Loans

The detail of the loan portfolio as of September 30, 2015 and December 31, 2014 was as follows:



	September 30, 2015						December 31, 2014
	Non-PCI Loans		PCI Loans		Total		Non-PCI Loans		PCI Loans		Total
	(in thousands)
Non-covered loans:
Commercial and industrial	$	2,152,638	$	246,813	$	2,399,451	$	1,959,927	$	277,371	$	2,237,298
Commercial real estate:
Commercial real estate	6,009,760		880,597		6,890,357		5,053,742		978,448		6,032,190
Construction	521,543		46,083		567,626		476,094		53,869		529,963
Total commercial real estate loans	6,531,303		926,680		7,457,983		5,529,836		1,032,317		6,562,153
Residential mortgage	2,863,402		83,294		2,946,696		2,419,044		96,631		2,515,675
Consumer:
Home equity	392,658		82,072		474,730		400,136		91,609		491,745
Automobile	1,219,734		24		1,219,758		1,144,780		51		1,144,831
Other consumer	379,291		9,414		388,705		298,389		11,931		310,320
Total consumer loans	1,991,683		91,510		2,083,193		1,843,305		103,591		1,946,896
Total non-covered loans	13,539,026		1,348,297		14,887,323		11,752,112		1,509,910		13,262,022
Covered loans:
Commercial and industrial	—		1,167		1,167		—		13,813		13,813
Commercial real estate	—		70,320		70,320		—		128,691		128,691
Construction	—		2,027		2,027		—		3,171		3,171
Residential mortgage	—		52,566		52,566		—		60,697		60,697
Consumer	—		3,411		3,411		—		5,519		5,519
Total covered loans	—		129,491		129,491		—		211,891		211,891
Total loans	$	13,539,026	$	1,477,788	$	15,016,814	$	11,752,112	$	1,721,801	$	13,473,913

Total non-covered loans include net unearned premiums and deferred loan costs of $106 thousand at September 30, 2015 as compared to net unearned discounts and deferred loan fees of $9.0 million at December 31, 2014. The outstanding balances (representing contractual balances owed to Valley) for non-covered PCI loans and covered loans totaled $1.4 billion and $149.3 million at September 30, 2015, respectively, and $1.6 billion and $253.7 million at December 31, 2014, respectively.

There were no sales of loans from the held for investment portfolio during the three and nine months ended September 30, 2015 and 2014.

Purchased Credit-Impaired Loans (Including Covered Loans)

PCI loans, which include loans acquired in FDIC-assisted transactions ("covered loans"), are accounted for in accordance with ASC Subtopic 310-30 and are initially recorded at fair value (as determined by the present value of expected future cash flows) with no valuation allowance (i.e., the allowance for loan losses), and aggregated and accounted for as pools of loans based on common risk characteristics. The difference between the undiscounted cash flows expected at acquisition and the initial carrying amount (fair value) of the PCI loans, or the “accretable yield,” is recognized as interest income utilizing the level-yield method over the life of each pool. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “non-accretable difference,” are not recognized as a yield adjustment, as a loss accrual or a valuation allowance. Reclassifications of the non-accretable difference to the accretable yield may occur subsequent to the loan acquisition dates due to increases in expected cash flows of the loan pools.

The following table presents changes in the accretable yield for PCI loans during the three and nine months ended September 30, 2015 and 2014:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(in thousands)
Balance, beginning of period	$	282,101		$	122,342		$	336,208		$	223,799
Accretion	(24,814		)	(15,538		)	(78,921		)	(46,981		)
Net decrease in expected cash flows	—			—			—			(70,014		)
Balance, end of period	$	257,287		$	106,804		$	257,287		$	106,804

The net decrease in expected cash flows for certain pools of loans (included in the table above) is recognized prospectively as an adjustment to the yield over the life of the individual pools. The net decrease during the nine months ended September 30, 2014 was mainly due to an increase in the expected repayment speeds for certain pools of non-covered PCI loans during the second quarter of 2014.

FDIC Loss-Share Receivable

The receivable arising from the loss-sharing agreements (referred to as the “FDIC loss-share receivable” on our consolidated statements of financial condition) is measured separately from the covered loan portfolio because the agreements are not contractually part of the covered loans and are not transferable should the Bank choose to dispose of the covered loans.

Changes in the FDIC loss-share receivable for the three and nine months ended September 30, 2015 and 2014 were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(in thousands)
Balance, beginning of the period	$	8,404		$	20,687		$	13,848		$	32,757
Discount accretion of the present value at the acquisition dates	43			12			130			35
Effect of additional cash flows on covered loans (prospective recognition)	—			(4,500		)	(4,072		)	(8,460		)
Decrease in the provision for losses on covered loans	—			—			—			(4,417		)
Net (recovered) reimbursable expenses	(238		)	745			174			2,248
Reimbursements from the FDIC	(1,082		)	(684		)	(2,835		)	(4,967		)
Other	140			(80		)	22			(1,016		)
Balance, end of the period	$	7,267		$	16,180		$	7,267		$	16,180

The aggregate effect of changes in the FDIC loss-share receivable was a net reduction in non-interest income of $55 thousand and $3.8 million for the three months ended September 30, 2015 and 2014, respectively, and $3.4 million and $11.6 million for nine months ended September 30, 2015 and 2014, respectively. The reduction (in both the receivable and non-interest income) during the nine months ended September 30, 2015 was mainly caused by the increase in our prospective recognition of the effect of additional cash flows from certain pooled loans during the first quarter of 2015. There were no additional cash flows on pooled loans during the second and third quarter of 2015, as the receivable was prospectively reduced for such additional cash flows over the shorter term of the commercial loan loss-sharing agreements (related to Valley's 2010 FDIC-assisted transactions) that expired in March 2015.

Loan Portfolio Risk Elements and Credit Risk Management

Credit risk management. For all of its loan types discussed below, Valley adheres to a credit policy designed to minimize credit risk while generating the maximum income given the level of risk. Management reviews and approves these policies and procedures on a regular basis with subsequent approval by the Board of Directors annually. Credit authority relating to a significant dollar percentage of the overall portfolio is centralized and controlled by the Credit Risk Management Division and by the Credit Committee. A reporting system supplements the management review process by providing management with frequent reports concerning loan production, loan quality, concentrations of credit, loan delinquencies, non-performing, and potential problem loans. Loan portfolio diversification is an important factor utilized by Valley to manage its risk across business sectors and through cyclical economic circumstances.

Commercial and industrial loans. A significant proportion of Valley’s commercial and industrial loan portfolio is granted to long-standing customers of proven ability and strong repayment performance. Underwriting standards are designed to assess the borrower’s ability to generate recurring cash flow sufficient to meet the debt service requirements of loans granted. While such recurring cash flow serves as the primary source of repayment, a significant number of the loans are collateralized by borrower assets intended to serve as a secondary source of repayment should the need arise. Anticipated cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value, or in the case of loans secured by accounts receivable, the ability of the borrower to collect all amounts due from its customers. Short-term loans may be made on an unsecured basis based on a borrower’s financial strength and past performance. Valley, in most cases, will obtain the personal guarantee of the borrower’s principals to mitigate the risk. Unsecured loans, when made, are generally granted to the Bank’s most credit worthy borrowers. Unsecured commercial and industrial loans totaled $360.8 million and $345.1 million at September 30, 2015 and December 31, 2014, respectively.

Commercial real estate loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans. Both Valley originated and purchased commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real property. Commercial real estate loans generally involve larger principal balances and longer repayment periods as compared to commercial and industrial loans. Repayment of most commercial real estate loans is dependent upon the cash flow generated from the property securing the loan or the business that occupies the property. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy and accordingly conservative loan to value ratios are required at origination, as well as stress tested to evaluate the impact of market changes relating to key underwriting elements. The properties securing the commercial real estate portfolio represent diverse types, with most properties located within Valley’s primary markets.

Construction loans. With respect to loans to developers and builders, Valley originates and manages construction loans structured on either a revolving or non-revolving basis, depending on the nature of the underlying development project. These loans are generally secured by the real estate to be developed and may also be secured by additional real estate to mitigate the risk. Non-revolving construction loans often involve the disbursement of substantially all committed funds with repayment substantially dependent on the successful completion and sale, or lease, of the project. Sources of repayment for these types of loans may be from pre-committed permanent loans from other lenders, sales of developed property, or an interim loan commitment from Valley until permanent financing is obtained elsewhere. Revolving construction loans (generally relating to single-family residential construction) are controlled with loan advances dependent upon the pre-sale of housing units financed. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Residential mortgages. Valley originates residential, first mortgage loans based on underwriting standards that generally comply with Fannie Mae and/or Freddie Mac requirements. Appraisals and valuations of real estate collateral are contracted directly with independent appraisers or from valuation services and not through appraisal management companies. The Bank’s appraisal management policy and procedure is in accordance with regulatory requirements and guidance issued by the Bank’s primary regulator. Credit scoring, using FICO® and other proprietary credit scoring models, is employed in the ultimate, judgmental credit decision by Valley’s underwriting staff. Valley does not use third party contract underwriting services. Residential mortgage loans include fixed and variable interest rate loans secured by one to four family homes generally located in northern and central New Jersey, the New York City metropolitan area, eastern Pennsylvania, and to a much lesser extent, central and southeast Florida. Valley’s ability to be repaid on such loans is closely linked to the economic and real estate market conditions in these regions. In deciding whether to originate each residential mortgage loan, Valley considers the qualifications of the borrower as well as the value of the underlying property.

Home equity loans. Home equity lending consists of both fixed and variable interest rate products. Valley mainly provides home equity loans to its residential mortgage customers within the footprint of its primary lending territory. Valley generally will not exceed a combined (i.e., first and second mortgage) loan-to-value ratio of 75 percent when originating a home equity loan.

Automobile loans. Valley uses both judgmental and scoring systems in the credit decision process for automobile loans. Automobile originations (including light truck and sport utility vehicles) are largely produced via indirect channels, originated through approved automobile dealers. Automotive collateral is generally a depreciating asset and there are times in the life of an automobile loan where the amount owed on a vehicle may exceed its collateral value. Additionally, automobile charge-offs will vary based on strength or weakness in the used vehicle market, original advance rate, when in the life cycle of a loan a default occurs and the condition of the collateral being liquidated. Where permitted by law, and subject to the limitations of the bankruptcy code, deficiency judgments are sought and acted upon to ultimately collect all money owed, even when a default resulted in a loss at collateral liquidation. Valley uses a third party to actively track collision and comprehensive risk insurance required of the borrower on the automobile and this third party provides coverage to Valley in the event of an uninsured collateral loss.

Other consumer loans. Valley’s other consumer loan portfolio includes direct consumer term loans, both secured and unsecured. The other consumer loan portfolio includes exposures in credit card loans, personal lines of credit, personal loans and loans secured by cash surrender value of life insurance. Valley believes the aggregate risk exposure of these loans and lines of credit was not significant at September 30, 2015. Unsecured consumer loans totaled approximately $17.4 million and $31.4 million, including $7.0 million and $7.6 million of credit card loans, at September 30, 2015 and December 31, 2014, respectively.

Credit Quality

The following table presents past due, non-accrual and current loans (excluding PCI loans, which are accounted for on a pool basis, and non-performing loans held for sale) by loan portfolio class at September 30, 2015 and December 31, 2014:



	Past Due and Non-Accrual Loans
	30-59 Days Past Due Loans		60-89 Days Past Due Loans		Accruing Loans 90 Days or More Past Due		Non-Accrual Loans		Total Past Due Loans		Current Non-PCI Loans		Total Non-PCI Loans
	(in thousands)
September 30, 2015
Commercial and industrial	$	2,081	$	1,996	$	224	$	12,845	$	17,146	$	2,135,492	$	2,152,638
Commercial real estate:
Commercial real estate	2,950		1,415		245		22,129		26,739		5,983,021		6,009,760
Construction	4,707		—		—		5,959		10,666		510,877		521,543
Total commercial real estate loans	7,657		1,415		245		28,088		37,405		6,493,898		6,531,303
Residential mortgage	5,617		1,977		3,468		16,657		27,719		2,835,683		2,863,402
Consumer loans:
Home equity	1,285		218		—		1,576		3,079		389,579		392,658
Automobile	1,904		480		164		—		2,548		1,217,186		1,219,734
Other consumer	302		24		2		58		386		378,905		379,291
Total consumer loans	3,491		722		166		1,634		6,013		1,985,670		1,991,683
Total	$	18,846	$	6,110	$	4,103	$	59,224	$	88,283	$	13,450,743	$	13,539,026
December 31, 2014
Commercial and industrial	$	1,630	$	1,102	$	226	$	8,467	$	11,425	$	1,948,502	$	1,959,927
Commercial real estate:
Commercial real estate	8,938		113		49		22,098		31,198		5,022,544		5,053,742
Construction	448		—		3,988		5,223		9,659		466,435		476,094
Total commercial real estate loans	9,386		113		4,037		27,321		40,857		5,488,979		5,529,836
Residential mortgage	6,200		3,575		1,063		17,760		28,598		2,390,446		2,419,044
Consumer loans:
Home equity	761		282		—		2,022		3,065		397,071		400,136
Automobile	1,902		391		126		90		2,509		1,142,271		1,144,780
Other consumer	319		91		26		97		533		297,856		298,389
Total consumer loans	2,982		764		152		2,209		6,107		1,837,198		1,843,305
Total	$	20,198	$	5,554	$	5,478	$	55,757	$	86,987	$	11,665,125	$	11,752,112

Impaired loans. Impaired loans, consisting of non-accrual commercial and industrial loans and commercial real estate loans over $250 thousand and all loans which were modified in troubled debt restructuring, are individually evaluated for impairment. PCI loans are not classified as impaired loans because they are accounted for on a pool basis.

The following table presents the information about impaired loans by loan portfolio class at September 30, 2015 and December 31, 2014:



	Recorded Investment With No Related Allowance		Recorded Investment With Related Allowance		Total Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
	(in thousands)
September 30, 2015
Commercial and industrial	$	6,624	$	20,760	$	27,384	$	32,070	$	4,446
Commercial real estate:
Commercial real estate	28,833		42,947		71,780		75,489		4,187
Construction	12,901		4,753		17,654		17,654		349
Total commercial real estate loans	41,734		47,700		89,434		93,143		4,536
Residential mortgage	7,269		16,155		23,424		16,166		1,632
Consumer loans:
Home equity	413		2,684		3,097		3,175		463
Total consumer loans	413		2,684		3,097		3,175		463
Total	$	56,040	$	87,299	$	143,339	$	144,554	$	11,077
December 31, 2014
Commercial and industrial	$	6,579	$	21,645	$	28,224	$	33,677	$	4,929
Commercial real estate:
Commercial real estate	29,784		44,713		74,497		77,007		5,342
Construction	14,502		2,299		16,801		20,694		160
Total commercial real estate loans	44,286		47,012		91,298		97,701		5,502
Residential mortgage	6,509		15,831		22,340		24,311		1,629
Consumer loans:
Home equity	235		2,911		3,146		3,247		465
Total consumer loans	235		2,911		3,146		3,247		465
Total	$	57,609	$	87,399	$	145,008	$	158,936	$	12,525

The following tables present by loan portfolio class, the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2015 and 2014:



	Three Months Ended September 30,
	2015				2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	28,892	$	232	$	30,387	$	172
Commercial real estate:
Commercial real estate	76,509		538		83,045		604
Construction	20,007		139		16,954		147
Total commercial real estate loans	96,516		677		99,999		751
Residential mortgage	25,336		208		25,382		227
Consumer loans:
Home equity	4,275		43		3,039		18
Total consumer loans	4,275		43		3,039		18
Total	$	155,019	$	1,160	$	158,807	$	1,168



	Nine Months Ended September 30,
	2015				2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Commercial and industrial	$	27,570	$	689	$	37,229	$	831
Commercial real estate:
Commercial real estate	76,900		1,918		91,184		2,173
Construction	16,066		415		18,541		445
Total commercial real estate loans	92,966		2,333		109,725		2,618
Residential mortgage	23,261		707		26,447		709
Consumer loans:
Home equity	4,125		111		1,855		47
Total consumer loans	4,125		111		1,855		47
Total	$	147,922	$	3,840	$	175,256	$	4,205

Interest income recognized on a cash basis (included in the table above) was immaterial for the three and nine months ended September 30, 2015 and 2014.

Troubled debt restructured loans. From time to time, Valley may extend, restructure, or otherwise modify the terms of existing loans, on a case-by-case basis, to remain competitive and retain certain customers, as well as assist other customers who may be experiencing financial difficulties. If the borrower is experiencing financial difficulties and a concession has been made at the time of such modification, the loan is classified as a troubled debt restructured loan (TDR). Valley’s PCI loans are excluded from the TDR disclosures below because they are evaluated for impairment on a pool by pool basis. When an individual PCI loan within a pool is modified as a TDR, it is not removed from its pool. All TDRs are classified as impaired loans and are included in the impaired loan disclosures above.

The majority of the concessions made for TDRs involve lowering the monthly payments on loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods. The concessions rarely result in the forgiveness of principal or accrued interest. In addition, Valley frequently obtains additional collateral or guarantor support when modifying such loans. If the borrower has demonstrated performance under the previous terms and Valley’s underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

Performing TDRs (not reported as non-accrual loans) totaled $91.2 million and $97.7 million as of September 30, 2015 and December 31, 2014, respectively. Non-performing TDRs totaled $14.8 million and $19.4 million as of September 30, 2015 and December 31, 2014, respectively.

The following tables present loans by loan portfolio class modified as TDRs during the three and nine months ended September 30, 2015 and 2014. The pre-modification and post-modification outstanding recorded investments disclosed in the table below represent the loan carrying amounts immediately prior to the modification and the carrying amounts at September 30, 2015 and 2014, respectively.



	Three Months Ended September 30, 2015					Three Months Ended September 30, 2014
Troubled Debt Restructurings	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	($ in thousands)
Commercial and industrial	2	$	1,530	$	1,530	1	$	3,159	$	3,159
Commercial real estate:
Commercial real estate	—	—		—		4	6,111		2,865
Construction	2	4,974		3,451		1	403		500
Total commercial real estate	2	4,974		3,451		5	6,514		3,365
Residential mortgage	3	1,080		1,050		3	568		557
Consumer	—	—		—		2	1,803		1,803
Total	7	$	7,584	$	6,031	11	$	12,044	$	8,884



	Nine Months Ended September 30, 2015					Nine Months Ended September 30, 2014
Troubled Debt Restructurings	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	($ in thousands)
Commercial and industrial	12	$	4,621	$	4,081	9	$	11,340	$	10,361
Commercial real estate:
Commercial real estate	4	6,562		6,444		12	22,282		18,011
Construction	3	5,474		4,635		3	5,731		4,232
Total commercial real estate	7	12,036		11,079		15	28,013		22,243
Residential mortgage	6	2,458		2,420		7	2,893		2,640
Consumer	1	1,081		1,072		3	1,935		1,935
Total	26	$	20,196	$	18,652	34	$	44,181	$	37,179

The majority of the TDR concessions made during the three and nine months ended September 30, 2015 and 2014 involved an extension of the loan term. The total TDRs presented in the above table had allocated specific reserves for loan losses totaling $602 thousand and $3.8 million at September 30, 2015 and 2014, respectively. These specific reserves are included in the allowance for loan losses for loans individually evaluated for impairment disclosed in Note 9. Partial loan charge-offs related to loans modified as TDRs in the table above totaled $861 thousand during the nine months ended September 30, 2014. There were no charge-offs related to TDR modifications during the three and nine months ended September 30, 2015 and the third quarter of 2014.

There were no non-PCI loans modified as TDRs within the previous 12 months for which there was a payment default (90 days or more past due) during the three and nine months ended September 30, 2015.

Credit quality indicators. Valley utilizes an internal loan classification system as a means of reporting problem loans within commercial and industrial, commercial real estate, and construction loan portfolio classes. Under Valley’s internal risk rating system, loan relationships could be classified as “Pass,” “Special Mention,” “Substandard,” “Doubtful,” and “Loss.” Substandard loans include loans that exhibit well-defined weakness and are characterized by the distinct possibility that Valley will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable. Loans classified as Loss are those considered uncollectible with insignificant value and are charged-off immediately to the allowance for loan losses. Loans that do not currently pose a sufficient risk to warrant classification in one of the aforementioned categories, but pose weaknesses that deserve management’s close attention are deemed Special Mention. Loans rated as Pass do not currently pose any identified risk and can range from the highest to average quality, depending on the degree of potential risk. Risk ratings are updated any time the situation warrants.

The following table presents the risk category of loans (excluding PCI loans) by class of loans based on the most recent analysis performed at September 30, 2015 and December 31, 2014.



Credit exposure - by internally assigned risk rating	Pass		Special Mention		Substandard		Doubtful		Total Non-PCI Loans
	(in thousands)
September 30, 2015
Commercial and industrial	$	2,045,297	$	66,354	$	39,152	$	1,835	$	2,152,638
Commercial real estate	5,842,344		61,842		105,574		—		6,009,760
Construction	507,223		982		13,338		—		521,543
Total	$	8,394,864	$	129,178	$	158,064	$	1,835	$	8,683,941
December 31, 2014
Commercial and industrial	$	1,865,472	$	50,453	$	44,002	$	—	$	1,959,927
Commercial real estate	4,903,185		40,232		110,325		—		5,053,742
Construction	455,145		1,923		16,482		2,544		476,094
Total	$	7,223,802	$	92,608	$	170,809	$	2,544	$	7,489,763

For residential mortgages, automobile, home equity and other consumer loan portfolio classes (excluding PCI loans), Valley also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in those loan classes based on payment activity as of September 30, 2015 and December 31, 2014:



Credit exposure - by payment activity	Performing Loans		Non-Performing Loans		Total Non-PCI Loans
	(in thousands)
September 30, 2015
Residential mortgage	$	2,846,745	$	16,657	$	2,863,402
Home equity	391,082		1,576		392,658
Automobile	1,219,734		—		1,219,734
Other consumer	379,233		58		379,291
Total	$	4,836,794	$	18,291	$	4,855,085
December 31, 2014
Residential mortgage	$	2,401,284	$	17,760	$	2,419,044
Home equity	398,114		2,022		400,136
Automobile	1,144,690		90		1,144,780
Other consumer	298,292		97		298,389
Total	$	4,242,380	$	19,969	$	4,262,349

Valley evaluates the credit quality of its PCI loan pools based on the expectation of the underlying cash flows of each pool, derived from the aging status and by payment activity of individual loans within the pool. The following table presents the recorded investment in PCI loans by class based on individual loan payment activity as of September 30, 2015 and December 31, 2014.



Credit exposure - by payment activity	Performing Loans		Non-Performing Loans		Total PCI Loans
	(in thousands)
September 30, 2015
Commercial and industrial	$	244,445	$	3,535	$	247,980
Commercial real estate	940,668		10,249		950,917
Construction	47,216		894		48,110
Residential mortgage	132,649		3,211		135,860
Consumer	90,582		4,339		94,921
Total	$	1,455,560	$	22,228	$	1,477,788
December 31, 2014
Commercial and industrial	$	272,027	$	19,157	$	291,184
Commercial real estate	1,091,784		15,355		1,107,139
Construction	52,802		4,238		57,040
Residential mortgage	153,789		3,539		157,328
Consumer	103,686		5,424		109,110
Total	$	1,674,088	$	47,713	$	1,721,801

Other real estate owned totaled $20.1 million at September 30, 2015 and included foreclosed residential real estate properties totaling $5.8 million. Residential mortgage and consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $12.3 million at September 30, 2015.