3. Loans and Leases

As of June 30, 2018 and December 31, 2017, loans and leases were comprised of the following:


	June 30,		December 31,
(dollars in thousands)	2018		2017
Commercial and industrial	$	3,116,145	$	3,135,266
Real estate:
Commercial		2,837,520		2,667,597
Construction		654,084		632,911
Residential		4,236,083		4,090,053
Total real estate		7,727,687		7,390,561
Consumer		1,632,088		1,586,476
Lease financing		161,766		165,066
Total loans and leases	$	12,637,686	$	12,277,369

Outstanding loan balances are reported net of unearned income, including net deferred loan costs of $34.5 million and $31.2 million at June 30, 2018 and December 31, 2017, respectively.

As of June 30, 2018, residential real estate loans totaling $2.6 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 $959.9 million were pledged to collateralize the borrowing capacity at the Federal Reserve Bank of San Francisco (“FRB”). As of December 31, 2017, residential real estate loans totaling $2.4 billion were pledged to collateralize the Company’s borrowing capacity at the FHLB, and consumer and commercial and industrial loans totaling $914.5 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 $3.6 million and $3.3 million at June 30, 2018 and December 31, 2017, 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 June 30, 2018 and December 31, 2017, remaining loan and lease commitments were comprised of the following:


	June 30,		December 31,
(dollars in thousands)	2018		2017
Commercial and industrial	$	2,449,440	$	2,406,261
Real estate:
Commercial		91,565		78,266
Construction		530,143		450,856
Residential		986,478		980,792
Total real estate		1,608,186		1,509,914
Consumer		1,505,763		1,485,588
Total loan and lease commitments	$	5,563,389	$	5,401,763