Loans and Leases

Loans and leases outstanding include the following as of the dates indicated:



	September 30, 2013		December 31, 2012
	(dollars in thousands)
Acquired loans	$	1,188,281	$	1,809,235
Originated loans and leases:
Commercial:
Construction and land development	300,266		309,190
Commercial mortgage	6,308,192		6,029,435
Other commercial real estate	177,599		160,980
Commercial and industrial	1,009,641		1,038,530
Lease financing	365,967		330,679
Other	180,435		125,681
Total commercial loans	8,342,100		7,994,495
Noncommercial:
Residential mortgage	927,426		822,889
Revolving mortgage	2,113,240		2,210,133
Construction and land development	121,553		131,992
Consumer	380,266		416,606
Total noncommercial loans	3,542,485		3,581,620
Total originated loans and leases	11,884,585		11,576,115
Total loans and leases	$	13,072,866	$	13,385,350



	September 30, 2013						December 31, 2012
	Impaired at acquisition date		All other acquired loans		Total		Impaired at acquisition date		All other acquired loans		Total
	(dollars in thousands)
Acquired loans:
Commercial:
Construction and land development	$	23,136	$	70,827	$	93,963	$	71,225	$	166,681	$	237,906
Commercial mortgage	81,389		662,960		744,349		107,281		947,192		1,054,473
Other commercial real estate	8,713		42,395		51,108		35,369		71,750		107,119
Commercial and industrial	144		24,304		24,448		3,932		45,531		49,463
Other	—		1,003		1,003		—		1,074		1,074
Total commercial loans	113,382		801,489		914,871		217,807		1,232,228		1,450,035
Noncommercial:
Residential mortgage	32,389		199,921		232,310		48,077		249,849		297,926
Revolving mortgage	8,416		26,418		34,834		9,606		29,104		38,710
Construction and land development	5,145		192		5,337		15,136		5,657		20,793
Consumer	—		929		929		—		1,771		1,771
Total noncommercial loans	45,950		227,460		273,410		72,819		286,381		359,200
Total acquired loans	$	159,332	$	1,028,949	$	1,188,281	$	290,626	$	1,518,609	$	1,809,235

At September 30, 2013, $2,534,250 in originated loans were pledged to secure debt obligations, compared to $2,570,773 at December 31, 2012.

Credit quality indicators

Loans and leases are monitored for credit quality on a recurring basis. The credit quality indicators used are dependent on the portfolio segment to which the loan relates. Originated commercial loans and leases, originated noncommercial loans and leases and acquired loans have different credit quality indicators as a result of the methods used to monitor each of these loan segments.

The credit quality indicators for originated commercial loans and leases and all acquired loans and leases are developed through review of individual borrowers on an ongoing basis. Each borrower is evaluated at least annually with more frequent evaluation of more severely criticized loans or leases. The indicators represent the rating for loans or leases as of the date presented based on the most recent assessment performed. These credit quality indicators are defined as follows:

Pass – A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification.

Special mention – A special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification.

Substandard – A substandard asset is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected.

Doubtful – An asset classified as doubtful has all the weaknesses inherent in an asset classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently existing facts, conditions and values.

Loss – Assets classified as loss are considered uncollectible and of such little value that it is inappropriate to be carried as an asset. This classification is not necessarily equivalent to no potential for recovery or salvage value, but rather that it is not appropriate to defer a full charge-off even though partial recovery may be effected in the future.

Ungraded – Ungraded loans represent loans that are not included in the individual credit grading process due to their relatively small balances or borrower type. The majority of originated, ungraded loans at September 30, 2013, relate to business credit cards and tobacco buyout loans classified as commercial and industrial loans. Business credit card loans with an outstanding balance of $73,701 at September 30, 2013, are subject to automatic charge-off when they become 120 days past due in the same manner as unsecured consumer lines of credit. Tobacco buyout loans with an outstanding balance of $21,808 at September 30, 2013, are secured by assignments of receivables made pursuant to the Fair and Equitable Tobacco Reform Act of 2004. The credit risk associated with these loans is considered low as the payments that began in 2005 and continue through 2014 are made by the Commodity Credit Corporation, which is part of the United States Department of Agriculture.

The credit quality indicators for originated, noncommercial loans are based on the delinquency status of the borrower. As the borrower becomes more delinquent, the likelihood of loss increases.

The composition of the loans and leases outstanding at September 30, 2013, and December 31, 2012, by credit quality indicator is provided below:



	Originated commercial loans and leases
Grade:	Construction and land development		Commercial mortgage		Other commercial real estate		Commercial and industrial		Lease financing		Other		Total originated commercial loans and leases
	(dollars in thousands)
September 30, 2013
Pass	$	285,044	$	6,019,286	$	172,341	$	885,691	$	359,195	$	179,085	$	7,900,642
Special mention	12,060		125,280		1,241		17,260		2,664		1,350		159,855
Substandard	3,109		155,593		3,709		6,606		3,335		—		172,352
Doubtful	53		6,703		75		1,428		773		—		9,032
Ungraded	—		1,330		233		98,656		—		—		100,219
Total	$	300,266	$	6,308,192	$	177,599	$	1,009,641	$	365,967	$	180,435	$	8,342,100
December 31, 2012
Pass	$	274,480	$	5,688,541	$	151,549	$	894,998	$	325,626	$	124,083	$	7,459,277
Special mention	14,666		166,882		2,812		13,275		1,601		837		200,073
Substandard	18,761		157,966		5,038		12,073		1,663		756		196,257
Doubtful	952		13,475		98		1,040		771		—		16,336
Ungraded	331		2,571		1,483		117,144		1,018		5		122,552
Total	$	309,190	$	6,029,435	$	160,980	$	1,038,530	$	330,679	$	125,681	$	7,994,495



	Originated noncommercial loans and leases
	Residential mortgage		Revolving mortgage		Construction and land development		Consumer		Total originated noncommercial loans
	(dollars in thousands)
September 30, 2013
Current	$	900,625	$	2,097,658	$	119,395	$	376,237	$	3,493,915
30-59 days past due	11,840		9,921		1,907		2,502		26,170
60-89 days past due	3,312		1,556		85		1,015		5,968
90 days or greater past due	11,649		4,105		166		512		16,432
Total	$	927,426	$	2,113,240	$	121,553	$	380,266	$	3,542,485
December 31, 2012
Current	$	786,626	$	2,190,186	$	128,764	409,218		$	3,514,794
30-59 days past due	15,711		12,868		1,941		4,405		34,925
60-89 days past due	7,559		3,200		490		1,705		12,954
90 days or greater past due	12,993		3,879		797		1,278		18,947
Total	$	822,889	$	2,210,133	$	131,992	$	416,606	$	3,581,620



	Acquired loans
Grade:	Construction and land development - commercial		Commercial mortgage		Other commercial real estate		Commercial and industrial		Residential mortgage		Revolving mortgage		Construction and land development - noncommercial		Consumer and other		Total acquired loans
	(dollars in thousands)
September 30, 2013
Pass	$	3,373	$	308,809	$	22,007	$	7,553	$	145,735	$	26,291	$	139	$	1,468	$	515,375
Special mention	18,395		176,338		6,602		9,268		8,676		2,865		—		26		222,170
Substandard	62,472		209,383		13,786		5,908		57,156		3,329		4,903		—		356,937
Doubtful	8,013		49,165		8,713		1,502		2,660		2,349		295		—		72,697
Ungraded	1,710		654		—		217		18,083		—		—		438		21,102
Total	$	93,963	$	744,349	$	51,108	$	24,448	$	232,310	$	34,834	$	5,337	$	1,932	$	1,188,281
December 31, 2012
Pass	$	17,010	$	376,974	$	33,570	$	19,451	$	172,165	$	29,540	$	334	$	1,617	$	650,661
Special mention	25,734		259,264		17,518		12,465		14,863		1,736		—		34		331,614
Substandard	105,061		344,542		44,335		14,698		83,193		7,434		17,190		239		616,692
Doubtful	87,445		73,016		11,696		2,757		4,268		—		3,269		117		182,568
Ungraded	2,656		677		—		92		23,437		—		—		838		27,700
Total	$	237,906	$	1,054,473	$	107,119	$	49,463	$	297,926	$	38,710	$	20,793	$	2,845	$	1,809,235

The aging of the outstanding loans and leases, by class, at September 30, 2013, and December 31, 2012, (excluding loans and leases acquired with deteriorated credit quality) is provided in the table below. The calculation of days past due begins on the day after payment is due and includes all days through which all required interest or principal has not been paid. Loans and leases 30 days or less past due are considered current due to various grace periods that allow borrowers to make payments within a stated period after the due date and still remain in compliance with the loan agreement.



	30-59 days past due		60-89 days past due		90 days or greater		Total past due		Current		Total loans and leases
	(dollars in thousands)
September 30, 2013
Originated loans and leases:
Construction and land development - commercial	$	1,755	$	49	$	562	$	2,366	$	297,900	$	300,266
Commercial mortgage	15,917		10,522		18,449		44,888		6,263,304		6,308,192
Other commercial real estate	103		400		1,169		1,672		175,927		177,599
Commercial and industrial	2,633		796		1,675		5,104		1,004,537		1,009,641
Lease financing	2,317		—		178		2,495		363,472		365,967
Other	—		—		—		—		180,435		180,435
Residential mortgage	11,840		3,312		11,649		26,801		900,625		927,426
Revolving mortgage	9,921		1,556		4,105		15,582		2,097,658		2,113,240
Construction and land development - noncommercial	1,907		85		166		2,158		119,395		121,553
Consumer	2,502		1,015		512		4,029		376,237		380,266
Total originated loans and leases	$	48,895	$	17,735	$	38,465	$	105,095	$	11,779,490	$	11,884,585
December 31, 2012
Originated loans and leases:
Construction and land development - commercial	$	927	$	—	$	7,878	$	8,805	$	300,385	$	309,190
Commercial mortgage	24,447		4,179		21,327		49,953		5,979,482		6,029,435
Other commercial real estate	387		1,240		1,034		2,661		158,319		160,980
Commercial and industrial	2,833		1,096		605		4,534		1,033,996		1,038,530
Lease financing	991		138		621		1,750		328,929		330,679
Other	18		13		—		31		125,650		125,681
Residential mortgage	15,711		7,559		12,993		36,263		786,626		822,889
Revolving mortgage	12,868		3,200		3,879		19,947		2,190,186		2,210,133
Construction and land development - noncommercial	1,941		490		797		3,228		128,764		131,992
Consumer	4,405		1,705		1,278		7,388		409,218		416,606
Total originated loans and leases	$	64,528	$	19,620	$	50,412	$	134,560	$	11,441,555	$	11,576,115

The recorded investment, by class, in loans and leases on nonaccrual status, and loans and leases greater than 90 days past due and still accruing at September 30, 2013, and December 31, 2012, (excluding loans and leases acquired with deteriorated credit quality) are as follows:



	September 30, 2013				December 31, 2012
	Nonaccrual loans and leases		Loans and leases > 90 days and accruing		Nonaccrual loans and leases		Loans and leases > 90 days and accruing
	(dollars in thousands)
Originated loans and leases:
Construction and land development - commercial	$	493	$	164	$	14,930	$	541
Commercial mortgage	44,818		601		50,532		1,671
Commercial and industrial	2,978		238		6,972		466
Lease financing	1,000		69		1,075		—
Other commercial real estate	1,937		800		2,319		—
Construction and land development - noncommercial	463		166		668		111
Residential mortgage	15,119		2,708		12,603		3,337
Revolving mortgage	—		4,105		—		3,877
Consumer	32		512		746		1,269
Total originated loans and leases	$	66,840	$	9,363	$	89,845	$	11,272

Acquired Loans

The following table provides changes in the carrying value of acquired loans impaired at acquisition date and all other acquired loans during the nine months ended September 30, 2013, and 2012:



	2013						2012
	Impaired at acquisition date			All other acquired loans			Impaired at acquisition date			All other acquired loans
	(dollars in thousands)
Balance, January 1	$	290,626		$	1,518,609		$	458,305		$	1,903,847
Reductions for repayments, foreclosures and changes in carrying value, net of accretion	(131,294		)	(489,660		)	(167,581		)	(297,474		)
Balance, September 30	$	159,332		$	1,028,949		$	290,724		$	1,606,373
Outstanding principal balance at September 30	$	670,256		$	1,412,617		$	1,077,975		$	2,253,660

The carrying value of loans on the cost recovery method was $29,194 at September 30, 2013, and $74,479 at December 31, 2012. Prior to the third quarter of 2012, the cost recovery method was being applied to nonperforming loans acquired from four of the six FDIC-assisted transactions. During the third and fourth quarters of 2012, those loans were installed on an acquired loan accounting system that estimated cash flows for all loans. Based on these improved cash flow estimates, loans that were previously accounted for under the cost recovery method began to accrete yield. The cost recovery method continues to be applied to loans when the timing of the cash flows is no longer reasonably estimable due to subsequent nonperformance by the borrower or uncertainty in the ultimate disposition of the asset.

For acquired loans, improved cash flow estimates and receipt of unscheduled loan payments result in the reclassification of nonaccretable difference to accretable yield. During the third and fourth quarters of 2012, the improved ability to estimate cash flows due to expanded use of an acquired loan accounting system also contributed to significant increases in accretable yield. Accretable yield resulting from the improved ability to estimate future cash flows generally does not represent amounts previously identified as nonaccretable difference.

The following table documents changes to the amount of accretable yield for the first nine months of 2013 and 2012. Other, net includes reclassifications from nonaccretable difference to accretable yield and changes to accretable yield attributable to revised cash flow estimates.



	2013			2012
	(dollars in thousands)
Balance, January 1	$	539,564		$	276,690
Accretion	(179,792		)	(193,438		)
Other, net	107,300			498,874
Balance, September 30	$	467,072		$	582,126