UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20459

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 ~~September 30, 2015~~March 31, 2016, 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 No. 0-10587

FULTON FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)



PENNSYLVANIA		23-2195389
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Penn Square, P.O. Box 4887, Lancaster, Pennsylvania		17604
(Address of principal executive offices)		(Zip Code)

(717) 291-2411

(Registrant’s telephone number, including area code)

Indicate by checkmark 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 checkmark 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 for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company in Rule 12b-2 of the Exchange Act.

Indicate by checkmark 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:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, $2.50 Par Value ~~–174,031,000~~–173,466,000 shares outstanding as of ~~October 30, 2015.~~April 29, 2016.

FULTON FINANCIAL CORPORATION

FORM 10-Q FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30, 2015~~MARCH 31, 2016

INDEX



Description		Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited):

(a)	Consolidated Balance Sheets - ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014~~2015	3

(b)	Consolidated Statements of Income - Three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~	4

(c)	Consolidated Statements of Comprehensive Income - Three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~	5

(d)	Consolidated Statements of Shareholders’ Equity - ~~Nine~~Three months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~	6

(e)	Consolidated Statements of Cash Flows - ~~Nine~~Three months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~	7

(f)	Notes to Consolidated Financial Statements	8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		3936

Item 3. Quantitative and Qualitative Disclosures about Market Risk		6754

Item 4. Controls and Procedures		7158

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		7259

Item 1A. Risk Factors		7259

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		7360

Item 3. Defaults Upon Senior Securities		7360

Item 4. Mine Safety Disclosures		7360

Item 5. Other Information		7360

Item 6. Exhibits		7360

Signatures		7461

Exhibit Index		7562

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

(in thousands, except per-share data)


	September 30, 2015			December 31, 2014			March 31, 2016			December 31, 2015
	(unaudited)						(unaudited)
ASSETS
Cash and due from banks	$	93,803		$	105,702		$	83,479		$	101,120
Interest-bearing deposits with other banks	510,943			358,130			346,582			230,300
Federal Reserve Bank and Federal Home Loan Bank stock	68,977			64,953			61,478			62,216
Loans held for sale	26,937			17,522			19,719			16,886
Available for sale investment securities	2,436,337			2,323,371			2,516,205			2,484,773
Loans, net of unearned income	13,536,361			13,111,716			13,870,701			13,838,602
Less: Allowance for loan losses	(167,136		)	(184,144		)	(163,841		)	(169,054		)
Net Loans	13,369,225			12,927,572			13,706,860			13,669,548
Premises and equipment	225,705			226,027			228,057			225,535
Accrued interest receivable	42,846			41,818			44,379			42,767
Goodwill and intangible assets	531,562			531,803			531,556			531,556
Other assets	531,724			527,869			583,939			550,017
Total Assets	$	17,838,059		$	17,124,767		$	18,122,254		$	17,914,718
LIABILITIES
Deposits:
Noninterest-bearing	$	3,906,228		$	3,640,623		$	4,134,861		$	3,948,114
Interest-bearing	10,178,166			9,726,883			10,269,419			10,184,203
Total Deposits	14,084,394			13,367,506			14,404,280			14,132,317
Short-term borrowings:
Federal funds purchased	5,527			6,219			32,645			197,235
Other short-term borrowings	426,104			323,500			320,238			300,428
Total Short-Term Borrowings	431,631			329,719			352,883			497,663
Accrued interest payable	14,727			18,045			13,567			10,724
Other liabilities	301,970			273,419			312,561			282,578
Federal Home Loan Bank advances and long-term debt	979,433			1,139,413			965,654			949,542
Total Liabilities	15,812,155			15,128,102			16,048,945			15,872,824
SHAREHOLDERS’ EQUITY
Common stock, $2.50 par value, 600 million shares authorized, 218.6 million shares issued in 2015 and 218.2 million shares issued in 2014	546,444			545,555
Common stock, $2.50 par value, 600 million shares authorized, 218.9 million shares issued in 2016 and 2015							547,262			547,141
Additional paid-in capital	1,447,569			1,420,523			1,452,471			1,450,690
Retained earnings	622,237			558,810			664,236			641,588
Accumulated other comprehensive loss	(13,219		)	(17,722		)	(5,137		)	(22,017		)
Treasury stock, at cost, 44.8 million shares in 2015 and 39.3 million shares in 2014	(577,127		)	(510,501		)
Treasury stock, at cost, 45.5 million shares in 2016 and 44.7 million shares in 2015							(585,523		)	(575,508		)
Total Shareholders’ Equity	2,025,904			1,996,665			2,073,309			2,041,894
Total Liabilities and Shareholders’ Equity	$	17,838,059		$	17,124,767		$	18,122,254		$	17,914,718

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


(in thousands, except per-share data)	Three months ended September 30					Nine months ended September 30						Three months ended March 31
	2015		2014			2015			2014			2016		2015
INTEREST INCOME
Loans, including fees	$	131,804	$	133,741		$	391,491		$	397,011		$	134,079	$	129,777
Investment securities:
Taxable	11,252		12,278			33,478			37,962			12,003		11,282
Tax-exempt	1,904		2,219			5,872			6,865			2,040		2,087
Dividends	190		339			834			996			160		348
Loans held for sale	194		237			632			585			131		173
Other interest income	884		976			3,922			3,065			898		2,105
Total Interest Income	146,228		149,790			436,229			446,484			149,311		145,772
INTEREST EXPENSE
Deposits	10,217		8,998			30,093			25,579			10,727		9,823
Short-term borrowings	92		297			272			1,470			268		77
Long-term debt	10,225		11,129			33,669			32,606			9,262		12,291
Total Interest Expense	20,534		20,424			64,034			59,655			20,257		22,191
Net Interest Income	125,694		129,366			372,195			386,829			129,054		123,581
Provision for credit losses	1,000		3,500			(500		)	9,500			1,530		(3,700		)
Net Interest Income After Provision for Credit Losses	124,694		125,866			372,695			377,329			127,524		127,281
NON-INTEREST INCOME
Service charges on deposit accounts	12,982		12,801			37,188			37,064			12,558		11,569
Investment management and trust services	11,237		11,120			33,137			33,417			10,988		10,889
Other service charges and fees	10,965		9,954			31,316			29,407			10,750		9,363
Mortgage banking income	3,864		4,038			13,891			13,384			4,030		4,688
Investment securities gains, net:
Net gains on sales of investment securities	1,730		99			8,290			1,223			947		4,145
Net other-than-temporary impairment losses	—		(18		)	—			(30		)
Investment securities gains, net	1,730		81			8,290			1,193
Other	3,996		3,906			12,178			10,813			3,864		4,083
Total Non-Interest Income	44,774		41,900			136,000			125,278			43,137		44,737
NON-INTEREST EXPENSE
Salaries and employee benefits	65,308		62,434			195,365			185,623			69,372		64,990
Net occupancy expense	10,710		11,582			36,211			36,649			12,220		13,692
Other outside services	7,373		8,632			21,248			19,684			6,056		5,750
Loss on redemption of trust preferred securities	5,626		—			5,626			—
Data processing	5,105		4,689			14,767			12,816			5,400		4,768
Software	3,984		3,353			10,678			9,487			3,921		3,318
Equipment expense	3,595		3,307			10,888			10,269			3,371		3,958
FDIC insurance expense	2,867		2,882			8,574			8,186			2,949		2,822
Supplies and postage												2,579		2,369
Professional fees	2,828		3,252			8,430			9,715			2,333		2,871
Supplies and postage	2,708		2,560			7,803			7,337
Marketing	2,102		1,798			5,570			5,719			1,624		1,233
Telecommunications	1,587		1,587			4,920			5,193			1,488		1,716
Other real estate owned and repossession expense												638		1,362
Operating risk loss	1,136		1,242			2,637			3,786			540		827
Other real estate owned and repossession expense	1,016		1,303			2,507			3,034
Intangible amortization	5		314			241			944			—		130
Other	8,939		6,863			26,256			23,084			7,922		8,672
Total Non-Interest Expense	124,889		115,798			361,721			341,526			120,413		118,478
Income Before Income Taxes	44,579		51,968			146,974			161,081			50,248		53,540
Income taxes	10,328		13,402			36,007			41,136			11,991		13,504
Net Income	$	34,251	$	38,566		$	110,967		$	119,945		$	38,257	$	40,036

PER SHARE:
Net Income (Basic)	$	0.20	$	0.21		$	0.63		$	0.64		$	0.22	$	0.22
Net Income (Diluted)	0.20		0.21			0.63			0.64			0.22		0.22
Cash Dividends	0.09		0.08			0.27			0.24			0.09		0.09
See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)


	Three months ended September 30						Nine months ended September 30						Three months ended March 31
	2015			2014			2015			2014			2016			2015

Net Income	$	34,251		$	38,566		$	110,967		$	119,945		$	38,257		$	40,036
Other Comprehensive Income (Loss), net of tax:
Unrealized gain (loss) on securities	7,857			(3,011		)	5,841			23,912
Reclassification adjustment for postretirement amendment gains included in net income	—			—			—			(944		)
Other Comprehensive Income, net of tax:
Unrealized gain on securities													17,026			9,992
Reclassification adjustment for securities gains included in net income	(1,124		)	(52		)	(5,388		)	(775		)	(616		)	(2,695		)
Reclassification adjustment for loss on derivative financial instruments included in net income	2,456			—			2,456			—
Non-credit related unrealized gain on other-than-temporarily impaired debt securities	—			138			125			650			—			125
Amortization of unrealized loss on derivative financial instruments	3			34			71			102			4			34
Unrecognized postretirement income arising due to plan amendment	—			—			—			2,144
Amortization of net unrecognized pension and postretirement items	466			104			1,398			304			466			466
Other Comprehensive Income (Loss)	9,658			(2,787		)	4,503			25,393
Other Comprehensive Income													16,880			7,922
Total Comprehensive Income	$	43,909		$	35,779		$	115,470		$	145,338		$	55,137		$	47,958

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30, 2015~~MARCH 31, 2016 AND ~~2014~~2015

(in thousands, except per-share data)


	Common Stock						Retained Earnings						Treasury Stock			Total			Common Stock						Retained Earnings						Treasury Stock			Total
	Shares Outstanding		Amount		Additional Paid-in Capital					Accumulated Other Comprehensive Income (Loss)									Shares Outstanding		Amount		Additional Paid-in Capital					Accumulated Other Comprehensive Income (Loss)

Balance at December 31, 2015																			174,176		$	547,141	$	1,450,690	$	641,588		$	(22,017	)	$	(575,508	)	$	2,041,894
Net income																									38,257									38,257
Other comprehensive income																												16,880						16,880
Stock issued, including related tax benefits																			134		121		345								1,181			1,647
Stock-based compensation awards																							1,436											1,436
Acquisition of treasury stock																			(917	)											(11,196		)	(11,196		)
Common stock cash dividends - $0.09 per share																									(15,609		)							(15,609		)
Balance at March 31, 2016																			173,393		$	547,262	$	1,452,471	$	664,236		$	(5,137	)	$	(585,523	)	$	2,073,309

Balance at December 31, 2014	178,924		$	545,555	$	1,420,523	$	558,810		$	(17,722	)	$	(510,501	)	$	1,996,665		178,924		$	545,555	$	1,420,523	$	558,810		$	(17,722	)	$	(510,501	)	$	1,996,665
Net income							110,967									110,967									40,036									40,036
Other comprehensive income										4,503						4,503												7,922						7,922
Stock issued, including related tax benefits	613		889		2,675								3,374			6,938			174		179		418								1,344			1,941
Stock-based compensation awards					4,371											4,371							1,071											1,071
Acquisition of treasury stock	(3,976	)											(50,000		)	(50,000		)
Settlement of accelerated stock repurchase agreement	(1,790	)			20,000								(20,000		)	—
Common stock cash dividends - $0.27 per share							(47,540		)							(47,540		)
Balance at September 30, 2015	173,771		$	546,444	$	1,447,569	$	622,237		$	(13,219	)	$	(577,127	)	$	2,025,904

Balance at December 31, 2013	192,652		$	544,568	$	1,432,974	$	463,843		$	(37,341	)	$	(340,857	)	$	2,063,187
Net income							119,945									119,945
Other comprehensive income										25,393						25,393
Stock issued, including related tax benefits	506		639		1,059								3,767			5,465
Stock-based compensation awards					4,310											4,310
Acquisition of treasury stock	(8,000	)											(95,255		)	(95,255		)
Common stock cash dividends - $0.24 per share							(45,039		)							(45,039		)
Balance at September 30, 2014	185,158		$	545,207	$	1,438,343	$	538,749		$	(11,948	)	$	(432,345	)	$	2,078,006
Common stock cash dividends - $0.09 per share																									(16,122		)							(16,122		)
Balance at March 31, 2015																			179,098		$	545,734	$	1,422,012	$	582,724		$	(9,800	)	$	(509,157	)	$	2,031,513

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	Nine months ended September 30						Three months ended March 31
	2015			2014			2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	110,967		$	119,945		$	38,257		$	40,036
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	(500		)	9,500			1,530			(3,700		)
Depreciation and amortization of premises and equipment	20,302			18,412			6,949			7,361
Net amortization of investment securities premiums	5,369			4,399			2,055			1,431
Net gains on sales of investment securities	(8,290		)	(1,193		)
Net increase in loans held for sale	(9,415		)	(3,861		)
Investment securities gains, net							(947		)	(4,145		)
Gain on sales of mortgage loans held for sale							(2,670		)	(3,533		)
Proceeds from sales of mortgage loans held for sale							114,255			171,051
Originations of mortgage loans held for sale							(114,418		)	(184,120		)
Amortization of intangible assets	241			944			—			130
Amortization of issuance costs on long-term debt							154			147
Stock-based compensation	4,371			4,310			1,436			1,071
Excess tax benefits from stock-based compensation	(86		)	(54		)	(10		)	(15		)
Loss on redemption of trust preferred securities	5,626			—
(Increase) decrease in accrued interest receivable	(1,028		)	493
Decrease (increase) in other assets	6,683			(1,909		)
(Decrease) increase in accrued interest payable	(3,318		)	2,207
Increase (decrease) in other liabilities	3,995			(5,315		)
Increase in accrued interest receivable							(1,612		)	(398		)
(Increase) decrease in other assets							(4,469		)	3,794
Increase in accrued interest payable							2,843			312
(Decrease) increase in other liabilities							(9,245		)	1,234
Total adjustments	23,950			27,933			(4,149		)	(9,380		)
Net cash provided by operating activities	134,917			147,878			34,108			30,656
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale	29,309			15,219			46,541			11,567
Proceeds from maturities of securities available for sale	317,813			273,688			117,221			105,647
Purchase of securities available for sale	(444,111		)	(164,676		)	(169,436		)	(37,142		)
Increase in short-term investments	(156,837		)	(129,418		)	(115,544		)	(280,584		)
Net increase in loans	(440,681		)	(271,494		)	(38,976		)	(6,362		)
Net purchases of premises and equipment	(19,980		)	(16,832		)	(9,471		)	(7,575		)
Net cash used in investing activities	(714,487		)	(293,513		)	(169,665		)	(214,449		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand and savings deposits	852,611			768,979			269,899			171,022
Net (decrease) increase in time deposits	(135,723		)	73,462
Increase (decrease) in short-term borrowings	101,912			(693,677		)
Net increase (decrease) in time deposits							2,064			(24,031		)
(Decrease) increase in short-term borrowings							(144,780		)	80,386
Additions to long-term debt	347,778			140,000			16,000			—
Repayments of long-term debt	(509,606		)	(5,295		)	(42		)	(45,043		)
Net proceeds from issuance of common stock	6,852			5,411			1,637			1,926
Excess tax benefits from stock-based compensation	86			54			10			15
Dividends paid	(46,239		)	(45,638		)	(15,676		)	(14,314		)
Acquisition of treasury stock	(50,000		)	(95,255		)	(11,196		)	—
Net cash provided by financing activities	567,671			148,041			117,916			169,961
Net (Decrease) Increase in Cash and Due From Banks	(11,899		)	2,406
Net Decrease in Cash and Due From Banks							(17,641		)	(13,832		)
Cash and Due From Banks at Beginning of Period	105,702			218,540			101,120			105,702
Cash and Due From Banks at End of Period	$	93,803		$	220,946		$	83,479		$	91,870
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	67,352		$	57,448		$	17,414		$	21,879
Income taxes	9,168			16,632			3,972			146
See Notes to Consolidated Financial Statements

FULTON FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements of Fulton Financial Corporation (the "Corporation") have been prepared in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities as of the date of the financial statements as well as revenues and expenses during the period. Actual results could differ from those estimates. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2014.~~2015. Operating results for the three ~~and nine~~ months ended ~~September 30, 2015~~March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2015.~~2016. The Corporation evaluates subsequent events through the date of filing of this Form 10-Q with the Securities and Exchange Commission ("SEC").

~~Recent~~Recently Adopted Accounting Standards

~~Effective January 1, 2015, the~~The Corporation adopted the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") Update 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects." ASC Update 2014-01 provides guidance on accounting for investments made by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low income housing tax credit. The Corporation has made certain investments in partnerships that generate tax credits under various federal programs which promote investment in low and moderate income housing and local economic development. The net income tax benefit associated with these investments, which consists of the amortization of the investments net of tax benefit, and the income tax credits earned on the investments recorded in income taxes on the consolidated income statements was $2.3 million and $2.1 million for the three months ended September 30, 2015 and 2014, respectively, and $7.1 million and $7.4 million for the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015 and December 31, 2014, the Corporation’s tax credit investments, included in other assets on the consolidated balance sheets, totaled $164.0 million and $155.6 million, respectively. The adoption of this ASC update did not have a material impact on the Corporation's consolidated financial statements for the three or nine months ended September 30, 2015 or 2014.

~~In February 2015, the~~ FASB ~~issued~~ ASC Update 2015-02, "Consolidation: Amendments to the Consolidation ~~Analysis."~~Analysis" effective January 1, 2016. ASC Update 2015-02 ~~changes~~changed the way reporting enterprises evaluate whether: (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a variable interest entity ("VIE"), and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. ASC Update 2015-02 iswas effective for public business entities' annual and interim reporting periods ~~beginning~~that began after December 15, 2015, with earlier adoption permitted.The ~~Corporation intends to adopt this standards update effective with its March 31, 2016 quarterly report on Form 10-Q, and does not expect the~~ adoption of ASC Update 2015-02 todid not have a material impact on ~~its~~the Corporation's consolidated financial statements.

~~In April 2015,~~Effective January 1, 2016, the Corporation adopted FASB ~~issued~~ ASC Update 2015-03, "Interest - Imputation of Interest" and the updated ASC Update 2015-03 with the issuance of ASC Update 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit ~~Arrangements,~~Arrangements.” ~~in August of 2015.~~ ASC Update 2015-03 simplifies the presentation of debt issuances costs. Debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts. ~~Under current~~Previously under U.S. GAAP, debt issuance costs ~~are~~were reported on the balance sheet as assets. The costs will continue to be amortized to interest expense using the effective interest method. ASC Update 2015-03 iswas effective for public business entities' annual and interim reporting periods beginning after December 15, 2015, with earlier adoption permitted. The ~~Corporation intends to adopt this standards update effective with its March 31, 2016 quarterly report on Form 10-Q and does not expect the~~ adoption of ASC Update 2015-03 todid not have a material impact on ~~its~~the Corporation's consolidated financial statements.

~~In April 2015, the~~The Corporation prospectively adopted FASB issued ASC Update 2015-05, "Customer's Accounting for Fees Paid in a Cloud Computing ~~Arrangement."~~Arrangement" effective January 1, 2016. ASC Update 2015-05 provides explicit guidance to determine when a customer's fees paid in a cloud computing arrangement is for the acquisition of software licenses, services, or both. ASC Update 2015-05 iswas effective for public business entities' annual and interim reporting periods beginning after December 15, 2015, with earlier adoption permitted. The adoption of ASC Update 2015-05 did not have a material impact on the Corporation's consolidated financial statements.

Recently Issued Accounting Standards

In May 2014, the FASB issued ASC Update 2014-09, "Revenue from Contracts with Customers." This standards update establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle prescribed by this standards update is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard applies to all contracts with customers, except those that are within the scope of other topics in the FASB ASC. The standard also requires significantly expanded disclosures about revenue recognition. For public business entities, ASC Update 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2017. Early application is not permitted. For the Corporation, ~~intends to adopt~~this standards update is effective with its March 31, 2018 quarterly report on Form 10-Q. The Corporation is currently evaluating the impact of the adoption of ASC Update 2014-09 on its consolidated financial statements.

In January 2016, the FASB issued ASC Update 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities." ASC Update 2016-01 provides guidance regarding the income statement impact of equity investments held by an entity and the recognition of changes in fair value of financial liabilities when the fair value option is elected. ASC Update 2016-01 is effective for public business entities' annual and interim reporting periods beginning after December 15, 2017, with earlier adoption permitted.The Corporation intends to adopt this standards update effective with its March 31, ~~2016~~2018 quarterly report on Form 10-Q and does not expect the adoption of ASC Update ~~2015-05~~2016-01 to have a material impact on its consolidated financial statements.

In February 2016, the FASB issued ASC Update 2016-02, "Leases." This standards update states that a lessee should recognize the assets and liabilities that arise from all leases with a term greater than 12 months. The core principle requires the lessee to recognize a liability to make lease payments and a "right-of-use" asset. The accounting applied by the lessor is relatively unchanged. The standards update also requires expanded qualitative and quantitative disclosures. For public business entities, ASC Update 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018. ASC Update 2016-02 mandates a modified retrospective transition for all entities. Early application is permitted. For the Corporation, this standards update is effective with its March 31, 2019 quarterly report on Form 10-Q. The Corporation is currently evaluating the impact of the adoption of ASC Update 2016-02 on its consolidated financial statements.

In March 2016, the FASB issued ASC Update 2016-09, "Stock Compensation: Improvements to Employee Share-Based Payment Accounting." The purpose of this standards update is to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liability, and classification on the statement of cash flows. ASC Update 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016. Early application is permitted. For the Corporation, this standards update is effective with its March 31, 2017 quarterly report on Form 10-Q. The Corporation is currently evaluating the impact of the adoption of ASC Update 2016-09 on its consolidated financial statements.

Reclassifications

Certain amounts in the 2015 consolidated financial statements and notes have been reclassified to conform to the 2016 presentation.

NOTE 2 – Net Income Per Share

Basic net income per share is calculated as net income divided by the weighted average number of shares outstanding.

Diluted net income per share is calculated as net income divided by the weighted average number of shares outstanding plus the incremental number of shares added as a result of converting common stock equivalents, calculated using the treasury stock method. The Corporation’s common stock equivalents consist of outstanding stock options, restricted stock, restricted stock units ("RSUs") and ~~performance based~~performance-based restricted stock units ("PSUs"). PSUs are required to be included in weighted average shares outstanding if performance measures, as defined in each PSU award agreement, are met as of the end of the period.

A reconciliation of weighted average shares outstanding used to calculate basic net income per share and diluted net income per share follows:


	Three months ended September 30		Nine months ended September 30		Three months ended March 31
	2015	2014	2015	2014	2016	2015
	(in thousands)				(in thousands)
Weighted average shares outstanding (basic)	174,338	186,109	176,399	187,893	173,331	178,471
Impact of common stock equivalents	1,004	846	1,029	970	1,085	986
Weighted average shares outstanding (diluted)	175,342	186,955	177,428	188,863	174,416	179,457

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015, ~~1.5 million~~885,000 and ~~1.8~~2.1 million stock options, respectively, were excluded from the diluted net income per share computation as their effect would have been anti-dilutive. For the three and nine months ended September 30, 2014, 2.5 million and 2.9 million stock options, respectively, were excluded from the diluted net income per share computation as their effect would have been anti-dilutive.

NOTE 3 – Accumulated Other Comprehensive Income

The following table presents changes in other comprehensive income:

Before-Tax Amount Tax Effect Net of Tax Amount
(in thousands)
Three months ended September 30, 2015
Unrealized gain on securities $ 12,088
$ (4,231 ) $ 7,857
Reclassification adjustment for securities gains included in net income (1) (1,730 ) 606
(1,124 )
Reclassification adjustment for loss on derivative financial instruments included in net income (2) 3,778
(1,322 ) 2,456
Amortization of unrealized loss on derivative financial instruments 5
(2 ) 3
Amortization of net unrecognized pension and postretirement items (3) 717
(251 ) 466
Total Other Comprehensive Income $ 14,858
$ (5,200 ) $ 9,658
Three months ended September 30, 2014
Unrealized loss on securities $ (4,629 ) $ 1,618
$ (3,011 )
Reclassification adjustment for securities gains included in net income (1) (81 ) 29
(52 )
Non-credit related unrealized gains on other-than-temporarily impaired debt securities 212
(74 ) 138
Amortization of unrealized loss on derivative financial instruments 52
(18 ) 34
Amortization of net unrecognized pension and postretirement items (3) 160
(56 ) 104
Total Other Comprehensive Loss $ (4,286 ) $ 1,499
$ (2,787 )

Nine months ended September 30, 2015
Unrealized gain on securities $ 8,987
$ (3,146 ) $ 5,841
Reclassification adjustment for securities gains included in net income (1) (8,290 ) 2,902
(5,388 )
Reclassification adjustment for loss on derivative financial instruments included in net income (2) 3,778
(1,322 ) 2,456
Non-credit related unrealized gains (losses) on other-than-temporarily impaired debt securities 192
(67 ) 125
Amortization of unrealized loss on derivative financial instruments 110
(39 ) 71
Amortization of net unrecognized pension and postretirement items (3) 2,151
(753 ) 1,398
Total Other Comprehensive Income $ 6,928
$ (2,425 ) $ 4,503
Nine months ended September 30, 2014
Unrealized gain on securities $ 36,790
$ (12,878 ) $ 23,912
Reclassification adjustment for securities gains included in net income (1) (1,193 ) 418
(775 )
Reclassification adjustment for postretirement gains included in net income (3) (1,452 ) 508
(944 )
Non-credit related unrealized gains (losses) on other-than-temporarily impaired debt securities 1,000
(350 ) 650
Amortization of unrealized loss on derivative financial instruments 157
(55 ) 102
Unrecognized pension and postretirement income 3,291
(1,147 ) 2,144
Amortization of net unrecognized pension and postretirement items (3) 469
(165 ) 304
Total Other Comprehensive Income $ 39,062
$ (13,669 ) $ 25,393



	Before-Tax Amount			Tax Effect			Net of Tax Amount
	(in thousands)
Three months ended March 31, 2016
Unrealized gain on securities	$	26,193		$	(9,167	)	$	17,026
Reclassification adjustment for securities gains included in net income ⁽¹⁾	(947		)	331			(616		)
Amortization of unrealized loss on derivative financial instruments ⁽²⁾	6			(2		)	4
Amortization of net unrecognized pension and postretirement items ⁽³⁾	717			(251		)	466
Total Other Comprehensive Income	$	25,969		$	(9,089	)	$	16,880
Three months ended March 31, 2015
Unrealized gain on securities	$	15,371		$	(5,379	)	$	9,992
Reclassification adjustment for securities gains included in net income ⁽¹⁾	(4,145		)	1,450			(2,695		)
Non-credit related unrealized gains on other-than-temporarily impaired debt securities	192			(67		)	125
Amortization of unrealized loss on derivative financial instruments⁽²⁾	52			(18		)	34
Amortization of net unrecognized pension and postretirement items ⁽³⁾	717			(251		)	466
Total Other Comprehensive Income	$	12,187		$	(4,265	)	$	7,922


(1)	Amounts reclassified out of accumulated other comprehensive income. Before-tax amounts included ~~within~~in "Investment securities gains, net" on the consolidated statements of income. See Note 4, "Investment Securities," for additional details.


(2)	~~Amount~~Amounts reclassified out of accumulated other comprehensive income. Before-tax ~~amount~~amounts included ~~within "Loss on Redemption of Trust Preferred Securities"~~in "Interest expense" on the consolidated statements of income. ~~See Note 15, "Long-Term Debt," for additional details.~~


(3)	Amounts reclassified out of accumulated other comprehensive income. Before-tax amounts included ~~within~~in "Salaries and employee benefits" on the consolidated statements of income. See Note 8, "Employee Benefit Plans," for additional details.

The following table presents changes in each component of accumulated other comprehensive income, net of tax:

Unrealized Gains (Losses) on Investment Securities Not Other-Than-Temporarily Impaired Unrealized Non-Credit Gains (Losses) on Other-Than-Temporarily Impaired Debt Securities Unrealized Effective Portions of Losses on Forward-Starting Interest Rate Swaps Unrecognized Pension and Postretirement Plan Income (Costs) Total
(in thousands)
Three months ended September 30, 2015
Balance at June 30, 2015 $ 830
$ 344
$ (2,478 ) $ (21,573 ) $ (22,877 )
Other comprehensive loss before reclassifications 7,857
—
—
—
7,857
Amounts reclassified from accumulated other comprehensive income (loss) (1,124 ) —
3
466
(655 )
Reclassification adjustment for loss on derivative financial instruments included in net income —
—
—
2,456
—
—
2,456
Balance at September 30, 2015 $ 7,563
$ 344
$ (19 ) $ (21,107 ) $ (13,219 )
Three months ended September 30, 2014

Balance at June 30, 2014 $ (580 ) $ 1,434
$ (2,614 ) $ (7,401 ) $ (9,161 )
Other comprehensive income before reclassifications (3,011 )

138
—
—
(2,873 )
Amounts reclassified from accumulated other comprehensive income (loss) (63 ) 11
34
104
86
Balance at September 30, 2014 $ (3,654 ) $ 1,583
$ (2,580 ) $ (7,297 ) $ (11,948 )

Nine months ended September 30, 2015
Balance at December 31, 2014 $ 5,980
$ 1,349
$ (2,546 ) $ (22,505 ) $ (17,722 )
Other comprehensive income before reclassifications 5,841
125
—
—
5,966
Amounts reclassified from accumulated other comprehensive income (loss) (4,258 ) (1,130 ) 71
1,398
(3,919 )
Reclassification adjustment for loss on derivative financial instruments included in net income —
—
2,456
—
2,456
Balance at September 30, 2015 $ 7,563
$ 344
$ (19 ) $ (21,107 ) $ (13,219 )
Nine months ended September 30, 2014
Balance at December 31, 2013 $ (27,510 ) $ 1,652
$ (2,682 ) $ (8,801 ) $ (37,341 )
Other comprehensive income before reclassifications 23,912
650
—
2,144
26,706
Amounts reclassified from accumulated other comprehensive income (loss) (56 ) (719 ) 102
(640 ) (1,313 )
Balance at September 30, 2014 $ (3,654 ) $ 1,583
$ (2,580 ) $ (7,297 ) $ (11,948 )



	Unrealized Gains (Losses) on Investment Securities Not Other-Than-Temporarily Impaired			Unrealized Non-Credit Gains (Losses) on Other-Than-Temporarily Impaired Debt Securities			Unrealized Effective Portions of Losses on Forward-Starting Interest Rate Swaps			Unrecognized Pension and Postretirement Plan Income (Costs)			Total
	(in thousands)
Three months ended March 31, 2016
Balance at December 31, 2015	$	(6,499	)	$	458		$	(15	)	$	(15,961	)	$	(22,017	)
Other comprehensive income before reclassifications	17,026			—			—			—			17,026
Amounts reclassified from accumulated other comprehensive income (loss)	(616		)	—			4			466			(146		)
Balance at March 31, 2016	$	9,911		$	458		$	(11	)	$	(15,495	)	$	(5,137	)
Three months ended March 31, 2015
Balance at December 31, 2014	$	5,980		$	1,349		$	(2,546	)	$	(22,505	)	$	(17,722	)
Other comprehensive income before reclassifications	9,992			125			—			—			10,117
Amounts reclassified from accumulated other comprehensive income (loss)	(1,661		)	(1,034		)	34			466			(2,195		)
Balance at March 31, 2015	$	14,311		$	440		$	(2,512	)	$	(22,039	)	$	(9,800	)

NOTE 4 – Investment Securities

The following table presents the amortized cost and estimated fair values of investment securities, which were all classified as available for sale:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)									(in thousands)
September 30, 2015
Equity securities	$	16,087	$	7,453	$	(8	)	$	23,532
March 31, 2016
U.S. Government sponsored agency securities	48,320		231		—			48,551		$	25,149	$	24	$	—		$	25,173
State and municipal securities	234,868		5,430		(62		)	240,236		307,038		7,025		(53		)	314,010
Corporate debt securities	102,297		2,935		(5,291		)	99,941		95,389		2,773		(8,276		)	89,886
Collateralized mortgage obligations	879,738		5,638		(11,077		)	874,299		782,018		5,322		(5,265		)	782,075
Mortgage-backed securities	1,036,193		16,845		(1,133		)	1,051,905		1,169,552		19,454		(338		)	1,188,668
Auction rate securities	106,661		—		(8,788		)	97,873		106,871		—		(9,545		)	97,326
	$	2,424,164	$	38,532	$	(26,359	)	$	2,436,337
Total debt securities										2,486,017		34,598		(23,477		)	2,497,138
Equity securities										14,228		4,852		(13		)	19,067
Total										$	2,500,245	$	39,450	$	(23,490	)	$	2,516,205


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)									(in thousands)
December 31, 2014
Equity securities	$	33,469	$	14,167	$	(13	)	$	47,623
U.S. Government securities	200		—		—			200
December 31, 2015
U.S. Government sponsored agency securities	209		5		—			214		$	25,154	$	35	$	(53	)	$	25,136
State and municipal securities	238,250		7,231		(266		)	245,215		256,746		6,019		—			262,765
Corporate debt securities	99,016		5,126		(6,108		)	98,034		100,336		2,695		(6,076		)	96,955
Collateralized mortgage obligations	917,395		5,705		(20,787		)	902,313		835,439		3,042		(16,972		)	821,509
Mortgage-backed securities	914,797		16,978		(2,944		)	928,831		1,154,935		10,104		(6,204		)	1,158,835
Auction rate securities	108,751		—		(7,810		)	100,941		106,772		—		(8,713		)	98,059
	$	2,312,087	$	49,212	$	(37,928	)	$	2,323,371
Total debt securities										2,479,382		21,895		(38,018		)	2,463,259
Equity securities										$	14,677	$	6,845	$	(8	)	$	21,514
Total										2,494,059		28,740		(38,026		)	2,484,773

Securities carried at ~~$1.8~~$1.6 billion as of ~~September 30, 2015~~March 31, 2016 and $1.7 billion as of December 31, ~~2014~~2015 were pledged as collateral to secure public and trust deposits and customer repurchase agreements.

Equity securities include common stocks of financial institutions (estimated fair value of ~~$22.4~~$18.2 million at ~~September 30, 2015~~March 31, 2016 and ~~$41.8~~$20.6 million at December 31, ~~2014)~~2015) and other equity investments (estimated fair value of ~~$1.1 million~~$892,000 at ~~September 30, 2015~~March 31, 2016 and ~~$5.8 million~~$914,000 at December 31, ~~2014)~~2015).

As of ~~September 30, 2015,~~March 31, 2016, the financial institutions stock portfolio had a cost basis of ~~$15.1~~$13.4 million and an estimated fair value of ~~$22.4~~$18.2 million, including an investment in a single financial institution with a cost basis of ~~$8.5~~$7.4 million and an estimated fair value of ~~$12.8~~$9.1 million. The estimated fair value of this investment accounted for ~~57.1%~~50.3% of the estimated fair value of the Corporation's investments in the common stocks of publicly traded financial institutions. No other investment ~~within~~in a single financial institution in the financial institutions stock portfolio exceeded 5%10% of the portfolio's estimated fair value.

The amortized cost and estimated fair values of debt securities as of ~~September 30, 2015,~~March 31, 2016, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


		Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value
	(in thousands)					(in thousands)
Due in one year or less		$	62,247	$	63,023		$	64,096	$	64,475
Due from one year to five years		104,989		107,283			89,237		91,302
Due from five years to ten years		132,930		136,571			92,154		95,021
Due after ten years		191,980		179,724			288,960		275,597
		492,146		486,601			534,447		526,395
Collateralized mortgage obligations		879,738		874,299			782,018		782,075
Mortgage-backed securities		1,036,193		1,051,905			1,169,552		1,188,668
		$	2,408,077	$	2,412,805
Total debt securities							$	2,486,017	$	2,497,138

The following table presents information related to the gross realized gains ~~and losses~~ on the sales of equity and debt securities:


	Gross Realized Gains		Gross Realized Losses			Other-than- temporary Impairment Losses			Net Gains (Losses)			Gross Realized Gains		Gross Realized Losses		Net Gains (Losses)
Three months ended September 30, 2015	(in thousands)
Three months ended March 31, 2016												(in thousands)
Equity securities	$	1,730	$	—		$	—		$	1,730		$	733	$	—	$	733
Debt securities	—		—			—			—			214		—		214
Total	$	1,730	$	—		$	—		$	1,730		$	947	$	—	$	947
Three months ended September 30, 2014
Three months ended March 31, 2015
Equity securities	$	99	$	—		$	—		$	99		$	1,970	$	—	$	1,970
Debt securities	—		—			(18		)	(18		)	2,175		—		2,175
Total	$	99	$	—		$	(18	)	$	81		$	4,145	$	—	$	4,145

Nine months ended September 30, 2015
Equity securities	$	5,990	$	—		$	—		$	5,990
Debt securities	2,300		—			—			2,300
Total	$	8,290	$	—		$	—		$	8,290
Nine months ended September 30, 2014
Equity securities	$	100	$	—		$	(12	)	$	88
Debt securities	1,446		(323		)	(18		)	1,105
Total	$	1,546	$	(323	)	$	(30	)	$	1,193

The following table presents a summary of the cumulative credit related other-than-temporary impairment charges, recognized as components of earnings, for debt securities held by the Corporation at ~~September 30, 2015~~March 31, 2016 and ~~2014:~~2015:


	Three months ended September 30						Nine months ended September 30						Three months ended March 31
	2015			2014			2015			2014			2016			2015
	(in thousands)												(in thousands)
Balance of cumulative credit losses on debt securities, beginning of period	$	(11,510	)	$	(17,214	)	$	(16,242	)	$	(20,691	)	$	(11,510	)	$	(16,242	)
Additions for credit losses recorded which were not previously recognized as components of earnings	—			(18		)	—			(18		)
Reductions for securities sold during the period	—			—			4,730			3,472			—			3,938
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security	—			—			2			5			—			2
Balance of cumulative credit losses on debt securities, end of period	$	(11,510	)	$	(17,232	)	$	(11,510	)	$	(17,232	)	$	(11,510	)	$	(12,302	)

The following table presents the gross unrealized losses and estimated fair values of investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at ~~September 30, 2015:~~March 31, 2016:


	Less than 12 months					12 months or longer					Total					Less than 12 months					12 months or longer					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(in thousands)															(in thousands)
U.S. Government sponsored agency securities	$	—	$	—		$	—	$	—		$	—	$	—
State and municipal securities	11,892		(62		)	—		—			11,892		(62		)	$	17,961	$	(53	)	$	—	$	—		$	17,961	$	(53	)
Corporate debt securities	7,968		(15		)	33,718		(5,276		)	41,686		(5,291		)	—		—			30,762		(8,276		)	30,762		(8,276		)
Collateralized mortgage obligations	30,723		(62		)	493,703		(11,015		)	524,426		(11,077		)	21,078		(87		)	461,807		(5,178		)	482,885		(5,265		)
Mortgage-backed securities	161,097		(443		)	67,071		(690		)	228,168		(1,133		)	98,180		(175		)	30,243		(163		)	128,423		(338		)
Auction rate securities	—		—			97,873		(8,788		)	97,873		(8,788		)	—		—			97,326		(9,545		)	97,326		(9,545		)
Total debt securities	211,680		(582		)	692,365		(25,769		)	904,045		(26,351		)	137,219		(315		)	620,138		(23,162		)	757,357		(23,477		)
Equity securities	—		—			13		(8		)	13		(8		)	50		(3		)	12		(10		)	62		(13		)
	$	211,680	$	(582	)	$	692,378	$	(25,777	)	$	904,058	$	(26,359	)	$	137,269	$	(318	)	$	620,150	$	(23,172	)	$	757,419	$	(23,490	)

The Corporation’s collateralized mortgage obligations and mortgage-backed securities have contractual terms that generally do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the decline in market value of these securities is attributable to changes in interest rates and not credit quality, and because the Corporation does not have the intent to sell and does not believe it will more likely than not be required to sell any of these securities prior to a recovery of their fair value to amortized cost, the Corporation does not consider these investments to be other-than-temporarily impaired as of ~~September 30, 2015.~~March 31, 2016.

~~The unrealized holding losses on~~As of March 31, 2016, all of the auction rate securities (auction rate certificates, or "ARCs"), are attributable to liquidity issues resulting from the failure of periodic auctions. The Corporation had previously purchased ARCs for investment management and trust customers as short-term investments with fair values that could be derived based on periodic auctions under normal market conditions. During 2008 and 2009, the Corporation purchased ARCs from these customers due to the failure of these periodic auctions, which made these previously short-term investments illiquid.

~~As of September 30, 2015, all of the ARCs~~ were rated above investment grade, with approximately ~~$5.4~~$5.5 million, or 6%, "AAA" rated and ~~$92.4~~$91.8 million, or 94%, "AA" rated. All of the loans underlying the ARCs have principal payments which are guaranteed by the federal government.

As of ~~September 30, 2015,~~March 31, 2016, all ARCs were current and making scheduled interest payments. Based on management’s evaluations, ARCs with an estimated fair value of ~~$97.9~~$97.3 million were not subject to any other-than-temporary impairment charges as of ~~September 30, 2015.~~March 31, 2016. The Corporation does not have the intent to sell and does not believe it will more likely than not be required to sell any of these securities prior to a recovery of their fair value to amortized cost, which may be at maturity.

For its investments in equity securities, particularly its investments in stocks of financial institutions, management evaluates the near-term prospects of the issuers in relation to the severity and duration of the impairment. Based on that evaluation and the Corporation’s ability and intent to hold those investments for a reasonable period of time sufficient for a recovery of fair value,

the Corporation does not consider those investments with unrealized holding losses as of ~~September 30, 2015~~March 31, 2016 to be other-than-temporarily impaired.

The majority of the Corporation's available for sale corporate debt securities are issued by financial institutions. The following table presents the amortized cost and estimated fair value of corporate debt securities:


	September 30, 2015				December 31, 2014				March 31, 2016				December 31, 2015
	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value		Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
	(in thousands)								(in thousands)
Single-issuer trust preferred securities	$	46,624	$	41,787	$	47,569	$	42,016	$	43,673	$	35,851	$	44,648	$	39,106
Subordinated debt	51,625		53,576		47,530		50,023		47,681		49,294		51,653		53,108
Pooled trust preferred securities	—		530		2,010		4,088		—		706		—		706
Corporate debt securities issued by financial institutions	98,249		95,893		97,109		96,127		91,354		85,851		96,301		92,920
Other corporate debt securities	4,048		4,048		1,907		1,907		4,035		4,035		4,035		4,035
Available for sale corporate debt securities	$	102,297	$	99,941	$	99,016	$	98,034	$	95,389	$	89,886	$	100,336	$	96,955

~~The Corporation’s investments in single-issuer~~Single-issuer trust preferred securities had an unrealized loss of ~~$4.8~~$7.8 million at September 30, 2015. The Corporation did not record any other-than-temporary impairment charges for single-issuer trust preferred securities during the three or nine months ended September 30, 2015 or 2014.~~Seven~~March 31, 2016. Six of the ~~Corporation's~~ 19 single-issuer trust preferred securities were rated below investment grade by at least one ratings agency, with an amortized cost of ~~$14.5~~$11.5 million and an estimated fair value of ~~$13.2~~$9.0 million at ~~September 30, 2015.~~March 31, 2016. All of the single-issuer trust preferred securities rated below investment grade were rated "BB" or "Ba". Two single-issuer trust preferred securities with an amortized cost of $3.7 million and an estimated fair value of ~~$2.7~~$2.4 million at ~~September 30, 2015~~March 31, 2016 were not rated by any ratings agency.

During the nine months ended September 30, 2015, the Corporation sold three pooled trust preferred securities with a total amortized cost of $1.9 million, for a gain of $2.3 million. As of September 30, 2015, both of the Corporation's remaining pooled trust preferred securities, with an amortized cost of $0 and an estimated fair value of $530,000, were rated below investment grade by at least one ratings agency, with ratings ranging from "C" to "Ca". The class of securities held by the Corporation was below the most senior tranche, with the Corporation’s interests being subordinate to other investors in the pool. The Corporation determines the fair value of pooled trust preferred securities based on quotes provided by third-party brokers.

The amortized cost of pooled trust preferred securities is the purchase price of the securities, net of cumulative credit related other-than-temporary impairment charges, determined using an expected cash flows model. The most significant input to the expected cash flows model is the expected payment deferral rate for each pooled trust preferred security. The Corporation evaluates the financial metrics, such as capital ratios and non-performing assets ratios, of the individual financial institution issuers that comprise each pooled trust preferred security to estimate its expected deferral rate.

Based on management’s evaluations, corporate debt securities with a fair value of ~~$99.9~~$89.9 million were not subject to any other-than-temporary impairment charges as of ~~September 30, 2015.~~March 31, 2016. The Corporation does not have the intent to sell and does not believe it will more likely than not be required to sell any of these securities prior to a recovery of their fair value to amortized cost, which may be at maturity.

NOTE 5 – Loans and Allowance for Credit Losses

Loans, Net of Unearned Income

Loans, net of unearned income are summarized as follows:


	September 30, 2015			December 31, 2014			March 31, 2016			December 31, 2015
	(in thousands)						(in thousands)
Real-estate - commercial mortgage	$	5,339,928		$	5,197,155		$	5,558,108		$	5,462,330
Commercial - industrial, financial and agricultural	3,929,908			3,725,567			4,035,333			4,088,962
Real-estate - home equity	1,693,649			1,736,688			1,659,481			1,684,439
Real-estate - residential mortgage	1,382,085			1,377,068			1,377,459			1,376,160
Real-estate - construction	769,565			690,601			810,872			799,988
Consumer	271,696			265,431			263,221			268,588
Leasing and other	161,911			127,562			179,765			170,914
Overdrafts	2,614			4,021			2,379			2,737
Loans, gross of unearned income	13,551,356			13,124,093			13,886,618			13,854,118
Unearned income	(14,995		)	(12,377		)	(15,917		)	(15,516		)
Loans, net of unearned income	$	13,536,361		$	13,111,716		$	13,870,701		$	13,838,602

Allowance for Credit Losses

The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments. The allowance for loan losses represents management’s estimate of incurred losses in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The reserve for unfunded lending commitments represents management’s estimate of incurred losses in its unfunded loan commitments and is recorded in other liabilities on the consolidated balance ~~sheet.~~sheets. The allowance for credit losses is increased by charges to expense, through the provision for credit losses, and decreased by charge-offs, net of recoveries.

The Corporation’s allowance for credit losses includes: (1) specific allowances allocated to loans evaluated for impairment under the FASB's ASC Section 310-10-35; and (2) allowances calculated for pools of loans measured for impairment under FASB ASC Subtopic 450-20.

The Corporation segments its loan portfolio by general loan type, or "portfolio segments," as presented in the table under the heading, "Loans, Net of Unearned Income," above. Certain portfolio segments are further disaggregated and evaluated collectively for impairment based on "class segments," which are largely based on the type of collateral underlying each loan. Commercial loans include loans secured by collateral and unsecured loans. Construction loan class segments include loans secured by commercial real estate, loans to commercial borrowers secured by residential real estate and loans to individuals secured by residential real estate. Consumer loan class segments include direct consumer installment loans and indirect automobile loans.

The following table presents the components of the allowance for credit losses:


	September 30, 2015		December 31, 2014		March 31, 2016		December 31, 2015
	(in thousands)				(in thousands)
Allowance for loan losses	$	167,136	$	184,144	$	163,841	$	169,054
Reserve for unfunded lending commitments	2,259		1,787		2,224		2,358
Allowance for credit losses	$	169,395	$	185,931	$	166,065	$	171,412

The following table presents the activity in the allowance for credit losses:


	Three months ended September 30						Nine months ended September 30						Three months ended March 31
	2015			2014			2015			2014			2016			2015
	(in thousands)												(in thousands)
Balance at beginning of period	$	169,453		$	193,442		$	185,931		$	204,917		$	171,412		$	185,931
Loans charged off	(5,561		)	(9,604		)	(26,697		)	(31,348		)	(11,155		)	(5,764		)
Recoveries of loans previously charged off	4,503			3,770			10,661			8,039			4,278			3,191
Net loans charged off	(1,058		)	(5,834		)	(16,036		)	(23,309		)	(6,877		)	(2,573		)
Provision for credit losses	1,000			3,500			(500		)	9,500			1,530			(3,700		)
Balance at end of period	$	169,395		$	191,108		$	169,395		$	191,108		$	166,065		$	179,658

The following table presents the activity in the allowance for loan losses by portfolio segment:


	Real Estate - Commercial Mortgage			Commercial - Industrial, Financial and Agricultural			Real Estate - Home Equity			Real Estate - Residential Mortgage			Real Estate - Construction			Consumer			Leasing and other and overdrafts			Unallocated			Total			Real Estate - Commercial Mortgage			Commercial - Industrial, Financial and Agricultural			Real Estate - Home Equity			Real Estate - Residential Mortgage			Real Estate - Construction			Consumer			Leasing, other and overdrafts			Unallocated			Total
	(in thousands)																											(in thousands)
Three months ended September 30, 2015
Balance at June 30, 2015	$	50,680		$	49,170		$	22,506		$	22,787		$	7,749		$	2,608		$	1,615		$	10,370		$	167,485
Three months ended March 31, 2016
Balance at December 31, 2015																												$	47,866		$	57,098		$	22,405		$	21,375		$	6,529		$	2,585		$	2,468		$	8,728		$	169,054
Loans charged off	(660		)	(1,640		)	(940		)	(1,035		)	(114		)	(650		)	(522		)	—			(5,561		)	(582		)	(6,188		)	(1,541		)	(1,068		)	(326		)	(1,007		)	(443		)	—			(11,155		)
Recoveries of loans previously charged off	842			1,598			304			201			898			314			346			—			4,503			825			2,319			338			136			383			196			81			—			4,278
Net loans charged off	182			(42		)	(636		)	(834		)	784			(336		)	(176		)	—			(1,058		)	243			(3,869		)	(1,203		)	(932		)	57			(811		)	(362		)	—			(6,877		)
Provision for loan losses (1)	825			(405		)	180			(609		)	(964		)	282			223			1,177			709			202			1,104			1,322			(515		)	(304		)	550			868			(1,563		)	1,664
Balance at September 30, 2015	$	51,687		$	48,723		$	22,050		$	21,344		$	7,569		$	2,554		$	1,662		$	11,547		$	167,136
Three months ended September 30, 2014
Balance at June 30, 2014	$	49,842		$	49,084		$	32,041		$	32,744		$	11,331		$	3,306		$	1,851		$	11,486		$	191,685
Loans charged off	(1,557		)	(5,167		)	(1,492		)	(231		)	(313		)	(538		)	(306		)	—			(9,604		)
Recoveries of loans previously charged off	1,167			1,013			336			95			470			448			241			—			3,770
Net loans charged off	(390		)	(4,154		)	(1,156		)	(136		)	157			(90		)	(65		)	—			(5,834		)
Provision for loan losses (1)	(278		)	6,110			406			397			(312		)	244			180			(3,121		)	3,626
Balance at September 30, 2014	$	49,174		$	51,040		$	31,291		$	33,005		$	11,176		$	3,460		$	1,966		$	8,365		$	189,477
Nine months ended September 30, 2015
Balance at March 31, 2016																												$	48,311		$	54,333		$	22,524		$	19,928		$	6,282		$	2,324		$	2,974		$	7,165		$	163,841
Three months ended March 31, 2015
Balance at December 31, 2014	$	53,493		$	51,378		$	28,271		$	29,072		$	9,756		$	3,015		$	1,799		$	7,360		$	184,144		$	53,493		$	51,378		$	28,271		$	29,072		$	9,756		$	3,015		$	1,799		$	7,360		$	184,144
Loans charged off	(3,011		)	(14,669		)	(2,578		)	(3,099		)	(201		)	(1,787		)	(1,352		)	—			(26,697		)	(709		)	(1,863		)	(768		)	(1,281		)	—			(780		)	(363		)	—			(5,764		)
Recoveries of loans previously charged off	1,729			3,855			744			547			2,276			923			587			—			10,661			436			786			251			159			1,147			241			171			—			3,191
Net loans charged off	(1,282		)	(10,814		)	(1,834		)	(2,552		)	2,075			(864		)	(765		)	—			(16,036		)	(273		)	(1,077		)	(517		)	(1,122		)	1,147			(539		)	(192		)	—			(2,573		)
Provision for loan losses (1)	(524		)	8,159			(4,387		)	(5,176		)	(4,262		)	403			628			4,187			(972		)	(360		)	6,849			(4,273		)	(4,715		)	(2,416		)	51			46			948			(3,870		)
Balance at September 30, 2015	$	51,687		$	48,723		$	22,050		$	21,344		$	7,569		$	2,554		$	1,662		$	11,547		$	167,136
Nine months ended September 30, 2014
Balance at December 31, 2013	$	55,659		$	50,330		$	28,222		$	33,082		$	12,649		$	3,260		$	3,370		$	16,208		$	202,780
Loans charged off	(5,084		)	(15,804		)	(4,377		)	(2,166		)	(745		)	(1,738		)	(1,434		)	—			(31,348		)
Recoveries of loans previously charged off	1,641			2,532			869			319			852			1,059			767			—			8,039
Net loans charged off	(3,443		)	(13,272		)	(3,508		)	(1,847		)	107			(679		)	(667		)	—			(23,309		)
Provision for loan losses (1)	(3,042		)	13,982			6,577			1,770			(1,580		)	879			(737		)	(7,843		)	10,006
Balance at September 30, 2014	$	49,174		$	51,040		$	31,291		$	33,005		$	11,176		$	3,460		$	1,966		$	8,365		$	189,477
Balance at March 31, 2015																												$	52,860		$	57,150		$	23,481		$	23,235		$	8,487		$	2,527		$	1,653		$	8,308		$	177,701

(1)

The provision for loan losses excluded a ~~$291,000~~$134,000 decrease and ~~$472,000~~a $170,000 increase, respectively, in the reserve for unfunded lending commitments for the three ~~and nine~~ months ended ~~September 30, 2015~~March 31, 2016 and ~~a $126,000 and $506,000 decrease, respectively, in the reserve for unfunded lending commitments for the three and nine months ended September 30, 2014.~~2015. The total provision for credit losses, comprised of allocations for both funded and unfunded loans, was ~~$1.0~~$1.5 million and negative ~~$500,000, respectively,~~$3.7 million for thethree ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015, ~~and $3.5 million and $9.5 million, respectively, for the three and nine months ended September 30, 2014.~~respectively.

The following table presents loans, net of unearned income and their related allowance for loan losses, by portfolio segment:


	Real Estate - Commercial Mortgage		Commercial - Industrial, Financial and Agricultural		Real Estate - Home Equity		Real Estate - Residential Mortgage		Real Estate - Construction		Consumer		Leasing and other and overdrafts		Unallocated (1)		Total		Real Estate - Commercial Mortgage		Commercial - Industrial, Financial and Agricultural		Real Estate - Home Equity		Real Estate - Residential Mortgage		Real Estate - Construction		Consumer		Leasing, other and overdrafts		Unallocated (1)		Total
	(in thousands)																		(in thousands)
Allowance for loan losses at September 30, 2015:
Allowance for loan losses at March 31, 2016:																			Allowance for loan losses at March 31, 2016:
Measured for impairment under FASB ASC Subtopic 450-20	$	38,490	$	36,002	$	14,867	$	7,921	$	5,119	$	2,535	$	1,662	$	11,547	$	118,143	$	35,914	$	40,969	$	13,541	$	7,599	$	4,004	$	2,302	$	1,756	$	7,165	$	113,250
Evaluated for impairment under FASB ASC Section 310-10-35	13,197		12,721		7,183		13,423		2,450		19		—		N/A		48,993		12,397		13,364		8,983		12,329		2,278		22		1,218		N/A		50,591
	$	51,687	$	48,723	$	22,050	$	21,344	$	7,569	$	2,554	$	1,662	$	11,547	$	167,136	$	48,311	$	54,333	$	22,524	$	19,928	$	6,282	$	2,324	$	2,974	$	7,165	$	163,841

Loans, net of unearned income at September 30, 2015:
Loans, net of unearned income at March 31, 2016:																			Loans, net of unearned income at March 31, 2016:
Measured for impairment under FASB ASC Subtopic 450-20	$	5,273,819	$	3,885,956	$	1,679,471	$	1,330,778	$	750,629	$	271,667	$	149,530	N/A		$	13,341,850	$	5,499,820	$	3,992,567	$	1,641,457	$	1,329,114	$	797,282	$	263,189	$	164,806	N/A		$	13,688,235
Evaluated for impairment under FASB ASC Section 310-10-35	66,109		43,952		14,178		51,307		18,936		29		—		N/A		194,511		58,288		42,766		18,024		48,345		13,590		32		1,421		N/A		182,466
	$	5,339,928	$	3,929,908	$	1,693,649	$	1,382,085	$	769,565	$	271,696	$	149,530	N/A		$	13,536,361	$	5,558,108	$	4,035,333	$	1,659,481	$	1,377,459	$	810,872	$	263,221	$	166,227	N/A		$	13,870,701

Allowance for loan losses at September 30, 2014:
Allowance for loan losses at March 31, 2015:																			Allowance for loan losses at March 31, 2015:
Measured for impairment under FASB ASC Subtopic 450-20	$	32,951	$	39,098	$	21,666	$	11,503	$	6,009	$	3,439	$	1,966	$	8,365	$	124,997	$	38,916	$	40,027	$	16,937	$	9,162	$	6,037	$	2,504	$	1,653	$	8,308	$	123,544
Evaluated for impairment under FASB ASC Section 310-10-35	16,223		11,942		9,625		21,502		5,167		21		—		N/A		64,480		13,944		17,123		6,544		14,073		2,450		23		—		N/A		54,157
	$	49,174	$	51,040	$	31,291	$	33,005	$	11,176	$	3,460	$	1,966	$	8,365	$	189,477	$	52,860	$	57,150	$	23,481	$	23,235	$	8,487	$	2,527	$	1,653	$	8,308	$	177,701

Loans, net of unearned income at September 30, 2014:
Loans, net of unearned income at March 31, 2015:																			Loans, net of unearned income at March 31, 2015:
Measured for impairment under FASB ASC Subtopic 450-20	$	5,095,263	$	3,655,162	$	1,719,049	$	1,319,333	$	658,822	$	278,196	$	111,148	N/A		$	12,836,973	$	5,157,342	$	3,716,037	$	1,688,869	$	1,312,861	$	656,021	$	257,265	$	124,255	N/A		$	12,912,650
Evaluated for impairment under FASB ASC Section 310-10-35	61,716		36,100		13,987		52,700		28,906		23		—		N/A		193,432		69,759		46,594		12,754		51,927		21,785		36		—		N/A		202,855
	$	5,156,979	$	3,691,262	$	1,733,036	$	1,372,033	$	687,728	$	278,219	$	111,148	N/A		$	13,030,405	$	5,227,101	$	3,762,631	$	1,701,623	$	1,364,788	$	677,806	$	257,301	$	124,255	N/A		$	13,115,505


(1)	The unallocated allowance, which was approximately 7%4% and 4%5% of the total allowance for credit losses, respectively, as of ~~both September 30,~~March 31, 2016 and March 31, 2015, ~~and September 30, 2014,~~ was, in the opinion of management, reasonable and appropriate given that the estimates used in the allocation process are inherently imprecise.

N/A - Not applicable.

Impaired Loans

A loan is considered to be impaired if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. Impaired loans consist of all loans on non-accrual status and accruing troubled debt restructurings ("TDRs"). An allowance for loan losses is established for an impaired loan if its carrying value exceeds its estimated fair value. Impaired loans to borrowers with total outstanding commitments greater than or equal to $1.0 million are evaluated individually for impairment. Impaired loans to borrowers with total outstanding commitments less than $1.0 million are pooled and measured for impairment collectively.

Based on an evaluation of all relevant credit quality factors, the Corporation recorded a ~~$500,000 negative~~$1.5 million provision for credit losses during the ~~nine~~three months ended ~~September 30, 2015,~~March 31, 2016, compared to a ~~$9.5~~$3.7 million negative provision for credit losses for the same period in ~~2014. The $10.0 million decrease in the provision for credit losses was driven by improvement in all credit quality measures, particularly net charge-off levels, across all loan portfolio segments.~~2015.

All loans individually evaluated for impairment under FASB ASC Section 310-10-35 are measured for losses on a quarterly basis.

As of ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, substantially all of the Corporation’s individually evaluated impaired loans with total outstanding balances greater than or equal to $1.0 million were measured based on the estimated fair value of each loan’s collateral. Collateral could be in the form of real estate, in the case of impaired commercial mortgages and construction loans, or business assets, such as accounts receivable or inventory, in the case of commercial and industrial loans. Commercial and industrial loans may also be secured by real property.

As of ~~September 30,~~March 31, 2016 and 2015, ~~and 2014,~~ approximately 77% and 78%, respectively, of impaired loans with principal balances greater than or equal to $1.0 million, whose primary collateral is real estate, were measured at estimated fair value using state certified third-party appraisals that had been updated ~~within~~in the preceding 12 months.

When updated appraisals are not obtained for loans evaluated for impairment under FASB ASC Section 310-10-35 that are secured by real estate, fair values are estimated based on the original appraisal values, as long as the original appraisal indicated an acceptable

loan-to-value position and, in the opinion of the Corporation's internal ~~loan evaluation~~credit administration staff, there has not been a significant deterioration in the collateral value since the original appraisal was performed. Original appraisals are typically used only when the estimated collateral value, as adjusted for the age of the appraisal, results in a current loan-to-value ratio that is lower than the Corporation's loan-to-value requirements for new loans, generally less than 70%.

The following table presents total impaired loans by class segment:


	September 30, 2015						December 31, 2014						March 31, 2016						December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Unpaid Principal Balance		Recorded Investment		Related Allowance		Unpaid Principal Balance		Recorded Investment		Related Allowance		Unpaid Principal Balance		Recorded Investment		Related Allowance
	(in thousands)												(in thousands)
With no related allowance recorded:	With no related allowance recorded:												With no related allowance recorded:
Real estate - commercial mortgage	$	31,961	$	26,075	$	—	$	25,802	$	23,236	$	—	$	26,361	$	23,023	$	—	$	27,872	$	22,596	$	—
Commercial - secured	22,097		17,661		—		17,599		14,582		—		14,638		12,227		—		18,012		13,702		—
Commercial - unsecured	86		86		—		—		—		—
Real estate - home equity	—		—		—		—		—		—
Real estate - residential mortgage	6,607		6,201		—		4,873		4,873		—		6,395		6,211		—		4,790		4,790		—
Construction - commercial residential	13,353		10,417		—		18,041		14,801		—		6,916		6,298		—		9,916		8,865		—
Construction - commercial	1,295		1,143		—		1,707		1,581		—
	75,399		61,583				68,022		59,073				54,310		47,759				60,590		49,953
With a related allowance recorded:	With a related allowance recorded:												With a related allowance recorded:
Real estate - commercial mortgage	48,734		40,034		13,197		49,619		40,023		16,715		44,849		35,265		12,397		45,189		35,698		12,471
Commercial - secured	29,415		23,533		11,789		24,824		19,335		12,165		34,752		29,655		12,850		39,659		33,629		14,085
Commercial - unsecured	2,832		2,672		932		1,241		1,089		865		1,039		884		514		971		821		498
Real estate - home equity	18,854		14,178		7,183		19,392		13,458		9,224		23,115		18,024		8,983		20,347		15,766		7,993
Real estate - residential mortgage	54,604		45,106		13,423		56,607		46,478		18,592		50,803		42,134		12,329		55,242		45,635		13,422
Construction - commercial residential	9,613		6,019		1,985		14,007		7,903		2,675		9,774		6,088		1,851		9,949		6,290		2,110
Construction - commercial	1,223		1,077		363		1,501		1,023		459		815		594		201		820		638		217
Construction - other	452		280		102		452		281		137		747		610		226		331		193		68
Consumer - direct	14		14		10		19		19		17		20		20		14		19		19		14
Consumer - indirect	15		15		9		20		19		18		12		12		8		14		14		8
Leasing, other and overdrafts													1,421		1,421		1,218		1,658		1,425		704
	165,756		132,928		48,993		167,682		129,628		60,867		167,347		134,707		50,591		174,199		140,128		51,590
Total	$	241,155	$	194,511	$	48,993	$	235,704	$	188,701	$	60,867	$	221,657	$	182,466	$	50,591	$	234,789	$	190,081	$	51,590

As of ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, there were ~~$61.6~~$47.8 million and ~~$59.1~~$50.0 million, respectively, of impaired loans that did not have a related allowance for loan loss. The estimated fair values of the collateral securing these loans exceeded their carrying amount, or they were previously charged down to realizable collateral values. Accordingly, no specific valuation allowance was considered to be necessary.

The following table presents average impaired loans by class segment:


	Three months ended September 30								Nine months ended September 30							Three months ended March 31
	2015				2014				2015				2014			2016				2015
	Average Recorded Investment		Interest Income (1)		Average Recorded Investment		Interest Income (1)		Average Recorded Investment		Interest Income (1)		Average Recorded Investment		Interest Income (1)	Average Recorded Investment		Interest Income (1)		Average Recorded Investment		Interest Income (1)
	(in thousands)															(in thousands)
With no related allowance recorded:
Real estate - commercial mortgage	$	25,216	$	68	$	23,056	$	78	$	26,033	$	246	$	23,524	244	$	22,810	$	69	$	26,849	$	91
Commercial - secured	17,609		28		18,903		29		16,142		74		20,014		98	12,964		16		14,676		21
Commercial - unsecured	43		—		—		—		22		—		—		—
Real estate - home equity	—		—		150		—		—		—		225		1
Real estate - residential mortgage	6,212		34		1,236		7		5,539		94		697		13	5,501		30		4,866		28
Construction - commercial residential	10,558		28		14,881		51		12,390		124		16,052		173	7,582		19		14,222		55
Construction - commercial	1,150		—		1,060		—		1,144		—		1,514		—	—		—		1,138		—
	60,788		158		59,286		165		61,270		538		62,026		529	48,857		134		61,751		195
With a related allowance recorded:
Real estate - commercial mortgage	40,572		110		38,469		130		40,116		368		37,794		394	35,482		108		39,660		133
Commercial - secured	22,386		36		19,764		30		23,668		111		21,404		101	31,642		38		24,950		36
Commercial - unsecured	2,788		1		850		1		1,981		4		847		3	853		1		1,175		1
Real estate - home equity	13,728		37		14,116		30		13,417		101		14,106		78	16,896		57		13,106		31
Real estate - residential mortgage	46,039		254		51,283		298		46,406		797		51,257		894	43,885		235		46,774		273
Construction - commercial residential	5,746		15		11,189		38		6,496		64		10,480		100	6,189		15		7,247		28
Construction - commercial	1,210		—		942		—		1,005		—		567		—	616		—		800		—
Construction - other	281		—		281		—		281		—		414		—	402		—		281		—
Consumer - direct	15		—		18		—		18		—		15		—	17		—		18		—
Consumer - indirect	15		—		6		—		17		—		4		—	16		—		19		—
Leasing, other and overdrafts																1,423		—		—		—
	132,780		453		136,918		527		133,405		1,445		136,888		1,570	137,421		454		134,030		502
Total	$	193,568	$	611	$	196,204	$	692	$	194,675	$	1,983	$	198,914	2,099	$	186,278	$	588	$	195,781	$	697


(1)	All impaired loans, excluding accruing TDRs, were non-accrual loans. Interest income recognized for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~ represents amounts earned on accruing TDRs.

Credit Quality Indicators and Non-performing Assets

The following table presents internal credit risk ratings for real estate - commercial mortgages, commercial - secured loans, commercial - unsecured loans, construction - commercial residential loans and construction - commercial loans:


	Pass						Special Mention						Substandard or Lower						Total						Pass						Special Mention						Substandard or Lower						Total
	September 30, 2015			December 31, 2014			September 30, 2015			December 31, 2014			September 30, 2015			December 31, 2014			September 30, 2015			December 31, 2014			March 31, 2016			December 31, 2015			March 31, 2016			December 31, 2015			March 31, 2016			December 31, 2015			March 31, 2016			December 31, 2015
	(dollars in thousands)																								(dollars in thousands)
Real estate - commercial mortgage	$	5,028,655		$	4,899,016		$	132,823		$	127,302		$	178,450		$	170,837		$	5,339,928		$	5,197,155		$	5,283,340		$	5,204,263		$	121,889		$	102,625		$	152,879		$	155,442		$	5,558,108		$	5,462,330
Commercial - secured	3,579,389			3,333,486			97,617			120,584			105,820			110,544			3,782,826			3,564,614			3,668,743			3,696,692			78,508			92,711			134,446			136,710			3,881,697			3,926,113
Commercial - unsecured	138,709			146,680			3,568			7,463			4,805			6,810			147,082			160,953			147,630			156,742			2,634			2,761			3,372			3,346			153,636			162,849
Total commercial - industrial, financial and agricultural	3,718,098			3,480,166			101,185			128,047			110,625			117,354			3,929,908			3,725,567			3,816,373			3,853,434			81,142			95,472			137,818			140,056			4,035,333			4,088,962
Construction - commercial residential	144,329			136,109			16,763			27,495			29,429			40,066			190,521			203,670			146,590			140,337			17,068			17,154			18,621			21,812			182,279			179,303
Construction - commercial	514,969			409,631			1,693			12,202			5,204			5,586			521,866			427,419			559,351			552,710			2,842			3,684			4,623			3,597			566,816			559,991
Total construction (excluding Construction - other)	659,298			545,740			18,456			39,697			34,633			45,652			712,387			631,089			705,941			693,047			19,910			20,838			23,244			25,409			749,095			739,294
	$	9,406,051		$	8,924,922		$	252,464		$	295,046		$	323,708		$	333,843		$	9,982,223		$	9,553,811		$	9,805,654		$	9,750,744		$	222,941		$	218,935		$	313,941		$	320,907		$	10,342,536		$	10,290,586
% of Total	94.2		%	93.4		%	2.5		%	3.1		%	3.3		%	3.5		%	100.0		%	100.0		%	94.8		%	94.8		%	2.2		%	2.1		%	3.0		%	3.1		%	100.0		%	100.0		%

The following is a summary of the Corporation's internal risk rating categories:

Pass: These loans do not currently pose undue credit risk and can range from the highest to average quality, depending on the degree of potential risk.

Special Mention: These loans constitute an undue and unwarranted credit risk, but not to a point of justifying a classification of substandard. Loans in this category are currently acceptable, but are nevertheless potentially weak.

Substandard or Lower: These loans are inadequately protected by current sound worth and paying capacity of the borrower. There exists a well-defined weakness or weaknesses that jeopardize the normal repayment of the debt.

The risk rating process allows management to identify ~~riskier~~ credits that potentially carry more risk in a timely manner and to allocate resources to managing troubled accounts. The Corporation believes that internal risk ratings are the most relevant credit quality indicator for the class segments presented above. The migration of loans through the various internal risk rating categories is a significant component of the allowance for credit loss methodology, which bases the probability of default on this migration. Assigning risk ratings involves judgment. Risk ratings are initially assigned to loans by loan officers and are reviewed on a regular basis by credit administration staff. The Corporation's loan review officers provide a separate assessment of risk rating accuracy. Ratings may be changed based on the ongoing monitoring procedures performed by loan officers or credit administration staff, or if specific loan review activities identify a deterioration or an improvement in the loan.

The Corporation does not assign internal risk ratings to smaller balance, homogeneous loans, such as home equity, residential mortgage, consumer, lease receivables and construction loans to individuals secured by residential real estate. For these loans, the most relevant credit quality indicator is delinquency status. The migration of loans through the various delinquency status categories is a significant component of the allowance for credit losses methodology for those loans, which bases the probability of default on this migration.

The following table presents a summary of delinquency and non-performing status for home equity, real estate - residential mortgages, construction loans to individuals and consumer, leasing and other loans by class segment:


	Performing						Delinquent (1)						Non-performing (2)						Total						Performing						Delinquent (1)						Non-performing (2)						Total
	September 30, 2015			December 31, 2014			September 30, 2015			December 31, 2014			September 30, 2015			December 31, 2014			September 30, 2015			December 31, 2014			March 31, 2016			December 31, 2015			March 31, 2016			December 31, 2015			March 31, 2016			December 31, 2015			March 31, 2016			December 31, 2015
	(dollars in thousands)																								(dollars in thousands)
Real estate - home equity	$	1,671,473		$	1,711,017		$	9,069		$	10,931		$	13,107		$	14,740		$	1,693,649		$	1,736,688		$	1,636,040		$	1,660,773		$	9,033		$	8,983		$	14,408		$	14,683		$	1,659,481		$	1,684,439
Real estate - residential mortgage	1,336,877			1,321,139			17,501			26,934			27,707			28,995			1,382,085			1,377,068			1,334,744			1,329,371			17,533			18,305			25,182			28,484			1,377,459			1,376,160
Construction - other	56,482			59,180			—			—			696			332			57,178			59,512			60,481			59,997			686			88			610			609			61,777			60,694
Consumer - direct	98,576			104,018			2,697			2,891			1,961			2,414			103,234			109,323			90,204			94,262			1,662			2,254			1,597			2,203			93,463			98,719
Consumer - indirect	166,040			153,358			2,304			2,574			118			176			168,462			156,108			167,863			166,823			1,690			2,809			205			237			169,758			169,869
Total consumer	264,616			257,376			5,001			5,465			2,079			2,590			271,696			265,431			258,067			261,085			3,352			5,063			1,802			2,440			263,221			268,588
Leasing and other and overdrafts	148,980			118,550			464			523			86			133			149,530			119,206
Leasing, overdrafts and other																									164,002			155,870			711			759			1,514			1,506			166,227			158,135
	$	3,478,428		$	3,467,262		$	32,035		$	43,853		$	43,675		$	46,790		$	3,554,138		$	3,557,905		$	3,453,334		$	3,467,096		$	31,315		$	33,198		$	43,516		$	47,722		$	3,528,165		$	3,548,016
% of Total	97.9		%	97.5		%	0.9		%	1.2		%	1.2		%	1.3		%	100.0		%	100.0		%	97.9		%	97.7		%	0.9		%	1.0		%	1.2		%	1.3		%	100.0		%	100.0		%


(1)	Includes all accruing loans 3130 days to 89 days past due.


(2)	Includes all accruing loans 90 days or more past due and all non-accrual loans.

The following table presents non-performing assets:

September 30,
2015 December 31,
2014
(in thousands)
Non-accrual loans $ 132,154
$ 121,080
Accruing loans 90 days or more past due 12,867
17,402
Total non-performing loans 145,021
138,482
Other real estate owned (OREO) 10,561
12,022
Total non-performing assets $ 155,582
$ 150,504

~~The following table presents TDRs, by class segment:~~

September 30,
2015 December 31,
2014
(in thousands)
Real-estate - residential mortgage $ 29,330
$ 31,308
Real-estate - commercial mortgage 17,282
18,822
Commercial - secured 7,259
5,170
Construction - commercial residential 4,363
9,241
Real estate - home equity 3,954
2,975
Commercial - unsecured 140
67
Consumer - indirect 15
19
Consumer - direct 14
19
Total accruing TDRs 62,357
67,621
Non-accrual TDRs (1) 27,618
24,616
Total TDRs $ 89,975
$ 92,237


~~(1)~~	~~Included within non-accrual loans in the preceding table detailing non-performing assets.~~

~~As of September 30, 2015 and December 31, 2014, there were $5.3 million and $3.9 million, respectively, of commitments to lend additional funds to borrowers whose loans were modified under TDRs.~~



	March 31, 2016		December 31, 2015
	(in thousands)
Non-accrual loans	$	122,170	$	129,523
Loans 90 days or more past due and still accruing	15,013		15,291
Total non-performing loans	137,183		144,814
Other real estate owned (OREO)	10,946		11,099
Total non-performing assets	$	148,129	$	155,913

~~The following table presents TDRs, by class segment as of September 30, 2015 and 2014, that were modified during the three and nine months ended September 30, 2015 and 2014:~~

Three months ended September 30 Nine months ended September 30
2015 2014 2015 2014
Number of Loans Recorded Investment Number of Loans Recorded Investment Number of Loans Recorded Investment Number of Loans Recorded Investment
(dollars in thousands)
Commercial - secured 3 $ 1,380
3 $ 1,214
14 $ 9,203
4 $ 1,357
Real estate - home equity 14 562
6 764
39 1,793
26 1,627
Real estate - residential mortgage 2 229
3 256
10 1,295
18 2,092
Real estate - commercial mortgage 2 188
1 391
6 2,815
10 10,195
Construction - commercial residential — —
— —
1 889
2 1,914
Commercial - unsecured — —
— —
1 42
— —
Consumer - indirect — —
— —
1 13
4 7
Consumer - direct — —
— —
— —
6 8
Total 21 $ 2,359
13 $ 2,625
72 $ 16,050
70 $ 17,200

The following table presents TDRs, by class segment, as of September 30, 2015 and 2014, that were modified within the previous 12 months and had a post-modification payment default during the nine months ended September 30, 2015 and 2014. The Corporation defines a payment default as a single missed payment.

2015 2014
Number of Loans Recorded Investment Number of Loans Recorded Investment
(dollars in thousands)
Commercial - secured 6 $ 3,855
3 $ 415
Real estate - residential mortgage 4 500
8 1,147
Real estate - home equity 9 459
5 724
Real estate - commercial mortgage 2 233
1 35
Construction - commercial residential — —
3 2,509
Total 21 $ 5,047
20 $ 4,830

The following table presents past due status and non-accrual loans by portfolio segment and class segment:


	September 30, 2015																March 31, 2016
	31-59 Days Past Due		60-89 Days Past Due		≥ 90 Days Past Due and Accruing		Non- accrual		Total ≥ 90 Days		Total Past Due		Current		Total		30-59 Days Past Due		60-89 Days Past Due		≥ 90 Days Past Due and Accruing		Non- accrual		Total ≥ 90 Days		Total Past Due		Current		Total
	(in thousands)																(in thousands)
Real estate - commercial mortgage	$	7,322	$	1,169	$	194	$	48,827	$	49,021	$	57,512	$	5,282,416	$	5,339,928	$	6,604	$	1,824	$	2,271	$	40,861	$	43,132	$	51,560	$	5,506,548	$	5,558,108
Commercial - secured	6,909		4,536		1,414		33,935		35,349		46,794		3,736,032		3,782,826		16,053		3,194		2,024		36,360		38,384		57,631		3,824,066		3,881,697
Commercial - unsecured	2,380		15		65		2,618		2,683		5,078		142,004		147,082		415		—		—		756		756		1,171		152,465		153,636
Total commercial - industrial, financial and agricultural	9,289		4,551		1,479		36,553		38,032		51,872		3,878,036		3,929,908		16,468		3,194		2,024		37,116		39,140		58,802		3,976,531		4,035,333
Real estate - home equity	6,312		2,757		2,883		10,224		13,107		22,176		1,671,473		1,693,649		7,024		2,009		2,914		11,494		14,408		23,441		1,636,040		1,659,481
Real estate - residential mortgage	11,499		6,002		5,730		21,977		27,707		45,208		1,336,877		1,382,085		12,136		5,397		4,402		20,780		25,182		42,715		1,334,744		1,377,459
Construction - commercial residential	1,832		231		—		12,073		12,073		14,136		176,385		190,521		1,550		1,967		1,495		9,294		10,789		14,306		167,973		182,279
Construction - commercial	265		—		—		2,220		2,220		2,485		519,381		521,866		—		—		12		594		606		606		566,210		566,816
Construction - other	—		—		416		280		696		696		56,482		57,178		686		—		—		610		610		1,296		60,481		61,777
Total real estate - construction	2,097		231		416		14,573		14,989		17,317		752,248		769,565		2,236		1,967		1,507		10,498		12,005		16,208		794,664		810,872
Consumer - direct	1,398		1,299		1,961		—		1,961		4,658		98,576		103,234		1,068		594		1,597		—		1,597		3,259		90,204		93,463
Consumer - indirect	1,962		342		118		—		118		2,422		166,040		168,462		1,483		207		205		—		205		1,895		167,863		169,758
Total consumer	3,360		1,641		2,079		—		2,079		7,080		264,616		271,696		2,551		801		1,802		—		1,802		5,154		258,067		263,221
Leasing and other and overdrafts	449		15		86		—		86		550		148,980		149,530
Leasing, overdrafts and other																	615		96		93		1,421		1,514		2,225		164,002		166,227
Total	$	40,328	$	16,366	$	12,867	$	132,154	$	145,021	$	201,715	$	13,334,646	$	13,536,361	$	47,634	$	15,288	$	15,013	$	122,170	$	137,183	$	200,105	$	13,670,596	$	13,870,701


	December 31, 2014																December 31, 2015
	31-59 Days Past Due		60-89 Days Past Due		≥ 90 Days Past Due and Accruing		Non- accrual		Total ≥ 90 Days		Total Past Due		Current		Total		30-59 Days Past Due		60-89 Days Past Due		≥ 90 Days Past Due and Accruing		Non- accrual		Total ≥ 90 Days		Total Past Due		Current		Total
	(in thousands)																(in thousands)
Real estate - commercial mortgage	$	14,399	$	3,677	$	800	$	44,437	$	45,237	$	63,313	$	5,133,842	$	5,197,155	$	6,469	$	1,312	$	439	$	40,731	$	41,170	$	48,951	$	5,413,379	$	5,462,330
Commercial - secured	4,839		958		610		28,747		29,357		35,154		3,529,460		3,564,614		5,654		2,615		1,853		41,498		43,351		51,620		3,874,493		3,926,113
Commercial - unsecured	395		65		9		1,022		1,031		1,491		159,462		160,953		510		83		19		701		720		1,313		161,536		162,849
Total commercial - industrial, financial and agricultural	5,234		1,023		619		29,769		30,388		36,645		3,688,922		3,725,567		6,164		2,698		1,872		42,199		44,071		52,933		4,036,029		4,088,962
Real estate - home equity	8,048		2,883		4,257		10,483		14,740		25,671		1,711,017		1,736,688		6,438		2,545		3,473		11,210		14,683		23,666		1,660,773		1,684,439
Real estate - residential mortgage	18,789		8,145		8,952		20,043		28,995		55,929		1,321,139		1,377,068		15,141		3,164		6,570		21,914		28,484		46,789		1,329,371		1,376,160
Construction - commercial residential	160		—		—		13,463		13,463		13,623		190,047		203,670		1,366		494		—		11,213		11,213		13,073		166,230		179,303
Construction - commercial	—		—		—		2,604		2,604		2,604		424,815		427,419		50		176		—		638		638		864		559,127		559,991
Construction - other	—		—		51		281		332		332		59,180		59,512		88		—		416		193		609		697		59,997		60,694
Total real estate - construction	160		—		51		16,348		16,399		16,559		674,042		690,601		1,504		670		416		12,044		12,460		14,634		785,354		799,988
Consumer - direct	2,034		857		2,414		—		2,414		5,305		104,018		109,323		1,687		567		2,203		—		2,203		4,457		94,262		98,719
Consumer - indirect	2,156		418		176		—		176		2,750		153,358		156,108		2,308		501		237		—		237		3,046		166,823		169,869
Total consumer	4,190		1,275		2,590		—		2,590		8,055		257,376		265,431		3,995		1,068		2,440		—		2,440		7,503		261,085		268,588
Leasing and other and overdrafts	357		166		133		—		133		656		118,550		119,206
Leasing, overdrafts and other																	483		276		81		1,425		1,506		2,265		155,870		158,135
Total	$	51,177	$	17,169	$	17,402	$	121,080	$	138,482	$	206,828	$	12,904,888	$	13,111,716	$	40,194	$	11,733	$	15,291	$	129,523	$	144,814	$	196,741	$	13,641,861	$	13,838,602

The following table presents TDRs:



	March 31, 2016		December 31, 2015
	(in thousands)
Real-estate - residential mortgage	$	27,565	$	28,511
Real-estate - commercial mortgage	17,427		17,563
Commercial - secured	5,522		5,833
Construction - commercial residential	3,092		3,942
Real estate - home equity	6,530		4,556
Commercial - unsecured	128		120
Consumer - indirect	12		14
Consumer - direct	20		19
Total accruing TDRs	60,296		60,558
Non-accrual TDRs (1)	27,277		31,035
Total TDRs	$	87,573	$	91,593


(1)	Included in non-accrual loans in the preceding table detailing non-performing assets.

As of March 31, 2016 and December 31, 2015, there were $3.8 million and $5.3 million, respectively, of commitments to lend additional funds to borrowers whose loans were modified under TDRs.

The following table presents TDRs, by class segment as of March 31, 2016 and 2015, that were modified during the three months ended March 31, 2016 and 2015:



		2016			2015
		Number of Loans	Post-Modification Recorded Investment		Number of Loans	Post-Modification Recorded Investment
		(dollars in thousands)
Commercial – secured:
	Extend maturity without rate concession	2	$	830	8	$	6,776
Commercial – unsecured:
	Extend maturity without rate concession	2	103		1	42
Real estate - commercial mortgage:
	Extend maturity without rate concession	—	—		3	2,495
Real estate - home equity:
	Extend maturity with rate concession	1	44		—	—
	Bankruptcy	37	2,698		10	492
Real estate – residential mortgage:
	Extend maturity with rate concession	—	—		1	104
	Extend maturity without rate concession	—	—		2	225
	Bankruptcy	—	—		1	281
Construction - commercial residential:
	Extend maturity without rate concession	—	—		1	889
Consumer - direct:
	Bankruptcy	1	2		—	—
Consumer - indirect:
	Bankruptcy	—	—		1	13

Total		43	$	3,677	28	$	11,317

The following table presents TDRs, by class segment, as of March 31, 2016 and 2015, that were modified in the previous 12 months and had a post-modification payment default during the three months ended March 31, 2016 and 2015. The Corporation defines a payment default as a single missed payment.



	2016			2015
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	(dollars in thousands)
Real estate - home equity	14	$	1,039	7	$	816
Real estate - residential mortgage	3	260		8	748
Real estate - commercial mortgage	3	235		2	1,659
Commercial - secured	1	47		7	7,888
Construction - commercial residential	—	—		1	1,366
Total	21	$	1,581	25	$	12,477

NOTE 6 – Mortgage Servicing Rights

The following table summarizes the changes in mortgage servicing rights ("MSRs"), which are included in other assets on the consolidated balance sheets:


	Three months ended September 30						Nine months ended September 30						Three months ended March 31
	2015			2014			2015			2014			2016			2015
	(in thousands)												(in thousands)
Amortized cost:
Balance at beginning of period	$	41,598		$	42,586		$	42,148		$	42,452		$	40,944		$	42,148
Originations of mortgage servicing rights	1,463			1,456			4,976			3,807			920			1,557
Amortization	(1,829		)	(1,664		)	(5,892		)	(3,881		)	(1,669		)	(1,902		)
Balance at end of period	$	41,232		$	42,378		$	41,232		$	42,378		$	40,195		$	41,803

MSRs represent the economic value of existing contractual rights to service mortgage loans that have been sold. Accordingly, actual and expected prepayments of the underlying mortgage loans can impact the value of MSRs. The Corporation accounts for MSRs at the lower of amortized cost or fair value.

The fair value of MSRs is estimated by discounting the estimated cash flows from servicing income, net of expense, over the expected life of the underlying loans at a discount rate commensurate with the risk associated with these assets. Expected life is based on the contractual terms of the loans, as adjusted for prepayment projections. No valuation allowance was necessary as of ~~September 30, 2015~~March 31, 2016 or ~~2014.~~ 2015.

As of ~~September 30, 2015,~~March 31, 2016, the estimated fair value of MSRs was ~~$43.8~~$40.8 million, which exceeded their book value.

NOTE 7 – Stock-Based Compensation

The Corporation grants equity awards to employees, consisting of stock options, restricted stock, RSUs and PSUs under its Amended and Restated Equity and Cash Incentive Compensation Plan ("Employee Equity Plan"). In addition, employees may purchase stock under the Corporation’s Employee Stock Purchase Plan. The fair value of equity awards granted to employees is recognized as compensation expense over the period during which employees are required to provide service in exchange for such awards. Compensation expense for PSUs is also recognized over the period during which employees are required to provide service in exchange for such awards, however, compensation expense may vary based on the expectations for actual performance relative to defined performance measures.

The Corporation also grants equity awards to non-employee members of its board of directors under the 2011 Directors’ Equity Participation Plan ("Directors’ Plan"). Under the Directors’ Plan, the Corporation can grant equity awards to non-employee holding company and subsidiary bank directors in the form of stock options, restricted stock or common stock.

Equity awards issued under the Employee Equity Plan are generally granted annually and become fully vested over or after a three-year vesting period. The vesting period for ~~non-performance based~~non-performance-based awards represents the period during which employees are required to provide service in exchange for such awards. Equity awards under the Directors' Plan generally vest immediately upon grant. Certain events, as defined in the Employee Equity Plan and the Directors' Plan, result in the acceleration of the vesting of equity awards.

The following table presents compensation expense and the related tax benefits for equity awards recognized in the consolidated statements of income:


	Three months ended September 30						Nine months ended September 30						Three months ended March 31
	2015			2014			2015			2014			2016			2015
	(in thousands)												(in thousands)
Stock-based compensation expense	$	1,533		$	1,288		$	4,371		$	4,310		$	1,436		$	1,071
Tax benefit	(489		)	(358		)	(1,403		)	(1,067		)	(433		)	(292		)
Stock-based compensation expense, net of tax	$	1,044		$	930		$	2,968		$	3,243		$	1,003		$	779

Stock option fair values are estimated through the use of the Black-Scholes valuation methodology as of the date of grant. Stock options carry terms of up to ten years. Fair values for restricted stock, RSUs and a majority of PSUs are based on the trading price of the Corporation’s stock on the date of grant and earn dividends during the vesting period, which are forfeitable if the awards

do not vest. The fair value of certain PSUs are estimated through the use of the Monte Carlo valuation methodology as of the date of grant.

As of ~~September 30, 2015~~March 31, 2016, the Employee Equity Plan had ~~11.6~~11.5 million shares reserved for future grants through 2023, and the Directors’ Plan had approximately 396,000 shares reserved for future grants through 2021.

NOTE 8 – Employee Benefit Plans

The Corporation maintains a defined benefit pension plan ("Pension Plan") for certain employees, which was curtailed ~~effective~~in ~~January 1,~~ 2008. Contributions to the Pension Plan are actuarially determined and funded annually, if required. Pension Plan assets are invested in: money markets; fixed income securities, including corporate bonds, U.S. Treasury securities and common trust funds; and equity securities, including common stocks and common stock mutual funds.

The net periodic benefit cost for the Corporation’s Pension Plan consisted of the following components:


	Three months ended September 30						Nine months ended September 30						Three months ended March 31
	2015			2014			2015			2014			2016			2015
	(in thousands)												(in thousands)
Service cost (1)	$	145		$	92		$	435		$	276		$	150		$	145
Interest cost	851			853			2,553			2,559			881			851
Expected return on plan assets	(752		)	(811		)	(2,256		)	(2,432		)	(726		)	(752		)
Net amortization and deferral	782			244			2,346			732			782			782
Net periodic benefit cost	$	1,026		$	378		$	3,078		$	1,135		$	1,087		$	1,026


(1)	~~The Pension Plan service~~Service cost ~~recorded for the nine months ended~~ ~~September 30, 2015~~ ~~and~~ ~~2014~~ was related to administrative costs associated with the plan and was not due to the accrual of additional participant benefits.

The Corporation ~~currently~~ provides ~~medical and life insurance~~ benefits under a postretirement benefits plan ("Postretirement Plan") to certain ~~retired full-time employees~~retirees who were employees of the Corporation prior to January 1, 1998.

~~Effective~~ and retired from employment with the Corporation prior to February 1, 2014, the Corporation amended the Postretirement Plan, making all active full-time employees ineligible for benefits under this plan. As a result of this amendment, the Corporation recorded a $1.5 million gain during the nine months ended September 30, 2014, as a reduction to salaries and employee benefits on the consolidated statements of income. The gain resulted from the recognition of the remaining prior service cost prior to the amendment date as of December 31, 2013. In addition, this amendment resulted in a $3.4 million decrease in the accumulated postretirement benefit obligation and a corresponding increase in unrecognized prior service cost credits.2014.

The net periodic cost (benefit) of the Corporation’s Postretirement Plan consisted of the following ~~components, excluding the $1.5 million plan amendment gain in 2014:~~components:


	Three months ended September 30						Nine months ended September 30						Three months ended March 31
	2015			2014			2015			2014			2016			2015
	(in thousands)												(in thousands)
Service cost (1)	$	—		$	—		$	—		$	15
Interest cost	52			48			156			157			38			52
Net accretion and deferral	(65		)	(84		)	(195		)	(263		)	(65		)	(65		)
Net periodic benefit	$	(13	)	$	(36	)	$	(39	)	$	(91	)	$	(27	)	$	(13	)


~~(1)~~	~~As a result of the plan amendment, additional participant benefits are not accrued under the Postretirement Plan after February 1, 2014.~~

The Corporation recognizes the funded status of its Pension Plan and Postretirement Plan on the consolidated balance sheets and recognizes the change in that funded status through other comprehensive income.

NOTE 9 – Derivative Financial Instruments

The Corporation manages its exposure to certain interest rate and foreign currency risks through the use of derivatives. None of the Corporation's outstanding derivative contracts are designated as hedges, and none are entered into for speculative purposes. Derivative instruments are carried at fair value, with changes in fair values recognized in earnings as components of non-interest income and non-interest expense on the consolidated statements of income.

Derivative contracts create counterparty credit risk with both the Corporation's customers and with institutional derivative counterparties. The Corporation manages counterparty credit risk through its credit approval processes, monitoring procedures and obtaining adequate collateral, when the Corporation determines it is appropriate to do so and in accordance with counterparty contracts.

Mortgage Banking Derivatives

In connection with its mortgage banking activities, the Corporation enters into commitments to originate certain fixed rate residential mortgage loans for customers, also referred to as interest rate locks. In addition, the Corporation enters into forward commitments for the future sales or purchases of mortgage-backed securities to or from third-party counterparties to hedge the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. Forward sales commitments may also be in the form of commitments to sell individual mortgage loans at a fixed price at a future date. The amount necessary to settle each interest rate lock is based on the price that secondary market investors would pay for loans with similar characteristics, including interest rate and term, as of the date fair value is measured. Gross derivative assets and liabilities are recorded ~~within~~in other assets and other liabilities, respectively, on the consolidated balance sheets, and changes in fair values during the period are recorded ~~within~~in mortgage banking income on the consolidated statements of income.

Interest Rate Swaps

The Corporation enters into interest rate swaps with certain qualifying commercial loan customers to meet their interest rate risk management needs. The Corporation simultaneously enters into interest rate swaps with dealer counterparties, with identical notional amounts and terms. The net result of these interest rate swaps is that the customer pays a fixed rate of interest and the Corporation receives a floating rate. These interest rate swaps are derivative financial instruments that are recorded at their fair value ~~within~~in other assets and other liabilities on the consolidated balance sheets, with changes in fair value during the period recorded ~~within~~in other non-interest expense on the consolidated statements of income.

Foreign Exchange Contracts

The Corporation enters into foreign exchange contracts to accommodate the needs of its customers. Foreign exchange contracts are commitments to buy or sell foreign currency on a future date at a contractual price. The Corporation offsets its foreign exchange contract exposure with customers by entering into contracts with third-party correspondent financial institutions to mitigate its exposure to fluctuations in foreign currency exchange rates. The Corporation also holds certain amounts of foreign currency with international correspondent banks. The Corporation's policy limits the total net foreign currency open positions, which includes all outstanding contracts and foreign account balances, to ~~$500,000~~.$500,000. Gross derivative assets and liabilities are recorded ~~within~~in other assets and other liabilities, respectively, on the consolidated balance sheets, with changes in fair values during the period recorded within other service charges and fees on the consolidated statements of income.

The following table presents a summary of the notional amounts and fair values of derivative financial instruments:


	September 30, 2015					December 31, 2014					March 31, 2016					December 31, 2015
	Notional Amount		Asset (Liability) Fair Value			Notional Amount		Asset (Liability) Fair Value			Notional Amount		Asset (Liability) Fair Value			Notional Amount		Asset (Liability) Fair Value
	(in thousands)										(in thousands)
Interest Rate Locks with Customers
Positive fair values	$	121,546	$	2,263		$	89,655	$	1,391		$	130,306	$	2,507		$	87,781	$	1,291
Negative fair values	172		(2		)	301		(6		)	3		—			267		(16		)
Net interest rate locks with customers			2,261					1,385					2,507					1,275
Forward Commitments
Positive fair values	110		—			—		—			—		—			69,045		205
Negative fair values	117,389		(1,502		)	93,802		(1,164		)	120,830		(925		)	16,193		(24		)
Net forward commitments			(1,502		)			(1,164		)			(925		)			181
Interest Rate Swaps with Customers
Positive fair values	681,647		37,436			468,080		19,716			939,820		62,323			846,490		32,915
Negative fair values	8,000		(87		)	25,418		(198		)	8,000		(32		)	8,757		(55		)
Net interest rate swaps with customers			37,349					19,518					62,291					32,860
Interest Rate Swaps with Dealer Counterparties
Positive fair values	8,000		87			25,418		198			8,000		32			8,757		55
Negative fair values	681,647		(37,436		)	468,080		(19,716		)	939,820		(62,323		)	846,490		(32,915		)
Net interest rate swaps with dealer counterparties			(37,349		)			(19,518		)			(62,291		)			(32,860		)
Foreign Exchange Contracts with Customers
Positive fair values	7,183		260			11,616		810			8,661		565			4,897		114
Negative fair values	7,091		(269		)	5,250		(441		)	6,380		(261		)	8,050		(184		)
Net foreign exchange contracts with customers			(9		)			369					304					(70		)
Foreign Exchange Contracts with Correspondent Banks
Positive fair values	10,308		614			5,287		446			10,863		463			9,728		428
Negative fair values	8,630		(334		)	13,572		(876		)	8,910		(461		)	6,899		(147		)
Net foreign exchange contracts with correspondent banks			280					(430		)			2					281
Net derivative fair value asset			$	1,030				$	160				$	1,888				$	1,667

The following table presents a summary of the fair value gains and losses on derivative financial instruments:

Three months ended September 30 Nine months ended September 30
2015 2014 2015 2014
(in thousands)
Interest rate locks with customers $ 1,041
$ (1,092 ) $ 876
$ 500
Forward commitments (3,183 ) 1,374
(338 ) (1,627 )
Interest rate swaps with customers 18,266
(40 ) 17,831
10,300
Interest rate swaps with dealer counterparties (18,266 ) 40
(17,831 ) (10,300 )
Foreign exchange contracts with customers (197 ) 557
(378 ) 854
Foreign exchange contracts with correspondent banks 323
(527 ) 710
(893 )
Net fair value gains (losses) on derivative financial instruments $ (2,016 ) $ 312
$ 870
$ (1,166 )



	Three months ended March 31
	2016			2015
	(in thousands)
Interest rate locks with customers	$	1,232		$	1,122
Forward commitments	(1,106		)	554
Interest rate swaps with customers	29,431			9,404
Interest rate swaps with dealer counterparties	(29,431		)	(9,404		)
Foreign exchange contracts with customers	374			567
Foreign exchange contracts with correspondent banks	(279		)	(324		)
Net fair value gains (losses) on derivative financial instruments	$	221		$	1,919

~~NOTE 10 –~~ Fair Value Option

U.S. GAAP permits entities to measure many financial instruments and certain other items at fair value and requires certain disclosures for amounts for which the fair value option is applied. The Corporation has elected to measure mortgage loans held for sale at fair value to more accurately reflect the financial results of its mortgage banking activities in its consolidated financial statements. Derivative financial instruments related to these activities are also recorded at fair value, as noted ~~within Note 9, "Derivative Financial Instruments."~~above. The Corporation

determines fair value for its mortgage loans held for sale based on the price that secondary market investors would pay for loans with similar characteristics, including interest rate and term, as of the date fair value is measured. Changes in fair values during the period are recorded as components of mortgage banking income on the consolidated statements of income. Interest income earned on mortgage loans held for sale is classified ~~within~~in interest income on the consolidated statements of income.

The following table presents a summary of the Corporation’s mortgage loans held for sale:


	September 30, 2015		December 31, 2014		March 31, 2016		December 31, 2015
	(in thousands)				(in thousands)
Cost	$	26,186	$	17,080	$	19,187	$	16,584
Fair value	26,937		17,522		19,719		16,886

During the three months ended ~~September 30,~~March 31, 2016 and 2015, the Corporation recorded gains related to changes in fair values of mortgage loans held for sale of ~~$531,000 compared to losses of $472,000 for the three months ended September 30, 2014. For the nine months ended September 30, 2015~~$230,000 and ~~2014, the Corporation recorded gains related to changes in fair values of mortgage loans held for sale of $309,000 and $343,000,~~$261,000, respectively.

~~NOTE 11 –~~ Balance Sheet Offsetting

Certain financial assets and liabilities may be eligible for offset on the consolidated balance sheets because they are subject to master netting arrangements or similar agreements. The Corporation elects to not offset assets and liabilities subject to such arrangements on the consolidated financial statements.

The Corporation is a party to interest rate swap transactions with financial institution counterparties and customers, disclosed in detail ~~within Note 9, "Derivative Financial Instruments."~~above. Under these agreements, the Corporation has the right to net-settle multiple contracts with the same counterparty in the event of default on, or termination of, any one contract. Cash collateral is posted by the party with a net liability position or the right to reclaim cash collateral exists in a net asset position in accordance with contract thresholds and can be used to settle the fair value of the interest rate swap agreements in the event of default.

The Corporation is also a party to foreign currency exchange contracts with financial institution counterparties, under which the Corporation has the right to net-settle multiple contracts with the same counterparty in the event of default on, or termination of, any one contract. As with interest rate swap contracts, cash collateral is posted by the party with a net liability position or the right to reclaim cash collateral exists in a net asset position in accordance with contract thresholds and can be used to settle the fair value of the foreign currency exchange contracts in the event of default. ~~For additional details, see Note 9, "Derivative Financial Instruments."~~

The Corporation also enters into agreements with customers in which it sells securities subject to an obligation to repurchase the same or similar securities, referred to as repurchase agreements. Under these agreements, the Corporation may transfer legal control over the assets but still maintain effective control through agreements that both entitle and obligate the Corporation to repurchase the assets. Therefore, repurchase agreements are reported as secured borrowings, classified ~~within~~in short-term borrowings on the consolidated balance sheets, while the securities underlying the repurchase agreements remain classified with investment securities on the consolidated balance sheets. The Corporation has no intention of setting off these amounts. Therefore, these repurchase agreements are not eligible for offset.

The following table presents the Corporation's financial instruments that are eligible for offset, and the effects of offsetting, on the consolidated balance sheets:


	Gross Amounts		Gross Amounts Not Offset								Gross Amounts		Gross Amounts Not Offset
	Recognized		on the Consolidated								Recognized		on the Consolidated
	on the		Balance Sheets								on the		Balance Sheets
	Consolidated		Financial			Cash			Net		Consolidated		Financial			Cash			Net
	Balance Sheets		Instruments (1)			Collateral (2)			Amount		Balance Sheets		Instruments (1)			Collateral (2)			Amount
	(in thousands)										(in thousands)
September 30, 2015
March 31, 2016
Interest rate swap derivative assets	$	37,523	$	(87	)	$	—		$	37,436	$	62,355	$	(32	)	$	—		$	62,323
Foreign exchange derivative assets with correspondent banks	614		(334		)	—			280		463		(303		)	—			160
Total	$	38,137	$	(421	)	$	—		$	37,716	$	62,818	$	(335	)	$	—		$	62,483

Interest rate swap derivative liabilities	$	37,523	$	(87	)	$	(37,436	)	$	—	$	62,355	$	(32	)	$	(59,130	)	$	3,193
Foreign exchange derivative liabilities with correspondent banks	334		(334		)	310			310		461		(303		)	300			458
Total	$	37,857	$	(421	)	$	(37,126	)	$	310	$	62,816	$	(335	)	$	(58,830	)	$	3,651

December 31, 2014
December 31, 2015
Interest rate swap derivative assets	$	19,914	$	(206	)	$	—		$	19,708	$	32,970	$	(55	)	$	—		$	32,915
Foreign exchange derivative assets with correspondent banks	446		(446		)	—			—		428		(147		)	—			281
Total	$	20,360	$	(652	)	$	—		$	19,708	$	33,398	$	(202	)	$	—		$	33,196

Interest rate swap derivative liabilities	$	19,914	$	(206	)	$	(19,210	)	$	498	$	32,970	$	(55	)	$	(31,130	)	$	1,785
Foreign exchange derivative liabilities with correspondent banks	876		(446		)	(310		)	120		147		(147		)	—			—
Total	$	20,790	$	(652	)	$	(19,520	)	$	618	$	33,117	$	(202	)	$	(31,130	)	$	1,785


(1)	For ~~interest rate swap and foreign exchange~~ derivative assets, amounts represent any derivative liability fair values that could be offset in the event of counterparty or customer default. For ~~interest rate swap and foreign exchange~~ derivative liabilities, amounts represent any derivative asset fair values that could be offset in the event of counterparty or customer default.


(2)	Amounts represent cash collateral posted or the right to reclaim cash collateral on interest rate swap transactions with financial institution ~~counterparties. Interest rate swaps~~counterparties and on foreign exchange derivative transactions with ~~customers are collateralized by the underlying loans to those borrowers.~~correspondent banks.

NOTE 1210 – Commitments and Contingencies

Commitments

The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.

Those financial instruments include commitments to extend credit and letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized on the Corporation’s consolidated balance sheets. Exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the outstanding amount of those instruments.

The outstanding amounts of commitments to extend credit and letters of credit as of the dates indicated were as follows:


	September 30, 2015		December 31, 2014		March 31, 2016		December 31, 2015
	(in thousands)				(in thousands)
Commitments to extend credit	$	5,635,629	$	4,389,064	$	5,932,144	$	5,784,138
Standby letters of credit	390,501		382,465		369,932		374,729
Commercial letters of credit	36,365		32,304		37,596		39,529

The Corporation records a reserve for unfunded lending commitments, which represents management’s estimate of losses associated with unused commitments to extend credit. See Note 5, "Loans and Allowance for Credit Losses," for additional details.

Residential Lending

Residential mortgages originated and sold by the Corporation consist primarily of conforming, prime loans sold to government sponsored agencies, such as the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"). The Corporation also sells ~~a portion of~~certain prime loans it originates to non-government sponsored agency investors.

The Corporation provides customary representations and warranties to government sponsored entities and investors that specify, among other things, that the loans have been underwritten to the standards established by the government sponsored entity or investor. The Corporation may be required to repurchase a loan, or reimburse the government sponsored entity or investor for a credit loss incurred on a loan, if it is determined that the representations and warranties have not been met. Such repurchases or reimbursements generally result from an underwriting or documentation deficiency. As of ~~September 30, 2015~~both March 31, 2016 and December 31, ~~2014,~~2015, total outstanding repurchase requests ~~were $851,000 and $543,000, respectively.~~totaled approximately $543,000.

From 2000 to 2011, the Corporation sold loans to the Federal Home Loan Bank of Pittsburgh under its Mortgage Partnership Finance Program ("MPF Program"). ~~No loans were sold under this program during the nine months ended September 30, 2015 or 2014.~~ The Corporation provided a "credit enhancement" for residential mortgage loans sold under the MPF Program whereby it would assume credit losses in excess of a defined "First Loss Account," or "FLA" balance, up to specified amounts. The FLA is funded by the Federal Home Loan Bank of Pittsburgh based on a percentage of the outstanding principal balance of loans sold. As of ~~September 30, 2015,~~March 31, 2016, the unpaid principal balance of loans sold under the MPF Program was approximately ~~$132~~$120 million. As of ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, the reserve for estimated credit losses related to loans sold under the MPF Program was ~~$1.8~~$2.0 million and ~~$2.3~~$1.8 million, respectively. Required reserves are calculated based on delinquency status and estimated loss rates established through the Corporation's existing allowance for credit losses methodology for residential mortgage loans.

As of ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, the total reserve for losses on residential mortgage loans sold was ~~$2.5~~$2.7 million and ~~$3.2~~$2.6 million, respectively, including both reserves for credit losses under the MPF Program and reserves for representation and warranty exposures. Management believes that the reserves recorded as of ~~September 30, 2015~~March 31, 2016 are adequate. However, declines in collateral values, the identification of additional loans to be repurchased, or a deterioration in the credit quality of loans sold under the MPF Program could necessitate additional reserves, established through charges to earnings, in the future.

~~Other Contingencies~~Legal Proceedings

The Corporation and its subsidiaries are involved in various legal proceedings in the ordinary course of business of the Corporation. The Corporation periodically evaluates the possible impact of pending litigation matters based on, among other factors, the advice of counsel, available insurance coverage and recorded liabilities and reserves for probable legal liabilities and costs. In addition, from time to time, the Corporation is the subject of investigations or other forms of regulatory or governmental inquiry covering a range of possible issues and, in some cases, these may be part of similar reviews of the specified activities of other industry participants. These inquiries could lead to administrative, civil or criminal proceedings, and could possibly result in fines, penalties, restitution or the need to alter the Corporation’s business practices, and cause the Corporation to incur additional costs. The Corporation’s practice is to cooperate fully with regulatory and governmental investigations. ~~Refer also to Part II. Other Information, Item 1. Legal Proceedings.~~

As of the date of this report, the Corporation believes that any liabilities, individually or in the aggregate, which may result from the final outcomes of pending proceedings will not have a material adverse effect on the financial condition of the Corporation. However, legal proceedings are often unpredictable, and it is possible that the ultimate resolution of any such matters, if unfavorable, may be material to the Corporation’s results of operations for any particular period, depending, in part, upon the size of the loss or liability imposed and the operating results for the applicable period.

BSA/AML Enforcement Orders

The Corporation and each of its bank subsidiaries are subject to regulatory enforcement orders issued during 2014 and 2015 by their respective federal and state bank regulatory agencies relating to identified deficiencies in the Corporation’s centralized Bank Secrecy Act and anti-money laundering compliance program (the "BSA/AML Compliance Program"), which was designed to comply with the requirements of the Bank Secrecy Act, the USA Patriot Act of 2001 and related anti-money laundering regulations (collectively, the "BSA/AML Requirements"). The regulatory enforcement orders, which are in the form of consent orders or orders to cease and desist issued upon consent ("Consent Orders"), generally require, among other things, that the Corporation and its bank subsidiaries undertake a number of required actions to strengthen and enhance the BSA/AML Compliance Program, and, in some cases, conduct retrospective reviews of past account activity and transactions, as well as certain reports filed in accordance with the BSA/AML Requirements, to determine whether suspicious activity and certain transactions in currency were

properly identified and reported in accordance with the BSA/AML Requirements. In addition to requiring strengthening and enhancement of the BSA/AML Compliance Program, while the Consent Orders remain in effect, the Corporation is subject to certain restrictions on expansion activities of the Corporation and its bank subsidiaries. Further, any failure to comply with the requirements of any of the Consent Orders involving the Corporation or its bank subsidiaries could result in further enforcement actions, the imposition of material restrictions on the activities of the Corporation or its bank subsidiaries, or the assessment of fines or penalties.

Fair Lending Investigation

During the second quarter of 2015, Fulton Bank, N.A. (the "Bank"), the Corporation’s largest bank subsidiary, received a letter from the U.S. Department of Justice (the "Department") indicating that the Department had initiated an investigation regarding potential violations of fair lending laws by the Bank in certain of its geographies. The Bank is cooperating with the Department and responding to the Department’s requests for information. Although the Corporation is not able to predict the outcome of the Department’s investigation, it could result in legal proceedings the resolution of which could potentially involve a settlement, fines or other remedial actions.

Agostino, et al. Litigation

Fulton Bank, N.A. (the "Bank"), the Corporation’s largest bank subsidiary, and two unrelated, third-party defendants, Ameriprise Financial Services, Inc. and Riverview Bank, have been named as defendants in a lawsuit brought on behalf of a group of 58 plaintiffs filed on March 31, 2016 in the Court of Common Pleas for Dauphin County, Pennsylvania (Agostino, et al. v. Ameriprise Financial Services, Inc., et al., No. 2016-CV-2048-CV). The plaintiffs in this action, who are individuals, trustees of certain irrevocable trusts or the executors of the estates of deceased individuals, were clients of Jeffrey M. Mottern, a now deceased attorney, who is alleged to have operated a Ponzi scheme which defrauded the plaintiffs over a period of years through the sale of fictitious, high-yielding investments or by otherwise misappropriating funds entrusted to Mr. Mottern. Mr. Mottern is alleged to have used the proceeds of these activities to engage in speculative securities trading, which incurred significant losses, and for Mr. Mottern’s personal expenses. The allegations against the Bank relate to a commercial checking account at the Bank maintained by Mr. Mottern in connection with Mr. Mottern’s law practice. The lawsuit alleges that the Bank is liable to the plaintiffs for failing to properly monitor Mr. Mottern’s checking account and detect Mr. Mottern’s fraudulent activity, and specifically alleges that the Bank aided and abetted Mr. Mottern’s: (1) fraud; (2) breach of fiduciary duty; (3) violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law; and (4) conversion. Similar claims have been asserted against Ameriprise Financial Services, Inc. and Riverview Bank, which allegedly maintained a personal brokerage account and a trust account for client or other third-party funds, respectively, for Mr. Mottern. The lawsuit seeks damages from the defendants, including the Bank, alleged to be in excess of $11.3 million, treble damages and attorneys’ fees with respect to alleged violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, punitive damages, plus interest and costs. On April 29, 2016, the Bank filed a Notice of Removal to remove this lawsuit to the United States District Court for the Middle District of Pennsylvania.

NOTE 1311 – Fair Value Measurements

FASB ASC Topic 820 establishes a fair value hierarchy for the inputs to valuation techniques used to measure assets and liabilities at fair value using the following three categories (from highest to lowest priority):

Level 1 – Inputs that represent quoted prices for identical instruments in active markets.

Level 2 – Inputs that represent quoted prices for similar instruments in active markets, or quoted prices for identical instruments in non-active markets. Also includes valuation techniques whose inputs are derived principally from observable market data other than quoted prices, such as interest rates or other market-corroborated means.

Level 3 – Inputs that are largely unobservable, as little or no market data exists for the instrument being valued.

The Corporation has categorized all assets and liabilities measured at fair value on both a recurring and nonrecurring basis into the above three levels.

The following tables present summaries of the Corporation’s assets and liabilities measured at fair value on a recurring basis and reported on the consolidated balance sheets:


	September 30, 2015								March 31, 2016
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)								(in thousands)
Mortgage loans held for sale	$	—	$	26,937	$	—	$	26,937	$	—	$	19,719	$	—	$	19,719
Available for sale investment securities:
Equity securities	23,532		—		—		23,532		19,067		—		—		19,067
U.S. Government sponsored agency securities	—		48,551		—		48,551		—		25,173		—		25,173
State and municipal securities	—		240,236		—		240,236		—		314,010		—		314,010
Corporate debt securities	—		96,761		3,180		99,941		—		86,780		3,106		89,886
Collateralized mortgage obligations	—		874,299		—		874,299		—		782,075		—		782,075
Mortgage-backed securities	—		1,051,905		—		1,051,905		—		1,188,668		—		1,188,668
Auction rate securities	—		—		97,873		97,873		—		—		97,326		97,326
Total available for sale investments	23,532		2,311,752		101,053		2,436,337
Total available for sale investment securities									19,067		2,396,706		100,432		2,516,205
Other assets	16,253		39,787		—		56,040		16,674		64,862		—		81,536
Total assets	$	39,785	$	2,378,476	$	101,053	$	2,519,314	$	35,741	$	2,481,287	$	100,432	$	2,617,460
Other liabilities	$	15,982	$	39,027	$	—	$	55,009	$	16,373	$	63,280	$	—	$	79,653


	December 31, 2014								December 31, 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)								(in thousands)
Mortgage loans held for sale	$	—	$	17,522	$	—	$	17,522	$	—	$	16,886	$	—	$	16,886
Available for sale investment securities:
Equity securities	47,623		—		—		47,623		21,514		—		—		21,514
U.S. Government securities	—		200		—		200
U.S. Government sponsored agency securities	—		214		—		214		—		25,136		—		25,136
State and municipal securities	—		245,215		—		245,215		—		262,765		—		262,765
Corporate debt securities	—		90,126		7,908		98,034		—		93,619		3,336		96,955
Collateralized mortgage obligations	—		902,313		—		902,313		—		821,509		—		821,509
Mortgage-backed securities	—		928,831		—		928,831		—		1,158,835		—		1,158,835
Auction rate securities	—		—		100,941		100,941		—		—		98,059		98,059
Total available for sale investments	47,623		2,166,899		108,849		2,323,371
Total available for sale investment securities									21,514		2,361,864		101,395		2,484,773
Other assets	17,682		21,305		—		38,987		16,129		34,465		—		50,594
Total assets	$	65,305	$	2,205,726	$	108,849	$	2,379,880	$	37,643	$	2,413,215	$	101,395	$	2,552,253
Other liabilities	$	17,737	$	21,084	$	—	$	38,821	$	15,914	$	33,010	$	—	$	48,924

The valuation techniques used to measure fair value for the items in the preceding tables are as follows:

Mortgage loans held for sale – This category consists of mortgage loans held for sale that the Corporation has elected to measure at fair value. Fair values as of ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014~~2015 were measured based on the price that secondary market investors were offering for loans with similar characteristics. See Note ~~10, "Fair Value Option"~~9, "Derivative Financial Instruments" for details related to the Corporation’s election to measure assets and liabilities at fair value.

Available for sale investment securities – Included ~~within~~in this asset category are both equity and debt securities. Level 2 available for sale debt securities are valued by a third-party pricing service commonly used in the banking industry. The pricing service uses pricing models that vary based on asset class and incorporate available market information, including quoted prices of investment securities with similar characteristics. Because many fixed income securities do not trade on a daily basis, pricing models use available information, as applicable, through processes such as benchmark yield curves, benchmarking of like securities, sector groupings, and matrix pricing.

Standard market inputs include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data, including market research publications. For certain security types, additional inputs may be used, or some of the standard market inputs may not be applicable.

Management tests the values provided by the pricing service by obtaining securities prices from an alternative third-party source and comparing the results. This test is done for approximately 80% of the securities valued by the pricing service. Generally, differences by security in excess of 5% are researched to reconcile the difference.

Equity securities – Equity securities consist of common stocks of financial institutions ($~~22.4~~18.2 million at ~~September 30, 2015~~March 31, 2016 and ~~$41.8~~$20.6 million at December 31, ~~2014)~~2015) and other equity investments ($~~1.1 million~~892,000 at ~~September 30, 2015~~March 31, 2016 and ~~$5.8 million~~$914,000 at December 31, ~~2014)~~2015). These Level 1 investments are measured at fair value based on quoted prices for identical securities in active markets.

U.S. Government securities/U.S. Government sponsored agency securities/State and municipal securities/Collateralized mortgage obligations/Mortgage-backed securities – These debt securities are classified as Level 2 investments. Fair values are determined by a third-party pricing service, as detailed above.

Corporate debt securities – This category consists of subordinated debt issued by financial institutions ($~~53.6~~49.3 million at ~~September 30, 2015~~March 31, 2016 and ~~$50.0~~$53.1 million at December 31, ~~2014)~~2015), single-issuer trust preferred securities issued by financial institutions ($~~41.8~~35.9 million at ~~September 30, 2015~~March 31, 2016 and ~~$42.0~~$39.1 million at December 31, ~~2014)~~2015), pooled trust preferred securities issued by financial institutions ($~~530,000~~706,000 at ~~September 30, 2015~~both March 31, 2016 and ~~$4.1 million at~~ December 31, ~~2014)~~2015) and other corporate debt issued by non-financial institutions ($4.0 million at ~~September 30, 2015~~both March 31, 2016 and ~~$1.9 million at~~ December 31, ~~2014)~~2015).

Level 2 investments include the Corporation’s holdings of subordinated debt, other corporate debt issued by non-financial institutions and ~~$39.2~~$33.5 million and ~~$38.2~~$36.5 million of single-issuer trust preferred securities held at ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, respectively. The fair values for these corporate debt securities are determined by a third-party pricing service, as detailed above.

Level 3 investments include the Corporation’s investments in pooled trust preferred securities ($~~530,000~~706,000 at ~~September 30, 2015~~both March 31, 2016 and ~~$4.1 million at~~ December 31, ~~2014)~~2015) and certain single-issuer trust preferred securities ($~~2.7~~2.4 million at ~~September 30, 2015~~March 31, 2016 and ~~$3.8~~$2.6 million at December 31, ~~2014)~~2015). The fair values of these securities were determined based on quotes provided by third-party brokers who determined fair values based predominantly on internal valuation models which were not indicative prices or binding offers. The Corporation’s third-party pricing service cannot derive fair values for these securities primarily due to inactive markets for similar investments. Level 3 values are tested by management primarily through trend analysis, by comparing current values to those reported at the end of the preceding calendar quarter, and determining if they are reasonable based on price and spread movements for this asset class.

Auction rate securities – Due to their illiquidity, ARCs are classified as Level 3 investments and are valued through the use of an expected cash flows model prepared by a third-party valuation expert. The assumptions used in preparing the expected cash flows model include estimates for coupon rates, time to maturity and market rates of return. The most significant unobservable input to the expected cash flows model is an assumed return to market liquidity sometime ~~within~~in the next five years. If the assumed return to market liquidity was lengthened beyond the next five years, this would result in a decrease in the fair value of these ARCs. The Corporation believes that the trusts underlying the ARCs will self-liquidate as student loans are repaid. Level 3 fair values are tested by management through the performance of a trend analysis of the market price and discount rate. Changes in the price and discount rates are compared to changes in market data, including bond ratings, parity ratios, balances and delinquency levels.

Other assets – Included ~~within~~in this category are the following:

Level 1 assets include mutual funds that are held in trust for employee deferred compensation plans ($~~15.4~~15.7 million at ~~September 30, 2015~~March 31, 2016 and ~~$16.4~~$15.6 million at December 31, ~~2014)~~2015) and the fair value of foreign currency exchange contracts ($~~874,000~~1.0 million at ~~September 30, 2015~~March 31, 2016 and ~~$1.3 million~~$547,000 at December 31, ~~2014)~~2015). The mutual funds and foreign exchange prices used to measure these items at fair value are based on quoted prices for identical instruments in active markets.

Level 2 assets include the fair value of mortgage banking derivatives in the form of interest rate locks and forward commitments with secondary market investors ($~~2.3~~2.5 million at ~~September 30, 2015~~March 31, 2016 and ~~$1.4~~$1.5 million at December 31, ~~2014)~~2015) and the fair value of interest rate swaps ($~~37.5~~62.4 million at ~~September 30, 2015~~March 31, 2016 and ~~$19.9~~

$33.0 million at December 31, ~~2014)~~2015). The fair values of the Corporation’s interest rate locks, forward commitments and interest rate swaps represent the amounts that would be required to settle the derivative financial instruments at the balance sheet date. See Note 9, "Derivative Financial Instruments," for additional information.

Other liabilities – Included ~~within~~in this category are the following:

Level 1 liabilities include employee deferred compensation liabilities which represent amounts due to employees under deferred compensation plans ($~~15.4~~15.7 million at ~~September 30, 2015~~March 31, 2016 and ~~$16.4~~$15.6 million at December 31, ~~2014)~~2015) and the fair value of foreign currency exchange contracts ($~~603,000~~722,000 at ~~September 30, 2015~~March 31, 2016 and ~~$1.3 million~~$331,000 at December 31, ~~2014)~~2015). The fair value of these liabilities are determined in the same manner as the related assets, as described under the heading "Other assets" above.

Level 2 liabilities include the fair value of mortgage banking derivatives in the form of interest rate locks and forward commitments with secondary market investors ($~~1.5 million~~925,000 at ~~September 30, 2015~~March 31, 2016 and ~~$1.2 million~~$40,000 at December 31, ~~2014)~~2015) and the fair value of interest rate swaps ($~~37.5~~62.4 million at ~~September 30, 2015~~March 31, 2016 and ~~$19.9~~$33.0 million at December 31, ~~2014)~~2015). The fair values of these liabilities are determined in the same manner as the related assets, as described under the heading "Other assets" above.

The following table presents the changes in the Corporation’s available for sale investment securities measured at fair value on a recurring basis using unobservable inputs (Level 3):


	Three months ended September 30, 2015									Three months ended March 31, 2016
	Pooled Trust Preferred Securities			Single-issuer Trust Preferred Securities			ARCs			Pooled Trust Preferred Securities			Single-issuer Trust Preferred Securities			ARCs
	(in thousands)									(in thousands)
Balance at June 30, 2015	$	530		$	3,820		$	98,606
Unrealized adjustment to fair value (1)	—			(203		)	(890		)
Settlements - calls	—			(970		)	—
Discount accretion (2)	—			3			157
Balance at September 30, 2015	$	530		$	2,650		$	97,873

	Three months ended September 30, 2014
Balance at June 30, 2014	$	4,275		$	3,820		$	146,931
Realized adjustment to fair value (3)	(18		)	—			—
Balance at December 31, 2015										$	706		$	2,630		$	98,059
Unrealized adjustment to fair value (1)	230			47			1,280			—			(233		)	(832		)
Discount accretion (2)	—			2			262			—			3			99
Balance at September 30, 2014	$	4,487		$	3,869		$	148,473

	Nine months ended September 30, 2015
Balance at March 31, 2016										$	706		$	2,400		$	97,326
	Pooled Trust Preferred Securities			Single-issuer Trust Preferred Securities			ARCs
	(in thousands)									Three months ended March 31, 2015
Balance at December 31, 2014	$	4,088		$	3,820		$	100,941		$	4,088		$	3,820		$	100,941
Sales	(3,633		)	—			—			(3,079		)	—			—
Unrealized adjustment to fair value (1)	190			(207		)	(978		)	190			(2		)	332
Settlements - calls	(117		)	(970		)	(2,446		)	(117		)	—			(2,446		)
Discount accretion (2)	2			7			356			2			2			105
Balance at September 30, 2015	$	530		$	2,650		$	97,873
Balance at March 31, 2015										$	1,084		$	3,820		$	98,932

	Nine months ended September 30, 2014
Balance at December 31, 2013	$	5,306		$	3,781		$	159,274
Sales	(1,394		)	—			(11,912		)
Realized adjustment to fair value (3)	(18		)	—			—
Unrealized adjustment to fair value (1)	789			83			1,528
Settlements - calls	(200		)	—			(1,081		)
Discount accretion (2)	4			5			664
Balance at September 30, 2014	$	4,487		$	3,869		$	148,473


(1)	Pooled trust preferred securities, single-issuer trust preferred securities and ARCs are classified as available for sale investment securities; as such, the unrealized adjustment to fair value was recorded as an unrealized holding gain (loss) and included as a component of available for sale investment securities on the consolidated balance sheets.


(2)	Included as a component of net interest income on the consolidated statements of income.


~~(3)~~	Realized adjustments to fair value represent credit related other-than-temporary impairment charges and gains on sales of investment securities, both included as components of investment securities gains on the consolidated statements of income.

Certain financial assets are not measured at fair value on an ongoing basis, but are subject to fair value measurement in certain circumstances, such as upon their acquisition or when there is evidence of impairment. The following table presents the Corporation’s financial assets measured at fair value on a nonrecurring basis and reported on the Corporation’s consolidated balance sheets:


	September 30, 2015								March 31, 2016
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)								(in thousands)
Net loans	$	—	$	—	$	145,518	$	145,518	$	—	$	—	$	131,875	$	131,875
Other financial assets	—		—		51,794		51,794		—		—		51,141		51,141
Total assets	$	—	$	—	$	197,312	$	197,312	$	—	$	—	$	183,016	$	183,016


	December 31, 2014								December 31, 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)								(in thousands)
Net loans	$	—	$	—	$	127,834	$	127,834	$	—	$	—	$	138,491	$	138,491
Other financial assets	—		—		54,170		54,170		—		—		52,043		52,043
Total assets	$	—	$	—	$	182,004	$	182,004	$	—	$	—	$	190,534	$	190,534

The valuation techniques used to measure fair value for the items in the table above are as follows:

Net loans – This category consists of loans that were evaluated for impairment under FASB ASC Section 310-10-35 and have been classified as Level 3 assets. The amount shown is the balance of impaired loans, net of the related allowance for loan losses. See Note 5, "Loans and Allowance for Credit Losses," for additional details.

Other financial assets – This category includes OREO ($~~10.6~~10.9 million at ~~September 30, 2015~~March 31, 2016 and ~~$12.0~~$11.1 million at December 31, ~~2014)~~2015) and MSRs ($~~41.2~~40.2 million at ~~September 30, 2015~~March 31, 2016 and ~~$42.1~~$40.9 million at December 31, ~~2014)~~2015), both classified as Level 3 assets.

Fair values for OREO were based on estimated selling prices less estimated selling costs for similar assets in active markets.

MSRs are initially recorded at fair value upon the sale of residential mortgage loans to secondary market investors. MSRs are amortized as a reduction to servicing income over the estimated lives of the underlying loans. MSRs are stratified and evaluated for impairment by comparing each stratum's carrying amount to its estimated fair value. Fair values are determined at the end of each quarter through a discounted cash flows valuation performed by a third-party valuation expert. Significant inputs to the valuation included expected net servicing income, the discount rate and the expected life of the underlying loans. Expected life is based on the contractual terms of the loans, as adjusted for prepayment projections. The weighted average annual constant prepayment rate and the weighted average discount rate used in the ~~September 30, 2015~~March 31, 2016 valuation were ~~11.6%~~12.5% and 9.6%, respectively. Management tests the reasonableness of the significant inputs to the third-party valuation in comparison to market data.

As required by FASB ASC Section 825-10-50, the following table details the book values and estimated fair values of the Corporation’s financial instruments as of ~~September 30, 2015~~March 31, 2016 and December 31, ~~2014.~~2015. In addition, a general description of the methods and assumptions used to estimate such fair values is also provided.


	September 30, 2015				December 31, 2014				March 31, 2016				December 31, 2015
	Book Value		Estimated Fair Value		Book Value		Estimated Fair Value		Book Value		Estimated Fair Value		Book Value		Estimated Fair Value
	(in thousands)								(in thousands)
FINANCIAL ASSETS
Cash and due from banks	$	93,803	$	93,803	$	105,702	$	105,702	$	83,479	$	83,479	$	101,120	$	101,120
Interest-bearing deposits with other banks	510,943		510,943		358,130		358,130		346,582		346,582		230,300		230,300
Federal Reserve Bank and Federal Home Loan Bank stock	68,977		68,977		64,953		64,953		61,478		61,478		62,216		62,216
Loans held for sale (1)	26,937		26,937		17,522		17,522		19,719		19,719		16,886		16,886
Available for sale investment securities (1)	2,436,337		2,436,337		2,323,371		2,323,371		2,516,205		2,516,205		2,484,773		2,484,773
Loans, net of unearned income (1)	13,536,361		13,428,016		13,111,716		13,030,543
Net Loans ⁽¹⁾									13,706,860		13,615,387		13,669,548		13,540,903
Accrued interest receivable	42,846		42,846		41,818		41,818		44,379		44,379		42,767		42,767
Other financial assets (1)	174,835		174,835		169,764		169,764		200,456		200,456		166,920		166,920
FINANCIAL LIABILITIES
Demand and savings deposits	$	11,148,667	$	11,148,667	$	10,296,055	$	10,296,055	$	11,537,266	$	11,537,266	$	11,267,367	$	11,267,367
Time deposits	2,935,727		2,944,618		3,071,451		3,069,883		2,867,014		2,961,225		2,864,950		2,862,868
Short-term borrowings	431,631		431,631		329,719		329,719		352,883		352,883		497,663		497,663
Accrued interest payable	14,727		14,727		18,045		18,045		13,567		13,567		10,724		10,724
Other financial liabilities (1)	192,281		192,281		172,786		172,786		220,267		220,267		190,927		190,927
Federal Home Loan Bank advances and long-term debt	979,433		1,002,761		1,139,413		1,142,980		965,654		990,222		949,542		959,315


(1)	These financial instruments, or certain financial instruments ~~within~~in these categories, are measured at fair value on the Corporation’s consolidated balance sheets. Descriptions of the fair value determinations for these financial instruments are disclosed above.

Fair values of financial instruments are significantly affected by the assumptions used, principally the timing of future cash flows and discount rates. Because assumptions are inherently subjective in nature, the estimated fair values cannot be substantiated by comparison to independent market quotes and, in many cases, the estimated fair values could not necessarily be realized in an immediate sale or settlement of the instrument. The aggregate fair value amounts presented do not necessarily represent management’s estimate of the underlying value of the Corporation.

For short-term financial instruments, defined as those with remaining maturities of 90 days or less, and excluding those recorded at fair value on the Corporation’s consolidated balance sheets, book value was considered to be a reasonable estimate of fair value.

The following instruments are predominantly short-term:



Assets		Liabilities
Cash and due from banks		Demand and savings deposits
~~Interest bearing~~Interest-bearing deposits with other banks		Short-term borrowings
Accrued interest receivable		Accrued interest payable

Federal Reserve Bank and Federal Home Loan Bank ("FHLB") stock represent restricted investments and are carried at cost on the consolidated balance sheets. Each of the Corporation’s subsidiary banks is a member of the Federal Home Loan Bank for the region encompassing the headquarters of the subsidiary bank. Memberships are maintained with the Atlanta, New York and Pittsburgh regional Federal Home Loan Banks (collectively referred to as the "FHLB").

Fair values for loans and time deposits were estimated by discounting future cash flows using the current rates at which similar loans would be made to borrowers and similar deposits would be issued to customers for the same remaining maturities. Fair values estimated in this manner do not fully incorporate an exit price approach to fair value, as defined in FASB ASC Topic 820.

The fair values of FHLB advances and long-term debt were estimated by discounting the remaining contractual cash flows using a rate at which the Corporation could issue debt with similar remaining maturities as of the balance sheet date. These borrowings would be categorized ~~within~~in Level 2 liabilities under FASB ASC Topic 820.

~~NOTE 14 – Common Stock Repurchase Plans~~

In November 2014, the Corporation entered into an accelerated share repurchase agreement ("ASR") with a third party to repurchase $100.0 million of shares of its common stock. Under the terms of the ASR, the Corporation paid $100.0 million to the third party in November 2014 and received an initial delivery of 6.5 million shares, representing 80% of the shares expected to be delivered under the ASR, based on the closing price for the Corporation’s shares on November 13, 2014. In April 2015, the third party delivered an additional 1.8 million shares of common stock pursuant to the terms of the ASR, thereby completing the $100.0 million ASR. The Corporation repurchased a total of 8.3 million shares of common stock under the ASR at an average price of $12.05 per share.

In April 2015, the Corporation announced that its board of directors had approved a share repurchase program pursuant to which the Corporation was authorized to repurchase up to $50.0 million of its outstanding shares of common stock, or approximately 2.3% of its outstanding shares, through December 31, 2015. Through ~~September 30, 2015, approximately 4.0 million shares had been repurchased under this program for a total cost of $50.0 million, or $12.57 per share, completing this program.~~

~~NOTE 15 – Long-Term Debt~~

In June 2015, the Corporation issued $150.0 million of ten-year subordinated notes, which mature on November 15, 2024 and carry a fixed rate of 4.50% and an effective rate of approximately 4.69% as a result of discounts and issuance costs. Interest is paid semi-annually in May and November.

The proceeds from the issuance of the subordinated notes were used to redeem $150.0 million of trust preferred securities in July 2015. The redeemed securities carried a fixed interest rate of 6.29% and an effective rate of 6.52%, and had a scheduled maturity of February 1, 2036. As a result of this transaction, the Corporation recorded a $5.6 million loss on redemption, included as a component of non-interest expense, in July 2015. The loss on redemption included $2.5 million, net of $1.3 million tax effect, that had been recorded as an other comprehensive loss at the time the trust preferred securities were issued related to a cash flow hedge. See Note 3, "Accumulated Other Comprehensive Income," for additional details.

~~NOTE 16 – Subsequent Event~~

In October 2015, the Corporation announced that its board of directors had approved a share repurchase program pursuant to which the Corporation is authorized to repurchase up to $50.0 million of its outstanding shares of common stock, or approximately 2.3% of its outstanding shares, through December 31, 2016. Repurchased shares will be added to treasury stock, at cost. As permitted by securities laws and other legal requirements and subject to market conditions and other factors, purchases may be made from time to time in open market or privately negotiated transactions, including, without limitation, through accelerated share repurchase transactions. The share repurchase program may be discontinued at any time.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations ("Management’s Discussion") relates to Fulton Financial Corporation (the "Corporation"), a financial holding company registered under the Bank Holding Company Act of 1956 and incorporated under the laws of the Commonwealth of Pennsylvania in 1982, and its wholly owned subsidiaries. Management’s Discussion should be read in conjunction with the consolidated financial statements and notes presented in this report.

FORWARD-LOOKING STATEMENTS

The Corporation has made, and may continue to make, certain forward-looking statements with respect to its financial condition and results of operations. Do not unduly rely on forward-looking statements. Forward-looking statements can be identified by the use of words such as "may," "should," "will," "could," "estimates," "predicts," "potential," "continue," "anticipates," "believes," "plans," "expects," "future," "intends" and similar expressions which are intended to identify forward-looking statements. Statements relating to the "outlook" or ~~"outlook for 2015"~~"2016 outlook" contained herein are forward-looking statements.

These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, some of which are beyond the Corporation's control and ability to predict, that could cause actual results to differ materially from those expressed in the forward-looking statements. The Corporation undertakes no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Many factors could affect future financial results including, without limitation:

~~the effects of market interest rates, and the relative balances of rate-sensitive assets to rate-sensitive liabilities, on net interest margin and net interest income;~~

~~the effects of changes in interest rates on demand for the Corporation’s products and services;~~

~~the effects of changes in interest rates or disruptions in liquidity markets on the Corporation’s sources of funding;~~

~~the Corporation’s ability to manage liquidity, both at the holding company level and at its subsidiary banks;~~

~~the impact of increased regulatory scrutiny of the banking industry;~~

~~the effects of the increasing amounts of time and expense associated with regulatory compliance and risk management;~~

~~the potential for negative consequences from regulatory violations, including potential supervisory actions and the assessment of fines and penalties;~~

the additional time, expense and investment required to comply with, and the restrictions on potential growth and investment activities resulting from, the existing enforcement orders applicable to the Corporation by federal and state bank regulatory agencies requiring improvement in compliance functions and other remedial actions, or any future enforcement orders;

~~the Corporation’s ability to manage the uncertainty associated with the delay in implementing many of the regulations mandated by the Dodd-Frank Act;~~

~~the effects of negative publicity on the Corporation’s reputation;~~

~~the Corporation’s ability to successfully transform its business model;~~

~~the Corporation’s ability to achieve its growth plans;~~

~~the effects of competition on deposit rates and growth, loan rates and growth and net interest margin;~~

~~the Corporation’s ability to manage the level of non-interest expenses, including salaries and employee benefits expenses, operating risk losses and goodwill impairment;~~

the impact of adverse conditions in the economy and capital markets on the performance of the Corporation’s loan portfolio and demand for the Corporation’s products and services;

increases in non-performing assets, which may require the Corporation to increase the allowance for credit losses, charge off loans and incur elevated collection and carrying costs related to such non-performing assets;

investment securities gains and losses, including other-than-temporary declines in the value of securities which may result in charges to earnings;

the effects of market interest rates, and the relative balances of rate-sensitive assets to rate-sensitive liabilities, on net interest margin and net interest income;

the effects of changes in interest rates on demand for the Corporation’s products and services;

the effects of changes in interest rates or disruptions in liquidity markets on the Corporation’s sources of funding;

the Corporation’s ability to manage liquidity, both at the holding company level and at its bank subsidiaries;

the impact of increased regulatory scrutiny of the banking industry;

the effects of the increasing amounts of time and expense associated with regulatory compliance and risk management;

the potential for negative consequences from regulatory violations, including potential supervisory actions and the assessment of fines and penalties;

the additional time, expense and investment required to comply with, and the restrictions on potential growth and investment activities resulting from, the existing enforcement orders applicable to the Corporation and its bank subsidiaries by federal and state bank regulatory agencies requiring improvement in compliance functions and other remedial actions, or any future enforcement orders;

the Corporation’s ability to manage the uncertainty associated with the delay in implementing many of the regulations mandated by the Dodd-Frank Act;

the effects of negative publicity on the Corporation’s reputation;

the effects of adverse outcomes in litigation and governmental or administrative proceedings;

the Corporation’s ability to successfully transform its business model;

the Corporation’s ability to achieve its growth plans;

the effects of competition on deposit rates and growth, loan rates and growth and net interest margin;

the Corporation’s ability to manage the level of non-interest expenses, including salaries and employee benefits expenses, operating risk losses and goodwill impairment;

the impact of operational risks, including the risk of human error, inadequate or failed internal processes and systems, computer and telecommunications systems failures, faulty or incomplete data and an inadequate risk management framework;

the impact of failures of third parties upon which the Corporation relies to perform in accordance with contractual arrangements;

the failure or circumvention of the Corporation’s system of internal controls;

the loss of, or failure to safeguard, confidential or proprietary information;

the Corporation’s failure to identify and to address cyber-security risks;

the Corporation’s ability to keep pace with technological changes;

the Corporation’s ability to attract and retain talented personnel;

capital and liquidity strategies, including the Corporation’s ability to comply with applicable capital and liquidity requirements, and the Corporation’s ability to generate capital internally or raise capital on favorable terms;

the Corporation’s reliance on its subsidiaries for substantially all of its revenues and its ability to pay dividends or other distributions; and

the effects of any downgrade in the Corporation’s credit ratings on its borrowing costs or access to capital markets.

RESULTS OF OPERATIONS

Overview and Outlook

Fulton Financial Corporation is a financial holding company comprised of six wholly owned banking subsidiaries which provide a full range of retail and commercial financial services in Pennsylvania, Delaware, Maryland, New Jersey and Virginia. The Corporation generates the majority of its revenue through net interest income, or the difference between interest earned on loans and investments and interest paid on deposits and borrowings. Growth in net interest income is dependent upon balance sheet growth and/or maintaining or increasing the net interest margin, which is net interest income (fully taxable-equivalent, or "FTE") as a percentage of average interest-earning assets. The Corporation also generates revenue through fees earned on the various services and products offered to its customers and through gains on sales of assets, such as loans, investments, or properties. Offsetting these revenue sources are provisions for credit losses on loans, non-interest expenses and income taxes.

The following table presents a summary of the Corporation’s earnings and selected performance ratios:


	As of or for the Three months ended September 30						As of or for the Nine months ended September 30						As of or for the Three months ended March 31
	2015			2014			2015			2014			2016			2015
Income before income taxes (in thousands)	$	44,579		$	51,968		$	146,974		$	161,081
Net income (in thousands)	$	34,251		$	38,566		$	110,967		$	119,945		$	38,257		$	40,036
Diluted net income per share	$	0.20		$	0.21		$	0.63		$	0.64		$	0.22		$	0.22
Return on average assets	0.78		%	0.90		%	0.86		%	0.95		%	0.86		%	0.95		%
Return on average equity	6.72		%	7.32		%	7.33		%	7.72		%	7.47		%	8.05		%
Return on average tangible equity ⁽¹⁾													10.07		%	10.96		%
Net interest margin ~~(1)~~(2)	3.18		%	3.39		%	3.22		%	3.42		%	3.23		%	3.27		%
Efficiency ratio ⁽¹⁾													68.33		%	70.16		%
Non-performing assets to total assets	0.87		%	0.91		%	0.87		%	0.91		%	0.82		%	0.94		%
Annualized net charge-offs to average loans	0.03		%	0.18		%	0.16		%	0.24		%	0.20		%	0.08		%


(1)	Ratio represents a financial measure derived by methods other than Generally Accepted Accounting Principles ("GAAP"). See reconciliation of this non-GAAP financial measure to the most comparable GAAP measure under the heading, "Supplemental Reporting of Non-GAAP Based Financial Measures" at the end of this "Overview and Outlook" section.


(2)	Presented on an FTE basis, using a 35% ~~Federal~~federal tax rate and statutory interest expense disallowances. See also the “Net Interest Income” section of Management’s Discussion.

~~Income before~~

Net income ~~taxes~~ for the three months ~~and nine months~~ ended ~~September 30, 2015~~March 31, 2016 decreased ~~$7.4~~$1.8 million, or ~~14.2%~~4.4%, ~~and $14.1 million, or 8.8%, respectively,~~ compared to the same ~~periods~~period of ~~2014. The Corporation's results~~2015, mainly due to an increase in the provision for ~~the three~~credit losses, a decrease in investment securities gains and ~~nine months ended September 30, 2015 in comparison to the same periods in 2014 were most significantly impacted by declines in net interest income and increases~~an increase in non-interest expense, partially offset by ~~decreases~~an increase in ~~the provision for credit losses and higher non-interest~~net interest income.

Following is a summary of financial highlights for the three ~~and nine~~ months ended ~~September 30, 2015:~~March 31, 2016:

FTE Net Interest Income and Net Interest Margin - For the three ~~and nine~~ months ended ~~September 30, 2015,~~March 31, 2016, FTE net interest income ~~decreased $3.7~~increased $5.9 million, or ~~2.8%~~4.6%, ~~and $14.6 million, or 3.8%, respectively, in comparison to the same periods in 2014.~~

For both the three and nine month periods, the decrease in net interest income resulted from the impact of lower net interest margins, partially offset by the impact of growth in interest-earning assets. In the third quarter of 2015, net interest margin decreased 21 basis points in comparison to the same period in ~~2014, mainly due to~~2015. This increase was driven by growth in interest-earning assets, partially offset by a 224 basis point decrease in ~~yields on interest-earning assets. For the first nine months of 2015,~~ the net interest ~~margin decreased 20 basis points~~margin.

Average interest-earning assets increased $825.2 million, or 5.2%, in the first quarter of 2016 in comparison to the same period in ~~2014 as yields on interest-earning assets decreased 18 basis points and the cost of interest-bearing liabilities increased 5 basis points.~~

~~Average interest-earning assets increased $553.4 million, or 3.5%, in the third quarter of~~ 2015, ~~in comparison to the same period of 2014,~~ mainly due to a ~~$447.1~~$757.9 million, or ~~3.5%~~5.8%, increase in average loans and a ~~$183.9~~$187.5 million, or ~~62.7%~~8.3%, increase in ~~other interest-earning assets,~~average investment securities, partially offset by a ~~$74.5~~$115.5 million, or ~~3.0%~~24.4%, decrease in ~~average investment securities.~~other interest-earning assets.

Average interest-earning assets increased $395.9 million, or 2.5%, in the first nine months of 2015 in comparison to the same period of 2014, primarily as a result of a $392.8 million, or 3.1%, increase in average loans and a $199.7 million, or 75.7%, increase in other interest-earning assets, partially offset by a $199.7 million, or 7.9%, decrease in average investment securities.

Average interest-bearing liabilities increased ~~$127.3~~$494.6 million, or ~~1.1%~~4.4%, ~~in the third quarter of 2015 in comparison to the third quarter of 2014,~~ primarily due to a ~~$469.2~~$524.3 million, or 4.9%, increase in interest-bearing deposits, partially offset by a $342.7 million, or 51.4%, decrease in short-term borrowings. Additional funding to support the increase in interest-earning assets was provided by a $390.1 million, or 11.1%, increase in noninterest-bearing deposits.

During the first nine months of 2015, average interest-bearing liabilities decreased $37.6 million, or 0.3%, in comparison to the first nine months of 2014 primarily due to a $634.7 million, or 65.2%, decrease in average short-term borrowings, offset by a $473.3 million, or 5.1%5.4%, increase in interest-bearing deposits, and a ~~$123.7~~$136.2 million, or ~~13.4%~~44.0%, increase in short-term borrowings, partially offset by $165.9 million, or 14.8%, decrease in FHLB advances and long-term debt. Additional funding to support the increase in interest-earning assets was provided by a ~~$407.0~~$305.8 million, or ~~12.1%~~8.4%, increase in noninterest-bearing deposits.

Asset Quality - The Corporation recorded a ~~$1.0~~$1.5 million provision for credit losses during the three months ended ~~September 30, 2015,~~March 31, 2016, compared to a ~~$3.5~~$3.7 million negative provision for the same period in ~~2014. During the nine months ended September 30, 2015, the Corporation recorded a $500,000~~2015. The negative provision ~~for credit losses compared to a $9.5 million provision for the same period~~ in ~~2014.~~2015 was driven by an improvement in net charge-off levels, particularly among pooled impaired loans across all portfolio segments.

Annualized net charge-offs to average loans outstanding were ~~0.03%~~0.20% for the ~~third~~first quarter of ~~2015,~~2016, compared to ~~0.18%~~0.08% for the ~~third~~first quarter of ~~2014. For the first nine months~~2015. Non-performing assets decreased $15.4 million, or 9.4%, as of ~~2015, annualized net charge-off to average loans outstanding were 0.16%~~March 31, 2016 compared to ~~0.24% for the same period~~March 31, 2015 and were 0.82% and 0.94% of ~~2014.~~total assets as of March 31, 2016 and March 31, 2015, respectively. The total delinquency rate was 1.44% as of March 31, 2016, compared to 1.76% as of March 31, 2015.

Non-interest Income - For the three ~~and nine~~ months ended ~~September 30, 2015,~~March 31, 2016, non-interest income, excluding investment securities gains, increased ~~$1.2~~$1.6 million, or ~~2.9%~~3.9%, ~~and $3.6 million, or 2.9%, respectively,~~ in comparison to the same periods in ~~2014.~~2015. The increase ~~in the third quarter of 2015 compared to the third quarter of 2014~~ was primarily a result of ~~an increase in~~higher service charges on deposit accounts and other service charges and fees, partially offset by ~~lower~~a decrease in mortgage banking income. The increase realized during the first nine months of 2015 compared to the first nine months of 2014 resulted from increases in other service charges and fees, mortgage banking income and other income.sales gains.

Gains on sales of investment securities for the three ~~and nine~~ months ended ~~September 30, 2015~~March 31, 2016 were ~~$1.7 million and $8.3 million, respectively,~~$947,000 as compared to ~~$81,000 and $1.2~~$4.1 million ~~respectively,~~ for the three ~~and nine~~ months ended ~~September 30, 2014.~~March 31, 2015.

Non-interest Expense - For the three ~~and nine~~ months ended ~~September 30, 2015,~~March 31, 2016, non-interest expense increased ~~$9.1~~$1.9 million, or ~~7.9%~~1.6%, ~~and $20.2 million, or 5.9%, respectively,~~ in comparison to the same ~~periods~~period in ~~2014.Included in non-interest expense for~~2015. The primary driver of the ~~three and nine months ended September 30, 2015~~increase was a ~~$5.6~~$4.4 million, ~~loss incurred on the redemption of trust preferred securities ("TruPS"). Excluding this loss, non-interest expense increased~~ ~~$3.5 million~~or 6.7%, or ~~3.0%~~,increase in salaries and~~$14.6 million, or~~ ~~4.3%, respectively, for the three and nine months ended September 30, 2015 compared to the same periods in 2014.~~

In both 2015 and 2014, the Corporation implemented cost savings initiatives that mitigated the impact of elevated expenses related to the continued build out of its risk, compliance and information technology infrastructures. In both periods, these initiatives included branch consolidations, changes in employee benefits, ~~and reductions~~partially offset by decreases in ~~staffing.~~

During the first nine months of 2015, these initiatives included the consolidation of 11 branches, modifications to retirement benefits and the elimination of certain positions. These actions resulted in implementation expenses of $2.1 million for the first nine months of 2015. The annualizedother expense ~~reductions from all of these 2015 initiatives, when completed, are projected to be approximately $6.5 million, with $4.8 million expected to be realized in 2015.~~

In 2014, cost savings initiatives resulted in implementation expenses, net of associated gains, of $980,000 during the first nine months. Cost savings from these initiatives are estimated to be approximately $7.9 million annually.

categories, most notably occupancy.

~~The following table presents a summary of the 2015 and 2014 cost savings initiatives:~~

Three months ended September 30, 2015 Nine months ended September 30, 2015 Estimated Expense Reductions for the Year Ending December 31, 2015 Estimated Annualized Cost Savings
Implementation Expenses Expense Reductions Implementation Expenses Expense Reductions
(in thousands)
Branch consolidations $ 70
$ (660 ) $ 1,640
$ (825 ) $ (1,590 ) $ (3,050 )
Modification of retirement benefits and staffing reductions —
(870 ) 450
(2,365 ) (3,235 ) (3,470 )
2015 cost savings initiatives $ 70
$ (1,530 ) $ 2,090
$ (3,190 ) $ (4,825 ) $ (6,520 )

Three months ended September 30, 2014 Nine months ended September 30, 2014 Actual Expense Reductions for the Year Ended December 31, 2014 Estimated Annualized Cost Savings
Implementation Expenses Expense Reductions Implementation Expenses (Gains) Expense Reductions
(in thousands)
Branch consolidations $ —
$ (800 ) $ 2,080
$ (1,600 ) $ (2,400 ) $ (3,200 )
Subsidiary bank management reductions and other employee benefit reductions —
(1,175 ) (1,100 ) (3,370 ) (4,550 ) (4,700 )
2014 cost savings initiatives $ —
$ (1,975 ) $ 980
$ (4,970 ) $ (6,950 ) $ (7,900 )

~~Regulatory Enforcement Orders~~ - During 2014 and 2015, the Corporation and each of its banking subsidiaries became subject to regulatory enforcement orders (the "Regulatory Orders") issued by banking regulatory agencies relating to identified deficiencies in a centralized Bank Secrecy Act and anti-money laundering compliance program (the "BSA/AML Compliance Program"), which was designed to comply with the requirements of the Bank Secrecy Act, the USA Patriot Act of 2001 and related anti-money laundering regulations (collectively, the "BSA/AML Requirements"). The Regulatory Orders are described in more detail in Part II. Other Information, Item 1. Legal Proceedings.2016 Outlook

The Regulatory Orders require, among other things, that the Corporation and its banking subsidiaries review, assess and take actions to strengthen and enhance the BSA/AML Compliance Program, and, in some cases, conduct retrospective reviews of past account activity and transactions, as well as certain reports filed in accordance with the BSA/AML Requirements, to determine whether suspicious activity and certain transactions in currency were properly identified and reported in accordance with the BSA/AML Requirements.Corporation's outlook for 2016:

~~In addition~~annual mid- to ~~requiring strengthening~~high- single digit growth rate in average loans and enhancement of the BSA/AML Compliance Program, while the Regulatory Orders remain in effect, the Corporation is subject to certain restrictions on expansion activities of the Corporation and its subsidiary banks. Further, any failure to comply with the requirements of any of the Regulatory Orders involving the Corporation or its subsidiary banks could result in further enforcement actions, the imposition of material restrictions on the activities of the Corporation or its subsidiary banks, or the assessment of fines or penalties.

Additional expenses and investments have been incurred as the Corporation expanded its hiring of personnel and use of outside professionals, such as consulting and legal services, and capital investments in operating systems to strengthen and support the BSA/AML Compliance Program, as well as the Corporation’s broader compliance and risk management infrastructures. The expense and capital investment associated with all of these efforts, including in connection with the Regulatory Orders, have had an adverse effect on the Corporation’s results of operations in recent periods and could have a material adverse effect on the Corporation’s results of operations in future periods.

~~2015 Outlook~~

~~The Corporation's original outlook for 2015 included the following:~~

~~anticipated annual average loan and deposit growth rates of 3% to 7%;~~deposits;

net interest margin ~~compression at a rate~~expected to be stable on an annual basis with modest quarterly volatility of plus or minus 0 to 43 basis ~~points per quarter, on average, based on the current interest rate environment;~~points;

~~continued modest~~ provision for credit losses ~~although provisions could be impacted~~driven primarily by ~~the performance of individual credits;~~loan growth;

annual mid- to ~~high-single~~high- single digit ~~annual~~ growth rate in non-interest income, excluding the impact of securities gains;

annual low- to mid- single digit growth rate in non-interest expense (excluding loss on redemption of Trust Preferred Securities (TruPS) incurred in the third quarter of 2015); and

42focus on utilizing capital to support growth and provide appropriate returns to shareholders.

~~annual non-interest expense growth in the low-single digit rate.~~

~~Based on results for the first nine months of 2015 and expectations for the remainder of 2015, the Corporation has updated its 2015 outlook. The updated outlook for 2015 is as follows:~~

~~anticipated annual average loan and deposit growth rates of 3% to 7%, with loan growth likely to be at the lower end of the range;~~

~~net interest margin compression at a rate of 0 to 3 basis points during the fourth quarter of 2015;~~

~~continued modest provision for credit losses, although provisions could be impacted by the performance of individual credits;~~

~~non-interest income growth is expected to be at, or just below, the lower end of the mid- to high-single digit range; and~~

~~Excluding the loss on the redemption of TruPS, non-interest expense growth is expected to be at, or slightly above, the low single digit range.~~

Supplemental Reporting of Non-GAAP Based Financial Measures

This Quarterly Report on Form 10-Q contains supplemental financial information, as detailed below, which has been derived by methods other than GAAP. The Corporation has presented these non-GAAP financial measures because it believes that these measures provide useful and comparative information to assess trends in the Corporation's results of operations. Presentation of these non-GAAP financial measures is consistent with how the Corporation evaluates its performance internally, and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Corporation's industry. Management believes that these non-GAAP financial measures, in addition to GAAP measures, are also useful to investors to evaluate the Corporation's results. Investors should recognize that the Corporation's presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures, and the Corporation strongly encourages a review of its consolidated financial statements in their entirety. Following are reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measure as of and for the quarter ended March 31:



	2016			2015
	(in thousands)
Return on average common shareholders' equity (tangible)
Net income	$	38,257		$	40,036
Plus: Intangible amortization, net of tax	—			85
Numerator	$	38,257		$	40,121

Average common shareholders' equity	$	2,058,799		$	2,015,963
Less: Average goodwill and intangible assets	(531,556		)	(531,732		)
Average tangible shareholders' equity (denominator)	$	1,527,243		$	1,484,231

Return on average common shareholders' equity (tangible), annualized	10.07		%	10.96		%

Efficiency ratio
Non-interest expense	$	120,413		$	118,478
Less: Intangible amortization	—			(130		)
Numerator	$	120,413		$	118,348

Net interest income (fully taxable equivalent) ⁽¹⁾	$	134,026		$	128,086
Plus: Total Non-interest income	43,137			44,737
Less: Investment securities gains, net	(947		)	(4,145		)
Denominator	$	176,216		$	168,678

Efficiency ratio	68.33		%	70.16		%


(1)	Presented on an FTE basis, using a 35% federal tax rate and statutory interest expense disallowances. See also the “Net Interest Income” section of Management’s Discussion.

Quarter Ended ~~September 30, 2015~~March 31, 2016 compared to the Quarter Ended ~~September 30, 2014~~March 31, 2015

Net Interest Income

~~Fully-taxable equivalent (FTE)~~

FTE net interest income ~~decreased $3.4~~increased $5.9 million, to ~~$130.3~~$134.0 million, in the ~~third~~first quarter of ~~2015,~~2016, from ~~$133.7~~$128.1 million in the ~~third~~first quarter of ~~2014.~~2015. This ~~decrease~~increase was primarily due to an $825.2 million, or 5.2%, increase in interest earning assets, partially offset by the impact of a 214 basis point, or ~~6.2%~~1.2%, decrease in the net interest margin, to ~~3.18%~~3.23% for the ~~third~~first quarter of ~~2015~~2016 from ~~3.39%~~3.27% for the ~~third~~first quarter of ~~2014, partially offset by the impact of an increase in average interest-earning assets.~~2015. The following table provides a comparative average balance sheet and net interest income analysis for ~~the third quarter of 2015 as compared to the same period in 2014.~~those periods. Interest income and yields are presented on an FTE basis, using a 35% ~~Federal~~federal tax rate and statutory interest expense disallowances. The discussion following this table is based on these FTE amounts. ~~All dollar amounts are in thousands.~~


	Three months ended September 30																Three months ended March 31
	2015								2014								2016								2015
	Average Balance			Interest (1)			Yield/ Rate		Average Balance			Interest (1)			Yield/ Rate		Average Balance			Interest (1)			Yield/ Rate		Average Balance			Interest (1)			Yield/ Rate
ASSETS	(dollars in thousands)																(dollars in thousands)
Interest-earning assets:
Loans, net of unearned income (2)	$	13,369,874		$	135,268		4.02	%	$	12,922,821		$	136,773		4.20	%	$	13,853,420		$	137,895		4.00	%	$	13,095,528		$	133,055		4.11	%
Taxable investment securities (3)	2,148,403			11,252			2.09		2,181,099			12,278			2.25		2,180,593			12,003			2.20		2,005,542			11,282			2.25
Tax-exempt investment securities (3)	230,178			2,929			5.09		256,303			3,414			5.33		259,396			3,138			4.84		229,082			3,212			5.61
Equity securities (3)	18,280			257			5.58		34,002			438			5.12		14,386			218			6.10		32,210			450			5.66
Total investment securities	2,396,861			14,438			2.41		2,471,404			16,130			2.61		2,454,375			15,359			2.50		2,266,834			14,944			2.64
Loans held for sale	20,704			194			3.74		23,699			237			4.01		12,252			131			4.28		17,002			173			4.07
Other interest-earning assets	477,145			884			0.74		293,286			976			1.33		358,562			898			1.00		474,033			2,105			1.78
Total interest-earning assets	16,264,584			150,784			3.68	%	15,711,210			154,116			3.90	%	16,678,609			154,283			3.72	%	15,853,397			150,277			3.83	%
Noninterest-earning assets:
Cash and due from banks	104,622								203,134								98,449								105,271
Premises and equipment	226,446								224,241								226,284								226,391
Other assets	1,097,600								1,055,521								1,137,292								1,114,078
Less: Allowance for loan losses	(168,770		)						(192,163		)						(167,372		)						(183,927		)
Total Assets	$	17,524,482							$	17,001,943							$	17,973,262							$	17,115,210
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Demand deposits	$	3,316,532		$	1,122		0.13	%	$	3,047,191		$	953		0.12	%	$	3,438,355		$	1,494		0.17	%	$	3,135,927		$	983		0.13	%
Savings deposits	3,714,282			1,436			0.15		3,468,958			1,061			0.12		3,932,824			1,804			0.18		3,517,057			1,119			0.13
Time deposits	2,963,774			7,659			1.03		3,009,225			6,984			0.92		2,867,651			7,429			1.04		3,061,593			7,721			1.02
Total interest-bearing deposits	9,994,588			10,217			0.41		9,525,374			8,998			0.37		10,238,830			10,727			0.42		9,714,577			9,823			0.41
Short-term borrowings	324,685			92			0.11		667,397			297			0.18		445,402			268			0.24		309,215			77			0.10
Federal Home Loan Bank advances and long-term debt	996,247			10,225			4.09		995,486			11,129			4.45		958,213			9,262			3.88		1,124,074			12,291			4.40
Total interest-bearing liabilities	11,315,520			20,534			0.72	%	11,188,257			20,424			0.73	%	11,642,445			20,257			0.70	%	11,147,866			22,191			0.80	%
Noninterest-bearing liabilities:
Demand deposits	3,904,176								3,514,033								3,967,887								3,662,040
Other	281,957								210,194								304,131								289,341
Total Liabilities	15,501,653								14,912,484								15,914,463								15,099,247
Shareholders’ equity	2,022,829								2,089,459								2,058,799								2,015,963
Total Liabilities and Shareholders’ Equity	$	17,524,482							$	17,001,943							$	17,973,262							$	17,115,210
Net interest income/net interest margin (FTE)				130,250			3.18	%				133,692			3.39	%				134,026			3.23	%				128,086			3.27	%
Tax equivalent adjustment				(4,556		)						(4,326		)						(4,972		)						(4,505		)
Net interest income				$	125,694							$	129,366							$	129,054							$	123,581


(1)	Includes dividends earned on equity securities.


(2)	Includes non-performing loans.


(3)	Balances include amortized historical cost for available for sale securities; the related unrealized holding gains (losses) are included in other assets.

The following table summarizes the changes in FTE interest income and interest expense resulting from changes in average balances (volume) and changes in rates for the three months ended ~~September 30:~~March 31:


	2015 vs. 2014 Increase (Decrease) due to change in									2016 vs. 2015 Increase (Decrease) due to change in
	Volume			Rate			Net			Volume			Rate			Net
	(in thousands)									(in thousands)
Interest income on:
Loans, net of unearned income	$	4,565		$	(6,070	)	$	(1,505	)	$	8,168		$	(3,328	)	$	4,840
Taxable investment securities	(178		)	(848		)	(1,026		)	986			(265		)	721
Tax-exempt investment securities	(336		)	(149		)	(485		)	393			(467		)	(74		)
Equity securities	(217		)	36			(181		)	(265		)	33			(232		)
Loans held for sale	(28		)	(15		)	(43		)	(51		)	9			(42		)
Other interest-earning assets	457			(549		)	(92		)	(433		)	(774		)	(1,207		)
Total interest income	$	4,263		$	(7,595	)	$	(3,332	)	$	8,798		$	(4,792	)	$	4,006
Interest expense on:
Demand deposits	$	87		$	82		$	169		$	103		$	408		$	511
Savings deposits	83			292			375			137			548			685
Time deposits	(111		)	786			675			(432		)	140			(292		)
Short-term borrowings	(116		)	(89		)	(205		)	46			145			191
Federal Home Loan Bank advances and long-term debt	9			(913		)	(904		)	(1,676		)	(1,353		)	(3,029		)
Total interest expense	$	(48	)	$	158		$	110		$	(1,822	)	$	(112	)	$	(1,934	)

Note: Changes which are partially attributable to both volume and rate are allocated to the volume and rate components presented above based on the percentage of direct changes that are attributable to each component.

As summarized above, the increase in average interest-earning assets, primarily loans, resulted in a 22$8.8 million increase in FTE interest income, which was partially offset by an 11 basis point, or ~~5.6%~~2.9%, decrease in yields on average interest-earning assets ~~primarily loans,~~which resulted in a ~~$7.6~~$4.8 million decrease in FTE interest income, partially offset by a $4.3 million increase in FTE interest income as a result of an increase in interest-earning assets, the net effect of increases in loans and other interest-earning assets, and a decrease in investment securities.

Average investment securities decreased $74.5 million, or 3.0%, as portfolio cash flows were not fully reinvested. The yield on average investment securities decreased 20 basis points, or 7.7%, to 2.41% in the third quarter of 2015 from 2.61% in the third quarter of 2014. The decrease in average investment securities was partially offset by a $183.9 million, or 62.7%, increase in other interest-earning assets. During the fourth quarter of 2014, the Corporation changed providers for check clearing services to the Federal Reserve Bank of Philadelphia, resulting in the transfer of clearing account balances from non-interest earning assets to low-yielding interest-bearing Federal Reserve Bank accounts. As a result, the average yield on other interest-earning assets decreased 59 basis points, or 44.4%, despite the increase in average other interest-earning assets.income.

Average loans and average FTE yields, by type, are summarized in the following table:


	Three months ended September 30								Increase (Decrease) in					Three months ended March 31								Increase (Decrease) in
	2015				2014				Balance					2016				2015				Balance
	Balance		Yield		Balance		Yield		$			%		Balance		Yield		Balance		Yield		$			%
	(dollars in thousands)													(dollars in thousands)
Real estate – commercial mortgage	$	5,242,021	4.09	%	$	5,114,221	4.35	%	$	127,800		2.5	%	$	5,487,421	4.03	%	$	5,163,845	4.22	%	$	323,576		6.3	%
Commercial – industrial, financial and agricultural	3,887,161		3.78		3,657,047		3.97		230,114			6.3		4,095,268		3.79		3,770,187		3.87		325,081			8.6
Real estate – home equity	1,692,860		4.08		1,727,253		4.18		(34,393		)	(2.0	)	1,674,032		4.10		1,721,300		4.14		(47,268		)	(2.7	)
Real estate – residential mortgage	1,381,141		3.78		1,369,087		3.93		12,054			0.9		1,381,409		3.78		1,370,376		3.84		11,033			0.8
Real estate – construction	753,584		3.88		663,922		3.98		89,662			13.5		792,014		3.82		688,690		3.93		103,324			15.0
Consumer	270,391		5.81		284,630		5.39		(14,239		)	(5.0	)	263,295		5.53		259,138		5.26		4,157			1.6
Leasing and other	142,716		6.79		106,661		7.32		36,055			33.8
Leasing, overdrafts and other														159,981		7.46		121,992		8.41		37,989			31.1
Total	$	13,369,874	4.02	%	$	12,922,821	4.20	%	$	447,053		3.5	%	$	13,853,420	4.00	%	$	13,095,528	4.11	%	$	757,892		5.8	%

Average loans increased ~~$447.1~~$757.9 million, or ~~3.5%~~5.8%, compared to the ~~third~~first quarter of ~~2014,~~2015, mainly in commercial loans, commercial mortgage, construction loans and leasing and other. The growth in commercial loans and leasing and other was driven by a combination of loans and leases to new customers and increased borrowings from existing customers, while the growth in construction loans was primarily due to an increase in loans secured by commercial properties. The average yield on loans decreased 1811 basis points, or ~~4.3%~~2.7%, to ~~4.02%~~4.00% in ~~2015~~2016 from ~~4.20%~~4.11% in ~~2014.~~2015. The decrease in average yields on loans was attributable to repayments of higher-yielding loans, continued refinancing activity at lower rates, and new loan production at rates lower than the overall portfolio yield.

Average total interest-bearing liabilities increased ~~$127.3~~$494.6 million, or ~~1.1%~~4.4%, compared to the ~~third~~first quarter of ~~2014.~~2015. Interest expense ~~increased $110,000,~~decreased $1.9 million, or ~~0.5%~~8.7%, to ~~$20.5~~$20.3 million in the ~~third~~first quarter of ~~2015.~~2016 as a result of a change in the mix from higher cost long-term debt to lower-cost deposits. Average deposits and average interest rates, by type, are summarized in the following table:


	Three months ended September 30								Increase (Decrease) in Balance					Three months ended March 31								Increase (Decrease) in Balance
	2015				2014				Increase (Decrease) in Balance					2016				2015				Increase (Decrease) in Balance
	Balance		Rate		Balance		Rate		$			%		Balance		Rate		Balance		Rate		$			%
	(dollars in thousands)													(dollars in thousands)
Noninterest-bearing demand	$	3,904,176	—	%	$	3,514,033	—	%	$	390,143		11.1	%	$	3,967,887	—	%	$	3,662,040	—	%	$	305,847		8.4	%
Interest-bearing demand	3,316,532		0.13		3,047,191		0.12		269,341			8.8		3,438,355		0.17		3,135,927		0.13		302,428			9.6
Savings	3,714,282		0.15		3,468,958		0.12		245,324			7.1		3,932,824		0.18		3,517,057		0.13		415,767			11.8
Total demand and savings	10,934,990		0.09		10,030,182		0.08		904,808			9.0		11,339,066		0.12		10,315,024		0.08		1,024,042			9.9
Time deposits	2,963,774		1.03		3,009,225		0.92		(45,451		)	(1.5	)	2,867,651		1.04		3,061,593		1.02		(193,942		)	(6.3	)
Total deposits	$	13,898,764	0.29	%	$	13,039,407	0.27	%	$	859,357		6.6	%	$	14,206,717	0.30	%	$	13,376,617	0.30	%	$	830,100		6.2	%

The ~~$904.8 million,~~$1.0 billion, or ~~9.0%~~9.9%, increase in total demand and savings accounts was primarily due to a ~~$427.4~~$465.7 million, or ~~12.3%~~9.7%, increase in personal account balances, a $363.6 million, or 10.0%, increase in business account balances and a ~~$352.3~~$195.6 million, or ~~7.6%, increase in personal account balances and a $124.7 million, or 6.7%~~10.7%, increase in municipal account balances. The average cost of total deposits ~~increased two basis points largely due~~remained unchanged in the first quarter of 2016 compared to the first quarter of 2015 as a result of an increase in noninterest-bearing deposits, which offset the impact of higher average rates on ~~average time~~interest-bearing deposits.

Average borrowings and interest rates, by type, are summarized in the following table:

Three months ended September 30 Increase (Decrease)
2015 2014 in Balance
Balance Rate Balance Rate $ %
(dollars in thousands)
Short-term borrowings:
Customer repurchase agreements $ 149,415
0.10 % $ 202,809
0.11 % $ (53,394 ) (26.3 )%
Customer short-term promissory notes 79,308
0.02
83,734
0.05
(4,426 ) (5.3 )
Total short-term customer funding 228,723
0.07
286,543
0.09
(57,820 ) (20.2 )
Federal funds purchased 85,092
0.19
224,930
0.19
(139,838 ) (62.2 )
Short-term FHLB advances (1) 10,870
0.34
155,924
0.32
(145,054 ) (93.0 )
Total short-term borrowings 324,685
0.11
667,397
0.18
(342,712 ) (51.4 )
Long-term debt:

FHLB advances 618,010
3.49
625,712
3.60
(7,702 ) (1.2 )
Other long-term debt 378,237
5.06
369,774
5.89
8,463
2.3
Total long-term debt 996,247
4.09
995,486
4.45
761
0.1



	Three months ended March 31								Increase (Decrease)
	2016				2015				in Balance
	Balance		Rate		Balance		Rate		$			%
	(dollars in thousands)
Short-term borrowings:
Customer repurchase agreements	$	171,408	0.11	%	$	173,625	0.10	%	$	(2,217	)	(1.3	)%
Customer short-term promissory notes	74,013		0.04		86,258		0.03		(12,245		)	(14.2	)
Total short-term customer funding	245,421		0.09		259,883		0.08		(14,462		)	(5.6	)
Federal funds purchased	183,970		0.42		25,054		0.15		158,916			N/M
Short-term FHLB advances ⁽¹⁾	16,011		0.46		24,278		0.28		(8,267		)	(34.1	)
Total short-term borrowings	445,402		0.24		309,215		0.10		136,187			44.0
Long-term debt:
FHLB advances	596,351		3.19		657,697		3.49		(61,346		)	(9.3	)
Other long-term debt	361,862		5.00		466,377		5.69		(104,515		)	(22.4	)
Total long-term debt	958,213		3.88		1,124,074		4.40		(165,861		)	(14.8	)
Total borrowings	$	1,403,615	2.72	%	$	1,433,289	3.47	%	$	(29,674	)	(2.1	)%

N/M - Not meaningful

(1) Represents FHLB advances with an original maturity term of less than one year.

Total short-term borrowings ~~decreased $342.7~~increased $136.2 million, or ~~51.4%~~44.0%, ~~primarily~~as a result of increases in ~~Federal~~federal funds ~~purchased and~~purchased. The increase generally reflects a shift from long-term to short-term ~~FHLB advances. The decrease was driven by lower~~ wholesale ~~funding needs resulting from the increase in average deposits exceeding the growth in average interest-earning assets.~~

funding. Average other long-term debt ~~increased $8.5~~decreased $165.9 million, or ~~2.3%~~14.8%. This ~~increase~~decrease was ~~the net impact~~primarily due to of the maturity of $100.0 million of subordinated debt in April 2015 and a $61.3 million decrease in FHLB advances. In addition, during 2015, the ~~redemption~~Corporation redeemed $150.0 million of TruPS with the proceeds from the issuance of $150.0 million of ~~TruPS~~lower-cost subordinated debt. These transactions contributed to a 52 basis point decrease in ~~July 2015, and the issuances of $100.0 million and $150.0 million of subordinated debt in November 2014 and June 2015, respectively. As a result of these transactions,~~ the cost of other long-term ~~debt~~debt. The average cost of total borrowings decreased 8375 basis ~~points.~~

Inpoints, or 21.6%, primarily due to the ~~third quarter of 2015, the Corporation executed two transactions~~Corporation's continuing efforts to ~~restructure its long-term FHLB advances. First, $200 million of FHLB advances, with a weighted average rate of 4.45%~~lengthen maturities and ~~maturing~~lock in the first quarter of 2017, were refinanced with advances maturing from September 2019 to December 2020, at a weighted average rate of 2.95%. This transaction will reduce interest expense on a quarterly basis by approximately $750,000, beginning in the fourth quarter of 2015. Second, forward agreements were executed to refinance an additional $200 million of FHLB advances when they mature in December 2016. These forward agreements have maturity dates from March 2021 to December 2021 and will reduce the weighted average rate on these advances from 4.03% to 2.40% and decrease interest expense on a quarterly basis by approximately $800,000 beginning in the first quarter of 2017.longer-term rates.

Provision for Credit Losses

The provision for credit losses was ~~$1.0~~$1.5 million for the ~~third~~first quarter of ~~2015, a decrease~~2016, an increase of ~~$2.5~~$5.2 million from the ~~third~~negative provision in the first quarter of ~~2014. This decrease resulted from lower allowance~~2015. The negative provision for ~~credit losses allocation needs as asset quality improved.~~the three months ended March 31, 2015 was driven by an improvement in net charge-off levels, particularly among pooled impaired loans across all portfolio segments.

The provision for credit losses is recognized as an expense in the consolidated statements of income and is the amount necessary to adjust the allowance for credit losses to its appropriate balance, as determined through the Corporation's allowance methodology. The Corporation determines the appropriate level of the allowance for credit losses based on many quantitative and qualitative factors, including, but not limited to: the size and composition of the loan portfolio, changes in risk ratings, changes in collateral values, delinquency levels, historical losses and economic conditions. See the "Financial Condition" section of Management's Discussion under the heading "Provision for Credit Losses and Allowance for Credit Losses" for details related to the Corporation's allowance and provision for credit losses.

Non-Interest Income

The following table presents the components of non-interest income:


	Three months ended September 30				Increase (Decrease)					Three months ended March 31				Increase (Decrease)
	2015		2014		$			%		2016		2015		$			%
	(dollars in thousands)									(dollars in thousands)
Service charges on deposit accounts:
Overdraft fees	$	5,652	$	5,806	$	(154	)	(2.7	)%	$	5,272	$	4,803	$	469		9.8	%
Cash management fees	3,418		3,191		227			7.1		3,466		3,217		249			7.7
Other	3,912		3,804		108			2.8		3,820		3,549		271			7.6
Total service charges on deposit accounts	12,982		12,801		181			1.4		12,558		11,569		989			8.5
Investment management and trust services	11,237		11,120		117			1.1		10,988		10,889		99			0.9
Other service charges and fees:
Merchant fees	4,000		3,774		226			6.0		3,682		3,177		505			15.9
Debit card income	2,572		2,407		165			6.9		2,511		2,389		122			5.1
Commercial interest rate swap fees										1,442		811		631			77.8
Letter of credit fees	1,143		1,163		(20		)	(1.7	)	1,146		1,157		(11		)	(1.0	)
Commercial swap fees	1,251		537		714			133.0
Other	1,999		2,073		(74		)	(3.6	)	1,969		1,829		140			7.7
Total other service charges and fees	10,965		9,954		1,011			10.2		10,750		9,363		1,387			14.8
Mortgage banking income:
Gain on sales of mortgage loans	2,627		2,613		14			0.5
Gains on sales of mortgage loans										2,670		3,533		(863		)	(24.4	)
Mortgage servicing income	1,237		1,425		(188		)	(13.2	)	1,360		1,155		205			17.7
Total mortgage banking income	3,864		4,038		(174		)	(4.3	)	4,030		4,688		(658		)	(14.0	)
Credit card income	2,548		2,331		217			9.3		2,424		2,235		189			8.5
Other income	1,448		1,575		(127		)	(8.1	)	1,440		1,848		(408		)	(22.1	)
Total, excluding gains on sales of investment securities	43,044		41,819		1,225			2.9		42,190		40,592		1,598			3.9
Net gains on sales of investment securities	1,730		81		1,649			N/M		947		4,145		(3,198		)	(77.2	)
Total	$	44,774	$	41,900	$	2,874		6.9	%	$	43,137	$	44,737	$	(1,600	)	(3.6	)%

~~N/M - Not meaningful~~

Excluding gains on sales of investment securities, non-interest income increased ~~$1.2~~$1.6 million, or ~~2.9%, the net effect of modest increases in certain income categories being partially offset by modest decreases in others.~~ 3.9%.Other service charges and fees grew ~~$1.0~~$1.4 million, or ~~10.2%~~14.8%, driven mainly by a ~~$714,000~~$631,000 increase in commercial interest rate swap fees, as new loan volumes increased in comparison to the ~~third~~first quarter of ~~2014.~~ 2015, and by a $505,000 increase in merchant fee income related to higher transaction volumes in the first quarter of 2016.Service charges on deposits increased ~~a moderate $181,000,~~$989,000, or ~~1.4%~~8.5%, ~~as a $227,000, or 7.1%, increase in cash management fees resulting from changes in fee structures were partially offset by lower overdraft fees.~~across all categories.

Gains on sales of mortgage loans ~~remained flat~~decreased $863,000, or 24.4%, when compared to the ~~third~~first quarter of ~~2014,~~2015, the net effect of a ~~13.7% increase~~34.7% decrease in volumes and a ~~11.6% decrease~~15.6% increase in spreads. Mortgage servicing income ~~decreased $188,000,~~increased $205,000, or ~~13.2%~~17.7%, due to ~~an increase~~a decrease in amortization of ~~mortgage servicing rights (MSRs),~~MSRs, as prepayments were ~~higher due to higher refinancing volumes~~lower when compared to the ~~third~~first quarter of ~~2014.~~2015.

~~Investment~~Gains on sales of investment securities ~~gains for~~decreased $3.2 million from the ~~third~~first quarter of 2015, ~~resulted~~which included gains from the sales of ~~financial institution stocks. Investment~~two pooled trust preferred debt securities ~~gains~~ in ~~the third quarter of 2014 resulted from sales of financial institution stocks, partially offset by other-than-temporary impairment losses.~~ 2015. See Note 4, "Investment Securities," in the Notes to Consolidated Financial Statements for additional details.

Non-Interest Expense

The following table presents the components of non-interest expense:


	Three months ended September 30				Increase (Decrease)					Three months ended March 31				Increase (Decrease)
	2015		2014		$			%		2016		2015		$			%
	(dollars in thousands)									(dollars in thousands)
Salaries and employee benefits	$	65,308	$	62,434	$	2,874		4.6	%	$	69,372	$	64,990	$	4,382		6.7	%
Net occupancy expense	10,710		11,582		(872		)	(7.5	)	12,220		13,692		(1,472		)	(10.8	)
Other outside services	7,373		8,632		(1,259		)	(14.6	)	6,056		5,750		306			5.3
Loss on redemption of trust preferred securities	5,626		—		5,626			N/M
Data processing	5,105		4,689		416			8.9		5,400		4,768		632			13.3
Software	3,984		3,353		631			18.8		3,921		3,318		603			18.2
Equipment expense	3,595		3,307		288			8.7		3,371		3,958		(587		)	(14.8	)
FDIC insurance expense	2,867		2,882		(15		)	(0.5	)	2,949		2,822		127			4.5
Supplies and postage										2,579		2,369		210			8.9
Professional fees	2,828		3,252		(424		)	(13.0	)	2,333		2,871		(538		)	(18.7	)
Supplies and postage	2,708		2,560		148			5.8
Marketing	2,102		1,798		304			16.9		1,624		1,233		391			31.7
Telecommunications	1,587		1,587		—			—		1,488		1,716		(228		)	(13.3	)
Other real estate owned and repossession expense										638		1,362		(724		)	(53.2	)
Operating risk loss	1,136		1,242		(106		)	(8.5	)	540		827		(287		)	(34.7	)
Other real estate owned and repossession expense	1,016		1,303		(287		)	(22.0	)
Intangible amortization	5		314		(309		)	(98.4	)	—		130		(130		)	(100.0	)
Other	8,939		6,863		2,076			30.2		7,922		8,672		(750		)	(8.6	)
Total	$	124,889	$	115,798	$	9,091		7.9	%	$	120,413	$	118,478	$	1,935		1.6	%

~~N/M - Not meaningful~~

The ~~$2.9~~$4.4 million, or ~~4.6%~~6.7%, increase in salaries and employee benefits primarily resulted from a ~~$2.3~~$4.2 million, or ~~4.2%~~7.9%, increase in salaries, ~~and a $625,000, or 6.7%, increase in employee benefits. The increase in salaries was~~resulting primarily ~~due to~~from higher average salaries per full-time equivalent (FTE) employee, ~~and~~normal merit increases, an increase in incentive compensation, ~~partially offset by the impact~~and an additional day of ~~a decrease~~expense in the ~~average number~~first quarter of ~~FTE employees,~~2016. Benefits expenses were largely unchanged.

Net occupancy expense decreased $1.5 million, or 10.8%, as a result of milder winter conditions in 2016 driving down snow removal and utilities costs when compared to ~~3,450 as~~the first quarter of ~~September 30,~~2015. In addition, 2015 ~~from 3,530 as~~included $600,000 of ~~September 30, 2014.~~accelerated depreciation related to consolidated branches.

Outside services include fees paid to consultants and expenses for contracted or outsourced services. Consulting expenses can fluctuate based on the timing and need for such services. The ~~decrease in FTE employees reflects the cost savings initiatives, primarily branch consolidations. The~~$306,000, or 5.3%, increase in ~~employee benefits~~expense in comparison to the first quarter of 2015 was ~~primarily~~largely due to ~~increases in defined benefit plan expense and other employee benefits, partially offset by a decrease in profit sharing expense.~~the timing of certain expenses related to the Corporation’s BSA/AML Compliance Program remediation efforts.

The ~~$1.3~~$1.2 million, or ~~14.6%, decrease in other outside services was primarily in costs related to BSA/AML remediation efforts. The $1.0 million, or 13.1%~~15.3%, combined increase in data processing and software resulted from ~~increased~~higher transaction ~~volume~~volumes and contractual increases ~~for expenses~~ related to core processing systems, and amortization of capitalized software investments.

Equipment expense decreased $587,000, or 14.8%, primarily due to lower depreciation expense when compared to the first quarter of 2015 as certain assets became fully depreciated.

The ~~$2.1 million increase~~$538,000, or 18.7%, decrease in professional fees was driven by lower costs for legal services resulting from both the timing and the need for such services.

Other real estate owned and repossession expense decreased $724,000, or 53.2%, when compared to the first quarter of 2015. This decrease was due to a $473,000 decrease in net losses on the sales of other real estate properties due to fewer transactions, and a $212,000 decrease in repossession expense due to lower activity.

The $750,000 decrease in the other ~~expenses~~category was ~~largely impacted by costs associated with branch consolidations.~~mainly due to lower state taxes as liabilities were adjusted to reflect current expectations regarding state tax exposures.

~~In July 2015, the Corporation redeemed $150.0 million of TruPS. In connection with this redemption, a loss of $5.6 million was recognized as a component of non-interest expense.~~

Income Taxes

Income tax expense for the ~~third~~first quarter of ~~2015~~2016 was ~~$10.3~~$12.0 million, a ~~$3.1~~$1.5 million, or ~~22.9%~~11.2%, decrease from ~~$13.4~~$13.5 million for the ~~third~~first quarter of ~~2014.~~2015.

The Corporation’s effective tax rate was ~~23.2%~~23.9% in the ~~third~~first quarter of ~~2015,~~2016, as compared to ~~25.8%~~25.2% in the ~~third~~first quarter of ~~2014.~~2015. The effective tax rate is generally lower than the ~~Federal~~federal statutory rate of 35% due to investments in tax-free municipal securities and credits earned from investments in partnerships that generate tax credits under various federal programs. The decrease in the effective rate from the ~~third quarter of 2014 was driven by lower income before income taxes, mainly resulting from the loss on redemption of TruPS, and higher net tax credits.~~

~~Nine Months Ended September 30, 2015 compared to the Nine Months Ended September 30, 2014~~

~~Net Interest Income~~

FTE net interest income decreased $13.9 million, or 3.5%, to $385.8 million in the first nine months of 2015 from $399.7 million in the same period of 2014. Net interest margin decreased 20 basis points, or 5.8%, to 3.22% for the first nine months of 2015 from 3.42% for the first nine months of 2014. The decrease in net interest margin was the result of an 18 basis point, or 4.6%, decrease in yields on interest-earning assets, and a 5 basis point, or 7.0%, increase in funding costs.

Nine months ended September 30
2015 2014
Average
Balance Interest (1) Yield/
Rate Average
Balance Interest (1) Yield/
Rate
ASSETS (dollars in thousands)
Interest-earning assets:
Loans, net of unearned income (2) $ 13,220,339
$ 401,662
4.06 % $ 12,827,563
$ 405,904
4.23 %
Taxable investment securities (3) 2,068,025
33,478
2.16
2,216,344
37,962
2.28
Tax-exempt investment securities (3) 225,209
9,035
5.35
268,604
10,561
5.24
Equity securities (3) 25,985
1,086
5.59
33,949
1,286
5.06
Total investment securities 2,319,219
43,599
2.51
2,518,897
49,809
2.64
Loans held for sale 21,360
632
3.94
18,259
585
4.27
Other interest-earning assets 463,545
3,922
1.13
263,797
3,065
1.55
Total interest-earning assets 16,024,463
449,815
3.75 % 15,628,516
459,363
3.93 %
Noninterest-earning assets:
Cash and due from banks 104,870
200,368

Premises and equipment 226,469
225,033

Other assets 1,101,856
1,041,834

Less: Allowance for loan losses (176,205 ) (197,235 )
Total Assets $ 17,281,453
$ 16,898,516

LIABILITIES AND EQUITY
Interest-bearing liabilities:
Demand deposits $ 3,202,380
$ 3,092
0.13 % $ 2,969,470
$ 2,766
0.12 %
Savings deposits 3,600,695
3,802
0.14
3,392,681
3,127
0.12
Time deposits 3,017,271
23,199
1.03
2,984,861
19,686
0.88
Total interest-bearing deposits 9,820,346
30,093
0.41
9,347,012
25,579
0.37
Short-term borrowings 338,019
272
0.11
972,694
1,470
0.20
FHLB advances and long-term debt 1,048,634
33,669
4.29
924,920
32,606
4.71
Total interest-bearing liabilities 11,206,999
64,034
0.76 % 11,244,626
59,655
0.71 %
Noninterest-bearing liabilities:
Demand deposits 3,767,919
3,360,876

Other 282,983
214,826

Total Liabilities 15,257,901
14,820,328

Shareholders’ equity 2,023,552
2,078,188

Total Liabilities and Shareholders’ Equity $ 17,281,453
$ 16,898,516

Net interest income/net interest margin (FTE) 385,781
3.22 % 399,708
3.42 %
Tax equivalent adjustment (13,586 ) (12,879 )
Net interest income $ 372,195
$ 386,829


~~(1)~~	~~Includes dividends earned on equity securities.~~


~~(2)~~	~~Includes non-performing loans.~~


~~(3)~~	~~Balances include amortized historical cost for available for sale securities; the related unrealized holding gains (losses) are included in other assets.~~

The following table summarizes the changes in FTE interest income and expense for the first nine months of 2015 as compared to the same period in 2014 due to changes in average balances (volume) and changes in rates:

2015 vs. 2014
Increase (Decrease) due
to change in
Volume Rate Net
(in thousands)
Interest income on:
Loans, net of unearned income $ 12,249
$ (16,491 ) $ (4,242 )
Taxable investment securities (1,984 ) (2,500 ) (4,484 )
Tax-exempt investment securities (1,299 ) (227 ) (1,526 )
Equity securities (322 ) 122
(200 )
Loans held for sale 111
(64 ) 47
Other interest-earning assets 2,403
(1,546 ) 857
Total interest income $ 11,158
$ (20,706 ) $ (9,548 )
Interest expense on:
Demand deposits $ 222
$ 104
$ 326
Savings deposits 200
475
675
Time deposits 216
3,297
3,513
Short-term borrowings (698 ) (500 ) (1,198 )
FHLB advances and long-term debt 4,115
(3,052 ) 1,063
Total interest expense $ 4,055
$ 324
$ 4,379

An 18 basis point, or 4.6%, decrease in yields on average interest-earning assets resulted in a $20.7 million decrease in FTE interest income. This decrease was partially offset by an $11.2 million increase in FTE interest income resulting from a $395.9 million, or 2.5%, increase in average interest-earning assets. Increases in loans and other interest-earning assets were partially offset by a decrease in average investment securities.

Average investment securities decreased $199.7 million, or 7.9%, as portfolio cash flows were not fully reinvested. The yield on average investments decreased 13 basis points, or 4.9%, to 2.51% in 2015 from 2.64% in 2014. The decrease in average investment securities was offset by a $199.7 million, or 75.7%, increase in other interest-earning assets. During the fourth quarter of 2014, the Corporation changed providers for check clearing services to the Federal Reserve Bank of Philadelphia, resulting in the transfer of clearing account balances from non-interest earning assets to low-yielding interest-bearing Federal Reserve Bank accounts, which contributed to a decrease in the yield on other interest-earning assets.

~~Average loans, by type, are summarized in the following table:~~

Nine months ended September 30 Increase (Decrease)
2015 2014 in Balance
Balance Yield Balance Yield $ %
(dollars in thousands)
Real estate – commercial mortgage $ 5,205,755
4.15 % $ 5,112,735
4.38 % $ 93,020
1.8 %
Commercial – industrial, financial and agricultural 3,831,678
3.81
3,637,440
3.98
194,238
5.3
Real estate – home equity 1,703,006
4.11
1,739,352
4.18
(36,346 ) (2.1 )
Real estate – residential mortgage 1,369,367
3.81
1,348,269
3.96
21,098
1.6
Real estate – construction 713,893
3.93
609,803
4.08
104,090
17.1
Consumer 265,002
5.52
278,697
4.93
(13,695 ) (4.9 )
Leasing and other 131,638
7.33
101,267
8.88
30,371
30.0
Total $ 13,220,339
4.06 % $ 12,827,563
4.23 % $ 392,776
3.1 %

The average yield on loans decreased 17 basis points, or 4.0%, to 4.06% in 2015 from 4.23% in 2014. The decrease in average yields on loans was attributable to repayments of higher-yielding loans and new loan production at lower rates. Average loan balances increased $392.8 million, or 3.1%. The $194.2 million, or 5.3%, increase in commercial loans, the $104.1 million, or 17.1%, increase in real estate construction loans and the $93.0 million, or 1.8%, increase in commercial mortgages were from both new and existing customers.

Interest expense increased $4.4 million, or 7.3%, to $64.0 million in the first nine months of 2015 from $59.7 million in the first nine months of 2014. Although total average interest-bearing liabilities decreased $37.6 million, or 0.3%, compared to the first nine months of 2014, a change in funding mix from lower cost short-term Federal funds purchased and short-term FHLB advances to higher cost deposits and long-term FHLB advances and subordinated debt drove the $4.1 million increase in interest expense attributable to volume.

~~Average deposits, by type, are summarized in the following table:~~

Nine months ended September 30 Increase in Balance
2015 2014
Balance Rate Balance Rate $ %
(dollars in thousands)
Noninterest-bearing demand $ 3,767,919
— % $ 3,360,876
— % $ 407,043
12.1 %
Interest-bearing demand 3,202,380
0.13
2,969,470
0.12
232,910
7.8
Savings 3,600,695
0.14
3,392,681
0.12
208,014
6.1
Total demand and savings 10,570,994
0.09
9,723,027
0.08
847,967
8.7
Time deposits 3,017,271
1.03
2,984,861
0.88
32,410
1.1
Total deposits $ 13,588,265
0.30 % $ 12,707,888
0.27 % $ 880,377
6.9 %

The $848.0 million, or 8.7%, increase in total demand and savings account balances was primarily due to a $416.3 million, or 12.5%, increase in business account balances, a $277.9 million, or 6.0%, increase in personal account balances and a $153.8 million, or 8.9%, increase in municipal account balances. The average cost of deposits increased 3 basis points, or 11.1%, to 0.30% in 2015 from 0.27% in 2014, primarily due to an increase in higher-cost time deposits.

~~The following table summarizes changes in average short-term borrowings and long-term debt, by type:~~

Nine months ended September 30 Increase (Decrease)
2015 2014 in Balance
Balance Rate Balance Rate $ %
(dollars in thousands)
Short-term borrowings:
Customer repurchase agreements $ 167,526
0.10 % $ 202,184
0.11 % $ (34,658 ) (17.1 )%
Customer short-term promissory notes 81,854
0.02
89,119
0.05
(7,265 ) (8.2 )
Total short-term customer funding 249,380
0.07
291,303
0.09
(41,923 ) (14.4 )
Federal funds purchased 72,961
0.17
361,162
0.21
(288,201 ) (79.8 )
Short-term FHLB advances (1) 15,678
0.31
320,229
0.29
(304,551 ) (95.1 )
Total short-term borrowings 338,019
0.11
972,694
0.20
(634,675 ) (65.2 )
Long-term debt:
FHLB advances 634,403
3.50
555,172
3.92
79,231
14.3
Other long-term debt 414,231
5.50
369,748
5.90
44,483
12.0
Total long-term debt 1,048,634
4.29
924,920
4.71
123,714
13.4

~~(1) Represents FHLB advances with an original maturity term of less than one year.~~

Total short-term borrowings decreased $634.7 million, or 65.2%, primarily in federal funds purchased and in short-term FHLB advances. The repayment of short-term borrowings was funded mainly by the increase in average deposits. Total long-term borrowings increased $123.7 million, or 13.4%, as a result of the Corporation's efforts to lengthen maturities and lock in longer-term rates.

~~Provision for Credit Losses~~

The provision for credit losses was a negative $500,000 for the first nine months of 2015, a decrease of $10.0 million, or 105.3%, in comparison to the first nine months of 2014, reflecting improvements in asset quality. In the first quarter of 2015, a negative provision of $3.7 million was recorded, primarily due to an improvement in all credit quality measures, particularly net charge-off levels, across all loan portfolio segments. For details related to the Corporation's allowance and provision for credit losses, see the "Financial Condition" section of Management's Discussion under the heading "Provision for Credit Losses and Allowance for Credit Losses."

~~Non-Interest Income~~

~~The following table presents the components of non-interest income:~~

Nine months ended September 30 Increase (Decrease)
2015 2014 $ %
(dollars in thousands)
Service charges on deposit accounts:
Overdraft fees $ 15,806
$ 16,645
$ (839 ) (5.0 )%
Cash management fees 10,004
9,589
415
4.3
Other 11,378
10,830
548
5.1
         Total service charges on deposit accounts 37,188
37,064
124
0.3
Investment management and trust services 33,137
33,417
(280 ) (0.8 )
Other service charges and fees:
Merchant fees 11,265
10,340
925
8.9
Debit card income 7,587
7,052
535
7.6
Letter of credit fees 3,474
3,448
26
0.8
Commercial swap fees 3,088
2,544
544
21.4
Other 5,902
6,023
(121 ) (2.0 )
        Total other service charges and fees 31,316
29,407
1,909
6.5
Mortgage banking income:
Gain on sales of mortgage loans 10,588
8,009
2,579
32.2
Mortgage servicing income 3,303
5,375
(2,072 ) (38.5 )
        Total mortgage banking income 13,891
13,384
507
3.8
Credit card income 7,257
6,855
402
5.9
Other income 4,921
3,958
963
24.3
        Total, excluding gains on sales of investment securities 127,710
124,085
3,625
2.9
Net gains on sales of investment securities 8,290
1,193
7,097
N/M
              Total $ 136,000
$ 125,278
$ 10,722
8.6 %

~~N/M - Not meaningful~~

Total service charges on deposits increased a modest $124,000, or 0.3%. Improvements were seen in other service charges on deposits ($548,000, or 5.1%, increase) due to growth in balances, and cash management fees ($415,000, or 4.3%, increase) due to changes in fee structures. These increases were largely offset by an $839,000, or 5.0%, decrease in overdraft fees due to lower volumes partially driven by changes in customer behavior.

The $925,000, or 8.9%, increase in merchant fee income, the $535,000, or 7.6%, increase in debit card income, and the $402,000, or 5.9%, increase in credit card income were largely driven by higher transaction volumes. Commercial swap fees increased $544,000, or 21.4%, due to higher new loan volumes.

Gains on sales of mortgage loans increased $2.6 million, or 32.2%, due to a $168.6 million, or 26.0%, increase in new loan commitments and a 4.9% increase in pricing spreads compared to 2014. The increase in new loan commitments was largely in refinancing volumes, which were $408.0 million, or 49.9%, of new loan commitments in 2015 compared to $186.5 million, or

~~28.8%, during 2014. Mortgage servicing income decreased $2.1 million, or 38.5%, due to an increase in amortization of mortgage servicing rights (MSRs), as prepayments increased when compared to 2014.~~

~~The $963,000, or 24.3%, increase in other income was due to higher gains on sales of fixed assets, primarily branch properties, in 2015.~~

Investment securities gains of $8.3 million for the first nine months of 2015 were a result of $6.0 million of net realized gains on the sales of financial institution stocks and $2.3 million of net realized gains on the sales of debt securities. The $1.2 million of investment securities gains for first nine months of 2014 included $1.1 million of net realized gains on debt securities and $88,000 of net realized gains on the sales of financial institution stocks.

~~Non-Interest Expense~~

~~The following table presents the components of non-interest expense:~~

Nine months ended September 30 Increase (Decrease)
2015 2014 $ %
(dollars in thousands)
Salaries and employee benefits $ 195,365
$ 185,623
$ 9,742
5.2 %
Net occupancy expense 36,211
36,649
(438 ) (1.2 )
Other outside services 21,248
19,684
1,564
7.9
Data processing 14,767
12,816
1,951
15.2
Equipment expense 10,888
10,269
619
6.0
Software 10,678
9,487
1,191
12.6
FDIC insurance expense 8,574
8,186
388
4.7
Professional fees 8,430
9,715
(1,285 ) (13.2 )
Supplies and postage 7,803
7,337
466
6.4
Loss on redemption of trust preferred securities 5,626
—
5,626
N/M
Marketing 5,570
5,719
(149 ) (2.6 )
Telecommunications 4,920
5,193
(273 ) (5.3 )
Other real estate owned and repossession expense 2,507
3,034
(527 ) (17.4 )
Operating risk loss 2,637
3,786
(1,149 ) (30.3 )
Intangible amortization 241
944
(703 ) (74.5 )
Other 26,256
23,084
3,172
13.7
Total $ 361,721
$ 341,526
$ 20,195
5.9 %

~~N/M - Not meaningful~~

Salaries and employee benefits increased $9.7 million, or 5.2%, with salaries increasing $6.9 million, or 4.4%, and employee benefits increasing $2.8 million, or 9.9%. The increase in salaries was primarily due to higher average salaries per full-time equivalent employee, an increase in incentive compensation, and higher temporary employee expenses, partially offset by a decrease in the average number of full-time equivalent employees to 3,470 for the nine months ended September 30, 2015, compared to 3,540 for the nine months ended September 30, 2014. The increase in employee benefits was primarily due to an increase in defined benefit plan expense in 2015, while 2014 included a $1.5 million gain realized on the post-retirement plan amendment in 2014.

Other outside services increased $1.6 million, or 7.9%, due to an increase in consulting services related to the Corporation’s risk management and compliance efforts, including those in connection with the enhancement of the Corporation's program for compliance with the BSA/AML Requirements. While BSA/AML remediation costs decreased for the third quarter of 2015 as compared to the third quarter of 2014, the year to date costs were higher due to significant expenditures incurred earlier in the year.

The $3.1 million, or 14.1%, combined increase in data processing and software resulted from increased expenses related to the core processing system used to maintain customer account records as a result of contractual increases and higher transaction volumes, and amortization of software.

~~The $1.3 million, or 13.2%, decrease in professional fees was due to a decrease in legal fees primarily resulting from the timing of engagements with outside counsel.~~

~~In July 2015, the Corporation redeemed $150.0 million of TruPS. In connection with this redemption, a loss of $5.6 million was recognized as a component of non-interest expense.~~

The $527,000, or 17.4%, decrease in other real estate owned and repossession expense was primarily due to lower repossession expense in 2015. This expense category can experience volatility from period to period based on the timing of foreclosures and sales of properties and payments of expenses, such as real estate taxes.

The $1.1 million, or 30.3%, decrease in operating risk loss was due to a $1.3 million decrease in check card fraud losses, partially offset by a $215,000 increase in losses associated with previously sold residential mortgages. See Note 12 "Commitments and Contingencies," in the Notes to Consolidated Financial Statements for additional details related to repurchases of previously sold residential mortgages.

~~Income Taxes~~

~~Income tax expense for the first nine months of 2015 was $36.0 million, a $5.1 million, or 12.5%, decrease from $41.1 million in 2014.~~

The Corporation’s effective tax rate was 24.5% in 2015, as compared to 25.5% in 2014. The effective tax rate is generally lower than the Federal statutory rate of 35% due to investments in tax-free municipal securities, tax credits earned from investments in partnerships that generate such credits under various federal programs and the effect of state income taxes. The lower effective tax rate in 2015 was driven by lower pre-tax ~~income.~~earnings and higher low-income housing tax credits.

FINANCIAL CONDITION

The table below presents condensed consolidated ending balance sheets.


					Increase (Decrease)									Increase (Decrease)
	September 30, 2015		December 31, 2014		$			%		March 31, 2016		December 31, 2015		$			%
	(dollars in thousands)									(dollars in thousands)
Assets
Cash and due from banks	$	93,803	$	105,702	$	(11,899	)	(11.3	)%	$	83,479	$	101,120	$	(17,641	)	(17.4	)%
Other interest-earning assets	579,920		423,083		156,837			37.1		408,060		292,516		115,544			39.5
Loans held for sale	26,937		17,522		9,415			53.7		19,719		16,886		2,833			16.8
Investment securities	2,436,337		2,323,371		112,966			4.9		2,516,205		2,484,773		31,432			1.3
Loans, net of allowance	13,369,225		12,927,572		441,653			3.4		13,706,860		13,669,548		37,312			0.3
Premises and equipment	225,705		226,027		(322		)	(0.1	)	228,057		225,535		2,522			1.1
Goodwill and intangible assets	531,562		531,803		(241		)	—		531,556		531,556		—			—
Other assets	574,570		569,687		4,883			0.9		628,318		592,784		35,534			6.0
Total Assets	$	17,838,059	$	17,124,767	$	713,292		4.2	%	$	18,122,254	$	17,914,718	$	207,536		1.2	%
Liabilities and Shareholders’ Equity
Deposits	$	14,084,394	$	13,367,506	$	716,888		5.4	%	$	14,404,280	$	14,132,317	$	271,963		1.9	%
Short-term borrowings	431,631		329,719		101,912			30.9		352,883		497,663		(144,780		)	(29.1	)
Long-term debt	979,433		1,139,413		(159,980		)	(14.0	)	965,654		949,542		16,112			1.7
Other liabilities	316,697		291,464		25,233			8.7		326,128		293,302		32,826			11.2
Total Liabilities	15,812,155		15,128,102		684,053			4.5		16,048,945		15,872,824		176,121			1.1
Total Shareholders’ Equity	2,025,904		1,996,665		29,239			1.5		2,073,309		2,041,894		31,415			1.5
Total Liabilities and Shareholders’ Equity	$	17,838,059	$	17,124,767	$	713,292		4.2	%	$	18,122,254	$	17,914,718	$	207,536		1.2	%

The ~~$156.8~~$115.5 million, or ~~37.1%~~39.5%, increase in other interest-earning assets resulted from higher balances of excess cash on deposit with the Federal Reserve Bank due to a higher net liquidity ~~position.~~position, generally resulting from deposit growth exceeding loan growth.

The $35.5 million, or 6.0%, increase in other assets and the $32.8 million, or 11.2%, increase in other liabilities were driven by higher fair values for derivative financial instruments. See Note 9, "Derivative Financial Instruments," in the Notes to Consolidated Financial Statements for additional details.

Investment Securities

The following table presents the carrying amount of investment securities:


					Increase (Decrease)									Increase (Decrease)
	September 30, 2015		December 31, 2014		$			%		March 31, 2016		December 31, 2015		$			%
	(dollars in thousands)									(dollars in thousands)
U.S. Government securities	$	—	$	200	$	(200	)	(100.0	)%
U.S. Government sponsored agency securities	48,551		214		48,337			N/M		$	25,173	$	25,136	$	37		0.1	%
State and municipal securities	240,236		245,215		(4,979		)	(2.0	)	314,010		262,765		51,245			19.5
Corporate debt securities	99,941		98,034		1,907			1.9		89,886		96,955		(7,069		)	(7.3	)
Collateralized mortgage obligations	874,299		902,313		(28,014		)	(3.1	)	782,075		821,509		(39,434		)	(4.8	)
Mortgage-backed securities	1,051,905		928,831		123,074			13.3		1,188,668		1,158,835		29,833			2.6
Auction rate securities	97,873		100,941		(3,068		)	(3.0	)	97,326		98,059		(733		)	(0.7	)
Total debt securities	2,412,805		2,275,748		137,057			6.0		2,497,138		2,463,259		33,879			1.4
Equity securities	23,532		47,623		(24,091		)	(50.6	)	19,067		21,514		(2,447		)	(11.4	)
Total	$	2,436,337	$	2,323,371	$	112,966		4.9	%	$	2,516,205	$	2,484,773	$	31,432		1.3	%

~~N/M - Not meaningful~~

~~Total investment~~State and municipal securities increased ~~$113.0~~$51.2 million, or ~~4.9%~~19.5%, ~~in comparison~~as the Corporation increased purchases of these securities to ~~December 31, 2014, as prior period portfolio cash flows were reinvested in mortgage-backed securities and U.S. Government sponsored agency securities.~~ ~~The $24.1 million, or 50.6%, decrease in equity securities reflects the sales~~take advantage of ~~certain financial institutions stocks during the first nine months of 2015.~~higher after tax equivalent yields relative to other investment options.

Loans, net of unearned income

The following table presents ending balances of loans outstanding, net of unearned income:


					Increase (Decrease)									Increase (Decrease)
	September 30, 2015		December 31, 2014		$			%		March 31, 2016		December 31, 2015		$			%
	(dollars in thousands)									(dollars in thousands)
Real-estate – commercial mortgage	$	5,339,928	$	5,197,155	$	142,773		2.7	%	$	5,558,108	$	5,462,330	$	95,778		1.8	%
Commercial – industrial, financial and agricultural	3,929,908		3,725,567		204,341			5.5		4,035,333		4,088,962		(53,629		)	(1.3	)
Real-estate – home equity	1,693,649		1,736,688		(43,039		)	(2.5	)	1,659,481		1,684,439		(24,958		)	(1.5	)
Real-estate – residential mortgage	1,382,085		1,377,068		5,017			0.4		1,377,459		1,376,160		1,299			0.1
Real-estate – construction	769,565		690,601		78,964			11.4		810,872		799,988		10,884			1.4
Consumer	271,696		265,431		6,265			2.4		263,221		268,588		(5,367		)	(2.0	)
Leasing and other	149,530		119,206		30,324			25.4
Leasing, overdrafts and other										166,227		158,135		8,092			5.1
Loans, net of unearned income	$	13,536,361	$	13,111,716	$	424,645		3.2	%	$	13,870,701	$	13,838,602	$	32,099		0.2	%

The Corporation does not have a significant concentration of credit risk with any single borrower, industry or geographical location. Approximately ~~$6.1~~$6.4 billion, or ~~45.1%~~45.9%, of the loan portfolio was in commercial mortgage and construction loans as of ~~September 30, 2015.~~March 31, 2016. The Corporation's maximum total lending commitment to an individual borrower was $50.0 million as of ~~September 30, 2015.~~March 31, 2016. In addition to its policy of limiting the maximum total lending commitment to any individual borrower to $50.0 million, the Corporation has established lower total lending limits for certain types of lending commitments, and lower total lending limits based on the Corporation's internal risk rating of an individual borrower at the time the lending commitment is approved. As of ~~September 30, 2015,~~March 31, 2016, the Corporation had ~~101~~112 relationships with total borrowing commitments between $20.0 million and $50.0 million.

Commercial loans increased $204.3 million, or 5.5%. The increase was primarily in the Pennsylvania ($191.0 million, or 7.3%) and Maryland ($25.8 million, or 8.6%) markets, partially offset by decreases in the Delaware and New Jersey markets.

Commercial mortgage loans increased ~~$142.8~~$95.8 million, or ~~2.7%~~1.8%, in comparison to December 31, ~~2014, generally~~2015 across all of the Corporation's geographical markets. Commercial loans decreased $53.6 million, or 1.3%, primarily in ~~all markets, with the exception of~~ the New Jersey ($31.2 million, or 5.5%), Pennsylvania ($19.0 million, or 0.6%), Virginia ($8.8 million, or 6.3%) and Delaware ($4.2 million, or 3.3%) markets, partially offset by an increase in the Maryland market ~~which experienced a slight decrease.~~($9.5 million, or 2.9%).

The following table summarizes the ~~percentage of~~industry concentration within the commercial ~~loans, by industry:~~loan portfolio:


	September 30, 2015		December 31, 2014		March 31, 2016		December 31, 2015
Services	20.2	%	19.2	%	22.3	%	22.6	%
Manufacturing	12.5		13.1		11.2		11.3
Health care	10.5		9.0		11.1		10.6
Construction (1)	10.4		11.0		9.7		9.7
Retail	8.8		9.6		8.5		8.3
Wholesale	8.6		8.7		8.0		8.0
Real estate (2)	7.5		7.6		7.7		7.3
Agriculture	4.9		5.5		4.8		5.1
Arts and entertainment	2.9		3.4		2.9		2.8
Transportation	2.2		2.4		2.7		2.7
Financial services	1.9		1.9		2.0		1.7
Other	9.6		8.6		9.1		9.9
	100.0	%	100.0	%
Total					100.0	%	100.0	%


(1)	Includes commercial loans to borrowers engaged in the construction industry.


(2)	Includes commercial loans to borrowers engaged in the business of: renting, leasing or managing real estate for others; selling and/or buying real estate for others; and appraising real estate.

Commercial loans and commercial mortgage loans also include shared national credits, which are participations in loans or loan commitments of at least $20.0 million that are shared by three or more banks. Below is a summary of the Corporation's outstanding purchased shared national credits:


	September 30, 2015		December 31, 2014		March 31, 2016		December 31, 2015
	(in thousands)				(in thousands)
Commercial - industrial, financial and agricultural	$	147,791	$	116,705	$	154,491	$	152,830
Real estate - commercial mortgage	124,971		137,952		99,463		96,219
	$	272,762	$	254,657
Total					$	253,954	$	249,049

Total shared national credits increased ~~$18.1~~$4.9 million, or ~~7.1%~~2.0%, in comparison to December 31, ~~2014.~~2015. The Corporation's shared national credits are to borrowers located in its geographical markets, and the increase was due to normal lending activities consistent with the Corporation's underwriting policies. As of ~~September 30, 2015, two~~March 31, 2016, none of the shared national credits were past due compared to one credit totaling $1.1 million, or ~~0.6%~~0.4%, of the total balance ~~were past due. There were no shared national credits~~that was past due atas of December 31, ~~2014.~~2015.

Construction loans include loans to commercial borrowers secured by commercial real estate, loans to commercial borrowers secured by residential real estate, and other construction loans, which represent loans to individuals secured by residential real estate. The following table presents outstanding construction loans and their delinquency rates by these class segments:


	September 30, 2015						December 31, 2014						March 31, 2016						December 31, 2015
	Balance		Delinquency Rate (1)		% of Total		Balance		Delinquency Rate (1)		% of Total		Balance		Delinquency Rate (1)		% of Total		Balance		Delinquency Rate (1)		% of Total
	(dollars in thousands)												(dollars in thousands)
Commercial	$	521,866	0.5	%	67.8	%	$	427,419	0.6	%	61.9	%	$	566,816	0.1	%	69.9	%	$	559,991	0.2	%	70.0	%
Commercial - residential	190,521		7.4		24.8		203,670		6.6		29.5		182,279		7.8		22.5		179,303		7.3		22.4
Other	57,178		1.2		7.4		59,512		0.6		8.6		61,777		2.1		7.6		60,694		1.1		7.6
Total Real estate - construction	$	769,565	2.3	%	100.0	%	$	690,601	2.4	%	100.0	%	$	810,872	2.0	%	100.0	%	$	799,988	1.8	%	100.0	%


(1)	Represents all accruing loans 3130 days or more past due and non-accrual loans as a percentage of total loans ~~within~~in each class segment.

Construction loans increased ~~$79.0~~$10.9 million, or ~~11.4%~~1.4%, in comparison to December 31, ~~2014~~2015 and comprised ~~5.7%~~5.8% of the total loan portfolio at ~~September 30, 2015 as compared to 5.3% at December~~March 31, ~~2014.~~2016. The increase in construction loans was primarily in loans secured by commercial real estate. Geographically, the increase in real estate construction loans was primarily in the ~~Pennsylvania~~New Jersey ($~~94.7~~12.1 million, or ~~26.1%~~7.7%) and ~~New Jersey ($43.9~~Delaware

($11.0 million, or ~~48.3%~~24.9%) markets, with slight increases also in the Virginia market, partially offset by decreases in the ~~Virginia~~Pennsylvania ($~~27.5~~10.1 million, or ~~30.4%~~2.1%), and Maryland ($~~23.8~~2.2 million, or ~~27.5%) and Delaware ($8.3 million, or 13.8%~~3.5%) markets.

~~Leasing and other loans increased $30.3 million, or 25.4%, in comparison to December 31, 2014 as a result of new products and services being added during 2015 and a focus on growing this portfolio.~~

~~Home equity loans decreased $43.0 million, or 2.5%, primarily as a result of customers refinancing outstanding home equity loans into residential mortgages.~~

Provision for Credit Losses and Allowance for Credit Losses

The following table presents the activity in the allowance for credit losses:


	Three months ended September 30						Nine months ended September 30						Three months ended March 31
	2015			2014			2015			2014			2016			2015
	(dollars in thousands)												(dollars in thousands)
Average balance of loans, net of unearned income	$	13,369,874		$	12,922,821		$	13,220,339		$	12,827,563		$	13,853,420		$	13,095,528

Balance of allowance for credit losses at beginning of period	$	169,453		$	193,442		$	185,931		$	204,917		$	171,412		$	185,931
Loans charged off:
Commercial – industrial, financial and agricultural	1,640			5,167			14,669			15,804			6,188			1,863
Real estate – residential mortgage	1,035			231			3,099			2,166			1,068			1,281
Real estate – home equity	940			1,492			2,578			4,377			1,541			768
Real estate – commercial mortgage	660			1,557			3,011			5,084			582			709
Consumer	650			538			1,787			1,738			1,007			780
Real estate – construction	114			313			201			745			326			—
Leasing and other	522			306			1,352			1,434
Leasing, overdrafts and other													443			363
Total loans charged off	5,561			9,604			26,697			31,348			11,155			5,764
Recoveries of loans previously charged off:
Commercial – industrial, financial and agricultural	1,598			1,013			3,855			2,532			2,319			786
Real estate – residential mortgage	201			95			547			319			136			159
Real estate – home equity	304			336			744			869			338			251
Real estate – commercial mortgage	842			1,167			1,729			1,641			825			436
Consumer	314			448			923			1,059			196			241
Real estate – construction	898			470			2,276			852			383			1,147
Leasing and other	346			241			587			767
Leasing, overdrafts and other													81			171
Total recoveries	4,503			3,770			10,661			8,039			4,278			3,191
Net loans charged off	1,058			5,834			16,036			23,309			6,877			2,573
Provision for credit losses	1,000			3,500			(500		)	9,500			1,530			(3,700		)
Balance of allowance for credit losses at end of period	$	169,395		$	191,108		$	169,395		$	191,108		$	166,065		$	179,658

Net charge-offs to average loans (annualized)	0.03		%	0.18		%	0.16		%	0.24		%	0.20		%	0.08		%

The following table presents the components of the allowance for credit losses:


	September 30, 2015			December 31, 2014			March 31, 2016			December 31, 2015
	(dollars in thousands)						(dollars in thousands)
Allowance for loan losses	$	167,136		$	184,144		$	163,841		$	169,054
Reserve for unfunded lending commitments	2,259			1,787			2,224			2,358
Allowance for credit losses	$	169,395		$	185,931		$	166,065		$	171,412

Allowance for credit losses to loans outstanding	1.25		%	1.42		%	1.20		%	1.24		%

The provision for credit losses for the three months ended ~~September 30, 2015~~March 31, 2016 was ~~$1.0~~$1.5 million, ~~a decrease~~an increase of ~~$2.5~~$5.2 million in comparison to the same period in ~~2014.For the nine months ended September 30, 2015, the provision for credit losses was a negative $500,000, a decrease of $10.0 million compared to the same period in 2014.~~2015. The ~~decrease~~increase in the provision for credit losses was ~~based on~~due to a negative provision for the ~~evaluation of~~three months ended March 31, 2015 which was driven by an improvement in net charge-off levels, particularly among pooled impaired loans across all ~~relevant credit quality factors and the results of the allowance for credit losses allocation methodology.~~portfolio segments.

Net charge-offs ~~decreased $4.8~~increased $4.3 million, or ~~81.9%~~167.3%, to ~~$1.1~~$6.9 million for the ~~third~~first quarter of ~~2015,~~2016, compared to ~~$5.8~~$2.6 million for the ~~third~~first quarter of ~~2014.~~2015. The ~~decrease~~increase in net charge-offs was primarily due to a ~~$4.1~~$2.8 million ~~decrease in commercial loan net charge-~~

~~offs. Of the $1.1 million of net charge-offs recorded in the third quarter of 2015, the majority were for loans originated in Pennsylvania.~~

During the first nine months of 2015, net charge-offs decreased $7.3 million, or 31.2%, to $16.0 million, compared to $23.3 million for the first nine months of 2014. The decrease in net charge-offs was primarily due to a $2.5 million, or 18.5%, decreaseincrease in commercial loan net charge-offs and a ~~$2.2~~$1.1 million ~~or 62.8%, decrease in commercial mortgage net charge-offs, a $2.0 million decrease~~increase in real estate construction net charge-offs ~~and~~as a ~~$1.7 million, or 47.7%, decrease~~result of lower recoveries compared to the same period in ~~home equity net charges-offs, partially offset by a $705,000, or 38.2%, increase in residential mortgage net charge-offs.~~the prior year. Of the ~~$16.0~~$6.9 million of net charge-offs recorded in the first ~~nine months~~quarter of ~~2015,~~2016, the majority were for loans originated in Pennsylvania ($5.5 million, or 80.0%) and New ~~Jersey.~~Jersey ($1.2 million, or 17.2%).

The following table summarizes non-performing assets as of the indicated dates:


	September 30, 2015			September 30, 2014			December 31, 2014			March 31, 2016			March 31, 2015			December 31, 2015
	(dollars in thousands)									(dollars in thousands)
Non-accrual loans	$	132,154		$	126,420		$	121,080		$	122,170		$	129,929		$	129,523
Loans 90 days or more past due and accruing	12,867			17,428			17,402
Loans 90 days or more past due and still accruing										15,013			19,365			15,291
Total non-performing loans	145,021			143,848			138,482			137,183			149,294			144,814
Other real estate owned (OREO)	10,561			13,489			12,022			10,946			14,251			11,099
Total non-performing assets	$	155,582		$	157,337		$	150,504		$	148,129		$	163,545		$	155,913
Non-accrual loans to total loans	0.98		%	0.97		%	0.92		%	0.88		%	0.99		%	0.94		%
Non-performing assets to total assets	0.87		%	0.91		%	0.88		%	0.82		%	0.94		%	0.87		%
Allowance for credit losses to non-performing loans	116.81		%	132.85		%	134.26		%	121.05		%	120.34		%	118.37		%

The following table presents accruing loans whose terms have been modified under troubled debt restructurings ("TDRs"), by type, as of the indicated dates:


	September 30, 2015		September 30, 2014		December 31, 2014		March 31, 2016		March 31, 2015		December 31, 2015
	(in thousands)						(in thousands)
Real estate – residential mortgage	$	29,330	$	30,850	$	31,308	$	27,565	$	31,574	$	28,511
Real estate – commercial mortgage	17,282		18,869		18,822		17,427		23,468		17,563
Real estate – construction	4,363		9,251		9,241		3,092		7,791		3,942
Commercial – industrial, financial and agricultural	7,399		5,115		5,237		5,650		6,975		5,953
Real estate – home equity	3,954		2,904		2,975		6,530		3,084		4,556
Consumer	29		23		38		32		34		33
Total accruing TDRs	62,357		67,012		67,621		60,296		72,926		60,558
Non-accrual TDRs (1)	27,618		27,724		24,616		27,277		29,392		31,035
Total TDRs	$	89,975	$	94,736	$	92,237	$	87,573	$	102,318	$	91,593

(1) Included with non-accrual loans in the preceding table.

TDRs modified during the first ~~nine~~three months of ~~2015~~2016 and still outstanding as of ~~September 30, 2015~~March 31, 2016 totaled ~~$16.1~~$3.7 million.During the first ~~nine~~three months of ~~2015, $5.0~~2016, $1.6 million of TDRs that were modified ~~within~~in the previous 12 months had a payment default, which the Corporation defines as a single missed scheduled payment, subsequent to modification.

The following table presents the changes in non-accrual loans for the three ~~and nine~~ months ended ~~September 30, 2015:~~March 31, 2016:


	Commercial - Industrial, Financial and Agricultural			Real Estate - Commercial Mortgage			Real Estate - Construction			Real Estate - Residential Mortgage			Real Estate - Home Equity			Consumer			Leasing			Total			Commercial - Industrial, Financial and Agricultural			Real Estate - Commercial Mortgage			Real Estate - Construction			Real Estate - Residential Mortgage			Real Estate - Home Equity			Consumer			Leasing			Total
	(in thousands)																								(in thousands)
Three months ended September 30, 2015
Balance of non-accrual loans at June 30, 2015	$	35,109		$	47,985		$	14,468		$	21,611		$	9,979		$	—		$	—		$	129,152
Three months ended March 31, 2016																									Three months ended March 31, 2016
Balance of non-accrual loans at December 31, 2015																									$	42,199		$	40,731		$	12,044		$	21,914		$	11,210		$	—		$	1,425		$	129,523
Additions	9,960			4,109			1,488			2,768			2,516			650			149			21,640			6,436			5,959			752			1,397			2,987			1,007			85			18,623
Payments	(5,187		)	(2,411		)	(1,269		)	(938		)	(766		)	—			—			(10,571		)	(5,331		)	(3,543		)	(1,972		)	(151		)	(366		)	—			(4		)	(11,367		)
Charge-offs	(1,640		)	(660		)	(114		)	(1,035		)	(940		)	(650		)	(149		)	(5,188		)	(6,188		)	(582		)	(326		)	(1,068		)	(1,541		)	(1,007		)	(85		)	(10,797		)
Transfers to accrual status	—			—			—			(136		)	(60		)	—			—			(196		)	—			—			—			(160		)	(675		)	—			—			(835		)
Transfers to OREO	(1,689		)	(196		)	—			(293		)	(505		)	—			—			(2,683		)	—			(1,704		)	—			(1,152		)	(121		)	—			—			(2,977		)
Balance of non-accrual loans at September 30, 2015	$	36,553		$	48,827		$	14,573		$	21,977		$	10,224		$	—		$	—		$	132,154

Nine months ended September 30, 2015
Balance of non-accrual loans as of December 31, 2014	$	29,769		$	44,437		$	16,348		$	20,043		$	10,483		$	—		$	—		$	121,080
Additions	37,661			22,047			3,966			9,737			6,110			1,789			506			81,816
Payments	(13,827		)	(13,710		)	(5,540		)	(2,373		)	(1,464		)	(2		)	—			(36,916		)
Charge-offs	(14,669		)	(3,011		)	(201		)	(3,099		)	(2,578		)	(1,787		)	(506		)	(25,851		)
Transfers to accrual status	—			(44		)	—			(440		)	(524		)	—			—			(1,008		)
Transfers to OREO	(2,381		)	(892		)	—			(1,891		)	(1,803		)	—			—			(6,967		)
Balance of non-accrual loans at September 30, 2015	$	36,553		$	48,827		$	14,573		$	21,977		$	10,224		$	—		$	—		$	132,154
Balance of non-accrual loans at March 31, 2016																									$	37,116		$	40,861		$	10,498		$	20,780		$	11,494		$	—		$	1,421		$	122,170

Non-accrual loans ~~increased $5.7~~decreased $7.8 million, or ~~4.5%~~6.0%, and ~~$11.1~~$7.4 million, or ~~9.1%~~5.7%, in comparison to ~~September 30, 2014~~March 31, 2015 and December 31, ~~2014,~~2015, respectively.

The following table summarizes non-performing loans, by type, as of the indicated dates:


	September 30, 2015		September 30, 2014		December 31, 2014		March 31, 2016		March 31, 2015		December 31, 2015
	(in thousands)						(in thousands)
Real estate – commercial mortgage	$	49,021	$	44,602	$	45,237	$	43,132	$	46,331	$	41,170
Commercial – industrial, financial and agricultural	38,032		33,277		30,388		39,140		43,265		44,071
Real estate – residential mortgage	27,707		28,135		28,995		25,182		28,595		28,484
Real estate – home equity							14,408		14,455		14,683
Real estate – construction	14,989		19,860		16,399		12,005		14,140		12,460
Real estate – home equity	13,107		15,071		14,740
Consumer	2,079		2,515		2,590		1,802		2,484		2,440
Leasing	86		388		133		1,514		24		1,506
Total non-performing loans	$	145,021	$	143,848	$	138,482	$	137,183	$	149,294	$	144,814

Non-performing loans ~~increased $1.2~~decreased $12.1 million, or ~~0.8%~~8.1%, and $7.6 million, or 5.3% in comparison to ~~September 30, 2014. Non-performing commercial~~March 31, 2015 and December 31, 2015, respectively. The decrease in non-performing loans increased $4.8 million, or 14.3%, and non-performing commercial mortgages increased $4.4 million, or 9.9%, while non-performing construction loans decreased $4.9 million, or 24.5%, and non-performing home equity loans decreased $2.0 million, or 13.0%, in comparison to September 30, 2014.was realized across most loan categories.

The following table summarizes the Corporation’s OREO, by property type, as of the indicated dates:


	September 30, 2015		September 30, 2014		December 31, 2014		March 31, 2016		March 31, 2015		December 31, 2015
	(in thousands)						(in thousands)
Residential properties	$	6,934	$	8,121	$	6,656	$	6,235	$	8,055	$	7,303
Commercial properties	1,584		3,758		3,453		3,101		3,254		2,167
Undeveloped land	2,043		1,610		1,913		1,610		2,942		1,629
Total OREO	$	10,561	$	13,489	$	12,022	$	10,946	$	14,251	$	11,099

The Corporation's ability to identify potential problem loans in a timely manner is important to maintaining an adequate allowance for credit losses. For commercial loans, commercial mortgages and construction loans to commercial borrowers, an internal risk rating process is used to monitor credit quality. The evaluation of credit risk for residential mortgages, home equity loans, construction loans to individuals, consumer loans and lease receivables is based on payment history, through the monitoring of delinquency levels and trends. For a description of the Corporation's risk ratings, see Note 5, "Loans and Allowance for Credit Losses," in the Notes to Consolidated Financial Statements.

Total internally risk rated loans were ~~$10.0~~$10.3 billion as of ~~September 30, 2015~~March 31, 2016 and ~~$9.6 billion as of~~ December 31, ~~2014.~~2015. The following table presents internal risk ratings for commercial loans, commercial mortgages and construction loans to commercial borrowers with internal risk ratings of Special Mention (considered criticized loans) or Substandard or lower (considered classified loans), by class segment:


	Special Mention						Increase (decrease)					Substandard or lower						Increase (decrease)					Total Criticized and Classified Loans						Special Mention						Increase (decrease)					Substandard or lower						Increase (decrease)					Total Criticized and Classified Loans
	September 30, 2015			December 31, 2014			$			%		September 30, 2015			December 31, 2014			$			%		September 30, 2015			December 31, 2014			March 31, 2016			December 31, 2015			$			%		March 31, 2016			December 31, 2015			$			%		March 31, 2016			December 31, 2015
	(dollars in thousands)																												(dollars in thousands)
Real estate - commercial mortgage	$	132,823		$	127,302		$	5,521		4.3	%	$	178,450		$	170,837		$	7,613		4.5	%	$	311,273		$	298,139		$	121,889		$	102,625		$	19,264		18.8	%	$	152,879		$	155,442		$	(2,563	)	(1.6	)%	$	274,768		$	258,067
Commercial - secured	97,617			120,584			(22,967		)	(19.0	)	105,820			110,544			(4,724		)	(4.3	)	203,437			231,128			78,508			92,711			(14,203		)	(15.3	)	134,446			136,710			(2,264		)	(1.7	)	212,954			229,421
Commercial -unsecured	3,568			7,463			(3,895		)	(52.2	)	4,805			6,810			(2,005		)	(29.4	)	8,373			14,273			2,634			2,761			(127		)	(4.6	)	3,372			3,346			26			0.8		6,006			6,107
Total Commercial - industrial, financial and agricultural	101,185			128,047			(26,862		)	(21.0	)	110,625			117,354			(6,729		)	(5.7	)	211,810			245,401			81,142			95,472			(14,330		)	(15.0	)	137,818			140,056			(2,238		)	(1.6	)	218,960			235,528
Construction - commercial residential	16,763			27,495			(10,732		)	(39.0	)	29,429			40,066			(10,637		)	(26.5	)	46,192			67,561			17,068			17,154			(86		)	(0.5	)	18,621			21,812			(3,191		)	(14.6	)	35,689			38,966
Construction - commercial	1,693			12,202			(10,509		)	(86.1	)	5,204			5,586			(382		)	(6.8	)	6,897			17,788			2,842			3,684			(842		)	(22.9	)	4,623			3,597			1,026			28.5		7,465			7,281
Total real estate - construction (excluding construction - other)	18,456			39,697			(21,241		)	(53.5	)	34,633			45,652			(11,019		)	(24.1	)	53,089			85,349			19,910			20,838			(928		)	(4.5	)	23,244			25,409			(2,165		)	(8.5	)	43,154			46,247
Total	$	252,464		$	295,046		$	(42,582	)	(14.4	)%	$	323,708		$	333,843		$	(10,135	)	(3.0	)%	$	576,172		$	628,889		$	222,941		$	218,935		$	4,006		1.8	%	$	313,941		$	320,907		$	(6,966	)	(2.2	)%	$	536,882		$	539,842

% of total risk rated loans	2.5		%	3.1		%						3.3		%	3.5		%						5.8		%	6.6		%	2.2		%	2.1		%						3.0		%	3.1		%						5.2		%	5.2		%

The following table summarizes loan delinquency rates, by type, as of the dates indicated:


	September 30, 2015									September 30, 2014									December 31, 2014									March 31, 2016									March 31, 2015									December 31, 2015
	31-89 Days			≥ 90 Days (1)			Total			31-89 Days			≥ 90 Days (1)			Total			31-89 Days			≥ 90 Days (1)			Total			30-89 Days			≥ 90 Days (1)			Total			30-89 Days			≥ 90 Days (1)			Total			30-89 Days			≥ 90 Days (1)			Total
Real estate – commercial mortgage	0.16		%	0.92		%	1.08		%	0.48		%	0.86		%	1.34		%	0.35		%	0.87		%	1.22		%	0.15		%	0.78		%	0.93		%	0.50		%	0.89		%	1.39		%	0.14		%	0.77		%	0.91		%
Commercial – industrial, financial and agricultural	0.35		%	0.97		%	1.32		%	0.28		%	0.91		%	1.19		%	0.17		%	0.81		%	0.98		%	0.49		%	0.97		%	1.46		%	0.26		%	1.15		%	1.41		%	0.21		%	1.06		%	1.27		%
Real estate – construction	0.30		%	1.95		%	2.25		%	0.03		%	2.89		%	2.92		%	0.02		%	2.38		%	2.40		%	0.52		%	1.48		%	2.00		%	0.31		%	2.09		%	2.40		%	0.28		%	1.59		%	1.87		%
Real estate – residential mortgage	1.27		%	2.00		%	3.27		%	1.81		%	2.06		%	3.87		%	1.96		%	2.10		%	4.06		%	1.27		%	1.83		%	3.10		%	1.75		%	2.10		%	3.85		%	1.33		%	2.07		%	3.40		%
Real estate – home equity	0.54		%	0.77		%	1.31		%	0.59		%	0.87		%	1.46		%	0.63		%	0.85		%	1.48		%	0.54		%	0.87		%	1.41		%	0.74		%	0.85		%	1.59		%	0.53		%	0.87		%	1.40		%
Consumer, leasing and other	1.30		%	0.51		%	1.81		%	1.41		%	0.75		%	2.16		%	1.56		%	0.70		%	2.26		%	0.95		%	0.77		%	1.72		%	1.72		%	0.65		%	2.37		%	1.36		%	0.92		%	2.28		%
Total	0.42		%	1.07		%	1.49		%	0.58		%	1.11		%	1.69		%	0.52		%	1.06		%	1.58		%	0.45		%	0.99		%	1.44		%	0.62		%	1.14		%	1.76		%	0.37		%	1.04		%	1.41		%
Total dollars (in thousands)	$	56,694		$	145,021		$	201,715		$	75,976		$	143,848		$	219,824		$	68,346		$	138,482		$	206,828		$	62,922		$	137,183		$	200,105		$	81,289		$	149,294		$	230,583		$	51,927		$	144,814		$	196,741


(1)	Includes non-accrual loans.

Management believes that the allowance for credit losses of ~~$169.4~~$166.1 million as of ~~September 30, 2015~~March 31, 2016 is sufficient to cover incurred losses in both the loan portfolio and the unfunded lending commitments as of that date and is appropriate based on applicable accounting standards.

Deposits and Borrowings

The following table presents ending deposits, by type:


					Increase (Decrease)									Increase (Decrease)
	September 30, 2015		December 31, 2014		$			%		March 31, 2016		December 31, 2015		$			%
	(dollars in thousands)									(dollars in thousands)
Noninterest-bearing demand	$	3,906,228	$	3,640,623	$	265,605		7.3	%	$	4,134,861	$	3,948,114	$	186,747		4.7	%
Interest-bearing demand	3,362,336		3,150,612		211,724			6.7		3,430,206		3,451,207		(21,001		)	(0.6	)
Savings	3,880,103		3,504,820		375,283			10.7		3,972,199		3,868,046		104,153			2.7
Total demand and savings	11,148,667		10,296,055		852,612			8.3		11,537,266		11,267,367		269,899			2.4
Time deposits	2,935,727		3,071,451		(135,724		)	(4.4	)	2,867,014		2,864,950		2,064			0.1
Total deposits	$	14,084,394	$	13,367,506	$	716,888		5.4	%	$	14,404,280	$	14,132,317	$	271,963		1.9	%

~~Non-interest bearing~~Noninterest-bearing demand deposits increased ~~$265.6~~$186.7 million, or ~~7.3%~~4.7%, primarily as a result of increases in business account balances of ~~$256.0~~$161.9 million, or ~~9.3%~~5.4%, and municipal account balances of ~~$12.6~~$20.8 million, or ~~12.6%~~22.7%.

Interest-bearing demand accounts ~~increased $211.7~~decreased $21.0 million, or ~~6.7%~~0.6%, primarily due to a ~~$188.6~~$29.5 million, or ~~15.8%~~1.5%, ~~seasonal~~decrease in personal account balances and a $3.6 million, or 1.2%, decrease in business account balances partially offset by a $12.1 million, or 1.0%, increase in municipal account ~~balances and a $25.9~~balances. The $104.2 million, or ~~20.3%, increase in business account balances. The $375.3 million, or 10.7%~~2.7%, increase in savings account balances was ~~primarily~~ due to a ~~$205.6~~$141.4 million, or ~~9.4%~~5.7%, increase in personal account balances partially offset by a ~~seasonal increase~~decrease of ~~$91.3~~$28.1 million, or ~~15.9%~~4.9%, in municipal account balances and a ~~$78.3~~$9.2 million, or ~~10.6%~~1.2%, ~~increase~~decrease in business account balances. ~~The $135.7 million, or 4.4%, decrease in time deposits was primarily due to a decrease in time deposits with original maturities of less than two years.~~

The following table summarizes the changes in ending borrowings, by type:


					Increase (Decrease)									Increase (Decrease)
	September 30, 2015		December 31, 2014		$			%		March 31, 2016		December 31, 2015		$			%
	(dollars in thousands)									(dollars in thousands)
Short-term borrowings:
Customer repurchase agreements	$	145,225	$	158,394	$	(13,169	)	(8.3	)%	$	162,431	$	111,496	$	50,935		45.7	%
Customer short-term promissory notes	80,879		95,106		(14,227		)	(15.0	)	76,807		78,932		(2,125		)	(2.7	)
Total short-term customer funding	226,104		253,500		(27,396		)	(10.8	)	239,238		190,428		48,810			25.6
Federal funds purchased	5,527		6,219		(692		)	(11.1	)	32,645		197,235		(164,590		)	(83.4	)
Short-term FHLB advances (1)	200,000		70,000		130,000			185.7		81,000		110,000		(29,000		)	(26.4	)
Total short-term borrowings	431,631		329,719		101,912			30.9		352,883		497,663		(144,780		)	(29.1	)
Long-term debt:
FHLB advances	617,790		673,107		(55,317		)	(8.2	)	603,720		587,756		15,964			2.7
Other long-term debt	361,643		466,306		(104,663		)	(22.4	)	361,934		361,786		148			—
Total long-term debt	979,433		1,139,413		(159,980		)	(14.0	)	965,654		949,542		16,112			1.7
Total borrowings	$	1,411,064	$	1,469,132	$	(58,068	)	(4.0	)%	$	1,318,537	$	1,447,205	$	(128,668	)	(8.9	)%

(1) Represents FHLB advances with an original maturity term of less than one year.

The ~~$101.9~~$144.8 million, ~~increase~~or 29.1%, decrease in total short-term borrowings ~~was largely due to~~reflects the use of a ~~$130.0~~portion of the $272.0 million ~~or 185.7%,~~ increase in deposits to repay short-term FHLB advances. The $55.3 million decrease in long-term FHLB advances resulted from maturities that were replaced with short-term advances. Other long-term debt decreased by $104.7 million, or 22.4%, primarilyborrowings, as a result of the the maturity of $100 million of subordinated debt in April 2015. In June 2015, the Corporation issued $150 million of ten-year subordinated debt at an effective rate of 4.69%. The proceeds were used to redeem $150 million of TruPS, that carried an effective rate of 6.52%, in July 2015.loan growth was lower.

Shareholders' Equity

Total shareholders’ equity increased ~~$29.2~~$31.4 million, or 1.5%, during the first ~~nine~~three months of ~~2015.~~2016. The increase was due primarily to ~~$111.0~~$38.3 million of net income and a $16.9 million increase in other comprehensive income, partially offset by ~~$47.5~~$15.6 million of common stock dividends and ~~$50.0~~$11.2 million in treasury stock purchases.

The Corporation and its subsidiary banks are subject to regulatory capital requirements administered by various banking regulators. Failure to meet minimum capital requirements could result in certain actions by regulators that could have a material effect on the Corporation’s financial statements. In July 2013, the Federal Reserve Board approved final rules (the "U.S. Basel III Capital Rules") establishing a new comprehensive capital framework for U.S. banking organizations and implementing the Basel Committee on Banking Supervision's December 2010 framework for strengthening international capital standards. The U.S. Basel III Capital Rules substantially revise the risk-based capital requirements applicable to bank holding companies and depository institutions.

The new minimum regulatory capital requirements established by the U.S. Basel III Capital Rules became effective for the Corporation on January 1, 2015, and will be fully phased in on January 1, 2019.

The U.S. Basel III Capital Rules require the Corporation and its bank subsidiaries to:

Meet a new minimum Common Equity Tier 1 capital ratio of 4.50% of risk-weighted assets and a Tier 1 capital ratio of 6.00% of risk-weighted assets;

Continue to require the current minimum Total capital ratio of 8.00% of risk-weighted assets and the minimum Tier 1 leverage capital ratio of 4.00% of average assets; and

Comply with a revised definition of capital to improve the ability of regulatory capital instruments to absorb losses. Certain non-qualifying capital instruments, including cumulative preferred stock and TruPS, are being phased out as a component of Tier 1 capital for institutions of the Corporation's size.

When fully phased in on January 1, 2019, the Corporation and its bank subsidiaries will also be required to maintain a "capital conservation buffer" of 2.50% above the minimum risk-based capital requirements, which must be maintained to avoid restrictions on capital distributions and certain discretionary bonus payments.

The U.S. Basel III Capital Rules use a standardized approach for risk weightings that expands the risk-weightings for assets and off-balance sheet exposures from the previous 0%, 20%, 50% and 100% categories to a much larger and more risk-sensitive number of categories, depending on the nature of the assets and off-balance sheet exposures and resulting in higher risk weights for a variety of asset categories.

As of ~~September 30, 2015,~~March 31, 2016, the Corporation and each of its bank subsidiaries met the minimum requirements of the U.S. Basel III Capital Rules, and each of the Corporation’s bank subsidiaries’ capital ratios exceeded the amounts required to be considered "well capitalized" as defined in the regulations. As of ~~September 30, 2015,~~March 31, 2016, the Corporation's capital levels also met the fully-phased in minimum capital requirements, including the capital conservation buffers, as prescribed in the U.S. Basel III Capital Rules.

The following table summarizes the Corporation’s capital ratios in comparison to regulatory requirements:

September 30, 2015 December 31, 2014 Regulatory
Minimum
for Capital
Adequacy
Common Equity Tier I (to Risk-Weighted Assets) 10.8 % N/A
4.5 %
Total Capital (to Risk-Weighted Assets) 13.8 % 14.7 % 8.0 %
Tier I Capital (to Risk-Weighted Assets) 10.8 % 12.3 % 6.0 %
Tier I Capital (to Average Assets) 9.4 % 10.0 % 4.0 %

The September 30, 2015 capital ratios presented above were determined in accordance with the Basel III Capital Rules while the December 31, 2014 capital ratios were calculated under the prior capital standards. The impact of transitioning to the Basel III Capital Rules was a decrease of approximately 45 basis points in the risk-based capital ratios, primarily as a result of the changes in risk-weightings.

~~Liquidity~~

The Corporation must maintain a sufficient level of liquid assets to meet the cash needs of its customers who, as depositors, may want to withdraw funds or who, as borrowers, may need credit availability. Liquidity is provided on a continuous basis through scheduled and unscheduled principal and interest payments on outstanding loans and investments and through the availability of deposits and borrowings. The Corporation also maintains secondary sources that provide liquidity on a secured and unsecured basis to meet short-term and long-term needs.

The Corporation maintains liquidity sources in the form of demand and savings deposits, time deposits, repurchase agreements and short-term promissory notes. The Corporation can access additional liquidity from these sources, if necessary, by increasing the rates of interest paid on those accounts and borrowings. The positive impact to liquidity resulting from paying higher interest rates could have a detrimental impact on the net interest margin and net income if rates on interest-earning assets do not experience a proportionate increase. Borrowing availability with the FHLB and the Federal Reserve Bank, along with Federal funds lines at various correspondent banks, provides the Corporation with additional liquidity.

Each of the Corporation’s subsidiary banks is a member of the FHLB and has access to FHLB overnight and term credit facilities. As of September 30, 2015, the Corporation had $817.8 million of short and long-term advances outstanding from the FHLB with an additional borrowing capacity of approximately $2.1 billion under these facilities. Advances from the FHLB are secured by qualifying commercial real estate and residential mortgage loans, investments and other assets.

As of September 30, 2015, the Corporation had aggregate availability under Federal funds lines of $1.2 billion with no borrowings outstanding on those lines. As of September 30, 2015, the Corporation had a repurchase agreement relationship with a community bank, with a balance of $5.5 million, classified as Federal funds purchased. A combination of commercial real estate loans, commercial loans and securities are pledged to the Federal Reserve Bank of Philadelphia to provide access to Federal Reserve Bank Discount Window borrowings. As of September 30, 2015, the Corporation had $1.3 billion of collateralized borrowing availability at the Discount Window, and no outstanding borrowings.



	March 31, 2016		December 31, 2015		Regulatory Minimum for Capital Adequacy		Fully Phased-in, with Capital Conservation Buffers
Total Capital (to Risk-Weighted Assets)	13.1	%	13.2	%	8.0	%	10.5	%
Tier I Capital (to Risk-Weighted Assets)	10.1	%	10.2	%	6.0	%	8.5	%
Common Equity Tier I (to Risk-Weighted Assets)	10.1	%	10.2	%	4.5	%	7.0	%
Tier I Capital (to Average Assets)	8.9	%	9.0	%	4.0	%	4.0	%

loans and dividends. Generally, these limitations are based on the subsidiary banks’ regulatory capital levels and their net income. Management continues to monitor the liquidity and capital needs of the parent company and will implement appropriate strategies, as necessary, to remain adequately capitalized and to meet its cash needs.

The Corporation’s sources and uses of funds were discussed in general terms in the net interest income section of Management’s Discussion and Analysis. The consolidated statements of cash flows provide additional information. The Corporation’s operating activities during the first nine months of 2015 generated $134.9 million of cash, mainly due to net income, partially offset by the impact of non-cash expenses, most notably a net increase in loans held for sale and investment securities gains. Cash used in investing activities was $714.5 million, due to net increases in loans, short-term investments, and investment securities. Net cash provided by financing activities was $567.7 million due to increases in deposits, short-term borrowings and additions to long-term debt, partially offset by repayments of long-term debt, common stock cash dividends and purchases of treasury stock.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the exposure to economic loss that arises from changes in the values of certain financial instruments. The types of market risk exposures generally faced by financial institutions include interest rate risk, equity market price risk, debt security market price risk, foreign currency price risk and commodity price risk. Due to the nature of its operations, ~~only equity market price risk, debt security market~~foreign currency price risk and ~~interest rate~~commodity price risk are not significant to the Corporation.

~~Equity Market Price Risk~~

Equity market price risk is the risk that changes in the values of equity investments could have a material impact on the financial position or results of operations of the Corporation. As of September 30, 2015, equity investments consisted of $22.4 million of common stocks of publicly traded financial institutions and $1.1 million of other equity investments.

The equity investments most susceptible to equity market price risk are the financial institutions stocks, which had a cost basis of approximately $15.1 million and a fair value of $22.4 million at September 30, 2015, including an investment in a single financial institution with a cost basis of $8.5 million and a fair value of $12.8 million. The fair value of this investment accounted for 57.1% of the fair value of the common stocks of publicly traded financial institutions. No other investment in a single financial institution within the financial institutions stock portfolio exceeded 5% of the portfolio's fair value. As of September 30, 2015, the financial institutions stock portfolio had $7.3 million of net unrealized gains.

Management continuously monitors the fair value of its equity investments and evaluates current market conditions and operating results of the issuers. Periodic sale and purchase decisions are made based on this monitoring process. None of the Corporation’s equity securities are classified as trading.

In addition to its equity portfolio, investment management and trust services income may be impacted by fluctuations in the equity markets. A portion of this revenue is based on the value of the underlying investment portfolios, many of which include equity investments. If the values of those investment portfolios decrease, whether due to factors influencing U.S. securities markets in general or otherwise, the Corporation’s revenue would be negatively impacted. In addition, the Corporation’s ability to sell its brokerage services in the future will be dependent, in part, upon consumers’ level of confidence in financial markets.

~~Debt Security Market Price Risk~~

Debt security market price risk is the risk that changes in the values of debt securities, unrelated to interest rate changes, could have a material impact on the financial position or results of operations of the Corporation. The Corporation’s debt security investments consist primarily of U.S. government sponsored agency issued mortgage-backed securities and collateralized mortgage obligations, state and municipal securities, U.S. government debt securities, auction rate securities and corporate debt securities. All of the Corporation's investments in mortgage-backed securities and collateralized mortgage obligations have principal payments that are guaranteed by U.S. government sponsored agencies.

~~Municipal Securities~~

As of September 30, 2015, the Corporation owned municipal securities issued by various municipalities with a total fair value of $240.2 million. The Corporation evaluates existing and potential holdings primarily based on the creditworthiness of the issuing municipality and then, to a lesser extent, on any underlying credit enhancement. Municipal securities can be supported by the general obligation of the issuing municipality, allowing the securities to be repaid by any means available to the issuing municipality. As of September 30, 2015, approximately 95% of municipal securities were supported by the general obligation of corresponding municipalities. Approximately 83% of these securities were school district issuances, which are also supported by the states of the issuing municipalities.

~~Auction Rate Certificates~~

~~As of September 30, 2015, the Corporation’s investments in student loan auction rate certificates (ARCs), had a cost basis of $106.7 million and a fair value of $97.9 million.~~

ARCs are long-term securities that were structured to allow their sale in periodic auctions, resulting in both the treatment of ARCs as short-term instruments in normal market conditions and fair values that could be derived based on periodic auction prices. However, since early 2008, market auctions for these securities failed due to an insufficient number of buyers, resulting in an illiquid market. Therefore, as of September 30, 2015, the fair values of the ARCs currently in the portfolio were derived using significant unobservable inputs based on an expected cash flows model which produced fair values that were materially different from those that would be expected from settlement of these investments in the current market. The expected cash flows model,

prepared by a third-party valuation expert, produced fair values that assumed a return to market liquidity sometime within the next five years. The Corporation believes that the trusts underlying the ARCs will self-liquidate as student loans are repaid.

The credit quality of the underlying debt associated with ARCs is also a factor in the determination of their estimated fair value. As of September 30, 2015, all of the ARCs were rated above investment grade, with approximately $5 million, or 6%, "AAA" rated and $92 million, or 94%, "AA" rated. All of the loans underlying the ARCs have principal payments that are guaranteed by the federal government. As of September 30, 2015, all ARCs were current and making scheduled interest payments.

~~Corporate Debt Securities Issued by Financial Institutions~~

The Corporation holds corporate debt securities in the form of pooled trust preferred securities, single-issuer trust preferred securities and subordinated debt issued by financial institutions, as presented in the following table as of September 30, 2015:

Amortized
cost

Estimated
fair value
(in thousands)
Single-issuer trust preferred securities $ 46,624
$ 41,787
Subordinated debt 51,625
53,576
Pooled trust preferred securities —
530
Corporate debt securities issued by financial institutions $ 98,249
$ 95,893

The fair values for pooled trust preferred securities and certain single-issuer trust preferred securities were based on quotes provided by third-party brokers who determined fair values based predominantly on internal valuation models which were not indicative prices or binding offers.

The Corporation’s investments in single-issuer trust preferred securities had an unrealized loss of $4.8 million at September 30, 2015. The Corporation did not record any other-than-temporary impairment charges for single-issuer trust preferred securities during the three and nine months ended September 30, 2015 or 2014. Seven of the Corporation's 19 single-issuer trust preferred securities were rated below investment grade by at least one ratings agency, with an amortized cost of $14.5 million and an estimated fair value of $13.2 million as of September 30, 2015. All of the single-issuer trust preferred securities rated below investment grade were rated "BB" or "Ba". Single-issuer trust preferred securities with an amortized cost of $3.7 million and an estimated fair value of $2.7 million at September 30, 2015 were not rated by any ratings agency.

As of September 30, 2015, the Corporation held two pooled trust preferred securities with an amortized cost of $0 and an estimated fair value of $530,000, that were rated below investment grade by at least one ratings agency. The class of securities held by the Corporation was below the most senior tranche, with the Corporation’s interests being subordinate to other investors in the pool.

The amortized cost of pooled trust preferred securities is the purchase price of the securities, net of cumulative credit related other-than-temporary impairment charges, determined using an expected cash flows model. The most significant input to the expected cash flows model was the expected payment deferral rate for each pooled trust preferred security. The Corporation evaluates the financial metrics, such as capital ratios and non-performing asset ratios, of the individual financial institution issuers that comprise each pooled trust preferred security to estimate its expected deferral rate.

~~See Note 13, "Fair Value Measurements," in the Notes to Consolidated Financial Statements for further discussion related to the fair values of debt securities.~~

Interest Rate Risk, Asset/Liability Management and Liquidity

Interest rate risk creates exposure in two primary areas. First, changes in rates have an impact on the Corporation’s liquidity position and could affect its ability to meet obligations and continue to grow. Second, movements in interest rates can create fluctuations in the Corporation’s net interest income and changes in the economic value of its equity.

The Corporation employs various management techniques to minimize its exposure to interest rate risk. An Asset/Liability Management Committee ~~("ALCO"), consisting of key financial and senior management personnel, meets on a regular basis. The ALCO~~(ALCO) is responsible for reviewing the interest rate sensitivity and liquidity positions of the Corporation, approving asset and liability management policies, and overseeing the formulation and implementation of strategies regarding balance sheet positions.

From a liquidity standpoint, the Corporation must maintain a sufficient level of liquid assets to meet the cash needs of its customers, who, as depositors, may want to withdraw funds or who, as borrowers, may need credit availability. Liquidity is provided on a continuous basis through scheduled and unscheduled principal and interest payments on outstanding loans and investments and

~~through the availability of deposits and borrowings. The Corporation also maintains secondary sources that provide liquidity on a secured and unsecured basis to meet short-term and long-term needs.~~

The following table provides information about the Corporation’s interest rate sensitive financial instruments as of September 30, 2015. The table presents expected cash flows and weighted average rates for each of the Corporation's significant interest rate sensitive financial instruments, by expected maturity period. None of the Corporation’s financial instruments are classified as trading. All dollar amounts are in thousands.

Expected Maturity Period Estimated
Year 1 Year 2 Year 3 Year 4 Year 5 Beyond Total Fair Value
Fixed rate loans (1) $ 975,597
$ 484,581
$ 350,691
$ 380,102
$ 239,651
$ 678,863
$ 3,109,485
$ 3,078,275
Average rate 3.60 % 4.20 % 4.07 % 4.43 % 4.32 % 3.61 % 3.90 %

Floating rate loans (1) (2) 2,392,556
1,597,191
1,293,230
1,095,874
1,069,244
2,976,168
10,424,263
10,347,127
Average rate 3.66 % 3.76 % 3.79 % 3.81 % 3.77 % 3.71 % 3.73 %

Fixed rate investments (3) 435,564
324,117
252,653
223,718
215,175
800,264
2,251,491
2,269,686
Average rate 2.80 % 2.83 % 2.69 % 2.58 % 2.49 % 2.59 % 2.67 %

Floating rate investments (3) 4,985
4,972
106,681
22
—
40,166
156,826
143,359
Average rate 1.04 % 1.90 % 1.90 % 2.00 % — % 1.50 % 1.77 %

Other interest-earning assets 537,880
—
—
—
—
68,977
606,857
606,857
Average rate 0.36 % — % — % — % — % 5.03 % 0.89 %

Total $ 4,346,582
$ 2,410,861
$ 2,003,255
$ 1,699,716
$ 1,524,070
$ 4,564,438
$ 16,548,922
$ 16,445,304
Average rate 3.15 % 3.72 % 3.60 % 3.79 % 3.68 % 3.50 % 3.50 %

Fixed rate deposits (4) $ 1,216,409
$ 501,015
$ 257,453
$ 364,496
$ 258,021
$ 24,697
$ 2,622,091
$ 2,642,857
Average rate 0.60 % 1.10 % 1.39 % 2.03 % 2.05 % 1.94 % 1.13 %

Floating rate deposits (5) 5,342,016
856,561
552,477
310,183
284,762
210,076
7,556,075
7,544,200
Average rate 0.17 % 0.11 % 0.10 % 0.08 % 0.08 % 0.13 % 0.15 %

Fixed rate borrowings (6) 31,297
351,638
668
130,533
157,947
290,854
962,937
996,097
Average rate 1.69 % 4.51 % 4.65 % 2.12 % 2.78 % 4.31 % 3.75 %

Floating rate borrowings (7) 431,632
—
—
—
—
16,496
448,128
438,296
Average rate 0.05 % — % — % — % — % 2.46 % 0.14 %

Total $ 7,021,354
$ 1,709,214
$ 810,598
$ 805,212
$ 700,730
$ 542,123
$ 11,589,231
$ 11,621,450
Average rate 0.24 % 1.30 % 0.51 % 1.30 % 1.41 % 2.53 % 0.67 %


~~(1)~~	~~Amounts are based on contractual payments and maturities, adjusted for expected prepayments. Excludes $2.6 million of overdraft deposit balances.~~


~~(2)~~	~~Line of credit amounts are based on historical cash flows, with an average life of approximately 5 years.~~


~~(3)~~	Amounts are based on contractual maturities; adjusted for expected prepayments on mortgage-backed securities and collateralized mortgage obligations and expected calls on agency and municipal securities. Excludes equity securities as such investments do not have maturity dates.


~~(4)~~	~~Amounts are based on contractual maturities of time deposits.~~


~~(5)~~	~~Estimated based on history of deposit flows.~~


~~(6)~~	~~Amounts are based on contractual maturities of debt instruments, adjusted for possible calls. Amounts also include junior subordinated deferrable interest debentures.~~


~~(7)~~	Amounts include Federal Funds purchased, short-term promissory notes and securities sold under agreements to repurchase, which mature in less than 90 days, in addition to junior subordinated deferrable interest debentures.

The preceding table and discussion addressed the liquidity implications of interest rate risk and focused on expected cash flows from financial instruments. Expected maturities, however, do not necessarily reflect the net interest income impact of interest rate changes. Certain financial instruments, such as adjustable rate loans, have repricing periods that differ from expected cash flows periods.

Included within the $10.4 billion of floating rate loans above are $3.3 billion of loans, or 31.9% of the total, that float with the prime interest rate, $2.3 billion, or 22.1%, of loans that float with other interest rates, primarily the London Interbank Offered Rate ("LIBOR"), and $4.8 billion, or 46.0%, of adjustable rate loans. The $4.8 billion of adjustable rate loans include loans that are fixed rate instruments for a certain period of time, and then convert to floating rates.

~~The following table presents the percentage of adjustable rate loans, at September 30, 2015, stratified by the period until their next repricing:~~



	~~Percent of Total~~ ~~Adjustable Rate~~ ~~Loans~~
~~One year~~	~~33.4%~~
~~Two years~~	~~17.9~~
~~Three years~~	~~17.4~~
~~Four years~~	~~12.9~~
~~Five years~~	~~11.1~~
~~Greater than five years~~	~~7.3~~

The Corporation uses two complementary methods to measure and manage interest rate risk. They are simulation of net interest income and estimates of economic value of equity. Using these measurements in tandem provides a reasonably comprehensive summary of the magnitude of the Corporation's interest rate risk, level of risk as time evolves, and exposure to changes in interest rates.

Simulation of net interest income is performed for the next ~~twelve-month~~12-month period. A variety of interest rate scenarios are used to measure the effects of sudden and gradual movements upward and downward in the yield curve. These results are compared to the results obtained in a flat or unchanged interest rate scenario. Simulation of net interest income is used primarily to measure the Corporation’s short-term earnings exposure to rate movements. The Corporation’s policy limits the potential exposure of net interest income, in a non-parallel instantaneous shock, to 10% of the base case net interest income for a 100 basis point shock in interest rates, 15% for a 200 basis point shock and 20% for a 300 basis point shock. A "shock" is an immediate upward or downward movement of interest rates. The shocks do not take into account changes in customer behavior that could result in changes to mix and/or volumes in the balance sheet, nor do they take into account ~~for competitive~~the potential effects of competition on the pricing of deposits and loans over the forward 12-month period.

Contractual maturities and repricing opportunities of loans are incorporated in the simulation model as are prepayment assumptions, maturity data and call options in the investment portfolio. Assumptions based on past experience are incorporated into the model for non-maturity deposit accounts. The assumptions used are inherently uncertain and, as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model's simulated results due to timing, amount and frequency of interest rate changes as well as changes in market conditions and the application and timing of various management strategies.

The following table summarizes the expected impact of abrupt interest rate changes on net interest income as of March 31, 2016 (due to the current level of interest rates, the 200 and 300 basis point downward shock scenarios are not shown):



Rate Shock (1)	Annual change in net interest income	% Change in net interest income
+300 bp	+ ~~$ 65.5~~$82.7 million	~~+13.3%~~16.0%
+200 bp	+ ~~$ 42.2~~$55.4 million	~~+8.6~~10.7%
+100 bp	+ ~~$ 18.4~~$25.8 million	~~+3.7~~5.0%
–100 bp	– ~~$ 16.3~~$14.2 million	–~~3.3~~ 2.7%

~~(1) The inclusion of only one -100 bp rate shock reflects the effect of implicit and explicit floors that limit further reduction in interest rates.~~


(1)	These results include the effect of implicit and explicit interest rate floors that limit further reduction in interest rates.

Economic value of equity estimates the discounted present value of asset ~~cash flows~~ and liability cash flows. Discount rates are based upon market prices for like assets and liabilities. Abrupt changes or "shocks" in interest rates, both upward and downward, are used to determine the comparative effect of such interest rate movements relative to the unchanged environment. This measurement tool is used primarily to evaluate the longer-term repricing risks and options in the Corporation’s balance sheet. The Corporation's policy limits the economic value of equity that may be at risk, in a non-parallel instantaneous shock, to 10% of the base case economic value of equity for a 100 basis point shock in interest rates, 20% for a 200 basis point shock and 30% for a 300 basis

point shock. As of ~~September 30, 2015,~~March 31, 2016, the Corporation was within economic value of equity policy limits for every 100 basis point shock.

Interest Rate Swaps

The Corporation enters into interest rate swaps with certain qualifying commercial loan customers to meet their interest rate risk management needs. The Corporation simultaneously enters into interest rate swaps with dealer counterparties, with identical notional amounts and terms. The net result of these interest rate swaps is that the customer pays a fixed rate of interest and the Corporation receives a floating rate. These interest rate swaps are derivative financial instruments that are recorded at their fair value in other assets and liabilities on the consolidated balance sheets. Changes in fair value during the period are recorded in other non-interest expense on the consolidated statements of income.

Liquidity

The Corporation must maintain a sufficient level of liquid assets to meet the cash needs of its customers, who, as depositors, may want to withdraw funds or who, as borrowers, need credit availability. Liquidity is provided on a continuous basis through scheduled and unscheduled principal and interest payments on investments and outstanding loans and through the availability of deposits and borrowings. The Corporation also maintains secondary sources that provide liquidity on a secured and unsecured basis to meet short-term and long-term needs.

The Corporation maintains liquidity sources in the form of demand and savings deposits, time deposits, repurchase agreements and short-term promissory notes. The Corporation can access additional liquidity from these sources, if necessary, by increasing the rates of interest paid on those accounts and borrowings. The positive impact to liquidity resulting from paying higher interest rates could have a detrimental impact on the net interest margin and net income if rates on interest-earning assets do not experience a proportionate increase. Borrowing availability with the FHLB and the Federal Reserve Bank, along with federal funds lines at various correspondent banks, provides the Corporation with additional liquidity.

Each of the Corporation’s subsidiary banks is a member of the FHLB and has access to FHLB overnight and term credit facilities.As of March 31, 2016, the Corporation had $684.7 million of short- and long-term advances outstanding from the FHLB with an additional borrowing capacity of approximately $2.7 billion under these facilities. Advances from the FHLB are secured by qualifying commercial real estate and residential mortgage loans, investments and other assets.

As of March 31, 2016, the Corporation had aggregate availability under federal funds lines of $1.2 billion with $32.6 million borrowed against that amount. A combination of commercial real estate loans, commercial loans and securities are pledged to the Federal Reserve Bank of Philadelphia to provide access to Federal Reserve Bank Discount Window borrowings. As of March 31, 2016, the Corporation had $1.2 billion of collateralized borrowing availability at the Discount Window, and no outstanding borrowings.

Liquidity must also be managed at the Fulton Financial Corporation parent company level. For safety and soundness reasons, banking regulations limit the amount of cash that can be transferred from subsidiary banks to the parent company in the form of loans and dividends. Generally, these limitations are based on the subsidiary banks’ regulatory capital levels and their net income. Management continues to monitor the liquidity and capital needs of the parent company and will implement appropriate strategies, as necessary, to remain adequately capitalized and to meet its cash needs.

The Corporation’s sources and uses of funds were discussed in general terms in the net interest income section of Management’s Discussion and Analysis. The consolidated statements of cash flows provide additional information. The Corporation’s operatingactivities during 2016 generated $34.1 million of cash, mainly due to net income. Cash used in investing activities was $169.7 million, due to net increases in loans and investment securities, partially offset by a decrease in short-term investments. Net cash provided by financing activities was $117.9 million due to increases in deposits, short-term borrowings and additions to long-term debt, partially offset by repayments of long-term debt, common stock, cash dividends and purchases of treasury stock.

Equity Market Price Risk

Equity market price risk is the risk that changes in the values of equity investments could have a material impact on the financial position or results of operations of the Corporation. As of March 31, 2016, equity investments consisted of $18.2 million of common stocks of publicly traded financial institutions and $892,000 of other equity investments.

The equity investments most susceptible to equity market price risk are the financial institutions stocks, which had a cost basis of approximately $13.4 million and a fair value of $18.2 million at March 31, 2016, including an investment in a single financial

institution with a cost basis of $7.4 million and a fair value of $9.1 million. The fair value of this investment accounted for 50.3% of the fair value of the common stocks of publicly traded financial institutions. No other investment in a single financial institution in the financial institutions stock portfolio exceeded 10% of the portfolio's fair value. In total, net unrealized gains in this portfolio were approximately $4.8 million as of March 31, 2016.

In addition to its equity portfolio, investment management and trust services income may be impacted by fluctuations in the equity markets. A portion of this revenue is based on the value of the underlying investment portfolios, many of which include equity investments. If the values of those investment portfolios decrease, whether due to factors influencing U.S. or international securities markets in general or otherwise, the Corporation’s revenue would be negatively impacted. In addition, the Corporation’s ability to sell its brokerage services in the future will be dependent, in part, upon consumers’ level of confidence in financial markets.

Debt Security Market Price Risk

Municipal Securities

As of March 31, 2016, the Corporation owned $314.0 million of municipal securities issued by various municipalities. Ongoing uncertainty with respect to the financial strength of municipal bond insurers places much greater emphasis on the underlying strength of issuers. Continued pressure on local tax revenues of issuers due to adverse economic conditions could have an adverse impact on the underlying credit quality of issuers. The Corporation evaluates existing and potential holdings primarily based on the creditworthiness of the issuing municipality and then, to a lesser extent, on any underlying credit enhancement. Municipal securities can be supported by the general obligation of the issuing municipality, allowing the securities to be repaid by any means available to the issuing municipality. As of March 31, 2016, approximately 97% of municipal securities were supported by the general obligation of corresponding municipalities. Approximately 78% of these securities were school district issuances, which are also supported by the states of the issuing municipalities.

Auction Rate Certificates

As of March 31, 2016, the Corporation’s investments in student loan auction rate securities, also known as auction rate certificates (ARCs), had a cost basis of $106.9 million and a fair value of $97.3 million.

ARCs are long-term securities that were structured to allow their sale in periodic auctions, resulting in both the treatment of ARCs as short-term instruments in normal market conditions and fair values that could be derived based on periodic auction prices. However, beginning in 2008, market auctions for these securities began to fail due to an insufficient number of buyers, resulting in an illiquid market. Therefore, as of March 31, 2016, the fair values of the ARCs currently in the portfolio were derived using significant unobservable inputs based on an expected cash flows model which produced fair values that were materially different from those that would be expected from settlement of these investments in the current market. The expected cash flows model produced fair values which assumed a return to market liquidity sometime in the next five years. The Corporation believes that the trusts underlying the ARCs will self-liquidate as student loans are repaid.

The credit quality of the underlying debt associated with the ARCs is also a factor in the determination of their estimated fair value. As of March 31, 2016, all of the ARCs were rated above investment grade, with approximately $6 million, or 6%, "AAA" rated and $92 million, or 94%, "AA" rated. All of the loans underlying the ARCs have principal payments that are guaranteed by the federal government. At March 31, 2016, all ARCs were current and making scheduled interest payments.

Corporate Debt Securities

The Corporation holds corporate debt securities in the form of pooled trust preferred securities, single-issuer trust preferred securities and subordinated debt issued by financial institutions. As of March 31, 2016, these securities had an amortized cost of $95.4 million and an estimated fair value of $89.9 million.

The amortized cost of pooled trust preferred securities is the purchase price of the securities, net of cumulative credit related other-than-temporary impairment charges, determined using an expected cash flows model. The most significant input to the expected cash flows model was the expected payment deferral rate for each pooled trust preferred security. The Corporation evaluates the financial metrics, such as capital ratios and non-performing asset ratios, of the individual financial institution issuers that comprise each pooled trust preferred security to estimate its expected deferral rate.

See "Note 4 - Investment Securities," in the Notes to Consolidated Financial Statements for further discussion related to the Corporation’s other-than-temporary impairment evaluations for debt securities, and see "Note 11 - Fair Value Measurements," in the Notes to Consolidated Financial Statements for further discussion related to the fair values of debt securities.

Item 4. Controls and Procedures

The Corporation carried out an evaluation, under the supervision and with the participation of the Corporation’s management, including the Corporation’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures pursuant to Rule 13a-15, promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"). Based upon that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this quarterly report, the Corporation’s disclosure controls and procedures are effective. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in Corporation reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There have been no changes in the Corporation’s internal control over financial reporting during the fiscal quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The ~~Corporation and its subsidiaries are involved in various legal proceedings~~information presented in the ~~ordinary course~~"Legal Proceedings" section of ~~business~~Note 10 "Commitment and Contingencies" of the Corporation. The Corporation periodically evaluates the possible impact of pending litigation matters based on, among other factors, the advice of counsel, available insurance coverage and recorded liabilities and reserves for probable legal liabilities and costs. In addition, from timeNotes to ~~time, the Corporation~~Consolidated Financial Statements is the subject of investigations or other forms of regulatory or governmental inquiry covering a range of possible issues and, in some cases, these may be part of similar reviews of the specified activities of other industry participants. These inquiries could lead to administrative, civil or criminal proceedings, and could possibly result in fines, penalties, restitution or the need to alter the Corporation’s business practices, and cause the Corporation to incur additional costs. The Corporation’s practice is to cooperate fully with regulatory and governmental investigations.

During the second quarter of 2015, Fulton Bank, N.A. (the "Bank"), the Corporation’s largest banking subsidiary, received a letter from the U.S. Department of Justice (the "Department") indicating that the Department had initiated an investigation regarding potential violations of fair lending lawsincorporated herein by the Bank in certain of its geographies. The Bank is cooperating with the Department and responding to the Department’s request for information. Although this matter appears to be at a preliminary stage, it could result in legal proceedings the resolution of which could potentially involve a settlement, fines or other remedial actions.

The Corporation and each of its banking subsidiaries are subject to regulatory enforcement orders issued during 2014 and 2015 by their respective Federal and state bank regulatory agencies relating to identified deficiencies in the Corporation’s centralized Bank Secrecy Act and anti-money laundering compliance program (the "BSA/AML Compliance Program"), which was designed to comply with the requirements of the Bank Secrecy Act, the USA Patriot Act of 2001 and related anti-money laundering regulations (collectively, the "BSA/AML Requirements"). The regulatory enforcement orders, which are in the form of consent orders or orders to cease and desist issued upon consent ("Consent Orders"), generally require, among other things, that the Corporation and its subsidiary banks undertake a number of required actions to strengthen and enhance the BSA/AML Compliance Program. Further information pertaining to the Consent Orders was previously disclosed by the Corporation in Part II, Item 9B of its Annual Report on Form 10-K and in its Form 10-K/A each for the year ended December 31, 2014 and filed with the SEC on February 27, 2015 and June 8, 2015, respectively; in its Form 10-Q for the quarter-ended March 31, 2015 filed with the SEC on May 11, 2015; and in Current Reports on Form 8-K filed with the SEC on July 18, September 9, and December 29, 2014.

reference.

Item 1A. Risk Factors

There have been no material changes to the risk factors as previously disclosed in Part I, Item 1A of the Corporation’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents the Corporation's monthly repurchases of its common stock during the ~~third~~first quarter of ~~2015:~~2016:

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value that May Yet Be Purchased Under the Plans or Programs

July 1, 2015 to July 31, 2015 1,192,400
$ 12.74
1,192,400
$ 15,790,528
August 1, 2015 to August 31, 2015 1,245,870
$ 12.67
1,245,870
—
September 1, 2015 to September 31, 2015 —
$ —
—
—



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value that May Yet Be Purchased Under the Plans or Programs

January 1, 2016 to January 31, 2016	375,000	$	12.14	375,000	$	45,446,078
February 1, 2016 to February 29, 2016	542,200	$	12.25	542,200	38,804,488
March 1, 2016 to March 31, 2016	—	$	—	—	38,804,488

~~On April 21,~~In October, 2015, the Corporation announced that its board of directors had approved a share repurchase program pursuant to which the Corporation is authorized to repurchase up to $50.0 million of its outstanding shares of common stock, or approximately 2.3% of its outstanding shares, through December 31, ~~2015.~~2016. Repurchased shares may be added to treasury stock, at cost. As permitted by securities laws and other legal requirements and subject to market conditions and other factors, purchases may be made from time to time in open market or privately negotiated transactions, including without limitation, through accelerated share repurchase transactions. The share repurchase program may be discontinued at any time. During the ~~second~~first quarter of ~~2015, 1.5 million~~2016, 917,200 shares had been repurchased under this program for a total cost of ~~$19.0~~$11.2 million, or ~~$12.36~~$12.21 per share. ~~During the third quarter of 2015, the remaining $31.0 million, or approximately 2.4 million shares at an average $12.71 per share, were repurchased, completing this repurchase program.~~

No stock repurchases were made outside the ~~programs~~program and all repurchases were made in accordance with the guidelines of Rule 10b-18 and in compliance with Regulation M.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

See Exhibit Index for a list of the exhibits required by Item 601 of Regulation S-K and filed as part of this report.

FULTON FINANCIAL CORPORATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



FULTON FINANCIAL CORPORATION

Date:	~~November 6, 2015~~May 5, 2016	/s/ E. Philip Wenger
		E. Philip Wenger
		Chairman, Chief Executive Officer and President

Date:	~~November 6, 2015~~May 5, 2016	/s/ Patrick S. Barrett
		Patrick S. Barrett
		Senior Executive Vice President and
		Chief Financial Officer

EXHIBIT INDEX

Exhibits Required Pursuant

to Item 601 of Regulation S-K




3.1		Articles of Incorporation, as amended and restated, of Fulton Financial Corporation– Incorporated by reference to Exhibit 3.1 of the Fulton Financial Corporation Current Report on Form 8-K dated June 24, 2011.

3.2		Bylaws of Fulton Financial Corporation as amended – Incorporated by reference to Exhibit 3.1 of the Fulton Financial Corporation Current Report on an Amended Form 8-K dated September 23, 2014.

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		Financial statements from the Quarterly Report on Form 10-Q of Fulton Financial Corporation for the period ended ~~September 30, 2015,~~March 31,2016, filed on ~~November 6, 2015,~~May 5, 2016, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income (iv) the Consolidated Statements of Shareholders' Equity, (v) the Consolidated ~~Statement~~Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements - filed herewith.

7562



	Three months ended September 30, 2015					Nine months ended September 30, 2015						Estimated Expense Reductions for the Year Ending December 31, 2015			Estimated Annualized Cost Savings
	Implementation Expenses		Expense Reductions			Implementation Expenses			Expense Reductions						Estimated Annualized Cost Savings
	(in thousands)
Branch consolidations	$	70	$	(660	)	$	1,640		$	(825	)	$	(1,590	)	$	(3,050	)
Modification of retirement benefits and staffing reductions	—		(870		)	450			(2,365		)	(3,235		)	(3,470		)
2015 cost savings initiatives	$	70	$	(1,530	)	$	2,090		$	(3,190	)	$	(4,825	)	$	(6,520	)

	Three months ended September 30, 2014					Nine months ended September 30, 2014						Actual Expense Reductions for the Year Ended December 31, 2014			Estimated Annualized Cost Savings
	Implementation Expenses		Expense Reductions			Implementation Expenses (Gains)			Expense Reductions						Estimated Annualized Cost Savings
	(in thousands)
Branch consolidations	$	—	$	(800	)	$	2,080		$	(1,600	)	$	(2,400	)	$	(3,200	)
Subsidiary bank management reductions and other employee benefit reductions	—		(1,175		)	(1,100		)	(3,370		)	(4,550		)	(4,700		)
2014 cost savings initiatives	$	—	$	(1,975	)	$	980		$	(4,970	)	$	(6,950	)	$	(7,900	)



	Nine months ended September 30								Increase in Balance
	2015				2014				Increase in Balance
	Balance		Rate		Balance		Rate		$		%
	(dollars in thousands)
Noninterest-bearing demand	$	3,767,919	—	%	$	3,360,876	—	%	$	407,043	12.1	%
Interest-bearing demand	3,202,380		0.13		2,969,470		0.12		232,910		7.8
Savings	3,600,695		0.14		3,392,681		0.12		208,014		6.1
Total demand and savings	10,570,994		0.09		9,723,027		0.08		847,967		8.7
Time deposits	3,017,271		1.03		2,984,861		0.88		32,410		1.1
Total deposits	$	13,588,265	0.30	%	$	12,707,888	0.27	%	$	880,377	6.9	%



	Expected Maturity Period																					Estimated
	Year 1			Year 2			Year 3			Year 4			Year 5			Beyond			Total			Fair Value
Fixed rate loans (1)	$	975,597		$	484,581		$	350,691		$	380,102		$	239,651		$	678,863		$	3,109,485		$	3,078,275
Average rate	3.60		%	4.20		%	4.07		%	4.43		%	4.32		%	3.61		%	3.90		%

Floating rate loans (1) (2)	2,392,556			1,597,191			1,293,230			1,095,874			1,069,244			2,976,168			10,424,263			10,347,127
Average rate	3.66		%	3.76		%	3.79		%	3.81		%	3.77		%	3.71		%	3.73		%

Fixed rate investments (3)	435,564			324,117			252,653			223,718			215,175			800,264			2,251,491			2,269,686
Average rate	2.80		%	2.83		%	2.69		%	2.58		%	2.49		%	2.59		%	2.67		%

Floating rate investments (3)	4,985			4,972			106,681			22			—			40,166			156,826			143,359
Average rate	1.04		%	1.90		%	1.90		%	2.00		%	—		%	1.50		%	1.77		%

Other interest-earning assets	537,880			—			—			—			—			68,977			606,857			606,857
Average rate	0.36		%	—		%	—		%	—		%	—		%	5.03		%	0.89		%

Total	$	4,346,582		$	2,410,861		$	2,003,255		$	1,699,716		$	1,524,070		$	4,564,438		$	16,548,922		$	16,445,304
Average rate	3.15		%	3.72		%	3.60		%	3.79		%	3.68		%	3.50		%	3.50		%

Fixed rate deposits (4)	$	1,216,409		$	501,015		$	257,453		$	364,496		$	258,021		$	24,697		$	2,622,091		$	2,642,857
Average rate	0.60		%	1.10		%	1.39		%	2.03		%	2.05		%	1.94		%	1.13		%

Floating rate deposits (5)	5,342,016			856,561			552,477			310,183			284,762			210,076			7,556,075			7,544,200
Average rate	0.17		%	0.11		%	0.10		%	0.08		%	0.08		%	0.13		%	0.15		%

Fixed rate borrowings (6)	31,297			351,638			668			130,533			157,947			290,854			962,937			996,097
Average rate	1.69		%	4.51		%	4.65		%	2.12		%	2.78		%	4.31		%	3.75		%

Floating rate borrowings (7)	431,632			—			—			—			—			16,496			448,128			438,296
Average rate	0.05		%	—		%	—		%	—		%	—		%	2.46		%	0.14		%

Total	$	7,021,354		$	1,709,214		$	810,598		$	805,212		$	700,730		$	542,123		$	11,589,231		$	11,621,450
Average rate	0.24		%	1.30		%	0.51		%	1.30		%	1.41		%	2.53		%	0.67		%

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company