3. Loans and Leases

As of March 31, 2017 and December 31, 2016, loans and leases were comprised of the following:


	March 31,		December 31,
(dollars in thousands)	2017		2016
Commercial and industrial	$	3,243,508	$	3,239,600
Real estate:
Commercial		2,532,253		2,343,495
Construction		469,741		450,012
Residential		3,864,509		3,796,459
Total real estate		6,866,503		6,589,966
Consumer		1,503,129		1,510,772
Lease financing		168,356		180,040
Total loans and leases	$	11,781,496	$	11,520,378

Outstanding loan balances are reported net of unearned income, including net deferred loan costs of $25.2 million and $23.8 million at March 31, 2017 and December 31, 2016, respectively.

As of March 31, 2017, residential real estate loans totaling $2.2 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 $933.7 million were pledged to collateralize the borrowing capacity at the Federal Reserve Bank of San Francisco (“FRB”). As of December 31, 2016, residential real estate loans totaling $2.1 billion were pledged to collateralize the Company’s borrowing capacity at the FHLB, and consumer and commercial and industrial loans totaling $935.7 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 $3.0 million and $4.1 million at March 31, 2017 and December 31, 2016, 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 March 31, 2017 and December 31, 2016, remaining loan and lease commitments were comprised of the following:


	March 31,		December 31,
(dollars in thousands)	2017		2016
Commercial and industrial	$	2,226,648	$	2,185,810
Real estate:
Commercial		86,210		88,331
Construction		379,275		434,406
Residential		974,438		953,781
Total real estate		1,439,923		1,476,518
Consumer		1,476,712		1,459,467
Lease financing		16		16
Total loan and lease commitments	$	5,143,299	$	5,121,811