Loans

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Loans

Loans

The period end loan composition was as follows.

	June 30, 2018(a)		December 31, 2017
	($ in Thousands)
Commercial and industrial	$	7,109,796	$	6,399,693
Commercial real estate — owner occupied	888,330		802,209
Commercial and business lending	7,998,126		7,201,902
Commercial real estate — investor	3,996,415		3,315,254
Real estate construction	1,487,159		1,451,684
Commercial real estate lending	5,483,574		4,766,938
Total commercial	13,481,700		11,968,840
Residential mortgage	8,207,253		7,546,534
Home equity	911,363		883,804
Other consumer	376,470		385,813
Total consumer	9,495,086		8,816,151
Total loans	$	22,976,786	$	20,784,991

(a) Includes $16 million of purchased credit-impaired loans

The following table presents commercial and consumer loans by credit quality indicator at June 30, 2018.

	Pass		Special Mention		Potential Problem		Nonaccrual		Total
	($ in Thousands)
Commercial and industrial	$	6,763,557	$	92,286	$	172,177	$	81,776	$	7,109,796
Commercial real estate - owner occupied	814,769		16,033		38,879		18,649		888,330
Commercial and business lending	7,578,326		108,319		211,056		100,425		7,998,126
Commercial real estate - investor	3,885,535		59,587		24,790		26,503		3,996,415
Real estate construction	1,452,888		29,559		3,168		1,544		1,487,159
Commercial real estate lending	5,338,423		89,146		27,958		28,047		5,483,574
Total commercial	12,916,749		197,465		239,014		128,472		13,481,700
Residential mortgage	8,141,803		199		2,355		62,896		8,207,253
Home equity	897,471		792		142		12,958		911,363
Other consumer	375,624		706		6		134		376,470
Total consumer	9,414,898		1,697		2,503		75,988		9,495,086
Total	$	22,331,647	$	199,162	$	241,517	$	204,460	$	22,976,786

The following table presents commercial and consumer loans by credit quality indicator at December 31, 2017.

	Pass		Special Mention		Potential Problem		Nonaccrual		Total
	($ in Thousands)
Commercial and industrial	$	6,015,884	$	157,245	$	113,778	$	112,786	$	6,399,693
Commercial real estate - owner occupied	723,291		14,181		41,997		22,740		802,209
Commercial and business lending	6,739,175		171,426		155,775		135,526		7,201,902
Commercial real estate - investor	3,266,389		24,845		19,291		4,729		3,315,254
Real estate construction	1,421,504		29,206		—		974		1,451,684
Commercial real estate lending	4,687,893		54,051		19,291		5,703		4,766,938
Total commercial	11,427,068		225,477		175,066		141,229		11,968,840
Residential mortgage	7,490,860		426		1,616		53,632		7,546,534
Home equity	868,958		1,137		195		13,514		883,804
Other consumer	384,990		652		—		171		385,813
Total consumer	8,744,808		2,215		1,811		67,317		8,816,151
Total	$	20,171,876	$	227,692	$	176,877	$	208,546	$	20,784,991

Factors that are important to managing overall credit quality are sound loan underwriting and administration, systematic monitoring of existing loans and commitments, effective loan review on an ongoing basis, early identification of potential problems, and appropriate allowance for loan losses, allowance for unfunded commitments, nonaccrual, and charge off policies.

For commercial loans, management has determined the pass credit quality indicator to include credits that exhibit acceptable financial statements, cash flow, and leverage. If any risk exists, it is mitigated by the loan structure, collateral, monitoring, or control. For consumer loans, performing loans include credits that are performing in accordance with the original contractual terms. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Special mention credits have potential weaknesses that deserve management’s attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the credit. Potential problem loans are considered inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged. These loans generally have a well-defined weakness, or weaknesses, that may jeopardize liquidation of the debt and are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Lastly, management considers a loan to be impaired when it is probable that the Corporation will be unable to collect all amounts due according to the original contractual terms of the note agreement, including both principal and interest. Management has determined that commercial and consumer loan relationships that have nonaccrual status or have had their terms restructured in a troubled debt restructuring meet this impaired loan definition. Commercial loans classified as special mention, potential problem, and nonaccrual are reviewed at a minimum on a quarterly basis, while pass and performing rated credits are reviewed on an annual basis or more frequently if the loan renewal is less than one year or if otherwise warranted.

The following table presents loans by past due status at June 30, 2018.

	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(a)		Nonaccrual(b)		Total
	($ in Thousands)
Commercial and industrial	$	7,027,210	$	407	$	181	$	222	$	81,776	$	7,109,796
Commercial real estate - owner occupied	869,488		193		—		—		18,649		888,330
Commercial and business lending	7,896,698		600		181		222		100,425		7,998,126
Commercial real estate - investor	3,969,084		828		—		—		26,503		3,996,415
Real estate construction	1,465,850		19,765		—		—		1,544		1,487,159
Commercial real estate lending	5,434,934		20,593		—		—		28,047		5,483,574
Total commercial	13,331,632		21,193		181		222		128,472		13,481,700
Residential mortgage	8,135,016		9,158		183		—		62,896		8,207,253
Home equity	891,135		6,534		736		—		12,958		911,363
Other consumer	372,984		972		763		1,617		134		376,470
Total consumer	9,399,135		16,664		1,682		1,617		75,988		9,495,086
Total	$	22,730,767	$	37,857	$	1,863	$	1,839	$	204,460	$	22,976,786

(a) The recorded investment in loans past due 90 days or more and still accruing totaled $2 million at June 30, 2018 (the same as the reported balances for the accruing loans noted above).

(b) Of the total nonaccrual loans, $141 million or 69% were current with respect to payment at June 30, 2018.

The following table presents loans by past due status at December 31, 2017.

	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(a)		Nonaccrual(b)		Total
	($ in Thousands)
Commercial and industrial	$	6,286,369	$	170	$	101	$	267	$	112,786	$	6,399,693
Commercial real estate - owner occupied	779,421		48		—		—		22,740		802,209
Commercial and business lending	7,065,790		218		101		267		135,526		7,201,902
Commercial real estate - investor	3,310,000		374		—		151		4,729		3,315,254
Real estate construction	1,450,459		168		83		—		974		1,451,684
Commercial real estate lending	4,760,459		542		83		151		5,703		4,766,938
Total commercial	11,826,249		760		184		418		141,229		11,968,840
Residential mortgage	7,483,350		9,186		366		—		53,632		7,546,534
Home equity	863,465		5,688		1,137		—		13,514		883,804
Other consumer	382,186		1,227		780		1,449		171		385,813
Total consumer	8,729,001		16,101		2,283		1,449		67,317		8,816,151
Total	$	20,555,250	$	16,861	$	2,467	$	1,867	$	208,546	$	20,784,991

(a) The recorded investment in loans past due 90 days or more and still accruing totaled $2 million at December 31, 2017 (the same as the reported balances for the accruing loans noted above).

(b) Of the total nonaccrual loans, $135 million or 65% were current with respect to payment at December 31, 2017.

The following table presents impaired loans individually evaluated under ASC Topic 310, excluding $16 million of purchased credit-impaired loans, at June 30, 2018.

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	($ in Thousands)
Loans with a related allowance
Commercial and industrial	$	75,928	$	77,873	$	17,628	$	70,082	$	725
Commercial real estate — owner occupied	15,386		15,853		829		15,649		95
Commercial and business lending	91,314		93,726		18,457		85,731		820
Commercial real estate — investor	15,397		15,469		4,132		15,485		901
Real estate construction	448		523		77		456		15
Commercial real estate lending	15,845		15,992		4,209		15,941		916
Total commercial	107,159		109,718		22,666		101,672		1,736
Residential mortgage	39,926		44,171		6,208		39,433		863
Home equity	9,817		10,809		3,514		9,917		282
Other consumer	1,049		1,051		109		1,051		1
Total consumer	50,792		56,031		9,831		50,401		1,146
Total loans(a)	$	157,951	$	165,749	$	32,497	$	152,073	$	2,882
Loans with no related allowance
Commercial and industrial	$	35,065	$	47,914	$	—	$	39,201	$	(286	)
Commercial real estate — owner occupied	4,869		5,920		—		4,179		24
Commercial and business lending	39,934		53,834		—		43,380		(262		)
Commercial real estate — investor	984		1,031		—		1,006		—
Real estate construction	—		—		—		—		—
Commercial real estate lending	984		1,031		—		1,006		—
Total commercial	40,918		54,865		—		44,386		(262		)
Residential mortgage	11,543		11,862		—		7,839		128
Home equity	1,275		1,289		—		785		12
Other consumer	—		—		—		—		—
Total consumer	12,818		13,151		—		8,624		140
Total loans(a)	$	53,736	$	68,016	$	—	$	53,010	$	(122	)
Total
Commercial and industrial	$	110,993	$	125,787	$	17,628	$	109,283	$	439
Commercial real estate — owner occupied	20,255		21,773		829		19,828		119
Commercial and business lending	131,248		147,560		18,457		129,111		558
Commercial real estate — investor	16,381		16,500		4,132		16,491		901
Real estate construction	448		523		77		456		15
Commercial real estate lending	16,829		17,023		4,209		16,947		916
Total commercial	148,077		164,583		22,666		146,058		1,474
Residential mortgage	51,469		56,033		6,208		47,272		991
Home equity	11,092		12,098		3,514		10,702		294
Other consumer	1,049		1,051		109		1,051		1
Total consumer	63,610		69,182		9,831		59,025		1,286
Total loans(a)	$	211,687	$	233,765	$	32,497	$	205,083	$	2,760

(a) The net recorded investment (defined as recorded investment, net of the related allowance) of the impaired loans represented 77% of the unpaid principal balance at June 30, 2018.

The following table presents impaired loans individually evaluated under ASC Topic 310 at December 31, 2017. 

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	($ in Thousands)
Loans with a related allowance
Commercial and industrial	$	81,649	$	83,579	$	10,838	$	58,494	$	2,629
Commercial real estate — owner occupied	23,796		23,937		2,973		12,124		736
Commercial and business lending	105,445		107,516		13,811		70,618		3,365
Commercial real estate — investor	17,823		17,862		1,597		16,924		1,694
Real estate construction	467		578		86		484		29
Commercial real estate lending	18,290		18,440		1,683		17,408		1,723
Total commercial	123,735		125,956		15,494		88,026		5,088
Residential mortgage	40,561		42,922		6,512		40,411		1,614
Home equity	10,250		10,986		3,718		10,521		549
Other consumer	1,135		1,138		122		1,140		3
Total consumer	51,946		55,046		10,352		52,072		2,166
Total loans(a)	$	175,681	$	181,002	$	25,846	$	140,098	$	7,254
Loans with no related allowance
Commercial and industrial	$	60,595	$	82,839	$	—	$	89,275	$	492
Commercial real estate — owner occupied	2,438		2,829		—		1,948		36
Commercial and business lending	63,033		85,668		—		91,223		528
Commercial real estate — investor	1,295		1,295		—		—		45
Real estate construction	—		—		—		—		—
Commercial real estate lending	1,295		1,295		—		—		45
Total commercial	64,328		86,963		—		91,223		573
Residential mortgage	6,925		7,204		—		4,999		217
Home equity	641		645		—		540		7
Other consumer	—		—		—		—		—
Total consumer	7,566		7,849		—		5,539		224
Total loans(a)	$	71,894	$	94,812	$	—	$	96,762	$	797
Total
Commercial and industrial	$	142,244	$	166,418	$	10,838	$	147,769	$	3,121
Commercial real estate — owner occupied	26,234		26,766		2,973		14,072		772
Commercial and business lending	168,478		193,184		13,811		161,841		3,893
Commercial real estate — investor	19,118		19,157		1,597		16,924		1,739
Real estate construction	467		578		86		484		29
Commercial real estate lending	19,585		19,735		1,683		17,408		1,768
Total commercial	188,063		212,919		15,494		179,249		5,661
Residential mortgage	47,486		50,126		6,512		45,410		1,831
Home equity	10,891		11,631		3,718		11,061		556
Other consumer	1,135		1,138		122		1,140		3
Total consumer	59,512		62,895		10,352		57,611		2,390
Total loans(a)	$	247,575	$	275,814	$	25,846	$	236,860	$	8,051

(a) The net recorded investment (defined as recorded investment, net of the related allowance) of the impaired loans represented 80% of the unpaid principal balance at December 31, 2017.

Troubled Debt Restructurings (“Restructured Loans”)

Loans are considered restructured loans if concessions have been granted to borrowers that are experiencing financial difficulty. The following table presents nonaccrual and performing restructured loans by loan portfolio.

	June 30, 2018				December 31, 2017
	Performing Restructured Loans		Nonaccrual Restructured Loans(a)		Performing Restructured Loans		Nonaccrual Restructured Loans(a)
	($ in Thousands)
Commercial and industrial	$	32,438	$	155	$	30,047	$	1,776
Commercial real estate — owner occupied	3,820		—		3,989		—
Commercial real estate — investor	372		14,268		14,389		—
Real estate construction	222		226		310		157
Residential mortgage	17,934		20,372		17,068		18,991
Home equity	7,900		2,972		7,705		2,537
Other consumer	1,037		12		1,110		25
Total	$	63,723	$	38,005	$	74,618	$	23,486

(a) Nonaccrual restructured loans have been included within nonaccrual loans.

The Corporation had a recorded investment of approximately $4 million in loans modified in troubled debt restructurings during the six months ended June 30, 2018, of which less than $1 million were in accrual status and approximately $4 million were in nonaccrual pending a sustained period of repayment.

The following table provides the number of loans modified in a troubled debt restructuring by loan portfolio during the six months ended June 30, 2018 and 2017, respectively, and the recorded investment and unpaid principal balance as of June 30, 2018 and 2017, respectively.

	Six Months Ended June 30, 2018					Six Months Ended June 30, 2017
	Number of Loans	Recorded Investment(a)		Unpaid Principal Balance(b)		Number of Loans	Recorded Investment(a)		Unpaid Principal Balance(b)
	($ in Thousands)
Commercial and industrial	1	$	47	$	47	24	$	30,935	$	52,260
Commercial real estate — owner occupied	—	—		—		2	716		716
Commercial real estate — investor	1	984		1,031		—	—		—
Residential mortgage	10	2,064		2,064		36	2,695		2,805
Home equity	10	935		949		26	674		919
Other consumer	1	5		8		—	—		—
Total	23	$	4,035	$	4,099	88	$	35,020	$	56,700

(a) Represents post-modification outstanding recorded investment.

(b) Represents pre-modification outstanding recorded investment.

Restructured loan modifications may include payment schedule modifications, interest rate concessions, maturity date extensions, modification of note structure (A/B Note), non-reaffirmed Chapter 7 bankruptcies, principal reduction, or some combination of these concessions. During the six months ended June 30, 2018, restructured loan modifications of commercial and industrial, commercial real estate, and real estate construction loans primarily included maturity date extensions and payment schedule modifications. Restructured loan modifications of home equity and residential mortgage loans primarily included maturity date extensions, interest rate concessions, non-reaffirmed Chapter 7 bankruptcies, or a combination of these concessions for the six months ended June 30, 2018.

The following table provides the number of loans modified in a troubled debt restructuring during the previous twelve months which subsequently defaulted during the six months ended June 30, 2018 and 2017, respectively, as well as the recorded investment in these restructured loans as of June 30, 2018 and 2017, respectively.

	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	($ in Thousands)
Commercial and industrial	3	$	—	—	$	—
Residential mortgage	8	2,219		17	941
Home equity	21	1,409		9	271
Total	32	$	3,628	26	$	1,212

All loans modified in a troubled debt restructuring are evaluated for impairment. The nature and extent of the impairment of restructured loans, including those which have experienced a subsequent payment default, is considered in the determination of an appropriate level of the allowance for loan losses.

Allowance for Credit Losses

The allowance for credit losses is comprised of the allowance for loan losses and the allowance for unfunded commitments. The level of the allowance for loan losses represents management’s estimate of an amount appropriate to provide for probable credit losses in the loan portfolio at the balance sheet date. The allowance for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated probable losses related to unfunded credit facilities (including unfunded loan commitments and letters of credit) and is included in accrued expenses and other liabilities on the consolidated balance sheets. See Note 12 for additional information on the allowance for unfunded commitments.

The following table presents a summary of the changes in the allowance for loan losses by portfolio segment for the six months ended June 30, 2018.

($ in Thousands)	Commercial and industrial			Commercial real estate - owner occupied			Commercial real estate -  investor			Real estate construction			Residential mortgage			Home equity			Other consumer			Total
December 31, 2017	$	123,068		$	10,352		$	41,059		$	34,370		$	29,607		$	22,126		$	5,298		$	265,880
Charge offs	(19,611		)	(1,042		)	(1,202		)	(53		)	(956		)	(1,729		)	(2,488		)	(27,081		)
Recoveries	6,406			287			21			290			690			1,192			416			9,302
Net Charge offs	(13,205		)	(755		)	(1,181		)	237			(266		)	(537		)	(2,072		)	(17,779		)
Provision for loan losses	750			1,213			4,272			(5,455		)	1,796			(301		)	2,225			4,500
June 30, 2018	$	110,613		$	10,810		$	44,150		$	29,152		$	31,137		$	21,288		$	5,451		$	252,601
Allowance for loan losses
Individually evaluated for impairment	$	17,628		$	829		$	4,132		$	77		$	6,208		$	3,514		$	109		$	32,497
Collectively evaluated for impairment	92,985			9,981			40,018			29,075			24,929			17,774			5,342			220,104
Acquired and accounted for under ASC 310-30(a)	—			—			—			—			—			—			—			—
Total allowance for loan losses	$	110,613		$	10,810		$	44,150		$	29,152		$	31,137		$	21,288		$	5,451		$	252,601
Loans
Individually evaluated for impairment	$	110,993		$	20,255		$	16,381		$	448		$	51,469		$	11,092		$	1,049		$	211,687
Collectively evaluated for impairment	6,996,038			866,356			3,969,829			1,486,464			8,154,904			900,187			375,421			22,749,199
Acquired and accounted for under ASC 310-30(a)	2,765			1,719			10,205			247			880			84			—			15,900
Total loans	$	7,109,796		$	888,330		$	3,996,415		$	1,487,159		$	8,207,253		$	911,363		$	376,470		$	22,976,786

(a) Loans acquired in business combinations and accounted for under ASC Subtopic 310-30 "Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality."

For comparison purposes, a summary of the changes in the allowance for loan losses by portfolio segment for the year ended December 31, 2017, was as follows.

($ in Thousands)	Commercial and industrial			Commercial real estate - owner occupied			Commercial real estate -  investor			Real estate construction			Residential mortgage			Home equity			Other consumer			Total
December 31, 2016	$	140,126		$	14,034		$	45,285		$	26,932		$	27,046		$	20,364		$	4,548		$	278,335
Charge offs	(44,533		)	(344		)	(991		)	(604		)	(2,611		)	(2,724		)	(4,439		)	(56,246		)
Recoveries	11,465			173			242			74			927			3,194			716			16,791
Net Charge offs	(33,068		)	(171		)	(749		)	(530		)	(1,684		)	470			(3,723		)	(39,455		)
Provision for loan losses	16,010			(3,511		)	(3,477		)	7,968			4,245			1,292			4,473			27,000
December 31, 2017	$	123,068		$	10,352		$	41,059		$	34,370		$	29,607		$	22,126		$	5,298		$	265,880
Allowance for loan losses
Individually evaluated for impairment	$	10,838		$	2,973		$	1,597		$	86		$	6,512		$	3,718		$	122		$	25,846
Collectively evaluated for impairment	112,230			7,379			39,462			34,284			23,095			18,408			5,176			240,034
Total allowance for loan losses	$	123,068		$	10,352		$	41,059		$	34,370		$	29,607		$	22,126		$	5,298		$	265,880
Loans
Individually evaluated for impairment	$	142,244		$	26,234		$	19,118		$	467		$	47,486		$	10,891		$	1,135		$	247,575
Collectively evaluated for impairment	6,257,449			775,975			3,296,136			1,451,217			7,499,048			872,913			384,678			20,537,416
Total loans	$	6,399,693		$	802,209		$	3,315,254		$	1,451,684		$	7,546,534		$	883,804		$	385,813		$	20,784,991

The allowance related to the oil and gas portfolio was $17 million at June 30, 2018 and represented 2.5% of total oil and gas loans.

($ in Millions)	Six Months Ended June 30, 2018			Year Ended December 31, 2017
Balance at beginning of period	$	27		$	38
Charge offs	(14		)	(25		)
Recoveries	3			—
Net Charge offs	(11		)	(25		)
Provision for loan losses	1			14
Balance at end of period	$	17		$	27
Allowance for loan losses
Individually evaluated for impairment	$	9		$	5
Collectively evaluated for impairment	8			22
Total allowance for loan losses	$	17		$	27
Loans
Individually evaluated for impairment	$	45		$	77
Collectively evaluated for impairment	637			523
Total loans	$	682		$	600

The following table presents a summary of the changes in the allowance for unfunded commitments.

	Six Months Ended June 30, 2018			Year Ended December 31, 2017
	($ in Thousands)
Allowance for Unfunded Commitments
Balance at beginning of period	$	24,400		$	25,400
Provision for unfunded commitments	(500		)	(1,000		)
Amount recorded at acquisition	2,436			—
Balance at end of period	$	26,336		$	24,400

Loans Acquired in Acquisition

Loans acquired in a business combination are recorded at estimated fair value on their purchase date without a carryover of the related allowance for loan and lease losses. Acquired loans are segregated into two types:

• Performing loans are accounted for in accordance with ASC Topic 310-20 "Nonrefundable Fees and Other Costs" as these loans do not have evidence of credit deterioration since origination.

• Nonperforming loans are accounted for in accordance with ASC Topic 310-30 as they display significant credit deterioration since origination.

For performing loans the difference between the estimated fair value of the loans and the principal outstanding is accreted over the remaining life of the loans.

In accordance with ASC 310-30, purchased credit-impaired loans are pooled by loan type and the difference between contractually required payments at acquisition and the cash flows expected to be collected is referred to as the non-accretable difference. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan pools when there is a reasonable expectation about the amount and timing of such cash flows. If a reasonable expectation on the amount or timing of such cash flows cannot be determined, accretion of the fair value discount for nonperforming loans will be recognized using the cost recovery method of accounting.

Changes in the accretable yield for loans acquired and accounted for under ASC Topic 310-30 were as follows for the six months ended June 30, 2018 and for the year ended December 31, 2017

	Six Months Ended June 30, 2018			Year Ended December 31, 2017
	($ in Thousands)
Changes in Accretable Yield
Balance at beginning of period	$	—		$	—
Purchases	4,881			—
Accretion	(119		)	—
Balance at end of period	$	4,762		$	—

For loans acquired, the fair value of purchased credit-impaired loans, on the acquisition date, was determined based on assigned risk ratings, expected cash flows and the fair value of loan collateral. The fair value of loans that were non-impaired was determined based on estimates of losses on defaults and other market factors.

At June 30, 2018, the Corporation had a total of approximately $32 million in net unaccreted purchase discount, of which approximately $26 million was related to performing loans and approximately $7 million was related to nonperforming loans.