Allowance for Credit Losses and Credit Quality

9 Months Ended

Sep. 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 nine months ended September 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	40,516			(2,501		)	38,015
Adjustment attributable to FDIC loss share arrangements	—			1,240			1,240
Net provision for loan losses	40,516			(1,261		)	39,255
Adjustment attributable to FDIC loss share arrangements	—			(1,240		)	(1,240		)
Transfer of balance to OREO and other	—			(2,045		)	(2,045		)
Loans charged-off	(28,559		)	(1,495		)	(30,054		)
Recoveries	3,124			775			3,899
Allowance for loan losses at end of period	$	108,889		$	39,304		$	148,193
Reserve for unfunded commitments at beginning of period	14,145			—			14,145
Provision for (Reversal of) unfunded lending commitments	(2,155		)	—			(2,155		)
Reserve for unfunded commitments at end of period	$	11,990		$	—		$	11,990
Allowance for credit losses at end of period	$	120,879		$	39,304		$	160,183

	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	17,743			112			17,855
Adjustment attributable to FDIC loss share arrangements	—			1,342			1,342
Net provision for loan losses	17,743			1,454			19,197
Adjustment attributable to FDIC loss share arrangements	—			(1,342		)	(1,342		)
Transfer of balance to OREO and other	—			(9,768		)	(9,768		)
Loans charged-off	(12,073		)	(952		)	(13,025		)
Recoveries	4,556			505			5,061
Allowance for loan losses at end of period	$	86,400		$	43,854		$	130,254
Reserve for unfunded commitments at beginning of period	11,801			—			11,801
Provision for unfunded lending commitments	2,724			—			2,724
Reserve for unfunded commitments at end of period	$	14,525		$	—		$	14,525
Allowance for credit losses at end of period	$	100,925		$	43,854		$	144,779

A summary of changes in the allowance for credit losses for legacy loans, by loan portfolio type, for the nine months ended September 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	(651		)	13,201			18,998			248			8,720			40,516
Loans charged off	(1,598		)	(2,418		)	(14,672		)	(240		)	(9,631		)	(28,559		)
Recoveries	766			251			—			142			1,965			3,124
Allowance for loan losses at end of period	$	23,175		$	34,317		$	28,189		$	4,097		$	19,111		$	108,889
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	(427		)	(46		)	(1,712		)	(148		)	178			(2,155		)
Reserve for unfunded commitments at end of period	$	3,733		$	3,402		$	953		$	682		$	3,220		$	11,990
Allowance on loans individually evaluated for impairment	$	655		$	8,996		$	14,396		$	110		$	1,053		$	25,210
Allowance on loans collectively evaluated for impairment	22,520			25,321			13,793			3,987			18,058			83,679
Loans, net of unearned income:
Balance at end of period	$	5,419,483		$	3,101,472		$	598,279		$	840,082		$	2,454,054		$	12,413,370
Balance at end of period individually evaluated for impairment	31,405			58,464			212,512			4,539			11,546			318,466
Balance at end of period collectively evaluated for impairment	5,388,078			3,043,008			385,767			835,543			2,442,508			12,094,904

	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	(947		)	1,308			9,269		1,474			6,639			17,743
Loans charged off	(2,009		)	(1,048		)	—		(224		)	(8,792		)	(12,073		)
Recoveries	1,535			49			—		44			2,928			4,556
Allowance for loan losses at end of period	$	25,331		$	24,764		$	15,218	$	3,972		$	17,115		$	86,400
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	218			(149		)	2,037		650			(32		)	2,724
Reserve for unfunded commitments at end of period	$	3,588		$	3,584		$	3,633	$	818		$	2,902		$	14,525
Allowance on loans individually evaluated for impairment	$	883		$	817		$	—	$	—		$	—		$	1,700
Allowance on loans collectively evaluated for impairment	24,448			23,947			15,218		3,972			17,115			84,700
Loans, net of unearned income:
Balance at end of period	$	4,321,723		$	2,779,503		$	713,935	$	660,543		$	2,303,554		$	10,779,258
Balance at end of period individually evaluated for impairment	26,463			22,076			3,409		—			198			52,146
Balance at end of period collectively evaluated for impairment	4,295,260			2,757,427			710,526		660,543			2,303,356			10,727,112

A summary of changes in the allowance for credit losses for acquired loans, by loan portfolio type, for the nine months ended September 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	(1,952		)	216			(99		)	1,017			(443		)	(1,261		)
Decrease in FDIC loss share receivable	(34		)	(50		)	—			(833		)	(323		)	(1,240		)
Transfer of balance to OREO and other	(380		)	(467		)	—			28			(1,226		)	(2,045		)
Loans charged off	(789		)	—			—			—			(706		)	(1,495		)
Recoveries	102			217			—			33			423			775
Allowance for loan losses at end of period	$	22,926		$	2,735		$	26		$	8,086		$	5,531		$	39,304
Allowance on loans individually evaluated for impairment	$	177		$	77		$	—		$	—		$	—		$	254
Allowance on loans collectively evaluated for impairment	22,749			2,658			26			8,086			5,531			39,050
Loans, net of unearned income:
Balance at end of period	$	1,261,732		$	361,525		$	1,362		$	430,448		$	456,062		$	2,511,129
Balance at end of period individually evaluated for impairment	5,647			1,926			—			—			679			8,252
Balance at end of period collectively evaluated for impairment	948,523			324,445			1,362			304,699			354,801			1,933,830
Balance at end of period acquired with deteriorated credit quality	307,562			35,154			—			125,749			100,582			569,047

	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	809			174			67		1,263			(859		)	1,454
(Decrease) Increase in FDIC loss share receivable	748			59			—		(277		)	(1,872		)	(1,342		)
Transfer of balance to OREO and other	(6,096		)	(282		)	—		(472		)	(2,918		)	(9,768		)
Loans charged off	—			(8		)	—		(59		)	(885		)	(952		)
Recoveries	8			116			—		4			377			505
Allowance for loans losses at end of period	$	25,418		$	3,324		$	118	$	6,943		$	8,051		$	43,854
Allowance on loans individually evaluated for impairment	$	—		$	—		$	—	$	—		$	16		$	16
Allowance on loans collectively evaluated for impairment	25,418			3,324			118		6,943			8,035			43,838
Loans, net of unearned income:
Balance at end of period	$	1,658,028		$	523,468		$	5,521	$	529,398		$	621,346		$	3,337,761
Balance at end of period individually evaluated for impairment	—			142			—		—			456			598
Balance at end of period collectively evaluated for impairment	1,205,439			465,514			5,521		385,854			493,032			2,555,360
Balance at end of period acquired with deteriorated credit quality	452,589			57,812			—		143,544			127,858			781,803

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, 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 September 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 September 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
	September 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	$	694,983	$	84	$	1,060	$	—	$	—	$	696,127	$	634,889	$	160	$	1,432	$	—	$	—	$	636,481
Commercial real estate - Other	4,654,619		22,919		45,656		162		—		4,723,356		3,806,528		21,877		37,001		2,175		—		3,867,581
Commercial and industrial	2,994,661		34,249		53,951		18,611		—		3,101,472		2,911,396		14,826		19,888		5,992		—		2,952,102
Energy-related	279,404		65,263		249,640		3,972		—		598,279		531,657		67,937		74,272		3,311		—		677,177
Total	$	8,623,667	$	122,515	$	350,307	$	22,745	$	—	$	9,119,234	$	7,884,470	$	104,800	$	132,593	$	11,478	$	—	$	8,133,341

	Legacy loans
	September 30, 2016						December 31, 2015
(Dollars in thousands)	Current		30+ Days Past Due		Total		Current		30+ Days Past Due		Total
Residential mortgage	$	817,154	$	22,928	$	840,082	$	676,347	$	17,676	$	694,023
Consumer - Home equity	1,740,001		15,294		1,755,295		1,565,596		10,047		1,575,643
Consumer - Indirect automobile	150,008		3,896		153,904		242,328		3,886		246,214
Consumer - Credit card	79,588		864		80,452		76,360		901		77,261
Consumer - Other	459,548		4,855		464,403		460,594		3,444		464,038
Total	$	3,246,299	$	47,837	$	3,294,136	$	3,021,225	$	35,954	$	3,057,179

	Acquired loans
	September 30, 2016															December 31, 2015
(Dollars in thousands)	Pass		Special Mention		Sub- standard		Doubtful		Loss		Premium/(Discount)			Total		Pass		Special Mention		Sub- standard		Doubtful		Loss		Premium/(Discount)			Total
Commercial real estate-Construction	$	63,139	$	140	$	5,167	$	744	$	—	$	11,605		$	80,795	$	104,064	$	1,681	$	8,803	$	771	$	—	$	10,107		$	125,426
Commercial real estate - Other	1,145,942		21,731		46,941		1,484		23		(35,184		)	1,180,937		1,395,884		26,080		79,119		6,124		111		(63,295		)	1,444,023
Commercial and industrial	361,376		6,216		14,443		558		—		(21,068		)	361,525		473,241		8,376		16,510		1,206		43		(6,900		)	492,476
Energy-related	1,369		—		—		—		—		(7		)	1,362		2,166		55		170		1,198		—		—			3,589
Total	$	1,571,826	$	28,087	$	66,551	$	2,786	$	23	$	(44,654	)	$	1,624,619	$	1,975,355	$	36,192	$	104,602	$	9,299	$	154	$	(60,088	)	$	2,065,514

	Acquired loans
	September 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	$	441,411	$	21,832	$	(32,795	)	$	430,448	$	506,103	$	24,752	$	(29,559	)	$	501,296
Consumer - Home equity	408,541		11,458		(24,164		)	395,835		503,635		16,381		(29,492		)	490,524
Consumer - Indirect automobile	9		1		(1		)	9		72		12		—			84
Consumer - Other	58,998		1,618		(398		)	60,218		79,732		1,475		(1,717		)	79,490
Total	$	908,959	$	34,909	$	(57,358	)	$	886,510	$	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.

	September 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	$	15,447	$	14,655	$	—		$	17,002	$	16,145	$	—
Commercial business	29,162		28,722		—			14,571		14,340		—
Energy-related	168,723		163,156		—			—		—		—
Residential mortgage	—		—		—			—		—		—
Consumer - Home equity	—		—		—			730		730		—
Consumer -Other	—		—		—			66		66		—
With an allowance recorded:
Commercial real estate	17,870		17,843		(660		)	21,377		13,753		(1,253		)
Commercial and industrial	31,406		31,067		(9,012		)	7,422		6,262		(277		)
Energy-related	52,749		49,407		(14,396		)	13,474		13,444		(2,125		)
Residential mortgage	18,205		16,840		(124		)	14,806		13,743		(64		)
Consumer - Home equity	16,845		15,615		(855		)	9,486		8,559		(363		)
Consumer - Indirect automobile	2,465		1,727		(128		)	1,955		1,181		(10		)
Consumer - Credit card	438		438		(9		)	394		394		(8		)
Consumer - Other	2,711		2,573		(122		)	1,450		899		(23		)
Total	$	356,021	$	342,043	$	(25,306	)	$	102,733	$	89,516	$	(4,123	)
Total commercial loans	$	315,357	$	304,850	$	(24,068	)	$	73,846	$	63,944	$	(3,655	)
Total mortgage loans	18,205		16,840		(124		)	14,806		13,743		(64		)
Total consumer loans	22,459		20,353		(1,114		)	14,081		11,829		(404		)

	Three Months Ended   September 30, 2016				Three Months Ended   September 30, 2015				Nine Months Ended   September 30, 2016				Nine Months Ended   September 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	$	20,345	$	220	$	16,018	$	37	$	20,633	$	663	$	16,036	$	79
Commercial and industrial	29,533		313		20,055		159		30,772		1,030		20,630		465
Energy-related	165,459		1,364		3,409		—		149,099		3,755		3,425		—
Residential mortgage	—		—		—		—		—		—		—		—
Consumer - Home equity	—		—		215		3		—		—		204		4
With an allowance recorded:
Commercial real estate	17,776		143		11,649		128		17,654		433		8,247		385
Commercial and industrial	31,859		366		2,121		—		39,087		1,211		2,634		—
Energy-related	55,947		416		99		—		42,089		1,325		106		—
Residential mortgage	16,558		49		15,008		—		16,410		177		15,100		—
Consumer - Home equity	14,632		119		5,344		—		13,696		348		5,462		—
Consumer - Indirect automobile	1,853		16		1,361		—		2,092		70		1,551		—
Consumer - Credit card	468		—		721		—		461		—		1,038		—
Consumer - Other	2,346		38		1,030		—		2,065		109		1,068		—
Total	$	356,776	$	3,044	$	77,030	$	327	334,058		9,121		$	75,501	$	933
Total commercial loans	$	320,919	$	2,822	$	53,351	$	324	$	299,334	$	8,417	$	51,078	$	929
Total mortgage loans	16,558		49		15,008		—		16,410		177		15,100		—
Total consumer loans	19,299		173		8,671		3		18,314		527		9,323		4

As of September 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.