Loans and leases and the allowance for credit losses | 4. Loans and leases and the allowance for credit losses The outstanding principal balance and the carrying amount of loans acquired at a discount that were recorded at fair value at the acquisition date and included in the consolidated balance sheet were as follows: September 30, December 31, 2016 2015 (in thousands) Outstanding principal balance $ 2,556,085 3,122,935 Carrying amount: Commercial, financial, leasing, etc. 62,244 78,847 Commercial real estate 504,406 644,284 Residential real estate 845,976 1,016,129 Consumer 609,400 725,807 $ 2,022,026 2,465,067 Purchased impaired loans included in the table above totaled $617 million at September 30, 2016 and $768 million at December 31, 2015, representing less than 1% of the Company’s assets as of each date. A summary of changes in the accretable yield for loans acquired at a discount for the three months and nine months ended September 30, 2016 and 2015 follows: Three months ended September 30 2016 2015 Purchased Other Purchased Other impaired acquired impaired acquired (in thousands) Balance at beginning of period $ 162,023 245,195 $ 77,624 344,989 Interest income (12,784 ) (26,540 ) (5,865 ) (37,396 ) Reclassifications from nonaccretable balance 2,256 12,050 47 769 Other (a) — (818 ) — 4,697 Balance at end of period $ 151,495 229,887 $ 71,806 313,059 Nine months ended September 30 2016 2015 Purchased Other Purchased Other impaired acquired impaired acquired (in thousands) Balance at beginning of period $ 184,618 296,434 $ 76,518 397,379 Interest income (40,906 ) (97,300 ) (16,843 ) (118,697 ) Reclassifications from nonaccretable balance 7,783 20,647 12,131 27,792 Other (a) — 10,106 — 6,585 Balance at end of period $ 151,495 229,887 $ 71,806 313,059 (a) Other changes in expected cash flows including changes in interest rates and prepayment assumptions. 4. Loans and leases and the allowance for credit losses, continued A summary of current, past due and nonaccrual loans as of September 30, 2016 and December 31, 2015 follows: Current 30-89 days past due Accruing loans past due 90 days or more (a) Accruing loans acquired at a discount past due 90 days or more (b) Purchased impaired (c) Nonaccrual Total September 30, 2016 (in thousands) Commercial, financial, leasing, etc. $ 21,601,646 70,597 10,831 1,893 795 231,401 $ 21,917,163 Real estate: Commercial 24,283,146 116,651 15,926 13,292 32,775 157,527 24,619,317 Residential builder and developer 1,814,299 16,993 4,476 3,262 18,096 20,118 1,877,244 Other commercial construction 5,525,684 20,238 — 198 15,412 20,669 5,582,201 Residential 18,438,396 494,767 281,023 12,510 401,551 213,896 19,842,143 Residential-limited documentation 3,400,578 105,621 — — 146,722 89,356 3,742,277 Consumer: Home equity lines and loans 5,586,704 40,406 — 13,014 1,640 79,623 5,721,387 Automobile 2,805,779 46,347 — 4 — 14,453 2,866,583 Other 3,410,790 31,033 5,026 21,009 — 10,319 3,478,177 Total $ 86,867,022 942,653 317,282 65,182 616,991 837,362 $ 89,646,492 December 31, 2015 Commercial, financial, leasing, etc. $ 20,122,648 52,868 2,310 693 1,902 241,917 $ 20,422,338 Real estate: Commercial (d) 23,111,673 172,439 12,963 8,790 46,790 179,606 23,532,261 Residential builder and developer 1,507,856 7,969 5,760 6,925 28,734 28,429 1,585,673 Other commercial construction (d) 3,962,620 65,932 7,936 2,001 24,525 16,363 4,079,377 Residential 20,507,551 560,312 284,451 16,079 488,599 153,281 22,010,273 Residential-limited documentation 3,885,073 137,289 — — 175,518 61,950 4,259,830 Consumer: Home equity lines and loans 5,805,222 45,604 — 15,222 2,261 84,467 5,952,776 Automobile 2,446,473 56,181 — 6 — 16,597 2,519,257 Other 3,051,435 36,702 4,021 18,757 — 16,799 3,127,714 Total $ 84,400,551 1,135,296 317,441 68,473 768,329 799,409 $ 87,489,499 (a) Excludes loans acquired at a discount. (b) Loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are presented separately. (c) Accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value. (d) The Company expanded its definition of construction loans in 2016 and, as a result, re-characterized certain commercial real estate loans as other commercial construction loans. The December 31, 2015 balances reflect such changes. One-to-four family residential mortgage loans held for sale were $415 million and $353 million at September 30, 2016 and December 31, 2015, respectively. Commercial mortgage loans held for sale were $290 million at September 30, 2016 and $39 million at December 31, 2015. 4. Loans and leases and the allowance for credit losses, continued Changes in the allowance for credit losses for the three months ended September 30, 2016 were as follows: Commercial, Financial, Real Estate Leasing, etc. Commercial Residential Consumer Unallocated Total (in thousands) Beginning balance $ 316,079 349,674 69,660 157,361 77,722 $ 970,496 Provision for credit losses 26,222 9,963 (6,232 ) 16,539 508 47,000 Net charge-offs Charge-offs (21,075 ) (1,564 ) (6,754 ) (29,882 ) — (59,275 ) Recoveries 6,958 1,704 1,919 7,319 — 17,900 Net charge-offs (14,117 ) 140 (4,835 ) (22,563 ) — (41,375 ) Ending balance $ 328,184 359,777 58,593 151,337 78,230 $ 976,121 Changes in the allowance for credit losses for the three months ended September 30, 2015 were as follows: Commercial, Financial, Real Estate Leasing, etc. Commercial Residential Consumer Unallocated Total (in thousands) Beginning balance $ 286,750 311,294 60,294 194,238 77,411 $ 929,987 Provision for credit losses 21,507 1,879 (3,155 ) 24,448 (679 ) 44,000 Net charge-offs Charge-offs (26,912 ) (2,203 ) (3,268 ) (20,758 ) — (53,141 ) Recoveries 5,322 2,119 1,125 4,386 — 12,952 Net charge-offs (21,590 ) (84 ) (2,143 ) (16,372 ) — (40,189 ) Ending balance $ 286,667 313,089 54,996 202,314 76,732 $ 933,798 Changes in the allowance for credit losses for the nine months ended September 30, 2016 were as follows: Commercial, Financial, Real Estate Leasing, etc. Commercial Residential Consumer Unallocated Total (in thousands) Beginning balance $ 300,404 326,831 72,238 178,320 78,199 $ 955,992 Provision for credit losses 39,667 29,799 (610 ) 59,113 31 128,000 Net charge-offs Charge-offs (34,711 ) (3,569 ) (18,816 ) (107,761 ) — (164,857 ) Recoveries 22,824 6,716 5,781 21,665 — 56,986 Net charge-offs (11,887 ) 3,147 (13,035 ) (86,096 ) — (107,871 ) Ending balance $ 328,184 359,777 58,593 151,337 78,230 $ 976,121 Changes in the allowance for credit losses for the nine months ended September 30, 2015 were as follows: Commercial, Financial, Real Estate Leasing, etc. Commercial Residential Consumer Unallocated Total (in thousands) Beginning balance $ 288,038 307,927 61,910 186,033 75,654 $ 919,562 Provision for credit losses 32,686 13,769 (571 ) 65,038 1,078 112,000 Net charge-offs Charge-offs (46,990 ) (12,352 ) (9,695 ) (64,542 ) — (133,579 ) Recoveries 12,933 3,745 3,352 15,785 — 35,815 Net charge-offs (34,057 ) (8,607 ) (6,343 ) (48,757 ) — (97,764 ) Ending balance $ 286,667 313,089 54,996 202,314 76,732 $ 933,798 4. Loans and leases and the allowance for credit losses, continued Despite the allocation in the preceding table, the allowance for credit losses is general in nature and is available to absorb losses from any loan or lease type. In establishing the allowance for credit losses, the Company estimates losses attributable to specific troubled credits identified through both normal and detailed or intensified credit review processes and also estimates losses inherent in other loans and leases on a collective basis. For purposes of determining the level of the allowance for credit losses, the Company evaluates its loan and lease portfolio by loan type. The amounts of loss components in the Company’s loan and lease portfolios are determined through a loan-by-loan analysis of larger balance commercial loans and commercial real estate loans that are in nonaccrual status and by applying loss factors to groups of loan balances based on loan type and management’s classification of such loans under the Company’s loan grading system. Measurement of the specific loss components is typically based on expected future cash flows, collateral values and other factors that may impact the borrower’s ability to pay. In determining the allowance for credit losses, the Company utilizes a loan grading system which is applied to commercial and commercial real estate credits on an individual loan basis. Loan officers are responsible for continually assigning grades to these loans based on standards outlined in the Company’s Credit Policy. Internal loan grades are also monitored by the Company’s loan review department to ensure consistency and strict adherence to the prescribed standards. Loan grades are assigned loss component factors that reflect the Company’s loss estimate for each group of loans and leases. Factors considered in assigning loan grades and loss component factors include borrower-specific information related to expected future cash flows and operating results, collateral values, geographic location, financial condition and performance, payment status, and other information; levels of and trends in portfolio charge-offs and recoveries; levels of and trends in portfolio delinquencies and impaired loans; changes in the risk profile of specific portfolios; trends in volume and terms of loans; effects of changes in credit concentrations; and observed trends and practices in the banking industry. As updated appraisals are obtained on individual loans or other events in the market place indicate that collateral values have significantly changed, individual loan grades are adjusted as appropriate. Changes in other factors cited may also lead to loan grade changes at any time. Except for consumer loans and residential real estate loans that are considered smaller balance homogenous loans and acquired loans that are evaluated on an aggregated basis, the Company considers a loan to be impaired for purposes of applying GAAP when, based on current information and events, it is probable that the Company will be unable to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days. Regardless of loan type, the Company considers a loan to be impaired if it qualifies as a troubled debt restructuring. Modified loans, including smaller balance homogenous loans, that are considered to be troubled debt restructurings are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. 4. Loans and leases and the allowance for credit losses, continued The following tables provide information with respect to loans and leases that were considered impaired as of September 30, 2016 and December 31, 2015 and for the three-month and nine-month periods ended September 30, 2016 and 2015. September 30, 2016 December 31, 2015 Recorded investment Unpaid principal balance Related allowance Recorded investment Unpaid principal balance Related allowance (in thousands) With an allowance recorded: Commercial, financial, leasing, etc. $ 192,805 212,009 55,020 179,037 195,821 44,752 Real estate: Commercial 75,749 85,137 14,939 85,974 95,855 18,764 Residential builder and developer 8,142 8,923 714 3,316 5,101 196 Other commercial construction 2,729 3,092 1,103 3,548 3,843 348 Residential 79,036 97,466 3,144 79,558 96,751 4,727 Residential-limited documentation 83,296 97,984 6,200 90,356 104,251 8,000 Consumer: Home equity lines and loans 42,862 46,844 7,697 25,220 26,195 3,777 Automobile 18,033 19,218 3,737 22,525 22,525 4,709 Other 4,122 5,122 864 17,620 17,620 4,820 506,774 575,795 93,418 507,154 567,962 90,093 With no related allowance recorded: Commercial, financial, leasing, etc. 72,429 80,757 — 93,190 110,735 — Real estate: Commercial 90,425 104,508 — 101,340 116,230 — Residential builder and developer 17,346 23,617 — 27,651 47,246 — Other commercial construction 18,265 37,432 — 13,221 31,477 — Residential 18,079 26,127 — 19,621 30,940 — Residential-limited documentation 17,611 27,936 — 18,414 31,113 — 234,155 300,377 — 273,437 367,741 — Total: Commercial, financial, leasing, etc. 265,234 292,766 55,020 272,227 306,556 44,752 Real estate: Commercial 166,174 189,645 14,939 187,314 212,085 18,764 Residential builder and developer 25,488 32,540 714 30,967 52,347 196 Other commercial construction 20,994 40,524 1,103 16,769 35,320 348 Residential 97,115 123,593 3,144 99,179 127,691 4,727 Residential-limited documentation 100,907 125,920 6,200 108,770 135,364 8,000 Consumer: Home equity lines and loans 42,862 46,844 7,697 25,220 26,195 3,777 Automobile 18,033 19,218 3,737 22,525 22,525 4,709 Other 4,122 5,122 864 17,620 17,620 4,820 Total $ 740,929 876,172 93,418 780,591 935,703 90,093 4. Loans and leases and the allowance for credit losses, continued Three months ended September 30, 2016 Three months ended September 30, 2015 Interest income recognized Interest income recognized Average recorded investment Total Cash basis Average recorded investment Total Cash basis (in thousands) Commercial, financial, leasing, etc. $ 262,796 744 744 242,157 1,017 1,017 Real estate: Commercial 175,256 1,806 1,806 179,327 2,327 2,327 Residential builder and developer 26,996 405 405 53,009 81 81 Other commercial construction 21,500 190 190 17,236 1,943 1,943 Residential 96,961 1,572 570 99,939 1,835 1,316 Residential-limited documentation 101,877 1,501 378 116,191 1,539 618 Consumer: Home equity lines and loans 41,740 368 112 21,952 231 66 Automobile 18,571 303 19 24,429 391 39 Other 4,077 72 11 19,238 188 23 Total $ 749,774 6,961 4,235 773,478 9,552 7,430 Nine months ended September 30, 2016 Nine months ended September 30, 2015 Interest income recognized Interest income recognized Average recorded investment Total Cash basis Average recorded investment Total Cash basis (in thousands) Commercial, financial, leasing, etc. $ 283,783 7,055 7,055 226,243 2,123 2,123 Real estate: Commercial 177,579 3,891 3,891 161,834 4,433 4,433 Residential builder and developer 30,832 488 488 64,165 275 275 Other commercial construction 19,774 563 563 22,130 2,166 2,166 Residential 97,229 4,778 2,591 101,997 4,639 3,011 Residential-limited documentation 104,382 4,580 1,648 120,710 4,799 1,962 Consumer: Home equity lines and loans 33,998 937 295 20,619 656 179 Automobile 20,358 964 83 26,521 1,257 136 Other 10,987 371 74 19,053 547 86 Total $ 778,922 23,627 16,688 763,272 20,895 14,371 In accordance with the previously described policies, the Company utilizes a loan grading system that is applied to all commercial loans and commercial real estate loans. Loan grades are utilized to differentiate risk within the portfolio and consider the expectations of default for each loan. Commercial loans and commercial real estate loans with a lower expectation of default are assigned one of ten possible “pass” loan grades and are generally ascribed lower loss factors when determining the allowance for credit losses. Loans with an elevated level of credit risk are classified as “criticized” and are ascribed a higher loss factor when determining the allowance for credit losses. Criticized loans may be classified as “nonaccrual” if the Company no longer expects to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more. All larger- balance criticized commercial loans and commercial real estate loans are individually reviewed by centralized loan review personnel each quarter to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing. Smaller-balance criticized loans are analyzed by business line risk management areas to ensure proper loan grade classification. Furthermore, criticized nonaccrual commercial loans and commercial real estate loans are considered impaired and, as a result, specific loss allowances on such loans are established within the allowance for credit losses to the extent appropriate in each individual instance. The following table summarizes the loan grades applied to the various classes of the Company’s commercial loans and commercial real estate loans. 4. Loans and leases and the allowance for credit losses, continued Real Estate Commercial, Residential Other Financial, Builder and Commercial Leasing, etc. Commercial Developer Construction (in thousands) September 30, 2016 Pass $ 20,825,301 23,540,787 1,699,263 5,405,719 Criticized accrual 860,461 921,003 157,863 155,813 Criticized nonaccrual 231,401 157,527 20,118 20,669 Total $ 21,917,163 24,619,317 1,877,244 5,582,201 December 31, 2015 Pass $ 19,442,183 22,697,398 1,497,465 3,834,137 Criticized accrual 738,238 655,257 59,779 228,877 Criticized nonaccrual 241,917 179,606 28,429 16,363 Total $ 20,422,338 23,532,261 1,585,673 4,079,377 In determining the allowance for credit losses, residential real estate loans and consumer loans are generally evaluated collectively after considering such factors as payment performance and recent loss experience and trends, which are mainly driven by current collateral values in the market place as well as the amount of loan defaults. Loss rates on such loans are determined by reference to recent charge-off history and are evaluated (and adjusted if deemed appropriate) through consideration of other factors including near-term forecasted loss estimates developed by the Company’s Credit Department. In arriving at such forecasts, the Company considers the current estimated fair value of its collateral based on geographical adjustments for home price depreciation/appreciation and overall borrower repayment performance. With regard to collateral values, the realizability of such values by the Company contemplates repayment of any first lien position prior to recovering amounts on a second lien position. However, residential real estate loans and outstanding balances of home equity loans and lines of credit that are more than 150 days past due are generally evaluated for collectibility on a loan-by-loan basis giving consideration to estimated collateral values. The carrying value of residential real estate loans and home equity loans and lines of credit for which a partial charge-off has been recognized aggregated $47 million and $33 million, respectively, at September 30, 2016 and $55 million and $21 million, respectively, at December 31, 2015. Residential real estate loans and home equity loans and lines of credit that were more than 150 days past due but did not require a partial charge-off because the net realizable value of the collateral exceeded the outstanding customer balance totaled $20 million and $38 million, respectively, at September 30, 2016 and $20 million and $28 million, respectively, at December 31, 2015. The Company also measures additional losses for purchased impaired loans when it is probable that the Company will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimates after acquisition. The determination of the allocated portion of the allowance for credit losses is very subjective. Given that inherent subjectivity and potential imprecision involved in determining the allocated portion of the allowance for credit losses, the Company also provides an inherent unallocated portion of the allowance. The unallocated portion of the allowance is intended to recognize probable losses that are not otherwise identifiable and includes management’s subjective determination of amounts necessary to provide for the possible use of imprecise estimates in determining the allocated portion of the allowance. Therefore, the level of the unallocated portion of the allowance is primarily reflective of the inherent imprecision in the various calculations used in determining the allocated portion of the allowance for credit losses. Other factors that could also lead to changes in the unallocated portion include the effects of expansion into new markets for which the Company does not have the same degree of familiarity and experience regarding portfolio performance in changing market conditions, the introduction of new loan and lease product types, and other risks associated with the Company’s loan portfolio that may not be specifically identifiable. 4. Loans and leases and the allowance for credit losses, continued The allocation of the allowance for credit losses summarized on the basis of the Company’s impairment methodology was as follows: Commercial, Financial, Real Estate Leasing, etc. Commercial Residential Consumer Total (in thousands) September 30, 2016 Individually evaluated for impairment $ 55,020 16,608 9,344 12,298 $ 93,270 Collectively evaluated for impairment 273,164 340,737 48,500 138,193 800,594 Purchased impaired — 2,432 749 846 4,027 Allocated $ 328,184 359,777 58,593 151,337 897,891 Unallocated 78,230 Total $ 976,121 December 31, 2015 Individually evaluated for impairment $ 44,752 19,175 12,727 13,306 $ 89,960 Collectively evaluated for impairment 255,615 307,000 57,624 163,511 783,750 Purchased impaired 37 656 1,887 1,503 4,083 Allocated $ 300,404 326,831 72,238 178,320 877,793 Unallocated 78,199 Total $ 955,992 The recorded investment in loans and leases summarized on the basis of the Company’s impairment methodology was as follows: Commercial, Financial, Real Estate Leasing, etc. Commercial Residential Consumer Total (in thousands) September 30, 2016 Individually evaluated for impairment $ 265,234 211,730 198,022 65,017 $ 740,003 Collectively evaluated for impairment 21,651,134 31,800,749 22,838,125 11,999,490 88,289,498 Purchased impaired 795 66,283 548,273 1,640 616,991 Total $ 21,917,163 32,078,762 23,584,420 12,066,147 $ 89,646,492 December 31, 2015 Individually evaluated for impairment $ 272,227 234,132 207,949 65,365 $ 779,673 Collectively evaluated for impairment 20,148,209 28,863,130 25,398,037 11,532,121 85,941,497 Purchased impaired 1,902 100,049 664,117 2,261 768,329 Total $ 20,422,338 29,197,311 26,270,103 11,599,747 $ 87,489,499 During the normal course of business, the Company modifies loans to maximize recovery efforts. If the borrower is experiencing financial difficulty and a concession is granted, the Company considers such modifications as troubled debt restructurings and classifies those loans as either nonaccrual loans or renegotiated loans. The types of concessions that the Company grants typically include principal deferrals and interest rate concessions, but may also include other types of concessions. 4. Loans and leases and the allowance for credit losses, continued The tables that follow summarize the Company’s loan modification activities that were considered troubled debt restructurings for the three months ended September 30, 2016 and 2015: Recorded investment Financial effects of modification Three months ended September 30, 2016 Number Pre- modification Post- modification Recorded investment (a) Interest (b) (dollars in thousands) Commercial, financial, leasing, etc. Principal deferral 30 $ 41,652 $ 40,183 $ (1,469 ) $ — Combination of concession types 13 27,834 19,802 (8,032 ) (6 ) Real estate: Commercial Principal deferral 14 12,302 11,644 (658 ) — Combination of concession types 4 2,623 2,614 (9 ) (172 ) Residential Principal deferral 21 4,489 4,714 225 — Combination of concession types 9 1,149 1,214 65 (120 ) Residential-limited documentation Principal deferral 3 435 470 35 — Combination of concession types 3 392 493 101 (123 ) Consumer: Home equity lines and loans Principal deferral 4 251 251 — — Combination of concession types 22 2,301 2,301 — (178 ) Automobile Principal deferral 10 186 186 — — Other Principal deferral 1 26 26 — — Total 134 $ 93,640 $ 83,898 $ (9,742 ) $ (599 ) (a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages. (b) Represents the present value of interest rate concessions discounted at the effective rate of the original loan. 4. Loans and leases and the allowance for credit losses, continued Recorded investment Financial effects of modification Three months ended September 30, 2015 Number Pre- modification Post- modification Recorded investment (a) Interest (b) (dollars in thousands) Commercial, financial, leasing, etc. Principal deferral 36 $ 7,893 $ 7,419 $ (474 ) $ — Combination of concession types 1 31 31 — (6 ) Real estate: Commercial Principal deferral 15 4,230 4,208 (22 ) — Combination of concession types 1 1,156 1,169 13 (54 ) Other commercial construction Principal deferral 3 296 390 94 — Residential Principal deferral 31 3,540 3,743 203 — Other 1 267 267 — — Combination of concession types 10 1,296 1,380 84 (178 ) Residential-limited documentation Principal deferral 1 265 276 11 — Combination of concession types 4 605 662 57 (91 ) Consumer: Home equity lines and loans Principal deferral 4 727 727 — — Combination of concession types 22 2,003 2,003 — (199 ) Automobile Principal deferral 35 316 316 — — Other 15 93 93 — — Combination of concession types 25 471 471 — (17 ) Other Principal deferral 24 352 352 — — Other 5 33 33 — — Combination of concession types 12 117 117 — (12 ) Total 245 $ 23,691 $ 23,657 $ (34 ) $ (557 ) (a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages. (b) Represents the present value of interest rate concessions discounted at the effective rate of the original loan. 4. Loans and leases and the allowance for credit losses, continued The tables below summarize the Company’s loan modification activities that were considered troubled debt restructurings for the nine months ended September 30, 2016 and 2015: Recorded investment Financial effects of modification Nine months ended September 30, 2016 Number Pre- modification Post- modification Recorded investment (a) Interest (b) (dollars in thousands) Commercial, financial, leasing, etc. Principal deferral 87 $ 98,956 $ 98,561 $ (395 ) $ — Combination of concession types 25 49,248 39,971 (9,277 ) (6 ) Real estate: Commercial Principal deferral 40 18,511 17,802 (709 ) — Interest rate reduction 1 129 129 — (25 ) Other 1 4,723 4,447 (276 ) — Combination of concession types 13 13,621 13,546 (75 ) (238 ) Residential builder and developer Principal deferral 3 23,905 22,958 (947 ) — Other commercial construction Principal deferral 1 250 250 — — Combination of concession types 1 124 124 — — Residential Principal deferral 46 7,433 7,945 512 — Combination of concession types 27 4,513 4,705 192 (120 ) Residential-limited documentation Principal deferral 6 711 803 92 — Combination of concession types 8 1,704 1,872 168 (462 ) Consumer: Home equity lines and loans Principal deferral 8 655 655 — — Combination of concession types 76 8,534 8,534 — (741 ) Automobile Principal deferral 102 865 865 — — Other 38 55 55 — — Combination of concession types 8 85 85 — (3 ) Other Principal deferral 56 951 951 — — Other 5 45 45 — — Combination of concession types 17 196 196 — (32 ) Total 569 $ 235,214 $ 224,499 $ (10,715 ) $ (1,627 ) (a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages. (b) Represents the present value of interest rate concessions discounted at the effective rate of the original loan. 4. Loans and leases and the allowance for credit losses, continued Recorded investment Financial effects of modification Nine months ended September 30, 2015 Number Pre- modification Post- modification Recorded investment (a) Interest (b) (dollars in thousands) Commercial, financial, leasing, etc. Principal deferral 87 $ 25,483 $ 24,331 $ (1,152 ) $ — Interest rate reduction 1 99 99 — (19 ) Other 2 8,991 8,883 (108 ) — Combination of concession types 6 25,075 24,884 (191 ) (245 ) Real estate: Commercial Principal deferral 37 47,005 45,569 (1,436 ) — Combination of concession types 6 3,238 3,242 4 (159 ) Residential builder and developer Principal deferral 2 10,650 10,598 (52 ) — Other commercial construction Principal deferral 3 296 390 94 — Residential Principal deferral 50 4,954 5,239 285 — Other 1 267 267 — — Combination of concession types 22 2,551 2,795 244 (356 ) Residential-limited documentation Principal deferral 2 426 437 11 — Combination of concession types 7 1,239 1,298 59 (121 ) Consumer: Home equity lines and loans Principal deferral 6 1,946 1,946 — — Combination of concession types 41 3,555 3,555 — (424 ) Automobile Principal deferral 133 1,234 1,234 — — Interest rate reduction 7 137 137 — (10 ) Other 38 134 134 — — Combination of concession types 42 693 693 — (28 ) Other Principal deferral 73 1,418 1,418 — — Other 12 113 113 — — Combination of concession types 35 384 384 — (44 ) Total 613 $ 139,888 $ 137,646 $ (2,242 ) $ (1,406 ) (a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages. (b) Represents the present value of interest rate concessions discounted at the effective rate of the original loan. Troubled debt restructurings are considered to be impaired loans and for purposes of establishing the allowance for credit losses are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. Impairment of troubled debt restructurings that have subsequently defaulted may also be measured based on the loan’s observable market price or the fair value of collateral if the loan is collateral-dependent. Charge-offs may also be recognized on troubled debt restructurings that have subsequently defaulted. Loans that were modified as troubled debt restructurings during the twelve months ended September 30, 2016 and 2015 and for which there was a subsequent payment default during the nine-month periods ended September 30, 2016 and 2015, respectively, were not material. 4. Loans and leases and the allowance for credit losses, continued The amount of foreclosed residential real estate property held by the Company was $148 million and $172 million at September 30, 2016 and December 31, 2015, respectively. There were $321 million and $315 million at September 30, 2016 and December 31, 2015, respectively, in loans secured by residential real estate and serviced by the Company that were in the process of foreclosure. There were $246 million at September 30, 2016 in loans secured by residential real estate and serviced by other entities for the Company that were in the process of foreclosure. Of all loans in the process of foreclosure at September 30, 2016, approximately 61% were classified as purchased impaired and 21% were government guaranteed. |