LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

During the fourth quarter of 2014, certain types of loans were reclassified due to their purpose and overall risk characteristics. Therefore, balances on certain loans and allowance for loan losses as of December 31, 2013 were reclassified to conform to the December 31, 2014 presentation.

The following table presents loans receivable as of December 31, 2014 and 2013:



	December 31,
	2014			2013
	(in thousands)
Commercial:
Multi-family	$	2,127,034		$	1,063,459
Commercial real estate	1,132,072			724,752
Commercial and industrial	540,430			292,937
Construction	56,669			31,314
Total Commercial Loans	3,856,205			2,112,462

Consumer:
Residential real estate	285,003			145,188
Manufactured housing	126,731			139,471
Home equity / other	1,541			2,144
Total Consumer Loans	413,275			286,803

Total loan receivable not covered under FDIC loss sharing agreements (1)	4,269,480			2,399,265
Commercial:
Commercial real estate	17,585			28,839
Commercial and industrial	2,235			3,658
Construction	6,705			11,603
Multi-family	372			600
Total Commercial Loans	26,897			44,700

Consumer:
Residential real estate	12,392			18,732
Home equity / other	2,892			3,293
Total Consumer Loans	15,284			22,025

Total loan receivable covered under FDIC loss sharing agreements (1)	42,181			66,725
Total all loans	4,311,661			2,465,990
Deferred (fees) costs and unamortized premiums/(discounts), net	512			(912		)
Allowance for loan losses	(30,932		)	(23,998		)
Loans receivable, net	$	4,281,241		$	2,441,080


(1)	Loans that were acquired in the two FDIC assisted transactions and are covered under loss sharing agreements with the FDIC are referred to as “covered” loans throughout these financial statements.

Non-Covered Loans

The following table summarizes non-covered loans by loan type and performance status as of December 31, 2014 and 2013:



	December 31, 2014
	30-89 Days Past Due (1)		90 Or More Days Past Due (1)		Total Past Due Still Accruing (1)		Non- Accrual		Current (2)		Purchased- Credit- Impaired Loans (3)		Total Loans (4)
	(in thousands)
Commercial real estate	$	—	$	—	$	—	$	3,450	$	1,101,119	$	27,503	$	1,132,072
Multi-family	—		—		—		—		2,124,448		2,586		2,127,034
Commercial and industrial	366		—		366		2,257		536,326		1,481		540,430
Construction	—		—		—		—		56,510		159		56,669
Residential real estate	1,226		—		1,226		849		273,565		9,363		285,003
Home equity / other	—		—		—		—		1,333		208		1,541
Manufactured housing (5)	6,324		4,388		10,712		931		111,072		4,016		126,731
Total	$	7,916	$	4,388	$	12,304	$	7,487	$	4,204,373	$	45,316	$	4,269,480



	December 31, 2013
	30-89 Days Past Due (1)		90 Or More Days Past Due (1)		Total Past Due Still Accruing (1)		Non- Accrual		Current (2)		Purchased- Credit- Impaired Loans (3)		Total Loans (4)
	(in thousands)
Commercial real estate	$	—	$	—	$	—	$	5,948	$	685,999	$	32,805	$	724,752
Multi-family	—		—		—		—		1,060,137		3,322		1,063,459
Commercial and industrial	10		—		10		4,564		284,767		3,596		292,937
Construction	—		—		—		1,584		29,482		248		31,314
Residential real estate	555		—		555		969		133,158		10,506		145,188
Home equity / other	—		—		—		—		1,728		416		2,144
Manufactured housing (5)	7,921		3,772		11,693		448		122,416		4,914		139,471
Total	$	8,486	$	3,772	$	12,258	$	13,513	$	2,317,687	$	55,807	$	2,399,265


(1)	Includes past due loans that are accruing interest because collection is considered probable.


(2)	Loans where next payment due is less than 30 days from the report date.

(3)

Purchased-credit-impaired loans aggregated into a pool are accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, and the past due status of the pools, or that of the individual loans within the pools, is not meaningful. Because of the credit impaired nature of the loans, the loans are recorded at a discount reflecting estimated future cash flows and the Bank recognizes interest income on each pool of loans reflecting the estimated yield and passage of time. Such loans are considered to be performing. Purchased-credit-impaired loans that are not in pools accrete interest when the timing and amount of their expected cash flows are reasonably estimable, and are reported as performing loans.


(4)	Amounts exclude deferred costs and fees, unamortized premiums and discounts, and the allowance for loan losses.


(5)	Manufactured housing loans purchased in 2010 are supported bycash reserves held at the Bank that are used to fund past-due payments when the loan becomes 90 days or more delinquent. Subsequent purchases are subject to varying provisions in the event of borrowers’ delinquencies.

Covered Loans

The following table summarizes covered loans by class and performance status as of December 31, 2014 and 2013:



	December 31, 2014
	30-89 Days Past Due (1)		90 Days Or More Past Due (1)		Total Past Due Still Accruing (1)		Non- Accrual		Current (2)		Purchased- Credit- Impaired Loans (3)		Total Loans (4)
	(in thousands)
Commercial and industrial	$	518	$	—	$	518	$	165	$	361	$	1,191	$	2,235
Multi-family	—		—		—		—		372		—		372
Commercial real estate	—		—		—		615		11,884		5,086		17,585
Construction	—		—		—		2,325		—		4,380		6,705
Residential real estate	—		—		—		1,006		10,782		604		12,392
Home equity / other	147		—		147		135		2,570		40		2,892
Total	$	665	$	—	$	665	$	4,246	$	25,969	$	11,301	$	42,181



	December 31, 2013
	30- 89 Days Past Due (1)		90 Days Or More Past Due (1)		Total Past Due Still Accruing (1)		Non- Accrual		Current (2)		Purchased- Credit- Impaired Loans (3)		Total Loans (4)
	(in thousands)
Commercial and industrial	$	178	$	—	$	178	$	151	$	1,067	$	2,262	$	3,658
Commercial real estate	362		—		362		2,599		17,059		8,819		28,839
Multi-family	—		—		—		—		600		—		600
Construction	—		—		—		2,325		—		9,278		11,603
Residential real estate	90		—		90		564		14,107		3,971		18,732
Home equity / other	56		—		56		11		3,081		145		3,293
Total	$	686	$	—	$	686	$	5,650	$	35,914	$	24,475	$	66,725


(1)	Includes past due loans that are accruing interest because collection is considered probable.


(2)	Purchased loans in FDIC assisted transactions with no evidence of credit deterioration since origination.

(3)


(4)	Amounts exclude deferred costs and fees, unamortized premiums and discounts, and the allowance for loan losses.

Allowance for Loan Losses and FDIC Loss Sharing Receivable

Losses incurred on covered loans are eligible for partial reimbursement by the FDIC. Subsequent to the purchase date, the expected cash flows on the covered loans are subject to evaluation. Decreases in the present value of expected cash flows on the covered loans are recognized by increasing the allowance for loan losses with a related charge to the provision for loan losses. At the same time, the FDIC indemnification asset is increased reflecting an estimated future collection from the FDIC, which is recorded as a reduction to the provision for loan losses. If the expected cash flows on the covered loans increase such that a previously recorded impairment can be reversed, the Bancorp records a reduction in the allowance for loan losses (with a related credit to the provision for loan losses) accompanied by a reduction in the FDIC receivable balance and a charge to the provision for loan losses. Increases in expected cash flows of covered loans and decreases in expected cash flows of the FDIC loss sharing receivable, when there are no previously recorded impairments, are considered together and recognized over the remaining life of the loans as interest income. The FDIC loss sharing receivable balance will be reduced through a charge to the provision for loan losses, with no offsetting reduction to the allowance for loan losses, as the FDIC loss sharing arrangements reach their contractual maturities and the estimated losses in the covered loans have not yet emerged or been realized in a final disposition event. The FDIC loss sharing arrangements for non-single family loans expire in third quarter 2015. The loss sharing arrangements for single family loans expire in third quarter 2020.

The following table presents changes in the allowance for loans losses and the FDIC loss sharing receivable for the years ended December 31, 2014, 2013 and 2012.



	Allowance for Loan Losses For The Year Ended December 31,
	2014			2013			2012
	(in thousands)
Beginning Balance	$	23,998		$	25,837		$	15,032
Provision for loan losses (1)	10,058			5,055			16,271
Charge-offs	(4,947		)	(7,338		)	(6,166		)
Recoveries	1,823			444			700
Ending Balance	$	30,932		$	23,998		$	25,837



	FDIC Loss Sharing Receivable For The Year Ended December 31,
	2014			2013			2012
	(in thousands)
Beginning Balance	$	10,046		$	12,343		$	13,077
Increased (decreased) estimated cash flows (2)	(4,689		)	2,819			2,001
Other activity, net (a)	2,409			1,610			3,838
Cash receipts from FDIC	(5,446		)	(6,726		)	(6,573		)
Ending Balance	$	2,320		$	10,046		$	12,343

(1) Provision for loan losses	$	10,058		$	5,055		$	16,271
(2) Effect attributable to FDIC loss share arrangements	4,689			(2,819		)	(2,001		)
Net amount reported as provision for loan losses	$	14,747		$	2,236		$	14,270

(a) Includes external costs, such as legal fees, real estate taxes and appraisal expenses, that qualify for reimbursement under loss share arrangements.

Impaired Loans – Covered and Non-Covered

The following tables present a summary of impaired loans as of the years ended December 31, 2014 and 2013. Purchased-credit-impaired loans are considered to be performing and are not included in the tables below.



	December 31, 2014
	Recorded Investment Net of Charge Offs		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(in thousands)
With no related allowance recorded:
Commercial and industrial	$	13,825	$	15,348	$	—	$	13,329	$	674
Commercial real estate	18,977		19,121		—		17,974		887
Construction	2,325		2,325		—		2,415		41
Home equity / other	21		21		—		26		—
Residential real estate	1,455		3,697		—		1,925		13
With an allowance recorded:
Commercial and industrial	1,833		1,833		818		1,725		28
Commercial real estate	1,410		1,410		304		2,086		39
Construction	—		—		—		851		—
Home equity / other	114		114		32		82		1
Residential real estate	365		365		188		296		1
Total	$	40,325	$	44,234	$	1,342	$	40,709	$	1,684



	December 31, 2013
	Recorded Investment Net of Charge Offs		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(in thousands)
With no related allowance recorded:
Commercial and industrial	$	13,097	$	13,159	$	—	$	9,953	$	603
Commercial real estate	14,397		15,249		—		22,475		978
Construction	2,777		4,046		—		6,408		6
Home equity / other	—		—		—		90		8
Residential real estate	2,831		2,831		—		2,523		31
With an allowance recorded:
Commercial and industrial	2,469		3,739		829		1,616		44
Commercial real estate	2,261		3,167		946		7,497		2
Construction	1,132		1,132		351		5,054		—
Home equity / other	64		64		17		48		5
Residential real estate	252		252		199		875		4
Total	$	39,280	$	43,639	$	2,342	$	56,539	$	1,681

Troubled Debt Restructurings

At December 31, 2014 and 2013, there were $5.0 million and $4.6 million, respectively, in loans categorized as troubled debt restructurings (“TDRs”). TDRs are reported as impaired loans in the calendar year of their restructuring and are evaluated to determine whether they should be placed on non-accrual status. In subsequent years, a TDR may be returned to accrual status if it satisfies a minimum six-month performance requirement; however, it will remain classified as impaired. Generally, the Bancorp requires sustained performance for nine months before returning a TDR to accrual status.

Modification of purchased-credit-impaired loans that are accounted for within loan pools in accordance with the accounting standards for purchased-credit-impaired loans do not result in the removal of these loans from the pool even if modifications would otherwise be considered a TDR. Accordingly, as each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, modifications of loans within such pools are not considered TDRs.

The following is an analysis of loans modified in a troubled debt restructuring by type of concession at December 31, 2014 and 2013. There were no modifications that involved forgiveness of debt.



	December 31, 2014
	TDRs in Compliance with Their Modified Terms and Accruing Interest		TDRs in Compliance with Their Modified Terms and Not Accruing Interest		Total
	(in thousands)
Extended under forbearance	$	460	$	—	$	460
Multiple extensions resulting from financial difficulty	—		—		—
Interest-rate reductions	231		389		620
Total	$	691	$	389	$	1,080



	December 31, 2013
	TDRs in Compliance with Their Modified Terms and Accruing Interest		TDRs in Compliance with Their Modified Terms and Not Accruing Interest		Total
	(in thousands)
Extended under forbearance	$	—	$	—	$	—
Multiple extensions resulting from financial difficulty	—		—		—
Interest rate reductions	790		448		1,238
Total	$	790	$	448	$	1,238

The following tables provide by class the number of loans modified in troubled debt restructurings and recorded investments at December 31, 2014 and 2013.



	December 31, 2014
	TDRs in Compliance with Their Modified Terms and Accruing Interest			TDRs in Compliance with Their Modified Terms and Not Accruing Interest
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	(dollars in thousands)
Commercial and industrial	—	$	—	—	$	—
Commercial real estate	—	—		—	—
Construction	—	—		—	—
Manufactured housing	4	231		6	389
Residential real estate	—	—		—	—
Home equity / other	11	460		—	—
Total loans	15	$	691	6	$	389



	December 31, 2013
	TDRs in Compliance with Their Modified Terms and Accruing Interest			TDRs in Compliance with Their Modified Terms and Not Accruing Interest
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	(dollars in thousands)
Commercial and industrial	—	$	—	—	$	—
Commercial real estate	—	—		—	—
Construction	—	—		—	—
Manufactured housing	8	758		5	448
Residential real estate	—	—		—	—
Home equity / other	1	32		—	—
Total loans	9	$	790	5	$	448

As of December 31, 2014 and 2013, there were no commitments to lend additional funds to debtors whose terms have been modified in TDRs.

For the year ended December 31, 2014 and 2013, the recorded investment of loans determined to be TDRs was $1.1 million and $1.2 million, respectively, both before and after restructuring. During the year ending December 31, 2014, six TDR loans defaulted with a recorded investment of $0.4 million. During the year ending December 31, 2013, five TDR loans defaulted with a recorded investment of $0.4 million. Since these loans were included in the loan portfolio that is subject to the cash reserve, they will be removed from the loan portfolio when they become ninety days past due.

Loans modified in troubled debt restructurings are evaluated for impairment. The nature and extent of impairment of TDRs, including those which have experienced a subsequent default, is considered in the determination of an appropriate level of allowance for credit losses. There were no specific allowances resulting from TDR modifications during 2014 or 2013.

Credit Quality Indicators

Commercial and industrial, commercial real estate, residential real estate and construction loans are based on an internally assigned risk rating system which are assigned at the loan origination and reviewed on a periodic or on an “as needed” basis. Consumer, mortgage warehouse, multi-family and manufactured housing loans are evaluated based on the payment activity of the loan.

To facilitate the monitoring of credit quality within the commercial and industrial, commercial real estate, construction, multi-family and residential real estate classes, and for purposes of analyzing historical loss rates used in the determination of the allowance for loan losses for the respective portfolio class, the Bank utilizes the following categories of risk ratings: pass/satisfactory (includes risk rating 1 through 6), special mention, substandard, doubtful, and loss. The risk rating categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. Pass/satisfactory ratings, which are assigned to those borrowers who do not have identified potential or well-defined weaknesses and for whom there is a high likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other categories are updated on a quarterly basis during the month preceding the end of the calendar quarter. Consumer loans are not assigned to a risk rating. While assigning risk ratings involves judgment, the risk-rating process allows management to identify riskier credits in a timely manner and allocate the appropriate resources to managing the loans.

The risk rating grades are defined as follows:

“1” – Pass/Excellent

Loans rated 1 represent a credit extension of the highest quality. The borrower’s historic (at least five years) cash flows manifest extremely large and stable margins of coverage. Balance sheets are conservative, well capitalized, and liquid. After considering debt service for proposed and existing debt, projected cash flows continue to be strong and provide ample coverage. The borrower typically reflects broad geographic and product diversification and has access to alternative financial markets.

“2” – Pass/Superior

Loans rated 2 are those for which the borrower has a strong financial condition, balance sheet, operations, cash flow, debt capacity and coverage with ratios better than industry norms. The borrowers of these loans exhibit a limited leverage position, borrowers are virtually immune to local economies in stable growing industries, and where management is well respected and the company has ready access to public markets.

“3” – Pass/Strong

Loans rated 3 are those loans for which the borrower has above average financial condition and flexibility; more than satisfactory debt service coverage, balance sheet and operating ratios are consistent with or better than industry peers, have little industry risk, move in diversified markets and are experienced and competent in their industry. These borrowers access to capital markets is limited mostly to private sources, often secured, but the borrower typically has access to a wide range of refinancing alternatives.

“4” – Pass/Good

Loans rated 4 have a sound primary and secondary source of repayment. The borrower may have access to alternative sources of financing, bust sources are not as widely available as they are to a higher grade borrower. These loans carry a normal level of risk, with very low loss exposure. The borrower has the ability to perform according to the terms of the credit facility. The margins of cash flow coverage are satisfactory but vulnerable to more rapid deterioration than the higher quality loans.

“5” – Satisfactory

Loans rated 5 are extended to borrowers who are determined to be a reasonable credit risk and demonstrate the ability to repay the debt from normal business operations. Risk factors may include reliability of margins and cash flows, liquidity, dependence on a single product or industry, cyclical trends, depth of management, or limited access to alternative financing sources. The borrower’s historical financial information may indicate erratic performance, but current trends are positive and the quality of financial information is adequate, but is not as detailed and sophisticated as information found on higher grad loans. If adverse circumstances arise, the impact on the borrower may be significant.

“6” – Satisfactory/Bankable with Care

Loans rated 6 are those for which the borrower has higher than normal credit risk; however cash flow and asset values are generally intact. These borrowers may exhibit declining financial characteristics, which increasing leverage and decreasing liquidity and may have limited resources and access to financial alternatives. Signs of weakness in these borrowers may include delinquent taxes, trade slowness and eroding profit margins.

“7” – Special Mention

Loans rated Special Mention are credit facilities that may have potential developing weaknesses and deserve extra attention from the account manager and other management personnel. In the event that potential weaknesses are not corrected or mitigated, deterioration in the ability of the borrower to repay the debt in the future may occur. This grade is not assigned to loans that bear certain peculiar risks normally associated with the type of financing involved, unless circumstances have caused the risk to increase to a level higher than would have been acceptable with the credit was originally approved. Loans where significant actual, not potential, weaknesses or problems are clearly evident are graded in the category below.

“8” – Substandard

Loans are classified Substandard when the loans are inadequately protected by the current sound worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the Company will sustain some loss if the weaknesses are not corrected.

“9” – Doubtful

The Bank assigns a doubtful rating to loans that have all the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans.

“10” – Loss

The Bank assigns a loss rating to loans considered uncollectible and of such little value that their continuance as an active asset is not warranted. Loss estimates in excess of 30% will result in a loss classification. Amounts classified as loss are immediately charged off.

Risk ratings are not established for home equity loans, consumer loans, and installment loans, mainly because these portfolios consist of a larger number of homogenous loans with smaller balances. Instead, these portfolios are evaluated for risk mainly based upon aggregate payment history through the monitoring of delinquency levels and trends and are classified as performing and nonperforming.

The following presents the credit quality tables as of December 31, 2014 and 2013 for the non-covered loan portfolio.



	December 31, 2014
	Commercial and Industrial		Commercial Real Estate		Multi-family		Construction		Residential Real Estate		Home equity / other		Manufactured Housing		Total
	(in thousands)
Pass/Satisfactory	$	524,848	$	1,109,565	$	2,127,034	$	56,669	$	283,240	$	—	$	—	$	4,101,356
Special Mention	13,238		16,002		—		—		243		—		—		29,483
Substandard	2,344		6,505		—		—		1,520		—		—		10,369
Performing (1)	—		—		—		—		—		1,541		115,088		116,629
Non-performing (2)	—		—		—		—		—		—		11,643		11,643
Total	$	540,430	$	1,132,072	$	2,127,034	$	56,669	$	285,003	$	1,541	$	126,731	$	4,269,480



	December 31, 2013
	Commercial and Industrial		Commercial Real Estate		Multi-family		Construction		Residential Real Estate		Home equity / other		Manufactured Housing		Total
	(in thousands)
Pass/Satisfactory	$	277,491	$	703,636	$	1,062,411	$	29,701	$	142,588	$	—	$	—	$	2,215,827
Special Mention	10,175		11,995		905		29		940		—		—		24,044
Substandard	5,271		9,121		143		1,584		1,660		—		—		17,779
Performing (1)	—		—		—		—		—		2,144		127,330		129,474
Non-performing (2)	—		—		—		—		—		—		12,141		12,141
Total	$	292,937	$	724,752	$	1,063,459	$	31,314	$	145,188	$	2,144	$	139,471	$	2,399,265


(1)	Includes home equity, consumer, and other installment loans not subject to risk ratings.


(2)	Includes loans that are past due and still accruing interest and loans on non-accrual status.

The following presents the credit quality tables as of December 31, 2014 and 2013 for the covered loan portfolio.



	December 31, 2014
	Commercial and Industrial		Commercial Real Estate		Multi-family		Construction		Residential Real Estate		Home equity / other		Total

Pass/Satisfactory	$	1,104	$	10,207	$	372	$	—	$	10,985	$	—	$	22,668
Special Mention	—		5,076		—		—		—		—		5,076
Substandard	1,131		2,302		—		6,705		1,407		—		11,545
Performing	—		—		—		—		—		2,610		2,610
Non-performing (1)	—		—		—		—		—		282		282
Total	$	2,235	$	17,585	$	372	$	6,705	$	12,392	$	2,892	$	42,181



	December 31, 2013
	Commercial and Industrial		Commercial Real Estate		Multi-family		Construction		Residential Real Estate		Home equity / other		Total

Pass/Satisfactory	$	1,582	$	17,803	$	600	$	—	$	14,137	$	—	$	34,122
Special Mention	106		3,107		—		—		455		—		3,668
Substandard	1,970		7,929		—		11,603		4,140		—		25,642
Performing	—		—		—		—		—		3,226		3,226
Non-performing (1)	—		—		—		—		—		67		67
Total	$	3,658	$	28,839	$	600	$	11,603	$	18,732	$	3,293	$	66,725


(1)	Includes loans that are past due and still accruing interest and loans on non-accrual status.

The changes in the allowance for loan losses for the years ended December 31, 2014 and 2013 and the loans and allowance for loan losses by class and impairment method as of December 31, are presented in the tables that follow. The amounts presented below for the provision for loan losses do not include expected benefits resulting from the FDIC loss share arrangements for the covered loans.



Twelve months ended December 31, 2014	Commercial and Industrial			Commercial Real Estate			Multi-family		Construction			Residential Real Estate			Manufactured Housing			Home equity / other			Total
	(in thousands)
Beginning Balance, January 1, 2014	$	2,674		$	11,478		$	4,227	$	2,385		$	2,490		$	614		$	130		$	23,998
Charge-offs	(1,155		)	(2,197		)	—		(895		)	(667		)	—			(33		)	(4,947		)
Recoveries	511			1,026			—		13			265			—			8			1,823
Provision for loan losses	2,716			3,265			4,266		(456		)	610			(352		)	9			10,058
Ending Balance, December 31, 2014	$	4,746		$	13,572		$	8,493	$	1,047		$	2,698		$	262		$	114		$	30,932
Loans:
Individually evaluated for impairment	$	15,658		$	20,387		$	—	$	2,325		$	1,820		$	—		$	135		$	40,325
Collectively evaluated for impairment	524,335			1,096,681			2,124,820		56,510			285,608			122,715			4,050			4,214,719
Loans acquired with credit deterioration	2,672			32,589			2,586		4,539			9,967			4,016			248			56,617
	$	542,665		$	1,149,657		$	2,127,406	$	63,374		$	297,395		$	126,731		$	4,433		$	4,311,661
Allowance for loan losses:
Individually evaluated for impairment	$	818		$	304		$	—	$	—		$	188		$	—		$	32		$	1,342
Collectively evaluated for impairment	3,766			8,336			8,493		424			1,436			92			28			22,575
Loans acquired with credit deterioration	162			4,932			—		623			1,074			170			54			7,015
	$	4,746		$	13,572		$	8,493	$	1,047		$	2,698		$	262		$	114		$	30,932



Twelve months ended December 31, 2013	Commercial and Industrial			Commercial Real Estate			Multi- family		Construction			Residential Real Estate			Manufactured Housing			Home equity / other			Residual Reserve			Total
	(in thousands)
Beginning Balance, January 1, 2013	$	1,548		$	13,644		$	1,795	$	3,991		$	3,233		$	750		$	154		$	722		$	25,837
Charge-offs	(1,387		)	(3,358		)	—		(2,096		)	(410		)	—			(87		)	—			(7,338		)
Recoveries	391			42			—		—			2			—			9			—			444
Provision for loan losses	2,122			1,150			2,432		490			(335		)	(136		)	54			(722		)	5,055
Ending Balance, December 31, 2013	$	2,674		$	11,478		$	4,227	$	2,385		$	2,490		$	614		$	130		$	—		$	23,998
Loans:
Individually evaluated for impairment	$	15,566		$	16,658		$	—	$	3,909		$	3,083		$	—		$	64		$	—		$	39,280
Collectively evaluated for impairment	275,171			695,309			1,060,736		29,482			146,361			134,557			4,812			—			2,346,428
Loans acquired with credit deterioration	5,858			41,624			3,322		9,526			14,477			4,914			561			—			80,282
	$	296,595		$	753,591		$	1,064,058	$	42,917		$	163,921		$	139,471		$	5,437		$	—		$	2,465,990
Allowance for loan losses:
Individually evaluated for impairment	$	829		$	946		$	—	$	351		$	199		$	—		$	17		$	—		$	2,342
Collectively evaluated for impairment	1,610			5,415			4,227		267			767			84			38			—			12,408
Loans acquired with credit deterioration	235			5,117			—		1,767			1,524			530			75			—			9,248
	$	2,674		$	11,478		$	4,227	$	2,385		$	2,490		$	614		$	130		$	—		$	23,998

The non-covered manufactured housing portfolio was purchased in August 2010. A portion of the purchase price may be used to reimburse the Bank under the specified terms in the Purchase Agreement for defaults of the underlying borrower and other specified items. At December 31, 2014 and 2013, funds available for reimbursement, if necessary, were $3.0 million and $3.1 million, respectively. Each quarter, these funds are evaluated to determine if they would be sufficient to absorb probable losses within the manufactured housing portfolio.

The following table presents the changes in accretable yield related to purchased-credit-impaired loans:



	December 31,
	2014			2013			2012
	(in thousands)
Accretable yield balance, beginning of period	$	22,557		$	32,174		$	45,358
Accretion to interest income	(3,201		)	(6,213		)	(11,723		)
Reclassification from nonaccretable difference and disposals, net	(1,750		)	(3,404		)	(1,461		)
Accretable yield balance, end of period	$	17,606		$	22,557		$	32,174