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 December 31, 2016 and 2015:



As of December 31, 2016 (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	$	13,441	$	174	$	2,341	$	11,779	$	3,716,977	$	3,744,712
Franchise	—		—		—		493		869,228		869,721
Mortgage warehouse lines of credit	—		—		—		—		204,225		204,225
Asset-based lending	1,924		—		135		1,609		871,402		875,070
Leases	510		—		—		1,331		293,073		294,914
PCI - commercial ⁽¹⁾	—		1,689		100		2,428		12,563		16,780
Total commercial	$	15,875	$	1,863	$	2,576	$	17,640	$	5,967,468	$	6,005,422
Commercial real estate:
Construction	2,408		—		—		1,824		606,007		610,239
Land	394		—		188		—		104,219		104,801
Office	4,337		—		4,506		1,232		857,599		867,674
Industrial	7,047		—		4,516		2,436		756,602		770,601
Retail	597		—		760		3,364		907,872		912,593
Multi-family	643		—		322		1,347		805,312		807,624
Mixed use and other	6,498		—		1,186		12,632		1,931,859		1,952,175
PCI - commercial real estate ⁽¹⁾	—		16,188		3,775		8,888		141,529		170,380
Total commercial real estate	$	21,924	$	16,188	$	15,253	$	31,723	$	6,110,999	$	6,196,087
Home equity	9,761		—		1,630		6,515		707,887		725,793
Residential real estate, including PCI	12,749		1,309		936		8,271		681,956		705,221
Premium finance receivables
Commercial insurance loans	14,709		7,962		5,646		14,580		2,435,684		2,478,581
Life insurance loans	—		3,717		17,514		16,204		3,182,935		3,220,370
PCI - life insurance loans ⁽¹⁾	—		—		—		—		249,657		249,657
Consumer and other, including PCI	439		207		100		887		120,408		122,041
Total loans, net of unearned income, excluding covered loans	$	75,457	$	31,246	$	43,655	$	95,820	$	19,456,994	$	19,703,172
Covered loans	2,121		2,492		225		1,553		51,754		58,145
Total loans, net of unearned income	$	77,578	$	33,738	$	43,880	$	97,373	$	19,508,748	$	19,761,317


(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. See Note 4, “Loans” for further discussion of these purchased loans.



As of December 31, 2015 (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


(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. See Note 4, “Loans” for further discussion of these purchased loans.

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 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 the Company determines 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 December 31, 2016 and 2015:



	Performing				Non-performing				Total
	December 31,		December 31,		December 31,		December 31,		December 31,		December 31,
(Dollars in thousands)	2016		2015		2016		2015		2016		2015
Loan Balances:
Commercial
Commercial, industrial and other	$	3,731,097	$	3,245,818	$	13,615	$	12,710	$	3,744,712	$	3,258,528
Franchise	869,721		245,228		—		—		869,721		245,228
Mortgage warehouse lines of credit	204,225		222,806		—		—		204,225		222,806
Asset-based lending	873,146		742,676		1,924		8		875,070		742,684
Leases	294,404		225,539		510		535		294,914		226,074
PCI - commercial ⁽¹⁾	16,780		18,589		—		—		16,780		18,589
Total commercial	$	5,989,373	$	4,700,656	$	16,049	$	13,253	$	6,005,422	$	4,713,909
Commercial real estate
Construction	607,831		358,354		2,408		306		610,239		358,660
Land	104,407		76,666		394		1,751		104,801		78,417
Office	863,337		858,382		4,337		4,619		867,674		863,001
Industrial	763,554		718,084		7,047		9,564		770,601		727,648
Retail	911,996		866,639		597		1,760		912,593		868,399
Multi-family	806,981		740,395		643		1,954		807,624		742,349
Mixed use and other	1,945,677		1,726,125		6,498		6,691		1,952,175		1,732,816
PCI - commercial real estate ⁽¹⁾	170,380		157,999		—		—		170,380		157,999
Total commercial real estate	$	6,174,163	$	5,502,644	$	21,924	$	26,645	$	6,196,087	$	5,529,289
Home equity	716,032		777,827		9,761		6,848		725,793		784,675
Residential real estate, including PCI	692,472		595,408		12,749		12,043		705,221		607,451
Premium finance receivables
Commercial insurance loans	2,455,910		2,350,066		22,671		24,855		2,478,581		2,374,921
Life insurance loans	3,216,653		2,593,204		3,717		—		3,220,370		2,593,204
PCI - life insurance loans ⁽¹⁾	249,657		368,292		—		—		249,657		368,292
Consumer and other, including PCI	121,458		145,963		583		413		122,041		146,376
Total loans, net of unearned income, excluding covered loans	$	19,615,718	$	17,034,060	$	87,454	$	84,057	$	19,703,172	$	17,118,117


(1)	PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. See Note 4, “Loans” for further discussion of these purchased loans.

A summary of the activity in the allowance for credit losses by loan portfolio (excluding covered loans) for the years ended December 31, 2016 and 2015 is as follows:



Year Ended December 31, 2016 (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	(90		)	(154		)	—			(57		)	10			—			(291		)
Reclassification to/from allowance for unfunded lending-related commitments	(500		)	(225		)	—			—			—			—			(725		)
Charge-offs	(7,915		)	(1,930		)	(3,998		)	(1,730		)	(8,193		)	(925		)	(24,691		)
Recoveries	1,594			2,945			484			225			2,374			186			7,808
Provision for credit losses	15,269			7,028			3,276			2,542			6,201			474			34,790
Allowance for loan losses at period end	$	44,493		$	51,422		$	11,774		$	5,714		$	7,625		$	1,263		$	122,291
Allowance for unfunded lending-related commitments at period end	500			1,173			—			—			—			—			1,673
Allowance for credit losses at period end	$	44,993		$	52,595		$	11,774		$	5,714		$	7,625		$	1,263		$	123,964
By measurement method:
Individually evaluated for impairment	1,717			3,004			1,233			849			—			100			6,903
Collectively evaluated for impairment	42,624			49,552			10,541			4,792			7,625			1,162			116,296
Loans acquired with deteriorated credit quality	652			39			—			73			—			1			765
Loans at period end:
Individually evaluated for impairment	$	20,790		$	42,309		$	9,994		$	17,735		$	—		$	495		$	91,323
Collectively evaluated for impairment	5,967,852			5,983,398			715,799			683,182			5,698,951			120,375			19,169,557
Loans acquired with deteriorated credit quality	16,780			170,380			—			4,304			249,657			1,171			442,292



Year Ended December 31, 2015 (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	(51		)	(419		)	—			(125		)	(142		)	—			(737		)
Reclassification to/from allowance for unfunded lending-related commitments	—			(138		)	—			—			—			—			(138		)
Charge-offs	(4,253		)	(6,543		)	(4,227		)	(2,903		)	(7,060		)	(521		)	(25,507		)
Recoveries	1,432			2,840			312			283			1,304			159			6,330
Provision for credit losses	7,308			12,485			3,427			3,261			6,618			648			33,747
Allowance for loan losses at period end	$	36,135		$	43,758		$	12,012		$	4,734		$	7,233		$	1,528		$	105,400
Allowance for unfunded lending-related commitments at period end	—			949			—			—			—			—			949
Allowance for credit losses at period end	$	36,135		$	44,707		$	12,012		$	4,734		$	7,233		$	1,528		$	106,349
By measurement method:
Individually evaluated for impairment	2,026			3,733			333			316			—			10			6,418
Collectively evaluated for impairment	34,025			40,625			11,679			4,416			7,233			1,518			99,496
Loans acquired with deteriorated credit quality	84			349			—			2			—			—			435
Loans at period end:
Individually evaluated for impairment	$	18,789		$	59,871		$	6,847		$	16,522		$	—		$	392		$	102,421
Collectively evaluated for impairment	4,676,531			5,311,419			777,828			587,463			4,968,125			144,640			16,466,006
Loans acquired with deteriorated credit quality	18,589			157,999			—			3,466			368,292			1,344			549,690

A summary of activity in the allowance for covered loan losses for the years ended December 31, 2016 and 2015 is as follows:



	Years Ended
	December 31,			December 31,
(Dollars in thousands)	2016			2015
Balance at beginning of period	$	3,026		$	2,131
Allowance for covered loan losses transferred to allowance for loan losses subsequent to loss share expiration	(156		)	—
Provision for covered loan losses before benefit attributable to FDIC loss share agreements	(3,530		)	(5,350		)
Benefit attributable to FDIC loss share agreements	2,949			4,545
Net provision for covered loan losses and transfer from allowance for covered loan losses to allowance for loan losses	$	(737	)	$	(805	)
Increase/decrease in FDIC indemnification liability/asset	(2,949		)	(4,545		)
Loans charged-off	(1,410		)	(827		)
Recoveries of loans charged-off	3,392			7,072
Net recoveries	$	1,982		$	6,245
Balance at end of period	$	1,322		$	3,026

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 loan losses, and a corresponding increase to the FDIC loss share asset or reduction to any FDIC loss share liability. See , “FDIC-Assisted Bank Acquisitions” within Note 7, “Business Combinations” for more detail.

Impaired Loans

A summary of impaired loans, including TDRs, at December 31, 2016 and 2015 is as follows:



(Dollars in thousands)	2016		2015
Impaired loans (included in non-performing and restructured loans):
Impaired loans with an allowance for loan loss required ⁽¹⁾	$	33,146	$	49,961
Impaired loans with no allowance for loan loss required	57,370		51,294
Total impaired loans ⁽²⁾	$	90,516	$	101,255
Allowance for loan losses related to impaired loans	$	6,377	$	6,380
TDRs	41,708		51,853
Reduction of interest income from non-accrual loans	3,060		3,006
Interest income recognized on impaired loans	5,485		6,198


(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 evaluated for impairment by loan class as of December 31, 2016 and 2015:



	As of						For the Year Ended
December 31, 2016 (Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	2,601	$	2,617	$	1,079	$	2,649	$	134
Asset-based lending	233		235		26		235		10
Leases	2,441		2,443		107		2,561		128
Commercial real estate
Construction	5,302		5,302		86		5,368		164
Land	1,283		1,283		1		1,303		47
Office	2,687		2,697		324		2,797		137
Industrial	5,207		5,843		1,810		7,804		421
Retail	1,750		1,834		170		2,039		101
Multi-family	—		—		—		—		—
Mixed use and other	3,812		4,010		592		4,038		195
Home equity	1,961		1,873		1,233		1,969		75
Residential real estate	5,752		6,327		849		5,816		261
Consumer and other	117		121		100		131		7
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial, industrial and other	$	12,534	$	14,704	$	—	$	14,944	$	948
Asset-based lending	1,691		2,550		—		8,467		377
Leases	873		873		—		939		56
Commercial real estate
Construction	4,003		4,003		—		4,161		81
Land	3,034		3,503		—		3,371		142
Office	3,994		5,921		—		4,002		323
Industrial	2,129		2,436		—		2,828		274
Retail	—		—		—		—		—
Multi-family	1,903		1,987		—		1,825		84
Mixed use and other	6,815		7,388		—		6,912		397
Home equity	8,033		10,483		—		8,830		475
Residential real estate	11,983		14,124		—		12,041		622
Consumer and other	378		489		—		393		26
Total loans, net of unearned income	$	90,516	$	103,046	$	6,377	$	105,423	$	5,485



	As of						For the Year Ended
December 31, 2015 (Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
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 loans, net of unearned income	$	101,255	$	124,249	$	6,380	$	107,170	$	6,198

Average recorded investment in impaired loans for the years ended December 31, 2016, 2015, and 2014 were $105.4 million, $107.2 million, and $135.0 million, respectively. Interest income recognized on impaired loans was $5.5 million, $6.2 million, and $7.2 million for the years ended December 31, 2016, 2015, and 2014, respectively.

TDRs

At December 31, 2016, the Company had $41.7 million in loans modified in TDRs. The $41.7 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 6 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 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 December 31, 2016 and approximately $2.7 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. For the year ended December 31, 2016 and 2015, the Company recorded $421,000 and $573,000, respectively, in interest income representing this decrease in impairment.

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 December 31, 2016, the Company had $9.4 million of foreclosed residential real estate properties included within OREO. Further, the recorded investment in residential mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process totaled $12.1 million at December 31, 2016.

The tables below present a summary of the post-modification balance of loans restructured during the years ended December 31, 2016, 2015, and 2014, which represent TDRs:



Year ended December 31, 2016	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt ⁽²⁾
(Dollars in thousands)	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	3	$	345	3	$	345	—	$	—	—	$	—	1	$	275
Leases	2	$	2,949	2	$	2,949	—	$	—	—	$	—	—	$	—
Commercial real estate
Commercial construction	—	—		—	—		—	—		—	—		—	—
Land	—	—		—	—		—	—		—	—		—	—
Office	1	450		1	450		—	—		—	—		—	—
Industrial	6	7,921		6	7,921		3	7,196		—	—		—	—
Retail	—	—		—	—		—	—		—	—		—	—
Multi-family	—	—		—	—		—	—		—	—		—	—
Mixed use and other	2	150		2	150		—	—		—	—		—	—
Residential real estate and other	7	1,082		5	841		6	850		2	470		—	—
Total loans	21	$	12,897	19	$	12,656	9	$	8,046	2	$	470	1	$	275

Year ended December 31, 2015	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt ⁽²⁾
(Dollars in thousands)	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—
Leases	—	—		—	—		—	—		—	—		—	—
Commercial real estate
Office	—	—		—	—		—	—		—	—		—	—
Industrial	1	169		1	169		—	—		1	169		—	—
Retail	—	—		—	—		—	—		—	—		—	—
Multi-family	—	—		—	—		—	—		—	—		—	—
Mixed use and other	2	201		2	201		—	—		2	201		—	—
Residential real estate and other	9	1,664		9	1,664		5	674		1	50		—	—
Total loans	12	$	2,034	12	$	2,034	5	$	674	4	$	420	—	$	—



Year ended December 31, 2014	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest-only Payments ⁽²⁾			Forgiveness of Debt ⁽²⁾
(Dollars in thousands)	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	2	$	1,549	1	$	88	1	$	1,461	2	$	1,549	—	$	—
Leases	—	—		—	—		—	—		—	—		—	—
Commercial real estate
Office	2	1,510		2	1,510		—	—		—	—		—	—
Industrial	2	1,763		2	1,763		1	685		1	1,078		—	—
Retail	1	202		1	202		—	—		—	—		—	—
Multi-family	1	181		—	—		1	181		—	—		—	—
Mixed use and other	7	4,926		3	2,837		7	4,926		1	1,273		—	—
Residential real estate and other	6	1,836		5	1,625		4	1,138		1	220		—	—
Total loans	21	$	11,967	14	$	8,025	14	$	8,391	5	$	4,120	—	$	—


(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 year ended December 31, 2016, $12.9 million, or 21 loans, were determined to be TDRs, compared to $2.0 million, or 12 loans, and $12.0 million, or 21 loans, in the years ended 2015 and 2014, respectively. Of these loans extended at below market terms, the weighted average extension had a term of approximately 19 months in 2016 compared to 45 months in 2015 and 19 months in 2014. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 34 basis points, 358 basis points and 170 basis points during the years ended December 31, 2016, 2015, and 2014, respectively. Interest-only payment terms were approximately seven months during the year ended 2016 compared to 17 months and seven months for the years ended 2015 and 2014, respectively. Additionally, $300,000 of principal balance were forgiven in 2016 compared to no principal balances during 2015 and 2014.

The tables below present a summary of all loans restructured in TDRs during the years ended December 31, 2016, 2015, and 2014, and such loans which were in payment default under the restructured terms during the respective periods:



	Year Ended December 31, 2016						Year Ended December 31, 2015						Year Ended December 31, 2014
	Total ⁽¹⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾			Total ⁽¹⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾			Total ⁽¹⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾
(Dollars in thousands)	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	3	$	345	1	$	28	—	$	—	—	$	—	2	$	1,549	1	$	88
Leases	2	$	2,949	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—
Commercial real-estate
Office	1	450		1	450		—	—		—	—		2	1,510		—	—
Industrial	6	7,921		5	7,347		1	169		—	—		2	1,763		1	1,078
Retail	—	—		—	—		—	—		—	—		1	202		—	—
Multi-family	—	—		—	—		—	—		—	—		1	181		1	181
Mixed use and other	2	150		1	16		2	201		2	201		7	4,926		2	569
Residential real estate and other	7	1,082		—	—		9	1,664		4	568		6	1,836		1	211
Total loans	21	$	12,897	8	$	7,841	12	$	2,034	6	$	769	21	$	11,967	6	$	2,127


(1)	Total TDRs represent all loans restructured in TDRs during the year 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.