Loans and Allowance for Credit Losses | NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES Loans, net of unearned income Loans, net of unearned income are summarized as follows as of December 31 : 2015 2014 (in thousands) Real estate – commercial mortgage $ 5,462,330 $ 5,197,155 Commercial – industrial, financial and agricultural 4,088,962 3,725,567 Real estate – home equity 1,684,439 1,736,688 Real estate – residential mortgage 1,376,160 1,377,068 Real estate – construction 799,988 690,601 Consumer 268,588 265,431 Leasing and other 170,914 127,562 Overdrafts 2,737 4,021 Loans, gross of unearned income 13,854,118 13,124,093 Unearned income (15,516 ) (12,377 ) Loans, net of unearned income $ 13,838,602 $ 13,111,716 The Corporation has extended credit to the officers and directors of the Corporation and to their associates. These related-party loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and do not involve more than the normal risk of collection. The aggregate dollar amount of these loans, including unadvanced commitments, was $191.6 million and $252.6 million as of December 31, 2015 and 2014 , respectively. During 2015 , additions totaled $12,000 and repayments and other changes in related-party loans totaled $61.0 million . The total portfolio of mortgage loans serviced by the Corporation for unrelated third parties was $4.8 billion and $4.9 billion as of December 31, 2015 and 2014 , respectively. Allowance for Credit Losses The following table presents the components of the allowance for credit losses as of December 31 : 2015 2014 2013 (in thousands) Allowance for loan losses $ 169,054 $ 184,144 $ 202,780 Reserve for unfunded lending commitments 2,358 1,787 2,137 Allowance for credit losses $ 171,412 $ 185,931 $ 204,917 The following table presents the activity in the allowance for credit losses for the years ended December 31 : 2015 2014 2013 (in thousands) Balance at beginning of year $ 185,931 $ 204,917 $ 225,439 Loans charged off (32,157 ) (44,593 ) (80,212 ) Recoveries of loans previously charged off 15,388 13,107 19,190 Net loans charged off (16,769 ) (31,486 ) (61,022 ) Provision for credit losses 2,250 12,500 40,500 Balance at end of year $ 171,412 $ 185,931 $ 204,917 The following table presents the activity in the allowance for loan losses by portfolio segment for the years ended December 31 and loans, net of unearned income, and their related allowance for loan losses, by portfolio segment, as of December 31: Real Estate - Commercial - Real Estate - Real Estate - Real Estate - Consumer Leasing Unallocated (1) Total (in thousands) Balance at December 31, 2013 $ 55,659 $ 50,330 $ 28,222 $ 33,082 $ 12,649 $ 3,260 $ 3,370 $ 16,208 $ 202,780 Loans charged off (6,004 ) (24,516 ) (5,486 ) (2,918 ) (1,209 ) (2,325 ) (2,135 ) — (44,593 ) Recoveries of loans previously charged off 1,960 4,256 1,025 451 3,177 1,322 916 — 13,107 Net loans charged off (4,044 ) (20,260 ) (4,461 ) (2,467 ) 1,968 (1,003 ) (1,219 ) — (31,486 ) Provision for loan losses (2) 1,878 21,308 4,510 (1,543 ) (4,861 ) 758 (352 ) (8,848 ) 12,850 Balance at December 31, 2014 53,493 51,378 28,271 29,072 9,756 3,015 1,799 7,360 184,144 Loans charged off (4,218 ) (15,639 ) (3,604 ) (3,612 ) (201 ) (2,227 ) (2,656 ) — (32,157 ) Recoveries of loans previously charged off 2,801 5,264 1,362 1,322 2,824 1,130 685 — 15,388 Net loans charged off (1,417 ) (10,375 ) (2,242 ) (2,290 ) 2,623 (1,097 ) (1,971 ) — (16,769 ) Provision for loan losses (2) (4,210 ) 16,095 (3,624 ) (5,407 ) (5,850 ) 667 2,640 1,368 1,679 Balance at December 31, 2015 $ 47,866 $ 57,098 $ 22,405 $ 21,375 $ 6,529 $ 2,585 $ 2,468 $ 8,728 $ 169,054 Allowance for loan losses at December 31, 2015 Measured for impairment under FASB ASC Subtopic 450-20 $ 35,395 $ 42,515 $ 14,412 $ 7,953 $ 4,134 $ 2,563 $ 1,764 $ 8,728 $ 117,464 Evaluated for impairment under FASB ASC Section 310-10-35 12,471 14,583 7,993 13,422 2,395 22 704 N/A 51,590 $ 47,866 $ 57,098 $ 22,405 $ 21,375 $ 6,529 $ 2,585 $ 2,468 $ 8,728 $ 169,054 Loans, net of unearned income at December 31, 2015 Measured for impairment under FASB ASC Subtopic 450-20 $ 5,404,036 $ 4,040,810 $ 1,668,673 $ 1,325,735 $ 784,002 $ 268,555 $ 156,710 N/A $ 13,648,521 Evaluated for impairment under FASB ASC Section 310-10-35 58,294 48,152 15,766 50,425 15,986 33 1,425 N/A 190,081 $ 5,462,330 $ 4,088,962 $ 1,684,439 $ 1,376,160 $ 799,988 $ 268,588 $ 158,135 N/A $ 13,838,602 Allowance for loan losses at December 31, 2014 Measured for impairment under FASB ASC Subtopic 450-20 $ 36,778 $ 38,348 $ 19,047 $ 10,480 $ 6,485 $ 2,980 $ 1,799 $ 7,360 $ 123,277 Evaluated for impairment under FASB ASC Section 310-10-35 16,715 13,030 9,224 18,592 3,271 35 — N/A 60,867 $ 53,493 $ 51,378 $ 28,271 $ 29,072 $ 9,756 $ 3,015 $ 1,799 $ 7,360 $ 184,144 Loans, net of unearned income at December 31, 2014 Measured for impairment under FASB ASC Subtopic 450-20 $ 5,133,896 $ 3,690,561 $ 1,723,230 $ 1,325,717 $ 665,012 $ 265,393 $ 119,206 N/A $ 12,923,015 Evaluated for impairment under FASB ASC Section 310-10-35 63,259 35,006 13,458 51,351 25,589 38 — N/A 188,701 $ 5,197,155 $ 3,725,567 $ 1,736,688 $ 1,377,068 $ 690,601 $ 265,431 $ 119,206 N/A $ 13,111,716 (1) The unallocated allowance, which was approximately 5% and 4% of the total allowance for credit losses as of December 31, 2015 and December 31, 2014 , respectively, was, in the opinion of management, reasonable and appropriate given that the estimates used in the allocation process are inherently imprecise. (2) For the year ended December 31, 2015 , the provision for loan losses excluded a $571,000 increase in the reserve for unfunded lending commitments. The total provision for credit losses, comprised of allocations for both funded and unfunded loans, was $2.3 million for the year ended December 31, 2015 . For the year ended December 31, 2014 , the provision for loan losses excluded a $350,000 decrease in the reserve for unfunded lending commitments. The total provision for credit losses, was $12.5 million for the year ended December 31, 2014 . N/A – Not applicable. Impaired Loans The following table presents total impaired loans by class segment as of December 31 : 2015 2014 Unpaid Recorded Related Unpaid Recorded Related (in thousands) With no related allowance recorded: Real estate - commercial mortgage $ 27,872 $ 22,596 $ — $ 25,802 $ 23,236 $ — Commercial - secured 18,012 13,702 — 17,599 14,582 — Real estate - residential mortgage 4,790 4,790 — 4,873 4,873 — Construction - commercial residential 9,916 8,865 — 18,041 14,801 — Construction - commercial — — — 1,707 1,581 — 60,590 49,953 68,022 59,073 With a related allowance recorded: Real estate - commercial mortgage 45,189 35,698 12,471 49,619 40,023 16,715 Commercial - secured 39,659 33,629 14,085 24,824 19,335 12,165 Commercial - unsecured 971 821 498 1,241 1,089 865 Real estate - home equity 20,347 15,766 7,993 19,392 13,458 9,224 Real estate - residential mortgage 55,242 45,635 13,422 56,607 46,478 18,592 Construction - commercial residential 9,949 6,290 2,110 14,007 7,903 2,675 Construction - commercial 820 638 217 1,501 1,023 459 Construction - other 331 193 68 452 281 137 Consumer - indirect 14 14 8 20 19 18 Consumer - direct 19 19 14 19 19 17 Leasing and other and overdrafts 1,658 1,425 704 — — — 174,199 140,128 51,590 167,682 129,628 60,867 Total $ 234,789 $ 190,081 $ 51,590 $ 235,704 $ 188,701 $ 60,867 As of December 31, 2015 and 2014 , there were $50.0 million and $59.1 million , respectively, of impaired loans that did not have a related allowance for loan loss. The estimated fair values of the collateral securing these loans exceeded their carrying amount, or the loans have been charged down to realizable collateral values. Accordingly, no specific valuation allowance was considered to be necessary. The following table presents average impaired loans, by class segment, for the years ended December 31 : 2015 2014 2013 Average Interest Income Average Interest Income Average Interest Income (in thousands) With no related allowance recorded: Real estate - commercial mortgage $ 25,345 $ 315 $ 23,467 $ 320 $ 28,603 $ 489 Commercial - secured 15,654 97 18,928 119 30,299 173 Commercial - unsecured 17 — — — 26 — Real estate - home equity — — 180 1 262 1 Real estate - residential mortgage 5,389 124 1,532 31 695 25 Construction - commercial residential 11,685 148 15,421 227 19,847 256 Construction - commercial 915 — 1,907 — 3,480 2 59,005 684 61,435 698 83,212 946 With a related allowance recorded: Real estate - commercial mortgage 39,232 475 38,240 524 44,136 706 Commercial - secured 25,660 150 20,991 129 27,919 153 Commercial - unsecured 1,749 6 895 3 1,411 5 Real estate - home equity 13,887 144 13,976 108 14,092 65 Real estate - residential mortgage 46,252 1,041 50,281 1,178 52,251 1,210 Construction - commercial residential 6,455 79 8,723 136 11,219 168 Construction - commercial 931 — 1,900 — 2,468 3 Construction - other 263 — 387 — 523 1 Consumer - indirect 16 1 7 — 1 — Consumer - direct 17 1 16 1 19 — Leasing and other and overdrafts 285 — — — 11 — 134,747 1,897 135,416 2,079 154,050 2,311 Total $ 193,752 $ 2,581 $ 196,851 $ 2,777 $ 237,262 $ 3,257 (1) All impaired loans, excluding accruing TDRs, were non-accrual loans. Interest income recognized for the years ended December 31, 2015 , 2014 and 2013 represents amounts earned on accruing TDRs. Credit Quality Indicators and Non-performing Assets The following table presents internal credit risk ratings as of December 31 : Pass Special Mention Substandard or Lower Total 2015 2014 2015 2014 2015 2014 2015 2014 (dollars in thousands) Real estate - commercial mortgage $ 5,204,263 $ 4,899,016 $ 102,625 $ 127,302 $ 155,442 $ 170,837 $ 5,462,330 $ 5,197,155 Commercial - secured 3,696,692 3,333,486 92,711 120,584 136,710 110,544 3,926,113 3,564,614 Commercial -unsecured 156,742 146,680 2,761 7,463 3,346 6,810 162,849 160,953 Total commercial - industrial, financial and agricultural 3,853,434 3,480,166 95,472 128,047 140,056 117,354 4,088,962 3,725,567 Construction - commercial residential 140,337 136,109 17,154 27,495 21,812 40,066 179,303 203,670 Construction - commercial 552,710 409,631 3,684 12,202 3,597 5,586 559,991 427,419 Total real estate - construction (excluding construction - other) 693,047 545,740 20,838 39,697 25,409 45,652 739,294 631,089 Total $ 9,750,744 $ 8,924,922 $ 218,935 $ 295,046 $ 320,907 $ 333,843 $ 10,290,586 $ 9,553,811 % of Total 94.8 % 93.4 % 2.1 % 3.1 % 3.1 % 3.5 % 100.0 % 100.0 % The following table presents delinquency and non-performing status for loans that do not have internal credit risk ratings, by class segment, as of December 31 : Performing Delinquent (1) Non-performing (2) Total 2015 2014 2015 2014 2015 2014 2015 2014 (dollars in thousands) Real estate - home equity $ 1,660,773 $ 1,711,017 $ 8,983 $ 10,931 $ 14,683 $ 14,740 $ 1,684,439 $ 1,736,688 Real estate - residential mortgage 1,329,371 1,321,139 18,305 26,934 28,484 28,995 1,376,160 1,377,068 Real estate - construction - other 59,997 59,180 88 — 609 332 60,694 59,512 Consumer - direct 94,262 104,018 2,254 2,891 2,203 2,414 98,719 109,323 Consumer - indirect 166,823 153,358 2,809 2,574 237 176 169,869 156,108 Total consumer 261,085 257,376 5,063 5,465 2,440 2,590 268,588 265,431 Leasing and other and overdrafts 155,870 118,550 759 523 1,506 133 158,135 119,206 Total $ 3,467,096 $ 3,467,262 $ 33,198 $ 43,853 $ 47,722 $ 46,790 $ 3,548,016 $ 3,557,905 % of Total 97.7 % 97.5 % 1.0 % 1.2 % 1.3 % 1.3 % 100.0 % 100.0 % (1) Includes all accruing loans 30 days to 89 days past due. (2) Includes all accruing loans 90 days or more past due and all non-accrual loans. The following table presents total non-performing assets as of December 31 : 2015 2014 (in thousands) Non-accrual loans $ 129,523 $ 121,080 Loans 90 days or more past due and still accruing 15,291 17,402 Total non-performing loans 144,814 138,482 Other real estate owned 11,099 12,022 Total non-performing assets $ 155,913 $ 150,504 The following table presents past due status and non-accrual loans, by portfolio segment and class segment, as of December 31 : 2015 30-59 60-89 ≥ 90 Days Non- Total ≥ 90 Total Past Current Total (in thousands) Real estate - commercial mortgage $ 6,469 $ 1,312 $ 439 $ 40,731 $ 41,170 $ 48,951 $ 5,413,379 $ 5,462,330 Commercial - secured 5,654 2,615 1,853 41,498 43,351 51,620 3,874,493 3,926,113 Commercial - unsecured 510 83 19 701 720 1,313 161,536 162,849 Total Commercial - industrial, financial and agricultural 6,164 2,698 1,872 42,199 44,071 52,933 4,036,029 4,088,962 Real estate - home equity 6,438 2,545 3,473 11,210 14,683 23,666 1,660,773 1,684,439 Real estate - residential mortgage 15,141 3,164 6,570 21,914 28,484 46,789 1,329,371 1,376,160 Construction - commercial 50 176 — 638 638 864 559,127 559,991 Construction - commercial residential 1,366 494 — 11,213 11,213 13,073 166,230 179,303 Construction - other 88 — 416 193 609 697 59,997 60,694 Total Real estate - construction 1,504 670 416 12,044 12,460 14,634 785,354 799,988 Consumer - direct 1,687 567 2,203 — 2,203 4,457 94,262 98,719 Consumer - indirect 2,308 501 237 — 237 3,046 166,823 169,869 Total Consumer 3,995 1,068 2,440 — 2,440 7,503 261,085 268,588 Leasing and other and overdrafts 483 276 81 1,425 1,506 2,265 155,870 158,135 $ 40,194 $ 11,733 $ 15,291 $ 129,523 $ 144,814 $ 196,741 $ 13,641,861 $ 13,838,602 2014 30-59 60-89 ≥ 90 Days Non- Total ≥ 90 Total Past Current Total (in thousands) Real estate - commercial mortgage $ 14,399 $ 3,677 $ 800 $ 44,437 $ 45,237 $ 63,313 $ 5,133,842 $ 5,197,155 Commercial - secured 4,839 958 610 28,747 29,357 35,154 3,529,460 3,564,614 Commercial - unsecured 395 65 9 1,022 1,031 1,491 159,462 160,953 Total Commercial - industrial, financial and agricultural 5,234 1,023 619 29,769 30,388 36,645 3,688,922 3,725,567 Real estate - home equity 8,048 2,883 4,257 10,483 14,740 25,671 1,711,017 1,736,688 Real estate - residential mortgage 18,789 8,145 8,952 20,043 28,995 55,929 1,321,139 1,377,068 Construction - commercial — — — 2,604 2,604 2,604 424,815 427,419 Construction - commercial residential 160 — — 13,463 13,463 13,623 190,047 203,670 Construction - other — — 51 281 332 332 59,180 59,512 Total Real estate - construction 160 — 51 16,348 16,399 16,559 674,042 690,601 Consumer - direct 2,034 857 2,414 — 2,414 5,305 104,018 109,323 Consumer - indirect 2,156 418 176 — 176 2,750 153,358 156,108 Total Consumer 4,190 1,275 2,590 — 2,590 8,055 257,376 265,431 Leasing and other and overdrafts 357 166 133 — 133 656 118,550 119,206 $ 51,177 $ 17,169 $ 17,402 $ 121,080 $ 138,482 $ 206,828 $ 12,904,888 $ 13,111,716 The following table presents TDRs as of December 31 : 2015 2014 (in thousands) Real-estate - residential mortgage $ 28,511 $ 31,308 Real-estate - commercial mortgage 17,563 18,822 Construction - commercial residential 3,942 9,241 Commercial - secured 5,833 5,170 Real estate - home equity 4,556 2,975 Commercial - unsecured 120 67 Consumer - direct 19 19 Consumer - indirect 14 19 Total accruing TDRs 60,558 67,621 Non-accrual TDRs (1) 31,035 24,616 Total TDRs $ 91,593 $ 92,237 (1) Included within non-accrual loans in the preceding table. As of December 31, 2015 and 2014 , there were $ 5.3 million and $ 3.9 million , respectively, of commitments to lend additional funds to borrowers whose loans were modified under TDRs. The following table presents TDRs by class segment and type of concession for loans that were modified during the years ended December 31, 2015 and 2014: 2015 2014 Number of Loans Post-Modification Recorded Investment Number of Loans Post-Modification Recorded Investment (dollars in thousands) Commercial – secured: Extend maturity with rate concession 2 $ 127 3 $ 315 Extend maturity without rate concession 9 3,785 8 1,640 Commercial – unsecured: Extend maturity without rate concession 1 38 — — Real estate - commercial mortgage: Extend maturity with rate concession 5 2,014 1 60 Extend maturity without rate concession 4 639 7 6,781 Real estate - home equity: Extend maturity with rate concession 2 36 — — Extend maturity without rate concession 3 203 — — Bankruptcy 52 2,501 30 1,551 Real estate – residential mortgage: Extend maturity with rate concession 4 750 2 390 Extend maturity without rate concession 3 262 2 210 Bankruptcy 7 2,508 19 1,807 Construction - commercial residential: Extend maturity without rate concession 1 1,535 3 3,616 Consumer - direct: Bankruptcy 2 6 7 7 Consumer - indirect: Bankruptcy 1 12 4 20 Total 96 $ 14,416 86 $ 16,397 The following table presents TDRs, by class segment, as of December 31, 2015 and 2014 that were modified during the years ended December 31, 2015 and 2014 and had a post-modification payment default during their respective year of modification. The Corporation defines a payment default as a single missed scheduled payment: 2015 2014 Number of Loans Recorded Investment Number of Loans Recorded Investment (dollars in thousands) Construction - commercial residential — $ — 2 $ 1,803 Real estate - commercial mortgage 4 359 2 1,660 Real estate - residential mortgage 4 445 11 1,430 Commercial - secured 8 3,549 4 1,208 Real estate - home equity 13 763 11 961 Consumer - direct — — 1 1 Total 29 $ 5,116 31 $ 7,063 |