Allowance for Credit Losses and Credit Quality

9 Months Ended

Sep. 30, 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 nine months ended September 30 was 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	32,190			26,678
Transfer of balance to OREO and other	(2,696		)	(5,709		)
Charge-offs	(29,971		)	(34,740		)
Recoveries	6,141			9,830
Allowance for loan and lease losses at end of period	$	146,235		$	136,950
Reserve for unfunded commitments at beginning of period	$	14,830		$	13,208
Balance created in acquisition accounting	—			900
Provision for unfunded lending commitments	1,314			613
Reserve for unfunded commitments at end of period	$	16,144		$	14,721
Allowance for credit losses at end of period	$	162,379		$	151,671

A summary of changes in the allowance for credit losses, by loan portfolio type, for the nine months ended September 30 was 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 (Reversal of) loan and lease losses	9,205			15,819			(152		)	7,318			32,190
Transfer of balance to OREO and other	(309		)	236			(2,879		)	256			(2,696		)
Charge-offs	(2,179		)	(17,799		)	(219		)	(9,774		)	(29,971		)
Recoveries	474			3,163			169			2,335			6,141
Allowance for loan and lease losses at end of period	$	58,997		$	55,515		$	9,917		$	21,806		$	146,235
Reserve for unfunded commitments at beginning of period	$	4,869		$	6,198		$	866		$	2,897		$	14,830
Provision for (Reversal of) unfunded commitments	357			493			(216		)	680			1,314
Reserve for unfunded commitments at end of period	$	5,226		$	6,691		$	650		$	3,577		$	16,144
Allowance on loans individually evaluated for impairment	$	2,721		$	7,974		$	281		$	3,039		$	14,015
Allowance on loans collectively evaluated for impairment	50,809			45,990			5,393			18,630			120,822
Allowance on loans acquired with deteriorated credit quality	5,467			1,551			4,243			137			11,398
Loans and leases, net of unearned income:
Balance at end of period	$	9,809,756		$	6,490,125		$	4,649,745		$	2,726,911		$	23,676,537
Balance at end of period individually evaluated for impairment	73,715			51,350			42,423			37,907			205,395
Balance at end of period collectively evaluated for impairment	9,605,296			6,417,426			4,526,508			2,636,015			23,185,245
Balance at end of period acquired with deteriorated credit quality	130,745			21,349			80,814			52,989			285,897

	2018
(in thousands)	Commercial Real Estate			Commercial and Industrial			Residential Mortgage			Consumer and Other			Total
Allowance for loan and lease losses at beginning of period	$	54,201		$	53,916		$	9,117		$	23,657		$	140,891
Provision for (Reversal of) loan and lease losses	(4,020		)	20,372			2,318			8,008			26,678
Transfer of balance to OREO and other	(1,556		)	(814		)	(45		)	(3,294		)	(5,709		)
Charge-offs	(1,281		)	(22,447		)	(365		)	(10,647		)	(34,740		)
Recoveries	1,019			5,665			53			3,093			9,830
Allowance for loan and lease losses at end of period	$	48,363		$	56,692		$	11,078		$	20,817		$	136,950
Reserve for unfunded commitments at beginning of period	$	4,531		$	5,309		$	555		$	2,813		$	13,208
Balance created in acquisition accounting	129			81			—			690			900
Provision for (Reversal of) unfunded commitments	(134		)	169			246			332			613
Reserve for unfunded commitments at end of period	$	4,526		$	5,559		$	801		$	3,835		$	14,721
Allowance on loans individually evaluated for impairment	$	2,650		$	10,471		$	154		$	2,973		$	16,248
Allowance on loans collectively evaluated for impairment	40,519			44,727			5,063			17,661			107,970
Allowance on loans acquired with deteriorated credit quality	5,194			1,494			5,861			183			12,732
Loans and leases, net of unearned income:
Balance at end of period	$	9,381,883		$	5,581,040		$	4,300,163		$	3,080,820		$	22,343,906
Balance at end of period individually evaluated for impairment	73,469			75,625			6,230			33,863			189,187
Balance at end of period collectively evaluated for impairment	9,126,653			5,478,377			4,174,524			2,970,301			21,749,855
Balance at end of period acquired with deteriorated credit quality	181,761			27,038			119,409			76,656			404,864

Portfolio Segment Risk Factors

Commercial real estate loans include loans to commercial customers for medium-term financing of land and buildings or for land development or construction of a building. These loans are repaid from revenues through 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 and industrial 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 commercial 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 commercial 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 September 30, 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.

	September 30, 2019												December 31, 2018
(in thousands)	Pass		Special Mention		Sub- standard		Doubtful		Loss		Total		Pass		Special Mention		Sub- standard		Doubtful		Total
Real estate - construction	$	1,300,847	$	19,631	$	9,536	$	—	$	—	$	1,330,014	$	1,182,554	$	1,062	$	12,740	$	10	$	1,196,366
Real estate - owner-occupied	2,409,221		19,786		38,214		840		—		2,468,061		2,328,999		25,526		41,297		—		2,395,822
Real estate - non-owner-occupied	5,926,537		47,494		37,193		447		10		6,011,681		5,687,963		78,009		26,512		3,633		5,796,117
Commercial and industrial	6,340,738		71,431		63,303		14,653		—		6,490,125		5,586,482		52,632		73,853		24,050		5,737,017
Total	$	15,977,343	$	158,342	$	148,246	$	15,940	$	10	$	16,299,881	$	14,785,998	$	157,229	$	154,402	$	27,693	$	15,125,322

	September 30, 2019						December 31, 2018
(in thousands)	Current		30+ Days Past Due		Total		Current		30+ Days Past Due		Total
Residential mortgage	$	4,567,633	$	82,112	$	4,649,745	$	4,290,152	$	69,004	$	4,359,156
Consumer - home equity	2,011,913		41,675		2,053,588		2,258,659		46,035		2,304,694
Consumer - other	665,702		7,621		673,323		721,231		9,412		730,643
Total	$	7,245,248	$	131,408	$	7,376,656	$	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.

	September 30, 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	$	9,540	$	8,531	$	—		$	10,261	$	9,262	$	—
Real estate - owner-occupied	33,985		33,590		—			25,037		19,044		—
Real estate - non-owner-occupied	23,964		22,652		—			15,265		14,288		—
Commercial and industrial	21,813		17,771		—			55,554		43,886		—
Residential mortgage	36,182		35,089		—			1,244		1,221		—
Consumer - home equity	4,736		4,734		—			4,183		4,176		—
With an allowance recorded:
Real estate - construction	98		85		(1		)	228		140		(11		)
Real estate - owner-occupied	5,135		4,921		(2,529		)	5,032		4,773		(520		)
Real estate - non-owner-occupied	4,149		3,936		(191		)	6,445		6,398		(105		)
Commercial and industrial	45,409		33,579		(7,974		)	46,387		27,915		(12,646		)
Residential mortgage	8,010		7,334		(281		)	5,870		5,358		(145		)
Consumer - home equity	29,773		29,124		(2,577		)	29,284		28,818		(2,427		)
Consumer - other	4,308		4,049		(462		)	4,956		4,446		(488		)
Total	$	227,102	$	205,395	$	(14,015	)	$	209,746	$	169,725	$	(16,342	)
Total commercial loans and leases	$	144,093	$	125,065	$	(10,695	)	$	164,209	$	125,706	$	(13,282	)
Total residential mortgage loans	44,192		42,423		(281		)	7,114		6,579		(145		)
Total consumer and other loans	38,817		37,907		(3,039		)	38,423		37,440		(2,915		)

	Three Months Ended September 30, 2019				Three Months Ended September 30, 2018				Nine Months Ended September 30, 2019				Nine Months Ended September 30, 2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(in thousands)
With no related allowance recorded:
Real estate - construction	$	7,333	$	82	$	10,806	$	164	$	7,145	$	242	$	10,371	$	460
Real estate - owner-occupied	33,895		355		34,118		209		34,437		1,235		34,505		903
Real estate - non-owner-occupied	22,794		72		22,091		249		22,910		301		22,988		746
Commercial and industrial	20,594		108		43,409		523		20,727		401		40,564		1,543
Residential mortgage	35,896		136		1,254		9		31,315		391		1,271		36
Consumer - home equity	4,736		47		705		2		4,613		137		708		16
With an allowance recorded:
Real estate - construction	87		—		148		—		93		—		151		1
Real estate - owner-occupied	4,952		10		4,006		83		5,050		113		4,044		102
Real estate - non-owner-occupied	4,155		46		2,398		20		4,090		137		2,442		76
Commercial and industrial	36,824		173		40,357		150		36,765		582		47,098		720
Residential mortgage	7,414		74		5,014		50		7,502		232		5,066		149
Consumer - home equity	29,200		298		28,577		305		28,982		890		27,905		892
Consumer - other	4,175		59		4,710		65		4,326		184		4,884		208
Total	$	212,055	$	1,460	$	197,593	$	1,829	$	207,955	$	4,845	$	201,997	$	5,852
Total commercial loans and leases	$	130,634	$	846	$	157,333	$	1,398	$	131,217	$	3,011	$	162,163	$	4,551
Total residential mortgage loans	43,310		210		6,268		59		38,817		623		6,337		185
Total consumer and other loans	38,111		404		33,992		372		37,921		1,211		33,497		1,116

As of September 30, 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.