Allowance for Credit Losses and Credit Quality

3 Months Ended

Mar. 31, 2019

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 three months ended March 31 is as follows:

(in thousands)	2019			2018
Allowance for loan and lease losses at beginning of period	$	140,571		$	140,891
Provision for loan and lease losses	12,612			7,987
Transfer of balance to OREO and other	(2,885		)	(48		)
Charge-offs	(8,918		)	(9,116		)
Recoveries	1,586			4,813
Allowance for loan and lease losses at end of period	$	142,966		$	144,527
Reserve for unfunded commitments at beginning of period	$	14,830		$	13,208
Provision for unfunded lending commitments	1,151			224
Reserve for unfunded commitments at end of period	$	15,981		$	13,432
Allowance for credit losses at end of period	$	158,947		$	157,959

A summary of changes in the allowance for credit losses, by loan portfolio type, for the three months ended March 31 is as follows:

	2019
(in thousands)	Commercial Real Estate			Commercial and Industrial			Residential Mortgage			Consumer and Other			Total
Allowance for loan and lease losses at beginning of period	$	51,806		$	54,096		$	12,998		$	21,671		$	140,571
Provision for loan and lease losses	6,887			2,876			1,749			1,100			12,612
Transfer of balance to OREO and other	—			—			(2,881		)	(4		)	(2,885		)
Charge-offs	(72		)	(4,931		)	(28		)	(3,887		)	(8,918		)
Recoveries	103			446			32			1,005			1,586
Allowance for loan and lease losses at end of period	$	58,724		$	52,487		$	11,870		$	19,885		$	142,966
Reserve for unfunded commitments at beginning of period	$	4,869		$	6,198		$	866		$	2,897		$	14,830
Provision for unfunded commitments	794			128			22			207			1,151
Reserve for unfunded commitments at end of period	$	5,663		$	6,326		$	888		$	3,104		$	15,981
Allowance on loans individually evaluated for impairment	$	3,078		$	10,988		$	258		$	2,624		$	16,948
Allowance on loans collectively evaluated for impairment	50,210			39,997			7,404			17,087			114,698
Allowance on loans acquired with deteriorated credit quality	5,436			1,502			4,208			174			11,320
Loans and leases, net of unearned income:
Balance at end of period	$	9,775,590		$	5,852,568		$	4,415,267		$	2,924,870		$	22,968,295
Balance at end of period individually evaluated for impairment	67,909			63,889			7,679			35,835			175,312
Balance at end of period collectively evaluated for impairment	9,546,809			5,764,084			4,323,051			2,830,797			22,464,741
Balance at end of period acquired with deteriorated credit quality	160,872			24,595			84,537			58,238			328,242

	2018
(in thousands)	Commercial Real Estate			Commercial and Industrial			Residential Mortgage			Consumer and Other			Total
Allowance for loan losses at beginning of period	$	54,201		$	53,916		$	9,117		$	23,657		$	140,891
Provision for (Reversal of) loan and lease losses	6,378			294			(686		)	2,001			7,987
Transfer of balance to OREO and other	(48		)	—			—			—			(48		)
Charge-offs	(114		)	(5,378		)	(105		)	(3,519		)	(9,116		)
Recoveries	191			3,698			22			902			4,813
Allowance for loan losses at end of period	$	60,608		$	52,530		$	8,348		$	23,041		$	144,527
Reserve for unfunded commitments at beginning of period	$	4,531		$	5,309		$	555		$	2,813		$	13,208
Provision for (Reversal of) unfunded commitments	1,476			(1,004		)	(15		)	(233		)	224
Reserve for unfunded commitments at end of period	$	6,007		$	4,305		$	540		$	2,580		$	13,432
Allowance on loans individually evaluated for impairment	$	2,506		$	14,040		$	178		$	2,974		$	19,698
Allowance on loans collectively evaluated for impairment	35,871			36,208			2,073			16,544			90,696
Allowance on loans acquired with deteriorated credit quality	22,231			2,282			6,097			3,523			34,133
Loans, net of unearned income:
Balance at end of period	$	9,248,951		$	5,325,682		$	3,971,067		$	3,160,390		$	21,706,090
Balance at end of period individually evaluated for impairment	78,489			78,725			6,041			33,277			196,532
Balance at end of period collectively evaluated for impairment	8,946,138			5,211,736			3,826,721			3,043,085			21,027,680
Balance at end of period acquired with deteriorated credit quality	224,324			35,221			138,305			84,028			481,878

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, sales of properties and refinances. Commercial and industrial loans and leases represent loans to commercial customers to finance general working capital needs, equipment purchases and leases 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 non-conforming 1-4 family mortgage loans secured by properties located in the Company's market areas and originated under terms and documentation that permit their sale in a 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 Indicators

For commercial loans and leases, the Company utilizes regulatory classification ratings to monitor credit quality. Loans with a "pass" rating are those that the Company believes will be fully repaid in accordance with the contractual loan terms. Commercial loans and leases that are "criticized" are those that have some weakness or potential weakness that indicate an increased probability of future loss. "Criticized" loans are grouped into three categories: "special mention", "substandard", and "doubtful". Special mention loans have potential weaknesses that, if left uncorrected, may result in deterioration of the Company's credit position at some future date.

Substandard loans have well-defined weaknesses and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful loans have the same weaknesses as substandard loans with the added characteristics that the probability of loss is high and collection of the full amount is improbable. Substandard and doubtful loans are collectively referred to as "classified" loans. For residential mortgage loans and consumer loans, the Company primarily uses the loan's payment and delinquency status to monitor credit quality. These credit quality indicators are continually updated and monitored.

The recorded investment in loans and leases by credit quality indicator is presented in the following tables. Asset risk classifications for commercial loans and leases reflect the classification as of March 31, 2019 and December 31, 2018. Credit quality information in the tables below includes total loans acquired (including acquired impaired loans) at the net loan balance, after the application of premiums and discounts. Loan premiums and discounts represent the adjustment of acquired loans to fair value at the acquisition date, as adjusted for income accretion and changes in cash flow estimates in subsequent periods.

	March 31, 2019										December 31, 2018
(in thousands)	Pass		Special Mention		Sub- standard		Doubtful		Total		Pass		Special Mention		Sub- standard		Doubtful		Total
Real estate - construction	$	1,213,202	$	147	$	6,289	$	9	$	1,219,647	$	1,182,554	$	1,062	$	12,740	$	10	$	1,196,366
Real estate - owner-occupied	2,332,819		33,359		41,087		814		2,408,079		2,328,999		25,526		41,297		—		2,395,822
Real estate - non-owner-occupied	6,028,301		82,839		34,015		2,709		6,147,864		5,687,963		78,009		26,512		3,633		5,796,117
Commercial and industrial	5,696,564		46,384		87,385		22,235		5,852,568		5,586,482		52,632		73,853		24,050		5,737,017
Total	$	15,270,886	$	162,729	$	168,776	$	25,767	$	15,628,158	$	14,785,998	$	157,229	$	154,402	$	27,693	$	15,125,322

	March 31, 2019						December 31, 2018
(in thousands)	Current		30+ Days Past Due		Total		Current		30+ Days Past Due		Total
Residential mortgage	$	4,335,779	$	79,488	$	4,415,267	$	4,290,152	$	69,004	$	4,359,156
Consumer - home equity	2,184,204		36,444		2,220,648		2,258,659		46,035		2,304,694
Consumer - other	698,074		6,148		704,222		721,231		9,412		730,643
Total	$	7,218,057	$	122,080	$	7,340,137	$	7,270,042	$	124,451	$	7,394,493

Impaired Loans

Information on the Company’s investment in impaired loans, which include all TDRs and all other non-accrual loans evaluated or measured individually for impairment for purposes of determining the ALLL, is presented in the following tables as of and for the periods indicated.

	March 31, 2019							December 31, 2018
	Unpaid Principal Balance		Recorded Investment		Related Allowance			Unpaid Principal Balance		Recorded Investment		Related Allowance
(in thousands)
With no related allowance recorded:
Real estate - construction	$	12,138	$	11,139	$	—		$	10,261	$	9,262	$	—
Real estate - owner-occupied	33,670		27,732		—			25,037		19,044		—
Real estate - non-owner-occupied	12,352		11,515		—			15,265		14,288		—
Commercial and industrial	52,821		32,380		—			55,554		43,886		—
Residential mortgage	1,456		1,456		—			1,244		1,221		—
Consumer - home equity	1,783		1,783		—			4,183		4,176		—
Consumer - other	—		—		—			—		—		—
With an allowance recorded:
Real estate - construction	224		134		(11		)	228		140		(11		)
Real estate - owner-occupied	5,553		5,393		(613		)	5,032		4,773		(520		)
Real estate - non-owner-occupied	12,113		11,996		(2,454		)	6,445		6,398		(105		)
Commercial and industrial	36,243		31,509		(10,988		)	46,387		27,915		(12,646		)
Residential mortgage	6,745		6,223		(258		)	5,870		5,358		(145		)
Consumer - home equity	30,847		29,861		(2,132		)	29,284		28,818		(2,427		)
Consumer - other	4,574		4,191		(492		)	4,956		4,446		(488		)
Total	$	210,519	$	175,312	$	(16,948	)	$	209,746	$	169,725	$	(16,342	)
Total commercial loans and leases	$	165,114	$	131,798	$	(14,066	)	$	164,209	$	125,706	$	(13,282	)
Total residential mortgage loans	8,201		7,679		(258		)	7,114		6,579		(145		)
Total consumer and other loans	37,204		35,835		(2,624		)	38,423		37,440		(2,915		)

	Three Months Ended March 31, 2019				Three Months Ended March 31, 2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(in thousands)
With no related allowance recorded:
Real estate - construction	$	11,142	$	169	$	10,470	$	144
Real estate - owner-occupied	27,865		301		36,277		334
Real estate - non-owner-occupied	11,566		69		10,557		98
Commercial and industrial	37,185		461		27,832		385
Residential mortgage	1,463		17		1,090		12
Consumer - home equity	1,204		10		32		—
With an allowance recorded:
Real estate - construction	136		—		153		1
Real estate - owner-occupied	5,433		8		17,608		112
Real estate - non-owner-occupied	12,042		79		3,302		10
Commercial and industrial	28,624		202		44,056		196
Residential mortgage	6,274		59		4,974		44
Consumer - home equity	30,345		292		28,203		292
Consumer - other	4,314		58		5,200		67
Total	$	177,593	$	1,725	$	189,754	$	1,695
Total commercial loans and leases	$	133,993	$	1,289	$	150,255	$	1,280
Total residential mortgage loans	7,737		76		6,064		56
Total consumer and other loans	35,863		360		33,435		359

As of March 31, 2019 and December 31, 2018, 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 TDR.