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Section 1: 10-Q (FORM 10-Q)

ASB-2015.3.31 10Q


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-31343
Associated Banc-Corp
(Exact name of registrant as specified in its charter)
Wisconsin
 
39-1098068
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
433 Main Street, Green Bay, Wisconsin
 
54301
(Address of principal executive offices)
 
(Zip Code)
(920) 491-7500
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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 12 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 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 for such shorter period that the registrant was required to submit and post such files).    Yes  ý    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 the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
ý
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨ (Do not check if smaller reporting company)
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  ý
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of registrant’s common stock, par value $0.01 per share, at April 30, 2015, was 152,521,932.



Table of Contents

ASSOCIATED BANC-CORP
TABLE OF CONTENTS
 
 
 
Page No.
PART I. Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2

Table of Contents

PART I — FINANCIAL INFORMATION
ITEM 1. Financial Statements:
ASSOCIATED BANC-CORP
Consolidated Balance Sheets
 
March 31, 2015
(Unaudited)
 
December 31, 2014 (Audited)
 
(In Thousands, except share and per share data)
ASSETS
 
 
 
Cash and due from banks
$
355,541

 
$
444,113

Interest-bearing deposits in other financial institutions
488,426

 
571,924

Federal funds sold and securities purchased under agreements to resell
3,380

 
16,030

Investment securities held to maturity, at amortized cost
438,047

 
404,455

Investment securities available for sale, at fair value
5,358,310

 
5,396,812

Federal Home Loan Bank and Federal Reserve Bank stocks, at cost
189,222

 
189,107

Loans held for sale
159,963

 
154,935

Loans
17,979,032

 
17,593,846

Allowance for loan losses
(265,268
)
 
(266,302
)
Loans, net
17,713,764

 
17,327,544

Premises and equipment, net
274,591

 
274,688

Goodwill
968,774

 
929,168

Other intangible assets, net
77,984

 
67,582

Trading assets
42,336

 
35,163

Other assets
998,402

 
1,010,253

Total assets
$
27,068,740

 
$
26,821,774

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Noninterest-bearing demand deposits
$
4,570,872

 
$
4,505,272

Interest-bearing deposits
15,280,720

 
14,258,232

Total deposits
19,851,592

 
18,763,504

Federal funds purchased and securities sold under agreements to repurchase
587,272

 
493,991

Other short-term funding
75,265

 
574,297

Long-term funding
3,429,925

 
3,930,117

Trading liabilities
44,730

 
37,329

Accrued expenses and other liabilities
197,818

 
222,285

Total liabilities
24,186,602

 
24,021,523

Stockholders’ equity
 
 
 
Preferred equity
59,727

 
59,727

Common stock
1,674

 
1,665

Surplus
1,505,170

 
1,484,933

Retained earnings
1,509,967

 
1,497,818

Accumulated other comprehensive income (loss)
24,800

 
(4,850
)
Treasury stock, at cost
(219,200
)
 
(239,042
)
Total stockholders’ equity
2,882,138

 
2,800,251

Total liabilities and stockholders’ equity
$
27,068,740

 
$
26,821,774

Preferred shares issued
61,356

 
61,356

Preferred shares authorized (par value $1.00 per share)
750,000

 
750,000

Common shares issued
167,429,351

 
166,544,252

Common shares authorized (par value $0.01 per share)
250,000,000

 
250,000,000

Treasury shares of common stock
13,862,507

 
15,002,318

See accompanying notes to consolidated financial statements.


3

Table of Contents

Item 1: Financial Statements Continued:

ASSOCIATED BANC-CORP
Consolidated Statements of Income
(Unaudited)
 
Three Months Ended March 31,
 
2015
 
2014
 
(In Thousands, except per share data)
INTEREST INCOME
 
 
 
Interest and fees on loans
$
151,945

 
$
143,387

Interest and dividends on investment securities
 
 
 
Taxable
25,092

 
26,257

Tax exempt
7,887

 
6,971

Other interest
1,692

 
1,449

Total interest income
186,616

 
178,064

INTEREST EXPENSE
 
 
 
Interest on deposits
7,619

 
6,159

Interest on Federal funds purchased and securities sold under agreements to repurchase
231

 
305

Interest on other short-term funding
81

 
116

Interest on long-term funding
10,872

 
6,511

Total interest expense
18,803

 
13,091

NET INTEREST INCOME
167,813

 
164,973

Provision for credit losses
4,500

 
5,000

Net interest income after provision for credit losses
163,313

 
159,973

NONINTEREST INCOME
 
 
 
Trust service fees
12,087

 
11,711

Service charges on deposit accounts
15,806

 
16,400

Card-based and other nondeposit fees
12,416

 
12,509

Insurance commissions
19,728

 
12,317

Brokerage and annuity commissions
3,683

 
4,033

Mortgage banking, net
7,408

 
6,361

Capital market fees, net
2,467

 
2,322

Bank owned life insurance income
2,875

 
4,320

Asset gains, net
1,096

 
728

Investment securities gains, net

 
378

Other
2,510

 
2,442

Total noninterest income
80,076

 
73,521

NONINTEREST EXPENSE
 
 
 
Personnel expense
100,152

 
97,698

Occupancy
17,683

 
15,560

Equipment
5,772

 
6,276

Technology
15,558

 
12,724

Business development and advertising
5,327

 
5,062

Other intangible amortization
801

 
991

Loan expense
2,996

 
2,787

Legal and professional fees
4,538

 
4,188

Foreclosure / OREO expense
1,425

 
1,896

FDIC expense
6,500

 
5,001

Other
13,503

 
15,475

Total noninterest expense
174,255

 
167,658

Income before income taxes
69,134

 
65,836

Income tax expense
22,462

 
20,637

Net income
46,672

 
45,199

Preferred stock dividends
1,228

 
1,244

Net income available to common equity
$
45,444

 
$
43,955

Earnings per common share:
 
 
 
Basic
$
0.30

 
$
0.27

Diluted
$
0.30

 
$
0.27

Average common shares outstanding:
 
 
 
Basic
150,070

 
161,467

Diluted
151,164

 
162,188

See accompanying notes to consolidated financial statements.

4

Table of Contents

Item 1: Financial Statements Continued:

ASSOCIATED BANC-CORP
Consolidated Statements of Comprehensive Income
(Unaudited)
 
Three Months Ended March 31,
 
2015
 
2014
 
($ in Thousands)
Net income
$
46,672

 
$
45,199

Other comprehensive income, net of tax:
 
 
 
Investment securities available for sale:
 
 
 
Net unrealized gains
47,418

 
20,627

Reclassification adjustment for net gains realized in net income

 
(378
)
Income tax expense
(18,105
)
 
(7,786
)
Other comprehensive income on investment securities available for sale
29,313

 
12,463

Defined benefit pension and postretirement obligations:
 
 
 
Amortization of prior service cost
13

 
15

Amortization of actuarial losses
532

 
316

Income tax expense
(208
)
 
(127
)
Other comprehensive income on pension and postretirement obligations
337

 
204

Total other comprehensive income
29,650

 
12,667

Comprehensive income
$
76,322

 
$
57,866

See accompanying notes to consolidated financial statements.


5

Table of Contents

Item 1: Financial Statements Continued:


ASSOCIATED BANC-CORP
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
 
Preferred
Equity
 
Common
Stock
 
Surplus
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury
Stock
 
Total
 
($ in Thousands, except per share data)
Balance, December 31, 2013
$
61,862

 
$
1,750

 
$
1,617,990

 
$
1,392,508

 
$
(24,244
)
 
$
(158,576
)
 
$
2,891,290

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 
45,199

 

 

 
45,199

Other comprehensive income

 

 

 

 
12,667

 

 
12,667

Comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
57,866

Common stock issued:
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation plans, net

 

 
376

 
(19,173
)
 

 
24,596

 
5,799

Purchase of treasury stock

 

 

 

 

 
(42,199
)
 
(42,199
)
Cash dividends:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, $0.09 per share

 

 


 
(14,639
)
 

 

 
(14,639
)
Preferred stock

 

 

 
(1,244
)
 

 

 
(1,244
)
Purchase of preferred stock
(704
)
 

 

 
(102
)
 

 

 
(806
)
Stock-based compensation expense, net

 

 
4,412

 

 

 

 
4,412

Tax benefit of stock-based compensation

 

 
545

 

 

 

 
545

Balance, March 31, 2014
$
61,158

 
$
1,750

 
$
1,623,323

 
$
1,402,549

 
$
(11,577
)
 
$
(176,179
)
 
$
2,901,024

Balance, December 31, 2014
$
59,727

 
$
1,665

 
$
1,484,933

 
$
1,497,818

 
$
(4,850
)
 
$
(239,042
)
 
$
2,800,251

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 
46,672

 

 

 
46,672

Other comprehensive income

 

 

 

 
29,650

 

 
29,650

Comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
76,322

Common stock issued:
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation plans, net

 

 
304

 
(18,015
)
 

 
23,947

 
6,236

Acquisition of Ahmann & Martin Co.

 
26

 
43,504

 

 

 

 
43,530

Purchase of common stock returned to authorized but unissued

 
(17
)
 
(29,983
)
 

 

 

 
(30,000
)
Purchase of treasury stock

 

 

 

 

 
(4,105
)
 
(4,105
)
Cash dividends:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, $0.10 per share

 

 

 
(15,280
)
 

 

 
(15,280
)
Preferred stock

 

 

 
(1,228
)
 

 

 
(1,228
)
Stock-based compensation expense, net

 

 
5,774

 

 

 

 
5,774

Tax benefit of stock-based compensation

 

 
638

 

 

 

 
638

Balance, March 31, 2015
$
59,727

 
$
1,674

 
$
1,505,170

 
$
1,509,967

 
$
24,800

 
$
(219,200
)
 
$
2,882,138

See accompanying notes to consolidated financial statements.

6

Table of Contents

Item 1: Financial Statements Continued:

ASSOCIATED BANC-CORP
Consolidated Statements of Cash Flows
(Unaudited) 
 
Three Months Ended March 31,
 
2015
 
2014
 
($ in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income
$
46,672

 
$
45,199

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Provision for credit losses
4,500

 
5,000

Depreciation and amortization
12,268

 
13,094

Addition to (recovery of) valuation allowance on mortgage servicing rights, net
243

 
(156
)
Amortization of mortgage servicing rights
3,179

 
2,725

Amortization of other intangible assets
801

 
991

Amortization and accretion on earning assets, funding, and other, net
9,572

 
6,537

Tax impact of stock based compensation
638

 
545

Gain on sales of investment securities, net

 
(378
)
Gain on sales of assets and impairment write-downs, net
(1,096
)
 
(728
)
Gain on mortgage banking activities, net
(3,141
)
 
(4,100
)
Mortgage loans originated and acquired for sale
(268,296
)
 
(203,764
)
Proceeds from sales of mortgage loans held for sale
238,399

 
224,348

Increase in interest receivable
(2,186
)
 
(3,009
)
Decrease in interest payable
(948
)
 
(6,474
)
Net change in other assets and other liabilities
(23,058
)
 
(6,165
)
Net cash provided by operating activities
17,547

 
73,665

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Net increase in loans
(368,794
)
 
(555,979
)
Purchases of:
 
 
 
Available for sale securities
(202,615
)
 
(273,627
)
Held to maturity securities
(36,788
)
 
(18,857
)
FHLB stock
(115
)
 
(111
)
Premises, equipment, and software, net of disposals
(13,944
)
 
(10,848
)
Other assets
(1,207
)
 
(850
)
Proceeds from:
 
 
 
Sales of available for sale securities
289

 
80,025

Prepayments, calls, and maturities of available for sale securities
282,835

 
180,880

Prepayments, calls, and maturities of other assets
5,155

 
11,036

Net cash received in acquisition
1,202

 

Net cash used in investing activities
(333,982
)
 
(588,331
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Net increase in deposits
1,088,088

 
242,760

Net increase (decrease) in short-term funding
(405,751
)
 
506,980

Repayment of long-term funding
(500,009
)
 
(155,009
)
Purchase of common stock returned to authorized but unissued
(30,000
)
 

Purchase of preferred stock

 
(806
)
Cash dividends on common stock
(15,280
)
 
(14,639
)
Cash dividends on preferred stock
(1,228
)
 
(1,244
)
Purchase of treasury stock
(4,105
)
 
(42,199
)
Net cash provided by financing activities
131,715

 
535,843

Net increase (decrease) in cash and cash equivalents
(184,720
)
 
21,177

Cash and cash equivalents at beginning of period
1,032,067

 
602,245

Cash and cash equivalents at end of period
$
847,347

 
$
623,422

Supplemental disclosures of cash flow information:
 
 
 
Cash paid for interest
$
19,643


$
19,578

Cash paid for income taxes


4,165

Loans and bank premises transferred to other real estate owned
2,104


6,343

Capitalized mortgage servicing rights
3,010


1,725

Acquisition:
 
 
 
     Fair value of assets acquired, including cash and cash equivalents
5,160

 

     Fair value ascribed to goodwill and intangible assets
51,221

 

     Fair value of liabilities assumed
12,851

 

     Common stock issued in acquisition
43,530

 

See accompanying notes to consolidated financial statements.

7

Table of Contents

Item 1: Financial Statements Continued:

ASSOCIATED BANC-CORP
Notes to Consolidated Financial Statements
These interim consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission and, therefore, certain information and footnote disclosures normally presented in accordance with U.S. generally accepted accounting principles have been omitted or abbreviated. The information contained in the consolidated financial statements and footnotes in Associated Banc-Corp’s 2014 annual report on Form 10-K, should be referred to in connection with the reading of these unaudited interim financial statements.
NOTE 1: Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position, results of operations and comprehensive income, changes in stockholders’ equity, and cash flows of Associated Banc-Corp (individually referred to herein as the “Parent Company,” and together with all of its subsidiaries and affiliates, collectively referred to herein as the “Corporation”) for the periods presented, and all such adjustments are of a normal recurring nature. The consolidated financial statements include the accounts of all subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Estimates that are particularly susceptible to significant change include the determination of the allowance for loan losses, goodwill impairment assessment, mortgage servicing rights valuation, and income taxes. Management has evaluated subsequent events for potential recognition or disclosure.
NOTE 2: Acquisition
On February 17, 2015, the Corporation acquired Ahmann & Martin Co., a risk and employee benefits consulting firm based in Minnesota. The firm merged into Associated Financial Group, LLC the Corporation's insurance brokerage subsidiary. The Corporation's acquisition of Ahmann & Martin Co. enhances the Corporation's ability to offer clients unique, comprehensive solutions to meet their insurance and financial risk management needs. The transaction was valued at approximately $48 million with the opportunity to increase the consideration by $8 million should certain contingencies be met over a defined period.
The transaction was accounted for using the acquisition method of accounting and as such, assets acquired, liabilities assumed and consideration exchanged were recorded at their estimated fair value on the acquisition date. Goodwill from the acquisition represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and is not deductible for tax purposes. As a result of the acquisition, the Corporation recorded goodwill of approximately $40 million and other intangible assets of approximately $12 million. Goodwill was assigned to the Corporation's Community, Consumer, and Business segment.
NOTE 3: New Accounting Pronouncements Adopted
In August 2014, the FASB issued an amendment to clarify how creditors are to classify certain government-guaranteed mortgage loans upon foreclosure. This amendment requires that a mortgage loan be derecognized and a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separate from the loan before foreclosure and (2) 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 the claim and (3) 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 (principal and interest) expected to be recovered from the guarantor. This amendment is effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2014. Entities may apply the amendments in this update either (a) prospectively to foreclosures that occur after the date of adoption or (b) modified retrospective transition using a cumulative-effect adjustment (through a reclassification to a separate other receivable) as of the beginning of the annual period of adoption. Prior periods should not be adjusted. The Corporation adopted the accounting standard on a prospective basis during the first quarter of 2015, as required, with no material impact on its results of operations, financial position, or liquidity.

In June 2014, the FASB issued an amendment to clarify the current accounting and disclosures for certain repurchase agreements. The amendments in this update require two accounting changes: (1) change the accounting for repurchase-to-maturity transactions to secured borrowing accounting and (2) require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments in this update also require additional disclosures for certain transactions on the transfer of financial

8

Table of Contents

assets, as well as new disclosures for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions that are accounted for as secured borrowings. This amendment is effective for public business entities for the first interim or annual period beginning after December 15, 2014. Early application is prohibited. The Corporation adopted the accounting standard during the first quarter of 2015, as required, with no material impact on its results of operations, financial position, or liquidity.
In January 2014, the FASB issued an amendment to clarify 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 agreement. In addition, the amendments require interim and annual disclosure of both the amount of foreclosed residential real estate property held by the creditor and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure in accordance with local requirements of the applicable jurisdiction. This amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. An entity can elect to adopt the amendments using either a modified retrospective method or a prospective transition method. The Corporation adopted the accounting standard using the prospective transition method during the first quarter of 2015, as required, with no material impact on its results of operations, financial position, or liquidity.
In January 2014, the FASB issued an amendment which permits reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes 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 method, the investment should be accounted for as an equity method investment or a cost method investment. The decision to apply the proportional amortization method of accounting is an accounting policy decision that should be applied consistently to all qualifying affordable housing project investments rather than a decision to be applied to individual investments. This amendment should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting investments. This amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. The Corporation made an accounting policy election to use the proportional amortization method for investments in qualified affordable housing projects during the first quarter of 2015, which had no material impact on the results of operations, financial position, or liquidity.

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NOTE 4: Earnings Per Common Share
Earnings per share are calculated utilizing the two-class method. Basic earnings per common share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per common share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding adjusted for the dilutive effect of common stock awards (outstanding stock options, unvested restricted stock, and outstanding stock warrants). Presented below are the calculations for basic and diluted earnings per common share.
 
For the Three Months Ended March 31,
 
2015
 
2014
 
(In Thousands, except per share data)
Net income
$
46,672

 
$
45,199

Preferred stock dividends
(1,228
)
 
(1,244
)
Net income available to common equity
$
45,444

 
$
43,955

Common shareholder dividends
(15,166
)
 
(14,488
)
Dividends on unvested share-based payment awards
(114
)
 
(151
)
Undistributed earnings
$
30,164

 
$
29,316

Undistributed earnings allocated to common shareholders
29,886

 
29,126

Undistributed earnings allocated to unvested share-based payment awards
278

 
190

Undistributed earnings
$
30,164

 
$
29,316

Basic
 
 
 
Distributed earnings to common shareholders
$
15,166

 
$
14,488

Undistributed earnings allocated to common shareholders
29,886

 
29,126

Total common shareholders earnings, basic
$
45,052

 
$
43,614

Diluted
 
 
 
Distributed earnings to common shareholders
$
15,166

 
$
14,488

Undistributed earnings allocated to common shareholders
29,886

 
29,126

Total common shareholders earnings, diluted
$
45,052

 
$
43,614

Weighted average common shares outstanding
150,070

 
161,467

Effect of dilutive common stock awards
1,094

 
721

Diluted weighted average common shares outstanding
151,164

 
162,188

Basic earnings per common share
$
0.30

 
$
0.27

Diluted earnings per common share
$
0.30

 
$
0.27

Options to purchase approximately 2 million and 3 million common shares were outstanding for the three months ended March 31, 2015 and 2014, respectively, but excluded from the calculation of diluted earnings per common share as the effect would have been anti-dilutive.
NOTE 5: Stock-Based Compensation
At March 31, 2015, the Corporation had one stock-based compensation plan, the 2013 Incentive Compensation Plan. All stock options granted under this plan have an exercise price that is equal to the closing price of the Corporation’s stock on the grant date.
The Corporation also issues restricted common stock and restricted common stock units to certain key employees (collectively referred to as “restricted stock awards”) under this plan. The shares of restricted stock are restricted as to transfer, but are not restricted as to dividend payment or voting rights. Restricted stock units receive dividend equivalents but do not have voting rights. The transfer restrictions lapse over three or four years, depending upon whether the awards are service-based or performance-based. Service-based awards are contingent upon continued employment or meeting the requirements for retirement, and performance-based awards are based on earnings per share performance goals, relative total shareholder return, and continued employment or meeting the requirements for retirement. The plan provides that restricted stock awards and stock options will

10

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immediately become fully vested upon retirement from the Corporation of those colleagues whose retirement meets the early retirement or normal retirement definitions under the plan (“retirement eligible colleagues”).
The fair value of stock options granted is estimated on the date of grant using a Black-Scholes option pricing model, while the fair value of restricted stock awards is their fair market value on the date of grant. The fair values of stock options and restricted stock awards are amortized as compensation expense on a straight-line basis over the vesting period of the grants. Beginning with the 2014 grants, expenses related to stock options and restricted stock are fully recognized on the date the colleague meets the definition of normal or early retirement. Compensation expense recognized is included in personnel expense in the consolidated statements of income.
Assumptions are used in estimating the fair value of stock options granted. The weighted average expected life of the stock option represents the period of time that stock options are expected to be outstanding and is estimated using historical data of stock option exercises and forfeitures. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility is based on the implied volatility of the Corporation’s stock. The following assumptions were used in estimating the fair value for options granted in the first three months of 2015 and full year 2014.
 
2015
 
2014
Dividend yield
2.00
%
 
2.00
%
Risk-free interest rate
2.00
%
 
2.00
%
Weighted average expected volatility
20.00
%
 
20.00
%
Weighted average expected life
6 years

 
6 years

Weighted average per share fair value of options
$3.08
 
$3.00
The Corporation is required to estimate potential forfeitures of stock grants and adjust compensation expense recorded accordingly. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized in the period of change and will also impact the amount of stock compensation expense to be recognized in future periods.
A summary of the Corporation’s stock option activity for the year ended December 31, 2014 and for three months ended March 31, 2015, is presented below.
Stock Options
Shares
 
Weighted Average
Exercise Price
 
Weighted Average
Remaining
Contractual Term
 
Aggregate Intrinsic
Value
(000s)
Outstanding at December 31, 2013
8,034,243

 
$18.37
 
 
 
 
Granted
1,389,452

 
$17.45
 
 
 
 
Exercised
(933,143
)
 
$13.77
 
 
 
 
Forfeited or expired
(643,214
)
 
$23.50
 
 
 
 
Outstanding at December 31, 2014
7,847,338

 
$18.34
 
5.79
 
$
23,986

Options exercisable at December 31, 2014
5,076,676

 
$19.96
 
4.41
 
$
14,953

Granted
1,348,504

 
$17.95
 
 
 
 
Exercised
(366,670
)
 
$13.84
 
 
 
 
Forfeited or expired
(495,890
)
 
$32.00
 
 
 
 
Outstanding at March 31, 2015
8,333,282

 
$17.71
 
6.60
 
$
22,821

Options exercisable at March 31, 2015
5,536,852

 
$18.02
 
5.28
 
$
18,637

The following table summarizes information about the Corporation’s nonvested stock option activity for the year ended December 31, 2014, and for the three months ended March 31, 2015.

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Nonvested Stock Options
Shares
 
Weighted Average
Grant Date Fair Value
Nonvested at December 31, 2013
3,110,523

 
$4.69
Granted
1,389,452

 
$3.00
Vested
(1,522,152
)
 
$4.92
Forfeited
(207,161
)
 
$4.38
Nonvested at December 31, 2014
2,770,662

 
$3.74
Granted
1,348,504

 
$3.08
Vested
(1,313,007
)
 
$4.31
Forfeited
(9,729
)
 
$3.35
Nonvested at March 31, 2015
2,796,430

 
$3.16
Intrinsic value represents the amount by which the fair market value of the underlying stock exceeds the exercise price of the stock option. For the three months ended March 31, 2015, the intrinsic value of stock options exercised was $2 million. For the year ended December 31, 2014, the intrinsic value of stock options exercised was $4 million. The total fair value of stock options that vested was $6 million for the three months ended March 31, 2015 and $7 million for the year ended December 31, 2014. The Corporation recognized compensation expense for the vesting of stock options of $1 million and $2 million for the three months ended March 31, 2015 and 2014, respectively. For the full year 2014, the Corporation recognized compensation expense of $6 million for the vesting of stock options. At March 31, 2015, the Corporation had $8 million of unrecognized compensation expense related to stock options that is expected to be recognized over the remaining requisite service periods that extend predominantly through fourth quarter 2018.
The following table summarizes information about the Corporation’s restricted stock awards activity for the year ended December 31, 2014, and for three months ended March 31, 2015.
Restricted Stock
Shares
 
Weighted Average
Grant Date Fair Value
Outstanding at December 31, 2013
1,511,765

 
$13.92
Granted
1,177,168

 
$17.35
Vested
(538,877
)
 
$14.12
Forfeited
(167,930
)
 
$15.26
Outstanding at December 31, 2014
1,982,126

 
$15.79
Granted
1,029,339

 
$16.77
Vested
(619,358
)
 
$15.52
Forfeited
(18,834
)
 
$16.13
Outstanding at March 31, 2015
2,373,273

 
$16.28
The Corporation amortizes the expense related to restricted stock awards as compensation expense over the vesting period specified in the grant. Restricted stock awards granted during 2014 and 2015 will vest ratably over a four year period. Expense for restricted stock awards of approximately $5 million and $3 million was recognized for the three months ended March 31, 2015 and 2014, respectively. The Corporation recognized approximately $10 million of expense for restricted stock awards for the full year 2014. Included in compensation expense for three months ended March 31, 2015 was approximately $700,000 of expense for the accelerated vesting of restricted stock awards granted to retirement eligible colleagues. The Corporation had $33 million of unrecognized compensation costs related to restricted stock awards at March 31, 2015 that is expected to be recognized over the remaining requisite service periods that extend predominantly through fourth quarter 2018.
The Corporation has the ability to issue shares from treasury or new shares upon the exercise of stock options or the granting of restricted stock awards. The Board of Directors has authorized management to repurchase shares of the Corporation’s common stock each quarter in the market, to be made available for issuance in connection with the Corporation’s employee incentive plans and for other corporate purposes. The repurchase of shares will be based on market and investment opportunities, capital levels, growth prospects, and regulatory constraints. Such repurchases may occur from time to time in open market purchases, block transactions, private transactions, accelerated share repurchase programs, or similar facilities.

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NOTE 6: Investment Securities
The amortized cost and fair values of investment securities available for sale and held to maturity were as follows.
March 31, 2015:
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Fair value
 
($ in Thousands)
Investment securities available for sale:
 
 
 
 
 
 
 
U.S. Treasury securities
$
999

 
$
3

 
$

 
$
1,002

Obligations of state and political subdivisions (municipal securities)
501,679

 
22,912

 
(4
)
 
524,587

Residential mortgage-related securities:
 
 
 
 
 
 
 
Government-sponsored enterprise (“GSE”)
3,613,144

 
73,227

 
(11,257
)
 
3,675,114

Private-label
1,962

 
1

 
(10
)
 
1,953

GSE commercial mortgage-related securities
1,158,217

 
6,114

 
(15,075
)
 
1,149,256

Other securities (debt and equity)
6,338

 
60

 

 
6,398

Total investment securities available for sale
$
5,282,339

 
$
102,317

 
$
(26,346
)
 
$
5,358,310

Investment securities held to maturity:
 
 
 
 
 
 
 
Obligations of state and political subdivisions (municipal securities)
$
438,047

 
$
9,482

 
$
(832
)
 
$
446,697

Total investment securities held to maturity
$
438,047

 
$
9,482

 
$
(832
)
 
$
446,697

December 31, 2014:
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Fair value
 
($ in Thousands)
Investment securities available for sale:
 
 
 
 
 
 
 
U.S. Treasury securities
$
999

 
$

 
$
(1
)
 
$
998

Obligations of state and political subdivisions (municipal securities)
560,839

 
21,869

 
(29
)
 
582,679

Residential mortgage-related securities:
 
 
 
 
 
 
 
GSE
3,700,103

 
61,236

 
(30,550
)
 
3,730,789

Private-label
2,297

 
7

 
(10
)
 
2,294

GSE commercial mortgage-related securities
1,097,913

 
1,922

 
(25,942
)
 
1,073,893

Other securities (debt and equity)
6,108

 
51

 

 
6,159

Total investment securities available for sale
$
5,368,259

 
$
85,085

 
$
(56,532
)
 
$
5,396,812

Investment securities held to maturity:
 
 
 
 
 
 
 
Obligations of state and political subdivisions (municipal securities)
$
404,455

 
$
9,444

 
$
(832
)
 
$
413,067

Total investment securities held to maturity
$
404,455

 
$
9,444

 
$
(832
)
 
$
413,067


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The amortized cost and fair values of investment securities available for sale and held to maturity at March 31, 2015, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
Available for Sale
 
Held to Maturity
($ in Thousands)
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
Due in one year or less
$
40,879

 
$
41,115

 
$

 
$

Due after one year through five years
233,433

 
245,483

 
2,253

 
2,291

Due after five years through ten years
234,102

 
244,730

 
122,372

 
124,896

Due after ten years
584

 
609

 
313,422

 
319,510

Total debt securities
508,998

 
531,937

 
438,047

 
446,697

Residential mortgage-related securities:
 
 
 
 
 
 
 
GSE
3,613,144

 
3,675,114

 

 

Private-label
1,962

 
1,953

 

 

GSE commercial mortgage-related securities
1,158,217

 
1,149,256

 

 

Equity securities
18

 
50

 

 

Total investment securities
$
5,282,339

 
$
5,358,310

 
$
438,047

 
$
446,697

Ratio of Fair Value to Amortized Cost
 
 
101.4
%
 
 
 
102.0
%
The following represents gross unrealized losses and the related fair value of investment securities available for sale and held to maturity, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2015.
 
Less than 12 months
 
12 months or more
 
Total
March 31, 2015
Number of
Securities
 
Unrealized
Losses
 
Fair
Value
 
Number of
Securities
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
 
 
($ in Thousands)
Investment securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions (municipal securities)
2

 
$
(1
)
 
$
629

 
1

 
$
(3
)
 
$
186

 
$
(4
)
 
$
815

Residential mortgage-related securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GSE
22

 
(805
)
 
204,345

 
43

 
(10,452
)
 
1,060,452

 
(11,257
)
 
1,264,797

Private-label
1

 
(9
)
 
1,750

 
2

 
(1
)
 
24

 
(10
)
 
1,774

GSE commercial mortgage-related securities
4

 
(95
)
 
99,052

 
20

 
(14,980
)
 
455,874

 
(15,075
)
 
554,926

Total
 
 
$
(910
)
 
$
305,776

 
 
 
$
(25,436
)
 
$
1,516,536

 
$
(26,346
)
 
$
1,822,312

Investment securities held to maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions (municipal securities)
163

 
$
(568
)
 
$
73,163

 
21

 
$
(264
)
 
$
9,552

 
$
(832
)
 
$
82,715

Total
 
 
$
(568
)
 
$
73,163

 
 
 
$
(264
)
 
$
9,552

 
$
(832
)
 
$
82,715







14

Table of Contents

For comparative purposes, the following represents gross unrealized losses and the related fair value of investment securities available for sale and held to maturity, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2014.
 
Less than 12 months
 
12 months or more
 
Total
December 31, 2014
Number of
Securities
 
Unrealized
Losses
 
Fair
Value
 
Number of
Securities
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
 
 
($ in Thousands)
Investment securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
1

 
$
(1
)
 
$
998

 

 
$

 
$

 
$
(1
)
 
$
998

Obligations of state and political subdivisions (municipal securities)
6

 
(9
)
 
3,374

 
6

 
(20
)
 
2,133

 
(29
)
 
5,507

Residential mortgage-related securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GSE
16

 
(1,404
)
 
333,713

 
56

 
(29,146
)
 
1,256,533

 
(30,550
)
 
1,590,246

Private-label
1

 
(9
)
 
1,772

 
2

 
(1
)
 
27

 
(10
)
 
1,799

GSE commercial mortgage-related securities
9

 
(1,766
)
 
329,982

 
20

 
(24,176
)
 
460,425

 
(25,942
)
 
790,407

Total
 
 
$
(3,189
)
 
$
669,839

 
 
 
$
(53,343
)
 
$
1,719,118

 
$
(56,532
)
 
$
2,388,957

Investment securities held to maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions (municipal securities)
74

 
$
(216
)
 
$
31,924

 
85

 
$
(616
)
 
$
38,915

 
$
(832
)
 
$
70,839

Total
 
 
$
(216
)
 
$
31,924

 
 
 
$
(616
)
 
$
38,915

 
$
(832
)
 
$
70,839

The Corporation reviews the investment securities portfolio on a quarterly basis to monitor its exposure to other-than-temporary impairment. A determination as to whether a security’s decline in fair value is other-than-temporary takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Corporation may consider in the other-than-temporary impairment analysis include, the length of time and extent to which the security has been in an unrealized loss position, changes in security ratings, financial condition and near-term prospects of the issuer, as well as security and industry specific economic conditions. In addition, with regards to its debt securities, the Corporation may also evaluate payment structure, whether there are defaulted payments or expected defaults, prepayment speeds, and the value of any underlying collateral.
Based on the Corporation’s evaluation, management does not believe any unrealized loss at March 31, 2015 represents an other-than-temporary impairment as these unrealized losses are primarily attributable to changes in interest rates and the current market conditions, and not credit deterioration. The unrealized losses reported for residential mortgage-related securities relate to private-label residential mortgage-related securities as well as residential mortgage-related securities issued by government-sponsored enterprises such as the Government National Mortgage Association (“GNMA”), the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FHLMC”). The unrealized losses reported for commercial mortgage-related securities relate to securities issued by GNMA. The unrealized losses reported for municipal securities relate to various state and local political subdivisions and school districts. The Corporation currently does not intend to sell nor does it believe that it will be required to sell the securities contained in the above unrealized losses table before recovery of their amortized cost basis. The improvement in the unrealized loss position of the investment securities portfolio was due to a reduction in the overall level of interest rates from December 31, 2014 to March 31, 2015. Since December 31, 2014, the three-year and ten-year U.S. Treasury note rates declined approximately 20 basis points ("bp") and 25 bp, respectively.
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank Stocks: The Corporation is required to maintain Federal Reserve stock and FHLB stock as a member of both the Federal Reserve System and the FHLB, and in amounts as required by these institutions. These equity securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par. Therefore, they are less liquid than other marketable equity securities and their fair value is equal to amortized cost. The Corporation had FHLB stock of $118 million at both March 31, 2015 and December 31, 2014 and Federal Reserve Bank stock of $71 million at both March 31, 2015 and December 31, 2014.

15

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NOTE 7: Loans, Allowance for Credit Losses, and Credit Quality
The period end loan composition was as follows.
 
March 31,
2015
 
December 31,
2014
 
($ in Thousands)
Commercial and industrial
$
6,140,420

 
$
5,905,902

Commercial real estate - owner occupied
1,003,885

 
1,007,937

Lease financing
49,496

 
51,529

Commercial and business lending
7,193,801

 
6,965,368

Commercial real estate - investor
3,086,980

 
3,056,485

Real estate construction
1,019,571

 
1,008,956

Commercial real estate lending
4,106,551

 
4,065,441

Total commercial
11,300,352

 
11,030,809

Home equity
1,583,614

 
1,636,058

Installment and credit cards
436,492

 
454,219

Residential mortgage
4,658,574

 
4,472,760

Total consumer
6,678,680

 
6,563,037

Total loans
$
17,979,032

 
$
17,593,846

A summary of the changes in the allowance for credit losses was as follows. 
 
Three Months Ended
March 31, 2015
 
Year Ended
December 31, 2014
 
($ in Thousands)
Allowance for Loan Losses:
 
 
 
Balance at beginning of period
$
266,302

 
$
268,315

Provision for loan losses
4,500

 
13,000

Charge offs
(13,270
)
 
(44,096
)
Recoveries
7,736

 
29,083

Net charge offs
(5,534
)
 
(15,013
)
Balance at end of period
$
265,268

 
$
266,302

Allowance for Unfunded Commitments:
 
 
 
Balance at beginning of period
$
24,900

 
$
21,900

Provision for unfunded commitments

 
3,000

Balance at end of period
$
24,900

 
$
24,900

Allowance for Credit Losses
$
290,168

 
$
291,202

The level of the allowance for loan losses represents management’s estimate of an amount appropriate to provide for probable credit losses in the loan portfolio at the balance sheet date. In general, the change in the allowance for loan losses is a function of a number of factors, including but not limited to changes in the loan portfolio, net charge offs, trends in past due and impaired loans, and the level of potential problem loans. Management considers the allowance for loan losses a critical accounting policy, as assessing these numerous factors involves significant judgment.
The allowance for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated probable losses related to unfunded credit facilities (including unfunded loan commitments and letters of credit) and is included in accrued expenses and other liabilities on the consolidated balance sheets. The determination of the appropriate level of the allowance for unfunded commitments is based upon an evaluation of the unfunded credit facilities, including an assessment of historical commitment utilization experience and credit risk grading of the loan. Net adjustments to the allowance for unfunded commitments are included in provision for credit losses in the consolidated statements of income. See Note 13 for additional information on the allowance for unfunded commitments.

16

Table of Contents

A summary of the changes in the allowance for loan losses by portfolio segment for the three months ended March 31, 2015, was as follows.
$ in Thousands
Commercial
and
industrial
 
Commercial
real estate -
owner
occupied
 
Lease
financing
 
Commercial
real estate -
investor
 
Real estate
construction
 
Home
equity
 
Installment
and credit
cards
 
Residential
mortgage
 
Total
Balance at Dec 31, 2014
$
116,025

 
$
16,510

 
$
1,610

 
$
46,333

 
$
20,999

 
$
30,359

 
$
6,435

 
$
28,031

 
$
266,302

Provision for loan losses
6,836

 
3,753

 
(130
)
 
(4,503
)
 
(402
)
 
348

 
359

 
(1,761
)
 
4,500

Charge offs
(6,829
)
 
(879
)
 

 
(1,002
)
 

 
(2,674
)
 
(938
)
 
(948
)
 
(13,270
)
Recoveries
2,179

 
140

 

 
3,531

 
743

 
669

 
169

 
305

 
7,736

Balance at Mar 31, 2015
$
118,211

 
$
19,524

 
$
1,480

 
$
44,359

 
$
21,340

 
$
28,702

 
$
6,025

 
$
25,627

 
$
265,268

Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance impaired loans individually evaluated for impairment
$
5,591

 
$
910

 
$
510

 
$
689

 
$
240

 
$
10

 
$

 
$
226

 
$
8,176

Ending balance impaired loans collectively evaluated for impairment
$
2,038

 
$
1,149

 
$

 
$
1,339

 
$
801

 
$
12,350

 
$
264

 
$
11,269

 
$
29,210

Total impaired loans
$
7,629

 
$
2,059

 
$
510

 
$
2,028

 
$
1,041

 
$
12,360

 
$
264

 
$
11,495

 
$
37,386

Ending balance all other loans collectively evaluated for impairment
$
110,582

 
$
17,465

 
$
970

 
$
42,331

 
$
20,299

 
$
16,342

 
$
5,761

 
$
14,132

 
$
227,882

Total
$
118,211

 
$
19,524

 
$
1,480

 
$
44,359

 
$
21,340

 
$
28,702

 
$
6,025

 
$
25,627

 
$
265,268

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance impaired loans individually evaluated for impairment
$
58,091

 
$
17,133

 
$
1,720

 
$
10,297

 
$
3,843

 
$
911

 
$

 
$
9,761

 
$
101,756

Ending balance impaired loans collectively evaluated for impairment
$
29,995

 
$
14,508

 
$

 
$
26,220

 
$
2,297

 
$
29,255

 
$
1,406

 
$
57,726

 
$
161,407

Total impaired loans
$
88,086

 
$
31,641

 
$
1,720

 
$
36,517

 
$
6,140

 
$
30,166

 
$
1,406

 
$
67,487

 
$
263,163

Ending balance all other loans collectively evaluated for impairment
$
6,052,334

 
$
972,244

 
$
47,776

 
$
3,050,463

 
$
1,013,431

 
$
1,553,448

 
$
435,086

 
$
4,591,087

 
$
17,715,869

Total
$
6,140,420

 
$
1,003,885

 
$
49,496

 
$
3,086,980

 
$
1,019,571

 
$
1,583,614

 
$
436,492

 
$
4,658,574

 
$
17,979,032

The allocation methodology used by the Corporation includes allocations for specifically identified impaired loans and loss factor allocations (used for both criticized and non-criticized loan categories), with a component primarily based on historical loss rates and a component primarily based on other qualitative factors. Management allocates the allowance for loan losses by pools of risk within each loan portfolio. The allocation of the allowance for loan losses by loan portfolio is made for analytical purposes and is not necessarily indicative of the trend of future loan losses in any particular category. At March 31, 2015, $27 million of the commercial and industrial allowance for loan losses was attributable to Oil and Gas related credits, compared to $17 million at December 31, 2014. This allocated allowance for loan losses represented 3.46% and 2.26% of period end Oil and Gas related loans at March 31, 2015 and December 31, 2014, respectively. The total allowance for loan losses is available to absorb losses from any segment of the loan portfolio.

17

Table of Contents

For comparison purposes, a summary of the changes in the allowance for loan losses by portfolio segment for the year ended December 31, 2014, was as follows.
$ in Thousands
Commercial
and
industrial
 
Commercial
real estate -
owner
occupied
 
Lease
financing
 
Commercial
real estate -
investor
 
Real estate
construction
 
Home
equity
 
Installment and credit cards
 
Residential
mortgage
 
Total
Balance at Dec 31, 2013
$
104,501

 
$
19,476

 
$
1,607

 
$
58,156

 
$
23,418

 
$
32,196

 
$
2,416

 
$
26,545

 
$
268,315

Provision for loan losses
14,767

 
(1,296
)
 
35

 
(17,290
)
 
(1,277
)
 
7,087

 
6,279

 
4,695

 
13,000

Charge offs
(14,633
)
 
(3,476
)
 
(39
)
 
(4,529
)
 
(1,958
)
 
(12,332
)
 
(2,876
)
 
(4,253
)
 
(44,096
)
Recoveries
11,390

 
1,806

 
7

 
9,996

 
816

 
3,408

 
616

 
1,044

 
29,083

Balance at Dec 31, 2014
$
116,025

 
$
16,510

 
$
1,610

 
$
46,333

 
$
20,999

 
$
30,359

 
$
6,435

 
$
28,031

 
$
266,302

Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance impaired loans individually evaluated for impairment
$
13,615

 
$
1,490

 
$
574

 
$
1,649

 
$
328

 
$
11

 
$

 
$
199

 
$
17,866

Ending balance impaired loans collectively evaluated for impairment
$
2,852

 
$
1,731

 
$

 
$
1,938

 
$
767

 
$
13,004

 
$
308

 
$
11,965

 
$
32,565

Total impaired loans
$
16,467

 
$
3,221