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 nine months ended September 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 17,743 143 (31 ) 17,855 Adjustment attributable to FDIC loss share arrangements — — 1,342 1,342 Net provision for loan losses 17,743 143 1,311 19,197 Adjustment attributable to FDIC loss share arrangements — — (1,342 ) (1,342 ) Transfer of balance to OREO — (209 ) (357 ) (566 ) Transfer of balance to non-covered — 28,700 (28,700 ) — Loans charged-off (12,073 ) (8,973 ) (1,188 ) (22,234 ) Recoveries 4,556 504 8 5,068 Allowance for loans losses at end of period 86,400 29,358 14,496 130,254 Reserve for unfunded commitments at beginning of period 11,801 — — 11,801 Provision for unfunded lending commitments 2,724 — — 2,724 Reserve for unfunded commitments at end of period 14,525 — — 14,525 Allowance for credit losses at end of period $ 100,925 $ 29,358 $ 14,496 $ 144,779 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 9,635 (1,795 ) 5,878 13,718 Adjustment attributable to FDIC loss share arrangements — — (1,153 ) (1,153 ) Net provision for (reversal of) loan losses 9,635 (1,795 ) 4,725 12,565 Adjustment attributable to FDIC loss share arrangements — — 1,153 1,153 Transfer of balance to OREO — (207 ) (5,171 ) (5,378 ) Loans charged-off (8,242 ) (586 ) (12,823 ) (21,651 ) Recoveries 4,338 401 38 4,777 Allowance for loans losses at end of period 73,073 2,370 59,097 134,540 Reserve for unfunded commitments at beginning of period 11,147 — — 11,147 Provision for unfunded lending commitments 952 — — 952 Reserve for unfunded commitments at end of period 12,099 — — 12,099 Allowance for credit losses at end of period $ 85,172 $ 2,370 $ 59,097 $ 146,639 A summary of changes in the allowance for credit losses for non-covered loans, by loan portfolio type, for the nine months ended September 30, is as follows: 2015 Commercial Real Estate Commercial and Industrial Energy-related Residential Mortgage (Dollars in thousands) Consumer Total Allowance for loans losses at beginning of period $ 32,630 $ 26,486 $ 5,999 $ 2,875 $ 17,377 $ 85,367 (Reversal of) Provision for loan losses (356 ) 1,327 9,339 1,897 5,679 17,886 Transfer of balance to OREO 174 (169 ) — (143 ) (71 ) (209 ) Transfer of balance to non-covered 20,763 1,445 — — 6,492 28,700 Loans charged off (7,091 ) (1,162 ) (3 ) (283 ) (12,507 ) (21,046 ) Recoveries 1,543 164 — 48 3,305 5,060 Allowance for loans losses at end of period 47,663 28,091 15,335 4,394 20,275 115,758 Reserve for unfunded commitments Balance at beginning of period 3,370 3,733 1,596 168 2,934 11,801 (Reversal of) Provision for unfunded commitments 218 (149 ) 2,037 650 (32 ) 2,724 Balance at end of period 3,588 3,584 3,633 818 2,902 14,525 Allowance for credit losses at end of period $ 51,251 $ 31,675 $ 18,968 $ 5,212 $ 23,177 $ 130,283 Allowance on loans individually evaluated for impairment $ 883 $ 817 $ — $ — $ 16 $ 1,716 Allowance on loans collectively evaluated for impairment 50,368 30,858 18,968 5,212 23,161 128,567 Loans, net of unearned income: Balance at end of period $ 5,936,161 $ 3,291,552 $ 719,456 $ 1,070,015 $ 2,846,294 $ 13,863,478 Balance at end of period individually evaluated for impairment 27,299 25,231 — — 214 52,744 Balance at end of period collectively evaluated for impairment 5,874,262 3,255,580 719,456 1,056,797 2,838,500 13,744,595 Balance at end of period acquired with deteriorated credit quality 34,600 10,741 — 13,218 7,580 66,139 2014 Commercial Real Estate Commercial and Industrial Energy-related Residential Mortgage (Dollars in thousands) Consumer Total Allowance for loans losses at beginning of period $ 26,126 $ 22,101 $ 6,878 $ 2,546 $ 14,248 $ 71,899 Provision for (Reversal of) loan losses 630 3,283 (1,115 ) 514 4,528 7,840 Transfer of balance to OREO — (130 ) — (12 ) (65 ) (207 ) Loans charged off (1,214 ) (1,097 ) — (607 ) (5,910 ) (8,828 ) Recoveries 2,209 93 — 134 2,303 4,739 Allowance for loans losses at end of period 27,751 24,250 5,763 2,575 15,104 75,443 Reserve for unfunded commitments at beginning of period 3,071 1,814 3,043 72 3,147 11,147 Provision for unfunded commitments 671 1,674 (1,427 ) 11 23 952 Reserve for unfunded commitments at end of period 3,742 3,488 1,616 83 3,170 12,099 Allowance for credit losses at end of period $ 31,493 $ 27,738 $ 7,379 $ 2,658 $ 18,274 $ 87,542 Allowance on loans individually evaluated for impairment $ 25 $ — $ — $ — $ — $ 25 Allowance on loans collectively evaluated for impairment 31,468 27,738 7,379 2,658 18,274 87,517 Loans, net of unearned income: Balance at end of period $ 3,988,172 $ 2,398,010 $ 839,823 $ 931,803 $ 2,398,890 $ 10,556,698 Balance at end of period individually evaluated for impairment 7,357 3,276 — — 706 11,339 Balance at end of period collectively evaluated for impairment 3,965,754 2,392,172 839,823 931,643 2,396,477 10,525,869 Balance at end of period acquired with deteriorated credit quality 15,061 2,562 — 160 1,707 19,490 A summary of changes in the allowance for credit losses for covered loans, by loan portfolio type, for the nine months ended September 30, is as follows: 2015 Commercial Real Estate Commercial and Industrial 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 217 152 841 101 1,311 (Decrease) Increase in FDIC loss share receivable 748 59 (277 ) (1,872 ) (1,342 ) Transfer of balance to OREO — (1 ) (339 ) (17 ) (357 ) Transfer of balance to non-covered (20,763 ) (1,445 ) — (6,492 ) (28,700 ) Loans charged off (1,188 ) — — — (1,188 ) Recoveries — — 8 — 8 Allowance for loans losses at end of period $ 3,086 $ — $ 6,519 $ 4,891 $ 14,496 Allowance on loans individually evaluated for impairment $ — $ — $ — $ — $ — Allowance on loans collectively evaluated for impairment 3,086 — 6,519 4,891 14,496 Loans, net of unearned income: Balance at end of period $ 43,590 $ 11,419 $ 119,926 $ 78,606 $ 253,541 Balance at end of period individually evaluated for impairment — — — — — Balance at end of period collectively evaluated for impairment 25,014 10,852 94,826 70,548 201,240 Balance at end of period acquired with deteriorated credit quality 18,576 567 25,100 8,058 52,301 2014 Commercial Real Estate Commercial and Industrial 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 2,544 376 971 834 4,725 (Decrease) Increase in FDIC loss share receivable 734 609 (2,911 ) 2,721 1,153 Transfer of balance to OREO (1,874 ) (1,162 ) (648 ) (1,487 ) (5,171 ) Loans charged off (9,578 ) (2,192 ) (90 ) (963 ) (12,823 ) Recoveries 38 — — — 38 Allowance for loans losses at end of period $ 30,636 $ 3,011 $ 8,211 $ 17,239 $ 59,097 Allowance on loans individually evaluated for impairment $ — $ — $ — $ — $ — Allowance on loans collectively evaluated for impairment 30,636 3,011 8,211 17,239 59,097 Loans, net of unearned income: Balance at end of period $ 247,156 $ 34,234 $ 130,976 $ 111,823 $ 524,189 Balance at end of period individually evaluated for impairment — — — — — Balance at end of period collectively evaluated for impairment 242,478 33,614 106,672 95,124 477,888 Balance at end of period acquired with deteriorated credit quality 4,678 620 24,304 16,699 46,301 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 September 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 September 30, 2015 and December 31, 2014 . Legacy loans September 30, 2015 December 31, 2014 (Dollars in thousands) Pass Special Mention Sub-standard Doubtful Loss Total Pass Special Mention Sub-standard Doubtful Total Commercial real estate - Construction $ 557,603 $ 100 $ 1,503 $ — $ 2 $ 559,208 $ 483,930 $ 240 $ 69 $ — $ 484,239 Commercial real estate - Other 3,699,714 24,473 37,874 454 — 3,762,515 3,120,370 49,847 22,193 162 3,192,572 Commercial and industrial 2,732,122 18,821 27,763 579 218 2,779,503 2,414,293 7,330 28,965 1,933 2,452,521 Energy-related 656,525 15,827 41,583 — — 713,935 872,842 — 24 — 872,866 Total $ 7,645,964 $ 59,221 $ 108,723 $ 1,033 $ 220 $ 7,815,161 $ 6,891,435 $ 57,417 $ 51,251 $ 2,095 $ 7,002,198 Legacy loans September 30, 2015 December 31, 2014 (Dollars in thousands) Current 30+ Days Past Due Total Current 30+ Days Past Due Total Residential mortgage $ 640,927 $ 19,616 $ 660,543 $ 508,789 $ 18,905 $ 527,694 Consumer - Home equity 1,480,368 8,428 1,488,796 1,278,865 12,111 1,290,976 Consumer - Indirect automobile 277,996 3,526 281,522 392,504 4,262 396,766 Consumer - Credit card 76,018 698 76,716 71,297 1,448 72,745 Consumer - Other 454,361 2,159 456,520 375,853 2,482 378,335 Total $ 2,929,670 $ 34,427 $ 2,964,097 $ 2,627,308 $ 39,208 $ 2,666,516 Non-covered acquired loans September 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 $ 114,684 $ 1,226 $ 8,538 $ 861 $ — $ (1,548 ) $ 123,761 $ 24,118 $ 2,006 $ 4,624 $ — $ (1,170 ) $ 29,578 Commercial real estate - Other 1,434,860 23,421 69,084 3,256 — (39,944 ) 1,490,677 443,450 12,794 49,139 — (39,119 ) 466,264 Commercial and industrial 498,286 3,671 12,905 1,022 539 (4,374 ) 512,049 86,213 1,861 4,807 257 (5,224 ) 87,914 Energy-related 3,358 771 1,392 — — — 5,521 7,731 — 11 — — 7,742 Total $ 2,051,188 $ 29,089 $ 91,919 $ 5,139 $ 539 $ (45,866 ) $ 2,132,008 $ 561,512 $ 16,661 $ 58,581 $ 257 $ (45,513 ) $ 591,498 Non-covered acquired loans September 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 $ 407,673 $ 6,401 $ (4,602 ) $ 409,472 $ 418,552 $ 11,858 $ (5,831 ) $ 424,579 Consumer - Home equity 452,928 7,381 (10,644 ) 449,665 216,310 9,808 (8,419 ) 217,699 Consumer - Indirect automobile 142 24 (39 ) 127 393 39 (40 ) 392 Consumer - Other 95,353 1,355 (3,760 ) 92,948 94,315 3,520 (4,217 ) 93,618 Total $ 956,096 $ 15,161 $ (19,045 ) $ 952,212 $ 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 September 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 $ 113 $ 820 $ 23 $ 1,091 $ 2,047 $ 34,731 $ 1,928 $ 8,008 $ — $ 44,667 Commercial real estate - Other 25,820 1,922 22,705 754 51,201 87,509 20,422 51,252 — 159,183 Commercial and industrial 5,637 810 6,846 2,358 15,651 23,380 395 9,275 — 33,050 $ 31,570 $ 3,552 $ 29,574 $ 4,203 $ 68,899 $ 145,620 $ 22,745 $ 68,535 $ — $ 236,900 Discount (13,890 ) (16,514 ) Total $ 55,009 $ 220,386 Covered loans September 30, 2015 December 31, 2014 30+ Days Premium 30+ Days Premium (Dollars in thousands) Current Total Current Total Residential mortgage $ 128,804 $ 20,672 $ (29,550 ) $ 119,926 $ 140,628 $ 22,058 $ (34,662 ) $ 128,024 Consumer - Home equity 85,772 9,643 (18,189 ) 77,226 99,478 16,542 (23,590 ) 92,430 Consumer - Credit card 542 27 — 569 614 34 — 648 Consumer - Other 216 15 580 811 337 18 2,701 3,056 Total $ 215,334 $ 30,357 $ (47,159 ) $ 198,532 $ 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. September 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 $ 16,491 $ 16,491 $ — $ 6,680 $ 6,680 $ — Commercial and industrial 20,360 20,360 — 2,483 2,483 — Energy-related 3,384 3,384 — — — — Consumer - Home equity 214 214 — 682 682 — With an allowance recorded: Commercial real estate 10,681 11,566 (885 ) 1,044 1,069 (25 ) Commercial and industrial 1,009 1,829 (820 ) 1,209 1,617 (408 ) Energy-related 91 94 (3 ) 27 27 — Residential mortgage 14,808 14,879 (71 ) 14,111 14,363 (252 ) Consumer - Home equity 5,248 5,278 (30 ) 7,121 7,165 (44 ) Consumer - Indirect automobile 1,120 1,129 (9 ) 1,410 1,419 (9 ) Consumer - Credit card 329 335 (6 ) 1,012 1,032 (20 ) Consumer - Other 895 920 (25 ) 781 790 (9 ) Total $ 74,630 $ 76,479 $ (1,849 ) $ 36,560 $ 37,327 $ (767 ) Total commercial loans $ 52,016 $ 53,724 $ (1,708 ) $ 11,443 $ 11,876 $ (433 ) Total mortgage loans 14,808 14,879 (71 ) 14,111 14,363 (252 ) Total consumer loans 7,806 7,876 (70 ) 11,006 11,088 (82 ) Three Months Ended Three Months Ended Nine Months Ended Nine 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 $ 16,018 $ 37 $ 7,026 $ 6 $ 16,036 $ 79 7,114 20 Commercial and industrial 20,055 159 3,553 11 20,630 465 4,417 48 Energy-related 3,409 — — — 3,425 — — — Consumer - Home equity 215 3 692 — 204 4 700 14 With an allowance recorded: Commercial real estate 11,649 128 1,631 — 8,247 385 1,533 91 Commercial and industrial 2,121 — 312 — 2,634 — 584 9 Energy-related 99 — — — 106 — — — Residential mortgage 15,008 — 17,305 — 15,100 — 16,341 119 Consumer - Home equity 5,344 — 7,177 5 5,462 — 7,404 40 Consumer - Indirect automobile 1,361 — 1,544 — 1,551 — 1,720 27 Consumer - Credit card 721 — 1,051 — 1,038 — 724 — Consumer - Other 1,030 — 470 — 1,068 — 489 11 Total $ 77,030 $ 327 $ 40,761 $ 22 $ 75,501 $ 933 $ 41,026 $ 379 Total commercial loans $ 53,351 $ 324 $ 12,522 $ 17 $ 51,078 $ 929 $ 13,648 168 Total mortgage loans 15,008 — 17,305 — 15,100 — 16,341 119 Total consumer loans 8,671 3 10,934 5 9,323 4 11,037 92 As of September 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. |