Allowance for Credit Losses and Credit Quality | ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY Allowance for Credit Losses Activity A summary of changes in the allowance for credit losses for the covered loan and non-covered loan portfolios for the six months ended June 30, is as follows: 2015 Non-covered loans (Dollars in thousands) Legacy Loans Acquired Loans Covered Loans Total Allowance for loans losses at beginning of period $ 76,174 $ 9,193 $ 44,764 $ 130,131 Provision for loan losses before benefit attributable to FDIC loss share agreements 12,631 791 (130 ) 13,292 Adjustment attributable to FDIC loss share arrangements — — 843 843 Net provision for loan losses 12,631 791 713 14,135 Adjustment attributable to FDIC loss share arrangements — — (843 ) (843 ) Transfer of balance to OREO — (333 ) (289 ) (622 ) Transfer of balance to non-covered — 28,700 (28,700 ) — Loans charged-off (7,114 ) (8,686 ) (1,130 ) (16,930 ) Recoveries 2,032 238 8 2,278 Allowance for loans losses at end of period 83,723 29,903 14,523 128,149 Reserve for unfunded commitments at beginning of period 11,801 — — 11,801 Provision for unfunded lending commitments 1,443 — — 1,443 Reserve for unfunded commitments at end of period 13,244 — — 13,244 Allowance for credit losses at end of period $ 96,967 $ 29,903 $ 14,523 $ 141,393 2014 Non-covered loans (Dollars in thousands) Legacy Loans Acquired Loans Covered Loans Total Allowance for loans losses at beginning of period $ 67,342 $ 4,557 $ 71,175 $ 143,074 Provision for (Reversal of) loan losses before benefit attributable to FDIC loss share agreements 5,078 (1,085 ) (740 ) 3,253 Adjustment attributable to FDIC loss share arrangements — — 3,598 3,598 Net (reversal of) provision for loan losses 5,078 (1,085 ) 2,858 6,851 Adjustment attributable to FDIC loss share arrangements — — (3,598 ) (3,598 ) Transfer of balance to OREO — (523 ) (5,085 ) (5,608 ) Loans charged-off (5,198 ) (182 ) (5,393 ) (10,773 ) Recoveries 3,426 109 38 3,573 Allowance for loans losses at end of period 70,648 2,876 59,995 133,519 Reserve for unfunded commitments at beginning of period 11,147 — — 11,147 Provision for unfunded lending commitments 113 — — 113 Reserve for unfunded commitments at end of period 11,260 — — 11,260 Allowance for credit losses at end of period $ 81,908 $ 2,876 $ 59,995 $ 144,779 A summary of changes in the allowance for credit losses for non-covered loans, by loan portfolio type, for the six months ended June 30, is as follows: 2015 Commercial Real Estate Commercial Business Residential Mortgage (Dollars in thousands) Consumer Total Allowance for loans losses at beginning of period $ 33,021 32,094 2,875 17,377 $ 85,367 Provision for (Reversal of) loan losses (463 ) 7,144 2,114 4,627 13,422 Transfer of balance to OREO (115 ) (169 ) (46 ) (3 ) (333 ) Transfer of balance to non-covered 20,972 1,236 — 6,492 28,700 Loans charged off (5,334 ) (997 ) (227 ) (9,242 ) (15,800 ) Recoveries 246 69 34 1,921 2,270 Allowance for loans losses at end of period 48,327 39,377 4,750 21,172 113,626 Reserve for unfunded commitments Balance at beginning of period 3,439 5,260 168 2,934 11,801 (Reversal of) Provision for unfunded commitments (15 ) 878 705 (125 ) 1,443 Balance at end of period 3,424 6,138 873 2,809 13,244 Allowance for credit losses at end of period $ 51,751 $ 45,515 $ 5,623 $ 23,981 $ 126,870 Allowance on loans individually evaluated for impairment $ 154 $ 1,287 $ — $ 3 $ 1,444 Allowance on loans collectively evaluated for impairment 51,597 44,228 5,623 23,978 125,426 Loans, net of unearned income: Balance at end of period $ 5,837,641 $ 3,957,920 $ 1,050,311 $ 2,838,085 $ 13,683,957 Balance at end of period individually evaluated for impairment 19,115 15,670 — 685 35,470 Balance at end of period collectively evaluated for impairment 5,792,146 3,937,161 1,034,199 2,822,808 13,586,314 Balance at end of period acquired with deteriorated credit quality 26,380 5,089 16,112 14,592 62,173 2014 Commercial Real Estate Commercial Business Residential Mortgage (Dollars in thousands) Consumer Total Allowance for loans losses at beginning of period $ 26,590 $ 28,515 $ 2,546 $ 14,248 $ 71,899 Provision for (Reversal of) loan losses 585 782 171 2,455 3,993 Transfer of balance to OREO (108 ) (162 ) (253 ) — (523 ) Loans charged off (660 ) (668 ) (435 ) (3,617 ) (5,380 ) Recoveries 1,699 65 114 1,657 3,535 Allowance for loans losses at end of period 28,106 28,532 2,143 14,743 73,524 Reserve for unfunded commitments at beginning of period 3,089 4,839 72 3,147 11,147 Provision for unfunded commitments 112 (43 ) 4 40 113 Reserve for unfunded commitments at end of period 3,201 4,796 76 3,187 11,260 Allowance for credit losses at end of period $ 31,307 $ 33,328 $ 2,219 $ 17,930 $ 84,784 Allowance on loans individually evaluated for impairment $ — $ 31 $ 171 $ — $ 202 Allowance on loans collectively evaluated for impairment 31,307 33,297 2,048 17,930 84,582 Loans, net of unearned income: Balance at end of period $ 3,949,444 $ 3,095,087 $ 983,011 $ 2,285,547 $ 10,313,089 Balance at end of period individually evaluated for impairment 5,976 4,563 1,058 248 11,845 Balance at end of period collectively evaluated for impairment 3,912,669 3,085,028 980,744 2,281,496 10,259,937 Balance at end of period acquired with deteriorated credit quality 30,799 5,496 1,209 3,803 41,307 A summary of changes in the allowance for credit losses for covered loans, by loan portfolio type, for the six months ended June 30, is as follows: 2015 Commercial Real Estate Commercial Business Residential Mortgage (Dollars in thousands) Consumer Total Allowance for loans losses at beginning of period $ 24,072 1,235 6,286 13,171 $ 44,764 Provision for loan losses 350 2 323 38 713 (Decrease) Increase in FDIC loss share receivable 773 — (66 ) (1,550 ) (843 ) Transfer of balance to OREO — (1 ) (274 ) (14 ) (289 ) Transfer of balance to non-covered (20,972 ) (1,236 ) — (6,492 ) (28,700 ) Loans charged off (1,130 ) — — — (1,130 ) Recoveries — — 8 — 8 Allowance for loans losses at end of period $ 3,093 $ — $ 6,277 $ 5,153 $ 14,523 Allowance on loans individually evaluated for impairment $ — $ — $ — $ — $ — Allowance on loans collectively evaluated for impairment 3,093 — 6,277 5,153 14,523 Loans, net of unearned income: Balance at end of period $ 49,542 $ 13,122 $ 119,297 $ 84,645 $ 266,606 Balance at end of period individually evaluated for impairment — — — — — Balance at end of period collectively evaluated for impairment 49,327 12,947 95,284 78,510 236,068 Balance at end of period acquired with deteriorated credit quality 215 175 24,013 6,135 30,538 2014 Commercial Real Estate Commercial Business Residential Mortgage (Dollars in thousands) Consumer Total Allowance for loans losses at beginning of period $ 38,772 $ 5,380 $ 10,889 $ 16,134 $ 71,175 Provision for loan losses 1,474 313 592 479 2,858 (Decrease) Increase in FDIC loss share receivable (2,121 ) 749 (2,100 ) (126 ) (3,598 ) Transfer of balance to OREO (1,857 ) (1,162 ) (534 ) (1,532 ) (5,085 ) Loans charged off (3,726 ) (1,589 ) — (78 ) (5,393 ) Recoveries 38 — — — 38 Allowance for loans losses at end of period $ 32,580 $ 3,691 $ 8,847 $ 14,877 $ 59,995 Allowance on loans individually evaluated for impairment — — — — — Allowance on loans collectively evaluated for impairment 32,580 3,691 8,847 14,877 59,995 Loans, net of unearned income: Balance at end of period $ 294,115 $ 35,902 $ 141,613 $ 113,809 $ 585,439 Balance at end of period individually evaluated for impairment — — — — — Balance at end of period collectively evaluated for impairment 287,592 35,902 113,340 99,334 536,168 Balance at end of period acquired with deteriorated credit quality 6,523 — 28,273 14,475 49,271 Credit Quality The Company’s investment in non-covered loans by credit quality indicator is presented in the following tables. Because of the difference in accounting for acquired loans, the tables below further segregate the Company’s non-covered loans between acquired loans and loans that were not acquired. Loan premiums/discounts in the tables below represent the adjustment of non-covered acquired loans to fair value at the acquisition date, as adjusted for income accretion and changes in cash flow estimates in subsequent periods. Asset risk classifications for commercial loans reflect the classification as of June 30, 2015 and December 31, 2014 . Credit quality information in the tables below includes loans acquired at the gross loan balance, prior to the application of premiums/discounts, at June 30, 2015 and December 31, 2014 . Legacy loans June 30, 2015 December 31, 2014 (Dollars in thousands) Pass Special Mention Sub-standard Doubtful Total Pass Special Mention Sub-standard Doubtful Total Commercial real estate - Construction $ 535,468 $ 1,767 $ 1,484 $ — $ 538,719 $ 483,930 $ 240 $ 69 $ — $ 484,239 Commercial real estate - Other 3,517,390 49,219 32,628 563 $ 3,599,800 3,161,593 49,847 22,217 162 3,233,819 Commercial business 3,310,794 21,599 66,349 1,442 $ 3,400,184 3,245,912 7,330 28,965 1,933 3,284,140 Total $ 7,363,652 $ 72,585 $ 100,461 $ 2,005 $ 7,538,703 $ 6,891,435 $ 57,417 $ 51,251 $ 2,095 $ 7,002,198 Legacy loans June 30, 2015 December 31, 2014 (Dollars in thousands) Current 30+ Days Past Due Total Current 30+ Days Past Due Total Residential mortgage $ 598,351 $ 18,146 $ 616,497 $ 508,789 $ 18,905 $ 527,694 Consumer - Home equity 1,386,801 12,204 1,399,005 1,278,865 12,111 1,290,976 Consumer - Indirect automobile 319,163 3,604 322,767 392,504 4,262 396,766 Consumer - Credit card 72,459 1,267 73,726 71,297 1,448 72,745 Consumer - Other 442,825 2,030 444,855 375,853 2,482 378,335 Total $ 2,819,599 $ 37,251 $ 2,856,850 $ 2,627,308 $ 39,208 $ 2,666,516 Non-covered acquired loans June 30, 2015 December 31, 2014 (Dollars in thousands) Pass Special Mention Sub- standard Doubtful Loss Discount Total Pass Special Mention Sub- standard Doubtful Discount Total Commercial real estate-Construction $ 132,088 $ 264 $ 7,550 $ 2,106 $ — $ (1,472 ) $ 140,536 $ 24,118 $ 2,006 $ 4,624 $ — $ (1,170 ) $ 29,578 Commercial real estate - Other 1,497,720 20,671 67,627 16,644 — (44,076 ) 1,558,586 445,557 12,794 49,139 — (39,119 ) 468,371 Commercial business 546,397 5,284 7,604 3,180 34 (4,763 ) 557,736 91,837 1,861 4,818 257 (5,224 ) 93,549 Total $ 2,176,205 $ 26,219 $ 82,781 $ 21,930 $ 34 $ (50,311 ) $ 2,256,858 $ 561,512 $ 16,661 $ 58,581 $ 257 $ (45,513 ) $ 591,498 Non-covered acquired loans June 30, 2015 December 31, 2014 (Dollars in thousands) Current 30+ Days Past Due Premium (discount) Total Current 30+ Days Past Due Premium (discount) Total Residential mortgage $ 429,893 $ 8,816 $ (4,895 ) $ 433,814 $ 418,552 $ 11,858 $ (5,831 ) $ 424,579 Consumer - Home equity 486,364 15,733 (13,272 ) 488,825 216,310 9,808 (8,419 ) 217,699 Consumer - Indirect automobile 195 26 (30 ) 191 393 39 (40 ) 392 Consumer - Other 110,490 2,145 (3,919 ) 108,716 94,315 3,520 (4,217 ) 93,618 Total $ 1,026,942 $ 26,720 $ (22,116 ) $ 1,031,546 $ 729,570 $ 25,225 $ (18,507 ) $ 736,288 The Company’s investment in covered loans by credit quality indicator is presented in the following table. Loan premiums/discounts in the tables below represent the adjustment of covered loans to net book value before allowance at the reporting date. Covered loans June 30, 2015 December 31, 2014 (Dollars in thousands) Pass Special Mention Sub- standard Doubtful Total Pass Special Mention Sub- standard Doubtful Total Commercial real estate - Construction $ 315 $ 843 $ 11,141 $ 2,101 $ 14,400 $ 34,731 $ 1,928 $ 8,008 $ — $ 44,667 Commercial real estate - Other 23,587 5,384 14,373 3,075 46,419 87,509 20,422 51,252 — 159,183 Commercial business 6,158 1,669 6,512 424 14,763 23,380 395 9,275 — 33,050 $ 30,060 $ 7,896 $ 32,026 $ 5,600 $ 75,582 $ 145,620 $ 22,745 $ 68,535 $ — $ 236,900 Discount (12,918 ) (16,514 ) Total $ 62,664 $ 220,386 Covered loans June 30, 2015 December 31, 2014 30+ Days Premium 30+ Days Premium (Dollars in thousands) Current Total Current Total Residential mortgage $ 131,351 $ 20,902 $ (32,956 ) $ 119,297 $ 140,628 $ 22,058 $ (34,662 ) $ 128,024 Consumer - Home equity 92,915 10,350 (20,022 ) 83,243 99,478 16,542 (23,590 ) 92,430 Consumer - Credit card 565 23 — 588 614 34 — 648 Consumer - Other 225 16 573 814 337 18 2,701 3,056 Total $ 225,056 $ 31,291 $ (52,405 ) $ 203,942 $ 241,057 $ 38,652 $ (55,551 ) $ 224,158 Legacy Impaired Loans Information on the Company’s investment in legacy impaired loans is presented in the following tables as of and for the periods indicated. June 30, 2015 December 31, 2014 Recorded Investment Unpaid Principal Balance Related Allowance Recorded Investment Unpaid Principal Balance Related Allowance (Dollars in thousands) With no related allowance recorded: Commercial real estate $ 16,172 $ 16,172 $ — $ 6,680 $ 6,680 $ — Commercial business 13,330 13,330 — 2,483 2,483 — Consumer - Home equity 228 228 — 682 682 — With an allowance recorded: Commercial real estate 5,237 5,407 (170 ) 1,068 1,093 (25 ) Commercial business 15,556 17,008 (1,452 ) 1,212 1,620 (408 ) Residential mortgage 15,504 15,587 (83 ) 14,111 14,363 (252 ) Consumer - Home equity 9,087 9,142 (55 ) 7,121 7,165 (44 ) Consumer - Indirect automobile 1,388 1,398 (10 ) 1,410 1,419 (9 ) Consumer - Credit card 1,047 1,067 (20 ) 1,012 1,032 (20 ) Consumer - Other 1,241 1,253 (12 ) 781 790 (9 ) Total $ 78,790 $ 80,592 $ (1,802 ) $ 36,560 $ 37,327 $ (767 ) Total commercial loans $ 50,295 $ 51,917 $ (1,622 ) $ 11,443 $ 11,876 $ (433 ) Total mortgage loans 15,504 15,587 (83 ) 14,111 14,363 (252 ) Total consumer loans 12,991 13,088 (97 ) 11,006 11,088 (82 ) Three Months Ended Three Months Ended Six Months Ended Six Months Ended Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Average Interest Average Interest (Dollars in thousands) With no related allowance recorded: Commercial real estate $ 16,361 $ 5 $ 5,228 $ 6 $ 16,417 $ 15 5,178 14 Commercial business 13,715 14 5,128 9 13,924 44 5,006 22 Consumer - Home equity 230 — 252 — 233 — 250 — With an allowance recorded: Commercial real estate 5,339 16 925 — 5,057 37 926 1 Commercial business 17,788 187 1,078 4 18,109 450 1,061 13 Residential mortgage 15,721 — 14,050 — 15,927 16 13,258 6 Consumer - Home equity 9,497 — 7,825 — 9,680 8 7,749 5 Consumer - Indirect automobile 1,691 — 1,310 — 1,792 13 1,300 6 Consumer - Credit card 1,199 — 750 — 1,196 — 560 — Consumer - Other 1,294 — 575 — 1,334 10 571 5 Total $ 82,835 $ 222 $ 37,121 $ 19 $ 83,669 $ 593 $ 35,859 $ 72 Total commercial loans $ 53,203 $ 222 $ 12,359 $ 19 $ 53,507 $ 546 $ 12,171 50 Total mortgage loans 15,721 — 14,050 — 15,927 16 13,258 6 Total consumer loans 13,911 — 10,712 — 14,235 31 10,430 16 As of June 30, 2015 and December 31, 2014 , the Company was not committed to lend a material amount of additional funds to any customer whose loan was classified as impaired or as a troubled debt restructuring. |