Loans and leases and the allowance for credit losses

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Loans and leases and the allowance for credit losses

4. Loans and leases and the allowance for credit losses

The outstanding principal balance and the carrying amount of loans acquired at a discount that were recorded at fair value at the acquisition date that is included in the consolidated balance sheet were as follows:

	June 30, 2016		December 31, 2015
	(in thousands)
Outstanding principal balance	$	2,735,024		3,122,935
Carrying amount:
Commercial, financial, leasing, etc.		68,648		78,847
Commercial real estate		548,485		644,284
Residential real estate		903,891		1,016,129
Consumer		650,456		725,807
	$	2,171,480		2,465,067

Purchased impaired loans included in the table above totaled $662 million at June 30, 2016 and $768 million at December 31, 2015, representing less than 1% of the Company’s assets as of each date. A summary of changes in the accretable yield for loans acquired at a discount for the three months and six months ended June 30, 2016 and 2015 follows:

	Three months ended June 30
	2016						2015
	Purchased impaired			Other acquired			Purchased impaired			Other acquired
	(in thousands)
Balance at beginning of period	$	171,185			269,017		$	71,422			357,895
Interest income		(14,060	)		(32,898	)		(5,772	)		(40,024	)
Reclassifications from nonaccretable balance, net		4,898			2,933			11,974			26,840
Other (a)		—			6,143			—			278
Balance at end of period	$	162,023			245,195		$	77,624			344,989

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. Loans and leases and the allowance for credit losses, continued

	Six months ended June 30
	2016						2015
	Purchased impaired			Other acquired			Purchased impaired			Other acquired
	(in thousands)
Balance at beginning of period	$	184,618			296,434		$	76,518			397,379
Interest income		(28,122	)		(70,760	)		(10,978	)		(81,301	)
Reclassifications from nonaccretable balance, net		5,527			8,597			12,084			27,023
Other (a)		—			10,924			—			1,888
Balance at end of period	$	162,023			245,195		$	77,624			344,989

(a) Other changes in expected cash flows including changes in interest rates and prepayment assumptions.

A summary of current, past due and nonaccrual loans as of June 30, 2016 and December 31, 2015 follows:

	Current		30-89 Days past due		Accruing loans past due 90 days or more(a)		Accruing loans acquired at a discount past due 90 days or more(b)		Purchased impaired(c)		Nonaccrual		Total
June 30, 2016	(in thousands)
Commercial, financial, leasing, etc.	$	21,157,606		63,069		6,665		452		766		240,684	$	21,469,242
Real estate:
Commercial		23,390,039		125,657		16,487		13,935		36,111		172,670		23,754,899
Residential builder and developer		1,819,984		14,892		—		4,847		19,972		24,263		1,883,958
Other commercial construction		4,993,493		41,297		—		280		16,009		21,294		5,072,373
Residential		19,208,724		470,646		270,845		13,087		433,192		202,949		20,599,443
Residential-limited documentation		3,584,715		112,743		—		—		154,320		79,028		3,930,806
Consumer:
Home equity lines and loans		5,658,417		34,735		—		14,608		1,689		86,870		5,796,319
Automobile		2,669,708		39,139		—		1		—		12,390		2,721,238
Other		3,232,679		26,501		4,452		21,381		—		8,707		3,293,720
Total	$	85,715,365		928,679		298,449		68,591		662,059		848,855	$	88,521,998

NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. Loans and leases and the allowance for credit losses, continued

	Current		30-89 Days past due		Accruing loans past due 90 days or more(a)		Accruing loans acquired at a discount past due 90 days or more(b)		Purchased impaired(c)		Nonaccrual		Total
December 31, 2015					(in thousands)
Commercial, financial, leasing, etc.	$	20,122,648		52,868		2,310		693		1,902		241,917	$	20,422,338
Real estate:
Commercial (d)		23,111,673		172,439		12,963		8,790		46,790		179,606		23,532,261
Residential builder and developer		1,507,856		7,969		5,760		6,925		28,734		28,429		1,585,673
Other commercial construction (d)		3,962,620		65,932		7,936		2,001		24,525		16,363		4,079,377
Residential		20,507,551		560,312		284,451		16,079		488,599		153,281		22,010,273
Residential-limited documentation		3,885,073		137,289		—		—		175,518		61,950		4,259,830
Consumer:
Home equity lines and loans		5,805,222		45,604		—		15,222		2,261		84,467		5,952,776
Automobile		2,446,473		56,181		—		6		—		16,597		2,519,257
Other		3,051,435		36,702		4,021		18,757		—		16,799		3,127,714
Total	$	84,400,551		1,135,296		317,441		68,473		768,329		799,409	$	87,489,499

(a) Excludes loans acquired at a discount.

(b) Loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are presented separately.

(c) Accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value.

(d) The Company expanded its definition of construction loans in 2016 and, as a result, re-characterized certain commercial real estate loans as other commercial construction loans. The December 31, 2015 balances reflect such changes.

One-to-four family residential mortgage loans held for sale were $374 million and $353 million at June 30, 2016 and December 31, 2015, respectively. Commercial mortgage loans held for sale were $228 million at June 30, 2016 and $39 million at December 31, 2015.

Changes in the allowance for credit losses for the three months ended June 30, 2016 were as follows:

	Commercial, Financial, Leasing, etc.			Real Estate
				Commercial			Residential			Consumer			Unallocated		Total
	(in thousands)
Beginning balance	$	323,866			331,985			68,371			160,819			77,711	$	962,752
Provision for credit losses		(10,919	)		15,823			4,404			22,681			11		32,000
Net charge-offs
Charge-offs		(7,487	)		(733	)		(5,090	)		(33,560	)		—		(46,870	)
Recoveries		10,619			2,599			1,975			7,421			—		22,614
Net charge-offs		3,132			1,866			(3,115	)		(26,139	)		—		(24,256	)
Ending balance	$	316,079			349,674			69,660			157,361			77,722	$	970,496

Changes in the allowance for credit losses for the three months ended June 30, 2015 were as follows:

	Commercial, Financial, Leasing, etc.			Real Estate
				Commercial			Residential			Consumer			Unallocated		Total
	(in thousands)
Beginning balance	$	281,069			317,375			60,741			186,052			76,136	$	921,373
Provision for credit losses		9,737			(3,652	)		1,624			21,016			1,275		30,000
Net charge-offs
Charge-offs		(7,728	)		(3,470	)		(3,309	)		(18,455	)		—		(32,962	)
Recoveries		3,672			1,041			1,238			5,625			—		11,576
Net charge-offs		(4,056	)		(2,429	)		(2,071	)		(12,830	)		—		(21,386	)
Ending balance	$	286,750			311,294			60,294			194,238			77,411	$	929,987

Changes in the allowance for credit losses for the six months ended June 30, 2016 were as follows:

	Commercial, Financial, Leasing, etc.			Real Estate
				Commercial			Residential			Consumer			Unallocated			Total
	(in thousands)
Beginning balance	$	300,404			326,831			72,238			178,320			78,199		$	955,992
Provision for credit losses		13,445			19,836			5,622			42,574			(477	)		81,000
Net charge-offs
Charge-offs		(13,636	)		(2,005	)		(12,062	)		(77,879	)		—			(105,582	)
Recoveries		15,866			5,012			3,862			14,346			—			39,086
Net charge-offs		2,230			3,007			(8,200	)		(63,533	)		—			(66,496	)
Ending balance	$	316,079			349,674			69,660			157,361			77,722		$	970,496

Changes in the allowance for credit losses for the six months ended June 30, 2015 were as follows:

	Commercial, Financial, Leasing, etc.			Real Estate
				Commercial			Residential			Consumer			Unallocated		Total
	(in thousands)
Beginning balance	$	288,038			307,927			61,910			186,033			75,654	$	919,562
Provision for credit losses		11,179			11,890			2,584			40,590			1,757		68,000
Net charge-offs
Charge-offs		(20,078	)		(10,149	)		(6,427	)		(43,784	)		—		(80,438	)
Recoveries		7,611			1,626			2,227			11,399			—		22,863
Net charge-offs		(12,467	)		(8,523	)		(4,200	)		(32,385	)		—		(57,575	)
Ending balance	$	286,750			311,294			60,294			194,238			77,411	$	929,987

Despite the above allocation, the allowance for credit losses is general in nature and is available to absorb losses from any loan or lease type.

In establishing the allowance for credit losses, the Company estimates losses attributable to specific troubled credits identified through both normal and detailed or intensified credit review processes and also estimates losses inherent in other loans and leases on a collective basis. For purposes of determining the level of the allowance for credit losses, the Company evaluates its loan and lease portfolio by loan type. The amounts of loss components in the Company’s loan and lease portfolios are determined through a loan-by-loan analysis of larger balance commercial loans and commercial real estate loans that are in nonaccrual status and by applying loss factors to groups of loan balances based on loan type and management’s classification of such loans under the Company’s loan grading system. Measurement of the specific loss components is typically based on expected future cash flows, collateral values and other factors that may impact the borrower’s ability to pay. In determining the allowance for credit losses, the Company utilizes a loan grading system which is applied to commercial and commercial real estate credits on an individual loan basis. Loan officers are responsible for continually assigning grades to these loans based on standards outlined in the Company’s Credit Policy. Internal loan grades are also monitored by the Company’s loan review department to ensure consistency and strict adherence to the prescribed standards. Loan grades are assigned loss component factors that reflect the Company’s loss estimate for each group of loans and leases. Factors considered in assigning loan grades and loss component factors include borrower-specific information related to expected future cash flows and operating results, collateral values, geographic location, financial condition and performance, payment status, and other information; levels of and trends in portfolio charge-offs and recoveries; levels of and trends in portfolio delinquencies and impaired loans; changes in the risk profile of specific portfolios; trends in volume and terms of loans; effects of changes in credit concentrations; and observed trends and practices in the banking industry. As updated appraisals are obtained on individual loans or other events in the market place indicate that collateral values have significantly changed, individual loan grades are adjusted as appropriate. Changes in other factors cited may also lead to loan grade changes at any time. Except for consumer and residential real estate loans that are considered smaller balance homogenous loans and acquired loans that are evaluated on an aggregated basis, the Company considers a loan to be impaired for purposes of applying GAAP when, based on current information and events, it is probable that the Company will be unable to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days. Regardless of loan type, the Company considers a loan to be impaired if it qualifies as a troubled debt restructuring. Modified loans, including smaller balance homogenous loans, that are considered to be troubled debt restructurings are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows.

The following tables provide information with respect to loans and leases that were considered impaired as of June 30, 2016 and December 31, 2015 and for the three-month and six-month periods ended June 30, 2016 and 2015:

	June 30, 2016						December 31, 2015
	Recorded investment		Unpaid principal balance		Related allowance		Recorded investment		Unpaid principal balance		Related allowance
	(in thousands)
With an allowance recorded:
Commercial, financial, leasing, etc.	$	196,990		219,662		50,010		179,037		195,821		44,752
Real estate:
Commercial		79,748		89,051		16,562		85,974		95,855		18,764
Residential builder and developer		6,854		7,788		581		3,316		5,101		196
Other commercial construction		3,312		3,731		1,223		3,548		3,843		348
Residential		77,975		96,157		3,337		79,558		96,751		4,727
Residential-limited documentation		85,201		98,607		6,700		90,356		104,251		8,000
Consumer:
Home equity lines and loans		40,004		40,914		7,421		25,220		26,195		3,777
Automobile		19,137		19,137		4,022		22,525		22,525		4,709
Other		4,426		4,426		940		17,620		17,620		4,820
		513,647		579,473		90,796		507,154		567,962		90,093
With no related allowance recorded:
Commercial, financial, leasing, etc.		74,409		83,632		—		93,190		110,735		—
Real estate:
Commercial		101,949		118,540		—		101,340		116,230		—
Residential builder and developer		21,619		30,837		—		27,651		47,246		—
Other commercial construction		18,334		37,278		—		13,221		31,477		—
Residential		18,945		27,933		—		19,621		30,940		—
Residential-limited documentation		17,790		29,972		—		18,414		31,113		—
		253,046		328,192		—		273,437		367,741		—
Total:
Commercial, financial, leasing, etc.		271,399		303,294		50,010		272,227		306,556		44,752
Real estate:
Commercial		181,697		207,591		16,562		187,314		212,085		18,764
Residential builder and developer		28,473		38,625		581		30,967		52,347		196
Other commercial construction		21,646		41,009		1,223		16,769		35,320		348
Residential		96,920		124,090		3,337		99,179		127,691		4,727
Residential-limited documentation		102,991		128,579		6,700		108,770		135,364		8,000
Consumer:
Home equity lines and loans		40,004		40,914		7,421		25,220		26,195		3,777
Automobile		19,137		19,137		4,022		22,525		22,525		4,709
Other		4,426		4,426		940		17,620		17,620		4,820
Total	$	766,693		907,665		90,796		780,591		935,703		90,093

	Three months ended June 30, 2016						Three months ended June 30, 2015
			Interest income recognized						Interest income recognized
	Average recorded investment		Total		Cash basis		Average recorded investment		Total		Cash basis
	(in thousands)
Commercial, financial, leasing, etc.	$	291,970		5,700		5,700		221,952		502		502
Real estate:
Commercial		175,028		611		611		153,105		1,004		1,004
Residential builder and developer		31,751		41		41		66,334		131		131
Other commercial construction		20,955		335		335		23,614		168		168
Residential		97,936		1,834		1,139		101,560		1,358		785
Residential-limited documentation		103,795		1,607		640		120,286		1,650		697
Consumer:
Home equity lines and loans		34,234		323		98		20,221		224		65
Automobile		20,542		322		28		26,123		416		43
Other		11,169		121		36		19,058		185		30
Total	$	787,380		10,894		8,628		752,253		5,638		3,425
	Six months ended June 30, 2016						Six months ended June 30, 2015
			Interest income recognized						Interest income recognized
	Average recorded investment		Total		Cash Basis		Average recorded investment		Total		Cash basis
	(in thousands)
Commercial, financial, leasing, etc.	$	294,277		6,311		6,311		218,285		1,106		1,106
Real estate:
Commercial		178,741		2,085		2,085		153,088		2,106		2,106
Residential builder and developer		32,750		83		83		69,742		194		194
Other commercial construction		18,911		373		373		24,577		223		223
Residential		97,362		3,206		2,021		103,025		2,804		1,695
Residential-limited documentation		105,634		3,079		1,270		122,970		3,260		1,344
Consumer:
Home equity lines and loans		30,127		569		183		19,952		425		113
Automobile		21,252		661		64		27,568		866		97
Other		14,443		299		63		18,960		359		63
Total	$	793,497		16,666		12,453		758,167		11,343		6,941

In accordance with the previously described policies, the Company utilizes a loan grading system that is applied to all commercial loans and commercial real estate loans. Loan grades are utilized to differentiate risk within the portfolio and consider the expectations of default for each loan. Commercial loans and commercial real estate loans with a lower expectation of default are assigned one of ten possible “pass” loan grades and are generally ascribed lower loss factors when determining the allowance for credit losses. Loans with an elevated level of credit risk are classified as “criticized” and are ascribed a higher loss factor when determining the allowance for credit losses. Criticized loans may be classified as “nonaccrual” if the Company no longer expects to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more. All larger balance criticized commercial loans and commercial real estate loans are individually reviewed by centralized loan review personnel each quarter to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing. Smaller balance criticized loans are analyzed by business line risk management areas to ensure proper loan grade classification. Furthermore, criticized nonaccrual commercial loans and commercial real estate loans are considered impaired and, as a result, specific loss allowances on such loans are established within the allowance for credit losses to the extent appropriate in each individual instance. The following table summarizes the loan grades applied to the various classes of the Company’s commercial loans and commercial real estate loans.

			Real Estate
	Commercial, Financial, Leasing, etc.		Commercial		Residential Builder and Developer		Other Commercial Construction
	(in thousands)
June 30, 2016
Pass	$	20,409,928		22,785,132		1,704,457		4,847,810
Criticized accrual		818,630		797,097		155,238		203,269
Criticized nonaccrual		240,684		172,670		24,263		21,294
Total	$	21,469,242		23,754,899		1,883,958		5,072,373
December 31, 2015
Pass	$	19,442,183		22,697,398		1,497,465		3,834,137
Criticized accrual		738,238		655,257		59,779		228,877
Criticized nonaccrual		241,917		179,606		28,429		16,363
Total	$	20,422,338		23,532,261		1,585,673		4,079,377

In determining the allowance for credit losses, residential real estate loans and consumer loans are generally evaluated collectively after considering such factors as payment performance and recent loss experience and trends, which are mainly driven by current collateral values in the market place as well as the amount of loan defaults. Loss rates on such loans are determined by reference to recent charge-off history and are evaluated (and adjusted if deemed appropriate) through consideration of other factors including near-term forecasted loss estimates developed by the Company’s Credit Department. In arriving at such forecasts, the Company considers the current estimated fair value of its collateral based on geographical adjustments for home price depreciation/appreciation and overall borrower repayment performance. With regard to collateral values, the realizability of such values by the Company contemplates repayment of any first lien position prior to recovering amounts on a second lien position. However, residential real estate loans and outstanding balances of home equity loans and lines of credit that are more than 150 days past due are generally evaluated for collectibility on a loan-by-loan basis giving consideration to estimated collateral values. The carrying value of residential real estate loans and home equity loans and lines of credit for which a partial charge-off has been recognized aggregated $52 million and $31 million, respectively, at June 30, 2016 and $55 million and $21 million, respectively, at December 31, 2015. Residential real estate loans and home equity loans and lines of credit that were more than 150 days past due but did not require a partial charge-off because the net realizable value of the collateral exceeded the outstanding customer balance totaled $18 million and $39 million, respectively, at June 30, 2016 and $20 million and $28 million, respectively, at December 31, 2015.

The Company also measures additional losses for purchased impaired loans when it is probable that the Company will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimates after acquisition. The determination of the allocated portion of the allowance for credit losses is very subjective. Given that inherent subjectivity and potential imprecision involved in determining the allocated portion of the allowance for credit losses, the Company also provides an inherent unallocated portion of the allowance. The unallocated portion of the allowance is intended to recognize probable losses that are not otherwise identifiable and includes management’s subjective determination of amounts necessary to provide for the possible use of imprecise estimates in determining the allocated portion of the allowance. Therefore, the level of the unallocated portion of the allowance is primarily reflective of the inherent imprecision in the various calculations used in determining the allocated portion of the allowance for credit losses. Other factors that could also lead to changes in the unallocated portion include the effects of expansion into new markets for which the Company does not have the same degree of familiarity and experience regarding portfolio performance in changing market conditions, the introduction of new loan and lease product types, and other risks associated with the Company’s loan portfolio that may not be specifically identifiable.

The allocation of the allowance for credit losses summarized on the basis of the Company’s impairment methodology was as follows:

	Commercial, Financial, Leasing, etc.		Real Estate
			Commercial		Residential		Consumer		Total
	(in thousands)
June 30, 2016
Individually evaluated for impairment	$	50,010		18,292		10,037		12,383	$	90,722
Collectively evaluated for impairment		266,069		328,919		57,666		143,891		796,545
Purchased impaired		—		2,463		1,957		1,087		5,507
Allocated	$	316,079		349,674		69,660		157,361		892,774
Unallocated										77,722
Total									$	970,496
December 31, 2015
Individually evaluated for impairment	$	44,752		19,175		12,727		13,306	$	89,960
Collectively evaluated for impairment		255,615		307,000		57,624		163,511		783,750
Purchased impaired		37		656		1,887		1,503		4,083
Allocated	$	300,404		326,831		72,238		178,320		877,793
Unallocated										78,199
Total									$	955,992

The recorded investment in loans and leases summarized on the basis of the Company’s impairment methodology was as follows:

	Commercial, Financial, Leasing, etc.		Real Estate
			Commercial		Residential		Consumer		Total
	(in thousands)
June 30, 2016
Individually evaluated for impairment	$	271,399		230,960		199,911		63,567	$	765,837
Collectively evaluated for impairment		21,197,077		30,408,178		23,742,826		11,746,021		87,094,102
Purchased impaired		766		72,092		587,512		1,689		662,059
Total	$	21,469,242		30,711,230		24,530,249		11,811,277	$	88,521,998
December 31, 2015
Individually evaluated for impairment	$	272,227		234,132		207,949		65,365	$	779,673
Collectively evaluated for impairment		20,148,209		28,863,130		25,398,037		11,532,121		85,941,497
Purchased impaired		1,902		100,049		664,117		2,261		768,329
Total	$	20,422,338		29,197,311		26,270,103		11,599,747	$	87,489,499

During the normal course of business, the Company modifies loans to maximize recovery efforts. If the borrower is experiencing financial difficulty and a concession is granted, the Company considers such modifications as troubled debt restructurings and classifies those loans as either nonaccrual loans or renegotiated loans. The types of concessions that the Company grants typically include principal deferrals and interest rate concessions, but may also include other types of concessions.

The tables that follow summarize the Company’s loan modification activities that were considered troubled debt restructurings for the three months ended June 30, 2016 and 2015:

			Recorded investment				Financial effects of modification
Three months ended June 30, 2016	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
			(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		33	$	45,733	$	45,657	$	(76	)	$	—
Combination of concession types		5		15,257		14,217		(1,040	)		—
Real estate:
Commercial
Principal deferral		10		2,726		2,710		(16	)		—
Interest rate reduction		1		129		129		—			(25	)
Other		1		4,723		4,447		(276	)		—
Combination of concession types		4		7,065		7,008		(57	)		(31	)
Residential builder and developer
Principal deferral		3		23,905		22,958		(947	)		—
Other commercial construction
Principal deferral		1		250		250		—			—
Combination of concession types		1		124		124		—			—
Residential
Principal deferral		8		963		1,040		77			—
Combination of concession types		8		1,043		1,122		79			—
Residential-limited documentation
Principal deferral		2		151		195		44			—
Consumer:
Home equity lines and loans
Principal deferral		1		69		69		—			—
Combination of concession types		31		3,737		3,737		—			(280	)
Automobile
Principal deferral		44		158		158		—			—
Other		22		17		17		—			—
Other
Principal deferral		29		551		551		—			—
Other		3		20		20		—			—
Combination of concession types		9		49		49		—			(5	)
Total		216	$	106,670	$	104,458	$	(2,212	)	$	(341	)

(a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages.

(b) Represents the present value of interest rate concessions discounted at the effective rate of the original loan.

			Recorded investment				Financial effects of modification
Three months ended June 30, 2015	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
			(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		30	$	16,018	$	15,355	$	(663	)	$	—
Other		2		8,991		8,883		(108	)		—
Combination of concession types		2		15,889		17,864		1,975			(239	)
Real estate:
Commercial
Principal deferral		15		38,983		37,585		(1,398	)		—
Combination of concession types		1		436		436		—			(53	)
Residential builder and developer
Principal deferral		1		9,252		9,200		(52	)		—
Residential
Principal deferral		12		693		754		61			—
Combination of concession types		9		961		1,066		105			(144	)
Residential-limited documentation
Principal deferral		1		161		161		—			—
Combination of concession types		2		424		426		2			(26	)
Consumer:
Home equity lines and loans
Principal deferral		1		1,198		1,198		—			—
Combination of concession types		14		1,356		1,356		—			(212	)
Automobile
Principal deferral		63		615		615		—			—
Interest rate reduction		4		95		95		—			(7	)
Other		13		21		21		—			—
Combination of concession types		9		138		138		—			(4	)
Other
Principal deferral		27		770		770		—			—
Other		2		21		21		—			—
Combination of concession types		10		43		43		—			(7	)
Total		218	$	96,065	$	95,987	$	(78	)	$	(692	)

(a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages.

(b) Represents the present value of interest rate concessions discounted at the effective rate of the original loan.

The tables below summarize the Company’s loan modification activities that were considered troubled debt restructurings for the six months ended June 30, 2016 and 2015:

			Recorded investment				Financial effects of modification
Six months ended June 30, 2016	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
			(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		57	$	57,304	$	58,378	$	1,074		$	—
Combination of concession types		12		21,414		20,169		(1,245	)		—
Real estate:
Commercial
Principal deferral		26		6,209		6,158		(51	)		—
Interest rate reduction		1		129		129		—			(25	)
Other		1		4,723		4,447		(276	)		—
Combination of concession types		9		10,998		10,932		(66	)		(66	)
Residential builder and developer
Principal deferral		3		23,905		22,958		(947	)		—
Other commercial construction
Principal deferral		1		250		250		—			—
Combination of concession types		1		124		124		—			—
Residential
Principal deferral		25		2,944		3,231		287			—
Combination of concession types		18		3,364		3,491		127			—
Residential-limited documentation
Principal deferral		3		276		333		57			—
Combination of concession types		5		1,312		1,379		67			(339	)
Consumer:
Home equity lines and loans
Principal deferral		4		404		404		—			—
Combination of concession types		54		6,233		6,233		—			(563	)
Automobile
Principal deferral		92		679		679		—			—
Other		38		55		55		—			—
Combination of concession types		8		85		85		—			(3	)
Other
Principal deferral		55		925		925		—			—
Other		5		45		45		—			—
Combination of concession types		17		196		196		—			(32	)
Total		435	$	141,574	$	140,601	$	(973	)	$	(1,028	)

(a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages.

(b) Represents the present value of interest rate concessions discounted at the effective rate of the original loan.

			Recorded investment				Financial effects of modification
Six months ended June 30, 2015	Number		Pre- modification		Post- modification		Recorded investment (a)			Interest (b)
	(dollars in thousands)
Commercial, financial, leasing, etc.
Principal deferral		51	$	17,590	$	16,912	$	(678	)	$	—
Interest rate reduction		1		99		99		—			(19	)
Other		2		8,991		8,883		(108	)		—
Combination of concession types		5		25,044		24,853		(191	)		(239	)
Real estate:
Commercial
Principal deferral		22		42,775		41,361		(1,414	)		—
Combination of concession types		5		2,082		2,073		(9	)		(105	)
Residential builder and developer
Principal deferral		2		10,650		10,598		(52	)		—
Residential
Principal deferral		19		1,414		1,496		82			—
Combination of concession types		12		1,255		1,415		160			(178	)
Residential-limited documentation
Principal deferral		1		161		161		—			—
Combination of concession types		3		634		636		2			(30	)
Consumer:
Home equity lines and loans
Principal deferral		2		1,219		1,219		—			—
Combination of concession types		19		1,552		1,552		—			(225	)
Automobile
Principal deferral		98		918		918		—			—
Interest rate reduction		7		137		137		—			(10	)
Other		23		41		41		—			—
Combination of concession types		17		222		222		—			(11	)
Other
Principal deferral		49		1,066		1,066		—			—
Other		7		80		80		—			—
Combination of concession types		23		267		267		—			(32	)
Total		368	$	116,197	$	113,989	$	(2,208	)	$	(849	)

(a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages.

(b) Represents the present value of interest rate concessions discounted at the effective rate of the original loan.

Troubled debt restructurings are considered to be impaired loans and for purposes of establishing the allowance for credit losses are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. Impairment of troubled debt restructurings that have subsequently defaulted may also be measured based on the loan’s observable market price or the fair value of collateral if the loan is collateral-dependent. Charge-offs may also be recognized on troubled debt restructurings that have subsequently defaulted. Loans that were modified as troubled debt restructurings during the twelve months ended June 30, 2016 and 2015 and for which there was a subsequent payment default during the six-month periods ended June 30, 2016 and 2015, respectively, were not material.

The amount of foreclosed residential real estate property held by the Company was $158 million and $172 million at June 30, 2016 and December 31, 2015, respectively. There were $305 million and $315 million at June 30, 2016 and December 31, 2015, respectively, in loans secured by residential real estate that were in the process of foreclosure.