Allowance for Credit Losses and Credit Quality

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Allowance for Credit Losses and Credit Quality

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

Allowance for Credit Losses Activity

A summary of changes in the allowance for credit losses for the six months ended June 30 is as follows:

	2016
(Dollars in thousands)	Legacy Loans			Acquired Loans			Total
Allowance for credit losses
Allowance for loan losses at beginning of period	$	93,808		$	44,570		$	138,378
Provision for (Reversal of) loan losses before benefit attributable to FDIC loss share agreements	28,390			(2,416		)	25,974
Adjustment attributable to FDIC loss share arrangements	—			797			797
Net provision for loan losses	28,390			(1,619		)	26,771
Adjustment attributable to FDIC loss share arrangements	—			(797		)	(797		)
Transfer of balance to OREO and other	—			(967		)	(967		)
Loans charged-off	(17,359		)	(1,196		)	(18,555		)
Recoveries	2,022			600			2,622
Allowance for loan losses at end of period	$	106,861		$	40,591		$	147,452
Reserve for unfunded commitments at beginning of period	14,145			—			14,145
Provision for (Reversal of) unfunded lending commitments	(319		)	—			(319		)
Reserve for unfunded commitments at end of period	$	13,826		$	—		$	13,826
Allowance for credit losses at end of period	$	120,687		$	40,591		$	161,278

	2015
(Dollars in thousands)	Legacy Loans			Acquired Loans			Total
Allowance for credit losses
Allowance for loan losses at beginning of period	$	76,174		$	53,957		$	130,131
Provision for loan losses before benefit attributable to FDIC loss share agreements	12,631			661			13,292
Adjustment attributable to FDIC loss share arrangements	—			843			843
Net provision for loan losses	12,631			1,504			14,135
Adjustment attributable to FDIC loss share arrangements	—			(843		)	(843		)
Transfer of balance to OREO and other	—			(9,765		)	(9,765		)
Loans charged-off	(7,114		)	(665		)	(7,779		)
Recoveries	2,032			238			2,270
Allowance for loan losses at end of period	$	83,723		$	44,426		$	128,149
Reserve for unfunded commitments at beginning of period	11,801			—			11,801
Provision for unfunded lending commitments	1,443			—			1,443
Reserve for unfunded commitments at end of period	$	13,244		$	—		$	13,244
Allowance for credit losses at end of period	$	96,967		$	44,426		$	141,393

A summary of changes in the allowance for credit losses for legacy loans, by loan portfolio type, for the six months ended June 30 is as follows:

	2016
	Commercial Real Estate			Commercial and Industrial			Energy-related			Residential Mortgage
(Dollars in thousands)													Consumer			Total
Allowance for loan losses at beginning of period	$	24,658		$	23,283		$	23,863		$	3,947		$	18,057		$	93,808
Provision for (Reversal of) loan losses	(715		)	5,874			16,819			264			6,148			28,390
Loans charged off	(1,549		)	(1,154		)	(7,715		)	(173		)	(6,768		)	(17,359		)
Recoveries	644			35			—			27			1,316			2,022
Allowance for loan losses at end of period	$	23,038		$	28,038		$	32,967		$	4,065		$	18,753		$	106,861
Reserve for unfunded commitments at beginning of period	$	4,160		$	3,448		$	2,665		$	830		$	3,042		$	14,145
Provision for (Reversal of) unfunded commitments	(26		)	(60		)	(442		)	(23		)	232			(319		)
Reserve for unfunded commitments at end of period	$	4,134		$	3,388		$	2,223		$	807		$	3,274		$	13,826
Allowance on loans individually evaluated for impairment	$	691		$	969		$	11,925		$	100		$	800		$	14,485
Allowance on loans collectively evaluated for impairment	22,347			27,069			21,042			3,965			17,953			92,376
Loans, net of unearned income:
Balance at end of period	$	5,097,689		$	3,027,590		$	659,510		$	794,701		$	2,405,359		$	11,984,849
Balance at end of period individually evaluated for impairment	26,152			34,298			148,317			3,451			9,140			221,358
Balance at end of period collectively evaluated for impairment	5,071,537			2,993,292			511,193			791,250			2,396,219			11,763,491

	2015
	Commercial Real Estate			Commercial and Industrial			Energy-related		Residential Mortgage
(Dollars in thousands)												Consumer			Total
Allowance for loan losses at beginning of period	$	26,752		$	24,455		$	5,949	$	2,678		$	16,340		$	76,174
Provision for (Reversal of) loan losses	(1,572		)	1,680			6,147		1,551			4,825			12,631
Loans charged off	(249		)	(890		)	—		(168		)	(5,807		)	(7,114		)
Recoveries	246			69			—		34			1,683			2,032
Allowance for loan losses at end of period	$	25,177		$	25,314		$	12,096	$	4,095		$	17,041		$	83,723
Reserve for unfunded commitments at beginning of period	$	3,370		$	3,733		$	1,596	$	168		$	2,934		$	11,801
Provision for (Reversal of) unfunded commitments	(17		)	(428		)	1,308		705			(125		)	1,443
Reserve for unfunded commitments at end of period	$	3,353		$	3,305		$	2,904	$	873		$	2,809		$	13,244
Allowance on loans individually evaluated for impairment	$	154		$	1,287		$	—	$	—		$	—		$	1,441
Allowance on loans collectively evaluated for impairment	25,023			24,027			12,096		4,095			17,041			82,282
Loans, net of unearned income:
Balance at end of period	$	4,105,592		$	2,650,799		$	782,312	$	616,497		$	2,240,353		$	10,395,553
Balance at end of period individually evaluated for impairment	19,115			15,400			—		—			229			34,744
Balance at end of period collectively evaluated for impairment	4,086,477			2,635,399			782,312		616,497			2,240,124			10,360,809

A summary of changes in the allowance for credit losses for acquired loans, by loan portfolio type, for the six months ended June 30 is as follows:

	2016
	Commercial Real Estate			Commercial and Industrial			Energy-related			Residential Mortgage
(Dollars in thousands)													Consumer			Total
Allowance for loan losses at beginning of period	$	25,979		$	2,819		$	125		$	7,841		$	7,806		$	44,570
Provision for (Reversal of) loan losses	(1,804		)	350			(52		)	896			(1,009		)	(1,619		)
Increase (Decrease) in FDIC loss share receivable	45			(28		)	—			(562		)	(252		)	(797		)
Transfer of balance to OREO and other	(880		)	323			—			22			(432		)	(967		)
Loans charged off	(31		)	(700		)	—			—			(465		)	(1,196		)
Recoveries	85			112			—			29			374			600
Allowance for loan losses at end of period	$	23,394		$	2,876		$	73		$	8,226		$	6,022		$	40,591
Allowance on loans individually evaluated for impairment	$	—		$	22		$	—		$	2		$	44		$	68
Allowance on loans collectively evaluated for impairment	23,394			2,854			73			8,224			5,978			40,523
Loans, net of unearned income:
Balance at end of period	$	1,374,312		$	408,219		$	2,524		$	454,361		$	498,296		$	2,737,712
Balance at end of period individually evaluated for impairment	1,145			2,075			—			245			4,412			7,877
Balance at end of period collectively evaluated for impairment	1,038,737			368,283			2,524			321,879			386,080			2,117,503
Balance at end of period acquired with deteriorated credit quality	334,430			37,861			—			132,237			107,804			612,332

	2015
	Commercial Real Estate			Commercial and Industrial			Energy-related		Residential Mortgage
(Dollars in thousands)												Consumer			Total
Allowance for loans losses at beginning of period	$	29,949		$	3,265		$	51	$	6,484		$	14,208		$	53,957
Provision for (Reversal of) loan losses	1,142			(395		)	30		887			(160		)	1,504
(Decrease) Increase in FDIC loss share receivable	773			—			—		(66		)	(1,550		)	(843		)
Transfer of balance to OREO and other	(6,331		)	(276		)	—		(312		)	(2,846		)	(9,765		)
Loans charged off	—			—			—		(59		)	(606		)	(665		)
Recoveries	—			—			—		—			238			238
Allowance for loans losses at end of period	$	25,533		$	2,594		$	81	$	6,934		$	9,284		$	44,426
Allowance on loans individually evaluated for impairment	$	—		$	—		$	—	$	—		$	3		$	3
Allowance on loans collectively evaluated for impairment	25,533			2,594			81		6,934			9,281			44,423
Loans, net of unearned income:
Balance at end of period	$	1,748,159		$	566,107		$	5,256	$	553,111		$	682,377		$	3,555,010
Balance at end of period individually evaluated for impairment	—			270			—		—			456			726
Balance at end of period collectively evaluated for impairment	1,294,062			512,889			5,256		410,792			549,070			2,772,069
Balance at end of period acquired with deteriorated credit quality	454,097			52,948			—		142,319			132,851			782,215

Portfolio Segment Risk Factors

Commercial real estate loans include loans to commercial customers for long-term financing of land and buildings or for land development or construction of a building. These loans are repaid through revenues from operations of the businesses, rents of properties and refinances. Commercial and industrial loans represent loans to commercial customers to finance general working capital needs, equipment purchases and other projects where repayment is derived from cash flows resulting from business operations. The Company originates commercial business loans on a secured and, to a lesser extent, unsecured basis.

Residential mortgage loans consist of loans to consumers to finance a primary residence. The vast majority of the residential mortgage loan portfolio is comprised of one-to-four family mortgage loans secured by properties located in the Company's market areas and originated under terms and documentation that permit sale in the secondary market.

Consumer loans are offered by the Company in order to provide a full range of retail financial services to its customers and include home equity, indirect automobile, credit card and other direct consumer installment loans. The Company originates substantially all of its consumer loans in its primary market areas. Loans in the consumer segment are sensitive to unemployment and other key consumer economic measures.

Credit Quality

The Company utilizes an asset risk classification system in accordance with guidelines established by the Federal Reserve Board as part of its efforts to monitor commercial asset quality. "Special mention" loans are defined as loans where known information about possible credit problems of the borrower cause management to have some doubt as to the ability of these borrowers to comply with the present loan repayment terms and which may result in future disclosures of these loans as non-performing. For assets with identified credit issues, the Company has two primary classifications for problem assets: "substandard" and "doubtful".

Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of the substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full satisfaction of the loan balance outstanding questionable, which makes probability of loss based on currently existing facts, conditions, and values higher. Loans classified as "Pass" do not meet the criteria set forth for special mention, substandard, or doubtful classification and are not considered criticized. Asset risk classifications are determined at origination or acquisition and reviewed on an ongoing basis. Risk classifications are changed if, in the opinion of management, the risk profile of the customer has changed since the last review of the loan relationship.

The Company’s investment in loans by credit quality indicator is presented in the following tables. The tables below further segregate the Company’s loans between loans that were originated by the Company (legacy loans) and acquired loans. Loan premiums/discounts in the tables below represent the adjustment of non-covered acquired loans to fair value at the acquisition date, as adjusted for income accretion and changes in cash flow estimates in subsequent periods. Asset risk classifications for commercial loans reflect the classification as of June 30, 2016 and December 31, 2015. Credit quality information in the tables below includes loans acquired at the gross loan balance, prior to the application of premiums/discounts, at June 30, 2016 and December 31, 2015.

Loan delinquency is the primary credit quality indicator that the Company utilizes to monitor consumer asset quality.

	Legacy loans
	June 30, 2016												December 31, 2015
(Dollars in thousands)	Pass		Special Mention		Sub-standard		Doubtful		Loss		Total		Pass		Special Mention		Sub-standard		Doubtful		Loss		Total
Commercial real estate - Construction	$	695,025	$	158	$	26	$	—	$	—	$	695,209	$	634,889	$	160	$	1,432	$	—	$	—	$	636,481
Commercial real estate - Other	4,344,218		20,213		37,735		314		—		4,402,480		3,806,528		21,877		37,001		2,175		—		3,867,581
Commercial and industrial	2,935,529		31,333		57,904		2,824		—		3,027,590		2,911,396		14,826		19,888		5,992		—		2,952,102
Energy-related	346,355		69,344		235,995		7,816		—		659,510		531,657		67,937		74,272		3,311		—		677,177
Total	$	8,321,127	$	121,048	$	331,660	$	10,954	$	—	$	8,784,789	$	7,884,470	$	104,800	$	132,593	$	11,478	$	—	$	8,133,341

	Legacy loans
	June 30, 2016						December 31, 2015
(Dollars in thousands)	Current		30+ Days Past Due		Total		Current		30+ Days Past Due		Total
Residential mortgage	$	778,094	$	16,607	$	794,701	$	676,347	$	17,676	$	694,023
Consumer - Home equity	1,684,473		10,640		1,695,113		1,565,596		10,047		1,575,643
Consumer - Indirect automobile	177,697		4,502		182,199		242,328		3,886		246,214
Consumer - Credit card	77,144		900		78,044		76,360		901		77,261
Consumer - Other	446,171		3,832		450,003		460,594		3,444		464,038
Total	$	3,163,579	$	36,481	$	3,200,060	$	3,021,225	$	35,954	$	3,057,179

	Acquired loans
	June 30, 2016															December 31, 2015
(Dollars in thousands)	Pass		Special Mention		Sub- standard		Doubtful		Loss		Discount			Total		Pass		Special Mention		Sub- standard		Doubtful		Loss		Discount			Total
Commercial real estate-Construction	$	91,301	$	144	$	3,964	$	744	$	—	$	11,243		$	107,396	$	104,064	$	1,681	$	8,803	$	771	$	—	$	10,107		$	125,426
Commercial real estate - Other	1,241,282		25,260		48,040		3,818		—		(51,484		)	1,266,916		1,395,884		26,080		79,119		6,124		111		(63,295		)	1,444,023
Commercial and industrial	404,046		2,438		14,213		589		—		(13,067		)	408,219		473,241		8,376		16,510		1,206		43		(6,900		)	492,476
Energy-related	2,512		—		48		—		—		(36		)	2,524		2,166		55		170		1,198		—		—			3,589
Total	$	1,739,141	$	27,842	$	66,265	$	5,151	$	—	$	(53,344	)	$	1,785,055	$	1,975,355	$	36,192	$	104,602	$	9,299	$	154	$	(60,088	)	$	2,065,514

	Acquired loans
	June 30, 2016									December 31, 2015
(Dollars in thousands)	Current		30+ Days Past Due		Premium (discount)			Total		Current		30+ Days Past Due		Premium (discount)			Total
Residential mortgage	$	464,518	$	23,721	$	(33,878	)	$	454,361	$	506,103	$	24,752	$	(29,559	)	$	501,296
Consumer - Home equity	446,532		14,462		(26,295		)	434,699		503,635		16,381		(29,492		)	490,524
Consumer - Indirect automobile	23		2		(1		)	24		72		12		—			84
Consumer - Other	62,995		1,306		(728		)	63,573		79,732		1,475		(1,717		)	79,490
Total	$	974,068	$	39,491	$	(60,902	)	$	952,657	$	1,089,542	$	42,620	$	(60,768	)	$	1,071,394

Legacy Impaired Loans

Information on the Company’s investment in legacy impaired loans, which include all TDRs and all other non-accrual loans, is presented in the following tables as of and for the periods indicated. Legacy non-accrual mortgage and consumer loans, and commercial loans below the Company's specific threshold, are included for purposes of this disclosure although such loans are generally not evaluated or measured individually for impairment for purposes of determining the allowance for loan losses.

	June 30, 2016							December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Related Allowance			Unpaid Principal Balance		Recorded Investment		Related Allowance
(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	16,362	$	15,492	$	—		$	17,002	$	16,145	$	—
Commercial business	32,292		32,177		—			14,571		14,340		—
Energy-related	116,226		116,160		—			—		—		—
Residential mortgage	825		825		—			—		—		—
Consumer - Home equity	—		—		—			730		730		—
Consumer -Other	—		—		—			66		66		—
With an allowance recorded:
Commercial real estate	20,075		11,580		(696		)	21,377		13,753		(1,253		)
Commercial and industrial	4,331		3,017		(981		)	7,422		6,262		(277		)
Energy-related	40,233		32,314		(11,926		)	13,474		13,444		(2,125		)
Residential mortgage	16,418		15,169		(151		)	14,806		13,743		(64		)
Consumer - Home equity	13,739		12,446		(697		)	9,486		8,559		(363		)
Consumer - Indirect automobile	2,551		1,556		(109		)	1,955		1,181		(10		)
Consumer - Credit card	533		533		(11		)	394		394		(8		)
Consumer - Other	2,031		1,720		(38		)	1,450		899		(23		)
Total	$	265,616	$	242,989	$	(14,609	)	$	102,733	$	89,516	$	(4,123	)
Total commercial loans	$	229,519	$	210,740	$	(13,603	)	$	73,846	$	63,944	$	(3,655	)
Total mortgage loans	17,243		15,994		(151		)	14,806		13,743		(64		)
Total consumer loans	18,854		16,255		(855		)	14,081		11,829		(404		)

	Three Months Ended   June 30, 2016				Three Months Ended   June 30, 2015				Six Months Ended   June 30, 2016				Six Months Ended   June 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	15,494	$	143	$	16,361	$	5	$	15,569	$	278	$	16,417	$	15
Commercial and industrial	36,212		467		13,715		14		41,074		947		13,924		44
Energy-related	106,692		912		—		—		102,364		1,857		—		—
Residential mortgage	825		10		—		—		825		19		—		—
Consumer - Home equity	—		—		230		—		—		—		233		—
With an allowance recorded:
Commercial real estate	16,492		85		5,316		16		19,749		173		5,034		37
Commercial and industrial	3,112		33		14,354		133		3,945		162		14,675		362
Energy-related	15,804		12		3,457		54		12,619		51		3,457		88
Residential mortgage	15,388		40		15,721		—		15,529		92		15,927		16
Consumer - Home equity	11,831		84		9,497		—		11,719		169		9,680		8
Consumer - Indirect automobile	1,831		17		1,691		—		2,001		45		1,792		13
Consumer - Credit card	461		—		1,199		—		457		—		1,196		—
Consumer - Other	1,696		28		1,294		—		1,600		54		1,334		10
Total	$	225,838	$	1,831	$	82,835	$	222	227,451		3,847		$	83,669	$	593
Total commercial loans	$	193,806	$	1,652	$	53,203	$	222	$	195,320	$	3,468	$	53,507	$	546
Total mortgage loans	16,213		50		15,721		—		16,354		111		15,927		16
Total consumer loans	15,819		129		13,911		—		15,777		268		14,235		31

As of June 30, 2016 and December 31, 2015, the Company was not committed to lend a material amount of additional funds to any customer whose loan was classified as impaired or as a troubled debt restructuring.