)
Commercial, financial and agricultural$45,583
 $53,325
 $
 $117,618
 $122,148
 $27,486
Real estate – construction3,403
 3,986
 
 628
 689
 515
Commercial real estate – mortgage24,851
 27,486
 
 51,241
 54,863
 3,210
Residential real estate – mortgage6,521
 6,521
 
 102,375
 102,375
 7,370
Equity lines of credit
 
 
 28,164
 30,302
 23,183
Equity loans
 
 
 46,413
 47,245
 7,573
Credit card
 
 
 
 
 
Consumer direct
 
 
 935
 935
 26
Consumer indirect
 
 
 1,854
 1,854
 1,854
Total loans$80,358
 $91,318
 $
 $349,228
 $360,411
 $71,217

The following table presentstables present information on individually evaluated impaired loans, by loan class.
Three Months Ended March 31, 2016 Three Months Ended March 31, 2015Three Months Ended September 30, 2016 Three Months Ended September 30, 2015
Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income RecognizedAverage Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized
(In Thousands)(In Thousands)
Commercial, financial and agricultural$343,028
 $320
 $64,881
 $339
$769,719
 $401
 $133,652
 $204
Real estate – construction3,999
 2
 6,115
 39
634
 2
 5,360
 21
Commercial real estate – mortgage60,504
 413
 88,178
 580
36,874
 255
 87,352
 517
Residential real estate – mortgage108,918
 636
 113,926
 695
110,262
 666
 107,927
 707
Equity lines of credit27,912
 281
 26,658
 283
26,231
 246
 27,185
 279
Equity loans45,947
 373
 52,435
 404
43,292
 375
 48,046
 392
Credit card
 
 
 

 
 
 
Consumer direct904
 8
 680
 6
803
 7
 397
 4
Consumer indirect1,859
 2
 1,544
 
2,505
 3
 1,749
 
Total loans$593,071
 $2,035
 $354,417
 $2,346
$990,320
 $1,955
 $411,668
 $2,124
 Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015
 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized
 (In Thousands)
Commercial, financial and agricultural$575,038
 $1,033
 $98,110
 $909
Real estate – construction2,118
 6
 5,837
 97
Commercial real estate – mortgage46,073
 932
 85,862
 1,634
Residential real estate – mortgage109,020
 1,953
 110,790
 2,096
Equity lines of credit27,170
 790
 26,891
 838
Equity loans44,629
 1,123
 50,168
 1,197
Credit card
 
 
 
Consumer direct854
 22
 686
 12
Consumer indirect2,152
 9
 1,645
 
Total loans$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, 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 D2) and the facility risk ratings are defined by ranges of the loss given default. The combination of those two approaches results in the assessment of the likelihood of loss and it is mapped to the regulatory classifications. The Company assigns internal risk ratings at loan origination and at regular intervals subsequent to origination. Loan review intervals are dependent on the size and risk grade of the loan, and are generally conducted at least annually. Additional reviews are conducted when information affecting the loan’s risk grade becomes available. The general characteristics of the risk grades are as follows:
The Company’s internally assigned letter grades “AAA” through “B-” correspond to the regulatory classification “Pass.” These loans do not have any identified potential or well-defined weaknesses and have a high likelihood of orderly repayment. Exceptions exist when either the facility is fully secured by a CD and held at the Company or the facility is secured by properly margined and controlled marketable securities.
Internally assigned letter grades “CCC+” through “CCC” correspond to the regulatory classification “Special Mention.” Loans within this classification have potential weaknesses that deserve management’s close

attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position at some future date. Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.
Internally assigned letter grades “CCC-” through “D1” correspond to the regulatory classification “Substandard.” A loan classified as substandard is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the loan. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
The internally assigned letter grade “D2” corresponds to the regulatory classification “Doubtful.” Loans classified as doubtful have all the weaknesses inherent in a loan classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable or improbable.

The Company considers payment history as the best indicator of credit quality for the consumer portfolio. Nonperforming loans in the tables below include loans classified as nonaccrual, loans 90 days or more past due and loans modified in a TDR 90 days or more past due.
The following tables, which exclude loans held for sale and covered loans, illustrate the credit quality indicators associated with the Company’s loans, by loan class.
CommercialCommercial
March 31, 2016September 30, 2016
Commercial, Financial and Agricultural Real Estate - Construction Commercial Real Estate - MortgageCommercial, Financial and Agricultural Real Estate - Construction Commercial Real Estate - Mortgage
(In Thousands)(In Thousands)
Pass$25,175,667
 $2,394,501
 $10,401,240
$22,686,955
 $2,154,286
 $11,031,439
Special Mention605,493
 4,299
 124,577
665,237
 56,486
 209,917
Substandard1,029,867
 8,694
 107,332
1,164,997
 4,485
 102,879
Doubtful53,020
 17
 14,245
321,879
 15
 17,395
$26,864,047
 $2,407,511
 $10,647,394
$24,839,068
 $2,215,272
 $11,361,630
 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 Mention469,400
 5,148
 142,124
Substandard688,427
 8,941
 133,091
Doubtful41,235
 19
 12,435
 $26,022,374
 $2,354,253
 $10,453,280

ConsumerConsumer
March 31, 2016September 30, 2016
Residential Real Estate – Mortgage Equity Lines of Credit Equity Loans Credit Card Consumer Direct Consumer IndirectResidential Real Estate – Mortgage Equity Lines of Credit Equity Loans Credit Card Consumer Direct Consumer Indirect
(In Thousands)(In Thousands)
Noncovered loans:                      
Performing$13,470,727
 $2,398,369
 $533,141
 $595,892
 $992,019
 $3,579,221
$13,335,843
 $2,459,409
 $465,626
 $589,687
 $1,181,871
 $3,182,146
Nonperforming119,542
 35,001
 14,426
 9,413
 3,633
 10,535
121,592
 35,059
 13,749
 10,175
 4,956
 14,089
$13,590,269
 $2,433,370
 $547,567
 $605,305
 $995,652
 $3,589,756
$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
Nonperforming115,693
 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


The following tables present an aging analysis of the Company’s past due loans, excluding loans classified as held for sale.
March 31, 2016September 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 Total30-59 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$17,837
 $9,947
 $3,012
 $568,154
 $9,545
 $608,495
 $26,255,552
 $26,864,047
$72,328
 $4,400
 $5,320
 $850,075
 $9,283
 $941,406
 $23,897,662
 $24,839,068
Real estate – construction4,345
 827
 415
 5,712
 2,664
 13,963
 2,393,548
 2,407,511
522
 1,062
 2,782
 1,214
 3,315
 8,895
 2,206,377
 2,215,272
Commercial real estate – mortgage7,865
 829
 807
 71,889
 5,425
 86,815
 10,560,579
 10,647,394
7,614
 369
 783
 63,593
 5,141
 77,500
 11,284,130
 11,361,630
Residential real estate – mortgage42,126
 18,321
 1,507
 117,602
 65,173
 244,729
 13,345,540
 13,590,269
56,204
 21,200
 3,929
 117,243
 63,008
 261,584
 13,195,851
 13,457,435
Equity lines of credit8,959
 3,779
 1,010
 33,991
 
 47,739
 2,385,631
 2,433,370
8,173
 4,477
 2,417
 32,642
 
 47,709
 2,446,759
 2,494,468
Equity loans7,027
 1,447
 443
 13,925
 37,132
 59,974
 487,593
 547,567
5,567
 1,694
 353
 13,198
 36,053
 56,865
 422,510
 479,375
Credit card4,876
 3,850
 9,413
 
 
 18,139
 587,166
 605,305
5,696
 4,264
 10,175
 
 
 20,135
 579,727
 599,862
Consumer direct8,239
 3,201
 2,951
 682
 868
 15,941
 979,711
 995,652
12,099
 4,725
 4,191
 765
 759
 22,539
 1,164,288
 1,186,827
Consumer indirect61,460
 11,916
 4,149
 6,386
 
 83,911
 3,505,845
 3,589,756
73,045
 20,165
 7,070
 7,019
 
 107,299
 3,088,936
 3,196,235
Covered loans5,147
 2,152
 36,783
 693
 
 44,775
 379,044
 423,819
4,075
 3,844
 28,505
 269
 
 36,693
 344,418
 381,111
Total loans$167,881
 $56,269
 $60,490
 $819,034
 $120,807
 $1,224,481
 $60,880,209
 $62,104,690
$245,323
 $66,200
 $65,525
 $1,086,018
 $117,559
 $1,580,625
 $58,630,658
 $60,211,283
 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
 (In Thousands)
Commercial, financial and agricultural$8,197
 $4,215
 $3,567
 $161,591
 $9,402
 $186,972
 $25,835,402
 $26,022,374
Real estate – construction2,864
 91
 421
 5,908
 2,247
 11,531
 2,342,722
 2,354,253
Commercial real estate – mortgage3,843
 1,461
 2,237
 69,953
 33,904
 111,398
 10,341,882
 10,453,280
Residential real estate – mortgage47,323
 19,540
 1,961
 113,234
 67,343
 249,401
 13,743,884
 13,993,285
Equity lines of credit8,263
 4,371
 2,883
 35,023
 
 50,540
 2,369,275
 2,419,815
Equity loans6,356
 2,194
 704
 15,614
 37,108
 61,976
 518,828
 580,804
Credit card5,563
 4,622
 9,718
 
 
 19,903
 607,456
 627,359
Consumer direct7,648
 3,801
 3,537
 561
 908
 16,455
 920,416
 936,871
Consumer indirect73,438
 17,167
 5,629
 5,027
 
 101,261
 3,393,821
 3,495,082
Covered loans4,862
 3,454
 37,972
 134
 
 46,422
 394,539
 440,961
Total loans$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, 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.

The following table provides a breakout of TDRs, including nonaccrual loans and covered loans and excluding loans classified as held for sale.
March 31, 2016September 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 Total30-59 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$
 $121
 $
 $15
 $136
 $9,424
 $9,560
$33
 $
 $
 $28,739
 $28,772
 $9,250
 $38,022
Real estate – construction
 
 
 3,855
 3,855
 2,664
 6,519

 
 
 585
 585
 3,315
 3,900
Commercial real estate – mortgage
 
 
 5,385
 5,385
 5,425
 10,810

 
 
 4,136
 4,136
 5,141
 9,277
Residential real estate – mortgage3,635
 594
 433
 30,700
 35,362
 60,511
 95,873
3,392
 389
 420
 35,562
 39,763
 58,807
 98,570
Equity lines of credit
 
 
 26,739
 26,739
 
 26,739

 
 
 24,507
 24,507
 
 24,507
Equity loans1,664
 736
 58
 8,648
 11,106
 34,674
 45,780
1,837
 766
 198
 7,066
 9,867
 33,252
 43,119
Credit card
 
 
 
 
 
 

 
 
 
 
 
 
Consumer direct
 
 
 22
 22
 868
 890

 
 
 37
 37
 759
 796
Consumer indirect
 
 
 1,990
 1,990
 
 1,990

 
 
 2,597
 2,597
 
 2,597
Covered loans
 
 
 
 
 
 

 
 
 27
 27
 
 27
Total loans$5,299
 $1,451
 $491
 $77,354
 $84,595
 $113,566
 $198,161
$5,262
 $1,155
 $618
 $103,256
 $110,291
 $110,524
 $220,815
 December 31, 2015
 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Nonaccrual Total Past Due and Nonaccrual Not Past Due or Nonaccrual Total
 (In Thousands)
Commercial, financial and agricultural$
 $
 $
 $131
 $131
 $9,402
 $9,533
Real estate – construction
 
 
 495
 495
 2,247
 2,742
Commercial real estate – mortgage
 
 
 7,205
 7,205
 33,904
 41,109
Residential real estate – mortgage2,188
 1,935
 498
 30,174
 34,795
 62,722
 97,517
Equity lines of credit
 
 
 27,176
 27,176
 
 27,176
Equity loans1,737
 782
 376
 9,844
 12,739
 34,213
 46,952
Credit card
 
 
 
 
 
 
Consumer direct
 
 
 27
 27
 908
 935
Consumer indirect
 
 
 1,853
 1,853
 
 1,853
Covered loans
 
 
 8
 8
 
 8
Total loans$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 March 31,September 30, 2016, $1.91.2 million of TDR modifications included an interest rate concession and $7.036.5 million of TDR modifications resulted from modifications to the loan’s structure. During the three months ended March 31,September 30, 2015, $300 thousand$2.0 million of TDR modifications included an interest rate concession and $4.5$4.7 million of TDR modifications resulted from modifications to the loan’s structure. During the nine months ended September 30, 2016, $4.2 million of TDR modifications included an interest rate concession and $49.8 million of TDR modifications resulted from modifications to the loan’s structure. During the nine

months ended September 30, 2015, $2.9 million of TDR modifications included an interest rate concession and $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 March 31, 2016 Three Months Ended March 31, 2015Three 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 InvestmentNumber of Contracts Post-Modification Outstanding Recorded Investment Number of Contracts Post-Modification Outstanding Recorded Investment
(Dollars in Thousands)(Dollars in Thousands)
Commercial, financial and agricultural3
 $262
 1
 $75
4
 $31,676
 2
 $69
Real estate – construction1
 3,392
 
 
1
 112
 
 
Commercial real estate – mortgage3
 1,275
 
 

 
 3
 532
Residential real estate – mortgage17
 2,338
 11
 1,740
21
 2,868
 14
 3,326
Equity lines of credit8
 977
 31
 1,913
30
 1,468
 27
 1,488
Equity loans3
 103
 14
 718
6
 635
 8
 340
Credit card
 
 
 

 
 
 
Consumer direct
 
 
 
2
 15
 4
 325
Consumer indirect30
 515
 22
 379
56
 917
 31
 549
Covered loans
 
 1
 5

 
 1
 8
 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
 (Dollars in Thousands)
Commercial, financial and agricultural9
 $32,026
 5
 $380
Real estate – construction2
 3,504
 
 
Commercial real estate – mortgage5
 1,431
 4
 758
Residential real estate – mortgage59
 10,654
 36
 7,571
Equity lines of credit66
 3,237
 86
 4,752
Equity loans15
 1,129
 28
 1,836
Credit card
 
 
 
Consumer direct3
 24
 21
 627
Consumer indirect119
 1,999
 53
 928
Covered loans
 
 3
 29
For the three and nine months ended March 31,September 30, 2016 and 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.

The following table providestables 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 March 31, 2016 Three Months Ended March 31, 2015Three Months Ended September 30, 2016 Three Months Ended September 30, 2015
Number of Contracts Recorded Investment at Default Number of Contracts Recorded Investment at DefaultNumber 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
 
 1
 178

 
 
 
Residential real estate – mortgage
 
 4
 647

 
 1
 119
Equity lines of credit
 
 
 
8
 204
 1
 
Equity loans
 
 2
 161
1
 42
 1
 55
Credit card
 
 
 

 
 
 
Consumer direct
 
 
 

 
 1
 100
Consumer indirect
 
 1
 18
1
 13
 
 
Covered loans
 
 
 

 
 1
 18
 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
 (Dollars in Thousands)
Commercial, financial and agricultural
 $
 
 $
Real estate – construction
 
 1
 377
Commercial real estate – mortgage
 
 1
 178
Residential real estate – mortgage
 
 6
 862
Equity lines of credit8
 204
 1
 
Equity loans1
 42
 3
 216
Credit card
 
 
 
Consumer direct
 
 1
 100
Consumer indirect2
 32
 1
 18
Covered loans
 
 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 March 31,September 30, 2016 and December 31, 2015, there were $4.021.9 million and $5.7 million, respectively, of commitments to lend additional funds to borrowers whose terms have been modified in a TDR.
Foreclosure Proceedings
OREO totaled $18$22 million and $21 million at March 31,September 30, 2016 and December 31, 2015, respectively. OREO included $16$20 million and $17 million of foreclosed residential real estate properties at March 31,September 30, 2016 and December 31, 2015, respectively. As of March 31,September 30, 2016 and December 31, 2015, there were $29 million and $30 million, respectively, of residential real estate loans secured by residential real estate properties for which formal foreclosure proceedings were in process.

(4)(5) Loan Sales and Servicing
Loans held for sale were $97$102 million and $71 million at March 31,September 30, 2016 and December 31, 2015, respectively. Loans held for sale at March 31,September 30, 2016 and December 31, 2015 were comprised entirely of residential real estate - mortgage loans.
The following table summarizes the Company's activity in the loans held for sale portfolio and loan sales, excluding activity related to loans originated for sale in the secondary market.
Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
2016 20152016 2015 2016 2015
(In Thousands)(In Thousands)
Loans transferred from held for investment to held for sale$764,022
 $
$
 $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 sold760,297
 8
121,745
 404,674
 1,007,096
 415,156
The following table summarizes the Company's sales of loans originated for sale in the secondary market.
Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
2016 20152016 2015 2016 2015
(In Thousands)(In Thousands)
Residential real estate loans originated for sale in the secondary market sold (1)$128,911
 $244,573
$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)5,768
 10,569
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
The following table summarizes the Company's activity related to residential real estate mortgage loans sold with retained servicing.
Three Months Ended March 31,Three Months Ended September 30, Nine Months Ended September 30,
2016 20152016 2015 2016 2015
(In Thousands)(In Thousands)
Residential real estate mortgage loans sold with retained servicing (1)(3)$444,807
 $244,573
$199,073
 $724,493
 $798,756
 $1,308,853
Servicing fees recognized (2)(4)6,063
 4,804
6,710
 5,802
 19,376
 15,741
(1)(3)There is no recourse to the Company for the failures of borrowers to pay loans when due.
(2)(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 related MSRs.
March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
(In Thousands)(In Thousands)
Recorded balance of residential real estate mortgage loans sold with retained servicing (1)(5)$4,735,750
 $4,444,602
$4,702,178
 $4,444,602
MSRs (2)(6)40,717
 44,541
39,027
 44,541
(1)(5)These loans are not included in loans on the Company's Unaudited Condensed Consolidated Balance Sheets.
(2)(6)Recorded under the fair value method and included in other assets on the Company's Unaudited Condensed Consolidated Balance Sheets.

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 March 31,Three Months Ended September 30, Nine Months Ended September 30,
2016 20152016 2015 2016 2015
(In Thousands)(In Thousands)
Carrying value, at beginning of period$44,541
 $35,488
$36,496
 $40,871
 $44,541
 $35,488
Additions4,407
 2,759
1,933
 6,844
 7,583
 13,566
Increase (decrease) in fair value:          
Due to changes in valuation inputs or assumptions(5,762) (2,592)3,250
 (5,485) (5,391) (5,631)
Due to other changes in fair value (1)(7)(2,469) (442)(2,652) (992) (7,706) (2,185)
Carrying value, at end of period$40,717
 $35,213
$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 March 31,September 30, 2016 and December 31, 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:
March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
(Dollars in Thousands)(Dollars in Thousands)
Fair value of MSRs$40,717
 $44,541
$39,027
 $44,541
Composition of residential loans serviced for others:      
Fixed rate mortgage loans96.9% 96.8%97.2% 96.8%
Adjustable rate mortgage loans3.1
 3.2
2.8
 3.2
Total100.0% 100.0%100.0% 100.0%
Weighted average life (in years)4.6
 5.4
4.4
 5.4
Prepayment speed:10.7% 12.4%20.6% 12.4%
Effect on fair value of a 10% increase$(1,747) $(1,547)$(1,834) $(1,547)
Effect on fair value of a 20% increase(3,351) (2,987)(3,512) (2,987)
Weighted average option adjusted spread:8.1% 9.0%8.1% 9.0%
Effect on fair value of a 10% increase$(1,358) $(1,504)$(1,132) $(1,504)
Effect on fair value of a 20% increase(2,363) (2,911)(2,146) (2,911)
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.

(5)(6) Derivatives and Hedging
The Company is a party to derivative instruments in the normal course of business 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, 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.
March 31, 2016 December 31, 2015September 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
 $99,446
 $
 $2,123,950
 $59,975
 $9,405
$2,123,950
 $95,671
 $
 $2,123,950
 $59,975
 $9,405
Total fair value hedges  99,446
 
   59,975
 9,405
  95,671
 
   59,975
 9,405
Cash flow hedges:                      
Interest rate contracts:                      
Swaps related to commercial loans1,900,000
 7,806
 
 1,900,000
 1,574
 782
1,725,000
 4,862
 
 1,900,000
 1,574
 782
Swaps related to FHLB advances320,000
 
 13,598
 320,000
 
 10,858
120,000
 
 11,846
 320,000
 
 10,858
Foreign currency contracts:           
Forwards related to currency fluctuations5,593
 
 389
 8,318
 
 40
Total cash flow hedges  7,806
 13,598
   1,574
 11,640
  4,862
 12,235
   1,574
 11,680
Total derivatives designated as hedging instruments  $107,252
 $13,598
   $61,549
 $21,045
  $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 contracts related to held for sale mortgages$813,000
 $1,064
 $1,390
 $216,500
 $502
 $217
$225,000
 $107
 $1,005
 $216,500
 $502
 $217
Interest rate lock commitments184,581
 3,696
 
 175,002
 2,880
 6
220,963
 4,532
 3
 175,002
 2,880
 6
Equity contracts:   ��                  
Purchased equity option related to equity-linked CDs867,043
 64,666
 
 876,649
 59,375
 
839,895
 61,157
 
 876,649
 59,375
 
Written equity option related to equity-linked CDs816,894
 
 61,115
 831,480
 
 56,559
783,256
 
 57,230
 831,480
 
 56,559
Foreign exchange contracts:                      
Forwards and swaps related to commercial loans502,987
 1,381
 5,235
 479,072
 3,821
 752
393,264
 849
 1,601
 479,072
 3,821
 752
Spots related to commercial loans38,929
 80
 3
 54,511
 6
 372
42,694
 49
 
 54,511
 6
 372
Swap associated with sale of Visa, Inc. Class B shares66,959
 
 1,674
 67,896
 
 1,697
72,405
 
 1,810
 67,896
 
 1,697
Futures contracts (3)330,000
 
 
 390,000
 
 
210,000
 
 
 390,000
 
 
Trading account assets and liabilities:                      
Interest rate contracts for customers26,289,240
 488,532
 424,520
 23,370,927
 303,944
 238,611
28,597,938
 518,406
 458,763
 23,370,927
 303,944
 238,611
Commodity contracts for customers77,957
 8,867
 8,858
 114,336
 14,127
 14,110
21,692
 2,093
 2,093
 114,336
 14,127
 14,110
Foreign exchange contracts for customers376,841
 9,463
 8,174
 425,946
 9,899
 8,578
900,644
 13,027
 10,997
 425,946
 9,899
 8,578
Total trading account assets and liabilities  506,862
 441,552
   327,970
 261,299
  533,526
 471,853
   327,970
 261,299
Total free-standing derivative instruments not designated as hedging instruments  $577,749
 $510,969
   $394,554
 $320,902
  $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 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 March 31,September 30, 2016 and 2015 related to hedged firm commitments no longer qualifying as a fair value hedge. At March 31,September 30, 2016, the fair value hedges had a weighted average expected remaining term of 4.94.4 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 Gain (Loss) for the
Condensed Consolidated Three Months Ended March 31,Condensed Consolidated Three Months Ended September 30, Nine Months Ended September 30,
Statements of Income Caption 2016 2015Statements of Income Caption 2016 2015 2016 2015
  (In Thousands)  (In Thousands)
Change in fair value of interest rate contracts:Change in fair value of interest rate contracts:    Change in fair value of interest rate contracts:        
Interest rate swaps hedging long term debtInterest on FHLB and other borrowings $48,876
 $10,118
Interest on FHLB and other borrowings $(20,209) $40,416
 $45,101
 $10,383
Hedged long term debtInterest on FHLB and other borrowings (44,731) (9,413)Interest on FHLB and other borrowings 19,246
 (38,634) (39,978) (12,511)
Other gains on interest rate contracts:    Other gains on interest rate contracts:        
Interest and amortization related to interest rate swaps on hedged long term debtInterest on FHLB and other borrowings 10,790
 9,566
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 March 31,September 30, 2016 and 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 March 31,September 30, 2016 and 2015.
At March 31,September 30, 2016, cash flow hedges not terminated had a net fair value of $(5.8)(7.4) million and a weighted average life of 1.31.1 years. Based on the current interest rate environment,Net losses of $678 thousand1.2 million of losses are expected to be 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 5.34.8 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 
 March 31,
 2016 2015
 (In Thousands)
Interest rate contracts:   
Net change in amount recognized in other comprehensive income$2,709
 $2,059
Amount reclassified from accumulated other comprehensive income (loss) into net interest income519
 1,047
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 income702
 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.
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 March 31,Condensed Consolidated Three Months Ended September 30, Nine Months Ended September 30,
Statements of Income Caption 2016 2015Statements of Income Caption 2016 2015 2016 2015
 (In Thousands) (In Thousands)
Futures contracts
Mortgage banking income
 and corporate and correspondent investment sales
 $(240) $47
Mortgage banking income
 and corporate and correspondent investment sales
 $86
 $(248) $(229) $(199)
Option contracts related to mortgage servicing rightsMortgage banking income (105) (195)Mortgage banking income 
 
 (264) (195)
Interest rate contracts:            
Forward contracts related to residential mortgage loans held for saleMortgage banking income (1,455) (400)Mortgage banking income 1,094
 (2,317) (2,027) 1,679
Interest rate lock commitmentsMortgage banking income 822
 2,669
Mortgage banking income (162) 308
 1,655
 1,447
Interest rate contracts for customersCorporate and correspondent investment sales 3,540
 4,639
Corporate and correspondent investment sales 5,371
 4,961
 14,780
 21,490
Commodity contracts:            
Commodity contracts for customersCorporate and correspondent investment sales (2) 14
Corporate and correspondent investment sales (1) (2) (6) 7
Equity contracts:            
Purchased equity option related to equity-linked CDsOther expense 5,291
 (6,288)Other expense (3,716) (13,960) 1,782
 (27,995)
Written equity option related to equity-linked CDsOther expense (4,556) 6,360
Other expense 3,625
 13,652
 (672) 27,712
Foreign currency contracts:            
Forward and swap contracts related to commercial loansOther income (13,947) 46,567
Other income (1,517) 17,181
 (5,173) 40,265
Spot contracts related to commercial loansOther income (1,108) (6,895)Other income 1,471
 (4,143) 91
 (7,663)
Foreign currency exchange contracts for customersCorporate and correspondent investment sales 431
 380
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.
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 March 31,September 30, 2016, interest rate swap agreements and options classified as trading were substantially matched. The

Company had credit risk of $507534 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 no material$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 March 31,September 30, 2016, respectively. There were $15 thousand and $9 thousand of net credit losses associated with derivative instruments classified as trading for the three and nine months ended September 30, 2015.

At March 31,September 30, 2016 and December 31, 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 March 31,September 30, 2016 have credit risk of $107101 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 March 31,September 30, 2016 and 2015. At March 31,September 30, 2016 and December 31, 2015, there were no nonperforming derivative positions classified as nontrading.
As of March 31,September 30, 2016 and December 31, 2015, the Company had recorded the right to reclaim cash collateral of $269295 million and $162 million, respectively, within other assets on the Company’s Unaudited Condensed Consolidated Balance Sheets and had recorded the obligation to return cash collateral of $5039 million and $40 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 March 31,September 30, 2016 was $6461 million for which the Company has collateral requirements of $6360 million in the normal course of business. If the credit risk-related contingent features underlying these agreements had been triggered on March 31,September 30, 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, 2015 was $46 million for which the Company had collateral requirements of $45 million in the normal course of business. If the credit risk-related contingent features underlying these agreements had been triggered on December 31, 2015, the Company’s collateral requirements to its counterparties would have increased by $1 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.

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 Collateral Received/Pledged (1)
 
Cash Collateral Received/ Pledged (1)
 Net AmountGross 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)
March 31, 2016           
September 30, 2016           
Derivative financial assets:                      
Subject to a master netting arrangement$273,520
 $
 $273,520
 $1,322
 $42,508
 $229,690
$285,731
 $
 $285,731
 $109
 $35,882
 $249,740
Not subject to a master netting arrangement411,481
 
 411,481
 
 
 411,481
415,022
 
 415,022
 
 
 415,022
Total derivative financial assets$685,001
 $
 $685,001
 $1,322
 $42,508
 $641,171
$700,753
 $
 $700,753
 $109
 $35,882
 $664,762
                      
Derivative financial liabilities:                      
Subject to a master netting arrangement$443,284
 $
 $443,284
 $28,990
 $264,679
 $149,615
$476,133
 $
 $476,133
 $24,862
 $295,448
 $155,823
Not subject to a master netting arrangement81,283
 
 81,283
 
 
 81,283
69,604
 
 69,604
 
 
 69,604
Total derivative financial liabilities$524,567
 $
 $524,567
 $28,990
 $264,679
 $230,898
$545,737
 $
 $545,737
 $24,862
 $295,448
 $225,427
                      
December 31, 2015                      
Derivative financial assets:                      
Subject to a master netting arrangement$191,061
 $
 $191,061
 $
 $33,517
 $157,544
$191,061
 $
 $191,061
 $
 $33,517
 $157,544
Not subject to a master netting arrangement265,042
 
 265,042
 
 
 265,042
265,042
 
 265,042
 
 
 265,042
Total derivative financial assets$456,103
 $
 $456,103
 $
 $33,517
 $422,586
$456,103
 $
 $456,103
 $
 $33,517
 $422,586
                      
Derivative financial liabilities:                      
Subject to a master netting arrangement$269,255
 $
 $269,255
 $23,856
 $159,594
 $85,805
$269,295
 $
 $269,295
 $23,856
 $159,594
 $85,845
Not subject to a master netting arrangement72,692
 
 72,692
 
 
 72,692
72,692
 
 72,692
 
 
 72,692
Total derivative financial liabilities$341,947
 $
 $341,947
 $23,856
 $159,594
 $158,497
$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.
(67) Securities Financing Activities
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.
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.
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 AmountGross 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)
March 31, 2016           
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$5,190,587
 $4,993,322
 $197,265
 $197,265
 $
 $
$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$5,141,613
 $4,993,322
 $148,291
 $148,291
 $
 $
$3,881,978
 $3,795,800
 $86,178
 $86,178
 $
 $
                      
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$5,282,661
 $5,003,555
 $279,106
 $279,106
 $
 $
$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$5,080,164
 $5,003,555
 $76,609
 $76,609
 $
 $
$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
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.
 Remaining Contractual Maturity of the Agreements Remaining Contractual Maturity of the Agreements
 Overnight and Continuous Up to 30 days 30 - 90 days Greater Than 90 days Total Overnight and Continuous Up to 30 days 30 - 90 days Greater Than 90 days Total
 (In Thousands) (In Thousands)
March 31, 2016          
September 30, 2016          
Securities sold under agreements to repurchase:Securities sold under agreements to repurchase:        Securities sold under agreements to repurchase:        
U.S. Treasury and other U.S. government agencies $3,004,194
 $710,940
 $762,955
 $
 $4,478,089
 $1,557,005
 $602,850
 $1,632,513
 $
 $3,792,368
Mortgage-backed securities 
 547,517
 
 
 547,517
 
 
 89,610
 
 89,610
Collateralized mortgage obligations 
 116,007
 
 
 116,007
Total $3,004,194
 $1,374,464
 $762,955
 $
 $5,141,613
 $1,557,005
 $602,850
 $1,722,123
 $
 $3,881,978
                    
December 31, 2015                    
Securities sold under agreements to repurchase:Securities sold under agreements to repurchase:        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
 $3,214,085
 $232,924
 $518,623
 $
 $3,965,632
Mortgage-backed securities 
 
 976,449
 
 976,449
 
 
 976,449
 
 976,449
Collateralized mortgage obligations 
 
 138,083
 
 138,083
 
 
 138,083
 
 138,083
Total $3,214,085
 $232,924
 $1,633,155
 $
 $5,080,164
 $3,214,085
 $232,924
 $1,633,155
 $
 $5,080,164
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 March 31,September 30, 2016, the fair value of collateral received related to securities purchased under agreements to resell was $5.1$4.0 billion and the fair value of collateral pledged for securities sold under agreements to repurchase was $4.5$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:
March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
(In Thousands)(In Thousands)
Commitments to extend credit$27,309,430
 $27,853,409
$26,736,536
 $27,853,409
Standby and commercial letters of credit1,511,613
 1,709,145
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 March 31,September 30, 2016 and December 31, 2015, the recorded amount of these deferred fees was $6.4$6.9 million and $6.0 million, respectively. The Company holds various assets as collateral supporting those commitments for which collateral is deemed necessary. At March 31,September 30, 2016, the maximum potential amount of future undiscounted payments the Company could be required to make under outstanding standby letters of credit was $1.5$1.4 billion. At March 31,September 30, 2016 and December 31, 2015, the Company had reserves related to letters of credit and unfunded commitments recorded in accrued expenses and other liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheet of $111$101 million and $85 million, respectively.
Loan Sale Recourse
The Company has potential recourse related to FNMA securitizations. At both March 31,September 30, 2016 and December 31, 2015, the amount of potential recourse was $19 million of which the Company had reserved $658$680 thousand and $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 March 31,September 30, 2016 and December 31, 2015, the Company 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 March 31,September 30, 2016 and December 31, 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 $146$147 million and $145 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 March 31,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 legal proceedings.
Set forth below are descriptions of certain of the Company’s legal proceedings.
In February 2011, BBVA 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 one of the underwriters.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 discoverydiscover the alleged misrepresentations.misstatements. The plaintiff seeks unspecified monetary relief. The courtDistrict Court granted the underwriter defendants’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 that BBVA Compass is infringing five patents owned by the plaintiff and related to the security infrastructure for 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, BBVA Compass was named as a defendant in a lawsuit filed in the Circuit Court of the Fourth Judicial Circuit in Duval County, Florida, Jack C. Demetree, et al. v. BBVA Compass, wherein the plaintiffs allege that their accountant stole approximately $16.4 million through unauthorized transactions on their accounts from 2006 to 2013. The plaintiffs seek unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.
In January 2016, BSI was named as a defendant in a lawsuit filed in the United States District Court for the Southern District of Texas, In re Plains All American Pipeline, L.P. Securities Litigation, wherein the plaintiffs challenge statements made in registration statementsmaterials and prospectuses filed with the 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 one of the underwriters.an underwriter. The plaintiffs seek unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.
The Company (including 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 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. The Company is cooperating with the Federal Reserve Board as it considers potential enforcement action against BSI and the Company including the imposition of civil money penalties 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 March 31,September 30, 2016, the Company had accrued legal reserves in the amount of $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" if "the chance of the future event or events occurring is more than remote but less than likely" and an event is "remote" if "the chance of the future event or events occurring is slight." At March 31,September 30, 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.
Income Tax Review
The Company is subject to review and examination from various tax authorities. The Company is currently under examination by a number of states, and has received notices of proposed adjustments related to 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 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.
At both March 31,September 30, 2016 and December 31, 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 $1.9$(478) thousand and $1.4 million and $548 thousand resulting from changes in fair value of these loans were recorded in noninterest income during the three months ended March 31,September 30, 2016 and 2015, respectively. Net gains (losses) of $2.1 million and $(651) thousand resulting from changes in fair value of these loans were recorded in noninterest income during the nine months ended September 30, 2016 and 2015, respectively.
The Company also had fair value changes on forward contracts related to residential mortgage loans held for sale of approximately $(1.5)$1.1 million and $(400) thousand$(2.3) million for the three months ended March 31,September 30, 2016 and 2015, respectively. The Company also had fair value changes on forward contracts related to residential mortgage loans held for sale of approximately $(2.0) million and $1.7 million for the nine months ended September 30, 2016 and 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 DifferenceAggregate Fair Value Aggregate Unpaid Principal Balance Difference
(In Thousands)(In Thousands)
March 31, 2016     
September 30, 2016     
Residential mortgage loans held for sale$96,784
 $92,882
 $3,902
$101,843
 $97,712
 $4,131
December 31, 2015          
Residential mortgage loans held for sale$70,582
 $68,553
 $2,029
$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. 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.



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 InputsFair Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs
March 31, 2016 (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$3,843,167
 $3,843,167
 $
 $
$3,512,398
 $3,512,398
 $
 $
Collateralized mortgage obligations518
 
 518
 
State and political subdivisions1,173
 
 1,173
 
1,183
 
 1,183
 
Other debt securities6,260
 
 6,260
 
2,852
 
 2,852
 
Interest rate contracts488,532
 
 488,532
 
518,406
 
 518,406
 
Commodity contracts8,867
 
 8,867
 
2,093
 
 2,093
 
Foreign exchange contracts9,463
 
 9,463
 
13,027
 
 13,027
 
Other trading assets1,071
 
 
 1,071
984
 
 
 984
Total trading account assets4,358,533
 3,843,167
 514,295
 1,071
4,051,461
 3,512,398
 538,079
 984
Investment securities available for sale:              
U.S. Treasury and other U.S. government agencies2,719,346
 1,515,720
 1,203,626
 
1,850,230
 717,327
 1,132,903
 
Mortgage-backed securities4,570,825
 
 4,570,825
 
4,005,637
 
 4,005,637
 
Collateralized mortgage obligations3,486,161
 
 3,486,161
 
5,207,217
 
 5,207,217
 
States and political subdivisions14,285
 
 14,285
 
10,075
 
 10,075
 
Other debt securities19,358
 19,358
 
 
16,852
 16,852
 
 
Equity securities (1)298
 45
 
 253
344
 51
 
 293
Total investment securities available for sale10,810,273
 1,535,123
 9,274,897
 253
11,090,355
 734,230
 10,355,832
 293
Loans held for sale96,784
 
 96,784
 
101,843
 
 101,843
 
Derivative assets:              
Interest rate contracts112,012
 
 108,316
 3,696
105,172
 
 100,640
 4,532
Equity contracts64,666
 
 64,666
 
61,157
 
 61,157
 
Foreign exchange contracts1,461
 
 1,461
 
898
 
 898
 
Total derivative assets178,139
 
 174,443
 3,696
167,227
 
 162,695
 4,532
Other assets40,717
 
 
 40,717
39,027
 
 
 39,027
Liabilities:              
Trading account liabilities:              
U.S. Treasury and other U.S. government agencies$3,773,727
 $3,773,727
 $
 $
$3,540,472
 $3,540,472
 $
 $
Other debt securities1,054
 
 1,054
 
751
 
 751
 
Interest rate contracts424,520
 
 424,520
 
458,763
 
 458,763
 
Commodity contracts8,858
 
 8,858
 
2,093
 
 2,093
 
Foreign exchange contracts8,174
 
 8,174
 
10,997
 
 10,997
 
Total trading account liabilities4,216,333
 3,773,727
 442,606
 
4,013,076
 3,540,472
 472,604
 
Derivative liabilities:              
Interest rate contracts14,988
 
 14,988
 
12,854
 
 12,851
 3
Equity contracts61,115
 
 61,115
 
57,230
 
 57,230
 
Foreign exchange contracts5,238
 
 5,238
 
1,990
 
 1,990
 
Total derivative liabilities81,341
 
 81,341
 
72,074
 
 72,071
 3
(1)
Excludes $456427 million of FHLB and Federal Reserve stock required to be owned by the Company at March 31,September 30, 2016. These securities are carried at par.

  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 InputsFair Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs
December 31, 2015 (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$3,805,269
 $3,805,269
 $
 $
$3,805,269
 $3,805,269
 $
 $
State and political subdivisions1,275
 
 1,275
 
1,275
 
 1,275
 
Other debt securities2,501
 
 2,501
 
2,501
 
 2,501
 
Interest rate contracts303,944
 
 303,944
 
303,944
 
 303,944
 
Commodity contracts14,127
 
 14,127
 
14,127
 
 14,127
 
Foreign exchange contracts9,899
 
 9,899
 
9,899
 
 9,899
 
Other trading assets1,117
 
 
 1,117
1,117
 
 
 1,117
Total trading account assets4,138,132
 3,805,269
 331,746
 1,117
4,138,132
 3,805,269
 331,746
 1,117
Investment securities available for sale:              
U.S. Treasury and other U.S. government agencies3,211,492
 1,982,408
 1,229,084
 
3,211,492
 1,982,408
 1,229,084
 
Mortgage-backed securities4,590,262
 
 4,590,262
 
4,590,262
 
 4,590,262
 
Collateralized mortgage obligations2,705,256
 
 2,705,256
 
2,705,256
 
 2,705,256
 
States and political subdivisions15,887
 
 15,887
 
15,887
 
 15,887
 
Other debt securities24,045
 24,045
 
 
24,045
 24,045
 
 
Equity securities (1)294
 41
 
 253
294
 41
 
 253
Total investment securities available for sale10,547,236
 2,006,494
 8,540,489
 253
10,547,236
 2,006,494
 8,540,489
 253
Loans held for sale70,582
 
 70,582
 
70,582
 
 70,582
 
Derivative assets:              
Interest rate contracts64,931
 
 62,051
 2,880
64,931
 
 62,051
 2,880
Equity contracts59,375
 
 59,375
 
59,375
 
 59,375
 
Foreign exchange contracts3,827
 
 3,827
 
3,827
 
 3,827
 
Total derivative assets128,133
 
 125,253
 2,880
128,133
 
 125,253
 2,880
Other assets44,541
 
 
 44,541
44,541
 
 
 44,541
Liabilities:              
Trading account liabilities:              
U.S. Treasury and other U.S. government agencies$3,881,925
 $3,881,925
 $
 $
$3,881,925
 $3,881,925
 $
 $
Other debt securities719
 
 719
 
719
 
 719
 
Interest rate contracts238,611
 
 238,611
 
238,611
 
 238,611
 
Commodity contracts14,110
 
 14,110
 
14,110
 
 14,110
 
Foreign exchange contracts8,578
 
 8,578
 
8,578
 
 8,578
 
Total trading account liabilities4,143,943
 3,881,925
 262,018
 
4,143,943
 3,881,925
 262,018
 
Derivative liabilities:              
Interest rate contracts21,268
 
 21,262
 6
21,268
 
 21,262
 6
Equity contracts56,559
 
 56,559
 
56,559
 
 56,559
 
Foreign exchange contracts1,124
 
 1,124
 
1,164
 
 1,164
 
Total derivative liabilities78,951
 
 78,945
 6
78,991
 
 78,985
 6
(1)
Excludes $503 million of FHLB and Federal Reserve stock required to be owned by the Company at December 31, 2015. These securities are carried at par.

There were no transfers between Levels 1 or 2 of the fair value hierarchy for the three and nine months ended March 31,September 30, 2016 and 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 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 March 31,Other Trading Assets Equity Securities Interest Rate Contracts, net Other Assets
Three Months Ended September 30,Other Trading Assets Equity Securities Interest Rate Contracts, net Other Assets
(In Thousands)(In Thousands)
Balance, January 1, 2015$1,590
 $4
 $2,318
 $35,488
Balance, July 1, 2015$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)(154) 
 2,669
 (3,034)(147) 
 308
 (6,477)
Included in other comprehensive income
 
 
 

 
 
 
Purchases, issuances, sales and settlements:              
Purchases
 76
 
 

 
 
 
Issuances
 
 
 2,759

 
 
 6,844
Sales
 
 
 

 (1) 
 
Settlements
 
 
 

 
 
 
Balance, March 31, 2015$1,436
 $80
 $4,987
 $35,213
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at March 31, 2015$(154) $
 $2,669
 $(3,034)
Balance, September 30, 2015$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)
              
Balance, January 1, 2016$1,117
 $253
 $2,874
 $44,541
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)(46) 
 822
 (8,231)(47) 
 (162) 598
Included in other comprehensive income
 
 
 

 
 
 
Purchases, issuances, sales and settlements:              
Purchases
 
 
 

 
 
 
Issuances
 
 
 4,407

 
 
 1,933
Sales
 
 
 

 (1) 
 
Settlements
 
 
 

 
 
 
Balance, March 31, 2016$1,071
 $253
 $3,696
 $40,717
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at March 31, 2016$(46) $
 $822
 $(8,231)
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.


 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
 (In Thousands)
Balance, January 1, 2015$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)
Included in other comprehensive income
 
 
 
Purchases, issuances, sales and settlements:       
Purchases
 247
 
 
Issuances
 
 
 13,566
Sales
 (1) 
 
Settlements
 
 
 
Balance, September 30, 2015$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)
        
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.

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 March 31,September 30, 2016 and 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)
March 31, 2016 (Level 1) (Level 2) (Level 3) Three Months Ended March 31, 2016September 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 measurementsNonrecurring fair value measurements      Nonrecurring fair value measurements        
Assets:                    
Investment securities held to maturity$2,595
 $
 $
 $2,595
 $
 $(130)
Impaired loans (1)$69,032
 $
 $
 $69,032
 $(15,408)71,806
 
 
 71,806
 (9,202) (55,922)
OREO17,877
 
 
 17,877
 (699)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)
March 31, 2015 (Level 1) (Level 2) (Level 3) Three Months Ended March 31, 2015September 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 measurementsNonrecurring fair value measurements      Nonrecurring fair value measurements        
Assets:                    
Investment securities held to maturity$3,205
 $
 $
 $3,205
 $(285)$15,423
 $
 $
 $15,423
 $
 $(1,298)
Impaired loans (1)132,336
 
 
 132,336
 (3,304)169,458
 
 
 169,458
 (6,836) (11,689)
OREO17,764
 
 
 17,764
 (1,259)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 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  Quantitative Information about Level 3 Fair Value Measurements
Fair Value at Range of Unobservable InputsFair Value at Range of Unobservable Inputs
March 31, 2016 Valuation Technique Unobservable Input(s)  (Weighted Average)September 30, 2016 Valuation Technique Unobservable Input(s)  (Weighted Average)
(In Thousands) (In Thousands) 
Recurring fair value measurements:Recurring fair value measurements: Recurring fair value measurements: 
Other trading assets$1,071
 Discounted cash flow Default rate 10.5%$984
 Discounted cash flow Default rate 9.3%
  Prepayment rate 5.7% - 9.8% (7.5%)  Prepayment rate 6.3% - 11.9% (8.5%)
Interest rate contracts3,696
 Discounted cash flow Closing ratios (pull-through) 3.7% - 99.4% (62.1%)4,529
 Discounted cash flow Closing ratios (pull-through) 3.7% - 99.4% (62.0%)
  Cap grids 0.3% - 2.3% (1.1%)  Cap grids 0.2% - 2.0% (0.9%)
Other assets - MSRs40,717
 Discounted cash flow Option adjusted spread 6.1% - 18.6% (8.1%)39,027
 Discounted cash flow Option adjusted spread 6.1% - 18.6% (8.1%)
  Constant prepayment rate or life speed 1.8% - 56.8% (10.8%)  Constant prepayment rate or life speed 1.8% - 71.6% (20.6%)
  Cost to service $65 - $4,000 ($88)  Cost to service $65 - $4,000 ($88)
Nonrecurring fair value measurements:Nonrecurring fair value measurements: Nonrecurring fair value measurements: 
Investment securities held to maturity$2,595
 Discounted cash flow Prepayment rate 10.9%
  Default rate 9.2%
  Loss severity 63.7%
Impaired loans69,032
 Appraised value Appraised value 0.0% - 100.0% (33.0%)71,806
 Appraised value Appraised value 0.0% - 80.0% (27.9%)
OREO17,877
 Appraised value Appraised value 8.0% (1)21,670
 Appraised value 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.

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:
March 31, 2016September 30, 2016
Carrying Amount Estimated Fair Value Level 1 Level 2 Level 3Carrying Amount Estimated Fair Value Level 1 Level 2 Level 3
(In Thousands)(In Thousands)
Financial Instruments:                  
Assets:                  
Cash and cash equivalents$5,344,833
 $5,344,833
 $5,344,833
 $
 $
$4,426,691
 $4,426,691
 $4,426,691
 $
 $
Investment securities held to maturity1,267,953
 1,201,832
 
 
 1,201,832
1,240,850
 1,241,234
 
 
 1,241,234
Loans, net61,282,250
 58,119,601
 
 
 58,119,601
59,349,203
 55,897,095
 
 
 55,897,095
Liabilities:                  
Deposits$68,947,616
 $69,070,020
 $
 $69,070,020
 $
$67,587,337
 $67,754,047
 $
 $67,754,047
 $
FHLB and other borrowings4,383,454
 4,339,062
 
 4,339,062
 
3,671,861
 3,637,982
 
 3,637,982
 
Federal funds purchased and securities sold under agreements to repurchase893,786
 893,786
 
 893,786
 
165,573
 165,573
 
 165,573
 
Other short-term borrowings150,000
 150,000
 
 150,000
 
50,000
 50,000
 
 50,000
 
December 31, 2015December 31, 2015
Carrying Amount Estimated Fair Value Level 1 Level 2 Level 3Carrying Amount Estimated Fair Value Level 1 Level 2 Level 3
(In Thousands)(In Thousands)
Financial Instruments:                  
Assets:                  
Cash and cash equivalents$4,452,892
 $4,452,892
 $4,452,892
 $
 $
$4,496,828
 $4,496,828
 $4,496,828
 $
 $
Investment securities held to maturity1,322,676
 1,244,121
 
 
 1,244,121
1,322,676
 1,244,121
 
 
 1,244,121
Loans, net60,561,411
 57,916,215
 
 
 57,916,215
60,561,411
 57,916,215
 
 
 57,916,215
Liabilities:                  
Deposits$65,980,530
 $66,089,665
 $
 $66,089,665
 $
$65,981,766
 $66,090,901
 $
 $66,090,901
 $
FHLB and other borrowings5,438,620
 5,405,386
 
 5,405,386
 
5,438,620
 5,405,386
 
 5,405,386
 
Federal funds purchased and securities sold under agreements to repurchase750,154
 750,154
 
 750,154
 
750,154
 750,154
 
 750,154
 
Other short-term borrowings150,000
 150,000
 
 150,000
 
150,000
 150,000
 
 150,000
 

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 fund purchased, securities sold under agreements to repurchase and 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.

(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.
Three Months Ended March 31,Three Months Ended September 30,
2016 20152016 2015
Pretax Tax Expense/ (Benefit) After-tax Pretax Tax Expense/ (Benefit) After-taxPretax 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$107,725
 $39,461
 $68,264
 $64,790
 $28,202
 $36,588
Unrealized holding gains (losses) arising during period from securities available for sale$(41,149) $(15,073) $(26,076) $48,686
 $21,193
 $27,493
Less: reclassification adjustment for net gains on sale of securities in net income8,353
 3,059
 5,294
 32,832
 14,292
 18,540

 
 
 6,736
 2,932
 3,804
Net change in unrealized gains on securities available for sale99,372
 36,402
 62,970
 31,958
 13,910
 18,048
Net change in unrealized gains (losses) on securities available for sale(41,149) (15,073) (26,076) 41,950
 18,261
 23,689
Change in unamortized net holding losses on investment securities held to maturity835
 306
 529
 3,142
 1,368
 1,774
1,844
 676
 1,168
 1,886
 820
 1,066
Less: non-credit related impairment on investment securities held to maturity
 
 
 87
 38
 49

 
 
 
 
 
Change in unamortized non-credit related impairment on investment securities held to maturity351
 129
 222
 276
 120
 156
354
 129
 225
 515
 225
 290
Net change in unamortized holding losses on securities held to maturity1,186
 435
 751
 3,331
 1,450
 1,881
2,198
 805
 1,393
 2,401
 1,045
 1,356
Unrealized holding gains arising during period from cash flow hedge instruments4,275
 1,566
 2,709
 3,646
 1,587
 2,059
Unrealized holding gains (losses) arising during period from cash flow hedge instruments(2,303) (842) (1,461) 3,456
 1,414
 2,042
Change in defined benefit plans1,300
 369
 931
 2,716
 1,001
 1,715

 
 
 
 
 
Other comprehensive income$106,133
 $38,772
 $67,361
 $41,651
 $17,948
 $23,703
Other comprehensive income (loss)$(41,254) $(15,110) $(26,144) $47,807
 $20,720
 $27,087
 Nine Months Ended September 30,
 2016 2015
 Pretax Tax Expense/ (Benefit) After-tax Pretax Tax Expense/ (Benefit) After-tax
 (In Thousands)
Other comprehensive income:           
Unrealized holding gains arising during period from securities available for sale$103,507
 $37,915
 $65,592
 $69,541
 $30,271
 $39,270
Less: reclassification adjustment for net gains on sale of securities in net income30,037
 11,002
 19,035
 66,967
 29,151
 37,816
Net change in unrealized gains on securities available for sale73,470
 26,913
 46,557
 2,574
 1,120
 1,454
Change in unamortized net holding losses on investment securities held to maturity4,615
 1,691
 2,924
 8,559
 3,725
 4,834
Less: non-credit related impairment on investment securities held to maturity151
 55
 96
 87
 38
 49
Change in unamortized non-credit related impairment on investment securities held to maturity1,021
 373
 648
 1,247
 543
 704
Net change in unamortized holding losses on securities held to maturity5,485
 2,009
 3,476
 9,719
 4,230
 5,489
Unrealized holding gains arising during period from cash flow hedge instruments2,734
 1,006
 1,728
 9,105
 3,783
 5,322
Change in defined benefit plans1,300
 369
 931
 2,716
 1,001
 1,715
Other comprehensive income$82,989
 $30,297
 $52,692
 $24,114
 $10,134
 $13,980


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 TotalUnrealized 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)(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 reclassifications36,588
 2,650
 
 (49) 39,189
39,270
 8,019
 
 (49) 47,240
Amounts reclassified from accumulated other comprehensive income (loss)(16,766) (591) 1,715
 156
 (15,486)(32,982) (2,697) 1,715
 704
 (33,260)
Net current period other comprehensive income19,822
 2,059
 1,715
 107
 23,703
6,288
 5,322
 1,715
 655
 13,980
Balance, March 31, 2015$24,291
 $(5,130) $(39,406) $(7,409) $(27,654)
Balance, September 30, 2015$10,757
 $(2,372) $(39,406) $(6,861) $(37,882)
                  
Balance, January 1, 2016$(56,326) $(6,378) $(29,166) $(7,437) $(99,307)$(56,326) $(6,407) $(29,166) $(7,437) $(99,336)
Other comprehensive income before reclassifications68,264
 3,038
 
 
 71,302
Other comprehensive income (loss) before reclassifications65,592
 2,787
 
 (96) 68,283
Amounts reclassified from accumulated other comprehensive income (loss)(4,765) (329) 931
 222
 (3,941)(16,111) (1,059) 931
 648
 (15,591)
Net current period other comprehensive income63,499
 2,709
 931
 222
 67,361
49,481
 1,728
 931
 552
 52,692
Balance, March 31, 2016$7,173
 $(3,669) $(28,235) $(7,215) $(31,946)
Balance, September 30, 2016$(6,845) $(4,679) $(28,235) $(6,885) $(46,644)

The following table presents information on reclassifications out of accumulated other comprehensive income (loss).
Details About Accumulated Other Comprehensive Income (Loss) Components 
Amounts Reclassified From Accumulated Other Comprehensive Income (Loss)  (1)
 Condensed Consolidated Statement of Income Caption 
Amounts Reclassified From Accumulated Other Comprehensive Income (Loss)  (1)
 Condensed Consolidated Statement of Income Caption
 Three Months Ended March 31,  Three Months Ended September 30, Nine Months Ended September 30, 
 2016 2015  2016 2015 2016 2015 
 (In Thousands)  (In Thousands) 
Unrealized Gains on Securities Available for Sale and Transferred to Held to Maturity $8,353
 $32,832
 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
 (835) (3,142) Interest on investment securities held to maturity (1,844) (1,886) (4,615) (8,559) Interest on investment securities held to maturity
 7,518
 29,690
  (1,844) 4,850
 25,422
 58,408
 
 (2,753) (12,924) Income tax expense 676
 (2,112) (9,311) (25,426) Income tax (expense) benefit
 $4,765
 $16,766
 Net of tax $(1,168) $2,738
 $16,111
 $32,982
 Net of tax
              
Accumulated Gains (Losses) on Cash Flow Hedging Instruments $2,048
 $2,813
 Interest and fees on loans $1,654
 $3,646
 $5,587
 $9,985
 Interest and fees on loans
 (1,529) (1,766) Interest and fees on FHLB advances (952) (1,722) (3,909) (5,207) Interest and fees on FHLB advances
 519
 1,047
  702
 1,924
 1,678
 4,778
 
 (190) (456) Income tax expense (260) (839) (619) (2,081) Income tax expense
 $329
 $591
 Net of tax $442
 $1,085
 $1,059
 $2,697
 Net of tax
              
Defined Benefit Plan Adjustment $(1,300) $(2,716) (2) $
 $
 $(1,300) $(2,716) (2)
 369
 1,001
 Income tax benefit 
 
 369
 1,001
 Income tax benefit
 $(931) $(1,715) Net of tax $
 $
 $(931) $(1,715) Net of tax
              
Unamortized Impairment Losses on Investment Securities Held to Maturity $(351) $(276) Interest on investment securities held to maturity $(354) $(515) $(1,021) $(1,247) Interest on investment securities held to maturity
 129
 120
 Income tax benefit 129
 225
 373
 543
 Income tax benefit
 $(222) $(156) 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 19, Benefit Plans, in the Notes to the December 31, 2015, Consolidated Financial Statements for additional details).

(10)(11) Supplemental Disclosure for Statement of Cash Flows
The following table presents the Company’s supplemental disclosures for statement of cash flows.
Three Months Ended March 31,Nine Months Ended September 30,
2016 20152016 2015
(In Thousands)(In Thousands)
Supplemental disclosures of cash flow information:      
Interest paid$108,970
 $90,984
$339,345
 $277,140
Net income taxes paid2,658
 2,212
94,808
 145,056
Supplemental schedule of noncash investing and financing activities:      
Transfer of loans and loans held for sale to OREO$6,651
 $2,718
$21,547
 $16,552
Transfer of loans to loans held for sale764,022
 
764,022
 906,857
Change in unrealized gains on available for sale securities99,372
 31,958
Change in unrealized gains (losses) on available for sale securities73,470
 2,574
Issuance of restricted stock, net of cancellations(66) 458
1,083
 458


(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.
The following tables present the segment information for the Company’s segments.
Three Months Ended March 31, 2016Three Months Ended September 30, 2016
Consumer and Commercial Banking Corporate and Investment Banking Treasury Corporate Support and Other ConsolidatedConsumer and Commercial Banking Corporate and Investment Banking Treasury Corporate Support and Other Consolidated
(In Thousands)(In Thousands)
Net interest income (expense)$541,391
 $40,908
 $(2,372) $(63,046) $516,881
$562,339
 $26,338
 $(1,512) $(72,356) $514,809
Allocated provision for loan losses58,187
 53,427
 
 1,631
 113,245
52,358
 18,208
 
 (5,459) 65,107
Noninterest income178,913
 41,522
 11,387
 (5,243) 226,579
209,131
 50,804
 7,960
 (4,130) 263,765
Noninterest expense460,848
 78,677
 5,237
 28,357
 573,119
476,830
 34,679
 5,101
 39,661
 556,271
Net income (loss) before income tax expense (benefit)201,269
 (49,674) 3,778
 (98,277) 57,096
242,282
 24,255
 1,347
 (110,688) 157,196
Income tax expense (benefit)70,444
 (17,386) 1,322
 (31,762) 22,618
84,799
 8,489
 471
 (56,914) 36,845
Net income (loss)130,825
 (32,288) 2,456
 (66,515) 34,478
157,483
 15,766
 876
 (53,774) 120,351
Less: net income attributable to noncontrolling interests105
 
 423
 
 528
107
 
 420
 (4) 523
Net income (loss) attributable to BBVA Compass Bancshares, Inc.$130,720
 $(32,288) $2,033
 $(66,515) $33,950
$157,376
 $15,766
 $456
 $(53,770) $119,828
Average assets$55,963,143
 $12,707,022
 $16,283,929
 $7,294,978
 $92,249,072
$56,486,459
 $10,980,519
 $16,462,880
 $6,970,481
 $90,900,339
Three Months Ended March 31, 2015Three Months Ended September 30, 2015
Consumer and Commercial Banking Corporate and Investment Banking Treasury Corporate Support and Other ConsolidatedConsumer and Commercial Banking Corporate and Investment Banking Treasury Corporate Support and Other Consolidated
(In Thousands)(In Thousands)
Net interest income$484,160
 $39,886
 $18,382
 $(33,399) $509,029
Net interest income (expense)$508,900
 $40,505
 $6,228
 $(47,759) $507,874
Allocated provision for loan losses30,524
 10,973
 
 534
 42,031
27,562
 24,466
 
 (22,877) 29,151
Noninterest income171,908
 49,486
 33,856
 (5,980) 249,270
221,063
 27,514
 7,879
 4,264
 260,720
Noninterest expense426,070
 39,436
 5,097
 52,116
 522,719
469,335
 38,044
 4,656
 45,340
 557,375
Net income (loss) before income tax expense (benefit)199,474
 38,963
 47,141
 (92,029) 193,549
233,066
 5,509
 9,451
 (65,958) 182,068
Income tax expense (benefit)69,816
 13,637
 16,500
 (48,171) 51,782
81,573
 1,928
 3,308
 (34,381) 52,428
Net income (loss)129,658
 25,326
 30,641
 (43,858) 141,767
151,493
 3,581
 6,143
 (31,577) 129,640
Less: net income attributable to noncontrolling interests228
 
 429
 
 657
65
 
 426
 
 491
Net income (loss) attributable to BBVA Compass Bancshares, Inc.$129,430
 $25,326
 $30,212
 $(43,858) $141,110
$151,428
 $3,581
 $5,717
 $(31,577) $129,149
Average assets$52,627,209
 $11,834,345
 $13,572,927
 $7,052,674
 $85,087,155
$55,341,631
 $12,578,897
 $15,085,951
 $6,879,618
 $89,886,097

 Nine Months Ended September 30, 2016
 Consumer and Commercial Banking Corporate and Investment Banking Treasury Corporate Support and Other Consolidated
 (In Thousands)
Net interest income (expense)$1,659,588
 $102,050
 $(18,114) $(207,595) $1,535,929
Allocated provision for loan losses167,559
 87,729
 
 9,737
 265,025
Noninterest income622,523
 138,982
 47,407
 (13,696) 795,216
Noninterest expense1,424,343
 144,047
 15,289
 105,773
 1,689,452
Net income (loss) before income tax expense (benefit)690,209
 9,256
 14,004
 (336,801) 376,668
Income tax expense (benefit)241,573
 3,239
 4,901
 (155,165) 94,548
Net income (loss)448,636
 6,017
 9,103
 (181,636) 282,120
Less: net income attributable to noncontrolling interests306
 
 1,271
 (8) 1,569
Net income (loss) attributable to BBVA Compass Bancshares, Inc.$448,330
 $6,017
 $7,832
 $(181,628) $280,551
Average assets$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 losses79,477
 41,714
 
 (3,860) 117,331
Noninterest income627,255
 117,131
 71,072
 1,718
 817,176
Noninterest expense1,361,989
 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 interests448
 
 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 businessoperating segment based on the utilization of services provided or other appropriate indicators. Capital is allocated to the lines of businessoperating 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 structure. The 2015 segment information has been revised to conform to the 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 2016 and 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 $4.9$5.4 billion and $5.3 billion as of March 31,September 30, 2016 and December 31, 2015, respectively. The net fair value of outstanding derivative contracts between the Company and BBVA are detailed below.
March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
(In Thousands)(In Thousands)
Derivative contracts:  
Fair value hedges$24,597
 $(9,405)$34,082
 $(9,405)
Cash flow hedges(389) (40)
Free-standing derivatives not designated as hedging instruments(50,944) (20,082)(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.
March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
(In Thousands)(In Thousands)
Securities purchased under agreements to resell$94,915
 $26,404
$16,406
 $26,404
Securities sold under agreements to repurchase81,618
 74,049
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 both March 31,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 $822 thousand$1.1 million and $552$587 thousand for the three months ended March 31,September 30, 2016 and 2015, respectively, and are included in interest on other noninterestshort-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 $3.9$6.5 million and $2.4$2.7 million for the three months ended March 31,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 $6.8$19.2 million and $6.3$17.5 million for the threenine months ended March 31,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.Stock that the Company issued in December 2015. At March 31,September 30, 2016, the carrying amount of the Series A Preferred Stock was approximately $229 million. During the three months ended March 31,September 30, 2016, the Company paid $3.2$3.5 million of 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 threenine months ended March 31,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, 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 the Company for the three months ended March 31,September 30, 2016 was $34.0$119.8 million compared to $141.1$129.1 million earned during the three months ended March 31,September 30, 2015. The decrease in net income attributable to the Company was primarily due todriven by an increase in provision expense and an increase in noninterest expense, as well as lower levels of noninterest income offset in part by an increase inhigher levels of net interest income.income and a lower income tax expense.
Net interest income totaled $516.9$514.8 million for the three months ended March 31,September 30, 2016 compared to $509.0$507.9 million for the three months ended March 31,September 30, 2015. The net interest margin for the three months ended March 31,September 30, 2016 was 2.73%, a decrease of 18 basis points compared to 2.91%2.70% for the three months ended March 31,September 30, 2015. The decreaseincrease in net interest marginincome 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 March 31,September 30, 2016 reflectscompared to the runoff of higher yielding covered loans as well assame period in 2015. Net interest income was also positively impacted by the impact of lower yields in the AFS investment securities portfolio.December 2015 interest rate increase.
The provision for loan losses was $113.2$65.1 million for the three months ended March 31,September 30, 2016 compared to $42.0$29.2 million of provision for loan losses for the three months ended March 31,September 30, 2015. The increase was primarily attributable to a decline in credit quality indicators stemming from downgrades in the commercial portfolio and an increase in charge-offs related to energy portfolioloans as well as consumer direct and indirect loans during the three months ended March 31,September 30, 2016. Net charge-offs for the three months ended March 31,September 30, 2016 totaled $53.5$46.1 million which represented a $28.3$17.6 million increase compared to $25.2$28.5 million for the three months ended March 31,September 30, 2015. The increase in net charge-offs for the three months ended March 31,September 30, 2016 as compared to the corresponding period in 2015 was primarily driven by a $14.2an $8.5 million increase in net charge-offs related to energy loans as well as a $13.4$12.9 million increase in consumer direct and consumer indirect net charge-offs.
Noninterest income was $226.6$263.8 million, a decreasean increase of $22.7$3.0 million compared to the three months ended March 31,September 30, 2015. The decreaseincrease in noninterest income was largely attributable to a $24.5$16.5 million decreaseincrease in investment securities gainsbanking and an $11.6advisory fees, a $4.1 million decreaseincrease in retail investment sales and a $7.7 million increase in mortgage banking income.banking. This was offset in part by a $19.9$22.7 million increasedecrease in other noninterest income, primarily as a result of gainsa $21.1 million gain on the sale of mortgage loans not initially originated for sale in the secondary market.market recognized during the three months ended September 30, 2015 and a $6.7 million decrease in investment securities gains.

Noninterest expense was $573.1$556.3 million for the three months ended March 31,September 30, 2016, an increase of $50.4 millionrelatively flat when compared to $557.4 for the three months ended March 31,September 30, 2015. The increase in noninterest expense was primarily attributable to a $51.6 million increase in other noninterest expense stemming from an increase in provision for unfunded commitments driven by the downgrades in the energy lending portfolio.
Income tax expense was $22.6$36.8 million for the three months ended March 31,September 30, 2016 compared to $51.8$52.4 million for the three months ended March 31,September 30, 2015. This resulted in an effective tax rate of 39.6%23.4% for 2016 and 26.8%28.8% for 2015. The decrease in the effective tax rate was primarily driven by a decrease in net income before income taxes relative to permanent income tax differences in 2016.
The Company's total assets at March 31,September 30, 2016 were $92.2$89.4 billion, an increasea decrease of $2.2 billion$712 million from December 31, 2015 levels. Total loans, excluding loans held for sale, were $62.1$60.2 billion at March 31,September 30, 2016, an increasea decrease of $781 million

$1.1 billion or 1.3%1.8% from year-end December 31, 2015 levels. The growthdecrease in loans was primarily driven by an increaseslight decreases in both commercial and consumer loans. Deposits increased $3.0$1.6 billion or 4.5%2.4% compared to December 31, 2015, driven by a 3.6%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 March 31,September 30, 2016 was $12.7$12.8 billion, an increase of $94$194 million compared to December 31, 2015.
Capital
Beginning January 1, 2015, the Company began the transition period forUnder 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 phase-intransitional provisions, the Company's Tier1 and CET1 ratios were 10.99%11.64% and 10.64%11.28%, respectively, at March 31,September 30, 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 March 31,September 30, 2016 and December 31, 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 March 31,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.
RegulatoryDigital 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 MarchJanuary 2016, the Federal Reserve BankCompany announced an alliance with industry disrupter FutureAdvisor, a subsidiary of Atlanta notifiedBlackRock, 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 Bank had improved its ratingintegration of Android Pay and Samsung Pay. The release underscores the Company’s drive to Satisfactory on its most recent Community Reinvestment Act exam.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 the Company totaled $34.0$119.8 million and $141.1$129.1 million for the three months ended March 31,September 30, 2016 and 2015, respectively. The Company’s results of operations for the three months ended March 31,September 30, 2016 reflected lower net income before income tax expense primarily as a result of higher provision for loan losses offset in part by higher net interest income offset byand 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 results of operations for the nine months ended September 30, 2016 reflected lower net income before income tax expense primarily as a result of higher provision for loan losses and noninterest expense as well asand lower noninterest income offset in part by higher 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 March 31,September 30, 2016 and 2015
Net interest income totaled $516.9$514.8 million for the three months ended March 31,September 30, 2016 compared to $509.0$507.9 million for the three months ended March 31,September 30, 2015.
Net interest income on a fully taxable equivalent basis totaled $536.2$534.7 million for the three months ended March 31,September 30, 2016 compared with $527.6$527.0 million for the three months ended March 31,September 30, 2015. Net interest income on a fully taxable equivalent basis increased $8.6$7.7 million in 2016 compared to 2015. The increase in net interest income was primarily the result of an increase in total average interest earning assets driven by higher balanceslevels 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 increasea decrease in the average balances of interest bearing depositsFHLB and other borrowings and other short-term borrowings for the three months ended March 31,September 30, 2016 compared to the same period in 2015.

Net interest margin was 2.73% for the three months ended March 31,September 30, 2016 compared to 2.91%2.70% for the three months ended March 31,September 30, 2015. The 18 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 $933 million increase in the average balance of trading account securities and an $875 million 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.
The fully taxable equivalent yield for the three months ended March 31,September 30, 2016 for the loan portfolio was 3.73%3.74% compared to 3.85%3.64% for the same period in 2015. The yield on non-covered loans for the three months ended March 31, 2016 was 3.70% compared to 3.77% for the corresponding period in 2015. The yield on covered loans for the three months ended March 31, 2016 was 8.44% compared to 12.71% for the corresponding period in 2015. The decrease in yield on covered loans10 basis point increase was primarily due todriven 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 1.81%1.83% for the three months ended March 31,September 30, 2016, compared to 2.13%1.92% for the three months ended March 31,September 30, 2015. The 329 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.
The yield on trading account securities increased to 1.46%1.41% for the three months ended March 31,September 30, 2016 compared to 1.29%1.37% for the three months ended March 31,September 30, 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.
The average rate paid on FHLB and other borrowings for the three months ended September 30, 2016 was 2.06% compared to 1.28% for the corresponding period in 2015. The 78 basis point increase was primarily driven by changes in the value of interest rate contracts hedging the value of FHLB and other borrowings.
Nine Months Ended September 30, 2016 and 2015
Net interest income totaled $1.5 billion for both the nine months ended September 30, 2016 and 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, 2016 and the nine months ended September 30, 2015.
Net interest margin was 2.71% for the nine months ended September 30, 2016 compared to 2.77% for the nine months ended September 30, 2015. The 6 basis point decline in net interest margin primarily reflects the impact of lower yields in the AFS investment securities portfolio.
The fully taxable equivalent yield for the nine months ended September 30, 2016 for the loan portfolio was 3.73% compared to 3.71 % for the same period in 2015.
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. The 33 basis point decrease was primarily driven by 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.
The yield on trading account securities increased to 1.43% for the nine months ended September 30, 2016 compared to 1.34% for the nine months ended September 30, 2015 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 0.66%0.65% for the threenine months ended March 31,September 30, 2016 compared to 0.64%0.61% for the threenine months ended March 31,September 30, 2015.
The average rate paid on FHLB and other borrowings for the threenine months ended March 31,September 30, 2016 was 1.43%1.73% compared to 1.59%1.57% for the corresponding period in 2015. The 16 basis point decreaseincrease was primarily driven by changes in the value of interest rate contracts hedging the value of FHLB and other borrowings offset byas well as the impact of the $700 million issuance of subordinated notes in April 2015 under the Global Bank Note program.
The average rate on other short-term borrowings increased 7 basis points to 1.39% for the three months ended March 31, 2016 due to the effect of the increase in U.S. Treasury short positions held by BSI, as well as the impact of the increase in the federal funds rate in December 2015.


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 March 31, 2016 Three Months Ended March 31, 2015Three Months Ended September 30, 2016 Three Months Ended September 30, 2015
Average Balance Income/Expense Yield/ Rate Average Balance Income/ Expense Yield/RateAverage Balance Income/Expense Yield/ Rate Average Balance Income/ Expense Yield/Rate
(Dollars in Thousands)(Dollars in Thousands)
Assets:                      
Interest earning assets:                      
Non-covered loans$61,766,631
 $568,214
 3.70% $58,325,525
 $542,609
 3.77%
Covered loans429,332
 9,008
 8.44
 487,524
 15,280
 12.71
Loans (1) (2) (3)62,195,963
 577,222
 3.73
 58,813,049
 557,889
 3.85
61,060,433
 574,748
 3.74
 60,632,304
 555,713
 3.64
Investment securities – AFS (tax exempt) (3)
13,283
 250
 7.57
 426,278
 4,362
 4.15
9,569
 195
 8.11
 193,008
 2,044
 4.20
Investment securities – AFS (taxable)11,177,452
 46,034
 1.66
 9,532,315
 45,368
 1.93
11,363,752
 48,255
 1.69
 10,314,680
 45,316
 1.74
Total investment securities – AFS11,190,735
 46,284
 1.66
 9,958,593
 49,730
 2.03
11,373,321
 48,450
 1.69
 10,507,688
 47,360
 1.79
Investment securities – HTM (tax exempt) (3)1,085,545
 8,722
 3.23
 1,111,793
 8,487
 3.10
1,059,610
 8,672
 3.26
 1,143,158
 9,070
 3.15
Investment securities – HTM (taxable)207,231
 1,116
 2.17
 248,603
 1,176
 1.92
189,672
 1,029
 2.16
 223,371
 1,049
 1.86
Total investment securities - HTM1,292,776
 9,838
 3.06
 1,360,396
 9,663
 2.88
1,249,282
 9,701
 3.09
 1,366,529
 10,119
 2.94
Trading account securities (3)3,944,776
 14,322
 1.46
 3,011,924
 9,614
 1.29
3,637,782
 12,927
 1.41
 4,167,721
 14,431
 1.37
Other (4) (5)437,255
 4,365
 4.02
 475,641
 996
 0.85
632,030
 4,563
 2.87
 685,391
 1,666
 0.96
Total earning assets79,061,505
 652,031
 3.32
 73,619,603
 627,892
 3.46
77,952,848
 650,389
 3.32
 77,359,633
 629,289
 3.23
Noninterest earning assets:                      
Cash and due from banks4,641,498
     3,042,002
    4,387,844
     4,206,639
    
Allowance for loan losses(784,632)     (691,535)    (848,067)     (725,871)    
Net unrealized gain on investment securities available for sale198
     67,067
    25,595
     9,568
    
Other noninterest earning assets9,330,503
     9,050,018
    9,382,119
     9,036,128
    
Total assets$92,249,072
     $85,087,155
    $90,900,339
     $89,886,097
    
Liabilities:                      
Interest bearing liabilities:                      
Interest bearing demand deposits$7,085,934
 3,942
 0.22
 $7,634,040
 3,037
 0.16
$6,824,519
 4,077
 0.24
 $6,949,920
 2,943
 0.17
Savings and money market accounts25,775,565
 26,743
 0.42
 23,790,189
 26,898
 0.46
25,663,079
 24,395
 0.38
 24,414,794
 22,260
 0.36
Certificates and other time deposits14,433,919
 47,069
 1.31
 12,614,526
 39,645
 1.27
14,670,360
 47,507
 1.29
 13,158,705
 42,990
 1.30
Foreign office deposits127,121
 61
 0.19
 148,945
 73
 0.20
106,219
 52
 0.19
 165,744
 89
 0.21
Total interest bearing deposits47,422,539
 77,815
 0.66
 44,187,700
 69,653
 0.64
47,264,177
 76,031
 0.64
 44,689,163
 68,282
 0.61
FHLB and other borrowings5,064,803
 18,012
 1.43
 4,880,657
 19,106
 1.59
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)800,243
 6,157
 3.09
 939,813
 1,326
 0.57
232,451
 4,934
 8.44
 677,351
 2,506
 1.47
Other short-term borrowings4,025,428
 13,896
 1.39
 3,150,252
 10,248
 1.32
3,737,212
 13,453
 1.43
 4,370,077
 11,129
 1.01
Total interest bearing liabilities57,313,013
 115,880
 0.81
 53,158,422
 100,333
 0.77
55,355,582
 115,733
 0.83
 56,067,778
 102,339
 0.72
Noninterest bearing deposits20,061,551
     17,933,517
    20,715,562
     19,312,087
    
Other noninterest bearing liabilities2,179,817
     1,878,784
    2,018,455
     2,126,929
    
Total liabilities79,554,381
     72,970,723
    78,089,599
     77,506,794
    
Shareholder’s equity12,694,691
     12,116,432
    12,810,740
     12,379,303
    
Total liabilities and shareholder’s equity$92,249,072
     $85,087,155
    $90,900,339
     $89,886,097
    
Net interest income/net interest spread  $536,151
 2.51%   $527,559
 2.69%  $534,656
 2.49%   $526,950
 2.51%
Net interest margin    2.73%     2.91%    2.73%     2.70%
Taxable equivalent adjustment  19,270
     18,530
    19,847
     19,076
  
Net interest income  $516,881
     $509,029
    $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 1
Consolidated Average Balance and Yield/ Rate Analysis
 Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015
 Average Balance Income/Expense Yield/ Rate Average Balance Income/ Expense Yield/Rate
 (Dollars in Thousands)
Assets:           
Interest earning assets:           
Loans (1) (2) (3)61,867,590
 1,727,822
 3.73
 59,737,187
 1,659,303
 3.71
Investment securities – AFS (tax exempt) (3)
11,483
 668
 7.77
 332,492
 10,100
 4.06
Investment securities – AFS (taxable)11,246,517
 130,585
 1.55
 9,861,132
 136,483
 1.85
Total investment securities – AFS11,258,000
 131,253
 1.56
 10,193,624
 146,583
 1.92
Investment securities – HTM (tax exempt) (3)1,070,547
 25,977
 3.24
 1,129,784
 26,373
 3.12
Investment securities – HTM (taxable)198,614
 3,316
 2.23
 236,515
 3,409
 1.93
Total investment securities - HTM1,269,161
 29,293
 3.08
 1,366,299
 29,782
 2.91
Trading account securities (3)3,786,156
 40,661
 1.43
 3,779,274
 37,878
 1.34
Other (4) (5)538,977
 13,275
 3.29
 604,319
 4,027
 0.89
Total earning assets78,719,884
 1,942,304
 3.30
 75,680,703
 1,877,573
 3.32
Noninterest earning assets:           
Cash and due from banks4,584,803
     3,642,765
    
Allowance for loan losses(823,372)     (707,459)    
Net unrealized gain on investment securities available for sale15,061
     44,180
    
Other noninterest earning assets9,382,051
     9,037,333
    
Total assets$91,878,427
     $87,697,522
    
Liabilities:           
Interest bearing liabilities:           
Interest bearing demand deposits$6,912,147
 11,867
 0.23
 $7,281,588
 8,868
 0.16
Savings and money market accounts25,861,764
 75,896
 0.39
 23,890,463
 70,465
 0.39
Certificates and other time deposits14,652,400
 142,856
 1.30
 12,832,829
 123,546
 1.29
Foreign office deposits108,444
 160
 0.20
 167,220
 257
 0.21
Total interest bearing deposits47,534,755
 230,779
 0.65
 44,172,100
 203,136
 0.61
FHLB and other borrowings4,543,350
 58,919
 1.73
 5,742,906
 67,068
 1.57
Federal funds purchased and securities sold under agreements to repurchase (5)569,772
 16,525
 3.87
 832,854
 5,534
 0.89
Other short-term borrowings3,912,069
 41,281
 1.41
 3,973,734
 36,668
 1.23
Total interest bearing liabilities56,559,946
 347,504
 0.82
 54,721,594
 312,406
 0.76
Noninterest bearing deposits20,432,380
     18,749,741
    
Other noninterest bearing liabilities2,122,640
     1,944,942
    
Total liabilities79,114,966
     75,416,277
    
Shareholder’s equity12,763,461
     12,281,245
    
Total liabilities and shareholder’s equity$91,878,427
     $87,697,522
    
Net interest income/net interest spread  $1,594,800
 2.48%   $1,565,167
 2.56%
Net interest margin    2.71%     2.77%
Taxable equivalent adjustment  58,871
     56,279
  
Net interest income  $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 7, Securities Financing Activities.


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 March 31,September 30, 2016 and 2015
For the three months ended March 31,September 30, 2016, the Company recorded $113.2$65.1 million of provision for loan losses compared to $42.0$29.2 million of provision for loan losses for the three months ended March 31,September 30, 2015. The increase in provision for loan losses for the three months ended March 31,September 30, 2016 as compared to the same period in 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 2016. The Company recorded net charge-offs of $53.5$165.6 million during the threenine months ended March 31,September 30, 2016 compared to $25.2$80.3 million during the corresponding period in 2015. Included in net-charge-offs for the threenine months ended March 31,September 30, 2016 was $14.2$49.4 million of net charge-offs related to energy loans compared to no$2.7 million of net charge-offs related to energy loans for the threenine months ended March 31,September 30, 2015. Net charge-offs were 0.35%0.36% (or 0.27% excluding net charge-offs on energy loans) of average loans for the threenine months ended March 31,September 30, 2016 compared to 0.17%0.18% (or 0.19% excluding net charge-offs on energy loans) of average loans for the threenine months ended March 31,September 30, 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 March 31,Three Months Ended September 30, Nine Months Ended 
 September 30,
2016 20152016 2015 2016 2015
(In Thousands)(In Thousands)
Service charges on deposit accounts$51,492
 $53,284
$55,047
 $54,917
 $158,393
 $161,891
Card and merchant processing fees29,742
 26,183
31,256
 29,024
 92,507
 83,918
Investment banking and advisory fees34,385
 17,842
 86,324
 84,975
Money transfer income25,058
 24,868
 75,960
 68,702
Retail investment sales22,567
 25,146
30,137
 26,055
 79,689
 77,574
Investment banking and advisory fees23,604
 30,334
Asset management fees8,805
 8,096
8,778
 7,918
 25,969
 24,449
Corporate and correspondent investment sales4,413
 6,259
6,974
 6,047
 21,490
 20,290
Mortgage banking(3,434) 8,159
8,242
 554
 5,410
 21,269
Bank owned life insurance4,416
 4,788
4,170
 4,345
 13,041
 13,527
Investment securities gains, net8,353
 32,832

 6,736
 30,037
 66,967
Loss on prepayment of FHLB and other borrowings, net
 (2,549)
 
 
 (6,118)
Other76,621
 56,738
59,718
 82,414
 206,396
 199,732
Total noninterest income$226,579
 $249,270
$263,765
 $260,720
 $795,216
 $817,176
Three Months Ended March 31,September 30, 2016 and 2015
Noninterest income was $226.6$263.8 million for the three months ended March 31,September 30, 2016 compared to $249.3$260.7 million for the three months ended March 31,September 30, 2015. The decreaseincrease in noninterest income was primarily driven by decreasesincreases in mortgageinvestment banking and advisory fees, retail investment securities gains which weresales and mortgage banking partially offset by an increasea 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 the same period in 2015.
Mortgage banking for the three months ended March 31,September 30, 2016 decreased $11.6 million fromwas $8.2 million foran increase of $7.7 million compared to the three months ended March 31,September 30, 2015. Mortgage banking for the three months ended March 31,September 30, 2016 included $3.8$7.2 million of origination fees and gains on sales of mortgage loans as well as lossesand gains of $7.1 million$986 thousand related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. Mortgage banking income for the three months ended March 31,September 30, 2015 included $8.4$8.3 million of origination fees and gains on sales of mortgage loans

as well as losses of $62 thousand$7.0 million related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. The decreaseincrease in mortgage banking income for the three months ended March 31,September 30, 2016 compared to the corresponding period in 2015 was primarily driven by a sharp decline in rates during the firstthird quarter of 20162015 which negatively impacted the valuations of mortgage loans held for sale, mortgage related derivatives, and MSRs.
Investment securities gains, net decreased to $8.4by $6.7 million for the three months ended March 31,September 30, 2016 compared to $32.8 million inas there were no sales of AFS securities during the three months ended March 31, 2015.September 30, 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 March 31,September 30, 2016, other income increaseddecreased by $19.9$22.7 million primarily due toas a result of a $21.1 million gain on the recognitionsale of $16.1 million in gains from the sales of $316 million of mortgage loans and $444 million of commercial loans not initially originated for sale in the secondary market.market recognized during the three months ended September 30, 2015.

Nine Months Ended September 30, 2016 and 2015
Noninterest income was $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 driven by a $3.4 million increase related to 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, 2016 compared to $68.7 million for the nine months ended September 30, 2015 due to 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, 2015. Mortgage banking for the nine months ended September 30, 2016 included $17.2 million of origination fees and gains on sales of mortgage loans partially offset by losses of $11.9 million related to fair value adjustments on mortgage loans held for 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. The decrease in mortgage banking for the nine months ended September 30, 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 mortgage loans held for sale, mortgage related derivatives, and MSRs. In addition, mortgage production volume decreased during the nine months ended September 30, 2016 compared to the corresponding period in 2015.
Investment securities gains, net were $30.0 million for the nine months ended September 30, 2016, compared to $67.0 million in the nine months ended September 30, 2015. See "—Investment Securities" for more information related to the investment securities sales.
During the nine months ended September 30, 2015, the Company prepaid approximately $595 million of FHLB advances resulting in a $6.1 million loss on the prepayment of FHLB advances and 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 March 31,Three Months Ended September 30, Nine Months Ended 
 September 30,
2016 20152016 2015 2016 2015
(In Thousands)(In Thousands)
Salaries, benefits and commissions$278,035
 $259,262
$279,132
 $271,143
 $836,067
 $804,828
Equipment60,136
 58,141
59,697
 58,414
 179,646
 174,311
Professional services55,694
 46,559
63,628
 55,476
 178,396
 154,134
Net occupancy39,120
 39,280
41,610
 39,706
 120,881
 119,731
FDIC indemnification expense4,710
 28,789
Money transfer expense16,680
 16,514
 50,048
 44,016
Amortization of intangibles4,093
 10,687
4,093
 9,507
 12,280
 30,083
Total securities impairment
 285

 
 130
 1,298
Other131,331
 79,716
91,431
 106,615
 312,004
 307,757
Total noninterest expense$573,119
 $522,719
$556,271
 $557,375
 $1,689,452
 $1,636,158

Three Months Ended March 31,September 30, 2016 and 2015
Noninterest expense was $573.1$556.3 million for the three months ended March 31,September 30, 2016 compared to $522.7$557.4 million for the three months ended March 31,September 30, 2015. The increase in noninterest expense was due to increases in professional services and other noninterest expense offset, in part, by decreases in FDIC indemnification expense and amortization of intangibles.
Professional services represents fees incurred for the various support functions, which includes legal, consulting, outsourcing and other professional related fees. Professional services increased by $9.1$8.2 million during the three months ended March 31,September 30, 2016 to $55.7$63.6 million compared to $46.6$55.5 million for the corresponding period in 2015 due to increases of approximately $3.0 million, $1.9 millionin other professional services, contractor services, and $1.4 million related to outsourcing, credit card processing and corporate legal expense, respectively.
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 $4.7 million during the three months ended March 31, 2016 compared to $28.8 million for the corresponding period in 2015. The decrease for the three months ended March 31, 2016 was primarily a result of the continued decline in the balance of the covered loan portfolio.processing.
Amortization expenseof intangibles decreased by $6.6 million to $4.1$5.4 million for the three months ended March 31,September 30, 2016 due to the lower level of intangible assets at March 31, 2016 compared to the same period in 2015.

September 30, 2016.
Other noninterest expense 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 $51.6decreased $15.2 million during the three months ended March 31,September 30, 2016 to $131.3$91.4 million compared to $79.7$106.6 million for the three months ended March 31,September 30, 2015. The increasedecrease was largelyprimarily 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 $25.7$4.3 million increasedecrease in the provision for unfunded commitmentscommitments.
Nine Months Ended September 30, 2016 and 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. The slight increase in noninterest expense was due to risk rating downgradesincreases in professional services and money transfer expense offset, in part, by a decrease in amortization of intangibles.
Professional services increased $24.3 million during the energy portfolio.nine months ended September 30, 2016 compared to the corresponding period in 2015 due to increases in expenses related to other professional services, outsourcing, contractor services and credit card processing.
Money transfer expense increased to $50.0 million for the nine months ended September 30, 2016 compared to $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, 2016.
Income Tax Expense
Three Months Ended March 31,September 30, 2016 and 2015
The Company’s income tax expense totaled $22.6$36.8 million and $51.8$52.4 million for the three months ended March 31,September 30, 2016 and 2015, respectively. The effective tax rate was 39.6%23.4% for the three months ended March 31,September 30, 2016 and 26.8%28.8% for the three months ended March 31,September 30, 2015.The decrease in the effective tax rate for the three months ended September 30, 2016 compared to the three months ended September 30, 2015 was primarily driven by a decrease in net income before income taxes relative to permanent income tax differences in 2016.
Nine Months Ended September 30, 2016 and 2015
The Company’s income tax expense totaled $94.5 million and $156.9 million for the nine months ended September 30, 2016 and 2015, respectively. The effective tax rate was 25.1% for the nine months ended September 30, 2016 and 27.4% for the nine months ended September 30, 2015.The decrease in the effective tax rate for the nine months ended September 30, 2016 compared to the same period in 2015 was primarily driven by a decrease in net income before income taxes relative to permanent income tax differences in 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 $4.4$4.1 billion at March 31,both September 30, 2016 compared to $4.1 billion atand December 31, 2015. The $220$87 million increasedecrease in trading account assets was primarily attributable to ana $293 million decrease in U.S. Treasury securities held by BSI offset by $214 million increase in interest contracts for customers.
Investment Securities
As of March 31,September 30, 2016, the securities portfolio included $11.3$11.5 billion in available for sale securities and $1.3$1.2 billion in held to maturity securities for a total investment portfolio of $12.5$12.8 billion, an increase of $161$385 million compared with December 31, 2015.
During the threenine months ended March 31,September 30, 2016, the Company received proceeds of $561 million$1.8 billion related to the sale of U.S. Treasury and other U.S. government agencies securities classified as available for sale which resulted in net gains of $8.4$30.0 million. During the threenine months ended March 31,September 30, 2015, the Company received proceeds of $1.1$2.9 billion from the sale of U.S. Treasury and other U.S. government agencies, mortgage-backed securities, collateralized mortgage obligations and states and political subdivisions classified as available for sale which resulted in net gains of $32.8$67.0 million.
Lending Activities
Average loans and loans held for sale represented 78.7%78.6% of average interest-earningsinterest-earning assets at March 31,September 30, 2016, compared to 78.9% at December 31, 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.

The following table presents the composition of the loan portfolio.
Table 4
Loan Portfolio
Table 4
Loan Portfolio
Table 4
Loan Portfolio
March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
(In Thousands)(In Thousands)
Commercial loans:      
Commercial, financial and agricultural$26,864,047
 $26,022,374
$24,839,068
 $26,022,374
Real estate – construction2,407,511
 2,354,253
2,215,272
 2,354,253
Commercial real estate – mortgage10,647,394
 10,453,280
11,361,630
 10,453,280
Total commercial loans$39,918,952
 $38,829,907
$38,415,970
 $38,829,907
Consumer loans:      
Residential real estate – mortgage$13,590,269
 $13,993,285
$13,457,435
 $13,993,285
Equity lines of credit2,433,370
 2,419,815
2,494,468
 2,419,815
Equity loans547,567
 580,804
479,375
 580,804
Credit card605,305
 627,359
599,862
 627,359
Consumer direct995,652
 936,871
1,186,827
 936,871
Consumer indirect3,589,756
 3,495,082
3,196,235
 3,495,082
Total consumer loans$21,761,919
 $22,053,216
$21,414,202
 $22,053,216
Covered loans423,819
 440,961
381,111
 440,961
Total loans$62,104,690
 $61,324,084
$60,211,283
 $61,324,084
Loans held for sale96,784
 70,582
101,843
 70,582
Total loans and loans held for sale$62,201,474
 $61,394,666
$60,313,126
 $61,394,666
Loans and loans held for sale, net of unearned income, totaled $62.2$60.3 billion at March 31,September 30, 2016, an increasea decrease of $807 million$1.1 billion from December 31, 2015. The increasedecrease in total loans was primarily driven by growth in commercial loans offset by a decrease in commercial

loans, which included the sale of $444 million of commercial loans during the nine months ended September 30, 2016. Additionally, residential real estate-mortgage loans due todecreased which included the sale of $316 million of residential real estate-mortgage loans during the threenine months ended March 31,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 $906 million$1.2 billion at March 31,September 30, 2016 an increase of $400$675 million compared to $506 million at December 31, 2015. The increase in nonperforming assets was primarily due to a $411$679 million increase in nonaccrual loans primarily related to downgrades of certain loans in the energy portfolio. At March��31,September 30, 2016, energy nonaccrual loans were $470$588 million compared to $92 million at December 31, 2015. Excluding energy nonperforming loans, asset quality in the remainder of the loan portfolio has remained solid.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, other real estate owned and other repossessed assets, nonperforming assets were 1.46%1.96% (or 1.04% excluding energy nonperforming loans) at March 31,September 30, 2016 compared with 0.82% (or 0.72% excluding energy nonperforming loans) at December 31, 2015.

The Company defines potential problem loans as commercial 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 decreased $61increased $28 million from December 31, 2015 to March 31,September 30, 2016. The decreaseincrease was primarily attributable to downgrades of loans in the energy portfolio migrating to nonaccrual offset by additional downgrades in the energy portfolio. See "—Concentrations" for additional discussion.

Table 5
Potential Problem Loans
Table 5
Potential Problem Loans
Table 5
Potential Problem Loans
March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
(In Thousands)(In Thousands)
Commercial, financial and agricultural$545,247
 $580,491
$628,020
 $580,491
Real estate – construction
 174
241
 174
Commercial real estate – mortgage48,313
 74,373
55,211
 74,373
$593,560
 $655,038
$683,472
 $655,038


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
March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
(In Thousands)(In Thousands)
Nonaccrual loans:      
Commercial, financial and agricultural$568,154
 $161,591
$850,075
 $161,591
Real estate – construction5,712
 5,908
1,214
 5,908
Commercial real estate – mortgage71,889
 69,953
63,593
 69,953
Residential real estate – mortgage117,602
 113,234
117,243
 113,234
Equity lines of credit33,991
 35,023
32,642
 35,023
Equity loans13,925
 15,614
13,198
 15,614
Credit card
 

 
Consumer direct682
 561
765
 561
Consumer indirect6,386
 5,027
7,019
 5,027
Covered693
 134
269
 134
Total nonaccrual loans819,034
 407,045
1,086,018
 407,045
Nonaccrual loans held for sale
 

 
Total nonaccrual loans and loans held for sale$819,034
 $407,045
$1,086,018
 $407,045
Accruing TDRs: (1)      
Commercial, financial and agricultural$9,545
 $9,402
$9,283
 $9,402
Real estate – construction2,664
 2,247
3,315
 2,247
Commercial real estate – mortgage5,425
 33,904
5,141
 33,904
Residential real estate – mortgage65,173
 67,343
63,008
 67,343
Equity lines of credit
 

 
Equity loans37,132
 37,108
36,053
 37,108
Credit card
 

 
Consumer direct868
 908
759
 908
Consumer indirect
 

 
Covered
 

 
Total TDRs120,807
 150,912
117,559
 150,912
TDRs classified as loans held for sale
 

 
Total TDRs (loans and loans held for sale)$120,807
 $150,912
$117,559
 $150,912
Loans 90 days past due and accruing:      
Commercial, financial and agricultural$3,012
 $3,567
$5,320
 $3,567
Real estate – construction415
 421
2,782
 421
Commercial real estate – mortgage807
 2,237
783
 2,237
Residential real estate – mortgage1,507
 1,961
3,929
 1,961
Equity lines of credit1,010
 2,883
2,417
 2,883
Equity loans443
 704
353
 704
Credit card9,413
 9,718
10,175
 9,718
Consumer direct2,951
 3,537
4,191
 3,537
Consumer indirect4,149
 5,629
7,070
 5,629
Covered36,783
 37,972
28,505
 37,972
Total loans 90 days past due and accruing60,490
 68,629
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$60,490
 $68,629
$65,525
 $68,629
OREO$17,877
 $20,862
$21,670
 $20,862
Other repossessed assets$8,601
 $8,774
$6,900
 $8,774
(1)
TDR totals include accruing loans 90 days past due classified as TDR.

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
March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
(In Thousands)(In Thousands)
Nonaccrual loans$819,034
 $407,045
$1,086,018
 $407,045
Loans 90 days or more past due and accruing (1)60,490
 68,629
65,525
 68,629
TDRs 90 days or more past due and accruing491
 874
618
 874
Nonperforming loans880,015
 476,548
1,152,161
 476,548
OREO17,877
 20,862
21,670
 20,862
Other repossessed assets8,601
 8,774
6,900
 8,774
Total nonperforming assets$906,493
 $506,184
$1,180,731
 $506,184
(1)Excludes loans classified as TDR.
Table 8
Asset Quality Ratios
Table 8
Asset Quality Ratios
Table 8
Asset Quality Ratios
March 31, 2016 December 31, 2015September 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)1.41% 0.78%1.91% 0.78%
Nonperforming assets as a percentage of total loans and loans held for sale, other real estate owned, and other repossessed assets (2)1.46% 0.82%1.96% 0.82%
Allowance for loan losses as a percentage of loans1.32% 1.24%1.43% 1.24%
Allowance for loan losses as a percentage of nonperforming loans (3)93.46% 160.04%74.82% 160.04%
(1)Nonperforming loans include nonaccrual loans and loans held for sale (including nonaccrual loans classified as 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 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
Three Months Ended March 31,Nine Months Ended September 30,
2016 20152016 2015
(In Thousands)(In Thousands)
Balance at beginning of period$20,862
 $20,600
$20,862
 $20,600
Transfer of loans and loans held for sale to OREO6,651
 2,718
21,547
 16,552
Sales of OREO(8,937) (4,295)(17,962) (10,073)
Write-downs of OREO(699) (1,259)(2,777) (3,317)
Balance at end of period$17,877
 $17,764
$21,670
 $23,762

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
Three Months Ended March 31,Nine Months Ended September 30,
2016 20152016 2015
(In Thousands)(In Thousands)
Balance at beginning of period,$406,911
 $322,540
$406,911
 $322,540
Additions497,717
 113,595
1,270,646
 305,310
Returns to accrual(8,987) (12,066)(43,492) (35,663)
Loan sales
 (320)(104,372) (7,150)
Payments and paydowns(5,340) (25,640)(216,754) (65,793)
Transfers to OREO(5,312) (2,069)(16,415) (16,134)
Charge-offs(66,648) (38,680)(210,775) (122,333)
Balance at end of period$818,341
 $357,360
$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
Three Months Ended March 31,Nine Months Ended September 30,
2016 20152016 2015
(In Thousands)(In Thousands)
Balance at beginning period$227,817
 $243,374
$227,817
 $243,374
New TDRs8,862
 4,825
54,004
 16,852
Payments/Payoffs(37,663) (12,891)(58,990) (27,166)
Charge-offs(704) (1,660)(1,428) (3,686)
Loan sales
 

 (1,982)
Transfer to OREO(151) 
(615) (1,479)
Balance at end of period$198,161
 $233,648
$220,788
 $225,913
The Company’s aggregate recorded investment in impaired loans modified through TDRs excluding covered loans decreased to $198$221 million at March 31,September 30, 2016 from $228 million at December 31, 2015. Included in these amounts are $121$118 million at March 31,September 30, 2016 and $151 million at December 31, 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 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.

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 $822$862 million at March 31,September 30, 2016, from $763 million at December 31, 2015. The ratio of the allowance for loan losses to total loans was 1.32%1.43% at March 31,September 30, 2016 compared to 1.24% at December 31, 2015. Nonperforming loans were $880 million$1.2 billion at March 31,September 30, 2016 compared to $477 million at December 31, 2015. The allowance attributable to individually impaired loans was $101$180 million at March 31,September 30, 2016 compared to $71 million at December 31, 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 0.35%0.30% of average loans for the three months ended March 31,September 30, 2016 compared to 0.17%0.19% of average loans for the three months ended March 31,September 30, 2015. The increase in net charge-offs for the three months ended March 31,September 30, 2016 as compared to the corresponding period in 2015 was primarily driven by a $13.6$6.7 million increase in commercial, financialconsumer direct net-charge-offs and agriculturala $6.2 million increase in consumer indirect net charge-off.charge-offs. Additionally, the increase was driven by charge-offs on energy loans. Commercial, financial and agricultural net charge-offs include $14.2$8.5 million of net charge-offs related to energy loans for the three months ended March 31,September 30, 2016 compared to no$2.7 million of net charge-offs related to energy loans for the three months ended March 31,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. The increase in net charge-offs for the nine months ended September 30, 2016 as compared to the corresponding period in 2015 was primarily driven by charge-offs on energy loans. Commercial, financial and agricultural net charge-offs include $49.4 million of net charge-offs related to energy loans 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 a $5.2$15.5 million increase in consumer direct net-charge-offs and an $8.2a $19.9 million increase in consumer indirect net charge-offs.

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 March 31,Three Months Ended September 30, Nine Months Ended September 30,
2016 20152016 2015 2016 2015
(Dollars in Thousands)(Dollars in Thousands)
Average loans outstanding during the period$62,119,402
 $58,713,393
$60,977,920
 $60,513,571
 $61,786,243
 $59,619,979
Allowance for loan losses, beginning of period$762,673
 $685,041
$843,051
 $721,471
 $762,673
 $685,041
Charge-offs:          
Commercial, financial and agricultural19,806
 6,619
13,702
 9,161
 66,541
 20,706
Real estate – construction241
 34
21
 124
 306
 199
Commercial real estate – mortgage448
 601
83
 786
 3,249
 2,181
Residential real estate – mortgage2,245
 3,152
2,043
 1,909
 6,148
 7,985
Equity lines of credit3,128
 2,809
2,141
 3,157
 7,259
 10,154
Equity loans828
 793
424
 878
 1,665
 2,750
Credit card8,923
 8,532
9,171
 7,380
 27,000
 24,138
Consumer direct9,808
 5,336
13,975
 7,055
 34,524
 19,686
Consumer indirect21,222
 10,677
23,326
 13,132
 64,083
 35,133
Covered249
 873

 490
 1,565
 1,516
Total charge-offs66,898
 39,426
64,886
 44,072
 212,340
 124,448
Recoveries:          
Commercial, financial and agricultural1,749
 2,182
4,766
 5,171
 7,775
 10,410
Real estate – construction543
 1,460
227
 550
 1,908
 4,157
Commercial real estate – mortgage426
 398
455
 349
 1,915
 870
Residential real estate – mortgage1,284
 2,225
1,483
 2,208
 4,156
 5,870
Equity lines of credit913
 866
1,540
 1,070
 3,589
 2,516
Equity loans222
 422
406
 494
 1,060
 2,580
Credit card733
 698
711
 705
 2,223
 2,087
Consumer direct1,097
 1,858
1,091
 861
 3,005
 3,703
Consumer indirect6,453
 4,109
8,129
 4,162
 21,090
 12,002
Covered
 

 2
 1
 3
Total recoveries13,420
 14,218
18,808
 15,572
 46,722
 44,198
Net charge-offs53,478
 25,208
46,078
 28,500
 165,618
 80,250
Total provision for loan losses113,245
 42,031
65,107
 29,151
 265,025
 117,331
Allowance for loan losses, end of period$822,440
 $701,864
$862,080
 $722,122
 $862,080
 $722,122
Net charge-offs to average loans0.35% 0.17%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 March 31,September 30, 2016 and December 31, 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 $26.9$24.8 billion at March 31,September 30, 2016, compared to $26.0 billion at December 31, 2015. This segment consists primarily of large national and international companies 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.

The following table provides details related to the commercial, financial, and agricultural portfolio segment.
Table 13
Commercial, Financial and Agricultural
Table 13
Commercial, Financial and Agricultural
Table 13
Commercial, Financial and Agricultural
 March 31, 2016 December 31, 2015 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 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)
Autos, Components and Durable Goods $651,245
 $64
 $
 $
 $627,543
 $83
 $
 $
 $623,902
 $55
 $
 $
 $627,543
 $83
 $
 $
Basic Materials 903,355
 1,535
 
 
 857,616
 99
 
 
 865,881
 65,682
 
 
 857,616
 99
 
 
Capital Goods & Industrial Services 2,492,737
 2,037
 210
 436
 2,587,038
 6,520
 19
 108
 2,435,761
 1,252
 48
 
 2,587,038
 6,520
 19
 108
Construction & Infrastructure 575,945
 44,724
 45
 133
 629,869
 13,998
 50
 139
 580,676
 41,779
 9
 1,349
 629,869
 13,998
 50
 139
Consumer & Healthcare 3,252,173
 10,416
 401
 
 3,223,674
 10,542
 424
 189
 3,058,568
 3,795
 95
 424
 3,223,674
 10,542
 424
 189
Energy 4,151,399
 470,357
 121
 
 3,840,226
 92,467
 120
 
 3,322,139
 588,226
 30
 
 3,840,226
 92,467
 120
 
Financial Services 1,042,009
 56
 4
 
 1,074,595
 131
 5
 
 1,032,949
 28
 
 
 1,074,595
 131
 5
 
General Corporates 1,856,066
 3,998
 103
 2,268
 1,410,666
 2,092
 51
 2,534
 1,853,823
 41,933
 52
 2,801
 1,410,666
 2,092
 51
 2,534
Institutions 2,604,914
 7,779
 8,342
 
 2,542,284
 5,841
 8,375
 
 2,387,447
 1,923
 2,039
 
 2,542,284
 5,841
 8,375
 
Leisure 1,946,415
 9,166
 213
 
 2,118,578
 11,077
 224
 66
 2,021,592
 10,116
 45
 92
 2,118,578
 11,077
 224
 66
Real Estate 1,572,129
 164
 
 
 1,583,582
 146
 
 
 1,245,644
 9
 
 
 1,583,582
 146
 
 
Retailers 2,517,659
 2,361
 38
 
 2,374,773
 2,671
 64
 496
 2,427,159
 47,693
 102
 654
 2,374,773
 2,671
 64
 496
Telecoms, Technology & Media 1,618,896
 15,367
 56
 175
 1,460,879
 15,768
 57
 35
 1,475,835
 2,015
 13
 
 1,460,879
 15,768
 57
 35
Transportation 786,578
 130
 
 
 800,413
 156
 
 
 777,991
 14,173
 
 
 800,413
 156
 
 
Utilities 892,527
 
 12
 
 890,638
 
 13
 
 729,701
 31,396
 6,850
 
 890,638
 
 13
 
Total Commercial, Financial and Agricultural $26,864,047
 $568,154
 $9,545
 $3,012
 $26,022,374
 $161,591
 $9,402
 $3,567
 $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 declining and lower oil prices which began late in 2014 and has continued into 2016, on its energy sector lending portfolio. Total energy exposure, including unused commitments to extend credit and letters of credit was $9.3$8.2 billion and $9.4 billion at March 31,September 30, 2016 and December 31, 2015, respectively. As shown in Table 14, the Company's energy sector loan balances at March 31,September 30, 2016 were approximately $4.2$3.3 billion and represented 6.7%5.5% of the Company's total loan portfolioloans and loans held for sale compared to $3.8 billion and 6.3% of the Company's total loan portfolioloans and loans held for sale as of December 31, 2015. This amount is comprised of loans directly related to energy, such as exploration and production, pipeline transportation of natural gas, crude oil and other refined petroleum products, oil field services, and refining and support as detailed in the following table.
Table 14
Energy Portfolio
Table 14
Energy Portfolio
Table 14
Energy Portfolio
 March 31, 2016 December 31, 2015 September 30, 2016 December 31, 2015
 Recorded Investment Total Commitment Nonaccrual Recorded Investment Total Commitment Nonaccrual Recorded Investment Total Commitment Nonaccrual Recorded Investment Total Commitment Nonaccrual
 (In Thousands) (In Thousands)
Exploration and production $2,140,376
 5,034,557
 $469,882
 $2,040,748
 $5,186,887
 $91,947
 $1,722,052
 4,244,802
 $511,520
 $2,040,748
 $5,186,887
 $91,947
Midstream 1,541,465
 3,426,768
 
 1,355,503
 3,293,216
 
 1,207,650
 3,209,931
 11,552
 1,355,503
 3,293,216
 
Drilling oil and support services 292,769
 504,455
 
 266,871
 554,782
 
 261,748
 468,728
 64,771
 266,871
 554,782
 
Refineries and terminals 134,211
 202,659
 475
 137,904
 211,258
 520
 130,689
 254,130
 383
 137,904
 211,258
 520
Other 42,578
 109,413
 
 39,200
 109,782
 
 
 
 
 39,200
 109,782
 
Total energy portfolio $4,151,399
 $9,277,852
 $470,357
 $3,840,226
 $9,355,925
 $92,467
 $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. The overall level of loans rated special mention or lower, including loans classified as nonaccrual, in the energy portfolio at March 31,September 30, 2016 was 22.9%33.8%, comprised of 5.4%7.9% rated special mention and 17.5%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 March 31,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 March 31,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 March 31,September 30, 2016, approximately 97%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 March 31,September 30, 2016, charge-offs in this portfolioon energy loans were approximately $14.2 million.$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. Through its ongoing portfolio credit quality assessment, the Company has and will continue to assess the impact to the allowance for loan losses and make adjustments as appropriate. As of March 31,September 30, 2016, the

Company's allowance for loan losses attributable to the energy portfolio totaled approximately 4%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 $10.5 billion at March 31,September 30, 2016 and December 31, 2015, respectively and real estate - construction loans totaled $2.2 billion at September 30, 2016, and $2.4 billion at both March 31, 2016, and December 31, 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.
The following tables present the geographic distribution for the commercial real estate and real estate - construction portfolios.
Table 15
Commercial Real Estate
Table 15
Commercial Real Estate
Table 15
Commercial Real Estate
 March 31, 2016 December 31, 2015 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 $519,296
 $3,284
 $2,022
 $
 $542,889
 $2,723
 $3,365
 $989
 $507,245
 $2,377
 $1,614
 $
 $542,889
 $2,723
 $3,365
 $989
Arizona 874,500
 6,715
 200
 
 837,949
 4,465
 465
 
 821,802
 6,415
 
 
 837,949
 4,465
 465
 
California 1,104,655
 876
 134
 
 1,104,368
 942
 222
 
 1,191,846
 734
 145
 
 1,104,368
 942
 222
 
Colorado 397,890
 8,174
 
 
 395,679
 8,460
 10,210
 
 431,910
 5,946
 201
 
 395,679
 8,460
 10,210
 
Florida 1,036,551
 9,320
 80
 
 965,365
 9,564
 138
 
 926,300
 8,656
 81
 
 965,365
 9,564
 138
 
New Mexico 164,903
 6,325
 81
 
 160,840
 6,405
 22
 
 181,612
 6,046
 86
 
 160,840
 6,405
 22
 
Texas 3,472,269
 27,294
 1,995
 807
 3,269,626
 28,956
 4,292
 1,248
 3,648,041
 24,044
 1,885
 783
 3,269,626
 28,956
 4,292
 1,248
Other 3,077,330
 9,901
 913
 
 3,176,564
 8,438
 15,190
 
 3,652,874
 9,375
 1,129
 
 3,176,564
 8,438
 15,190
 
 $10,647,394
 $71,889
 $5,425
 $807
 $10,453,280
 $69,953
 $33,904
 $2,237
 $11,361,630
 $63,593
 $5,141
 $783
 $10,453,280
 $69,953
 $33,904
 $2,237


Table 16
Real Estate – Construction
Table 16
Real Estate – Construction
Table 16
Real Estate – Construction
 March 31, 2016 December 31, 2015 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 $26,538
 $331
 $151
 $
 $27,815
 $389
 $312
 $122
 $17,753
 $118
 $309
 $
 $27,815
 $389
 $312
 $122
Arizona 87,422
 2,244
 1,378
 
 80,713
 2,404
 
 
 88,634
 
 
 
 80,713
 2,404
 
 
California 347,732
 18
 11
 
 326,698
 19
 22
 
 312,120
 6
 22
 
 326,698
 19
 22
 
Colorado 86,157
 
 
 
 92,764
 
 
 
 82,059
 
 
 
 92,764
 
 
 
Florida 201,183
 
 
 
 205,466
 
 
 
 209,672
 2
 
 200
 205,466
 
 
 
New Mexico 16,751
 87
 25
 
 13,092
 93
 51
 
 18,278
 
 50
 269
 13,092
 93
 51
 
Texas 1,144,412
 2,770
 1,099
 415
 1,105,252
 2,727
 1,862
 299
 1,033,278
 975
 2,934
 2,313
 1,105,252
 2,727
 1,862
 299
Other 497,316
 262
 
 
 502,453
 276
 
 
 453,478
 113
 
 
 502,453
 276
 
 
 $2,407,511
 $5,712
 $2,664
 $415
 $2,354,253
 $5,908
 $2,247
 $421
 $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.
Residential real estate - mortgage loans totaled $13.6$13.5 billion and $14.0 billion at March 31,September 30, 2016 and December 31, 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 17
Residential Real Estate - Mortgage
Table 17
Residential Real Estate - Mortgage
Table 17
Residential Real Estate - Mortgage
 March 31, 2016 December 31, 2015 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 $1,042,192
 $15,524
 $13,654
 $23
 $1,111,987
 $13,868
 $14,528
 $29
 $1,022,754
 $13,587
 $12,578
 $339
 $1,111,987
 $13,868
 $14,528
 $29
Arizona 1,346,199
 7,138
 11,020
 195
 1,395,539
 7,251
 11,567
 242
 1,299,940
 10,707
 10,809
 811
 1,395,539
 7,251
 11,567
 242
California 2,970,693
 15,620
 2,745
 93
 3,022,425
 13,705
 2,691
 104
 2,973,859
 14,447
 3,002
 73
 3,022,425
 13,705
 2,691
 104
Colorado 1,178,248
 3,914
 3,307
 2
 1,225,818
 3,660
 3,471
 2
 1,147,940
 7,971
 3,145
 
 1,225,818
 3,660
 3,471
 2
Florida 1,702,805
 24,895
 10,466
 109
 1,708,912
 24,595
 10,595
 134
 1,705,359
 24,530
 10,559
 120
 1,708,912
 24,595
 10,595
 134
New Mexico 213,186
 2,513
 2,085
 
 217,476
 1,827
 2,149
 32
 215,360
 1,851
 1,598
 
 217,476
 1,827
 2,149
 32
Texas 4,618,863
 30,611
 18,544
 1,085
 4,784,292
 25,731
 18,908
 1,418
 4,594,440
 27,314
 18,107
 2,586
 4,784,292
 25,731
 18,908
 1,418
Other 518,083
 17,387
 3,352
 
 526,836
 22,597
 3,434
 
 497,783
 16,836
 3,210
 
 526,836
 22,597
 3,434
 
 $13,590,269
 $117,602
 $65,173
 $1,507
 $13,993,285
 $113,234
 $67,343
 $1,961
 $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 18
Residential Real Estate - Mortgage
Table 18
Residential Real Estate - Mortgage
Table 18
Residential Real Estate - Mortgage
 March 31, 2016 December 31, 2015 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 $622,758
 $80,971
 $21,907
 $573
 $631,139
 $72,791
 $20,380
 $1,359
 $635,525
 $78,395
 $22,189
 $1,495
 $631,139
 $72,791
 $20,380
 $1,359
621 – 680 1,328,746
 15,427
 19,324
 120
 1,351,069
 21,000
 21,018
 52
 1,266,902
 20,360
 17,068
 609
 1,351,069
 21,000
 21,018
 52
681 – 720 2,136,386
 5,768
 12,104
 109
 2,227,263
 4,182
 12,364
 154
 2,047,383
 5,792
 11,531
 574
 2,227,263
 4,182
 12,364
 154
Above 720 8,625,121
 2,064
 10,632
 430
 8,870,080
 1,916
 12,350
 272
 8,709,051
 2,874
 11,010
 194
 8,870,080
 1,916
 12,350
 272
Unknown 877,258
 13,372
 1,206
 275
 913,734
 13,345
 1,231
 124
 798,574
 9,822
 1,210
 1,057
 913,734
 13,345
 1,231
 124
 $13,590,269
 $117,602
 $65,173
 $1,507
 $13,993,285
 $113,234
 $67,343
 $1,961
 $13,457,435
 $117,243
 $63,008
 $3,929
 $13,993,285
 $113,234
 $67,343
 $1,961
Equity lines of credit and equity loans totaled $3.0 billion at both March 31,September 30, 2016 and December 31, 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 19
Equity Loans and Lines
Table 19
Equity Loans and Lines
Table 19
Equity Loans and Lines
 March 31, 2016 December 31, 2015 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 $573,556
 $9,807
 $9,799
 $341
 $586,094
 $10,445
 $9,847
 $1,007
 $566,873
 $7,820
 $9,416
 $762
 $586,094
 $10,445
 $9,847
 $1,007
Arizona 409,526
 9,622
 6,106
 287
 416,109
 8,846
 6,267
 980
 402,576
 8,711
 5,888
 551
 416,109
 8,846
 6,267
 980
California 296,401
 1,238
 64
 
 292,210
 1,676
 100
 24
 302,204
 893
 37
 362
 292,210
 1,676
 100
 24
Colorado 210,525
 4,798
 3,211
 100
 211,464
 4,971
 3,045
 123
 198,983
 4,700
 2,744
 257
 211,464
 4,971
 3,045
 123
Florida 392,765
 8,842
 7,075
 181
 393,931
 9,178
 7,188
 472
 387,109
 9,362
 6,875
 208
 393,931
 9,178
 7,188
 472
New Mexico 54,980
 1,972
 1,032
 
 56,148
 2,383
 1,052
 
 54,142
 1,592
 1,064
 
 56,148
 2,383
 1,052
 
Texas 990,547
 10,106
 8,891
 524
 985,899
 11,447
 8,665
 845
 1,009,717
 11,135
 8,685
 630
 985,899
 11,447
 8,665
 845
Other 52,637
 1,531
 954
 20
 58,764
 1,691
 944
 136
 52,239
 1,627
 1,344
 
 58,764
 1,691
 944
 136
 $2,980,937
 $47,916
 $37,132
 $1,453
 $3,000,619
 $50,637
 $37,108
 $3,587
 $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 20
Equity Loans and Lines
Table 20
Equity Loans and Lines
Table 20
Equity Loans and Lines
 March 31, 2016 December 31, 2015 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 $223,052
 $22,770
 $10,470
 $1,161
 $220,476
 $23,367
 $10,923
 $3,125
 $208,948
 $22,203
 $8,862
 $2,420
 $220,476
 $23,367
 $10,923
 $3,125
621 – 680 426,024
 13,965
 13,799
 180
 439,350
 15,677
 12,812
 187
 409,392
 13,487
 13,817
 174
 439,350
 15,677
 12,812
 187
681 – 720 576,522
 7,785
 7,330
 
 565,476
 7,456
 8,067
 160
 570,710
 7,287
 8,380
 151
 565,476
 7,456
 8,067
 160
Above 720 1,733,340
 3,034
 5,373
 100
 1,752,094
 3,641
 5,143
 115
 1,768,927
 2,453
 4,847
 25
 1,752,094
 3,641
 5,143
 115
Unknown 21,999
 362
 160
 12
 23,223
 496
 163
 
 15,866
 410
 147
 
 23,223
 496
 163
 
 $2,980,937
 $47,916
 $37,132
 $1,453
 $3,000,619
 $50,637
 $37,108
 $3,587
 $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 or online. Total credit card, consumer direct and consumer indirect loans at March 31,September 30, 2016 were $5.2$5.0 billion, or 8.4%8.3% of the total loan portfolio compared to $5.1 billion, or 8.3% of the total loan portfolio at December 31, 2015.
Foreign Exposure
As of March 31,September 30, 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. 
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 March 31,September 30, 2016, the Company's and the Bank's credit ratings were as follows:
Table 21
Credit Ratings
 As of March 31,September 30, 2016
 Standard & Poor’s (3) Moody’s (4) Fitch
BBVA Compass Bancshares, Inc.     
Long-term debt ratingBBB+ Baa3 BBB+
Short-term debt ratingA-2 - F2
Compass Bank     
Long-term debt ratingBBB+ Baa3 BBB+
Long-term bank deposits (1)N/A A3 A-
Subordinated debtBBB Baa3 BBB-
Short-term debt ratingA-2 P-3 F2
Short-term deposit rating (2)N/A P-2 F2
OutlookNegative 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.
(3) On February 9, 2016, S&P revised its outlook to negative from stable.
(4) On February 16, 2016, Moody's affirmed its ratings and maintained its outlook of stable.
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, 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.
Deposits
Total deposits increased by $3.0$1.6 billion from December 31, 2015 to March 31,September 30, 2016. At March 31,September 30, 2016 and December 31, 2015, total deposits included $6.5$6.4 billion and $7.0 billion of brokered deposits, respectively. The following table presents the Company’s deposits segregated by major category:
Table 22
Composition of Deposits
Table 22
Composition of Deposits
Table 22
Composition of Deposits
March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
Balance % of Total Balance % of TotalBalance % of Total Balance % of Total
(Dollars in Thousands)(Dollars in Thousands)
Noninterest-bearing demand deposits$20,439,114
 29.6% $19,290,266
 29.2%$20,585,598
 30.4% $19,291,533
 29.2%
Interest-bearing demand deposits6,993,680
 10.1
 7,378,804
 11.2
7,089,795
 10.5
 7,378,804
 11.2
Savings and money market26,356,454
 38.3
 25,241,292
 38.3
25,616,692
 37.9
 25,241,292
 38.3
Time deposits14,825,701
 21.5
 13,977,170
 21.2
14,186,318
 21.0
 13,977,139
 21.2
Foreign office deposits-interest-bearing332,667
 0.5
 92,998
 0.1
108,934
 0.2
 92,998
 0.1
Total deposits$68,947,616
 100.0% $65,980,530
 100.0%$67,587,337
 100.0% $65,981,766
 100.0%
Total deposits increased by $3.0 billion from December 31, 2015 to March 31,September 30, 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 March 31,September 30, 2016 and December 31, 2015, the $745$79 million and $674 million, respectively, of federal funds purchased included in short-term borrowings was primarily a result of customer activity.
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 23
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 EndMaximum 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 March 31, 2016         
Balance at September 30, 2016         
Federal funds purchased$766,095
 $703,569
 0.51% $745,495
 0.51%$766,095
 $478,813
 0.50% $79,395
 0.32%
Securities sold under agreements to repurchase148,291
 96,674
 0.49
 148,291
 0.45
148,291
 90,959
 0.72
 86,178
 0.76
Other short-term borrowings4,377,423
 4,025,428
 1.39
 3,924,781
 1.39
4,497,354
 3,912,069
 1.41
 3,591,223
 1.42
$5,291,809
 $4,825,671
   $4,818,567
  $5,411,740
 $4,481,841
   $3,756,796
  
Balance at December 31, 2015                  
Federal funds purchased$975,785
 $692,737
 0.26% $673,545
 0.37%$975,785
 $692,737
 0.26% $673,545
 0.37%
Securities sold under agreements to repurchase232,605
 114,940
 0.22
 76,609
 0.44
232,605
 114,940
 0.22
 76,609
 0.44
Other short-term borrowings4,982,154
 4,006,716
 1.31
 4,032,644
 1.34
4,982,154
 4,006,716
 1.31
 4,032,644
 1.34
$6,190,544
 $4,814,393
   $4,782,798
  $6,190,544
 $4,814,393
   $4,782,798
  
At both March 31, 2016 and December 31, 2015, short-term borrowings totaled $4.8 billion.
At March 31,September 30, 2016 and December 31, 2015, FHLB and other borrowings were $4.4$3.7 billion and $5.4 billion, respectively. For the threenine months ended March 31,September 30, 2016, the Company had no$1.3 billion of proceeds received from FHLB and other borrowings and repayments were approximately $1.1$3.1 billion.
Shareholder’s Equity
Total shareholder's equity was $12.7$12.8 billion at March 31,September 30, 2016 compared to $12.6 billion at December 31, 2015, an increase of $94$194 million. Shareholder's equity increased $34$281 million due to earnings attributable to the Company during the period offset by the payment of preferred and common dividends totaling $70 million as well as a decrease$69 million dividend to BBVA Bancomer USA, Inc. for the purchase of the four operating subsidiaries from BBVA Bancomer USA, Inc. See Note 2, Acquisition Activity, in accumulated other losses of $67 million.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.
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 March 31,September 30, 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 March 31,September 30, 2016 and 2015.
Table 24
Net Interest Income Sensitivity
Table 24
Net Interest Income Sensitivity
Table 24
Net Interest Income Sensitivity
Estimated % Change in Net Interest IncomeEstimated % Change in Net Interest Income
March 31, 2016 March 31, 2015September 30, 2016 September 30, 2015
Rate Change      
+ 200 basis points12.53% 9.77%11.95% 8.96%
+ 100 basis points6.30
 4.87
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 25
Economic Value of Equity
Table 25
Economic Value of Equity
Table 25
Economic Value of Equity
Estimated % Change in Economic Value of EquityEstimated % Change in Economic Value of Equity
March 31, 2016 March 31, 2015September 30, 2016 September 30, 2015
Rate Change      
+ 300 basis points(1.11) % (4.58) %(2.07) % (3.98) %
+ 200 basis points(0.23) (2.65)(0.75) (2.27)
+ 100 basis points0.39
 (1.05)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 March 31,September 30, 2016, the Company had derivative financial instruments outstanding with notional amounts of $34.7$36.3 billion. The estimated net fair value of open contracts was in an asset position of $160$155 million at March 31,September 30, 2016. For additional information about derivatives, refer to Note 5,6, Derivatives and Hedging, in the Notes to the Unaudited Condensed Consolidated Financial Statements.
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 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 March 31,September 30, 2016 or December 31, 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. 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 was 90 percent, followed by 100 percent in January 2017. At March 31,September 30, 2016, the Company was fully compliant with the liquidity coverage ratio rule.minimum phased-in LCR requirements 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 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 willis expected to be subject to a 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 following table sets forth the Company's U.S. Basel III regulatory capital ratios subject to transitional provisions at March 31,September 30, 2016 and December 31, 2015.
Table 26
Capital Ratios
Table 26
Capital Ratios
Table 26
Capital Ratios
March 31, 2016 December 31, 2015September 30, 2016 December 31, 2015
(Dollars in Thousands)(Dollars in Thousands)
Capital:      
CET1 Capital$7,386,352
 $7,363,961
$7,553,460
 $7,363,961
Tier 1 Capital$7,624,752
 $7,631,561
$7,791,860
 $7,631,561
Total Capital$9,403,265
 $9,417,750
$9,494,310
 $9,417,750
Ratios:      
CET1 Risk-based Capital Ratio10.64% 10.70%11.28% 10.70%
Tier 1 Risk-based Capital Ratio10.99% 11.08%11.64% 11.08%
Total Risk-based Capital Ratio13.55% 13.68%14.18% 13.68%
Leverage Ratio8.74% 8.95%9.08% 8.95%
At March 31,September 30, 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.
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, 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, 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, twoone of which remained outstanding during the three months ended March 31, 2016 and one of which was canceled during the three months ended March 31,September 30, 2016. For the three months ended March 31,September 30, 2016, revenues of $2,698$360 (including fees and/or commissions) have been recorded in connection with these counter indemnities. The BBVA Group does not allocate direct costs to fees and commissions and therefore has not disclosed a separate profit measure. Additionally,Due to changes in EU Council Regulations effective January 16, 2016, Bank Melli is no longer included on the EU list of persons and entities subject to the restrictive measure relating to the freezing of funds and economic resources. Therefore, BBVA Group received $219,901as a result of the cancellation of one of the counter indemnities. The BBVA Group does not allocate direct costsis no longer required to fees and commissions and therefore has not disclosed a separate profit measure. In accordance with Council Regulation (EU) Nr. 267/2012 of March 23, 2012,block any payments of any amounts due to Bank Melli under thesethe outstanding counter indemnities will be initially blockedindemnity and thereafter released uponis no longer required to request authorization byfrom the relevant Spanish authorities. The BBVA Group is committedauthorities to terminating these business relationships as soon as contractually possible and does not intendrelease such funds to enter into new business relationships involving Bank Melli.

LettersRefund of creditfunds from Bank Sepah. . During the yearthree months ended December 31, 2015,September 30, 2016, Bank Sepah returned to the BBVA Group had credit exposure to Bank Sepah arising from a letterfunds in the amount of credit issued$4,624 originally transferred by Bank Sepah to a non-Iranian client of the BBVA Group in Europe. This letterMarch 2007 to an account at Bank Sepah in the name of credit, which was granted before 2004, expiredBBVA’s representative office in October 2015. As a result, this letter of credit was no longer outstanding during the three months ended March 31, 2016.Tehran.
Iranian embassy-related activity. The BBVA Group maintains bank accounts in Spain for two employees of the Iranian embassy in Spain. The two employees are Spanish citizens, and one of them has retired. Estimated gross revenues for the three months ended March 31,September 30, 2016, from embassy-related activity, which include fees and/or commissions, did not exceed $244.$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.

Item 6.
Exhibits
Exhibit NumberDescription of Documents
  
2.1Purchase 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).
3.1Restated 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).
3.2Bylaws 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).
31.1Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1Certification 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.
32.2Certification 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.
101.1Interactive 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.


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



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