3.LOANS AND ALLOWANCE FOR LOAN LOSSES

The Bank’s financing receivables consist primarily of loans and a minimal amount of lease financing receivables (together referred to as “loans”). Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, inclusive of purchase premiums or discounts, deferred loan fees and costs and the allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method.

Lease financing receivables, all of which are direct financing leases, are reported at their principal balance outstanding net of any unearned income, deferred fees and costs and applicable allowance for losses. Leasing income is recognized on a basis that achieves a constant periodic rate of return on the outstanding lease financing balances over the lease terms.

The composition of loans follows:

(in thousands)	September 30, 2014			December 31, 2013

Residential real estate:
Owner occupied	$	1,127,595		$	1,097,795
Owner occupied - correspondent*	139,252			—
Non owner occupied	98,365			110,809
Commercial real estate	771,765			773,173
Commercial real estate - purchased whole loans*	34,714			34,186
Construction & land development	44,462			44,351
Commercial & industrial	149,943			127,763
Lease financing receivables	819			—
Warehouse lines of credit	272,584			149,576
Home equity	241,189			226,782
Consumer:
RPG loans	3,460			1,827
Credit cards	9,230			9,030
Overdrafts	966			944
Purchased whole loans*	4,664			—
Other consumer	9,527			13,556

Total loans**	2,908,535			2,589,792
Allowance for loan losses	(23,617		)	(23,026		)

Total loans, net	$	2,884,918		$	2,566,766

* - Identifies loans outside of the Bank’s historical market footprint.

** - Total loans are presented inclusive of premiums, discounts and net loan origination fees and costs. See table directly below for expanded detail.

The table below reconciles the contractually receivable and carrying amounts of loans at September 30, 2014 and December 31, 2013:

(in thousands)	September 30, 2014			December 31, 2013

Contractually receivable	$	2,922,238		$	2,614,632
Unearned income	(95		)	—
Unamortized premiums(1)	3,032			260
Unaccreted discounts(2)	(18,089		)	(26,624		)
Net unamortized deferred origination fees and costs	1,449			1,524
Carrying value of loans	$	2,908,535		$	2,589,792

(1)

- Premiums predominately relate to loans acquired through the Bank’s Correspondent Lending division.

(2)

- Discounts predominately relate to loans acquired in the Bank’s 2012 FDIC-assisted transactions.

Loan Purchases

In May 2014, the Bank began acquiring single family, first lien mortgage loans for investment within its loan portfolio through its Correspondent Lending division. Correspondent Lending generally involves the Bank acquiring, primarily from its Mortgage Warehouse clients, closed loans that meet the Bank’s specifications. Substantially all loans purchased through the Correspondent Lending channel are purchased at a premium. Premiums on loans held for investment acquired though the Correspondent Lending division are amortized into interest income on a level-yield method over the expected life of the loan. Loans acquired through the Correspondent Lending division generally reflect borrowers outside of the Bank’s historical market footprint, with a substantial majority of loans originated through the division as of September 30, 2014, secured by single residences located in the state of California.

In addition to secured mortgage loans acquired through its Correspondent Lending division, the Bank also began acquiring unsecured consumer installment loans for investment from a third-party originator in April 2014. Such consumer loans are purchased at par and are selected by the Bank based on certain underwriting characteristics.

The table below reflects the purchased activity of single family, first lien mortgage loans and unsecured consumer loans, by class, during the three and nine months ended September 30, 2014. No purchases of these type loans were made during 2013.

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(in thousands)	2014		2014

Residential real estate:
Owner occupied - correspondent	$	128,374	$	139,632
Consumer:
Purchased whole loans	2,524		5,037
Total purchased loans	$	130,898	$	144,669

Purchased Credit Impaired (“PCI”) Loans

The contractual amount of PCI loans acquired during the Bank’s 2012 FDIC-assisted transactions and accounted for under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, decreased from $58 million as of December 31, 2013 to $36 million as of September 30, 2014. The carrying value of these loans was $41 million as of December 31, 2013 compared to $25 million as of September 30, 2014.

The table below reconciles the contractually required and carrying amounts of PCI loans at September 30, 2014 and December 31, 2013:

(in thousands)	September 30, 2014			December 31, 2013

Contractually-required principal	$	35,760		$	57,992
Non-accretable amount	(8,610		)	(13,582		)
Accretable amount	(2,418		)	(3,457		)
Carrying value of loans	$	24,732		$	40,953

The following table presents a rollforward of the accretable amount on PCI loans for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2014			2013			2014			2013

Balance, beginning of period	$	(2,487	)	$	(1,381	)	$	(3,457	)	$	(3,231	)
Transfers between non-accretable and accretable	(609		)	(3,725		)	(2,949		)	(5,421		)
Net accretion into interest income on loans, including loan fees	678			1,916			3,988			5,179
Other changes	—			—			—			283
Balance, end of period	$	(2,418	)	$	(3,190	)	$	(2,418	)	$	(3,190	)

Credit Quality Indicators

Based on the Bank’s internal analyses performed as of September 30, 2014 and December 31, 2013, the following tables reflect loans by risk category, as such categories are defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013:

									Purchased		Purchased
									Credit		Credit
									Impaired		Impaired		Total
September 30, 2014			Special				Doubtful /		Loans -		Loans -		Rated
(in thousands)	Pass		Mention *		Substandard *		Loss		Group 1		Substandard		Loans**

Residential real estate:
Owner occupied	$	—	$	27,485	$	12,845	$	—	$	1,612	$	—	$	41,942
Owner occupied - correspondent	—		—		—		—		—		—		—
Non owner occupied	—		1,173		2,329		—		3,988		—		7,490
Commercial real estate	729,403		9,549		15,794		—		16,978		41		771,765
Commercial real estate - purchased whole loans	34,714		—		—		—		—		—		34,714
Construction & land development	41,248		122		2,462		—		630		—		44,462
Commercial & industrial	146,183		493		1,803		—		1,253		211		149,943
Lease financing receivables	819		—		—		—		—		—		819
Warehouse lines of credit	272,584		—		—		—		—		—		272,584
Home equity	—		—		2,230		—		—		—		2,230
Consumer:
RPG loans	—		—		—		—		—		—		—
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Purchased whole loans	—		—		—		—		—		—		—
Other consumer	—		14		48		—		19		—		81

Total	$	1,224,951	$	38,836	$	37,511	$	—	$	24,480	$	252	$	1,326,030

* - At September 30, 2014, Special Mention and Substandard loans included $1 million and $5 million, respectively, which were removed from PCI accounting in accordance with ASC 310-30-35-13 due to a post-acquisition troubled debt restructuring.

** - The above table excludes all non-classified residential real estate and consumer loans at the respective period ends. The table also excludes most non-classified small commercial & industrial and commercial real estate relationships totaling $100,000 or less. These loans are not rated by the Company since they are accruing interest and are not past due 80-days-or-more.

									Purchased		Purchased
									Credit		Credit
									Impaired		Impaired		Total
December 31, 2013			Special				Doubtful /		Loans -		Loans -		Rated
(in thousands)	Pass		Mention *		Substandard *		Loss		Group 1		Substandard		Loans**

Residential real estate:
Owner occupied	$	—	$	27,431	$	10,994	$	—	$	2,810	$	—	$	41,235
Owner occupied - correspondent	—		—		—		—		—		—		—
Non owner occupied	—		919		1,292		—		7,936		—		10,147
Commercial real estate	709,610		11,125		25,296		—		27,142		—		773,173
Commercial real estate - Purchased whole loans	34,186		—		—		—		—		—		34,186
Construction & land development	40,591		128		2,386		—		1,246		—		44,351
Commercial & industrial	123,646		296		2,035		—		1,564		222		127,763
Lease financing receivables	—		—		—		—		—		—		—
Warehouse lines of credit	149,576		—		—		—		—		—		149,576
Home equity	—		250		2,014		—		—		—		2,264
Consumer:
RPG loans	—		—		—		—		—		—		—
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Purchased whole loans	—		—		—		—		—		—		—
Other consumer	—		18		66		—		33		—		117

Total	$	1,057,609	$	40,167	$	44,083	$	—	$	40,731	$	222	$	1,182,812

* - At December 31, 2013, Special Mention and Substandard loans included $1 million and $6 million, respectively, which were removed from PCI accounting in accordance with ASC 310-30-35-13 due to a post-acquisition troubled debt restructuring.

Allowance for Loan Losses

Activity in the allowance for loan losses (“Allowance”) follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2014			2013			2014			2013

Allowance, beginning of period	$	22,772		$	22,491		$	23,026		$	23,729

Charge offs - Traditional Banking	(1,071		)	(1,627		)	(2,698		)	(4,744		)
Charge offs - RPG	(2		)	—			(2		)	—
Total charge offs	(1,073		)	(1,627		)	(2,700		)	(4,744		)

Recoveries - Traditional Banking	376			371			1,233			1,231
Recoveries - RPG	32			57			558			796
Total recoveries	408			428			1,791			2,027

Net (charge offs) recoveries - Traditional Banking	(695		)	(1,256		)	(1,465		)	(3,513		)
Net (charge offs) recoveries - RPG	30			57			556			796
Net (charge offs) recoveries	(665		)	(1,199		)	(909		)	(2,717		)

Provision for losses - Traditional Banking	1,542			2,257			2,012			3,276
Provision for losses - RPG	(32		)	(57		)	(512		)	(796		)
Total provision for losses	1,510			2,200			1,500			2,480

Allowance, end of period	$	23,617		$	23,492		$	23,617		$	23,492

The Allowance calculation includes the following qualitative factors, which are considered in combination with the Bank’s historical loss rates in determining the general loss reserve within the Allowance:

Changes in nature, volume and seasoning of the portfolio;

Changes in experience, ability and depth of lending management and other relevant staff;

Changes in the quality of the Bank’s credit review system;

Changes in policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

Changes in the volume and severity of past due, non-accrual and classified loans;

Changes in the value of underlying collateral for collateral-dependent loans;

Changes in international, national, regional, and local economic and business conditions and developments that affect the collectibility of portfolios, including the condition of various market segments;

The existence and effect of any concentrations of credit, and changes in the level of such concentrations; and

The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio.

The following tables present the activity in the Allowance by portfolio class for the three months ended September 30, 2014 and 2013:

													Commercial
	Residential Real Estate												Real Estate -									Lease
Three Months Ended	Owner			Owner Occupied -			Non Owner			Commercial			Purchased			Construction &			Commercial &			Financing
September 30, 2014 (in thousands)	Occupied			Correspondent			Occupied			Real Estate			Whole Loans			Land Development			Industrial			Receivables

Beginning balance	$	8,055		$	60		$	839		$	7,696		$	34		$	1,090		$	1,152		$	3
Provision for losses	(148		)	706			50			547			—			(4		)	(81		)	5
Charge offs	(161		)	—			(135		)	(365		)	—			—			—			—
Recoveries	26			—			17			9			—			—			37			—

Ending balance	$	7,772		$	766		$	771		$	7,887		$	34		$	1,086		$	1,108		$	8

(continued)

	Warehouse						Consumer
	Lines of			Home			RPG			Credit						Purchased			Other
	Credit			Equity			Loans			Cards			Overdrafts			Whole Loans			Consumer			Total

Beginning balance	$	610		$	2,403		$	46		$	286		$	280		$	—		$	218		$	22,772
Provision for losses	71			283			(32		)	19			17			189			(112		)	1,510
Charge offs	—			(146		)	(2		)	(23		)	(136		)	—			(105		)	(1,073		)
Recoveries	—			88			32			10			91			—			98			408

Ending balance	$	681		$	2,628		$	44		$	292		$	252		$	189		$	99		$	23,617

													Commercial
	Residential Real Estate												Real Estate -									Lease
Three Months Ended	Owner			Owner Occupied -			Non Owner			Commercial			Purchased			Construction &			Commercial &			Financing
September 30, 2013 (in thousands)	Occupied			Correspondent			Occupied			Real Estate			Whole Loans			Land Development			Industrial			Receivables

Beginning balance	$	7,563		$	—		$	642		$	8,763		$	34		$	1,587		$	710		$	—
Provision for losses	1,198			—			157			686			—			16			232			—
Charge offs	(578		)	—			(67		)	(307		)	—			(16		)	(102		)	—
Recoveries	20			—			59			38			—			7			19			—

Ending balance	$	8,203		$	—		$	791		$	9,180		$	34		$	1,594		$	859		$	—

(continued)

	Warehouse						Consumer
	Lines of			Home			RPG			Credit						Purchased			Other
	Credit			Equity			Loans			Cards			Overdrafts			Whole Loans			Consumer			Total

Beginning balance	$	462		$	1,932		$	—		$	344		$	249		$	—		$	205		$	22,491
Provision for losses	(143		)	104			(57		)	(18		)	26			—			(1		)	2,200
Charge offs	—			(218		)	—			(60		)	(169		)	—			(110		)	(1,627		)
Recoveries	—			55			57			4			95			—			74			428

Ending balance	$	319		$	1,873		$	—		$	270		$	201		$	—		$	168		$	23,492

The following tables present the activity in the Allowance by portfolio class for the nine months ended September 30, 2014 and 2013:

													Commercial
	Residential Real Estate												Real Estate -									Lease
Nine Months Ended	Owner			Owner Occupied -			Non Owner			Commercial			Purchased			Construction &			Commercial &			Financing
September 30, 2014 (in thousands)	Occupied			Correspondent			Occupied			Real Estate			Whole Loans			Land Development			Industrial			Receivables

Beginning balance	$	7,816		$	—		$	1,023		$	8,309		$	34		$	1,296		$	1,089		$	—
Provision for losses	430			766			(121		)	163			—			(277		)	(68		)	8
Charge offs	(580		)	—			(157		)	(739		)	—			(18		)	(20		)	—
Recoveries	106			—			26			154			—			85			107			—

Ending balance	$	7,772		$	766		$	771		$	7,887		$	34		$	1,086		$	1,108		$	8

(continued)

	Warehouse						Consumer
	Lines of			Home			RPG			Credit						Purchased			Other
	Credit			Equity			Loans			Cards			Overdrafts			Whole Loans			Consumer			Total

Beginning balance	$	449		$	2,396		$	—		$	289		$	199		$	—		$	126		$	23,026
Provision for losses	232			518			(512		)	41			177			189			(46		)	1,500
Charge offs	—			(429		)	(2		)	(65		)	(429		)	—			(261		)	(2,700		)
Recoveries	—			143			558			27			305			—			280			1,791

Ending balance	$	681		$	2,628		$	44		$	292		$	252		$	189		$	99		$	23,617

													Commercial
	Residential Real Estate												Real Estate -									Lease
Nine Months Ended	Owner			Owner Occupied -			Non Owner			Commercial			Purchased			Construction &			Commercial &			Financing
September 30, 2013 (in thousands)	Occupied			Correspondent			Occupied			Real Estate			Whole Loans			Land Development			Industrial			Receivables

Beginning balance	$	7,006		$	—		$	1,049		$	8,843		$	34		$	2,769		$	580		$	—
Provision for losses	2,269			—			(106		)	1,192			—			(604		)	618			—
Charge offs	(1,291		)	—			(225		)	(972		)	—			(616		)	(412		)	—
Recoveries	219			—			73			117			—			45			73			—

Ending balance	$	8,203		$	—		$	791		$	9,180		$	34		$	1,594		$	859		$	—

(continued)

	Warehouse						Consumer
	Lines of			Home			RPG			Credit						Purchased			Other
	Credit			Equity			Loans			Cards			Overdrafts			Whole Loans			Consumer			Total

Beginning balance	$	541		$	2,348		$	—		$	210		$	198		$	—		$	151		$	23,729
Provision for losses	(222		)	(248		)	(796		)	166			153			—			58			2,480
Charge offs	—			(354		)	—			(120		)	(474		)	—			(280		)	(4,744		)
Recoveries	—			127			796			14			324			—			239			2,027

Ending balance	$	319		$	1,873		$	—		$	270		$	201		$	—		$	168		$	23,492

Non-performing Loans and Other Assets

Detail of non-performing loans and other assets follows:

(dollars in thousands)	September 30, 2014			December 31, 2013

Loans on non-accrual status(1)	$	21,447		$	19,104
Loans past due 90-days-or-more and still on accrual(2)	—			1,974

Total non-performing loans	21,447			21,078
Other real estate owned	11,937			17,102
Total non-performing assets	$	33,384		$	38,180

Credit Quality Ratios

Non-performing loans to total loans	0.74		%	0.81		%
Non-performing assets to total loans (including OREO)	1.14		%	1.46		%
Non-performing assets to total assets	0.92		%	1.13		%

(1)

Loans on non-accrual status include impaired loans, which are discussed subsequently in Footnote 3 in this section of the filing.

(2)

All loans past due 90-days-or-more and still accruing were PCI loans accounted for under ASC 310-30.

The following table presents the recorded investment in non-accrual loans and loans past due 90-days-or-more and still on accrual by class:

					Past Due 90-Days-or-More
	Non-Accrual				and Still Accruing Interest*
(in thousands)	September 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013

Residential real estate:
Owner occupied	$	9,457	$	8,538	$	—	$	673
Owner occupied - correspondent	—		—		—		—
Non owner occupied	1,632		1,279		—		—
Commercial real estate	6,739		7,643		—		—
Commercial real estate - purchased whole loans	—		—		—		—
Construction & land development	1,990		97		—		70
Commercial & industrial	—		327		—		1,231
Lease financing receivables	—		—		—		—
Warehouse lines of credit	—		—		—		—
Home equity	1,545		1,128		—		—
Consumer:
RPG loans	—		—		—		—
Credit cards	—		—		—		—
Overdrafts	—		—		—		—
Purchased whole loans	—		—		—		—
Other consumer	84		92		—		—

Total	$	21,447	$	19,104	$	—	$	1,974

* - For all periods presented, loans past due 90-days-or-more and still on accrual consist entirely of PCI loans.

Non-accrual loans and loans past due 90-days-or-more and still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. Non-accrual loans are typically returned to accrual status when all the principal and interest amounts contractually due are brought current and held current for six consecutive months and future contractual payments are reasonably assured. Troubled debt restructurings (“TDR”s) on non-accrual status are reviewed for return to accrual status on an individual basis, with additional consideration given to performance under the modified terms.

Delinquent Loans

The following tables present the aging of the recorded investment in loans by class:

	30 - 59			60 - 89			90 or More
September 30, 2014	Days			Days			Days			Total			Total Not
(dollars in thousands)	Delinquent			Delinquent			Delinquent*			Delinquent			Delinquent		Total

Residential real estate:
Owner occupied	$	1,440		$	1,474		$	2,983		$	5,897		$	1,121,698	$	1,127,595
Owner occupied - correspondent	—			—			—			—			139,252		139,252
Non owner occupied	87			464			133			684			97,681		98,365
Commercial real estate	—			—			2,433			2,433			769,332		771,765
Commercial real estate - purchased whole loans	—			—			—			—			34,714		34,714
Construction & land development	—			—			1,990			1,990			42,472		44,462
Commercial & industrial	—			—			—			—			149,943		149,943
Lease financing receivables	—			—			—			—			819		819
Warehouse lines of credit	—			—			—			—			272,584		272,584
Home equity	194			149			420			763			240,426		241,189
Consumer:
RPG loans	105			24			—			129			3,331		3,460
Credit cards	45			13			3			61			9,169		9,230
Overdrafts	150			1			—			151			815		966
Purchased whole loans	—			—			—			—			4,664		4,664
Other consumer	106			12			—			118			9,409		9,527

Total	$	2,127		$	2,137		$	7,962		$	12,226		$	2,896,309	$	2,908,535
Delinquency ratio**	0.07		%	0.07		%	0.27		%	0.42		%

	30 - 59			60 - 89			90 or More
December 31, 2013	Days			Days			Days			Total			Total Not
(dollars in thousands)	Delinquent			Delinquent			Delinquent*			Delinquent			Delinquent		Total

Residential real estate:
Owner occupied	$	1,956		$	733		$	3,668		$	6,357		$	1,091,438	$	1,097,795
Owner occupied - correspondent	—			—			—			—			—		—
Non owner occupied	195			967			131			1,293			109,516		110,809
Commercial real estate	874			384			3,940			5,198			767,975		773,173
Commercial real estate - purchased whole loans	—			—			—			—			34,186		34,186
Construction & land development	332			—			167			499			43,852		44,351
Commercial & industrial	—			—			1,415			1,415			126,348		127,763
Lease financing receivables	—			—			—			—			—		—
Warehouse lines of credit	—			—			—			—			149,576		149,576
Home equity	665			48			397			1,110			225,672		226,782
Consumer:
RPG loans	—			—			—			—			1,827		1,827
Credit cards	87			6			5			98			8,932		9,030
Overdrafts	159			—			—			159			785		944
Purchased whole loans	—			—			—			—			—		—
Other consumer	67			27			—			94			13,462		13,556

Total	$	4,335		$	2,165		$	9,723		$	16,223		$	2,573,569	$	2,589,792
Delinquency ratio**	0.17		%	0.08		%	0.38		%	0.63		%

* - Except for PCI loans, all loans 90-days-or-more past due as of September 30, 2014 and December 31, 2013 were on non-accrual status.

** - Delinquency ratio equals total delinquent loans by delinquency class divided by total loans.

Impaired Loans

The Bank defines impaired loans as follows:

All loans internally rated as “Substandard,” “Doubtful” or “Loss;”

All loans internally rated in a PCI category with cash flows that have deteriorated from management’s initial estimate;

All loans on non-accrual status and non-PCI loans past due 90 days-or-more still on accrual;

All retail and commercial TDRs; and

Any other situation where the full collection of the total amount due for a loan is improbable or otherwise meets the definition of impaired.

See the section titled “Credit Quality Indicators” in this section of the filing for additional discussion regarding the Bank’s loan classification structure.

Information regarding the Bank’s impaired loans follows:

(in thousands)	September 30, 2014		December 31, 2013

Loans with no allocated Allowance	$	32,748	$	36,721
Loans with allocated Allowance	57,565		71,273

Total impaired loans	$	90,313	$	107,994

Amount of the Allowance allocated	$	5,651	$	6,674

Approximately $14 million and $24 million of impaired loans at September 30, 2014 and December 31, 2013 were PCI loans. Approximately $5 million and $6 million of impaired loans at September 30, 2014 and December 31, 2013 were formerly PCI loans which became classified as “impaired” through a troubled debt restructuring.

The following tables present the balance in the Allowance and the recorded investment in loans by portfolio class based on impairment method as of September 30, 2014 and December 31, 2013:

									Commercial
	Residential Real Estate								Real Estate -						Lease
	Owner		Owner Occupied -		Non Owner		Commercial		Purchased		Construction &		Commercial &		Financing
September 30, 2014 (in thousands)	Occupied		Correspondent		Occupied		Real Estate		Whole Loans		Land Development		Industrial		Receivables

Allowance:
Ending Allowance balance:
Individually evaluated for impairment, excluding PCI loans	$	3,298	$	—	$	113	$	788	$	—	$	190	$	—	$	—
Collectively evaluated for impairment	4,436		766		595		6,574		34		896		813		8
PCI loans with post acquisition impairment	38		—		63		525		—		—		295		—
PCI loans without post acquisition impairment	—		—		—		—		—		—		—		—

Total ending Allowance:	$	7,772	$	766	$	771	$	7,887	$	34	$	1,086	$	1,108	$	8

Loans:
Impaired loans individually evaluated, excluding PCI loans	$	40,274	$	—	$	3,138	$	24,370	$	—	$	2,656	$	3,884	$	—
Loans collectively evaluated for impairment	1,085,709		139,252		91,239		730,376		34,714		41,176		144,595		819
PCI loans with post acquisition impairment	897		—		3,162		8,265		—		—		1,365		—
PCI loans without post acquisition impairment	715		—		826		8,754		—		630		99		—

	$	1,127,595	$	139,252	$	98,365	$	771,765	$	34,714	$	44,462	$	149,943	$	819

(continued)

	Warehouse				Consumer
	Lines of		Home		RPG		Credit				Purchased		Other
	Credit		Equity		Loans		Cards		Overdrafts		Whole Loans		Consumer		Total

Allowance:
Ending Allowance balance:
Individually evaluated for impairment, excluding PCI loans	$	—	$	291	$	—	$	—	$	—	$	—	$	49	$	4,729
Collectively evaluated for impairment	681		2,337		44		292		252		189		49		17,966
PCI loans with post acquisition impairment	—		—		—		—		—		—		1		922
PCI loans without post acquisition impairment	—		—		—		—		—		—		—		—

Total ending Allowance:	$	681	$	2,628	$	44	$	292	$	252	$	189	$	99	$	23,617

Loans:
Impaired loans individually evaluated, excluding PCI loans	$	—	$	2,230	$	—	$	—	$	—	$	—	$	62	$	76,614
Loans collectively evaluated for impairment	272,584		238,959		3,460		9,230		966		4,664		9,446		2,807,189
PCI loans with post acquisition impairment	—		—		—		—		—		—		10		13,699
PCI loans without post acquisition impairment	—		—		—		—		—		—		9		11,033

Total ending loan balance	$	272,584	$	241,189	$	3,460	$	9,230	$	966	$	4,664	$	9,527	$	2,908,535

									Commercial
	Residential Real Estate								Real Estate -						Lease
	Owner		Owner Occupied -		Non Owner		Commercial		Purchased		Construction &		Commercial &		Financing
December 31, 2013 (in thousands)	Occupied		Correspondent		Occupied		Real Estate		Whole Loans		Land Development		Industrial		Receivables

Allowance:
Ending Allowance balance:
Individually evaluated for impairment, excluding PCI loans	$	3,606	$	—	$	61	$	1,232	$	—	$	146	$	111	$	—
Collectively evaluated for impairment	4,159		—		672		6,474		34		1,140		661		—
PCI loans with post acquisition impairment	51		—		290		603		—		10		317		—
PCI loans without post acquisition impairment	—		—		—		—		—		—		—		—

Total ending Allowance:	$	7,816	$	—	$	1,023	$	8,309	$	34	$	1,296	$	1,089	$	—

Loans:
Impaired loans individually evaluated, excluding PCI loans	$	39,211	$	—	$	2,061	$	33,519	$	—	$	2,494	$	4,521	$	—
Loans collectively evaluated for impairment	1,055,774		—		100,812		712,512		34,186		40,611		121,456		—
PCI loans with post acquisition impairment	1,455		—		5,984		14,512		—		267		1,609		—
PCI loans without post acquisition impairment	1,355		—		1,952		12,630		—		979		177		—

Total ending loan balance	$	1,097,795	$	—	$	110,809	$	773,173	$	34,186	$	44,351	$	127,763	$	—

(continued)

	Warehouse				Consumer
	Lines of		Home		RPG		Credit				Purchased		Other
	Credit		Equity		Loans		Cards		Overdrafts		Whole Loans		Consumer		Total

Allowance:
Ending Allowance balance:
Individually evaluated for impairment, excluding PCI loans	$	—	$	203	$	—	$	—	$	—	$	—	$	43	$	5,402
Collectively evaluated for impairment	449		2,193		2		289		199		—		80		16,352
PCI loans with post acquisition impairment	—		—		—		—		—		—		1		1,272
PCI loans without post acquisition impairment	—		—		—		—		—		—		—		—

Total ending Allowance:	$	449	$	2,396	$	2	$	289	$	199	$	—	$	124	$	23,026

Loans:
Impaired loans individually evaluated, excluding PCI loans	$	—	$	2,264	$	—	$	—	$	—	$	—	$	85	$	84,155
Loans collectively evaluated for impairment	149,576		224,518		1,827		9,030		944		—		13,438		2,464,684
PCI loans with post acquisition impairment	—		—		—		—		—		—		12		23,839
PCI loans without post acquisition impairment	—		—		—		—		—		—		21		17,114

Total ending loan balance	$	149,576	$	226,782	$	1,827	$	9,030	$	944	$	—	$	13,556	$	2,589,792

The following tables present loans individually evaluated for impairment by class as of September 30, 2014 and December 31, 2013 and for the three and nine months ended September 30, 2014 and 2013. The difference between the “Unpaid Principal Balance” and “Recorded Investment” columns represents life-to-date partial write downs/charge offs taken on individual impaired credits.

	As of						Three Months Ended						Nine Months Ended
	September 30, 2014						September 30, 2014						September 30, 2014
											Cash Basis						Cash Basis
	Unpaid						Average		Interest		Interest		Average		Interest		Interest
	Principal		Recorded		Allowance		Recorded		Income		Income		Recorded		Income		Income
(in thousands)	Balance		Investment		Allocated		Investment		Recognized		Recognized		Investment		Recognized		Recognized

Impaired loans with no related allowance recorded:
Residential real estate:
Owner occupied	$	6,961	$	6,577	$	—	$	6,717	$	66	$	—	$	6,838	$	190	$	—
Owner occupied - correspondent	—		—		—		—		—		—		—		—		—
Non owner occupied	2,023		1,870		—		1,731		11		—		1,518		36		—
Commercial real estate	17,767		16,516		—		15,682		95		—		17,985		434		—
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—		—		—
Construction & land development	2,164		2,164		—		2,123		3		—		2,103		6		—
Commercial & industrial	3,884		3,884		—		4,019		31		—		4,126		181		—
Lease financing receivables	—		—		—		—		—		—		—		—		—
Warehouse lines of credit	—		—		—		—		—		—		—		—		—
Home equity	1,888		1,737		—		1,802		11		—		1,780		27		—
Consumer:
RPG loans	—		—		—		—		—		—		—		—		—
Credit cards	—		—		—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—		—		—
Purchased whole loans	—		—		—		—		—		—		—		—		—
Other consumer	—		—		—		—		—		—		5		—		—

Impaired loans with an allowance recorded:
Residential real estate:
Owner occupied	35,090		34,594		3,336		34,919		246		—		34,697		737		—
Owner occupied - correspondent	—		—		—		—		—		—		—		—		—
Non owner occupied	4,430		4,430		176		4,811		51		—		5,700		149		—
Commercial real estate	16,158		16,119		1,313		17,479		186		—		20,338		499		—
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—		—		—
Construction & land development	492		492		190		498		6		—		546		17		—
Commercial & industrial	1,365		1,365		295		1,374		18		—		1,579		78		—
Lease financing receivables	—		—		—		—		—		—		—		—		—
Warehouse lines of credit	—		—		—		—		—		—		—		—		—
Home equity	548		493		291		436		—		—		588		—		—
Consumer:
RPG loans	—		—		—		—		—		—		—		—		—
Credit cards	—		—		—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—		—		—
Purchased whole loans	—		—		—		—		—		—		—		—		—
Other consumer	72		72		50		69		1		—		77		1		—
Total impaired loans	$	92,842	$	90,313	$	5,651	$	91,660	$	725	$	—	$	97,880	$	2,355	$	—

	As of						Three Months Ended						Nine Months Ended
	December 31, 2013						September 30, 2013						September 30, 2013
											Cash Basis						Cash Basis
	Unpaid						Average		Interest		Interest		Average		Interest		Interest
	Principal		Recorded		Allowance		Recorded		Income		Income		Recorded		Income		Income
(in thousands)	Balance		Investment		Allocated		Investment		Recognized		Recognized		Investment		Recognized		Recognized

Impaired loans with no related allowance recorded:
Residential real estate:
Owner occupied	$	7,136	$	6,569	$	—	$	6,088	$	35	$	—	$	9,876	$	89	$	—
Owner occupied - correspondent	—		—		—		—		—		—		—		—		—
Non owner occupied	1,498		1,256		—		1,269		—		—		1,411		18		—
Commercial real estate	21,886		20,953		—		18,566		451		—		18,382		809		—
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—		—		—
Construction & land development	2,087		2,087		—		1,930		73		—		2,126		127		—
Commercial & industrial	4,367		4,258		—		3,460		204		—		3,770		413		—
Lease financing receivables	—		—		—		—		—		—		—		—		—
Warehouse lines of credit	—		—		—		—		—		—		—		—		—
Home equity	1,695		1,577		—		1,724		34		—		1,867		64		—
Consumer:
RPG loans	—		—		—		—		—		—		—		—		—
Credit cards	—		—		—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—		—		—
Purchased whole loans	—		—		—		—		—		—		—		—		—
Other consumer	18		18		—		37		—		—		221		—		—

Impaired loans with an allowance recorded:
Residential real estate:
Owner occupied	34,393		34,097		3,657		36,008		315		—		33,841		876		—
Owner occupied - correspondent	—		—		—		—		—		—		—		—		—
Non owner occupied	6,789		6,789		351		5,688		166		—		4,661		208		—
Commercial real estate	27,080		27,078		1,835		26,508		549		—		26,055		998		—
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—		—		—
Construction & land development	674		674		156		2,000		30		—		2,674		75		—
Commercial & industrial	1,872		1,872		428		2,641		21		—		2,702		27		—
Lease financing receivables	—		—		—		—		—		—		—		—		—
Warehouse lines of credit	—		—		—		—		—		—		—		—		—
Home equity	688		687		203		1,026		21		—		1,289		41		—
Consumer:
RPG loans	—		—		—		—		—		—		—		—		—
Credit cards	—		—		—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—		—		—
Purchased whole loans	—		—		—		—		—		—		—		—		—
Other consumer	79		79		44		116		1		—		92		3		—
Total impaired loans	$	110,262	$	107,994	$	6,674	$	107,061	$	1,900	$	—	$	108,967	$	3,748	$	—

Troubled Debt Restructurings

A TDR is the situation where, due to a borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise have considered. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Bank’s internal underwriting policy.

All TDRs are considered “Impaired,” including PCI loans subsequently restructured. The majority of the Bank’s commercial related and construction TDRs involve a restructuring of financing terms such as a reduction in the payment amount to require only interest and escrow (if required) and/or extending the maturity date of the debt. The substantial majority of the Bank’s residential real estate TDR concessions involve reducing the client’s loan payment through a rate reduction for a set period of time based on the borrower’s ability to service the modified loan payment. Retail loans may also be classified as TDRs due to legal modifications, such as bankruptcies.

Non-accrual loans modified as TDRs typically remain on non-accrual status and continue to be reported as non-performing loans for a minimum of six months. Accruing loans modified as TDRs are evaluated for non-accrual status based on a current evaluation of the borrower’s financial condition and ability and willingness to service the modified debt. At September 30, 2014 and December 31, 2013, $15 million and $13 million of TDRs were on non-accrual status.

Detail of TDRs differentiated by loan class and accrual status follows:

	Troubled Debt		Troubled Debt		Total
	Restructurings on		Restructurings on		Troubled Debt
September 30, 2014 (in thousands)	Non-Accrual Status		Accrual Status		Restructurings

Residential real estate	$	6,836	$	32,984	$	39,820
Commercial real estate	6,258		15,665		21,923
Construction & land development	1,990		562		2,552
Commercial & industrial	—		3,884		3,884

Total troubled debt restructurings	$	15,084	$	53,095	$	68,179

	Troubled Debt		Troubled Debt		Total
	Restructurings on		Restructurings on		Troubled Debt
December 31, 2013 (in thousands)	Non-Accrual Status		Accrual Status		Restructurings

Residential real estate	$	5,514	$	31,705	$	37,219
Commercial real estate	7,486		22,041		29,527
Construction & land development	97		2,608		2,705
Commercial & industrial	143		4,378		4,521

Total troubled debt restructurings	$	13,240	$	60,732	$	73,972

The Bank considers a TDR to be performing to its modified terms if the loan is in accrual status and not past due 30 days or more as of the reporting date. A summary of TDRs outstanding by modification and performance under modified terms at September 30, 2014 and December 31, 2013 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
September 30, 2014 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Interest only payments	$	683	$	395	$	1,078
Rate reduction	27,970		4,399		32,369
Principal deferral	1,066		385		1,451
Legal modifications	3,390		1,532		4,922
Total residential TDRs	33,109		6,711		39,820

Commercial related and construction/land development loans:
Interest only payments	3,703		950		4,653
Rate reduction	9,900		2,881		12,781
Principal deferral	6,507		4,209		10,716
Legal modifications	—		209		209
Total commercial TDRs	20,110		8,249		28,359
Total troubled debt restructurings	$	53,219	$	14,960	$	68,179

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
December 31, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Interest only payments	$	430	$	671	$	1,101
Rate reduction	26,004		4,993		30,997
Principal deferral	1,840		632		2,472
Legal modifications	1,247		1,402		2,649
Total residential TDRs	29,521		7,698		37,219

Commercial related and construction/land development loans:
Interest only payments	6,086		1,321		7,407
Rate reduction	13,958		663		14,621
Principal deferral	8,983		5,351		14,334
Legal modifications	—		391		391
Total commercial TDRs	29,027		7,726		36,753
Total troubled debt restructurings	$	58,548	$	15,424	$	73,972

As of September 30, 2014 and December 31, 2013, 78% and 79% of the Bank’s TDRs were performing according to their modified terms. The Bank had provided $4 million and $5 million of specific reserve allocations to customers whose debt terms have been modified in TDRs as of September 30, 2014 and December 31, 2013. Specific reserve allocations are generally assessed for commercial loans prior to loans being modified as a TDR, as most migrate from the Bank’s internal “watch list” and have been specifically provided for or reserved for as part of the Bank’s normal loss provisioning methodology. The Bank had not committed to finance any additional material amounts to its existing TDR relationships at September 30, 2014.

A summary of the categories of TDR loan modifications that occurred during the three months ended September 30, 2014 and 2013 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Three Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2014 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Interest only payments	$	—	$	395	$	395
Rate reduction	358		127		485
Principal deferral	349		—		349
Legal modifications	149		198		347
Total residential TDRs	856		720		1,576

Commercial related and construction/land development loans:
Interest only payments	368		392		760
Rate reduction	2,374		—		2,374
Principal deferral	1,172		—		1,172
Total commercial TDRs	3,914		392		4,306
Total troubled debt restructurings	$	4,770	$	1,112	$	5,882

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Three Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Rate reduction	$	1,082	$	—	$	1,082
Principal deferral	—		—		—
Legal modifications	172		272		444
Total residential TDRs	1,254		272		1,526

Commercial related and construction/land development loans:
Interest only payments	441		145		586
Rate reduction	3,407		189		3,596
Principal deferral	1,456		—		1,456
Legal modifications	—		167		167
Total commercial TDRs	5,304		501		5,805
Total troubled debt restructurings	$	6,558	$	773	$	7,331

As of September 30, 2014 and 2013, 81% and 89% of the Bank’s TDRs that occurred during the third quarters of 2014 and 2013 were performing according to their modified terms. The Bank provided $268,000 and $294,000 in specific reserve allocations to customers whose loan terms were modified in TDRs during the third quarters of 2014 and 2013. As stated above, specific reserves for commercial loans are generally assessed prior to loans being modified as a TDR, as most of these loans migrate from the Bank’s internal watch list and have been specifically reserved for as part of the Bank’s normal reserving methodology.

A summary of the categories of TDR loan modifications that occurred during the nine months ended September 30, 2014 and 2013 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Nine Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2014 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Interest only payments	$	—	$	397	$	397
Rate reduction	2,053		1,451		3,504
Principal deferral	468		29		497
Legal modifications	2,146		796		2,942
Total residential TDRs	4,667		2,673		7,340

Commercial related and construction/land development loans:
Interest only payments	672		392		1,064
Rate reduction	2,830		1,071		3,901
Principal deferral	1,420		1,744		3,164
Total commercial TDRs	4,922		3,207		8,129
Total troubled debt restructurings	$	9,589	$	5,880	$	15,469

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Nine Months Ended	Performing to		Not Performing to		Troubled Debt
Septemer 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Interest only payments	$	165	$	—	$	165
Rate reduction	2,703		689		3,392
Principal deferral	64		160		224
Legal modifications	1,405		826		2,231
Total residential TDRs	4,337		1,675		6,012

Commercial related and construction/land development loans:
Interest only payments	719		145		864
Rate reduction	3,407		189		3,596
Principal deferral	1,765		—		1,765
Legal modifications	—		167		167
Total commercial TDRs	5,891		501		6,392
Total troubled debt restructurings	$	10,228	$	2,176	$	12,404

As of September 30, 2014 and 2013, 62% and 82% of the Bank’s TDRs that occurred during the first nine months of 2014 and 2013 were performing according to their modified terms. The Bank provided $602,000 and $1 million in specific reserve allocations to customers whose loan terms were modified in TDRs during the first nine months of 2014 and 2013. As stated above, specific reserves are generally assessed prior to loans being modified as a TDR, as most of these loans migrate from the Bank’s internal watch list and have been specifically reserved for as part of the Bank’s normal reserving methodology.

There were no significant changes between the pre and post modification loan balances at September 30, 2014 and December 31, 2013.

The following tables present loans by class modified as troubled debt restructurings within the previous twelve months of September 30, 2014 and 2013 and for which there was a payment default during the three months ended September 30, 2014 and 2013:

Three Months Ended	Number of	Recorded
September 30, 2014 (dollars in thousands)	Loans	Investment

Residential real estate:
Owner occupied	1	$	45
Owner occupied - correspondent	—	—
Non owner occupied	6	589
Commercial real estate	2	467
Commercial real estate - purchased whole loans	—	—
Construction & land development	—	—
Commercial & industrial	—	—
Lease financing receivables	—	—
Warehouse lines of credit	—	—
Home equity	—	—
Consumer:
RPG loans	—	—
Credit cards	—	—
Overdrafts	—	—
Purchased whole loans	—	—
Other consumer	—	—

Total	9	$	1,101

Three Months Ended	Number of	Recorded
September 30, 2013 (dollars in thousands)	Loans	Investment

Residential real estate:
Owner occupied	14	$	979
Owner occupied - correspondent	—	—
Non owner occupied	—	—
Commercial real estate	2	357
Commercial real estate - purchased whole loans	—	—
Construction & land development	—	—
Commercial & industrial	1	145
Lease financing receivables	—	—
Warehouse lines of credit	—	—
Home equity	1	68
Consumer:
RPG loans	—	—
Credit cards	—	—
Overdrafts	—	—
Purchased whole loans	—	—
Other consumer	—	—

Total	18	$	1,549

Nine Months Ended	Number of	Recorded
September 30, 2014 (dollars in thousands)	Loans	Investment

Residential real estate:
Owner occupied	9	$	1,388
Owner occupied - correspondent	—	—
Non owner occupied	6	589
Commercial real estate	3	1,537
Commercial real estate - purchased whole loans	—	—
Construction & land development	1	1,500
Commercial & industrial	—	—
Lease financing receivables	—	—
Warehouse lines of credit	—	—
Home equity	—	—
Consumer:
RPG loans	—	—
Credit cards	—	—
Overdrafts	—	—
Purchased whole loans	—	—
Other consumer	—	—

Total	19	$	5,014

Nine Months Ended	Number of	Recorded
September 30, 2013 (dollars in thousands)	Loans	Investment

Residential real estate:
Owner occupied	32	$	2,434
Owner occupied - correspondent	—	—
Non owner occupied	—	—
Commercial real estate	2	357
Commercial real estate - purchased whole loans	—	—
Construction & land development	—	—
Commercial & industrial	1	145
Lease financing receivables	—	—
Warehouse lines of credit	—	—
Home equity	2	74
Consumer:
RPG loans	—	—
Credit cards	—	—
Overdrafts	—	—
Purchased whole loans	—	—
Other consumer	—	—

Total	37	$	3,010