UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the quarterly period ended September 30, ~~2016~~2017



¨	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 or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting ~~company”~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 October 31, ~~2016~~2017
Common Stock (par value $0.01 per share)		222,950,751 shares

Explanatory Note

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

TABLE OF CONTENTS



		Page

Part I	Financial Information
Item 1.	Financial Statements (Unaudited)	7
	Condensed Consolidated Balance Sheets as of September 30, ~~2016~~2017 and December 31, ~~2015~~2016	7
	Condensed Consolidated Statements of Income for the three and nine months ended September 30, ~~2016~~2017 and ~~2015~~2016	8
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2016~~2017 and ~~2015~~2016	9
	Condensed Consolidated Statements of Shareholder's Equity for the nine months ended September 30, ~~2016~~2017 and ~~2015~~2016	10
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2016~~2017 and ~~2015~~2016	11
	Notes to the ~~September 30, 2016~~Unaudited Condensed Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6261
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	9088
Item 4.	Controls and Procedures	9088

Part II	Other Information
Item 1.	Legal Proceedings	9190
Item 1A.	Risk Factors	9190
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9190
Item 3.	Defaults Upon Senior Securities	9190
Item 4.	Mine Safety Disclosures	9190
Item 5.	Other Information	9190
Item 6.	Exhibits	9392
Signatures		9493

Glossary of Acronyms and Terms

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



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



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

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~~impact of consumer protection regulations, ~~which could adversely affect the Company's business, financial condition or results of operations;~~

including 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 instability of~~volatile or declining 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~~declining oil prices;

if the Bank's CRA rating ~~which~~were to decline, that 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 ~~intangible assets;~~intangibles;

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)

	September 30, 2016			December 31, 2015			September 30, 2017			December 31, 2016
	(In Thousands)						(In Thousands)
Assets:
Cash and due from banks	$	4,054,423		$	4,165,880		$	1,145,745		$	1,284,261
Interest bearing funds with the Federal Reserve							2,400,533			1,830,078
Federal funds sold, securities purchased under agreements to resell and interest bearing deposits	372,268			330,948			188,380			137,447
Cash and cash equivalents	4,426,691			4,496,828			3,734,658			3,251,786
Trading account assets	4,051,461			4,138,132			572,104			3,144,600
Investment securities available for sale	11,516,885			11,050,520			12,268,309			11,665,055
Investment securities held to maturity (fair value of $1,241,234 and $1,244,121 at September 30, 2016 and December 31, 2015, respectively)	1,240,850			1,322,676
Loans held for sale, at fair value	101,843			70,582
Investment securities held to maturity (fair value of $1,067,919 and $1,182,009 at September 30, 2017 and December 31, 2016, respectively)							1,077,372			1,203,217
Loans held for sale, (includes $77,783 and $105,257 measured at fair value for September 30, 2017 and December 31, 2016, respectively)							77,783			161,849
Loans	60,211,283			61,324,084			60,315,204			60,061,263
Allowance for loan losses	(862,080		)	(762,673		)	(849,119		)	(838,293		)
Net loans	59,349,203			60,561,411			59,466,085			59,222,970
Premises and equipment, net	1,287,457			1,322,378			1,226,747			1,300,054
Bank owned life insurance	712,422			700,285			720,693			711,939
Goodwill	5,043,197			5,043,197			4,983,296			4,983,296
Other intangible assets	19,296			31,576
Other real estate owned	21,670			20,862
Other assets	1,585,863			1,310,091			1,556,613			1,435,187
Total assets	$	89,356,838		$	90,068,538		$	85,683,660		$	87,079,953
Liabilities:
Deposits:
Noninterest bearing	$	20,585,598		$	19,291,533		$	21,094,235		$	20,332,792
Interest bearing	47,001,739			46,690,233			46,119,332			46,946,741
Total deposits	67,587,337			65,981,766			67,213,567			67,279,533
FHLB and other borrowings	3,671,861			5,438,620			3,956,041			3,001,551
Federal funds purchased and securities sold under agreements to repurchase	165,573			750,154			44,761			39,052
Other short-term borrowings	3,591,223			4,032,644			327,539			2,802,977
Accrued expenses and other liabilities	1,521,654			1,240,645			1,025,849			1,206,133
Total liabilities	76,537,648			77,443,829			72,567,757			74,329,246
Shareholder’s Equity:
Series A Preferred stock — $0.01 par value, liquidation preference $200,000 per share
Authorized - 30,000,000 shares
Issued — 1,150 shares at both September 30, 2016 and December 31, 2015	229,475			229,475
Authorized — 30,000,000 shares
Issued — 1,150 shares at both September 30, 2017 and December 31, 2016							229,475			229,475
Common stock — $0.01 par value:
Authorized — 300,000,000 shares
Issued — 222,950,751 shares at both September 30, 2016 and December 31, 2015	2,230			2,230
Issued — 222,950,751 shares at both September 30, 2017 and December 31, 2016							2,230			2,230
Surplus	15,020,937			15,160,267			14,912,412			14,985,673
Accumulated deficit	(2,416,402		)	(2,696,953		)	(1,920,184		)	(2,327,440		)
Accumulated other comprehensive loss	(46,644		)	(99,336		)	(137,583		)	(168,252		)
Total BBVA Compass Bancshares, Inc. shareholder’s equity	12,789,596			12,595,683			13,086,350			12,721,686
Noncontrolling interests	29,594			29,026			29,553			29,021
Total shareholder’s equity	12,819,190			12,624,709			13,115,903			12,750,707
Total liabilities and shareholder’s equity	$	89,356,838		$	90,068,538		$	85,683,660		$	87,079,953

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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015			2017		2016		2017		2016
	(In Thousands)									(In Thousands)
Interest income:
Interest and fees on loans	$	557,996	$	540,517	$	1,678,249	$	1,615,753		$	623,884	$	557,996	$	1,805,971	$	1,678,249
Interest on investment securities available for sale	48,382		46,646		131,021		143,058			53,930		48,382		164,398		131,021
Interest on investment securities held to maturity	6,675		6,953		20,229		20,579			6,994		6,675		20,454		20,229
Interest on federal funds sold, securities purchased under agreements to resell and interest bearing deposits	4,563		1,666		13,275		4,027			11,557		4,563		32,868		13,275
Interest on trading account assets	12,926		14,431		40,659		37,877			6,247		12,926		26,349		40,659
Total interest income	630,542		610,213		1,883,433		1,821,294			702,612		630,542		2,050,040		1,883,433
Interest expense:
Interest on deposits	76,031		68,282		230,779		203,136			75,083		76,031		211,301		230,779
Interest on FHLB and other borrowings	21,315		20,422		58,919		67,068			29,904		21,315		71,422		58,919
Interest on federal funds purchased and securities sold under agreements to repurchase	4,934		2,506		16,525		5,534			4,623		4,934		16,462		16,525
Interest on other short-term borrowings	13,453		11,129		41,281		36,668			3,641		13,453		24,233		41,281
Total interest expense	115,733		102,339		347,504		312,406			113,251		115,733		323,418		347,504
Net interest income	514,809		507,874		1,535,929		1,508,888			589,361		514,809		1,726,622		1,535,929
Provision for loan losses	65,107		29,151		265,025		117,331			103,434		65,107		228,858		265,025
Net interest income after provision for loan losses	449,702		478,723		1,270,904		1,391,557			485,927		449,702		1,497,764		1,270,904
Noninterest income:
Service charges on deposit accounts	55,047		54,917		158,393		161,891			55,953		55,047		166,040		158,393
Card and merchant processing fees	31,256		29,024		92,507		83,918			32,297		31,256		94,749		92,507
Retail investment sales										26,817		30,137		82,876		79,689
Investment banking and advisory fees	34,385		17,842		86,324		84,975			30,500		34,385		78,744		86,324
Money transfer income	25,058		24,868		75,960		68,702			24,881		25,058		77,408		75,960
Retail investment sales	30,137		26,055		79,689		77,574
Asset management fees	8,778		7,918		25,969		24,449			10,336		8,778		30,162		25,969
Corporate and correspondent investment sales	6,974		6,047		21,490		20,290			5,145		6,974		26,249		21,490
Mortgage banking	8,242		554		5,410		21,269			3,450		8,242		9,636		5,410
Bank owned life insurance	4,170		4,345		13,041		13,527			4,322		4,170		12,711		13,041
Investment securities gains, net	—		6,736		30,037		66,967			3,033		—		3,033		30,037
Loss on prepayment of FHLB and other borrowings, net	—		—		—		(6,118		)
Other	59,718		82,414		206,396		199,732			61,060		59,718		167,198		206,396
Total noninterest income	263,765		260,720		795,216		817,176			257,794		263,765		748,806		795,216
Noninterest expense:
Salaries, benefits and commissions	279,132		271,143		836,067		804,828			279,384		279,132		835,825		836,067
Equipment	59,697		58,414		179,646		174,311			60,656		59,697		184,691		179,646
Professional services	63,628		55,476		178,396		154,134			64,775		63,628		187,422		178,396
Net occupancy	41,610		39,706		120,881		119,731			42,227		41,610		125,568		120,881
Money transfer expense	16,680		16,514		50,048		44,016			15,938		16,680		50,069		50,048
Amortization of intangibles	4,093		9,507		12,280		30,083			2,525		4,093		7,575		12,280
Securities impairment:
Other-than-temporary impairment	—		—		281		1,385			—		—		242		281
Less: non-credit portion recognized in other comprehensive income	—		—		151		87			—		—		—		151
Total securities impairment	—		—		130		1,298			—		—		242		130
Other	91,431		106,615		312,004		307,757			108,457		91,431		304,367		312,004
Total noninterest expense	556,271		557,375		1,689,452		1,636,158			573,962		556,271		1,695,759		1,689,452
Net income before income tax expense	157,196		182,068		376,668		572,575			169,759		157,196		550,811		376,668
Income tax expense	36,845		52,428		94,548		156,865			39,308		36,845		142,097		94,548
Net income	120,351		129,640		282,120		415,710			130,451		120,351		408,714		282,120
Less: net income attributable to noncontrolling interests	523		491		1,569		1,738			584		523		1,458		1,569
Net income attributable to BBVA Compass Bancshares, Inc.	119,828		129,149		280,551		413,972			129,867		119,828		407,256		280,551
Less: preferred stock dividends	3,476		—		10,148		—			3,786		3,476		11,034		10,148
Net income attributable to common shareholder	$	116,352	$	129,149	$	270,403	$	413,972		$	126,081	$	116,352	$	396,222	$	270,403

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 September 30,					Nine Months Ended September 30,				Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015		2016		2015		2017			2016			2017			2016
	(In Thousands)									(In Thousands)
Net income	$	120,351		$	129,640	$	282,120	$	415,710	$	130,451		$	120,351		$	408,714		$	282,120
Other comprehensive income, net of tax:
Unrealized holding (losses) gains arising during period from securities available for sale	(26,076		)	27,493		65,592		39,270
Net unrealized holding (losses) gains arising during period from securities available for sale										(646		)	(26,076		)	38,919			65,592
Less: reclassification adjustment for net gains on sale of securities available for sale in net income	—			3,804		19,035		37,816		1,911			—			1,911			19,035
Net change in unrealized holding gains (losses) on securities available for sale	(26,076		)	23,689		46,557		1,454
Net change in net unrealized holding (losses) gains on securities available for sale										(2,557		)	(26,076		)	37,008			46,557
Change in unamortized net holding losses on investment securities held to maturity	1,168			1,066		2,924		4,834		999			1,168			2,540			2,924
Less: non-credit related impairment on investment securities held to maturity	—			—		96		49		—			—			—			96
Change in unamortized non-credit related impairment on investment securities held to maturity	225			290		648		704		251			225			778			648
Net change in unamortized holding losses on securities held to maturity	1,393			1,356		3,476		5,489		1,250			1,393			3,318			3,476
Unrealized holding (losses) gains arising during period from cash flow hedge instruments	(1,461		)	2,042		1,728		5,322
Unrealized holding gains (losses) arising during period from cash flow hedge instruments										855			(1,461		)	(9,172		)	1,728
Change in defined benefit plans	—			—		931		1,715		—			—			(485		)	931
Other comprehensive (loss) income, net of tax	(26,144		)	27,087		52,692		13,980		(452		)	(26,144		)	30,669			52,692
Comprehensive income	94,207			156,727		334,812		429,690		129,999			94,207			439,383			334,812
Less: comprehensive income attributable to noncontrolling interests	523			491		1,569		1,738		584			523			1,458			1,569
Comprehensive income attributable to BBVA Compass Bancshares, Inc.	$	93,684		$	156,236	$	333,243	$	427,952	$	129,415		$	93,684		$	437,925		$	333,243

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

Balance, January 1, 2016	$	229,475	$	2,230	$	15,160,267		$	(2,696,953	)	$	(99,336	)	$	29,026		$	12,624,709
Balance, December 31, 2015																				$	229,475	$	2,230	$	15,160,267		$	(2,696,953	)	$	(99,336	)	$	29,026		$	12,624,709
Net income	—		—		—			280,551			—			1,569			282,120			—		—		—			280,551			—			1,569			282,120
Other comprehensive income, net of tax	—		—		—			—			52,692			—			52,692			—		—		—			—			52,692			—			52,692
Preferred stock dividends	—		—		(10,148		)	—			—			(1,037		)	(11,185		)	—		—		(10,148		)	—			—			(1,037		)	(11,185		)
Common stock dividends	—		—		(60,000		)	—			—			—			(60,000		)	—		—		(60,000		)	—			—			—			(60,000		)
Dividend to BBVA Bancomer USA, Inc.	—		—		(69,151		)	—			—			—			(69,151		)	—		—		(69,151		)	—			—			—			(69,151		)
Capital contribution	—		—		—			—			—			36			36			—		—		—			—			—			36			36
Vesting of restricted stock	—		—		(1,527		)	—			—			—			(1,527		)	—		—		(1,527		)	—			—			—			(1,527		)
Restricted stock retained to cover taxes	—		—		(545		)	—			—			—			(545		)	—		—		(545		)	—			—			—			(545		)
Restricted stock tax benefit	—		—		(468		)	—			—			—			(468		)
Restricted stock tax deficiency																				—		—		(468		)	—			—			—			(468		)
Amortization of stock-based deferred compensation	—		—		2,509			—			—			—			2,509			—		—		2,509			—			—			—			2,509
Balance, September 30, 2016	$	229,475	$	2,230	$	15,020,937		$	(2,416,402	)	$	(46,644	)	$	29,594		$	12,819,190		$	229,475	$	2,230	$	15,020,937		$	(2,416,402	)	$	(46,644	)	$	29,594		$	12,819,190

Balance, December 31, 2016																				$	229,475	$	2,230	$	14,985,673		$	(2,327,440	)	$	(168,252	)	$	29,021		$	12,750,707
Net income																				—		—		—			407,256			—			1,458			408,714
Other comprehensive income, net of tax																				—		—		—			—			30,669			—			30,669
Preferred stock dividends																				—		—		(11,034		)	—			—			(1,037		)	(12,071		)
Common stock dividends																				—		—		(60,000		)	—			—			—			(60,000		)
Capital contribution																				—		—		—			—			—			111			111
Vesting of restricted stock																				—		—		(1,538		)	—			—			—			(1,538		)
Restricted stock retained to cover taxes																				—		—		(689		)	—			—			—			(689		)
Balance, September 30, 2017																				$	229,475	$	2,230	$	14,912,412		$	(1,920,184	)	$	(137,583	)	$	29,553		$	13,115,903

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)

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2017			2016
	(In Thousands)						(In Thousands)
Operating Activities:
Net income	$	282,120		$	415,710		$	408,714		$	282,120
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	221,975			206,882			222,467			221,975
Securities impairment	130			1,298			242			130
Amortization of intangibles	12,280			30,083			7,575			12,280
Accretion of discount, loan fees and purchase market adjustments, net	(17,191		)	(84,168		)	(11,346		)	(17,191		)
Net change in FDIC indemnification liability	4,180			49,669			22			4,180
Gain on termination of FDIC shared loss agreement							(1,779		)	—
Provision for loan losses	265,025			117,331			228,858			265,025
Amortization of stock based compensation	2,509			1,772			—			2,509
Net change in trading account assets	(369,690		)	(153,297		)	119,641			(369,690		)
Net change in trading account liabilities	210,554			80,378			(66,800		)	210,554
Net change in loans held for sale	(27,468		)	32,058			27,645			(27,468		)
Deferred tax benefit	(22,596		)	(9,686		)
Deferred tax expense (benefit)							31,200			(22,596		)
Investment securities gains, net	(30,037		)	(66,967		)	(3,033		)	(30,037		)
Loss on prepayment of FHLB and other borrowings, net	—			6,118
Loss on sale of premises and equipment	5,019			151			2,468			5,019
Gain on sale of loans	(15,551		)	(21,086		)	—			(15,551		)
Net (gain) loss on sale of other real estate and other assets	(406		)	500
(Increase) decrease in other assets	(260,823		)	20,424
Increase (decrease) in other liabilities	68,043			(125,524		)
Net loss (gain) on sale of other real estate and other assets							1,606			(406		)
Increase in other assets							(195,868		)	(260,823		)
Increase in other liabilities							7,059			68,043
Net cash provided by operating activities	328,073			501,646			778,671			328,073
Investing Activities:
Proceeds from sales of investment securities available for sale	1,785,313			2,877,744			210,906			1,785,313
Proceeds from prepayments, maturities and calls of investment securities available for sale	1,629,841			1,225,031			2,082,636			1,629,841
Purchases of investment securities available for sale	(3,848,779		)	(4,662,585		)	(2,902,214		)	(3,848,779		)
Proceeds from prepayments, maturities and calls of investment securities held to maturity	114,689			82,163			137,480			114,689
Purchases of investment securities held to maturity	(27,104		)	(82,634		)	(6,233		)	(27,104		)
Proceeds from sales of trading securities	729,218			2,871,708			2,762,293			729,218
Purchases of trading securities	(272,857		)	(4,077,520		)	(309,438		)	(272,857		)
Net change in loan portfolio	(66,962		)	(3,853,782		)	(604,297		)	(66,962		)
Proceeds from sales of loans	1,022,579			436,242			175,088			1,022,579
Purchase of premises and equipment	(112,419		)	(103,165		)	(81,590		)	(112,419		)
Proceeds from sale of premises and equipment	6,311			7,974			2,064			6,311
Net cash paid in acquisition	—			(12,567		)
Reimbursements from FDIC for covered assets	878			818
(Payments to) reimbursements from FDIC for covered assets							(2,832		)	878
Net cash paid to the FDIC for termination of shared loss agreement							(131,603		)	—
Proceeds from sales of other real estate owned	21,145			12,890			22,650			21,145
Net cash provided by (used in) investing activities	981,853			(5,277,683		)
Net cash provided by investing activities							1,354,910			981,853
Financing Activities:
Net increase in demand deposits, NOW accounts and savings accounts	1,380,456			2,527,448
Net (decrease) increase in demand deposits, NOW accounts and savings accounts							(119,583		)	1,380,456
Net increase in time deposits	215,262			767,539			44,704			215,262
Net decrease in federal funds purchased and securities sold under agreements to repurchase	(584,581		)	(490,244		)
Net (decrease) increase in other short-term borrowings	(441,421		)	1,622,173
Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase							5,709			(584,581		)
Net decrease in other short-term borrowings							(2,475,438		)	(441,421		)
Proceeds from FHLB and other borrowings	1,250,000			4,000,000			9,245,563			1,250,000
Repayment of FHLB and other borrowings	(3,057,407		)	(2,612,915		)	(8,277,477		)	(3,057,407		)
Capital contribution for non-controlling interest	36			—			111			36
Vesting of restricted stock	(1,527		)	(3,603		)	(1,538		)	(1,527		)
Restricted stock grants retained to cover taxes	(545		)	(3,016		)	(689		)	(545		)
Dividend paid to BBVA Bancomer USA, Inc.	(69,151		)	—			—			(69,151		)
Common dividends paid	(60,000		)	(35,000		)	(60,000		)	(60,000		)
Preferred dividends paid	(11,185		)	(1,037		)	(12,071		)	(11,185		)
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
Net cash used in financing activities							(1,650,709		)	(1,380,063		)
Net increase (decrease) in cash and cash equivalents							482,872			(70,137		)
Cash and cash equivalents at beginning of year	4,496,828			3,432,948			3,251,786			4,496,828
Cash and cash equivalents at end of period	$	4,426,691		$	4,428,256		$	3,734,658		$	4,426,691

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

General

The accounting and reporting policies of the Company and the methods of applying those policies that materially affect the consolidated financial statements conform with U.S. GAAP and with general financial services industry practices. The accompanying ~~interim condensed~~unaudited consolidated financial statements include the accounts of BBVA Compass Bancshares, Inc. and its subsidiaries and have been prepared in conformity with U.S. GAAP for interim financial information and in accordance with the ~~rules~~instructions to Quarterly Report on Form 10-Q and ~~regulations~~Article 10 of Regulation S-X as promulgated by the ~~SEC~~Securities 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.Exchange Commission. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the condensed consolidated financial statements have been included. Operating results for the three and nine months ended September 30, ~~2016,~~2017, are not necessarily indicative of the results that may be expected for the year ended December 31, ~~2016.~~2017. 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.~~2016.

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 Consolidated Financial Statements

The preparation of consolidated 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 Adopted Accounting Standards

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 were effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. The adoption of this standard did not have an impact on the financial condition or results of operations of the Company.

Recently Issued Accounting Standards Not Yet Adopted

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 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 utilizing a modified retrospective transition method in the first quarter of ~~2018.~~2018 and will be subject to expanded disclosure requirements upon adoption. The Company's implementation efforts include the identification of

~~Consolidation~~

~~In February 2015,~~revenue within the ~~FASB issued ASU 2015-02,~~ ~~Amendments to~~scope of the ~~Consolidation Analysis.~~ ~~The amendments in this ASU modify~~guidance, as well as the evaluation of ~~whether limited partnerships~~revenue contracts. While the Company has not yet identified any material changes in the timing of revenue recognition, the Company's review is ongoing and ~~similar legal entities are variable interest entities or voting interest entities, eliminate~~continues to evaluate 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~~certain contract costs ~~the amendments in this ASU require debt issuance costs related to a recognized debt liability be~~(whether 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 conditiongross 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.offset against noninterest income).

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,~~In November 2016, the ~~Parent completed~~FASB issued ASU 2016-18, Statement of Cash Flows - Restricted Cash. The amendments in this ASU require that a statement of cash flows explain the ~~purchase~~change during the period in the total of ~~four subsidiaries (Bancomer Transfer Services, Bancomer Payment Services, Bancomer Foreign Exchange,~~cash, cash equivalents, and ~~Bancomer Financial Services) from BBVA Bancomer USA, Inc. BBVA Bancomer USA, Inc.~~amounts generally described as restricted cash or restricted cash equivalents. 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 ~~a wholly-owned U.S. subsidiary~~permitted. The Company is currently assessing the impact that the adoption of ~~BBVA Bancomer, S.A., Mexico City, Mexico and ultimately a wholly-owned subsidiary~~this standard will have on the Statement 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~~Cash Flows of the ~~Parent.~~Company.

~~The transaction was structured as~~Goodwill

In January 2017, the FASB issued ASU 2017-04, Intangibles -Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Under the amendments in this ASU, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a ~~cash purchase totaling $69.2 million. At December 31, 2015,~~reporting unit with its carrying

amount, and (2) recognize an impairment charge for the ~~four subsidiaries had~~amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total ~~assets~~amount of ~~approximately $103 million. Because~~goodwill allocated to that reporting unit. Additionally, ASU No. 2017-04 removes the ~~Company~~requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, ~~the acquired subsidiaries are under common control~~if it fails such qualitative test, to perform Step 2 of the ~~ultimate parent, BBVA,~~goodwill impairment test. This ASU is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The ASU should be applied using a prospective method. The Company is currently assessing 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 subsidiariespronouncement 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 adoption.

Retirement Benefits

In March 2017, the ~~acquisition~~FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments in this ASU require that an employer disaggregate the service cost component from the other components of net benefit cost. The amendments also provide explicit guidance on how to ~~certain captions within~~present the ~~Company's Unaudited Condensed Consolidated Balance Sheet as of December 31, 2015~~service cost component and the ~~Company's Unaudited Condensed Consolidated Income Statement~~other components of net benefit cost in the income statement and allow only the service cost component of net benefit cost to be eligible for capitalization. This ASU is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. Early adoption is permitted. The ASU should be applied retrospectively for the ~~three~~presentation of the service cost component and ~~nine months ended September 30, 2015.~~the other components of net benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net benefit cost. The adoption of this standard is not expected to have a material impact on the financial condition or results of operations of the Company.

Premium Amortization on Purchased Callable Debt Securities

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
In March 2017, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities. The amendments in this ASU reduce the amortization period for certain callable debt securities carried at a premium and require the premium to be amortized over a period not to exceed the earliest call date. These amendments do not apply to securities carried at a discount. This ASU is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. Early adoption is permitted. The ASU should be applied using a modified retrospective method. The adoption of this standard is not expected to have a material impact on the financial condition or results of operations of the Company.

Derivatives and Hedging

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,~~In August 2017, the ~~Unaudited Condensed Consolidated Statements~~FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. The amendments in this ASU better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of ~~Comprehensive Income, Shareholder's Equity~~hedge results. This ASU is effective for fiscal years beginning after December 15, 2018, and ~~Cash Flows along with Footnotes 6, 9, 10, 12,~~for interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing this pronouncement and ~~13 have been adjusted to reflect these retrospective adjustments.~~

the impact of adoption.

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

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


	September 30, 2016								September 30, 2017
			Gross Unrealized								Gross Unrealized
	Amortized Cost		Gains		Losses		Fair Value		Amortized Cost		Gains		Losses		Fair Value
	(In Thousands)								(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	1,856,178	$	10,178	$	16,126	$	1,850,230	$	3,704,848	$	5,243	$	30,401	$	3,679,690
Mortgage-backed securities	3,988,469		36,732		19,564		4,005,637		3,051,728		18,256		31,667		3,038,317
Collateralized mortgage obligations	5,207,807		18,842		19,432		5,207,217		5,171,868		4,663		76,490		5,100,041
States and political subdivisions	9,787		288		—		10,075		2,276		118		—		2,394
Other	16,528		356		32		16,852		17,739		96		87		17,748
Equity securities	426,826		48		—		426,874		430,032		87		—		430,119
Total	$	11,505,595	$	66,444	$	55,154	$	11,516,885	$	12,378,491	$	28,463	$	138,645	$	12,268,309
Investment securities held to maturity:
Collateralized mortgage obligations	$	88,611	$	4,733	$	5,460	$	87,884	$	69,098	$	4,232	$	3,634	$	69,696
Asset-backed securities	17,144		1,959		1,465		17,638		10,409		2,011		768		11,652
States and political subdivisions	1,070,917		17,667		16,516		1,072,068		936,353		5,103		15,054		926,402
Other	64,178		1,417		1,951		63,644		61,512		306		1,649		60,169
Total	$	1,240,850	$	25,776	$	25,392	$	1,241,234	$	1,077,372	$	11,652	$	21,105	$	1,067,919


	December 31, 2015								December 31, 2016
			Gross Unrealized								Gross Unrealized
	Amortized Cost		Gains		Losses		Fair Value		Amortized Cost		Gains		Losses		Fair Value
	(In Thousands)								(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	3,232,238	$	4,076	$	24,822	$	3,211,492	$	2,409,141	$	2,390	$	37,200	$	2,374,331
Mortgage-backed securities	4,624,441		16,548		50,727		4,590,262		3,796,270		12,869		45,801		3,763,338
Collateralized mortgage obligations	2,713,075		8,200		16,019		2,705,256		5,200,241		5,292		106,605		5,098,928
States and political subdivisions	15,492		395		—		15,887		8,457		184		—		8,641
Other	23,914		175		44		24,045		16,321		6		142		16,185
Equity securities	503,540		38		—		503,578		403,548		84		—		403,632
Total	$	11,112,700	$	29,432	$	91,612	$	11,050,520	$	11,833,978	$	20,825	$	189,748	$	11,665,055
Investment securities held to maturity:
Collateralized mortgage obligations	$	103,947	$	6,022	$	4,634	$	105,335	$	83,087	$	5,265	$	3,278	$	85,074
Asset-backed securities	24,011		3,002		1,574		25,439		15,118		1,982		1,081		16,019
States and political subdivisions	1,128,240		729		82,632		1,046,337		1,040,716		2,309		25,518		1,017,507
Other	66,478		2,644		2,112		67,010		64,296		1,143		2,030		63,409
Total	$	1,322,676	$	12,397	$	90,952	$	1,244,121	$	1,203,217	$	10,699	$	31,907	$	1,182,009

In the above ~~table,~~tables, equity securities include $~~427~~430 million and $~~503~~403 million at September 30, ~~2016~~2017 and December 31, ~~2015~~2016, 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~~tables disclose the fair value and the gross unrealized losses of the Company’s available for sale securities and held to maturity securities that were in a loss position at September 30, ~~2016~~2017 and December 31, ~~2015~~2016. This information is aggregated by investment category and the length of time the individual securities have been in an unrealized loss position.


	September 30, 2016												September 30, 2017
	Securities in a loss position for less than 12 months				Securities in a loss position for 12 months or longer				Total				Securities in a loss position for less than 12 months				Securities in a loss position for 12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)												(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	386,626	$	4,012	$	604,317	$	12,114	$	990,943	$	16,126	$	1,754,139	$	10,074	$	1,048,956	$	20,327	$	2,803,095	$	30,401
Mortgage-backed securities	301,922		2,182		1,502,080		17,382		1,804,002		19,564		833,667		7,391		1,200,390		24,276		2,034,057		31,667
Collateralized mortgage obligations	2,319,508		13,007		704,501		6,425		3,024,009		19,432		1,364,631		7,317		3,068,922		69,173		4,433,553		76,490
Other	—		—		1,090		32		1,090		32		3,897		29		1,064		58		4,961		87
Total	$	3,008,056	$	19,201	$	2,811,988	$	35,953	$	5,820,044	$	55,154	$	3,956,334	$	24,811	$	5,319,332	$	113,834	$	9,275,666	$	138,645

Investment securities held to maturity:
Collateralized mortgage obligations	$	4,099	$	519	$	50,858	$	4,941	$	54,957	$	5,460	$	11,479	$	860	$	36,588	$	2,774	$	48,067	$	3,634
Asset-backed securities	425		14		9,964		1,451		10,389		1,465		—		—		6,767		768		6,767		768
States and political subdivisions	57,577		4,378		325,680		12,138		383,257		16,516		427,317		10,710		156,604		4,344		583,921		15,054
Other	16,504		94		3,538		1,857		20,042		1,951		14,847		61		21,089		1,588		35,936		1,649
Total	$	78,605	$	5,005	$	390,040	$	20,387	$	468,645	$	25,392	$	453,643	$	11,631	$	221,048	$	9,474	$	674,691	$	21,105


	December 31, 2015												December 31, 2016
	Securities in a loss position for less than 12 months				Securities in a loss position for 12 months or longer				Total				Securities in a loss position for less than 12 months				Securities in a loss position for 12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)												(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	2,081,528	$	16,523	$	460,160	$	8,299	$	2,541,688	$	24,822	$	1,277,341	$	23,862	$	609,078	$	13,338	$	1,886,419	$	37,200
Mortgage-backed securities	2,623,761		20,380		1,408,069		30,347		4,031,830		50,727		1,425,743		15,235		1,368,957		30,566		2,794,700		45,801
Collateralized mortgage obligations	1,321,121		10,378		393,210		5,641		1,714,331		16,019		3,527,757		99,477		782,849		7,128		4,310,606		106,605
Other	—		—		1,078		44		1,078		44		3,849		77		1,057		65		4,906		142
Total	$	6,026,410	$	47,281	$	2,262,517	$	44,331	$	8,288,927	$	91,612	$	6,234,690	$	138,651	$	2,761,941	$	51,097	$	8,996,631	$	189,748

Investment securities held to maturity:
Collateralized mortgage obligations	$	11,066	$	326	$	52,601	$	4,308	$	63,667	$	4,634	$	3,847	$	527	$	40,083	$	2,751	$	43,930	$	3,278
Asset-backed securities	—		—		15,790		1,574		15,790		1,574		343		1		9,238		1,080		9,581		1,081
States and political subdivisions	73,302		6,533		794,489		76,099		867,791		82,632		532,090		13,043		313,803		12,475		845,893		25,518
Other	—		—		4,015		2,112		4,015		2,112		16,578		174		3,587		1,856		20,165		2,030
Total	$	84,368	$	6,859	$	866,895	$	84,093	$	951,263	$	90,952	$	552,858	$	13,745	$	366,711	$	18,162	$	919,569	$	31,907

As indicated in the previous tables, at September 30, ~~2016,~~2017, the Company held certain investment securities in unrealized loss positions. The Company does not ~~have the intent~~intend to sell these securities ~~and believes~~nor is it ~~is not more likely than not that~~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 September 30, ~~2016~~2017 or December 31, ~~2015~~2016, other than those noted below.

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015		2017		2016		2017		2016
	(In Thousands)								(In Thousands)
Balance at beginning of period	$	22,582	$	22,421	$	22,452	$	21,123	$	22,824	$	22,582	$	22,582	$	22,452
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		—		—		242		—
Additions for the credit component on debt securities in which OTTI was previously recognized	—		—		130		285		—		—		—		130
Balance at end of period	$	22,582	$	22,421	$	22,582	$	22,421	$	22,824	$	22,582	$	22,824	$	22,582

For both the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, there was no OTTI recognized on held to maturity securities. For the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, there was ~~$130~~$242 thousand and ~~$1.3 million,~~$130 thousand, respectively, of OTTI recognized on held to maturity securities. The investment securities primarily impacted by credit impairment are held to maturity non-agency collateralized mortgage obligations.

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


September 30, 2016	Amortized Cost		Fair Value
September 30, 2017					Amortized Cost		Fair Value
	(In Thousands)				(In Thousands)
Investment securities available for sale:
Maturing within one year	$	91,838	$	91,868	$	150,384	$	150,356
Maturing after one but within five years	365,562		369,917		1,283,937		1,279,279
Maturing after five but within ten years	367,002		370,969		1,347,306		1,342,532
Maturing after ten years	1,058,091		1,044,403		943,236		927,665
	1,882,493		1,877,157		3,724,863		3,699,832
Mortgage-backed securities and collateralized mortgage obligations	9,196,276		9,212,854		8,223,596		8,138,358
Equity securities	426,826		426,874		430,032		430,119
Total	$	11,505,595	$	11,516,885	$	12,378,491	$	12,268,309

Investment securities held to maturity:
Maturing within one year	$	67,853	$	68,283	$	101,445	$	101,473
Maturing after one but within five years	244,188		243,803		192,870		192,122
Maturing after five but within ten years	260,272		258,962		225,282		222,099
Maturing after ten years	579,926		582,302		488,677		482,529
	1,152,239		1,153,350		1,008,274		998,223
Collateralized mortgage obligations	88,611		87,884		69,098		69,696
Total	$	1,240,850	$	1,241,234	$	1,077,372	$	1,067,919

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015		2017		2016		2017		2016
	(In Thousands)								(In Thousands)
Gross gains	$	—	$	8,568	$	30,037	$	68,799	$	3,033	$	—	$	3,033	$	30,037
Gross losses	—		1,832		—		1,832		—		—		—		—
Net realized gains	$	—	$	6,736	$	30,037	$	66,967	$	3,033	$	—	$	3,033	$	30,037

(43) Loans and Allowance for Loan Losses

The following table presents the composition of the loan portfolio.


	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
	(In Thousands)				(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	24,839,068	$	26,022,374	$	25,091,942	$	25,122,002
Real estate – construction	2,215,272		2,354,253		2,247,144		2,125,316
Commercial real estate – mortgage	11,361,630		10,453,280		11,342,378		11,210,660
Total commercial loans	38,415,970		38,829,907		38,681,464		38,457,978
Consumer loans:
Residential real estate – mortgage	13,457,435		13,993,285		13,398,503		13,259,994
Equity lines of credit	2,494,468		2,419,815		2,617,312		2,543,778
Equity loans	479,375		580,804		383,376		445,709
Credit card	599,862		627,359		590,975		604,881
Consumer direct	1,186,827		936,871		1,604,396		1,254,641
Consumer indirect	3,196,235		3,495,082		3,039,178		3,134,948
Total consumer loans	21,414,202		22,053,216		21,633,740		21,243,951
Covered loans(1)	381,111		440,961		—		359,334
Total loans	$	60,211,283	$	61,324,084	$	60,315,204	$	60,061,263

(1)

Covered loans represent loans acquired from the FDIC subject to loss sharing agreements. 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. In July 2017, the Company entered into an agreement with the FDIC to terminate the Company's single family residential loss share agreement ahead of the contractual maturity. Loans no longer covered under a loss share agreement were reclassified to their appropriate loan type.

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

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			Commercial, Financial and Agricultural			Commercial Real Estate (1)			Residential Real Estate (2)			Consumer (3)			Covered			Total
	(In Thousands)																		(In Thousands)
Three months ended September 30, 2017																			Three months ended September 30, 2017
Allowance for loan losses:
Beginning balance																			$	427,654		$	116,819		$	108,095		$	164,384		$	—		$	816,952
Provision for loan losses																			20,513			10,633			8,411			63,877			—			103,434
Loan charge-offs																			(21,320		)	(7,913		)	(4,290		)	(55,102		)	—			(88,625		)
Loan recoveries																			6,625			235			2,401			8,097			—			17,358
Net (charge-offs) recoveries																			(14,695		)	(7,678		)	(1,889		)	(47,005		)	—			(71,267		)
Ending balance																			$	433,472		$	119,774		$	114,617		$	181,256		$	—		$	849,119
Three months ended September 30, 2016	Three months ended September 30, 2016																		Three months ended September 30, 2016
Allowance for loan losses:
Beginning balance	$	499,398		$	114,311		$	119,076		$	110,266		$	—		$	843,051		$	499,398		$	114,311		$	119,076		$	110,266		$	—		$	843,051
Provision (credit) for loan losses	20,533			54			528			43,992			—			65,107
Loans charged off	(13,702		)	(104		)	(4,608		)	(46,472		)	—			(64,886		)
Loan recoveries	4,766			682			3,429			9,931			—			18,808
Net (charge-offs) recoveries	(8,936		)	578			(1,179		)	(36,541		)	—			(46,078		)
Ending balance	$	510,995		$	114,943		$	118,425		$	117,717		$	—		$	862,080
Three months ended September 30, 2015
Allowance for loan losses:
Beginning balance	$	350,879		$	135,152		$	133,995		$	99,559		$	1,886		$	721,471
Provision (credit) for loan losses	16,424			(7,256		)	(577		)	20,091			469			29,151
Loans charged off	(9,161		)	(910		)	(5,944		)	(27,567		)	(490		)	(44,072		)
Provision for loan losses																			20,533			54			528			43,992			—			65,107
Loan charge-offs																			(13,702		)	(104		)	(4,608		)	(46,472		)	—			(64,886		)
Loan recoveries	5,171			899			3,772			5,728			2			15,572			4,766			682			3,429			9,931			—			18,808
Net (charge-offs) recoveries	(3,990		)	(11		)	(2,172		)	(21,839		)	(488		)	(28,500		)	(8,936		)	578			(1,179		)	(36,541		)	—			(46,078		)
Ending balance	$	363,313		$	127,885		$	131,246		$	97,811		$	1,867		$	722,122		$	510,995		$	114,943		$	118,425		$	117,717		$	—		$	862,080

Nine Months Ended September 30, 2017																			Nine Months Ended September 30, 2017
Allowance for loan losses:
Beginning balance																			$	458,580		$	116,937		$	119,484		$	143,292		$	—		$	838,293
Provision (credit) for loan losses																			49,045			7,534			2,639			169,671			(31		)	228,858
Loan charge-offs																			(91,943		)	(8,927		)	(16,242		)	(160,261		)	—			(277,373		)
Loan recoveries																			17,790			4,230			8,736			28,554			31			59,341
Net (charge-offs) recoveries																			(74,153		)	(4,697		)	(7,506		)	(131,707		)	31			(218,032		)
Ending balance																			$	433,472		$	119,774		$	114,617		$	181,256		$	—		$	849,119
Nine Months Ended September 30, 2016	Nine Months Ended September 30, 2016																		Nine Months Ended September 30, 2016
Allowance for loan losses:
Beginning balance	$	402,113		$	122,068		$	132,104		$	104,948		$	1,440		$	762,673		$	402,113		$	122,068		$	132,104		$	104,948		$	1,440		$	762,673
Provision (credit) for loan losses	167,648			(7,393		)	(7,412		)	112,058			124			265,025			167,648			(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 charge-offs																			(66,541		)	(3,555		)	(15,072		)	(125,607		)	(1,565		)	(212,340		)
Loan recoveries	7,775			3,823			8,805			26,318			1			46,722			7,775			3,823			8,805			26,318			1			46,722
Net (charge-offs) recoveries	(58,766		)	268			(6,267		)	(99,289		)	(1,564		)	(165,618		)	(58,766		)	268			(6,267		)	(99,289		)	(1,564		)	(165,618		)
Ending balance	$	510,995		$	114,943		$	118,425		$	117,717		$	—		$	862,080		$	510,995		$	114,943		$	118,425		$	117,717		$	—		$	862,080
Nine 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 losses	74,127			(12,995		)	(13,458		)	69,085			572			117,331
Loans charged off	(20,706		)	(2,380		)	(20,889		)	(78,957		)	(1,516		)	(124,448		)
Loan recoveries	10,410			5,027			10,966			17,792			3			44,198
Net (charge-offs) recoveries	(10,296		)	2,647			(9,923		)	(61,165		)	(1,513		)	(80,250		)
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		Commercial, Financial and Agricultural		Commercial Real Estate (1)		Residential Real Estate (2)		Consumer (3)		Covered		Total
	(In Thousands)												(In Thousands)
September 30, 2016
September 30, 2017
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	$	138,067	$	3,253	$	35,867	$	2,507	$	—	$	179,694	$	67,280	$	9,723	$	28,989	$	2,260	$	—	$	108,252
Collectively evaluated for impairment	372,928		111,690		82,558		115,210		—		682,386		366,192		110,051		85,628		178,996		—		740,867
Purchased loans	—		—		—		—		—		—
Total allowance for loan losses	$	510,995	$	114,943	$	118,425	$	117,717	$	—	$	862,080	$	433,472	$	119,774	$	114,617	$	181,256	$	—	$	849,119
Ending balance of loans:	Ending balance of loans:												Ending balance of loans:
Individually evaluated for impairment	$	839,679	$	38,967	$	180,308	$	3,393	$	—	$	1,062,347	$	302,285	$	82,905	$	170,608	$	3,862	$	—	$	559,660
Collectively evaluated for impairment	23,972,927		13,503,337		16,250,039		4,975,230		—		58,701,533		24,789,657		13,506,617		16,228,583		5,230,687		—		59,755,544
Purchased loans	26,462		34,598		931		4,301		381,111		447,403
Total loans	$	24,839,068	$	13,576,902	$	16,431,278	$	4,982,924	$	381,111	$	60,211,283	$	25,091,942	$	13,589,522	$	16,399,191	$	5,234,549	$	—	$	60,315,204

December 31, 2015
December 31, 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	$	27,486	$	3,725	$	38,126	$	1,880	$	—	$	71,217	$	99,932	$	4,037	$	32,016	$	2,223	$	—	$	138,208
Collectively evaluated for impairment	374,458		118,343		93,978		103,068		—		689,847		358,648		112,900		87,468		141,069		—		700,085
Purchased loans	169		—		—		—		1,440		1,609
Total allowance for loan losses	$	402,113	$	122,068	$	132,104	$	104,948	$	1,440	$	762,673	$	458,580	$	116,937	$	119,484	$	143,292	$	—	$	838,293
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	$	719,468	$	44,258	$	186,338	$	3,042	$	—	$	953,106
Collectively evaluated for impairment	25,828,286		12,685,320		16,809,525		5,051,488		—		60,374,619		24,402,534		13,291,718		16,063,143		4,991,428		359,334		59,108,157
Purchased loans	30,887		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	$	25,122,002	$	13,335,976	$	16,249,481	$	4,994,470	$	359,334	$	60,061,263


(1)	Includes commercial real estate – mortgage and real estate – construction loans.


(2)	Includes residential real estate – mortgage, equity lines of credit and equity loans.


(3)	Includes credit card, consumer direct and consumer indirect loans.

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


	September 30, 2016												September 30, 2017
	Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance						Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance
	Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance
	(In Thousands)												(In Thousands)
Commercial, financial and agricultural	$	420,005	$	428,688	$	—	$	419,674	$	445,592	$	138,067	$	124,830	$	134,543	$	—	$	177,455	$	218,610	$	67,280
Real estate – construction	—		—		—		707		819		377		4,593		4,593		—		215		262		196
Commercial real estate – mortgage	15,161		15,765		—		23,099		24,498		2,876		33,979		35,189		—		44,118		51,622		9,527
Residential real estate – mortgage	—		—		—		111,773		111,773		9,226		—		—		—		113,464		113,464		9,743
Equity lines of credit	—		—		—		25,679		26,069		20,572		—		—		—		20,385		20,389		14,919
Equity loans	—		—		—		42,856		43,563		6,069		—		—		—		36,759		37,451		4,327
Credit card	—		—		—		—		—		—		—		—		—		—		—		—
Consumer direct	—		—		—		797		797		56		—		—		—		2,591		2,591		1,074
Consumer indirect	—		—		—		2,596		2,596		2,451		—		—		—		1,271		1,271		1,186
Total loans	$	435,166	$	444,453	$	—	$	627,181	$	655,707	$	179,694	$	163,402	$	174,325	$	—	$	396,258	$	445,660	$	108,252


	December 31, 2015												December 31, 2016
	Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance						Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance
	Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance
	(In Thousands)												(In Thousands)
Commercial, financial and agricultural	$	45,583	$	53,325	$	—	$	117,618	$	122,148	$	27,486	$	375,957	$	396,294	$	—	$	343,511	$	371,085	$	99,932
Real estate – construction	3,403		3,986		—		628		689		515		—		—		—		344		459		344
Commercial real estate – mortgage	24,851		27,486		—		51,241		54,863		3,210		19,235		20,177		—		24,679		24,865		3,693
Residential real estate – mortgage	6,521		6,521		—		102,375		102,375		7,370		—		—		—		119,986		119,986		7,529
Equity lines of credit	—		—		—		28,164		30,302		23,183		—		—		—		24,591		25,045		19,083
Equity loans	—		—		—		46,413		47,245		7,573		—		—		—		41,761		42,561		5,404
Credit card	—		—		—		—		—		—		—		—		—		—		—		—
Consumer direct	—		—		—		935		935		26		—		—		—		745		745		59
Consumer indirect	—		—		—		1,854		1,854		1,854		—		—		—		2,297		2,297		2,164
Total loans	$	80,358	$	91,318	$	—	$	349,228	$	360,411	$	71,217	$	395,192	$	416,471	$	—	$	557,914	$	587,043	$	138,208

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


	Three Months Ended September 30, 2016				Three Months Ended September 30, 2015				Three Months Ended September 30, 2017				Three Months Ended September 30, 2016
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)								(In Thousands)
Commercial, financial and agricultural	$	769,719	$	401	$	133,652	$	204	$	348,075	$	191	$	769,719	$	401
Real estate – construction	634		2		5,360		21		4,230		2		634		2
Commercial real estate – mortgage	36,874		255		87,352		517		83,568		232		36,874		255
Residential real estate – mortgage	110,262		666		107,927		707		115,267		671		110,262		666
Equity lines of credit	26,231		246		27,185		279		20,845		219		26,231		246
Equity loans	43,292		375		48,046		392		37,085		323		43,292		375
Credit card	—		—		—		—		—		—		—		—
Consumer direct	803		7		397		4		2,599		11		803		7
Consumer indirect	2,505		3		1,749		—		1,355		2		2,505		3
Total loans	$	990,320	$	1,955	$	411,668	$	2,124	$	613,024	$	1,651	$	990,320	$	1,955

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 – construction 2,118
6
5,837
97
Commercial real estate – mortgage 46,073
932
85,862
1,634
Residential real estate – mortgage 109,020
1,953
110,790
2,096
Equity lines of credit 27,170
790
26,891
838
Equity loans 44,629
1,123
50,168
1,197
Credit card —
—
—
—
Consumer direct 854
22
686
12
Consumer indirect 2,152
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.~~



	Nine Months Ended September 30, 2017				Nine Months Ended September 30, 2016
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
Commercial, financial and agricultural	$	472,639	$	743	$	575,038	$	1,033
Real estate – construction	1,811		6		2,118		6
Commercial real estate – mortgage	69,304		852		46,073		932
Residential real estate – mortgage	115,622		1,986		109,020		1,953
Equity lines of credit	22,151		671		27,170		790
Equity loans	38,711		997		44,629		1,123
Credit card	—		—		—		—
Consumer direct	1,320		22		854		22
Consumer indirect	1,706		8		2,152		9
Total loans	$	723,264	$	5,285	$	807,054	$	5,868

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.~~2016.

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.


	Commercial						Commercial
	September 30, 2016						September 30, 2017
	Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage		Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage
	(In Thousands)						(In Thousands)
Pass	$	22,686,955	$	2,154,286	$	11,031,439	$	23,705,231	$	2,208,525	$	11,054,754
Special Mention	665,237		56,486		209,917		514,233		35,017		111,720
Substandard	1,164,997		4,485		102,879		746,719		3,602		158,623
Doubtful	321,879		15		17,395		125,759		—		17,281
	$	24,839,068	$	2,215,272	$	11,361,630	$	25,091,942	$	2,247,144	$	11,342,378


	December 31, 2015						December 31, 2016
	Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage		Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage
	(In Thousands)						(In Thousands)
Pass	$	24,823,312	$	2,340,145	$	10,165,630	$	23,142,975	$	2,055,483	$	10,898,877
Special Mention	469,400		5,148		142,124		758,417		60,826		187,182
Substandard	688,427		8,941		133,091		1,081,439		9,007		106,183
Doubtful	41,235		19		12,435		139,171		—		18,418
	$	26,022,374	$	2,354,253	$	10,453,280	$	25,122,002	$	2,125,316	$	11,210,660


	Consumer												Consumer
	September 30, 2016												September 30, 2017
	Residential Real Estate – Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect		Residential Real Estate – Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)												(In Thousands)
Noncovered loans:
Performing	$	13,335,843	$	2,459,409	$	465,626	$	589,687	$	1,181,871	$	3,182,146	$	13,219,631	$	2,580,717	$	371,092	$	580,283	$	1,596,441	$	3,021,453
Nonperforming	121,592		35,059		13,749		10,175		4,956		14,089		178,872		36,595		12,284		10,692		7,955		17,725
	$	13,457,435	$	2,494,468	$	479,375	$	599,862	$	1,186,827	$	3,196,235	$	13,398,503	$	2,617,312	$	383,376	$	590,975	$	1,604,396	$	3,039,178


	December 31, 2015												December 31, 2016
	Residential Real Estate -Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect		Residential Real Estate -Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)												(In Thousands)
Noncovered loans:
Performing	$	13,877,592	$	2,381,909	$	564,110	$	617,641	$	932,773	$	3,484,426	$	13,115,936	$	2,507,375	$	431,417	$	593,927	$	1,249,370	$	3,121,825
Nonperforming	115,693		37,906		16,694		9,718		4,098		10,656		144,058		36,403		14,292		10,954		5,271		13,123
	$	13,993,285	$	2,419,815	$	580,804	$	627,359	$	936,871	$	3,495,082	$	13,259,994	$	2,543,778	$	445,709	$	604,881	$	1,254,641	$	3,134,948

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


	September 30, 2016																September 30, 2017
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Total Past Due and Impaired		Not Past Due or Impaired		Total		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Total Past Due and Impaired		Not Past Due or Impaired		Total
	(In Thousands)																(In Thousands)
Commercial, financial and agricultural	$	72,328	$	4,400	$	5,320	$	850,075	$	9,283	$	941,406	$	23,897,662	$	24,839,068	$	51,581	$	6,351	$	6,072	$	324,071	$	1,259	$	389,334	$	24,702,608	$	25,091,942
Real estate – construction	522		1,062		2,782		1,214		3,315		8,895		2,206,377		2,215,272		661		94		2,955		1,877		106		5,693		2,241,451		2,247,144
Commercial real estate – mortgage	7,614		369		783		63,593		5,141		77,500		11,284,130		11,361,630		21,324		1,089		3,686		108,040		4,645		138,784		11,203,594		11,342,378
Residential real estate – mortgage	56,204		21,200		3,929		117,243		63,008		261,584		13,195,851		13,457,435		57,582		32,606		2,558		175,490		59,086		327,322		13,071,181		13,398,503
Equity lines of credit	8,173		4,477		2,417		32,642		—		47,709		2,446,759		2,494,468		11,118		4,824		2,179		34,416		237		52,774		2,564,538		2,617,312
Equity loans	5,567		1,694		353		13,198		36,053		56,865		422,510		479,375		3,470		1,798		840		11,305		30,574		47,987		335,389		383,376
Credit card	5,696		4,264		10,175		—		—		20,135		579,727		599,862		6,832		4,777		10,692		—		—		22,301		568,674		590,975
Consumer direct	12,099		4,725		4,191		765		759		22,539		1,164,288		1,186,827		17,563		6,796		5,209		2,746		577		32,891		1,571,505		1,604,396
Consumer indirect	73,045		20,165		7,070		7,019		—		107,299		3,088,936		3,196,235		81,534		23,070		8,858		8,867		—		122,329		2,916,849		3,039,178
Covered loans	4,075		3,844		28,505		269		—		36,693		344,418		381,111
Total loans	$	245,323	$	66,200	$	65,525	$	1,086,018	$	117,559	$	1,580,625	$	58,630,658	$	60,211,283	$	251,665	$	81,405	$	43,049	$	666,812	$	96,484	$	1,139,415	$	59,175,789	$	60,315,204


	December 31, 2015																December 31, 2016
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Total Past Due and Impaired		Not Past Due or Impaired		Total		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Total Past Due and Impaired		Not Past Due or Impaired		Total
	(In Thousands)																(In Thousands)
Commercial, financial and agricultural	$	8,197	$	4,215	$	3,567	$	161,591	$	9,402	$	186,972	$	25,835,402	$	26,022,374	$	23,788	$	6,581	$	2,891	$	596,454	$	8,726	$	638,440	$	24,483,562	$	25,122,002
Real estate – construction	2,864		91		421		5,908		2,247		11,531		2,342,722		2,354,253		918		50		2,007		1,239		2,393		6,607		2,118,709		2,125,316
Commercial real estate – mortgage	3,843		1,461		2,237		69,953		33,904		111,398		10,341,882		10,453,280		3,791		3,474		—		71,921		4,860		84,046		11,126,614		11,210,660
Residential real estate – mortgage	47,323		19,540		1,961		113,234		67,343		249,401		13,743,884		13,993,285		57,359		28,450		3,356		140,303		59,893		289,361		12,970,633		13,259,994
Equity lines of credit	8,263		4,371		2,883		35,023		—		50,540		2,369,275		2,419,815		7,922		4,583		2,950		33,453		—		48,908		2,494,870		2,543,778
Equity loans	6,356		2,194		704		15,614		37,108		61,976		518,828		580,804		5,615		1,843		467		13,635		34,746		56,306		389,403		445,709
Credit card	5,563		4,622		9,718		—		—		19,903		607,456		627,359		6,411		5,042		10,954		—		—		22,407		582,474		604,881
Consumer direct	7,648		3,801		3,537		561		908		16,455		920,416		936,871		13,338		4,563		4,482		789		704		23,876		1,230,765		1,254,641
Consumer indirect	73,438		17,167		5,629		5,027		—		101,261		3,393,821		3,495,082		85,198		22,833		7,197		5,926		—		121,154		3,013,794		3,134,948
Covered loans	4,862		3,454		37,972		134		—		46,422		394,539		440,961		7,311		1,351		27,238		730		—		36,630		322,704		359,334
Total loans	$	168,357	$	60,916	$	68,629	$	407,045	$	150,912	$	855,859	$	60,468,225	$	61,324,084	$	211,651	$	78,770	$	61,542	$	864,450	$	111,322	$	1,327,735	$	58,733,528	$	60,061,263

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.~~2016.

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.~~

September 30, 2016
30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Nonaccrual Total Past Due and Nonaccrual Not Past Due or Nonaccrual Total
(In Thousands)
Commercial, financial and agricultural $ 33
$ —
$ —
$ 28,739
$ 28,772
$ 9,250
$ 38,022
Real estate – construction —
—
—
585
585
3,315
3,900
Commercial real estate – mortgage —
—
—
4,136
4,136
5,141
9,277
Residential real estate – mortgage 3,392
389
420
35,562
39,763
58,807
98,570
Equity lines of credit —
—
—
24,507
24,507
—
24,507
Equity loans 1,837
766
198
7,066
9,867
33,252
43,119
Credit card —
—
—
—
—
—
—
Consumer direct —
—
—
37
37
759
796
Consumer indirect —
—
—
2,597
2,597
—
2,597
Covered loans —
—
—
27
27
—
27
Total loans $ 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 – mortgage 2,188
1,935
498
30,174
34,795
62,722
97,517
Equity lines of credit —
—
—
27,176
27,176
—
27,176
Equity loans 1,737
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~~borrowers' loan ~~agreement~~agreements are considered TDRs if a concession is granted for economic or legal reasons related to a borrower’s financial difficulties that otherwise would not be considered. Within each of the Company’s loan classes, TDRs typically involve modification of the loan interest rate to a below market rate or an extension or deferment of the loan. During the three months ended September 30, ~~2016,~~2017, $~~1.2~~3.3 million of TDR

modifications included an interest rate concession and $~~36.5~~102.3 million of TDR modifications resulted from modifications to the loan’s structure. During the three months ended September 30, ~~2015, $2.0~~2016, $1.2 million of TDR modifications included an interest rate concession and ~~$4.7~~$36.5 million of TDR modifications resulted from modifications to the loan’s structure. During the nine months ended September 30, 2017, $5.2 million of TDR modifications included an interest rate concession and $212.5 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~~tables present an analysis of the types of loans that were restructured and classified as TDRs, excluding loans classified as held for sale.


	Three Months Ended September 30, 2016			Three Months Ended September 30, 2015			Three Months Ended September 30, 2017			Three Months Ended September 30, 2016
	Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)						(Dollars in Thousands)
Commercial, financial and agricultural	4	$	31,676	2	$	69	11	$	103,223	4	$	31,676
Real estate – construction	1	112		—	—		—	—		1	112
Commercial real estate – mortgage	—	—		3	532		—	—		—	—
Residential real estate – mortgage	21	2,868		14	3,326		9	1,665		21	2,868
Equity lines of credit	30	1,468		27	1,488		7	368		30	1,468
Equity loans	6	635		8	340		10	342		6	635
Credit card	—	—		—	—		—	—		—	—
Consumer direct	2	15		4	325		—	—		2	15
Consumer indirect	56	917		31	549		1	5		56	917
Covered loans	—	—		1	8		—	—		—	—


	Nine Months Ended September 30, 2016			Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
	Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)						(Dollars in Thousands)
Commercial, financial and agricultural	9	$	32,026	5	$	380	24	$	205,387	9	$	32,026
Real estate – construction	2	3,504		—	—		—	—		2	3,504
Commercial real estate – mortgage	5	1,431		4	758		2	502		5	1,431
Residential real estate – mortgage	59	10,654		36	7,571		44	8,763		59	10,654
Equity lines of credit	66	3,237		86	4,752		34	1,708		66	3,237
Equity loans	15	1,129		28	1,836		26	1,031		15	1,129
Credit card	—	—		—	—		—	—		—	—
Consumer direct	3	24		21	627		—	—		3	24
Consumer indirect	119	1,999		53	928		14	209		119	1,999
Covered loans	—	—		3	29		2	103		—	—

Charge-offs and changes to the allowance related to modifications classified as TDRs were approximately $20.3 million and $26.1 million for the three and nine months ended September 30, 2017, respectively. For the three and nine months ended 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 tables provide a summary of initial subsequent defaults that occurred within one year of the restructure date. The table excludes loans classified as held for sale as of period-end and includes loans no longer in default as of period-end.


	Three Months Ended September 30, 2016			Three Months Ended September 30, 2015			Three Months Ended September 30, 2017			Three Months Ended September 30, 2016
	Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default
	(Dollars in Thousands)						(Dollars in Thousands)
Commercial, financial and agricultural	—	$	—	—	$	—	—	$	—	—	$	—
Real estate – construction	—	—		—	—		—	—		—	—
Commercial real estate – mortgage	—	—		—	—		—	—		—	—
Residential real estate – mortgage	—	—		1	119		—	—		—	—
Equity lines of credit	8	204		1	—		—	—		8	204
Equity loans	1	42		1	55		—	—		1	42
Credit card	—	—		—	—		—	—		—	—
Consumer direct	—	—		1	100		—	—		—	—
Consumer indirect	1	13		—	—		—	—		1	13
Covered loans	—	—		1	18		—	—		—	—


	Nine Months Ended September 30, 2016			Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
	Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default
	(Dollars in Thousands)						(Dollars in Thousands)
Commercial, financial and agricultural	—	$	—	—	$	—	—	$	—	—	$	—
Real estate – construction	—	—		1	377		—	—		—	—
Commercial real estate – mortgage	—	—		1	178		—	—		—	—
Residential real estate – mortgage	—	—		6	862		1	505		—	—
Equity lines of credit	8	204		1	—		—	—		8	204
Equity loans	1	42		3	216		2	51		1	42
Credit card	—	—		—	—		—	—		—	—
Consumer direct	—	—		1	100		—	—		—	—
Consumer indirect	2	32		1	18		1	22		2	32
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 September 30, ~~2016~~2017 and December 31, ~~2015~~2016, there were $~~21.9~~8.0 million and $~~5.7~~12.6 million, respectively, of commitments to lend additional funds to borrowers whose terms have been modified in a TDR.

Foreclosure Proceedings

OREO totaled $22 million and $21 million at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. OREO included ~~$20~~$16 million and ~~$17~~$18 million of foreclosed residential real estate properties at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. As of September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, there were ~~$29~~$59 million and ~~$30~~$48 million, respectively, of residential real estate loans secured by residential real estate properties for which formal foreclosure proceedings were in process.

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

Loans held for sale were ~~$102~~$78 million and ~~$71~~$162 million at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

Loans held for sale at September 30, ~~2016 and December 31, 2015~~2017, were comprised entirely of residential real estate -— mortgage loans. Loans held for sale at December 31, 2016, were comprised of $57 million of commercial, financial and agricultural loans and $105 million 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 September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015		2017		2016		2017		2016
	(In Thousands)								(In Thousands)
Loans transferred from held for investment to held for sale	$	—	$	907,414	$	764,022	$	907,414	$	—	$	—	$	—	$	764,022
Charge-offs on loans recognized at transfer from held for investment to held for sale	—		—		—		—		—		—		—		—
Loans and loans held for sale sold	121,745		404,674		1,007,096		415,156		—		121,745		175,088		1,007,096

The following table summarizes the Company's sales of loans originated for sale in the secondary market.


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015		2017		2016		2017		2016
	(In Thousands)								(In Thousands)
Residential real estate loans originated for sale in the secondary market sold (1)	$	199,073	$	724,493	$	482,860	$	1,309,035	$	164,075	$	199,073	$	496,891	$	482,860
Net gains recognized on sales of residential real estate loans originated for sale in the secondary market (2)	9,024		11,008		21,705		32,968		7,322		9,024		19,178		21,705


(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 September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015		2017		2016		2017		2016
	(In Thousands)								(In Thousands)
Residential real estate mortgage loans sold with retained servicing ~~(3)~~	$	199,073	$	724,493	$	798,756	$	1,308,853	$	164,075	$	199,073	$	496,891	$	798,756
Servicing fees recognized ~~(4)~~(1)	6,710		5,802		19,376		15,741		6,173		6,710		19,083		19,376


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


~~(4)~~(1)	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.


	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
	(In Thousands)				(In Thousands)
Recorded balance of residential real estate mortgage loans sold with retained servicing ~~(5)~~(1)	$	4,702,178	$	4,444,602	$	4,652,024	$	4,684,899
MSRs ~~(6)~~(2)	39,027		44,541		48,550		51,428


~~(5)~~(1)	These loans are not included in loans on the Company's Unaudited Condensed Consolidated Balance Sheets.


~~(6)~~(2)	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 September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015			2017			2016			2017			2016
	(In Thousands)												(In Thousands)
Carrying value, at beginning of period	$	36,496		$	40,871		$	44,541		$	35,488		$	49,398		$	36,496		$	51,428		$	44,541
Additions	1,933			6,844			7,583			13,566			1,729			1,933			5,328			7,583
Increase (decrease) in fair value:
Due to changes in valuation inputs or assumptions	3,250			(5,485		)	(5,391		)	(5,631		)	721			3,250			(100		)	(5,391		)
Due to other changes in fair value ~~(7)~~(1)	(2,652		)	(992		)	(7,706		)	(2,185		)	(3,298		)	(2,652		)	(8,106		)	(7,706		)
Carrying value, at end of period	$	39,027		$	41,238		$	39,027		$	41,238		$	48,550		$	39,027		$	48,550		$	39,027


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

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

At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the sensitivity of the current fair value of the residential MSRs to immediate 10% and 20% adverse changes in key economic assumptions are included in the following table:


	September 30, 2016			December 31, 2015			September 30, 2017			December 31, 2016
	(Dollars in Thousands)						(Dollars in Thousands)
Fair value of MSRs	$	39,027		$	44,541		$	48,550		$	51,428
Composition of residential loans serviced for others:
Fixed rate mortgage loans	97.2		%	96.8		%	97.4		%	97.3		%
Adjustable rate mortgage loans	2.8			3.2			2.6			2.7
Total	100.0		%	100.0		%	100.0		%	100.0		%
Weighted average life (in years)	4.4			5.4			6.1			6.5
Prepayment speed:	20.6		%	12.4		%	11.3		%	15.7		%
Effect on fair value of a 10% increase	$	(1,834	)	$	(1,547	)	$	(1,531	)	$	(1,646	)
Effect on fair value of a 20% increase	(3,512		)	(2,987		)	(2,970		)	(3,184		)
Weighted average option adjusted spread:	8.1		%	9.0		%	8.2		%	8.1		%
Effect on fair value of a 10% increase	$	(1,132	)	$	(1,504	)	$	(1,720	)	$	(1,758	)
Effect on fair value of a 20% increase	(2,146		)	(2,911		)	(3,315		)	(3,402		)

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 to another, which may magnify or counteract the effect of the change.

~~(6)~~(5) 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 not 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~~2016, for additional information on the Company's accounting policies related to derivative instruments and hedging activities. The following table reflects the notional amount and fair value of derivative instruments included on the Company’s Unaudited Condensed Consolidated Balance Sheets on a gross basis.


	September 30, 2016						December 31, 2015						September 30, 2017 (4)						December 31, 2016
			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	$	95,671	$	—	$	2,123,950	$	59,975	$	9,405	$	2,473,950	$	24,296	$	14,323	$	2,123,950	$	38,890	$	14,226
Total fair value hedges			95,671		—				59,975		9,405				24,296		14,323				38,890		14,226
Cash flow hedges:
Interest rate contracts:
Swaps related to commercial loans	1,725,000		4,862		—		1,900,000		1,574		782		9,175,000		45		24,178		7,625,000		2,340		11,570
Swaps related to FHLB advances	120,000		—		11,846		320,000		—		10,858		120,000		—		5,950		120,000		—		7,093
Foreign currency contracts:
Forwards related to currency fluctuations	5,593		—		389		8,318		—		40		1,543		340		—		3,618		—		380
Total cash flow hedges			4,862		12,235				1,574		11,680				385		30,128				2,340		19,043
Total derivatives designated as hedging instruments			$	100,533	$	12,235			$	61,549	$	21,085			$	24,681	$	44,451			$	41,230	$	33,269

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	$	225,000	$	107	$	1,005	$	216,500	$	502	$	217	$	173,500	$	180	$	199	$	251,500	$	2,479	$	493
Option contracts related to mortgage servicing rights													45,000		77		—		—		—		—
Interest rate lock commitments	220,963		4,532		3		175,002		2,880		6		144,240		2,924		1		150,616		2,424		32
Equity contracts:
Purchased equity option related to equity-linked CDs	839,895		61,157		—		876,649		59,375		—		815,307		42,415		—		833,763		57,198		—
Written equity option related to equity-linked CDs	783,256		—		57,230		831,480		—		56,559		730,504		—		38,351		770,632		—		53,044
Foreign exchange contracts:
Forwards and swaps related to commercial loans	393,264		849		1,601		479,072		3,821		752		404,986		2,215		1,874		424,155		3,741		1,723
Spots related to commercial loans	42,694		49		—		54,511		6		372		31,680		62		—		54,599		134		—
Swap associated with sale of Visa, Inc. Class B shares	72,405		—		1,810		67,896		—		1,697		92,139		—		2,303		68,308		—		1,708
Futures contracts (3)	210,000		—		—		390,000		—		—		795,000		—		—		104,000		—		—
Trading account assets and liabilities:
Interest rate contracts for customers	28,597,938		518,406		458,763		23,370,927		303,944		238,611		30,771,530		224,561		174,414		28,000,014		290,238		228,748
Commodity contracts for customers	21,692		2,093		2,093		114,336		14,127		14,110
Foreign exchange contracts for customers	900,644		13,027		10,997		425,946		9,899		8,578		1,039,862		15,696		13,851		870,084		28,367		26,317
Total trading account assets and liabilities			533,526		471,853				327,970		261,299				240,257		188,265				318,605		255,065
Total free-standing derivative instruments not designated as hedging instruments			$	600,220	$	533,502			$	394,554	$	320,902			$	288,130	$	230,993			$	384,581	$	312,065


(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.

(4)

In January 2017, a clearing organization adopted a rule change that requires transactions to be considered settled-to-market each day. Beginning in the first quarter of 2017, to the extent the Company determined transactions with this clearing organization to be settled-to-market, the impact was a reduction to the derivative assets and liabilities as well as a corresponding decrease in cash collateral.

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 September 30, ~~2016~~2017 and ~~2015~~2016, related to hedged firm commitments no longer qualifying as a fair value hedge. At September 30, ~~2016,~~2017, the fair value hedges had a weighted average expected remaining term of ~~4.4 years~~.4.2 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 September 30,						Nine Months Ended September 30,						Condensed Consolidated	Three Months Ended September 30,						Nine Months Ended September 30,
	Statements of Income Caption	2016			2015			2016			2015			Statements of Income Caption	2017			2016			2017			2016
		(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 debt	Interest on FHLB and other borrowings	$	(20,209	)	$	40,416		$	45,101		$	10,383		Interest on FHLB and other borrowings	$	(6,637	)	$	(20,209	)	$	(14,691	)	$	45,101
Hedged long term debt	Interest on FHLB and other borrowings	19,246			(38,634		)	(39,978		)	(12,511		)	Interest on FHLB and other borrowings	6,614			19,246			14,532			(39,978		)
Other gains on interest rate contracts:	Other gains on interest rate contracts:													Other gains on interest rate contracts:
Interest and amortization related to interest rate swaps on hedged long term debt	Interest on FHLB and other borrowings	10,489			12,413			31,834			34,157			Interest on FHLB and other borrowings	7,690			10,489			24,239			31,834

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~~was $202 thousand and $229 thousand of cash flow hedging losses recognized because of hedge ineffectiveness for the three and nine months ended September 30, 2017, respectively, and there was no material cash flow hedging gains or losses recognized because of hedge ineffectiveness for the three and nine months ended September 30, ~~2016 and~~ ~~2015~~.2016. There were no gains or losses reclassified from other comprehensive income because of the discontinuance of cash flow hedges related to certain forecasted transactions that are probable of not occurring for the three and nine months ended September 30, ~~2016~~2017 and ~~2015~~2016.

At September 30, ~~2016,~~2017, cash flow hedges not terminated had a net fair value of $~~(7.4)~~(29.7) million and a weighted average life of ~~1.1 years~~.1.2 years. Net losses of ~~$1.2~~$42.0 million are expected to be reclassified to 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 3.8 years.~~4.8 years~~.

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


	Gain (Loss) for the									Gain (Loss) for the
	Three Months Ended September 30,					Nine Months Ended September 30,				Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015		2016		2015		2017			2016			2017			2016
	(In Thousands)									(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	$	855		$	(1,461	)	$	(9,172	)	$	1,728
Amount reclassified from accumulated other comprehensive income (loss) into net income	702			1,924		1,678		4,778		(2,835		)	702			5,043			1,678
Amount of ineffectiveness recognized in net income	—			—		—		—		202			—			229			—

Derivatives Not Designated As Hedges

Derivatives not designated as hedges include those that are entered into as either economic hedges to facilitate client needs or as part of the Company’s overall risk management ~~strategy or to facilitate client needs.~~strategy. 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 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 September 30,						Nine Months Ended September 30,						Condensed Consolidated	Three Months Ended September 30,						Nine Months Ended September 30,
	Statements of Income Caption	2016			2015			2016			2015			Statements of Income Caption	2017			2016			2017			2016
		(In Thousands)													(In Thousands)
Futures contracts	Mortgage banking income and corporate and correspondent investment sales	$	86		$	(248	)	$	(229	)	$	(199	)	Mortgage banking income and corporate and correspondent investment sales	$	(18	)	$	86		$	(1	)	$	(229	)
Option contracts related to mortgage servicing rights	Mortgage banking income	—			—			(264		)	(195		)
Interest rate contracts:
Forward contracts related to residential mortgage loans held for sale	Mortgage banking income	1,094			(2,317		)	(2,027		)	1,679			Mortgage banking income	(46		)	1,094			(2,005		)	(2,027		)
Option contracts related to mortgage servicing rights														Mortgage banking income	(253		)	—			(391		)	(264		)
Interest rate lock commitments	Mortgage banking income	(162		)	308			1,655			1,447			Mortgage banking income	(262		)	(162		)	531			1,655
Interest rate contracts for customers	Corporate and correspondent investment sales	5,371			4,961			14,780			21,490			Corporate and correspondent investment sales	5,979			5,371			21,318			14,780
Commodity contracts:
Commodity contracts for customers	Corporate and correspondent investment sales	(1		)	(2		)	(6		)	7			Corporate and correspondent investment sales	—			(1		)	—			(6		)
Equity contracts:
Purchased equity option related to equity-linked CDs	Other expense	(3,716		)	(13,960		)	1,782			(27,995		)	Other expense	(8,921		)	(3,716		)	(14,783		)	1,782
Written equity option related to equity-linked CDs	Other expense	3,625			13,652			(672		)	27,712			Other expense	8,643			3,625			14,692			(672		)
Foreign currency contracts:
Forward and swap contracts related to commercial loans	Other income	(1,517		)	17,181			(5,173		)	40,265			Other income	(13,107		)	(1,517		)	(36,373		)	(5,173		)
Spot contracts related to commercial loans	Other income	1,471			(4,143		)	91			(7,663		)	Other income	1,620			1,471			4,175			91
Foreign currency exchange contracts for customers	Corporate and correspondent investment sales	1,305			590			2,954			1,451			Corporate and correspondent investment sales	2,709			1,305			7,770			2,954

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 September 30, ~~2016,~~2017, interest rate swap agreements and options classified as trading were substantially matched. The

Company had credit risk of $~~534~~240 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 credit losses associated with derivative instruments classified as trading for the three and nine months ended September 30, 2017. There were $2.6 million and $2.5 million of net credit losses associated with derivative instruments classified as trading for the three and nine months ended September 30, 2016, respectively. ~~There were $15 thousand and $9 thousand of net credit losses associated with derivative instruments classified as trading for the three and nine months ended September 30, 2015.~~ At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, there were no material nonperforming derivative positions classified as trading.

The Company’s derivative positions ~~held for~~designated as hedging ~~purposes~~instruments are primarily executed in the over-the-counter market. These positions at September 30, ~~2016~~2017, have credit risk of $~~101~~25 million, which does not take into consideration master netting arrangements or the value of the collateral.

There were no credit losses associated with derivative instruments classified as nontrading for the three and nine months ended September 30, ~~2016~~2017 and ~~2015~~2016. At September 30, ~~2016~~2017 and December 31, ~~2015~~2016, there were no nonperforming derivative positions classified as nontrading.

As of September 30, ~~2016~~2017 and December 31, ~~2015~~2016, the Company had recorded the right to reclaim cash collateral of $~~295~~108 million and $~~162~~103 million, respectively, within other assets on the Company’s Unaudited Condensed Consolidated Balance Sheets and had recorded the obligation to return cash collateral of $3955 million and $4037 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 maintain a certain credit rating from each of the major credit rating agencies. If the Company’s debt were to fall below this rating, it would be in violation of these provisions, and the counterparties to the derivative instruments could demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position on September 30, ~~2016~~2017, was $6130 million for which the Company has collateral requirements of $6029 million in the normal course of business. If the credit risk-related contingent features underlying these agreements had been triggered on September 30, ~~2016,~~2017, the Company’s collateral requirements to its counterparties would ~~have increased by~~require an additional increase of $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~~2016, was $4630 million for which the Company had collateral requirements of $4529 million in the normal course of business. If the credit risk-related contingent features underlying these agreements had been triggered on December 31, ~~2015~~2016, 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 table 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 Amount		Gross Amounts Recognized		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amount Presented in the Condensed Consolidated Balance Sheets		Financial Instruments Collateral Received/Pledged (1)		Cash Collateral Received/ Pledged (1)		Net Amount
	(In Thousands)												(In Thousands)
September 30, 2016
September 30, 2017
Derivative financial assets:
Subject to a master netting arrangement	$	285,731	$	—	$	285,731	$	109	$	35,882	$	249,740	$	160,210	$	—	$	160,210	$	—	$	29,699	$	130,511
Not subject to a master netting arrangement	415,022		—		415,022		—		—		415,022		152,601		—		152,601		—		—		152,601
Total derivative financial assets	$	700,753	$	—	$	700,753	$	109	$	35,882	$	664,762	$	312,811	$	—	$	312,811	$	—	$	29,699	$	283,112

Derivative financial liabilities:
Subject to a master netting arrangement	$	476,133	$	—	$	476,133	$	24,862	$	295,448	$	155,823	$	196,021	$	—	$	196,021	$	3,264	$	107,463	$	85,294
Not subject to a master netting arrangement	69,604		—		69,604		—		—		69,604		79,423		—		79,423		—		—		79,423
Total derivative financial liabilities	$	545,737	$	—	$	545,737	$	24,862	$	295,448	$	225,427	$	275,444	$	—	$	275,444	$	3,264	$	107,463	$	164,717

December 31, 2015
December 31, 2016
Derivative financial assets:
Subject to a master netting arrangement	$	191,061	$	—	$	191,061	$	—	$	33,517	$	157,544	$	234,002	$	—	$	234,002	$	—	$	33,212	$	200,790
Not subject to a master netting arrangement	265,042		—		265,042		—		—		265,042		191,809		—		191,809		—		—		191,809
Total derivative financial assets	$	456,103	$	—	$	456,103	$	—	$	33,517	$	422,586	$	425,811	$	—	$	425,811	$	—	$	33,212	$	392,599

Derivative financial liabilities:
Subject to a master netting arrangement	$	269,295	$	—	$	269,295	$	23,856	$	159,594	$	85,845	$	248,669	$	—	$	248,669	$	9,685	$	102,603	$	136,381
Not subject to a master netting arrangement	72,692		—		72,692		—		—		72,692		96,665		—		96,665		—		—		96,665
Total derivative financial liabilities	$	341,987	$	—	$	341,987	$	23,856	$	159,594	$	158,537	$	345,334	$	—	$	345,334	$	9,685	$	102,603	$	233,046


(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.

(76) 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 6,5, 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 securities and other U.S. government ~~agencies, mortgage-backed~~agency securities and ~~collateralized mortgage obligations.~~mortgage-backed securities.

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 Amount		Gross Amounts Recognized		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amount Presented in the Condensed Consolidated Balance Sheets		Financial Instruments Collateral Received/Pledged (1)		Cash Collateral Received/ Pledged (1)		Net Amount
	(In Thousands)												(In Thousands)
September 30, 2016
September 30, 2017 (2)
Securities purchased under agreements to resell:	Securities purchased under agreements to resell:												Securities purchased under agreements to resell:
Subject to a master netting arrangement	$	4,113,664	$	3,795,800	$	317,864	$	317,864	$	—	$	—	$	484,445	$	343,325	$	141,120	$	141,120	$	—	$	—

Securities sold under agreements to repurchase:	Securities sold under agreements to repurchase:												Securities sold under agreements to repurchase:
Subject to a master netting arrangement	$	3,881,978	$	3,795,800	$	86,178	$	86,178	$	—	$	—	$	388,086	$	343,325	$	44,761	$	44,761	$	—	$	—

December 31, 2015
December 31, 2016 (2)
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	$	—	$	—	$	3,164,039	$	3,069,489	$	94,550	$	94,550	$	—	$	—

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	$	—	$	—	$	3,095,655	$	3,069,488	$	26,167	$	26,167	$	—	$	—


(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.


(2)	The decrease in gross amounts recognized from December 31, 2016 to September 30, 2017, relates to a reduction in securities purchased under agreements to resell and securities sold under agreements to repurchase held by BSI.

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)
September 30, 2016
September 30, 2017
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		$	1,557,005	$	602,850	$	1,632,513	$	—	$	3,792,368		$	275,860	$	—	$	44,761	$	—	$	320,621
Mortgage-backed securities		—		—		89,610		—		89,610			—		—		67,465		—		67,465
Total		$	1,557,005	$	602,850	$	1,722,123	$	—	$	3,881,978		$	275,860	$	—	$	112,226	$	—	$	388,086

December 31, 2015
December 31, 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		$	3,214,085	$	232,924	$	518,623	$	—	$	3,965,632		$	1,408,736	$	806,526	$	798,089	$	—	$	3,013,351
Mortgage-backed securities		—		—		976,449		—		976,449			—		—		82,304		—		82,304
Collateralized mortgage obligations		—		—		138,083		—		138,083
Total		$	3,214,085	$	232,924	$	1,633,155	$	—	$	5,080,164		$	1,408,736	$	806,526	$	880,393	$	—	$	3,095,655

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

At September 30, 2017, the fair value of collateral received related to securities purchased under agreements to resell was $552 million and the fair value of collateral pledged for securities sold under agreements to repurchase was $392 million. At December 31, 2016, the fair value of collateral received related to securities purchased under agreements to resell was ~~$4.0~~$3.1 billion and the fair value of collateral pledged for securities sold under agreements to repurchase was $3.4 billion. At December 31, 2015, the fair value of collateral received related to securities purchased under agreements to resell was $5.2 billion and the fair value of collateral pledged for securities sold under agreements to repurchase was $4.9$3.1 billion.

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

Commitments to Extend Credit & Standby and Commercial Letters of Credit

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


	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
	(In Thousands)				(In Thousands)
Commitments to extend credit	$	26,736,536	$	27,853,409	$	27,548,488	$	27,070,935
Standby and commercial letters of credit	1,406,754		1,709,145		1,383,185		1,474,405

Commitments to extend credit are agreements to lend to customers as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

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

The credit risk involved in issuing letters of credit and commitments is essentially the same as that involved in extending loan facilities to customers. The fair value of the letters of credit and commitments typically approximates the fee received from the customer for issuing such commitments. These fees are deferred and are recognized over the commitment period. At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the recorded amount of these deferred fees was ~~$6.9~~$7 million and ~~$6.0~~$8 million, respectively. The Company holds various assets as collateral supporting those commitments for which collateral is deemed necessary. At September 30, ~~2016,~~2017, the maximum potential amount of future undiscounted payments the Company could be required to make under outstanding standby letters of credit was $1.4 billion. At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, 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 ~~$101~~$81 million and ~~$85~~$77 million, respectively.

Loan Sale Recourse

The Company has potential recourse related to specific FNMA securitizations. At both September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the amount of potential recourse was $19 million of which the Company had reserved ~~$680~~$766 thousand and ~~$869~~$681 thousand, respectively, which is recorded in accrued expenses and other liabilities on the Company's Unaudited Condensed Consolidated Balance Sheets for the respective periods.

The Company also issues standard representations and warranties related to mortgage loan sales to government-sponsored agencies. Although these agreements often do not specify limitations, the Company does not believe that any payments related to these representations and warranties would materially change the financial condition or results of operations of the Company. At both September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, 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.~~FDIC. 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~~On July 12, 2017, the Company entered into an agreement with the FDIC to terminate the Company's loss share agreement ahead of the ~~loss sharing agreements may also require a payment by~~contractual maturity. Under the ~~Bank to the FDIC on October 15, 2019. On that date, the Bank is required to pay the FDIC 60%~~terms 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 September 30, 2016 and December 31, 2015,agreement, the Company ~~estimated the potential amount~~made a net payment of ~~payment due~~$132 million to the FDIC in ~~2019, at the end~~July as consideration for early termination of the ~~loss sharing agreements, to be $147 million~~shared-loss agreement 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. AtThe termination resulted in a $1.8 million gain for the three and nine months ended September 30, ~~2016 and December 31, 2015, the FDIC indemnification liability was $136 million and $131 million, respectively, and~~2017 which was recorded in ~~accrued expenses and~~ other ~~liabilities~~noninterest income in the Company's Unaudited Condensed Consolidated ~~Balance Sheets.~~Statements of Income.

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.~~

vigorously. 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 an underwriter. The plaintiff alleges that Lehman Brothers made material misstatements in the offering materials, and that the underwriter defendants failed to conduct appropriate due diligence to discover the alleged misstatements. The plaintiff seeks unspecified monetary relief. The District Court granted the underwriter defendants' motion to dismiss and the plaintiff has appealed. On July 8, 2016, the appellate court affirmed the dismissal of the claims against the underwriter defendants, and on September 22, 2016, the plaintiff filed a petition for writ of certiorari with the United States Supreme Court. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

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

In June 2013, Compass Bank (“BBVA ~~Compass~~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 January 2014, BBVA Compass was named as a defendant in a lawsuit filed in the District Court of Dallas County, Texas, David Bagwell, individually and as Trustee of the David S. Bagwell Trust v. BBVA Compass, et al., wherein the plaintiff alleges that BBVA Compass wrongfully sold his loan to a third party after representing it would not do so. The plaintiff seeks 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 putative class action 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 materials 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.~~Pipeline and underwritten by BSI, ~~was an underwriter.~~among others. The plaintiffs seek unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In March 2016, BBVA Compass was named as a defendant in a lawsuit filed in the United States District Court of the Southern District of Texas, Lomix Limited Partnership, et al. v. BBVA Compass, wherein the plaintiffs (who are the borrower and guarantors of the underlying loan) allege that BBVA Compass wrongfully disclosed the guarantors’ personal financial information in connection with the sale of the loan to a third party. The plaintiffs seek unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In October 2016, BSI was named as a defendant in a putative class action lawsuit filed in the District Court of Harris County, Texas, and subsequently removed to the United States District Court for the Southern District of Texas, St. Lucie County Fire District Firefighters' Pension Trust, individually and on behalf of all others similarly situated v. Southwestern Energy Company, et al., wherein the plaintiffs allege that Southwestern Energy Company, its officers and directors, and the underwriting defendants (including BSI) made inaccurate and misleading statements in the registration statement and prospectus related to a securities offering. The plaintiffs seek unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In December 2016, BBVA Compass was named as a defendant in an adversary proceeding filed in the United States Bankruptcy Court for the Southern District of New York, In re: SunEdison, Inc., et al. // Official Committee of Unsecured Creditors v. BBVA Compass, et al., wherein the plaintiffs allege that the first-lien lenders (including BBVA Compass) exercised undue influence and control over SunEdison’s bankruptcy, that SunEdison improperly incurred secured debt through second-lien secured notes to the detriment of SunEdison’s unsecured creditors shortly before SunEdison filed its bankruptcy petition, and that the second-lien notes constitute avoidable fraudulent transfers under the Bankruptcy Code. The plaintiffs seek unspecified monetary relief. The parties reached a settlement that was approved by the Bankruptcy Court on July 25, 2017. The settlement will be fully consummated on or before November 15, 2017.

In December 2016, BBVA Compass was named as a defendant in a putative class action lawsuit filed in the United States District Court for the Northern District of Alabama, Robert Hossfeld, individually and on behalf of all others similarly situated v. BBVA Compass Bancshares, Inc. and MSR Group, LLC, alleging violations of the Telephone Consumer Protection Act in the context of customer satisfaction survey calls to the cell phones of individuals who have not given, or who have withdrawn, consent to receive calls on their cell phones. The plaintiffs seek unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In August 2017, BSI was named as a defendant in a putative class action lawsuit filed in the United States District Court for the District of Connecticut, Ontario Teachers’ Pension Plan Board, individually and on behalf of all others similarly situated v. Teva Pharmaceutical Industries Ltd., et al., wherein the plaintiffs allege that Teva Pharmaceutical Industries Ltd. (“Teva”), its officers and directors, and the underwriting defendants (including BSI) made inaccurate and misleading statements in the offering materials related to Teva’s role in an alleged conspiracy to inflate the market prices of certain generic drug products. The plaintiffs seek unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In August 2017, BBVA Compass was named as a defendant in a lawsuit filed in the United States District Court for the Northern District of Texas, United States of America ex rel. Edward Hendrickson v. BBVA Compass, et al., alleging that the defendant banks, including BBVA Compass, violated the federal False Claims Act by accepting federal agency benefit payments into the accounts of deceased customers. Hendrickson seeks unspecified monetary relief on behalf of the United States government. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In September 2017, BBVA Compass was named as a defendant in putative class action lawsuit filed in the United States District Court for the Northern District of Illinois, Lara Bellissimo, individually and on behalf of similarly situated individuals v. BBVA Compass, alleging violations of the Telephone Consumer Protection Act in the context of calls to the cell phones of individuals who were not the individuals that provided the phone numbers to BBVA Compass. 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 reasonably estimable, the Company does not accrue legal reserves. At September 30, ~~2016,~~2017, the Company had accrued legal reserves in the amount of ~~$30~~$2 million. Additionally, for those matters where a loss is ~~both estimable and~~ reasonably possible and the amount of loss is reasonably estimable, the Company estimates the amount of losses that it could incur beyond the accrued legal reserves. Under U.S. GAAP, an event is ~~"reasonably possible"~~“reasonably possible” if ~~"the~~“the chance of the future event or events occurring is more than remote but less than ~~likely"~~likely” and an event is ~~"remote"~~“remote if ~~"the~~“the chance of the future event or events occurring is slight."” At September 30, ~~2016,~~2017, there were no such matters where a loss was ~~both estimable~~reasonably possible and reasonably estimable, creating reasonably possible losses beyond the accrued legal ~~reserve.~~reserves.

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.

~~(9)~~(8) 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 securities and other U.S. government ~~agencies~~agency 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 securities and other U.S. government ~~agencies~~agency 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~~agency 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 September 30, ~~2016~~2017 and December 31, ~~2015,~~ 2016, 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 or (losses) of ~~$(478)~~$98 thousand and ~~$1.4 million~~$(478) thousand resulting from changes in fair value of these loans were recorded in noninterest income during the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively. Net gains ~~(losses)~~ of $1.2 million and $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, 2017 and 2016, ~~and 2015,~~ respectively.

The Company also had fair value changes on forward contracts related to residential mortgage loans held for sale of approximately ~~$1.1 million~~$(46) thousand and ~~$(2.3)~~$1.1 million for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, 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 both the nine months ended September 30, ~~2016~~2017 and ~~2015, respectively.~~2016. An immaterial portion of these amounts was attributable to changes in instrument-specific credit risk.

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


	Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference		Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference
	(In Thousands)						(In Thousands)
September 30, 2016
September 30, 2017
Residential mortgage loans held for sale	$	101,843	$	97,712	$	4,131	$	77,783	$	75,192	$	2,591
December 31, 2015
December 31, 2016
Residential mortgage loans held for sale	$	70,582	$	68,553	$	2,029	$	105,257	$	103,886	$	1,371

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/~~Asset Liability Committee on an annual basis.

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

commercial valuation system. The MSR 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.

Other assets - SBIC – A component of other assets measured at fair value on a recurring basis and classified within Level 3 of the fair value hierarchy are SBIC investments initially valued based on transaction price. The SBIC investments are valued initially based upon transaction price. Valuation factors such as recent or proposed purchase or sale of debt or equity of the issuer, pricing by other dealers in similar securities, size of position held, liquidity of the

market, and changes in economic conditions affecting the issuer, are used in the determination of estimated fair value. These SBIC investments are classified as Level 3 within the valuation hierarchy.

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


			Fair Value Measurements at the End of the Reporting Period Using								Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	September 30, 2016		(Level 1)		(Level 2)		(Level 3)		September 30, 2017		(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	$	3,512,398	$	3,512,398	$	—	$	—	$	330,919	$	330,919	$	—	$	—
Collateralized mortgage obligations	518		—		518		—
State and political subdivisions	1,183		—		1,183		—		297		—		297		—
Other debt securities	2,852		—		2,852		—		68		—		68		—
Interest rate contracts	518,406		—		518,406		—		224,561		—		224,561		—
Commodity contracts	2,093		—		2,093		—
Foreign exchange contracts	13,027		—		13,027		—		15,696		—		15,696		—
Other trading assets	984		—		—		984		563		—		—		563
Total trading account assets	4,051,461		3,512,398		538,079		984		572,104		330,919		240,622		563
Investment securities available for sale:
U.S. Treasury and other U.S. government agencies	1,850,230		717,327		1,132,903		—		3,679,690		2,669,033		1,010,657		—
Mortgage-backed securities	4,005,637		—		4,005,637		—		3,038,317		—		3,038,317		—
Collateralized mortgage obligations	5,207,217		—		5,207,217		—		5,100,041		—		5,100,041		—
States and political subdivisions	10,075		—		10,075		—		2,394		—		2,394		—
Other debt securities	16,852		16,852		—		—		17,748		17,748		—		—
Equity securities (1)	344		51		—		293		440		89		—		351
Total investment securities available for sale	11,090,355		734,230		10,355,832		293		11,838,630		2,686,870		9,151,409		351
Loans held for sale	101,843		—		101,843		—		77,783		—		77,783		—
Derivative assets:
Interest rate contracts	105,172		—		100,640		4,532		27,522		77		24,521		2,924
Equity contracts	61,157		—		61,157		—		42,415		—		42,415		—
Foreign exchange contracts	898		—		898		—		2,617		—		2,617		—
Total derivative assets	167,227		—		162,695		4,532		72,554		77		69,553		2,924
Other assets	39,027		—		—		39,027
Other assets - MSR									48,550		—		—		48,550
Other assets - SBIC									32,745		—		—		32,745
Liabilities:
Trading account liabilities:
U.S. Treasury and other U.S. government agencies	$	3,540,472	$	3,540,472	$	—	$	—	$	327,539	$	327,539	$	—	$	—
Other debt securities	751		—		751		—
Interest rate contracts	458,763		—		458,763		—		174,414		—		174,414		—
Commodity contracts	2,093		—		2,093		—
Foreign exchange contracts	10,997		—		10,997		—		13,851		—		13,851		—
Total trading account liabilities	4,013,076		3,540,472		472,604		—		515,804		327,539		188,265		—
Derivative liabilities:
Interest rate contracts	12,854		—		12,851		3		44,651		—		44,650		1
Equity contracts	57,230		—		57,230		—		38,351		—		38,351		—
Foreign exchange contracts	1,990		—		1,990		—		1,874		—		1,874		—
Total derivative liabilities	72,074		—		72,071		3		84,876		—		84,875		1


(1)	Excludes ~~$427~~$430 million of FHLB and Federal Reserve stock required to be owned by the Company at September 30, ~~2016.~~2017. 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 Inputs		Fair 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, 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	$	3,805,269	$	3,805,269	$	—	$	—	$	2,820,797	$	2,820,797	$	—	$	—
State and political subdivisions	1,275		—		1,275		—		219		—		219		—
Other debt securities	2,501		—		2,501		—		4,120		—		4,120		—
Interest rate contracts	303,944		—		303,944		—		290,238		—		290,238		—
Commodity contracts	14,127		—		14,127		—
Foreign exchange contracts	9,899		—		9,899		—		28,367		—		28,367		—
Other trading assets	1,117		—		—		1,117		859		—		—		859
Total trading account assets	4,138,132		3,805,269		331,746		1,117		3,144,600		2,820,797		322,944		859
Investment securities available for sale:
U.S. Treasury and other U.S. government agencies	3,211,492		1,982,408		1,229,084		—		2,374,331		1,266,564		1,107,767		—
Mortgage-backed securities	4,590,262		—		4,590,262		—		3,763,338		—		3,763,338		—
Collateralized mortgage obligations	2,705,256		—		2,705,256		—		5,098,928		—		5,098,928		—
States and political subdivisions	15,887		—		15,887		—		8,641		—		8,641		—
Other debt securities	24,045		24,045		—		—		16,185		16,185		—		—
Equity securities (1)	294		41		—		253		380		87		—		293
Total investment securities available for sale	10,547,236		2,006,494		8,540,489		253		11,261,803		1,282,836		9,978,674		293
Loans held for sale	70,582		—		70,582		—		105,257		—		105,257		—
Derivative assets:
Interest rate contracts	64,931		—		62,051		2,880		46,133		—		43,709		2,424
Equity contracts	59,375		—		59,375		—		57,198		—		57,198		—
Foreign exchange contracts	3,827		—		3,827		—		3,875		—		3,875		—
Total derivative assets	128,133		—		125,253		2,880		107,206		—		104,782		2,424
Other assets	44,541		—		—		44,541
Other assets - MSR									51,428		—		—		51,428
Other assets - SBIC									15,639		—		—		15,639
Liabilities:
Trading account liabilities:
U.S. Treasury and other U.S. government agencies	$	3,881,925	$	3,881,925	$	—	$	—	$	2,750,085	$	2,750,085	$	—	$	—
Other debt securities	719		—		719		—		2,892		—		2,892		—
Interest rate contracts	238,611		—		238,611		—		228,748		—		228,748		—
Commodity contracts	14,110		—		14,110		—
Foreign exchange contracts	8,578		—		8,578		—		26,317		—		26,317		—
Total trading account liabilities	4,143,943		3,881,925		262,018		—		3,008,042		2,750,085		257,957		—
Derivative liabilities:
Interest rate contracts	21,268		—		21,262		6		33,414		—		33,382		32
Equity contracts	56,559		—		56,559		—		53,044		—		53,044		—
Foreign exchange contracts	1,164		—		1,164		—		2,103		—		2,103		—
Total derivative liabilities	78,991		—		78,985		6		88,561		—		88,529		32


(1)	Excludes ~~$503~~$403 million of FHLB and Federal Reserve stock required to be owned by the Company at December 31, ~~2015~~.2016. 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 September 30, ~~2016~~2017 and ~~2015~~.2016. 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 September 30,	Other Trading Assets			Equity Securities			Interest Rate Contracts, net			Other Assets			Other Trading Assets			Equity Securities			Interest Rate Contracts, net			Other Assets - MSR			Other Assets - SBIC
	(In Thousands)												(In Thousands)
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)	(147		)	—			308			(6,477		)
Included in other comprehensive income	—			—			—			—
Purchases, issuances, sales and settlements:
Purchases	—			—			—			—
Issuances	—			—			—			6,844
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	$	(147	)	$	—		$	308		$	(6,477	)

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

Balance, June 30, 2017													$	778		$	353		$	3,185		$	49,398		$	22,572
Transfers into Level 3													—			—			—			—			—
Transfers out of Level 3													—			—			—			—			—
Total gains or losses (realized/unrealized):
Included in earnings (1)													(215		)	—			(262		)	(2,577		)	—
Included in other comprehensive income													—			—			—			—			—
Purchases, issuances, sales and settlements:
Purchases													—			—			—			—			10,173
Issuances													—			—			—			1,729			—
Sales													—			(2		)	—			—			—
Settlements													—			—			—			—			—
Balance, September 30, 2017													$	563		$	351		$	2,923		$	48,550		$	32,745
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2017													$	(215	)	$	—		$	(262	)	$	(2,577	)	$	—


(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 - MSR			Other Assets - SBIC
	(In Thousands)
Balance, December 31, 2015	$	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	)	$	—

Balance, December 31, 2016	$	859		$	293		$	2,392	$	51,428		$	15,639
Transfers into Level 3	—			—			—		—			—
Transfers out of Level 3	—			—			—		—			—
Total gains or losses (realized/unrealized):
Included in earnings (1)	(296		)	—			531		(8,206		)	550
Included in other comprehensive income	—			—			—		—			—
Purchases, issuances, sales and settlements:
Purchases	—			60			—		—			16,556
Issuances	—			—			—		5,328			—
Sales	—			(2		)	—		—			—
Settlements	—			—			—		—			—
Balance, September 30, 2017	$	563		$	351		$	2,923	$	48,550		$	32,745
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2017	$	(296	)	$	—		$	531	$	(8,206	)	$	550


(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~~tables represent those assets that were subject to fair value adjustments during the three and nine months ended September 30, ~~2016~~2017 and ~~2015~~2016, and still held as of the end of the period, and the related gains and losses from fair value adjustments on assets sold during the period as well as assets still held as of the end of the period.


			Fair Value Measurements at the End of the Reporting Period Using														Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)						Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)
	September 30, 2016		(Level 1)		(Level 2)		(Level 3)		Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016			September 30, 2017		(Level 1)		(Level 2)		(Level 3)		Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
	(In Thousands)														(In Thousands)
Nonrecurring fair value measurements	Nonrecurring fair value measurements														Nonrecurring fair value measurements
Assets:
Investment securities held to maturity	$	2,595	$	—	$	—	$	2,595	$	—		$	(130	)	$	1,863	$	—	$	—	$	1,863	$	—		$	(242	)
Impaired loans (1)	71,806		—		—		71,806		(9,202		)	(55,922		)	44,434		—		—		44,434		(12,389		)	(49,894		)
OREO	21,670		—		—		21,670		(458		)	(2,777		)	22,012		—		—		22,012		(1,845		)	(4,640		)

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


(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~~assessments are derived using a discounted cash flow modeling approach, the nonrecurring fair value ~~measurements~~adjustments 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~~adjustments 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~~Company’s Consolidated Balance Sheets at the lower of recorded balance or fair value, which is based on appraisals and third-party price opinions, less estimated costs to sell. The fair value is classified as Level 3.

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



			Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at				Range of Unobservable Inputs
	September 30, 2017		Valuation Technique	Unobservable Input(s)	(Weighted Average)
	(In Thousands)
Recurring fair value measurements:
Other trading assets	$	563	Discounted cash flow	Default rate	10.2%
				Prepayment rate	5.8% - 11.0% (8.0%)
Interest rate contracts, net	2,923		Discounted cash flow	Closing ratios (pull-through)	20.5% - 99.5% (70.7%)
				Cap grids	0.5% - 2.2% (0.9%)
Other assets - MSRs	48,550		Discounted cash flow	Option adjusted spread	4.6% - 17.2% (8.2%)
				Constant prepayment rate or life speed	1.2% - 51.9% (9.4%)
				Cost to service	$65 - $4,000 ($80)
Other assets - SBIC investments	32,745		Transaction price	Transaction price	N/A
Nonrecurring fair value measurements:
Investment securities held to maturity	$	1,863	Discounted cash flow	Prepayment rate	5.1%
				Default rate	4.8%
				Loss severity	70.6%
Impaired loans	44,434		Appraised value	Appraised value	0.0% - 100.0% (29.0%)
OREO	22,012		Appraised value	Appraised value	8.0% (1)


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

Quantitative Information about Level 3 Fair Value Measurements

Fair Value at

Range of Unobservable Inputs

Fair Value at

Range of Unobservable Inputs

September 30, 2016

Valuation Technique

Unobservable Input(s)

(Weighted Average)

December 31, 2016

Valuation Technique

Unobservable Input(s)

(Weighted Average)

(In Thousands)

Recurring fair value measurements:

Other trading assets

984

Discounted cash flow

Default rate

9.3%

859

Discounted cash flow

Default rate

10.1%

Prepayment rate

6.3% - 11.9% (8.5%)

Prepayment rate

6.2% - 11.1% (8.2%)

Interest rate contracts

4,529

Discounted cash flow

Closing ratios (pull-through)

3.7% - 99.4% (62.0%)

Interest rate contracts, net

2,392

Discounted cash flow

Closing ratios (pull-through)

18.6% - 99.1% (68.5%)

Cap grids

0.2% - 2.0% (0.9%)

Cap grids

0.1% - 2.3% (1.1%)

Other assets - MSRs

39,027

Discounted cash flow

Option adjusted spread

6.1% - 18.6% (8.1%)

51,428

Discounted cash flow

Option adjusted spread

6.1% - 18.6% (8.1%)

Constant prepayment rate or life speed

1.8% - 71.6% (20.6%)

Constant prepayment rate or life speed

1.3% - 62.0% (15.7%)

Cost to service

$65 - $4,000 ($88)

Cost to service

$65 - $4,000 ($79)

Other assets - SBIC investments

15,639

Transaction price

N/A

Nonrecurring fair value measurements:

Investment securities held to maturity

2,595

Discounted cash flow

Prepayment rate

10.9%

2,550

Discounted cash flow

Prepayment rate

10.9%

Default rate

9.2%

Default rate

9.2%

Loss severity

63.7%

Loss severity

63.7%

Impaired loans

71,806

Appraised value

0.0% - 80.0% (27.9%)

59,807

Appraised value

0.0% - 80.0% (31.9%)

OREO

21,670

Appraised value

8.0% (1)

21,112

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 Account 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~~contracts 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.

Other Assets - SBIC Investments

The significant unobservable inputs used in the fair value measurement of SBIC Investments are initially based upon transaction price. Increases or decreases in valuation factors such as recent or proposed purchase or sale of debt or equity of the issuer, pricing by other dealers in similar securities, size of position held, liquidity of the market will have a corresponding impact in the value of SBIC investments.

Fair Value of Financial Instruments

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


	September 30, 2016										September 30, 2017
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3		Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In Thousands)										(In Thousands)
Financial Instruments:
Assets:
Cash and cash equivalents	$	4,426,691	$	4,426,691	$	4,426,691	$	—	$	—	$	3,734,658	$	3,734,658	$	3,734,658	$	—	$	—
Investment securities held to maturity	1,240,850		1,241,234		—		—		1,241,234		1,077,372		1,067,919		—		—		1,067,919
Loans, net	59,349,203		55,897,095		—		—		55,897,095		59,466,085		56,701,917		—		—		56,701,917
Liabilities:
Deposits	$	67,587,337	$	67,754,047	$	—	$	67,754,047	$	—	$	67,213,567	$	67,260,405	$	—	$	67,260,405	$	—
FHLB and other borrowings	3,671,861		3,637,982		—		3,637,982		—		3,956,041		4,005,971		—		4,005,971		—
Federal funds purchased and securities sold under agreements to repurchase	165,573		165,573		—		165,573		—		44,761		44,761		—		44,761		—
Other short-term borrowings	50,000		50,000		—		50,000		—


	December 31, 2015										December 31, 2016
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3		Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In Thousands)										(In Thousands)
Financial Instruments:
Assets:
Cash and cash equivalents	$	4,496,828	$	4,496,828	$	4,496,828	$	—	$	—	$	3,251,786	$	3,251,786	$	3,251,786	$	—	$	—
Investment securities held to maturity	1,322,676		1,244,121		—		—		1,244,121		1,203,217		1,182,009		—		—		1,182,009
Loans, net	60,561,411		57,916,215		—		—		57,916,215		59,222,970		56,283,761		—		—		56,283,761
Liabilities:
Deposits	$	65,981,766	$	66,090,901	$	—	$	66,090,901	$	—	$	67,279,533	$	67,359,299	$	—	$	67,359,299	$	—
FHLB and other borrowings	5,438,620		5,405,386		—		5,405,386		—		3,001,551		3,001,836		—		3,001,836		—
Federal funds purchased and securities sold under agreements to repurchase	750,154		750,154		—		750,154		—		39,052		39,052		—		39,052		—
Other short-term borrowings	150,000		150,000		—		150,000		—		50,000		50,000		—		50,000		—

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.

~~(10)~~(9) 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 September 30,
2016 2015
Pretax Tax Expense/ (Benefit) After-tax Pretax Tax Expense/ (Benefit) After-tax
(In Thousands)
Other comprehensive income:
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 income —
—
—
6,736
2,932
3,804
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 maturity 1,844
676
1,168
1,886
820
1,066
Less: non-credit related impairment on investment securities held to maturity —
—
—
—
—
—
Change in unamortized non-credit related impairment on investment securities held to maturity 354
129
225
515
225
290
Net change in unamortized holding losses on securities held to maturity 2,198
805
1,393
2,401
1,045
1,356
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 plans —
—
—
—
—
—
Other comprehensive income (loss) $ (41,254 ) $ (15,110 ) $ (26,144 ) $ 47,807
$ 20,720
$ 27,087


													Three Months Ended September 30,
													2017									2016
													Pretax			Tax Expense/ (Benefit)			After-tax			Pretax			Tax Expense/ (Benefit)			After-tax
													(In Thousands)
Other comprehensive income:
Unrealized holding losses arising during period from securities available for sale													$	(1,025	)	$	(379	)	$	(646	)	$	(41,149	)	$	(15,073	)	$	(26,076	)
Less: reclassification adjustment for net gains on sale of securities in net income													3,033			1,122			1,911			—			—			—
Net change in unrealized losses on securities available for sale													(4,058		)	(1,501		)	(2,557		)	(41,149		)	(15,073		)	(26,076		)
Change in unamortized net holding losses on investment securities held to maturity													1,586			587			999			1,844			676			1,168
Change in unamortized non-credit related impairment on investment securities held to maturity													399			148			251			354			129			225
Net change in unamortized holding losses on securities held to maturity													1,985			735			1,250			2,198			805			1,393
Unrealized holding gains (losses) arising during period from cash flow hedge instruments													1,367			512			855			(2,303		)	(842		)	(1,461		)
Change in defined benefit plans													—			—			—			—			—			—
Other comprehensive loss													$	(706	)	$	(254	)	$	(452	)	$	(41,254	)	$	(15,110	)	$	(26,144	)


	Nine Months Ended September 30,												Nine Months Ended September 30,
	2016						2015						2017									2016
	Pretax		Tax Expense/ (Benefit)		After-tax		Pretax		Tax Expense/ (Benefit)		After-tax		Pretax			Tax Expense/ (Benefit)			After-tax			Pretax			Tax Expense/ (Benefit)			After-tax
	(In Thousands)												(In Thousands)
Other comprehensive income:
Unrealized holding gains arising during period from securities available for sale	$	103,507	$	37,915	$	65,592	$	69,541	$	30,271	$	39,270	$	61,774		$	22,855		$	38,919		$	103,507		$	37,915		$	65,592
Less: reclassification adjustment for net gains on sale of securities in net income	30,037		11,002		19,035		66,967		29,151		37,816		3,033			1,122			1,911			30,037			11,002			19,035
Net change in unrealized gains on securities available for sale	73,470		26,913		46,557		2,574		1,120		1,454		58,741			21,733			37,008			73,470			26,913			46,557
Change in unamortized net holding losses on investment securities held to maturity	4,615		1,691		2,924		8,559		3,725		4,834		4,032			1,492			2,540			4,615			1,691			2,924
Less: non-credit related impairment on investment securities held to maturity	151		55		96		87		38		49		—			—			—			151			55			96
Change in unamortized non-credit related impairment on investment securities held to maturity	1,021		373		648		1,247		543		704		1,236			458			778			1,021			373			648
Net change in unamortized holding losses on securities held to maturity	5,485		2,009		3,476		9,719		4,230		5,489		5,268			1,950			3,318			5,485			2,009			3,476
Unrealized holding gains arising during period from cash flow hedge instruments	2,734		1,006		1,728		9,105		3,783		5,322
Unrealized holding (losses) gains arising during period from cash flow hedge instruments													(14,581		)	(5,409		)	(9,172		)	2,734			1,006			1,728
Change in defined benefit plans	1,300		369		931		2,716		1,001		1,715		(773		)	(288		)	(485		)	1,300			369			931
Other comprehensive income	$	82,989	$	30,297	$	52,692	$	24,114	$	10,134	$	13,980	$	48,655		$	17,986		$	30,669		$	82,989		$	30,297		$	52,692

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


	Unrealized Gains (Losses) on Securities Available for Sale and Transferred to Held to Maturity			Accumulated Gains (Losses) on Cash Flow Hedging Instruments			Defined Benefit Plan Adjustment			Unamortized Impairment Losses on Investment Securities Held to Maturity			Total			Unrealized Gains (Losses) on Securities Available for Sale and Transferred to Held to Maturity			Accumulated Gains (Losses) on Cash Flow Hedging Instruments			Defined Benefit Plan Adjustment			Unamortized Impairment Losses on Investment Securities Held to Maturity			Total
	(In Thousands)															(In Thousands)
Balance, January 1, 2015	$	4,469		$	(7,694	)	$	(41,121	)	$	(7,516	)	$	(51,862	)
Other comprehensive income (loss) before reclassifications	39,270			8,019			—			(49		)	47,240
Amounts reclassified from accumulated other comprehensive income (loss)	(32,982		)	(2,697		)	1,715			704			(33,260		)
Net current period other comprehensive income	6,288			5,322			1,715			655			13,980
Balance, September 30, 2015	$	10,757		$	(2,372	)	$	(39,406	)	$	(6,861	)	$	(37,882	)

Balance, January 1, 2016	$	(56,326	)	$	(6,407	)	$	(29,166	)	$	(7,437	)	$	(99,336	)
Balance, December 31, 2015																$	(56,326	)	$	(6,407	)	$	(29,166	)	$	(7,437	)	$	(99,336	)
Other comprehensive income (loss) before reclassifications	65,592			2,787			—			(96		)	68,283			65,592			2,787			—			(96		)	68,283
Amounts reclassified from accumulated other comprehensive income (loss)	(16,111		)	(1,059		)	931			648			(15,591		)	(16,111		)	(1,059		)	931			648			(15,591		)
Net current period other comprehensive income	49,481			1,728			931			552			52,692			49,481			1,728			931			552			52,692
Balance, September 30, 2016	$	(6,845	)	$	(4,679	)	$	(28,235	)	$	(6,885	)	$	(46,644	)	$	(6,845	)	$	(4,679	)	$	(28,235	)	$	(6,885	)	$	(46,644	)

Balance, December 31, 2016																$	(119,562	)	$	(10,080	)	$	(32,028	)	$	(6,582	)	$	(168,252	)
Other comprehensive income (loss) before reclassifications																38,919			(6,000		)	—			—			32,919
Amounts reclassified from accumulated other comprehensive income (loss)																629			(3,172		)	(485		)	778			(2,250		)
Net current period other comprehensive income (loss)																39,548			(9,172		)	(485		)	778			30,669
Balance, September 30, 2017																$	(80,014	)	$	(19,252	)	$	(32,513	)	$	(5,804	)	$	(137,583	)

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 September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015				2017			2016			2017			2016
	(In Thousands)													(In Thousands)
Unrealized Gains (Losses) on Securities Available for Sale and Transferred to Held to Maturity	$	—		$	6,736		$	30,037		$	66,967		Investment securities gains, net	$	3,033		$	—		$	3,033		$	30,037		Investment securities gains, net
	(1,844		)	(1,886		)	(4,615		)	(8,559		)	Interest on investment securities held to maturity	(1,586		)	(1,844		)	(4,032		)	(4,615		)	Interest on investment securities held to maturity
	(1,844		)	4,850			25,422			58,408				1,447			(1,844		)	(999		)	25,422
	676			(2,112		)	(9,311		)	(25,426		)	Income tax (expense) benefit	(535		)	676			370			(9,311		)	Income tax (expense) benefit
	$	(1,168	)	$	2,738		$	16,111		$	32,982		Net of tax	$	912		$	(1,168	)	$	(629	)	$	16,111		Net of tax

Accumulated Gains (Losses) on Cash Flow Hedging Instruments	$	1,654		$	3,646		$	5,587		$	9,985		Interest and fees on loans	$	(2,258	)	$	1,654		$	6,920		$	5,587		Interest and fees on loans
	(952		)	(1,722		)	(3,909		)	(5,207		)	Interest and fees on FHLB advances	(577		)	(952		)	(1,877		)	(3,909		)	Interest and fees on FHLB advances
	702			1,924			1,678			4,778				(2,835		)	702			5,043			1,678
	(260		)	(839		)	(619		)	(2,081		)	Income tax expense	1,054			(260		)	(1,871		)	(619		)	Income tax (expense) benefit
	$	442		$	1,085		$	1,059		$	2,697		Net of tax	$	(1,781	)	$	442		$	3,172		$	1,059		Net of tax

Defined Benefit Plan Adjustment	$	—		$	—		$	(1,300	)	$	(2,716	)	(2)	$	—		$	—		$	773		$	(1,300	)	(2)
	—			—			369			1,001			Income tax benefit	—			—			(288		)	369			Income tax (expense) benefit
	$	—		$	—		$	(931	)	$	(1,715	)	Net of tax	$	—		$	—		$	485		$	(931	)	Net of tax

Unamortized Impairment Losses on Investment Securities Held to Maturity	$	(354	)	$	(515	)	$	(1,021	)	$	(1,247	)	Interest on investment securities held to maturity	$	(399	)	$	(354	)	$	(1,236	)	$	(1,021	)	Interest on investment securities held to maturity
	129			225			373			543			Income tax benefit	148			129			458			373			Income tax benefit
	$	(225	)	$	(290	)	$	(648	)	$	(704	)	Net of tax	$	(251	)	$	(225	)	$	(778	)	$	(648	)	Net of tax


(1)	Amounts in parentheses indicate debits to the ~~consolidated statement~~Condensed Consolidated Statement of ~~income.~~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,~~2016, Consolidated Financial Statements for additional details).

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

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


	Nine Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2017		2016
	(In Thousands)				(In Thousands)
Supplemental disclosures of cash flow information:
Interest paid	$	339,345	$	277,140	$	331,062	$	339,345
Net income taxes paid	94,808		145,056		109,460		94,808
Supplemental schedule of noncash investing and financing activities:
Transfer of loans and loans held for sale to OREO	$	21,547	$	16,552	$	25,156	$	21,547
Transfer of loans to loans held for sale	764,022		906,857		—		764,022
Change in unrealized gains (losses) on available for sale securities	73,470		2,574
Issuance of restricted stock, net of cancellations	1,083		458		—		1,083

(1211) 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.

In August 2017, the Company announced a reorganization of its line of business structure that will divide the existing Consumer and Commercial Banking segment into a retail line of business and a commercial line of business. This will change the Company's segment reporting structure during the fourth quarter of 2017.

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


	Three Months Ended September 30, 2016												Three Months Ended September 30, 2017
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury			Corporate Support and Other			Consolidated		Consumer and Commercial Banking		Corporate and Investment Banking			Treasury			Corporate Support and Other			Consolidated
	(In Thousands)												(In Thousands)
Net interest income (expense)	$	562,339	$	26,338	$	(1,512	)	$	(72,356	)	$	514,809
Net interest income													$	526,201	$	43,645		$	648		$	18,867		$	589,361
Allocated provision for loan losses	52,358		18,208		—			(5,459		)	65,107		110,642		(11,708		)	—			4,500			103,434
Noninterest income	209,131		50,804		7,960			(4,130		)	263,765		199,589		56,231			4,745			(2,771		)	257,794
Noninterest expense	476,830		34,679		5,101			39,661			556,271		480,684		43,496			6,340			43,442			573,962
Net income (loss) before income tax expense (benefit)	242,282		24,255		1,347			(110,688		)	157,196		134,464		68,088			(947		)	(31,846		)	169,759
Income tax expense (benefit)	84,799		8,489		471			(56,914		)	36,845		47,063		23,831			(331		)	(31,255		)	39,308
Net income (loss)	157,483		15,766		876			(53,774		)	120,351
Less: net income attributable to noncontrolling interests	107		—		420			(4		)	523
Net income													87,401		44,257			(616		)	(591		)	130,451
Less: net income (loss) attributable to noncontrolling interests													176		—			414			(6		)	584
Net income (loss) attributable to BBVA Compass Bancshares, Inc.	$	157,376	$	15,766	$	456		$	(53,770	)	$	119,828	$	87,225	$	44,257		$	(1,030	)	$	(585	)	$	129,867
Average assets	$	56,486,459	$	10,980,519	$	16,462,880		$	6,970,481		$	90,900,339	$	54,661,908	$	9,869,664		$	15,686,910		$	7,081,497		$	87,299,979


	Three Months Ended September 30, 2015											Three Months Ended September 30, 2016
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated		Consumer and Commercial Banking		Corporate and Investment Banking		Treasury			Corporate Support and Other			Consolidated
	(In Thousands)											(In Thousands)
Net interest income (expense)	$	508,900	$	40,505	$	6,228	$	(47,759	)	$	507,874	$	519,774	$	33,785	$	(4,250	)	$	(34,500	)	$	514,809
Allocated provision for loan losses	27,562		24,466		—		(22,877		)	29,151		52,358		18,208		—			(5,459		)	65,107
Noninterest income	221,063		27,514		7,879		4,264			260,720		198,967		54,168		7,960			2,670			263,765
Noninterest expense	469,335		38,044		4,656		45,340			557,375		476,569		34,939		5,101			39,662			556,271
Net income (loss) before income tax expense (benefit)	233,066		5,509		9,451		(65,958		)	182,068		189,814		34,806		(1,391		)	(66,033		)	157,196
Income tax expense (benefit)	81,573		1,928		3,308		(34,381		)	52,428		66,435		12,182		(487		)	(41,285		)	36,845
Net income (loss)	151,493		3,581		6,143		(31,577		)	129,640		123,379		22,624		(904		)	(24,748		)	120,351
Less: net income attributable to noncontrolling interests	65		—		426		—			491
Less: net income (loss) attributable to noncontrolling interests												107		—		420			(4		)	523
Net income (loss) attributable to BBVA Compass Bancshares, Inc.	$	151,428	$	3,581	$	5,717	$	(31,577	)	$	129,149	$	123,272	$	22,624	$	(1,324	)	$	(24,744	)	$	119,828
Average assets	$	55,341,631	$	12,578,897	$	15,085,951	$	6,879,618		$	89,886,097	$	54,398,207	$	13,006,089	$	16,462,880		$	7,033,163		$	90,900,339


	Nine Months Ended September 30, 2016												Nine Months Ended September 30, 2017
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury			Corporate Support and Other			Consolidated		Consumer and Commercial Banking		Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated
	(In Thousands)												(In Thousands)
Net interest income (expense)	$	1,659,588	$	102,050	$	(18,114	)	$	(207,595	)	$	1,535,929
Net interest income													$	1,561,941	$	117,401	$	22,791	$	24,489		$	1,726,622
Allocated provision for loan losses	167,559		87,729		—			9,737			265,025		205,484		16,311		—		7,063			228,858
Noninterest income	622,523		138,982		47,407			(13,696		)	795,216		584,516		151,166		8,380		4,744			748,806
Noninterest expense	1,424,343		144,047		15,289			105,773			1,689,452		1,443,457		111,675		18,983		121,644			1,695,759
Net income (loss) before income tax expense (benefit)	690,209		9,256		14,004			(336,801		)	376,668		497,516		140,581		12,188		(99,474		)	550,811
Income tax expense (benefit)	241,573		3,239		4,901			(155,165		)	94,548		174,131		49,203		4,266		(85,503		)	142,097
Net income (loss)	448,636		6,017		9,103			(181,636		)	282,120		323,385		91,378		7,922		(13,971		)	408,714
Less: net income attributable to noncontrolling interests	306		—		1,271			(8		)	1,569
Less: net income (loss) attributable to noncontrolling interests													216		—		1,250		(8		)	1,458
Net income (loss) attributable to BBVA Compass Bancshares, Inc.	$	448,330	$	6,017	$	7,832		$	(181,628	)	$	280,551	$	323,169	$	91,378	$	6,672	$	(13,963	)	$	407,256
Average assets	$	56,541,683	$	11,960,225	$	16,395,875		$	6,980,644		$	91,878,427	$	54,446,725	$	10,555,362	$	15,375,036	$	7,105,233		$	87,482,356


	Nine Months Ended September 30, 2015											Nine Months Ended September 30, 2016
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated		Consumer and Commercial Banking		Corporate and Investment Banking		Treasury			Corporate Support and Other			Consolidated
	(In Thousands)											(In Thousands)
Net interest income (expense)	$	1,485,992	$	119,259	$	25,026	$	(121,389	)	$	1,508,888	$	1,536,010	$	122,946	$	(26,176	)	$	(96,851	)	$	1,535,929
Allocated provision for loan losses	79,477		41,714		—		(3,860		)	117,331		167,559		87,729		—			9,737			265,025
Noninterest income	627,255		117,131		71,072		1,718			817,176		592,323		146,492		47,407			8,994			795,216
Noninterest expense	1,361,989		115,572		14,683		143,914			1,636,158		1,423,397		144,993		15,289			105,773			1,689,452
Net income (loss) before income tax expense (benefit)	671,781		79,104		81,415		(259,725		)	572,575		537,377		36,716		5,942			(203,367		)	376,668
Income tax expense (benefit)	235,123		27,686		28,495		(134,439		)	156,865		188,082		12,851		2,079			(108,464		)	94,548
Net income (loss)	436,658		51,418		52,920		(125,286		)	415,710		349,295		23,865		3,863			(94,903		)	282,120
Less: net income attributable to noncontrolling interests	448		—		1,290		—			1,738
Less: net income (loss) attributable to noncontrolling interests												306		—		1,271			(8		)	1,569
Net income (loss) attributable to BBVA Compass Bancshares, Inc.	$	436,210	$	51,418	$	51,630	$	(125,286	)	$	413,972	$	348,989	$	23,865	$	2,592		$	(94,895	)	$	280,551
Average assets	$	54,040,909	$	12,459,085	$	14,288,092	$	6,909,436		$	87,697,522	$	54,603,369	$	13,879,094	$	16,395,875		$	7,000,089		$	91,878,427

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 operating segment based on the utilization of services provided or other appropriate indicators. Capital is allocated to the operating segments based upon the underlying risks in each business taking into account economic and regulatory capital standards.

The development and application of these methodologies is a dynamic process. Accordingly, prior period financials have been revised to reflect management accounting enhancements and changes in the Company's organizational ~~structure.~~structure due to the transfer of certain customer relationships within its large middle market customer group from the Consumer and Commercial Banking segment to the Corporate and Investment Banking segment that occurred during the fourth quarter of 2016. The ~~2015~~2016 segment information has been revised to conform to the ~~2016~~2017 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.

~~(13)~~(12) 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~~2017 and ~~2015~~2016.

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 ~~$5.4~~$5.6 billion and ~~$5.3~~$5.2 billion as of September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. The net fair value of outstanding derivative contracts between the Company and BBVA are detailed below.


	September 30, 2016			December 31, 2015			September 30, 2017			December 31, 2016
	(In Thousands)						(In Thousands)
Derivative contracts:
Fair value hedges	$	34,082		$	(9,405	)	$	(8,898	)	$	(14,225	)
Cash flow hedges	(389		)	(40		)	340			(380		)
Free-standing derivatives not designated as hedging instruments	(58,934		)	(20,082		)	(1,379		)	(14,326		)

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

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


	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
	(In Thousands)				(In Thousands)
Securities purchased under agreements to resell	$	16,406	$	26,404	$	—	$	8,330
Securities sold under agreements to repurchase	82,942		74,049		44,761		23,397

Borrowings

BSI, a wholly owned subsidiary of the Company, ~~has~~had a $420 million revolving note and cash subordination agreement with BBVA that was executed on March 16, 2012, with aan original maturity date of March 16, 2018. On March 16, 2017, the agreement was amended to increase the available amount to $450 million and the maturity date was extended to March 16, 2023. BSI also has a $150 million line of credit with BBVA that was initiated on August 1, 2014. At September 30, ~~2016~~2017 there was ~~$50 million~~no amount outstanding onunder the line of credit agreement and $50 million outstanding at December 31, 2016. At both September 30, 2017 and December 31, 2016 there was 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 $25 thousand and $1.1 million ~~and $587 thousand~~ for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively, and are included in interest on other short-term borrowings within the Company's Unaudited Condensed Consolidated Statements of Income. Interest expense related to these agreements was ~~$2.7 million~~$917 thousand and ~~$1.7~~$2.7 million for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~ 2016,

respectively, and are included in interest on other short-term borrowings within the Company's Unaudited Condensed Consolidated Statements of Income.

Service and Referral Agreements

The Company and its affiliates entered into or were subject to various service and referral agreements with BBVA and its affiliates. Each of the agreements was done in the ordinary course of business and on market terms. Income associated with these agreements was ~~$6.5~~$13.2 million and ~~$2.7~~$6.5 million for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, 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~~$8.7 million and ~~$5.6~~$6.6 million for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, 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 $27.1 million and $9.3 million for ~~both~~ the nine months ended September 30, 2017 and 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 ~~were $19.2~~was $21.3 million and ~~$17.5~~$19.2 million for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively, and is recorded as a component of noninterest expense within the Company's Unaudited Condensed Consolidated Statements of Income.

Series A Preferred Stock

BBVA is the sole holder of the Series A Preferred Stock that the Company issued in December 2015. At September 30, ~~2016~~2017, the carrying amount of the Series A Preferred Stock was approximately $229 million. During the ~~three~~nine months ended September 30, 2017 and 2016, the Company paid ~~$3.5~~$11.0 million and $10.1 million, respectively, 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 nine months ended September 30, 2016, the Company sold approximately $444 million of commercial loans to BBVA and recognized a gain on sale of $1.5 million that was recorded as a component of other noninterest income within the Company's Unaudited Condensed Consolidated Statements of Income.


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

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

Critical Accounting Policies

The accounting principles followed by the Company and the methods of applying these principles conform with accounting principles generally accepted in the United States of America and with general practices within the banking industry. The Company’s critical accounting policies relate to (1) the allowance for loan losses, (2) fair value of financial instruments, ~~(3) income taxes~~ and ~~(4)~~(3) 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.~~2016. Additional disclosures regarding the effects of new accounting pronouncements are included in Note 1, Basis of Presentation, in the Notes to the Unaudited Condensed Consolidated Financial Statements, included herein.

Executive Overview

Financial Performance

Consolidated net income attributable to the Company for the three months ended September 30, ~~2016~~2017 was ~~$119.8~~$129.9 million compared to ~~$129.1~~$119.8 million earned during the three months ended September 30, ~~2015.~~2016. The ~~decrease in~~Company’s results of operations for the three months ended September 30, 2017, reflected higher net income ~~attributable to the Company was~~before income tax expense primarily ~~driven by an increase in provision expense offset in part by~~as a result of higher ~~levels of~~ net interest income offset by lower noninterest income and ~~a lower income tax~~the impact of higher provision for loan losses and noninterest expense.

Net interest income totaled $589.4 million for the three months ended September 30, 2017 compared to $514.8 million for the three months ended September 30, ~~2016 compared to $507.9 million for the three months ended September 30, 2015.~~2016. The net interest margin for the three months ended September 30, ~~2016~~2017 was ~~2.73%~~3.13%, compared to ~~2.70%~~2.62% for the three months ended September 30, 2015. The increase in net interest income was primarily the result of an increase in total average interest earning assets, driven by higher levels of average loans as well as a slight decrease in total average interest bearing liabilities due to a decrease in the average balances of FHLB and other borrowings and other short-term borrowings for the three months ended September 30, 2016 compared to the same period in 2015.2016. Net interest income was ~~also~~ positively impacted by higher interest rates due to the ~~December 2015~~impact of the Federal Reserve Board benchmark interest rate ~~increase.~~increases.

The provision for loan losses was ~~$65.1~~$103.4 million for the three months ended September 30, ~~2016~~2017 compared to ~~$29.2~~$65.1 million of provision for loan losses for the three months ended September 30, ~~2015.~~2016. The increase in provision for loan losses was primarily ~~attributable~~due to ~~a decline in credit quality indicators stemming from downgrades in the commercial portfolio and an increase in charge-offs~~$60 million of additional allowance for loan losses related to ~~energy loans as well as consumer direct~~the estimated impact of Hurricanes Harvey and ~~indirect loans~~Irma on the loan portfolio during the three months ended September 30, ~~2016.~~ 2017 offset in part by a reduction in provision expense associated with improvements in credit quality indicators in the energy portfolio during the three months ended September 30, 2017.

Net charge-offs for the three months ended September 30, ~~2016~~2017 totaled ~~$46.1~~$71.3 million which represented a ~~$17.6~~$25.2 million increase compared to ~~$28.5~~$46.1 million for the three months ended September 30, ~~2015.~~2016. The increase in net charge-offs for the three months ended September 30, ~~2016~~2017 as compared to the corresponding period in ~~2015~~2016 was primarily driven by ~~an $8.5~~a $5.8 million increase in commercial, financial and agricultural net charge-offs, ~~related to energy loans as well as~~an $8.1 million increase in commercial real estate - mortgage net charge-offs, and a ~~$12.9~~$5.4 million increase in consumer direct ~~and consumer indirect~~ net charge-offs.

Noninterest income was ~~$263.8~~$257.8 million, ~~an increase~~a decrease of ~~$3.0~~$6.0 million compared to the three months ended September 30, ~~2015.~~2016. The ~~increase~~decrease in noninterest income was largely attributable to a ~~$16.5~~$4.8 million ~~increase~~decrease in mortgage banking, as well as a $3.9 million decrease in investment banking and advisory fees, and a ~~$4.1~~$3.3 million ~~increase~~decrease in retail investment sales ~~and~~offset by a ~~$7.7~~$3.0 million increase in ~~mortgage banking. This was offset in part by a $22.7~~investment securities gains

Noninterest expense increased $17.7 million ~~decrease in other noninterest income, primarily as a result of a $21.1~~to $574.0 million ~~gain on the sale of mortgage loans not initially originated~~ for ~~sale in the secondary market recognized during~~ the three months ended September 30, ~~2015 and a $6.7 million decrease in investment securities gains.~~

~~Noninterest expense was~~2017 compared to $556.3 million for the three months ended September 30, ~~2016, relatively flat when compared~~2016. The increase was driven by a $17.0 million increase in other noninterest expense due, in part, to ~~$557.4~~higher levels of provisions for unfunded commitments and higher levels of business development expense.

Income tax expense was $39.3 million for the three months ended September 30, ~~2015.~~

~~Income tax expense was~~2017 compared to $36.8 million for the three months ended September 30, ~~2016 compared to $52.4 million for the three months ended September 30, 2015.~~2016. This resulted in an effective tax rate of 23.2% for 2017 and 23.4% for ~~2016 and 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 September 30, ~~2016~~2017 were ~~$89.4~~$85.7 billion, a decrease of ~~$712 million~~$1.4 billion from December 31, ~~2015~~2016 levels. The primary driver of the change in total assets was the $2.6 billion decrease in trading account assets due to a decrease in U.S. Treasury securities held by BSI. Total loans, excluding loans held for sale, were ~~$60.2~~$60.3 billion at September 30, ~~2016, a decrease~~2017, an increase of ~~$1.1 billion~~$254 million or ~~1.8%~~0.4% from year-end December 31, ~~2015~~2016 levels. The ~~decrease~~increase in loans was primarily driven by ~~slight decreases~~increases in both commercial and consumer loans. Deposits ~~increased $1.6 billion~~decreased $66 million or ~~2.4%~~0.1% compared to December 31, ~~2015, driven by a 2.7% increase in transaction accounts and a 1.5% increase in time deposits, which was fueled by an increase in noninterest bearing deposits.~~2016.

Total shareholder's equity at September 30, ~~2016~~2017 was ~~$12.8~~$13.1 billion, an increase of ~~$194~~$365 million compared to December 31, ~~2015.~~2016.

Capital and Regulatory

Under the Basel III transitional provisions, the Company's Tier1 and CET1 ratios were ~~11.64%~~12.42% and ~~11.28%~~12.07%, respectively, at September 30, ~~2016~~2017 compared to ~~11.08%~~11.85% and ~~10.70%~~11.49%, respectively, at December 31, ~~2015.~~2016.

On August 1, 2017, BBVA received notification that the Federal Reserve Board determined that the election by BBVA to become an FHC was effective as of August 1, 2017.

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~~must obtain regulatory approval prior to ~~pay~~paying any ~~dividends at September 30, 2016 and December 31, 2015 without regulatory approval.~~dividends.

~~Through the first nine months of 2016,~~During 2017, the Parent paid common dividends of ~~$60~~$60.0 million to its sole shareholder, BBVA. Any ~~future~~ dividends paid ~~from~~by the Parent must be set forth as capital actions in the Company's capital plan and not objected to by the Federal Reserve Board.

At September 30, ~~2016,~~2017, the Company was fully compliant with the liquidity coverage ratio rule. Management believes that the current sources of liquidity are adequate to meet the Company’s requirements and plans for continued growth.

~~Digital Transformation~~

~~As technology advances continue to change the landscape~~Impact of ~~the financial services industry, customer behaviors are rapidly adapting~~Hurricanes Harvey 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. Irma

During the ~~first nine months~~third quarter of ~~2016,~~2017, the Company's geographic footprint was impacted by Hurricanes Harvey and Irma. Hurricane Harvey struck the coast of Texas in August 2017 and caused significant flood and wind damage to the cities close to the Gulf Coast. In September 2017, Hurricane Irma struck south Florida and then continued inland impacting parts of Georgia and South Carolina and causing significant flood and wind damage.

At September 30, 2017, the Company has ~~experienced an increase~~identified approximately $11.9 billion of outstanding loans, consisting of approximately $5.9 billion of consumer loans and $6.0 billion of commercial loans, in ~~number~~the most significantly impacted areas. As part of ~~customers utilizing~~ its ~~digital and mobile capabilities. In addition,~~ongoing evaluation process, the Company has ~~also seen an increase~~identified loans where the mailing address or collateral were located within FEMA designated disaster zip codes, surveyed borrowers in ~~products sold through~~the impacted areas, and evaluated applicable insurance coverage. At September 30, 2017 based on this initial evaluation, the Company has recorded approximately $60 million in additional allowance for loan losses related to its ~~digital channels as a percentage~~best estimate of ~~products sold through all channels.~~hurricane-related losses in this portion of its loan portfolio.

~~Noteworthy items~~The amount of the allowance for loan losses related to the ~~Company’s digital transformation announced during~~Hurricanes Harvey and Irma impacted loan portfolio may change in the ~~first~~future as additional or different information affecting customers in these areas is obtained. Additionally, the impacted loan portfolio may be subject to additional pressure on credit quality metrics including past due, criticized, and nonperforming loans, as well as net charge-offs.

The Company had nine ~~months of 2016 included the following:~~

~~In January 2016,~~branches that sustained significant damage due to hurricanes. At September 30, 2017, the Company ~~announced an alliance with industry disrupter FutureAdvisor, a subsidiary of BlackRock, the world’s largest asset manager. The alliance makes sophisticated tools and guidance available~~has recognized approximately $2.2 million in expenses related to ~~the Company’s digital savvy clients who are~~property damage 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.covered by insurance.

~~In May 2016,~~Additionally, for the three months ended September 30, 2017, the Company ~~announced that it had expanded its suite~~has recognized approximately $1.5 million of ~~mobile payment solutions for its cardholders~~expense associated with ~~the integration of Android Pay~~relief efforts and ~~Samsung Pay. The release underscores the Company’s drive~~commitments made to ~~provide more~~employees 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.~~charitable organizations.

Analysis of Results of Operations

Consolidated net income attributable to the Company totaled ~~$119.8~~$129.9 million and ~~$129.1~~$119.8 million for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively. The Company’s results of operations for the three months ended September 30, ~~2016~~2017, reflected ~~lower~~higher net income before income tax expense primarily as a result of higher net interest income offset by lower noninterest income and the impact of higher provision for loan losses ~~offset in part by higher net interest income~~ and noninterest ~~income.~~expense.

Consolidated net income attributable to the Company totaled ~~$280.6~~$407.3 million and ~~$414.0~~$280.6 million for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively. The Company’s results of operations for the nine months ended September 30, ~~2016~~2017, reflected ~~lower~~higher net income before income tax expense primarily as a result of higher net interest income and lower provision for loan losses and noninterest ~~expense and lower noninterest income offset in part by higher net interest income.~~expense.

Net Interest Income and Net Interest Margin

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

Three Months Ended September 30, ~~2016~~2017 and ~~2015~~2016

Net interest income on a fully taxable equivalent basis totaled $611.3 million for the three months ended September 30, 2017, an increase of $76.6 million compared with $534.7 million for the three months ended September 30, ~~2016 compared with $527.0 million for the three months ended September 30, 2015. Net interest income on a fully taxable equivalent basis increased $7.7 million in 2016 compared to 2015.~~2016. The increase in net interest income was primarily the result of an increase in ~~total average~~ interest ~~earning assets driven by higher levels of average~~income on loans and investment securities 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~~expense on other short-term ~~borrowings~~borrowings.

Net interest margin was 3.13% for the three months ended September 30, ~~2016~~2017 compared to ~~the same period in 2015.~~

~~Net interest margin was 2.73%~~2.62% for the three months ended September 30, ~~2016 compared to 2.70% for~~2016. The 51 basis point increase in net interest margin was primarily driven by the ~~three months ended September 30, 2015.~~impact of higher interest rates.

The fully taxable equivalent yield for the three months ended September 30, ~~2016~~2017, for the loan portfolio was ~~3.74%~~4.23% compared to ~~3.64%~~3.74% for the same period in ~~2015.~~2016. The 1049 basis point increase was primarily driven by ~~originations of higher yielding loans as well as~~ the impact of ~~the rate increase in December 2015.~~higher interest rates.

The fully taxable equivalent yield on the investment securities portfolio was 1.89% for the three months ended September 30, 2017 compared to 1.83% for the three months ended September 30, ~~2016, compared~~2016. The 6 basis point increase was a result of increases in interest rates. Additionally, as interest rates have increased the amount of premium amortization required has decreased as actual and expected prepayments have decreased.

The yield on trading account securities increased to ~~1.92%~~1.77% for the three months ended September 30, 2015. The 9 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~~2017 compared to 1.41% for the three months ended September 30, 2016, ~~compared~~primarily due to ~~1.37% for~~ the ~~three months ended September 30, 2015.~~

impact of higher interest rates.

The average rate paid on interest bearing deposits was 0.67% for the three months ended September 30, 2017 compared to 0.64% for the three months ended September 30, ~~2016 compared to 0.61% for the three months ended September 30, 2015.~~2016.

The average rate paid on FHLB and other borrowings for the three months ended September 30, ~~2016~~2017 was ~~2.06%~~2.35% compared to ~~1.28%~~2.06% for the corresponding period in ~~2015.~~2016. The 7829 basis point increase was primarily driven by ~~changes~~the impact of higher rate FHLB advances as well as the impact of the $750 million issuance of unsecured senior notes in June 2017.

The average rate paid on other short-term borrowings for the three months ended September 30, 2017 decreased to 1.04% compared to 1.43% for the three months ended September 30, 2016, due primarily to the impact of the decrease in the ~~value~~average balance of ~~interest rate contracts hedging the value of FHLB and~~ other short-term borrowings.

Nine Months Ended September 30, ~~2016~~2017 and ~~2015~~2016

Net interest income totaled ~~$1.5~~$1.7 billion for ~~both~~ the nine months ended September 30, ~~2016 and~~2017 compared to $1.5 billion for the nine months ended September 30, ~~2015.~~2016.

Net interest income on a fully taxable equivalent basis totaled ~~$1.6~~$1.8 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~~2017 compared ~~to 2.77%~~with $1.6 billion for the nine months ended September 30, ~~2015.~~2016. The 6increase in net interest income was primarily the result of an increase in interest income on loans and investment securities as well as a decrease in interest expense on deposits and other-short term borrowings.

Net interest margin was 3.07% for the nine months ended September 30, 2017 compared to 2.60% for the nine months ended September 30, 2016. The 47 basis point ~~decline~~increase in net interest margin was primarily ~~reflects~~driven by the impact of ~~lower yields in the AFS investment securities portfolio.~~higher interest rates.

The fully taxable equivalent yield for the nine months ended September 30, ~~2016~~2017, for the loan portfolio was ~~3.73%~~4.13% compared to ~~3.71 %~~3.73% for the same period in ~~2015.~~2016. The 40 basis point increase was primarily driven by the impact of higher interest rates.

The fully taxable equivalent yield on the investment securities portfolio was 1.96% for the nine months ended September 30, 2017 compared to 1.71% for the nine months ended September 30, ~~2016, compared~~2016. The 25 basis point increase was a result of increases in interest rates. Additionally, as interest rates have increased the amount of premium amortization required has decreased as actual and expected prepayments have decreased.

The yield on trading account securities increased to ~~2.04%~~1.58% 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~~2017 compared to 1.43% for the nine months ended September 30, 2016 ~~compared to 1.34% for the nine months ended September 30, 2015~~primarily due to ~~an increase in~~ the ~~average balance~~impact of ~~U.S. Treasury securities held by BSI.~~higher interest rates.

The average rate paid on interest bearing deposits was 0.62% for the nine months ended September 30, 2017 compared to 0.65% for the nine months ended September 30, ~~2016 compared to 0.61% for the nine months ended September 30, 2015.~~2016.

The average rate paid on FHLB and other borrowings for the nine months ended September 30, ~~2016~~2017, was ~~1.73%~~2.32% compared to ~~1.57%~~1.73% for the corresponding period in ~~2015.~~2016. The 1659 basis point increase was primarily driven by ~~changes in~~ the ~~value~~impact of interest rate contracts hedging ~~the value of~~ FHLB and other borrowings.

The average rate paid on other short-term borrowings ~~as well as~~for the ~~impact of~~nine months ended September 30, 2017 increased to 1.45% compared to 1.41% for the ~~$700 million issuance of subordinated notes in April 2015 under the Global Bank Note program.~~nine months ended September 30, 2016.

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.rates.

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

	Three Months Ended September 30, 2016							Three Months Ended September 30, 2015							Three Months Ended September 30, 2017							Three Months Ended September 30, 2016
	Average Balance			Income/Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/Rate		Average Balance			Income/Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/Rate
	(Dollars in Thousands)														(Dollars in Thousands)
Assets:
Interest earning assets:
Loans (1) (2) (3)	61,060,433			574,748		3.74		60,632,304			555,713		3.64		$	60,271,504		$	642,670	4.23	%	$	61,060,433		$	574,748	3.74	%
Investment securities – AFS (tax exempt)(3)	9,569			195		8.11		193,008			2,044		4.20		1,399			24		6.81		9,569			195		8.11
Investment securities – AFS (taxable)	11,363,752			48,255		1.69		10,314,680			45,316		1.74		12,315,872			53,915		1.74		11,363,752			48,255		1.69
Total investment securities – AFS	11,373,321			48,450		1.69		10,507,688			47,360		1.79		12,317,271			53,939		1.74		11,373,321			48,450		1.69
Investment securities – HTM (tax exempt) (3)	1,059,610			8,672		3.26		1,143,158			9,070		3.15		963,089			8,867		3.65		1,059,610			8,672		3.26
Investment securities – HTM (taxable)	189,672			1,029		2.16		223,371			1,049		1.86		159,804			1,221		3.03		189,672			1,029		2.16
Total investment securities - HTM	1,249,282			9,701		3.09		1,366,529			10,119		2.94		1,122,893			10,088		3.56		1,249,282			9,701		3.09
Trading account securities (3)	3,637,782			12,927		1.41		4,167,721			14,431		1.37		1,396,429			6,247		1.77		3,637,782			12,927		1.41
Other (4) (5)	632,030			4,563		2.87		685,391			1,666		0.96
Other (4) (5) (6)															2,313,287			11,557		1.98		3,718,225			4,563		0.49
Total earning assets	77,952,848			650,389		3.32		77,359,633			629,289		3.23		77,421,384			724,501		3.71		81,039,043			650,389		3.19
Noninterest earning assets:
Cash and due from banks(6)	4,387,844							4,206,639							1,038,203							1,301,649
Allowance for loan losses	(848,067		)					(725,871		)					(821,227		)					(848,067		)
Net unrealized gain on investment securities available for sale	25,595							9,568
Net unrealized (loss) gain on investment securities available for sale															(76,457		)					25,595
Other noninterest earning assets	9,382,119							9,036,128							9,738,076							9,382,119
Total assets	$	90,900,339						$	89,886,097						$	87,299,979						$	90,900,339
Liabilities:
Interest bearing liabilities:
Interest bearing demand deposits	$	6,824,519		4,077		0.24		$	6,949,920		2,943		0.17		$	7,557,010		6,819		0.36		$	6,824,519		4,077		0.24
Savings and money market accounts	25,663,079			24,395		0.38		24,414,794			22,260		0.36		24,551,131			27,962		0.45		25,663,079			24,395		0.38
Certificates and other time deposits	14,670,360			47,507		1.29		13,158,705			42,990		1.30		12,408,794			40,302		1.29		14,670,360			47,507		1.29
Foreign office deposits	106,219			52		0.19		165,744			89		0.21		—			—		—		106,219			52		0.19
Total interest bearing deposits	47,264,177			76,031		0.64		44,689,163			68,282		0.61		44,516,935			75,083		0.67		47,264,177			76,031		0.64
FHLB and other borrowings	4,121,742			21,315		2.06		6,331,187			20,422		1.28		5,053,340			29,904		2.35		4,121,742			21,315		2.06
Federal funds purchased and securities sold under agreements to repurchase (5)	232,451			4,934		8.44		677,351			2,506		1.47		52,034			4,623		35.25		232,451			4,934		8.44
Other short-term borrowings	3,737,212			13,453		1.43		4,370,077			11,129		1.01		1,386,329			3,641		1.04		3,737,212			13,453		1.43
Total interest bearing liabilities	55,355,582			115,733		0.83		56,067,778			102,339		0.72		51,008,638			113,251		0.88		55,355,582			115,733		0.83
Noninterest bearing deposits	20,715,562							19,312,087							21,072,789							20,715,562
Other noninterest bearing liabilities	2,018,455							2,126,929							2,087,637							2,018,455
Total liabilities	78,089,599							77,506,794							74,169,064							78,089,599
Shareholder’s equity	12,810,740							12,379,303							13,130,915							12,810,740
Total liabilities and shareholder’s equity	$	90,900,339						$	89,886,097						$	87,299,979						$	90,900,339
Net interest income/net interest spread				$	534,656	2.49	%				$	526,950	2.51	%				$	611,250	2.83	%				$	534,656	2.36	%
Net interest margin						2.73	%						2.70	%						3.13	%						2.62	%
Taxable equivalent adjustment				19,847							19,076							21,889							19,847
Net interest income				$	514,809						$	507,874						$	589,361						$	514,809


(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 7,6, Securities Financing ~~Activities.~~Activities, in the notes to the financial statements.


(6)	Beginning in the fourth quarter of 2016, interest bearing deposits with the Federal Reserve are included in earning assets. Previous to this change, these balances were included as noninterest earning assets within cash and due from banks. Prior periods have been reclassified to conform to current period presentation.

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

	Nine Months Ended September 30, 2016							Nine Months Ended September 30, 2015							Nine Months Ended September 30, 2017							Nine Months Ended September 30, 2016
	Average Balance			Income/Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/Rate		Average Balance			Income/Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/Rate
	(Dollars in Thousands)														(Dollars in Thousands)
Assets:
Interest earning assets:
Loans (1) (2) (3)	61,867,590			1,727,822		3.73		59,737,187			1,659,303		3.71		$	60,166,823		$	1,859,740	4.13	%	$	61,867,590		$	1,727,822	3.73	%
Investment securities – AFS (tax exempt)(3)	11,483			668		7.77		332,492			10,100		4.06		4,014			243		8.09		11,483			668		7.77
Investment securities – AFS (taxable)	11,246,517			130,585		1.55		9,861,132			136,483		1.85		12,078,924			164,240		1.82		11,246,517			130,585		1.55
Total investment securities – AFS	11,258,000			131,253		1.56		10,193,624			146,583		1.92		12,082,938			164,483		1.82		11,258,000			131,253		1.56
Investment securities – HTM (tax exempt) (3)	1,070,547			25,977		3.24		1,129,784			26,373		3.12		974,886			26,264		3.60		1,070,547			25,977		3.24
Investment securities – HTM (taxable)	198,614			3,316		2.23		236,515			3,409		1.93		167,008			3,356		2.69		198,614			3,316		2.23
Total investment securities - HTM	1,269,161			29,293		3.08		1,366,299			29,782		2.91		1,141,894			29,620		3.47		1,269,161			29,293		3.08
Trading account securities (3)	3,786,156			40,661		1.43		3,779,274			37,878		1.34		2,235,621			26,352		1.58		3,786,156			40,661		1.43
Other (4) (5)	538,977			13,275		3.29		604,319			4,027		0.89
Other (4) (5) (6)															2,402,511			32,868		1.83		3,849,093			13,275		0.46
Total earning assets	78,719,884			1,942,304		3.30		75,680,703			1,877,573		3.32		78,029,787			2,113,063		3.62		82,030,000			1,942,304		3.16
Noninterest earning assets:
Cash and due from banks(6)	4,584,803							3,642,765							918,124							1,274,687
Allowance for loan losses	(823,372		)					(707,459		)					(835,915		)					(823,372		)
Net unrealized gain on investment securities available for sale	15,061							44,180
Net unrealized (loss) gain on investment securities available for sale															(102,461		)					15,061
Other noninterest earning assets	9,382,051							9,037,333							9,472,821							9,382,051
Total assets	$	91,878,427						$	87,697,522						$	87,482,356						$	91,878,427
Liabilities:
Interest bearing liabilities:
Interest bearing demand deposits	$	6,912,147		11,867		0.23		$	7,281,588		8,868		0.16		$	7,863,401		19,211		0.33		$	6,912,147		11,867		0.23
Savings and money market accounts	25,861,764			75,896		0.39		23,890,463			70,465		0.39		24,826,554			72,643		0.39		25,861,764			75,896		0.39
Certificates and other time deposits	14,652,400			142,856		1.30		12,832,829			123,546		1.29		12,554,506			119,447		1.27		14,652,400			142,856		1.30
Foreign office deposits	108,444			160		0.20		167,220			257		0.21		—			—		—		108,444			160		0.20
Total interest bearing deposits	47,534,755			230,779		0.65		44,172,100			203,136		0.61		45,244,461			211,301		0.62		47,534,755			230,779		0.65
FHLB and other borrowings	4,543,350			58,919		1.73		5,742,906			67,068		1.57		4,115,511			71,422		2.32		4,543,350			58,919		1.73
Federal funds purchased and securities sold under agreements to repurchase (5)	569,772			16,525		3.87		832,854			5,534		0.89		64,676			16,462		34.03		569,772			16,525		3.87
Other short-term borrowings	3,912,069			41,281		1.41		3,973,734			36,668		1.23		2,239,427			24,233		1.45		3,912,069			41,281		1.41
Total interest bearing liabilities	56,559,946			347,504		0.82		54,721,594			312,406		0.76		51,664,075			323,418		0.84		56,559,946			347,504		0.82
Noninterest bearing deposits	20,432,380							18,749,741							20,922,150							20,432,380
Other noninterest bearing liabilities	2,122,640							1,944,942							1,899,015							2,122,640
Total liabilities	79,114,966							75,416,277							74,485,240							79,114,966
Shareholder’s equity	12,763,461							12,281,245							12,997,116							12,763,461
Total liabilities and shareholder’s equity	$	91,878,427						$	87,697,522						$	87,482,356						$	91,878,427
Net interest income/net interest spread				$	1,594,800	2.48	%				$	1,565,167	2.56	%				$	1,789,645	2.78	%				$	1,594,800	2.34	%
Net interest margin						2.71	%						2.77	%						3.07	%						2.60	%
Taxable equivalent adjustment				58,871							56,279							63,023							58,871
Net interest income				$	1,535,929						$	1,508,888						$	1,726,622						$	1,535,929


(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 7,6, Securities Financing ~~Activities.~~Activities, in the notes to the financial statements.


(6)	Beginning in the fourth quarter of 2016, interest bearing deposits with the Federal Reserve are included in earning assets. Previous to this change, these balances were included as noninterest earning assets within cash and due from banks. Prior periods have been reclassified to conform to current period presentation.

Provision for Loan Losses

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

Three Months Ended September 30, ~~2016~~2017 and ~~2015~~2016

For the three months ended September 30, ~~2016,~~2017, the Company recorded ~~$65.1~~$103.4 million of provision for loan losses compared to ~~$29.2~~$65.1 million of provision for loan losses for the three months ended September 30, ~~2015.~~2016. The increase in provision for loan losses was primarily due to $60 million of additional allowance for loan losses related to the estimated impact of Hurricanes Harvey and Irma on the loan portfolio during the three months ended September 30, ~~2016 as compared to the same period~~2017 offset in ~~2015 was primarily to~~part by a ~~decline~~reduction in provision expense associated with improvements in credit quality indicators ~~stemming from downgrades~~ in the ~~commercial~~energy portfolio ~~and an increase in charge-offs related to energy loans as well as consumer direct and indirect loans~~ during ~~2016.~~ the three months ended September 30, 2017.

The Company recorded net charge-offs of ~~$46.1~~$71.3 million during the three months ended September 30, ~~2016~~2017 compared to ~~$28.5~~$46.1 million during the corresponding period in ~~2015.~~2016. The increase in net charge-offs for the three months ended September 30, 2017 as compared to the corresponding period in 2016 was driven in part by an $8.1 million increase in commercial real estate-mortgage net charge-offs, a $5.8 million increase in commercial, financial and agricultural net charge-offs and a $5.4 million increase in consumer direct net charge-offs. Included in net-charge-offs for the three months ended September 30, ~~2016~~2017 was ~~$8.5 million~~$127 thousand of net charge-offs related to energy loans compared to ~~$2.7~~$8.5 million of charge-offs related to energy loans for the three months ended September 30, ~~2015.~~2016. Net charge-offs were 0.47% (or 0.49% excluding net charge-offs on energy loans) of average loans for the three months ended September 30, 2017 compared to 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.~~2016.

Nine Months Ended September 30, ~~2016~~2017 and ~~2015~~2016

For the nine months ended September 30, ~~2016,~~2017, the Company recorded ~~$265.0~~$228.9 million of provision for loan losses compared to ~~$117.3~~$265.0 million of provision for loan losses for the nine months ended September 30, ~~2015.~~2016. The ~~increase~~decrease in provision for loan losses ~~for~~was primarily due to improvements in credit quality indicators in the energy portfolio during the nine months ended September 30, 2017, when compared to the negative credit quality indicators stemming from downgrades in the energy portfolio that occurred during the nine months ended September 30, 2016 ~~as compared~~offset by the impact of $60 million of additional allowance for loan losses related to the ~~same period in 2015 was primarily attributable to a decline in credit quality indicators primarily driven by downgrades in~~estimated impact of Hurricanes Harvey and Irma on the ~~energy~~loan portfolio during ~~2016.~~ the nine months ended September 30, 2017.

The Company recorded net charge-offs of ~~$165.6~~$218.0 million during the nine months ended September 30, ~~2016~~2017 compared to ~~$80.3~~$165.6 million during the corresponding period in ~~2015.~~2016. The increase in net charge-offs for the nine months ended September 30, 2017 as compared to the corresponding period in 2016 was driven, in part, by a $15.4 million increase in commercial, financial and agricultural net charge-offs as well as a $20.5 million increase in consumer direct net charge-offs. Included in net-charge-offs for the nine months ended September 30, ~~2016~~2017 was ~~$49.4~~$56.7 million of net charge-offs related to energy loans compared to ~~$2.7~~$49.4 million of ~~net~~ charge-offs related to energy loans for the nine months ended September 30, ~~2015.~~2016. Net charge-offs were 0.48% (or 0.38% excluding net charge-offs on energy loans) of average loans for the nine months ended September 30, 2017 compared to 0.36% (or 0.27% excluding net charge-offs on energy loans) of average loans for the nine months ended September 30, ~~2016 compared to 0.18% (or 0.19% excluding net charge-offs on energy loans) of average loans for the nine months ended September 30, 2015.~~2016.

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 4,3, Loans and Allowance for Loan Losses, in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional disclosures.

Noninterest Income

The following table presents the components of noninterest income.

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

	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015			2017		2016		2017		2016
	(In Thousands)									(In Thousands)
Service charges on deposit accounts	$	55,047	$	54,917	$	158,393	$	161,891		$	55,953	$	55,047	$	166,040	$	158,393
Card and merchant processing fees	31,256		29,024		92,507		83,918			32,297		31,256		94,749		92,507
Retail investment sales										26,817		30,137		82,876		79,689
Investment banking and advisory fees	34,385		17,842		86,324		84,975			30,500		34,385		78,744		86,324
Money transfer income	25,058		24,868		75,960		68,702			24,881		25,058		77,408		75,960
Retail investment sales	30,137		26,055		79,689		77,574
Asset management fees	8,778		7,918		25,969		24,449			10,336		8,778		30,162		25,969
Corporate and correspondent investment sales	6,974		6,047		21,490		20,290			5,145		6,974		26,249		21,490
Mortgage banking	8,242		554		5,410		21,269			3,450		8,242		9,636		5,410
Bank owned life insurance	4,170		4,345		13,041		13,527			4,322		4,170		12,711		13,041
Investment securities gains, net	—		6,736		30,037		66,967			3,033		—		3,033		30,037
Loss on prepayment of FHLB and other borrowings, net	—		—		—		(6,118		)
Other	59,718		82,414		206,396		199,732			61,060		59,718		167,198		206,396
Total noninterest income	$	263,765	$	260,720	$	795,216	$	817,176		$	257,794	$	263,765	$	748,806	$	795,216

Three Months Ended September 30, ~~2016~~2017 and ~~2015~~2016

Noninterest income was $257.8 million for the three months ended September 30, 2017, compared to $263.8 million for the three months ended September 30, ~~2016 compared~~2016. The decrease in noninterest income was primarily driven by decreases in retail investment sales, investment banking and advisory fees and mortgage banking partially offset by an increase in investment securities gains.

Retail investment sales is comprised of mutual funds and annuity sales income and insurance sales fees. Income from retail investment sales decreased to ~~$260.7~~$26.8 million for the three months ended September 30, ~~2015. The increase~~2017, compared to $30.1 million for the three months ended September 30, 2016, due to a decrease of $4.5 million in ~~noninterest~~fixed annuity income, ~~was primarily driven by increases in investment banking and advisory fees, retail investment sales and mortgage banking~~ partially offset by an increase of $1.1 million in variable annuity income. The improved market conditions caused a ~~decrease~~shift in ~~other noninterest income.~~demand from fixed annuities towards variable annuities.

Income from investment banking and advisory fees ~~increased~~decreased to $30.5 million for the three months ended September 30, 2017, compared to $34.4 million for the three months ended September 30, 2016, due to a decrease in the volume of bond underwriting activity during the third quarter 2017 compared to ~~$17.8~~the same period in 2016.

Asset management fees are fees generated from money management transactions executed with the Company through trusts, higher net worth customers and other long-term clients. Asset management fees for the three months ended September 30, 2017, increased to $10.3 million, from $8.8 million for the three months ended September 30, ~~2015~~2016, due primarily to an increase in ~~structuring and advisory fees and higher bond originations during the third quarter 2016~~assets under management compared to the same period in ~~2015.~~2016.

Corporate and correspondent investment sales represents income generated through the sales of interest rate protection contracts to corporate customers and the sale of bonds and other services to the Company's correspondent banking clients. Income from corporate and correspondent investment sales decreased to $5.1 million for the three months ended September 30, 2017, compared to $7.0 million for the three months ended September 30, 2016, due to a decrease in bond trading during the three months ended September 30, 2017.

Mortgage banking for the three months ended September 30, ~~2016~~2017 was ~~$8.2~~$3.5 million, ~~an increase~~a decrease of ~~$7.7~~$4.8 million compared to the three months ended September 30, ~~2015.~~2016. Mortgage banking for the three months ended September 30, 2017, included $6.5 million of origination fees and gains on sales of mortgage loans partially offset by net losses of $2.7 million related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. Mortgage banking for the three months ended September 30, 2016, included $7.2 million of origination fees

and gains on sales of mortgage loans and gains of $986 thousand related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. ~~Mortgage~~The decrease in mortgage banking for the three months ended September 30, ~~2015~~2017, compared to the corresponding period in 2016 was primarily driven by a slight decline in rates during the third quarter of 2017 which negatively impacted the valuations of mortgage loans held for sale, mortgage related derivatives, and MSRs. In addition, mortgage production volume decreased during the three months ended September 30, 2017, compared to the corresponding period in 2016.

Investment securities gains, net increased by $3.0 million for the three months ended September 30, 2017, due to the sale of AFS securities during the three months ended September 30, 2017. See "—Investment Securities" for more information related to the investment securities sales.

Nine Months Ended September 30, 2017 and 2016

Noninterest income was $748.8 million for the nine months ended September 30, 2017, compared to $795.2 million for the nine months ended September 30, 2016. The decrease in noninterest income was primarily driven by decreases in investment securities gains, investment banking and advisory fees and other noninterest income partially offset by increases in asset management fees, corporate and correspondent investment sales and mortgage banking.

Asset management fees for the nine months ended September 30, 2017 was $30.2 million, compared to $26.0 million the nine months ended September 30, 2016, due primarily to an increase in assets under management compared to the same period in 2016.

Income from corporate and correspondent investment sales increased to $26.2 million for the nine months ended September 30, 2017, from $21.5 million for the corresponding period in 2016. The $4.8 million increase was due in part to income related to an increase in interest rate contracts and foreign currency exchange contracts.

Mortgage banking for the nine months ended September 30, 2017 was $9.6 million, an increase of $4.2 million compared to the nine months ended September 30, 2016. Mortgage banking for the nine months ended September 30, 2017, included ~~$8.3~~$18.3 million of origination fees and gains on sales of mortgage loans ~~as well as~~partially offset by net losses of ~~$7.0~~$8.5 million related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. 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 net losses of $11.9 million related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. The increase in mortgage banking for the ~~three~~nine months ended September 30, ~~2016~~2017, compared to the corresponding period in ~~2015~~2016 was primarily driven by a decline in rates during ~~the third quarter of 2015~~2016, which negatively impacted the valuations of mortgage loans held for sale, mortgage related derivatives, and MSRs.

Investment securities gains, net decreased ~~by $6.7~~to $3.0 million for the ~~three~~nine months ended September 30, ~~2016 as there were no sales of AFS securities during~~2017, compared to $30.0 million in the ~~three~~nine months ended September 30, ~~2016.~~2017. 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~~nine months ended September 30, ~~2016,~~2017, other income decreased by ~~$22.7~~$39.2 million ~~primarily as~~due in part to a ~~result of~~$17.7 million residual value write down related to a ~~$21.1~~commercial lease and a $16.1 million gain onrecognized during 2016 from the sale of ~~mortgage~~ loans not initially originated for sale in the secondary ~~market recognized during the three months ended September 30, 2015.~~market.

~~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 September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015		2017		2016		2017		2016
	(In Thousands)								(In Thousands)
Salaries, benefits and commissions	$	279,132	$	271,143	$	836,067	$	804,828	$	279,384	$	279,132	$	835,825	$	836,067
Equipment	59,697		58,414		179,646		174,311		60,656		59,697		184,691		179,646
Professional services	63,628		55,476		178,396		154,134		64,775		63,628		187,422		178,396
Net occupancy	41,610		39,706		120,881		119,731		42,227		41,610		125,568		120,881
Money transfer expense	16,680		16,514		50,048		44,016		15,938		16,680		50,069		50,048
Amortization of intangibles	4,093		9,507		12,280		30,083		2,525		4,093		7,575		12,280
Total securities impairment	—		—		130		1,298		—		—		242		130
Other	91,431		106,615		312,004		307,757		108,457		91,431		304,367		312,004
Total noninterest expense	$	556,271	$	557,375	$	1,689,452	$	1,636,158	$	573,962	$	556,271	$	1,695,759	$	1,689,452

Three Months Ended September 30, ~~2016~~2017 and ~~2015~~2016

Noninterest expense was $574.0 million for the three months ended September 30, 2017, an increase of $17.7 million compared to $556.3 million for the three months ended September 30, ~~2016 compared to $557.4~~2016. The increase was driven by higher levels of other noninterest expense offset, in part, by a decrease in amortization of intangibles.

Amortization expense decreased by $1.6 million for the three months ended September 30, ~~2015.~~

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

~~Amortization of intangibles decreased $5.4 million for the three months ended September 30, 2016~~2017, due to the lower level of intangible assets at September 30, 2017, compared to the same period in 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 ~~decreased $15.2~~increased $17.0 million during the three months ended September 30, ~~2016~~2017, to ~~$91.4~~$108.5 million compared to ~~$106.6~~$91.4 million for the three months ended September 30, ~~2015.~~2016. The ~~decrease~~increase was primarily attributable to ~~an $8.5~~a $9.5 million ~~decrease in FDIC indemnification expense due to the continued runoff of the covered loan portfolio, as well as a $4.3 million decrease~~increase in the provision for unfunded ~~commitments.~~commitments and letters of credit in 2017 compared to the corresponding period in 2016 as well as a $3.3 million increase in business development expenses in 2017 compared to the corresponding period in 2016.

Nine Months Ended September 30, ~~2016~~2017 and ~~2015~~2016

Noninterest expense was $1.7 billion for both 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 increases in professional services~~2017 and ~~money transfer expense offset, in part, by a decrease in amortization of intangibles.~~2016.

Professional services increased ~~$24.3~~$9.0 million during the nine months ended September 30, ~~2016~~2017, to $187.4 million compared to $178.4 million for the corresponding period in ~~2015~~2016 due to increases ~~in expenses~~of $5.0 million, $4.5 million and $3.6 million related to ~~other professional services, outsourcing,~~ contractor services, consulting and bankcard fees, respectively, which were partially offset by a decrease of $6.4 million related to credit card processing.

~~Money transfer~~Other noninterest expense ~~increased~~decreased $7.6 million during the nine months ended September 30, 2017, to ~~$50.0~~$304.4 million compared to $312.0 million for the nine months ended September 30, ~~2016~~2016. The decrease was primarily attributable to an $11.1 million decrease in the provision for unfunded commitments and letters of credit in 2017 compared to ~~$44.0~~the corresponding period in 2016 offset in part by a $6.7 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~~increase in marketing expense in 2017 compared to the ~~lower level of intangible assets at September 30,~~corresponding period in 2016.

Income Tax Expense

Three Months Ended September 30, ~~2016~~2017 and ~~2015~~2016

The Company’s income tax expense totaled ~~$36.8~~$39.3 million and ~~$52.4~~$36.8 million for the three months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively. The effective tax rate was 23.2% for the three months ended September 30, 2017 and 23.4% for the three months ended September 30, ~~2016 and 28.8% for the three months ended 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~~2017 and ~~2015~~2016

The Company’s income tax expense totaled ~~$94.5~~$142.1 million and ~~$156.9~~$94.5 million for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively. The effective tax rate was 25.8% for the nine months ended September 30, 2017 and 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 ~~$4.1 billion~~$572 million at ~~both~~ September 30, ~~2016 and~~2017, compared to $3.1 billion December 31, ~~2015.~~2016. The ~~$87 million~~$2.6 billion decrease in trading account assets was primarily attributable to a ~~$293 million~~$2.5 billion decrease in U.S. Treasury securities held by ~~BSI offset by $214 million increase in interest contracts for customers.~~BSI.

Investment Securities

As of September 30, ~~2016,~~2017, the securities portfolio included ~~$11.5~~$12.3 billion in available for sale securities and ~~$1.2~~$1.1 billion in held to maturity securities for a total investment securities portfolio of ~~$12.8~~$13.3 billion, an increase of ~~$385~~$477 million compared with December 31, ~~2015.~~2016.

During the nine months ended September 30, 2017, the Company received proceeds of $210.9 million from the sale of U.S. Treasury and other U.S. government agencies securities classified as available for sale which resulted in net gains of $3.0 million. During the nine months ended September 30, 2016, the Company received proceeds of $1.8 billion ~~related to~~from the sale of U.S. Treasury and other U.S. government agencies securities classified as available for sale which resulted in net gains of $30.0 million. During the nine months ended September 30, 2015, the Company received proceeds of $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 $67.0 million.

Lending Activities

~~Average loans and loans held for sale represented 78.6% of average interest-earning assets at 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,~~estate — construction, and commercial real estate–mortgage loans. Consumer loans are comprised of residential ~~real-estate~~real estate — mortgage, equity lines of credit, equity loans, credit cards, consumer direct and consumer indirect loans.

The Company also ~~has~~had a portfolio of covered loans that were acquired in the 2009 FDIC-assisted acquisition of certain assets and liabilities of Guaranty Bank. Covered loans represent loans acquired from the FDIC subject to loss sharing agreements. 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. In July 2017, the Company entered into an agreement with the FDIC to terminate the Company's single family residential loss share agreement ahead of the contractual maturity.

The following table presents the composition of the loan portfolio.

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

	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
	(In Thousands)				(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	24,839,068	$	26,022,374	$	25,091,942	$	25,122,002
Real estate – construction	2,215,272		2,354,253		2,247,144		2,125,316
Commercial real estate – mortgage	11,361,630		10,453,280		11,342,378		11,210,660
Total commercial loans	$	38,415,970	$	38,829,907	$	38,681,464	$	38,457,978
Consumer loans:
Residential real estate – mortgage	$	13,457,435	$	13,993,285	$	13,398,503	$	13,259,994
Equity lines of credit	2,494,468		2,419,815		2,617,312		2,543,778
Equity loans	479,375		580,804		383,376		445,709
Credit card	599,862		627,359		590,975		604,881
Consumer direct	1,186,827		936,871		1,604,396		1,254,641
Consumer indirect	3,196,235		3,495,082		3,039,178		3,134,948
Total consumer loans	$	21,414,202	$	22,053,216	$	21,633,740	$	21,243,951
Covered loans	381,111		440,961		—		359,334
Total loans	$	60,211,283	$	61,324,084	$	60,315,204	$	60,061,263
Loans held for sale	101,843		70,582		77,783		161,849
Total loans and loans held for sale	$	60,313,126	$	61,394,666	$	60,392,987	$	60,223,112

Loans and loans held for sale, net of unearned income, totaled ~~$60.3~~$60.4 billion at September 30, ~~2016, a decrease~~2017, an increase of ~~$1.1 billion~~$170 million from December 31, ~~2015. The decrease in total loans was primarily driven 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 decreased which included the sale of $316 million of residential real estate-mortgage loans during the nine months ended September 30, 2016.

See Note 43, Loans and Allowance for Loan Losses, and Note 5,4, 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 ~~$1.2 billion~~$744 million at September 30, ~~2016 an increase~~2017, a decrease of ~~$675~~$268 million compared to ~~$506 million~~$1.0 billion at December 31, ~~2015.~~2016. The ~~increase~~decrease in nonperforming assets was primarily due to a ~~$679~~$254 million ~~increase~~decrease in nonaccrual loans ~~primarily related to downgrades of certain loans~~driven by a $206 million decrease in ~~the~~ energy ~~portfolio.~~nonaccrual loans. At September 30, ~~2016,~~2017, energy nonaccrual loans were ~~$588~~$181 million compared to ~~$92~~$387 million at December 31, ~~2015.~~2016. The decrease in energy nonaccrual loans was due in part to sales of nonperforming energy loans during the nine months ended September 30, 2017. Excluding energy nonperforming loans, nonperforming assets totaled ~~$593~~$563 million at September 30, ~~2016~~2017 compared to ~~$414~~$625 million at December 31, ~~2015.~~2016. As a percentage of total loans and loans held for sale, other real estate owned and other repossessed assets, nonperforming assets were ~~1.96%~~1.23% (or ~~1.04%~~0.98% excluding energy nonperforming loans) at September 30, ~~2016~~2017 compared with ~~0.82%~~1.68% (or ~~0.72%~~1.10% excluding energy nonperforming loans) at December 31, ~~2015.~~2016.

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 4,3, Loans and Allowance for Loan Losses, in the Notes to the Unaudited Condensed Consolidated Financial Statements for further information on the Company’s credit grade categories, which are derived from standard regulatory rating definitions. The following table provides a summary of potential problem loans.

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

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

	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
	(In Thousands)				(In Thousands)
Commercial, financial and agricultural	$	628,020	$	580,491	$	558,549	$	630,760
Real estate – construction	241		174		3,114		5,578
Commercial real estate – mortgage	55,211		74,373		68,964		57,108
	$	683,472	$	655,038	$	630,627	$	693,446

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

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

	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
	(In Thousands)				(In Thousands)
Nonaccrual loans:
Commercial, financial and agricultural	$	850,075	$	161,591	$	324,071	$	596,454
Real estate – construction	1,214		5,908		1,877		1,239
Commercial real estate – mortgage	63,593		69,953		108,040		71,921
Residential real estate – mortgage	117,243		113,234		175,490		140,303
Equity lines of credit	32,642		35,023		34,416		33,453
Equity loans	13,198		15,614		11,305		13,635
Credit card	—		—		—		—
Consumer direct	765		561		2,746		789
Consumer indirect	7,019		5,027		8,867		5,926
Covered	269		134		—		730
Total nonaccrual loans	1,086,018		407,045		666,812		864,450
Nonaccrual loans held for sale	—		—		—		56,592
Total nonaccrual loans and loans held for sale	$	1,086,018	$	407,045	$	666,812	$	921,042
Accruing TDRs: (1)
Commercial, financial and agricultural	$	9,283	$	9,402	$	1,259	$	8,726
Real estate – construction	3,315		2,247		106		2,393
Commercial real estate – mortgage	5,141		33,904		4,645		4,860
Residential real estate – mortgage	63,008		67,343		59,086		59,893
Equity lines of credit	—		—		237		—
Equity loans	36,053		37,108		30,574		34,746
Credit card	—		—		—		—
Consumer direct	759		908		577		704
Consumer indirect	—		—		—		—
Covered	—		—		—		—
Total TDRs	117,559		150,912
TDRs classified as loans held for sale	—		—
Total TDRs (loans and loans held for sale)	$	117,559	$	150,912
Total Accruing TDRs					96,484		111,322
Accruing TDRs classified as loans held for sale					—		—
Total Accruing TDRs (loans and loans held for sale)					$	96,484	$	111,322
Loans 90 days past due and accruing:
Commercial, financial and agricultural	$	5,320	$	3,567	$	6,072	$	2,891
Real estate – construction	2,782		421		2,955		2,007
Commercial real estate – mortgage	783		2,237		3,686		—
Residential real estate – mortgage	3,929		1,961		2,558		3,356
Equity lines of credit	2,417		2,883		2,179		2,950
Equity loans	353		704		840		467
Credit card	10,175		9,718		10,692		10,954
Consumer direct	4,191		3,537		5,209		4,482
Consumer indirect	7,070		5,629		8,858		7,197
Covered	28,505		37,972		—		27,238
Total loans 90 days past due and accruing	65,525		68,629		43,049		61,542
Loans held for sale 90 days past due and accruing	—		—		—		—
Total loans and loans held for sale 90 days past due and accruing	$	65,525	$	68,629	$	43,049	$	61,542
OREO	$	21,670	$	20,862	$	22,012	$	21,112
Other repossessed assets	$	6,900	$	8,774	$	11,443	$	7,587


(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

	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
	(In Thousands)				(In Thousands)
Nonaccrual loans	$	1,086,018	$	407,045	$	666,812	$	921,042
Loans 90 days or more past due and accruing (1)	65,525		68,629		43,049		61,542
TDRs 90 days or more past due and accruing	618		874		963		589
Nonperforming loans	1,152,161		476,548		710,824		983,173
OREO	21,670		20,862		22,012		21,112
Other repossessed assets	6,900		8,774		11,443		7,587
Total nonperforming assets	$	1,180,731	$	506,184	$	744,279	$	1,011,872


(1)	Excludes loans classified as TDR.

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

	September 30, 2016		December 31, 2015
	(In Thousands)				September 30, 2017		December 31, 2016
Asset Quality Ratios:
Nonperforming loans and loans held for sale as a percentage of loans and loans held for sale (1)	1.91	%	0.78	%	1.18	%	1.63	%
Nonperforming assets as a percentage of total loans and loans held for sale, other real estate owned, and other repossessed assets (2)	1.96	%	0.82	%	1.23		1.68
Allowance for loan losses as a percentage of loans	1.43	%	1.24	%	1.41		1.40
Allowance for loan losses as a percentage of nonperforming loans (3)	74.82	%	160.04	%	119.46		90.47


(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
Nine Months Ended September 30,
2016 2015
(In Thousands)
Balance at beginning of period $ 20,862
$ 20,600
Transfer of loans and loans held for sale to OREO 21,547
16,552
Sales of OREO (17,962 ) (10,073 )
Write-downs of OREO (2,777 ) (3,317 )
Balance at end of period $ 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 9 Rollforward of Nonaccrual Loans							Table 9 Rollforward of Nonaccrual Loans

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2017			2016
	(In Thousands)						(In Thousands)
Balance at beginning of period,	$	406,911		$	322,540		$	920,312		$	406,911
Additions	1,270,646			305,310			487,329			1,270,646
Returns to accrual	(43,492		)	(35,663		)	(49,458		)	(43,492		)
Loan sales	(104,372		)	(7,150		)	(98,797		)	(104,372		)
Payments and paydowns	(216,754		)	(65,793		)	(290,722		)	(216,754		)
Transfers to OREO	(16,415		)	(16,134		)	(24,480		)	(16,415		)
Charge-offs	(210,775		)	(122,333		)	(277,372		)	(210,775		)
Balance at end of period	$	1,085,749		$	380,777		$	666,812		$	1,085,749

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.~~loan term. 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 4,

3, 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 10 Rollforward of TDR Activity							Table 10 Rollforward of TDR Activity

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2017			2016
	(In Thousands)						(In Thousands)
Balance at beginning period	$	227,817		$	243,374		$	213,868		$	227,817
New TDRs	54,004			16,852			217,600			54,004
Payments/Payoffs	(58,990		)	(27,166		)	(123,460		)	(58,990		)
Charge-offs	(1,428		)	(3,686		)	(4,526		)	(1,428		)
Loan sales	—			(1,982		)
Transfer to OREO	(615		)	(1,479		)	(448		)	(615		)
Balance at end of period	$	220,788		$	225,913		$	303,034		$	220,788

The Company’s aggregate recorded investment in impaired loans modified through TDRs excluding covered loans ~~decreased to $221~~was $303 million at September 30, ~~2016 from $228~~2017 compared to $214 million at December 31, ~~2015.~~2016. The increase in TDRs was due to an increase in commercial, financial and agricultural TDRs, primarily associated with energy loans. Included in these amounts are ~~$118~~$96 million at September 30, ~~2016~~2017 and ~~$151~~$111 million at December 31, ~~2015~~2016 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 4,3, 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 ~~$862~~$849 million at September 30, ~~2016,~~2017, from ~~$763~~$838 million at December 31, ~~2015.~~2016. The ratio of the allowance for loan losses to total loans was ~~1.43%~~1.41% at September 30, ~~2016~~2017 compared to ~~1.24%~~1.40% at December 31, ~~2015.~~2016. Nonperforming loans were ~~$1.2 billion~~$711 million at September 30, ~~2016~~2017 compared to ~~$477~~$983 million at December 31, ~~2015.~~2016. The allowance attributable to individually impaired loans was ~~$180~~$108 million at September 30, ~~2016~~2017 compared to ~~$71~~$138 million at December 31, ~~2015.~~2016. 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 0.47% of average loans for the three months ended September 30, 2017 compared to 0.30% of average loans for the three months ended September 30, ~~2016 compared to 0.19% of average loans for the three months ended September 30, 2015.~~2016. The increase in net charge-offs for the three months ended September 30, ~~2016~~2017 as compared to the corresponding period in ~~2015~~2016 was ~~primarily~~ driven in part by an $8.1 million increase in commercial real estate-mortgage net charge-offs, a ~~$6.7~~$5.8 million increase in commercial, financial and agricultural net charge-offs and a $5.4 million increase in consumer direct ~~net-charge-offs and a $6.2 million increase in consumer indirect~~ net charge-offs. ~~Additionally, the increase was driven by charge-offs on energy loans.~~ Commercial, financial and agricultural net charge-offs include $127 thousand of net charge-offs related to energy loans for the three months ended September 30, 2017 compared to $8.5 million of net charge-offs related to energy loans for the three months ended September 30, ~~2016 compared to $2.7 million~~2016.

Net charge-offs were 0.48% of ~~net charge-offs related to energy~~average loans for the ~~three~~nine months ended September 30, ~~2015.~~

~~Net charge-offs were~~2017 compared to 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.~~2016. The increase in net charge-offs for the nine months ended September 30, ~~2016~~2017 as compared to the corresponding period in ~~2015~~2016 was ~~primarily~~ driven, in part, by a $15.4 million increase in commercial, financial and agricultural net charge-offs ~~on energy loans.~~as well as a $20.5 million increase in consumer direct net charge-offs. Commercial, financial and agricultural net charge-offs include $56.7 million of net charge-offs related to energy loans for the nine months ended September 30, 2017 compared to $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 $15.5 million increase in consumer direct net-charge-offs and a $19.9 million increase in consumer indirect net charge-offs.2016.

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 11 Summary of Loan Loss Experience													Table 11 Summary of Loan Loss Experience

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015			2017			2016			2017			2016
	(Dollars in Thousands)												(Dollars in Thousands)
Average loans outstanding during the period	$	60,977,920		$	60,513,571		$	61,786,243		$	59,619,979		$	60,215,551		$	60,977,920		$	60,111,031		$	61,786,243
Allowance for loan losses, beginning of period	$	843,051		$	721,471		$	762,673		$	685,041		$	816,952		$	843,051		$	838,293		$	762,673
Charge-offs:
Commercial, financial and agricultural	13,702			9,161			66,541			20,706			21,320			13,702			91,943			66,541
Real estate – construction	21			124			306			199			—			21			82			306
Commercial real estate – mortgage	83			786			3,249			2,181			7,913			83			8,845			3,249
Residential real estate – mortgage	2,043			1,909			6,148			7,985			2,587			2,043			8,769			6,148
Equity lines of credit	2,141			3,157			7,259			10,154			1,314			2,141			5,054			7,259
Equity loans	424			878			1,665			2,750			389			424			2,419			1,665
Credit card	9,171			7,380			27,000			24,138			11,333			9,171			33,479			27,000
Consumer direct	13,975			7,055			34,524			19,686			19,940			13,975			57,030			34,524
Consumer indirect	23,326			13,132			64,083			35,133			23,829			23,326			69,752			64,083
Covered	—			490			1,565			1,516			—			—			—			1,565
Total charge-offs	64,886			44,072			212,340			124,448			88,625			64,886			277,373			212,340
Recoveries:
Commercial, financial and agricultural	4,766			5,171			7,775			10,410			6,625			4,766			17,790			7,775
Real estate – construction	227			550			1,908			4,157			29			227			965			1,908
Commercial real estate – mortgage	455			349			1,915			870			206			455			3,265			1,915
Residential real estate – mortgage	1,483			2,208			4,156			5,870			870			1,483			4,453			4,156
Equity lines of credit	1,540			1,070			3,589			2,516			1,135			1,540			2,914			3,589
Equity loans	406			494			1,060			2,580			396			406			1,369			1,060
Credit card	711			705			2,223			2,087			742			711			2,392			2,223
Consumer direct	1,091			861			3,005			3,703			1,659			1,091			5,032			3,005
Consumer indirect	8,129			4,162			21,090			12,002			5,696			8,129			21,130			21,090
Covered	—			2			1			3			—			—			31			1
Total recoveries	18,808			15,572			46,722			44,198			17,358			18,808			59,341			46,722
Net charge-offs	46,078			28,500			165,618			80,250			71,267			46,078			218,032			165,618
Total provision for loan losses	65,107			29,151			265,025			117,331			103,434			65,107			228,858			265,025
Allowance for loan losses, end of period	$	862,080		$	722,122		$	862,080		$	722,122		$	849,119		$	862,080		$	849,119		$	862,080
Net charge-offs to average loans	0.30		%	0.19		%	0.36		%	0.18		%	0.47		%	0.30		%	0.48		%	0.36		%

Concentrations

The following tables provide further details regarding the Company’s commercial, financial and agricultural, commercial real estate, residential real estate and consumer portfolio segments as of September 30, ~~2016~~2017 and December 31, ~~2015.~~2016.

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 ~~$24.8~~$25.1 billion at both September 30, ~~2016, compared to $26.0 billion at~~2017 and December 31, ~~2015.~~2016. 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

~~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 12 Commercial, Financial and Agricultural																	Table 12 Commercial, Financial and Agricultural

	September 30, 2016								December 31, 2015									September 30, 2017								December 31, 2016 (1)
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	$	623,902	$	55	$	—	$	—	$	627,543	$	83	$	—	$	—		$	488,240	$	26	$	—	$	—	$	579,864	$	40	$	—	$	57
Basic Materials	865,881		65,682		—		—		857,616		99		—		—			637,602		56		—		—		740,247		12,388		—		—
Capital Goods & Industrial Services	2,435,761		1,252		48		—		2,587,038		6,520		19		108			2,722,652		9,054		149		188		2,580,976		645		174		—
Construction & Infrastructure	580,676		41,779		9		1,349		629,869		13,998		50		139			605,639		39,609		11		—		550,282		33,992		29		—
Consumer & Healthcare	3,058,568		3,795		95		424		3,223,674		10,542		424		189			3,348,282		9,822		902		357		3,169,897		3,363		374		56
Energy	3,322,139		588,226		30		—		3,840,226		92,467		120		—			2,952,237		181,005		—		—		3,246,189		386,544		—		—
Financial Services	1,032,949		28		—		—		1,074,595		131		5		—			1,107,967		69		—		—		1,234,469		115		—		—
General Corporates	1,853,823		41,933		52		2,801		1,410,666		2,092		51		2,534			1,568,970		5,611		28		4,540		2,145,350		80,606		54		2,684
Institutions	2,387,447		1,923		2,039		—		2,542,284		5,841		8,375		—			2,717,842		1,897		—		—		2,368,603		1,650		7,868		74
Leisure	2,021,592		10,116		45		92		2,118,578		11,077		224		66			2,354,338		10,219		120		—		2,013,522		8,458		170		—
Real Estate	1,245,644		9		—		—		1,583,582		146		—		—			951,810		505		—		—		1,045,810		—		—		—
Retailers	2,427,159		47,693		102		654		2,374,773		2,671		64		496
Retail & Wholesale Trade																		2,694,278		6,706		49		681		2,407,291		30,460		—		—
Telecoms, Technology & Media	1,475,835		2,015		13		—		1,460,879		15,768		57		35			1,493,008		3,480		—		306		1,521,981		2,234		53		20
Transportation	777,991		14,173		—		—		800,413		156		—		—			867,528		36,846		—		—		792,672		11,384		—		—
Utilities	729,701		31,396		6,850		—		890,638		—		13		—			581,549		19,166		—		—		724,849		24,575		4		—
Total Commercial, Financial and Agricultural	$	24,839,068	$	850,075	$	9,283	$	5,320	$	26,022,374	$	161,591	$	9,402	$	3,567		$	25,091,942	$	324,071	$	1,259	$	6,072	$	25,122,002	$	596,454	$	8,726	$	2,891


(1)	December 31, 2016 data has been revised to conform to current period industry classifications, as the Company redefined industry classifications during the second quarter of 2017.

The Company has been closely monitoring ~~the impact of lower oil prices on~~ its energy sector lending ~~portfolio.~~portfolio which was negatively impacted by the lower level of oil prices which began in mid-2014. Total energy exposure, including unused commitments to extend credit and letters of credit was ~~$8.2~~$7.7 billion and ~~$9.4~~$8.1 billion at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. As shown in Table ~~14,~~13, the Company's energy sector loan balances at September 30, ~~2016~~2017, were approximately ~~$3.3~~$3.0 billion and represented ~~5.5%~~4.9% of the Company's total loans ~~and loans held for sale~~ compared to ~~$3.8~~$3.2 billion and ~~6.3%~~5.4% of the Company's total loans ~~and loans held for sale~~ as of December 31, ~~2015.~~2016. 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 13 Energy Portfolio													Table 13 Energy Portfolio

	September 30, 2016						December 31, 2015							September 30, 2017						December 31, 2016
	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	$	1,722,052	4,244,802		$	511,520	$	2,040,748	$	5,186,887	$	91,947		$	1,630,303	4,080,635		$	178,449	$	1,654,565	$	4,182,861	$	308,096
Midstream	1,207,650		3,209,931		11,552		1,355,503		3,293,216		—			976,845		3,011,822		—		1,199,844		3,230,513		11,298
Drilling oil and support services	261,748		468,728		64,771		266,871		554,782		—			179,636		373,389		2,350		263,770		467,908		66,811
Refineries and terminals	130,689		254,130		383		137,904		211,258		520			165,453		266,081		205		128,010		262,618		339
Other	—		—		—		39,200		109,782		—			—		—		—		—		—		—
Total energy portfolio	$	3,322,139	$	8,177,591	$	588,226	$	3,840,226	$	9,355,925	$	92,467		$	2,952,237	$	7,731,927	$	181,004	$	3,246,189	$	8,143,900	$	386,544

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 September 30, 2016 was 33.8%, comprised of 7.9% rated special mention and 25.9% rated substandard or lower. At December 31, 2015 the overall level of loans rated special mention or lower in the energy portfolio was 16.3%, comprised of 4.3% rated special mention and 12.0% rated substandard or lower.



	September 30, 2017				December 31, 2016
	As a % of Energy Loans		As a % of Total Loans		As a % of Energy Loans		As a % of Total Loans
Exploration and production	55.2	%	2.7	%	51.0	%	2.8	%
Midstream	33.1		1.6		37.0		2.0
Drilling oil and support services	6.1		0.3		8.1		0.4
Refineries and terminals	5.6		0.3		3.9		0.2
Other	—		—		—		—
Total energy portfolio	100.0	%	4.9	%	100.0	%	5.4	%

The Company employs a variety of risk management strategies, including the use of concentration limits, underwriting standards and continuous monitoring. As of September 30, ~~2016,~~2017, the Company has observed ~~negative trending of the internal risk ratings~~a decrease in ~~the~~total energy ~~lending portfolio and an increase~~loans outstanding as well as a decrease in nonaccrual loans, ~~from 2015,~~ as indicated in Table ~~14. Additionally,~~13. The decrease in total exposure in the ~~Company has continued~~energy portfolio primarily reflects reduced borrowing bases resulting in a reduction in total commitments, while the decrease in recorded investment largely reflects energy customers taking actions to adjust their cash flows and ~~may continue to observe negative trending subsequent to~~reduce their levels of debt.

The overall level of loans rated special mention or lower, including loans classified as nonaccrual, in the energy portfolio at September 30, ~~2016.~~ 2017 was 23.8%, comprised of 6.7% rated special mention and 17.1% rated substandard or lower. At December 31, 2016, the overall level of loans rated special mention or lower in the energy portfolio was 32.7%, comprised of 8.7% rated special mention and 24.0% rated substandard or lower.

Currently, the credit quality issues have mostly been isolated to the exploration and production subsector ~~which is~~and the drilling oil and support services subsector, ~~that is~~even though the latter represents a relatively small percentage of the portfolio. These subsectors are the subsectors most acutely impacted by pricing conditions. ~~At September 30, 2016, approximately 85% of loans rated special mention or lower were in the exploration and production subsector.~~ Within this subsector, many loans are secured and utilize borrowing base features linked to the physical commodity reserves and supported by engineering data. The borrowing bases are refreshed with updated information on a recurring

basis. ~~In the current pricing environment, the~~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~~its operations are directly impacted by reduced spending by those in the exploration and production sector. However as noted in Table ~~14,~~13, the Company's exposure in this sector is limited.

For the three and nine months ended September 30, ~~2016,~~2017, charge-offs on energy loans were approximately $127 thousand and $56.7 million, respectively, compared to $8.5 million and $49.4 million, ~~respectively. Charge-offs in this portfolio have remained low as~~respectively, for the ~~majority of classified energy portfolio loans remain well secured. However, if the current level of~~three and nine months ended September 30, 2016. If oil prices ~~stagnates or continues to further~~resume their 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 September 30, ~~2016,~~2017, the Company's allowance for loan losses attributable to the energy portfolio totaled approximately 5%2.7% 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 ~~$11.4~~$11.3 billion and ~~$10.5~~$11.2 billion at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, and real estate -— construction loans totaled $2.2 billion at September 30, ~~2016,~~2017 and ~~$2.4~~$2.1 billion at December 31, ~~2015, respectively.~~2016.

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 14 Commercial Real Estate																	Table 14 Commercial Real Estate

	September 30, 2016								December 31, 2015									September 30, 2017								December 31, 2016
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	$	507,245	$	2,377	$	1,614	$	—	$	542,889	$	2,723	$	3,365	$	989		$	406,441	$	7,849	$	2,411	$	—	$	493,199	$	1,853	$	2,513	$	—
Arizona	821,802		6,415		—		—		837,949		4,465		465		—			795,651		7,452		—		—		847,908		5,252		—		—
California	1,191,846		734		145		—		1,104,368		942		222		—			1,376,528		2,319		—		—		1,139,785		4,645		—		—
Colorado	431,910		5,946		201		—		395,679		8,460		10,210		—			429,081		6,311		—		—		436,640		6,902		—		—
Florida	926,300		8,656		81		—		965,365		9,564		138		—			1,079,177		6,783		110		—		912,874		7,262		134		—
New Mexico	181,612		6,046		86		—		160,840		6,405		22		—			215,969		8,415		128		—		174,911		6,354		132		—
Texas	3,648,041		24,044		1,885		783		3,269,626		28,956		4,292		1,248			3,505,312		41,642		1,088		3,686		3,576,090		33,043		1,152		—
Other	3,652,874		9,375		1,129		—		3,176,564		8,438		15,190		—			3,534,219		27,269		908		—		3,629,253		6,610		929		—
	$	11,361,630	$	63,593	$	5,141	$	783	$	10,453,280	$	69,953	$	33,904	$	2,237		$	11,342,378	$	108,040	$	4,645	$	3,686	$	11,210,660	$	71,921	$	4,860	$	—

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

	September 30, 2016								December 31, 2015									September 30, 2017								December 31, 2016
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	$	17,753	$	118	$	309	$	—	$	27,815	$	389	$	312	$	122		$	37,745	$	84	$	—	$	133	$	17,517	$	43	$	—	$	—
Arizona	88,634		—		—		—		80,713		2,404		—		—			135,506		—		—		1,224		94,191		—		—		—
California	312,120		6		22		—		326,698		19		22		—			265,854		—		—		756		246,094		—		—		—
Colorado	82,059		—		—		—		92,764		—		—		—			80,691		—		—		—		91,434		—		—		—
Florida	209,672		2		—		200		205,466		—		—		—			229,085		—		—		—		228,530		2		—		—
New Mexico	18,278		—		50		269		13,092		93		51		—			10,947		—		53		—		16,487		—		1,163		—
Texas	1,033,278		975		2,934		2,313		1,105,252		2,727		1,862		299			1,079,470		1,468		53		842		1,024,830		1,066		1,230		2,007
Other	453,478		113		—		—		502,453		276		—		—			407,846		325		—		—		406,233		128		—		—
	$	2,215,272	$	1,214	$	3,315	$	2,782	$	2,354,253	$	5,908	$	2,247	$	421		$	2,247,144	$	1,877	$	106	$	2,955	$	2,125,316	$	1,239	$	2,393	$	2,007

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 ~~$13.5~~$13.4 billion and ~~$14.0~~$13.3 billion at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, 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 16 Residential Real Estate — Mortgage																	Table 16 Residential Real Estate — Mortgage

	September 30, 2016								December 31, 2015									September 30, 2017								December 31, 2016
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	$	1,022,754	$	13,587	$	12,578	$	339	$	1,111,987	$	13,868	$	14,528	$	29		$	980,473	$	19,071	$	12,484	$	183	$	1,005,975	$	16,607	$	11,390	$	512
Arizona	1,299,940		10,707		10,809		811		1,395,539		7,251		11,567		242			1,279,565		12,644		8,697		227		1,270,521		11,831		9,901		412
California	2,973,859		14,447		3,002		73		3,022,425		13,705		2,691		104			3,004,957		16,369		3,098		63		2,929,393		16,258		2,164		429
Colorado	1,147,940		7,971		3,145		—		1,225,818		3,660		3,471		2			1,139,609		18,532		2,710		—		1,111,097		14,165		2,552		—
Florida	1,705,359		24,530		10,559		120		1,708,912		24,595		10,595		134			1,701,821		38,227		9,493		289		1,697,555		28,266		10,636		120
New Mexico	215,360		1,851		1,598		—		217,476		1,827		2,149		32			222,332		3,292		1,616		110		216,865		1,955		1,630		—
Texas	4,594,440		27,314		18,107		2,586		4,784,292		25,731		18,908		1,418			4,586,976		49,581		17,488		1,522		4,539,469		34,232		18,850		1,752
Other	497,783		16,836		3,210		—		526,836		22,597		3,434		—			482,770		17,774		3,500		164		489,119		16,989		2,770		131
	$	13,457,435	$	117,243	$	63,008	$	3,929	$	13,993,285	$	113,234	$	67,343	$	1,961		$	13,398,503	$	175,490	$	59,086	$	2,558	$	13,259,994	$	140,303	$	59,893	$	3,356

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

	September 30, 2016								December 31, 2015									September 30, 2017								December 31, 2016
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	$	635,525	$	78,395	$	22,189	$	1,495	$	631,139	$	72,791	$	20,380	$	1,359		$	698,415	$	110,588	$	14,386	$	1,110	$	664,660	$	91,262	$	14,831	$	2,111
621 – 680	1,266,902		20,360		17,068		609		1,351,069		21,000		21,018		52			1,237,705		26,086		20,278		244		1,279,658		21,507		16,854		825
681 – 720	2,047,383		5,792		11,531		574		2,227,263		4,182		12,364		154			1,931,767		9,274		10,439		98		1,980,276		6,288		13,921		37
Above 720	8,709,051		2,874		11,010		194		8,870,080		1,916		12,350		272			8,780,212		4,411		13,464		831		8,548,993		4,327		13,957		193
Unknown	798,574		9,822		1,210		1,057		913,734		13,345		1,231		124			750,404		25,131		519		275		786,407		16,919		330		190
	$	13,457,435	$	117,243	$	63,008	$	3,929	$	13,993,285	$	113,234	$	67,343	$	1,961		$	13,398,503	$	175,490	$	59,086	$	2,558	$	13,259,994	$	140,303	$	59,893	$	3,356

Equity lines of credit and equity loans totaled $3.0 billion at both September 30, ~~2016~~2017 and December 31, ~~2015.~~2016. 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 18 Equity Loans and Lines																	Table 18 Equity Loans and Lines

	September 30, 2016								December 31, 2015									September 30, 2017								December 31, 2016
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	$	566,873	$	7,820	$	9,416	$	762	$	586,094	$	10,445	$	9,847	$	1,007		$	550,451	$	10,477	$	9,157	$	509	$	566,990	$	8,380	$	11,338	$	932
Arizona	402,576		8,711		5,888		551		416,109		8,846		6,267		980			381,562		7,929		3,724		665		399,225		8,562		4,396		989
California	302,204		893		37		362		292,210		1,676		100		24			338,114		823		379		70		314,929		1,216		285		—
Colorado	198,983		4,700		2,744		257		211,464		4,971		3,045		123			191,161		3,497		1,477		18		192,517		3,802		1,388		86
Florida	387,109		9,362		6,875		208		393,931		9,178		7,188		472			371,592		9,037		6,516		346		382,853		9,195		7,375		583
New Mexico	54,142		1,592		1,064		—		56,148		2,383		1,052		—			53,128		1,539		652		—		53,491		2,087		600		—
Texas	1,009,717		11,135		8,685		630		985,899		11,447		8,665		845			1,078,023		11,461		8,492		1,327		1,040,395		12,309		8,997		704
Other	52,239		1,627		1,344		—		58,764		1,691		944		136			36,657		958		414		84		39,087		1,537		367		123
	$	2,973,843	$	45,840	$	36,053	$	2,770	$	3,000,619	$	50,637	$	37,108	$	3,587		$	3,000,688	$	45,721	$	30,811	$	3,019	$	2,989,487	$	47,088	$	34,746	$	3,417

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 19 Equity Loans and Lines																	Table 19 Equity Loans and Lines

	September 30, 2016								December 31, 2015									September 30, 2017								December 31, 2016
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	$	208,948	$	22,203	$	8,862	$	2,420	$	220,476	$	23,367	$	10,923	$	3,125		$	218,316	$	21,825	$	7,654	$	2,543	$	207,659	$	24,532	$	8,723	$	1,940
621 – 680	409,392		13,487		13,817		174		439,350		15,677		12,812		187			387,696		12,003		11,875		221		412,752		12,930		13,326		542
681 – 720	570,710		7,287		8,380		151		565,476		7,456		8,067		160			544,717		7,971		4,542		85		557,850		6,980		6,081		713
Above 720	1,768,927		2,453		4,847		25		1,752,094		3,641		5,143		115			1,838,787		3,762		6,666		170		1,798,151		2,466		6,430		222
Unknown	15,866		410		147		—		23,223		496		163		—			11,172		160		74		—		13,075		180		186		—
	$	2,973,843	$	45,840	$	36,053	$	2,770	$	3,000,619	$	50,637	$	37,108	$	3,587		$	3,000,688	$	45,721	$	30,811	$	3,019	$	2,989,487	$	47,088	$	34,746	$	3,417

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 underwriting guidelines and industry accepted ~~tools and underwriting guidelines.~~tools. 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 September 30, ~~2016~~2017 were ~~$5.0~~$5.2 billion, or ~~8.3%~~8.7% of the total loan portfolio compared to ~~$5.1~~$5.0 billion, or 8.3% of the total loan portfolio at December 31, ~~2015.~~2016.

Foreign Exposure

As of September 30, ~~2016,~~2017, 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 September 30, ~~2016,~~2017, the Company's and the Bank's credit ratings were as follows:

Table 2120 Credit Ratings

	As of September 30, ~~2016~~2017
	Standard & Poor’s	Moody’s	Fitch
BBVA Compass Bancshares, Inc.
Long-term debt rating	BBB+	Baa3	BBB+
Short-term debt rating	A-2	-	F2
Compass Bank
Long-term debt rating	BBB+	Baa3	BBB+
Long-term bank deposits (1)	N/A	A3	A-
Subordinated debt	BBB	Baa3	BBB-
Short-term debt rating	A-2	P-3	F2
Short-term deposit rating (2)	N/A	P-2	F2
Outlook	~~Negative~~Stable	Stable	Stable

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

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

The cost and availability of financing to the Company and the Bank are impacted by its credit ratings. A downgrade to the Company’s or Bank’s credit ratings could affect its ability to access the credit markets and increase its borrowing costs, thereby adversely impacting the Company’s financial condition and liquidity. Key factors in maintaining high credit ratings include a stable and diverse earnings stream, strong credit quality, strong capital ratios and diverse funding sources, in addition to disciplined liquidity monitoring procedures. See the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016, 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~~decreased by ~~$1.6 billion~~$66 million from December 31, ~~2015~~2016 to September 30, ~~2016.~~2017. At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, total deposits included ~~$6.4~~$8.4 billion and ~~$7.0~~$5.8 billion of brokered deposits, respectively. The following table presents the Company’s deposits segregated by major category:

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

	September 30, 2016				December 31, 2015				September 30, 2017				December 31, 2016
	Balance		% of Total		Balance		% of Total		Balance		% of Total		Balance		% of Total
	(Dollars in Thousands)								(Dollars in Thousands)
Noninterest-bearing demand deposits	$	20,585,598	30.4	%	$	19,291,533	29.2	%	$	21,094,235	31.4	%	$	20,332,792	30.2	%
Interest-bearing demand deposits	7,089,795		10.5		7,378,804		11.2		7,945,902		11.8		8,188,868		12.2
Savings and money market	25,616,692		37.9		25,241,292		38.3		24,691,943		36.7		25,330,003		37.6
Time deposits	14,186,318		21.0		13,977,139		21.2		13,481,487		20.1		13,427,870		20.0
Foreign office deposits-interest-bearing	108,934		0.2		92,998		0.1
Total deposits	$	67,587,337	100.0	%	$	65,981,766	100.0	%	$	67,213,567	100.0	%	$	67,279,533	100.0	%

Total deposits increased from December 31, 2015 to September 30, 2016 primarily due to growth in noninterest bearing demand deposits, savings and money market and time deposits. Marketing efforts were the primary drivers of the growth.

Borrowed Funds

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

Short-term borrowings are primarily in the form of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings. At both September 30, 2016 and December 31, 2015, the $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 22 Short-Term Borrowings											Table 22 Short-Term Borrowings

	Maximum Outstanding at Any Month End		Average Balance		Average Interest Rate		Ending Balance		Average Interest Rate at Period End		Maximum Outstanding at Any Month End		Average Balance		Average Interest Rate		Ending Balance		Average Interest Rate at Period End
	(Dollars in Thousands)										(Dollars in Thousands)
Balance at September 30, 2016
Balance at September 30, 2017
Federal funds purchased	$	766,095	$	478,813	0.50	%	$	79,395	0.32	%	$	—	$	373	0.36	%	$	—	0.53	%
Securities sold under agreements to repurchase(1)	148,291		90,959		0.72		86,178		0.76		114,361		64,303		0.93		44,761		0.84
Other short-term borrowings	4,497,354		3,912,069		1.41		3,591,223		1.42		2,721,539		2,239,427		1.45		327,539		0.68
	$	5,411,740	$	4,481,841			$	3,756,796			$	2,835,900	$	2,304,103			$	372,300
Balance at December 31, 2015
Balance at December 31, 2016
Federal funds purchased	$	975,785	$	692,737	0.26	%	$	673,545	0.37	%	$	766,095	$	372,355	0.49	%	$	12,885	0.39	%
Securities sold under agreements to repurchase(1)	232,605		114,940		0.22		76,609		0.44		148,291		79,625		0.49		26,167		0.55
Other short-term borrowings	4,982,154		4,006,716		1.31		4,032,644		1.34		4,497,354		3,778,752		1.44		2,802,977		1.68
	$	6,190,544	$	4,814,393			$	4,782,798			$	5,411,740	$	4,230,732			$	2,842,029


(1)	Average interest rate does not reflect impact of balance sheet offsetting. See Note 6, Securities Financing Activities, in the Notes to the Unaudited Condensed Consolidated Financial Statements.

Total short-term borrowings decreased to $372 million at September 30, 2017 from $2.8 billion at December 31, 2016 due to a reduction in U.S. Treasury short positions held by BSI.

At September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, FHLB and other borrowings were ~~$3.7~~$4.0 billion and ~~$5.4~~$3.0 billion, respectively. In June 2017, the Bank issued under its Global Bank Note Program $750 million aggregate principal amount of its 2.875% unsecured senior notes due 2022. For the nine months ended September 30, ~~2016,~~2017, the Company had ~~$1.3~~$9.2 billion of proceeds received from FHLB and other borrowings and repayments were approximately ~~$3.1~~$8.3 billion.

Shareholder’s Equity

Total shareholder's equity was ~~$12.8~~$13.1 billion at September 30, ~~2016~~2017, compared to ~~$12.6~~$12.8 billion at December 31, ~~2015,~~2016, an increase of ~~$194~~$365 million. Shareholder's equity increased ~~$281~~$407 million due to earnings attributable to the Company during the period, offset by the payment of preferred and common dividends totaling ~~$70~~$71.0 million ~~as well as a $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 the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information.its sole shareholder, BBVA.

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~~risk, liquidity risk, operational risk, market risk, model risk, reputational risk, fiduciary risk, suitability risk, compliance risk, legal risk, and 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 September 30, ~~2016,~~2017, is shown in the table ~~below along with comparable prior-period information.~~below. Such analysis assumes a gradual and sustained parallel shift in interest rates, expectations of balance sheet growth and composition and the Company’s estimate of how interest-bearing transaction accounts would reprice in each scenario using current yield curves at September 30, ~~2016 and 2015.~~2017.

Table 24
Net Interest Income Sensitivity
Estimated % Change in Net Interest Income
September 30, 2016 September 30, 2015
Rate Change
+ 200 basis points 11.95 % 8.96 %
+ 100 basis points 6.06
4.42

Table 23 Net Interest Income Sensitivity

	Estimated % Change in Net Interest Income
	September 30, 2017
Rate Change
+ 200 basis points	8.93	%
+ 100 basis points	4.58
- 100 basis points	(4.82	)

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

Table 24 Economic Value of Equity

	Estimated % Change in Economic Value of Equity
	September 30, 2017
Rate Change
+ 300 basis points	(6.10)	%
+ 200 basis points	(3.80	)
+ 100 basis points	(1.64	)
- 100 basis points	(0.72	)

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

Derivatives

The Company uses derivatives primarily to manage economic risks related to commercial loans, mortgage banking operations, long-term debt and other funding sources. The Company also uses derivatives to facilitate transactions on behalf of its clients. As of September 30, ~~2016,~~2017, the Company had derivative financial instruments outstanding with notional amounts of ~~$36.3~~$46.8 billion. The estimated net fair value of open contracts was in an asset position of ~~$155~~$37 million at September 30, ~~2016.~~2017. For additional information about derivatives, refer to Note 6,5, 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 September 30, ~~2016~~2017 or December 31, ~~2015~~2016 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.

On June 29, 2017, the Bank issued under its Global Bank Note Program $750 million aggregate principal amount of its 2.875% unsecured senior notes due 2022.

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. InAs of January ~~2016,~~

2017, the ~~minimum phased-in~~ LCR requirement was ~~90 percent, followed by~~ 100 ~~percent in January 2017.~~percent. At September 30, ~~2016,~~2017, the Company was fully compliant with the ~~minimum phased-in~~ LCR requirements in effect for ~~2016.~~2017. 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.

~~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 is 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 September 30, ~~2016~~2017 and December 31, ~~2015.~~2016.

Table 26 Capital Ratios
Table 25 Capital Ratios							Table 25 Capital Ratios

	September 30, 2016			December 31, 2015			September 30, 2017			December 31, 2016
	(Dollars in Thousands)						(Dollars in Thousands)
Capital:
CET1 Capital	$	7,553,460		$	7,363,961		$	8,005,526		$	7,669,118
Tier 1 Capital	$	7,791,860		$	7,631,561		8,239,726			7,907,518
Total Capital	$	9,494,310		$	9,417,750		9,706,431			9,550,482
Ratios:
CET1 Risk-based Capital Ratio	11.28		%	10.70		%	12.07		%	11.49		%
Tier 1 Risk-based Capital Ratio	11.64		%	11.08		%	12.42			11.85
Total Risk-based Capital Ratio	14.18		%	13.68		%	14.63			14.31
Leverage Ratio	9.08		%	8.95		%	10.00			9.46

At September 30, ~~2016,~~2017, 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 87, 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.~~2016.

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.~~2016.


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, one of which remained outstanding during the three months ended September 30, ~~2016.~~2017. For the three months ended September 30, ~~2016, revenues of $360 (including~~2017, no fees and/or ~~commissions)~~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. Due to changes in EU~~In accordance with Council ~~Regulations effective January 16, 2016, Bank Melli is no longer included on the EU list~~Regulation (EU) Nr. 267/2012 of ~~persons and entities subject to the restrictive measure relating to the freezing of funds and economic resources. Therefore, BBVA is no longer required to block~~March 23, 2012, any payments of amounts due to Bank Melli under these counter indemnities were initially blocked and thereafter released upon authorization by the relevant Spanish authorities. The BBVA Group is committed to terminating the outstanding counter indemnity as soon as contractually possible and ~~is no longer required~~does not intend to ~~request authorization from the relevant Spanish authorities to release such funds to~~enter into new business relationships involving Bank Melli.

~~Refund of funds from Bank Sepah.~~ During the three months ended September 30, 2016, Bank Sepah returned to the BBVA Group funds in the amount of $4,624 originally transferred by the BBVA Group in March 2007 to an account at Bank Sepah in the name of BBVA’s representative office in Tehran.

Iranian embassy-related activity. The BBVA Group maintains bank accounts in Spain for ~~two employees~~one employee of the Iranian embassy in Spain. ~~The two employees are~~This employee is a Spanish ~~citizens, and one of them has retired.~~citizen. Estimated gross revenues for the three months ended September 30, ~~2016~~,2017, from embassy-related activity, which include fees and/or commissions, did not exceed ~~$190.~~$56. 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 Number	Description of Documents

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

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

SIGNATURES

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



Date: November ~~9, 2016~~8, 2017	BBVA Compass Bancshares, Inc.
	By:	/s/ Kirk P. Pressley
		Name:	Kirk P. Pressley
		Title:	Senior Executive Vice President, Chief Financial Officer and Duly Authorized Officer

9493



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

Table 25 Economic Value of Equity

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

Large accelerated filer o

Accelerated filer o

Non-accelerated filer þ(Do not check if a smaller reporting company)

Smaller reporting company o

Emerging growth company o