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 : 2016 2015 (in thousands) Real estate – commercial mortgage $ 6,018,582 $ 5,462,330 Commercial – industrial, financial and agricultural 4,087,486 4,088,962 Real estate – home equity 1,625,115 1,684,439 Real estate – residential mortgage 1,601,994 1,376,160 Real estate – construction 843,649 799,988 Consumer 291,470 268,588 Leasing and other 246,704 170,914 Overdrafts 3,662 2,737 Loans, gross of unearned income 14,718,662 13,854,118 Unearned income (19,390 ) (15,516 ) Loans, net of unearned income $ 14,699,272 $ 13,838,602 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 $154.4 million and $191.6 million as of December 31, 2016 and 2015 , respectively. During 2016 , additions totaled $26.6 million and repayments totaled $63.8 million in related-party loans. The total portfolio of mortgage loans serviced by the Corporation for unrelated third parties was $4.7 billion and $4.8 billion as of December 31, 2016 and 2015 , respectively. Allowance for Credit Losses The following table presents the components of the allowance for credit losses as of December 31 : 2016 2015 2014 (in thousands) Allowance for loan losses $ 168,679 $ 169,054 $ 184,144 Reserve for unfunded lending commitments 2,646 2,358 1,787 Allowance for credit losses $ 171,325 $ 171,412 $ 185,931 The following table presents the activity in the allowance for credit losses for the years ended December 31 : 2016 2015 2014 (in thousands) Balance at beginning of year $ 171,412 $ 185,931 $ 204,917 Loans charged off (33,927 ) (32,157 ) (44,593 ) Recoveries of loans previously charged off 20,658 15,388 13,107 Net loans charged off (13,269 ) (16,769 ) (31,486 ) Provision for credit losses 13,182 2,250 12,500 Balance at end of year $ 171,325 $ 171,412 $ 185,931 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 Total (in thousands) 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 (1) (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 Loans charged off (3,580 ) (15,276 ) (4,912 ) (2,326 ) (1,218 ) (2,800 ) (3,815 ) — (33,927 ) Recoveries of loans previously charged off 3,373 8,981 1,171 1,072 3,924 1,295 842 — 20,658 Net loans charged off (207 ) (6,295 ) (3,741 ) (1,254 ) 2,706 (1,505 ) (2,973 ) — (13,269 ) Provision for loan losses (1) (817 ) 3,550 8,137 2,808 (2,780 ) 2,494 3,697 (4,195 ) 12,894 Balance at December 31, 2016 $ 46,842 $ 54,353 $ 26,801 $ 22,929 $ 6,455 $ 3,574 $ 3,192 $ 4,533 $ 168,679 Allowance for loan losses at December 31, 2016 Measured for impairment under FASB ASC Subtopic 450-20 $ 36,680 $ 40,700 $ 17,290 $ 11,032 $ 4,587 $ 3,548 $ 3,192 $ 4,533 $ 121,562 Evaluated for impairment under FASB ASC Section 310-10-35 10,162 13,653 9,511 11,897 1,868 26 — N/A 47,117 $ 46,842 $ 54,353 $ 26,801 $ 22,929 $ 6,455 $ 3,574 $ 3,192 $ 4,533 $ 168,679 Loans, net of unearned income at December 31, 2016 Measured for impairment under FASB ASC Subtopic 450-20 $ 5,963,689 $ 4,038,511 $ 1,605,910 $ 1,555,946 $ 833,117 $ 291,430 $ 230,976 N/A $ 14,519,579 Evaluated for impairment under FASB ASC Section 310-10-35 54,893 48,975 19,205 46,048 10,532 40 — N/A 179,693 $ 6,018,582 $ 4,087,486 $ 1,625,115 $ 1,601,994 $ 843,649 $ 291,470 $ 230,976 N/A $ 14,699,272 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 (1) For the year ended December 31, 2016 , the provision for loan losses excluded a $288,000 increase in the reserve for unfunded lending commitments. The total provision for credit losses, comprised of allocations for both funded and unfunded loans, was $13.2 million for the year ended December 31, 2016 . 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 was $2.3 million for the year ended December 31, 2015 . N/A – Not applicable. Impaired Loans The following table presents total impaired loans by class segment as of December 31 : 2016 2015 Unpaid Recorded Related Unpaid Recorded Related (in thousands) With no related allowance recorded: Real estate - commercial mortgage $ 28,757 $ 25,447 $ — $ 27,872 $ 22,596 $ — Commercial - secured 29,296 25,526 — 18,012 13,702 — Real estate - residential mortgage 4,689 4,689 — 4,790 4,790 — Construction - commercial residential 6,271 4,795 — 9,916 8,865 — 69,013 60,457 60,590 49,953 With a related allowance recorded: Real estate - commercial mortgage 37,132 29,446 10,162 45,189 35,698 12,471 Commercial - secured 27,767 22,626 13,198 39,659 33,629 14,085 Commercial - unsecured 1,122 823 455 971 821 498 Real estate - home equity 23,971 19,205 9,511 20,347 15,766 7,993 Real estate - residential mortgage 48,885 41,359 11,897 55,242 45,635 13,422 Construction - commercial residential 10,103 4,206 1,300 9,949 6,290 2,110 Construction - commercial 681 435 145 820 638 217 Construction - other 1,096 1,096 423 331 193 68 Consumer - indirect 19 19 12 14 14 8 Consumer - direct 21 21 14 19 19 14 Leasing and other and overdrafts — — — 1,658 1,425 704 150,797 119,236 47,117 174,199 140,128 51,590 Total $ 219,810 $ 179,693 $ 47,117 $ 234,789 $ 190,081 $ 51,590 As of December 31, 2016 and 2015 , there were $60.5 million and $50.0 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 : 2016 2015 2014 Average Interest Income Average Interest Income Average Interest Income (in thousands) With no related allowance recorded: Real estate - commercial mortgage $ 24,232 $ 294 $ 25,345 $ 315 $ 23,467 $ 320 Commercial - secured 19,825 104 15,654 97 18,928 119 Commercial - unsecured — — 17 — — — Real estate - home equity — — — — 180 1 Real estate - residential mortgage 5,598 126 5,389 124 1,532 31 Construction - commercial residential 6,285 48 11,685 148 15,421 227 Construction - commercial — — 915 — 1,907 — 55,940 572 59,005 684 61,435 698 With a related allowance recorded: Real estate - commercial mortgage 31,737 384 39,232 475 38,240 524 Commercial - secured 25,857 130 25,660 150 20,991 129 Commercial - unsecured 887 4 1,749 6 895 3 Real estate - home equity 17,912 285 13,887 144 13,976 108 Real estate - residential mortgage 42,191 908 46,252 1,041 50,281 1,178 Construction - commercial residential 5,295 41 6,455 79 8,723 136 Construction - commercial 524 — 931 — 1,900 — Construction - other 682 — 263 — 387 — Consumer - indirect 15 1 16 1 7 — Consumer - direct 18 1 17 1 16 1 Leasing, other and overdrafts 854 — 285 — — — 125,972 1,754 134,747 1,897 135,416 2,079 Total $ 181,912 $ 2,326 $ 193,752 $ 2,581 $ 196,851 $ 2,777 (1) All impaired loans, excluding accruing TDRs, were non-accrual loans. Interest income recognized for the years ended December 31, 2016 , 2015 and 2014 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 2016 2015 2016 2015 2016 2015 2016 2015 (dollars in thousands) Real estate - commercial mortgage $ 5,763,122 $ 5,204,263 $ 132,484 $ 102,625 $ 122,976 $ 155,442 $ 6,018,582 $ 5,462,330 Commercial - secured 3,686,152 3,696,692 128,873 92,711 118,527 136,710 3,933,552 3,926,113 Commercial -unsecured 145,922 156,742 4,481 2,761 3,531 3,346 153,934 162,849 Total commercial - industrial, financial and agricultural 3,832,074 3,853,434 133,354 95,472 122,058 140,056 4,087,486 4,088,962 Construction - commercial residential 113,570 140,337 15,447 17,154 13,172 21,812 142,189 179,303 Construction - commercial 635,963 552,710 3,412 3,684 5,115 3,597 644,490 559,991 Total real estate - construction (excluding construction - other) 749,533 693,047 18,859 20,838 18,287 25,409 786,679 739,294 Total $ 10,344,729 $ 9,750,744 $ 284,697 $ 218,935 $ 263,321 $ 320,907 $ 10,892,747 $ 10,290,586 % of Total 95.0 % 94.8 % 2.6 % 2.1 % 2.4 % 3.1 % 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 2016 2015 2016 2015 2016 2015 2016 2015 (dollars in thousands) Real estate - home equity $ 1,602,687 $ 1,660,773 $ 9,274 $ 8,983 $ 13,154 $ 14,683 $ 1,625,115 $ 1,684,439 Real estate - residential mortgage 1,557,995 1,329,371 20,344 18,305 23,655 28,484 1,601,994 1,376,160 Real estate - construction - other 55,874 59,997 — 88 1,096 609 56,970 60,694 Consumer - direct 93,572 94,262 1,752 2,254 1,563 2,203 96,887 98,719 Consumer - indirect 190,656 166,823 3,599 2,809 328 237 194,583 169,869 Total consumer 284,228 261,085 5,351 5,063 1,891 2,440 291,470 268,588 Leasing, other and overdrafts 229,591 155,870 1,068 759 317 1,506 230,976 158,135 Total $ 3,730,375 $ 3,467,096 $ 36,037 $ 33,198 $ 40,113 $ 47,722 $ 3,806,525 $ 3,548,016 % of Total 98.0 % 97.7 % 0.9 % 1.0 % 1.1 % 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 : 2016 2015 (in thousands) Non-accrual loans $ 120,133 $ 129,523 Loans 90 days or more past due and still accruing 11,505 15,291 Total non-performing loans 131,638 144,814 Other real estate owned 12,815 11,099 Total non-performing assets $ 144,453 $ 155,913 The following table presents past due status and non-accrual loans, by portfolio segment and class segment, as of December 31 : 2016 30-59 60-89 ≥ 90 Days Non- Total ≥ 90 Total Past Current Total (in thousands) Real estate - commercial mortgage $ 6,254 $ 1,622 $ 383 $ 38,936 $ 39,319 $ 47,195 $ 5,971,387 $ 6,018,582 Commercial - secured 6,660 2,616 959 41,589 42,548 51,824 3,881,728 3,933,552 Commercial - unsecured 898 35 152 760 912 1,845 152,089 153,934 Total Commercial - industrial, financial and agricultural 7,558 2,651 1,111 42,349 43,460 53,669 4,033,817 4,087,486 Real estate - home equity 6,596 2,678 2,543 10,611 13,154 22,428 1,602,687 1,625,115 Real estate - residential mortgage 15,600 4,744 5,224 18,431 23,655 43,999 1,557,995 1,601,994 Construction - commercial 743 — — 435 435 1,178 643,312 644,490 Construction - commercial residential 233 51 36 8,275 8,311 8,595 133,594 142,189 Construction - other — — — 1,096 1,096 1,096 55,874 56,970 Total Real estate - construction 976 51 36 9,806 9,842 10,869 832,780 843,649 Consumer - direct 1,211 541 1,563 — 1,563 3,315 93,572 96,887 Consumer - indirect 3,200 399 328 — 328 3,927 190,656 194,583 Total Consumer 4,411 940 1,891 — 1,891 7,242 284,228 291,470 Leasing, other and overdrafts 543 525 317 — 317 1,385 229,591 230,976 $ 41,938 $ 13,211 $ 11,505 $ 120,133 $ 131,638 $ 186,787 $ 14,512,485 $ 14,699,272 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, 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 The following table presents TDRs as of December 31 : 2016 2015 (in thousands) Real-estate - residential mortgage $ 27,617 $ 28,511 Real-estate - commercial mortgage 15,957 17,563 Construction - commercial residential 726 3,942 Commercial - secured 6,564 5,833 Real estate - home equity 8,594 4,556 Commercial - unsecured 63 120 Consumer - direct 20 19 Consumer - indirect 19 14 Total accruing TDRs 59,560 60,558 Non-accrual TDRs (1) 27,850 31,035 Total TDRs $ 87,410 $ 91,593 (1) Included within non-accrual loans in the preceding table. As of December 31, 2016 and 2015 , there were $ 3.6 million and $ 5.3 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, 2016, 2015 and 2014: 2016 2015 2014 Number of Loans Post-Modification Recorded Investment 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 10 3,801 9 3,785 8 1,640 Commercial – unsecured: Extend maturity without rate concession 2 103 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 89 4,484 3 203 — — Bankruptcy 47 2,671 52 2,501 30 1,551 Real estate – residential mortgage: Extend maturity with rate concession — — 4 750 2 390 Extend maturity without rate concession 2 315 3 262 2 210 Bankruptcy 6 981 7 2,508 19 1,807 Construction - commercial residential: Extend maturity without rate concession — — 1 1,535 3 3,616 Consumer - direct: Bankruptcy 1 2 2 6 7 7 Consumer - indirect: Bankruptcy 1 21 1 12 4 20 Total 158 $ 12,378 96 $ 14,416 86 $ 16,397 The following table presents TDRs, by class segment, as of December 31, 2016 , 2015 and 2014 that were modified during the years ended December 31, 2016 , 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: 2016 2015 2014 Number of Loans Recorded Investment Number of Loans Recorded Investment Number of Loans Recorded Investment (dollars in thousands) Construction - commercial residential — $ — — $ — 2 $ 1,803 Real estate - commercial mortgage 1 118 4 359 2 1,660 Real estate - residential mortgage 8 1,500 4 445 11 1,430 Commercial - secured 6 2,497 8 3,549 4 1,208 Commercial - unsecured 1 26 — — — — Real estate - home equity 28 1,836 13 763 11 961 Consumer - indirect 1 19 — — — — Consumer - direct — — — — 1 1 Total 45 $ 5,996 29 $ 5,116 31 $ 7,063 |