Loans And Allowance For Loan Losses | Loans and Allowance for Loan Losses Major classifications within the Company’s held to maturity loan portfolio at December 31, 2016 and 2015 are as follows: (In thousands) 2016 2015 Commercial: Business $ 4,776,365 $ 4,397,893 Real estate — construction and land 791,236 624,070 Real estate — business 2,643,374 2,355,544 Personal Banking: Real estate — personal 2,010,397 1,915,953 Consumer 1,990,801 1,924,365 Revolving home equity 413,634 432,981 Consumer credit card 776,465 779,744 Overdrafts 10,464 6,142 Total loans $ 13,412,736 $ 12,436,692 Loans to directors and executive officers of the Parent and the Bank, and to their associates, are summarized as follows: (In thousands) Balance at January 1, 2016 $ 63,737 Additions 547,001 Amounts collected (547,864 ) Amounts written off — Balance, December 31, 2016 $ 62,874 Management believes all loans to directors and executive officers have been made in the ordinary course of business with normal credit terms, including interest rate and collateral considerations, and do not represent more than a normal risk of collection. The activity in the table above includes draws and repayments on several lines of credit with business entities. There were no outstanding loans at December 31, 2016 to principal holders (over 10% ownership) of the Company’s common stock. The Company’s lending activity is generally centered in Missouri, Illinois, Kansas and other nearby states including Oklahoma, Colorado, Iowa, Ohio, Texas, and others. The Company maintains a diversified portfolio with limited industry concentrations of credit risk. Loans and loan commitments are extended under the Company’s normal credit standards, controls, and monitoring features. Most loan commitments are short or intermediate term in nature. Commercial loan maturities generally range from three to seven years. Collateral is commonly required and would include such assets as marketable securities and cash equivalent assets, accounts receivable and inventory, equipment, other forms of personal property, and real estate. At December 31, 2016 , unfunded loan commitments totaled $10.4 billion (which included $4.9 billion in unused approved lines of credit related to credit card loan agreements) which could be drawn by customers subject to certain review and terms of agreement. At December 31, 2016 , loans totaling $ 3.8 billion were pledged at the FHLB as collateral for borrowings and letters of credit obtained to secure public deposits. Additional loans of $ 1.7 billion were pledged at the Federal Reserve Bank as collateral for discount window borrowings. The Company has a net investment in direct financing and sales type leases of $523.9 million and $463.1 million at December 31, 2016 and 2015 , respectively, which is included in business loans on the Company’s consolidated balance sheets. This investment includes deferred income of $ 33.3 million and $ 29.4 million at December 31, 2016 and 2015 , respectively. The net investment in operating leases amounted to $ 19.0 million and $ 16.9 million at December 31, 2016 and 2015 , respectively, and is included in other assets on the Company’s consolidated balance sheets. Allowance for loan losses A summary of the activity in the allowance for losses during the previous three years follows: (In thousands) Commercial Personal Banking Total Balance at December 31, 2013 $ 94,189 $ 67,343 $ 161,532 Provision for loan losses (5,204 ) 34,735 29,531 Deductions: Loans charged off 4,548 48,225 52,773 Less recoveries 5,185 13,057 18,242 Net loans charged off (recoveries) (637 ) 35,168 34,531 Balance at December 31, 2014 89,622 66,910 156,532 Provision for loan losses (9,319 ) 38,046 28,727 Deductions: Loans charged off 4,057 46,993 51,050 Less recoveries 5,840 11,483 17,323 Net loans charged off (recoveries) (1,783 ) 35,510 33,727 Balance at December 31, 2015 82,086 69,446 151,532 Provision for loan losses 4,898 31,420 36,318 Deductions: Loans charged off 3,258 47,720 50,978 Less recoveries 7,635 11,425 19,060 Net loans charged off (recoveries) (4,377 ) 36,295 31,918 Balance at December 31, 2016 $ 91,361 $ 64,571 $ 155,932 The following table shows the balance in the allowance for loan losses and the related loan balance at December 31, 2016 and 2015 , disaggregated on the basis of impairment methodology. Impaired loans evaluated under ASC 310-10-35 include loans on non-accrual status which are individually evaluated for impairment and other impaired loans deemed to have similar risk characteristics, which are collectively evaluated. All other loans are collectively evaluated for impairment under ASC 450-20. Impaired Loans All Other Loans (In thousands) Allowance for Loan Losses Loans Outstanding Allowance for Loan Losses Loans Outstanding December 31, 2016 Commercial $ 1,817 $ 44,795 $ 89,544 $ 8,166,180 Personal Banking 1,292 19,737 63,279 5,182,024 Total $ 3,109 $ 64,532 $ 152,823 $ 13,348,204 December 31, 2015 Commercial $ 1,927 $ 43,027 $ 80,159 $ 7,334,480 Personal Banking 1,557 22,287 67,889 5,036,898 Total $ 3,484 $ 65,314 $ 148,048 $ 12,371,378 Impaired loans The table below shows the Company’s investment in impaired loans at December 31, 2016 and 2015 . These loans consist of all loans on non-accrual status and other restructured loans whose terms have been modified and classified as troubled debt restructurings under current accounting guidance. These restructured loans are performing in accordance with their modified terms, and because the Company believes it probable that all amounts due under the modified terms of the agreements will be collected, interest on these loans is being recognized on an accrual basis. They are discussed further in the "Troubled debt restructurings" section on page 76. (In thousands) 2016 2015 Non-accrual loans $ 14,283 $ 26,575 Restructured loans (accruing) 50,249 38,739 Total impaired loans $ 64,532 $ 65,314 The following table provides additional information about impaired loans held by the Company at December 31, 2016 and 2015 , segregated between loans for which an allowance for credit losses has been provided and loans for which no allowance has been provided. (In thousands) Recorded Investment Unpaid Principal Balance Related Allowance December 31, 2016 With no related allowance recorded: Business $ 7,375 $ 10,470 $ — Real estate – construction and land 557 752 — $ 7,932 $ 11,222 $ — With an allowance recorded: Business $ 29,924 $ 31,795 $ 1,318 Real estate – construction and land 69 72 3 Real estate – business 6,870 8,072 496 Real estate – personal 6,394 9,199 642 Consumer 5,281 5,281 57 Revolving home equity 584 584 1 Consumer credit card 7,478 7,478 592 $ 56,600 $ 62,481 $ 3,109 Total $ 64,532 $ 73,703 $ 3,109 December 31, 2015 With no related allowance recorded: Business $ 9,330 $ 11,777 $ — Real estate – construction and land 2,961 8,956 — Real estate – business 4,793 6,264 — Real estate – personal 373 373 — $ 17,457 $ 27,370 $ — With an allowance recorded: Business $ 18,227 $ 20,031 $ 1,119 Real estate – construction and land 1,227 2,804 63 Real estate – business 6,489 9,008 745 Real estate – personal 7,667 10,530 831 Consumer 5,599 5,599 63 Revolving home equity 704 852 67 Consumer credit card 7,944 7,944 596 $ 47,857 $ 56,768 $ 3,484 Total $ 65,314 $ 84,138 $ 3,484 Total average impaired loans during 2016 and 2015 are shown in the table below. 2016 2015 (In thousands) Commercial Personal Banking Total Commercial Personal Banking Total Average impaired loans: Non-accrual loans $ 17,294 $ 4,135 $ 21,429 $ 24,284 $ 5,449 $ 29,733 Restructured loans (accruing) 32,295 17,058 49,353 16,671 18,395 35,066 Total $ 49,589 $ 21,193 $ 70,782 $ 40,955 $ 23,844 $ 64,799 The table below shows interest income recognized during the years ended December 31, 2016 , 2015 and 2014 for impaired loans held at the end of each respective period. This interest relates to accruing restructured loans, as discussed previously. Years Ended December 31 (In thousands) 2016 2015 2014 Interest income recognized on impaired loans: Business $ 1,064 $ 495 $ 344 Real estate – construction and land 2 80 361 Real estate – business 171 122 153 Real estate – personal 152 187 208 Consumer 339 348 286 Revolving home equity 31 20 27 Consumer credit card 722 750 993 Total $ 2,481 $ 2,002 $ 2,372 Delinquent and non-accrual loans The following table provides aging information on the Company’s past due and accruing loans, in addition to the balances of loans on non-accrual status, at December 31, 2016 and 2015 . (In thousands) Current or Less Than 30 Days Past Due 30 – 89 Days Past Due 90 Days Past Due and Still Accruing Non-accrual Total December 31, 2016 Commercial: Business $ 4,763,274 $ 3,735 $ 674 $ 8,682 $ 4,776,365 Real estate – construction and land 789,633 1,039 — 564 791,236 Real estate – business 2,639,586 2,154 — 1,634 2,643,374 Personal Banking: Real estate – personal 1,995,724 9,162 2,108 3,403 2,010,397 Consumer 1,957,358 29,783 3,660 — 1,990,801 Revolving home equity 411,483 1,032 1,119 — 413,634 Consumer credit card 757,443 10,187 8,835 — 776,465 Overdrafts 10,014 450 — — 10,464 Total $ 13,324,515 $ 57,542 $ 16,396 $ 14,283 $ 13,412,736 December 31, 2015 Commercial: Business $ 4,384,149 $ 2,306 $ 564 $ 10,874 $ 4,397,893 Real estate – construction and land 617,838 3,142 — 3,090 624,070 Real estate – business 2,340,919 6,762 — 7,863 2,355,544 Personal Banking: Real estate – personal 1,901,330 7,117 3,081 4,425 1,915,953 Consumer 1,903,389 18,273 2,703 — 1,924,365 Revolving home equity 427,998 2,641 2,019 323 432,981 Consumer credit card 762,750 8,894 8,100 — 779,744 Overdrafts 5,834 308 — — 6,142 Total $ 12,344,207 $ 49,443 $ 16,467 $ 26,575 $ 12,436,692 Credit quality The following table provides information about the credit quality of the Commercial loan portfolio, using the Company’s internal rating system as an indicator. The internal rating system is a series of grades reflecting management’s risk assessment, based on its analysis of the borrower’s financial condition. The “pass” category consists of a range of loan grades that reflect increasing, though still acceptable, risk. Movement of risk through the various grade levels in the “pass” category is monitored for early identification of credit deterioration. The “special mention” rating is attached to loans where the borrower exhibits material negative financial trends due to borrower specific or systemic conditions that, if left uncorrected, threaten its capacity to meet its debt obligations. The borrower is believed to have sufficient financial flexibility to react to and resolve its negative financial situation. It is a transitional grade that is closely monitored for improvement or deterioration. The “substandard” rating is applied to loans where the borrower exhibits well-defined weaknesses that jeopardize its continued performance and are of a severity that the distinct possibility of default exists. Loans are placed on “non-accrual” when management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment, as discussed in Note 1. Commercial Loans (In thousands) Business Real Estate -Construction Real Estate - Business Total December 31, 2016 Pass $ 4,607,553 $ 788,778 $ 2,543,348 $ 7,939,679 Special mention 116,642 722 45,479 162,843 Substandard 43,488 1,172 52,913 97,573 Non-accrual 8,682 564 1,634 10,880 Total $ 4,776,365 $ 791,236 $ 2,643,374 $ 8,210,975 December 31, 2015 Pass $ 4,278,857 $ 618,788 $ 2,281,565 $ 7,179,210 Special mention 49,302 1,033 15,009 65,344 Substandard 58,860 1,159 51,107 111,126 Non-accrual 10,874 3,090 7,863 21,827 Total $ 4,397,893 $ 624,070 $ 2,355,544 $ 7,377,507 The credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided in the table in the above section on "Delinquent and non-accrual loans" . In addition, FICO scores are obtained and updated on a quarterly basis for most of the loans in the Personal Banking portfolio. This is a published credit score designed to measure the risk of default by taking into account various factors from a person's financial history. The bank normally obtains a FICO score at the loan's origination and renewal dates, and updates are obtained on a quarterly basis. Excluded from the table below are certain personal real estate loans for which FICO scores are not obtained because the loans are related to commercial activity. These loans totaled $237.2 million at December 31, 2016 and $257.8 million at December 31, 2015 ; less than 6% of the Personal Banking portfolio. For the remainder of loans in the Personal Banking portfolio, the table below shows the percentage of balances outstanding at December 31, 2016 and 2015 by FICO score. Personal Banking Loans % of Loan Category Real Estate - Personal Consumer Revolving Home Equity Consumer Credit Card December 31, 2016 FICO score: Under 600 1.3 % 3.4 % 1.0 % 4.9 % 600 – 659 2.6 6.4 1.8 15.5 660 – 719 10.4 19.7 9.7 34.9 720 – 779 25.4 26.3 21.1 25.1 780 and over 60.3 44.2 66.4 19.6 Total 100.0 % 100.0 % 100.0 % 100.0 % December 31, 2015 FICO score: Under 600 1.5 % 4.5 % 1.5 % 3.9 % 600 – 659 3.0 9.7 3.9 12.0 660 – 719 9.1 21.8 13.6 31.7 720 – 779 25.0 26.4 28.4 27.9 780 and over 61.4 37.6 52.6 24.5 Total 100.0 % 100.0 % 100.0 % 100.0 % Troubled debt restructurings As mentioned previously, the Company's impaired loans include loans which have been classified as troubled debt restructurings. Total restructured loans amounted to $59.1 million and $53.7 million at December 31, 2016 and 2015 , respectively. Restructured loans are those extended to borrowers who are experiencing financial difficulty and who have been granted a concession. Restructured loans are placed on non-accrual status if the Company does not believe it probable that amounts due under the contractual terms will be collected, and those non-accrual loans totaled $8.8 million at December 31, 2016 . Other performing restructured loans totaled $50.2 million at December 31, 2016 . These are partly comprised of certain business, construction and business real estate loans classified as substandard. Upon maturity, the loans renewed at interest rates judged not to be market rates for new debt with similar risk and as a result were classified as troubled debt restructurings. These commercial loans totaled $34.5 million at December 31, 2016 . These restructured loans are performing in accordance with their modified terms, and because the Company believes it probable that all amounts due under the modified terms of the agreements will be collected, interest on these loans is being recognized on an accrual basis. Troubled debt restructurings also include certain credit card loans under various debt management and assistance programs, which totaled $7.5 million at December 31, 2016 . Modifications to credit card loans generally involve removing the available line of credit, placing loans on amortizing status, and lowering the contractual interest rate. The Company also classifies certain loans as troubled debt restructurings because they were not reaffirmed by the borrower in bankruptcy proceedings. These loans, which are comprised of personal real estate, revolving home equity and consumer loans, totaled $7.9 million at December 31, 2016 . Interest on these loans is being recognized on an accrual basis, as the borrowers are continuing to make payments. The table below shows the outstanding balance of loans classified as troubled debt restructurings at December 31, 2016 , in addition to the period end balances of restructured loans which the Company considers to have been in default at any time during the past twelve months. For purposes of this disclosure, the Company considers "default" to mean 90 days or more past due as to interest or principal. (In thousands) December 31, 2016 Balance 90 days past due at any time during previous 12 months Commercial: Business $ 35,648 $ — Real estate – construction and land 557 557 Real estate – business 5,236 — Personal Banking: Real estate – personal 4,230 426 Consumer 5,342 44 Revolving home equity 583 — Consumer credit card 7,478 613 Total restructured loans $ 59,074 $ 1,640 For those loans on non-accrual status also classified as restructured, the modification did not create any further financial effect on the Company as those loans were already recorded at net realizable value. For those performing commercial loans classified as restructured, there were no concessions involving forgiveness of principal or interest and, therefore, there was no financial impact to the Company as a result of modification to these loans. No financial impact resulted from those performing loans where the debt was not reaffirmed in bankruptcy, as no changes to loan terms occurred in that process . However, the effects of modifications to consumer credit card loans were estimated to decrease interest income by approximately $870 thousand on an annual, pre-tax basis, compared to amounts contractually owed. The allowance for loan losses related to troubled debt restructurings on non-accrual status is determined by individual evaluation, including collateral adequacy, using the same process as loans on non-accrual status which are not classified as troubled debt restructurings. Those performing loans classified as troubled debt restructurings are accruing loans which management expects to collect under contractual terms. Performing commercial loans have had no other concessions granted other than being renewed at an interest rate judged not to be market. As such, they have similar risk characteristics as non-troubled debt commercial loans and are collectively evaluated based on internal risk rating, loan type, delinquency, historical experience and current economic factors. Performing personal banking loans classified as troubled debt restructurings resulted from the borrower not reaffirming the debt during bankruptcy and have had no other concession granted, other than the Bank's future limitations on collecting payment deficiencies or in pursuing foreclosure actions. As such, they have similar risk characteristics as non-troubled debt personal banking loans and are evaluated collectively based on loan type, delinquency, historical experience and current economic factors. If a troubled debt restructuring defaults and is already on non-accrual status, the allowance for loan losses continues to be based on individual evaluation, using discounted expected cash flows or the fair value of collateral. If an accruing, troubled debt restructuring defaults, the loan's risk rating is downgraded to non-accrual status and the loan's related allowance for loan losses is determined based on individual evaluation, or if necessary, the loan is charged off and collection efforts begin. The Company had commitments of $ 10.3 million at December 31, 2016 to lend additional funds to borrowers with restructured loans, compared to $3.5 million at December 31, 2015 . Loans held for sale Beginning January 1, 2015, certain long-term fixed rate personal real estate loan originations have been designated as held for sale, and the Company has elected the fair value option for these loans. The election of the fair value option aligns the accounting for these loans with the related economic hedges discussed in Note 17. At December 31, 2016 , the fair value of these loans was $9.3 million , and the unpaid principal balance was $9.2 million . None of these loans were on non-accrual status or past due. Beginning in the third quarter of 2015, the Company has designated certain student loan originations as held for sale. The borrowers are credit-worthy students who are attending colleges and universities. The loans are intended to be sold in the secondary market, and the Company maintains contracts with Sallie Mae to sell the loans at various times while the student is attending school or shortly after graduation. At December 31, 2016 , the balance of these loans was $5.2 million . These loans are carried at lower of cost or fair value, and none were on non-accrual status. Foreclosed real estate/repossessed assets The Company’s holdings of foreclosed real estate totaled $ 366 thousand and $ 2.8 million at December 31, 2016 and 2015 , respectively. Personal property acquired in repossession, generally autos and marine and recreational vehicles, totaled $ 2.2 million and $ 3.3 million at December 31, 2016 and 2015 , respectively. Upon acquisition, these assets are recorded at fair value less estimated selling costs at the date of foreclosure, establishing a new cost basis. They are subsequently carried at the lower of this cost basis or fair value less estimated selling costs. |