4. Loans and leases and the allowance for credit losses

A summary of current, past due and nonaccrual loans as of June 30, 2017 and December 31, 2016 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
	(In thousands)
June 30, 2017
Commercial, financial, leasing, etc.	$	21,936,863		49,066		1,126		394		2,307		201,295	$	22,191,051
Real estate:
Commercial		25,237,177		256,218		19,187		11,644		24,518		201,518		25,750,262
Residential builder and developer		1,639,210		11,172		—		1,805		10,960		7,389		1,670,536
Other commercial construction		5,808,838		83,700		7,481		—		12,209		15,965		5,928,193
Residential		16,438,548		424,098		233,081		7,970		336,177		236,813		17,676,687
Residential — limited documentation		2,968,241		82,569		300		—		126,222		106,152		3,283,484
Consumer:
Home equity lines and loans		5,337,934		32,378		773		11,632		—		77,471		5,460,188
Automobile		3,166,912		59,243		—		1		—		17,154		3,243,310
Other		3,814,045		26,617		3,513		24,052		—		8,617		3,876,844
Total	$	86,347,768		1,025,061		265,461		57,498		512,393		872,374	$	89,080,555

December 31, 2016
Commercial, financial, leasing, etc.	$	22,287,857		53,503		6,195		417		641		261,434	$	22,610,047
Real estate:
Commercial		25,076,684		183,531		7,054		12,870		31,404		176,201		25,487,744
Residential builder and developer		1,884,989		4,667		5		1,952		14,006		16,707		1,922,326
Other commercial construction		5,985,118		77,701		922		198		14,274		18,111		6,096,324
Residential		17,631,377		485,468		281,298		11,537		378,549		229,242		19,017,471
Residential — limited documentation		3,239,344		88,366		—		—		139,158		106,573		3,573,441
Consumer:
Home equity lines and loans		5,502,091		44,565		—		12,678		—		81,815		5,641,149
Automobile		2,869,232		56,158		—		1		—		18,674		2,944,065
Other		3,491,629		31,286		5,185		21,491		—		11,258		3,560,849
Total	$	87,968,321		1,025,245		300,659		61,144		578,032		920,015	$	90,853,416

(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.

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

One-to-four family residential mortgage loans held for sale were $340 million and $414 million at June 30, 2017 and December 31, 2016, respectively. Commercial real estate loans held for sale were $208 million at June 30, 2017 and $643 million at December 31, 2016.

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

	June 30,		December 31,
	2017		2016
	(In thousands)

Outstanding principal balance	$	1,842,739		2,311,699
Carrying amount:
Commercial, financial, leasing, etc.		51,728		59,928
Commercial real estate		368,661		456,820
Residential real estate		717,139		799,802
Consumer		240,640		487,721
	$	1,378,168		1,804,271

Purchased impaired loans included in the table above totaled $512 million at June 30, 2017 and $578 million at December 31, 2016, 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, 2017 and 2016 follows:


	Three Months Ended June 30,
	2017						2016
	Purchased			Other			Purchased			Other
	Impaired			Acquired			Impaired			Acquired
	(In thousands)

Balance at beginning of period	$	143,454			181,310		$	171,185			269,017
Interest income		(10,806	)		(20,923	)		(14,060	)		(32,898	)
Reclassifications from nonaccretable balance		884			1,852			4,898			2,933
Other (a)		—			860			—			6,143
Balance at end of period	$	133,532			163,099		$	162,023			245,195

	Six Months Ended June 30,
	2017						2016
	Purchased			Other			Purchased			Other
	Impaired			Acquired			Impaired			Acquired
	(In thousands)

Balance at beginning of period	$	154,233			201,153		$	184,618			296,434
Interest income		(21,731	)		(46,441	)		(28,122	)		(70,760	)
Reclassifications from nonaccretable balance		1,030			5,035			5,527			8,597
Other (a)		—			3,352			—			10,924
Balance at end of period	$	133,532			163,099		$	162,023			245,195

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

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

Changes in the allowance for credit losses for the three months ended June 30, 2017 were as follows:

	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated			Total
	(In thousands)

Beginning balance	$	347,760			360,010			62,012			153,172			78,476		$	1,001,430
Provision for credit losses		13,368			7,638			7,163			24,190			(359	)		52,000
Net charge-offs
Charge-offs		(25,247	)		(1,853	)		(5,899	)		(28,683	)		—			(61,682	)
Recoveries		3,433			434			2,730			9,880			—			16,477
Net charge-offs		(21,814	)		(1,419	)		(3,169	)		(18,803	)		—			(45,205	)
Ending balance	$	339,314			366,229			66,006			158,559			78,117		$	1,008,225

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

	Commercial, Financial,			Real Estate
	Leasing, etc.			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) recoveries		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 six months ended June 30, 2017 were as follows:

	Commercial, Financial,			Real Estate
	Leasing, etc.			Commercial			Residential			Consumer			Unallocated		Total
	(In thousands)

Beginning balance	$	330,833			362,719			61,127			156,288			78,030	$	988,997
Provision for credit losses		42,191			8,900			12,800			43,022			87		107,000
Net charge-offs
Charge-offs		(41,604	)		(7,298	)		(12,158	)		(63,186	)		—		(124,246	)
Recoveries		7,894			1,908			4,237			22,435			—		36,474
Net charge-offs		(33,710	)		(5,390	)		(7,921	)		(40,751	)		—		(87,772	)
Ending balance	$	339,314			366,229			66,006			158,559			78,117	$	1,008,225

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

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

	Commercial, Financial,			Real Estate
	Leasing, etc.			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) recoveries		2,230			3,007			(8,200	)		(63,533	)		—			(66,496	)
Ending balance	$	316,079			349,674			69,660			157,361			77,722		$	970,496

Despite the allocation in the preceding tables, 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 credit 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 loans 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.

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

The following tables provide information with respect to loans and leases that were considered impaired as of June 30, 2017 and December 31, 2016 and for the three-month and six-month periods ended June 30, 2017 and 2016.

	June 30, 2017						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
With an allowance recorded:
Commercial, financial, leasing, etc.	$	162,881		186,158		50,377		168,072		184,432		48,480
Real estate:
Commercial		91,624		107,191		11,047		71,862		86,666		11,620
Residential builder and developer		5,656		5,834		350		7,396		8,361		506
Other commercial construction		1,825		2,102		327		2,475		2,731		448
Residential		96,638		117,969		3,610		86,680		105,944		3,457
Residential — limited documentation		82,086		97,879		4,700		82,547		97,718		6,000
Consumer:
Home equity lines and loans		47,890		52,611		8,791		44,693		48,965		8,027
Automobile		14,919		17,153		3,149		16,982		18,272		3,740
Other		3,354		5,656		687		3,791		5,296		776
		506,873		592,553		83,038		484,498		558,385		83,054
With no related allowance recorded:
Commercial, financial, leasing, etc.		63,884		85,046		—		100,805		124,786		—
Real estate:
Commercial		132,061		141,025		—		113,276		121,846		—
Residential builder and developer		5,791		13,227		—		14,368		21,124		—
Other commercial construction		14,382		33,641		—		15,933		35,281		—
Residential		12,672		18,156		—		16,823		24,161		—
Residential — limited documentation		10,900		18,313		—		15,429		24,590		—
		239,690		309,408		—		276,634		351,788		—
Total:
Commercial, financial, leasing, etc.		226,765		271,204		50,377		268,877		309,218		48,480
Real estate:
Commercial		223,685		248,216		11,047		185,138		208,512		11,620
Residential builder and developer		11,447		19,061		350		21,764		29,485		506
Other commercial construction		16,207		35,743		327		18,408		38,012		448
Residential		109,310		136,125		3,610		103,503		130,105		3,457
Residential — limited documentation		92,986		116,192		4,700		97,976		122,308		6,000
Consumer:
Home equity lines and loans		47,890		52,611		8,791		44,693		48,965		8,027
Automobile		14,919		17,153		3,149		16,982		18,272		3,740
Other		3,354		5,656		687		3,791		5,296		776
Total	$	746,563		901,961		83,038		761,132		910,173		83,054

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

	Three Months Ended June 30, 2017						Three Months Ended June 30, 2016
			Interest Income Recognized						Interest Income Recognized
	Average Recorded Investment		Total		Cash Basis		Average Recorded Investment		Total		Cash Basis
	(In thousands)

Commercial, financial, leasing, etc.	$	230,767		805		805		291,970		5,700		5,700
Real estate:
Commercial		200,005		813		813		175,028		611		611
Residential builder and developer		15,577		467		467		31,751		41		41
Other commercial construction		14,213		86		86		20,955		335		335
Residential		108,036		1,465		606		97,936		1,834		1,139
Residential — limited documentation		95,208		1,449		339		103,795		1,607		640
Consumer:
Home equity lines and loans		46,872		422		91		34,234		323		98
Automobile		15,506		262		21		20,542		322		28
Other		3,468		75		3		11,169		121		36
Total	$	729,652		5,844		3,231		787,380		10,894		8,628

	Six Months Ended June 30, 2017						Six Months Ended June 30, 2016
			Interest Income Recognized						Interest Income Recognized
	Average Recorded Investment		Total		Cash Basis		Average Recorded Investment		Total		Cash Basis
	(In thousands)

Commercial, financial, leasing, etc.	$	251,352		1,283		1,283		294,277		6,311		6,311
Real estate:
Commercial		191,935		1,788		1,788		178,741		2,085		2,085
Residential builder and developer		17,552		896		896		32,750		83		83
Other commercial construction		14,922		933		933		18,911		373		373
Residential		106,166		3,101		1,380		97,362		3,206		2,021
Residential-limited documentation		96,033		2,949		723		105,634		3,079		1,270
Consumer:
Home equity lines and loans		46,327		821		191		30,127		569		183
Automobile		15,931		537		40		21,252		661		64
Other		3,510		147		6		14,443		299		63
Total	$	743,728		12,455		7,240		793,497		16,666		12,453

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

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 credit 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,				Residential		Other
	Financial,				Builder and		Commercial
	Leasing, etc.		Commercial		Developer		Construction
	(In thousands)
June 30, 2017
Pass	$	21,096,685		24,830,082		1,592,047		5,757,119
Criticized accrual		893,071		718,662		71,100		155,109
Criticized nonaccrual		201,295		201,518		7,389		15,965
Total	$	22,191,051		25,750,262		1,670,536		5,928,193
December 31, 2016
Pass	$	21,398,581		24,570,269		1,789,071		5,912,351
Criticized accrual		950,032		741,274		116,548		165,862
Criticized nonaccrual		261,434		176,201		16,707		18,111
Total	$	22,610,047		25,487,744		1,922,326		6,096,324

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

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 collectability 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 totaled $42 million and $26 million, respectively, at June 30, 2017 and $44 million and $32 million, respectively, at December 31, 2016. 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 were $18 million and $37 million, respectively, at June 30, 2017 and $16 million and $39 million, respectively, at December 31, 2016.

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.

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

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

	Commercial, Financial,		Real Estate
	Leasing, etc.		Commercial		Residential		Consumer		Total
	(In thousands)
June 30, 2017
Individually evaluated for impairment	$	50,377		11,724		8,310		12,627	$	83,038
Collectively evaluated for impairment		288,937		352,539		49,266		145,932		836,674
Purchased impaired		—		1,966		8,430		—		10,396
Allocated	$	339,314		366,229		66,006		158,559		930,108
Unallocated										78,117
Total									$	1,008,225
December 31, 2016
Individually evaluated for impairment	$	48,480		12,500		9,457		12,543	$	82,980
Collectively evaluated for impairment		282,353		348,301		47,993		143,745		822,392
Purchased impaired		—		1,918		3,677		—		5,595
Allocated	$	330,833		362,719		61,127		156,288		910,967
Unallocated										78,030
Total									$	988,997

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

	Commercial, Financial,		Real Estate
	Leasing, etc.		Commercial		Residential		Consumer		Total
	(In thousands)
June 30, 2017
Individually evaluated for impairment	$	226,765		251,339		202,296		66,163	$	746,563
Collectively evaluated for impairment		21,961,979		33,049,965		20,295,476		12,514,179		87,821,599
Purchased impaired		2,307		47,687		462,399		—		512,393
Total	$	22,191,051		33,348,991		20,960,171		12,580,342	$	89,080,555
December 31, 2016
Individually evaluated for impairment	$	268,877		224,630		201,479		65,466	$	760,452
Collectively evaluated for impairment		22,340,529		33,222,080		21,871,726		12,080,597		89,514,932
Purchased impaired		641		59,684		517,707		—		578,032
Total	$	22,610,047		33,506,394		22,590,912		12,146,063	$	90,853,416

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.

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

The tables that follow summarize the Company’s loan modification activities that were considered troubled debt restructurings for the three-month and six-month periods ended June 30, 2017 and 2016:

					Post-modification (a)
	Number		Pre- modification recorded investment		Principal Deferral		Other		Combination of Concession Types		Total
Three Months Ended June 30, 2017	(Dollars in thousands)

Commercial, financial, leasing, etc.		63	$	65,613	$	8,172	$	5,556	$	35,232	$	48,960
Real estate:
Commercial		30		26,045		11,782		—		14,276		26,058
Other commercial construction		1		66		66		—		—		66
Residential		30		7,956		2,982		—		5,486		8,468
Residential — limited documentation		7		1,831		235		—		1,660		1,895
Consumer:
Home equity lines and loans		35		3,229		416		—		2,818		3,234
Automobile		22		428		380		—		48		428
Other		3		54		54		—		—		54
Total		191	$	105,222	$	24,087	$	5,556	$	59,520	$	89,163

Three Months Ended June 30, 2016

Commercial, financial, leasing, etc.		38	$	60,990	$	45,657	$	—	$	14,217	$	59,874
Real estate:
Commercial		16		14,643		2,710		4,576		7,008		14,294
Residential builder and developer		3		23,905		22,958		—		—		22,958
Other commercial construction		2		374		250		—		124		374
Residential		16		2,006		1,040		—		1,122		2,162
Residential — limited documentation		2		151		195		—		—		195
Consumer:
Home equity lines and loans		32		3,806		69		—		3,737		3,806
Automobile		66		175		158		17		—		175
Other		41		620		551		20		49		620
Total		216	$	106,670	$	73,588	$	4,613	$	26,257	$	104,458

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

					Post-modification (a)
	Number		Pre- modification recorded investment		Principal Deferral		Other		Combination of Concession Types		Total
Six Months Ended June 30, 2017	(Dollars in thousands)

Commercial, financial, leasing, etc.		113	$	77,534	$	12,561	$	6,362	$	37,960	$	56,883
Real estate:
Commercial		50		32,747		14,773		—		17,882		32,655
Residential builder and developer		3		12,291		—		—		10,879		10,879
Other commercial construction		2		168		168		—		—		168
Residential		71		17,336		8,575		—		9,841		18,416
Residential — limited documentation		13		3,209		235		—		3,185		3,420
Consumer:
Home equity lines and loans		60		5,731		579		491		4,666		5,736
Automobile		42		818		763		—		55		818
Other		5		80		80		—		—		80
Total		359	$	149,914	$	37,734	$	6,853	$	84,468	$	129,055

Six Months Ended June 30, 2016

Commercial, financial, leasing, etc.		69	$	78,718	$	58,378	$	—	$	20,169	$	78,547
Real estate:
Commercial		37		22,059		6,158		4,576		10,932		21,666
Residential builder and developer		3		23,905		22,958		—		—		22,958
Other commercial construction		2		374		250		—		124		374
Residential		43		6,308		3,231		—		3,491		6,722
Residential — limited documentation		8		1,588		333		—		1,379		1,712
Consumer:
Home equity lines and loans		58		6,637		404		—		6,233		6,637
Automobile		138		819		679		55		85		819
Other		77		1,166		925		45		196		1,166
Total		435	$	141,574	$	93,316	$	4,676	$	42,609	$	140,601

(a)	Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages. The present value of interest rate concessions, discounted at the effective rate of the original loan, was not material.

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, 2017 and 2016 and for which there was a subsequent payment default during the six-month periods ended June 30, 2017 and 2016, respectively, were not material.

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

The amount of foreclosed residential real estate property held by the Company totaled $100 million and $129 million at June 30, 2017 and December 31, 2016, respectively. There were $576 million and $506 million at June 30, 2017 and December 31, 2016, respectively, in loans secured by residential real estate that were in the process of foreclosure. Of all loans in the process of foreclosure at June 30, 2017, approximately 51% were classified as purchased impaired and 18% were government guaranteed.