We maintain an allowance for loan losses, or ALL, at a level determined to be adequate to absorb estimated probable credit losses inherent in the loan portfolio as of the balance sheet date. We develop and document a systematic ALL methodology based on the following portfolio segments: 1) CRE, 2) C&I, 3) Commercial Construction, 4) Consumer Real Estate and 5) Other Consumer.

The following are key risks within each portfolio segment:

CRE—Loans secured by commercial purpose real estate, including both owner occupied properties and investment properties, for various purposes such as hotels, strip malls and apartments. Operations of the individual projects as well as global cash flows of the debtors are the primary sources of repayment for these loans. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the collateral type as well as the business prospects of the lessee, if the project is not owner occupied.

C&I—Loans made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. Cash flow from the operations of the company is the primary source of repayment for these loans. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the industry of the company. Collateral for these types of loans often do not have sufficient value in a distressed or liquidation scenario to satisfy the outstanding debt.

Commercial Construction—Loans made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. While the risk of these loans is generally confined to the construction period, if there are problems, the project may not be complete, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer.

Consumer Real Estate—Loans secured by first and second liens such as home equity loans, home equity lines of credit and 1-4 family residences, including purchase money mortgages. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the local housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.

Other Consumer—Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. This segment includes auto loans, unsecured loans and lines and credit cards. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

We further assess risk within each portfolio segment by pooling loans with similar risk characteristics. For the commercial loan classes, the most important indicator of risk is the internally assigned risk rating, including pass, special mention and substandard. Consumer loans are pooled by type of collateral, lien position and loan to value, or LTV, ratio for Consumer Real Estate loans. Historical loss rates are applied to these loan pools to determine the reserve for loans collectively evaluated for impairment.

The ALL methodology for groups of loans collectively evaluated for impairment is comprised of both a quantitative and qualitative analysis. A key assumption in the quantitative component of the reserve is the loss emergence period, or LEP. The LEP is an estimate of the average amount of time from the point at which a loss is incurred on a loan to the point at which the loss is confirmed. In general, the LEP will be shorter in an economic slowdown or recession and longer during times of economic stability or growth, as customers are better able to delay loss confirmation after a potential loss event has occurred.

Another key assumption is the look-back period, or LBP, which represents the historical data period utilized to calculate loss rates.

Management monitors various credit quality indicators for both the commercial and consumer loan portfolios, including delinquency, nonperforming status and changes in risk ratings on a monthly basis.

The following tables present the age analysis of past due loans segregated by class of loans as of March 31, 2015 and December 31, 2014:



	March 31, 2015
(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Past Due⁽¹⁾		Nonaccrual		Total Past Due		Total Loans
Commercial real estate	$	2,138,815	$	2,955	$	522	$	1,735	$	8,386	$	13,598	$	2,152,413
Commercial and industrial	1,202,897		4,089		517		—		3,550		8,156		1,211,053
Commercial construction	281,084		969		—		2,140		1,973		5,082		286,166
Residential mortgage	516,515		1,548		63		1,154		2,226		4,991		521,506
Home equity	438,629		1,583		198		—		1,986		3,767		442,396
Installment and other consumer	65,465		249		27		—		13		289		65,754
Consumer construction	4,410		—		—		—		—		—		4,410
Loans held for sale	6,126		—		—		—		—		—		6,126
Totals	$	4,653,941	$	11,393	$	1,327	$	5,029	$	18,134	$	35,883	$	4,689,824
⁽¹⁾Represents acquired loans that were recorded at fair value at the acquisition date.



	December 31, 2014
(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Past Due		Nonaccrual		Total Past Due		Total Loans
Commercial real estate	$	1,674,930	$	2,548	$	323	$	—	$	4,435	$	7,306	$	1,682,236
Commercial and industrial	991,136		1,227		153		—		1,622		3,002		994,138
Commercial construction	214,174		—		—		—		1,974		1,974		216,148
Residential mortgage	485,465		565		1,220		—		2,336		4,121		489,586
Home equity	414,303		1,756		445		—		2,059		4,260		418,563
Installment and other consumer	65,111		352		73		—		31		456		65,567
Consumer construction	2,508		—		—		—		—		—		2,508
Loans held for sale	2,970		—		—		—		—		—		2,970
Totals	$	3,850,597	$	6,448	$	2,214	$	—	$	12,457	$	21,119	$	3,871,716

We continually monitor the commercial loan portfolio through an internal risk rating system. Loan risk ratings are assigned based upon the creditworthiness of the borrower and are reviewed on an ongoing basis according to our internal policies. Loans within the pass rating generally have a lower risk of loss than loans risk rated as special mention or substandard.

Our risk ratings are consistent with regulatory guidance and are as follows:

Pass—The loan is currently performing and is of high quality.

Special Mention—A special mention loan has potential weaknesses that warrant management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects or in the strength of our credit position at some future date. Economic and market conditions, beyond the borrower’s control, may in the future necessitate this classification.

Substandard—A substandard loan is not adequately protected by the net worth and/or paying capacity of the borrower or by the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. These loans are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.

The following tables present the recorded investment in commercial loan classes by internally assigned risk ratings as of the dates presented:



	March 31, 2015
(dollars in thousands)	Commercial Real Estate		% of Total		Commercial and Industrial		% of Total		Commercial Construction		% of Total		Total		% of Total
Pass	$	2,073,492	96.3	%	$	1,137,101	93.9	%	$	247,967	86.7	%	$	3,458,560	94.8	%
Special mention	25,204		1.2	%	55,529		4.6	%	20,600		7.2	%	101,333		2.8	%
Substandard	53,717		2.5	%	18,423		1.5	%	17,599		6.1	%	89,739		2.4	%
Total	$	2,152,413	100	%	$	1,211,053	100.0	%	$	286,166	100.0	%	$	3,649,632	100.0	%

	December 31, 2014
(dollars in thousands)	Commercial Real Estate		% of Total		Commercial and Industrial		% of Total		Commercial Construction		% of Total		Total		% of Total
Pass	$	1,635,132	97.2	%	$	948,663	95.4	%	$	196,520	90.9	%	$	2,780,315	96.1	%
Special mention	23,597		1.4	%	30,357		3.1	%	12,014		5.6	%	65,968		2.3	%
Substandard	23,507		1.4	%	15,118		1.5	%	7,614		3.5	%	46,239		1.6	%
Total	$	1,682,236	100.0	%	$	994,138	100.0	%	$	216,148	100.0	%	$	2,892,522	100.0	%

We monitor the delinquent status of the consumer portfolio on a monthly basis. Loans are considered nonperforming when interest and principal are 90 days or more past due or management has determined that a material deterioration in the borrower’s financial condition exists. The risk of loss is generally highest for nonperforming loans.

The following tables present the recorded investment in consumer loan classes by performing and nonperforming status as of the dates presented:



	March 31, 2015
(dollars in thousands)	Residential Mortgage		% of Total		Home Equity		% of Total		Installment and other consumer		% of Total		Consumer Construction		% of Total		Total		% of Total
Performing	$	519,280	99.6	%	$	440,410	99.6	%	$	65,741	100.0	%	$	4,410	100.0	%	$	1,029,841	99.6	%
Nonperforming	2,226		0.4	%	1,986		0.4	%	13		—	%	—		—	%	4,225		0.4	%
Total	$	521,506	100.0	%	$	442,396	100.0	%	$	65,754	100.0	%	$	4,410	100.0	%	$	1,034,066	100.0	%

	December 31, 2014
(dollars in thousands)	Residential Mortgage		% of Total		Home Equity		% of Total		Installment and other consumer		% of Total		Consumer Construction		% of Total		Total		% of Total
Performing	$	487,250	99.5	%	$	416,504	99.5	%	$	65,536	99.9	%	$	2,508	100.0	%	$	971,798	99.5	%
Nonperforming	2,336		0.5	%	2,059		0.5	%	31		0.1	%	—		—	%	4,426		0.5	%
Total	$	489,586	100.0	%	$	418,563	100.0	%	$	65,567	100.0	%	$	2,508	100.0	%	$	976,224	100.0	%

We individually evaluate all substandard and nonaccrual commercial loans greater than $0.5 million for impairment. Loans are considered to be impaired when based upon current information and events it is probable that we will be unable to collect all principal and interest payments due according to the original contractual terms of the loan agreement. All TDRs will be reported as an impaired loan for the remaining life of the loan, unless the restructuring agreement specifies an interest rate equal to or greater than the rate that would be accepted at the time of the restructuring for a new loan with comparable risk and it is expected that the remaining principal and interest will be fully collected according to the restructured agreement. For all TDRs, regardless of size, as well as all other impaired loans, we conduct further analysis to determine the probable loss and assign a specific reserve to the loan if deemed appropriate.

The following tables summarize investments in loans considered to be impaired and the related information on those impaired loans as of the dates presented:



	March 31, 2015						December 31, 2014
(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Without a related allowance recorded:
Commercial real estate	$	22,515	$	27,937	$	—	$	19,890	$	25,262	$	—
Commercial and industrial	10,338		11,238		—		9,218		9,449		—
Commercial construction	7,696		11,385		—		7,605		11,293		—
Consumer real estate	7,039		7,637		—		7,159		7,733		—
Other consumer	31		34		—		42		48		—
Total without a Related Allowance Recorded	47,619		58,231		—		43,914		53,785		—
With a related allowance recorded:
Commercial real estate	811		811		39		—		—		—
Commercial and industrial	—		—		—		—		—		—
Commercial construction	—		—		—		—		—		—
Consumer real estate	41		41		41		43		43		43
Other consumer	18		18		8		20		20		11
Total with a Related Allowance Recorded	870		870		88		63		63		54
Total:
Commercial real estate	23,326		28,748		39		19,890		25,262		—
Commercial and industrial	10,338		11,238		—		9,218		9,449		—
Commercial construction	7,696		11,385		—		7,605		11,293		—
Consumer real estate	7,080		7,678		41		7,202		7,776		43
Other consumer	49		52		8		62		68		11
Total	$	48,489	$	59,101	$	88	$	43,977	$	53,848	$	54

The following tables summarize investments in loans considered to be impaired and related information on those impaired loans the periods presented:



	For the Three Months Ended
	March 31, 2015				March 31, 2014
(dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Without a related allowance recorded:
Commercial real estate	$	22,627	$	164	$	23,539	$	167
Commercial and industrial	10,847		62		9,826		55
Commercial construction	7,704		53		8,324		57
Consumer real estate	7,073		96		8,258		103
Other consumer	34		—		121		1
Total without a Related Allowance Recorded	48,285		375		50,068		383
With a related allowance recorded:
Commercial real estate	823		8		—		—
Commercial and industrial	—		—		—		—
Commercial construction	—		—		—		—
Consumer real estate	42		1		51		1
Other consumer	19		—		32		1
Total with a Related Allowance Recorded	884		9		83		2
Total:
Commercial real estate	23,450		172		23,539		167
Commercial and industrial	10,847		62		9,826		55
Commercial construction	7,704		53		8,324		57
Consumer real estate	7,115		97		8,309		104
Other consumer	53		—		153		2
Total	$	49,169	$	384	$	50,151	$	385

The following tables detail activity in the ALL for the periods presented:



	Three Months Ended March 31, 2015
(dollars in thousands)	Commercial Real Estate			Commercial and Industrial			Commercial Construction			Consumer Real Estate			Other Consumer			Total Loans
Balance at beginning of period	$	20,164		$	13,668		$	6,093		$	6,333		$	1,653		$	47,911
Charge-offs	(66		)	(707		)	—			(375		)	(303		)	(1,451		)
Recoveries	103			114			1			136			85			439
Net (Charge-offs)/ Recoveries	37			(593		)	1			(239		)	(218		)	(1,012		)
Provision for loan losses	(1,130		)	636			775			629			297			1,207
Balance at End of Period	$	19,071		$	13,711		$	6,869		$	6,723		$	1,732		$	48,106


	Three Months Ended March 31, 2014
(dollars in thousands)	Commercial Real Estate			Commercial and Industrial			Commercial Construction			Consumer Real Estate			Other Consumer			Total Loans
Balance at beginning of period	$	18,921		$	14,433		$	5,374		$	6,362		$	1,165		$	46,255
Charge-offs	(266		)	(290		)	(28		)	(123		)	(267		)	(974		)
Recoveries	540			314			50			59			83			1,046
Net (Charge-offs)/ Recoveries	274			24			22			(64		)	(184		)	72
Provision for loan losses	685			(478		)	(213		)	110			185			289
Balance at End of Period	$	19,880		$	13,979		$	5,183		$	6,408		$	1,166		$	46,616

The following tables present the ALL and recorded investments in loans by category as of March 31, 2015 and December 31, 2014:



	March 31, 2015
	Allowance for Loan Losses						Portfolio Loans
(dollars in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total⁽¹⁾
Commercial real estate	$	39	$	19,032	$	19,071	$	23,326	$	2,129,087	$	2,152,413
Commercial and industrial	—		13,711		13,711		10,338		1,200,715		1,211,053
Commercial construction	—		6,869		6,869		7,696		278,470		286,166
Consumer real estate	41		6,682		6,723		7,080		961,232		968,312
Other consumer	8		1,724		1,732		49		65,705		65,754
Total	$	88	$	48,018	$	48,106	$	48,489	$	4,635,209	$	4,683,698
⁽¹⁾Includes acquired loans.
	December 31, 2014
	Allowance for Loan Losses						Portfolio Loans
(dollars in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total⁽¹⁾
Commercial real estate	$	—	$	20,164	$	20,164	$	19,890	$	1,662,346	$	1,682,236
Commercial and industrial	—		13,668		13,668		9,218		984,920		994,138
Commercial construction	—		6,093		6,093		7,605		208,543		216,148
Consumer real estate	43		6,290		6,333		7,202		903,455		910,657
Other consumer	11		1,642		1,653		62		65,505		65,567
Total	$	54	$	47,857	$	47,911	$	43,977	$	3,824,769	$	3,868,746
⁽¹⁾Includes acquired loans.

Acquired loans are recorded at fair value with no carryover of the ALL. Credit deterioration on any acquired loan incurred subsequent to the acquisition date will be recognized in the ALL through the provision. At March 31, 2015, no additional ALL was recorded for acquired loans.