FCNCA_10Q_06.30.2015
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 June 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 August 4, 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)
June 30, 2015
 
December 31, 2014
Assets
 
 
 
Cash and due from banks
$
514,404

 
$
604,182

Overnight investments
1,703,341

 
1,724,919

Investment securities available for sale
7,350,194

 
7,171,917

Investment securities held to maturity
351

 
518

Loans held for sale
85,040

 
63,696

Loans and leases
19,520,185

 
18,769,465

Less allowance for loan and lease losses
(208,317
)
 
(204,466
)
Net loans and leases
19,311,868

 
18,564,999

Premises and equipment
1,121,421

 
1,125,081

Other real estate owned:
 
 
 
Covered under loss share agreements
12,890

 
22,982

Not covered under loss share agreements
60,358

 
70,454

Income earned not collected
66,729

 
57,254

FDIC loss share receivable
5,808

 
28,701

Goodwill
139,773

 
139,773

Other intangible assets
98,998

 
106,610

Other assets
425,680

 
394,027

Total assets
$
30,896,855

 
$
30,075,113

Liabilities
 
 
 
Deposits:
 
 
 
Noninterest-bearing
$
8,970,056

 
$
8,086,784

Interest-bearing
17,541,840

 
17,591,793

Total deposits
26,511,896

 
25,678,577

Short-term borrowings
723,225

 
987,184

Long-term obligations
475,568

 
351,320

FDIC loss share payable
122,038

 
116,535

Other liabilities
270,238

 
253,903

Total liabilities
28,102,965

 
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 June 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 June 30, 2015 and December 31, 2014)
1,005

 
1,005

Surplus
658,918

 
658,918

Retained earnings
2,174,121

 
2,069,647

Accumulated other comprehensive loss
(51,159
)
 
(52,981
)
Total shareholders’ equity
2,793,890

 
2,687,594

Total liabilities and shareholders’ equity
$
30,896,855

 
$
30,075,113


See accompanying Notes to Consolidated Financial Statements.

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First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Income
 
 
Three months ended June 30
 
Six months ended June 30
(Dollars in thousands, except per share data, unaudited)
2015
 
2014
 
2015
 
2014
Interest income
 
 
 
 
 
 
 
Loans and leases
$
222,682

 
$
164,108

 
$
433,544

 
$
325,142

Investment securities and dividend income
21,806

 
12,447

 
41,116

 
24,195

Overnight investments
1,525

 
756

 
2,863

 
1,368

Total interest income
246,013

 
177,311

 
477,523

 
350,705

Interest expense
 
 
 
 
 
 
 
Deposits
5,534

 
6,006

 
11,163

 
12,831

Short-term borrowings
1,658

 
1,551

 
3,592

 
2,136

Long-term obligations
4,171

 
4,056

 
7,953

 
9,109

Total interest expense
11,363

 
11,613

 
22,708

 
24,076

Net interest income
234,650

 
165,698

 
454,815

 
326,629

Provision (credit) for loan and lease losses
7,719

 
(7,299
)
 
13,511

 
(9,202
)
Net interest income after provision (credit) for loan and lease losses
226,931

 
172,997

 
441,304

 
335,831

Noninterest income
 
 
 
 
 
 
 
Gain on acquisition
—

 
—

 
42,930

 
—

Cardholder services
19,214

 
13,257

 
37,615

 
25,089

Merchant services
22,070

 
15,035

 
40,950

 
28,556

Service charges on deposit accounts
22,361

 
15,265

 
44,419

 
29,705

Wealth management services
21,555

 
15,815

 
42,435

 
30,695

Fees from processing services
45

 
5,682

 
95

 
10,543

Securities gains
147

 
—

 
5,273

 
—

Other service charges and fees
5,685

 
4,250

 
11,140

 
8,194

Mortgage income
5,571

 
1,210

 
10,120

 
2,165

Insurance commissions
2,456

 
2,253

 
5,753

 
5,540

ATM income
1,825

 
1,260

 
3,489

 
2,462

Adjustments to FDIC loss share receivable
(4,553
)
 
(15,295
)
 
(5,600
)
 
(27,644
)
Other(1)
11,074

 
7,857

 
19,584

 
13,598

Total noninterest income
107,450

 
66,589

 
258,203

 
128,903

Noninterest expense
 
 
 
 
 
 
 
Salaries and wages
110,685

 
81,839

 
217,228

 
161,192

Employee benefits
27,212

 
19,741

 
57,358

 
39,841

Occupancy expense
25,532

 
20,300

 
51,152

 
40,710

Equipment expense
23,296

 
19,581

 
46,837

 
38,354

FDIC insurance expense
4,551

 
2,640

 
8,822

 
5,276

Foreclosure-related expenses
1,019

 
3,858

 
3,576

 
9,268

Merger-related expenses
4,573

 
3,450

 
7,570

 
5,903

Other
67,823

 
47,611

 
130,314

 
89,506

Total noninterest expense
264,691

 
199,020

 
522,857

 
390,050

Income before income taxes
69,690

 
40,566

 
176,650

 
74,684

Income taxes(1)
25,168

 
13,880

 
64,970

 
25,519

Net income(1)
$
44,522

 
$
26,686

 
$
111,680

 
$
49,165

Average shares outstanding
12,010,405

 
9,618,941

 
12,010,405

 
9,618,941

Net income per share(1)
$
3.71

 
$
2.77

 
$
9.30

 
$
5.11

(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.

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


 
Three months ended June 30
 
Six months ended June 30
(Dollars in thousands, unaudited)
2015
 
2014
 
2015
 
2014
Net income(1)
$
44,522

 
$
26,686

 
$
111,680

 
$
49,165

Other comprehensive income:
 
 
 
 
 
 
 
Unrealized (losses) gains on securities:
 
 
 
 
 
 
 
Change in unrealized securities (losses) gains arising during period
(29,226
)
 
31,550

 
1,189

 
43,449

Tax effect
11,352

 
(12,225
)
 
(461
)
 
(16,868
)
Reclassification adjustment for net gains realized and included in income before income taxes
(147
)
 
—

 
(5,273
)
 
—

Tax effect
74

 
—

 
2,051

 
—

Total change in unrealized (losses) gains on securities, net of tax
(17,947
)
 
19,325

 
(2,494
)
 
26,581

Change in fair value of cash flow hedges:
 
 
 
 
 
 
 
Change in unrecognized loss on cash flow hedges
709

 
568

 
1,285

 
1,287

Tax effect
(274
)
 
(218
)
 
(496
)
 
(496
)
Total change in unrecognized loss on cash flow hedges, net of tax
435

 
350

 
789

 
791

Change in pension obligation:
 
 
 
 
 
 
 
Amortization of actuarial losses and prior service cost
2,887

 
1,598

 
5,773

 
3,197

Tax effect
(1,123
)
 
(622
)
 
(2,246
)
 
(1,244
)
Total change in pension obligation, net of tax
1,764

 
976

 
3,527

 
1,953

Other comprehensive income
(15,748
)
 
20,651

 
1,822

 
29,325

Total comprehensive income(1)
$
28,774

 
$
47,337

 
$
113,502

 
$
78,490

(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.


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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)
—

 
—

 
—

 
49,165

 
—

 
49,165

Other comprehensive income, net of tax
—

 
—

 
—

 
—

 
29,325

 
29,325

Cash dividends ($0.60 per share)
—

 
—

 
—

 
(5,771
)
 
—

 
(5,771
)
Balance at June 30, 2014
$
8,586

 
$
1,033

 
$
143,766

 
$
1,986,739

 
$
4,057

 
$
2,144,181

 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2014
$
11,005

 
$
1,005

 
$
658,918

 
$
2,069,647

 
$
(52,981
)
 
$
2,687,594

Net income
—

 
—

 
—

 
111,680

 
—

 
111,680

Other comprehensive income, net of tax
—

 
—

 
—

 
—

 
1,822

 
1,822

Cash dividends ($0.60 per share)
—

 
—

 
—

 
(7,206
)
 
—

 
(7,206
)
Balance at June 30, 2015
$
11,005

 
$
1,005

 
$
658,918

 
$
2,174,121

 
$
(51,159
)
 
$
2,793,890

(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.

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First Citizens BancShares, Inc. and Subsidiaries
Consolidated Statements of Cash Flows 
 
Six months ended June 30
(Dollars in thousands, unaudited)
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income(1)
$
111,680

 
$
49,165

Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
Provision (credit) for loan and lease losses
13,511

 
(9,202
)
Deferred tax benefit(1)
(23,762
)
 
(3,640
)
Net change in current taxes
(25,261
)
 
5,973

Depreciation
44,312

 
35,455

Net change in accrued interest payable
(2,359
)
 
560

Net increase in income earned not collected
(9,475
)
 
(629
)
Gain on acquisition
(42,930
)
 
—

Securities gains
(5,273
)
 
—

Origination of loans held for sale
(355,819
)
 
(123,144
)
Proceeds from sale of loans held for sale
338,466

 
123,967

Gain on sale of loans
(3,991
)
 
(2,220
)
Net writedowns/losses on other real estate
3,188

 
6,993

Net amortization of premiums and discounts(1)
(45,662
)
 
(17,288
)
Amortization of intangible assets
8,302

 
1,207

Reduction in FDIC receivable for loss share agreements
27,291

 
17,121

Increase in FDIC payable for loss share agreements
5,503

 
4,903

Net change in other assets(1)
14,243

 
(32,693
)
Net change in other liabilities
25,085

 
35,033

Net cash provided by operating activities
77,049

 
91,561

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Net increase in loans outstanding
(566,524
)
 
(57,271
)
Purchases of investment securities available for sale
(1,435,387
)
 
(1,409,878
)
Proceeds from maturities/calls of investment securities held to maturity
167

 
214

Proceeds from maturities/calls of investment securities available for sale
757,780

 
1,529,687

Proceeds from sales of investment securities available for sale
522,024

 
—

Net change in overnight investments
21,578

 
(259,150
)
Cash paid to the FDIC for loss share agreements
(10,890
)
 
(4,350
)
Proceeds from sales of other real estate
47,391

 
38,370

Additions to premises and equipment
(31,921
)
 
(39,550
)
Business acquisition, net cash acquired
123,137

 
18,194

Net cash used by investing activities
(572,645
)
 
(183,734
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Net decrease in time deposits
(359,125
)
 
(219,297
)
Net increase in demand and other interest-bearing deposits
926,092

 
270,118

Net change in short-term borrowings
(269,460
)
 
81,716

Repayment of long-term obligations
(4,483
)
 
(1,240
)
Origination of long-term obligations
120,000

 
—

Cash dividends paid
(7,206
)
 
(5,771
)
Net cash provided by financing activities
405,818

 
125,526

Change in cash and due from banks
(89,778
)
 
33,353

Cash and due from banks at beginning of period
604,182

 
533,599

Cash and due from banks at end of period
$
514,404

 
$
566,952

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
 
 
 
Transfers of loans to other real estate
$
30,350

 
$
25,080

Dividends declared but not paid
3,603

 
2,886

(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.

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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.
Fair values recorded as a result of acquisitions are subject to refinement for up to one year after the closing date of the transaction as additional information regarding closing date fair values becomes available. We have increased previously reported amounts of gain on acquisition, net income and retained earnings for the six months ended June 30, 2015 by $3.3 million, net of tax, as a result of adjustments made to the fair value of assets acquired in the FDIC-assisted acquisition of Capitol City Bank & Trust (CCBT) of Atlanta, Georgia in the first quarter of 2015.
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) 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.

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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 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments will be effective upon the 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 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 disclosure for certain transactions accounted for as a sale was effective for the fiscal period beginning after December 15, 2014, 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.

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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 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 $76.4 million and $57.1 million at June 30, 2015 and December 31, 2014, respectively, 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 companies, 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 companies. 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

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in enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively and improves guidance for multiple-element arrangements.
The ASU 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 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 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 $26.2 million.

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 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 $1.1 million and $1.3 million were recorded in the Consolidated Statements of Income for the three and six months ended June 30, 2015, respectively. Loan-related interest income generated from CCBT was approximately $2.4 million for the second quarter of 2015 and $3.7 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.

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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 June 30
 
Six months ended June 30
(Dollars in thousands)
2014
 
2014
Total revenue (interest income plus noninterest income)
$
330,253

 
$
653,777

Net income
$
40,259

 
$
77,489


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NOTE C - INVESTMENTS
The amortized cost and fair value of investment securities classified as available for sale and held to maturity at June 30, 2015 and December 31, 2014, are as follows:
 
June 30, 2015
(Dollars in thousands)
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Investment securities available for sale
 
 
 
 
 
 
 
U.S. Treasury
$
2,198,027

 
$
8,832

 
$
—

 
$
2,206,859

Government agency
774,962

 
1,667

 
385

 
776,244

Mortgage-backed securities
4,372,946

 
11,664

 
17,519

 
4,367,091

Total investment securities available for sale
$
7,345,935

 
$
22,163

 
$
17,904

 
$
7,350,194

 
 
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
 
 
June 30, 2015
 
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Investment securities held to maturity
 
 
 
 
 
 
 
Mortgage-backed securities
$
351

 
$
14

 
$
—

 
$
365

 
 
 
 
 
 
 
 
 
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.
 
June 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
$
412,357

 
$
412,720

 
$
447,866

 
$
447,992

One through five years
2,560,632

 
2,570,383

 
3,087,521

 
3,090,621

Mortgage-backed securities
4,372,946

 
4,367,091

 
3,628,187

 
3,633,304

Total investment securities available for sale
$
7,345,935

 
$
7,350,194

 
$
7,163,574

 
$
7,171,917

Investment securities held to maturity
 
 
 
 
 
 
 
Mortgage-backed securities held to maturity
$
351

 
$
365

 
$
518

 
$
544


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For each period presented, securities gains (losses) included the following:
 
Three months ended June 30
 
Six months ended June 30
(Dollars in thousands)
2015
 
2014
 
2015
 
2014
Gross gains on sales of investment securities available for sale
$
151

 
$
—

 
$
5,286

 
$
—

Gross losses on sales of investment securities available for sale
(4
)
 
—

 
(13
)
 
—

Total net securities gain
$
147

 
$
—

 
$
5,273

 
$
—


The following table provides information regarding securities with unrealized losses as of June 30, 2015 and December 31, 2014.
 
June 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:
 
 
 
 
 
 
 
 
 
 
 
Government agency
90,567

 
385

 
—

 
—

 
90,567

 
385

Mortgage-backed securities
1,872,344

 
12,736

 
296,170

 
4,783

 
2,168,514

 
17,519

Total
$
1,962,911

 
$
13,121

 
$
296,170

 
$
4,783

 
$
2,259,081

 
$
17,904

 
 
 
 
 
 
 
 
 
 
 
 
 
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 $296.2 million and $832.4 million had continuous unrealized losses for more than 12 months as of June 30, 2015 and December 31, 2014, respectively, with an aggregate unrealized loss of $4.8 million and $10.0 million, respectively. As of June 30, 2015, all 38 of these investments are government sponsored enterprise-issued mortgage-backed securities. None of the unrealized losses identified as of June 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 $4.69 billion at June 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.


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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 that 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.



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Loans and leases outstanding included the following at June 30, 2015 and December 31, 2014:
(Dollars in thousands)
June 30, 2015
 
December 31, 2014
Non-PCI loans and leases:
 
 
 
Commercial:
 
 
 
Construction and land development
$
547,151

 
$
493,133

Commercial mortgage
7,861,590

 
7,552,948

Other commercial real estate
288,214

 
244,875

Commercial and industrial
2,199,591

 
1,988,934

Lease financing
643,508

 
571,916

Other
338,389

 
353,833

Total commercial loans
11,878,443

 
11,205,639

Noncommercial:
 
 
 
Residential mortgage
2,597,064

 
2,493,058

Revolving mortgage
2,529,936

 
2,561,800

Construction and land development
227,280

 
205,016

Consumer
1,164,223

 
1,117,454

Total noncommercial loans
6,518,503

 
6,377,328

Total non-PCI loans and leases
18,396,946

 
17,582,967

PCI loans:
 
 
 
Commercial:
 
 
 
Construction and land development
48,208

 
78,079

Commercial mortgage
611,505

 
577,518

Other commercial real estate
14,353

 
40,193

Commercial and industrial
20,382

 
27,254

Other
2,597

 
3,079

Total commercial loans
697,045

 
726,123

Noncommercial:
 
 
 
Residential mortgage
358,307

 
382,340

Revolving mortgage
64,340

 
74,109

Construction and land development
345

 
912

Consumer
3,202

 
3,014

Total noncommercial loans
426,194

 
460,375

Total PCI loans
1,123,239

 
1,186,498

Total loans and leases
$
19,520,185

 
$
18,769,465

At June 30, 2015, $319.7 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"). Loan balances at June 30, 2015 for the expiring agreements from SAB and FRB were $30.9 million and $9.0 million, respectively. Loss share protection for Williamsburg First National Bank non-single family residential loans with a balance of $8.2 million at June 30, 2015 will expire at the beginning of the fourth quarter of 2015.
At June 30, 2015, $3.31 billion in noncovered loans with a lendable collateral value of $2.38 billion were used to secure $290.3 million in Federal Home Loan Bank ("FHLB") of Atlanta advances, resulting in additional borrowing capacity of $2.09 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 $49.3 million and $61.2 million at June 30, 2015 and December 31, 2014, respectively.



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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 June 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.


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Non-PCI loans and leases outstanding at June 30, 2015 and December 31, 2014 by credit quality indicator are provided below:
 
 
June 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
$
532,286

 
$
7,613,114

 
$
285,339

 
$
2,050,360

 
$
635,084

 
$
334,601

 
$
11,450,784

Special mention
12,385

 
102,773

 
267

 
17,861

 
4,797

 
1,859

 
139,942

Substandard
2,331

 
141,061

 
1,043

 
16,471

 
3,294

 
1,929

 
166,129

Doubtful
—

 
1,553

 
—

 
2,333

 
325

 
—

 
4,211

Ungraded
149

 
3,089

 
1,565

 
112,566

 
8

 
—

 
117,377

Total
$
547,151

 
$
7,861,590

 
$
288,214

 
$
2,199,591

 
$
643,508

 
$
338,389

 
$
11,878,443

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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


 
June 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
$
2,559,874

 
$
2,516,158

 
$
224,776

 
$
1,156,148

 
$
6,456,956

30-59 days past due
22,118

 
6,174

 
1,542

 
5,060

 
34,894

60-89 days past due
6,039

 
2,372

 
469

 
1,928

 
10,808

90 days or greater past due
9,033

 
5,232

 
493

 
1,087

 
15,845

Total
$
2,597,064

 
$
2,529,936

 
$
227,280

 
$
1,164,223

 
$
6,518,503

 
 
 
 
 
 
 
 
 
 
 
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 June 30, 2015 and December 31, 2014 by credit quality indicator are provided below:
 
June 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
$
18,052

 
$
324,320

 
$
8,456

 
$
11,681

 
$
796

 
$
363,305

Special mention
2,506

 
100,609

 
13

 
1,934

 
—

 
105,062

Substandard
21,917

 
172,577

 
5,549

 
5,796

 
1,801

 
207,640

Doubtful
4,341

 
13,571

 
—

 
307

 
—

 
18,219

Ungraded
1,392

 
428

 
335

 
664

 
—

 
2,819

Total
$
48,208

 
$
611,505

 
$
14,353

 
$
20,382

 
$
2,597

 
$
697,045

 
 
 
 
 
 
 
 
 
 
 
 
 
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


 
June 30, 2015
 
PCI noncommercial loans
(Dollars in thousands)
Residential
mortgage
 
Revolving
mortgage
 
Construction
and land
development
 
Consumer
 
Total PCI noncommercial
loans
Current
$
311,880

 
$
57,529

 
$
314

 
$
2,902

 
$
372,625

30-59 days past due
11,435

 
4,434

 
31

 
112

 
16,012

60-89 days past due
3,882

 
147

 
—

 
45

 
4,074

90 days or greater past due
31,110

 
2,230

 
—

 
143

 
33,483

Total
$
358,307

 
$
64,340

 
$
345

 
$
3,202

 
$
426,194

 
 
 
 
 
 
 
 
 
 
 
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 June 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.
 
June 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
$
1,632

 
$
612

 
$
921

 
$
3,165

 
$
543,986

 
$
547,151

Commercial mortgage
11,903

 
4,896

 
14,676

 
31,475

 
7,830,115

 
7,861,590

Other commercial real estate
49

 
—

 
188

 
237

 
287,977

 
288,214

Commercial and industrial
6,275

 
1,010

 
1,050

 
8,335

 
2,191,256

 
2,199,591

Lease financing
1,161

 
90

 
308

 
1,559

 
641,949

 
643,508

Residential mortgage
22,118

 
6,039

 
9,033

 
37,190

 
2,559,874

 
2,597,064

Revolving mortgage
6,174

 
2,372

 
5,232

 
13,778

 
2,516,158

 
2,529,936

Construction and land development - noncommercial
1,542

 
469

 
493

 
2,504

 
224,776

 
227,280

Consumer
5,060

 
1,928

 
1,087

 
8,075

 
1,156,148

 
1,164,223

Other
338

 
—

 
210

 
548

 
337,841

 
338,389

Total non-PCI loans and leases
$
56,252

 
$
17,416

 
$
33,198

 
$
106,866

 
$
18,290,080

 
$
18,396,946

 
 
 
 
 
 
 
 
 
 
 
 
 
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 June 30, 2015 and December 31, 2014 for non-PCI loans, were as follows:
 
June 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:
 
 
 
 
 
 
 
Construction and land development - commercial
$
1,401

 
$
102

 
$
343

 
$
56

Commercial mortgage
34,140

 
2,863

 
24,720

 
1,003