3. Loans and Leases

As of September 30, 2016 and December 31, 2015, loans and leases were comprised of the following:


(dollars in thousands)	2016		2015
Commercial and industrial	$	3,265,291	$	3,057,455
Real estate:
Commercial		2,311,874		2,164,448
Construction		475,333		367,460
Residential		3,687,660		3,532,427
Total real estate		6,474,867		6,064,335
Consumer		1,469,220		1,401,561
Lease financing		187,177		198,679
Total loans and leases	$	11,396,555	$	10,722,030

Outstanding loan balances are reported net of unearned income, including net deferred loan costs of $21.9 million and $17.2 million at September 30, 2016 and December 31, 2015, respectively.

As of September 30, 2016, residential real estate loans totaling $2.0 billion were pledged to collateralize the Company’s borrowing capacity at the Federal Home Loan Bank of Des Moines (“FHLB”), and consumer and commercial and industrial loans totaling $935.6 million were pledged to collateralize the borrowing capacity at the Federal Reserve Bank of San Francisco (“FRB”). As of December 31, 2015, residential real estate loans totaling $2.5 billion were pledged to collateralize the Company’s borrowing capacity at the FHLB, and consumer and commercial and industrial loans totaling $814.2 million were pledged to collateralize the borrowing capacity at the FRB. Residential real estate loans collateralized by properties that were in the process of foreclosure totaled $4.0 million and $11.3 million at September 30, 2016 and December 31, 2015, respectively.

In the course of evaluating the credit risk presented by a customer and the pricing that will adequately compensate the Company for assuming that risk, management may require a certain amount of collateral support. The type of collateral held varies, but may include accounts receivable, inventory, land, buildings, equipment, income-producing commercial properties and residential real estate. The Company applies the same collateral policy for loans whether they are funded immediately or on a delayed basis. The loan and lease portfolio is principally located in Hawaii and, to a lesser extent, on the U.S. Mainland, Guam and Saipan. The risk inherent in the portfolio depends upon both the economic stability of the state or territories, which affects property values, and the financial strength and creditworthiness of the borrowers.

At September 30, 2016 and December 31, 2015, remaining loan and lease commitments were comprised of the following:


(dollars in thousands)	2016		2015
Commercial and industrial	$	2,194,182	$	2,262,712
Real estate:
Commercial		74,193		46,812
Construction		495,320		480,926
Residential		950,373		953,984
Total real estate		1,519,886		1,481,722
Consumer		1,465,486		1,448,336
Lease financing		16		104
Total loan and lease commitments	$	5,179,570	$	5,192,874