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Loans and Leases | 9 Months Ended
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Sep. 30, 2015
Loans and Leases Receivable Disclosure [Abstract] |
Loans and Leases | LOANS AND LEASES BancShares' accounting methods for loans and leases differ depending on whether they are purchased credit-impaired (PCI) or non-PCI. Non-PCI loans and leases include originated commercial, originated noncommercial, purchased revolving, and purchased non-impaired loans. For purchased non-impaired loans to be included as non-PCI, it must be determined that the loans do not have a discount due, at least in part, to credit quality at the time of acquisition. Conversely, loans for which it is probable at acquisition that all required payments will not be collected in accordance with contractual terms are considered PCI loans. PCI loans are evaluated at acquisition and where a discount is required at least in part due to credit quality, the nonrevolving loans are accounted for under the guidance in ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. PCI loans and leases are recorded at fair value at the date of acquisition. No allowance for loan and lease losses is recorded on the acquisition date as the fair value of the acquired assets incorporates assumptions regarding credit risk. An allowance is recorded if there is additional credit deterioration after the acquisition date. BancShares reports PCI and non-PCI loan portfolios separately, and each portfolio is further divided into commercial and non-commercial based on the type of borrower, purpose, collateral, and/or our underlying credit management processes. Additionally, loans are assigned to loan classes, which further disaggregate loans based upon common risk characteristics. Commercial – Commercial loans include construction and land development, mortgage, other commercial real estate, commercial and industrial, lease financing and other. Construction and land development – Construction and land development consists of loans to finance land for development, investment, and use in a commercial business enterprise; multifamily apartments; and other commercial buildings that may be owner-occupied or income generating investments for the owner. Commercial mortgage – Commercial mortgage consists of loans to purchase or refinance owner-occupied nonresidential and investment properties. Investment properties include office buildings and other facilities that are rented or leased to unrelated parties. Other commercial real estate – Other commercial real estate consists of loans secured by farmland (including residential farms and other improvements) and multifamily (5 or more) residential properties. Commercial and industrial – Commercial and industrial consists of loans or lines of credit to finance corporate credit cards, accounts receivable, inventory and other general business purposes. Lease financing – Lease financing consists solely of lease financing agreements for business equipment, vehicles and other assets. Other – Other consists of all other commercial loans not classified in one of the preceding classes. These typically include loans to non-profit organizations such as churches, hospitals, educational and charitable organizations. Noncommercial – Noncommercial consist of residential and revolving mortgage, construction and land development, and consumer loans. Residential mortgage – Residential real estate consists of loans to purchase, construct or refinance the borrower's primary dwelling, second residence or vacation home. Revolving mortgage – Revolving mortgage consists of home equity lines of credit that are secured by first or second liens on the borrower's primary residence. Construction and land development – Construction and land development consists of loans to construct the borrower's primary or secondary residence or vacant land upon which the owner intends to construct a dwelling at a future date. Consumer – Consumer loans consist of installment loans to finance purchases of vehicles, unsecured home improvements and revolving lines of credit that can be secured or unsecured, including personal credit cards. Loans and leases outstanding included the following at September 30, 2015 and December 31, 2014:
(Dollars in thousands) | September 30, 2015 |  | December 31, 2014
Non-PCI loans and leases: |  |  |
Commercial: |  |  |
Construction and land development | $ | 563,926 |  |  | $ | 493,133 |
Commercial mortgage | 8,076,946 |  |  | 7,552,948 |
Other commercial real estate | 316,924 |  |  | 244,875 |
Commercial and industrial | 2,211,973 |  |  | 1,988,934 |
Lease financing | 691,915 |  |  | 571,916 |
Other | 357,760 |  |  | 353,833 |
Total commercial loans | 12,219,444 |  |  | 11,205,639 |
Noncommercial: |  |  |
Residential mortgage | 2,659,821 |  |  | 2,493,058 |
Revolving mortgage | 2,519,972 |  |  | 2,561,800 |
Construction and land development | 220,493 |  |  | 205,016 |
Consumer | 1,192,012 |  |  | 1,117,454 |
Total noncommercial loans | 6,592,298 |  |  | 6,377,328 |
Total non-PCI loans and leases | 18,811,742 |  |  | 17,582,967 |
PCI loans: |  |  |
Commercial: |  |  |
Construction and land development | 41,582 |  |  | 78,079 |
Commercial mortgage | 568,256 |  |  | 577,518 |
Other commercial real estate | 18,013 |  |  | 40,193 |
Commercial and industrial | 17,023 |  |  | 27,254 |
Other | 2,087 |  |  | 3,079 |
Total commercial loans | 646,961 |  |  | 726,123 |
Noncommercial: |  |  |
Residential mortgage | 334,518 |  |  | 382,340 |
Revolving mortgage | 59,695 |  |  | 74,109 |
Construction and land development | 347 |  |  | 912 |
Consumer | 2,543 |  |  | 3,014 |
Total noncommercial loans | 397,103 |  |  | 460,375 |
Total PCI loans | 1,044,064 |  |  | 1,186,498 |
Total loans and leases | $ | 19,855,806 |  |  | $ | 18,769,465 |
At September 30, 2015, $296.5 million of total loans and leases were covered under loss share agreements, compared to $485.3 million at December 31, 2014. At the beginning of the second quarter of 2015, loss share protection expired for non-single family residential loans acquired from Sun American Bank ("SAB") and all loans acquired from First Regional Bank ("FRB"). The loan balance at September 30, 2015 for the expired agreements from SAB were $29.9 million. FRB loan balances at September 30, 2015 were insignificant. Loss share protection for Williamsburg First National Bank non-single family residential loans with a balance of $7.0 million at September 30, 2015 will expire at the beginning of the fourth quarter of 2015. At September 30, 2015, $3.69 billion in noncovered loans with a lendable collateral value of $2.59 billion were used to secure $520.3 million in Federal Home Loan Bank ("FHLB") of Atlanta advances, resulting in additional borrowing capacity of $2.07 billion. At December 31, 2014, $3.16 billion in noncovered loans with a lendable collateral value of $2.20 billion were used to secure $240.3 million in FHLB of Atlanta advances, resulting additional borrowing capacity of $1.96 billion. The unamortized discount related to the non-PCI loans and leases acquired in the Bancorporation merger totaled $45.1 million and $61.2 million at September 30, 2015 and December 31, 2014, respectively. During the three and nine months ended September 30, 2015, accretion income on non-PCI loans equaled $4.5 million and $15.6 million, respectively. There was no accretion income on non-PCI loans recorded for the same periods in 2014. Credit quality indicators Loans and leases are monitored for credit quality on a recurring basis. The credit quality indicators used are dependent on the portfolio segment to which the loan relates. Commercial and noncommercial loans and leases have different credit quality indicators as a result of the unique characteristics of the loan segment being evaluated. The credit quality indicators for non-PCI and PCI commercial loans and leases are developed through a review of individual borrowers on an ongoing basis. Each commercial loan is evaluated annually with more frequent evaluation of more severely criticized loans or leases. The credit quality indicators for non-PCI and PCI noncommercial loans are based on the delinquency status of the borrower. As the borrower becomes more delinquent, the likelihood of loss increases. The indicators represent the rating for loans or leases as of the date presented based on the most recent assessment performed. These credit quality indicators are defined as follows: Pass – A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification. Special mention – A special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification. Substandard – A substandard asset is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected. Doubtful – An asset classified as doubtful has all the weaknesses inherent in an asset classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently existing facts, conditions and values. Loss – Assets classified as loss are considered uncollectible and of such little value that it is inappropriate to be carried as an asset. This classification is not necessarily equivalent to no potential for recovery or salvage value, but rather that it is not appropriate to defer a full charge-off even though partial recovery may be effected in the future. Ungraded – Ungraded loans represent loans that are not included in the individual credit grading process due to their relatively small balances or borrower type. The majority of ungraded loans at September 30, 2015 and December 31, 2014 relate to business credit cards. Business credit card loans are subject to automatic charge-off when they become 120 days past due in the same manner as unsecured consumer lines of credit. The remaining balance is comprised of a small amount of commercial mortgage and other commercial real estate loans. Non-PCI loans and leases outstanding at September 30, 2015 and December 31, 2014 by credit quality indicator are provided below:
| September 30, 2015
(Dollars in thousands) | Non-PCI commercial loans and leases
Grade: | Construction and land development |  | Commercial mortgage |  | Other commercial real estate |  | Commercial and industrial |  | Lease financing |  | Other |  | Total non-PCI commercial loans and leases
Pass | $ | 555,833 |  |  | $ | 7,821,706 |  |  | $ | 314,171 |  |  | $ | 2,070,568 |  |  | $ | 683,265 |  |  | $ | 354,222 |  |  | $ | 11,799,765 |
Special mention | 5,606 |  |  | 107,790 |  |  | 285 |  |  | 16,812 |  |  | 5,161 |  |  | 1,828 |  |  | 137,482 |
Substandard | 2,487 |  |  | 143,536 |  |  | 1,010 |  |  | 15,241 |  |  | 3,163 |  |  | 1,710 |  |  | 167,147 |
Doubtful | — |  |  | 647 |  |  | — |  |  | 1,544 |  |  | 326 |  |  | — |  |  | 2,517 |
Ungraded | — |  |  | 3,267 |  |  | 1,458 |  |  | 107,808 |  |  | — |  |  | — |  |  | 112,533 |
Total | $ | 563,926 |  |  | $ | 8,076,946 |  |  | $ | 316,924 |  |  | $ | 2,211,973 |  |  | $ | 691,915 |  |  | $ | 357,760 |  |  | $ | 12,219,444 |
| December 31, 2014
| Non-PCI commercial loans and leases
| Construction and land development |  | Commercial mortgage |  | Other commercial real estate |  | Commercial and industrial |  | Lease financing |  | Other |  | Total non-PCI commercial loans and leases
Pass | $ | 474,374 |  |  | $ | 7,284,714 |  |  | $ | 242,053 |  |  | $ | 1,859,415 |  |  | $ | 564,319 |  |  | $ | 349,111 |  |  | $ | 10,773,986 |
Special mention | 13,927 |  |  | 129,247 |  |  | 909 |  |  | 27,683 |  |  | 3,205 |  |  | 1,384 |  |  | 176,355 |
Substandard | 4,720 |  |  | 134,677 |  |  | 1,765 |  |  | 8,878 |  |  | 3,955 |  |  | 3,338 |  |  | 157,333 |
Doubtful | — |  |  | 2,366 |  |  | — |  |  | 164 |  |  | 365 |  |  | — |  |  | 2,895 |
Ungraded | 112 |  |  | 1,944 |  |  | 148 |  |  | 92,794 |  |  | 72 |  |  | — |  |  | 95,070 |
Total | $ | 493,133 |  |  | $ | 7,552,948 |  |  | $ | 244,875 |  |  | $ | 1,988,934 |  |  | $ | 571,916 |  |  | $ | 353,833 |  |  | $ | 11,205,639 |
| September 30, 2015
| Non-PCI noncommercial loans and leases
(Dollars in thousands) | Residential mortgage |  | Revolving mortgage |  | Construction and land development |  | Consumer |  | Total non-PCI noncommercial loans and leases
Current | $ | 2,615,954 |  |  | $ | 2,503,750 |  |  | $ | 216,736 |  |  | $ | 1,181,710 |  |  | $ | 6,518,150 |
30-59 days past due | 24,179 |  |  | 9,936 |  |  | 2,539 |  |  | 6,889 |  |  | 43,543 |
60-89 days past due | 7,640 |  |  | 2,031 |  |  | 642 |  |  | 2,091 |  |  | 12,404 |
90 days or greater past due | 12,048 |  |  | 4,255 |  |  | 576 |  |  | 1,322 |  |  | 18,201 |
Total | $ | 2,659,821 |  |  | $ | 2,519,972 |  |  | $ | 220,493 |  |  | $ | 1,192,012 |  |  | $ | 6,592,298 |
| December 31, 2014
| Non-PCI noncommercial loans and leases
| Residential mortgage |  | Revolving mortgage |  | Construction and land development |  | Consumer |  | Total non-PCI noncommercial loans and leases
Current | $ | 2,454,797 |  |  | $ | 2,542,807 |  |  | $ | 202,344 |  |  | $ | 1,110,153 |  |  | $ | 6,310,101 |
30-59 days past due | 23,288 |  |  | 11,097 |  |  | 1,646 |  |  | 4,577 |  |  | 40,608 |
60-89 days past due | 6,018 |  |  | 2,433 |  |  | 824 |  |  | 1,619 |  |  | 10,894 |
90 days or greater past due | 8,955 |  |  | 5,463 |  |  | 202 |  |  | 1,105 |  |  | 15,725 |
Total | $ | 2,493,058 |  |  | $ | 2,561,800 |  |  | $ | 205,016 |  |  | $ | 1,117,454 |  |  | $ | 6,377,328 |
PCI loans and leases outstanding at September 30, 2015 and December 31, 2014 by credit quality indicator are provided below:
| September 30, 2015
(Dollars in thousands) | PCI commercial loans
Grade: | Construction and land development |  | Commercial mortgage |  | Other commercial real estate |  | Commercial and industrial |  | Other |  | Total PCI commercial loans
Pass | $ | 18,236 |  |  | $ | 302,848 |  |  | $ | 8,519 |  |  | $ | 10,744 |  |  | $ | 775 |  |  | $ | 341,122 |
Special mention | 2,250 |  |  | 94,955 |  |  | — |  |  | 1,462 |  |  | — |  |  | 98,667 |
Substandard | 16,806 |  |  | 159,148 |  |  | 9,048 |  |  | 4,395 |  |  | 1,312 |  |  | 190,709 |
Doubtful | 4,290 |  |  | 10,967 |  |  | — |  |  | 292 |  |  | — |  |  | 15,549 |
Ungraded | — |  |  | 338 |  |  | 446 |  |  | 130 |  |  | — |  |  | 914 |
Total | $ | 41,582 |  |  | $ | 568,256 |  |  | $ | 18,013 |  |  | $ | 17,023 |  |  | $ | 2,087 |  |  | $ | 646,961 |
| December 31, 2014
| PCI commercial loans
| Construction and land development |  | Commercial mortgage |  | Other commercial real estate |  | Commercial and industrial |  | Other |  | Total PCI commercial loans
Pass | $ | 13,514 |  |  | $ | 300,187 |  |  | $ | 11,033 |  |  | $ | 16,637 |  |  | $ | 801 |  |  | $ | 342,172 |
Special mention | 6,063 |  |  | 98,724 |  |  | 16,271 |  |  | 4,137 |  |  | — |  |  | 125,195 |
Substandard | 53,739 |  |  | 171,920 |  |  | 12,889 |  |  | 6,312 |  |  | 2,278 |  |  | 247,138 |
Doubtful | 2,809 |  |  | 6,302 |  |  | — |  |  | 130 |  |  | — |  |  | 9,241 |
Ungraded | 1,954 |  |  | 385 |  |  | — |  |  | 38 |  |  | — |  |  | 2,377 |
Total | $ | 78,079 |  |  | $ | 577,518 |  |  | $ | 40,193 |  |  | $ | 27,254 |  |  | $ | 3,079 |  |  | $ | 726,123 |
| September 30, 2015
| PCI noncommercial loans
(Dollars in thousands) | Residential mortgage |  | Revolving mortgage |  | Construction and land development |  | Consumer |  | Total PCI noncommercial loans
Current | $ | 286,402 |  |  | $ | 54,594 |  |  | $ | 347 |  |  | $ | 2,322 |  |  | $ | 343,665 |
30-59 days past due | 14,514 |  |  | 1,234 |  |  | — |  |  | 90 |  |  | 15,838 |
60-89 days past due | 6,103 |  |  | 307 |  |  | — |  |  | 131 |  |  | 6,541 |
90 days or greater past due | 27,499 |  |  | 3,560 |  |  | — |  |  | — |  |  | 31,059 |
Total | $ | 334,518 |  |  | $ | 59,695 |  |  | $ | 347 |  |  | $ | 2,543 |  |  | $ | 397,103 |
| December 31, 2014
| PCI noncommercial loans
| Residential mortgage |  | Revolving mortgage |  | Construction and land development |  | Consumer |  | Total PCI noncommercial loans
Current | $ | 326,589 |  |  | $ | 68,548 |  |  | $ | 506 |  |  | $ | 2,582 |  |  | $ | 398,225 |
30-59 days past due | 11,432 |  |  | 1,405 |  |  | — |  |  | 147 |  |  | 12,984 |
60-89 days past due | 10,073 |  |  | 345 |  |  | — |  |  | 25 |  |  | 10,443 |
90 days or greater past due | 34,246 |  |  | 3,811 |  |  | 406 |  |  | 260 |  |  | 38,723 |
Total | $ | 382,340 |  |  | $ | 74,109 |  |  | $ | 912 |  |  | $ | 3,014 |  |  | $ | 460,375 |
The aging of the outstanding non-PCI loans and leases, by class, at September 30, 2015 and December 31, 2014 is provided in the table below. The calculation of days past due begins on the day after payment is due and includes all days through which all required interest or principal has not been paid. Loans and leases 30 days or less past due are considered current as various grace periods allow borrowers to make payments within a stated period after the due date and still remain in compliance with the loan agreement.
| September 30, 2015
(Dollars in thousands) | 30-59 days past due |  | 60-89 days past due |  | 90 days or greater |  | Total past due |  | Current |  | Total loans and leases
Non-PCI loans and leases: |  |  |  |  |  |  |  |  |  |  |
Construction and land development - commercial | $ | 1,319 |  |  | $ | 266 |  |  | $ | 282 |  |  | $ | 1,867 |  |  | $ | 562,059 |  |  | $ | 563,926 |
Commercial mortgage | 14,587 |  |  | 4,897 |  |  | 21,416 |  |  | 40,900 |  |  | 8,036,046 |  |  | 8,076,946 |
Other commercial real estate | 403 |  |  | 290 |  |  | 159 |  |  | 852 |  |  | 316,072 |  |  | 316,924 |
Commercial and industrial | 5,492 |  |  | 961 |  |  | 1,328 |  |  | 7,781 |  |  | 2,204,192 |  |  | 2,211,973 |
Lease financing | 398 |  |  | 169 |  |  | 310 |  |  | 877 |  |  | 691,038 |  |  | 691,915 |
Residential mortgage | 24,179 |  |  | 7,640 |  |  | 12,048 |  |  | 43,867 |  |  | 2,615,954 |  |  | 2,659,821 |
Revolving mortgage | 9,936 |  |  | 2,031 |  |  | 4,255 |  |  | 16,222 |  |  | 2,503,750 |  |  | 2,519,972 |
Construction and land development - noncommercial | 2,539 |  |  | 642 |  |  | 576 |  |  | 3,757 |  |  | 216,736 |  |  | 220,493 |
Consumer | 6,889 |  |  | 2,091 |  |  | 1,322 |  |  | 10,302 |  |  | 1,181,710 |  |  | 1,192,012 |
Other | 11 |  |  | — |  |  | 184 |  |  | 195 |  |  | 357,565 |  |  | 357,760 |
Total non-PCI loans and leases | $ | 65,753 |  |  | $ | 18,987 |  |  | $ | 41,880 |  |  | $ | 126,620 |  |  | $ | 18,685,122 |  |  | $ | 18,811,742 |
| December 31, 2014
| 30-59 days past due |  | 60-89 days past due |  | 90 days or greater |  | Total past due |  | Current |  | Total loans and leases
Non-PCI loans and leases: |  |  |  |  |  |  |  |  |  |  |
Construction and land development - commercial | $ | 520 |  |  | $ | 283 |  |  | $ | 330 |  |  | $ | 1,133 |  |  | $ | 492,000 |  |  | $ | 493,133 |
Commercial mortgage | 11,367 |  |  | 4,782 |  |  | 8,061 |  |  | 24,210 |  |  | 7,528,738 |  |  | 7,552,948 |
Other commercial real estate | 206 |  |  | 70 |  |  | 102 |  |  | 378 |  |  | 244,497 |  |  | 244,875 |
Commercial and industrial | 2,843 |  |  | 1,545 |  |  | 378 |  |  | 4,766 |  |  | 1,984,168 |  |  | 1,988,934 |
Lease financing | 1,631 |  |  | 8 |  |  | 2 |  |  | 1,641 |  |  | 570,275 |  |  | 571,916 |
Residential mortgage | 23,288 |  |  | 6,018 |  |  | 8,955 |  |  | 38,261 |  |  | 2,454,797 |  |  | 2,493,058 |
Revolving mortgage | 11,097 |  |  | 2,433 |  |  | 5,463 |  |  | 18,993 |  |  | 2,542,807 |  |  | 2,561,800 |
Construction and land development - noncommercial | 1,646 |  |  | 824 |  |  | 202 |  |  | 2,672 |  |  | 202,344 |  |  | 205,016 |
Consumer | 4,577 |  |  | 1,619 |  |  | 1,105 |  |  | 7,301 |  |  | 1,110,153 |  |  | 1,117,454 |
Other | 146 |  |  | 1,966 |  |  | — |  |  | 2,112 |  |  | 351,721 |  |  | 353,833 |
Total non-PCI loans and leases | $ | 57,321 |  |  | $ | 19,548 |  |  | $ | 24,598 |  |  | $ | 101,467 |  |  | $ | 17,481,500 |  |  | $ | 17,582,967 |
The recorded investment, by class, in loans and leases on nonaccrual status, and loans and leases greater than 90 days past due and still accruing at September 30, 2015 and December 31, 2014 for non-PCI loans, were as follows:
| September 30, 2015 |  | December 31, 2014
(Dollars in thousands) | Nonaccrual loans and leases |  | Loans and leases > 90 days and accruing |  | Nonaccrual loans and leases |  | Loans and leases > 90 days and accruing
Non-PCI loans and leases: |  |  |  |  |  |  |
Construction and land development - commercial | $ | 617 |  |  | $ | 45 |  |  | $ | 343 |  |  | $ | 56 |
Commercial mortgage | 41,607 |  |  | 3,353 |  |  | 24,720 |  |  | 1,003 |
Other commercial real estate | 262 |  |  | — |  |  | 619 |  |  | 35 |
Commercial and industrial | 6,633 |  |  | 502 |  |  | 1,741 |  |  | 239 |
Lease financing | 374 |  |  | — |  |  | 374 |  |  | 2 |
Residential mortgage | 24,911 |  |  | 1,444 |  |  | 14,242 |  |  | 3,191 |
Revolving mortgage | 10,856 |  |  | 19 |  |  | — |  |  | 5,463 |
Construction and land development - noncommercial | 875 |  |  | — |  |  | — |  |  | 202 |
Consumer | 1,008 |  |  | 863 |  |  | — |  |  | 1,059 |
Other | 133 |  |  | 51 |  |  | 1,966 |  |  | — |
Total non-PCI loans and leases | $ | 87,276 |  |  | $ | 6,277 |  |  | $ | 44,005 |  |  | $ | 11,250 |
Purchased credit-impaired loans (PCI) loans The following table relates to PCI loans acquired in the CCBT acquisition and summarizes the contractually required payments, which include principal and interest, expected cash flows to be collected, and the fair value of PCI loans and leases at the acquisition date.
(Dollars in thousands) |
Contractually required payments | $ | 247,812 |
Cash flows expected to be collected | $ | 207,688 |
Fair value of loans at acquisition | $ | 154,496 |
The recorded fair values of PCI loans acquired in the CCBT acquisition as of the acquisition date were as follows:
(Dollars in thousands) |
Commercial: |
Construction and land development | $ | 4,116 |
Commercial mortgage | 129,732 |
Other commercial real estate | 3,202 |
Commercial and industrial | 2,844 |
Total commercial loans | 139,894 |
Noncommercial: |
Residential mortgage | 13,251 |
Consumer | 1,351 |
Total noncommercial loans | 14,602 |
Total PCI loans and leases | $ | 154,496 |
The following table provides changes in the carrying value of all purchased credit-impaired loans during the nine months ended September 30, 2015 and September 30, 2014:
(Dollars in thousands) | 2015 |  | 2014
Balance at January 1 | $ | 1,186,498 |  |  | $ | 1,029,426 |
Fair value of acquired loans | 154,496 |  |  | 316,327 |
Accretion | 91,642 |  |  | 89,775 |
Payments received and other changes, net | (388,572 | ) |  | (439,248 | )
Balance at September 30 | $ | 1,044,064 |  |  | $ | 996,280 |
Unpaid principal balance at September 30 | $ | 1,788,136 |  |  | $ | 1,754,882 |
The carrying value of loans on the cost recovery method was $6.9 million at September 30, 2015 and $33.4 million at December 31, 2014. The cost recovery method is applied to loans when the timing of future cash flows is not reasonably estimable due to borrower nonperformance or uncertainty in the ultimate disposition of the asset. The recorded investment of PCI loans on nonaccrual status was $5.3 million and $33.4 million at September 30, 2015 and December 31, 2014, respectively. For PCI loans, improved cash flow estimates and receipt of unscheduled loan payments result in the reclassification of nonaccretable difference to accretable yield. Accretable yield resulting from the improved ability to estimate future cash flows generally does not represent amounts previously identified as nonaccretable difference. The following table documents changes to the amount of accretable yield for the first nine months of 2015 and 2014.
(Dollars in thousands) | 2015 |  | 2014
Balance at January 1 | $ | 418,160 |  |  | $ | 439,990 |
Additions from acquisitions | 53,192 |  |  | 84,295 |
Accretion | (91,642 | ) |  | (89,775 | )
Reclassifications from nonaccretable difference | 15,687 |  |  | 1,374 |
Changes in expected cash flows that do not affect nonaccretable difference | (53,458 | ) |  | (22,068 | )
Balance at September 30 | $ | 341,939 |  |  | $ | 413,816 |

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=49124121&loc=d3e5066-111524 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.3,4) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=49124121&loc=d3e5162-111524 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(k)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=49124121&loc=d3e5074-111524 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 7 -Article 9 + Details
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