Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans

The tables below show the aging of the Company’s loan portfolio at September 30, 2016, December 31, 2015 and September 30, 2015:



As of September 30, 2016			90+ days and still accruing		60-89 days past due		30-59 days past due
(Dollars in thousands)	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	15,809	$	—	$	7,324	$	8,987	$	3,573,396	$	3,605,516
Franchise	—		—		458		1,626		872,661		874,745
Mortgage warehouse lines of credit	—		—		—		—		309,632		309,632
Asset-based lending	234		—		3,772		3,741		837,972		845,719
Leases	375		—		239		—		299,339		299,953
PCI - commercial ⁽¹⁾	—		1,783		—		1,036		13,160		15,979
Total commercial	16,418		1,783		11,793		15,390		5,906,160		5,951,544
Commercial real estate:
Construction	400		—		—		3,775		447,302		451,477
Land	1,208		—		787		300		105,406		107,701
Office	3,609		—		6,457		8,062		865,954		884,082
Industrial	9,967		—		940		2,961		753,636		767,504
Retail	909		—		1,340		8,723		884,369		895,341
Multi-family	90		—		3,051		2,169		789,645		794,955
Mixed use and other	6,442		—		2,157		5,184		1,837,724		1,851,507
PCI - commercial real estate ⁽¹⁾	—		21,433		1,509		4,066		129,109		156,117
Total commercial real estate	22,625		21,433		16,241		35,240		5,813,145		5,908,684
Home equity	9,309		—		1,728		3,842		727,989		742,868
Residential real estate, including PCI	12,205		1,496		2,232		1,088		646,577		663,598
Premium finance receivables
Commercial insurance loans	14,214		7,754		6,968		10,291		2,391,006		2,430,233
Life insurance loans	—		—		9,960		3,717		3,006,795		3,020,472
PCI - life insurance loans ⁽¹⁾	—		—		—		—		262,887		262,887
Consumer and other, including PCI	543		124		204		871		119,233		120,975
Total loans, net of unearned income, excluding covered loans	$	75,314	$	32,590	$	49,126	$	70,439	$	18,873,792	$	19,101,261
Covered loans	2,331		4,806		1,545		2,456		84,802		95,940
Total loans, net of unearned income	$	77,645	$	37,396	$	50,671	$	72,895	$	18,958,594	$	19,197,201


(1)	PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.



As of December 31, 2015			90+ days and still accruing		60-89 days past due		30-59 days past due
(Dollars in thousands)	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	12,704	$	6	$	6,749	$	12,930	$	3,226,139	$	3,258,528
Franchise	—		—		—		—		245,228		245,228
Mortgage warehouse lines of credit	—		—		—		—		222,806		222,806
Asset-based lending	8		—		3,864		1,844		736,968		742,684
Leases	—		535		748		4,192		220,599		226,074
PCI - commercial ⁽¹⁾	—		892		—		2,510		15,187		18,589
Total commercial	12,712		1,433		11,361		21,476		4,666,927		4,713,909
Commercial real estate
Construction	306		—		1,371		1,645		355,338		358,660
Land	1,751		—		—		120		76,546		78,417
Office	4,619		—		764		3,817		853,801		863,001
Industrial	9,564		—		1,868		1,009		715,207		727,648
Retail	1,760		—		442		2,310		863,887		868,399
Multi-family	1,954		—		597		6,568		733,230		742,349
Mixed use and other	6,691		—		6,723		7,215		1,712,187		1,732,816
PCI - commercial real estate ⁽¹⁾	—		22,111		4,662		16,559		114,667		157,999
Total commercial real estate	26,645		22,111		16,427		39,243		5,424,863		5,529,289
Home equity	6,848		—		1,889		5,517		770,421		784,675
Residential real estate, including PCI	12,043		488		2,166		3,903		588,851		607,451
Premium finance receivables
Commercial insurance loans	14,561		10,294		6,624		21,656		2,321,786		2,374,921
Life insurance loans	—		—		3,432		11,140		2,578,632		2,593,204
PCI - life insurance loans ⁽¹⁾	—		—		—		—		368,292		368,292
Consumer and other, including PCI	263		211		204		1,187		144,511		146,376
Total loans, net of unearned income, excluding covered loans	$	73,072	$	34,537	$	42,103	$	104,122	$	16,864,283	$	17,118,117
Covered loans	5,878		7,335		703		5,774		128,983		148,673
Total loans, net of unearned income	$	78,950	$	41,872	$	42,806	$	109,896	$	16,993,266	$	17,266,790



As of September 30, 2015			90+ days and still accruing		60-89 days past due		30-59 days past due
(Dollars in thousands)	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	12,006	$	—	$	2,775	$	9,709	$	2,985,985	$	3,010,475
Franchise	—		—		80		376		221,545		222,001
Mortgage warehouse lines of credit	—		—		—		—		136,614		136,614
Asset-based lending	12		—		1,313		247		800,798		802,370
Leases	—		—		—		89		205,697		205,786
PCI - commercial ⁽¹⁾	—		217		—		39		22,683		22,939
Total commercial	12,018		217		4,168		10,460		4,373,322		4,400,185
Commercial real estate:
Construction	31		—		—		3,535		343,668		347,234
Land	1,756		—		—		2,207		75,113		79,076
Office	4,045		—		10,861		2,362		773,043		790,311
Industrial	11,637		—		786		897		622,804		636,124
Retail	2,022		—		1,536		821		781,463		785,842
Multi-family	1,525		—		512		744		684,878		687,659
Mixed use and other	7,601		—		2,340		12,871		1,797,516		1,820,328
PCI - commercial real estate ⁽¹⁾	—		13,547		299		583		146,563		160,992
Total commercial real estate	28,617		13,547		16,334		24,020		5,225,048		5,307,566
Home equity	8,365		—		811		4,124		784,165		797,465
Residential real estate, including PCI	14,557		424		1,340		1,606		553,816		571,743
Premium finance receivables
Commercial insurance loans	13,751		8,231		6,664		13,659		2,364,770		2,407,075
Life insurance loans	—		—		9,656		2,627		2,314,406		2,326,689
PCI - life insurance loans ⁽¹⁾	—		—		—		—		373,586		373,586
Consumer and other, including PCI	297		140		56		935		130,474		131,902
Total loans, net of unearned income, excluding covered loans	$	77,605	$	22,559	$	39,029	$	57,431	$	16,119,587	$	16,316,211
Covered loans	6,540		7,626		1,392		802		152,249		168,609
Total loans, net of unearned income	$	84,145	$	30,185	$	40,421	$	58,233	$	16,271,836	$	16,484,820


(1)	PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

The Company's ability to manage credit risk depends in large part on our ability to properly identify and manage problem loans. To do so, the Company operates a credit risk rating system under which our credit management personnel assign a credit risk rating (1 to 10 rating) to each loan at the time of origination and review loans on a regular basis.

Each loan officer is responsible for monitoring his or her loan portfolio, recommending a credit risk rating for each loan in his or her portfolio and ensuring the credit risk ratings are appropriate. These credit risk ratings are then ratified by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors including: a borrower’s financial strength, cash flow coverage, collateral protection and guarantees.

The Company’s Problem Loan Reporting system automatically includes all loans with credit risk ratings of 6 through 9. This system is designed to provide an on-going detailed tracking mechanism for each problem loan. Once management determines that a loan has deteriorated to a point where it has a credit risk rating of 6 or worse, the Company’s Managed Asset Division performs an overall credit and collateral review. As part of this review, all underlying collateral is identified and the valuation methodology is analyzed and tracked. As a result of this initial review by the Company’s Managed Asset Division, the credit risk rating is reviewed and a portion of the outstanding loan balance may be deemed uncollectible or an impairment reserve may be established. The Company’s impairment analysis utilizes an independent re-appraisal of the collateral (unless such a third-party evaluation is not possible due to the unique nature of the collateral, such as a closely-held business or thinly traded securities). In the case of commercial real estate collateral, an independent third party appraisal is ordered by the Company’s Real Estate Services Group to determine if there has been any change in the underlying collateral value. These independent appraisals are reviewed by the Real Estate Services Group and sometimes by independent third party valuation experts and may be adjusted depending upon market conditions.

Through the credit risk rating process, loans are reviewed to determine if they are performing in accordance with the original contractual terms. If the borrower has failed to comply with the original contractual terms, further action may be required by the Company, including a downgrade in the credit risk rating, movement to non-accrual status, a charge-off or the establishment of a specific impairment reserve. If we determine that a loan amount, or portion thereof, is uncollectible, the loan’s credit risk rating is immediately downgraded to an 8 or 9 and the uncollectible amount is charged-off. Any loan that has a partial charge-off continues to be assigned a credit risk rating of an 8 or 9 for the duration of time that a balance remains outstanding. The Company undertakes a thorough and ongoing analysis to determine if additional impairment and/or charge-offs are appropriate and to begin a workout plan for the credit to minimize actual losses.

If, based on current information and events, it is probable that the Company will be unable to collect all amounts due to it according to the contractual terms of the loan agreement, a specific impairment reserve is established. In determining the appropriate charge-off for collateral-dependent loans, the Company considers the results of appraisals for the associated collateral.

Non-performing loans include all non-accrual loans (8 and 9 risk ratings) as well as loans 90 days past due and still accruing interest, excluding PCI and covered loans. The remainder of the portfolio is considered performing under the contractual terms of the loan agreement. The following table presents the recorded investment based on performance of loans by class, excluding covered loans, per the most recent analysis at September 30, 2016, December 31, 2015 and September 30, 2015:



	Performing						Non-performing						Total
(Dollars in thousands)	September 30, 2016		December 31, 2015		September 30, 2015		September 30, 2016		December 31, 2015		September 30, 2015		September 30, 2016		December 31, 2015		September 30, 2015
Loan Balances:
Commercial
Commercial, industrial and other	$	3,589,707	$	3,245,818	$	2,998,469	$	15,809	$	12,710	$	12,006	$	3,605,516	$	3,258,528	$	3,010,475
Franchise	874,745		245,228		222,001		—		—		—		874,745		245,228		222,001
Mortgage warehouse lines of credit	309,632		222,806		136,614		—		—		—		309,632		222,806		136,614
Asset-based lending	845,485		742,676		802,358		234		8		12		845,719		742,684		802,370
Leases	299,578		225,539		205,786		375		535		—		299,953		226,074		205,786
PCI - commercial ⁽¹⁾	15,979		18,589		22,939		—		—		—		15,979		18,589		22,939
Total commercial	5,935,126		4,700,656		4,388,167		16,418		13,253		12,018		5,951,544		4,713,909		4,400,185
Commercial real estate
Construction	451,077		358,354		347,203		400		306		31		451,477		358,660		347,234
Land	106,493		76,666		77,320		1,208		1,751		1,756		107,701		78,417		79,076
Office	880,473		858,382		786,266		3,609		4,619		4,045		884,082		863,001		790,311
Industrial	757,537		718,084		624,487		9,967		9,564		11,637		767,504		727,648		636,124
Retail	894,432		866,639		783,820		909		1,760		2,022		895,341		868,399		785,842
Multi-family	794,865		740,395		686,134		90		1,954		1,525		794,955		742,349		687,659
Mixed use and other	1,845,065		1,726,125		1,812,727		6,442		6,691		7,601		1,851,507		1,732,816		1,820,328
PCI - commercial real estate⁽¹⁾	156,117		157,999		160,992		—		—		—		156,117		157,999		160,992
Total commercial real estate	5,886,059		5,502,644		5,278,949		22,625		26,645		28,617		5,908,684		5,529,289		5,307,566
Home equity	733,559		777,827		789,100		9,309		6,848		8,365		742,868		784,675		797,465
Residential real estate, including PCI	651,393		595,408		557,186		12,205		12,043		14,557		663,598		607,451		571,743
Premium finance receivables
Commercial insurance loans	2,408,265		2,350,066		2,385,093		21,968		24,855		21,982		2,430,233		2,374,921		2,407,075
Life insurance loans	3,020,472		2,593,204		2,326,689		—		—		—		3,020,472		2,593,204		2,326,689
PCI - life insurance loans ⁽¹⁾	262,887		368,292		373,586		—		—		—		262,887		368,292		373,586
Consumer and other, including PCI	120,372		145,963		131,465		603		413		437		120,975		146,376		131,902
Total loans, net of unearned income, excluding covered loans	$	19,018,133	$	17,034,060	$	16,230,235	$	83,128	$	84,057	$	85,976	$	19,101,261	$	17,118,117	$	16,316,211


(1)	PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. See Note 6 - Loans for further discussion of these purchased loans.

A summary of activity in the allowance for credit losses by loan portfolio (excluding covered loans) for the three and nine months ended September 30, 2016 and 2015 is as follows:



Three months ended September 30, 2016				Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	41,654		$	46,824		$	11,383		$	5,405		$	7,814		$	1,276		$	114,356
Other adjustments	(35		)	(57		)	—			(10		)	(10		)	—			(112		)
Reclassification from allowance for unfunded lending-related commitments	(500		)	(79		)	—			—			—			—			(579		)
Charge-offs	(3,469		)	(382		)	(574		)	(134		)	(1,959		)	(389		)	(6,907		)
Recoveries	176			364			65			61			456			72			1,194
Provision for credit losses	5,212			1,678			810			781			974			286			9,741
Allowance for loan losses at period end	$	43,038		$	48,348		$	11,684		$	6,103		$	7,275		$	1,245		$	117,693
Allowance for unfunded lending-related commitments at period end	$	500		$	1,148		$	—		$	—		$	—		$	—		$	1,648
Allowance for credit losses at period end	$	43,538		$	49,496		$	11,684		$	6,103		$	7,275		$	1,245		$	119,341
Individually evaluated for impairment	$	2,554		$	2,491		$	964		$	1,166		$	—		$	192		$	7,367
Collectively evaluated for impairment	40,252			46,983			10,720			4,867			7,275			1,053			111,150
Loans acquired with deteriorated credit quality	732			22			—			70			—			—			824
Loans at period end
Individually evaluated for impairment	$	19,133		$	45,290		$	9,309		$	17,040		$	—		$	602		$	91,374
Collectively evaluated for impairment	5,916,432			5,707,277			733,559			642,633			5,450,705			119,162			18,569,768
Loans acquired with deteriorated credit quality	15,979			156,117			—			3,925			262,887			1,211			440,119



Three months ended September 30, 2015	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	32,900		$	42,198		$	12,288		$	5,019		$	6,921		$	878		$	100,204
Other adjustments	(12		)	(85		)	—			(6		)	(50		)	—			(153		)
Reclassification from allowance for unfunded lending-related commitments	—			(42		)	—			—			—			—			(42		)
Charge-offs	(964		)	(1,948		)	(1,116		)	(1,138		)	(1,595		)	(116		)	(6,877		)
Recoveries	462			213			42			136			294			52			1,199
Provision for credit losses	1,604			3,725			1,009			575			1,511			241			8,665
Allowance for loan losses at period end	$	33,990		$	44,061		$	12,223		$	4,586		$	7,081		$	1,055		$	102,996
Allowance for unfunded lending-related commitments at period end	$	—		$	926		$	—		$	—		$	—		$	—		$	926
Allowance for credit losses at period end	$	33,990		$	44,987		$	12,223		$	4,586		$	7,081		$	1,055		$	103,922
Individually evaluated for impairment	$	1,881		$	5,832		$	239		$	544		$	—		$	30		$	8,526
Collectively evaluated for impairment	31,943			38,361			11,984			4,042			7,081			1,024			94,435
Loans acquired with deteriorated credit quality	166			794			—			—			—			1			961
Loans at period end
Individually evaluated for impairment	$	18,211		$	68,947		$	8,365		$	18,267		$	—		$	430		$	114,220
Collectively evaluated for impairment	4,359,035			5,077,627			789,100			549,794			4,733,764			131,472			15,640,792
Loans acquired with deteriorated credit quality	22,939			160,992			—			3,682			373,586			—			561,199



Nine months ended September 30, 2016				Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	36,135		$	43,758		$	12,012		$	4,734		$	7,233		$	1,528		$	105,400
Other adjustments	(103		)	(203		)	—			(49		)	31			—			(324		)
Reclassification from allowance for unfunded lending-related commitments	(500		)	(200		)	—			—			—			—			(700		)
Charge-offs	(4,861		)	(1,555		)	(3,672		)	(1,320		)	(6,350		)	(720		)	(18,478		)
Recoveries	926			1,029			184			204			1,876			143			4,362
Provision for credit losses	11,441			5,519			3,160			2,534			4,485			294			27,433
Allowance for loan losses at period end	$	43,038		$	48,348		$	11,684		$	6,103		$	7,275		$	1,245		$	117,693
Allowance for unfunded lending-related commitments at period end	$	500		$	1,148		$	—		$	—		$	—		$	—		$	1,648
Allowance for credit losses at period end	$	43,538		$	49,496		$	11,684		$	6,103		$	7,275		$	1,245		$	119,341



Nine months ended September 30, 2015				Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real Estate			Home Equity			Residential Real Estate			Premium Finance Receivable			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	31,699		$	35,533		$	12,500		$	4,218		$	6,513		$	1,242		$	91,705
Other adjustments	(42		)	(346		)	—			(14		)	(92		)	—			(494		)
Reclassification from allowance for unfunded lending-related commitments	—			(151		)	—			—			—			—			(151		)
Charge-offs	(2,884		)	(3,809		)	(3,547		)	(2,692		)	(4,384		)	(342		)	(17,658		)
Recoveries	1,117			2,349			129			228			1,081			139			5,043
Provision for credit losses	4,100			10,485			3,141			2,846			3,963			16			24,551
Allowance for loan losses at period end	$	33,990		$	44,061		$	12,223		$	4,586		$	7,081		$	1,055		$	102,996
Allowance for unfunded lending-related commitments at period end	$	—		$	926		$	—		$	—		$	—		$	—		$	926
Allowance for credit losses at period end	$	33,990		$	44,987		$	12,223		$	4,586		$	7,081		$	1,055		$	103,922

A summary of activity in the allowance for covered loan losses for the three and nine months ended September 30, 2016 and 2015 is as follows:



	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
(Dollars in thousands)	2016			2015			2016			2015
Balance at beginning of period	$	2,412		$	2,215		$	3,026		$	2,131
Provision for covered loan losses before benefit attributable to FDIC loss share agreements	(847		)	(1,716		)	(3,495		)	(3,339		)
Benefit attributable to FDIC loss share agreements	677			1,373			2,796			2,671
Net provision for covered loan losses	(170		)	(343		)	(699		)	(668		)
Increase/decrease in FDIC indemnification liability/asset	(677		)	(1,373		)	(2,796		)	(2,671		)
Loans charged-off	(918		)	(287		)	(1,291		)	(664		)
Recoveries of loans charged-off	775			2,706			3,182			4,790
Net (charge-offs) recoveries	(143		)	2,419			1,891			4,126
Balance at end of period	$	1,422		$	2,918		$	1,422		$	2,918

In conjunction with FDIC-assisted transactions, the Company entered into loss share agreements with the FDIC. Additional expected losses, to the extent such expected losses result in the recognition of an allowance for loan losses, will increase the FDIC loss share asset or reduce any FDIC loss share liability. The allowance for loan losses for loans acquired in FDIC-assisted transactions is determined without giving consideration to the amounts recoverable through loss share agreements (since the loss share agreements are separately accounted for and thus presented “gross” on the balance sheet). On the Consolidated Statements of Income, the provision for credit losses is reported net of changes in the amount recoverable under the loss share agreements. Reductions to expected losses, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, will reduce the FDIC loss share asset or increase any FDIC loss share liability. Additions to expected losses will require an increase to the allowance for covered loan losses, and a corresponding increase to the FDIC loss share asset or reduction to any FDIC loss share liability. See “FDIC-Assisted Transactions” within Note 3 – Business Combinations for more detail.

Impaired Loans

A summary of impaired loans, including troubled debt restructurings ("TDRs"), is as follows:



	September 30,		December 31,		September 30,
(Dollars in thousands)	2016		2015		2015
Impaired loans (included in non-performing and TDRs):
Impaired loans with an allowance for loan loss required ⁽¹⁾	$	39,022	$	49,961	$	51,113
Impaired loans with no allowance for loan loss required	51,518		51,294		61,914
Total impaired loans ⁽²⁾	$	90,540	$	101,255	$	113,027
Allowance for loan losses related to impaired loans	$	6,836	$	6,380	$	8,483
TDRs	$	44,276	$	51,853	$	59,320


(1)	These impaired loans require an allowance for loan losses because the estimated fair value of the loans or related collateral is less than the recorded investment in the loans.


(2)	Impaired loans are considered by the Company to be non-accrual loans, TDRs or loans with principal and/or interest at risk, even if the loan is current with all payments of principal and interest.

The following tables present impaired loans by loan class, excluding covered loans, for the periods ended as follows:



							For the Nine Months Ended
	As of September 30, 2016						September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	5,426	$	5,434	$	1,887	$	5,487	$	212
Asset-based lending	234		235		44		235		7
Leases	375		375		116		388		14
Commercial real estate
Construction	—		—		—		—		—
Land	2,620		2,620		44		2,670		80
Office	1,697		2,361		182		1,722		79
Industrial	6,855		7,338		1,388		7,069		284
Retail	6,605		6,623		240		6,668		160
Multi-family	1,266		1,266		8		1,134		29
Mixed use and other	5,437		5,511		605		5,452		198
Home equity	2,373		2,457		964		2,404		63
Residential real estate	5,942		6,428		1,166		5,807		190
Consumer and other	192		192		192		194		8
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	12,669	$	16,261	$	—	$	14,745	$	717
Asset-based lending	—		—		—		—		—
Leases	—		—		—		—		—
Commercial real estate
Construction	1,995		1,995		—		2,273		94
Land	3,864		8,088		—		4,316		408
Office	4,980		6,243		—		4,978		260
Industrial	3,508		3,827		—		3,574		200
Retail	805		913		—		936		36
Multi-family	89		174		—		109		5
Mixed use and other	5,164		5,712		—		5,300		236
Home equity	6,936		9,108		—		7,736		320
Residential real estate	11,098		13,077		—		11,125		445
Consumer and other	410		520		—		428		21
Total impaired loans, net of unearned income	$	90,540	$	106,758	$	6,836	$	94,750	$	4,066



							For the Twelve Months Ended
	As of December 31, 2015						December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	9,754	$	12,498	$	2,012	$	10,123	$	792
Asset-based lending	—		—		—		—		—
Leases	—		—		—		—		—
Commercial real estate
Construction	—		—		—		—		—
Land	4,929		8,711		41		5,127		547
Office	5,050		6,051		632		5,394		314
Industrial	8,413		9,105		1,943		10,590		565
Retail	8,527		9,230		343		8,596		386
Multi-family	370		370		202		372		25
Mixed use and other	7,590		7,708		570		7,681		328
Home equity	423		435		333		351		16
Residential real estate	4,710		4,799		294		4,618		182
Consumer and other	195		220		10		216		12
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	8,562	$	9,915	$	—	$	9,885	$	521
Asset-based lending	8		1,570		—		5		88
Leases	—		—		—		—		—
Commercial real estate
Construction	2,328		2,329		—		2,316		113
Land	888		2,373		—		929		90
Office	3,500		4,484		—		3,613		237
Industrial	2,217		2,426		—		2,286		188
Retail	2,757		2,925		—		2,897		129
Multi-family	2,344		2,807		—		2,390		117
Mixed use and other	10,510		14,060		—		11,939		624
Home equity	6,424		7,987		—		5,738		288
Residential real estate	11,559		13,979		—		11,903		624
Consumer and other	197		267		—		201		12
Total impaired loans, net of unearned income	$	101,255	$	124,249	$	6,380	$	107,170	$	6,198



							For the Nine Months Ended
	As of September 30, 2015						September 30, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	8,580	$	9,118	$	1,865	$	8,906	$	381
Asset-based lending	—		—		—		—		—
Leases	—		—		—		—		—
Commercial real estate
Construction	—		—		—		—		—
Land	3,559		7,309		31		3,713		362
Office	6,765		7,724		2,162		7,113		263
Industrial	10,049		10,542		1,550		10,662		421
Retail	8,899		9,596		381		8,906		306
Multi-family	1,199		1,622		203		1,210		60
Mixed use and other	7,162		7,345		1,501		7,250		224
Home equity	547		762		239		672		25
Residential real estate	4,225		4,326		521		4,280		130
Consumer and other	128		128		30		139		6
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	9,142	$	11,997	$	—	$	9,716	$	539
Asset-based lending	12		1,573		—		4		66
Leases	—		—		—		—		—
Commercial real estate
Construction	2,054		2,055		—		2,034		73
Land	4,114		4,874		—		4,232		130
Office	4,171		5,120		—		4,243		194
Industrial	2,255		2,448		—		2,304		141
Retail	3,140		3,302		—		3,305		104
Multi-family	1,330		1,635		—		1,522		50
Mixed use and other	13,788		16,576		—		14,668		563
Home equity	7,818		8,406		—		7,065		229
Residential real estate	13,788		15,932		—		14,387		449
Consumer and other	302		398		—		311		15
Total impaired loans, net of unearned income	$	113,027	$	132,788	$	8,483	$	116,642	$	4,731

TDRs

At September 30, 2016, the Company had $44.3 million in loans modified in TDRs. The $44.3 million in TDRs represents 89 credits in which economic concessions were granted to certain borrowers to better align the terms of their loans with their current ability to pay.

The Company’s approach to restructuring loans, excluding PCI loans, is built on its credit risk rating system which requires credit management personnel to assign a credit risk rating to each loan. In each case, the loan officer is responsible for recommending a credit risk rating for each loan and ensuring the credit risk ratings are appropriate. These credit risk ratings are then reviewed and approved by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors including a borrower’s financial strength, cash flow coverage, collateral protection and guarantees. The Company’s credit risk rating scale is one through ten with higher scores indicating higher risk. In the case of loans rated six or worse following modification, the Company’s Managed Assets Division evaluates the loan and the credit risk rating and determines that the loan has been restructured to be reasonably assured of repayment and of performance according to the modified terms and is supported by a current, well-documented credit assessment of the borrower’s financial condition and prospects for repayment under the revised terms.

A modification of a loan, excluding PCI loans, with an existing credit risk rating of 6 or worse or a modification of any other credit, which will result in a restructured credit risk rating of six or worse, must be reviewed for possible TDR classification. In that event, our Managed Assets Division conducts an overall credit and collateral review. A modification of these loans is considered to be a TDR if both (1) the borrower is experiencing financial difficulty and (2) for economic or legal reasons, the bank grants a concession to a borrower that it would not otherwise consider. The modification of a loan, excluding PCI loans, where the credit risk rating is 5 or better both before and after such modification is not considered to be a TDR. Based on the Company’s credit risk rating system, it considers that borrowers whose credit risk rating is 5 or better are not experiencing financial difficulties and therefore, are not considered TDRs.

All credits determined to be a TDR will continue to be classified as a TDR in all subsequent periods, unless the borrower has been in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) and the current interest rate represents a market rate at the time of restructuring. The Managed Assets Division, in consultation with the respective loan officer, determines whether the modified interest rate represented a current market rate at the time of restructuring. Using knowledge of current market conditions and rates, competitive pricing on recent loan originations, and an assessment of various characteristics of the modified loan (including collateral position and payment history), an appropriate market rate for a new borrower with similar risk is determined. If the modified interest rate meets or exceeds this market rate for a new borrower with similar risk, the modified interest rate represents a market rate at the time of restructuring. Additionally, before removing a loan from TDR classification, a review of the current or previously measured impairment on the loan and any concerns related to future performance by the borrower is conducted. If concerns exist about the future ability of the borrower to meet its obligations under the loans based on a credit review by the Managed Assets Division, the TDR classification is not removed from the loan.

TDRs are reviewed at the time of the modification and on a quarterly basis to determine if a specific reserve is necessary. The carrying amount of the loan is compared to the expected payments to be received, discounted at the loan's original rate, or for collateral dependent loans, to the fair value of the collateral. Any shortfall is recorded as a specific reserve. The Company, in accordance with ASC 310-10, continues to individually measure impairment of these loans after the TDR classification is removed.

Each TDR was reviewed for impairment at September 30, 2016 and approximately $2.8 million of impairment was present and appropriately reserved for through the Company’s normal reserving methodology in the Company’s allowance for loan losses. For TDRs in which impairment is calculated by the present value of future cash flows, the Company records interest income representing the decrease in impairment resulting from the passage of time during the respective period, which differs from interest income from contractually required interest on these specific loans. During both the three months ended September 30, 2016 and 2015, the Company recorded $98,000 interest income representing this decrease in impairment. For the nine months ended September 30, 2016 and 2015, the Company recorded $323,000 and $385,000, respectively, in interest income.

TDRs may arise in which, due to financial difficulties experienced by the borrower, the Company obtains through physical possession one or more collateral assets in satisfaction of all or part of an existing credit. Once possession is obtained, the Company reclassifies the appropriate portion of the remaining balance of the credit from loans to OREO, which is included within other assets in the Consolidated Statements of Condition. For any residential real estate property collateralizing a consumer mortgage loan, the Company is considered to possess the related collateral only if legal title is obtained upon completion of foreclosure, or the borrower conveys all interest in the residential real estate property to the Company through completion of a deed in lieu of foreclosure or similar legal agreement. Excluding covered OREO, at September 30, 2016, the Company had $11.7 million of foreclosed residential real estate properties included within OREO.

The tables below present a summary of the post-modification balance of loans restructured during the three and nine months ended September 30, 2016 and 2015, respectively, which represent TDRs:



Three months ended September 30, 2016 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt⁽²⁾
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	1	$	28	1	$	28	—	$	—	—	$	—	—	$	—
Commercial real estate
Office	—	—		—	—		—	—		—	—		—	—
Industrial	—	—		—	—		—	—		—	—		—	—
Mixed use and other	—	—		—	—		—	—		—	—		—	—
Residential real estate and other	1	43		1	43		1	43		—	—		—	—
Total loans	2	$	71	2	$	71	1	$	43	—	$	—	—	$	—



Three months ended September 30, 2015 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt⁽²⁾
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—
Commercial real estate
Office	—	—		—	—		—	—		—	—		—	—
Industrial	—	—		—	—		—	—		—	—		—	—
Mixed use and other	—	—		—	—		—	—		—	—		—	—
Residential real estate and other	1	222		1	222		1	222		—	—		—	—
Total loans	1	$	222	1	$	222	1	$	222	—	$	—	—	$	—


(1)	TDRs may have more than one modification representing a concession. As such, TDRs during the period may be represented in more than one of the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.

During the three months ended September 30, 2016, two loans totaling $71,000 were determined to be TDRs, compared to one loan totaling $222,000 in the same period of 2015. Of these loans extended at below market terms, the weighted average extension had a term of approximately 22 months during the quarter ended September 30, 2016 compared to 214 months for the quarter ended September 30, 2015. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 150 basis points and 338 basis points during the three months ending September 30, 2016 and 2015, respectively. Additionally, no principal balances were forgiven in the third quarter of 2016 or 2015.



Nine months ended September 30, 2016 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt⁽²⁾
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	3	$	345	3	$	345	—	$	—	—	$	—	1	$	275
Commercial real estate
Office	1	450		1	450		—	—		—	—		—	—
Industrial	6	7,921		6	7,921		3	7,196		—	—		—	—
Mixed use and other	2	150		2	150		—	—		—	—		—	—
Residential real estate and other	3	583		2	423		3	583		1	380		—	—
Total loans	15	$	9,449	14	$	9,289	6	$	7,779	1	$	380	1	$	275


(1)	TDRs may have more than one modification representing a concession. As such, TDRs during the period may be represented in more than one of the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.



Nine months ended September 30, 2015 (Dollars in thousands)	Total⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt⁽²⁾
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—
Commercial real estate
Office							—	—					—	—
Industrial	1	169		1	169		—	—		1	169		—	—
Mixed use and other	—	—		—	—		—	—		—	—		—	—
Residential real estate and other	9	1,664		9	1,664		5	674		1	50		—	—
Total loans	10	$	1,833	10	$	1,833	5	$	674	2	$	219	—	$	—


(1)	TDRs may have more than one modification representing a concession. As such, TDRs during the period may be represented in more than one of the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.

During the nine months ended September 30, 2016, 15 loans totaling $9.4 million were determined to be TDRs, compared to ten loans totaling $1.8 million in the same period of 2015. Of these loans extended at below market terms, the weighted average extension had a term of approximately six months during the nine months ended September 30, 2016 compared to 49 months for the nine months ended September 30, 2015. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 30 basis points and 358 basis points for the year-to-date periods September 30, 2016 and 2015, respectively. Interest-only payment terms were approximately six months during the nine months ending September 30, 2016 compared to 28 months during the same period of 2015. Additionally, $300,000 of principal balances were forgiven in the first nine months of 2016 compared to no balances forgiven during the same period of 2015.

The following table presents a summary of all loans restructured in TDRs during the twelve months ended September 30, 2016 and 2015, and such loans which were in payment default under the restructured terms during the respective periods below:



(Dollars in thousands)	As of September 30, 2016			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
	Total ⁽¹⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾
	Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	3	$	345	—	$	—	—	$	—
Commercial real estate
Office	1	450		1	450		1	450
Industrial	6	7,921		3	725		3	725
Mixed use and other	4	351		1	16		3	217
Residential real estate and other	3	583		—	—		—	—
Total loans	17	$	9,650	5	$	1,191	7	$	1,392



(Dollars in thousands)	As of September 30, 2015			Three Months Ended September 30, 2015			Nine Months Ended September 30, 2015
	Total ⁽¹⁾⁽³⁾			Payments in Default ⁽²⁾⁽³⁾			Payments in Default ⁽²⁾⁽³⁾
	Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	1	$	1,461	—	$	—	—	$	—
Commercial real estate
Office	1	720		—	—		—	—
Industrial	2	854		1	685		1	685
Mixed use and other	—	—		—	—		—	—
Residential real estate and other	11	2,613		2	131		3	345
Total loans	15	$	5,648	3	$	816	4	$	1,030


(1)	Total TDRs represent all loans restructured in TDRs during the previous twelve months from the date indicated.


(2)	TDRs considered to be in payment default are over 30 days past-due subsequent to the restructuring.


(3)	Balances represent the recorded investment in the loan at the time of the restructuring.