ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
PENNSYLVANIA | 23-2195389 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
One Penn Square, P.O. Box 4887, Lancaster, Pennsylvania | 17604 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ý | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Description | Page | ||
PART I. FINANCIAL INFORMATION | |||
(a) | |||
(b) | |||
(c) | |||
(d) | |||
(e) | |||
September 30, 2011 | December 31, 2010 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Cash and due from banks | $ | 291,870 | $ | 198,954 | |||
Interest-bearing deposits with other banks | 256,360 | 33,297 | |||||
Loans held for sale | 63,554 | 83,940 | |||||
Investment securities: | |||||||
Held to maturity (estimated fair value of $6,774 in 2011 and $7,818 in 2010) | 6,734 | 7,751 | |||||
Available for sale | 2,769,823 | 2,853,733 | |||||
Loans, net of unearned income | 11,895,655 | 11,933,307 | |||||
Less: Allowance for loan losses | (266,978 | ) | (274,271 | ) | |||
Net Loans | 11,628,677 | 11,659,036 | |||||
Premises and equipment | 206,170 | 208,016 | |||||
Accrued interest receivable | 52,460 | 53,841 | |||||
Goodwill | 535,940 | 535,518 | |||||
Intangible assets | 9,158 | 12,461 | |||||
Other assets | 475,105 | 628,707 | |||||
Total Assets | $ | 16,295,851 | $ | 16,275,254 | |||
LIABILITIES | |||||||
Deposits: | |||||||
Noninterest-bearing | $ | 2,535,744 | $ | 2,194,988 | |||
Interest-bearing | 10,101,880 | 10,193,593 | |||||
Total Deposits | 12,637,624 | 12,388,581 | |||||
Short-term borrowings: | |||||||
Federal funds purchased | 75,962 | 267,844 | |||||
Other short-term borrowings | 372,993 | 406,233 | |||||
Total Short-Term Borrowings | 448,955 | 674,077 | |||||
Accrued interest payable | 27,678 | 33,333 | |||||
Other liabilities | 171,430 | 179,424 | |||||
Federal Home Loan Bank advances and long-term debt | 1,025,505 | 1,119,450 | |||||
Total Liabilities | 14,311,192 | 14,394,865 | |||||
SHAREHOLDERS’ EQUITY | |||||||
Common stock, $2.50 par value, 600 million shares authorized, 216.0 million shares issued in 2011 and 215.4 million shares issued in 2010 | 540,000 | 538,492 | |||||
Additional paid-in capital | 1,423,149 | 1,420,127 | |||||
Retained earnings | 239,986 | 158,453 | |||||
Accumulated other comprehensive income: | |||||||
Unrealized gains on investment securities not other-than-temporarily impaired | 35,414 | 22,354 | |||||
Unrealized non-credit related losses on other-than-temporarily impaired debt securities | (1,064 | ) | (2,355 | ) | |||
Unrecognized pension and postretirement plan costs | (4,451 | ) | (4,414 | ) | |||
Unamortized effective portions of losses on forward-starting interest rate swaps | (2,988 | ) | (3,090 | ) | |||
Accumulated Other Comprehensive Income | 26,911 | 12,495 | |||||
Treasury stock, 16.1 million shares in 2011 and 16.3 million shares in 2010, at cost | (245,387 | ) | (249,178 | ) | |||
Total Shareholders’ Equity | 1,984,659 | 1,880,389 | |||||
Total Liabilities and Shareholders’ Equity | $ | 16,295,851 | $ | 16,275,254 | |||
See Notes to Consolidated Financial Statements |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
INTEREST INCOME | |||||||||||||||
Loans, including fees | $ | 149,460 | $ | 158,060 | $ | 448,707 | $ | 473,222 | |||||||
Investment securities: | |||||||||||||||
Taxable | 20,166 | 22,363 | 62,722 | 75,658 | |||||||||||
Tax-exempt | 2,896 | 3,226 | 9,217 | 10,169 | |||||||||||
Dividends | 698 | 686 | 2,077 | 2,075 | |||||||||||
Loans held for sale | 425 | 919 | 1,417 | 2,142 | |||||||||||
Other interest income | 91 | 102 | 225 | 358 | |||||||||||
Total Interest Income | 173,736 | 185,356 | 524,365 | 563,624 | |||||||||||
INTEREST EXPENSE | |||||||||||||||
Deposits | 19,684 | 29,755 | 64,745 | 95,312 | |||||||||||
Short-term borrowings | 151 | 267 | 573 | 1,206 | |||||||||||
Long-term debt | 12,408 | 15,148 | 37,346 | 49,253 | |||||||||||
Total Interest Expense | 32,243 | 45,170 | 102,664 | 145,771 | |||||||||||
Net Interest Income | 141,493 | 140,186 | 421,701 | 417,853 | |||||||||||
Provision for credit losses | 31,000 | 40,000 | 105,000 | 120,000 | |||||||||||
Net Interest Income After Provision for Credit Losses | 110,493 | 100,186 | 316,701 | 297,853 | |||||||||||
OTHER INCOME | |||||||||||||||
Service charges on deposit accounts | 15,164 | 14,752 | 42,801 | 44,501 | |||||||||||
Other service charges and fees | 12,507 | 11,540 | 36,698 | 33,174 | |||||||||||
Investment management and trust services | 8,914 | 8,604 | 27,756 | 25,347 | |||||||||||
Mortgage banking income | 7,942 | 12,399 | 19,454 | 20,447 | |||||||||||
Other | 4,777 | 3,877 | 14,177 | 12,194 | |||||||||||
Total other-than-temporary impairment losses | (509 | ) | (2,428 | ) | (1,601 | ) | (12,013 | ) | |||||||
Less: Portion of (gain) loss recognized in other comprehensive income (before taxes) | (80 | ) | (387 | ) | (672 | ) | 723 | ||||||||
Net other-than-temporary impairment losses | (589 | ) | (2,815 | ) | (2,273 | ) | (11,290 | ) | |||||||
Net gains on sale of investment securities | 146 | 4,641 | 3,780 | 11,797 | |||||||||||
Net investment securities gains (losses) | (443 | ) | 1,826 | 1,507 | 507 | ||||||||||
Total Other Income | 48,861 | 52,998 | 142,393 | 136,170 | |||||||||||
OTHER EXPENSES | |||||||||||||||
Salaries and employee benefits | 58,948 | 54,533 | 169,326 | 161,532 | |||||||||||
Net occupancy expense | 10,790 | 10,519 | 33,030 | 32,688 | |||||||||||
FDIC insurance expense | 3,732 | 4,709 | 11,750 | 14,799 | |||||||||||
Data processing | 3,473 | 3,187 | 10,059 | 9,915 | |||||||||||
Other real estate owned and repossession expense | 3,270 | 2,620 | 7,815 | 7,176 | |||||||||||
Professional fees | 3,247 | 3,040 | 9,198 | 8,621 | |||||||||||
Equipment expense | 3,032 | 2,956 | 9,541 | 8,710 | |||||||||||
Software | 2,142 | 2,039 | 6,146 | 5,359 | |||||||||||
Marketing | 1,923 | 2,601 | 6,622 | 6,702 | |||||||||||
Intangible amortization | 953 | 1,293 | 3,303 | 3,948 | |||||||||||
Other | 15,079 | 15,214 | 43,840 | 44,388 | |||||||||||
Total Other Expenses | 106,589 | 102,711 | 310,630 | 303,838 | |||||||||||
Income Before Income Taxes | 52,765 | 50,473 | 148,464 | 130,185 | |||||||||||
Income taxes | 13,441 | 12,793 | 38,970 | 33,343 | |||||||||||
Net Income | 39,324 | 37,680 | 109,494 | 96,842 | |||||||||||
Preferred stock dividends and discount accretion | — | (6,172 | ) | — | (16,303 | ) | |||||||||
Net Income Available to Common Shareholders | $ | 39,324 | $ | 31,508 | $ | 109,494 | $ | 80,539 | |||||||
PER COMMON SHARE: | |||||||||||||||
Net income (basic) | $ | 0.20 | $ | 0.16 | $ | 0.55 | $ | 0.43 | |||||||
Net income (diluted) | 0.20 | 0.16 | 0.55 | 0.43 | |||||||||||
Cash dividends | 0.05 | 0.03 | 0.14 | 0.09 | |||||||||||
See Notes to Consolidated Financial Statements |
Common Stock | Retained Earnings | Treasury Stock | Total | |||||||||||||||||||||||||||
Preferred Stock | Shares Outstanding | Amount | Additional Paid-in Capital | Accumulated Other Comprehensive Income | ||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||
December 31, 2010 | $ | — | 199,050 | $ | 538,492 | $ | 1,420,127 | $ | 158,453 | $ | 12,495 | $ | (249,178 | ) | $ | 1,880,389 | ||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||
Net income | 109,494 | 109,494 | ||||||||||||||||||||||||||||
Other comprehensive income | 14,416 | 14,416 | ||||||||||||||||||||||||||||
Total comprehensive income | 123,910 | |||||||||||||||||||||||||||||
Stock issued, including related tax benefits | 841 | 1,508 | (451 | ) | 3,791 | 4,848 | ||||||||||||||||||||||||
Stock-based compensation awards | 3,473 | 3,473 | ||||||||||||||||||||||||||||
Common stock cash dividends - $0.14 per share | (27,961 | ) | (27,961 | ) | ||||||||||||||||||||||||||
September 30, 2011 | $ | — | 199,891 | $ | 540,000 | $ | 1,423,149 | $ | 239,986 | $ | 26,911 | $ | (245,387 | ) | $ | 1,984,659 | ||||||||||||||
December 31, 2009 | $ | 370,290 | 176,364 | $ | 482,491 | $ | 1,257,730 | $ | 71,999 | $ | 7,458 | $ | (253,486 | ) | $ | 1,936,482 | ||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||
Net income | 96,842 | 96,842 | ||||||||||||||||||||||||||||
Other comprehensive income | 28,332 | 28,332 | ||||||||||||||||||||||||||||
Total comprehensive income | 125,174 | |||||||||||||||||||||||||||||
Stock issued, including related tax benefits | 22,519 | 55,751 | 171,205 | 3,283 | 230,239 | |||||||||||||||||||||||||
Stock-based compensation awards | 1,428 | 1,428 | ||||||||||||||||||||||||||||
Redemption of preferred stock and repurchase of common stock warrant | (376,500 | ) | (10,800 | ) | (387,300 | ) | ||||||||||||||||||||||||
Preferred stock discount accretion | 6,210 | (6,210 | ) | — | ||||||||||||||||||||||||||
Preferred stock cash dividends | (12,498 | ) | (12,498 | ) | ||||||||||||||||||||||||||
Common stock cash dividends - $0.09 per share | (17,215 | ) | (17,215 | ) | ||||||||||||||||||||||||||
September 30, 2010 | $ | — | 198,883 | $ | 538,242 | $ | 1,419,563 | $ | 132,918 | $ | 35,790 | $ | (250,203 | ) | $ | 1,876,310 | ||||||||||||||
See Notes to Consolidated Financial Statements |
Nine Months Ended September 30 | |||||||
2011 | 2010 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net Income | $ | 109,494 | $ | 96,842 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Provision for credit losses | 105,000 | 120,000 | |||||
Depreciation and amortization of premises and equipment | 15,824 | 15,371 | |||||
Net amortization of investment securities premiums | 2,596 | 2,916 | |||||
Investment securities gains | (1,507 | ) | (507 | ) | |||
Net decrease (increase) in loans held for sale | 20,386 | (17,856 | ) | ||||
Amortization of intangible assets | 3,303 | 3,948 | |||||
Stock-based compensation | 3,473 | 1,428 | |||||
Decrease in accrued interest receivable | 1,381 | 3,348 | |||||
Decrease (increase) in other assets | 13,599 | (9,424 | ) | ||||
Decrease in accrued interest payable | (5,655 | ) | (11,194 | ) | |||
Decrease in other liabilities | (18,862 | ) | (17,527 | ) | |||
Total adjustments | 139,538 | 90,503 | |||||
Net cash provided by operating activities | 249,032 | 187,345 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Proceeds from sales of securities available for sale | 419,803 | 401,518 | |||||
Proceeds from maturities of securities held to maturity | 388 | 382 | |||||
Proceeds from maturities of securities available for sale | 440,475 | 567,825 | |||||
Purchase of securities held to maturity | (28 | ) | (194 | ) | |||
Purchase of securities available for sale | (616,586 | ) | (467,698 | ) | |||
Increase in short-term investments | (223,063 | ) | (176,830 | ) | |||
Net increase in loans | (74,029 | ) | (70,873 | ) | |||
Net purchases of premises and equipment | (13,978 | ) | (15,169 | ) | |||
Net cash (used in) provided by investing activities | (67,018 | ) | 238,961 | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Net increase in demand and savings deposits | 728,652 | 892,809 | |||||
Net decrease in time deposits | (479,609 | ) | (422,606 | ) | |||
Decrease in short-term borrowings | (225,122 | ) | (397,859 | ) | |||
Additions to long-term debt | — | 47,900 | |||||
Repayments of long-term debt | (93,945 | ) | (389,160 | ) | |||
Net proceeds from issuance of stock | 4,848 | 230,239 | |||||
Redemption of preferred stock and common stock warrant | — | (387,300 | ) | ||||
Dividends paid | (23,922 | ) | (29,037 | ) | |||
Net cash used in financing activities | (89,098 | ) | (455,014 | ) | |||
Net Increase (Decrease) in Cash and Due From Banks | 92,916 | (28,708 | ) | ||||
Cash and Due From Banks at Beginning of Period | 198,954 | 284,508 | |||||
Cash and Due From Banks at End of Period | $ | 291,870 | $ | 255,800 | |||
Supplemental Disclosures of Cash Flow Information | |||||||
Cash paid during the period for: | |||||||
Interest | $ | 108,319 | $ | 156,965 | |||
Income taxes | 21,216 | 41,018 | |||||
See Notes to Consolidated Financial Statements |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||
(in thousands) | |||||||||||
Weighted average shares outstanding (basic) | 199,028 | 198,282 | 198,801 | 188,306 | |||||||
Effect of dilutive securities | 786 | 510 | 743 | 529 | |||||||
Weighted average shares outstanding (diluted) | 199,814 | 198,792 | 199,544 | 188,835 |
Nine Months Ended September 30 | |||||||
2011 | 2010 | ||||||
(in thousands) | |||||||
Unrealized gain on securities (net of an $8.2 million and $16.4 million tax effect in 2011 and 2010, respectively) | $ | 15,143 | $ | 30,390 | |||
Non-credit related unrealized gain (loss) on other-than-temporarily impaired debt securities (net of a $100,000 and $1.0 million tax effect in 2011 and 2010, respectively) | 187 | (1,886 | ) | ||||
Unrealized gain on derivative financial instruments (net of a $55,000 tax effect in 2011 and 2010) (1) | 102 | 102 | |||||
(Accretion) amortization of net unrecognized pension and postretirement items (net of a $19,000 and $30,000 tax effect in 2011 and 2010, respectively) | (37 | ) | 55 | ||||
Reclassification adjustment for securities gains included in net income (net of a $527,000 and $177,000 tax effect in 2011 and 2010, respectively) | (979 | ) | (329 | ) | |||
Other comprehensive income | $ | 14,416 | $ | 28,332 |
(1) | Amounts represent the amortization of the effective portions of losses on forward-starting interest rate swaps, designated as cash flow hedges and entered into in prior years in connection with the issuance of fixed-rate debt. The total amount recorded as a reduction to accumulated other comprehensive income upon settlement of these derivatives is being amortized to interest expense over the life of the related securities using the effective interest method. The amount of net losses in accumulated other comprehensive income that will be reclassified into earnings during the next twelve months is expected to be approximately $135,000. |
Held to Maturity at September 30, 2011 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||
(in thousands) | |||||||||||||||
U.S. Government sponsored agency securities | $ | 5,987 | $ | — | $ | (7 | ) | $ | 5,980 | ||||||
State and municipal securities | 179 | — | — | 179 | |||||||||||
Mortgage-backed securities | 568 | 47 | — | 615 | |||||||||||
$ | 6,734 | $ | 47 | $ | (7 | ) | $ | 6,774 | |||||||
Available for Sale at September 30, 2011 | |||||||||||||||
Equity securities | $ | 123,483 | $ | 2,291 | $ | (5,408 | ) | $ | 120,366 | ||||||
U.S. Government securities | 1,325 | — | — | 1,325 | |||||||||||
U.S. Government sponsored agency securities | 4,735 | 110 | (1 | ) | 4,844 | ||||||||||
State and municipal securities | 320,969 | 13,091 | — | 334,060 | |||||||||||
Corporate debt securities | 130,455 | 4,892 | (12,912 | ) | 122,435 | ||||||||||
Collateralized mortgage obligations | 1,078,396 | 29,212 | (353 | ) | 1,107,255 | ||||||||||
Mortgage-backed securities | 802,142 | 36,763 | (69 | ) | 838,836 | ||||||||||
Auction rate securities | 255,472 | 283 | (15,053 | ) | 240,702 | ||||||||||
$ | 2,716,977 | $ | 86,642 | $ | (33,796 | ) | $ | 2,769,823 |
Held to Maturity at December 31, 2010 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||
(in thousands) | |||||||||||||||
U.S. Government sponsored agency securities | $ | 6,339 | $ | — | $ | (1 | ) | $ | 6,338 | ||||||
State and municipal securities | 346 | — | — | 346 | |||||||||||
Mortgage-backed securities | 1,066 | 68 | — | 1,134 | |||||||||||
$ | 7,751 | $ | 68 | $ | (1 | ) | $ | 7,818 | |||||||
Available for Sale at December 31, 2010 | |||||||||||||||
Equity securities | $ | 133,570 | $ | 3,872 | $ | (974 | ) | $ | 136,468 | ||||||
U.S. Government securities | 1,649 | — | — | 1,649 | |||||||||||
U.S. Government sponsored agency securities | 4,888 | 172 | (2 | ) | 5,058 | ||||||||||
State and municipal securities | 345,053 | 6,003 | (1,493 | ) | 349,563 | ||||||||||
Corporate debt securities | 137,101 | 3,808 | (16,123 | ) | 124,786 | ||||||||||
Collateralized mortgage obligations | 1,085,613 | 23,457 | (5,012 | ) | 1,104,058 | ||||||||||
Mortgage-backed securities | 843,446 | 31,080 | (3,054 | ) | 871,472 | ||||||||||
Auction rate securities | 271,645 | 892 | (11,858 | ) | 260,679 | ||||||||||
$ | 2,822,965 | $ | 69,284 | $ | (38,516 | ) | $ | 2,853,733 |
Held to Maturity | Available for Sale | ||||||||||||||
Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
Due in one year or less | $ | 6,052 | $ | 6,045 | $ | 70,852 | $ | 71,305 | |||||||
Due from one year to five years | 114 | 114 | 46,088 | 47,500 | |||||||||||
Due from five years to ten years | — | — | 127,391 | 135,592 | |||||||||||
Due after ten years | — | — | 468,625 | 448,969 | |||||||||||
6,166 | 6,159 | 712,956 | 703,366 | ||||||||||||
Collateralized mortgage obligations | — | — | 1,078,396 | 1,107,255 | |||||||||||
Mortgage-backed securities | 568 | 615 | 802,142 | 838,836 | |||||||||||
$ | 6,734 | $ | 6,774 | $ | 2,593,494 | $ | 2,649,457 |
Gross Realized Gains | Gross Realized Losses | Other-than- temporary Impairment Losses | Net Gains (Losses) | ||||||||||||
(in thousands) | |||||||||||||||
Three months ended September 30, 2011 | |||||||||||||||
Equity securities | $ | 146 | $ | — | $ | (244 | ) | $ | (98 | ) | |||||
Debt securities | — | — | (345 | ) | (345 | ) | |||||||||
Total | $ | 146 | $ | — | $ | (589 | ) | $ | (443 | ) | |||||
Three months ended September 30, 2010: | |||||||||||||||
Equity securities | $ | 601 | $ | (391 | ) | $ | (480 | ) | $ | (270 | ) | ||||
Debt securities | 4,485 | (54 | ) | (2,335 | ) | 2,096 | |||||||||
Total | $ | 5,086 | $ | (445 | ) | $ | (2,815 | ) | $ | 1,826 | |||||
Nine months ended September 30, 2011 | |||||||||||||||
Equity securities | $ | 194 | $ | — | $ | (575 | ) | $ | (381 | ) | |||||
Debt securities | 3,605 | (19 | ) | (1,698 | ) | 1,888 | |||||||||
Total | $ | 3,799 | $ | (19 | ) | $ | (2,273 | ) | $ | 1,507 | |||||
Nine months ended September 30, 2010: | |||||||||||||||
Equity securities | $ | 1,451 | $ | (391 | ) | $ | (1,813 | ) | $ | (753 | ) | ||||
Debt securities | 10,809 | (72 | ) | (9,477 | ) | 1,260 | |||||||||
Total | $ | 12,260 | $ | (463 | ) | $ | (11,290 | ) | $ | 507 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Balance of cumulative credit losses on debt securities, beginning of period | $ | (28,876 | ) | $ | (22,754 | ) | $ | (27,560 | ) | $ | (15,612 | ) | |||
Additions for credit losses recorded which were not previously recognized as components of earnings | (345 | ) | (2,335 | ) | (1,698 | ) | (9,477 | ) | |||||||
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | 40 | 21 | 77 | 21 | |||||||||||
Balance of cumulative credit losses on debt securities, end of period | $ | (29,181 | ) | $ | (25,068 | ) | $ | (29,181 | ) | $ | (25,068 | ) |
Less than 12 months | 12 months or longer | Total | |||||||||||||||||||||
Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
U.S. Government sponsored agency securities | $ | 5,401 | $ | (7 | ) | $ | 175 | $ | (1 | ) | $ | 5,576 | $ | (8 | ) | ||||||||
Corporate debt securities | 16,909 | (1,060 | ) | 41,371 | (11,852 | ) | 58,280 | (12,912 | ) | ||||||||||||||
Collateralized mortgage obligations | 101,324 | (353 | ) | — | — | 101,324 | (353 | ) | |||||||||||||||
Mortgage-backed securities | 26,100 | (69 | ) | — | — | 26,100 | (69 | ) | |||||||||||||||
Auction rate securities | 37,059 | (1,915 | ) | 182,341 | (13,138 | ) | 219,400 | (15,053 | ) | ||||||||||||||
Total debt securities | 186,793 | (3,404 | ) | 223,887 | (24,991 | ) | 410,680 | (28,395 | ) | ||||||||||||||
Equity securities | 13,747 | (4,951 | ) | 1,316 | (457 | ) | 15,063 | (5,408 | ) | ||||||||||||||
$ | 200,540 | $ | (8,355 | ) | $ | 225,203 | $ | (25,448 | ) | $ | 425,743 | $ | (33,803 | ) |
September 30, 2011 | December 31, 2010 | ||||||||||||||
Amortized cost | Estimated fair value | Amortized cost | Estimated fair value | ||||||||||||
(in thousands) | |||||||||||||||
Single-issuer trust preferred securities | $ | 86,366 | $ | 77,861 | $ | 91,257 | $ | 81,789 | |||||||
Subordinated debt | 35,080 | 36,754 | 34,995 | 35,915 | |||||||||||
Pooled trust preferred securities | 6,464 | 5,275 | 8,295 | 4,528 | |||||||||||
Corporate debt securities issued by financial institutions | 127,910 | 119,890 | 134,547 | 122,232 | |||||||||||
Other corporate debt securities | 2,545 | 2,545 | 2,554 | 2,554 | |||||||||||
Available for sale corporate debt securities | $ | 130,455 | $ | 122,435 | $ | 137,101 | $ | 124,786 |
September 30, 2011 | December 31, 2010 | ||||||
(in thousands) | |||||||
Real-estate – commercial mortgage | $ | 4,491,155 | $ | 4,375,980 | |||
Commercial – industrial, financial and agricultural | 3,690,164 | 3,704,384 | |||||
Real-estate – home equity | 1,630,880 | 1,641,777 | |||||
Real-estate – residential mortgage | 1,041,463 | 995,990 | |||||
Real-estate – construction | 648,398 | 801,185 | |||||
Consumer | 327,054 | 350,161 | |||||
Leasing and other | 59,337 | 61,017 | |||||
Overdrafts | 13,646 | 10,011 | |||||
Loans, gross of unearned income | 11,902,097 | 11,940,505 | |||||
Unearned income | (6,442 | ) | (7,198 | ) | |||
Loans, net of unearned income | $ | 11,895,655 | $ | 11,933,307 |
• | Change in the identification of loans evaluated individually for impairment – The population of loans evaluated individually for impairment was revised to include only loans on non-accrual status and impaired troubled debt restructurings (Impaired TDRs). Impaired TDRs represent TDRs that were: (1) modified via a change in the interest rate that, at the time of restructuring, was favorable in comparison to rates offered for loans with similar risk characteristics; or (2) 90 days or more past due according to their modified terms; or (3) modified in the current year. |
• | Quarterly evaluations of impaired loans – Due to the reduction in loans evaluated individually for impairment noted above, all loans evaluated individually for impairment are now measured for losses on a quarterly basis. Measurement may be on a more frequent basis if there is a significant change in the amount or timing of an impaired loan’s expected future cash flows, if actual cash flows are significantly different from the cash flows previously projected, or if the fair value of an impaired loan’s collateral significantly changes. In addition, the Corporation implemented a new appraisal policy which requires that impaired loans secured predominately by real estate have updated certified third-party appraisals, generally every 12 months. |
• | Change in the determination of allocation needs on loans evaluated collectively for impairment – Under its new methodology, the Corporation revised and further disaggregated its pools of loans evaluated collectively for impairment. Similar to the prior methodology, pools are segmented by general loan types, and further segmented by collateral types, where appropriate. However, under the new methodology, pools are further disaggregated by internal credit risk ratings for commercial loans, commercial mortgages and construction loans and by delinquency status for residential mortgages, consumer loans and all other loan types. |
September 30, 2011 | December 31, 2010 | ||||||
(in thousands) | |||||||
Allowance for loan losses | $ | 266,978 | $ | 274,271 | |||
Reserve for unfunded lending commitments | 1,839 | 1,227 | |||||
Allowance for credit losses | $ | 268,817 | $ | 275,498 |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Balance at beginning of period | $ | 268,633 | $ | 280,377 | $ | 275,498 | $ | 257,553 | |||||||
Loans charged off | (32,897 | ) | (38,797 | ) | (119,101 | ) | (100,321 | ) | |||||||
Recoveries of loans previously charged off | 2,081 | 3,294 | 7,420 | 7,642 | |||||||||||
Net loans charged off | (30,816 | ) | (35,503 | ) | (111,681 | ) | (92,679 | ) | |||||||
Provision for credit losses | 31,000 | 40,000 | 105,000 | 120,000 | |||||||||||
Balance at end of period | $ | 268,817 | $ | 284,874 | $ | 268,817 | $ | 284,874 |
Real Estate - Commercial Mortgage | Commercial - Industrial, Financial and Agricultural | Real Estate - Home Equity | Real Estate - Residential Mortgage | Real Estate - Construction | Consumer | Leasing and other and Overdrafts | Unallocated | Total | |||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||||
Three months ended September 30, 2011 | |||||||||||||||||||||||||||||||||||
Balance at July 1, 2011 | $ | 73,598 | $ | 82,613 | $ | 9,560 | $ | 31,912 | $ | 30,570 | $ | 1,755 | $ | 1,787 | $ | 34,888 | $ | 266,683 | |||||||||||||||||
Loans charged off | (5,730 | ) | (14,840 | ) | (1,158 | ) | (1,514 | ) | (8,535 | ) | (634 | ) | (486 | ) | — | (32,897 | ) | ||||||||||||||||||
Recoveries of loans previously charged off | 249 | 695 | 23 | 36 | 595 | 291 | 192 | — | 2,081 | ||||||||||||||||||||||||||
Net loans charged off | (5,481 | ) | (14,145 | ) | (1,135 | ) | (1,478 | ) | (7,940 | ) | (343 | ) | (294 | ) | — | (30,816 | ) | ||||||||||||||||||
Provision for loan losses (1) | 13,066 | 11,669 | 1,418 | 2,902 | 10,415 | 2,990 | 768 | (12,117 | ) | 31,111 | |||||||||||||||||||||||||
Balance at September 30, 2011 | $ | 81,183 | $ | 80,137 | $ | 9,843 | $ | 33,336 | $ | 33,045 | $ | 4,402 | $ | 2,261 | $ | 22,771 | $ | 266,978 | |||||||||||||||||
Nine months ended September 30, 2011 | |||||||||||||||||||||||||||||||||||
Balance at January 1, 2011 | $ | 40,831 | $ | 101,436 | $ | 6,454 | $ | 17,425 | $ | 58,117 | $ | 4,669 | $ | 3,840 | $ | 41,499 | $ | 274,271 | |||||||||||||||||
Loans charged off | (22,851 | ) | (43,582 | ) | (4,276 | ) | (14,217 | ) | (29,897 | ) | (2,606 | ) | (1,672 | ) | — | (119,101 | ) | ||||||||||||||||||
Recoveries of loans previously charged off | 1,975 | 2,089 | 26 | 270 | 1,237 | 1,033 | 790 | — | 7,420 | ||||||||||||||||||||||||||
Net loans charged off | (20,876 | ) | (41,493 | ) | (4,250 | ) | (13,947 | ) | (28,660 | ) | (1,573 | ) | (882 | ) | — | (111,681 | ) | ||||||||||||||||||
Provision for loan losses | 38,345 | 33,582 | 3,949 | 21,962 | 28,359 | 4,382 | 247 | (26,438 | ) | 104,388 | |||||||||||||||||||||||||
Impact of change in allowance methodology | 22,883 | (13,388 | ) | 3,690 | 7,896 | (24,771 | ) | (3,076 | ) | (944 | ) | 7,710 | — | ||||||||||||||||||||||
Provision for loan losses, including impact of change in allowance methodology (1) | 61,228 | 20,194 | 7,639 | 29,858 | 3,588 | 1,306 | (697 | ) | (18,728 | ) | 104,388 | ||||||||||||||||||||||||
Balance at September 30, 2011 | $ | 81,183 | $ | 80,137 | $ | 9,843 | $ | 33,336 | $ | 33,045 | $ | 4,402 | $ | 2,261 | $ | 22,771 | $ | 266,978 |
(1) | Provision for loan losses is net of a $111,000 decrease and $612,000 increase in provision applied to unfunded commitments for the three and nine months ended September 30, 2011, respectively. The total provision for credit losses, comprised of allocations for both funded and unfunded loans, was $31.0 million and $105.0 million for the three and nine months ended September 30, 2011, respectively. |
Real Estate - Commercial Mortgage | Commercial - Industrial, Financial and Agricultural | Real Estate - Home Equity | Real Estate - Residential Mortgage | Real Estate - Construction | Consumer | Leasing and other and Overdrafts | Unallocated (1) | Total | |||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||||
Allowance for loan losses at September 30, 2011: | |||||||||||||||||||||||||||||||||||
Evaluated collectively for impairment under FASB ASC Subtopic 450-20 | $ | 47,914 | $ | 51,510 | $ | 9,843 | $ | 7,142 | $ | 20,480 | $ | 1,773 | $ | 2,205 | $ | 22,771 | $ | 163,638 | |||||||||||||||||
Evaluated individually for impairment under FASB ASC Section 310-10-35 | 33,269 | 28,627 | — | 26,194 | 12,565 | 2,629 | 56 | N/A | 103,340 | ||||||||||||||||||||||||||
$ | 81,183 | $ | 80,137 | $ | 9,843 | $ | 33,336 | $ | 33,045 | $ | 4,402 | $ | 2,261 | $ | 22,771 | $ | 266,978 | ||||||||||||||||||
Loans, net of unearned income at September 30, 2011: | |||||||||||||||||||||||||||||||||||
Evaluated collectively for impairment under FASB ASC Subtopic 450-20 | $ | 4,377,383 | $ | 3,603,914 | $ | 1,630,880 | $ | 975,463 | $ | 596,581 | $ | 322,113 | $ | 66,455 | N/A | $ | 11,572,789 | ||||||||||||||||||
Evaluated individually for impairment under FASB ASC Section 310-10-35 | 113,772 | 86,250 | — | 66,000 | 51,817 | 4,941 | 86 | N/A | 322,866 | ||||||||||||||||||||||||||
$ | 4,491,155 | $ | 3,690,164 | $ | 1,630,880 | $ | 1,041,463 | $ | 648,398 | $ | 327,054 | $ | 66,541 | N/A | $ | 11,895,655 | |||||||||||||||||||
Allowance for loan losses at December 31, 2010: | |||||||||||||||||||||||||||||||||||
Evaluated collectively for impairment under FASB ASC Subtopic 450-20 | $ | 22,836 | $ | 32,323 | $ | 6,454 | $ | 11,475 | $ | 35,247 | $ | 4,669 | $ | 3,840 | $ | 41,499 | $ | 158,343 | |||||||||||||||||
Evaluated individually for impairment under FASB ASC Section 310-10-35 | 17,995 | 69,113 | — | 5,950 | 22,870 | — | — | N/A | 115,928 | ||||||||||||||||||||||||||