Allowance for Loan and Lease Loss and Credit Quality

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

Formula Allowance

When loans and leases are originated or acquired, 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 or estimated note sale price, 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.

Management believes that the ALLL was adequate as of December 31, 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 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 methodology or policies in the periods presented.

Activity in the Allowance for Loan and Lease Losses

The following table summarizes activity related to the allowance for loan and lease losses by loan and lease portfolio segment for the years ended December 31, 2014 and 2013:



(in thousands)	December 31, 2014
	Commercial									Consumer
	Real Estate			Commercial			Residential			& Other			Total
Balance, beginning of period	$	59,538		$	27,028		$	7,487		$	1,032		$	95,085
Charge-offs	(8,030		)	(16,824		)	(1,855		)	(3,469		)	(30,178		)
Recoveries	2,539			6,744			462			1,274			11,019
Provision	1,137			24,268			9,828			5,008			40,241
Balance, end of period	$	55,184		$	41,216		$	15,922		$	3,845		$	116,167

	December 31, 2013
	Commercial									Consumer
	Real Estate			Commercial			Residential			& Other			Total
Balance, beginning of period	$	67,038		$	27,905		$	7,729		$	994		$	103,666
Charge-offs	(9,748		)	(20,810		)	(3,655		)	(1,285		)	(35,498		)
Recoveries	4,436			10,445			569			751			16,201
Provision (recapture)	(2,188		)	9,488			2,844			572			10,716
Balance, end of period	$	59,538		$	27,028		$	7,487		$	1,032		$	95,085

The following table presents the allowance and recorded investment in loans and leases by portfolio segment and balances individually or collectively evaluated for impairment as of December 31, 2014 and 2013:



(in thousands)	December 31, 2014
	Commercial						Consumer
	Real Estate		Commercial		Residential		& Other		Total
Allowance for loans and leases:
Collectively evaluated for impairment	$	49,243	$	38,201	$	15,858	$	3,118	$	106,420
Individually evaluated for impairment	1,088		320		—		—		1,408
Loans acquired with deteriorated credit quality	4,853		2,695		64		727		8,339
Total	$	55,184	$	41,216	$	15,922	$	3,845	$	116,167
Loans and leases:
Collectively evaluated for impairment	$	8,374,716	$	2,884,388	$	3,084,633	$	318,572	$	14,662,309
Individually evaluated for impairment	69,636		32,936		—		—		102,572
Loans acquired with deteriorated credit quality	459,308		31,499		1,580		70,464		562,851
Total	$	8,903,660	$	2,948,823	$	3,086,213	$	389,036	$	15,327,732



(in thousands)	December 31, 2013
	Commercial						Consumer
	Real Estate		Commercial		Residential		& Other		Total
Allowance for loans and leases:
Collectively evaluated for impairment	$	51,758	$	24,303	$	6,878	$	914	$	83,853
Individually evaluated for impairment	1,785		12		—		—		1,797
Loans acquired with deteriorated credit quality	5,995		2,713		609		118		9,435
Total	$	59,538	$	27,028	$	7,487	$	1,032	$	95,085
Loans and leases:
Collectively evaluated for impairment	$	4,236,643	$	2,114,929	$	866,463	$	50,636	$	7,268,671
Individually evaluated for impairment	89,280		11,503		—		—		100,783
Loans acquired with deteriorated credit quality	304,232		15,781		36,960		1,739		358,712
Total	$	4,630,155	$	2,142,213	$	903,423	$	52,375	$	7,728,166

Summary of Reserve for Unfunded Commitments Activity

The following table presents a summary of activity in the RUC and unfunded commitments for the years ended December 31, 2014 and 2013:



(in thousands)	December 31, 2014			December 31, 2013
Balance, beginning of period	$	1,436		$	1,223
Net change to other expense	(1,863		)	213
Acquired reserve	3,966			—
Balance, end of period	$	3,539		$	1,436



(in thousands)
	Total
Unfunded loan and lease commitments:
December 31, 2014	$	3,000,505
December 31, 2013	$	1,638,446

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 years ended December 31, 2014 and 2013:



(in thousands)	2014		2013
Commercial real estate
Non-owner occupied term	$	15,500	$	4,039
Owner occupied term	87,385		3,738
Multifamily	60,508		—
Construction & development	566		3,515
Residential development	800		363
Commercial
Term	30,497		47,635
LOC & other	6,061		—
Residential
Mortgage	108,246		1,008
Home equity loans & lines	24,445		—
Consumer & other	7,344		—
Total	$	341,352	$	60,298

Asset Quality and Non-Performing Loans and Leases

We manage asset quality and control credit risk through diversification of the 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 Administration 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 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 it is probable that we will not be able to collect all amounts due according to the loan contract, including scheduled interest payments. Generally, when loans are identified as impaired, they are moved to the Special Assets Department. When we identify a loan as impaired, we measure the loan for potential 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 will use the current fair value of collateral, less selling costs. The starting point for determining the fair value of collateral is through obtaining external appraisals. Generally, external appraisals are updated every 12 months. We obtain appraisals from a pre-approved list of independent, third party, local appraisal firms. Approval and addition to the list is based on experience, reputation, character, consistency and knowledge of the respective real estate market. At a minimum, it is ascertained that the appraiser is: (a) currently licensed in the state in which the property is located, (b) is experienced in the appraisal of properties similar to the property being appraised, (c) is actively engaged in the appraisal work, (d) has knowledge of current real estate market conditions and financing trends, (e) is reputable, and (f) is not on Freddie Mac's or the Bank's Exclusionary List of appraisers and brokers. In certain cases appraisals will be reviewed by our Real Estate Valuation Services group to ensure the quality of the appraisal and the expertise and independence of the appraiser. Upon receipt and review, an external appraisal is utilized to measure a loan for potential impairment. Our impairment analysis documents the date of the appraisal used in the analysis, whether the officer preparing the report deems it current, and, if not, allows for internal valuation adjustments with justification. Typical justified adjustments might include discounts for continued market deterioration subsequent to appraisal date, adjustments for the release of collateral contemplated in the appraisal, or the value of other collateral or consideration not contemplated in the appraisal. An appraisal over one year old in most cases will be considered stale dated and an updated or new appraisal will be required. Any adjustments from appraised value to net realizable value are detailed and justified in the impairment analysis, which is reviewed and approved by senior credit quality officers and the Bank's ALLL Committee. Although an external appraisal is the primary source to value collateral-dependent loans, we may also utilize values obtained through purchase and sale agreements, negotiated short sales, broker price opinions, or the sales price of the note. These alternative sources of value are used only if deemed to be more representative of value based on updated information regarding collateral resolution. Impairment analyses are updated, reviewed and approved on a quarterly basis at or near the end of each reporting period. Appraisals or other alternative sources of value received subsequent to the reporting period, but prior to our filing of periodic reports, are considered and evaluated to ensure our periodic filings are materially correct and not misleading. Based on these processes, we do not believe there are significant time lapses for the recognition of additional loan loss provisions or charge-offs from the date they become known.

The Bank has written down impaired, non-accrual loans as of December 31, 2014 to their estimated net realizable value, and expects resolution with no additional material loss, absent further decline in market prices.

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

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



(in thousands)	December 31, 2014
	Greater Than		60 to 89		Greater Than								Total
	30 to 59 Days		Days		90 Days and		Total		Non-		Current &		Loans
	Past Due		Past Due		Accruing		Past Due		accrual		Other (1)		and Leases
Commercial real estate
Non-owner occupied term, net	$	452	$	—	$	283	$	735	$	8,957	$	3,280,918	$	3,290,610
Owner occupied term, net	2,304		347		—		2,651		8,292		2,622,921		2,633,864
Multifamily, net	—		512		—		512		300		2,637,806		2,638,618
Construction & development, net	1,091		—		—		1,091		—		257,631		258,722
Residential development, net	6,155		—		—		6,155		—		75,691		81,846
Commercial
Term, net	1,098		242		3		1,343		19,097		1,082,547		1,102,987
LOC & other, net	1,637		1,155		1,223		4,015		8,825		1,309,882		1,322,722
Leases and equipment finance, net	1,482		1,695		695		3,872		5,084		514,158		523,114
Residential
Mortgage, net	8		1,224		4,289		5,521		655		2,227,559		2,233,735
Home equity loans & lines, net	1,924		702		749		3,375		615		848,488		852,478
Consumer & other, net	2,133		498		270		2,901		216		385,919		389,036
Total, net of deferred fees and costs	$	18,284	$	6,375	$	7,512	$	32,171	$	52,041	$	15,243,520	$	15,327,732

(1) Other includes purchased credit impaired loans of $562.9 million.



(in thousands)	December 31, 2013
	Greater Than		60 to 89		Greater Than								Total
	30 to 59 Days		Days		90 Days and		Total		Non-		Current &		Loans
	Past Due		Past Due		Accruing		Past Due		accrual		Other (1)		and Leases
Commercial real estate
Non-owner occupied term, net	$	3,618	$	352	$	—	$	3,970	$	9,193	$	2,521,999	$	2,535,162
Owner occupied term, net	1,320		340		610		2,270		6,204		1,300,926		1,309,400
Multifamily, net	—		—		—		—		935		440,273		441,208
Construction & development, net	—		—		—		—		—		248,686		248,686
Residential development, net	—		—		—		—		2,801		92,898		95,699
Commercial
Term, net	901		1,436		—		2,337		8,723		775,504		786,564
LOC & other, net	619		224		—		843		1,222		991,993		994,058
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		—		616,055		619,517
Home equity loans & lines, net	473		563		160		1,196		—		282,710		283,906
Consumer & other, net	69		75		73		217		—		52,158		52,375
Total, net of deferred fees and costs	$	10,252	$	5,038	$	3,430	$	18,720	$	31,891	$	7,677,555	$	7,728,166

(1) Other includes purchased credit impaired loans of $358.7 million.

Impaired Loans

Loans with no related allowance reported generally represent non-accrual loans. The Bank recognizes the charge-off of impairment reserves on impaired loans in the period it arises for collateral dependent loans. Therefore, the non-accrual loans as of December 31, 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 specific 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 only impaired loans accruing interest at each respective date represent certain restructured loans on accrual status. 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.

The following table summarizes our impaired loans, including average recorded investment and interest income recognized on impaired loans, by loan class for the years ended December 31, 2014 and 2013:



(in thousands)	December 31, 2014
	Unpaid		Recorded Investment
	Principal		Without		With		Related
	Balance		Allowance		Allowance		Allowance
Commercial real estate
Non-owner occupied term, net	$	42,793	$	16,916	$	22,190	$	502
Owner occupied term, net	16,339		8,290		7,655		364
Multifamily, net	4,040		300		3,519		49
Construction & development, net	2,655		—		1,091		7
Residential development, net	9,670		—		9,675		166
Commercial
Term, net	31,733		18,701		256		12
LOC & other, net	18,761		8,575		5,404		308
Residential
Mortgage, net	—		—		—		—
Home equity loans & lines, net	626		—		—		—
Consumer & other, net	152		—		—		—
Total, net of deferred fees and costs	$	126,769	$	52,782	$	49,790	$	1,408



(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
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



(in thousands)	December 31, 2014				December 31, 2013
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Commercial real estate
Non-owner occupied term, net	$	50,589	$	1,619	$	63,274	$	1,512
Owner occupied term, net	12,781		282		7,462		205
Multifamily, net	2,954		145		765		—
Construction & development, net	6,156		44		13,919		484
Residential development, net	13,237		463		22,351		644
Commercial
Term, net	15,401		15		11,955		17
LOC & other, net	5,138		—		4,008		51
Residential
Mortgage, net	—		—		153		—
Home equity loans & lines, net	—		—		95		—
Consumer & other, net	26		—		1		—
Total, net of deferred fees and costs	$	106,282	$	2,568	$	123,983	$	2,913

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

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 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 greater than 30 to 59 days past due from the required payment date at month-end.

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

Doubtful—A homogeneous doubtful loan or lease, risk rated 9, is 90 to 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 greater than 30 to 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 to 180 days past due from the required payment date at month-end or a closed-end loan 90 to 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 loan and lease portfolio as of December 31, 2014 and December 31, 2013:



(in thousands)	December 31, 2014
	Pass/Watch		Special Mention		Substandard		Doubtful		Loss		Impaired ⁽¹⁾		Total

Commercial real estate
Non-owner occupied term, net	$	3,027,777	$	99,556	$	123,350	$	821	$	—	$	39,106	$	3,290,610
Owner occupied term, net	2,475,944		58,425		81,567		309		1,674		15,945		2,633,864
Multifamily, net	2,610,039		9,583		15,177		—		—		3,819		2,638,618
Construction & development, net	248,547		4,081		5,003		—		—		1,091		258,722
Residential development, net	68,789		963		2,419		—		—		9,675		81,846
Commercial
Term, net	1,055,728		12,661		15,219		198		224		18,957		1,102,987
LOC & other, net	1,281,628		17,665		9,082		280		88		13,979		1,322,722
Leases and equipment finance, net	513,104		2,554		3,809		3,255		392		—		523,114
Residential
Mortgage, net	2,215,956		2,330		4,497		—		10,952		—		2,233,735
Home equity loans & lines, net	846,277		3,271		1,079		—		1,851		—		852,478
Consumer & other, net	385,754		2,717		198		—		367		—		389,036
Total, net of deferred fees and costs	$	14,729,543	$	213,806	$	261,400	$	4,863	$	15,548	$	102,572	$	15,327,732

⁽¹⁾The percentage of impaired loans classified as pass/watch, special mention, substandard, doubtful, and loss was 5.6%, 15.1%, 77.9%, 0.1%, and 1.3% respectively, as of December 31, 2014.



(in thousands)	December 31, 2013
	Pass/Watch		Special Mention		Substandard		Doubtful		Loss		Impaired ⁽¹⁾		Total
Commercial real estate
Non-owner occupied term, net	$	2,207,603	$	135,005	$	142,907	$	—	$	—	$	49,647	$	2,535,162
Owner occupied term, net	1,213,321		31,071		53,181		421		—		11,406		1,309,400
Multifamily, net	409,626		8,213		22,434		—		—		935		441,208
Construction & development, net	231,380		2,054		5,663		—		—		9,589		248,686
Residential development, net	67,513		2,060		8,329		94		—		17,703		95,699
Commercial
Term, net	722,723		26,548		27,983		287		—		9,023		786,564
LOC & other, net	955,826		25,222		10,530		—		—		2,480		994,058
Leases and equipment finance, net	351,971		4,585		1,706		2,996		333		—		361,591
Residential
Mortgage, net	616,039		1,405		743		—		1,330		—		619,517
Home equity loans & lines, net	282,490		1,038		242		—		136		—		283,906
Consumer & other, net	52,157		144		33		—		41		—		52,375
Total, net of deferred fees and costs	$	7,110,649	$	237,345	$	273,751	$	3,798	$	1,840	$	100,783	$	7,728,166

⁽¹⁾ The percentage of classified as pass/watch, special mention, and substandard was 6.4%, 3.7%, and 89.9%, respectively, as of December 31, 2013.

Troubled Debt Restructurings

At December 31, 2014 and December 31, 2013, impaired loans of $54.8 million and $68.8 million were classified as accruing restructured loans, respectively. 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 $1.0 million available commitments for troubled debt restructurings outstanding as of December 31, 2014 and none as of December 31, 2013.

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



(in thousands)	December 31, 2014
	Accrual		Non-Accrual		Total
	Status		Status		Modifications
Commercial real estate, net	$	48,817	$	2,319	$	51,136
Commercial, net	5,404		9,541		14,945
Residential, net	615		—		615
Total, net of deferred fees and costs	$	54,836	$	11,860	$	66,696



(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 following tables present newly restructured loans that occurred during the years ended December 31, 2014 and 2013:



(in thousands)	December 31, 2014
	Rate		Term		Interest Only		Payment		Combination		Total
	Modifications		Modifications		Modifications		Modifications		Modifications		Modifications
Commercial real estate, net	$	—	$	2,332	$	—	$	—	$	3,519	$	5,851
Commercial, net	—		8,359		—		—		5,410		13,769
Residential, net	—		—		—		—		138		138
Consumer & other, net	—		—		—		—		—		—
Total, net of deferred fees and costs	$	—	$	10,691	$	—	$	—	$	9,067	$	19,758

	December 31, 2013
	Rate		Term		Interest Only		Payment		Combination
	Modifications		Modifications		Modifications		Modifications		Modifications		Total
Commercial real estate, net	$	—	$	—	$	4,291	$	—	$	—	$	4,291
Commercial, net	—		—		—		—		4,040		4,040
Residential, net	—		—		—		—		478		478
Consumer & other, net	—		—		—		—		—		—
Total, net of deferred fees and costs	$	—	$	—	$	4,291	$	—	$	4,518	$	8,809

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 year end December 31, 2014. There were $1.8 million of commercial financing receivables modified as troubled debt restructurings within the previous 12 months for which there was a payment default during the year ended December 31, 2013.