LOANS AND CREDIT QUALITY

The following loan portfolio and credit quality disclosures exclude covered loans. Covered loans represent loans acquired through a Federal Deposit Insurance Corporation ("FDIC") assisted transaction that are subject to a loss share agreement and are presented separately in the Consolidated Statements of Financial Condition. Refer to the "Covered Assets" section in this footnote for further information regarding covered loans.

Loan Portfolio

(Amounts in thousands)



	June 30, 2015		December 31, 2014
Commercial and industrial	$	6,397,736	$	5,996,070
Commercial - owner-occupied CRE	2,048,489		1,892,564
Total commercial	8,446,225		7,888,634
Commercial real estate	2,432,608		2,323,616
Commercial real estate - multi-family	561,924		593,103
Total commercial real estate	2,994,532		2,916,719
Construction	371,096		381,102
Residential real estate	415,826		361,565
Home equity	137,461		142,177
Personal	178,141		202,022
Total loans	$	12,543,281	$	11,892,219
Net deferred loan fees and unamortized discount and premium on loans, included as a reduction in total loans	$	45,138	$	47,017
Overdrawn demand deposits included in total loans	$	1,149	$	1,963

We primarily lend to businesses and consumers in the market areas in which we have physical locations. We seek to diversify our loan portfolio by loan type, industry type for commercial and industrial loans, product type for commercial real estate and construction loans, and borrower.

Loans Held-For-Sale

(Amounts in thousands)



	June 30, 2015		December 31, 2014
Mortgage loans held-for-sale ⁽¹⁾	$	24,414	$	42,215
Other loans held-for-sale ⁽²⁾	29,849		72,946
Total loans held-for-sale	$	54,263	$	115,161


⁽¹⁾	Comprised of residential mortgage loan originations intended to be sold in the secondary market. The Company accounts for these loans under the fair value option. Refer to Note 16 for additional information regarding mortgage loans held-for-sale.

⁽²⁾

Amounts at June 30, 2015, represent commercial and commercial real estate loans carried at the lower of aggregate cost or fair value. Generally, the Company intends to sell these loans within 30-60 days from the date the intent to sell was established. Amounts at December 31, 2014, consist of $36.6 million of commercial, commercial real estate and construction loans carried at the lower of aggregate cost or fair value and $36.3 million of commercial, commercial real estate, construction, home equity and personal loans held-for-sale in connection with the sale of the Company's banking office located in Norcross, Georgia, which closed in January 2015.

Carrying Value of Loans Pledged

(Amounts in thousands)



	June 30, 2015		December 31, 2014
Loans pledged to secure outstanding borrowings or availability:
FRB discount window borrowings ⁽¹⁾	$	431,488	$	478,692
FHLB advances ⁽²⁾	1,845,935		1,576,168
Total	$	2,277,423	$	2,054,860


⁽¹⁾	No borrowings were outstanding at June 30, 2015, or December 31, 2014.


⁽²⁾	Refer to Notes 7 and 8 for additional information regarding FHLB advances.

Loan Portfolio Aging

(Amounts in thousands)



			Delinquent
	Current		30 – 59 Days Past Due		60 – 89 Days Past Due		90 Days Past Due and Accruing		Total Accruing Loans		Nonaccrual		Total Loans
As of June 30, 2015
Commercial	$	8,416,607	$	1,561	$	212	$	—	$	8,418,380	$	27,845	$	8,446,225
Commercial real estate	2,981,091		—		—		—		2,981,091		13,441		2,994,532
Construction	371,096		—		—		—		371,096		—		371,096
Residential real estate	411,251		—		459		—		411,710		4,116		415,826
Home equity	125,741		572		—		—		126,313		11,148		137,461
Personal	178,098		18		1		—		178,117		24		178,141
Total loans	$	12,483,884	$	2,151	$	672	$	—	$	12,486,707	$	56,574	$	12,543,281
As of December 31, 2014
Commercial	$	7,855,833	$	762	$	992	$	—	$	7,857,587	$	31,047	$	7,888,634
Commercial real estate	2,891,301		5,408		261		—		2,896,970		19,749		2,916,719
Construction	380,939		163		—		—		381,102		—		381,102
Residential real estate	354,717		943		631		—		356,291		5,274		361,565
Home equity	128,500		397		2,236		—		131,133		11,044		142,177
Personal	201,569		23		—		—		201,592		430		202,022
Total loans	$	11,812,859	$	7,696	$	4,120	$	—	$	11,824,675	$	67,544	$	11,892,219

Impaired Loans

Impaired loans consist of nonaccrual loans (which include nonaccrual troubled debt restructurings ("TDRs")) and loans classified as accruing TDRs. A loan is considered impaired when, based on current information and events, either (i) management believes that it is probable that we will be unable to collect all amounts due (both principal and interest) according to the original contractual terms of the loan agreement, or (ii) it has been classified as a TDR.

The following two tables present our recorded investment in impaired loans outstanding by product segment, including our recorded investment in impaired loans, which represents the principal amount outstanding, net of unearned income, deferred loan fees and costs, and any direct principal charge-offs.

Impaired Loans

(Amounts in thousands)



	Unpaid Contractual Principal Balance		Recorded Investment With No Specific Reserve		Recorded Investment With Specific Reserve		Total Recorded Investment		Specific Reserve
As of June 30, 2015
Commercial	$	74,657	$	49,519	$	13,258	$	62,777	$	2,889
Commercial real estate	19,925		3,824		9,617		13,441		2,102
Residential real estate	4,484		—		4,116		4,116		606
Home equity	13,566		3,985		8,917		12,902		1,865
Personal	24		—		24		24		6
Total impaired loans	$	112,656	$	57,328	$	35,932	$	93,260	$	7,468
As of December 31, 2014
Commercial	$	60,174	$	25,739	$	26,432	$	52,171	$	11,487
Commercial real estate	26,738		9,755		10,193		19,948		2,441
Residential real estate	5,849		349		4,925		5,274		735
Home equity	12,904		3,627		8,839		12,466		1,855
Personal	430		—		430		430		109
Total impaired loans	$	106,095	$	39,470	$	50,819	$	90,289	$	16,627

Average Recorded Investment and Interest Income Recognized on Impaired Loans⁽¹⁾

(Amounts in thousands)



	Three Months Ended June 30,
	2015				2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial	$	59,380	$	316	$	55,534	$	419
Commercial real estate	14,823		10		36,960		20
Residential real estate	4,454		—		9,481		—
Home equity	12,714		24		12,614		21
Personal	248		—		599		—
Total	$	91,619	$	350	$	115,188	$	460


⁽¹⁾	Represents amounts while classified as impaired for the periods presented.

Average Recorded Investment and Interest Income Recognized on Impaired Loans⁽¹⁾(Continued)

(Amounts in thousands)



	Six Months Ended June 30,
	2015				2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial	$	55,791	$	500	$	48,935	$	801
Commercial real estate	16,359		13		41,617		44
Residential real estate	4,676		—		9,700		—
Home equity	13,094		46		13,018		45
Personal	300		—		632		—
Total	$	90,220	$	559	$	113,902	$	890


⁽¹⁾	Represents amounts while classified as impaired for the periods presented.

Credit Quality Indicators

We attempt to mitigate risk through loan structure, collateral, monitoring, and other credit risk management controls. We have adopted an internal risk rating policy in which each loan is rated for credit quality with a numerical rating of 1 through 8. Loans rated 5 and better (1-5 ratings, inclusive) are considered "pass" rated credits and we believe exhibit acceptable financial performance, cash flow, and leverage. Credits rated 6 are performing in accordance with contractual terms but are considered "special mention" as these credits demonstrate potential weakness that, if left unresolved, may result in deterioration in our credit position and/or the repayment prospects for the credit. Borrowers rated special mention may exhibit adverse operating trends, high leverage, tight liquidity or other credit concerns. Loans rated 7 may be classified as either accruing ("potential problem") or nonaccrual ("nonperforming"). Potential problem loans, like special mention, are loans that are performing in accordance with contractual terms, but for which management has some level of concern (greater than that of special mention loans) about the ability of the borrowers to meet existing repayment terms in future periods. Potential problem loans continue to accrue interest but the ultimate collection of these loans in full is a risk due to the same conditions that characterize a 6-rated credit. These credits may also have somewhat increased risk profiles as a result of the current net worth and/or paying capacity of the obligor or guarantors or a declining value of the collateral pledged. These loans generally have a well-defined weakness that may jeopardize collection of the debt and are characterized by the distinct possibility that we may sustain some loss if the deficiencies are not resolved. Although these loans are generally identified as potential problem loans and require additional attention by management, they may never become nonperforming. Nonperforming loans include nonaccrual loans risk rated 7 or 8 and have all the weaknesses inherent in a 7-rated potential problem loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently-existing facts, conditions and values, highly questionable and improbable. Special mention, potential problem and nonperforming loans are reviewed at a minimum on a quarterly basis, while all other rated credits over a certain dollar threshold, depending on loan type, are reviewed annually or more frequently as the circumstances warrant.

Credit Quality Indicators

(Dollars in thousands)



	Special Mention		% of Portfolio Loan Type	Potential Problem Loans		% of Portfolio Loan Type	Non- Performing Loans		% of Portfolio Loan Type	Total Loans
As of June 30, 2015
Commercial	$	124,689	1.5	$	125,948	1.5	$	27,845	0.3	$	8,446,225
Commercial real estate	83		*	2,614		0.1	13,441		0.4	2,994,532
Construction	—		—	—		—	—		—	371,096
Residential real estate	6,148		1.5	6,533		1.6	4,116		1.0	415,826
Home equity	806		0.6	2,618		1.9	11,148		8.1	137,461
Personal	715		0.4	44		*	24		*	178,141
Total	$	132,441	1.1	$	137,757	1.1	$	56,574	0.5	$	12,543,281
As of December 31, 2014
Commercial	$	93,130	1.2	$	78,562	1.0	$	31,047	0.4	$	7,888,634
Commercial real estate	3,552		0.1	746		*	19,749		0.7	2,916,719
Construction	—		—	—		—	—		—	381,102
Residential real estate	2,964		0.8	5,981		1.7	5,274		1.5	361,565
Home equity	1,170		0.8	2,108		1.5	11,044		7.8	142,177
Personal	173		0.1	45		*	430		0.2	202,022
Total	$	100,989	0.8	$	87,442	0.7	$	67,544	0.6	$	11,892,219


*	Less than 0.1%

Troubled Debt Restructured Loans

Troubled Debt Restructured Loans Outstanding

(Amounts in thousands)



	June 30, 2015				December 31, 2014
	Accruing		Nonaccrual ⁽¹⁾		Accruing		Nonaccrual ⁽¹⁾
Commercial	$	34,932	$	7,944	$	21,124	$	20,113
Commercial real estate	—		10,638		199		8,005
Residential real estate	—		1,325		—		1,881
Home equity	1,754		5,832		1,422		5,886
Personal	—		—		—		413
Total	$	36,686	$	25,739	$	22,745	$	36,298


⁽¹⁾	Included in nonperforming loans.

At June 30, 2015 and December 31, 2014, credit commitments to lend additional funds to debtors whose loan terms have been modified in a TDR (both accruing and nonaccruing) totaled $14.0 million and $8.5 million, respectively.

Additions to Accruing Troubled Debt Restructurings During the Period

(Dollars in thousands)



	Three Months Ended June 30,
	2015					2014
	Number of Borrowers	Recorded Investment ⁽¹⁾				Number of Borrowers	Recorded Investment ⁽¹⁾
	Number of Borrowers	Pre- Modification		Post- Modification		Number of Borrowers	Pre- Modification		Post- Modification
Commercial
Extension of maturity date ⁽²⁾	4	$	13,415	$	13,134	1	$	3,550	$	3,550
Other concession ⁽³⁾	—	—		—		1	2,638		2,638
Total commercial	4	13,415		13,134		2	6,188		6,188
Home equity
Extension of maturity date ⁽²⁾	1	346		346		—	—		—
Total accruing	5	$	13,761	$	13,480	2	$	6,188	$	6,188
Change in recorded investment due to principal paydown at time of modification				$	281				$	—



	Six Months Ended June 30,
	2015					2014
		Recorded Investment ⁽¹⁾					Recorded Investment ⁽¹⁾
	Number of Borrowers	Pre- Modification		Post- Modification		Number of Borrowers	Pre- Modification		Post- Modification
Commercial
Extension of maturity date ⁽²⁾	5	$	15,809	$	15,528	2	$	3,750	$	3,750
Other concession ⁽³⁾	—	—		—		2	15,579		15,579
Total commercial	5	15,809		15,528		4	19,329		19,329
Commercial real estate
Other concession ⁽³⁾	—	—		—		1	426		426
Home equity
Extension of maturity date ⁽²⁾	1	346		346		—	—		—
Total accruing	6	$	16,155	$	15,874	5	$	19,755	$	19,755
Change in recorded investment due to principal paydown at time of modification				$	281				$	—


⁽¹⁾	Represents amounts as of the date immediately prior to and immediately after the modification is effective.


⁽²⁾	Extension of maturity date also includes loans renewed at an existing rate of interest that is considered a below market rate for that particular loan’s risk profile.


⁽³⁾	Other concessions primarily include interest rate reductions, loan increases or deferrals of principal.

Additions to Nonaccrual Troubled Debt Restructurings During the Period

(Dollars in thousands)



	Three Months Ended June 30,
	2015					2014
	Number of Borrowers	Recorded Investment ⁽¹⁾				Number of Borrowers	Recorded Investment ⁽¹⁾
	Number of Borrowers	Pre- Modification		Post- Modification		Number of Borrowers	Pre- Modification		Post- Modification
Commercial
Extension of maturity date ⁽²⁾	4	$	2,583	$	2,583	—	$	—	$	—
Other concession ⁽³⁾	1	2,107		2,107		2	97		97
Total commercial	5	4,690		4,690		2	97		97
Commercial real estate
Other concession ⁽³⁾	—	—		—		1	1,120		1,120
Residential real estate
Other concession ⁽³⁾	—	—		—		1	70		70
Home equity
Extension of maturity date ⁽²⁾	3	170		165		—	—		—
Other concession ⁽³⁾	—	—		—		2	865		865
Total home equity	3	170		165		2	865		865
Total nonaccrual	8	$	4,860	$	4,855	6	$	2,152	$	2,152
Change in recorded investment due to principal paydown at time of modification				$	5				$	—



	Six Months Ended June 30,
	2015					2014
		Recorded Investment ⁽¹⁾					Recorded Investment ⁽¹⁾
	Number of Borrowers	Pre- Modification		Post- Modification		Number of Borrowers	Pre- Modification		Post- Modification
Commercial
Extension of maturity date ⁽²⁾	4	$	2,583	$	2,583	—	$	—	$	—
Other concession ⁽³⁾	2	2,780		2,773		4	553		503
Total commercial	6	5,363		5,356		4	553		503
Commercial real estate
Extension of maturity date ⁽²⁾	2	1,747		1,660		—	—		—
Other concession ⁽³⁾	1	3,773		3,773		1	1,120		1,120
Total commercial real estate	3	5,520		5,433		1	1,120		1,120
Residential real estate
Other concession ⁽³⁾	—	—		—		3	565		565
Home equity
Extension of maturity date ⁽²⁾	3	170		165		1	114		114
Other concession ⁽³⁾	2	77		77		3	1,115		1,115
Total home equity	5	247		242		4	1,229		1,229
Total nonaccrual	14	$	11,130	$	11,031	12	$	3,467	$	3,417
Net decrease in recorded investment at time of modification				$	99				$	50


⁽¹⁾	Represents amounts as of the date immediately prior to and immediately after the modification is effective.


⁽²⁾	Extension of maturity date also includes loans renewed at an existing rate of interest that is considered a below market rate for that particular loan’s risk profile.


⁽³⁾	Other concessions primarily include interest rate reductions, loan increases or deferrals of principal.

At the time an accruing loan becomes modified and meets the definition of a TDR, it is considered impaired and no longer included as part of the general loan loss reserve population. However, our general loan loss reserve methodology does consider the amount and product type of the TDRs removed as a proxy for potentially heightened risk in the general portfolio when establishing final reserve requirements.

As impaired loans, TDRs (both accruing and nonaccruing) are evaluated for impairment at the end of each quarter with a specific valuation reserve created, or adjusted (either individually or as part of a pool), if necessary, as a component of the allowance for loan losses. Refer to the "Impaired Loan" and "Allowance for Loan Loss" sections of Note 1, "Summary of Significant Accounting Policies," in the Notes to Consolidated Financial Statements of our 2014 Annual Report on Form 10-K regarding our policy for assessing potential impairment on such loans. Our allowance for loan losses included $3.8 million and $10.6 million in specific reserves for nonaccrual TDRs at June 30, 2015, and December 31, 2014, respectively. For accruing TDRs, there were no specific reserves at June 30, 2015, and December 31, 2014, respectively, as the present value of cash flows for the restructured loan were greater than the recorded investment in the loan.

During the six months ended June 30, 2014, a single commercial real estate loan totaling $699,000 became nonperforming within 12 months of being modified as an accruing TDR. There were no such transactions for the six months ended June 30, 2015. A loan typically becomes nonperforming and placed on nonaccrual status when the principal or interest payments are 90 days past due based on contractual terms or when an individual analysis of a borrower’s creditworthiness indicates a loan should be placed on nonaccrual status earlier than the 90-day past due date.

Other Real Estate Owned

The following table presents the composition of property acquired as a result of borrower defaults on loans secured by real property.

OREO Composition

(Amounts in thousands)



	June 30, 2015		December 31, 2014
Single-family homes	$	7,494	$	7,902
Land parcels	3,807		4,237
Multi-family	1,026		488
Office/industrial	1,734		3,832
Retail	1,023		957
Total OREO properties	$	15,084	$	17,416

The recorded investment in consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process totaled $5.3 million at June 30, 2015, and $5.5 million at December 31, 2014.

Covered Assets

Covered assets represent acquired residential mortgage loans and foreclosed real estate covered under a loss sharing agreement with the FDIC and include an indemnification receivable representing the present value of the expected reimbursement from the FDIC related to expected losses on the acquired loans and foreclosed real estate under such agreement. The loss share agreement will expire on September 30, 2019.

The carrying amount of covered assets is presented in the following table.

Covered Assets

(Amounts in thousands)



	June 30, 2015			December 31, 2014
Residential mortgage loans ⁽¹⁾	$	28,259		$	32,182
Foreclosed real estate - single family homes	159			187
Estimated loss reimbursement by the FDIC	2,111			1,763
Total covered assets	30,529			34,132
Allowance for covered loan losses	(6,332		)	(5,191		)
Net covered assets	$	24,197		$	28,941


⁽¹⁾	Includes $264,000 and $420,000 of purchased credit-impaired loans as of June 30, 2015, and December 31, 2014, respectively.

The recorded investment in residential mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process totaled $531,000 and $856,000 at June 30, 2015 and December 31, 2014, respectively.