Allowance for Non-Covered Loan and Lease Loss and Credit Quality

The Bank's methodology for assessing the appropriateness of the Allowance for Loan and Lease Loss "ALLL" consists of three key elements, which includes 1) the formula allowance; 2) the specific allowance; and 3) the unallocated allowance. By incorporating these factors into a single allowance requirement analysis, all risk-based activities within the loan and lease portfolios are simultaneously considered.

Formula Allowance

When loans and leases are originated, they are assigned a risk rating that is reassessed periodically during the term of the loan or lease through the credit review process. The Bank's risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk. The 10 risk rating categories are a primary factor in determining an appropriate amount for the formula allowance.

The formula allowance is calculated by applying risk factors to various segments of pools of outstanding loans and leases. Risk factors are assigned to each portfolio segment based on management's evaluation of the losses inherent within each segment. Segments or regions with greater risk of loss will therefore be assigned a higher risk factor.

Base risk – The portfolio is segmented into loan categories, and these categories are assigned a Base risk factor based on an evaluation of the loss inherent within each segment.

Extra risk – Additional risk factors provide for an additional allocation of ALLL based on the loan and lease risk rating system and loan delinquency, and reflect the increased level of inherent losses associated with more adversely classified loans and leases.

Risk factors may be changed periodically based on management's evaluation of the following factors: loss experience; changes in the level of non-performing loans and leases; regulatory exam results; changes in the level of adversely classified loans and leases; improvement or deterioration in local economic conditions; and any other factors deemed relevant.

Specific Allowance

Regular credit reviews of the portfolio identify loans that are considered potentially impaired. Potentially impaired loans are referred to the ALLL Committee which reviews and approves designated loans as impaired. A loan is considered impaired, when based on current information and events, we determine that we will probably not be able to collect all amounts due according to the loan contract, including scheduled interest payments. When we identify a loan as impaired, we measure the impairment using discounted cash flows, except when the sole remaining source of the repayment for the loan is the liquidation of the collateral. In these cases, we use the current fair value of the collateral, less selling costs, instead of discounted cash flows. If we determine that the value of the impaired loan is less than the recorded investment in the loan, we either recognize an impairment reserve as a specific allowance to be provided for in the allowance for loan and lease losses or charge-off the impaired balance on collateral-dependent loans if it is determined that such amount represents a confirmed loss. Loans determined to be impaired with a specific allowance are excluded from the formula allowance so as not to double-count the loss exposure. The non-accrual impaired loans as of period end have already been partially charged-off to their estimated net realizable value, and are expected to be resolved over the coming quarters with no additional material loss, absent further decline in market prices.

The combination of the formula allowance component and the specific allowance component represents the allocated allowance for loan and lease losses.

Unallocated Allowance

The Bank may also maintain an unallocated allowance amount to provide for other credit losses inherent in a loan and lease portfolio that may not have been contemplated in the credit loss factors. This unallocated amount generally comprises less than 5% of the allowance, but may be maintained at higher levels during times of deteriorating economic conditions characterized by falling real estate values. The unallocated amount is reviewed quarterly based on trends in credit losses, the results of credit reviews, overall economic trends and other qualitative factors.

Management believes that the ALLL was adequate as of June 30, 2014. There is, however, no assurance that future loan and lease losses will not exceed the levels provided for in the ALLL and could possibly result in additional charges to the provision for loan and lease losses.

The reserve for unfunded commitments ("RUC") is established to absorb inherent losses associated with our commitment to lend funds, such as with a letter or line of credit. The adequacy of the ALLL and RUC are monitored on a regular basis and are based on management's evaluation of numerous factors. These factors include the quality of the current loan portfolio; the trend in the loan portfolio's risk ratings; current economic conditions; loan concentrations; loan growth rates; past-due and non-performing trends; evaluation of specific loss estimates for all significant problem loans; historical charge-off and recovery experience; and other pertinent information.

There have been no significant changes to the Bank's ALLL methodology or policies in the periods presented.

Activity in the Non-Covered Allowance for Loan and Lease Losses

The following table summarizes activity related to the allowance for non-covered loan and lease losses by non-covered loan and lease portfolio segment for three and six months ended June 30, 2014 and 2013:



(in thousands)	Three Months Ended June 30, 2014
	Commercial									Consumer
	Real Estate			Commercial			Residential			& Other			Total
Balance, beginning of period	$	51,847		$	26,762		$	7,191		$	909		$	86,709
Charge-offs	(629		)	(4,418		)	(449		)	(318		)	(5,814		)
Recoveries	532			979			120			70			1,701
Provision	208			9,264			4,541			1,386			15,399
Balance, end of period	$	51,958		$	32,587		$	11,403		$	2,047		$	97,995

	Three Months Ended June 30, 2013
	Commercial									Consumer
	Real Estate			Commercial			Residential			& Other			Total
Balance, beginning of period	$	55,095		$	21,661		$	7,219		$	717		$	84,692
Charge-offs	(2,038		)	(1,614		)	(728		)	(224		)	(4,604		)
Recoveries	1,480			1,086			87			102			2,755
Provision	712			454			1,672			155			2,993
Balance, end of period	$	55,249		$	21,587		$	8,250		$	750		$	85,836




(in thousands)	Six Months Ended June 30, 2014
	Commercial									Consumer
	Real Estate			Commercial			Residential			& Other			Total
Balance, beginning of period	$	53,433		$	24,191		$	6,827		$	863		$	85,314
Charge-offs	(2,524		)	(7,767		)	(582		)	(506		)	(11,379		)
Recoveries	971			1,960			167			163			3,261
Provision	78			14,203			4,991			1,527			20,799
Balance, end of period	$	51,958		$	32,587		$	11,403		$	2,047		$	97,995

	Six Months Ended June 30, 2013
	Commercial									Consumer
	Real Estate			Commercial			Residential			& Other			Total
Balance, beginning of period	$	54,909		$	22,925		$	6,925		$	632		$	85,391
Charge-offs	(3,492		)	(7,788		)	(1,632		)	(417		)	(13,329		)
Recoveries	1,950			1,453			179			211			3,793
Provision	1,882			4,997			2,778			324			9,981
Balance, end of period	$	55,249		$	21,587		$	8,250		$	750		$	85,836

The following table presents the allowance and recorded investment in non-covered loans and leases by portfolio segment and balances as of June 30, 2014 and 2013:



(in thousands)	June 30, 2014
	Commercial						Consumer
	Real Estate		Commercial		Residential		& Other		Total
Allowance for non-covered loans and leases:
Collectively evaluated for impairment	$	50,656	$	32,572	$	11,403	$	2,047	$	96,678
Individually evaluated for impairment	1,302		15		—		—		1,317
Loans acquired with deteriorated credit quality	—		—		—		—		—
Total	$	51,958	$	32,587	$	11,403	$	2,047	$	97,995
Non-covered loans and leases:
Collectively evaluated for impairment	$	8,451,692	$	2,818,710	$	2,711,158	$	330,291	$	14,311,851
Individually evaluated for impairment	92,676		23,274		—		—		115,950
Loans acquired with deteriorated credit quality	306,241		48,173		46,610		1,520		402,544
Total	$	8,850,609	$	2,890,157	$	2,757,768	$	331,811	$	14,830,345



(in thousands)	June 30, 2013
	Commercial						Consumer
	Real Estate		Commercial		Residential		& Other		Total
Allowance for non-covered loans and leases:
Collectively evaluated for impairment	$	53,400	$	21,583	$	8,239	$	750	$	83,972
Individually evaluated for impairment	1,849		4		11		—		1,864
Total	$	55,249	$	21,587	$	8,250	$	750	$	85,836
Non-covered loans and leases:
Collectively evaluated for impairment	$	4,112,263	$	1,749,697	$	766,578	$	42,016	$	6,670,554
Individually evaluated for impairment	111,814		15,045		477		—		127,336
Total	$	4,224,077	$	1,764,742	$	767,055	$	42,016	$	6,797,890

The non-covered loan and lease balances are net of net deferred loans costs of $13.5 million at June 30, 2014 and net of net deferred fees of $10.8 million at June 30, 2013.

Summary of Reserve for Unfunded Commitments Activity

The following table presents a summary of activity in the RUC and unfunded commitments for the three and six months ended June 30, 2014 and 2013:



(in thousands)	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2014			2013		2014			2013
Balance, beginning of period	$	1,417		$	1,269	$	1,436		$	1,223
Net change to other expense	(538		)	58		(557		)	104
Acquired reserve	3,966			—		3,966			—
Balance, end of period	$	4,845		$	1,327	$	4,845		$	1,327



(in thousands)
	Total
Unfunded loan and lease commitments:
June 30, 2014	$	2,814,549
June 30, 2013	$	1,553,657

Non-covered loans and leases sold

In the course of managing the loan and lease portfolio, at certain times, management may decide to sell loans and leases. The following table summarizes loans and leases sold by loan portfolio during the three and six months ended June 30, 2014 and 2013:



(in thousands)	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Commercial real estate
Non-owner occupied term	$	11,606	$	—	$	14,799	$	—
Owner occupied term	46,097				48,244		2,850
Multifamily	25,202				25,202		—
Construction & development	566		—		566		3,515
Residential development	195		340		800		363
Commercial
Term	9,873		35,411		25,869		46,536
LOC & other	5,062		—		5,062		—
Residential
Mortgage	5,703		—		6,034		—
Home equity loans & lines	24,445		—		24,445		—
Consumer & other	7,344		—		7,344		—
Total	$	136,093	$	35,751	$	158,365	$	53,264

Asset Quality and Non-Performing Loans and Leases

We manage asset quality and control credit risk through diversification of the non-covered loan and lease portfolio and the application of policies designed to promote sound underwriting and loan and lease monitoring practices. The Bank's Credit Quality Group is charged with monitoring asset quality, establishing credit policies and procedures and enforcing the consistent application of these policies and procedures across the Bank. Reviews of non-performing, past due non-covered loans and leases and larger credits, designed to identify potential charges to the allowance for loan and lease losses, and to determine the adequacy of the allowance, are conducted on an ongoing basis. These reviews consider such factors as the financial strength of borrowers, the value of the applicable collateral, loan and lease loss experience, estimated loan and lease losses, growth in the loan and lease portfolio, prevailing economic conditions and other factors.

A loan is considered impaired when based on current information and events, we determine that we will probably not be able to collect all amounts due according to the loan contract, including scheduled interest payments. When we identify a loan as impaired, we measure the impairment using discounted cash flows, except when the sole remaining source of the repayment for the loan is the liquidation of the collateral.

Non-Covered Non-Accrual Loans and Leases and Loans and Leases Past Due

The following table summarizes our non-covered non-accrual loans and leases and loans and leases past due, by loan and lease class, as of June 30, 2014 and December 31, 2013:



(in thousands)	June 30, 2014
	Greater than 30 to 59 Days Past Due		60 to 89 Days Past Due		90 Days and Greater and Accruing		Total Past Due		Non-Accrual		Current & Other (1)		Total non-cover Loans and Leases
Commercial real estate
Non-owner occupied term, net	$	907	$	3,242	$	298	$	4,447	$	17,689	$	3,325,893	$	3,348,029
Owner occupied term, net	2,700		6,018		—		8,718		4,442		2,652,968		2,666,128
Multifamily, net	—		516		—		516		1,311		2,481,168		2,482,995
Construction & development, net	—		1,804		—		1,804		—		259,963		261,767
Residential development, net	—		—		—		—		—		91,690		91,690
Commercial
Term, net	443		512		—		955		19,142		1,084,109		1,104,206
LOC & other, net	1,534		952		225		2,711		2,587		1,316,869		1,322,167
Leases and equipment finance, net	1,156		1,343		638		3,137		3,153		457,494		463,784
Residential
Mortgage, net	94		4,001		2,889		6,984		—		1,951,613		1,958,597
Home equity loans & lines, net	1,555		417		830		2,802		—		796,369		799,171
Consumer & other, net	1,331		388		39		1,758		34		330,019		331,811
Total, net of deferred fees and costs	$	9,720	$	19,193	$	4,919	$	33,832	$	48,358	$	14,748,155	$	14,830,345

(1) Other includes purchased impaired non-covered loans of $402.5 million.



(in thousands)	December 31, 2013
	Greater than 30 to 59 Days Past Due		60 to 89 Days Past Due		90 Days and Greater and Accruing		Total Past Due		Non-Accrual		Current & Other (1)		Total non-cover Loans and Leases



Commercial real estate
Non-owner occupied term, net	$	3,618	$	352	$	—	$	3,970	$	9,193	$	2,315,097	$	2,328,260
Owner occupied term, net	1,320		340		610		2,270		6,204		1,251,109		1,259,583
Multifamily, net	—		—		—		—		935		402,602		403,537
Construction & development, net	—		—		—		—		—		245,231		245,231
Residential development, net	—		—		—		—		2,801		85,612		88,413
Commercial
Term, net	901		1,436		—		2,337		8,723		759,785		770,845
LOC & other, net	619		224		—		843		1,222		985,295		987,360
Leases and equipment finance, net	2,202		1,706		517		4,425		2,813		354,353		361,591
Residential
Mortgage, net	1,050		342		2,070		3,462		—		593,739		597,201
Home equity loans & lines, net	473		563		160		1,196		—		263,073		264,269
Consumer & other, net	69		75		73		217		—		47,896		48,113
Total, net of deferred fees and costs	$	10,252	$	5,038	$	3,430	$	18,720	$	31,891	$	7,303,792	$	7,354,403

(1) Other includes purchased impaired non-covered loans of $21.9 million

Non-Covered Impaired Loans

Loans with no related allowance reported generally represent non-accrual loans. The Bank recognizes the charge-off on impaired loans in the period it arises for collateral-dependent loans. Therefore, the non-accrual loans as of June 30, 2014 have already been written-down to their estimated net realizable value and are expected to be resolved with no additional material loss, absent further decline in market prices. The valuation allowance on impaired loans primarily represents the impairment reserves on performing restructured loans, and is measured by comparing the present value of expected future cash flows on the restructured loans discounted at the interest rate of the original loan agreement to the loan's carrying value.

The following table summarizes our non-covered impaired loans by loan class as of June 30, 2014 and December 31, 2013:



(in thousands)	June 30, 2014
	Unpaid		Recorded Investment
	Principal		Without		With		Related
	Balance		Allowance		Allowance		Allowance

Commercial real estate
Non-owner occupied term, net	$	55,179	$	28,444	$	23,680	$	651
Owner occupied term, net	12,349		5,026		7,114		452
Multifamily, net	5,185		1,311		3,519		86
Construction & development, net	10,505		8,393		1,091		9
Residential development, net	14,103		6,487		7,611		104
Commercial
Term, net	28,874		19,142		300		11
LOC & other, net	7,619		2,587		1,245		4
Leases, net	—		—		—		—
Residential
Mortgage, net	—		—		—		—
Home equity loans & lines, net	329		—		—		—
Consumer & other, net	153		—		—		—
Total, net of deferred fees and costs	$	134,296	$	71,390	$	44,560	$	1,317



(in thousands)	December 31, 2013
	Unpaid		Recorded Investment
	Principal		Without		With		Related
	Balance		Allowance		Allowance		Allowance

Commercial real estate
Non-owner occupied term, net	$	50,602	$	18,285	$	31,362	$	928
Owner occupied term, net	11,876		6,204		5,202		198
Multifamily, net	1,416		935		—		—
Construction & development, net	10,609		8,498		1,091		11
Residential development, net	22,513		5,776		11,927		648
Commercial
Term, net	22,750		8,723		300		8
LOC & other, net	7,144		1,222		1,258		4
Leases, net	—		—		—		—
Residential
Mortgage, net	—		—		—		—
Home equity loans & lines, net	—		—		—		—
Consumer & other, net	—		—		—		—
Total, net of deferred fees and costs	$	126,910	$	49,643	$	51,140	$	1,797

The following table summarizes our average recorded investment and interest income recognized on impaired non-covered loans by loan class for the three and six months ended June 30, 2014 and 2013:



(in thousands)	Three Months Ended				Three Months Ended
	June 30, 2014				June 30, 2013
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Commercial real estate
Non-owner occupied term, net	$	52,913	$	297	$	—	$	—
Owner occupied term, net	12,660		75		—		—
Multifamily, net	2,592		—		79,775		400
Construction & development, net	9,505		195		12,462		150
Residential development, net	14,263		152		20,946		158
Commercial
Term, net	15,853		4		13,754		5
LOC & other, net	3,055		12		3,455		13
Residential
Mortgage, net	—		—		383		59
Home equity loans & lines, net	—		—		25		—
Consumer & other, net	—		—		—		—
Total, net of deferred fees and costs	$	110,841	$	735	$	130,800	$	785



(in thousands)	Six Months Ended				Six Months Ended
	June 30, 2014				June 30, 2013
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Commercial real estate
Non-owner occupied term, net	$	51,824	$	646	$	77,846	$	769
Owner occupied term, net	12,242		152		—		—
Multifamily, net	2,040		—		—		—
Construction & development, net	9,533		313		15,074		299
Residential development, net	15,410		311		25,276		316
Commercial
Term, net	13,576		8		13,306		9
LOC & other, net	2,863		25		5,219		24
Residential
Mortgage, net	—		—		255		114
Home equity loans & lines, net	—		—		159		—
Consumer & other, net	—		—		1		—
Total, net of deferred fees and costs	$	107,488	$	1,455	$	137,136	$	1,531

The impaired loans for which these interest income amounts were recognized primarily relate to accruing restructured loans.

Non-Covered Credit Quality Indicators

As previously noted, the Bank's risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk. The Bank differentiates its lending portfolios into homogeneous loans and leases and non-homogeneous loans and leases. The 10 risk rating categories can be generally described by the following groupings for non-homogeneous loans and leases:

Minimal Risk—A minimal risk loan or lease, risk rated 1, is to a borrower of the highest quality. The borrower has an unquestioned ability to produce consistent profits and service all obligations and can absorb severe market disturbances with little or no difficulty.

Low Risk—A low risk loan or lease, risk rated 2, is similar in characteristics to a minimal risk loan. Margins may be smaller or protective elements may be subject to greater fluctuation. The borrower will have a strong demonstrated ability to produce profits, provide ample debt service coverage and to absorb market disturbances.

Modest Risk—A modest risk loan or lease, risk rated 3, is a desirable loan or lease with excellent sources of repayment and no currently identifiable risk associated with collection. The borrower exhibits a very strong capacity to repay the credit in accordance with the repayment agreement. The borrower may be susceptible to economic cycles, but will have reserves to weather these cycles.

Average Risk—An average risk loan or lease, risk rated 4, is an attractive loan or lease with sound sources of repayment and no material collection or repayment weakness evident. The borrower has an acceptable capacity to pay in accordance with the agreement. The borrower is susceptible to economic cycles and more efficient competition, but should have modest reserves sufficient to survive all but the most severe downturns or major setbacks.

Acceptable Risk—An acceptable risk loan or lease, risk rated 5, is a loan or lease with lower than average, but still acceptable credit risk. These borrowers may have higher leverage, less certain but viable repayment sources, have limited financial reserves and may possess weaknesses that can be adequately mitigated through collateral, structural or credit enhancement. The borrower is susceptible to economic cycles and is less resilient to negative market forces or financial events. Reserves may be insufficient to survive a modest downturn.

Watch—A watch loan or lease, risk rated 6, is still pass-rated, but represents the lowest level of acceptable risk due to an emerging risk element or declining performance trend. Watch ratings are expected to be temporary, with issues resolved or manifested to the extent that a higher or lower rating would be appropriate. The borrower should have a plausible plan, with reasonable certainty of success, to correct the problems in a short period of time.

Special Mention—A special mention loan or lease, risk rated 7, has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or the institution's credit position at some future date. They contain unfavorable characteristics and are generally undesirable. Loans and leases in this category are currently protected but are potentially weak and constitute an undue and unwarranted credit risk, but not to the point of a substandard classification. A special mention loan or lease has potential weaknesses, which if not checked or corrected, weaken the asset or inadequately protect the Bank's position at some future date.

Substandard—A substandard asset, risk rated 8, is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard. Loans and leases are classified as substandard when they have unsatisfactory characteristics causing unacceptable levels of risk. A substandard loan or lease normally has one or more well-defined weaknesses that could jeopardize repayment of the debt. The likely need to liquidate assets to correct the problem, rather than repayment from successful operations is the key distinction between special mention and substandard.

Doubtful—Loans or leases classified as doubtful, risk rated 9, have all the weaknesses inherent in one classified substandard 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 reasonably specific pending factors, which may work towards strengthening of the asset, classification as a loss (and immediate charge-off) is deferred until more exact status may be determined. Pending factors include proposed merger, acquisition, liquidation procedures, capital injection, and perfection of liens on additional collateral and refinancing plans. In certain circumstances, a doubtful rating will be temporary, while the Bank is awaiting an updated collateral valuation. In these cases, once the collateral is valued and appropriate margin applied, the remaining un-collateralized portion will be charged-off. The remaining balance, properly margined, may then be upgraded to substandard, however must remain on non-accrual.

Loss—Loans or leases classified as loss, risk rated 10, are considered un-collectible and of such little value that the continuance as an active Bank asset is not warranted. This rating does not mean that the loan or lease has no recovery or salvage value, but rather that the loan or lease should be charged-off now, even though partial or full recovery may be possible in the future.

Impaired—Loans are classified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal and interest when due, in accordance with the terms of the original loan agreement, without unreasonable delay. This generally includes all loans classified as non-accrual and troubled debt restructurings. Impaired loans are risk rated for internal and regulatory rating purposes, but presented separately for clarification.

Homogeneous loans and leases are not risk rated until they are greater than 30 days past due, and risk rating is based primarily on the past due status of the loan or lease. The risk rating categories can be generally described by the following groupings for commercial and commercial real estate homogeneous loans and leases:

Special Mention—A homogeneous special mention loan or lease, risk rated 7, is 30-59 days past due from the required payment date at month-end.

Substandard—A homogeneous substandard loan or lease, risk rated 8, is 60-89 days past due from the required payment date at month-end.

Doubtful—A homogeneous doubtful loan or lease, risk rated 9, is 90-179 days past due from the required payment date at month-end.

Loss—A homogeneous loss loan or lease, risk rated 10, is 180 days and more past due from the required payment date. These loans are generally charged-off in the month in which the 180 day time period elapses.

The risk rating categories can be generally described by the following groupings for residential and consumer and other homogeneous loans:

Special Mention—A homogeneous retail special mention loan, risk rated 7, is 30-89 days past due from the required payment date at month-end.

Substandard—A homogeneous retail substandard loan, risk rated 8, is an open-end loan 90-180 days past due from the required payment date at month-end or a closed-end loan 90-120 days past due from the required payment date at month-end.

Loss—A homogeneous retail loss loan, risk rated 10, is a closed-end loan that becomes past due 120 cumulative days or an open-end retail loan that becomes past due 180 cumulative days from the contractual due date. These loans are generally charged-off in the month in which the 120 or 180 day period elapses.

The following table summarizes our internal risk rating by loan and lease class for the non-covered loan and lease portfolio as of June 30, 2014 and December 31, 2013:



(in thousands)	June 30, 2014
	Pass/Watch		Special Mention		Substandard		Doubtful		Loss		Impaired (1)		Total
Commercial real estate
Non-owner occupied term, net	$	3,068,321	$	114,558	$	112,571	$	455	$	—	$	52,124	$	3,348,029
Owner occupied term, net	2,495,045		66,195		90,618		2,130		—		12,140		2,666,128
Multifamily, net	2,463,434		7,848		6,883		—		—		4,830		2,482,995
Construction & development, net	243,553		4,892		3,838		—		—		9,484		261,767
Residential development, net	75,108		797		1,687		—		—		14,098		91,690
Commercial
Term, net	1,048,347		19,866		16,250		301		—		19,442		1,104,206
LOC & other, net	1,263,347		32,938		21,541		509		—		3,832		1,322,167
Leases and equipment finance, net	456,999		1,492		1,395		3,892		6		—		463,784
Residential
Mortgage, net	1,935,023		6,092		15,789		—		1,693		—		1,958,597
Home equity loans & lines, net	790,689		5,025		2,674		—		783		—		799,171
Consumer & other, net	328,675		2,361		763		—		12		—		331,811
Total, net of deferred fees and costs	$	14,168,541	$	262,064	$	274,009	$	7,287	$	2,494	$	115,950	$	14,830,345

(1) Impaired loans includes 5.9% classified as watch, 2.6% classified as special mentioned, 89.4% classified as substandard, and 2.1% classified as doubtful.



(in thousands)	December 31, 2013
	Pass/Watch		Special Mention		Substandard		Doubtful		Loss		Impaired (1)		Total
Commercial real estate
Non-owner occupied term, net	$	2,073,366	$	108,263	$	96,984	$	—	$	—	$	49,647	$	2,328,260
Owner occupied term, net	1,182,865		27,615		37,524		173		—		11,406		1,259,583
Multifamily, net	385,335		5,574		11,693		—		—		935		403,537
Construction & development, net	230,262		2,054		3,326		—		—		9,589		245,231
Residential development, net	67,019		1,836		1,855		—		—		17,703		88,413
Commercial
Term, net	718,778		23,393		19,651		—		—		9,023		770,845
LOC & other, net	951,109		24,197		9,574		—		—		2,480		987,360
Leases and equipment finance, net	351,971		4,585		1,706		2,996		333		—		361,591
Residential
Mortgage, net	593,723		1,405		743		—		1,330		—		597,201
Home equity loans & lines, net	263,070		1,038		25		—		136		—		264,269
Consumer & other, net	47,895		144		33		—		41		—		48,113
Total, net of deferred fees and costs	$	6,865,393	$	200,104	$	183,114	$	3,169	$	1,840	$	100,783	$	7,354,403

(1) Impaired loans includes 6.4% classified as watch, 3.7% classified as special mentioned, and 89.9% classified as substandard.

Troubled Debt Restructurings

At June 30, 2014 and December 31, 2013, impaired loans of $67.5 million and $68.8 million, respectively, were classified as accruing restructured loans. The restructurings were granted in response to borrower financial difficulty, and generally provide for a temporary modification of loan repayment terms. The restructured loans on accrual status represent the only impaired loans accruing interest. In order for a restructured loan to be considered for accrual status, the loan's collateral coverage generally will be greater than or equal to 100% of the loan balance, the loan is current on payments, and the borrower must either prefund an interest reserve or demonstrate the ability to make payments from a verified source of cash flow. Impaired restructured loans carry a specific allowance and the allowance on impaired restructured loans is calculated consistently across the portfolios.

There were $3.8 million of available commitments for troubled debt restructurings outstanding as of June 30, 2014 and none as of December 31, 2013.

The following tables present troubled debt restructurings by accrual versus non-accrual status and by loan segment as of June 30, 2014 and December 31, 2013:



(in thousands)	June 30, 2014
	Accrual		Non-Accrual		Total
	Status		Status		Modifications
Commercial real estate, net	$	65,612	$	3,782	$	69,394
Commercial, net	1,245		2,720		3,965
Residential, net	607		—		607
Total, net of deferred fees and costs	$	67,464	$	6,502	$	73,966



(in thousands)	December 31, 2013
	Accrual		Non-Accrual		Total
	Status		Status		Modifications
Commercial real estate, net	$	67,060	$	2,196	$	69,256
Commercial, net	1,258		2,603		3,861
Residential, net	473		—		473
Total, net of deferred fees and costs	$	68,791	$	4,799	$	73,590

The Bank's policy is that loans placed on non-accrual will typically remain on non-accrual status until all principal and interest payments are brought current and the prospect for future payment in accordance with the loan agreement appears relatively certain. The Bank's policy generally refers to six months of payment performance as sufficient to warrant a return to accrual status.

The types of modifications offered can generally be described in the following categories:

Rate Modification—A modification in which the interest rate is modified.

Term Modification —A modification in which the maturity date, timing of payments, or frequency of payments is changed.

Interest Only Modification—A modification in which the loan is converted to interest only payments for a period of time.

Payment Modification—A modification in which the payment amount is changed, other than an interest only modification described above.

Combination Modification—Any other type of modification, including the use of multiple types of modifications.

There were no new non-covered restructured loans during the three months ended March 31, 2014. The following table presents newly non-covered restructured loans that occurred during the three months ended June 30, 2014 and three and six months ended June 30, 2013:



(in thousands)	Three and Six Months Ended June 30, 2014
	Rate		Term		Interest Only		Payment		Combination		Total
	Modifications		Modifications		Modifications		Modifications		Modifications		Modifications
Commercial real estate
Non-owner occupied term, net	$	—	$	1,244	$	—	$	—	$	—	$	1,244
Multifamily, net	—		—		—		—		3,519		3,519
Residential
Mortgage, net	—		—		—		—		138		138
Total, net of deferred fees and costs	$	—	$	1,244	$	—	$	—	$	3,657	$	4,901

	Three Months Ended June 30, 2013
	Rate		Term		Interest Only		Payment		Combination		Total
	Modifications		Modifications		Modifications		Modifications		Modifications		Modifications
Residential
Mortgage, net	$	—	$	—	$	—	$	—	$	189	$	189
Total, net of deferred fees and costs	$	—	$	—	$	—	$	—	$	189	$	189




(in thousands)	Six Months Ended June 30, 2013
	Rate		Term		Interest Only		Payment		Combination		Total
	Modifications		Modifications		Modifications		Modifications		Modifications		Modifications
Commercial real estate
Term & multifamily, net	$	—	$	—	$	4,291	$	—	$	—	$	4,291
LOC & other, net	—		—		—		—		452		452
Residential
Mortgage, net	—		—		—		—		478		478
Total, net of deferred fees and costs	$	—	$	—	$	4,291	$	—	$	930	$	5,221

For the periods presented in the tables above, the outstanding recorded investment was the same pre and post modification.

There were no financing receivables modified as troubled debt restructurings within the previous 12 months for which there was a payment default during the three and six months ended June 30, 2014 and 2013.