Loans

The following table shows the Company's loan portfolio by category as of the dates shown:



(Dollars in thousands)	December 31, 2014			December 31, 2013
Balance:
Commercial	$	3,924,394		$	3,253,687
Commercial real-estate	4,505,753			4,230,035
Home equity	716,293			719,137
Residential real-estate	483,542			434,992
Premium finance receivables—commercial	2,350,833			2,167,565
Premium finance receivables—life insurance	2,277,571			1,923,698
Consumer and other	151,012			167,488
Total loans, net of unearned income, excluding covered loans	$	14,409,398		$	12,896,602
Covered loans	226,709			346,431
Total loans, net of unearned income	$	14,636,107		$	13,243,033
Mix:
Commercial	26		%	25		%
Commercial real-estate	31			32
Home equity	5			5
Residential real-estate	3			3
Premium finance receivables—commercial	16			16
Premium finance receivables—life insurance	16			15
Consumer and other	1			1
Total loans, net of unearned income, excluding covered loans	98		%	97		%
Covered loans	2			3
Total loans, net of unearned income	100		%	100		%

The Company’s loan portfolio is generally comprised of loans to consumers and small to medium-sized businesses located within the geographic market areas that the banks serve. The premium finance receivables portfolios are made to customers throughout the United States and Canada. The Company strives to maintain a loan portfolio that is diverse in terms of loan type, industry, borrower and geographic concentrations. Such diversification reduces the exposure to economic downturns that may occur in different segments of the economy or in different industries.

Certain premium finance receivables are recorded net of unearned income. The unearned income portions of such premium finance receivables were $46.9 million and $41.9 million at December 31, 2014 and 2013, respectively. Certain life insurance premium finance receivables attributable to the life insurance premium finance loan acquisition in 2009 as well as PCI loans are recorded net of credit discounts. See “Acquired Loan Information at Acquisition,” below.

Total loans, excluding PCI loans, include net deferred loan fees and costs and fair value purchase accounting adjustments totaling $330,000 and $(9.2) million at December 31, 2014 and 2013, respectively. The net credit balance at December 31, 2013 is primarily the result of purchase accounting adjustments related to the acquisition of FNBI and Diamond in 2013.

Certain real estate loans, including mortgage loans held-for-sale, and home equity loans with balances totaling approximately $3.6 billion and $2.9 billion at December 31, 2014 and 2013, respectively, were pledged as collateral to secure the availability of borrowings from certain federal agency banks. At December 31, 2014, approximately $2.9 billion of these pledged loans are included in a blanket pledge of qualifying loans to the FHLB. The remaining $717.3 million of pledged loans was used to secure potential borrowings at the Federal Reserve Bank discount window. At December 31, 2014 and 2013, the banks borrowed $733.1 million and $417.8 million, respectively, from the FHLB in connection with these collateral arrangements. See Note 12 – Federal Home Loan Bank Advances for a summary of these borrowings.

It is the policy of the Company to review each prospective credit in order to determine the appropriateness and, when required, the adequacy of security or collateral necessary to obtain when making a loan. The type of collateral, when required, will vary from liquid assets to real estate. The Company seeks to assure access to collateral, in the event of default, through adherence to state lending laws and the Company’s credit monitoring procedures.

Acquired Loan Information at Acquisition — PCI Loans

As part of our previous acquisitions, we acquired loans for which there was evidence of credit quality deterioration since origination and we determined that it was probable that the Company would be unable to collect all contractually required principal and interest payments. The following table presents the unpaid principal balance and carrying value for these acquired loans:



	December 31, 2014				December 31, 2013
(Dollars in thousands)	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Bank acquisitions	$	285,809	$	227,229	$	453,944	$	338,517
Life insurance premium finance loans acquisition	399,665		393,479		437,155		423,906

Accretable Yield Activity — PCI Loans

Changes in expected cash flows may vary from period to period as the Company periodically updates its cash flow model assumptions for PCI loans. The factors that most significantly affect the estimates of gross cash flows expected to be collected, and accordingly the accretable yield, include changes in the benchmark interest rate indices for variable-rate products and changes in prepayment assumptions and loss estimates. The following table provides activity for the accretable yield of PCI loans.



	Years Ended December 31,
	2014						2013
(Dollars in thousands)	Bank Acquisitions			Life Insurance Premium Finance Loans			Bank Acquisitions			Life Insurance Premium Finance Loans
Accretable yield, beginning balance	$	107,655		$	8,254		$	143,224		$	13,055
Acquisitions	—			—			5,428			—
Accretable yield amortized to interest income	(29,893		)	(7,063		)	(36,898		)	(8,795		)
Accretable yield amortized to indemnification asset ⁽¹⁾	(30,691		)	—			(36,202		)	—
Reclassification from non-accretable difference ⁽²⁾	35,782			185			50,873			2,840
(Decreases) increases in interest cash flows due to payments and changes in interest rates	(5,368		)	241			(18,770		)	1,154
Accretable yield, ending balance ⁽³⁾	$	77,485		$	1,617		$	107,655		$	8,254


(1)	Represents the portion of the current period accreted yield, resulting from lower expected losses, applied to reduce the loss share indemnification asset.


(2)	Reclassification is the result of subsequent increases in expected principal cash flows.


(3)	As of December 31, 2014, the Company estimates that the remaining accretable yield balance to be amortized to the indemnification asset for the bank acquisitions is $18.5 million The remainder of the accretable yield related to bank acquisitions is expected to be amortized to interest income.

Accretion to interest income from loans acquired in bank acquisitions totaled $29.9 million and $36.9 million in 2014 and 2013, respectively. These amounts include accretion from both covered and non-covered loans, and are included together within interest and fees on loans in the Consolidated Statements of Income.