UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2015

or

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                     to  

Commission File Number: 000-55106

BBVA Compass Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Texas		20-8948381
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
2200 Post Oak Blvd. Houston, Texas		77056
(Address of principal executive offices)		(Zip Code)
	(205) 297-3000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at October 31, 2015
Common Stock (par value $0.01 per share)	222,950,751 shares

Explanatory Note

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this report with certain reduced disclosures as permitted by those instructions.

TABLE OF CONTENTS

		Page
Part I	Financial Information
Item 1.	Financial Statements (Unaudited)	7
	Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014	7
	Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2015 and 2014	8
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2015 and 2014	9
	Condensed Consolidated Statements of Shareholder's Equity for the nine months ended September 30, 2015 and 2014	10
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014	11
	Notes to the September 30, 2015 Condensed Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	59
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	89
Item 4.	Controls and Procedures	89
Part II	Other Information
Item 1.	Legal Proceedings	89
Item 1A.	Risk Factors	90
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	90
Item 3.	Defaults Upon Senior Securities	90
Item 4.	Mine Safety Disclosures	90
Item 5.	Other Information	90
Item 6.	Exhibits	92
Signatures		93

Glossary of Acronyms and Terms

The following listing provides a comprehensive reference of common acronyms and terms used throughout the document:

AFS	Available For Sale
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
Basel III	Global regulatory framework developed by the Basel Committee on Banking Supervision
Bank	Compass Bank
BBVA	Banco Bilbao Vizcaya Argentaria, S.A.
BBVA Compass	Registered trade name of Compass Bank
BBVA Group	BBVA and its consolidated subsidiaries
BOLI	Bank Owned Life Insurance
BSI	BBVA Securities Inc.
Capital Securities	Debentures issued by the Parent
Cash Flow Hedge	A hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability
CD	Certificate of Deposit and/or time deposits
CESCE	Spanish Export Credit Agency
CET1	Common Equity Tier 1
CET1 Risk Based Capital Ratio	Ratio of Common Tier 1 capital to risk-weighted assets
CFPB	Consumer Financial Protection Bureau
Company	BBVA Compass Bancshares, Inc. and its subsidiaries
Covered Assets	Loans and other real estate owned acquired from the FDIC subject to loss sharing agreements
Covered Loans	Loans acquired from the FDIC subject to loss sharing agreements
CRA	Community Reinvestment Act
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
ERM	Enterprise Risk Management
EVE	Economic Value of Equity
Exchange Act	Securities and Exchange Act of 1934, as amended
Fair Value Hedge	A hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment
FASB	Financial Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
Federal Reserve Board	Board of Governors of the Federal Reserve System
FHLB	Federal Home Loan Bank
FICO	Fair Isaac Corporation
Fitch	Fitch Ratings
FNMA	Federal National Mortgage Association
Guaranty Bank	Collectively, certain assets and liabilities of Guaranty Bank, acquired by the Company in 2009
HTM	Held To Maturity
IRS	Internal Revenue Service
LCR	Liquidity Coverage Ratio
Leverage Ratio	Ratio of Tier 1 capital to quarterly average on-balance sheet assets
Moody's	Moody's Investor Services, Inc.
MRA	Master Repurchase Agreement
MSR	Mortgage Servicing Rights
OAS	Option Adjusted Spread

3

OCC	Office of the Comptroller of the Currency
OREO	Other Real Estate Owned
OTTI	Other-Than-Temporary Impairment
Parent	BBVA Compass Bancshares, Inc.
Potential Problem Loans	Noncovered, commercial loans rated substandard or below, which do not meet the definition of nonaccrual, TDR, or 90 days past due and still accruing
Purchased Impaired Loans	Loans with evidence of credit deterioration since acquisition for which it is probable all contractual payments will not be received that are accounted for under ASC Subtopic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality
Purchased Nonimpaired Loans	Acquired loans with a fair value that is lower than the contractual amounts due that are not required to be accounted for in accordance with ASC Subtopic 310-30
SBA	Small Business Administration
SEC	Securities and Exchange Commission
S&P	Standard and Poor's Rating Services
TBA	To be announced
TDR	Troubled Debt Restructuring
Tier 1 Risk-Based Capital Ratio	Ratio of Tier 1 capital to risk-weighted assets
Total Risk-Based Capital Ratio	Ratio of Total capital (the sum of Tier 1 capital and Tier 2 capital) to risk-weighted assets
U.S.	United States of America
U.S. Treasury	United States Department of the Treasury
U.S. Basel III final rule	Final rule to implement the Basel III capital framework in the United States
U.S. GAAP	Accounting principles generally accepted in the United States

4

Unless otherwise specified, the terms “we,” “us,” “our,” and the “Company” are used to refer to BBVA Compass Bancshares, Inc. and its subsidiaries, or any one or more of them, as the context may require. The term “Parent” refers to BBVA Compass Bancshares, Inc. The term “BBVA” refers to Banco Bilbao Vizcaya Argentaria, S.A., the parent company of BBVA Compass Bancshares, Inc.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements about the Company and its industry that involve substantial risks and uncertainties. Statements other than statements of current or historical fact, including statements regarding the Company's future financial condition, results of operations, business plans, liquidity, cash flows, projected costs, and the impact of any laws or regulations applicable to the Company, are forward-looking statements. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Such factors include, but are not limited to, the following:

• national, regional and local economic conditions may be less favorable than expected, resulting in, among other things, increased loan charge-offs, higher provisions for credit losses and/or reduced demand for the Company's services;

• disruptions to the credit and financial markets, either nationally or globally, including downgrades of the U.S. government's credit rating and the failure of the European Union to stabilize the fiscal condition of member countries;

• weakness in the real estate market, including the secondary residential mortgage market, which can affect, among other things, the value of collateral securing mortgage loans, mortgage loan originations and delinquencies, and profits on sales of mortgage loans;

• legislative, regulatory or accounting changes, including changes resulting from the adoption and implementation of the Dodd-Frank Act, which may adversely affect our business and/or competitive position, impose additional costs on the Company or cause us to change our business practices;

• the Dodd-Frank Act's consumer protection regulations which could adversely affect the Company's business, financial condition or results of operations;

• the CFPB's residential mortgage and other retail lending regulations, which could adversely affect the Company's business, financial condition or results of operations;

• declining oil prices, which could have a negative impact on the economies and real estate markets of states such as Texas, resulting in, among other things, higher delinquencies and increased charge-offs in the energy lending portfolio as well as other commercial and consumer loan portfolios indirectly impacted by the declining oil prices;

• the Bank's CRA rating, which has resulted in certain restrictions on the Company's activities;

• disruptions in the Company's ability to access capital markets, which may adversely affect its capital resources and liquidity;

• the Company's heavy reliance on communications and information systems to conduct its business and reliance on third parties and affiliates to provide key components of its business infrastructure, any disruptions of which could interrupt the Company's operations or increase the costs of doing business;

• the Company's financial reporting controls and procedures may not prevent or detect all errors or fraud;

• the Company is subject to certain risks related to originating and selling mortgages. It may be required to repurchase mortgage loans or indemnify mortgage loan purchases as a result of breaches of representations and warranties, borrower fraud or certain breaches of its servicing agreements, and this could harm the Company's liquidity, results of operations and financial condition;

• the Company's dependence on the accuracy and completeness of information about clients and counterparties;

• the fiscal and monetary policies of the federal government and its agencies;

• the failure to satisfy capital adequacy and liquidity guidelines applicable to the Company;

• downgrades to the Company's credit ratings;

• changes in interest rates which could affect interest rate spreads and net interest income;

• costs and effects of litigation, regulatory investigations or similar matters;

• a failure by the Company to effectively manage the risks the Company faces, including credit, operational and cyber security risks;

5

• increased pressures from competitors (both banks and non-banks) and/or an inability by the Company to remain competitive in the financial services industry, particularly in the markets which the Company serves, and keep pace with technological changes;

• unpredictable natural or other disasters, which could impact the Company's customers or operations;

• a loss of customer deposits, which could increase the Company's funding costs;

• the impact that can result from having loans concentrated by loan type, industry segment, borrower type or location of the borrower or collateral;

• changes in the creditworthiness of customers;

• increased loan losses or impairment of goodwill and other intangibles;

• potential changes in interchange fees;

• negative public opinion, which could damage the Company's reputation and adversely impact business and revenues;

• the Company has in the past and may in the future pursue acquisitions, which could affect costs and from which the Company may not be able to realize anticipated benefits;

• the Company depends on the expertise of key personnel, and if these individuals leave or change their roles without effective replacements, operations may suffer;

• the Company may not be able to hire or retain additional qualified personnel and recruiting and compensation costs may increase as a result of turnover, both of which may increase costs and reduce profitability and may adversely impact the Company's ability to implement the Company's business strategies; and

• changes in the Company's accounting policies or in accounting standards, which could materially affect how the Company reports financial results and condition.

The forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the time they are made and do not necessarily reflect the Company’s outlook at any other point in time. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or for any other reason. However, readers should carefully review the risk factors set forth in other reports or documents the Company files periodically with the SEC.

6

PART I FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
	September 30, 2015			December 31, 2014
	(In Thousands)
Assets:
Cash and due from banks	$	3,898,257		$	2,764,345
Federal funds sold, securities purchased under agreements to resell and interest bearing deposits	479,207			624,060
Cash and cash equivalents	4,377,464			3,388,405
Trading account assets	4,193,506			2,834,397
Investment securities available for sale	10,803,660			10,237,275
Investment securities held to maturity (fair value of $1,268,114 and $1,275,963 at September 30, 2015 and December 31, 2014, respectively)	1,357,801			1,348,354
Loans held for sale (includes $122,758 and $154,816 measured at fair value at September 30, 2015 and December 31, 2014, respectively)	634,158			154,816
Loans	60,287,221			57,371,784
Allowance for loan losses	(722,122		)	(685,041		)
Net loans	59,565,099			56,686,743
Premises and equipment, net	1,309,009			1,351,479
Bank owned life insurance	697,023			694,335
Goodwill	5,060,197			5,046,847
Other intangible assets	40,701			70,784
Other real estate owned	23,762			20,600
Other assets	1,297,620			1,318,392
Total assets	$	89,360,000		$	83,152,427
Liabilities:
Deposits:
Noninterest bearing	$	19,060,016		$	17,169,412
Interest bearing	45,432,380			44,020,304
Total deposits	64,492,396			61,189,716
FHLB and other borrowings	6,216,425			4,809,843
Federal funds purchased and securities sold under agreements to repurchase	639,259			1,129,503
Other short-term borrowings	4,167,897			2,545,724
Accrued expenses and other liabilities	1,463,688			1,474,067
Total liabilities	76,979,665			71,148,853
Shareholder’s Equity:
Preferred stock — $0.01 par value:
Authorized - 30,000,000 shares at September 30, 2015 and none at December 31, 2014
Issued or outstanding — none	—			—
Common stock — $0.01 par value:
Authorized — 300,000,000 shares
Issued — 222,950,751 shares at both September 30, 2015 and December 31, 2014	2,230			2,230
Surplus	15,246,072			15,285,991
Accumulated deficit	(2,859,770		)	(3,262,181		)
Accumulated other comprehensive loss	(37,789		)	(51,357		)
Total BBVA Compass Bancshares, Inc. shareholder’s equity	12,350,743			11,974,683
Noncontrolling interests	29,592			28,891
Total shareholder’s equity	12,380,335			12,003,574
Total liabilities and shareholder’s equity	$	89,360,000		$	83,152,427

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

7

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015			2014
	(In Thousands)
Interest income:
Interest and fees on loans	$	540,517	$	509,766	$	1,615,753		$	1,538,788
Interest on investment securities available for sale	46,646		48,363		143,058			145,706
Interest on investment securities held to maturity	6,953		6,862		20,579			21,111
Interest on federal funds sold, securities purchased under agreements to resell and interest bearing deposits	1,659		47		4,017			136
Interest on trading account assets	14,431		933		37,877			2,027
Total interest income	610,206		565,971		1,821,284			1,707,768
Interest expense:
Interest on deposits	68,282		66,763		203,136			180,880
Interest on FHLB and other borrowings	20,422		16,399		67,068			48,947
Interest on federal funds purchased and securities sold under agreements to repurchase	2,506		447		5,534			1,384
Interest on other short-term borrowings	11,129		394		36,668			516
Total interest expense	102,339		84,003		312,406			231,727
Net interest income	507,867		481,968		1,508,878			1,476,041
Provision for loan losses	29,151		3,869		117,331			86,387
Net interest income after provision for loan losses	478,716		478,099		1,391,547			1,389,654
Noninterest income:
Service charges on deposit accounts	54,917		57,537		161,891			165,886
Card and merchant processing fees	29,024		28,682		83,918			81,459
Retail investment sales	26,055		27,645		77,574			83,053
Investment banking and advisory fees	17,842		18,750		84,975			63,226
Asset management fees	7,918		10,666		24,449			31,959
Corporate and correspondent investment sales	6,047		5,388		20,290			22,016
Mortgage banking income	554		8,498		21,269			18,924
Bank owned life insurance	4,345		4,603		13,527			12,807
Investment securities gains, net	6,736		9,710		66,967			47,608
Gain (loss) on prepayment of FHLB and other borrowings, net	—		143		(6,118		)	(315		)
Other	79,938		54,809		192,473			154,581
Total noninterest income	233,376		226,431		741,215			681,204
Noninterest expense:
Salaries, benefits and commissions	268,362		265,334		796,333			791,204
Equipment	58,151		56,355		173,467			165,562
Professional services	54,784		52,463		152,462			148,652
Net occupancy	39,525		39,357		119,187			118,514
FDIC indemnification expense	8,461		18,748		49,669			80,736
Amortization of intangibles	9,507		12,635		30,083			38,800
Securities impairment:
Other-than-temporary impairment	—		—		1,385			415
Less: non-credit portion recognized in other comprehensive income	—		—		87			235
Total securities impairment	—		—		1,298			180
Other	97,460		88,250		256,106			253,623
Total noninterest expense	536,250		533,142		1,578,605			1,597,271
Net income before income tax expense	175,842		171,388		554,157			473,587
Income tax expense	50,110		27,770		150,008			107,467
Net income	125,732		143,618		404,149			366,120
Less: net income attributable to noncontrolling interests	491		815		1,738			1,772
Net income attributable to shareholder	$	125,241	$	142,803	$	402,411		$	364,348

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

8

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015		2014
	(In Thousands)
Net income	$	125,732	$	143,618		$	404,149	$	366,120
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) arising during period from securities available for sale	27,493		(11,272		)	39,270		40,883
Less: reclassification adjustment for net gains on sale of securities available for sale in net income	3,804		6,220			37,816		30,498
Net change in unrealized holding gains (losses) on securities available for sale	23,689		(17,492		)	1,454		10,385
Change in unamortized net holding losses on investment securities held to maturity	1,066		2,398			4,834		7,183
Less: non-credit related impairment on investment securities held to maturity	—		—			49		151
Change in unamortized non-credit related impairment on investment securities held to maturity	290		249			704		732
Net change in unamortized holding losses on securities held to maturity	1,356		2,647			5,489		7,764
Unrealized holding gains (losses) arising during period from cash flow hedge instruments	1,838		(706		)	4,910		(2,388		)
Change in defined benefit plans	—		—			1,715		(1,671		)
Other comprehensive income (loss), net of tax	26,883		(15,551		)	13,568		14,090
Comprehensive income	152,615		128,067			417,717		380,210
Less: comprehensive income attributable to noncontrolling interests	491		815			1,738		1,772
Comprehensive income attributable to shareholder	$	152,124	$	127,252		$	415,979	$	378,438

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

9

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (Unaudited)
	Common Stock		Surplus			Accumulated Deficit			Accumulated Other Comprehensive Loss			Non-controlling Interests			Total Shareholder’s Equity
	(In Thousands)
Balance, January 1, 2014	$	2,207	$	15,273,218		$	(3,728,737	)	$	(87,936	)	$	29,007		$	11,487,759
Net income	—		—			364,348			—			1,772			366,120
Other comprehensive income, net of tax	—		—			—			14,090			—			14,090
Issuance of common stock	23		116,977			—			—			—			117,000
Dividends	—		(51,000		)	—			—			(1,037		)	(52,037		)
Vesting of restricted stock	—		(4,702		)	—			—			—			(4,702		)
Restricted stock retained to cover taxes	—		(2,507		)	—			—			—			(2,507		)
Amortization of stock-based deferred compensation	—		1,330			—			—			—			1,330
Balance, September 30, 2014	$	2,230	$	15,333,316		$	(3,364,389	)	$	(73,846	)	$	29,742		$	11,927,053
Balance, January 1, 2015	$	2,230	$	15,285,991		$	(3,262,181	)	$	(51,357	)	$	28,891		$	12,003,574
Net income	—		—			402,411			—			1,738			404,149
Other comprehensive income, net of tax	—		—			—			13,568			—			13,568
Dividends	—		(35,000		)	—			—			(1,037		)	(36,037		)
Vesting of restricted stock	—		(3,720		)	—			—			—			(3,720		)
Restricted stock retained to cover taxes	—		(2,984		)	—			—			—			(2,984		)
Amortization of stock-based deferred compensation	—		1,785			—			—			—			1,785
Balance, September 30, 2015	$	2,230	$	15,246,072		$	(2,859,770	)	$	(37,789	)	$	29,592		$	12,380,335

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

10

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Nine Months Ended September 30,
	2015			2014
	(In Thousands)
Operating Activities:
Net income	$	404,149		$	366,120
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	206,552			202,924
Securities impairment	1,298			180
Amortization of intangibles	30,083			38,800
Accretion of discount, loan fees and purchase market adjustments, net	(84,168		)	(125,587		)
Net change in FDIC indemnification asset/liability	49,669			80,736
Provision for loan losses	117,331			86,387
Amortization of stock based compensation	1,785			1,330
Net change in trading account assets	(153,297		)	(195,206		)
Net change in trading account liabilities	80,378			(20,600		)
Net change in loans held for sale	32,058			(29,644		)
Deferred tax benefit	(9,686		)	(37,057		)
Investment securities gains, net	(66,967		)	(47,608		)
Loss on prepayment of FHLB and other borrowings, net	6,118			315
Loss on sale of premises and equipment	146			5,162
(Gain) loss on sale of loans	(21,086		)	75
Net (gain) loss on sale of other real estate and other assets	500			(956		)
Loss on disposition	—			981
(Increase) decrease in other assets	38,934			(436,361		)
Increase (decrease) in other liabilities	(138,963		)	456,534
Net cash provided by operating activities	494,834			346,525
Investing Activities:
Proceeds from sales of investment securities available for sale	2,877,744			960,744
Proceeds from prepayments, maturities and calls of investment securities available for sale	1,225,031			1,019,919
Purchases of investment securities available for sale	(4,662,585		)	(2,992,721		)
Proceeds from prepayments, maturities and calls of investment securities held to maturity	82,163			116,274
Purchases of investment securities held to maturity	(82,634		)	(2,654		)
Proceeds from sales of trading securities	2,871,708			—
Purchases of trading securities	(4,077,520		)	—
Net change in loan portfolio	(3,853,782		)	(4,435,927		)
Purchase of premises and equipment	(102,522		)	(58,748		)
Proceeds from sale of premises and equipment	7,979			15,563
Net cash paid in acquisition	(12,567		)	(97,566		)
Proceeds from sales of loans	436,242			101,740
Reimbursements from (payments to) FDIC for covered assets	818			(13,863		)
Proceeds from sales of other real estate owned	12,890			21,095
Net cash used in investing activities	(5,277,035		)	(5,366,144		)
Financing Activities:
Net increase in demand deposits, NOW accounts and savings accounts	2,527,448			4,914,997
Net increase in time deposits	767,539			910,489
Net decrease in federal funds purchased and securities sold under agreements to repurchase	(490,244		)	(43,517		)
Net increase in other short-term borrowings	1,622,173			241,244
Proceeds from FHLB and other borrowings	4,000,000			1,694,297
Repayment of FHLB and other borrowings	(2,612,915		)	(1,438,571		)
Vesting of restricted stock	(3,720		)	(4,702		)
Restricted stock grants retained to cover taxes	(2,984		)	(2,507		)
Issuance of common stock	—			117,000
Common dividends paid	(35,000		)	(51,000		)
Preferred dividends paid	(1,037		)	(1,037		)
Net cash provided by financing activities	5,771,260			6,336,693
Net increase in cash and cash equivalents	989,059			1,317,074
Cash and cash equivalents at beginning of year	3,388,405			3,598,460
Cash and cash equivalents at end of period	$	4,377,464		$	4,915,534

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

11

BBVA COMPASS BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

General

The accounting and reporting policies of the Company and the methods of applying those policies that materially affect the consolidated financial statements conform with U.S. GAAP and with general financial services industry practices. The accompanying interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC and, therefore, do not include all information and notes to the consolidated financial statements necessary for a complete presentation of financial position, results of operations, comprehensive income and cash flows in conformity with U.S. GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the condensed consolidated financial statements have been included. Operating results for the three and nine months ended September 30, 2015, are not necessarily indicative of the results that may be expected for the year ended December 31, 2015. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The Company has evaluated subsequent events for potential recognition and disclosure through the filing date of this Quarterly Report on Form 10-Q to determine if either recognition or disclosure of significant events or transactions is required.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, the most significant of which relate to the allowance for loan losses, goodwill impairment, fair value measurements and income taxes. Actual results could differ from those estimates.

Recently Issued Accounting Standards

Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure

In January 2014, the FASB released ASU 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this ASU clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both the amount of foreclosed residential real estate property held by the creditor and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company elected to adopt the amendments in this ASU using the prospective transition method. The adoption of this standard did not have a material impact on the financial condition or results of operations of the Company. See Note 3, Loans and Allowance for Loan Losses.

Revenue from Contracts with Customers

In May 2014, the FASB released ASU 2014-09, Revenue from Contracts with Customers. The core principle of this codified guidance requires an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides five steps to be analyzed to accomplish the core principle. The amendments in this ASU were originally effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Subsequently, the FASB issued a one-year deferral for implementation, which results in the new guidance being effective for annual and interim reporting periods beginning after December 15, 2017. The FASB,

12

however, permitted adoption of the new guidance on the original effective date. The Company is currently assessing the impact that the adoption of this standard will have on the financial condition and results of operations of the Company.

Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures

In June 2014, the FASB issued ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this ASU change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. In addition, for repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments in this ASU also require disclosures on transfers accounted for as sales in transactions that are economically similar to repurchase agreements, and provide increased transparency about the types of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The accounting changes in this ASU and disclosures for certain transactions accounted for as a sale are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The disclosures for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014 and for interim periods beginning after March 15, 2015. The adoption of this standard did not have a material impact on the financial condition or results of operations of the Company. See Note 6, Securities Financing Activities.

Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure

In August 2014, the FASB issued ASU 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure. The amendments in this ASU address the classification and measurement of foreclosed loans which were part of a government-sponsored loan guarantee program. If certain criteria are met, the loan should be derecognized and a separate other receivable should be recorded upon foreclosure at the amount of the loan balance expected to be recovered from the guarantor. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The adoption of this standard did not have a material impact on the financial condition or results of operations of the Company.

Consolidation

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis. The amendments in this ASU modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, eliminate the presumption that a general partner should consolidate a limited partnership, affect the consolidation analysis of reporting entities that are involved with variable interest entities and provide a scope exception from consolidation guidance for reporting entities with interest in certain investment funds. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this standard is not expected to have a material impact on the financial condition or results of operations of the Company.

Simplifying the Presentation of Debt Issuance Costs

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in this ASU require debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this standard is not expected to have a material impact on the financial condition or results of operations of the Company.

13

Customer's Accounting for Fees Paid in a Cloud Computing Arrangement

In April 2015, the FASB issued ASU 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. The amendments in this ASU provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this standard is not expected to have a material impact on the financial condition or results of operations of the Company.

(2)Investment Securities Available for Sale and Investment Securities Held to Maturity

The following table presents the adjusted cost and approximate fair value of investment securities available for sale and investment securities held to maturity.

	September 30, 2015
			Gross Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	3,007,221	$	23,596	$	8,693	$	3,022,124
Mortgage-backed securities	4,634,728		37,379		17,571		4,654,536
Collateralized mortgage obligations	2,475,968		17,419		7,760		2,485,627
States and political subdivisions	81,940		3,455		—		85,395
Other	24,863		307		33		25,137
Equity securities	530,800		41		—		530,841
Total	$	10,755,520	$	82,197	$	34,057	$	10,803,660
Investment securities held to maturity:
Collateralized mortgage obligations	$	108,422	$	6,088	$	5,968	$	108,542
Asset-backed securities	27,047		2,901		2,039		27,909
States and political subdivisions	1,156,205		828		92,048		1,064,985
Other	66,127		2,744		2,193		66,678
Total	$	1,357,801	$	12,561	$	102,248	$	1,268,114

14

	December 31, 2014
			Gross Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	2,312,572	$	10,360	$	9,390	$	2,313,542
Mortgage-backed securities	4,399,706		64,371		40,242		4,423,835
Collateralized mortgage obligations	2,475,115		19,385		5,921		2,488,579
States and political subdivisions	460,569		8,008		1,262		467,315
Other	44,225		238		22		44,441
Equity securities	499,522		41		—		499,563
Total	$	10,191,709	$	102,403	$	56,837	$	10,237,275
Investment securities held to maturity:
Collateralized mortgage obligations	$	124,051	$	5,878	$	5,452	$	124,477
Asset-backed securities	39,187		3,568		2,011		40,744
States and political subdivisions	1,112,415		2,143		79,246		1,035,312
Other	72,701		4,920		2,191		75,430
Total	$	1,348,354	$	16,509	$	88,900	$	1,275,963

In the above table, equity securities include $531 million and $500 million at September 30, 2015 and December 31, 2014, respectively, of FHLB and Federal Reserve stock carried at par.

The investments held within the states and political subdivision caption of investment securities held to maturity relate to private placement transactions underwritten as loans by the Company but that meet the definition of a security within ASC Topic 320, Investments – Debt and Equity Securities.

15

The following table discloses the fair value and the gross unrealized losses of the Company’s available for sale securities and held to maturity securities that were in a loss position at September 30, 2015 and December 31, 2014. This information is aggregated by investment category and the length of time the individual securities have been in an unrealized loss position.

	September 30, 2015
	Securities in a loss position for less than 12 months				Securities in a loss position for 12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	299,978	$	4,133	$	375,491	$	4,560	$	675,469	$	8,693
Mortgage-backed securities	845,311		2,323		1,501,811		15,248		2,347,122		17,571
Collateralized mortgage obligations	926,611		5,049		104,894		2,711		1,031,505		7,760
Other	—		—		1,089		33		1,089		33
Total	$	2,071,900	$	11,505	$	1,983,285	$	22,552	$	4,055,185	$	34,057
Investment securities held to maturity:
Collateralized mortgage obligations	$	22,293	$	478	$	45,527	$	5,490	$	67,820	$	5,968
Asset-backed securities	277		2		17,229		2,037		17,506		2,039
States and political subdivisions	119,336		7,919		783,030		84,129		902,366		92,048
Other	3,909		2,193		—		—		3,909		2,193
Total	$	145,815	$	10,592	$	845,786	$	91,656	$	991,601	$	102,248

	December 31, 2014
	Securities in a loss position for less than 12 months				Securities in a loss position for 12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	620,794	$	8,220	$	37,220	$	1,170	$	658,014	$	9,390
Mortgage-backed securities	308,734		862		1,915,494		39,380		2,224,228		40,242
Collateralized mortgage obligations	714,173		3,829		146,806		2,092		860,979		5,921
States and political subdivisions	—		—		135,825		1,262		135,825		1,262
Other	—		—		1,099		22		1,099		22
Total	$	1,643,701	$	12,911	$	2,236,444	$	43,926	$	3,880,145	$	56,837
Investment securities held to maturity:
Collateralized mortgage obligations	$	34,400	$	1,099	$	27,389	$	4,353	$	61,789	$	5,452
Asset-backed securities	—		—		23,374		2,011		23,374		2,011
States and political subdivisions	21,688		768		817,570		78,478		839,258		79,246
Other	4,061		2,191		—		—		4,061		2,191
Total	$	60,149	$	4,058	$	868,333	$	84,842	$	928,482	$	88,900

As indicated in the previous tables, at September 30, 2015, the Company held certain investment securities in unrealized loss positions. The Company does not have the intent to sell these securities and believes it is not more likely than not that it will be required to sell these securities before their anticipated recovery.

16

The Company regularly evaluates each available for sale and held to maturity security in a loss position for OTTI. In its evaluation, the Company considers such factors as the length of time and the extent to which the fair value has been below cost, the financial condition of the issuer, the Company’s intent to hold the security to an expected recovery in market value and whether it is more likely than not that the Company will have to sell the security before its fair value recovers. Activity related to the credit loss component of the OTTI is recognized in earnings. The portion of OTTI related to all other factors is recognized in other comprehensive income.

Management does not believe that any individual unrealized loss in the Company’s investment securities available for sale or held to maturity portfolios, presented in the preceding tables, represents an OTTI at either September 30, 2015 or December 31, 2014, other than those noted below.

The following table discloses activity related to credit losses for debt securities where a portion of the OTTI was recognized in other comprehensive income.

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2015		2014		2015		2014
	(In Thousands)
Balance at beginning of period	$	22,421	$	21,123	$	21,123	$	20,943
Reductions for securities paid off during the period (realized)	—		—		—		—
Additions for the credit component on debt securities in which OTTI was not previously recognized	—		—		1,013		—
Additions for the credit component on debt securities in which OTTI was previously recognized	—		—		285		180
Balance at end of period	$	22,421	$	21,123	$	22,421	$	21,123

For the three months ended September 30, 2015 and 2014, there was no OTTI recognized on securities. For the nine months ended September 30, 2015 and 2014, there was $1.3 million and $180 thousand, respectively of OTTI recognized on held to maturity securities. The investment securities primarily impacted by credit impairment are held to maturity non-agency collateralized mortgage obligations, asset-backed securities and states and political subdivisions.

The maturities of the securities portfolios are presented in the following table.

September 30, 2015	Amortized Cost		Fair Value
	(In Thousands)
Investment securities available for sale:
Maturing within one year	$	43,142	$	43,201
Maturing after one but within five years	700,472		705,328
Maturing after five but within ten years	1,180,155		1,197,004
Maturing after ten years	1,190,255		1,187,123
	3,114,024		3,132,656
Mortgage-backed securities and collateralized mortgage obligations	7,110,696		7,140,163
Equity securities	530,800		530,841
Total	$	10,755,520	$	10,803,660
Investment securities held to maturity:
Maturing within one year	$	436	$	436
Maturing after one but within five years	320,489		306,843
Maturing after five but within ten years	290,719		262,135
Maturing after ten years	637,735		590,158
	1,249,379		1,159,572
Collateralized mortgage obligations	108,422		108,542
Total	$	1,357,801	$	1,268,114

17

The gross realized gains and losses recognized on sales of investment securities available for sale are shown in the table below.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(In Thousands)
Gross gains	$	8,568	$	9,710	$	68,799	$	47,608
Gross losses	1,832		—		1,832		—
Net realized gains	$	6,736	$	9,710	$	66,967	$	47,608

(3) Loans and Allowance for Loan Losses

The following table presents the composition of the loan portfolio.

	September 30, 2015		December 31, 2014
	(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	25,636,319	$	23,828,537
Real estate – construction	2,315,351		2,154,652
Commercial real estate – mortgage	10,624,632		9,877,206
Total commercial loans	38,576,302		35,860,395
Consumer loans:
Residential real estate – mortgage	13,897,723		13,922,656
Equity lines of credit	2,376,408		2,304,784
Equity loans	612,148		634,968
Credit card	609,982		630,456
Consumer direct	854,989		652,927
Consumer indirect	2,901,603		2,870,408
Total consumer loans	21,252,853		21,016,199
Covered loans	458,066		495,190
Total loans	$	60,287,221	$	57,371,784

18

Allowance for Loan Losses and Credit Quality

The following table, which excludes loans held for sale, presents a summary of the activity in the allowance for loan losses. The portion of the allowance that has not been identified by the Company as related to specific loan categories has been allocated to the individual loan categories on a pro rata basis for purposes of the table below:

	Commercial, Financial and Agricultural			Commercial Real Estate (1)			Residential Real Estate (2)			Consumer (3)			Covered			Total Loans
	(In Thousands)
Three months ended September 30, 2015
Allowance for loan losses:
Beginning balance	$	350,879		$	135,152		$	133,995		$	99,559		$	1,886		$	721,471
Provision (credit) for loan losses	16,424			(7,256		)	(577		)	20,091			469			29,151
Loans charged off	(9,161		)	(910		)	(5,944		)	(27,567		)	(490		)	(44,072		)
Loan recoveries	5,171			899			3,772			5,728			2			15,572
Net (charge-offs) recoveries	(3,990		)	(11		)	(2,172		)	(21,839		)	(488		)	(28,500		)
Ending balance	$	363,313		$	127,885		$	131,246		$	97,811		$	1,867		$	722,122
Three months ended September 30, 2014
Allowance for loan losses:
Beginning balance	$	317,790		$	142,941		$	153,694		$	88,784		$	11,551		$	714,760
Provision (credit) for loan losses	(6,889		)	(8,180		)	6,963			16,216			(4,241		)	3,869
Loans charged off	(3,404		)	(555		)	(9,852		)	(20,514		)	(1,124		)	(35,449		)
Loan recoveries	3,818			1,285			3,266			3,909			420			12,698
Net (charge-offs) recoveries	414			730			(6,586		)	(16,605		)	(704		)	(22,751		)
Ending balance	$	311,315		$	135,491		$	154,071		$	88,395		$	6,606		$	695,878
Nine Months Ended September 30, 2015
Allowance for loan losses:
Beginning balance	$	299,482		$	138,233		$	154,627		$	89,891		$	2,808		$	685,041
Provision (credit) for loan losses	74,127			(12,995		)	(13,458		)	69,085			572			117,331
Loans charged off	(20,706		)	(2,380		)	(20,889		)	(78,957		)	(1,516		)	(124,448		)
Loan recoveries	10,410			5,027			10,966			17,792			3			44,198
Net (charge-offs) recoveries	(10,296		)	2,647			(9,923		)	(61,165		)	(1,513		)	(80,250		)
Ending balance	$	363,313		$	127,885		$	131,246		$	97,811		$	1,867		$	722,122
Nine Months Ended September 30, 2014
Allowance for loan losses:
Beginning balance	$	292,327		$	158,960		$	155,575		$	90,903		$	2,954		$	700,719
Provision (credit) for loan losses	30,107			(17,959		)	27,675			46,014			550			86,387
Loans charged off	(23,855		)	(10,506		)	(39,421		)	(62,887		)	(2,131		)	(138,800		)
Loan recoveries	12,736			4,996			10,242			14,365			5,233			47,572
Net (charge-offs) recoveries	(11,119		)	(5,510		)	(29,179		)	(48,522		)	3,102			(91,228		)
Ending balance	$	311,315		$	135,491		$	154,071		$	88,395		$	6,606		$	695,878

(1) Includes commercial real estate – mortgage and real estate – construction loans.

(2) Includes residential real estate – mortgage, equity lines of credit and equity loans.

(3) Includes credit card, consumer direct and consumer indirect loans.

19

The table below provides a summary of the allowance for loan losses and related loan balances by portfolio.

	Commercial, Financial and Agricultural		Commercial Real Estate (1)		Residential Real Estate (2)		Consumer (3)		Covered		Total Loans
	(In Thousands)
September 30, 2015
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	20,252	$	3,899	$	37,772	$	1,950	$	—	$	63,873
Collectively evaluated for impairment	342,881		123,986		93,474		95,861		—		656,202
Purchased impaired	—		—		—		—		1,767		1,767
Purchased nonimpaired	180		—		—		—		100		280
Total allowance for loan losses	$	363,313	$	127,885	$	131,246	$	97,811	$	1,867	$	722,122
Ending balance of loans:
Individually evaluated for impairment	$	131,009	$	92,110	$	178,357	$	2,376	$	—	$	403,852
Collectively evaluated for impairment	25,469,026		12,799,785		16,707,156		4,359,094		—		59,335,061
Purchased impaired	—		—		—		—		334,086		334,086
Purchased nonimpaired	36,284		48,088		766		5,104		123,980		214,222
Total loans	$	25,636,319	$	12,939,983	$	16,886,279	$	4,366,574	$	458,066	$	60,287,221
December 31, 2014
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	11,158	$	8,466	$	42,277	$	1,532	$	—	$	63,433
Collectively evaluated for impairment	287,105		129,767		112,350		88,037		—		617,259
Purchased impaired	—		—		—		—		2,066		2,066
Purchased nonimpaired	1,219		—		—		322		742		2,283
Total allowance for loan losses	$	299,482	$	138,233	$	154,627	$	89,891	$	2,808	$	685,041
Ending balance of loans:
Individually evaluated for impairment	$	48,173	$	105,608	$	195,462	$	1,827	$	—	$	351,070
Collectively evaluated for impairment	23,745,149		11,896,943		16,665,930		4,145,880		—		56,453,902
Purchased impaired	—		—		—		—		361,572		361,572
Purchased nonimpaired	35,215		29,307		1,016		6,084		133,618		205,240
Total loans	$	23,828,537	$	12,031,858	$	16,862,408	$	4,153,791	$	495,190	$	57,371,784

(1) Includes commercial real estate – mortgage and real estate – construction loans.

(2) Includes residential real estate – mortgage, equity lines of credit and equity loans.

(3) Includes credit card, consumer direct and consumer indirect loans.

20

The following table presents information on individually evaluated impaired loans, by loan class.

	September 30, 2015
	Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance
	Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance
	(In Thousands)
Commercial, financial and agricultural	$	6,186	$	13,575	$	—	$	124,823	$	128,517	$	20,252
Real estate – construction	3,446		3,996		—		642		697		642
Commercial real estate – mortgage	36,385		39,065		—		51,637		54,746		3,257
Residential real estate – mortgage	—		—		—		103,626		103,626		6,685
Equity lines of credit	—		—		—		27,098		29,046		23,055
Equity loans	—		—		—		47,633		48,232		8,032
Credit card	—		—		—		—		—		—
Consumer direct	—		—		—		501		501		75
Consumer indirect	—		—		—		1,875		1,889		1,875
Total loans	$	46,017	$	56,636	$	—	$	357,835	$	367,254	$	63,873

	December 31, 2014
	Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance
	Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance
	(In Thousands)
Commercial, financial and agricultural	$	—	$	—	$	—	$	48,173	$	61,552	$	11,158
Real estate – construction	3,492		4,006		—		2,686		2,731		872
Commercial real estate – mortgage	22,822		23,781		—		76,608		82,005		7,594
Residential real estate – mortgage	8,795		8,795		—		107,223		107,306		9,236
Equity lines of credit	—		—		—		25,743		26,124		23,394
Equity loans	—		—		—		53,701		54,038		9,647
Credit card	—		—		—		—		—		—
Consumer direct	—		—		—		337		337		42
Consumer indirect	—		—		—		1,490		1,490		1,490
Total loans	$	35,109	$	36,582	$	—	$	315,961	$	335,583	$	63,433

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The following table presents information on individually evaluated impaired loans, by loan class.

	Three Months Ended September 30, 2015				Three Months Ended September 30, 2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
Commercial, financial and agricultural	$	133,652	$	204	$	70,256	$	182
Real estate – construction	5,360		21		9,054		58
Commercial real estate – mortgage	87,352		517		108,323		754
Residential real estate – mortgage	107,927		707		112,912		724
Equity lines of credit	27,185		279		24,010		268
Equity loans	48,046		392		54,506		432
Credit card	—		—		—		—
Consumer direct	397		4		94		1
Consumer indirect	1,749		—		1,276		1
Total loans	$	411,668	$	2,124	$	380,431	$	2,420

	Nine Months Ended September 30, 2015				Nine Months Ended September 30, 2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
Commercial, financial and agricultural	$	98,110	$	909	$	95,116	$	970
Real estate – construction	5,837		97		9,421		177
Commercial real estate – mortgage	85,862		1,634		122,358		2,531
Residential real estate – mortgage	110,790		2,096		113,579		2,168
Equity lines of credit	26,891		838		23,641		773
Equity loans	50,168		1,197		54,977		1,286
Credit card	—		—		—		—
Consumer direct	686		12		131		3
Consumer indirect	1,645		—		1,283		3
Total loans	$	379,989	$	6,783	$	420,506	$	7,911

The tables above do not include Purchased Impaired Loans, Purchased Nonimpaired Loans or loans held for sale.

Detailed information on the Company's allowance for loan losses methodology and the Company's impaired loan policy are included in the Company's Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2014.

The Company monitors the credit quality of its commercial portfolio using an internal dual risk rating, which considers both the obligor and the facility. The obligor risk ratings are defined by ranges of default probabilities of the borrowers (AAA through D) and the facility risk ratings are defined by ranges of the loss given default. The combination of those two approaches results in the assessment of the likelihood of loss and it is mapped to the regulatory classifications. The Company assigns internal risk ratings at loan origination and at regular intervals subsequent to origination. Loan review intervals are dependent on the size and risk grade of the loan, and are generally conducted at least annually. Additional reviews are conducted when information affecting the loan’s risk grade becomes available. The general characteristics of the risk grades are as follows:

• The Company’s internally assigned letter grades “AAA” through “B-” correspond to the regulatory classification “Pass.” These loans do not have any identified potential or well-defined weaknesses and have a high likelihood of orderly repayment. Exceptions exist when either the facility is fully secured by a CD and held at the Company or the facility is secured by properly margined and controlled marketable securities.

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• Internally assigned letter grades “CCC+” through “CCC” correspond to the regulatory classification “Special Mention.” Loans within this classification have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position at some future date. Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

• Internally assigned letter grades “CCC-” through “D1” correspond to the regulatory classification “Substandard.” A loan classified as substandard is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the loan. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

• The internally assigned letter grade “D2” corresponds to the regulatory classification “Doubtful.” Loans classified as doubtful have all the weaknesses inherent in a loan classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable or improbable.

The Company considers payment history as the best indicator of credit quality for the consumer portfolio. Nonperforming loans in the tables below include loans classified as nonaccrual, loans 90 days or more past due and loans modified in a TDR 90 days or more past due.

The following tables, which exclude loans held for sale and covered loans, illustrate the credit quality indicators associated with the Company’s loans, by loan class.

	Commercial
	September 30, 2015
	Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage
	(In Thousands)
Noncovered loans:
Pass	$	24,549,024	$	2,294,904	$	10,285,290
Special Mention	549,038		9,624		179,911
Substandard	511,634		10,803		144,928
Doubtful	26,623		20		14,503
	$	25,636,319	$	2,315,351	$	10,624,632

	December 31, 2014
	Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage
	(In Thousands)
Noncovered loans:
Pass	$	23,380,541	$	2,098,994	$	9,514,917
Special Mention	280,934		42,176		210,337
Substandard	128,251		13,458		129,435
Doubtful	38,811		24		22,517
	$	23,828,537	$	2,154,652	$	9,877,206

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	Consumer
	September 30, 2015
	Residential Real Estate – Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)
Noncovered loans:
Performing	$	13,792,551	$	2,340,561	$	595,931	$	601,660	$	852,101	$	2,891,337
Nonperforming	105,172		35,847		16,217		8,322		2,888		10,266
	$	13,897,723	$	2,376,408	$	612,148	$	609,982	$	854,989	$	2,901,603

	December 31, 2014
	Residential Real Estate -Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)
Noncovered loans:
Performing	$	13,810,857	$	2,269,231	$	614,064	$	621,015	$	649,832	$	2,865,013
Nonperforming	111,799		35,553		20,904		9,441		3,095		5,395
	$	13,922,656	$	2,304,784	$	634,968	$	630,456	$	652,927	$	2,870,408

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The following tables present an aging analysis of the Company’s past due loans, excluding loans classified as held for sale.

	September 30, 2015
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Total Past Due and Impaired		Not Past Due or Impaired		Total
	(In Thousands)
Commercial, financial and agricultural	$	15,300	$	3,930	$	5,202	$	130,370	$	9,635	$	164,437	$	25,471,882	$	25,636,319
Real estate – construction	1,565		117		426		5,712		2,247		10,067		2,305,284		2,315,351
Commercial real estate – mortgage	4,887		732		5,607		85,975		33,837		131,038		10,493,594		10,624,632
Residential real estate – mortgage	47,936		15,450		1,230		103,492		71,102		239,210		13,658,513		13,897,723
Equity lines of credit	8,988		4,675		2,411		33,436		—		49,510		2,326,898		2,376,408
Equity loans	6,485		1,807		985		15,104		37,785		62,166		549,982		612,148
Credit card	5,949		3,621		8,322		—		—		17,892		592,090		609,982
Consumer direct	16,433		1,988		2,153		635		469		21,678		833,311		854,989
Consumer indirect	60,018		12,901		4,213		6,053		—		83,185		2,818,418		2,901,603
Covered loans	4,303		3,347		43,039		153		—		50,842		407,224		458,066
Total loans	$	171,864	$	48,568	$	73,588	$	380,930	$	155,075	$	830,025	$	59,457,196	$	60,287,221

	December 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Total Past Due and Impaired		Not Past Due or Impaired		Total
	(In Thousands)
Commercial, financial and agricultural	$	10,829	$	5,765	$	1,610	$	61,157	$	10,127	$	89,488	$	23,739,049	$	23,828,537
Real estate – construction	1,954		994		477		7,964		2,112		13,501		2,141,151		2,154,652
Commercial real estate – mortgage	9,813		4,808		628		89,736		39,841		144,826		9,732,380		9,877,206
Residential real estate – mortgage	45,279		16,510		2,598		108,357		69,408		242,152		13,680,504		13,922,656
Equity lines of credit	9,929		4,395		2,679		32,874		—		49,877		2,254,907		2,304,784
Equity loans	6,357		3,268		997		19,029		41,197		70,848		564,120		634,968
Credit card	5,692		3,921		9,441		—		—		19,054		611,402		630,456
Consumer direct	9,542		1,826		2,296		799		298		14,761		638,166		652,927
Consumer indirect	35,366		7,935		2,771		2,624		—		48,696		2,821,712		2,870,408
Covered loans	6,678		4,618		47,957		114		—		59,367		435,823		495,190
Total loans	$	141,439	$	54,040	$	71,454	$	322,654	$	162,983	$	752,570	$	56,619,214	$	57,371,784

Policies related to the Company's nonaccrual and past due loans are included in the Company's Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2014.

It is the Company’s policy to classify TDRs that are not accruing interest as nonaccrual loans. It is also the Company’s policy to classify TDR past due loans that are accruing interest as TDRs and not according to their past due status. The tables above reflect this policy.

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The following table provides a breakout of TDRs, including nonaccrual loans and covered loans and excluding loans classified as held for sale.

	September 30, 2015
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Total Past Due and Nonaccrual		Not Past Due or Nonaccrual		Total
	(In Thousands)
Commercial, financial and agricultural	$	7	$	126	$	—	$	634	$	767	$	9,502	$	10,269
Real estate – construction	—		—		—		503		503		2,247		2,750
Commercial real estate – mortgage	—		—		—		4,094		4,094		33,837		37,931
Residential real estate – mortgage	3,165		2,726		450		27,847		34,188		64,761		98,949
Equity lines of credit	—		—		—		26,007		26,007		—		26,007
Equity loans	1,543		2,212		128		9,848		13,731		33,902		47,633
Credit card	—		—		—		—		—		—		—
Consumer direct	—		—		100		30		130		369		499
Consumer indirect	—		—		—		1,875		1,875		—		1,875
Covered loans	—		—		—		8		8		—		8
Total loans	$	4,715	$	5,064	$	678	$	70,846	$	81,303	$	144,618	$	225,921

	December 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Total Past Due and Nonaccrual		Not Past Due or Nonaccrual		Total
	(In Thousands)
Commercial, financial and agricultural	$	11	$	—	$	—	$	2,052	$	2,063	$	10,116	$	12,179
Real estate – construction	—		—		—		200		200		2,112		2,312
Commercial real estate – mortgage	371		536		—		7,068		7,975		38,934		46,909
Residential real estate – mortgage	2,440		2,688		844		32,518		38,490		63,436		101,926
Equity lines of credit	—		—		—		24,519		24,519		—		24,519
Equity loans	2,182		1,124		878		12,504		16,688		37,013		53,701
Credit card	—		—		—		—		—		—		—
Consumer direct	105		—		—		40		145		193		338
Consumer indirect	—		—		—		1,490		1,490		—		1,490
Covered loans	—		—		—		17		17		—		17
Total loans	$	5,109	$	4,348	$	1,722	$	80,408	$	91,587	$	151,804	$	243,391

Modifications to a borrower’s loan agreement are considered TDRs if a concession is granted for economic or legal reasons related to a borrower’s financial difficulties that otherwise would not be considered. Within each of the Company’s loan classes, TDRs typically involve modification of the loan interest rate to a below market rate or an extension or deferment of the loan. During the three months ended September 30, 2015, $2.0 million of TDR modifications included an interest rate concession and $4.7 million of TDR modifications resulted from modifications to the loan’s structure. During the three months ended September 30, 2014, $1.4 million of TDR modifications included an interest rate concession and $19.6 million of TDR modifications resulted from modifications to the loan’s structure. During the nine months ended September 30, 2015, $2.9 million of TDR modifications included an interest rate concession and $14.0 million of TDR modifications resulted from modifications to the loan’s structure. During the nine

26

months ended September 30, 2014, $8.3 million of TDR modifications included an interest rate concession and $33.0 million of TDR modifications resulted from modifications to the loan’s structure.

The following table presents an analysis of the types of loans that were restructured and classified as TDRs, excluding loans classified as held for sale.

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014
	Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)
Commercial, financial and agricultural	2	$	69	2	$	14,118
Real estate – construction	—	—		2	405
Commercial real estate – mortgage	3	532		—	—
Residential real estate – mortgage	14	3,326		18	3,255
Equity lines of credit	27	1,488		32	1,946
Equity loans	8	340		13	920
Credit card	—	—		—	—
Consumer direct	4	325		—	—
Consumer indirect	31	549		21	343
Covered loans	1	8		1	3

	Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2014
	Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)
Commercial, financial and agricultural	5	$	380	4	$	14,281
Real estate – construction	—	—		2	405
Commercial real estate – mortgage	4	758		9	6,586
Residential real estate – mortgage	36	7,571		74	8,373
Equity lines of credit	86	4,752		129	6,426
Equity loans	28	1,836		54	4,237
Credit card	—	—		—	—
Consumer direct	21	627		—	—
Consumer indirect	53	928		71	1,015
Covered loans	3	29		1	3

For the three and nine months ended September 30, 2015 and 2014, charge-offs and changes to the allowance related to modifications classified as TDRs were not material.

The Company considers TDRs aged 90 days or more past due, charged off or classified as nonaccrual subsequent to modification, where the loan was not classified as a nonperforming loan at the time of modification, as subsequently defaulted.

27

The following tables provide a summary of initial subsequent defaults that occurred within one year of the restructure date. The table excludes loans classified as held for sale as of period-end and includes loans no longer in default as of period-end.

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014
	Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default
	(Dollars in Thousands)
Commercial, financial and agricultural	—	$	—	—	$	—
Real estate – construction	—	—		—	—
Commercial real estate – mortgage	—	—		—	—
Residential real estate – mortgage	1	119		2	144
Equity lines of credit	1	—		—	—
Equity loans	1	55		3	381
Credit card	—	—		—	—
Consumer direct	1	100		—	—
Consumer indirect	—	—		—	—
Covered loans	1	18		—	—

	Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2014
	Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default
	(Dollars in Thousands)
Commercial, financial and agricultural	—	$	—	—	$	—
Real estate – construction	1	377		—	—
Commercial real estate – mortgage	1	178		1	2,198
Residential real estate – mortgage	6	862		2	144
Equity lines of credit	1	—		3	275
Equity loans	3	216		7	763
Credit card	—	—		—	—
Consumer direct	1	100		—	—
Consumer indirect	1	18		—	—
Covered loans	2	24		—	—

The Company’s allowance for loan losses is largely driven by updated risk ratings assigned to commercial loans, updated borrower credit scores on consumer loans, and borrower delinquency history in both commercial and consumer portfolios.  As such, the provision for loan losses is impacted primarily by changes in borrower payment performance rather than TDR classification.  In addition, all commercial and consumer loans modified in a TDR are considered to be impaired, even if they maintain their accrual status.

At September 30, 2015 and December 31, 2014, there were $3.8 million and $1.1 million, respectively, of commitments to lend additional funds to borrowers whose terms have been modified in a TDR.

Foreclosure Proceedings

Other real estate owned totaled $24 million and $21 million at September 30, 2015 and December 31, 2014, respectively. Other real estate owned included $17 million and $11 million of foreclosed residential real estate properties at September 30, 2015 and December 31, 2014, respectively. As of September 30, 2015 and December 31, 2014, there were $29 million and $26 million, respectively, of residential real estate loans secured by residential real estate properties for which formal foreclosure proceedings were in process.

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(4)Loan Sales and Servicing

Loans held for sale were $634 million and $155 million at September 30, 2015 and December 31, 2014, respectively. Loans held for sale were comprised of $511 million and $123 million of consumer indirect loans and residential real estate - mortgage loans, respectively, at September 30, 2015. Loans held for sale at December 31, 2014 were comprised entirely of residential real estate - mortgage loans.

There were $907 million loans transferred from the held for investment portfolio to the loans held for sale portfolio during the three and nine months ended September 30, 2015. Loans transferred to the held for sale portfolio during the three and nine months ended September 30, 2015 were comprised of $396 million of residential real estate - mortgage loans and $511 million of consumer indirect loans. The consumer indirect loans were transferred in preparation of completing a securitization in the fourth quarter of 2015. There were no charge-offs recognized upon transfer of these loans. There were $14 million of loans transferred from the held for investment portfolio to the loans held for sale portfolio during the nine months ended September 30, 2014. The Company recognized charge-offs upon transfer of these loans totaling $4.3 million. There were no loans transferred from the held for investment portfolio to the loans held for sale portfolio during the three months ended September 30, 2014.

As noted above, the Company transferred $511 million of consumer indirect loans to loans held for sale in anticipation of completing a securitization in the fourth quarter of 2015. Due to market conditions that arose in October, the Company chose not to securitize the consumer indirect loans and, accordingly, on October 15, 2015, transferred these loans back to the held for investment portfolio as management determined that it had the ability and intent to hold these loans for the foreseeable future.

The Company sold loans and loans held for sale, excluding loans originated for sale in the secondary market, with a recorded balance of $405 million and $415 million during the three and nine months ended September 30, 2015. The Company sold loans and loans held for sale, excluding loans originated for sale in the secondary market, with a recorded balance of $1 million and $102 million, during the three and nine months ended September 30, 2014, respectively.

Sales of residential real estate – mortgage loans originated for sale in the secondary market, including loans originated for sale where the Company retained servicing responsibilities, were $725 million and $1.3 billion for the three and nine months ended September 30, 2015, respectively, and $367 million and $736 million for the three and nine months ended September 30, 2014, respectively. The Company recognized net gains of $11.0 million and $33.0 million on the sale of residential real estate mortgage loans originated for sale during the three and nine months ended September 30, 2015, respectively, and $11.7 million and $22.9 million for the three and nine months ended September 30, 2014, respectively. These gains were recorded in mortgage banking income in the Company’s Unaudited Condensed Consolidated Statements of Income.

Residential Real Estate Mortgage Loans Sold with Retained Servicing

During the three and nine months ended September 30, 2015, the Company sold $725 million and $1.3 billion, respectively, of residential real estate mortgage loans where the Company retained servicing responsibilities. During the three and nine months ended September 30, 2014, the Company sold $367 million and $736 million, respectively, of residential real estate mortgage loans where the Company retained servicing responsibilities. For these sold loans, there is no recourse to the Company for the failures of borrowers to pay when due. Residential real estate mortgage loans sold where the Company retained servicing totaled $4.4 billion and $3.3 billion, respectively, at September 30, 2015 and December 31, 2014. These loans are not included in loans on the Company’s Unaudited Condensed Consolidated Balance Sheets.

In connection with residential real estate mortgage loans sold with retained servicing, the Company receives servicing fees based on a percentage of the outstanding balance. The Company recognized servicing fees of $5.8 million and $15.7 million during the three and nine months ended September 30, 2015, respectively. The Company recognized servicing fees of $4.1 million and $11.4 million during the three and nine months ended September 30, 2014, respectively. These fees were recorded as a component of other noninterest income in the Company’s Unaudited Condensed Consolidated Statements of Income. At September 30, 2015 and December 31, 2014, the Company had recorded $41 million and $35 million of MSRs, respectively, under the fair value method in other assets on the Company’s Unaudited Condensed Consolidated Balance Sheets.

29

The fair value of MSRs is significantly affected by mortgage interest rates available in the marketplace, which influence mortgage loan prepayment speeds. In general, during periods of declining rates, the fair value of MSRs declines due to increasing prepayments attributable to increased mortgage-refinance activity. During periods of rising interest rates, the fair value of MSRs generally increases due to reduced refinance activity. The Company maintains a non-qualifying hedging strategy to manage a portion of the risk associated with changes in the fair value of the MSR portfolio.  This strategy includes the purchase of various trading securities.  The interest income, mark-to-market adjustments and gain or loss from sale activities associated with these securities are expected to economically hedge a portion of the change in the fair value of the MSR portfolio.

The following table is an analysis of the activity in the Company’s MSRs.

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2015			2014			2015			2014
	(In Thousands)
Carrying value, at beginning of period	$	40,871		$	31,104		$	35,488		$	30,065
Additions	6,844			4,060			13,566			8,066
Increase (decrease) in fair value:
Due to changes in valuation inputs or assumptions	(5,485		)	367			(5,631		)	(1,427		)
Due to other changes in fair value (1)	(992		)	(639		)	(2,185		)	(1,812		)
Carrying value, at end of period	$	41,238		$	34,892		$	41,238		$	34,892

(1) Represents the realization of expected net servicing cash flows, expected borrower repayments and the passage of time.

See Note 8, Fair Value of Financial Instruments, for additional disclosures related to the assumptions and estimates used in determining fair value of MSRs.

At September 30, 2015 and December 31, 2014, the sensitivity of the current fair value of the residential MSRs to immediate 10% and 20% adverse changes in key economic assumptions are included in the following table:

	September 30, 2015			December 31, 2014
	(Dollars in Thousands)
Fair value of MSRs	$	41,238		$	35,488
Composition of residential loans serviced for others:
Fixed rate mortgage loans	96.7		%	96.1		%
Adjustable rate mortgage loans	3.3			3.9
Total	100.0		%	100.0		%
Weighted average life (in years)	5.6			6.2
Prepayment speed:	11.1		%	10.6		%
Effect on fair value of a 10% increase	$	(1,368	)	$	(1,220	)
Effect on fair value of a 20% increase	(2,645		)	(2,375		)
Weighted average option adjusted spread/discount rate: (1)	9.0		%	10.1		%
Effect on fair value of a 10% increase	$	(1,421	)	$	(1,291	)
Effect on fair value of a 20% increase	(2,750		)	(2,492		)

(1) During the three months ended September 30, 2015, the Company utilized a new third-party service provider for the valuation of servicing rights. The new service provider utilizes an option-adjusted spread valuation approach instead of a static discount rate approach to discount cash flows. This change did not have a material impact on the value of the mortgage servicing rights.

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one assumption may result in changes in another, which may magnify or counteract the effect of the change.

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(5)Derivatives and Hedging

The Company is a party to derivative instruments in the normal course of business for trading purposes and for purposes other than trading to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates and foreign currency exchange rates. The Company has made an accounting policy decision to not offset derivative fair value amounts under master netting agreements. See Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 for additional information on the Company's accounting policies related to derivative instruments and hedging activities. The following table reflects the notional amount and fair value of derivative instruments included on the Company’s Unaudited Condensed Consolidated Balance Sheets on a gross basis.

	September 30, 2015						December 31, 2014
			Fair Value						Fair Value
	Notional Amount		Derivative Assets (1)		Derivative Liabilities (2)		Notional Amount		Derivative Assets (1)		Derivative Liabilities (2)
	(In Thousands)
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate swaps related to long-term debt	$	2,123,950	$	80,083	$	—	$	1,423,950	$	69,700	$	—
Total fair value hedges			80,083		—				69,700		—
Cash flow hedges:
Interest rate contracts:
Swaps related to commercial loans	2,050,000		10,106		—		1,100,000		1,793		1,023
Swaps related to FHLB advances	320,000		—		14,134		320,000		—		13,474
Total cash flow hedges			10,106		14,134				1,793		14,497
Total derivatives designated as hedging instruments			$	90,189	$	14,134			$	71,493	$	14,497
Free-standing derivatives not designated as hedging instruments:
Interest rate contracts:
Forward and option contracts related to held for sale mortgages	$	264,000	$	162	$	2,000	$	189,000	$	18	$	1,576
Equity contracts:
Purchased equity option related to equity-linked CDs	875,030		48,493		—		821,849		76,487		—
Swap associated with sale of Visa, Inc. Class B shares	60,988		—		1,525		57,393		—		1,435
Foreign exchange contracts:
Forwards related to commercial loans	555,061		5,952		695		602,066		5,529		612
Spots related to commercial loans	69,537		—		86		74,940		41		80
Futures contracts (3)	422,000		—		—		342,000		—		—
Interest rate lock commitments	196,779		3,768		3		180,822		2,319		1
Written equity option related to equity-linked CDs	835,394		—		46,607		795,467		—		74,319
Trading account assets and liabilities:
Interest rate contracts for customers	23,346,172		386,687		323,285		18,678,390		296,239		236,763
Commodity contracts for customers	154,853		17,272		17,221		264,491		25,569		25,448
Foreign exchange contracts for customers	294,534		10,333		9,611		425,123		8,268		7,527
Total trading account assets and liabilities			414,292		350,117				330,076		269,738
Total free-standing derivative instruments not designated as hedging instruments			$	472,667	$	401,033			$	414,470	$	347,761

(1) Derivative assets, except for trading account assets that are recorded as a component of trading account assets on the Company's Unaudited Condensed Consolidated Balance Sheets, are recorded in other assets on the Company’s Unaudited Condensed Consolidated Balance Sheets.

(2) Derivative liabilities are recorded in accrued expenses and other liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheets.

(3) Changes in fair value are cash settled daily; therefore, there is no ending balance at any given reporting period.

Hedging Derivatives

The Company uses derivative instruments to manage the risk of earnings fluctuations caused by interest rate volatility. For those financial instruments that qualify and are designated as a hedging relationship, either a fair value hedge or

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cash flow hedge, the effect of interest rate movements on the hedged assets or liabilities will generally be offset by change in fair value of the derivative instrument.

Fair Value Hedges

The Company enters into fair value hedging relationships using interest rate swaps to mitigate the Company’s exposure to losses in value as interest rates change. Derivative instruments that are used as part of the Company’s interest rate risk management strategy include interest rate swaps that relate to the pricing of specific balance sheet assets and liabilities. Interest rate swaps generally involve the exchange of fixed and variable rate interest payments between two parties, based on a common notional principal amount and maturity date.

Interest rate swaps are used to convert the Company’s fixed rate long-term debt to a variable rate. The critical terms of the interest rate swaps match the terms of the corresponding hedged items. All components of each derivative instrument’s gain or loss are included in the assessment of hedge effectiveness.

The Company recognized no gains or losses for the three and nine months ended September 30, 2015 and 2014 related to hedged firm commitments no longer qualifying as a fair value hedge. At September 30, 2015, the fair value hedges had a weighted average expected remaining term of 5.4 years.

The following table reflects the change in fair value for interest rate contracts and the related hedged items as well as other gains and losses related to fair value hedges including gains and losses recognized because of hedge ineffectiveness.

		Gain (Loss) for the
	Condensed Consolidated	Three Months Ended September 30,						Nine Months Ended September 30,
	Statements of Income Caption	2015			2014			2015			2014
		(In Thousands)
Change in fair value of interest rate contracts:
Interest rate swaps hedging long term debt	Interest on FHLB and other borrowings	$	40,416		$	(5,391	)	$	10,383		$	(5,515	)
Hedged long term debt	Interest on FHLB and other borrowings	(38,634		)	4,829			(12,511		)	5,048
Other gains on interest rate contracts:
Interest and amortization related to interest rate swaps on hedged long term debt	Interest on FHLB and other borrowings	12,413			6,081			34,157			18,114

There were no material fair value hedging gains and losses recognized because of hedge ineffectiveness for the three and nine months ended September 30, 2015 and 2014.

Cash Flow Hedges

The Company enters into cash flow hedging relationships using interest rate swaps and options, such as caps and floors, to mitigate exposure to the variability in future cash flows or other forecasted transactions associated with its floating rate assets and liabilities. The Company uses interest rate swaps and options to hedge the repricing characteristics of its floating rate commercial loans and FHLB advances. All components of each derivative instrument’s gain or loss are included in the assessment of hedge effectiveness. The initial assessment of expected hedge effectiveness is based on regression analysis. The ongoing periodic measures of hedge ineffectiveness are based on the expected change in cash flows of the hedged item caused by changes in the benchmark interest rate. There were no material cash flow hedging gains or losses recognized because of hedge ineffectiveness for the three and nine months ended September 30, 2015 and 2014. There were no gains or losses reclassified from other comprehensive income because of the discontinuance of cash flow hedges related to certain forecasted transactions that are probable of not occurring for the three and nine months ended September 30, 2015 and 2014.

At September 30, 2015, cash flow hedges not terminated had a net fair value of $(4.0) million and a weighted average life of 1.7 years. Based on the current interest rate environment, $523 thousand of losses are expected to be

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reclassified to net interest income over the next 12 months as net settlements occur. The maximum length of time over which the entity is hedging its exposure to the variability in future cash flows for forecasted transactions is 5.8 years.

The following table presents the effect of derivative instruments designated and qualifying as cash flow hedges on the Company’s Unaudited Condensed Consolidated Balance Sheets and the Company’s Unaudited Condensed Consolidated Statements of Income.

	Gain (Loss) for the
	Three Months Ended   September 30,					Nine Months Ended   September 30,
	2015		2014			2015		2014
	(In Thousands)
Interest rate contracts:
Net change in amount recognized in other comprehensive income	$	1,838	$	(706	)	$	4,910	$	(2,388	)
Amount reclassified from accumulated other comprehensive income into net interest income	1,924		(41		)	4,778		(1,768		)
Amount of ineffectiveness recognized in net interest income	—		—			—		—

Derivatives Not Designated As Hedges

Derivatives not designated as hedges include those that are entered into as either economic hedges as part of the Company’s overall risk management strategy or to facilitate client needs. Economic hedges are those that do not qualify to be treated as a fair value hedge, cash flow hedge or foreign currency hedge for accounting purposes, but are necessary to economically manage the risk exposure associated with the assets and liabilities of the Company.

The Company also enters into a variety of interest rate contracts, commodity contracts and foreign exchange contracts in its trading activities. The primary purpose for using these derivative instruments in the trading account is to facilitate customer transactions. The trading interest rate contract portfolio is actively managed and hedged with similar products to limit market value risk of the portfolio. Changes in the estimated fair value of contracts in the trading account along with the related interest settlements on the contracts are recorded in noninterest income as corporate and correspondent investment sales in the Company's Unaudited Condensed Consolidated Statements of Income.

The Company enters into forward contracts to economically hedge the change in fair value of certain residential mortgage loans held for sale due to changes in interest rates. Revaluation gains and losses from free-standing derivatives related to mortgage banking activity are recorded as a component of mortgage banking income in the Company’s Unaudited Condensed Consolidated Statements of Income.

Interest rate lock commitments issued on residential mortgage loan commitments to be held for resale are also considered free-standing derivative instruments, and the interest rate exposure on these commitments is economically hedged primarily with forward contracts. Revaluation gains and losses from free-standing derivatives related to mortgage banking activity are recorded as a component of mortgage banking income in the Company's Unaudited Condensed Consolidated Statements of Income.

In conjunction with the sale of its Visa, Inc. Class B shares in 2009, the Company entered into a total return swap in which the Company will make or receive payments based on subsequent changes in the conversion rate of the Class B shares into Class A shares. This total return swap is accounted for as a free-standing derivative.

The Company offers its customers equity-linked CDs that have a return linked to individual equities and equity indices. Under appropriate accounting guidance, a CD that pays interest based on changes in an equity index is a hybrid instrument that requires separation into a host contract (the CD) and an embedded derivative contract (written equity call option). The Company has entered into an offsetting derivative contract in order to economically hedge the exposure related to the issuance of equity-linked CDs. Both the embedded derivative and derivative contract entered into by the Company are classified as free-standing derivative instruments that are recorded at fair value with offsetting gains and losses recognized within noninterest expense in the Company's Unaudited Condensed Consolidated Statements of Income.

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The Company also enters into foreign currency contracts to hedge its exposure to fluctuations in foreign currency exchange rates due to its funding of commercial loans in foreign currencies.

The net gains and losses recorded in the Company's Unaudited Condensed Consolidated Statements of Income from free-standing derivative instruments not designated as hedging instruments are summarized in the following table.

		Gain (Loss) for the
	Condensed Consolidated	Three Months Ended September 30,				Nine Months Ended September 30,
	Statements of Income Caption	2015		2014		2015		2014
		(In Thousands)
Futures contracts	Mortgage banking income  and corporate and correspondent investment sales	(248	)	87		(199	)	(146	)
Option contracts related to mortgage servicing rights	Mortgage banking income	—		—		(195	)	41
Interest rate contracts:
Forward and option contracts related to residential mortgage loans held for sale	Mortgage banking income	(2,317	)	1,558		1,679		(2,549	)
Interest rate lock commitments	Mortgage banking income	308		(842	)	1,447		2,089
Interest rate contracts for customers	Corporate and correspondent investment sales	4,961		4,800		21,490		13,958
Commodity contracts:
Commodity contracts for customers	Corporate and correspondent investment sales	(2	)	191		7		94
Equity contracts:
Purchased equity option related to equity-linked CDs	Other expense	(13,960	)	17,979		(27,995	)	24,686
Written equity option related to equity-linked CDs	Other expense	13,652		(17,777	)	27,712		(24,321	)
Foreign currency contracts:
Forward contracts related to commercial loans	Other income	17,181		44,452		40,265		27,022
Spot contracts related to commercial loans	Other income	(4,143	)	(4,459	)	(7,663	)	(1,052	)
Foreign currency exchange contracts for customers	Corporate and correspondent investment sales	590		309		1,451		679

Derivatives Credit and Market Risks

By using derivative instruments, the Company is exposed to credit and market risk. If the counterparty fails to perform, credit risk is equal to the extent of the Company’s fair value gain in a derivative. When the fair value of a derivative instrument contract is positive, this generally indicates that the counterparty owes the Company and, therefore, creates a credit risk for the Company. When the fair value of a derivative instrument contract is negative, the Company owes the counterparty and, therefore, it has no credit risk. The Company minimizes the credit risk in derivative instruments by entering into transactions with high-quality counterparties that are reviewed periodically. Credit losses are also mitigated through collateral agreements and other contract provisions with derivative counterparties.

Market risk is the adverse effect that a change in interest rates or implied volatility rates has on the value of a financial instrument. The Company manages the market risk associated with interest rate contracts by establishing and monitoring limits as to the types and degree of risk that may be undertaken.

The Company’s derivatives activities are monitored by its Asset/Liability Committee as part of its risk-management oversight. The Company’s Asset/Liability Committee is responsible for mandating various hedging strategies that are developed through its analysis of data from financial simulation models and other internal and industry sources. The resulting hedging strategies are then incorporated into the Company’s overall interest rate risk management and trading strategies.

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Entering into interest rate swap agreements and options involves not only the risk of dealing with counterparties and their ability to meet the terms of the contracts but also interest rate risk associated with unmatched positions. At September 30, 2015, interest rate swap agreements and options classified as trading were substantially matched. The Company had credit risk of $414 million related to derivative instruments in the trading account portfolio, which does not take into consideration master netting arrangements or the value of the collateral. There were $15 thousand and $9 thousand, respectively, in net credit losses associated with derivative instruments classified as trading for the three and nine months ended September 30, 2015. There were $125 thousand and $851 thousand, respectively, in net credit losses associated with derivative instruments classified as trading for the three and nine months ended September 30, 2014. At September 30, 2015 and December 31, 2014, there were no material nonperforming derivative positions classified as trading.

The Company’s derivative positions held for hedging purposes are primarily executed in the over-the-counter market. These positions at September 30, 2015 have credit risk of $90 million, which does not take into consideration master netting arrangements or the value of the collateral.

There were no credit losses associated with derivative instruments classified as nontrading for the three and nine months ended September 30, 2015 and 2014. At September 30, 2015 and December 31, 2014, there were no nonperforming derivative positions classified as nontrading.

As of September 30, 2015 and December 31, 2014, the Company had recorded the right to reclaim cash collateral of $194 million and $46 million, respectively, within other assets on the Company’s Unaudited Condensed Consolidated Balance Sheets and had recorded the obligation to return cash collateral of $42 million and $62 million, respectively, within deposits on the Company’s Unaudited Condensed Consolidated Balance Sheets.

Contingent Features

Certain of the Company’s derivative instruments contain provisions that require the Company’s debt to maintain a certain credit rating from each of the major credit rating agencies. If the Company’s debt were to fall below this rating, it would be in violation of these provisions, and the counterparties to the derivative instruments could demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position on September 30, 2015 was $57 million for which the Company has collateral requirements of $56 million in the normal course of business. If the credit risk-related contingent features underlying these agreements had been triggered on September 30, 2015, the Company’s collateral requirements to its counterparties would have increased by $1 million. The aggregate fair value of all derivative instruments with credit risk-related contingent features that were in a liability position on December 31, 2014 was $65 million for which the Company had collateral requirements of $62 million in the normal course of business. If the credit risk-related contingent features underlying these agreements had been triggered on December 31, 2014, the Company’s collateral requirements to its counterparties would have increased by $4 million.

Netting of Derivative Instruments

The Company is party to master netting arrangements with its financial institution counterparties for some of its derivative and hedging activities. The Company does not offset assets and liabilities under these master netting arrangements for financial statement presentation purposes. The master netting arrangements provide for single net settlement of all derivative instrument arrangements, as well as collateral, in the event of default, or termination of, any one contract with the respective counterparties. Cash collateral is usually posted by the counterparty with a net liability position in accordance with contract thresholds.

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The following represents the Company’s total gross derivative instrument assets and liabilities subject to an enforceable master netting arrangement. The derivative instruments the Company has with its customers are not subject to an enforceable master netting arrangement.

	Gross Amounts Recognized		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amount Presented in the Condensed Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Received/ Pledged (1)		Net Amount
	(In Thousands)
September 30, 2015
Derivative financial assets:
Subject to a master netting arrangement	$	223,580	$	—	$	223,580	$	3,186	$	35,444	$	184,950
Not subject to a master netting arrangement	339,276		—		339,276		—		—		339,276
Total derivative financial assets	$	562,856	$	—	$	562,856	$	3,186	$	35,444	$	524,226
Derivative financial liabilities:
Subject to a master netting arrangement	$	345,621	$	—	$	345,621	$	23,143	$	189,765	$	132,713
Not subject to a master netting arrangement	69,546		—		69,546		—		—		69,546
Total derivative financial liabilities	$	415,167	$	—	$	415,167	$	23,143	$	189,765	$	202,259
December 31, 2014
Derivative financial assets:
Subject to a master netting arrangement	$	225,227	$	—	$	225,227	$	—	$	58,309	$	166,918
Not subject to a master netting arrangement	260,736		—		260,736		—		—		260,736
Total derivative financial assets	$	485,963	$	—	$	485,963	$	—	$	58,309	$	427,654
Derivative financial liabilities:
Subject to a master netting arrangement	$	259,018	$	—	$	259,018	$	29,677	$	44,163	$	185,178
Not subject to a master netting arrangement	103,240		—		103,240		—		—		103,240
Total derivative financial liabilities	$	362,258	$	—	$	362,258	$	29,677	$	44,163	$	288,418

(1) The actual amount of collateral received/pledged is limited to the asset/liability balance and does not include excess collateral received/pledged. When excess collateral exists, the collateral shown in the table above has been allocated based on the percentage of the actual amount of collateral posted.

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(6) Securities Financing Activities

Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase are accounted for as secured borrowings. The following table presents the Company's related activity, by collateral type and remaining contractual maturity.

	September 30, 2015
	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 days		30 - 90 days		Greater Than 90 days		Total
	(In Thousands)
Securities Sold Under Agreements Repurchase:
U.S. Treasury and other U.S. government agencies	$	3,514,574	$	220,369	$	—	$	—	$	3,734,943
Mortgage-backed securities	—		—		913,612		—		913,612
Collateralized mortgage obligations	—		—		145,888		—		145,888
Total	$	3,514,574	$	220,369	$	1,059,500	$	—	$	4,794,443

In the event of a significant decline in fair value of the collateral pledged for the securities sold under agreements to repurchase, the Company would be required to provide additional collateral. The Company minimizes the risk by monitoring the liquidity and credit quality of the collateral, as well as the maturity profile of the transactions.

At September 30, 2015, the fair value of collateral received related to securities purchased under agreements to resell was $5.1 billion and the fair value of collateral pledged for securities sold under agreements to repurchase was $4.9 billion. At December 31, 2014, the fair value of collateral received related to securities purchased under agreements to resell was $2.6 billion and the fair value of collateral pledged for securities sold under agreements to repurchase was $2.5 billion.

Netting of Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase

The Company has various financial asset and liabilities that are subject to enforceable master netting agreements or similar agreements. The Company's derivatives that are subject to enforceable master netting agreements or similar transactions are discussed in Note 5, Derivatives and Hedging. The Company enters into agreements under which it purchases or sells securities subject to an obligation to resell or repurchase the same or similar securities. Securities purchased under agreements to resell and securities sold under agreements to repurchase are generally accounted for as collateralized financing transactions and recorded at the amounts at which the securities were purchased or sold plus accrued interest. The securities pledged as collateral are generally U.S. Treasury and other U.S. government agencies, mortgage-backed securities and collateralized mortgage obligations classified as available for sale.

Securities purchased under agreements to resell and securities sold under agreements to repurchase are governed by a MRA. Under the terms of the MRA, all transactions between the Company and the counterparty constitute a single business relationship such that in the event of default, the nondefaulting party is entitled to set off claims and apply property held by that party in respect of any transaction against obligations owed. Any payments, deliveries, or other transfers may be applied against each other and netted. These amounts are limited to the contract asset/liability balance, and accordingly, do not include excess collateral received or pledged. The Company offsets the assets and liabilities under netting arrangements for the balance sheet presentation of securities purchased under agreements to resell and securities sold under agreements to repurchase provided certain criteria are met that permit balance sheet netting.

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The following represents the Company’s assets/liabilities subject to an enforceable master netting arrangement.

	Gross Amounts Recognized		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amount Presented in the Condensed Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Received/ Pledged (1)		Net Amount
	(In Thousands)
September 30, 2015
Securities purchased under agreements to resell:
Subject to a master netting arrangement	$	5,140,025	$	4,693,819	$	446,206	$	446,206	$	—	$	—
Securities sold under agreements to repurchase:
Subject to a master netting arrangement	$	4,794,443	$	4,693,819	$	100,624	$	100,624	$	—	$	—
December 31, 2014
Securities purchased under agreements to resell:
Subject to a master netting arrangement	$	3,100,200	$	2,533,661	$	566,539	$	566,539	$	—	$	—
Securities sold under agreements to repurchase:
Subject to a master netting arrangement	$	2,969,345	$	2,533,661	$	435,684	$	435,684	$	—	$	—

(1) The actual amount of collateral received/pledged is limited to the asset/liability balance and does not include excess collateral received/pledged. When excess collateral exists, the collateral shown in the table above has been allocated based on the percentage of the actual amount of collateral posted.

(7)Commitments, Contingencies and Guarantees

Commitments to Extend Credit & Standby and Commercial Letters of Credit

The following represents the Company’s commitments to extend credit, standby letters of credit and commercial letters of credit:

	September 30, 2015		December 31, 2014
	(In Thousands)
Commitments to extend credit	$	28,139,475	$	28,369,666
Standby and commercial letters of credit	1,745,629		1,871,323

Commitments to extend credit are agreements to lend to customers as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Standby and commercial letters of credit are commitments issued by the Company to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions, and expire in decreasing amounts with terms ranging from one to four years.

The credit risk involved in issuing letters of credit and commitments is essentially the same as that involved in extending loan facilities to customers. The fair value of the letters of credit and commitments typically approximates the fee received from the customer for issuing such commitments. These fees are deferred and are recognized over the commitment period. At September 30, 2015 and December 31, 2014, the recorded amount of these deferred fees was $5.9 million and $5.2 million, respectively. The Company holds various assets as collateral supporting those commitments for which collateral is deemed necessary. At September 30, 2015, the maximum potential amount of future undiscounted payments the Company could be required to make under outstanding standby letters of credit was $1.7 billion. At September 30, 2015 and December 31, 2014, the Company had reserves related to letters of credit and

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unfunded commitments recorded in accrued expenses and other liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheet of $90 million and $94 million, respectively.

Loan Sale Recourse

The Company has potential recourse related to FNMA securitizations. At September 30, 2015 and December 31, 2014, the amount of potential recourse was $19 million and $20 million, of which the Company had reserved $877 thousand and $655 thousand, respectively, which is recorded in accrued expenses and other liabilities on the Company's Unaudited Condensed Consolidated Balance Sheets for the respective periods.

The Company also issues standard representations and warranties related to mortgage loan sales to government-sponsored agencies. Although these agreements often do not specify limitations, the Company does not believe that any payments related to these representations and warranties would materially change the financial condition or results of operations of the Company. At both September 30, 2015 and December 31, 2014, the Company recorded $1 million of reserves in accrued expenses and other liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheets related to potential losses from loans sold.

Loss Sharing Agreement

In connection with the Guaranty Bank acquisition, the Bank entered into loss sharing agreements with the FDIC that covered approximately $9.7 billion of loans and OREO, excluding the impact of purchase accounting adjustments. In accordance with the terms of the loss sharing agreements, the FDIC’s obligation to reimburse the Bank for losses with respect to the acquired loans and acquired OREO begins with the first dollar of incurred losses, as defined in the loss sharing agreements. The terms of the loss sharing agreements provide that the FDIC will reimburse the Bank for 80% of incurred losses up to $2.3 billion and 95% of incurred losses in excess of $2.3 billion. Gains and recoveries on covered assets offset incurred losses, or are paid to the FDIC, at the applicable loss share percentage at the time of recovery. The loss sharing agreements provide for FDIC loss sharing for five years for commercial loans and 10 years for single family residential loans. The loss sharing agreement for commercial loans expired in the fourth quarter of 2014.

The provisions of the loss sharing agreements may also require a payment by the Bank to the FDIC on October 15, 2019. On that date, the Bank is required to pay the FDIC 60% of the excess, if any, of (i) $457 million over (ii) the sum of (a) 25% of the total net amounts paid to the Bank under both of the loss share agreements plus (b) 20% of the deemed total cost to the Bank of administering the covered assets under the loss sharing agreements. The deemed total cost to the Bank of administering the covered assets is the sum of 2% of the average of the principal amount of covered assets based on the beginning and end of year balances for each of the 10 years during which the loss sharing agreements are in effect. At both September 30, 2015 and December 31, 2014, the Company estimated the potential amount of payment due to the FDIC in 2019, at the end of the loss sharing agreements, to be $145 million. The ultimate settlement amount of this payment due to the FDIC is dependent upon the performance of the underlying covered assets, the passage of time and actual claims submitted to the FDIC.

Legal and Regulatory Proceedings

In the ordinary course of business, the Company is subject to legal proceedings, including claims, litigation, investigations and administrative proceedings, all of which are considered incidental to the normal conduct of business. The Company believes it has substantial defenses to the claims asserted against it in its currently outstanding legal proceedings and, with respect to such legal proceedings, intends to continue to defend itself vigorously against such claims.

Set forth below are descriptions of certain of the Company’s legal proceedings:

In February 2015, the Company was named as a defendant in a lawsuit filed in the Superior Court for the State of California, County of San Diego, Morris Cerullo World Evangelism v. BBVA Compass and Jack Wilkinson, wherein the plaintiff alleges the Company wrongfully failed to honor a standby letter of credit in the amount of $5.2 million. The plaintiff's allegations in this lawsuit are virtually identical to its allegations in the earlier filed federal court lawsuit. As in that lawsuit, the plaintiff seeks $5.2 million, plus other, unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

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In June 2013, the Company was named as a defendant in a lawsuit filed in the United States District Court for the Northern District of Alabama, Intellectual Ventures II, LLC v. BBVA Compass Bancshares, Inc. and BBVA Compass, wherein the plaintiff alleges the Company is infringing five patents owned by the plaintiff and related to the security infrastructure for the Company's online banking services. The plaintiff seeks unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In March 2014, the Company was named as a defendant in a lawsuit filed in the Circuit Court of the Fourth Judicial Circuit in Duval County, Florida, Jack C. Demetree, et al. v. BBVA Compass, wherein the plaintiffs allege that their accountant stole approximately $17.1 million through unauthorized transactions on their accounts from 2009 to 2013, and that BBVA Compass enabled the theft. The plaintiffs seek unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

In November 2014, the Company was named as a defendant in a lawsuit filed in the United States District Court for the Western District of Texas, Maxim Integrated Products v. Compass Bank, wherein the plaintiff alleges the Company is infringing three patents owned by the plaintiff and related to data encryption for the Company’s mobile banking applications. The plaintiff seeks unspecified monetary relief. The Company believes there are substantial defenses to these claims and intends to defend them vigorously.

The Company (including the Bank) is or may become involved from time to time in information-gathering requests, reviews, investigations and proceedings (both formal and informal) by various governmental regulatory agencies, law enforcement authorities and self-regulatory bodies regarding the Company’s business. Such matters could develop into administrative, civil, or criminal proceeding or enforcement actions and may result in material adverse consequences, including without limitation adverse judgments, settlements, fines, penalties, orders, injunctions, alterations in the Company’s business practices or other actions, and could result in additional expenses and collateral costs, including reputational damage, which could have a material adverse impact on the Company’s business, consolidated financial position, results of operations or cash flows.

The Company owns all of the outstanding stock of BSI, a registered broker-dealer. Applicable law limits BSI from deriving more than 25 percent of its gross revenues from underwriting or dealing in bank-ineligible securities (“ineligible revenue”). Prior to the contribution of BSI to the Company in April 2013, BSI’s ineligible revenues in certain periods exceeded the 25 percent limit. It is possible that the Federal Reserve Board may take either formal or informal enforcement action against BSI and the Company and civil money penalties cannot be excluded. At this time, the Company does not know the amount of a potential civil money penalty, if any.

There are other litigation matters that arise in the normal course of business. The Company assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, the Company records a liability in its consolidated financial statements. These legal reserves may be increased or decreased to reflect any relevant developments. Where a loss is not probable or the amount of loss is not estimable, the Company does not accrue legal reserves. At September 30, 2015, the Company had accrued legal reserves in the amount of $13 million. Additionally, for those matters where a loss is both estimable and reasonably possible, the Company estimates losses that it could incur beyond the accrued legal reserves. Under U.S. GAAP, an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely” and an event is “remote” if “the chance of the future event or events occurring is slight.” At September 30, 2015, there were no such matters where a loss was both estimable and reasonably possible beyond the accrued legal reserve.

While the outcome of legal proceedings and the timing of the ultimate resolution are inherently difficult to predict, based on information currently available, advice of counsel and available insurance coverage, the Company believes that it has established adequate legal reserves. Further, based upon available information, the Company is of the opinion that these legal proceedings, individually or in the aggregate, will not have a material adverse effect on the Company’s financial condition or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to the Company’s results of operations for any particular period, depending, in part, upon the size of the loss or liability imposed and the operating results for the applicable period.

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Income Tax Review

The Company is subject to review and examination from various tax authorities. The Company is currently under examination by the IRS and a number of states, and has received notices of proposed adjustments related to federal and state income taxes due for prior years. Management believes that adequate provisions for income taxes have been recorded.

(8)Fair Value of Financial Instruments

The Company applies the fair value accounting guidance required under ASC Topic 820 which establishes a framework for measuring fair value. This guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. This guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within this fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. The three levels within the fair value hierarchy are described as follows.

• Level 1 – Fair value is based on quoted prices in an active market for identical assets or liabilities.

• Level 2 – Fair value is based on quoted market prices for similar instruments traded in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.

• Level 3 – Fair value is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities would include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar pricing techniques based on the Company’s own assumptions about what market participants would use to price the asset or liability.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments under the fair value hierarchy, is set forth below. These valuation methodologies were applied to the Company’s financial assets and financial liabilities carried at fair value. In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use observable market based parameters as inputs. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as other unobservable parameters. Any such valuation adjustments are applied consistently over time. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and, therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented herein.

Financial Instruments Measured at Fair Value on a Recurring Basis

Trading account assets and liabilities, securities available for sale, certain mortgage loans held for sale, derivative assets and liabilities, and mortgage servicing rights are recorded at fair value on a recurring basis. The following is a description of the valuation methodologies for these assets and liabilities.

Trading account assets and liabilities and investment securities available for sale – Trading account assets and liabilities and investment securities available for sale consist of U.S. Treasury and other U.S. government agencies securities, mortgage-backed securities, collateralized mortgage obligations, debt obligations of state and political subdivisions, other debt and equity securities, and derivative contracts.

• U.S. Treasury and other U.S. government agencies securities are valued based on quoted market prices of identical assets on active exchanges (Level 1 measurements) or are valued based on a market approach using

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observable inputs such as benchmark yields, reported trades, broker/dealer quotes, benchmark securities, and bids/offers of government-sponsored enterprise securities (Level 2 measurements).

• Mortgage-backed securities are primarily valued using market-based pricing matrices that are based on observable inputs including benchmark To Be Announced security prices, U.S. Treasury yields, U.S. dollar swap yields, and benchmark floating-rate indices. Mortgage-backed securities pricing may also give consideration to pool-specific data such as prepayment history and collateral characteristics. Valuations for mortgage-backed securities are therefore classified as Level 2 measurements.

• Collateralized mortgage obligations are valued using market-based pricing matrices that are based on observable inputs including reported trades, bids, offers, dealer quotes, U.S. Treasury yields, U.S. dollar swap yields, market convention prepayment speeds, tranche-specific characteristics, prepayment history, and collateral characteristics. Fair value measurements for collateralized mortgage obligations are classified as Level 2.

• Debt obligations of states and political subdivisions are primarily valued using market-based pricing matrices that are based on observable inputs including Municipal Securities Rulemaking Board reported trades, issuer spreads, material event notices, and benchmark yield curves. These valuations are Level 2 measurements.

• Other debt and equity securities consist of mutual funds, foreign and corporate debt, and U.S. government agencies equity securities. Mutual funds are valued based on quoted market prices of identical assets trading on active exchanges. These valuations are Level 1 measurements. Foreign and corporate debt valuations are based on information and assumptions that are observable in the market place. The valuations for these securities are therefore classified as Level 2. U.S. government agency equity securities are valued based on quoted market prices of identical assets trading on active exchanges. These valuations thus qualify as Level 1 measurements.

• Other derivative assets and liabilities consist primarily of interest rate and commodity contracts. The Company’s interest rate contracts are valued utilizing Level 2 observable inputs (yield curves and volatilities) to determine a current market price for each interest rate contract. Commodity contracts are priced using raw market data, primarily in the form of quotes for fixed and basis swaps with monthly, quarterly, seasonal or calendar-year terms. Proprietary models provided by a third party are used to generate forward curves and volatility surfaces. As a result of the valuation process and observable inputs used, commodity contracts are classified as Level 2 measurements. To validate the reasonableness of these calculations, management compares the assumptions with market information.

• Other trading assets primarily consist of interest-only strips which are valued by an independent third-party. The independent third-party values the assets on a loan-by-loan basis using a discounted cash flow analysis that employs prepayment assumptions, discount rate assumptions, and default curves. The prepayment assumptions are created from actual SBA pool prepayment history. The discount rates are derived from actual SBA loan secondary market transactions. The default curves are created using historical observable and unobservable inputs. As such, interest-only strips are classified as Level 3 measurements. The Company’s SBA department is responsible for ensuring the appropriate application of the valuation, capitalization, and amortization policies of the Company’s interest-only strips. The department performs independent, internal valuations of the interest-only strips on a quarterly basis, which are then reconciled to the third-party valuations to ensure their validity.

Loans held for sale – The Company has elected to apply the fair value option for single family real estate mortgage loans originated for resale in the secondary market. The election allows for a more effective offset of the changes in fair values of the loans and the derivative instruments used to economically hedge them without the burden of complying with the requirements for hedge accounting. The Company has not elected the fair value option for other loans held for sale primarily because they are not economically hedged using derivative instruments.

The fair value of loans held for sale is based on what secondary markets are currently offering for portfolios with similar characteristics. The changes in fair value of these assets are largely driven by changes in interest rates subsequent to loan funding and changes in the fair value of servicing associated with the mortgage loan held for sale. Both the mortgage loans held for sale and the related forward contracts are classified as Level 2.

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At both September 30, 2015 and December 31, 2014, no material loans held for sale for which the fair value option was elected were 90 days or more past due or were in nonaccrual. Interest income on mortgage loans held for sale is recognized based on contractual rates and is reflected in interest and fees on loans in the Company's Unaudited Condensed Consolidated Statements of Income. Net gains (losses) of $1.4 million and $(2.3) million resulting from changes in fair value of these loans were recorded in noninterest income during the three months ended September 30, 2015 and 2014, respectively. Net (losses) gains of $(651) thousand and $3.8 million resulting from changes in fair value of these loans were recorded in noninterest income during the nine months ended September 30, 2015 and 2014, respectively.

The Company also had fair value changes on forward contracts related to residential mortgage loans held for sale of approximately $(2.3) million and $1.8 million for the three months ended September 30, 2015 and 2014, respectively. The Company also had fair value changes on forward contracts related to residential mortgage loans held for sale of approximately $1.7 million and $(2.4) million for the nine months ended September 30, 2015 and 2014, respectively. An immaterial portion of these amounts was attributable to changes in instrument-specific credit risk.

The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for residential mortgage loans measured at fair value.

	Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference
	(In Thousands)
September 30, 2015
Residential mortgage loans held for sale	$	122,758	$	117,157	$	5,601
December 31, 2014
Residential mortgage loans held for sale	$	154,816	$	148,564	$	6,252

Derivative assets and liabilities – Derivative assets and liabilities are measured using models that primarily use market observable inputs, such as quoted security prices, and are accordingly classified as Level 2. The derivative assets and liabilities classified within Level 3 of the fair value hierarchy were comprised of interest rate lock commitments that are valued using third-party software that calculates fair market value considering current quoted TBA and other market based prices and then applies closing ratio assumptions based on software-produced pull through ratios that are generated using the Company’s historical fallout activity. Based upon this process, the fair value measurement obtained for these financial instruments is deemed a Level 3 classification. The Company's Secondary Marketing Committee is responsible for the appropriate application of the valuation policies and procedures surrounding the Company’s interest rate lock commitments. Policies established to govern mortgage pipeline risk management activities must be approved by the Company’s Asset/Liability Committee on an annual basis.

Other assets – Other assets measured at fair value on a recurring basis and classified within Level 3 of the fair value hierarchy were comprised of MSRs that are valued through a discounted cash flow analysis using a third-party commercial valuation system. The valuation takes into consideration the objective characteristics of the MSR portfolio, such as loan amount, note rate, service fee, loan term, and common industry assumptions, such as servicing costs, ancillary income, prepayment estimates, earning rates, cost of fund rates, option-adjusted spreads, etc. The Company’s portfolio-specific factors are also considered in calculating the fair value of MSRs to the extent one can reasonably assume a buyer would also incorporate these factors. Examples of such factors are geographical concentrations of the portfolio, liquidity consideration, or additional views of risk not inherently accounted for in prepayment assumptions. Product liquidity and these other risks are generally incorporated through adjustment of discount factors applied to forecasted cash flows. Based on this method of pricing MSRs, the fair value measurement obtained for these financial instruments is deemed a Level 3 classification. The value of the MSR is calculated by a third-party firm that specializes in the MSR market and valuation services. Additionally, the Company obtains a valuation from an independent party to compare for reasonableness. During the three months ended September 30, 2015, the Company utilized a new third-party service provider for the valuation of servicing rights. The new service provider utilizes an option-adjusted spread valuation approach instead of a static discount rate approach to discount cash flows. This change did not have a material impact on the value of the MSR. The Company’s Secondary Marketing Committee is responsible for ensuring the appropriate application of valuation, capitalization, and fair value decay policies for the MSR portfolio. The Committee meets at least monthly to review the MSR portfolio.

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The following tables summarize the financial assets and liabilities measured at fair value on a recurring basis.

			Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	September 30, 2015		(Level 1)		(Level 2)		(Level 3)
	(In Thousands)
Recurring fair value measurements
Assets:
Trading account assets:
U.S. Treasury and other U.S. government agencies	$	3,772,337	$	3,772,337	$	—	$	—
State and political subdivisions	1,161		—		1,161		—
Other debt securities	3,639		—		3,639		—
Interest rate contracts	386,687		—		386,687		—
Commodity contracts	17,272		—		17,272		—
Foreign exchange contracts	10,333		—		10,333		—
Other trading assets	2,077		—		824		1,253
Total trading account assets	4,193,506		3,772,337		419,916		1,253
Loans held for sale	122,758		—		122,758		—
Investment securities available for sale:
U.S. Treasury and other U.S. government agencies	3,022,124		1,760,471		1,261,653		—
Mortgage-backed securities	4,654,536		—		4,654,536		—
Collateralized mortgage obligations	2,485,627		—		2,485,627		—
States and political subdivisions	85,395		—		85,395		—
Other debt securities	25,137		25,137		—		—
Equity securities (1)	294		44		—		250
Total investment securities available for sale	10,273,113		1,785,652		8,487,211		250
Derivative assets:
Interest rate contracts	94,119		—		90,351		3,768
Equity contracts	48,493		—		48,493		—
Foreign exchange contracts	5,952		—		5,952		—
Total derivative assets	148,564		—		144,796		3,768
Other assets	41,238		—		—		41,238
Liabilities:
Trading account liabilities:
U.S. Treasury and other U.S. government agencies	$	4,017,897	$	4,017,897	$	—	$	—
Interest rate contracts	323,285		—		323,285		—
Commodity contracts	17,221		—		17,221		—
Foreign exchange contracts	9,611		—		9,611		—
Total trading account liabilities	4,368,014		4,017,897		350,117		—
Derivative liabilities:
Interest rate contracts	16,137		—		16,134		3
Equity contracts	46,607		—		46,607		—
Foreign exchange contracts	781		—		781		—
Total derivative liabilities	63,525		—		63,522		3

(1) Excludes $531 million of FHLB and Federal Reserve stock required to be owned by the Company at September 30, 2015. These securities are carried at par.

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			Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
	(In Thousands)
Recurring fair value measurements
Assets:
Trading account assets:
U.S. Treasury and other U.S. government agencies	$	2,502,308	$	2,502,308	$	—	$	—
Interest rate contracts	296,239		—		296,239		—
Commodity contracts	25,569		—		25,569		—
Foreign exchange contracts	8,268		—		8,268		—
Other trading assets	2,013		—		423		1,590
Total trading account assets	2,834,397		2,502,308		330,499		1,590
Loans held for sale	154,816		—		154,816		—
Investment securities available for sale:
U.S. Treasury and other U.S. government agencies	2,313,542		1,298,040		1,015,502		—
Mortgage-backed securities	4,423,835		—		4,423,835		—
Collateralized mortgage obligations	2,488,579		—		2,488,579		—
States and political subdivisions	467,315		—		467,315		—
Other debt securities	44,441		44,441		—		—
Equity securities (1)	48		44		—		4
Total investment securities available for sale	9,737,760		1,342,525		8,395,231		4
Derivative assets:
Interest rate contracts	73,830		—		71,511		2,319
Equity contracts	76,487		—		76,487		—
Foreign exchange contracts	5,570		—		5,570		—
Total derivative assets	155,887		—		153,568		2,319
Other assets	35,488		—		—		35,488
Liabilities:
Trading account liabilities:
U.S. Treasury and other U.S. government agencies	$	2,545,299	$	2,545,299	$	—	$	—
Interest rate contracts	236,763		—		236,763		—
Commodity contracts	25,448		—		25,448		—
Foreign exchange contracts	7,527		—		7,527		—
Other trading liabilities	425		—		425		—
Total trading account liabilities	2,815,462		2,545,299		270,163		—
Derivative liabilities:
Interest rate contracts	16,074		—		16,073		1
Equity contracts	74,319		—		74,319		—
Foreign exchange contracts	692		—		692		—
Total derivative liabilities	91,085		—		91,084		1

(1) Excludes $500 million of FHLB and Federal Reserve stock required to be owned by the Company at December 31, 2014. These securities are carried at par.

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There were no transfers between Levels 1 or 2 of the fair value hierarchy for the three and nine months ended September 30, 2015 and 2014. It is the Company’s policy to value any transfers between levels of the fair value hierarchy based on end of period fair values.

The following tables reconcile the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Three Months Ended September 30,	Other Trading Assets			Equity Securities			Interest Rate Contracts, net			Other Assets
	(In Thousands)
Balance, July 1, 2014	$	1,709		$	6		$	3,821		$	31,104
Transfers into Level 3	—			—			—			—
Transfers out of Level 3	—			—			—			—
Total gains or losses (realized/unrealized):
Included in earnings (1)	10			—			(842		)	(272		)
Included in other comprehensive income	—			—			—			—
Purchases, issuances, sales and settlements:
Purchases	—			—			—			—
Issuances	—			—			—			4,060
Sales	—			—			—			—
Settlements	—			—			—			—
Balance, September 30, 2014	$	1,719		$	6		$	2,979		$	34,892
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2014	$	10		$	—		$	(842	)	$	(272	)
Balance, July 1, 2015	$	1,400		$	251		$	3,457		$	40,871
Transfers into Level 3	—			—			—			—
Transfers out of Level 3	—			—			—			—
Total gains or losses (realized/unrealized):
Included in earnings (1)	(147		)	—			308			(6,477		)
Included in other comprehensive income	—			—			—			—
Purchases, issuances, sales and settlements:
Purchases	—			—			—			—
Issuances	—			—			—			6,844
Sales	—			(1		)	—			—
Settlements	—			—			—			—
Balance, September 30, 2015	$	1,253		$	250		$	3,765		$	41,238
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2015	$	(147	)	$	—		$	308		$	(6,477	)

(1) Included in noninterest income in the Unaudited Condensed Consolidated Statements of Income.

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	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Nine Months Ended September 30,	Other Trading Assets			Equity Securities			Interest Rate Contracts, net		Other Assets
	(In Thousands)
Balance, January 1, 2014	$	1,645		$	6		$	890	$	30,065
Transfers into Level 3	—			—			—		—
Transfers out of Level 3	—			—			—		—
Total gains or losses (realized/unrealized):
Included in earnings (1)	74			—			2,089		(3,239		)
Included in other comprehensive income	—			—			—		—
Purchases, issuances, sales and settlements:
Purchases	—			—			—		—
Issuances	—			—			—		8,066
Sales	—			—			—		—
Settlements	—			—			—		—
Balance, September 30, 2014	$	1,719		$	6		$	2,979	$	34,892
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2014	$	74		$	—		$	2,089	$	(3,239	)
Balance, January 1, 2015	$	1,590		$	4		$	2,318	$	35,488
Transfers into Level 3	—			—			—		—
Transfers out of Level 3	—			—			—		—
Total gains or losses (realized/unrealized):
Included in earnings (1)	(337		)	—			1,447		(7,816		)
Included in other comprehensive income	—			—			—		—
Purchases, issuances, sales and settlements:
Purchases	—			247			—		—
Issuances	—			—			—		13,566
Sales	—			(1		)	—		—
Settlements	—			—			—		—
Balance, September 30, 2015	$	1,253		$	250		$	3,765	$	41,238
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2015	$	(337	)	$	—		$	1,447	$	(7,816	)

(1) Included in noninterest income in the Unaudited Condensed Consolidated Statements of Income.

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Assets Measured at Fair Value on a Nonrecurring Basis

Periodically, certain assets may be recorded at fair value on a non-recurring basis. These adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets due to impairment. The following table represents those assets that were subject to fair value adjustments during the three and nine months ended September 30, 2015 and 2014 and still held as of the end of the period, and the related gains and losses from fair value adjustments on assets sold during the period as well as assets still held as of the end of the period.

			Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)
	September 30, 2015		(Level 1)		(Level 2)		(Level 3)		Three Months Ended September 30, 2015			Nine Months Ended September 30, 2015
	(In Thousands)
Nonrecurring fair value measurements
Assets:
Investment securities held to maturity	$	15,423	$	—	$	—	$	15,423	$	—		$	(1,298	)
Impaired loans (1)	169,458		—		—		169,458		(6,836		)	(11,689		)
OREO	23,762		—		—		23,762		(1,135		)	(3,317		)
			Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)
	September 30, 2014		(Level 1)		(Level 2)		(Level 3)		Three Months Ended September 30, 2014			Nine Months Ended September 30, 2014
	(In Thousands)
Nonrecurring fair value measurements
Assets:
Investment securities held to maturity	$	3,832	$	—	$	—	$	3,832	$	—		$	(180	)
Impaired loans (1)	137,398		—		—		137,398		(2,362		)	(21,238		)
OREO	17,058		—		—		17,058		(758		)	(2,340		)

(1) Total gains (losses) represent charge-offs on impaired loans for which adjustments are based on the appraised value of the collateral.

The following is a description of the methodologies applied for valuing these assets:

Investment securities held to maturity – Nonrecurring fair value adjustments on investment securities held to maturity reflect impairment write-downs which the Company believes are other than temporary. For analyzing these securities, the Company has retained a third-party valuation firm. Impairment is determined through the use of cash flow models that estimate cash flows on the underlying mortgages using security-specific collateral and the transaction structure. The cash flow models incorporate the remaining cash flows which are adjusted for future expected credit losses. Future expected credit losses are determined by using various assumptions such as current default rates, prepayment rates, and loss severities. The Company develops these assumptions through the use of market data published by third-party sources in addition to historical analysis which includes actual delinquency and default information through the current period. The expected cash flows are then discounted at the interest rate used to recognize interest income on the security

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to arrive at a present value amount. As the fair value measurements are derived using a discounted cash flow modeling approach, the nonrecurring fair value measurements are classified as Level 3.

Impaired Loans – Impaired loans measured at fair value on a non-recurring basis represent the carrying value of impaired loans for which adjustments are based on the appraised value of the collateral. Nonrecurring fair value adjustments to impaired loans reflect full or partial write-downs that are generally based on the fair value of the underlying collateral supporting the loan. Loans subjected to nonrecurring fair value measurements based on the current estimated fair value of the collateral are classified as Level 3.

OREO – OREO is recorded on the Company's Unaudited Condensed Consolidated Balance Sheets at the lower of recorded balance or fair value, which is based on appraisals and third-party price opinions, less estimated costs to sell. The fair value is classified as Level 3.

The table below presents quantitative information about the significant unobservable inputs for material assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring and nonrecurring basis.

			Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at				Range of Unobservable Inputs
	September 30, 2015		Valuation Technique	Unobservable Input(s)	(Weighted Average)
	(In Thousands)
Recurring fair value measurements:
Other trading assets	$	1,253	Discounted cash flow	Default rate	9.2%
				Prepayment rate	5.9% - 10.4% (7.8%)
Interest rate contracts	3,765		Discounted cash flow	Closing ratios (pull-through)	8.4% - 99.3% (61.0%)
				Cap grids	0.0% - 2.7% (1.1%)
Other assets - MSRs	41,238		Discounted cash flow	Option adjusted spread	6.7% - 18.6% (9.0%)
				Constant prepayment rate or life speed	1.2% - 59.8% (11.1%)
				Cost to service	$60 - $1,068 ($80)
Nonrecurring fair value measurements:
Investment securities held to maturity	$	15,423	Discounted cash flow	Prepayment rate	9.6%
				Default rate	7.5%
				Loss severity	61.2%
				Expected loss	7.9%
Impaired loans	169,458		Appraised value	Appraised value	0.0% - 100.0% (24.9%)
OREO	23,762		Appraised value	Appraised value	8.0% (1)

(1) Represents discount to appraised value for estimated costs to sell.

The following provides a description of the sensitivity of the valuation technique to changes in unobservable inputs for recurring fair value measurements.

Recurring Fair Value Measurements Using Significant Unobservable Inputs

Other Trading Assets – Interest-Only Strips

Significant unobservable inputs used in the valuation of the Company’s interest-only strips include default rates and prepayment assumptions. Significant increases in either of these inputs in isolation would result in significantly lower fair value measurements. Generally, a change in the assumption used for the probability of default is accompanied by a directionally opposite change in the assumption used for prepayment rates.

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Interest Rate Contracts - Interest Rate Lock Commitments

Significant unobservable inputs used in the valuation of interest rate lock commitments are pull-through and cap grids. Increases or decreases in the pull-through or cap grids will have a corresponding impact in the value of interest rate contracts.

Other Assets - MSRs

The significant unobservable inputs used in the fair value measurement of MSRs are option-adjusted spreads, constant prepayment rate or life speed, and cost to service assumptions. The impact of prepayments and changes in the option-adjusted spread are based on a variety of underlying inputs. Increases or decreases to the underlying cash flow inputs will have a corresponding impact on the value of the MSR asset. The impact of the costs to service assumption will have a directionally opposite change in the fair value of the MSR asset.

Fair Value of Financial Instruments

The carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of the Company’s financial instruments, excluding financial instruments measured at fair value on a recurring basis, are as follows:

	September 30, 2015
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In Thousands)
Financial Instruments:
Assets:
Cash and cash equivalents	$	4,377,464	$	4,377,464	$	4,377,464	$	—	$	—
Investment securities held to maturity	1,357,801		1,268,114		—		—		1,268,114
Loans and loans held for sale not measured at fair value, net	60,076,499		57,494,082		—		—		57,494,082
Liabilities:
Deposits	$	64,492,396	$	64,609,174	$	—	$	64,609,174	$	—
FHLB and other borrowings	6,216,425		6,186,068		—		6,186,068		—
Federal funds purchased and securities sold under agreements to repurchase	639,259		639,259		—		639,259		—
Other short-term borrowings	150,000		150,000		—		150,000		—

	December 31, 2014
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In Thousands)
Financial Instruments:
Assets:
Cash and cash equivalents	$	3,388,405	$	3,388,405	$	3,388,405	$	—	$	—
Investment securities held to maturity	1,348,354		1,275,963		—		—		1,275,963
Loans, net	56,686,743		54,551,442		—		—		54,551,442
Liabilities:
Deposits	$	61,189,716	$	61,263,812	$	—	$	61,263,812	$	—
FHLB and other borrowings	4,809,843		4,786,152		—		4,786,152		—
Federal funds purchased and securities sold under agreements to repurchase	1,129,503		1,129,503		—		1,129,503		—

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The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments not carried at fair value:

Cash and cash equivalents: Cash and cash equivalents have maturities of three months or less. Accordingly, the carrying amount approximates fair value. Because these amounts generally relate to either currency or highly liquid assets, these are considered a Level 1 measurement.

Investment securities held to maturity: The fair values of securities held to maturity are estimated using a discounted cash flow approach. The discounted cash flow model uses inputs such as estimated prepayment speed, loss rates, and default rates. They are considered a Level 3 measurement as the valuation employs significant unobservable inputs.

Loans: Loans are presented net of the allowance for loan losses and are valued using discounted cash flows. The discount rates used to determine the present value of these loans are based on current market interest rates for loans with similar credit risk and term. They are considered a Level 3 measurement as the valuation employs significant unobservable inputs.

Deposits: The fair values of demand deposits are equal to the carrying amounts. Demand deposits include noninterest bearing demand deposits, savings accounts, NOW accounts and money market demand accounts. Discounted cash flows have been used to value fixed rate term deposits. The discount rate used is based on interest rates currently being offered by the Company on comparable deposits as to amount and term. They are considered a Level 2 measurement as the valuation primarily employs observable inputs for similar instruments.

FHLB and other borrowings: The fair value of the Company’s fixed rate borrowings, which includes the Company’s Capital Securities, are estimated using discounted cash flows, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The carrying amount of the Company’s variable rate borrowings approximates fair value. As such, these borrowings are considered a Level 2 measurement as the valuation primarily employs observable inputs for similar instruments.

Federal funds purchased and securities sold under agreements to repurchase: The carrying amounts of federal funds purchased and securities sold under agreements to repurchase approximate fair value. They are therefore considered a Level 2 measurement.

Short-term borrowings: The carrying amounts of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings approximates fair value. They are therefore considered a Level 2 measurement.

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(9)Comprehensive Income

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances arising from nonowner sources. The following summarizes the change in the components of other comprehensive income (loss).

	Three Months Ended September 30,
	2015						2014
	Pretax		Tax Expense/ (Benefit)		After-tax		Pretax			Tax Expense/ (Benefit)			After-tax
	(In Thousands)
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during period from securities available for sale	$	48,686	$	21,193	$	27,493	$	(17,597	)	$	(6,325	)	$	(11,272	)
Less: reclassification adjustment for net gains on sale of securities in net income	6,736		2,932		3,804		9,710			3,490			6,220
Net change in unrealized gains (losses) on securities available for sale	41,950		18,261		23,689		(27,307		)	(9,815		)	(17,492		)
Change in unamortized net holding losses on investment securities held to maturity	1,886		820		1,066		3,745			1,347			2,398
Less: non-credit related impairment on investment securities held to maturity	—		—		—		—			—			—
Change in unamortized non-credit related impairment on investment securities held to maturity	515		225		290		387			138			249
Net change in unamortized holding losses on securities held to maturity	2,401		1,045		1,356		4,132			1,485			2,647
Unrealized holding gains (losses) arising during period from cash flow hedge instruments	3,252		1,414		1,838		(1,103		)	(397		)	(706		)
Change in defined benefit plans	—		—		—		—			—			—
Other comprehensive income (loss)	$	47,603	$	20,720	$	26,883	$	(24,278	)	$	(8,727	)	$	(15,551	)

	Nine Months Ended September 30,
	2015						2014
	Pretax		Tax Expense/ (Benefit)		After-tax		Pretax			Tax Expense/ (Benefit)			After-tax
	(In Thousands)
Other comprehensive income:
Unrealized holding gains arising during period from securities available for sale	$	69,541	$	30,271	$	39,270	$	63,819		$	22,936		$	40,883
Less: reclassification adjustment for net gains on sale of securities in net income	66,967		29,151		37,816		47,608			17,110			30,498
Net change in unrealized gains on securities available for sale	2,574		1,120		1,454		16,211			5,826			10,385
Change in unamortized net holding losses on investment securities held to maturity	8,559		3,725		4,834		11,213			4,030			7,183
Less: non-credit related impairment on investment securities held to maturity	87		38		49		235			84			151
Change in unamortized non-credit related impairment on investment securities held to maturity	1,247		543		704		1,141			409			732
Net change in unamortized holding losses on securities held to maturity	9,719		4,230		5,489		12,119			4,355			7,764
Unrealized holding gains (losses) arising during period from cash flow hedge instruments	8,693		3,783		4,910		(3,729		)	(1,341		)	(2,388		)
Change in defined benefit plans	2,716		1,001		1,715		(2,672		)	(1,001		)	(1,671		)
Other comprehensive income	$	23,702	$	10,134	$	13,568	$	21,929		$	7,839		$	14,090

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Activity in accumulated other comprehensive income (loss), net of tax was as follows:

	Unrealized Gains (Losses) on Securities Available for Sale and Transferred to Held to Maturity			Accumulated Gains (Losses) on Cash Flow Hedging Instruments			Defined Benefit Plan Adjustment			Unamortized Impairment Losses on Investment Securities Held to Maturity			Total
	(In Thousands)
Balance, January 1, 2014	$	(31,490	)	$	(5,289	)	$	(41,921	)	$	(9,236	)	$	(87,936	)
Other comprehensive income (loss) before reclassifications	40,883			(3,521		)	—			(151		)	37,211
Amounts reclassified from accumulated other comprehensive income (loss)	(23,315		)	1,133			(1,671		)	732			(23,121		)
Net current period other comprehensive income (loss)	17,568			(2,388		)	(1,671		)	581			14,090
Balance, September 30, 2014	$	(13,922	)	$	(7,677	)	$	(43,592	)	$	(8,655	)	$	(73,846	)
Balance, January 1, 2015	$	4,469		$	(7,189	)	$	(41,121	)	$	(7,516	)	$	(51,357	)
Other comprehensive income (loss) before reclassifications	39,270			7,607			—			(49		)	46,828
Amounts reclassified from accumulated other comprehensive income (loss)	(32,982		)	(2,697		)	1,715			704			(33,260		)
Net current period other comprehensive income	6,288			4,910			1,715			655			13,568
Balance, September 30, 2015	$	10,757		$	(2,279	)	$	(39,406	)	$	(6,861	)	$	(37,789	)

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The following table presents information on reclassifications out of accumulated other comprehensive income.

Details About Accumulated Other Comprehensive Income Components	Amounts Reclassified From Accumulated Other Comprehensive Income(1)												Condensed Consolidated Statement of Income Caption
	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(In Thousands)
Unrealized Gains on Securities Available for Sale and Transferred to Held to Maturity	$	6,736		$	9,710		$	66,967		$	47,608		Investment securities gains, net
	(1,886		)	(3,745		)	(8,559		)	(11,213		)	Interest on investment securities held to maturity
	4,850			5,965			58,408			36,395
	(2,112		)	(2,143		)	(25,426		)	(13,080		)	Income tax expense
	$	2,738		$	3,822		$	32,982		$	23,315		Net of tax
Accumulated Gains (Losses) on Cash Flow Hedging Instruments	$	3,646		$	1,727		$	9,985		$	3,551		Interest and fees on loans
	(1,722		)	(1,768		)	(5,207		)	(5,319		)	Interest and fees on FHLB advances
	1,924			(41		)	4,778			(1,768		)
	(839		)	15			(2,081		)	635			Income tax (expense) benefit
	$	1,085		$	(26	)	$	2,697		$	(1,133	)	Net of tax
Defined Benefit Plan Adjustment	$	—		$	—		$	(2,716	)	$	2,672		(2)
	—			—			1,001			(1,001		)	Income tax (expense) benefit
	$	—		$	—		$	(1,715	)	$	1,671		Net of tax
Unamortized Impairment Losses on Investment Securities Held to Maturity	$	(515	)	$	(387	)	$	(1,247	)	$	(1,141	)	Interest on investment securities held to maturity
	225			138			543			409			Income tax benefit
	$	(290	)	$	(249	)	$	(704	)	$	(732	)	Net of tax

(1) Amounts in parentheses indicate debits to the consolidated statement of income.

(2) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 18, Benefit Plans, in the Notes to the December 31, 2014, Consolidated Financial Statements for additional details).

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(10)Supplemental Disclosure for Statement of Cash Flows

The following table presents the Company’s supplemental disclosures for statement of cash flows.

	Nine Months Ended September 30,
	2015		2014
	(In Thousands)
Supplemental disclosures of cash flow information:
Interest paid	$	277,140	$	202,851
Net income taxes paid	145,056		95,167
Supplemental schedule of noncash investing and financing activities:
Transfer of loans and loans held for sale to OREO	$	16,552	$	14,278
Transfer of loans to loans held for sale	906,857		14,129
Change in unrealized gain (loss) on available for sale securities	2,574		16,211
Issuance of restricted stock, net of cancellations	458		(1,060		)
Business combinations:
Assets acquired	14,327		117,068
Liabilities assumed	977		18,329

(11) Segment Information

The Company’s operating segments are based on the Company’s organizational structure. Each segment reflects the manner in which financial information is evaluated by management. The operating segment results include certain overhead allocations and intercompany transactions. All intercompany transactions have been eliminated to determine the consolidated balances. The Company operates primarily in the United States, and, accordingly, revenue and assets outside the United States are not material. There are no individual customers whose revenues exceeded 10% of consolidated revenue.

During the first quarter of 2015, the Company reorganized its internal management structure and, accordingly, its segment reporting structure. As a result of this reorganization, the Wealth and Retail and Commercial operating segments were combined into one operating segment, Consumer and Commercial Banking. Prior periods' information has been restated to conform to the current periods' presentation. The Company's reportable operating segments now consist of Consumer and Commercial Banking, Corporate and Investment Banking, Treasury, and Corporate Support and Other.

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The following tables present the segment information for the Company’s segments.

	Three Months Ended September 30, 2015
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated
	(In Thousands)
Net interest income (expense)	$	508,547	$	42,465	$	6,228	$	(49,373	)	$	507,867
Allocated provision for loan losses	25,698		24,466		—		(21,013		)	29,151
Noninterest income	199,619		30,039		7,879		(4,161		)	233,376
Noninterest expense	441,549		38,456		4,656		51,589			536,250
Net income (loss) before income tax expense (benefit)	240,919		9,582		9,451		(84,110		)	175,842
Income tax expense (benefit)	84,322		3,354		3,308		(40,874		)	50,110
Net income (loss)	156,597		6,228		6,143		(43,236		)	125,732
Less: net income attributable to noncontrolling interests	65		—		426		—			491
Net income (loss) attributable to shareholder	$	156,532	$	6,228	$	5,717	$	(43,236	)	$	125,241
Average assets	$	54,994,543	$	12,578,903	$	15,085,951	$	7,102,333		$	89,761,730

	Three Months Ended September 30, 2014
	Consumer and Commercial Banking		Corporate and Investment Banking			Treasury		Corporate Support and Other			Consolidated
	(In Thousands)
Net interest income	$	472,822	$	33,253		$	4,698	$	(28,805	)	$	481,968
Allocated provision for loan losses	17,242		(3,795		)	—		(9,578		)	3,869
Noninterest income	176,740		44,706			16,035		(11,050		)	226,431
Noninterest expense	434,957		40,968			5,093		52,124			533,142
Net income (loss) before income tax expense (benefit)	197,363		40,786			15,640		(82,401		)	171,388
Income tax expense (benefit)	73,518		15,193			5,826		(66,767		)	27,770
Net income (loss)	123,845		25,593			9,814		(15,634		)	143,618
Less: net income attributable to noncontrolling interests	382		—			433		—			815
Net income (loss) attributable to shareholder	$	123,463	$	25,593		$	9,381	$	(15,634	)	$	142,803
Average assets	$	50,488,226	$	7,303,466		$	13,238,660	$	6,878,735		$	77,909,087

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	Nine Months Ended September 30, 2015
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated
	(In Thousands)
Net interest income (expense)	$	1,485,422	$	121,428	$	25,026	$	(122,998	)	$	1,508,878
Allocated provision for loan losses	77,116		41,714		—		(1,499		)	117,331
Noninterest income	568,548		126,739		71,072		(25,144		)	741,215
Noninterest expense	1,292,947		116,994		14,683		153,981			1,578,605
Net income (loss) before income tax expense (benefit)	683,907		89,459		81,415		(300,624		)	554,157
Income tax expense (benefit)	239,367		31,311		28,495		(149,165		)	150,008
Net income (loss)	444,540		58,148		52,920		(151,459		)	404,149
Less: net income attributable to noncontrolling interests	448		—		1,290		—			1,738
Net income (loss) attributable to shareholder	$	444,092	$	58,148	$	51,630	$	(151,459	)	$	402,411
Average assets	$	53,748,809	$	12,459,087	$	14,288,092	$	7,092,747		$	87,588,735

	Nine Months Ended September 30, 2014
	Consumer and Commercial Banking		Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated
	(In Thousands)
Net interest income	$	1,391,303	$	100,759	$	12,954	$	(28,975	)	$	1,476,041
Allocated provision for loan losses	92,115		5,509		—		(11,237		)	86,387
Noninterest income	524,765		137,796		63,803		(45,160		)	681,204
Noninterest expense	1,294,095		112,725		12,130		178,321			1,597,271
Net income (loss) before income tax expense (benefit)	529,858		120,321		64,627		(241,219		)	473,587
Income tax expense (benefit)	197,372		44,820		24,074		(158,799		)	107,467
Net income (loss)	332,486		75,501		40,553		(82,420		)	366,120
Less: net income attributable to noncontrolling interests	464		—		1,308		—			1,772
Net income (loss) attributable to shareholder	$	332,022	$	75,501	$	39,245	$	(82,420	)	$	364,348
Average assets	$	49,140,107	$	7,000,603	$	12,773,686	$	6,859,995		$	75,774,391

The financial information presented was derived from the internal profitability reporting system used by management to monitor and manage the financial performance of the Company. This information is based on internal management accounting policies that have been developed to reflect the underlying economics of the businesses. These policies address the methodologies applied and include policies related to funds transfer pricing, cost allocations and capital allocations.

Funds transfer pricing was used in the determination of net interest income earned primarily on loans and deposits. The method employed for funds transfer pricing is a matched funding concept whereby operating segments which are fund providers are credited and those that are fund users are charged based on maturity, prepayment and/or repricing characteristics applied on an instrument level. Costs for centrally managed operations are generally allocated to the lines of business based on the utilization of services provided or other appropriate indicators. Capital is allocated to the lines of business based upon the underlying risks in each business taking into account economic and regulatory capital standards.

The development and application of these methodologies is a dynamic process. Accordingly, prior period financials have been revised to reflect management accounting enhancements and changes in the Company's organizational

57

structure. The 2014 segment information has been revised to conform to the 2015 presentation. In addition, unlike financial accounting, there is no authoritative literature for management accounting similar to U.S. GAAP. Consequently, reported results are not necessarily comparable to those presented by other financial institutions.

(12)Related Party Transactions

The Company enters into various transactions with BBVA that affect the Company’s business and operations. The following discloses the significant transactions between the Company and BBVA during 2015 and 2014.

The Company believes all of the transactions entered into between the Company and BBVA were transacted on terms that were no more or less beneficial to the Company than similar transactions entered into with unrelated market participants, including interest rates and transaction costs. The Company foresees executing similar transactions with BBVA in the future.

Derivatives

The Company has entered into various derivative contracts as noted below with BBVA as the upstream counterparty. The total notional amount of outstanding derivative contracts between the Company and BBVA are $850 million and $200 million for cash flow hedges and $4.7 billion and $4.2 billion for free-standing derivatives not designated as hedging instruments at September 30, 2015 and December 31, 2014, respectively. The net fair value of outstanding derivative contracts between the Company and BBVA are detailed below.

	September 30, 2015			December 31, 2014
	(In Thousands)
Derivative contracts:
Cash flow hedges	$	57		$	1,693
Free-standing derivatives not designated as hedging instruments	(38,590		)	9,512

Securities Purchased Under Agreements to Resell/ Securities Sold Under Agreements to Repurchase

The Company enters into agreements with BBVA as the counterparty under which it purchases/sells securities subject to an obligation to resell/repurchase the same or similar securities. The following represents the amount of securities purchased under agreement to resell and securities sold under agreement to repurchase where BBVA is the counterparty.

	September 30, 2015		December 31, 2014
	(In Thousands)
Securities purchased under agreements to resell	$	29,975	$	97,970
Securities sold under agreements to repurchase	—		435,684

Borrowings

BSI, a wholly owned subsidiary of the Company, has a $420 million revolving note and cash subordination agreement with BBVA that was executed on March 16, 2012 with a maturity date of March 16, 2018. BSI also has a $150 million line of credit with BBVA that was initiated on August 1, 2014. At September 30, 2015 there was $150 million outstanding on the line of credit agreement and no amount outstanding under the revolving note and cash subordination agreement. At December 31, 2014 there were no amounts outstanding under either of these agreements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

The accounting principles followed by the Company and the methods of applying these principles conform with accounting principles generally accepted in the United States of America and with general practices within the banking industry. The Company’s critical accounting policies relate to (1) the allowance for loan losses, (2) fair value of financial instruments, (3) income taxes and (4) goodwill impairment. These critical accounting policies require the use of estimates, assumptions and judgments which are based on information available as of the date of the financial statements. Accordingly, as this information changes, future financial statements could reflect the use of different estimates, assumptions and judgments. Certain determinations inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. The Company’s significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in detail in Note 1 in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Additional disclosures regarding the effects of new accounting pronouncements are included in Note 1, Basis of Presentation, included herein.

Executive Overview

Financial Performance

Consolidated net income attributable to shareholder for the three months ended September 30, 2015 was $125.2 million compared to $142.8 million earned during the three months ended September 30, 2014. The decrease in net income attributable to shareholder was primarily due to an increase in provision expense and an increase in income tax expense, offset in part by an increase in noninterest income as well as an increase in net interest income.

Net interest income totaled $507.9 million for the three months ended September 30, 2015 compared to $482.0 million for the three months ended September 30, 2014. The net interest margin for the three months ended September 30, 2015 was 2.70%, a decline of 31 basis points compared to 3.01% for the three months ended September 30, 2014. The decrease in net interest margin for the three months ended September 30, 2015 was driven by lower yields on earning assets.

The provision for loan losses was $29.2 million for the three months ended September 30, 2015 compared to $3.9 million of provision for loan losses for the three months ended September 30, 2014. The increase was primarily attributable to a decline in credit quality indicators primarily driven by downgrades in the energy portfolio during 2015. Net charge-offs for the three months ended September 30, 2015 totaled $28.5 million which represented a $5.7 million increase compared to $22.8 million for the three months ended September 30, 2014.

Noninterest income was $233.4 million, an increase of $6.9 million compared to the three months ended September 30, 2014. The increase in noninterest income was largely attributable to a $25.1 million increase in other noninterest income due to a $21.1 million gain on the sale of mortgage loans not initially originated for sale in the secondary market, offset by a $7.9 million decrease in mortgage banking income.

Noninterest expense was $536.3 million for the three months ended September 30, 2015, an increase of $3.1 million compared to the three months ended September 30, 2014. The increase in noninterest expense was primarily attributable to a $9.2 million increase in other noninterest expense primarily due to an increase in provision for unfunded commitments and valuation reserves on loans held for sale offset by a $10.3 million decrease in FDIC indemnification expense.

Income tax expense was $50.1 million for the three months ended September 30, 2015 compared to $27.8 million for the three months ended September 30, 2014. This resulted in an effective tax rate of 28.5% for 2015 and 16.2% for 2014. The increase in the effective tax rate for the three months ended September 30, 2015 was primarily driven by the release of a valuation allowance on net operating losses of BSI during the three months ended September 30, 2014.

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The Company's total assets at September 30, 2015 were $89.4 billion, an increase of $6.2 billion from December 31, 2014 levels. Total loans, excluding loans held for sale, were $60.3 billion at September 30, 2015, an increase of $2.9 billion or 5.1% from year-end December 31, 2014 levels. The growth in loans was primarily due to increases in commercial loans. Deposits increased $3.3 billion or 5.4% compared to December 31, 2014, driven by a 5.2% increase in transaction accounts, which was fueled by an increase in noninterest bearing deposits.

Total shareholder's equity at September 30, 2015 was $12.4 billion, an increase of $377 million compared to December 31, 2014.

Capital

Beginning January 1, 2015, the Company began the transition period for the Basel III capital rules. As such, the Company will report Basel III capital ratios under the phase-in provisions for regulatory reporting purposes until fully phased in at January 1, 2019. Under these new provisions, the Company's Tier1 and CET1 ratios were 10.74% and 10.68%, respectively, at September 30, 2015 under the phase in provisions.

Liquidity

The Company’s sources of liquidity include customers’ interest-bearing and noninterest-bearing deposit accounts, loan principal and interest payments, investment securities, short-term investments and borrowings. As a bank holding company, the Parent’s primary source of liquidity is the Bank. Due to the net earnings restrictions on dividend distributions, the Bank was not permitted to pay any dividends at September 30, 2015 and December 31, 2014 without regulatory approval.

Management believes that the current sources of liquidity are adequate to meet the Company’s requirements and plans for continued growth.

Analysis of Results of Operations

Consolidated net income attributable to shareholder totaled $125.2 million and $142.8 million for the three months ended September 30, 2015 and 2014, respectively. Consolidated net income attributable to shareholder totaled $402.4 million and $364.3 million for the nine months ended September 30, 2015 and 2014, respectively. The Company’s results of operations for the three months ended September 30, 2015 reflected higher noninterest income partially due to a $21 million gain on the sale of mortgage loans included in other noninterest income offset by higher income tax expense. The Company's results of operations for the nine months ended September 30, 2015 reflected higher noninterest income due to higher levels of investment banking and advisory fees, mortgage banking income and investment securities gains as well as lower noninterest expense primarily due to a decrease in FDIC indemnification expense.

Net Interest Income and Net Interest Margin

Net interest income is the principal component of the Company’s income stream and represents the difference, or spread, between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates as well as changes in the volume and mix of earning assets and interest bearing liabilities can impact net interest income. The following discussion of net interest income is presented on a fully taxable equivalent basis, unless otherwise noted, to facilitate performance comparisons among various taxable and tax-exempt assets.

Three Months Ended September 30, 2015 and 2014

Net interest income totaled $507.9 million for the three months ended September 30, 2015 compared to $482.0 million for the three months ended September 30, 2014.

Net interest income on a fully taxable equivalent basis totaled $526.9 million for the three months ended September 30, 2015 compared with $500.8 million for the three months ended September 30, 2014. Net interest income on a fully taxable equivalent basis increased $26.1 million in 2015 compared to 2014. The increase in net interest income was primarily the result of an increase in total interest earning assets driven by higher balances in loans and trading account securities. Offsetting this increase was an increase in total interest bearing liabilities due to an increase in the balances of interest bearing deposits, FHLB and other borrowings and other short-term borrowings for the three months ended September 30, 2015 compared to the same period in 2014.

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Net interest margin was 2.70% for the three months ended September 30, 2015 compared to 3.01% for the three months ended September 30, 2014. The 31 basis point decline in net interest margin primarily reflects the runoff of higher yielding covered loans as well as the impact of lower yields in the AFS investment securities portfolio. In addition, net interest margin has been negatively impacted by a $4.0 billion increase in the average balance of trading account securities and a $4.3 billion increase in the average balance of other short term borrowings due to an increase in U.S. Treasury long and short positions held by BSI.

The fully taxable equivalent yield for the three months ended September 30, 2015 for the loan portfolio was 3.64% compared to 3.75% for the same period in 2014. The yield on non-covered loans for the three months ended September 30, 2015 was 3.59% compared to 3.60% for the corresponding period in 2014. The yield on covered loans for the three months ended September 30, 2015 was 10.28% compared to 17.92% for the corresponding period in 2014. The loss sharing agreement for commercial loans expired in the fourth quarter of 2014. Upon expiration, the income associated with these commercial loans is now included in non-covered loans interest income. The decrease in yield on covered loans was primarily due to the impact of the quarterly reassessment of expected future cash flows.

The fully taxable equivalent yield on the investment securities portfolio was 1.92% for the three months ended September 30, 2015, compared to 2.26% for the three months ended September 30, 2014. The 34 basis point decrease was primarily driven by proceeds from the sale of higher yielding investment securities and from prepayments, maturities and calls of investment securities that have been reinvested into investment securities with lower market rates due to a lower rate environment.

The yield on trading account securities decreased to 1.37% for the three months ended September 30, 2015 compared to 2.79% for the three months ended September 30, 2014 due to an increase in U.S. Treasury securities held by BSI.

The average rate paid on interest bearing deposits was 0.61% for the three months ended September 30, 2015 compared to 0.62% for the three months ended September 30, 2014.

The average rate paid on FHLB and other borrowings for the three months ended September 30, 2015 was 1.28% compared to 1.70% for the corresponding period in 2014. The 42 basis point decrease was driven by changes in the value of interest rate contracts hedging the value of FHLB and other borrowings offset by the impact of the $1 billion issuance of senior notes in September 2014 and the $700 million issuance of subordinated notes in April 2015 under the Global Bank Note program.

The average rate on other short-term borrowings decreased 204 basis points to 1.01% for the three months ended September 30, 2015 due to the effect of the increase in U.S. Treasury short positions held by BSI.

Nine Months Ended September 30, 2015and 2014

Net interest income totaled $1.5 billion for both the nine months ended September 30, 2015 and 2014.

Net interest income on a fully taxable equivalent basis totaled $1.6 billion for the nine months ended September 30, 2015 and $1.5 billion for the nine months ended September 30, 2014.

Net interest margin was 2.77% for the nine months ended September 30, 2015 compared to 3.18% for the nine months ended September 30, 2014. The 41 basis point decline in net interest margin primarily reflects the runoff of higher yielding covered loans as well as the impact of lower yields in the AFS investment securities portfolio. In addition, net interest margin was negatively impacted by the increase in the average balance of trading account securities and the increase in the average balance of other short term borrowings primarily due to an increase in U.S. Treasury long and short positions held by BSI.

The fully taxable equivalent yield for the nine months ended September 30, 2015 for the loan portfolio was 3.71% compared to 3.93 % for the same period in 2014. The yield on non-covered loans for the nine months ended September 30, 2015 was 3.65 % compared to 3.66 % for the corresponding period in 2014. The yield on covered loans for the nine months ended September 30, 2015 was 11.19 % compared to 24.91 % for the corresponding period in 2014. The loss sharing agreement for commercial loans expired in the fourth quarter of 2014. Upon expiration, the income associated with these commercial loans is now included in non-covered loans interest income. The decrease in yield on covered loans was primarily due to the impact of the quarterly reassessment of expected future cash flows.

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The fully taxable equivalent yield on the investment securities portfolio was 2.04% for the nine months ended September 30, 2015, compared to 2.35% for the nine months ended September 30, 2014. The 31 basis point decrease was primarily driven by proceeds from the sale of higher yielding investment securities, and from prepayments, maturities and calls of investment securities that have been reinvested into investment securities with lower market rates due to a lower rate environment.

The yield on trading account securities was 1.34% for the nine months ended September 30, 2015 compared to 2.71% for the nine months ended September 30, 2014 due to an increase in U.S. Treasury securities held by BSI.

The average rate paid on interest bearing deposits was 0.61% for the nine months ended September 30, 2015 compared to 0.59% for the nine months ended September 30, 2014.

The average rate on FHLB and other borrowings for the nine months ended September 30, 2015 was 1.56% compared to 1.61% for the corresponding period in 2014.

The average rate on other short-term borrowing was 1.23% for the nine months ended September 30, 2015 compared to 2.54% for nine months ended September 30, 2014 due to the effect of the increase in U.S. Treasury short positions held by BSI.

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The following table sets forth the major components of net interest income and the related annualized yields and rates, as well as the variances between the periods caused by changes in interest rates versus changes in volumes. Changes attributable to the mix of assets and liabilities have been allocated proportionally between the changes due to yield/rate and the changes due to volume.

Table 1 Consolidated Average Balance and Yield/ Rate Analysis
	Three Months Ended September 30, 2015							Three Months Ended September 30, 2014
	Average Balance			Income/Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/Rate
	(Dollars in Thousands)
Assets:
Interest earning assets:
Non-covered loans	$	60,170,975		$	543,762	3.59	%	$	54,756,383		$	497,046	3.60	%
Covered loans	461,329			11,951		10.28		593,266			26,797		17.92
Loans (1) (2) (3)	60,632,304			555,713		3.64		55,349,649			523,843		3.75
Investment securities – AFS (tax exempt)(3)	193,008			2,044		4.20		488,143			5,119		4.16
Investment securities – AFS (taxable)	10,314,680			45,316		1.74		8,640,258			45,031		2.07
Total investment securities – AFS	10,507,688			47,360		1.79		9,128,401			50,150		2.18
Investment securities – HTM (tax exempt) (3)	1,143,158			9,070		3.15		1,152,622			8,622		2.97
Investment securities – HTM (taxable)	223,371			1,049		1.86		275,387			1,249		1.80
Total investment securities - HTM	1,366,529			10,119		2.94		1,428,009			9,871		2.74
Trading account securities (3)	4,167,721			14,431		1.37		133,453			937		2.79
Other (4) (5)	682,436			1,659		0.96		66,241			47		0.28
Total earning assets	77,356,678			629,282		3.23		66,105,753			584,848		3.51
Noninterest earning assets:
Cash and due from banks	4,154,979							3,509,394
Allowance for loan losses	(725,871		)					(712,811		)
Net unrealized gain (loss) on investment securities available for sale	9,568							37,160
Other noninterest earning assets	8,966,376							8,969,591
Total assets	$	89,761,730						$	77,909,087
Liabilities:
Interest bearing liabilities:
Interest bearing demand deposits	$	6,949,920		2,943		0.17		$	7,079,309		2,971		0.17
Savings and money market accounts	24,414,794			22,260		0.36		22,479,532			24,256		0.43
Certificates and other time deposits	13,158,735			42,990		1.30		12,956,374			39,478		1.21
Foreign office deposits	177,014			89		0.20		120,989			58		0.19
Total interest bearing deposits	44,700,463			68,282		0.61		42,636,204			66,763		0.62
FHLB and other borrowings	6,331,187			20,422		1.28		3,827,684			16,399		1.70
Federal funds purchased and securities sold under agreements to repurchase (5)	677,351			2,506		1.47		838,802			447		0.21
Other short-term borrowings	4,370,077			11,129		1.01		51,290			394		3.05
Total interest bearing liabilities	56,079,078			102,339		0.72		47,353,980			84,003		0.70
Noninterest bearing deposits	19,311,966							17,039,477
Other noninterest bearing liabilities	2,053,536							1,598,363
Total liabilities	77,444,580							65,991,820
Shareholder’s equity	12,317,150							11,917,267
Total liabilities and shareholder’s equity	$	89,761,730						$	77,909,087
Net interest income/net interest spread				$	526,943	2.51	%				$	500,845	2.81	%
Net interest margin						2.70	%						3.01	%
Taxable equivalent adjustment				19,076							18,877
Net interest income				$	507,867						$	481,968

(1) Loans include loans held for sale and nonaccrual loans.

(2) Interest income includes loan fees for rate calculation purposes.

(3) Yields are stated on a fully taxable equivalent basis assuming the tax rate in effect for each period presented.

(4) Includes federal funds sold, securities purchased under agreements to resell, interest bearing deposits, and other earning assets.

(5) Yield/rate reflects impact of balance sheet offsetting. See Note 6, Securities Financing Activities.

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Table 1 Consolidated Average Balance and Yield/ Rate Analysis
	Nine Months Ended September 30, 2015							Nine Months Ended September 30, 2014
	Average Balance			Income/Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/Rate
	(Dollars in Thousands)
Assets:
Interest earning assets:
Non-covered loans	$	59,261,882		$	1,619,513	3.65	%	$	53,091,001		$	1,454,943	3.66	%
Covered loans	475,305			39,790		11.19		660,487			123,064		24.91
Loans (1) (2) (3)	59,737,187			1,659,303		3.71		53,751,488			1,578,007		3.93
Investment securities – AFS (tax exempt)(3)	332,492			10,100		4.06		498,452			15,822		4.24
Investment securities – AFS (taxable)	9,861,132			136,483		1.85		8,374,817			135,407		2.16
Total investment securities – AFS	10,193,624			146,583		1.92		8,873,269			151,229		2.28
Investment securities – HTM (tax exempt) (3)	1,129,784			26,373		3.12		1,172,896			26,355		3.00
Investment securities – HTM (taxable)	236,515			3,409		1.93		292,503			3,955		1.81
Total investment securities - HTM	1,366,299			29,782		2.91		1,465,399			30,310		2.77
Trading account securities (3)	3,779,274			37,878		1.34		100,611			2,036		2.71
Other (4) (5)	601,357			4,017		0.89		37,891			136		0.48
Total earning assets	75,677,741			1,877,563		3.32		64,228,658			1,761,718		3.67
Noninterest earning assets:
Cash and due from banks	3,589,289							3,346,640
Allowance for loan losses	(707,459		)					(707,630		)
Net unrealized gain (loss) on investment securities available for sale	44,180							40,216
Other noninterest earning assets	8,984,984							8,866,507
Total assets	$	87,588,735						$	75,774,391
Liabilities:
Interest bearing liabilities:
Interest bearing demand deposits	$	7,281,588		8,868		0.16		$	7,269,983		9,066		0.17
Savings and money market accounts	23,890,463			70,465		0.39		21,020,159			59,922		0.38
Certificates and other time deposits	12,832,859			123,546		1.29		12,733,405			111,717		1.17
Foreign office deposits	171,048			257		0.20		121,212			175		0.19
Total interest bearing deposits	44,175,958			203,136		0.61		41,144,759			180,880		0.59
FHLB and other borrowings	5,742,906			67,068		1.56		4,070,692			48,947		1.61
Federal funds purchased and securities sold under agreements to repurchase (5)	832,854			5,534		0.89		885,147			1,384		0.21
Other short-term borrowings	3,973,734			36,668		1.23		27,183			516		2.54
Total interest bearing liabilities	54,725,452			312,406		0.76		46,127,781			231,727		0.67
Noninterest bearing deposits	18,749,621							16,349,912
Other noninterest bearing liabilities	1,890,692							1,509,944
Total liabilities	75,365,765							63,987,637
Shareholder’s equity	12,222,970							11,786,754
Total liabilities and shareholder’s equity	$	87,588,735						$	75,774,391
Net interest income/net interest spread				$	1,565,157	2.56	%				$	1,529,991	3.00	%
Net interest margin						2.77	%						3.18	%
Taxable equivalent adjustment				56,279							53,950
Net interest income				$	1,508,878						$	1,476,041

(1) Loans include loans held for sale and nonaccrual loans.

(2) Interest income includes loan fees for rate calculation purposes.

(3) Yields are stated on a fully taxable equivalent basis assuming the tax rate in effect for each period presented.

(4) Includes federal funds sold, securities purchased under agreements to resell, interest bearing deposits, and other earning assets.

(5) Yield/rate reflects impact of balance sheet offsetting. See Note 6, Securities Financing Activities.

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Provision for Loan Losses

The provision for loan losses is the charge to earnings that management determines to be necessary to maintain the allowance for loan losses at a sufficient level reflecting management's estimate of probable incurred losses in the loan portfolio.

Three Months Ended September 30, 2015 and 2014

For the three months ended September 30, 2015, the Company recorded $29.2 million of provision for loan losses compared to $3.9 million of provision for loan losses for the three months ended September 30, 2014. The increase in provision for loan losses for the three months ended September 30, 2015 as compared to the same period in 2014 was primarily attributable to a decline in credit quality indicators primarily driven by downgrades in the energy portfolio during 2015. The Company recorded net charge-offs of $28.5 million during the three months ended September 30, 2015 compared to $22.8 million during the corresponding period in 2014. Net charge-offs were 0.19% of average loans for the three months ended September 30, 2015 compared to 0.16% of average loans for the three months ended September 30, 2014.

Nine Months Ended September 30, 2015and 2014

For the nine months ended September 30, 2015, the Company recorded $117.3 million of provision for loan losses compared to $86.4 million of provision for loan losses for the nine months ended September 30, 2014. The increase in provision for loan losses for the nine months ended September 30, 2015 as compared to the same period in 2014 was primarily attributable to loan growth as well as a decline in credit quality indicators primarily driven by downgrades in the energy portfolio during 2015.The Company recorded net charge-offs of $80.3 million during the nine months ended September 30, 2015 compared to $91.2 million during the corresponding period in 2014. Net charge-offs were 0.18% of average loans for the nine months ended September 30, 2015 compared to 0.23% of average loans for the nine months ended September 30, 2014.

For further discussion and analysis of the allowance for loan losses, refer to the discussion of lending activities found later in this section. Also, refer to Note 3, Loans and Allowance for Loan Losses, in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional disclosures.

Noninterest Income

The following table presents the components of noninterest income.

Table 2 Noninterest Income
	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2015		2014		2015			2014
	(In Thousands)
Service charges on deposit accounts	$	54,917	$	57,537	$	161,891		$	165,886
Card and merchant processing fees	29,024		28,682		83,918			81,459
Retail investment sales	26,055		27,645		77,574			83,053
Investment banking and advisory fees	17,842		18,750		84,975			63,226
Asset management fees	7,918		10,666		24,449			31,959
Corporate and correspondent investment sales	6,047		5,388		20,290			22,016
Mortgage banking income	554		8,498		21,269			18,924
Bank owned life insurance	4,345		4,603		13,527			12,807
Investment securities gains, net	6,736		9,710		66,967			47,608
Gain (loss) on prepayment of FHLB and other borrowings, net	—		143		(6,118		)	(315		)
Other	79,938		54,809		192,473			154,581
Total noninterest income	$	233,376	$	226,431	$	741,215		$	681,204

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Three Months Ended September 30, 2015 and 2014

Noninterest income was $233.4 million for the three months ended September 30, 2015 compared to $226.4 million for the three months ended September 30, 2014. The increase in noninterest income was largely attributable to an increase in other noninterest income which was partially offset by decreases in service charges on deposit accounts, asset management fees, mortgage banking income and investment securities gains.

Service charges on deposit accounts represent the Company's largest category of noninterest revenue. Service charges on deposit accounts decreased to $54.9 million for the three months ended September 30, 2015, compared to $57.5 million for the three months ended September 30, 2014 due to a decline in consumer overdraft fees.

Asset management fees for the three months ended September 30, 2015, decreased by $2.7 million from the corresponding period in2014primarily driven by a decrease in assets under management due to the divestiture of one of the Bank's wealth management subsidiaries.

Mortgage banking income for the three months ended September 30, 2015 was $554 thousand compared to $8.5 million for the three months ended September 30, 2014. Mortgage banking income for the three months ended September 30, 2015 included $8.3 million of origination fees and gains on sales of mortgage loans as well as losses of $7.0 million related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. Mortgage banking income for the three months ended September 30, 2014 included $10.3 million of origination fees and gains on sales of mortgage loans as well as losses of $1.7 million related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. The decrease in mortgage banking income for the three months ended September 30, 2015 compared to the corresponding period in 2014 was primarily driven by the lower interest rate environment during the third quarter of 2015 which negatively impacted the valuations of mortgage loans held for sale, mortgage related derivatives, and MSRs.

Investment securities gains, net decreased to $6.7 million for the three months ended September 30, 2015, compared to $9.7 million in the three months ended September 30, 2014, see "—Investment Securities" for more information related to the investment securities sales.

Other income is comprised of income recognized that does not typically fit into one of the other noninterest income categories and includes various fees associated with letters of credit, syndications, ATMs and foreign exchange. For the three months ended September 30, 2015, other income increased by $25.1 million primarily attributable to a $21.1 million gain on the sale of mortgage loans. During the three months ended September 30, 2015, the Company transferred to loans held for sale and sold approximately $396 million of mortgage loans.

Nine Months Ended September 30, 2015and 2014

Noninterest income was $741.2 million for the nine months ended September 30, 2015 compared to $681.2 million for the nine months ended September 30, 2014. The increase in noninterest income was largely attributable to increasesin investment banking and advisory fees, mortgage banking income and other noninterest income.

Income from investment banking and advisory fees increased to $85.0 million for the nine months ended September 30, 2015, compared to $63.2 million for the nine months ended September 30, 2014 due primarily to an increase in structuring and advisory fees and higher bond originations during 2015 compared to the same period in 2014.

Mortgage banking income for the nine months ended September 30, 2015 was $21.3 million compared to $18.9 million for the nine months ended September 30, 2014. Mortgage banking income for the nine months ended September 30, 2015 included $28.0 million of origination fees and gains on sales of mortgage loans as well as losses of $5.5 million related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. Mortgage banking income for the nine months ended September 30, 2014 included $18.9 million of origination fees and gains on sales of mortgage loans as well as gains of $321 thousand related to fair value adjustments on mortgage loans held for sale, mortgage related derivatives and MSRs. The increase in mortgage banking income for the nine months ended September 30, 2015 compared to the corresponding period in 2014 was primarily driven by higher refinance volume at higher margins compared to the same period in 2014.

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Investment securities gains, net increased to $67.0 million for the nine months ended September 30, 2015, compared to $47.6 million in the nine months ended September 30, 2014, see "—Investment Securities" for more information related to the investment securities sales.

For the nine months ended September 30, 2015, other income increased by $37.9 million primarily due to a gain of $21.1 million on the sale of mortgage loans. Servicing fees also increased $4.4 million due to an increase in loans sold to FNMA where the Company retained the servicing in 2015 compared to 2014. Trade services fees and miscellaneous income also increased $4.7 million and $9.9 million, respectively, for the nine months ended September 30, 2015.

Noninterest Expense

The following table presents the components of noninterest expense.

Table 3 Noninterest Expense
	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2015		2014		2015		2014
	(In Thousands)
Salaries, benefits and commissions	$	268,362	$	265,334	$	796,333	$	791,204
Equipment	58,151		56,355		173,467		165,562
Professional services	54,784		52,463		152,462		148,652
Net occupancy	39,525		39,357		119,187		118,514
FDIC indemnification expense	8,461		18,748		49,669		80,736
Amortization of intangibles	9,507		12,635		30,083		38,800
Total securities impairment	—		—		1,298		180
Other	97,460		88,250		256,106		253,623
Total noninterest expense	$	536,250	$	533,142	$	1,578,605	$	1,597,271

Three Months Ended September 30, 2015 and 2014

Noninterest expense was $536.3 million for the three months ended September 30, 2015 compared to $533.1 million for the three months ended September 30, 2014. The $3.1 million increase in noninterest expense was primarily driven by an increase in salaries, benefits and commissions and other noninterest expense offset by a decrease in FDIC indemnification expense and amortization of intangibles.

Salaries, benefits and commissions increased to $268.4 million for the three months ended September 30, 2015 compared to $265.3 million for the three months ended September 30, 2014. The increase was due to $3.0 million of salaries and benefits recognized during the three months ended September 30, 2015 related to Spring Studios which was acquired by the Company during the second quarter of 2015.

FDIC indemnification expense, which represents the amortization of changes in the FDIC indemnification asset and liability stemming from changes in credit expectations of covered loans, was $8.5 million during the three months ended September 30, 2015 compared to $18.7 million for the corresponding period in 2014. The decrease for the three months ended September 30, 2015 was primarily a result of the continued decline in the balance of the covered loan portfolio.

Amortization expense decreased by $3.1 million to $9.5 million for the three months ended September 30, 2015 due to the lower level of intangible assets at September 30, 2015 compared to the same period in 2014.

Other noninterest expense represents FDIC insurance, marketing, communications, postage, supplies, subscriptions, provision for unfunded commitments and gains and losses on the sales and write-downs of OREO. Other noninterest expense increased for the three months ended September 30, 2015 to $97.5 million compared to $88.3 million for the three months ended September 30, 2014 attributable to a $4.3 million increase in the provision for unfunded

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commitments and a $4.6 million valuation adjustment related to loans transferred to held for sale during the third quarter of 2015.

Nine Months Ended September 30, 2015and 2014

Noninterest expense was $1.6 billion for the nine months ended September 30, 2015, a decrease of $18.7 million compared to the nine months ended September 30, 2014.The main drivers of the decrease were a decrease in FDIC indemnification expense and amortization of intangibles which was partially offset by increases in salaries, benefits and commissions and equipment expense.

Salaries, benefits and commissions increased to $796.3 million for the nine months ended September 30, 2015 compared to $791.2 million for the nine months ended September 30, 2014. The increase was due to $4.7 million of salaries and benefits recognized during the nine months ended September 30, 2015 related to Spring Studios which was acquired by the Company during the second quarter of 2015.

Equipment expense was $173.5 million during the nine months ended September 30, 2015 compared to $165.6 million for the corresponding period in 2014 due to a $9.8 million increase in software amortization resulting from software additions in 2015 offset by a $2.0 million decrease related to hardware depreciation.

FDIC indemnification expense was $49.7 million during the nine months ended September 30, 2015 compared to $80.7 million for the corresponding period in 2014. The decrease for the nine months ended September 30, 2015 was primarily a result of the continued decline in the balance of the covered loan portfolio.

Amortization expense decreased by $8.7 million to $30.1 million for the nine months ended September 30, 2015 due to the lower level of intangible assets at September 30, 2015 compared to the same period in 2014.

Income Tax Expense

Three Months Ended September 30, 2015 and 2014

The Company’s income tax expense totaled $50.1 million and $27.8 million for the three months ended September 30, 2015 and 2014, respectively. The effective tax rate was 28.5% for the three months ended September 30, 2015 and 16.2% for the three months ended September 30, 2014.The increase in the effective tax rate for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 was primarily driven by the release of a valuation allowance on net operating losses of BSI during the three months ended September 30, 2014.

Nine Months Ended September 30, 2015and 2014

The Company’s income tax expense totaled $150.0 million and $107.5 million for the nine months ended September 30, 2015 and 2014, respectively. The effective tax rate was 27.1% for the nine months ended September 30, 2015 and 22.7% for the nine months ended September 30, 2014. The increase in the effective tax rate for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 was primarily driven by higher net income before income tax expense relative to permanent income tax differences in 2015 as compared to the same period in 2014 and the release of a valuation allowance on net operating losses of BSI during the three months ended September 30, 2014.

Analysis of Financial Condition

A review of the Company’s major balance sheet categories is presented below.

Trading Account Assets

Trading account assets totaled $4.2 billion at September 30, 2015 compared to $2.8 billion at December 31, 2014. The $1.4 billion increase in trading account assets was attributable to an increase in U.S. Treasury securities held by BSI.

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Investment Securities

As of September 30, 2015, the securities portfolio included $10.8 billion in available for sale securities and $1.4 billion in held to maturity securities for a total investment portfolio of $12.2 billion, an increase of $576 million compared with December 31, 2014.

During the three months ended September 30, 2015, as part of the Company's liquidity management strategy and due to upcoming LCR requirements, the Company sold approximately $263 million of state and political subdivisions and $287 million of mortgage-backed securities and collateralized mortgage obligations classified as available for sale. See the "—Liquidity Management" and Note2,Investment Securities Available for Sale and Investment Securities Held to Maturity,in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional disclosures.

During the nine months ended September 30, 2015, the Company received proceeds of $2.9 billion related to the sale of U.S. Treasury and other U.S. government agencies, mortgage-backed securities, collateralized mortgage obligations and states and political subdivisions holdings classified as available for sale which resulted in net gains of $67.0 million. During the nine months ended September 30, 2014, the Company received proceeds of $961 million from the sale of mortgage-backed securities and collateralized mortgage obligations classified as available for sale which resulted in net gains of $47.6 million.

Lending Activities

Average loans and loans held for sale, net of unearned income, represented 78.9% of average interest-earnings assets at September 30, 2015, compared to 83.0% at December 31, 2014. The Company groups its loans into portfolio segments based on internal classifications reflecting the manner in which the allowance for loan losses is established and how credit risk is measured, monitored and reported. Commercial loans are comprised of commercial, financial and agricultural, real estate-construction, and commercial real estate–mortgage loans. Consumer loans are comprised of residential real-estate mortgage, equity lines of credit, equity loans, credit cards, consumer direct and consumer indirect loans. The Company also has a portfolio of covered loans that were acquired in the FDIC-assisted acquisition of certain assets and liabilities of Guaranty Bank.

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The following table presents the composition of the loan portfolio.

Table 4 Loan Portfolio
	September 30, 2015		December 31, 2014
	(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	25,636,319	$	23,828,537
Real estate – construction	2,315,351		2,154,652
Commercial real estate – mortgage	10,624,632		9,877,206
Total commercial loans	$	38,576,302	$	35,860,395
Consumer loans:
Residential real estate – mortgage	$	13,897,723	$	13,922,656
Equity lines of credit	2,376,408		2,304,784
Equity loans	612,148		634,968
Credit card	609,982		630,456
Consumer direct	854,989		652,927
Consumer indirect	2,901,603		2,870,408
Total consumer loans	$	21,252,853	$	21,016,199
Covered loans	458,066		495,190
Total loans	$	60,287,221	$	57,371,784
Loans held for sale	634,158		154,816
Total loans and loans held for sale	$	60,921,379	$	57,526,600

Loans and loans held for sale, net of unearned income, totaled $60.9 billion at September 30, 2015, an increase of $3.4 billion from December 31, 2014. The increase in total loans was primarily driven by growth in commercial loans as well as increases in the consumer direct and consumer indirect loan portfolios.

See Note 3, Loans and Allowance for Loan Losses, and Note 4, Loan Sales and Servicing, in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional discussion.

Asset Quality

Nonperforming assets, which includes nonaccrual loans, nonaccrual loans held for sale, accruing loans 90 days past due, accruing TDRs 90 days past due, other real estate owned and other repossessed assets, totaled $482 million at September 30, 2015 compared to $420 million at December 31, 2014. The increase in nonperforming assets was primarily due to a $58 million increase in nonaccrual loans primarily related to downgrades of certain loans in the energy portfolio. As a percentage of total loans and loans held for sale and other real estate, nonperforming assets were 0.79% at September 30, 2015 compared with 0.73% at December 31, 2014.

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The Company defines potential problem loans as commercial noncovered loans rated substandard or doubtful that do not meet the definition of nonaccrual, TDR or 90 days past due and still accruing. See Note 3, Loans and Allowance for Loan Losses, in the Notes to the Unaudited Condensed Consolidated Financial Statements for further information on the Company’s credit grade categories, which are derived from standard regulatory rating definitions. The following table provides a summary of potential problem loans.

Potential problem loans increased $317 million from December 31, 2014 to September 30, 2015. The increase was primarily attributable to downgrades in the energy portfolio. See "—Concentrations" for additional discussion.

Table 5 Potential Problem Loans
	September 30, 2015		December 31, 2014
	(In Thousands)
Commercial, financial and agricultural	$	415,383	$	111,919
Real estate – construction	185		214
Commercial real estate – mortgage	69,532		55,517
	$	485,100	$	167,650

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The following table summarizes asset quality information and includes loans held for sale and purchased impaired loans.

Table 6 Asset Quality
	September 30, 2015		December 31, 2014
	(In Thousands)
Nonaccrual loans:
Commercial, financial and agricultural	$	130,370	$	61,157
Real estate – construction	5,712		7,964
Commercial real estate – mortgage	85,975		89,736
Residential real estate – mortgage	103,492		108,357
Equity lines of credit	33,436		32,874
Equity loans	15,104		19,029
Credit card	—		—
Consumer direct	635		799
Consumer indirect	6,053		2,624
Covered	153		114
Total nonaccrual loans	380,930		322,654
Nonaccrual loans held for sale	—		—
Total nonaccrual loans and loans held for sale	$	380,930	$	322,654
Accruing TDRs: (1)
Commercial, financial and agricultural	$	9,635	$	10,127
Real estate – construction	2,247		2,112
Commercial real estate – mortgage	33,837		39,841
Residential real estate – mortgage	71,102		69,408
Equity lines of credit	—		—
Equity loans	37,785		41,197
Credit card	—		—
Consumer direct	469		298
Consumer indirect	—		—
Covered	—		—
Total TDRs	155,075		162,983
TDRs classified as loans held for sale	—		—
Total TDRs (loans and loans held for sale)	$	155,075	$	162,983
Loans 90 days past due and accruing:
Commercial, financial and agricultural	$	5,202	$	1,610
Real estate – construction	426		477
Commercial real estate – mortgage	5,607		628
Residential real estate – mortgage	1,230		2,598
Equity lines of credit	2,411		2,679
Equity loans	985		997
Credit card	8,322		9,441
Consumer direct	2,153		2,296
Consumer indirect	4,213		2,771
Covered	43,039		47,957
Total loans 90 days past due and accruing	73,588		71,454
Loans held for sale 90 days past due and accruing	—		—
Total loans and loans held for sale 90 days past due and accruing	$	73,588	$	71,454
Other real estate	$	23,762	$	20,600
Other repossessed assets	$	3,331	$	3,920

(1) TDR totals include accruing loans 90 days past due classified as TDRs.

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Nonperforming assets, which include loans held for sale and purchased impaired loans, are detailed in the following table.

Table 7 Nonperforming Assets
	September 30, 2015		December 31, 2014
	(In Thousands)
Nonaccrual loans	$	380,930	$	322,654
Loans 90 days or more past due and accruing (1)	73,588		71,454
TDRs 90 days or more past due and accruing	678		1,722
Nonperforming loans	455,196		395,830
OREO	23,762		20,600
Other repossessed assets	3,331		3,920
Total nonperforming assets	$	482,289	$	420,350

(1) Excludes loans classified as TDRs.

Table 8 Asset Quality Ratios
	September 30, 2015		December 31, 2014
	(In Thousands)
Asset Quality Ratios:
Nonperforming loans and loans held for sale as a percentage of loans and loans held for sale (1)	0.75	%	0.69	%
Nonperforming assets as a percentage of loans and loans held for sale, other real estate, and other repossessed assets (2)	0.79	%	0.73	%
Allowance for loan losses as a percentage of loans	1.20	%	1.19	%
Allowance for loan losses as a percentage of nonperforming loans (3)	158.64	%	173.06	%

(1) Nonperforming loans include nonaccrual loans and loans held for sale (including nonaccrual loans classified as TDRs), accruing loans 90 days past due and accruing TDRs 90 days past due.

(2) Nonperforming assets include nonperforming loans, other real estate and other repossessed assets.

(3) Nonperforming loans include nonaccrual loans (including nonaccrual loans classified as TDRs), accruing loans 90 days past due and accruing TDRs 90 days past due.

The following table provides a rollforward of OREO.

Table 9 Rollforward of Other Real Estate Owned
	Nine Months Ended September 30,
	2015			2014
	(In Thousands)
Balance at beginning of period	$	20,600		$	23,228
Transfer of loans and loans held for sale to OREO	16,552			14,278
Sales of OREO	(10,073		)	(18,108		)
Write-downs of OREO	(3,317		)	(2,340		)
Balance at end of period	$	23,762		$	17,058

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The following table provides a rollforward of nonaccrual loans and loans held for sale, excluding covered loans.

Table 10 Rollforward of Nonaccrual Loans
	Nine Months Ended September 30,
	2015			2014
	(In Thousands)
Balance at beginning of period,	$	322,540		$	436,290
Additions	305,310			275,906
Returns to accrual	(35,663		)	(65,071		)
Loan sales	(7,150		)	(69,115		)
Payments and paydowns	(65,793		)	(86,865		)
Transfers to OREO	(16,134		)	(13,310		)
Charge-offs	(122,333		)	(136,670		)
Balance at end of period	$	380,777		$	341,165

When borrowers are experiencing financial difficulties, the Company, in order to assist the borrowers in repaying the principal and interest owed to the Company, may make certain modifications to the loan agreement. To facilitate this process, a concessionary modification that would not otherwise be considered may be granted resulting in a classification of the loan as a TDR. Within each of the Company’s loan classes, TDRs typically involve modification of the loan interest rate to a below market rate or an extension or deferment of the loan. The financial effects of TDRs are reflected in the components that comprise the allowance for loan losses in either the amount of charge-offs or loan loss provision and period-end allowance levels. All TDRs are considered to be impaired loans. Refer to Note 3, Loans and Allowance for Loan Losses, in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information.

The following table provides a rollforward of TDR activity, excluding covered loans and loans held for sale.

Table 11 Rollforward of TDR Activity
	Nine Months Ended September 30,
	2015			2014
	(In Thousands)
Balance at beginning period	$	243,374		$	310,282
New TDRs	16,852			41,322
Payments/Payoffs	(27,166		)	(75,631		)
Charge-offs	(3,686		)	(5,023		)
Loan sales	(1,982		)	(2,098		)
Transfer to OREO	(1,479		)	(3,896		)
Balance at end of period	$	225,913		$	264,956

The Company’s aggregate recorded investment in impaired loans modified through TDRs excluding covered loans decreased to $226 million at September 30, 2015 from $243 million at December 31, 2014. Included in these amounts are $155 million at September 30, 2015 and $163 million at December 31, 2014 of accruing TDRs, excluding covered loans. Accruing TDRs are not considered nonperforming because they are performing in accordance with the restructured terms.

The Company's allowance for loan losses is largely driven by risk ratings assigned to commercial loans, updated borrower credit scores on consumer loans and borrower delinquency history in both commercial and consumer portfolios.  As such, the provision for credit losses is impacted primarily by changes in borrower payment performance rather than TDR classification.  In addition, all commercial and consumer loans modified in a TDR are considered to be impaired, even if they maintain their accrual status.

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Allowance for Loan Losses

Management’s policy is to maintain the allowance for loan losses at a level sufficient to absorb estimated probable incurred losses in the loan portfolio. See Note 3, Loans and Allowance for Loan Losses, in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional disclosures regarding the allowance for loan losses. The total allowance for loan losses increased to $722 million at September 30, 2015, from $685 million at December 31, 2014. The ratio of the allowance for loan losses to total loans was 1.20% at September 30, 2015 compared to 1.19% at December 31, 2014. Nonperforming loans were $455 million at September 30, 2015 compared to $396 million at December 31, 2014. The allowance attributable to individually impaired loans was $64 million at September 30, 2015 compared to $63 million at December 31, 2014.

Net charge-offs were 0.19% of average loans for the three months ended September 30, 2015 compared to 0.16% of average loans for the three months ended September 30, 2014. The increase in net charge-offs for the three months ended September 30, 2015 as compared to the corresponding period in 2014 was primarily driven by increases in commercial, financial and agricultural and consumer indirect portfolios. Net charge-offs were 0.18% of average loans for the nine months ended September 30, 2015 compared to 0.23% of average loans for the nine months ended September 30, 2014. The decrease in net charge-offs for the nine months ended September 30, 2015 as compared to the corresponding period in 2014 was primarily driven by decreases in the commercial, financial and agricultural, commercial and residential real estate - mortgage, equity lines of credit and equity loans portfolios offset by increases in the consumer direct and consumer indirect portfolios.

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The following table sets forth information with respect to the Company’s loans, excluding loans held for sale, and the allowance for loan losses.

Table 12 Summary of Loan Loss Experience
	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(Dollars in Thousands)
Average loans outstanding during the period	$	60,513,571		$	55,196,146		$	59,619,979		$	53,635,972
Allowance for loan losses, beginning of period	$	721,471		$	714,760		$	685,041		$	700,719
Charge-offs:
Commercial, financial and agricultural	9,161			3,404			20,706			23,855
Real estate – construction	124			26			199			2,154
Commercial real estate – mortgage	786			529			2,181			8,352
Residential real estate – mortgage	1,909			4,461			7,985			15,984
Equity lines of credit	3,157			3,735			10,154			17,156
Equity loans	878			1,656			2,750			6,281
Credit card	7,380			8,271			24,138			27,250
Consumer direct	7,055			5,582			19,686			17,211
Consumer indirect	13,132			6,661			35,133			18,426
Covered	490			1,124			1,516			2,131
Total charge-offs	44,072			35,449			124,448			138,800
Recoveries:
Commercial, financial and agricultural	5,171			3,818			10,410			12,736
Real estate – construction	550			1,003			4,157			2,976
Commercial real estate – mortgage	349			282			870			2,020
Residential real estate – mortgage	2,208			1,238			5,870			4,674
Equity lines of credit	1,070			1,514			2,516			3,893
Equity loans	494			514			2,580			1,675
Credit card	705			701			2,087			2,144
Consumer direct	861			1,100			3,703			4,716
Consumer indirect	4,162			2,108			12,002			7,505
Covered	2			420			3			5,233
Total recoveries	15,572			12,698			44,198			47,572
Net charge-offs	28,500			22,751			80,250			91,228
Total provision for loan losses	29,151			3,869			117,331			86,387
Allowance for loan losses, end of period	$	722,122		$	695,878		$	722,122		$	695,878
Net charge-offs to average loans	0.19		%	0.16		%	0.18		%	0.23		%

Concentrations

The following tables provide further details regarding the Company’s commercial, financial and agricultural, commercial real estate, residential real estate and consumer portfolio segments as of September 30, 2015 and December 31, 2014.

Commercial, Financial and Agricultural

In accordance with the Company's lending policy, each commercial loan undergoes a detailed underwriting process, which incorporates the Company's risk tolerance, credit policy and procedures. In addition, the Company has a graduated approval process which accounts for the quality, loan type and total exposure of the borrower. The Company has also adopted an internal exposure-based limit which is based on a variety of risk factors, including but not limited to the borrower industry.

The commercial, financial and agricultural portfolio segment totaled $25.6 billion at September 30, 2015, compared to $23.8 billion at December 31, 2014. This segment consists primarily of large national and international companies

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and small to mid-sized companies. This portfolio segment also contains owner occupied commercial real estate loans. Loans in this portfolio are generally underwritten individually and are secured with the assets of the company, and/or the personal guarantees of the business owners. The Company minimizes the risk associated with this portfolio segment by various means, including maintaining prudent advance rates, financial covenants, and obtaining personal guarantees from the principals of the borrower.

Beginning late in 2014, oil prices began to decline and, as a result, the Company has been closely monitoring the potential impact on its energy lending portfolio. As shown in Table 13, the Company's energy industry loan balances at September 30, 2015 were approximately $3.7 billion and represented 6.2% of the Company's total loan portfolio. This amount is comprised of loans directly related to energy, such as refining and support, exploration and production, pipeline transportation of natural gas, crude oil and other refined petroleum products, and oil field services. The Company employs a variety of risk management strategies, including the use of concentration limits, underwriting standards and continuous monitoring. As of September 30, 2015, the Company has observed negative trending of the internal risk ratings in the energy lending portfolio and a moderate increase in non-accrual loans as indicated in Table 13. Additionally, the Company has continued to observe negative trending subsequent to September 30, 2015.

The overall level of loans rated special mention or lower in this portfolio at September 30, 2015 is 14.3%, comprised of 4.8% rated special mention and 9.5% rated substandard or lower. The decline in oil prices has negatively impacted the financial results for many borrowers in the portfolio leading to internal rating downgrades. The internal rating downgrades reflect the weakened financial performance of certain borrowers in this portfolio. If the current level of oil prices stagnates, this energy-related portfolio may be subject to additional pressure on credit quality metrics including past due, criticized, and nonperforming loans, as well as net charge-offs.

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The following table provides details related to the commercial, financial, and agricultural portfolio segment.

Table 13 Commercial, Financial and Agricultural
	September 30, 2015								December 31, 2014
Industry	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)
Autos, Components and Durable Goods	$	721,090	$	14	$	—	$	—	$	576,185	$	380	$	—	$	—
Basic Materials	904,518		67		—		1,752		1,006,900		73		—		—
Capital Goods & Industrial Services	2,482,540		6,278		19		—		2,155,565		4,673		19		—
Construction & Infrastructure	686,152		1,840		143		154		726,504		2,627		208		1,567
Consumer & Healthcare	3,192,056		10,904		444		—		2,787,797		4,673		843		2
Energy	3,731,583		42,851		118		—		3,612,145		6,186		—		—
Financial Services	1,089,544		1,126		7		—		1,402,784		223		10		3
General Corporates	1,259,739		2,362		154		2,211		1,202,276		2,899		305		38
Institutions	2,489,273		6,404		8,161		—		2,219,357		9,724		7,175		—
Leisure	2,021,945		12,438		226		—		1,832,870		3,850		248		—
Real Estate	1,711,782		2,056		—		107		1,428,412		45		—		—
Retailers	2,407,989		27,719		83		777		2,333,268		5,172		296		—
Telecoms, Technology & Media	1,362,071		15,925		55		201		1,177,541		19,157		—		—
Transportation	770,893		386		211		—		723,088		1,443		1,005		—
Utilities	805,144		—		14		—		643,845		32		18		—
Total Commercial, Financial and Agricultural	$	25,636,319	$	130,370	$	9,635	$	5,202	$	23,828,537	$	61,157	$	10,127	$	1,610

Commercial Real Estate

The commercial real estate portfolio segment includes the commercial real estate and real estate - construction loan portfolios. Commercial real estate loans totaled $10.6 billion and $9.9 billion at September 30, 2015 and December 31, 2014, respectively and real estate - construction loans totaled $2.3 billion and $2.2 billion at September 30, 2015, and December 31, 2014, respectively.

This portfolio segment consists primarily of extensions of credits to real estate developers and investors for the financing of land and buildings, whereby the repayment is generated from the sale of the real estate or the income generated by the real estate property. The Company attempts to minimize risk on commercial real estate properties by various means, including requiring collateral with values that exceed the loan amount, adequate cash flow to service the debt, and the personal guarantees of principals of the borrowers. In order to minimize risk on the construction portfolio, the Company has established an operations group outside of the lending staff which is responsible for loan disbursements during the construction process.

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The following tables present the geographic distribution for the commercial real estate and real estate - construction portfolios.

Table 14 Commercial Real Estate
	September 30, 2015								December 31, 2014
State	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)
Alabama	$	580,130	$	8,018	$	3,685	$	420	$	623,029	$	9,328	$	3,540	$	—
Arizona	821,333		4,424		519		717		807,315		5,757		2,748		—
California	1,205,199		3,814		243		237		1,182,095		2,182		794		—
Colorado	382,603		8,466		11,262		95		464,992		12,996		11,364		—
Florida	1,001,666		9,692		157		943		908,329		7,567		168		—
New Mexico	156,528		6,302		26		—		176,896		6,149		31		—
Texas	3,261,678		30,294		2,308		2,916		3,128,072		31,494		2,446		628
Other	3,215,495		14,965		15,637		279		2,586,478		14,263		18,750		—
	$	10,624,632	$	85,975	$	33,837	$	5,607	$	9,877,206	$	89,736	$	39,841	$	628

Table 15 Real Estate – Construction
	September 30, 2015								December 31, 2014
State	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)
Alabama	$	31,035	$	338	$	317	$	—	$	67,466	$	117	$	426	$	—
Arizona	107,639		2,338		—		—		155,379		2,852		—		—
California	304,123		19		23		—		228,284		24		31		—
Colorado	95,750		—		—		—		74,526		—		—		—
Florida	168,469		—		—		—		161,322		88		—		—
New Mexico	10,798		89		52		—		13,977		—		72		207
Texas	1,109,488		2,489		1,855		426		1,013,865		4,089		1,583		270
Other	488,049		439		—		—		439,833		794		—		—
	$	2,315,351	$	5,712	$	2,247	$	426	$	2,154,652	$	7,964	$	2,112	$	477

Residential Real Estate

The residential real estate portfolio includes residential real estate - mortgage loans, equity lines of credit and equity loans. The residential real estate portfolio primarily contains loans to individuals, which are secured by single-family residences. Loans of this type are generally smaller in size than commercial real estate loans and are geographically dispersed throughout the Company's market areas, with some guaranteed by government agencies or private mortgage insurers. Losses on residential real estate loans depend, to a large degree, on the level of interest rates, the unemployment rate, economic conditions and collateral values.

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Residential real estate - mortgage loans totaled $13.9 billion at both September 30, 2015 and December 31, 2014. Risks associated with residential real estate - mortgage loans are mitigated through rigorous underwriting procedures, collateral values established by independent appraisers and mortgage insurance. In addition, the collateral for this portfolio segment is concentrated in the Company's footprint as indicated in the table below.

Table 16 Residential Real Estate - Mortgage
	September 30, 2015								December 31, 2014
State	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)
Alabama	$	1,123,185	$	11,322	$	15,355	$	9	$	1,292,303	$	12,905	$	14,824	$	97
Arizona	1,395,907		6,651		11,141		205		1,460,922		8,806		10,229		310
California	2,971,404		13,720		2,988		—		2,607,029		12,051		3,475		—
Colorado	1,215,632		4,244		4,365		2		1,237,629		3,304		3,557		6
Florida	1,659,273		20,271		11,216		192		1,541,425		17,322		11,317		279
New Mexico	216,993		1,748		2,253		—		243,755		1,478		2,146		—
Texas	4,773,332		24,953		20,185		822		5,113,914		27,156		20,425		1,487
Other	541,997		20,583		3,599		—		425,679		25,335		3,435		419
	$	13,897,723	$	103,492	$	71,102	$	1,230	$	13,922,656	$	108,357	$	69,408	$	2,598

The following table provides information related to refreshed FICO scores for the Company's residential real estate portfolio.

Table 17 Residential Real Estate - Mortgage
	September 30, 2015								December 31, 2014
FICO Score	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)
Below 621	$	644,566	$	68,690	$	24,660	$	698	$	569,353	$	68,951	$	25,474	$	1,550
621 – 680	1,360,605		16,030		20,644		80		1,280,517		17,347		22,469		214
681 – 720	2,208,883		3,799		10,014		24		2,289,138		12,808		9,747		76
Above 720	8,795,364		2,338		13,812		323		8,823,328		2,205		10,573		341
Unknown	888,305		12,635		1,972		105		960,320		7,046		1,145		417
	$	13,897,723	$	103,492	$	71,102	$	1,230	$	13,922,656	$	108,357	$	69,408	$	2,598

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Equity lines of credit and equity loans totaled $3.0 billion and $2.9 billion at September 30, 2015 and December 31, 2014, respectively. Losses in these portfolios generally track overall economic conditions. These loans are underwritten in accordance with the underwriting standards set forth in the Company's policy and procedures. The collateral for this portfolio segment is concentrated within the Company's footprint as indicated in the table below.

Table 18 Equity Loans and Lines
	September 30, 2015								December 31, 2014
State	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)
Alabama	$	591,632	$	9,879	$	9,968	$	594	$	635,845	$	9,524	$	10,368	$	911
Arizona	415,979		9,155		6,488		723		429,133		9,877		6,778		292
California	277,651		604		65		343		172,193		905		181		145
Colorado	214,759		5,436		3,201		—		231,088		6,636		3,961		68
Florida	399,195		8,374		7,275		1,072		415,537		8,178		7,064		470
New Mexico	55,812		1,832		797		—		57,917		1,387		1,030		509
Texas	975,010		11,450		8,936		664		951,219		14,298		11,042		1,081
Other	58,518		1,810		1,055		—		46,820		1,098		773		200
	$	2,988,556	$	48,540	$	37,785	$	3,396	$	2,939,752	$	51,903	$	41,197	$	3,676

The following table provides information related to refreshed FICO scores for the Company's equity loans and lines.

Table 19 Equity Loans and Lines
	September 30, 2015								December 31, 2014
FICO Score	Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due		Recorded Investment		Nonaccrual		Accruing TDRs		Accruing Greater Than 90 Days Past Due
	(In Thousands)
Below 621	$	224,888	$	20,543	$	11,002	$	224	$	248,517	$	23,910	$	13,684	$	2,958
621 – 680	454,610		17,054		14,562		497		446,053		17,000		15,972		422
681 – 720	577,135		6,766		7,220		660		554,301		8,057		6,632		66
Above 720	1,708,525		3,640		4,832		1,990		1,668,734		2,151		4,779		191
Unknown	23,398		537		169		25		22,147		785		130		39
	$	2,988,556	$	48,540	$	37,785	$	3,396	$	2,939,752	$	51,903	$	41,197	$	3,676

Other Consumer

The Company also operates a consumer finance unit which purchases loan contracts for indirect automobile consumer financing. These loans are centrally underwritten using industry accepted tools and underwriting guidelines. The Company also originates credit card loans and other consumer direct loans that are centrally underwritten and sourced from the Company's branches. Total credit card, consumer direct and consumer indirect loans at September 30, 2015 were $4.4 billion, or 7.2% of the total loan portfolio compared to $4.2 billion, or 7.2% of the total loan portfolio at December 31, 2014.

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Foreign Exposure

As of September 30, 2015, foreign exposure risk did not represent a significant concentration of the Company's total portfolio of loans and was substantially represented by borrowers domiciled in Mexico and foreign borrowers currently residing in the United States. 

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Funding Activities

Deposits are the primary source of funds for lending and investing activities and their cost is the largest category of interest expense. The Company also utilizes brokered deposits as a funding source in addition to customer deposits. Scheduled payments, as well as prepayments, and maturities from portfolios of loans and investment securities also provide a stable source of funds. FHLB advances, other secured borrowings, federal funds purchased, securities sold under agreements to repurchase and other short-term borrowed funds, as well as longer-term debt issued through the capital markets, all provide supplemental liquidity sources. The Company’s funding activities are monitored and governed through the Company’s asset/liability management process.

At September 30, 2015, the Company's and the Bank's credit ratings were as follows:

Table 20 Credit Ratings
	As of September 30, 2015
	Standard & Poor’s	Moody’s	Fitch
BBVA Compass Bancshares, Inc.
Long-term debt rating	BBB	Baa3	BBB+
Short-term debt rating	A-2	—	F2
Compass Bank
Long-term debt rating	BBB	Baa3	BBB+
Long-term bank deposits (1)	N/A	A3	A-
Subordinated debt	BBB-	Baa3	BBB-
Short-term debt rating	A-2	P-3	F2
Short-term deposit rating (2)	N/A	P-2	F2
Outlook	Stable	Stable	Stable

(1) S&P does not provide a rating for long-term bank deposits; therefore, the rating is N/A.

(2) S&P does not provide a short-term deposit rating; therefore, the rating is N/A.

The cost and availability of financing to the Company and the Bank are impacted by its credit ratings. A downgrade to the Company’s or Bank’s credit ratings could affect its ability to access the credit markets and increase its borrowing costs, thereby adversely impacting the Company’s financial condition and liquidity. Key factors in maintaining high credit ratings include a stable and diverse earnings stream, strong credit quality, strong capital ratios and diverse funding sources, in addition to disciplined liquidity monitoring procedures. See the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 for additional information.

A security rating is not a recommendation to buy, sell or hold securities, and the ratings are subject to revision or withdrawal by the assigning rating agency. Each rating should be evaluated independently of any other rating.

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Deposits

Total deposits increased by $3.3 billion from December 31, 2014 to September 30, 2015. At September 30, 2015 and December 31, 2014, total deposits included $5.4 billion and $3.7 billion of brokered deposits, respectively. The following table presents the Company’s deposits segregated by major category:

Table 21 Composition of Deposits
	September 30, 2015				December 31, 2014
	Balance		% of Total		Balance		% of Total
	(Dollars in Thousands)
Noninterest-bearing demand deposits	$	19,060,016	29.6	%	$	17,169,412	28.1	%
Interest-bearing demand deposits	6,915,305		10.7		7,738,682		12.6
Savings and money market	24,898,385		38.6		23,438,164		38.3
Time deposits	13,464,339		20.9		12,666,959		20.7
Foreign office deposits-interest-bearing	154,351		0.2		176,499		0.3
Total deposits	$	64,492,396	100.0	%	$	61,189,716	100.0	%

Total deposits increased by $3.3 billion from December 31, 2014 to September 30, 2015 primarily due to growth in noninterest bearing demand deposits, savings and money market and time deposits. Marketing efforts and new product rollouts were the primary drivers of the growth.

Borrowed Funds

In addition to internal deposit generation, the Company also relies on borrowed funds as a supplemental source of funding. Borrowed funds consist of short-term borrowings, FHLB advances, subordinated debentures and other long-term borrowings.

Short-term borrowings are primarily in the form of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings. At both September 30, 2015 and December 31, 2014, the $539 million and $694 million of federal funds purchased included in short-term borrowings was a result of customer activity.

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The short-term borrowings table presents the distribution of the Company’s short-term borrowed funds and the corresponding weighted average interest rates. Also provided are the maximum outstanding amounts of borrowings, the average amounts of borrowings and the average interest rates at period-end.

Table 22 Short-Term Borrowings
	Maximum Outstanding at Any Month End		Average Balance		Average Interest Rate		Ending Balance		Average Interest Rate at Period End
	(Dollars in Thousands)
Balance at September 30, 2015
Federal funds purchased	$	975,785	$	703,462	0.25	%	$	538,635	0.26	%
Securities sold under agreements to repurchase	232,605		129,392		0.14		100,624		0.25
Other short-term borrowings	4,982,154		3,973,734		1.23		4,167,897		0.42
	$	6,190,544	$	4,806,588			$	4,807,156
Balance at December 31, 2014
Federal funds purchased	$	960,935	$	722,753	0.25	%	$	693,819	0.27	%
Securities sold under agreements to repurchase	435,684		212,686		0.23		435,684		0.73
Other short-term borrowings	2,545,724		385,461		1.38		2,545,724		1.62
	$	3,942,343	$	1,320,900			$	3,675,227

At September 30, 2015, short-term borrowings totaled $4.8 billion, an increase of $1.1 billion, or 30.8% compared to December 31, 2014. The increase in total short-term borrowings was primarily driven by a $1.6 billion increase in other short-term borrowings related to U.S. Treasury short positions held by the Parent's broker dealer subsidiary, BSI.

At September 30, 2015 and December 31, 2014, FHLB and other borrowings were $6.2 billion and $4.8 billion, respectively. In April 2015, the Bank issued under its Global Bank Note Program $700 million aggregate principal amount of its 3.875% unsecured subordinated notes due 2025. For the nine months ended September 30, 2015, the Company had total proceeds of $4.0 billion received from FHLB and other borrowings and repayments were approximately $2.6 billion.

Shareholder’s Equity

Total shareholder's equity at September 30, 2015 was $12.4 billion compared to $12.0 billion at December 31, 2014, an increase of $377 million. Shareholder's equity increased $402 million due to earnings attributable to shareholder during the period offset by the payment of a $35 million common dividend to the Company's sole shareholder, BBVA.

Risk Management

In the normal course of business, the Company encounters inherent risk in its business activities. The Company’s risk management approach includes processes for identifying, assessing, managing, monitoring and reporting risks. Management has grouped the risks facing its operations into the following categories: credit risk, structural interest rate, market and liquidity risk, operational risk, strategic and business risk, and reputational risk. Each of these risks is managed through the Company’s ERM program. The ERM program provides the structure and framework necessary to identify, measure, control and manage risk across the organization. ERM is the cornerstone for defining risk tolerance, identifying and monitoring key risk indicators, managing capital and integrating the Company’s capital planning process with on-going risk assessments and related stress testing for major risks.

Market Risk Management

The effective management of market risk is essential to achieving the Company’s strategic financial objectives. As a financial institution, the Company’s most significant market risk exposure is interest rate risk in its balance sheet; however, market risk also includes product liquidity risk, price risk and volatility risk in the Company’s lines of business. The primary objectives of market risk management are to minimize any adverse effect that changes in market risk factors may have on net interest income, and to offset the risk of price changes for certain assets recorded at fair value.

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Interest Rate Market Risk

The Company’s net interest income and the fair value of its financial instruments are influenced by changes in the level of interest rates. The Company manages its exposure to fluctuations in interest rates through policies established by its Asset/Liability Committee. The Asset/Liability Committee meets regularly and has responsibility for approving asset/liability management policies, formulating strategies to improve balance sheet positioning and/or earnings and reviewing the interest rate sensitivity of the Company.

Management utilizes an interest rate simulation model to estimate the sensitivity of the Company’s net interest income to changes in interest rates. Such estimates are based upon a number of assumptions for each scenario, including the level of balance sheet growth, deposit repricing characteristics and the rate of prepayments.

The estimated impact on the Company’s net interest income sensitivity over a one-year time horizon at September 30, 2015, is shown in the table below along with comparable prior-period information. Such analysis assumes a gradual and sustained parallel shift in interest rates, expectations of balance sheet growth and composition and the Company’s estimate of how interest-bearing transaction accounts would reprice in each scenario using current yield curves at September 30, 2015 and 2014.

Table 23 Net Interest Income Sensitivity
	Estimated % Change in Net Interest Income
	September 30, 2015		September 30, 2014
Rate Change
+ 200 basis points	8.96	%	10.97	%
+ 100 basis points	4.42		5.44

The following table shows the effect that the indicated changes in interest rates would have on EVE. Inherent in this calculation are many assumptions used to project lifetime cash flows for every item on the balance sheet that may or may not be realized, such as deposit decay rates, prepayment speeds and spread assumptions. This measurement only values existing business without consideration of new business or potential management actions.

Table 24 Economic Value of Equity
	Estimated % Change in Economic Value of Equity
	September 30, 2015		September 30, 2014
Rate Change
+ 300 basis points	(3.98)	%	(1.83)	%
+ 200 basis points	(2.27	)	(0.81	)
+ 100 basis points	(0.78	)	(0.14	)

The Company is also subject to trading risk. The Company utilizes various tools to measure and manage price risk in its trading portfolios. In addition, the Board of Directors of the Company has established certain limits relative to positions and activities. The level of price risk exposure at any given point in time depends on the market environment and expectation of future price and market movements, and will vary from period to period.

Derivatives

The Company uses derivatives primarily to manage economic risks related to commercial loans, mortgage banking operations, long-term debt and other funding sources. The Company also uses derivatives to facilitate transactions on behalf of its clients. As of September 30, 2015, the Company had derivative financial instruments outstanding with notional amounts of $31.6 billion. The estimated net fair value of open contracts was in an asset position of $148 million at September 30, 2015. For additional information about derivatives, refer to Note 5, Derivatives and Hedging, in the Notes to the Unaudited Condensed Consolidated Financial Statements.

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Liquidity Management

Liquidity is the ability of the Company to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Liquidity management involves maintaining the Company’s ability to meet the day-to-day cash flow requirements of its customers, whether they are depositors wishing to withdraw funds or borrowers requiring funds to meet their credit needs. Without proper liquidity management, the Company would not be able to perform the primary function of a financial intermediary and would, therefore, not be able to meet the needs of the communities it serves.

The Company regularly assesses liquidity needs under various scenarios of market conditions, asset growth and changes in credit ratings. The assessment includes liquidity stress testing which measures various sources and uses of funds under the different scenarios. The assessment provides regular monitoring of unused borrowing capacity and available sources of contingent liquidity to prepare for unexpected liquidity needs and to cover unanticipated events that could affect liquidity.

The asset portion of the balance sheet provides liquidity primarily through unencumbered securities available for sale, loan principal and interest payments, maturities and prepayments of investment securities held to maturity and, to a lesser extent, sales of investment securities available for sale and trading account assets. Other short-term investments such as federal funds sold, and securities purchased under agreements to resell, are additional sources of liquidity.

The liability portion of the balance sheet provides liquidity through various customers’ interest-bearing and noninterest-bearing deposit accounts and through FHLB and other borrowings. Brokered deposits, federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings as well as excess borrowing capacity with the FHLB are additional sources of liquidity and, basically, represent the Company’s incremental borrowing capacity. These sources of liquidity are used as necessary to fund asset growth and meet short-term liquidity needs.

In 2014, the Bank established a Global Bank Note Program under which the Bank may from time to time subject to market conditions, issue senior notes due seven days or more from the date of issue and subordinated notes due five years or more from the date of issue. On April 10, 2015, the Bank completed the sale of $700 million aggregate principal amount of its 3.875% unsecured subordinated notes due 2025.

In addition to the Company’s financial performance and condition, liquidity may be impacted by the Parent’s structure as a bank holding company that is a separate legal entity from the Bank. The Parent requires cash for various operating needs including payment of dividends to its shareholder, the servicing of debt, and the payment of general corporate expenses. The primary source of liquidity for the Parent is dividends paid by the Bank. Applicable federal and state statutes and regulations impose restrictions on the amount of dividends that may be paid by the Bank. In addition to the formal statutes and regulations, regulatory authorities also consider the adequacy of the Bank’s total capital in relation to its assets, deposits and other such items. Due to the net earnings restrictions on dividend distributions under Alabama law, the Bank was not permitted to pay dividends at September 30, 2015 or December 31, 2014 without regulatory approval. Appropriate limits and guidelines are in place to ensure the Parent has sufficient cash to meet operating expenses and other commitments without relying on subsidiaries or capital markets for funding.

During the nine months ended September 30, 2015, the Parent paid common dividends totaling $35 million to its sole shareholder, BBVA. Any future dividends paid from the Parent must be set forth as capital actions in the Company's capital plans and not objected to by the Federal Reserve Board.

The Company’s ability to raise funding at competitive prices is affected by the rating agencies’ views of the Company’s credit quality, liquidity, capital and earnings. Management meets with the rating agencies on a routine basis to discuss the current outlook for the Company.

In 2014, the Federal Reserve Board, the OCC, and the FDIC approved a final rule implementing a minimum liquidity coverage ratio requirement for certain large bank holding companies, savings and loan holding companies and depository institutions, and a less stringent LCR requirement for other banking organizations, such as the Company, with $50 billion or more in total consolidated assets. The final rule imposes a monthly reporting requirement. In January 2016, the minimum phased-in LCR requirement will be 90 percent, followed by 100 percent in January 2017. The Company anticipates being fully compliant with the LCR requirements upon implementation without having to make any

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significant changes to its current balance sheet. However, should the Company's cash position or investment mix change in the future, the Company's ability to meet the LCR requirement may be impacted.

Management believes that the current sources of liquidity are adequate to meet the Company’s requirements and plans for continued growth.

Capital

The Company and the Bank are subject to various regulatory capital requirements administered by federal and state banking regulators. Failure to meet minimum risk-based and leverage capital requirements can subject the Company and the Bank to a series of increasingly restrictive regulatory actions.

The U.S. Basel III final rule revised the minimum regulatory capital ratio thresholds for the Company and the Bank and the well-capitalized thresholds for the Bank. The Federal Reserve Board has not yet adopted well-capitalized standards for bank holding companies under the U.S. Basel III capital framework. The U.S. Basel III capital rule introduces a new capital measure called CET1 capital, specifies that Tier 1 capital consist of CET1 and "Additional Tier 1 capital" instruments meeting specified requirements and expands the scope of the deductions from and adjustments to capital as compared to previously existing regulations.

Under the U.S. Basel III capital rule, the minimum regulatory capital ratios effective as of January 1, 2015 are as follows:

•4.5% CET1 Risk-Based Capital Ratio

•6.0% Tier 1 Risk-Based Capital Ratio

•8.0% Total Risk-Based Capital Ratio

•4.0% Tier 1 Leverage Ratio

The U.S. Basel III capital rule also requires a capital conservation buffer that is designed to absorb losses during periods of economic stress and that must be maintained on top of these minimum risk-based capital ratios. When U.S. Basel III is fully phased-in on January 1, 2019, the Company and Bank will be subject to a greater than 2.5% CET1 capital conservation buffer, under which they must maintain a CET1 Risk-Based Capital Ratio of greater than 7.0%, a Tier 1 Risk-Based Capital Ratio of greater than 8.5%, and a Total Risk-Based Capital Ratio of greater than 10.5%. Failure of the Company or the Bank to maintain the buffer will result in restrictions on the ability to make dividend payments, repurchase shares, and pay discretionary bonuses.

The Company regularly performs stress testing on its capital levels and is required annually to submit the Company’s capital plan to the banking regulators. In July 2015, the Federal Reserve released a proposed amendment to the capital plan and stress test rules that would, among other things, require large bank holding companies such as the Company to reflect capital issuances associated with certain planned acquisitions and dividends related to expensed employee compensation in its company-run stress test assumptions. The proposed amendments would be effective beginning with the 2016 capital planning and stress testing cycle.

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The following table sets forth the Company's U.S. Basel III regulatory capital ratios at September 30, 2015 subject to transitional provisions and its Basel I regulatory capital ratios at December 31, 2014.

Table 25  Capital Ratios
	September 30, 2015 (1)			December 31, 2014 (2)
	(Dollars in Thousands)
Capital:
CET1 Capital	$	7,314,615		N/A
Tier 1 Capital	$	7,357,370		$	7,046,902
Total Capital	$	9,164,629		$	8,254,184
Ratios:
CET1 Risk-based Capital Ratio	10.68		%	N/A
Tier 1 Risk-based Capital Ratio	10.74		%	10.94		%
Total Risk-based Capital Ratio	13.38		%	12.81		%
Leverage Ratio	8.69		%	9.09		%

(1) Calculated using the Transitional Basel III regulatory capital methodology applicable to the Company during 2015.

(2) Calculated using the Basel I regulatory capital methodology applicable to the Company during 2014.

N/A = not applicable

At September 30, 2015, the regulatory capital ratios of the Bank exceeded the “well-capitalized” standard for banks based on applicable U.S. regulatory capital requirements. The Company continually monitors these ratios to ensure that the Bank exceeds this standard.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Refer to “Market Risk Management” in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, herein.

Item 4.Controls and Procedures

Disclosure Controls and Procedures.

Management of the Company, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures. Based on their evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

Changes In Internal Control Over Financial Reporting.

There have been no changes in the Company’s internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

See under “Legal and Regulatory Proceedings” in Note 7, Commitments, Contingencies and Guarantees, of the Notes to the Unaudited Condensed Consolidated Financial Statements.

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Item 1A. Risk Factors

Various risk and uncertainties could affect the Company's business. These risks are described elsewhere in this report and the Company's other filings with the SEC, including the Company's Annual Report on Form 10-K for the year-ended December 31, 2014.

There have been no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the year-ended December 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Omitted pursuant to General Instruction H of Form 10-Q.

Item 3. Defaults Upon Senior Securities

Omitted pursuant to General Instruction H of Form 10-Q.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5.    Other Information

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act

The Company discloses the following information pursuant to Section 13(r) of the Exchange Act, which requires an issuer to disclose whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with natural persons or entities designated by the U.S. government under specified executive orders, including activities not prohibited by U.S. law and conducted outside the United States by non-U.S. affiliates in compliance with local law. In order to comply with this requirement, the Company has requested relevant information from its affiliates globally.

The Company has not knowingly engaged in activities, transactions or dealings relating to Iran or with natural persons or entities designated by the U.S. government under the specified executive orders.

Because the Company is controlled by BBVA, a Spanish corporation, the Company's disclosure includes activities, transactions or dealings conducted outside the United States by non-U.S. affiliates of BBVA and its consolidated subsidiaries that are not controlled by the Company. The BBVA Group has the following activities, transactions and dealings with Iran requiring disclosure.

Legacy contractual obligations related to counter indemnities. Before 2007, the BBVA Group issued certain counter indemnities to its non-Iranian customers in Europe for various business activities relating to Iran in support of guarantees provided by Bank Melli, three of which remained outstanding during the three months ended September 30, 2015. For the three months ended September 30, 2015, no payments or revenues (including fees and/or commissions) have been recorded in connection with these counter indemnities. In addition, in accordance with Council Regulation (EU) Nr. 267/2012 of March 23, 2012, payments of any amounts due to Bank Melli under these counter indemnities will be initially blocked and thereafter released upon authorization by the relevant Spanish authorities. The BBVA Group is committed to terminating these business relationships as soon as contractually possible and does not intend to enter into new business relationships involving Bank Melli.

Letters of credit. During the three months ended September 30, 2015, the BBVA Group had credit exposure to Bank Sepah arising from a letter of credit issued by Bank Sepah to a non-Iranian client of the BBVA Group in Europe. This letter of credit, which was granted before 2004, was used to secure a loan granted by the BBVA Group to a client in order to finance certain Iran-related activities. This loan was supported by the CESCE. The loan related to the client’s exportation of goods to Iran (consisting of goods relating to apelletizing plant for iron concentration and equipment). For the three months ended September 30, 2015, interest charged by the BBVA Group in connection with this letter of credit totaled $2,828. However, this amount was blocked and is pending release upon authorization by the relevant Spanish authorities. Accordingly, for the three months ended September 30, 2015, no payments or revenues (including fees and/or commissions) have been recorded in connection with this letter of credit. The BBVA Group is committed

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to terminating the outstanding business relationship with Bank Sepah as soon as contractually possible and does not intend to enter into new business relationships involving Bank Sepah.

Iranian embassy-related activity. The BBVA Group maintains bank accounts in Spain for two employees of the Iranian embassy in Spain. The bank accounts of one additional employee were closed on March 20, 2015. The two employees are Spanish citizens, and one of them has retired. Estimated gross revenues for the three months ended September 30, 2015, from embassy-related activity, which include fees and/or commissions, did not exceed $253. The BBVA Group does not allocate direct costs to fees and commissions and therefore has not disclosed a separate profit measure. The BBVA Group is committed to terminating these business relationships as soon as legally possible.

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Item 6. Exhibits

Exhibit Number	Description of Documents
2.1	Purchase and Assumption Agreement Whole Bank All Deposits among the Federal Deposit Insurance Corporation, Receiver of Guaranty Bank, Austin, Texas, the Federal Deposit Insurance Corporation and Compass Bank, dated as of August 21, 2009 (incorporated by reference to Exhibit 2.1 of the Company’s Registration Statement on Form 10 filed with the Commission on November 22, 2013, File No. 0-55106).
3.1	Amended and Restated Certificate of Formation of BBVA Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.1 of the Company's Form 8-K filed with the Commission on April 13, 2015, File No. 0-55106).
3.2	Bylaws of BBVA Compass Bancshares, Inc. (incorporated herein by reference to Exhibit 3.2 of the Company’s Registration Statement on Form 10 filed with the Commission on November 22, 2013, File No. 0-55106).
31.1	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1	Interactive Data File.

Certain instruments defining rights of holders of long-term debt of the Company and its subsidiaries constituting less than 10% of the Company’s total assets are not filed herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. At the SEC’s request, the Company agrees to furnish the SEC a copy of any such agreement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 10, 2015	BBVA Compass Bancshares, Inc.
	By:	/s/ Kirk P. Pressley
		Name:	Kirk P. Pressley
		Title:	Senior Executive Vice President, Chief Financial Officer and Duly Authorized Officer

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