10-Q
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________
FORM 10-Q
____________________________________________________
x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2015
or
 
¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-16715
____________________________________________________
First Citizens BancShares, Inc.
(Exact name of Registrant as specified in its charter)
____________________________________________________
Delaware
56-1528994
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
 
 
4300 Six Forks Road, Raleigh, North Carolina
27609
(Address of principle executive offices)
(Zip code)
(919) 716-7000
(Registrant’s telephone number, including area code)
____________________________________________________
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days.    Yes  x   No  ¨
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the Registrant was required to submit and post such files)    Yes  x    No  ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of ‘accelerated filer’ and ‘large accelerated filer’ in Rule 12b-2 of the Exchange Act:
 
Large accelerated filer
x
 
Accelerated filer
¨
Non-accelerated filer
¨
 
Smaller reporting company
¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
Class A Common Stock—$1 Par Value—11,005,220 shares
Class B Common Stock—$1 Par Value—1,005,185 shares
(Number of shares outstanding, by class, as of November 3, 2015)

Table of Contents

INDEX
 
 
 
Page No.
 
 
 
PART I.
FINANCIAL INFORMATION
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II.
OTHER INFORMATION
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 6.

2
Table of Contents

PART I
 
Item 1.
Financial Statements


First Citizens BancShares, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, unaudited)
September 30, 2015
 
December 31, 2014
Assets
 
 
 
Cash and due from banks
$
546,444

 
$
604,182

Overnight investments
2,368,132

 
1,724,919

Investment securities available for sale
6,690,578

 
7,171,917

Investment securities held to maturity
301

 
518

Loans held for sale
71,874

 
63,696

Loans and leases
19,855,806

 
18,769,465

Less allowance for loan and lease losses
(205,463
)
 
(204,466
)
Net loans and leases
19,650,343

 
18,564,999

Premises and equipment
1,123,828

 
1,125,081

Other real estate owned:
 
 
 
Covered under loss share agreements
8,152

 
22,982

Not covered under loss share agreements
61,707

 
70,454

Income earned not collected
67,368

 
57,254

FDIC loss share receivable
9,276

 
28,701

Goodwill
139,773

 
139,773

Other intangible assets
95,535

 
106,610

Other assets
616,513

 
394,027

Total assets
$
31,449,824

 
$
30,075,113

Liabilities
 
 
 
Deposits:
 
 
 
Noninterest-bearing
$
9,171,529

 
$
8,086,784

Interest-bearing
17,547,846

 
17,591,793

Total deposits
26,719,375

 
25,678,577

Short-term borrowings
759,757

 
987,184

Long-term obligations
705,418

 
351,320

FDIC loss share payable
124,038

 
116,535

Other liabilities
278,708

 
253,903

Total liabilities
28,587,296

 
27,387,519

Shareholders’ equity
 
 
 
Common stock:
 
 
 
Class A - $1 par value (16,000,000 shares authorized; 11,005,220 shares issued and outstanding at September 30, 2015 and December 31, 2014)
11,005

 
11,005

Class B - $1 par value (2,000,000 shares authorized; 1,005,185 shares issued and outstanding at September 30, 2015 and December 31, 2014)
1,005

 
1,005

Surplus
658,918

 
658,918

Retained earnings
2,226,476

 
2,069,647

Accumulated other comprehensive loss
(34,876
)
 
(52,981
)
Total shareholders’ equity
2,862,528

 
2,687,594

Total liabilities and shareholders’ equity
$
31,449,824

 
$
30,075,113


See accompanying Notes to Consolidated Financial Statements.

3
Table of Contents

First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Income
 
 
Three months ended September 30
 
Nine months ended September 30
(Dollars in thousands, except per share data, unaudited)
2015
 
2014
 
2015
 
2014
Interest income
 
 
 
 
 
 
 
Loans and leases
$
224,631

 
$
164,259

 
$
658,175

 
$
489,401

Investment securities and dividend income
24,020

 
12,707

 
65,136

 
36,902

Overnight investments
1,174

 
655

 
4,037

 
2,023

Total interest income
249,825

 
177,621

 
727,348

 
528,326

Interest expense
 
 
 
 
 
 
 
Deposits
5,216

 
5,703

 
16,379

 
18,534

Short-term borrowings
590

 
2,694

 
4,182

 
4,830

Long-term obligations
4,648

 
3,002

 
12,601

 
12,111

Total interest expense
10,454

 
11,399

 
33,162

 
35,475

Net interest income
239,371

 
166,222

 
694,186

 
492,851

Provision (credit) for loan and lease losses
107

 
1,537

 
13,618

 
(7,665
)
Net interest income after provision (credit) for loan and lease losses
239,264

 
164,685

 
680,568

 
500,516

Noninterest income
 
 
 
 
 
 
 
Gain on acquisition
—

 
—

 
42,930

 
—

Cardholder services
19,588

 
13,248

 
57,203

 
38,337

Merchant services
22,005

 
15,556

 
62,955

 
44,112

Service charges on deposit accounts
23,153

 
15,489

 
67,572

 
45,194

Wealth management services
22,223

 
15,657

 
64,658

 
46,352

Fees from processing services
45

 
7,303

 
140

 
17,846

Securities gains
5,564

 
—

 
10,837

 
—

Other service charges and fees
6,163

 
4,001

 
17,303

 
12,195

Mortgage income
4,852

 
1,164

 
14,972

 
3,329

Insurance commissions
2,945

 
2,422

 
8,698

 
7,962

ATM income
1,800

 
1,199

 
5,289

 
3,661

Adjustments to FDIC loss share receivable
(4,130
)
 
(4,386
)
 
(9,730
)
 
(32,030
)
Other(1)
5,542

 
6,946

 
25,126

 
20,544

Total noninterest income
109,750

 
78,599

 
367,953

 
207,502

Noninterest expense
 
 
 
 
 
 
 
Salaries and wages
108,992

 
81,825

 
324,358

 
243,017

Employee benefits
27,121

 
19,797

 
86,341

 
59,638

Occupancy expense
22,260

 
20,265

 
73,412

 
60,975

Equipment expense
22,447

 
18,767

 
69,284

 
57,121

FDIC insurance expense
4,933

 
2,915

 
13,755

 
8,191

Foreclosure-related expenses
1,087

 
4,838

 
4,663

 
13,787

Merger-related expenses
3,679

 
1,505

 
11,249

 
7,352

Other
69,653

 
51,898

 
199,967

 
141,779

Total noninterest expense
260,172

 
201,810

 
783,029

 
591,860

Income before income taxes
88,842

 
41,474

 
265,492

 
116,158

Income taxes(1)
32,884

 
14,973

 
97,854

 
40,492

Net income(1)
$
55,958

 
$
26,501

 
$
167,638

 
$
75,666

Average shares outstanding
12,010,405

 
9,618,941

 
12,010,405

 
9,618,941

Net income per share(1)
$
4.66

 
$
2.76

 
$
13.96

 
$
7.87

(1) Amounts for the 2014 period have been updated to reflect the fourth quarter 2014 adoption of Accounting Standard Update (ASU) 2014-01 related to investments in qualified affordable housing projects.

See accompanying Notes to Consolidated Financial Statements.

4
Table of Contents

First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income


 
Three months ended September 30
 
Nine months ended September 30
(Dollars in thousands, unaudited)
2015
 
2014
 
2015
 
2014
Net income(1)
$
55,958

 
$
26,501

 
$
167,638

 
$
75,666

Other comprehensive income (loss):
 
 
 
 
 
 
 
Unrealized gains (losses) on securities:
 
 
 
 
 
 
 
Change in unrealized securities gains (losses) arising during period
28,231

 
(11,444
)
 
29,420

 
32,006

Tax effect
(10,737
)
 
4,444

 
(11,198
)
 
(12,425
)
Reclassification adjustment for net gains realized and included in income before income taxes
(5,564
)
 
—

 
(10,837
)
 
—

Tax effect
2,094

 
—

 
4,145

 
—

Total change in unrealized gains (losses) on securities, net of tax
14,024

 
(7,000
)
 
11,530

 
19,581

Change in fair value of cash flow hedges:
 
 
 
 
 
 
 
Change in unrecognized loss on cash flow hedges
721

 
949

 
2,006

 
2,236

Tax effect
(300
)
 
(367
)
 
(796
)
 
(863
)
Total change in unrecognized loss on cash flow hedges, net of tax
421

 
582

 
1,210

 
1,373

Change in pension obligation:
 
 
 
 
 
 
 
Amortization of actuarial losses and prior service cost
2,916

 
822

 
8,689

 
4,019

Tax effect
(1,078
)
 
(319
)
 
(3,324
)
 
(1,563
)
Total change in pension obligation, net of tax
1,838

 
503

 
5,365

 
2,456

Other comprehensive income (loss)
16,283

 
(5,915
)
 
18,105

 
23,410

Total comprehensive income(1)
$
72,241

 
$
20,586

 
$
185,743

 
$
99,076

(1) Amounts for 2014 period have been updated to reflect the fourth quarter 2014 adoption of ASU 2014-01 related to investments in qualified affordable housing projects.

See accompanying Notes to Consolidated Financial Statements.


5
Table of Contents

First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity

 
(Dollars in thousands, unaudited)
Class A
Common Stock
 
Class B
Common Stock
 
Surplus
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
(Loss) Income
 
Total
Shareholders’
Equity
Balance at December 31, 2013
$
8,586

 
$
1,033

 
$
143,766

 
$
1,943,345

 
$
(25,268
)
 
$
2,071,462

Net income(1)
—

 
—

 
—

 
75,666

 
—

 
75,666

Other comprehensive income, net of tax
—

 
—

 
—

 
—

 
23,410

 
23,410

Cash dividends ($0.90 per share)
—

 
—

 
—

 
(8,657
)
 
—

 
(8,657
)
Balance at September 30, 2014
$
8,586

 
$
1,033

 
$
143,766

 
$
2,010,354

 
$
(1,858
)
 
$
2,161,881

 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2014
$
11,005

 
$
1,005

 
$
658,918

 
$
2,069,647

 
$
(52,981
)
 
$
2,687,594

Net income
—

 
—

 
—

 
167,638

 
—

 
167,638

Other comprehensive income, net of tax
—

 
—

 
—

 
—

 
18,105

 
18,105

Cash dividends ($0.90 per share)
—

 
—

 
—

 
(10,809
)
 
—

 
(10,809
)
Balance at September 30, 2015
$
11,005

 
$
1,005

 
$
658,918

 
$
2,226,476

 
$
(34,876
)
 
$
2,862,528

(1) Amount for the 2014 period has been updated to reflect the fourth quarter 2014 adoption of ASU 2014-01 related to investments in qualified affordable housing projects.
See accompanying Notes to Consolidated Financial Statements.

6
Table of Contents


First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Cash Flows 
 
Nine months ended September 30
(Dollars in thousands, unaudited)
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income(1)
$
167,638

 
$
75,666

Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
Provision (credit) for loan and lease losses
13,618

 
(7,665
)
Deferred tax benefit(1)
(3,941
)
 
(24,374
)
Net change in current taxes
(26,195
)
 
(24,716
)
Depreciation
65,559

 
53,249

Net change in accrued interest payable
(2,244
)
 
(1,434
)
Net increase in income earned not collected
(10,114
)
 
(121
)
Gain on acquisition
(42,930
)
 
—

Securities gains
(10,837
)
 
—

Origination of loans held for sale
(542,836
)
 
(198,134
)
Proceeds from sale of loans
540,737

 
206,310

Gain on sale of loans
(6,079
)
 
(3,334
)
Net writedowns/losses on other real estate
4,355

 
9,770

Net amortization of premiums and discounts(1)
(70,150
)
 
(33,917
)
Amortization of intangible assets
11,765

 
1,737

Reduction in FDIC receivable for loss share agreements
35,395

 
16,708

Increase in FDIC payable for loss share agreements
7,503

 
7,546

Net change in other assets(1)
29,225

 
(37,077
)
Net change in other liabilities
37,077

 
27,327

Net cash provided by operating activities
197,546

 
67,541

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Net increase in loans outstanding
(928,132
)
 
(329,925
)
Purchases of investment securities available for sale
(1,887,604
)
 
(1,999,666
)
Proceeds from maturities/calls of investment securities held to maturity
217

 
300

Proceeds from maturities/calls of investment securities available for sale
1,139,053

 
1,993,051

Proceeds from sales of investment securities available for sale
1,036,254

 
—

Net change in overnight investments
(643,213
)
 
151,972

Proceeds from sales of loans
45,862

 
—

Cash paid to the FDIC for loss share agreements
(24,805
)
 
(5,479
)
Proceeds from sales of other real estate
63,446

 
55,478

Additions to premises and equipment
(55,575
)
 
(65,763
)
Business acquisition, net cash acquired
123,137

 
18,194

Net cash used by investing activities
(1,131,360
)
 
(181,838
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Net decrease in time deposits
(405,160
)
 
(301,849
)
Net increase in demand and other interest-bearing deposits
1,179,606

 
202,853

Net change in short-term borrowings
(232,928
)
 
91,345

Repayment of long-term obligations
(4,633
)
 
(2,001
)
Origination of long-term obligations
350,000

 
—

Cash dividends paid
(10,809
)
 
(8,657
)
Net cash provided (used) by financing activities
876,076

 
(18,309
)
Change in cash and due from banks
(57,738
)
 
(132,606
)
Cash and due from banks at beginning of period
604,182

 
533,599

Cash and due from banks at end of period
$
546,444

 
$
400,993

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
 
 
 
Transfers of loans to other real estate
$
44,065

 
$
42,136

Dividends declared but not paid
3,603

 
2,886

Unsettled sales of investment securities
236,617

 
—

(1) Amounts for the 2014 period have been updated to reflect the fourth quarter 2014 adoption of ASU 2014-01 related to investments in qualified affordable housing projects.
See accompanying Notes to Consolidated Financial Statements.

7
Table of Contents

First Citizens BancShares, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements


NOTE A - ACCOUNTING POLICIES AND BASIS OF PRESENTATION

First Citizens BancShares, Inc. (BancShares) is a financial holding company organized under the laws of Delaware and conducts operations through its banking subsidiary, First-Citizens Bank & Trust Company (FCB), which is headquartered in Raleigh, North Carolina.

General
These consolidated financial statements and notes thereto are presented in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flow activity required in accordance with accounting principles generally accepted in the United States of America (GAAP). In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the consolidated financial position and consolidated results of operations have been made. The unaudited interim consolidated financial statements included in this Form 10-Q should be read in conjunction with the consolidated financial statements and footnotes included in BancShares' Annual Report on Form 10-K for the year ended December 31, 2014.

Reclassifications
Prior period financial statements reflect the retrospective application of Accounting Standards Update (ASU) 2014-01, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments Qualified Affordable Housing Projects which was adopted effective in the fourth quarter of 2014 and did not have a material impact on our consolidated financial condition or results of operations.

In certain instances other than the retrospective adoption of ASU 2014-01, amounts reported in prior years' consolidated financial statements have been reclassified to conform to the current financial statement presentation. Such reclassifications had no effect on previously reported shareholders' equity or net income.

Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and different assumptions in the application of these policies could result in material changes in BancShares' consolidated financial position, the consolidated results of its operations or related disclosures. Material estimates that are particularly susceptible to significant change include:
•
Allowance for loan and lease losses
•
Fair value of financial instruments, including acquired assets and assumed liabilities
•
Pension plan assumptions
•
Cash flow estimates on purchased credit-impaired loans
•
Receivable from and payable to the FDIC for loss share agreements
•
Income tax assets, liabilities and expense
Recently Adopted Accounting Pronouncements
Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2015-10, Technical Corrections and Improvements
The amendments in this ASU represent changes to clarify the Codification, correct unintended application of guidance and make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Additionally, some of the amendments will make the Codification easier to understand and easier to apply by eliminating inconsistencies, providing needed clarifications, and improving the presentation of guidance in the Codification.
The transition guidance varies based on the amendments in this ASU. The amendments in this ASU that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December

8
Table of Contents

15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments were effective upon issuance. We adopted the amendments effective second quarter of 2015. The adoption did not have an impact on our consolidated financial position or consolidated results of operations.
FASB ASU 2015-08, Business Combinations (Topic 805): Pushdown Accounting - Amendments to Securities and Exchange Commission (SEC) Paragraphs Pursuant to Staff Accounting Bulletin No. 115
The amendments in this ASU remove references to SEC Staff Accounting Bulletin (SAB) Topic 5.J as the SEC staff previously rescinded its guidance with the issuance of SAB No. 115 when the FASB issued its own pushdown accounting guidance in ASU 2014-17, an amendment we adopted effective fourth quarter of 2014. We adopted the amendments in ASU 2015-08 effective second quarter of 2015. The adoption did not have an impact on our consolidated financial position or consolidated results of operations.
FASB ASU 2014-14, Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure
This ASU requires a reporting entity to derecognize a mortgage loan and recognize a separate other receivable upon foreclosure if the following conditions are met: the loan has a government guarantee that is not separable from the loan before foreclosure; at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim and at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance expected to be recovered from the guarantor.
The amendments in this ASU were effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. We adopted this guidance effective first quarter of 2015. The initial adoption did not have any effect on our consolidated financial position or consolidated results of operations.
FASB ASU 2014-11, Transfers and Servicing (Topic 860)
This ASU aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which has resulted in outcomes referred to as off-balance-sheet accounting. The ASU requires a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. The ASU also requires expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings.
The accounting changes in this ASU were effective for fiscal years beginning after December 15, 2014. In addition, the disclosures for certain transactions accounted for as a sale were effective for the fiscal period beginning after December 15, 2014, while the disclosures for transactions accounted for as secured borrowings were required to be presented for fiscal periods beginning after December 15, 2014, and interim periods beginning after March 15, 2015. We adopted the guidance effective first quarter of 2015. The initial adoption did not have any effect on our consolidated financial position or consolidated results of operations. The new disclosures required by this ASU are included in Note I.
FASB ASU 2014-04, Receivables-Troubled Debt Restructurings by Creditors (Subtopic 310-40)
This ASU clarifies that an in-substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.
The amendments in this ASU were effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. We adopted the guidance effective first quarter of 2015. The initial adoption did not have any effect on our consolidated financial position or consolidated results of operations. The new disclosures required by this ASU are included in Note F.

9
Table of Contents

FASB ASU 2014-01, Investments - Equity Method and Joint Ventures (Topic 323) - Accounting for Investments in Qualified Affordable Housing Projects
This ASU permits an accounting policy election to account for investments in qualified affordable housing projects (LIHTC) using the proportional amortization method if certain conditions are met. Under the proportional amortization method, the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received and recognize the net investment performance in the income statement as a component of income tax expense (benefit).
For those investments in qualified affordable housing projects not accounted for using the proportional amortization method, the investment should be accounted for as an equity method investment or a cost method investment in accordance with Accounting Standards Codification (ASC) 970-323.
The decision to apply the proportional amortization method of accounting will be applied consistently to all qualifying affordable housing project investments rather than a decision to be applied to individual investments.
BancShares early adopted the guidance effective in the fourth quarter of 2014. Previously, LIHTC investments were accounted for under the cost or equity method, and the amortization was recorded as a reduction to other noninterest income, with the tax credits and other benefits received recorded as a component of the provision for income taxes. BancShares believes the proportional amortization method better represents the economics of LIHTC investments and provides users with a better understanding of the returns from such investments than the cost or equity method. LIHTC investments were $74.5 million and $57.1 million at September 30, 2015 and December 31, 2014, respectively, and are included in "other assets" on the Consolidated Balance Sheets.
The cumulative effect of the retrospective application of the change in amortization method was a $2.4 million decrease to both "other assets" and "retained earnings" on the Consolidated Balance Sheets as of January 1, 2012. Under the new amortization method of accounting, amortization expense is recognized in income tax expense in the Consolidated Statements of Income and is offset by the tax effect of tax losses and tax credits received from the investments. This change resulted in a reclassification of expense previously recorded as a reduction in other noninterest income to income tax expense along with additional amortization recognized under the new method of accounting in the Consolidated Statements of Income. An additional change resulting from the new amortization method of accounting was that a deferred tax asset or liability no longer exists as a result of these investments, thus in the retrospective application of the new method, the removal of the deferred tax asset previously reported as well as the additional amortization of the investments, both recorded in other assets, reflected in the Consolidated Balance Sheets were removed. We do not believe the impact of this change in accounting principle is material.
Recently Issued Accounting Pronouncements
FASB ASU 2015-03, Interest–Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs
This ASU simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update.
This ASU is effective for interim and annual periods beginning after December 15, 2015 for public business entities, and is to be applied retrospectively. Early adoption is permitted. We will adopt the guidance effective in the first quarter of 2016 and do not anticipate any impact on our consolidated financial position or consolidated results of operations as a result of adoption.
FASB ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis
This ASU improves targeted areas of consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the new standard places more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity ("VIE"), and changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs.
The amendments in this ASU are effective for periods beginning after December 15, 2015 for public business entities. Early adoption is permitted. We will adopt the guidance effective in the first quarter of 2016 and do not anticipate any significant impact on our consolidated financial position or consolidated results of operations as a result of adoption.
FASB ASU 2014-09, Revenue from Contracts with Customers (Topic 606)
In May 2014, the FASB issued a standard on the recognition of revenue from contracts with customers with the core principle being for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also results

10
Table of Contents

in enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively and improves guidance for multiple-element arrangements.
Per ASU 2015-14, Deferral of the Effective Date, this guidance was deferred and is effective for fiscal periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted for fiscal periods beginning after December 15, 2016. We are currently evaluating the impact of the new standard and we will adopt during the first quarter of 2018 using one of two retrospective application methods.
NOTE B - BUSINESS COMBINATIONS
Capitol City Bank & Trust Company
On February 13, 2015, FCB entered into an agreement with the Federal Deposit Insurance Corporation (FDIC), as Receiver, to purchase certain assets and assume certain liabilities of Capitol City Bank & Trust (CCBT). The acquisition expanded FCB's presence in Georgia as CCBT operated eight branch locations in Atlanta, Stone Mountain, Albany, Augusta and Savannah, Georgia. In June of 2015, FCB closed one of the branches in Atlanta.

The CCBT transaction was accounted for under the acquisition method of accounting and, accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values on the acquisition date. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding closing date fair values becomes available.

The fair value of the assets acquired recorded was $211.9 million, including $154.5 million in loans and $690 thousand of identifiable intangible assets. Liabilities assumed were $272.5 million of which $266.4 million were deposits. During the second quarter of 2015, adjustments were made to the acquisition fair values primarily based upon updated collateral valuations resulting in an increase of $5.4 million to the gain on acquisition. These adjustments were applied retroactively to the first quarter of 2015 and brought the total gain on the transaction to $42.9 million which is included in noninterest income in the Consolidated Statements of Income. The total after-tax impact of the gain was $26.4 million.

The following table provides the identifiable assets acquired and liabilities assumed at their estimated fair values as of the acquisition date.
(Dollars in thousands)
 
As recorded by FCB
Assets
 
 
Cash and cash equivalents
 
$
19,622

Investment securities
 
35,413

Loans
 
154,496

Intangible assets
 
690

Other assets
 
1,714

Total assets acquired
 
211,935

Liabilities
 
 
Deposits
 
266,352

Short-term borrowings
 
5,501

Other liabilities
 
667

Total liabilities assumed
 
272,520

Fair value of net liabilities assumed
 
(60,585
)
Cash received from FDIC
 
103,515

Gain on acquisition of CCBT
 
$
42,930

Merger-related expenses of $525 thousand and $1.8 million were recorded in the Consolidated Statements of Income for the three and nine months ended September 30, 2015, respectively. Loan-related interest income generated from CCBT was approximately $2.3 million for the third quarter of 2015 and $6.0 million since the acquisition date.
All loans resulting from the CCBT transaction were recorded at the acquisition date with a discount attributable, at least in part, to credit quality, and are therefore accounted for as purchased credit-impaired (PCI) loans under ASC 310-30.
First Citizens Bancorporation, Inc. and First Citizens Bank and Trust Company, Inc.
On October 1, 2014, BancShares completed the merger of First Citizens Bancorporation, Inc. (Bancorporation) with and into BancShares pursuant to an Agreement and Plan of Merger dated June 10, 2014, as amended on July 29, 2014. First Citizens Bank and Trust Company, Inc. merged with and into FCB on January 1, 2015.

11
Table of Contents

Under the terms of the Merger Agreement, each share of Bancorporation common stock was converted into the right to receive 4.00 shares of BancShares' Class A common stock and $50.00 cash, unless the holder elected for each share to be converted into the right to receive 3.58 shares of BancShares' Class A common stock and 0.42 shares of BancShares' Class B common stock. BancShares issued 2,586,762 Class A common shares at a fair value of $560.4 million and 18,202 Class B common shares at a fair value of $3.9 million to Bancorporation shareholders. Also, cash paid to Bancorporation shareholders was $30.4 million. At the time of the merger, Bancorporation owned 32,042 shares of common stock in Bancorporation with an approximate fair value of $29.6 million. The fair value of common stock owned by BancShares in Bancorporation was considered part of the purchase price, and the shares ceased to exist after completion of the merger.
The Bancorporation transaction was accounted for under the acquisition method of accounting and, accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values on the acquisition date. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition. Assets acquired, excluding goodwill, totaled $8.28 billion, including $4.49 billion in loans and leases, $2.01 billion of investment securities available for sale, $1.28 billion in cash and overnight investments, and $109.4 million of identifiable intangible assets. Liabilities assumed were $7.66 billion, including $7.17 billion of deposits. Goodwill of $4.2 million was recorded equaling the excess purchase price over the estimated fair value of the net assets acquired on the acquisition date.
The following unaudited pro forma financial information reflects the consolidated results of operations of BancShares. These results combine the historical results of Bancorporation in the BancShares' Consolidated Statements of Income and, while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place at the beginning of the period presented. The unaudited pro forma information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future results of operations of BancShares.
 
Three months ended September 30
 
Nine months ended September 30
(Dollars in thousands)
2014
 
2014
Total revenue (interest income plus noninterest income)
$
341,927

 
$
995,704

Net loss
$
(127,768
)
 
$
(50,279
)
The merger transaction between BancShares and Bancorporation constituted a triggering event for which Bancorporation undertook a goodwill impairment assessment. Based on the analysis performed, Bancorporation determined that its fair value did not support the goodwill recorded; therefore, Bancorporation recorded a $166.8 million goodwill impairment charge to write-off a portion of goodwill prior to the October 1, 2014 effective date of the merger. This goodwill impairment is included in the pro forma financial results for the quarter and nine months ended September 30, 2014.

12
Table of Contents

NOTE C - INVESTMENTS
The amortized cost and fair value of investment securities classified as available for sale and held to maturity at September 30, 2015 and December 31, 2014, are as follows:
 
September 30, 2015
(Dollars in thousands)
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Investment securities available for sale
 
 
 
 
 
 
 
U.S. Treasury
$
1,685,794

 
$
5,708

 
$
—

 
$
1,691,502

Government agency
633,162

 
1,742

 
—

 
634,904

Mortgage-backed securities
4,343,105

 
26,375

 
6,919

 
4,362,561

Equity securities
1,591

 
20

 
—

 
1,611

Total investment securities available for sale
$
6,663,652

 
$
33,845

 
$
6,919

 
$
6,690,578

 
 
 
 
 
 
 
 
 
December 31, 2014
 
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
U.S. Treasury
$
2,626,900

 
$
2,922

 
$
152

 
$
2,629,670

Government agency
908,362

 
702

 
247

 
908,817

Mortgage-backed securities
3,628,187

 
16,964

 
11,847

 
3,633,304

Municipal securities
125

 
1

 
—

 
126

Total investment securities available for sale
$
7,163,574

 
$
20,589

 
$
12,246

 
$
7,171,917

 
 
 
 
 
 
 
 
 
September 30, 2015
 
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Investment securities held to maturity
 
 
 
 
 
 
 
Mortgage-backed securities
$
301

 
$
13

 
$
—

 
$
314

 
 
 
 
 
 
 
 
 
December 31, 2014
 
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Mortgage-backed securities
$
518

 
$
26

 
$
—

 
$
544


Investments in mortgage-backed securities primarily represent securities issued by the Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation.The following table provides the amortized cost and fair value by contractual maturity. Expected maturities will differ from contractual maturities on certain securities because borrowers and issuers may have the right to call or prepay obligations with or without prepayment penalties. Repayments of mortgage-backed securities are dependent on the repayments of the underlying loan balances.
 
September 30, 2015
 
December 31, 2014
(Dollars in thousands)
Cost
 
Fair
value
 
Cost
 
Fair
value
Investment securities available for sale
 
 
 
 
 
 
 
Non-amortizing securities maturing in:
 
 
 
 
 
 
 
One year or less
$
673,879

 
$
675,164

 
$
447,866

 
$
447,992

One through five years
1,645,077

 
1,651,242

 
3,087,521

 
3,090,621

Mortgage-backed securities
4,343,105

 
4,362,561

 
3,628,187

 
3,633,304

Equity securities
1,591

 
1,611

 
—

 
—

Total investment securities available for sale
$
6,663,652

 
$
6,690,578

 
$
7,163,574

 
$
7,171,917

Investment securities held to maturity
 
 
 
 
 
 
 
Mortgage-backed securities held to maturity
$
301

 
$
314

 
$
518

 
$
544


13
Table of Contents

For each period presented, securities gains (losses) included the following:
 
Three months ended September 30
 
Nine months ended September 30
(Dollars in thousands)
2015
 
2014
 
2015
 
2014
Gross gains on sales of investment securities available for sale
$
5,564

 
$
—

 
$
10,850

 
$
—

Gross losses on sales of investment securities available for sale
—

 
—

 
(13
)
 
—

Total net securities gain
$
5,564

 
$
—

 
$
10,837

 
$
—


The following table provides information regarding securities with unrealized losses as of September 30, 2015 and December 31, 2014.
 
September 30, 2015
 
Less than 12 months
 
12 months or more
 
Total
(Dollars in thousands)
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
Investment securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
$
911,980

 
$
3,024

 
$
300,157

 
$
3,895

 
$
1,212,137

 
$
6,919

Total
$
911,980

 
$
3,024

 
$
300,157

 
$
3,895

 
$
1,212,137

 
$
6,919

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
Less than 12 months
 
12 months or more
 
Total
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
Investment securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
$
338,612

 
$
151

 
$
1,015

 
$
1

 
$
339,627

 
$
152

Government agency
261,288

 
247

 
—

 
—

 
261,288

 
247

Mortgage-backed securities
573,374

 
1,805

 
831,405

 
10,042

 
1,404,779

 
11,847

Total
$
1,173,274

 
$
2,203

 
$
832,420

 
$
10,043

 
$
2,005,694

 
$
12,246

Investment securities with an aggregate fair value of $300.2 million and $832.4 million had continuous unrealized losses for more than 12 months as of September 30, 2015 and December 31, 2014, respectively, with an aggregate unrealized loss of $3.9 million and $10.0 million, respectively. As of September 30, 2015, all 40 of these investments are government sponsored enterprise-issued mortgage-backed securities. None of the unrealized losses identified as of September 30, 2015 or December 31, 2014 relate to the marketability of the securities or the issuer’s ability to honor redemption obligations. Rather, the unrealized losses relate to changes in interest rates relative to when the investment securities were purchased. For all periods presented, BancShares had the ability and intent to retain these securities for a period of time sufficient to recover all unrealized losses. Therefore, none of the securities were deemed to be other than temporarily impaired.
Investment securities having an aggregate carrying value of $4.75 billion at September 30, 2015 and $4.37 billion at December 31, 2014 were pledged as collateral to secure public funds on deposit and certain short-term borrowings, and for other purposes as required by law.


14
Table of Contents

NOTE D - LOANS AND LEASES
BancShares' accounting methods for loans and leases differ depending on whether they are purchased credit-impaired (PCI) or non-PCI. Non-PCI loans and leases include originated commercial, originated noncommercial, purchased revolving, and purchased non-impaired loans. For purchased non-impaired loans to be included as non-PCI, it must be determined that the loans do not have a discount due, at least in part, to credit quality at the time of acquisition. Conversely, loans for which it is probable at acquisition that all required payments will not be collected in accordance with contractual terms are considered PCI loans. PCI loans are evaluated at acquisition and where a discount is required at least in part due to credit quality, the nonrevolving loans are accounted for under the guidance in ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. PCI loans and leases are recorded at fair value at the date of acquisition. No allowance for loan and lease losses is recorded on the acquisition date as the fair value of the acquired assets incorporates assumptions regarding credit risk. An allowance is recorded if there is additional credit deterioration after the acquisition date.
BancShares reports PCI and non-PCI loan portfolios separately, and each portfolio is further divided into commercial and non-commercial based on the type of borrower, purpose, collateral, and/or our underlying credit management processes. Additionally, loans are assigned to loan classes, which further disaggregate loans based upon common risk characteristics.
Commercial – Commercial loans include construction and land development, mortgage, other commercial real estate, commercial and industrial, lease financing and other.

Construction and land development – Construction and land development consists of loans to finance land for development, investment, and use in a commercial business enterprise; multifamily apartments; and other commercial buildings that may be owner-occupied or income generating investments for the owner.
Commercial mortgage – Commercial mortgage consists of loans to purchase or refinance owner-occupied nonresidential and investment properties. Investment properties include office buildings and other facilities that are rented or leased to unrelated parties.
Other commercial real estate – Other commercial real estate consists of loans secured by farmland (including residential farms and other improvements) and multifamily (5 or more) residential properties.
Commercial and industrial – Commercial and industrial consists of loans or lines of credit to finance corporate credit cards, accounts receivable, inventory and other general business purposes.
Lease financing – Lease financing consists solely of lease financing agreements for business equipment, vehicles and other assets.
Other – Other consists of all other commercial loans not classified in one of the preceding classes. These typically include loans to non-profit organizations such as churches, hospitals, educational and charitable organizations.

Noncommercial – Noncommercial consist of residential and revolving mortgage, construction and land development, and consumer loans.

Residential mortgage – Residential real estate consists of loans to purchase, construct or refinance the borrower's primary dwelling, second residence or vacation home.
Revolving mortgage – Revolving mortgage consists of home equity lines of credit that are secured by first or second liens on the borrower's primary residence.
Construction and land development – Construction and land development consists of loans to construct the borrower's primary or secondary residence or vacant land upon which the owner intends to construct a dwelling at a future date.
Consumer – Consumer loans consist of installment loans to finance purchases of vehicles, unsecured home improvements and revolving lines of credit that can be secured or unsecured, including personal credit cards.



15
Table of Contents

Loans and leases outstanding included the following at September 30, 2015 and December 31, 2014:
(Dollars in thousands)
September 30, 2015
 
December 31, 2014
Non-PCI loans and leases:
 
 
 
Commercial:
 
 
 
Construction and land development
$
563,926

 
$
493,133

Commercial mortgage
8,076,946

 
7,552,948

Other commercial real estate
316,924

 
244,875

Commercial and industrial
2,211,973

 
1,988,934

Lease financing
691,915

 
571,916

Other
357,760

 
353,833

Total commercial loans
12,219,444

 
11,205,639

Noncommercial:
 
 
 
Residential mortgage
2,659,821

 
2,493,058

Revolving mortgage
2,519,972

 
2,561,800

Construction and land development
220,493

 
205,016

Consumer
1,192,012

 
1,117,454

Total noncommercial loans
6,592,298

 
6,377,328

Total non-PCI loans and leases
18,811,742

 
17,582,967

PCI loans:
 
 
 
Commercial:
 
 
 
Construction and land development
41,582

 
78,079

Commercial mortgage
568,256

 
577,518

Other commercial real estate
18,013

 
40,193

Commercial and industrial
17,023

 
27,254

Other
2,087

 
3,079

Total commercial loans
646,961

 
726,123

Noncommercial:
 
 
 
Residential mortgage
334,518

 
382,340

Revolving mortgage
59,695

 
74,109

Construction and land development
347

 
912

Consumer
2,543

 
3,014

Total noncommercial loans
397,103

 
460,375

Total PCI loans
1,044,064

 
1,186,498

Total loans and leases
$
19,855,806

 
$
18,769,465

At September 30, 2015, $296.5 million of total loans and leases were covered under loss share agreements, compared to $485.3 million at December 31, 2014. At the beginning of the second quarter of 2015, loss share protection expired for non-single family residential loans acquired from Sun American Bank ("SAB") and all loans acquired from First Regional Bank ("FRB"). The loan balance at September 30, 2015 for the expired agreements from SAB were $29.9 million. FRB loan balances at September 30, 2015 were insignificant. Loss share protection for Williamsburg First National Bank non-single family residential loans with a balance of $7.0 million at September 30, 2015 will expire at the beginning of the fourth quarter of 2015.
At September 30, 2015, $3.69 billion in noncovered loans with a lendable collateral value of $2.59 billion were used to secure $520.3 million in Federal Home Loan Bank ("FHLB") of Atlanta advances, resulting in additional borrowing capacity of $2.07 billion. At December 31, 2014, $3.16 billion in noncovered loans with a lendable collateral value of $2.20 billion were used to secure $240.3 million in FHLB of Atlanta advances, resulting additional borrowing capacity of $1.96 billion.

The unamortized discount related to the non-PCI loans and leases acquired in the Bancorporation merger totaled $45.1 million and $61.2 million at September 30, 2015 and December 31, 2014, respectively. During the three and nine months ended September 30, 2015, accretion income on non-PCI loans equaled $4.5 million and $15.6 million, respectively. There was no accretion income on non-PCI loans recorded for the same periods in 2014.



16
Table of Contents

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. Commercial and noncommercial loans and leases have different credit quality indicators as a result of the unique characteristics of the loan segment being evaluated. The credit quality indicators for non-PCI and PCI commercial loans and leases are developed through a review of individual borrowers on an ongoing basis. Each commercial loan is evaluated annually with more frequent evaluation of more severely criticized loans or leases. The credit quality indicators for non-PCI and PCI noncommercial loans are based on the delinquency status of the borrower. As the borrower becomes more delinquent, the likelihood of loss increases. 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 ungraded loans at September 30, 2015 and December 31, 2014 relate to business credit cards. Business credit card loans are subject to automatic charge-off when they become 120 days past due in the same manner as unsecured consumer lines of credit. The remaining balance is comprised of a small amount of commercial mortgage and other commercial real estate loans.


17
Table of Contents

Non-PCI loans and leases outstanding at September 30, 2015 and December 31, 2014 by credit quality indicator are provided below:
 
 
September 30, 2015
(Dollars in thousands)
Non-PCI commercial loans and leases
Grade:
Construction  and land
development
 
Commercial
mortgage
 
Other
commercial real estate
 
Commercial  and
industrial
 
Lease financing
 
Other
 
Total non-PCI commercial loans and leases
Pass
$
555,833

 
$
7,821,706

 
$
314,171

 
$
2,070,568

 
$
683,265

 
$
354,222

 
$
11,799,765

Special mention
5,606

 
107,790

 
285

 
16,812

 
5,161

 
1,828

 
137,482

Substandard
2,487

 
143,536

 
1,010

 
15,241

 
3,163

 
1,710

 
167,147

Doubtful
—

 
647

 
—

 
1,544

 
326

 
—

 
2,517

Ungraded
—

 
3,267

 
1,458

 
107,808

 
—

 
—

 
112,533

Total
$
563,926

 
$
8,076,946

 
$
316,924

 
$
2,211,973

 
$
691,915

 
$
357,760

 
$
12,219,444

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
Non-PCI commercial loans and leases
 
Construction  and land
development
 
Commercial
mortgage
 
Other
commercial real estate
 
Commercial  and
industrial
 
Lease financing
 
Other
 
Total non-PCI commercial loans and leases
Pass
$
474,374

 
$
7,284,714

 
$
242,053

 
$
1,859,415

 
$
564,319

 
$
349,111

 
$
10,773,986

Special mention
13,927

 
129,247

 
909

 
27,683

 
3,205

 
1,384

 
176,355

Substandard
4,720

 
134,677

 
1,765

 
8,878

 
3,955

 
3,338

 
157,333

Doubtful
—

 
2,366

 
—

 
164

 
365

 
—

 
2,895

Ungraded
112

 
1,944

 
148

 
92,794

 
72

 
—

 
95,070

Total
$
493,133

 
$
7,552,948

 
$
244,875

 
$
1,988,934

 
$
571,916

 
$
353,833

 
$
11,205,639


 
September 30, 2015
 
Non-PCI noncommercial loans and leases
(Dollars in thousands)
Residential
mortgage
 
Revolving
mortgage
 
Construction
and land
development
 
Consumer
 
Total non-PCI noncommercial
loans and leases
Current
$
2,615,954

 
$
2,503,750

 
$
216,736

 
$
1,181,710

 
$
6,518,150

30-59 days past due
24,179

 
9,936

 
2,539

 
6,889

 
43,543

60-89 days past due
7,640

 
2,031

 
642

 
2,091

 
12,404

90 days or greater past due
12,048

 
4,255

 
576

 
1,322

 
18,201

Total
$
2,659,821

 
$
2,519,972

 
$
220,493

 
$
1,192,012

 
$
6,592,298

 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
Non-PCI noncommercial loans and leases
 
Residential
mortgage
 
Revolving
mortgage
 
Construction
and land
development
 
Consumer
 
Total non-PCI noncommercial
loans and leases
Current
$
2,454,797

 
$
2,542,807

 
$
202,344

 
$
1,110,153

 
$
6,310,101

30-59 days past due
23,288

 
11,097

 
1,646

 
4,577

 
40,608

60-89 days past due
6,018

 
2,433

 
824

 
1,619

 
10,894

90 days or greater past due
8,955

 
5,463

 
202

 
1,105

 
15,725

Total
$
2,493,058

 
$
2,561,800

 
$
205,016

 
$
1,117,454

 
$
6,377,328




18
Table of Contents

 
PCI loans and leases outstanding at September 30, 2015 and December 31, 2014 by credit quality indicator are provided below:
 
September 30, 2015
(Dollars in thousands)
PCI commercial loans
Grade:
Construction
and land
development
 
Commercial
mortgage
 
Other
commercial
real estate
 
Commercial
and
industrial
 
Other
 
Total PCI commercial
loans
Pass
$
18,236

 
$
302,848

 
$
8,519

 
$
10,744

 
$
775

 
$
341,122

Special mention
2,250

 
94,955

 
—

 
1,462

 
—

 
98,667

Substandard
16,806

 
159,148

 
9,048

 
4,395

 
1,312

 
190,709

Doubtful
4,290

 
10,967

 
—

 
292

 
—

 
15,549

Ungraded
—

 
338

 
446

 
130

 
—

 
914

Total
$
41,582

 
$
568,256

 
$
18,013

 
$
17,023

 
$
2,087

 
$
646,961

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
PCI commercial loans
 
Construction
and land
development
 
Commercial
mortgage
 
Other
commercial
real estate
 
Commercial
and
industrial
 
Other
 
Total PCI commercial
loans
Pass
$
13,514

 
$
300,187

 
$
11,033

 
$
16,637

 
$
801

 
$
342,172

Special mention
6,063

 
98,724

 
16,271

 
4,137

 
—

 
125,195

Substandard
53,739

 
171,920

 
12,889

 
6,312

 
2,278

 
247,138

Doubtful
2,809

 
6,302

 
—

 
130

 
—

 
9,241

Ungraded
1,954

 
385

 
—

 
38

 
—

 
2,377

Total
$
78,079

 
$
577,518

 
$
40,193

 
$
27,254

 
$
3,079

 
$
726,123


 
September 30, 2015
 
PCI noncommercial loans
(Dollars in thousands)
Residential
mortgage
 
Revolving
mortgage
 
Construction
and land
development
 
Consumer
 
Total PCI noncommercial
loans
Current
$
286,402

 
$
54,594

 
$
347

 
$
2,322

 
$
343,665

30-59 days past due
14,514

 
1,234

 
—

 
90

 
15,838

60-89 days past due
6,103

 
307

 
—

 
131

 
6,541

90 days or greater past due
27,499

 
3,560

 
—

 
—

 
31,059

Total
$
334,518

 
$
59,695

 
$
347

 
$
2,543

 
$
397,103

 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
PCI noncommercial loans
 
Residential
mortgage
 
Revolving
mortgage
 
Construction
and land
development
 
Consumer
 
Total PCI noncommercial
loans
Current
$
326,589

 
$
68,548

 
$
506

 
$
2,582

 
$
398,225

30-59 days past due
11,432

 
1,405

 
—

 
147

 
12,984

60-89 days past due
10,073

 
345

 
—

 
25

 
10,443

90 days or greater past due
34,246

 
3,811

 
406

 
260

 
38,723

Total
$
382,340

 
$
74,109

 
$
912

 
$
3,014

 
$
460,375





19
Table of Contents

The aging of the outstanding non-PCI loans and leases, by class, at September 30, 2015 and December 31, 2014 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 as various grace periods allow borrowers to make payments within a stated period after the due date and still remain in compliance with the loan agreement.
 
September 30, 2015
(Dollars in thousands)
30-59 days
past due
 
60-89 days
past due
 
90 days or greater
 
Total past
due
 
Current
 
Total loans
and leases
Non-PCI loans and leases:
 
 
 
 
 
 
 
 
 
 
 
Construction and land development - commercial
$
1,319

 
$
266

 
$
282

 
$
1,867

 
$
562,059

 
$
563,926

Commercial mortgage
14,587

 
4,897

 
21,416

 
40,900

 
8,036,046

 
8,076,946

Other commercial real estate
403

 
290

 
159

 
852

 
316,072

 
316,924

Commercial and industrial
5,492

 
961

 
1,328

 
7,781

 
2,204,192

 
2,211,973

Lease financing
398

 
169

 
310

 
877

 
691,038

 
691,915

Residential mortgage
24,179

 
7,640

 
12,048

 
43,867

 
2,615,954

 
2,659,821

Revolving mortgage
9,936

 
2,031

 
4,255

 
16,222

 
2,503,750

 
2,519,972

Construction and land development - noncommercial
2,539

 
642

 
576

 
3,757

 
216,736

 
220,493

Consumer
6,889

 
2,091

 
1,322

 
10,302

 
1,181,710

 
1,192,012

Other
11

 
—

 
184

 
195

 
357,565

 
357,760

Total non-PCI loans and leases
$
65,753

 
$
18,987

 
$
41,880

 
$
126,620

 
$
18,685,122

 
$
18,811,742

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
30-59 days
past due
 
60-89 days
past due
 
90 days or greater
 
Total past
due
 
Current
 
Total loans
and leases
Non-PCI loans and leases:
 
 
 
 
 
 
 
 
 
 
 
Construction and land development - commercial
$
520

 
$
283

 
$
330

 
$
1,133

 
$
492,000

 
$
493,133

Commercial mortgage
11,367

 
4,782

 
8,061

 
24,210

 
7,528,738

 
7,552,948

Other commercial real estate
206

 
70

 
102

 
378

 
244,497

 
244,875

Commercial and industrial
2,843

 
1,545

 
378

 
4,766

 
1,984,168

 
1,988,934

Lease financing
1,631

 
8

 
2

 
1,641

 
570,275

 
571,916

Residential mortgage
23,288

 
6,018

 
8,955

 
38,261

 
2,454,797

 
2,493,058

Revolving mortgage
11,097

 
2,433

 
5,463

 
18,993

 
2,542,807

 
2,561,800

Construction and land development - noncommercial
1,646

 
824

 
202

 
2,672

 
202,344

 
205,016

Consumer
4,577

 
1,619

 
1,105

 
7,301

 
1,110,153

 
1,117,454

Other
146

 
1,966

 
—

 
2,112

 
351,721

 
353,833

Total non-PCI loans and leases
$
57,321

 
$
19,548

 
$
24,598

 
$
101,467

 
$
17,481,500

 
$
17,582,967



20
Table of Contents

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, 2015 and December 31, 2014 for non-PCI loans, were as follows:
 
September 30, 2015
 
December 31, 2014
(Dollars in thousands)
Nonaccrual
loans and
leases
 
Loans and
leases > 90
days and
accruing
 
Nonaccrual
loans and
leases
 
Loans and
leases > 90
days and
accruing
Non-PCI loans and leases: