Bbva Usa Bancshares 10-Q 2015 Q1 Quarterly report

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 March 31, 2015

or

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

For the transition period from                     to  

Commission File Number: 000-55106

BBVA Compass Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Texas		20-8948381
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
2200 Post Oak Blvd. Houston, Texas		77056
(Address of principal executive offices)		(Zip Code)
	(205) 297-3000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

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

Class	Outstanding at April 30, 2015
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 March 31, 2015 and December 31, 2014	7
	Condensed Consolidated Statements of Income for the three months ended March 31, 2015 and 2014	8
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2015 and 2014	9
	Condensed Consolidated Statements of Shareholder's Equity for the three months ended March 31, 2015 and 2014	10
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014	11
	Notes to the March 31, 2015 Condensed Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	57
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	82
Item 4.	Controls and Procedures	82
Part II	Other Information
Item 1.	Legal Proceedings	82
Item 1A.	Risk Factors	82
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	82
Item 3.	Defaults Upon Senior Securities	82
Item 4.	Mine Safety Disclosures	82
Item 5.	Other Information	82
Item 6.	Exhibits	84
Signatures		85

Glossary of Acronyms and Terms

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

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

3

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

4

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

Forward-Looking Statements

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

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

• 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 the declining oil prices;

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

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

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

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

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

• the Bank's CRA rating, which has resulted 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;

• 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;

5

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

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

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

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

• changes in the creditworthiness of customers;

• increased loan losses or impairment of goodwill and other intangibles;

• 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.

6

PART I FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
	March 31, 2015			December 31, 2014
	(In Thousands)
Assets:
Cash and due from banks	$	3,664,182		$	2,764,345
Federal funds sold, securities purchased under agreements to resell and interest bearing deposits	300,175			624,060
Cash and cash equivalents	3,964,357			3,388,405
Trading account assets	3,680,427			2,834,397
Investment securities available for sale	10,101,828			10,237,275
Investment securities held to maturity (fair value of $1,297,565 and $1,275,963 at March 31, 2015 and December 31, 2014, respectively)	1,373,542			1,348,354
Loans held for sale (includes $198,488 and $154,816 measured at fair value at March 31, 2015 and December 31, 2014, respectively)	198,488			154,816
Loans	58,558,463			57,371,784
Allowance for loan losses	(701,864		)	(685,041		)
Net loans	57,856,599			56,686,743
Premises and equipment, net	1,332,539			1,351,479
Bank owned life insurance	694,370			694,335
Goodwill	5,046,847			5,046,847
Other intangible assets	60,097			70,784
Other real estate owned	17,764			20,600
Other assets	1,148,883			1,318,392
Total assets	$	85,475,741		$	83,152,427
Liabilities:
Deposits:
Noninterest bearing	$	18,599,702		$	17,169,412
Interest bearing	44,300,979			44,020,304
Total deposits	62,900,681			61,189,716
FHLB and other borrowings	4,919,141			4,809,843
Federal funds purchased and securities sold under agreements to repurchase	909,683			1,129,503
Other short-term borrowings	3,377,694			2,545,724
Accrued expenses and other liabilities	1,206,612			1,474,067
Total liabilities	73,313,811			71,148,853
Shareholder’s Equity:
Common stock — $0.01 par value:
Authorized — 300,000,000 shares
Issued — 222,950,751 shares at both March 31, 2015 and December 31, 2014	2,230			2,230
Surplus	15,278,877			15,285,991
Accumulated deficit	(3,121,071		)	(3,262,181		)
Accumulated other comprehensive loss	(27,654		)	(51,357		)
Total BBVA Compass Bancshares, Inc. shareholder’s equity	12,132,382			11,974,683
Noncontrolling interests	29,548			28,891
Total shareholder’s equity	12,161,930			12,003,574
Total liabilities and shareholder’s equity	$	85,475,741		$	83,152,427

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

7

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
	Three Months Ended March 31,
	2015			2014
	(In Thousands)
Interest income:
Interest and fees on loans	$	543,842		$	508,506
Interest on investment securities available for sale	48,208			49,090
Interest on investment securities held to maturity	6,702			7,246
Interest on federal funds sold, securities purchased under agreements to resell and interest bearing deposits	996			47
Interest on trading account assets	9,614			516
Total interest income	609,362			565,405
Interest expense:
Interest on deposits	69,653			53,216
Interest on FHLB and other borrowings	19,106			16,364
Interest on federal funds purchased and securities sold under agreements to repurchase	1,326			500
Interest on other short-term borrowings	10,248			26
Total interest expense	100,333			70,106
Net interest income	509,029			495,299
Provision for loan losses	42,031			37,266
Net interest income after provision for loan losses	466,998			458,033
Noninterest income:
Service charges on deposit accounts	53,284			53,391
Card and merchant processing fees	26,183			24,304
Retail investment sales	25,146			26,564
Investment banking and advisory fees	30,334			22,196
Asset management fees	8,096			10,758
Corporate and correspondent investment sales	6,259			8,656
Mortgage banking income	8,159			4,276
Bank owned life insurance	4,788			3,967
Investment securities gains, net	32,832			16,434
Loss on prepayment of FHLB and other borrowings	(2,549		)	(458		)
Other	56,738			49,240
Total noninterest income	249,270			219,328
Noninterest expense:
Salaries, benefits and commissions	259,262			262,569
Equipment	58,141			53,738
Professional services	46,559			46,399
Net occupancy	39,280			38,957
FDIC indemnification expense	28,789			31,618
Amortization of intangibles	10,687			12,534
Securities impairment:
Other-than-temporary impairment	372			381
Less: non-credit portion recognized in other comprehensive income	87			235
Total securities impairment	285			146
Other	79,716			72,906
Total noninterest expense	522,719			518,867
Net income before income tax expense	193,549			158,494
Income tax expense	51,782			43,567
Net income	141,767			114,927
Less: net income attributable to noncontrolling interests	657			453
Net income attributable to shareholder	$	141,110		$	114,474

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

8

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
	Three Months Ended March 31,
	2015		2014
	(In Thousands)
Net income	$	141,767	$	114,927
Other comprehensive income, net of tax:
Unrealized holding gains arising during period from securities available for sale	36,588		26,240
Less: reclassification adjustment for net gains on sale of securities available for sale in net income	18,540		10,526
Net change in unrealized holding gains on securities available for sale	18,048		15,714
Change in unamortized net holding losses on investment securities held to maturity	1,774		3,058
Less: non-credit related impairment on investment securities held to maturity	49		151
Change in unamortized non-credit related impairment on investment securities held to maturity	156		246
Net change in unamortized holding losses on securities held to maturity	1,881		3,153
Unrealized holding gains (losses) arising during period from cash flow hedge instruments	2,059		(807		)
Change in defined benefit plans	1,715		(1,671		)
Other comprehensive income, net of tax	23,703		16,389
Comprehensive income	165,470		131,316
Less: comprehensive income attributable to noncontrolling interests	657		453
Comprehensive income attributable to shareholder	$	164,813	$	130,863

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

9

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (Unaudited)
	Common Stock		Surplus			Accumulated Deficit			Accumulated Other Comprehensive Loss			Non-controlling Interests		Total Shareholder’s Equity
	(In Thousands)
Balance, January 1, 2014	$	2,207	$	15,273,218		$	(3,728,737	)	$	(87,936	)	$	29,007	$	11,487,759
Net income	—		—			114,474			—			453		114,927
Other comprehensive income, net of tax	—		—			—			16,389			—		16,389
Issuance of common stock	23		116,977			—			—			—		117,000
Vesting of restricted stock	—		(4,525		)	—			—			—		(4,525		)
Restricted stock retained to cover taxes	—		(2,266		)	—			—			—		(2,266		)
Amortization of stock-based deferred compensation	—		550			—			—			—		550
Balance, March 31, 2014	$	2,230	$	15,383,954		$	(3,614,263	)	$	(71,547	)	$	29,460	$	11,729,834
Balance, January 1, 2015	$	2,230	$	15,285,991		$	(3,262,181	)	$	(51,357	)	$	28,891	$	12,003,574
Net income	—		—			141,110			—			657		141,767
Other comprehensive income, net of tax	—		—			—			23,703			—		23,703
Vesting of restricted stock	—		(7,662		)	—			—			—		(7,662		)
Amortization of stock-based deferred compensation	—		548			—			—			—		548
Balance, March 31, 2015	$	2,230	$	15,278,877		$	(3,121,071	)	$	(27,654	)	$	29,548	$	12,161,930

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

10

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Three Months Ended March 31,
	2015			2014
	(In Thousands)
Operating Activities:
Net income	$	141,767		$	114,927
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	69,595			65,110
Securities impairment	285			146
Amortization of intangibles	10,687			12,534
Accretion of discount, loan fees and purchase market adjustments, net	(53,747		)	(50,201		)
Net change in FDIC indemnification asset/liability	28,789			31,618
Provision for loan losses	42,031			37,266
Amortization of stock based compensation	548			550
Net change in trading account assets	(191,826		)	(23,033		)
Net change in trading account liabilities	76,217			(10,444		)
Net change in loans held for sale	(43,672		)	45,494
Deferred tax expense	32,676			32,252
Investment securities gains, net	(32,832		)	(16,434		)
Loss on prepayment of FHLB and other borrowings	2,549			458
Loss on sale of premises and equipment	1,627			1,452
Loss on sale of student loans	2			75
Net (gain) loss on sale of other real estate and other assets	(134		)	1,701
Loss on disposition	—			981
(Increase) decrease in other assets	132,983			(123,144		)
Increase (decrease) in other liabilities	(372,520		)	4,830
Net cash (used in) provided by operating activities	(154,975		)	126,138
Investing Activities:
Proceeds from sales of investment securities available for sale	1,147,705			430,715
Proceeds from prepayments, maturities and calls of investment securities available for sale	349,624			315,980
Purchases of investment securities available for sale	(1,316,531		)	(947,146		)
Proceeds from prepayments, maturities and calls of investment securities held to maturity	28,700			30,787
Purchases of investment securities held to maturity	(50,632		)	—
Proceeds from sales of trading securities	1,292,110			—
Purchases of trading securities	(1,946,314		)	—
Net change in loan portfolio	(1,160,570		)	(2,070,125		)
Purchase of premises and equipment	(28,831		)	(15,941		)
Proceeds from sale of premises and equipment	778			4,156
Net cash paid in acquisition	—			(96,651		)
Proceeds from sales of loans	6			54,310
Reimbursements from (payments to) FDIC for covered assets	908			(6,478		)
Proceeds from sales of other real estate owned	5,688			4,630
Net cash used in investing activities	(1,677,359		)	(2,295,763		)
Financing Activities:
Net increase in demand deposits, NOW accounts and savings accounts	1,793,161			1,962,805
Net increase (decrease) in time deposits	(86,419		)	684,694
Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase	(219,820		)	104,808
Net increase in other short-term borrowings	831,970			23,231
Proceeds from FHLB and other borrowings	500,000			—
Repayment of FHLB and other borrowings	(402,944		)	(40,910		)
Vesting of restricted stock	(7,662		)	(4,525		)
Restricted stock grants retained to cover taxes	—			(2,266		)
Issuance of common stock	—			117,000
Net cash provided by financing activities	2,408,286			2,844,837
Net increase in cash and cash equivalents	575,952			675,212
Cash and cash equivalents at beginning of year	3,388,405			3,598,460
Cash and cash equivalents at end of period	$	3,964,357		$	4,273,672

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

11

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 financial statements have been prepared in accordance with the rules and regulations of the SEC and, therefore, do not include all information and notes to the consolidated financial statements necessary for a complete presentation of financial position, results of operations, comprehensive income and cash flows in conformity with U.S. GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the consolidated financial statements have been included. Operating results for the three months ended March 31, 2015, are not necessarily indicative of the results that may be expected for the year ended December 31, 2015. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

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. See Note 13,Subsequent Events.

Use of Estimates in the Preparation of Financial Statements

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

Recently Issued Accounting Standards

Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure

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

Revenue from Contracts with Customers

In May 2014, the FASB released ASU 2014-09, Revenue from Contracts with Customers. The core principle of this codified guidance requires an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides five steps to be analyzed to accomplish the core principle. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early application is not 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.

12

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

In June 2014, the FASB issued ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this ASU change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. In addition, for repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments in this ASU also require disclosures on transfers accounted for as sales in transactions that are economically similar to repurchase agreements, and provide increased transparency about the types of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The accounting changes in this ASU and disclosures for certain transactions accounted for as a sale are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The disclosures for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014 and for interim periods beginning after March 15, 2015. The adoption of this standard did not have a material impact on the financial condition or results of operations of the Company.

Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure

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

Consolidation

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

Simplifying the Presentation of Debt Issuance Costs

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

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

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

13

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

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

	March 31, 2015
			Gross Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	2,521,508	$	25,318	$	10,056	$	2,536,770
Mortgage-backed securities	4,155,135		53,876		21,524		4,187,487
Collateralized mortgage obligations	2,423,466		25,813		4,210		2,445,069
States and political subdivisions	408,115		8,124		197		416,042
Other	17,430		356		19		17,767
Equity securities	498,650		43		—		498,693
Total	$	10,024,304	$	113,530	$	36,006	$	10,101,828
Investment securities held to maturity:
Collateralized mortgage obligations	$	119,253	$	6,320	$	4,748	$	120,825
Asset-backed securities	35,618		3,240		2,299		36,559
States and political subdivisions	1,148,747		1,586		82,032		1,068,301
Other	69,924		4,120		2,164		71,880
Total	$	1,373,542	$	15,266	$	91,243	$	1,297,565

	December 31, 2014
			Gross Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	2,312,572	$	10,360	$	9,390	$	2,313,542
Mortgage-backed securities	4,399,706		64,371		40,242		4,423,835
Collateralized mortgage obligations	2,475,115		19,385		5,921		2,488,579
States and political subdivisions	460,569		8,008		1,262		467,315
Other	44,225		238		22		44,441
Equity securities	499,522		41		—		499,563
Total	$	10,191,709	$	102,403	$	56,837	$	10,237,275
Investment securities held to maturity:
Collateralized mortgage obligations	$	124,051	$	5,878	$	5,452	$	124,477
Asset-backed securities	39,187		3,568		2,011		40,744
States and political subdivisions	1,112,415		2,143		79,246		1,035,312
Other	72,701		4,920		2,191		75,430
Total	$	1,348,354	$	16,509	$	88,900	$	1,275,963

In the above table, equity securities include $499 million and $500 million at March 31, 2015 and December 31, 2014, respectively, of FHLB and Federal Reserve stock carried at par.

14

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

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

	March 31, 2015
	Securities in a loss position for less than 12 months				Securities in a loss position for 12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	752,519	$	8,600	$	91,136	$	1,456	$	843,655	$	10,056
Mortgage-backed securities	380,594		1,042		1,701,752		20,482		2,082,346		21,524
Collateralized mortgage obligations	633,205		3,513		91,229		697		724,434		4,210
States and political subdivisions	43,797		197		—		—		43,797		197
Other	—		—		1,103		19		1,103		19
Total	$	1,810,115	$	13,352	$	1,885,220	$	22,654	$	3,695,335	$	36,006
Investment securities held to maturity:
Collateralized mortgage obligations	$	23,045	$	349	$	46,293	$	4,399	$	69,338	$	4,748
Asset-backed securities	—		—		21,297		2,299		21,297		2,299
States and political subdivisions	75,204		4,903		812,731		77,129		887,935		82,032
Other	3,953		2,164		—		—		3,953		2,164
Total	$	102,202	$	7,416	$	880,321	$	83,827	$	982,523	$	91,243

15

	December 31, 2014
	Securities in a loss position for less than 12 months				Securities in a loss position for 12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	620,794	$	8,220	$	37,220	$	1,170	$	658,014	$	9,390
Mortgage-backed securities	308,734		862		1,915,494		39,380		2,224,228		40,242
Collateralized mortgage obligations	714,173		3,829		146,806		2,092		860,979		5,921
States and political subdivisions	—		—		135,825		1,262		135,825		1,262
Other	—		—		1,099		22		1,099		22
Total	$	1,643,701	$	12,911	$	2,236,444	$	43,926	$	3,880,145	$	56,837
Investment securities held to maturity:
Collateralized mortgage obligations	$	34,400	$	1,099	$	27,389	$	4,353	$	61,789	$	5,452
Asset-backed securities	—		—		23,374		2,011		23,374		2,011
States and political subdivisions	21,688		768		817,570		78,478		839,258		79,246
Other	4,061		2,191		—		—		4,061		2,191
Total	$	60,149	$	4,058	$	868,333	$	84,842	$	928,482	$	88,900

As indicated in the previous tables, at March 31, 2015, the Company held certain investment securities in unrealized loss positions. The Company does not have the intent to sell these securities and believes it is not more likely than not that it will be required to sell these securities before their anticipated recovery.

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

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

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

	Three Months Ended   March 31,
	2015		2014
	(In Thousands)
Balance at beginning of period	$	21,123	$	20,943
Reductions for securities paid off during the period (realized)	—		—
Additions for the credit component on debt securities in which OTTI was not previously recognized	—		—
Additions for the credit component on debt securities in which OTTI was previously recognized	285		146
Balance at end of period	$	21,408	$	21,089

For the three months ended March 31, 2015, there was $285 thousand OTTI recognized on held to maturity securities, and for the three months ended March 31, 2014, the Company recognized $146 thousand. The investment securities

16

primarily impacted by credit impairment are held to maturity non-agency collateralized mortgage obligations and asset-backed securities.

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

March 31, 2015	Amortized Cost		Fair Value
	(In Thousands)
Investment securities available for sale:
Maturing within one year	$	48,475	$	48,860
Maturing after one but within five years	688,061		701,812
Maturing after five but within ten years	983,328		997,119
Maturing after ten years	1,227,189		1,222,788
	2,947,053		2,970,579
Mortgage-backed securities and collateralized mortgage obligations	6,578,601		6,632,556
Equity securities	498,650		498,693
Total	$	10,024,304	$	10,101,828
Investment securities held to maturity:
Maturing within one year	$	9,079	$	9,092
Maturing after one but within five years	300,029		286,940
Maturing after five but within ten years	182,574		176,641
Maturing after ten years	762,607		704,067
	1,254,289		1,176,740
Collateralized mortgage obligations	119,253		120,825
Total	$	1,373,542	$	1,297,565

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

	Three Months Ended March 31,
	2015		2014
	(In Thousands)
Gross gains	$	32,832	$	16,434
Gross losses	—		—
Net realized gains	$	32,832	$	16,434

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(3) Loans and Allowance for Loan Losses

The following table presents the composition of the loan portfolio.

	March 31, 2015		December 31, 2014
	(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	24,448,964	$	23,828,537
Real estate – construction	2,325,495		2,154,652
Commercial real estate – mortgage	9,920,583		9,877,206
Total commercial loans	36,695,042		35,860,395
Consumer loans:
Residential real estate – mortgage	14,000,868		13,922,656
Equity lines of credit	2,325,884		2,304,784
Equity loans	635,295		634,968
Credit card	600,030		630,456
Consumer direct	707,251		652,927
Consumer indirect	3,105,533		2,870,408
Total consumer loans	21,374,861		21,016,199
Covered loans	488,560		495,190
Total loans	$	58,558,463	$	57,371,784

Purchased Impaired Loans

Purchased Impaired Loans are recognized on the Company's Unaudited Condensed Consolidated Balance Sheets within loans, net of recorded discount. The following table presents the unpaid principal balance, discount, allowance for loan losses and carrying value of the Purchased Impaired Loans.

	March 31, 2015			December 31, 2014
	(In Thousands)
Unpaid principal balance	$	367,704		$	378,913
Discount	(12,287		)	(17,341		)
Allowance for loan losses	(727		)	(2,066		)
Carrying value	$	354,690		$	359,506

Ananalysis of the accretable yield related to the Purchased Impaired Loans follows.

	Three Months Ended March 31,
	2015			2014
	(In Thousands)
Balance at beginning of period	$	68,785		$	105,698
Transfer to nonaccretable difference	(3,417		)	(8,162		)
Accretion	(8,057		)	(16,172		)
Other	—			—
Balance at end of period	$	57,311		$	81,364

The Company had allowance for loan losses of $727 thousand and $2.1 million related to Purchased Impaired Loans at March 31, 2015 and December 31, 2014, respectively. During the three months ended March 31, 2015 and 2014, the Company recognized $(907) thousand and $(10.8) million, respectively, of reduction in provision for loan losses attributable to credit improvements subsequent to acquisition of these loans.

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Purchased Nonimpaired Loans

At acquisition, Purchased Nonimpaired Loans were determined to have fair value discounts, some of which were related to credit. The portion of the fair value discount not related to credit is being accreted to interest income over the expected remaining life of the loans based on expected cash flows. For the three months ended March 31, 2015 and 2014 approximately $36.6 million and $37.8 million, respectively, of interest income was recognized on these loans. The discount related to credit on the Purchased Nonimpaired Loans is reviewed for adequacy quarterly. If the expected losses exceed the credit discount, an allowance for loan losses is provided. If the expected losses are reduced, the related credit discount is accreted to interest income over the expected remaining life of the loans.

The following table presents the unpaid principal balance, discount, allowance for loan losses, and carrying value of the Purchased Nonimpaired Loans.

	March 31, 2015			December 31, 2014
	(In Thousands)
Unpaid principal balance	$	274,581		$	294,202
Discount	(57,280		)	(88,962		)
Allowance for loan losses	(2,115		)	(2,283		)
Carrying value	$	215,186		$	202,957

FDIC Indemnification Asset (Liability)

The Company has entered into loss sharing agreements with the FDIC that require the FDIC to reimburse the Bank for losses with respect to covered loans and covered OREO. In addition, the provisions of the loss sharing agreements may also require a payment by the Bank to the FDIC on October 15, 2019 if the acquired portfolio's credit improves beyond original expectations. Activity associated with the Company's estimate of the potential amount of this payment is included in the table below. The Company has chosen to net the amounts due from the FDIC and due to the FDIC into the FDIC indemnification asset (liability), which is recorded in accrued expenses and other liabilities in the Company's Unaudited Condensed Consolidated Balance Sheets. See Note 7, Commitments, Contingencies and Guarantees, for additional information related to the loss sharing agreements. A summary of the activity in the FDIC indemnification asset (liability) is presented in the following table.

	Three Months Ended March 31,
	2015			2014
	(In Thousands)
Balance at beginning of period	$	(78,025	)	$	24,315
Increase (decrease) due to credit loss provision (benefit) recorded on FDIC covered loans	(631		)	5,061
Amortization and accretion, net	(27,898		)	(36,823		)
Payments to (reimbursements from) FDIC for covered assets	(908		)	6,478
Other	(260		)	144
Balance at end of period	$	(107,722	)	$	(825	)

Other adjustments include those resulting from the change in loss estimates related to OREO as a result of changes in expected cash flows as well as adjustments resulting from amounts owed to the FDIC for unexpected recoveries of amounts previously charged off and loan expenses incurred and claimed.

19

Allowance for Loan Losses and Credit Quality

The following table, which excludes loans held for sale, presents a summary of the activity in the allowance for loan losses. The portion of the allowance that has not been identified by the Company as related to specific loan categories has been allocated to the individual loan categories on a pro rata basis for purposes of the table below:

	Commercial, Financial and Agricultural			Commercial Real Estate (1)			Residential Real Estate (2)			Consumer (3)			Covered			Total Loans
	(In Thousands)
Three months ended March 31, 2015
Allowance for loan losses:
Beginning balance	$	299,482		$	138,233		$	154,627		$	89,891		$	2,808		$	685,041
Provision (credit) for loan losses	28,352			(185		)	(6,439		)	20,770			(467		)	42,031
Loans charged off	(6,619		)	(635		)	(6,754		)	(24,545		)	(873		)	(39,426		)
Loan recoveries	2,182			1,858			3,513			6,665			—			14,218
Net (charge-offs) recoveries	(4,437		)	1,223			(3,241		)	(17,880		)	(873		)	(25,208		)
Ending balance	$	323,397		$	139,271		$	144,947		$	92,781		$	1,468		$	701,864
Three months ended March 31, 2014
Allowance for loan losses:
Beginning balance	$	292,327		$	158,960		$	155,575		$	90,903		$	2,954		$	700,719
Provision (credit) for loan losses	7,501			(4,722		)	12,673			16,829			4,985			37,266
Loans charged off	(4,934		)	(2,646		)	(15,708		)	(21,704		)	(216		)	(45,208		)
Loan recoveries	4,985			1,538			2,694			5,329			342			14,888
Net (charge-offs) recoveries	51			(1,108		)	(13,014		)	(16,375		)	126			(30,320		)
Ending balance	$	299,879		$	153,130		$	155,234		$	91,357		$	8,065		$	707,665

(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.

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The table below provides a summary of the allowance for loan losses and related loan balances by portfolio.

	Commercial, Financial and Agricultural		Commercial Real Estate (1)		Residential Real Estate (2)		Consumer (3)		Covered		Total Loans
	(In Thousands)
March 31, 2015
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	13,510	$	6,742	$	39,023	$	1,596	$	—	$	60,871
Collectively evaluated for impairment	308,826		132,529		105,924		90,872		—		638,151
Purchased impaired	—		—		—		—		727		727
Purchased nonimpaired	1,061		—		—		313		741		2,115
Total allowance for loan losses	$	323,397	$	139,271	$	144,947	$	92,781	$	1,468	$	701,864
Loans:
Ending balance of loans:
Individually evaluated for impairment	$	81,606	$	92,480	$	190,447	$	3,004	$	—	$	367,537
Collectively evaluated for impairment	24,328,772		12,114,814		16,770,610		4,404,012		—		57,618,208
Purchased impaired	—		—		—		—		355,417		355,417
Purchased nonimpaired	38,586		38,784		990		5,798		133,143		217,301
Total loans	$	24,448,964	$	12,246,078	$	16,962,047	$	4,412,814	$	488,560	$	58,558,463
December 31, 2014
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	11,158	$	8,466	$	42,277	$	1,532	$	—	$	63,433
Collectively evaluated for impairment	287,105		129,767		112,350		88,037		—		617,259
Purchased impaired	—		—		—		—		2,066		2,066
Purchased nonimpaired	1,219		—		—		322		742		2,283
Total allowance for loan losses	$	299,482	$	138,233	$	154,627	$	89,891	$	2,808	$	685,041
Loans:
Ending balance of loans:
Individually evaluated for impairment	$	48,173	$	105,608	$	195,462	$	1,827	$	—	$	351,070
Collectively evaluated for impairment	23,745,149		11,896,943		16,665,930		4,145,880		—		56,453,902
Purchased impaired	—		—		—		—		361,572		361,572
Purchased nonimpaired	35,215		29,307		1,016		6,084		133,618		205,240
Total loans	$	23,828,537	$	12,031,858	$	16,862,408	$	4,153,791	$	495,190	$	57,371,784

(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.

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

	March 31, 2015
	Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance
	Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance
	(In Thousands)
Commercial, financial and agricultural	$	6,377	$	13,575	$	—	$	75,229	$	79,360	$	13,510
Real estate – construction	3,492		4,006		—		2,580		2,625		793
Commercial real estate – mortgage	22,240		23,210		—		64,168		68,690		5,949
Residential real estate – mortgage	6,886		6,886		—		105,079		105,162		7,188
Equity lines of credit	—		—		—		26,718		27,124		23,675
Equity loans	—		—		—		51,764		52,225		8,160
Credit card	—		—		—		—		—		—
Consumer direct	—		—		—		1,383		1,383		77
Consumer indirect	—		—		—		1,621		1,621		1,519
Total loans	$	38,995	$	47,677	$	—	$	328,542	$	338,190	$	60,871

	December 31, 2014
	Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance
	Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance
	(In Thousands)
Commercial, financial and agricultural	$	—	$	—	$	—	$	48,173	$	61,552	$	11,158
Real estate – construction	3,492		4,006		—		2,686		2,731		872
Commercial real estate – mortgage	22,822		23,781		—		76,608		82,005		7,594
Residential real estate – mortgage	8,795		8,795		—		107,223		107,306		9,236
Equity lines of credit	—		—		—		25,743		26,124		23,394
Equity loans	—		—		—		53,701		54,038		9,647
Credit card	—		—		—		—		—		—
Consumer direct	—		—		—		337		337		42
Consumer indirect	—		—		—		1,490		1,490		1,490
Total loans	$	35,109	$	36,582	$	—	$	315,961	$	335,583	$	63,433

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

	Three Months Ended March 31, 2015				Three Months Ended March 31, 2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
Commercial, financial and agricultural	$	64,881	$	339	$	126,821	$	245
Real estate – construction	6,115		39		10,120		63
Commercial real estate – mortgage	88,178		580		141,347		942
Residential real estate – mortgage	113,926		695		114,965		719
Equity lines of credit	26,658		283		23,403		250
Equity loans	52,435		404		55,027		425
Credit card	—		—		—		—
Consumer direct	680		6		158		1
Consumer indirect	1,544		—		1,265		1
Total loans	$	354,417	$	2,346	$	473,106	$	2,646

The tables above do not include Purchased Impaired Loans, Purchased Nonimpaired Loans or loans held for sale. At March 31, 2015, there were $1.9 million and $4.7 million of recorded investment and unpaid principal balance, respectively, on Purchased Impaired Loans with credit deterioration subsequent to acquisition that were individually evaluated for impairment. There was no allowance for loan losses recorded on these loans. At December 31, 2014, there were $1.3 million and $4.7 million of recorded investment and unpaid principal balance, respectively, on Purchased Impaired Loans with credit deterioration subsequent to acquisition that were individually evaluated for impairment. There was no allowance for loan losses recorded on these loans. Purchased Nonimpaired Loans are not included in the tables above as they are evaluated collectively on a pool basis and not on an individual basis.

Detailed information on the Company's allowance for loan losses methodology and the Company's impaired loan policy are included in the Company's Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2014.

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 (AAA through D) 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. Loans so classified 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.

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• The internally assigned letter grade “D2” corresponds to the regulatory classification “Doubtful.” Loans classified as doubtful have all the weaknesses inherent in one 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
	March 31, 2015
	Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage
	(In Thousands)
Noncovered loans:
Pass	$	23,899,964	$	2,250,178	$	9,578,494
Special Mention	285,158		62,033		194,696
Substandard	222,535		13,261		130,061
Doubtful	41,307		23		17,332
	$	24,448,964	$	2,325,495	$	9,920,583

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

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	Consumer
	March 31, 2015
	Residential Real Estate – Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)
Noncovered loans:
Performing	$	13,890,173	$	2,289,292	$	616,266	$	591,412	$	702,815	$	3,098,855
Nonperforming	110,695		36,592		19,029		8,618		4,436		6,678
	$	14,000,868	$	2,325,884	$	635,295	$	600,030	$	707,251	$	3,105,533

	December 31, 2014
	Residential Real Estate -Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)
Noncovered loans:
Performing	$	13,810,857	$	2,269,231	$	614,064	$	621,015	$	649,832	$	2,865,013
Nonperforming	111,799		35,553		20,904		9,441		3,095		5,395
	$	13,922,656	$	2,304,784	$	634,968	$	630,456	$	652,927	$	2,870,408

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

	March 31, 2015
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Total Past Due and Impaired		Not Past Due or Impaired		Total
	(In Thousands)
Commercial, financial and agricultural	$	7,940	$	3,981	$	2,901	$	95,318	$	9,632	$	119,772	$	24,329,192	$	24,448,964
Real estate – construction	5,275		450		392		7,781		2,237		16,135		2,309,360		2,325,495
Commercial real estate – mortgage	6,346		3,629		2,542		87,931		35,292		135,740		9,784,843		9,920,583
Residential real estate – mortgage	45,893		17,007		3,195		107,051		70,299		243,445		13,757,423		14,000,868
Equity lines of credit	10,615		4,602		1,995		34,597		—		51,809		2,274,075		2,325,884
Equity loans	5,387		1,728		703		18,313		40,432		66,563		568,732		635,295
Credit card	5,004		3,441		8,618		—		—		17,063		582,967		600,030
Consumer direct	7,545		2,406		2,426		2,010		180		14,567		692,684		707,251
Consumer indirect	34,444		6,726		2,576		4,102		—		47,848		3,057,685		3,105,533
Covered loans	6,582		3,872		45,402		179		—		56,035		432,525		488,560
Total loans	$	135,031	$	47,842	$	70,750	$	357,282	$	158,072	$	768,977	$	57,789,486	$	58,558,463

	December 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Total Past Due and Impaired		Not Past Due or Impaired		Total
	(In Thousands)
Commercial, financial and agricultural	$	10,829	$	5,765	$	1,610	$	61,157	$	10,127	$	89,488	$	23,739,049	$	23,828,537
Real estate – construction	1,954		994		477		7,964		2,112		13,501		2,141,151		2,154,652
Commercial real estate – mortgage	9,813		4,808		628		89,736		39,841		144,826		9,732,380		9,877,206
Residential real estate – mortgage	45,279		16,510		2,598		108,357		69,408		242,152		13,680,504		13,922,656
Equity lines of credit	9,929		4,395		2,679		32,874		—		49,877		2,254,907		2,304,784
Equity loans	6,357		3,268		997		19,029		41,197		70,848		564,120		634,968
Credit card	5,692		3,921		9,441		—		—		19,054		611,402		630,456
Consumer direct	9,542		1,826		2,296		799		298		14,761		638,166		652,927
Consumer indirect	35,366		7,935		2,771		2,624		—		48,696		2,821,712		2,870,408
Covered loans	6,678		4,618		47,957		114		—		59,367		435,823		495,190
Total loans	$	141,439	$	54,040	$	71,454	$	322,654	$	162,983	$	752,570	$	56,619,214	$	57,371,784

Policies related to the Company's nonaccrual and past due loans are included in the Company's Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2014.

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.

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

	March 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	$	20	$	35	$	—	$	1,620	$	1,675	$	9,577	$	11,252
Real estate – construction	—		—		—		142		142		2,237		2,379
Commercial real estate – mortgage	—		—		358		6,226		6,584		34,934		41,518
Residential real estate – mortgage	1,366		658		449		29,087		31,560		67,826		99,386
Equity lines of credit	—		—		—		25,518		25,518		—		25,518
Equity loans	1,662		975		13		11,328		13,978		37,782		51,760
Credit card	—		—		—		—		—		—		—
Consumer direct	—		—		—		34		34		180		214
Consumer indirect	—		—		—		1,621		1,621		—		1,621
Covered loans	—		—		—		8		8		—		8
Total loans	$	3,048	$	1,668	$	820	$	75,584	$	81,120	$	152,536	$	233,656

	December 31, 2014
	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	$	11	$	—	$	—	$	2,052	$	2,063	$	10,116	$	12,179
Real estate – construction	—		—		—		200		200		2,112		2,312
Commercial real estate – mortgage	371		536		—		7,068		7,975		38,934		46,909
Residential real estate – mortgage	2,440		2,688		844		32,518		38,490		63,436		101,926
Equity lines of credit	—		—		—		24,519		24,519		—		24,519
Equity loans	2,182		1,124		878		12,504		16,688		37,013		53,701
Credit card	—		—		—		—		—		—		—
Consumer direct	105		—		—		40		145		193		338
Consumer indirect	—		—		—		1,490		1,490		—		1,490
Covered loans	—		—		—		17		17		—		17
Total loans	$	5,109	$	4,348	$	1,722	$	80,408	$	91,587	$	151,804	$	243,391

At March 31, 2015 and December 31, 2014, there were no loans held for sale classified as TDRs.

Modifications to a borrower’s loan agreement are considered TDRs if a concession is granted for economic or legal reasons related to a borrower’s financial difficulties that otherwise would not be considered. Within each of the Company’s loan classes, TDRs typically involve modification of the loan interest rate to a below market rate or an extension or deferment of the loan. During the three months ended March 31, 2015, $300 thousand of TDR modifications included an interest rate concession and $4.5 million of TDR modifications resulted from modifications to the loan’s structure. During the three months ended March 31, 2014, $2.4 million of TDR modifications included an interest rate concession and $7.0 million of TDR modifications resulted from modifications to the loan’s structure.

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The following table presents an analysis of the types of loans that were restructured and classified as TDRs, excluding loans classified as held for sale.

	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
	Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)
Commercial, financial and agricultural	1	$	75	—	$	—
Real estate – construction	—	—		—	—
Commercial real estate – mortgage	—	—		6	3,930
Residential real estate – mortgage	11	1,740		10	994
Equity lines of credit	31	1,913		49	2,302
Equity loans	14	718		18	1,987
Credit card	—	—		—	—
Consumer direct	—	—		—	—
Consumer indirect	22	379		18	202
Covered loans	1	5		—	—

For the three months ended March 31, 2015 and 2014, 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 March 31, 2015			Three Months Ended March 31, 2014
	Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default
	(Dollars in Thousands)
Commercial, financial and agricultural	—	$	—	—	$	—
Real estate – construction	—	—		—	—
Commercial real estate – mortgage	1	178		—	—
Residential real estate – mortgage	4	647		—	—
Equity lines of credit	—	—		3	275
Equity loans	2	161		1	63
Credit card	—	—		—	—
Consumer direct	—	—		—	—
Consumer indirect	1	18		—	—
Covered loans	—	—		—	—

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.

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At March 31, 2015 and December 31, 2014, there were $1.0 million and $1.1 million, respectively, of commitments to lend additional funds to borrowers whose terms have been modified in a TDR.

Foreclosure Proceedings

Other real estate owned totaled $18 million and $21 million at March 31, 2015 and December 31, 2014, respectively. Other real estate owned included $11 million of foreclosed residential real estate properties at both March 31, 2015 and December 31, 2014. As of March 31, 2015 and December 31, 2014, there were $34 million and $26 million of residential real estate loans secured by residential real estate properties for which formal foreclosure proceedings were in process.

(4)Loan Sales and Servicing

Loans held for sale were $198 million and $155 million at March 31, 2015 and December 31, 2014, respectively, and were comprised entirely of residential real estate - mortgage loans.

There were no loans transferred from the held for investment portfolio to the loans held for sale portfolio during the three months ended March 31, 2015 and 2014. There were no material sales of loans and loans held for sale, excluding loans originated for sale in the secondary market, during the three months ended March 31, 2015. The Company sold loans and loans held for sale with a recorded balance of $62 million, excluding loans originated for sale in the secondary market, during the three months ended March 31, 2014.

Sales of residential real estate – mortgage loans originated for sale in the secondary market, including loans originated for sale where the Company retained servicing responsibilities, were $245 million and $188 million for the three months ended March 31, 2015 and 2014, respectively. The Company recognized net gains of $10.6 million and $4.1 million on the sale of residential real estate mortgage loans originated for sale during the three months ended March 31, 2015 and 2014, respectively. These gains were recorded in mortgage banking income in the Company’s Unaudited Condensed Consolidated Statements of Income.

Residential Real Estate Mortgage Loans Sold with Retained Servicing

During the three months ended March 31, 2015 and 2014, the Company sold $245 million and $188 million, respectively, of residential real estate mortgage loans originated for sale where the Company retained servicing responsibilities. For these sold loans, there is no recourse to the Company for the failures of borrowers to pay when due. Residential real estate mortgage loans sold where the Company retained servicing totaled $3.5 billion and $3.3 billion, respectively, at March 31, 2015 and December 31, 2014. These loans are not included in loans on the Company’s Unaudited Condensed Consolidated Balance Sheets.

In connection with residential real estate mortgage loans sold with retained servicing, the Company receives servicing fees based on a percentage of the outstanding balance. The Company recognized servicing fees of $4.8 million and $3.6 million during the three months ended March 31, 2015 and 2014, respectively, as a component of other noninterest income in the Company’s Unaudited Condensed Consolidated Statements of Income. At both March 31, 2015 and December 31, 2014, the Company had recorded $35 million of MSRs, under the fair value method in other assets on the Company’s Unaudited Condensed Consolidated Balance Sheets.

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

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

	Three Months Ended   March 31,
	2015			2014
	(In Thousands)
Carrying value, at beginning of period	$	35,488		$	30,065
Additions	2,759			2,083
Increase (decrease) in fair value:
Due to changes in valuation inputs or assumptions	(2,592		)	291
Due to other changes in fair value (1)	(442		)	(611		)
Carrying value, at end of period	$	35,213		$	31,828

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

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

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

	March 31, 2015			December 31, 2014
	(Dollars in Thousands)
Fair value of MSRs	$	35,213		$	35,488
Composition of residential loans serviced for others:
Fixed rate mortgage loans	96.0		%	96.1		%
Adjustable rate mortgage loans	4.0			3.9
Total	100.0		%	100.0		%
Weighted average life (in years)	6.0			6.2
Prepayment speed:	11.2		%	10.6		%
Effect on fair value of a 10% increase	$	(1,407	)	$	(1,220	)
Effect on fair value of a 20% increase	(2,712		)	(2,375		)
Weighted average discount rate:	10.1		%	10.1		%
Effect on fair value of a 10% increase	$	(1,298	)	$	(1,291	)
Effect on fair value of a 20% increase	(2,508		)	(2,492		)

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

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(5)Derivatives and Hedging

The Company is a party to derivative instruments in the normal course of business for trading purposes and for purposes other than trading to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates and foreign currency exchange rates. The Company has made an accounting policy decision to not offset derivative fair value amounts under master netting agreements. See Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 for additional information on the Company's accounting policies related to derivative instruments and hedging activities. The following table reflects the notional amount and fair value of derivative instruments included on the Company’s Unaudited Condensed Consolidated Balance Sheets on a gross basis.

	March 31, 2015						December 31, 2014
			Fair Value						Fair Value
	Notional Amount		Derivative Assets (1)		Derivative Liabilities (2)		Notional Amount		Derivative Assets (1)		Derivative Liabilities (2)
	(In Thousands)
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate swaps related to long-term debt	$	1,423,950	$	79,818	$	—	$	1,423,950	$	69,700	$	—
Total fair value hedges			79,818		—				69,700		—
Cash flow hedges:
Interest rate contracts:
Swaps related to commercial loans	1,800,000		5,807		—		1,100,000		1,793		1,023
Swaps related to FHLB advances	320,000		—		14,871		320,000		—		13,474
Total cash flow hedges			5,807		14,871				1,793		14,497
Total derivatives designated as hedging instruments			$	85,625	$	14,871			$	71,493	$	14,497
Free-standing derivatives not designated as hedging instruments:
Interest rate contracts:
Forward and option contracts related to held for sale mortgages	$	321,000	$	73	$	2,031	$	189,000	$	18	$	1,576
Equity contracts:
Purchased equity option related to equity-linked CDs	846,272		70,199		—		821,849		76,487		—
Swap associated with sale of Visa, Inc. Class B shares	57,267		—		1,432		57,393		—		1,435
Foreign exchange contracts:
Forwards related to commercial loans	562,373		8,826		870		602,066		5,529		612
Spots related to commercial loans	57,968		131		59		74,940		41		80
Futures contracts (3)	683,000		—		—		342,000		—		—
Interest rate lock commitments	294,685		4,988		1		180,822		2,319		1
Written equity option related to equity-linked CDs	815,904		—		67,959		795,467		—		74,319
Trading account assets and liabilities:
Interest rate contracts for customers	20,758,720		369,042		310,602		18,678,390		296,239		236,763
Commodity contracts for customers	235,099		21,568		21,471		264,491		25,569		25,448
Foreign exchange contracts for customers	508,321		14,607		13,883		425,123		8,268		7,527
Total trading account assets and liabilities			405,217		345,956				330,076		269,738
Total free-standing derivative instruments not designated as hedging instruments			$	489,434	$	418,308			$	414,470	$	347,761

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

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

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

Hedging Derivatives

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

31

cash flow hedge, the effect of interest rate movements on the hedged assets or liabilities will generally be offset by 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 months ended March 31, 2015 and 2014 related to hedged firm commitments no longer qualifying as a fair value hedge. At March 31, 2015, the fair value hedges had a weighted average expected remaining term of 3.8 years.

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

		Gain (Loss) for the
	Condensed Consolidated	Three Months Ended March 31,
	Statements of Income Caption	2015			2014
		(In Thousands)
Change in fair value of interest rate contracts:
Interest rate swaps hedging long term debt	Interest on FHLB and other borrowings	$	10,118		$	(935	)
Hedged long term debt	Interest on FHLB and other borrowings	(9,413		)	1,809
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	9,566			5,265

There were no material fair value hedging gains and losses recognized because of hedge ineffectiveness for the three months ended March 31, 2015 and 2014.

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. All components of each derivative instrument’s gain or loss are included in the assessment of hedge effectiveness. The initial assessment of expected hedge effectiveness is based on regression analysis. The ongoing periodic measures of hedge ineffectiveness are based on the expected change in cash flows of the hedged item caused by changes in the benchmark interest rate. There were no material cash flow hedging gains or losses recognized because of hedge ineffectiveness for the three months ended March 31, 2015 and 2014. 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 months ended March 31, 2015 and 2014.

At March 31, 2015, cash flow hedges not terminated had a net fair value of $(9.1) million and a weighted average life of 2.2 years. Based on the current interest rate environment, $835 thousand of gains are expected to be reclassified to net interest income over the next 12 months as net settlements occur. The maximum length of time over which the entity is hedging its exposure to the variability in future cash flows for forecasted transactions is 6.3 years.

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

	Gain (Loss) for the
	Three Months Ended   March 31,
	2015		2014
	(In Thousands)
Interest rate contracts:
Net change in amount recognized in other comprehensive income	$	2,059	$	807
Amount reclassified from accumulated other comprehensive income into net interest income	1,047		(1,163		)
Amount of ineffectiveness recognized in net interest income	—		—

Derivatives Not Designated As Hedges

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

The Company also enters into a variety of interest rate contracts, commodity contracts and foreign exchange contracts in its trading activities. The primary purpose for using these derivative instruments in the trading account is to facilitate customer transactions. The trading interest rate contract portfolio 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.

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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
	Condensed Consolidated	Three Months Ended March 31,
	Statements of Income Caption	2015		2014
		(In Thousands)
Futures contracts	Mortgage banking income  and corporate and correspondent investment sales	47		(76	)
Option contracts related to mortgage servicing rights	Mortgage banking income	(195	)	—
Interest rate contracts:
Forward and option contracts related to residential mortgage loans held for sale	Mortgage banking income	(400	)	(1,554	)
Interest rate lock commitments	Mortgage banking income	2,669		792
Interest rate contracts for customers	Corporate and correspondent investment sales	4,639		5,118
Commodity contracts:
Commodity contracts for customers	Corporate and correspondent investment sales	14		8
Equity contracts:
Purchased equity option related to equity-linked CDs	Other expense	(6,288	)	3,778
Written equity option related to equity-linked CDs	Other expense	6,360		(3,679	)
Foreign currency contracts:
Forward contracts related to commercial loans	Other income	46,567		(5,487	)
Spot contracts related to commercial loans	Other income	(6,895	)	880
Foreign currency exchange contracts for customers	Corporate and correspondent investment sales	380		193

Derivatives Credit and Market Risks

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

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

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

Entering into interest rate swap agreements and options involves not only the risk of dealing with counterparties and their ability to meet the terms of the contracts but also interest rate risk associated with unmatched positions. At March 31, 2015, interest rate swap agreements and options classified as trading were substantially matched. The Company had credit risk of $405 million related to derivative instruments in the trading account portfolio, which does not take into consideration master netting arrangements or the value of the collateral. There were $2 thousand and $1

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thousand in credit losses associated with derivative instruments classified as trading for the three months ended March 31, 2015 and 2014, respectively. At March 31, 2015 and December 31, 2014, there were no material nonperforming derivative positions classified as trading.

The Company’s derivative positions held for hedging purposes are primarily executed in the over-the-counter market. These positions at March 31, 2015 have credit risk of $95 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 months ended March 31, 2015 and 2014. At March 31, 2015 and December 31, 2014, there were no nonperforming derivative positions classified as nontrading.

As of March 31, 2015 and December 31, 2014, the Company had recorded the right to reclaim cash collateral of $54 million and $46 million, respectively, within other assets on the Company’s Unaudited Condensed Consolidated Balance Sheets and had recorded the obligation to return cash collateral of $56 million and $62 million, respectively, within deposits on the Company’s Unaudited Condensed Consolidated Balance Sheets.

Contingent Features

Certain of the Company’s derivative instruments contain provisions that require the Company’s debt to maintain a certain credit rating from each of the major credit rating agencies. If the Company’s debt were to fall below this rating, it would be in violation of these provisions, and the counterparties to the derivative instruments could demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position on March 31, 2015 was $71 million for which the Company has collateral requirements of $67 million in the normal course of business. If the credit risk-related contingent features underlying these agreements had been triggered on March 31, 2015, the Company’s collateral requirements to its counterparties would have increased by $4 million. The aggregate fair value of all derivative instruments with credit risk-related contingent features that were in a liability position on December 31, 2014 was $65 million for which the Company had collateral requirements of $62 million in the normal course of business. If the credit risk-related contingent features underlying these agreements had been triggered on December 31, 2014, the Company’s collateral requirements to its counterparties would have increased by $4 million.

(6) Assets and Liabilities Subject to Enforceable Master Netting Arrangements

Derivatives

In conjunction with the derivative and hedging activity discussed in Note 5, Derivatives and Hedging, 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.

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

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. government and federal agency securities.

At March 31, 2015, the fair value of collateral received related to securities purchased under agreements to resell was $3.4 billion and the fair value of collateral pledged for securities sold under agreements to repurchase was $3.2 billion. At December 31, 2014, the fair value of collateral received related to securities purchased under agreements to resell was $2.6 billion and the fair value of collateral pledged for securities sold under agreements to repurchase was $2.5 billion.

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Securities purchased under agreements to resell and securities sold under agreements to repurchase are governed by a MRA. Under the terms of the MRA, all transactions between the Company and the counterparty constitute a single business relationship such that in the event of default, the nondefaulting party is entitled to set off claims and apply property held by that party in respect of any transaction against obligations owed. Any payments, deliveries, or other transfers may be applied against each other and netted. These amounts are limited to the contract asset/liability balance, and accordingly, do not include excess collateral received or pledged. The Company offsets the assets and liabilities under netting arrangements for the balance sheet presentation of securities purchased under agreements to resell and securities sold under agreements to repurchase provided certain criteria are met that permit balance sheet netting.

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

							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Amounts Recognized		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amount Presented in the Condensed Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Received/ Pledged (1)		Net Amount
	(In Thousands)
March 31, 2015
Securities purchased under agreements to resell:
Subject to a master netting arrangement	$	3,497,408	$	3,223,019	$	274,389	$	274,389	$	—	$	—
Derivative financial assets:
Subject to a master netting arrangement	$	245,285	$	—	$	245,285	$	—	$	49,064	$	196,221
Not subject to a master netting arrangement	329,774		—		329,774		—		—		329,774
Total derivative financial assets	$	575,059	$	—	$	575,059	$	—	$	49,064	$	525,995
Securities sold under agreements to repurchase:
Subject to a master netting arrangement	$	3,250,397	$	3,223,019	$	27,378	$	27,378	$	—	$	—
Derivative financial liabilities:
Subject to a master netting arrangement	$	335,349	$	—	$	335,349	$	27,453	$	55,574	$	252,322
Not subject to a master netting arrangement	97,830		—		97,830		—		—		97,830
Total derivative financial liabilities	$	433,179	$	—	$	433,179	$	27,453	$	55,574	$	350,152
December 31, 2014
Securities purchased under agreements to resell:
Subject to a master netting arrangement	$	3,100,200	$	2,533,661	$	566,539	$	566,539	$	—	$	—
Derivative financial assets:
Subject to a master netting arrangement	$	225,227	$	—	$	225,227	$	—	$	58,309	$	166,918
Not subject to a master netting arrangement	260,736		—		260,736		—		—		260,736
Total derivative financial assets	$	485,963	$	—	$	485,963	$	—	$	58,309	$	427,654
Securities sold under agreements to repurchase:
Subject to a master netting arrangement	$	2,969,345	$	2,533,661	$	435,684	$	435,684	$	—	$	—
Derivative financial liabilities:
Subject to a master netting arrangement	$	259,018	$	—	$	259,018	$	29,677	$	44,163	$	185,178
Not subject to a master netting arrangement	103,240		—		103,240		—		—		103,240
Total derivative financial liabilities	$	362,258	$	—	$	362,258	$	29,677	$	44,163	$	288,418

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

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(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:

	March 31, 2015		December 31, 2014
	(In Thousands)
Commitments to extend credit	$	28,348,272	$	28,369,666
Standby and commercial letters of credit	1,695,974		1,871,323

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

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

The credit risk involved in issuing letters of credit and commitments is essentially the same as that involved in extending loan facilities to customers. The fair value of the letters of credit and commitments typically approximates the fee received from the customer for issuing such commitments. These fees are deferred and are recognized over the commitment period. At March 31, 2015 and December 31, 2014, the recorded amount of these deferred fees was $6.5 million and $5.2 million, respectively. The Company holds various assets as collateral supporting those commitments for which collateral is deemed necessary. At March 31, 2015, the maximum potential amount of future undiscounted payments the Company could be required to make under outstanding standby letters of credit was $1.7 billion. At March 31, 2015 and December 31, 2014, 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 $93 million and $94 million, respectively.

Loan Sale Recourse

The Company has potential recourse related to FNMA securitizations. At both March 31, 2015 and December 31, 2014, the amount of potential recourse was $20 million, of which the Company had reserved $716 thousand and $655 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 March 31, 2015 and December 31, 2014, the Company recorded $1 million of reserves in accrued expenses and other liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheets related to potential losses from loans sold.

Loss Sharing Agreement

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

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for single family residential loans. The loss sharing agreement for commercial loans expired in the fourth quarter of 2014.

The provisions of the loss sharing agreements may also require a payment by the Bank to the FDIC on October 15, 2019. On that date, the Bank is required to pay the FDIC 60% of the excess, if any, of (i) $457 million over (ii) the sum of (a) 25% of the total net amounts paid to the Bank under both of the loss share agreements plus (b) 20% of the deemed total cost to the Bank of administering the covered assets under the loss sharing agreements. The deemed total cost to the Bank of administering the covered assets is the sum of 2% of the average of the principal amount of covered assets based on the beginning and end of year balances for each of the 10 years during which the loss sharing agreements are in effect. At both March 31, 2015 and December 31, 2014, the Company estimated the potential amount of payment due to the FDIC in 2019, at the end of the loss sharing agreements, to be $145 million. 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. See Note 3,Loans and Allowance for Loan Losses, for additional information.

Legal and Regulatory Proceedings

In the ordinary course of business, the Company is subject to legal proceedings, including claims, litigation, investigations and administrative proceedings, all of which are considered incidental to the normal conduct of business. The Company believes it has substantial defenses to the claims asserted against it in its currently outstanding legal proceedings and, with respect to such legal proceedings, intends to continue to defend itself vigorously against such claims.

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

In May 2013, the Company 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 counterclaim plaintiff alleges the Company wrongfully failed to honor a standby letter of credit in the amount of $5.2 million. The counterclaim plaintiff seeks $5.2 million, plus other, unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

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

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

In March 2014, the Company was named as a defendant in a lawsuit filed in the Circuit Court of the Fourth Judicial Circuit in Duval County, Florida, Jack C. Demetree, et al. v. BBVA Compass, wherein the plaintiffs allege that their accountant stole approximately $17.1 million through unauthorized transactions on their accounts from 2009 to 2013, and that BBVA Compass enabled the theft. The plaintiffs seek unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In November 2014, the Company was named as a defendant in a lawsuit filed in the United States District Court for the Western District of Texas, Maxim Integrated Products v. Compass Bank, wherein the plaintiff alleges the Company is infringing three patents owned by the plaintiff and related to data encryption for the

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Company’s mobile banking applications. The plaintiff seeks unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

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

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

There are other litigation matters that arise in the normal course of business. The Company assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, the Company records a liability in its consolidated financial statements. These legal reserves may be increased or decreased to reflect any relevant developments. Where a loss is not probable or the amount of loss is not estimable, the Company does not accrue legal reserves. At March 31, 2015, the Company had accrued legal reserves in the amount of $15 million. Additionally, for those matters where a loss is both estimable and reasonably possible, the Company estimates losses that it could incur beyond the accrued legal reserves. Under U.S. GAAP, an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely” and an event is “remote” if “the chance of the future event or events occurring is slight.” At March 31, 2015, there were no such matters where a loss was both estimable and reasonably possible beyond the accrued legal reserve.

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

Income Tax Review

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

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(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 and other U.S. government agencies securities, mortgage-backed securities, collateralized mortgage obligations, debt obligations of state and political subdivisions, other debt and equity securities, and derivative contracts.

• U.S. Treasury and other U.S. government agencies securities are valued based on quoted market prices of identical assets on active exchanges (Level 1 measurements) or are valued based on a market approach using observable inputs such as benchmark yields, reported trades, broker/dealer quotes, benchmark securities, and bids/offers of government-sponsored enterprise securities (Level 2 measurements).

• Mortgage-backed securities are primarily valued using market-based pricing matrices that are based on observable inputs including benchmark To Be Announced security prices, U.S. Treasury yields, U.S. dollar swap yields, and benchmark floating-rate indices. Mortgage-backed securities pricing may also give

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consideration to pool-specific data such as prepayment history and collateral characteristics. Valuations for mortgage-backed securities are therefore classified as Level 2 measurements.

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

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

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

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

• Other trading assets primarily consist of interest-only strips which are valued by an independent third-party. The independent third-party values the assets on a loan-by-loan basis using a discounted cash flow analysis that employs prepayment assumptions, discount rate assumptions, and default curves. The prepayment assumptions are created from actual SBA pool prepayment history. The discount rates are derived from actual SBA loan secondary market transactions. The default curves are created using historical observable and unobservable inputs. As such, interest-only strips are classified as Level 3 measurements. The Company’s SBA department is responsible for ensuring the appropriate application of the valuation, capitalization, and amortization policies of the Company’s interest-only strips. The department performs independent, internal valuations of the interest-only strips on a quarterly basis, which are then reconciled to the third-party valuations to ensure their validity.

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

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

At both March 31, 2015 and December 31, 2014, 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 of $548 thousand and $690 thousand resulting from changes

42

in fair value of these loans were recorded in noninterest income during the three months ended March 31, 2015 and 2014, respectively.

The Company also had fair value changes on forward contracts related to residential mortgage loans held for sale of approximately $(400) thousand and $(1.6) million for the three months ended March 31, 2015 and 2014, respectively. An immaterial portion of these amounts was attributable to changes in instrument-specific credit risk.

The following tables summarize 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
	(In Thousands)
March 31, 2015
Residential mortgage loans held for sale	$	198,488	$	191,687	$	6,801
December 31, 2014
Residential mortgage loans held for sale	$	154,816	$	148,564	$	6,252

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

Other assets – Other assets measured at fair value on a recurring basis and classified within Level 3 of the fair value hierarchy were comprised of MSRs that are valued through a discounted cash flow analysis using a third-party commercial valuation system. The valuation takes into consideration the objective characteristics of the MSR portfolio, such as loan amount, note rate, service fee, loan term, and common industry assumptions, such as servicing costs, ancillary income, prepayment estimates, earning rates, cost of fund rates, discount rates, 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 considerations such as housing authority loans which have a limited number of approved servicers, 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.

43

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		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
	(In Thousands)
Recurring fair value measurements
Assets:
Trading account assets:
U.S. Treasury and other U.S. government agencies	$	3,267,024	$	3,267,024	$	—	$	—
State and political subdivisions	1,030		—		1,030		—
Other debt securities	3,972		—		3,972		—
Other equity securities	166		—		166		—
Interest rate contracts	369,042		—		369,042		—
Commodity contracts	21,568		—		21,568		—
Foreign exchange contracts	14,607		—		14,607		—
Other trading assets	3,018		—		1,582		1,436
Total trading account assets	3,680,427		3,267,024		411,967		1,436
Loans held for sale	198,488		—		198,488		—
Investment securities available for sale:
U.S. Treasury and other U.S. government agencies	2,536,770		1,367,699		1,169,071		—
Mortgage-backed securities	4,187,487		—		4,187,487		—
Collateralized mortgage obligations	2,445,069		—		2,445,069		—
States and political subdivisions	416,042		—		416,042		—
Other debt securities	17,767		17,767		—		—
Equity securities (1)	126		46		—		80
Total investment securities available for sale	9,603,261		1,385,512		8,217,669		80
Derivative assets:
Interest rate contracts	90,686		—		85,698		4,988
Equity contracts	70,199		—		70,199		—
Foreign exchange contracts	8,957		—		8,957		—
Total derivative assets	169,842		—		164,854		4,988
Other assets	35,213		—		—		35,213
Liabilities:
Trading account liabilities:
U.S. Treasury and other U.S. government agencies	$	3,368,354	$	3,368,354	$	—	$	—
Interest rate contracts	310,602		—		310,602		—
Commodity contracts	21,471		—		21,471		—
Foreign exchange contracts	13,883		—		13,883		—
Other debt securities	7,756		—		7,756		—
Other trading liabilities	1,584		—		1,584		—
Total trading account liabilities	3,723,650		3,368,354		355,296		—
Derivative liabilities:
Interest rate contracts	16,903		—		16,902		1
Equity contracts	67,959		—		67,959		—
Foreign exchange contracts	929		—		929		—
Total derivative liabilities	85,791		—		85,790		1

(1) Excludes $499 million of FHLB and Federal Reserve stock required to be owned by the Company at March 31, 2015. These securities are carried at par.

44

			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
	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
	(In Thousands)
Recurring fair value measurements
Assets:
Trading account assets:
U.S. Treasury and other U.S. government agencies	$	2,502,308	$	2,502,308	$	—	$	—
Interest rate contracts	296,239		—		296,239		—
Commodity contracts	25,569		—		25,569		—
Foreign exchange contracts	8,268		—		8,268		—
Other trading assets	2,013		—		423		1,590
Total trading account assets	2,834,397		2,502,308		330,499		1,590
Loans held for sale	154,816		—		154,816		—
Investment securities available for sale:
U.S. Treasury and other U.S. government agencies	2,313,542		1,298,040		1,015,502		—
Mortgage-backed securities	4,423,835		—		4,423,835		—
Collateralized mortgage obligations	2,488,579		—		2,488,579		—
States and political subdivisions	467,315		—		467,315		—
Other debt securities	44,441		44,441		—		—
Equity securities (1)	48		44		—		4
Total investment securities available for sale	9,737,760		1,342,525		8,395,231		4
Derivative assets:
Interest rate contracts	73,830		—		71,511		2,319
Equity contracts	76,487		—		76,487		—
Foreign exchange contracts	5,570		—		5,570		—
Total derivative assets	155,887		—		153,568		2,319
Other assets	35,488		—		—		35,488
Liabilities:
Trading account liabilities:
U.S. Treasury and other U.S. government agencies	$	2,545,299	$	2,545,299	$	—	$	—
Interest rate contracts	236,763		—		236,763		—
Commodity contracts	25,448		—		25,448		—
Foreign exchange contracts	7,527		—		7,527		—
Other trading liabilities	425		—		425		—
Total trading account liabilities	2,815,462		2,545,299		270,163		—
Derivative liabilities:
Interest rate contracts	16,074		—		16,073		1
Equity contracts	74,319		—		74,319		—
Foreign exchange contracts	692		—		692		—
Total derivative liabilities	91,085		—		91,084		1

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

45

There were no transfers between Levels 1 or 2 of the fair value hierarchy for the three months ended March 31, 2015 and 2014. 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)
Three Months Ended March 31,	Other Trading Assets			Equity Securities		Interest Rate Contracts, net		Other Assets
	(In Thousands)
Balance, January 1, 2014	$	1,645		$	6	$	890	$	30,065
Transfers into Level 3	—			—		—		—
Transfers out of Level 3	—			—		—		—
Total gains or losses (realized/unrealized):
Included in earnings (1)	47			—		792		(320		)
Included in other comprehensive income	—			—		—		—
Purchases, issuances, sales and settlements:
Purchases	—			—		—		—
Issuances	—			—		—		2,083
Sales	—			—		—		—
Settlements	—			—		—		—
Balance, March 31, 2014	$	1,692		$	6	$	1,682	$	31,828
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at March 31, 2014	$	47		$	—	$	792	$	(320	)
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)	(154		)	—		2,669		(3,034		)
Included in other comprehensive income	—			—		—		—
Purchases, issuances, sales and settlements:
Purchases	—			76		—		—
Issuances	—			—		—		2,759
Sales	—			—		—		—
Settlements	—			—		—		—
Balance, March 31, 2015	$	1,436		$	80	$	4,987	$	35,213
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at March 31, 2015	$	(154	)	$	—	$	2,669	$	(3,034	)

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

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Assets Measured at Fair Value on a Nonrecurring Basis

Periodically, certain assets may be recorded at fair value on a non-recurring basis. These adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets due to impairment. The following table represents those assets that were subject to fair value adjustments during the three months ended March 31, 2015 and 2014 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		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)
	March 31, 2015		(Level 1)		(Level 2)		(Level 3)		Three Months Ended March 31, 2015
	(In Thousands)
Nonrecurring fair value measurements
Assets:
Investment securities held to maturity	$	3,205	$	—	$	—	$	3,205	$	(285	)
Impaired loans (1)	132,336		—		—		132,336		(3,304		)
OREO	17,764		—		—		17,764		(1,259		)
			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)
	March 31, 2014		(Level 1)		(Level 2)		(Level 3)		Three Months Ended March 31, 2014
	(In Thousands)
Nonrecurring fair value measurements
Assets:
Investment securities held to maturity	$	3,462	$	—	$	—	$	3,462	$	(146	)
Impaired loans (1)	169,546		—		—		169,546		(4,344		)
OREO	25,817		—		—		25,817		577

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

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

Investment securities held to maturity – Nonrecurring fair value adjustments on investment securities held to maturity reflect impairment write-downs which the Company believes are other than temporary. For analyzing these securities, the Company has retained a third party valuation firm. Impairment is determined through the use of cash flow models that estimate cash flows on the underlying mortgages using security-specific collateral and the transaction structure. The cash flow models incorporate the remaining cash flows which are adjusted for future expected credit losses. Future expected credit losses are determined by using various assumptions such as current default rates, prepayment rates, and loss severities. The Company develops these assumptions through the use of market data published by third party sources in addition to historical analysis which includes actual delinquency and default information through the current period. The expected cash flows are then discounted at the interest rate used to recognize interest income on the security to arrive at a present value amount. As the fair value measurements are derived using a discounted cash flow modeling approach, the nonrecurring fair value measurements are classified as Level 3.

47

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

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

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

			Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at				Range of Unobservable Inputs
	March 31, 2015		Valuation Technique	Unobservable Input(s)	(Weighted Average)
	(In Thousands)
Recurring fair value measurements:
Other trading assets	$	1,436	Discounted cash flow	Default rate	8.9%
				Prepayment rate	5.4% - 9.8% (7.3%)
Interest rate contracts	4,987		Discounted cash flow	Closing ratios (pull-through)	6.4% - 98.7% (59.6%)
				Cap grids	0.3% - 2.5% (1.1%)
Other assets - MSRs	35,213		Discounted cash flow	Discount rate	10.0% - 11.0% (10.1%)
				Constant prepayment rate or life speed	6.1% - 49.5% (11.2%)
				Cost to service	$57 - $566 ($67)
Nonrecurring fair value measurements:
Investment securities held to maturity	$	3,205	Discounted cash flow	Prepayment rate	9.6%
				Default rate	7.5%
				Loss severity	61.2%
Impaired loans	132,336		Appraised value	Appraised value	0.0% - 100.0% (26.8%)
OREO	17,764		Appraised value	Appraised value	8.0%

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

Recurring Fair Value Measurements Using Significant Unobservable Inputs

Other Trading Assets – Interest-Only Strips

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

48

Interest Rate Contracts - Interest Rate Lock Commitments

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

Other Assets - MSRs

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

Fair Value of Financial Instruments

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

	March 31, 2015
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In Thousands)
Financial Instruments:
Assets:
Cash and cash equivalents	$	3,964,357	$	3,964,357	$	3,964,357	$	—	$	—
Investment securities held to maturity	1,373,542		1,297,565		—		—		1,297,565
Loans, net	57,856,599		55,263,025		—		—		55,263,025
Liabilities:
Deposits	$	62,900,681	$	63,012,674	$	—	$	63,012,674	$	—
FHLB and other borrowings	4,919,141		4,925,458		—		4,925,458		—
Federal funds purchased and securities sold under agreements to repurchase	909,683		909,683		—		909,683		—

	December 31, 2014
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In Thousands)
Financial Instruments:
Assets:
Cash and cash equivalents	$	3,388,405	$	3,388,405	$	3,388,405	$	—	$	—
Investment securities held to maturity	1,348,354		1,275,963		—		—		1,275,963
Loans, net	56,686,743		54,551,442		—		—		54,551,442
Liabilities:
Deposits	$	61,189,716	$	61,263,812	$	—	$	61,263,812	$	—
FHLB and other borrowings	4,809,843		4,786,152		—		4,786,152		—
Federal funds purchased and securities sold under agreements to repurchase	1,129,503		1,129,503		—		1,129,503		—

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.

49

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.

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

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.

(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 (loss).

	Three Months Ended March 31,
	2015						2014
	Pretax		Tax Expense/ (Benefit)		After-tax		Pretax			Tax Expense/ (Benefit)			After-tax
	(In Thousands)
Other comprehensive income:
Unrealized holding gains arising during period from securities available for sale	$	64,790	$	28,202	$	36,588	$	40,962		$	14,722		$	26,240
Less: reclassification adjustment for net gains on sale of securities in net income	32,832		14,292		18,540		16,434			5,908			10,526
Net change in unrealized gains on securities available for sale	31,958		13,910		18,048		24,528			8,814			15,714
Change in unamortized net holding losses on investment securities held to maturity	3,142		1,368		1,774		4,774			1,716			3,058
Less: non-credit related impairment on investment securities held to maturity	87		38		49		235			84			151
Change in unamortized non-credit related impairment on investment securities held to maturity	276		120		156		385			139			246
Net change in unamortized holding losses on securities held to maturity	3,331		1,450		1,881		4,924			1,771			3,153
Unrealized holding gains (losses) arising during period from cash flow hedge instruments	3,646		1,587		2,059		(1,261		)	(454		)	(807		)
Change in defined benefit plans	2,716		1,001		1,715		(2,672		)	(1,001		)	(1,671		)
Other comprehensive income	$	41,651	$	17,948	$	23,703	$	25,519		$	9,130		$	16,389

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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
	(In Thousands)
Balance, January 1, 2014	$	(31,490	)	$	(5,289	)	$	(41,921	)	$	(9,236	)	$	(87,936	)
Other comprehensive income (loss) before reclassifications	26,240			(1,553		)	—			(151		)	24,536
Amounts reclassified from accumulated other comprehensive income (loss)	(7,468		)	746			(1,671		)	246			(8,147		)
Net current period other comprehensive income (loss)	18,772			(807		)	(1,671		)	95			16,389
Balance, March 31, 2014	$	(12,718	)	$	(6,096	)	$	(43,592	)	$	(9,141	)	$	(71,547	)
Balance, January 1, 2015	$	4,469		$	(7,189	)	$	(41,121	)	$	(7,516	)	$	(51,357	)
Other comprehensive income (loss) before reclassifications	36,588			2,650			—			(49		)	39,189
Amounts reclassified from accumulated other comprehensive income (loss)	(16,766		)	(591		)	1,715			156			(15,486		)
Net current period other comprehensive income	19,822			2,059			1,715			107			23,703
Balance, March 31, 2015	$	24,291		$	(5,130	)	$	(39,406	)	$	(7,409	)	$	(27,654	)

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The following table presents information on reclassifications out of accumulated other comprehensive income.

Details About Accumulated Other Comprehensive Income Components	Amounts Reclassified From Accumulated Other Comprehensive Income(1)						Condensed Consolidated Statement of Income Caption
	Three Months Ended March 31,
	2015			2014
	(In Thousands)
Unrealized Gains on Securities Available for Sale and Transferred to Held to Maturity	$	32,832		$	16,434		Investment securities gains, net
	(3,142		)	(4,774		)	Interest on investment securities held to maturity
	29,690			11,660
	(12,924		)	(4,192		)	Income tax expense
	$	16,766		$	7,468		Net of tax
Accumulated (Gains) Losses on Cash Flow Hedging Instruments	$	2,813		$	612		Interest and fees on loans
	(1,766		)	(1,775		)	Interest and fees on FHLB advances
	1,047			(1,163		)
	(456		)	417			Income tax (expense) benefit
	$	591		$	(746	)	Net of tax
Defined Benefit Plan Adjustment	$	(2,716	)	$	2,672		(2)
	1,001			(1,001		)	Income tax (expense) benefit
	$	(1,715	)	$	1,671		Net of tax
Unamortized Impairment Losses on Investment Securities Held to Maturity	$	(276	)	$	(385	)	Interest on investment securities held to maturity
	120			139			Income tax benefit
	$	(156	)	$	(246	)	Net of tax

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

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

(10)Supplemental Disclosure for Statement of Cash Flows

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

	Three Months Ended March 31,
	2015		2014
	(In Thousands)
Supplemental disclosures of cash flow information:
Interest paid	$	90,984	$	55,675
Net income taxes paid (refunded)	2,212		(708		)
Supplemental schedule of noncash investing and financing activities:
Transfer of loans and loans held for sale to OREO	$	2,718	$	8,920
Change in unrealized gain (loss) on available for sale securities	31,958		24,528
Issuance of restricted stock, net of cancellations	458		(547		)
Business combinations:
Assets acquired	—		116,152
Liabilities assumed	—		18,329

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(11) Segment Information

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

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

The Consumer and Commercial Banking segment serves both the Company’s consumer customers through its full-service banking centers, private client offices throughout the U.S., and through the use of alternative delivery channels such as the internet, mobile devices and telephone banking. It also serves its commercial customers through its full array of banking and investment services to businesses in the Company’s markets. The Consumer and Commercial Banking segment provides individuals with comprehensive products and services including home mortgages, credit and debit cards, deposit accounts, insurance products, mutual funds and brokerage services. The segment also provides private banking and wealth management services to high net worth individuals, including specialized investment portfolio management, traditional credit products, traditional trust and estate services, investment advisory services, financial counseling and customized services to companies and their employees. In addition to traditional credit and deposit products, the Consumer and Commercial Banking segment also supports its commercial customers with capabilities in treasury management, leasing, accounts receivable purchasing, asset-based lending, international services, and insurance and interest rate protection and investment products. The Consumer and Commercial Banking segment is additionally responsible for the Company's small business customers and indirect automobile portfolio.

The Corporate and Investment Banking segment is responsible for providing a full array of banking and investment services to corporate and institutional clients. In addition to traditional credit and deposit products, the Corporate and Investment Banking segment also supports its customers with capabilities in treasury management, leasing, accounts receivable purchasing, asset-based lending, foreign-exchange and international services, and interest rate protection and investment products.

The Treasury segment’s primary function is to manage the liquidity and funding positions of the Company, the interest rate sensitivity of the Company's balance sheet, and to manage the investment securities portfolio.

Corporate Support and Other includes activities that are not directly attributable to the operating segments, such as, the activities of the Parent and corporate support functions that are not directly attributable to a strategic business segment, as well as the elimination of intercompany transactions. Corporate Support and Other also includes activities associated with assets and liabilities of Guaranty Bank acquired by the Company in 2009 and the related FDIC indemnification asset as well as the activities associated with Simple acquired by the Company in 2014.

53

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

	Three Months Ended March 31, 2015
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated
	(In Thousands)
Net interest income (expense)	$	482,365	$	39,932	$	18,382	$	(31,650	)	$	509,029
Allocated provision for loan losses	30,294		11,025		—		712			42,031
Noninterest income	176,317		49,487		33,856		(10,390		)	249,270
Noninterest expense	424,608		40,186		5,097		52,828			522,719
Net income (loss) before income tax expense (benefit)	203,780		38,208		47,141		(95,580		)	193,549
Income tax expense (benefit)	71,323		13,373		16,500		(49,414		)	51,782
Net income (loss)	132,457		24,835		30,641		(46,166		)	141,767
Less: net income attributable to noncontrolling interests	228		—		429		—			657
Net income (loss) attributable to shareholder	$	132,229	$	24,835	$	30,212	$	(46,166	)	$	141,110
Average assets	$	52,605,892	$	11,833,948	$	13,572,927	$	7,074,388		$	85,087,155

	Three Months Ended March 31, 2014
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated
	(In Thousands)
Net interest income	$	453,867	$	32,077	$	4,625	$	4,730		$	495,299
Allocated provision for loan losses	36,621		1,010		—		(365		)	37,266
Noninterest income	174,257		47,235		22,013		(24,177		)	219,328
Noninterest expense	429,925		31,214		3,640		54,088			518,867
Net income (loss) before income tax expense (benefit)	161,578		47,088		22,998		(73,170		)	158,494
Income tax expense (benefit)	60,188		17,540		8,567		(42,728		)	43,567
Net income (loss)	101,390		29,548		14,431		(30,442		)	114,927
Less: net income attributable to noncontrolling interests	17		—		436		—			453
Net income (loss) attributable to shareholder	$	101,373	$	29,548	$	13,995	$	(30,442	)	$	114,474
Average assets	$	47,781,589	$	6,418,599	$	12,334,277	$	6,824,679		$	73,359,144

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 lines of business which are fund providers are credited and those that are fund users are charged based on maturity, prepayment and/or repricing characteristics applied on an instrument level. Costs for centrally managed operations are generally allocated to the lines of business based on the utilization of services provided or other appropriate indicators. Capital is allocated to the lines of business based upon the underlying risks in each business taking into account economic and regulatory capital standards.

54

The development and application of these methodologies is a dynamic process. Accordingly, prior period financials have been revised to reflect management accounting enhancements and changes in the Company's organizational structure. The 2014 segment information has been revised to conform to the 2015 presentation. In addition, unlike financial accounting, there is no authoritative literature for management accounting similar to U.S. GAAP. Consequently, reported results are not necessarily comparable to those presented by other financial institutions.

(12)Related Party Transactions

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

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 net fair value of outstanding derivative contracts between the Company and BBVA are detailed below.

	March 31, 2015			December 31, 2014
	(In Thousands)
Derivative contracts:
Cash flow hedges	$	1,164		$	1,693
Free-standing derivatives not designated as hedging instruments	(10,055		)	9,512

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

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

	March 31, 2015		December 31, 2014
	(In Thousands)
Securities purchased under agreements to resell	$	—	$	97,970
Securities sold under agreements to repurchase	212		435,684

Borrowings

BSI, a wholly owned subsidiary of the Company, has a $420 million revolving note and cash subordination agreement with BBVA that was executed on March 16, 2012 with a maturity date of March 16, 2018. BSI also has a $150 million line of credit with BBVA that was initiated on August 1, 2014. At March 31, 2015 and December 31, 2014, there were no amounts outstanding under either of these agreements.

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(13) Subsequent Events

On April 10, 2015, the Bank closed the sale of $700 million aggregate principal amount of its 3.875% unsecured subordinated notes due 2025. The notes were offered in connection with a Global Bank Note Program under which the Bank may from time to time issue senior notes due seven days or more from the date of issue and subordinated notes due five years or more from the date of issue.

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

Critical Accounting Policies

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

Executive Overview

General

Notable accomplishments for the Company during the three months ended March 31, 2015 included the following:

• Balance sheet growth remained strong as total assets were $85.5 billion at March 31, 2015, an increase of 2.8% from December 31, 2014.

• Total loans at March 31, 2015 were $58.6 billion, up 2.1% from December 31, 2014.

• Nonperforming assets ratio of 0.77% remained at historically low levels at March 31, 2015. Net charge-offs were 0.17% of average loans for the three months ended March 31, 2015 compared to 0.24% of average loans for the three months ended March 31, 2014.

• Total deposits increased 2.8% from December 31, 2014 to $62.9 billion at March 31, 2015 driven by increases in low-cost interest bearing accounts and increases in noninterest bearing deposits.

• The Company was informed that the Federal Reserve Board did not object to the Company's 2015 capital plan.

Financial Performance

Consolidated net income attributable to shareholder for the three months ended March 31, 2015 was $141.1 million compared to $114.5 million earned during the three months ended March 31, 2014. The increase in net income attributable to shareholder was primarily due to an increase in noninterest income as well as an increase net interest income, offset in part by increases in provision for loan losses, noninterest expense and income tax expense.

Net interest income totaled $509.0 million for the three months ended March 31, 2015 compared to $495.3 million for the three months ended March 31, 2014. The net interest margin for the three months ended March 31, 2015 was 2.91%, a decline of 43 basis points compared to 3.34% for the three months ended March 31, 2014. The decrease in net interest margin for the three months ended March 31, 2015 was driven by lower yields on earning assets, particularly yields on covered loans.

The provision for loan losses was $42.0 million for the three months ended March 31, 2015, which represented an increase of $4.8 million compared to the three months ended March 31, 2014. The increase in provision for loan losses for the three months ended March 31, 2015 as compared to the three months ended March 31, 2014 was primarily attributable to loan growth during 2015. Net charge-offs for the three months ended March 31, 2015 totaled $25.2 million which represented a $5.1 million decrease compared to $30.3 million for the three months ended March 31, 2014.

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Noninterest income was $249.3 million, an increase of $29.9 million compared to the three months ended March 31, 2014. The increase in noninterest income was largely attributable to a $16.4 million increase in investment securities gains as well as an increase in investment banking and advisory fees of $8.1 million.

Noninterest expense was $522.7 million for the three months ended March 31, 2015, an increase of $3.9 million compared to the three months ended March 31, 2014. The higher level of noninterest expense was primarily attributable to a $4.4 million increase in equipment expense and a $6.8 million increase in other noninterest expense primarily due to a $2.9 million increase in FDIC insurance expense and a $1.6 million increase in marketing expense. These increases were partially offset by a $3.3 million decrease in salaries, benefits and commissions and $2.8 million decrease in FDIC indemnification expense.

Income tax expense was $51.8 million for the three months ended March 31, 2015 compared to $43.6 million for the three months ended March 31, 2014. This resulted in an effective tax rate of 26.8% for 2015 and 27.5% for 2014. The decrease in the effective tax rate for the three months ended March 31, 2015 was primarily driven by an increase in tax exempt income as a proportion of net income before income tax expense in 2015.

The Company's total assets at March 31, 2015 were $85.5 billion, an increase of $2.3 billion from December 31, 2014 levels. Total loans, excluding loans held for sale, were $58.6 billion at March 31, 2015, an increase of $1.2 billion or 2.1% from year-end December 31, 2014 levels. The growth in loans was primarily due to increases in commercial loans, residential mortgages and indirect auto lending. Deposits increased $1.7 billion or 2.8% compared to December 31, 2014, driven by transaction accounts, which increased 3.7% fueled by savings and money market growth.

Total shareholder's equity at March 31, 2015 was $12.2 billion, an increase of $158 million compared to December 31, 2014.

Capital

Beginning January 1, 2015, the Company began the transition period for the Basel III capital rules. As such, the Company will report Basel III capital ratios under the phase-in provisions for regulatory reporting purposes. Under these new provisions, the Company's Tier1 and CET1 ratios were 10.65% and 10.58%, respectively, at March 31, 2015 under the phase in provisions.

On March 11, 2015, the Company was informed that the Federal Reserve Board did not object to the Company's 2015 capital plan and capital actions proposed in the capital plan, including an increase in the annual common dividend from $102 million to $115 million. The common dividends are subject to approval by the Company's Board of Directors.

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 the Bank. Due to the net earnings restrictions on dividend distributions, the Bank was not permitted to pay any dividends at March 31, 2015 and December 31, 2014 without regulatory approval.

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

Analysis of Results of Operations

Consolidated net income attributable to shareholder totaled $141.1 million and $114.5 million for the three months ended March 31, 2015 and 2014, respectively. The Company’s results of operations for the three months ended March 31, 2015 reflected higher noninterest income due to higher levels of investment banking and advisory fees and investment securities gains.

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Net Interest Income and Net Interest Margin

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

Three Months Ended March 31, 2015 and 2014

Net interest income totaled $509.0 million for the three months ended March 31, 2015 compared to $495.3 million for the three months ended March 31, 2014.

Net interest income on a fully taxable equivalent basis totaled $527.6 million for the three months ended March 31, 2015 compared with $512.4 million for the three months ended March 31, 2014. Net interest income on a fully taxable equivalent basis increased $15.1 million in 2015 compared to 2014. The increase in net interest income was primarily the result of an increase in total earning assets driven by an increase in loans as well as an increase in trading account securities. Offsetting this increase was an increase in total interest bearing liabilities due to higher balances in total interest bearing deposits and other short term borrowings for the three months ended March 31, 2015 compared to the same period in 2014.

Net interest margin was 2.91% for the three months ended March 31, 2015 compared to 3.34% for the three months ended March 31, 2014. The 43 basis point decline in net interest margin primarily reflects the runoff of higher yielding covered loans as well as the impact of lower yields in the AFS investment securities portfolio.

The fully taxable equivalent yield for the three months ended March 31, 2015 for the loan portfolio was 3.85% compared to 4.06% for the same period in 2014. The yield on non-covered loans for the three months ended March 31, 2015 was 3.77% compared to 3.72% for the corresponding period in 2014. The yield on covered loans for the three months ended March 31, 2015 was 12.71% compared to 28.56% for the corresponding period in 2014. The loss sharing agreement for commercial loans expired in the fourth quarter of 2014. Upon expiration, the income associated with these commercial loans is now included in non-covered loans interest income. The decrease in yield on covered loans was primarily due to the impact of the quarterly reassessment of expected future cash flows.

The fully taxable equivalent yield on the investment securities portfolio was 2.13% for the three months ended March 31, 2015, compared to 2.45% for the three months ended March 31, 2014. The 32 basis point decrease was primarily driven by proceeds from the sale of higher yielding investment securities, and from prepayments, maturities and calls of investment securities that have been reinvested into investment securities with lower market rates due to a lower rate environment.

The average rate paid on interest bearing deposits was 0.64% for the three months ended March 31, 2015 compared to 0.55% for the three months ended March 31, 2014. The nine basis point increase in the average rate paid was driven by increases in rates on savings and money market accounts and certificates and other time deposits.

The average rate on FHLB and other borrowings for the three months ended March 31, 2015 was 1.59% compared to 1.55% for the corresponding period in 2014.

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

Table 1 Consolidated Average Balance and Yield/ Rate Analysis
	Three Months Ended March 31, 2015							Three Months Ended March 31, 2014							Change Due To
	Average Balance			Income/Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/Rate		Volume			Yield/Rate			Total
	(Dollars in Thousands)
Assets:
Interest earning assets:
Non-covered loans	$	58,325,525		$	542,609	3.77	%	$	51,222,305		$	469,824	3.72	%	$	65,995		$	6,790		$	72,785
Covered Loans	487,524			15,280		12.71		720,816			50,768		28.56		(13,072		)	(22,416		)	(35,488		)
Loans (1) (2) (3)	58,813,049			557,889		3.85		51,943,121			520,592		4.06		52,923			(15,626		)	37,297
Investment securities – AFS (tax exempt)(3)	426,278			4,362		4.15		511,046			5,453		4.33		(875		)	(217		)	(1,092		)
Investment securities – AFS (taxable)	9,532,315			45,368		1.93		8,141,538			45,541		2.27		29,320			(29,492		)	(172		)
Total investment securities – AFS	9,958,593			49,730		2.03		8,652,584			50,994		2.39		28,445			(29,709		)	(1,264		)
Investment securities – HTM (tax exempt) (3)	1,111,793			8,487		3.10		1,198,061			8,957		3.03		(1,546		)	1,075			(471		)
Investment securities – HTM (taxable)	248,603			1,176		1.92		307,337			1,416		1.87		(482		)	242			(240		)
Total investment securities - HTM	1,360,396			9,663		2.88		1,505,398			10,373		2.79		(2,028		)	1,317			(711		)
Trading account securities (3)	3,011,924			9,614		1.29		83,622			519		2.52		10,987			(1,892		)	9,095
Other (4) (5)	475,641			996		0.85		22,428			47		0.85		949			—			949
Total earning assets	73,619,603			627,892		3.46		62,207,153			582,525		3.80		91,276			(45,910		)	45,366
Noninterest earning assets:
Cash and due from banks	3,042,002							3,171,215
Allowance for loan losses	(691,535		)					(702,748		)
Net unrealized gain (loss) on investment securities available for sale	67,067							38,545
Other noninterest earning assets	9,050,018							8,644,979
Total assets	$	85,087,155						$	73,359,144
Liabilities:
Interest bearing liabilities:
Interest bearing demand deposits	$	7,634,040		3,037		0.16		$	7,491,112		2,997		0.16		136			(96		)	40
Savings and money market accounts	23,790,189			26,898		0.46		19,581,890			15,666		0.32		3,843			7,389			11,232
Certificates and other time deposits	12,614,526			39,645		1.27		12,360,560			34,491		1.13		732			4,422			5,154
Foreign office deposits	148,945			73		0.20		123,141			62		0.20		22			(11		)	11
Total interest bearing deposits	44,187,700			69,653		0.64		39,556,703			53,216		0.55		4,733			11,704			16,437
FHLB and other borrowings	4,880,657			19,106		1.59		4,289,004			16,364		1.55		2,307			435			2,742
Federal funds purchased and securities sold under agreements to repurchase (5)	939,813			1,326		0.57		941,171			500		0.22		(5		)	831			826
Other short-term borrowings	3,150,252			10,248		1.32		12,553			26		0.84		10,199			23			10,222
Total interest bearing liabilities	53,158,422			100,333		0.77		44,799,431			70,106		0.63		17,234			12,993			30,227
Noninterest bearing deposits	17,933,517							15,652,987
Other noninterest bearing liabilities	1,878,784							1,290,879
Total liabilities	72,970,723							61,743,297
Shareholder’s equity	12,116,432							11,615,847
Total liabilities and shareholder’s equity	$	85,087,155						$	73,359,144
Net interest income/net interest spread				$	527,559	2.69	%				$	512,419	3.17	%	$	74,042		$	(58,903	)	$	15,139
Net interest margin						2.91	%						3.34	%
Taxable equivalent adjustment				18,530							17,120
Net interest income				$	509,029						$	495,299

(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 reflect impact of balance sheet offsetting. See Note 6, Assets and Liabilities Subject to Enforceable Master Netting Arrangements.

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Provision for Loan Losses

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

Three Months Ended March 31, 2015 and 2014

For the three months ended March 31, 2015, the Company recorded $42.0 million of provision for loan losses compared to $37.3 million of provision for loan losses for the three months ended March 31, 2014. The increase in provision for loan losses for the three months ended March 31, 2015 as compared to the three months ended March 31, 2014 was primarily attributable to loan growth. The Company recorded net charge-offs of $25.2 million during the three months ended March 31, 2015 compared to $30.3 million during the corresponding period in 2014. Net charge-offs were 0.17% of average loans for the three months ended March 31, 2015 compared to 0.24% of average loans for the three months ended March 31, 2014.

For further discussion and analysis of the allowance for loan losses, refer to the discussion of lending activities found later in this section. Also, refer to Note 3, 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
	Three Months Ended   March 31,
	2015			2014
	(In Thousands)
Service charges on deposit accounts	$	53,284		$	53,391
Card and merchant processing fees	26,183			24,304
Retail investment sales	25,146			26,564
Investment banking and advisory fees	30,334			22,196
Asset management fees	8,096			10,758
Corporate and correspondent investment sales	6,259			8,656
Mortgage banking income	8,159			4,276
Bank owned life insurance	4,788			3,967
Investment securities gains, net	32,832			16,434
Loss on prepayment of FHLB and other borrowings	(2,549		)	(458		)
Other	56,738			49,240
Total noninterest income	$	249,270		$	219,328

Three Months Ended March 31, 2015 and 2014

Noninterest income was $249.3 million for the three months ended March 31, 2015 compared to $219.3 million for the three months ended March 31, 2014. The increase in noninterest income was largely attributable to increases in investment banking and advisory fees, mortgage banking income, investment securities gains as well as an increase in other noninterest income.

Investment banking and advisory fees primarily represents income from BSI, the Company's broker-dealer subsidiary. Income from investment banking and advisory fees increased to $30.3 million for the three months ended March 31, 2015, compared to $22.2 million for the three months ended March 31, 2014 due primarily to an increase in debt capital market fees during the first quarter of 2015.

Mortgage banking income for the three months ended March 31, 2015 was $8.2 million compared to $4.3 million for the three months ended March 31, 2014. Mortgage banking income for the three months ended March 31, 2015

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included $8.4 million of origination fees and gains on sales of mortgage loans as well as losses of $62 thousand related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. Mortgage banking income for the three months ended March 31, 2014 included $4.7 million of origination fees and gains on sales of mortgage loans and losses of $328 thousand related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. The increase in mortgage banking income for the three months ended March 31, 2015 compared to the corresponding period in 2014 was primarily driven by the lower interest rate environment during the first quarter of 2015 which contributed to higher refinance volume at higher margins compared to the same period in 2014.

Investment securities gains, net increased to $32.8 million for the three months ended March 31, 2015, compared to $16.4 million in the three months ended March 31, 2014, see "—Investment Securities" for more information related to the investment securities sales.

Other income is comprised of income recognized that does not typically fit into one of the other noninterest income categories and includes various fees associated with letters of credit, syndications, ATMs and foreign exchange. For the three months ended March 31, 2015, other income increased by $7.5 million primarily due to an increase in miscellaneous fees.

Noninterest Expense

The following table presents the components of noninterest expense.

Table 3 Noninterest Expense
	Three Months Ended   March 31,
	2015		2014
	(In Thousands)
Salaries, benefits and commissions	$	259,262	$	262,569
Equipment	58,141		53,738
Professional services	46,559		46,399
Net occupancy	39,280		38,957
FDIC indemnification expense	28,789		31,618
Amortization of intangibles	10,687		12,534
Total securities impairment	285		146
Other	79,716		72,906
Total noninterest expense	$	522,719	$	518,867

Three Months Ended March 31, 2015 and 2014

Noninterest expense was $522.7 million for the three months ended March 31, 2015 compared to $518.9 million for the three months ended March 31, 2014. The higher level of noninterest expense was primarily attributable to increases in equipment expense and other noninterest expense. The increase in noninterest expense was partially offset by decreases in salaries, benefits and commissions and FDIC indemnification expense.

Salaries, benefits and commissions decreased to $259.3 million for the three months ended March 31, 2015 compared to $262.6 million for the three months ended March 31, 2014. The decrease of $3.3 million was attributable to lower benefit costs in the first quarter of 2015 compared to the first quarter of 2014.

Equipment expense increased by $4.4 million for the three months ended March 31, 2015 due primarily to increases in hardware and software maintenance of approximately $2.3 million and hardware depreciation and software amortization of $2.8 million related to upgrades of the Company's technology platform.

FDIC indemnification expense, which represents the amortization of changes in the FDIC indemnification asset and liability stemming from changes in credit expectations of covered loans, was $28.8 million during the three months

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ended March 31, 2015 compared to $31.6 million for the corresponding period in 2014. The decrease for the three months ended March 31, 2015 was primarily a result of the continued decline in the balance of the covered loan portfolio.

Other noninterest expense represents FDIC insurance, marketing, communications, postage, supplies, subscriptions, provision for unfunded commitments and gains and losses on the sales and write-downs of OREO. Other noninterest expense increased for the three months ended March 31, 2015 to $79.7 million compared to $72.9 million for the three months ended March 31, 2014 attributable to a $2.9 million increase in FDIC insurance expense, a $1.6 million increase in marketing and a $2.3 million increase in miscellaneous expense.

Income Tax Expense

Three Months Ended March 31, 2015 and 2014

The Company’s income tax expense totaled $51.8 million and $43.6 million for the three months ended March 31, 2015 and 2014, respectively. The effective tax rate was 26.8% for the three months ended March 31, 2015 and 27.5% for the three months ended March 31, 2014.The decrease in the effective tax rate for the three months ended March 31, 2015 compared to the three months ended March 31, 2014 was primarily driven by an increase in tax exempt income as a proportion of net income before income tax expense in 2015.

Analysis of Financial Condition

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

Investment Securities

As of March 31, 2015, the securities portfolio included $10.1 billion in available for sale securities and $1.4 billion in held to maturity securities for a total investment portfolio of $11.5 billion, a decrease of $110 million compared with December 31, 2014.

During the three months ended March 31, 2015, the Company received proceeds of $1.1 billion related to the sale of U.S. Treasury and other U.S. government agencies, mortgage-backed securities, collateralized mortgage obligations and states and political subdivisions classified as available for sale which resulted in net gains of $32.8 million. During the three months ended March 31, 2014, the Company received proceeds of $431 million from the sale of mortgage-backed securities and collateralized mortgage obligations classified as available for sale which resulted in net gains of $16.4 million.

Lending Activities

Average loans and loans held for sale, net of unearned income, represented 79.9% of average interest-earnings assets at March 31, 2015, compared to 83.0% at December 31, 2014. The Company groups its loans into portfolio segments based on internal classifications reflecting the manner in which the allowance for loan losses is established and how credit risk is measured, monitored and reported. Commercial loans are comprised of commercial, financial and agricultural, real estate-construction, and commercial real estate–mortgage loans. Consumer loans are comprised of residential real-estate mortgage, equity lines of credit, equity loans, credit cards, consumer direct and consumer indirect loans. The Company also has a portfolio of covered loans that were acquired in the FDIC-assisted acquisition of certain assets and liabilities of Guaranty Bank.

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The following table presents the composition of the loan portfolio.

Table 4 Loan Portfolio
	March 31, 2015		December 31, 2014
	(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	24,448,964	$	23,828,537
Real estate – construction	2,325,495		2,154,652
Commercial real estate – mortgage	9,920,583		9,877,206
Total commercial loans	$	36,695,042	$	35,860,395
Consumer loans:
Residential real estate – mortgage	$	14,000,868	$	13,922,656
Equity lines of credit	2,325,884		2,304,784
Equity loans	635,295		634,968
Credit card	600,030		630,456
Consumer direct	707,251		652,927
Consumer indirect	3,105,533		2,870,408
Total consumer loans	$	21,374,861	$	21,016,199
Covered loans	488,560		495,190
Total loans	$	58,558,463	$	57,371,784
Loans held for sale	198,488		154,816
Total loans and loans held for sale	$	58,756,951	$	57,526,600

Loans and loans held for sale, net of unearned income, totaled $58.8 billion at March 31, 2015, an increase of $1.2 billion from December 31, 2014. The increase in total loans was primarily driven by growth in commercial loans as well as increases in the residential real estate - mortgage and consumer indirect loan portfolios.

See Note 3, Loans and Allowance for Loan Losses, 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 $451 million at March 31, 2015 compared to $420 million at December 31, 2014. The increase in nonperforming assets, excluding covered assets, was primarily due to a $35 million increase in nonaccrual loans. As a percentage of total loans and loans held for sale and other real estate, nonperforming assets were 0.77% at March 31, 2015 compared with 0.73% at December 31, 2014.

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The Company defines potential problem loans as commercial noncovered loans rated substandard or doubtful that do not meet the definition of nonaccrual, TDR or 90 days past due and still accruing. See Note 3, 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.

Table 5 Potential Problem Loans
	March 31, 2015		December 31, 2014
	(In Thousands)
Commercial, financial and agricultural	$	204,218	$	111,919
Real estate – construction	579		214
Commercial real estate – mortgage	56,472		55,517
	$	261,269	$	167,650

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

Table 6 Asset Quality
	March 31, 2015		December 31, 2014
	(In Thousands)
Nonaccrual loans:
Commercial, financial and agricultural	$	95,318	$	61,157
Real estate – construction	7,781		7,964
Commercial real estate – mortgage	87,931		89,736
Residential real estate – mortgage	107,051		108,357
Equity lines of credit	34,597		32,874
Equity loans	18,313		19,029
Credit card	—		—
Consumer direct	2,010		799
Consumer indirect	4,102		2,624
Covered	179		114
Total nonaccrual loans	357,282		322,654
Nonaccrual loans held for sale	257		—
Total nonaccrual loans and loans held for sale	$	357,539	$	322,654
Accruing TDRs: (1)
Commercial, financial and agricultural	$	9,632	$	10,127
Real estate – construction	2,237		2,112
Commercial real estate – mortgage	35,292		39,841
Residential real estate – mortgage	70,299		69,408
Equity lines of credit	—		—
Equity loans	40,432		41,197
Credit card	—		—
Consumer direct	180		298
Consumer indirect	—		—
Covered	—		—
Total TDRs	158,072		162,983
TDRs classified as loans held for sale	—		—
Total TDRs (loans and loans held for sale)	$	158,072	$	162,983
Loans 90 days past due and accruing:
Commercial, financial and agricultural	$	2,901	$	1,610
Real estate – construction	392		477
Commercial real estate – mortgage	2,542		628
Residential real estate – mortgage	3,195		2,598
Equity lines of credit	1,995		2,679
Equity loans	703		997
Credit card	8,618		9,441
Consumer direct	2,426		2,296
Consumer indirect	2,576		2,771
Covered	45,402		47,957
Total loans 90 days past due and accruing	70,750		71,454
Loans held for sale 90 days past due and accruing	—		—
Total loans and loans held for sale 90 days past due and accruing	$	70,750	$	71,454
Other real estate	$	17,764	$	20,600
Other repossessed assets	$	3,823	$	3,920

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

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

Table 7 Nonperforming Assets
	March 31, 2015		December 31, 2014
	(In Thousands)
Nonaccrual loans	$	357,539	$	322,654
Loans 90 days or more past due and accruing (1)	70,750		71,454
TDRs 90 days or more past due and accruing	820		1,722
Nonperforming loans	429,109		395,830
OREO	17,764		20,600
Other repossessed assets	3,823		3,920
Total nonperforming assets	$	450,696	$	420,350

(1) Excludes loans classified as TDRs.

Table 8 Asset Quality Ratios
	March 31, 2015		December 31, 2014
	(In Thousands)
Asset Quality Ratios:
Nonperforming loans and loans held for sale as a percentage of loans and loans held for sale (1)	0.73	%	0.69	%
Nonperforming assets as a percentage of loans and loans held for sale, other real estate, and other repossessed assets (2)	0.77	%	0.73	%
Allowance for loan losses as a percentage of loans	1.20	%	1.19	%
Allowance for loan losses as a percentage of nonperforming loans (3)	163.66	%	173.06	%

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

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

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

The current inventory of other real estate totaled $18 million at March 31, 2015 compared to $21 million at December 31, 2014.

The following table provides a rollforward of OREO.

Table 9 Rollforward of Other Real Estate Owned
	Three Months Ended March 31,
	2015			2014
	(In Thousands)
Balance at beginning of period	$	20,600		$	23,228
Transfer of loans and loans held for sale to OREO	2,718			8,920
Sales of OREO	(4,295		)	(5,438		)
Write-downs of OREO	(1,259		)	(893		)
Balance at end of period	$	17,764		$	25,817

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

Table 10 Rollforward of Nonaccrual Loans
	Three Months Ended March 31,
	2015			2014
	(In Thousands)
Balance at beginning of period,	$	322,540		$	436,290
Additions	113,595			94,973
Returns to accrual	(12,066		)	(24,630		)
Loan sales	(320		)	(39,949		)
Payments and paydowns	(25,640		)	(31,461		)
Transfers to OREO	(2,069		)	(7,192		)
Charge-offs	(38,680		)	(44,991		)
Balance at end of period	$	357,360		$	383,040

When borrowers are experiencing financial difficulties, the Company, in order to assist the borrowers in repaying the principal and interest owed to the Company, may make certain modifications to the loan agreement. To facilitate this process, a concessionary modification that would not otherwise be considered may be granted resulting in a classification of the loan as a TDR. Within each of the Company’s loan classes, TDRs typically involve modification of the loan interest rate to a below market rate or an extension or deferment of the loan. The financial effects of TDRs are reflected in the components that comprise the allowance for loan losses in either the amount of charge-offs or loan loss provision and period-end allowance levels. All TDRs are considered to be impaired loans. Refer to Note 3, 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
	Three Months Ended March 31,
	2015			2014
	(In Thousands)
Balance at beginning period	$	243,374		$	310,282
New TDRs	4,825			9,415
Payments/Payoffs	(12,891		)	(19,542		)
Charge-offs	(1,660		)	(1,798		)
Loan sales	—			(2,039		)
Transfer to ORE	—			(3,896		)
Balance at end of period	$	233,648		$	292,422

The Company’s aggregate recorded investment in impaired loans modified through TDRs excluding covered loans decreased to $234 million at March 31, 2015 from $243 million at December 31, 2014. Included in these amounts are $158 million at March 31, 2015 and $163 million at December 31, 2014 of accruing TDRs, excluding covered loans. Accruing TDRs are not considered nonperforming because they are performing in accordance with the restructured terms.

The Company's allowance for loan losses is largely driven by risk ratings assigned to commercial loans, updated borrower credit scores on consumer loans and borrower delinquency history in both commercial and consumer portfolios.  As such, the provision for credit 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.

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Allowance for Loan Losses

Management’s policy is to maintain the allowance for loan losses at a level sufficient to absorb estimated probable incurred losses in the loan portfolio. See Note 3, 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 $702 million at March 31, 2015, from $685 million at December 31, 2014. The ratio of the allowance for loan losses to total loans was 1.20% at March 31, 2015 compared to 1.19% at December 31, 2014. Nonperforming loans were $429 million at March 31, 2015 compared to $396 million at December 31, 2014. The allowance attributable to individually impaired loans was $61 million at March 31, 2015 compared to $63 million at December 31, 2014.

Net charge-offs were 0.17% of average loans for the three months ended March 31, 2015 compared to 0.24% of average loans for the three months ended March 31, 2014. The decrease in net charge-offs for the three months ended March 31, 2015 as compared to the corresponding period in 2014 was primarily driven by decreases in the residential real estate - mortgage, equity lines of credit and equity loans portfolios offset by increases in commercial, financial and agricultural and consumer indirect portfolios.

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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 13 Summary of Loan Loss Experience
	Three Months Ended   March 31,
	2015			2014
	(Dollars in Thousands)
Average loans outstanding during the period	$	58,713,393		$	51,864,597
Allowance for loan losses, beginning of period	$	685,041		$	700,719
Charge-offs:
Commercial, financial and agricultural	6,619			4,934
Real estate – construction	34			224
Commercial real estate – mortgage	601			2,422
Residential real estate – mortgage	3,152			7,266
Equity lines of credit	2,809			5,819
Equity loans	793			2,623
Credit card	8,532			9,334
Consumer direct	5,336			5,826
Consumer indirect	10,677			6,544
Covered	873			216
Total charge-offs	39,426			45,208
Recoveries:
Commercial, financial and agricultural	2,182			4,985
Real estate – construction	1,460			1,139
Commercial real estate – mortgage	398			399
Residential real estate – mortgage	2,225			1,209
Equity lines of credit	866			981
Equity loans	422			504
Credit card	698			655
Consumer direct	1,858			1,884
Consumer indirect	4,109			2,790
Covered	—			342
Total recoveries	14,218			14,888
Net charge-offs	25,208			30,320
Total provision for loan losses	42,031			37,266
Allowance for loan losses, end of period	$	701,864		$	707,665
Net charge-offs to average loans	0.17		%	0.24		%

Concentrations

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

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 $24.4 billion at March 31, 2015, compared to $23.8 billion at December 31, 2014. This segment consists primarily of large national and international companies

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and small to mid-sized companies. This portfolio segment also contains owner occupied commercial real estate loans. Loans in this portfolio are generally underwritten individually and are secured with the assets of the company, and/or the personal guarantees of the business owners. The Company minimizes the risk associated with this portfolio segment by various means, including maintaining prudent advance rates, financial covenants, and obtaining personal guarantees from the principals of the borrower.

Beginning late in 2014, oil prices began to decline and, as a result, the Company has been closely monitoring the situation for the potential impact on its energy lending portfolio. As shown in Table 14, the Company's energy industry loan balances at March 31, 2015 were approximately $3.7 billion and represented approximately 6% of the Company's total loan portfolio. This amount is comprised of loans directly related to energy, such as oil field services, refining and support, exploration and production, and pipeline transportation of natural gas, crude oil and other refined petroleum products. The Company employs a variety of risk management strategies, including the use of concentration limits, underwriting standards and continuous monitoring. As of March 31, 2015, the Company has observed only a modest negative movement of the internal risk ratings in the energy lending portfolio. The overall level of loans rated special mention or lower in this portfolio is 3.46%. However, if the current low level of oil prices continues, 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.

The following table provides details related to the commercial, financial, and agricultural portfolio segment.

Table 14 Commercial, Financial and Agricultural
	March 31, 2015								December 31, 2014
Industry	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)
Autos, Components and Durable Goods	$	695,920	$	335	$	—	$	—	$	576,185	$	380	$	—	$	—
Basic Materials	1,127,714		72		—		—		1,006,900		73		—		—
Capital Goods & Industrial Services	2,280,556		4,534		19		—		2,155,565		4,673		19		—
Construction & Infrastructure	702,301		2,090		200		—		726,504		2,627		208		1,567
Consumer & Healthcare	2,935,725		3,297		457		16		2,787,797		4,673		843		2
Energy	3,712,706		11,564		—		—		3,612,145		6,186		—		—
Financial Services	1,204,606		1,231		9		—		1,402,784		223		10		3
General Corporates	1,193,045		2,682		167		2,611		1,202,276		2,899		305		38
Institutions	2,264,522		10,827		7,520		—		2,219,357		9,724		7,175		—
Leisure	1,850,993		3,832		249		—		1,832,870		3,850		248		—
Real Estate	1,617,256		2,137		—		—		1,428,412		45		—		—
Retailers	2,380,637		32,474		137		212		2,333,268		5,172		296		—
Telecoms, Technology & Media	1,170,238		19,042		—		15		1,177,541		19,157		—		—
Transportation	649,139		1,190		857		47		723,088		1,443		1,005		—
Utilities	663,606		11		17		—		643,845		32		18		—
Total Commercial, Financial and Agricultural	$	24,448,964	$	95,318	$	9,632	$	2,901	$	23,828,537	$	61,157	$	10,127	$	1,610

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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 $9.9 billion at both March 31, 2015 and December 31, 2014, and real estate - construction loans totaled $2.3 billion and $2.2 billion at March 31, 2015, and December 31, 2014, respectively.

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

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

Table 15 Commercial Real Estate
	March 31, 2015								December 31, 2014
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
	(In Thousands)
Alabama	$	610,772	$	7,463	$	3,482	$	—	$	623,029	$	9,328	$	3,540	$	—
Arizona	754,419		5,216		859		—		807,315		5,757		2,748		—
California	1,104,090		1,569		792		—		1,182,095		2,182		794		—
Colorado	476,928		10,240		11,164		—		464,992		12,996		11,364		—
Florida	904,678		8,914		162		—		908,329		7,567		168		—
New Mexico	162,145		6,300		29		—		176,896		6,149		31		—
Texas	3,144,708		30,895		2,193		2,542		3,128,072		31,494		2,446		628
Other	2,762,843		17,334		16,611		—		2,586,478		14,263		18,750		—
	$	9,920,583	$	87,931	$	35,292	$	2,542	$	9,877,206	$	89,736	$	39,841	$	628

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Table 16 Real Estate – Construction
	March 31, 2015								December 31, 2014
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
	(In Thousands)
Alabama	$	67,297	$	111	$	346	$	392	$	67,466	$	117	$	426	$	—
Arizona	168,082		3,299		—		—		155,379		2,852		—		—
California	253,235		—		25		—		228,284		24		31		—
Colorado	84,218		—		—		—		74,526		—		—		—
Florida	188,142		102		—		—		161,322		88		—		—
New Mexico	8,172		37		58		—		13,977		—		72		207
Texas	1,104,271		3,239		1,808		—		1,013,865		4,089		1,583		270
Other	452,078		993		—		—		439,833		794		—		—
	$	2,325,495	$	7,781	$	2,237	$	392	$	2,154,652	$	7,964	$	2,112	$	477

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 $14.0 billion at March 31, 2015 compared to $13.9 billion at December 31, 2014. 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
	March 31, 2015								December 31, 2014
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
	(In Thousands)
Alabama	$	1,231,029	$	10,341	$	14,589	$	114	$	1,292,303	$	12,905	$	14,824	$	97
Arizona	1,408,330		6,943		8,858		253		1,460,922		8,806		10,229		310
California	2,834,223		7,687		2,019		439		2,607,029		12,051		3,475		—
Colorado	1,213,092		6,720		8,374		6		1,237,629		3,304		3,557		6
Florida	1,567,075		15,741		9,540		294		1,541,425		17,322		11,317		279
New Mexico	233,553		3,418		1,646		—		243,755		1,478		2,146		—
Texas	4,949,568		31,653		17,335		2,022		5,113,914		27,156		20,425		1,487
Other	563,998		24,548		7,938		67		425,679		25,335		3,435		419
	$	14,000,868	$	107,051	$	70,299	$	3,195	$	13,922,656	$	108,357	$	69,408	$	2,598

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

Table 18 Residential Real Estate - Mortgage
	March 31, 2015								December 31, 2014
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
	(In Thousands)
Below 621	$	653,195	$	71,390	$	22,997	$	1,996	$	569,353	$	68,951	$	25,474	$	1,550
621-680	1,314,984		13,916		23,817		196		1,280,517		17,347		22,469		214
681 – 720	2,237,842		8,275		10,302		220		2,289,138		12,808		9,747		76
Above 720	8,929,562		1,865		11,999		224		8,823,328		2,205		10,573		341
Unknown	865,285		11,605		1,184		559		960,320		7,046		1,145		417
	$	14,000,868	$	107,051	$	70,299	$	3,195	$	13,922,656	$	108,357	$	69,408	$	2,598

Equity lines of credit and equity loans totaled $3.0 billion and $2.9 billion at March 31, 2015 and December 31, 2014, respectively. 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
	March 31, 2015								December 31, 2014
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
	(In Thousands)
Alabama	$	609,774	$	9,617	$	10,410	$	713	$	635,845	$	9,524	$	10,368	$	911
Arizona	418,337		9,477		6,743		375		429,133		9,877		6,778		292
California	231,226		535		139		—		172,193		905		181		145
Colorado	222,383		6,491		3,871		—		231,088		6,636		3,961		68
Florida	406,695		9,146		6,999		535		415,537		8,178		7,064		470
New Mexico	56,894		1,599		947		177		57,917		1,387		1,030		509
Texas	966,106		14,371		10,567		676		951,219		14,298		11,042		1,081
Other	49,764		1,674		756		222		46,820		1,098		773		200
	$	2,961,179	$	52,910	$	40,432	$	2,698	$	2,939,752	$	51,903	$	41,197	$	3,676

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

Table 20 Equity Loans and Lines
	March 31, 2015								December 31, 2014
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
	(In Thousands)
Below 621	$	245,050	$	24,014	$	13,000	$	2,558	$	248,517	$	23,910	$	13,684	$	2,958
621-680	457,024		17,996		15,451		140		446,053		17,000		15,972		422
681 – 720	565,739		7,509		6,886		—		554,301		8,057		6,632		66
Above 720	1,666,016		2,567		4,973		—		1,668,734		2,151		4,779		191
Unknown	27,350		824		122		—		22,147		785		130		39
	$	2,961,179	$	52,910	$	40,432	$	2,698	$	2,939,752	$	51,903	$	41,197	$	3,676

Other Consumer

The Company also operates a consumer finance unit which purchases loan contracts for indirect automobile consumer financing. These loans are centrally underwritten using industry accepted tools and underwriting guidelines. The Company also originates credit card loans and other consumer direct loans that are centrally underwritten and sourced from the Company's branches. Total credit card, consumer direct and consumer indirect loans at March 31, 2015 were $4.4 billion, or 7.5% of the total loan portfolio compared to $4.2 billion, or 7.2% of the total loan portfolio at December 31, 2014.

Foreign Exposure

As of March 31, 2015, 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. 

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Funding Activities

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

At March 31, 2015, the Company's and the Bank's credit ratings were as follows:

Table 21 Credit Ratings
	As of March 31, 2015
	Standard & Poor’s	Moody’s	Fitch
BBVA Compass Bancshares, Inc.
Long-term rating	BBB	Baa3	BBB+
Short-term rating	A-2	—	F2
Outlook	Stable	Stable	Stable
Compass Bank
Long-term rating	BBB	Baa2	BBB+
Short term rating	A-2	P-2	F2
Outlook	Stable	Under Review	Stable

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

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Deposits

Total deposits increased by $1.7 billion from December 31, 2014 to March 31, 2015. At both March 31, 2015 and December 31, 2014, total deposits included $3.7 billion of brokered deposits. The following table presents the Company’s deposits segregated by major category:

Table 22 Composition of Deposits
	March 31, 2015				December 31, 2014
	Balance		% of Total		Balance		% of Total
	(Dollars in Thousands)
Noninterest-bearing demand deposits	$	18,599,702	29.6	%	$	17,169,412	28.1	%
Interest-bearing demand deposits	7,476,824		11.9		7,738,682		12.6
Savings and money market	24,062,893		38.2		23,438,164		38.3
Time deposits	12,523,388		19.9		12,666,959		20.7
Foreign office deposits-interest-bearing	237,874		0.4		176,499		0.3
Total deposits	$	62,900,681	100.0	%	$	61,189,716	100.0	%

Total deposits increased by $1.7 billion from December 31, 2014 to March 31, 2015 due to growth in noninterest bearing demand deposits, and savings and money market accounts. Marketing efforts and new product rollouts were the primary drivers of the growth in noninterest bearing demand deposits and savings and money market accounts.

Borrowed Funds

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

Short-term borrowings are primarily in the form of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings. At both March 31, 2015 and December 31, 2014, the $882 million and $694 million of federal funds purchased included in short-term borrowings was a result of customer activity.

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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
	Maximum Outstanding at Any Month End		Average Balance		Average Interest Rate		Ending Balance		Average Interest Rate at Period End
	(Dollars in Thousands)
Balance at March 31, 2015
Federal funds purchased	$	975,785	$	811,861	0.25	%	$	882,305	0.26	%
Securities sold under agreements to repurchase	136,895		127,952		0.11		27,378		0.21
Other short-term borrowings	3,377,694		3,150,252		1.32		3,377,694		1.16
	$	4,490,374	$	4,090,065			$	4,287,377
Balance at December 31, 2014
Federal funds purchased	$	960,935	$	722,753	0.25	%	$	693,819	0.27	%
Securities sold under agreements to repurchase	435,684		212,686		0.23		435,684		0.73
Other short-term borrowings	2,545,724		385,461		1.38		2,545,724		1.62
	$	3,942,343	$	1,320,900			$	3,675,227

At March 31, 2015, short-term borrowings totaled $4.3 billion, an increase of $612 million, or 16.7% compared to December 31, 2014. The increase in total short-term borrowings was primarily driven by an $832 million increase in other short-term borrowings related to U.S. Treasury short positions held by the Parent's broker dealer subsidiary, BSI.

At March 31, 2015 and December 31, 2014, FHLB and other borrowings were $4.9 billion and $4.8 billion, respectively. During three months ended March 31, 2015, the Company had proceeds of $500 million received from FHLB and other borrowings and repayments were approximately $403 million.

Shareholder’s Equity

Total shareholder's equity at March 31, 2015 was $12.1 billion compared to $12.0 billion at December 31, 2014, an increase of $158 million. Shareholder's equity increased $141 million due to earnings attributable to shareholder during the period. In addition, accumulated other comprehensive income increased $24 million, primarily as a result of an increase in the fair value of investment securities available for sale.

Risk Management

In the normal course of business, the Company encounters inherent risk in its business activities. The Company’s risk management approach includes processes for identifying, assessing, managing, monitoring and reporting risks. Management has grouped the risks facing its operations into the following categories: credit risk, structural interest rate, market and liquidity risk, operational risk, strategic and business risk, 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.

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Interest Rate Market Risk

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

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

The estimated impact on the Company’s net interest income sensitivity over a one-year time horizon at March 31, 2015, is shown in the table below along with comparable prior-period information. Such analysis assumes a gradual and sustained parallel shift in interest rates, expectations of balance sheet growth and composition and the Company’s estimate of how interest-bearing transaction accounts would reprice in each scenario using current yield curves at March 31, 2015 and 2014.

Table 24 Net Interest Income Sensitivity
	Estimated % Change in Net Interest Income
	March 31, 2015		March 31, 2014
Rate Change
+ 200 basis points	9.77	%	7.67	%
+ 100 basis points	4.87		3.78

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
	March 31, 2015		March 31, 2014
Rate Change
+ 300 basis points	(4.58)	%	(3.96)	%
+ 200 basis points	(2.65	)	(2.31	)
+ 100 basis points	(1.05	)	(1.03	)

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

Derivatives

The Company uses derivatives primarily to manage economic risks related to commercial loans, mortgage banking operations, long-term debt and other funding sources. The Company also uses derivatives to facilitate transactions on behalf of its clients. As of March 31, 2015, the Company had derivative financial instruments outstanding with notional amounts of $28.7 billion. The estimated net fair value of open contracts was in an asset position of $142 million at March 31, 2015. For additional information about derivatives, refer to Note 5, Derivatives and Hedging, in the Notes to the Unaudited Condensed Consolidated Financial Statements.

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Liquidity Management

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

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

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

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

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

In addition to the Company’s financial performance and condition, liquidity may be impacted by the Parent’s structure as a bank holding company that is a separate legal entity from the Bank. The Parent requires cash for various operating needs including payment of dividends to its shareholder, the servicing of debt, and the payment of general corporate expenses. The primary source of liquidity for the Parent is dividends paid by the Bank. Applicable federal and state statutes and regulations impose restrictions on the amount of dividends that may be paid by the Bank. In addition to the formal statutes and regulations, regulatory authorities also consider the adequacy of the Bank’s total capital in relation to its assets, deposits and other such items. Due to the net earnings restrictions on dividend distributions under Alabama law, the Bank was not permitted to pay dividends at March 31, 2015 or December 31, 2014 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 dividends paid from the Parent must be set forth as capital actions in the Company's capital plans and not objected by the Federal Reserve Board before any dividends can be paid.

On March 11, 2015, the Company was informed that the Federal Reserve Board did not object to the Company's 2015 capital plan and capital actions proposed in the capital plan, including an increase in the annual common dividend from $102 million to $115 million. The common dividends are subject to approval by the Company's Board of Directors.

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.

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

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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 revises the minimum 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. These new rules, which introduce a new capital measure called CET1, specify that Tier 1 capital consist of CET1 and "Additional Tier 1 capital" instruments meeting specified requirements and expand the scope of the deductions/adjustments to capital as compared to existing regulations.

Under these new rules, the minimum capital ratios effective as of January 1, 2015 are as follows:

•4.5% CET1 Risk-Based Capital Ratio.

•6.0% Tier 1 Risk-Based Capital Ratio.

•8.0% Total Risk-Based Capital Ratio.

The new rules also introduce a new capital conservation buffer designed to absorb losses during periods of economic stress. The capital conservation buffer is composed entirely of CET1 and is maintained on top of these minimum risk-based capital ratios.

When fully phased-in on January 1, 2019,these new rules will require the Company and Bank to maintain such additional capital conservation buffer of 2.5% of CET1 to risk-weighted assets, effectively resulting in minimum ratios of CET1 to risk-weighted assets of at least 7%, Tier 1 capital to risk-weighted assets of at least 8.5%, and Total capital to risk-weighted assets of at least 10.5%.

The Company regularly performs stress testing on its capital levels and is required to periodically submit the Company’s capital plan to the banking regulators.

The following table sets forth the Transitional Basel III regulatory capital ratios at March 31, 2015 and the Basel I regulatory capital ratios at December 31, 2014.

Table 26  Capital Ratios
	March 31, 2015 (1)			December 31, 2014 (2)
	(Dollars in Thousands)
Risk-based capital:
Common Equity Tier 1 Capital	$	7,093,548		N/A
Tier 1 Capital	$	7,136,277		$	7,046,902
Total Qualifying Capital	$	8,376,793		$	8,254,184
Assets:
Total risk-adjusted assets (regulatory)	$	67,024,162		$	64,417,765
Ratios:
Common equity tier 1 capital ratio	10.58		%	N/A
Tier 1 risk-based capital ratio	10.65		%	10.94		%
Total risk-based capital ratio	12.50		%	12.81		%
Leverage ratio	8.92		%	9.09		%

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

(2) Calculated using the Basel 1 regulatory capital methodology applicable to the Company during 2014.

N/A = not applicable

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At March 31, 2015, 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 7, 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, 2014.

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

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

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compliance with local law. In order to comply with this requirement, the Company has requested relevant information from its affiliates globally.

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

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

Legacy contractual obligations related to counter indemnities. Before 2007, the BBVA Group issued certain counter indemnities to its non-Iranian customers in Europe for various business activities relating to Iran in support of guarantees provided by Bank Melli, three of which remained outstanding during the three months ended March 31, 2015. For the three months ended March 31, 2015, no payments or revenues (including fees and/or commissions) have been recorded in connection with these counter indemnities. In addition, in accordance with Council Regulation (EU) Nr. 267/2012 of March 23, 2012, payments of any amounts due to Bank Melli under these counter indemnities will be initially blocked and thereafter released upon authorization by the relevant Spanish authorities. The BBVA Group is committed to terminating these business relationships as soon as contractually possible and does not intend to enter into new business relationships involving Bank Melli.

Letters of credit. During the three months ended March 31, 2015, the BBVA Group had credit exposure to Bank Sepah arising from a letter of credit issued by Bank Sepah to a non-Iranian client of the BBVA Group in Europe. This letter of credit, which was granted before 2004, was used to secure a loan granted by the BBVA Group to a client in order to finance certain Iran-related activities. This loan was supported by the CESCE. The loan related to the client’s exportation of goods to Iran (consisting of goods relating to apelletizing plant for iron concentration and equipment). For the three months ended March 31, 2015, $6,946 of payments or revenues (including fees and/or commissions) have been recorded in connection with this letter of credit. These fees and commissions were previously reported in the Company's annual report on Form 10-K for the year ended December 31, 2014, as they related to payments made in 2014. Such payments were initially blocked by the BBVA Group in 2014 and thereafter released during the three months ended March 31, 2015 upon authorization by the relevant Spanish authorities. The BBVA Group is committed to terminating the outstanding business relationship with Bank Sepah as soon as contractually possible and does not intend to enter into new business relationships involving Bank Sepah.

Iranian embassy-related activity. The BBVA Group maintains bank accounts in Spain for three employees of the Iranian embassy in Spain. All three employees are Spanish citizens, and one of them has retired. Estimated gross revenues for the three months ended March 31, 2015, from embassy-related activity, which include fees and/or commissions, did not exceed $530. The BBVA Group does not allocate direct costs to fees and commissions and therefore has not disclosed a separate profit measure. The BBVA Group is committed to terminating these business relationships as soon as legally possible.

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Item 6. Exhibits

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

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

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SIGNATURES

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

Date: May 13, 2015	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

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