Loans and Leases | NOTE 6. LOANS AND LEASES Our loan and lease portfolio includes originated and purchased loans and leases. Originated and purchased loans and leases for which there was no evidence of credit deterioration at their acquisition date and for which it was probable that we would collect all contractually due payments, are referred to collectively as Non-PCI loans. Generally, PCI loans are purchased loans for which there was, at the acquisition date, evidence of credit deterioration since their origination and for which it was probable that collection of all contractually due payments was unlikely. Non-PCI loans are carried at the principal amount outstanding, net of deferred fees and costs, and net of purchase discounts and premiums for acquired loans. Deferred fees and costs and purchase discounts and premiums on acquired non-impaired loans are recognized as an adjustment to interest income over the contractual life of the loans primarily using the effective interest method or recognized as income when the related loans are paid off or sold. PCI loans are accounted for in accordance with ASC Subtopic 310‑30, “ Loans and Debt Securities Acquired with Deteriorated Credit Quality .” For PCI loans, at the time of acquisition, we estimate the amount and timing of undiscounted expected principal and interest payments (the "undiscounted expected cash flows"). The difference between the undiscounted expected cash flows and the estimated fair value of the acquired loans is the accretable yield. The carrying value of PCI loans is reduced by payments received, both principal and interest, and increased by the portion of the accretable yield recognized as interest income. Loans Held for Sale In the fourth quarter of 2017, we sold $1.5 billion of cash flow loans and exited our CapitalSource Division origination operations related to general, technology, and healthcare cash flow loans. As of December 31, 2017 , $1.0 billion of the loans sold had settled, while $481.1 million were classified as held for sale. The loans held for sale at December 31, 2017 settled in the first quarter of 2018. In connection with the loan sale and transfer of loans to held for sale, we recognized $2.2 million in charge-offs during the fourth quarter of 2017 to record the loans at the lower of cost or fair value. Loans and Leases Held for Investment The following table summarizes the composition of our loans and leases held for investment as of the dates indicated: December 31, 2017 December 31, 2016 Non-PCI Non-PCI Loans PCI Loans PCI and Leases Loans Total and Leases Loans Total (In thousands) Real estate mortgage $ 7,815,355 $ 53,658 $ 7,869,013 $ 5,635,675 $ 92,793 $ 5,728,468 Real estate construction and land 1,611,287 — 1,611,287 975,032 2,409 977,441 Commercial 7,137,978 4,158 7,142,136 8,426,236 12,994 8,439,230 Consumer 409,551 234 409,785 375,149 249 375,398 Total gross loans and leases held for investment 16,974,171 58,050 17,032,221 15,412,092 108,445 15,520,537 Deferred fees, net (59,464 ) (14 ) (59,478 ) (64,562 ) (21 ) (64,583 ) Total loans and leases held for investment, net of deferred fees 16,914,707 58,036 16,972,743 15,347,530 108,424 15,455,954 Allowance for loan and lease losses (133,012 ) (6,444 ) (139,456 ) (143,755 ) (13,483 ) (157,238 ) Total loans and leases held for investment, net $ 16,781,695 $ 51,592 $ 16,833,287 $ 15,203,775 $ 94,941 $ 15,298,716 Non‑PCI Loans and Leases Held for Investment The following tables present an aging analysis of our Non‑PCI loans and leases held for investment, net of deferred fees, by portfolio segment and class as of the dates indicated: December 31, 2017 30 - 89 90 or More Days Days Total Past Due Past Due Past Due Current Total (In thousands) Real estate mortgage: Commercial $ 29,070 $ 9,107 $ 38,177 $ 5,323,310 $ 5,361,487 Residential 6,999 2,022 9,021 2,428,483 2,437,504 Total real estate mortgage 36,069 11,129 47,198 7,751,793 7,798,991 Real estate construction and land: Commercial — — — 769,075 769,075 Residential 2,081 — 2,081 820,073 822,154 Total real estate construction and land 2,081 — 2,081 1,589,148 1,591,229 Commercial: Asset-based 1,512 — 1,512 3,010,188 3,011,700 Venture capital 6,533 760 7,293 2,115,418 2,122,711 Cash flow 1,334 1,586 2,920 1,320,594 1,323,514 Equipment finance 344 690 1,034 655,961 656,995 Total commercial 9,723 3,036 12,759 7,102,161 7,114,920 Consumer 562 — 562 409,005 409,567 Total (1) $ 48,435 $ 14,165 $ 62,600 $ 16,852,107 $ 16,914,707 ________________________ (1) Excludes loans held for sale carried at lower of cost or fair value. December 31, 2016 30 - 89 90 or More Days Days Total Past Due Past Due Past Due Current Total (In thousands) Real estate mortgage: Commercial $ 8,590 $ 3,303 $ 11,893 $ 4,341,740 $ 4,353,633 Residential 5,694 1,999 7,693 1,256,630 1,264,323 Total real estate mortgage 14,284 5,302 19,586 5,598,370 5,617,956 Real estate construction and land: Commercial — — — 578,838 578,838 Residential 364 — 364 383,637 384,001 Total real estate construction and land 364 — 364 962,475 962,839 Commercial: Asset-based 1,500 2 1,502 2,607,543 2,609,045 Venture capital 13,589 5,769 19,358 1,963,798 1,983,156 Cash flow 191 1,821 2,012 3,105,380 3,107,392 Equipment finance 1,417 3,051 4,468 687,499 691,967 Total commercial 16,697 10,643 27,340 8,364,220 8,391,560 Consumer 224 — 224 374,951 375,175 Total $ 31,569 $ 15,945 $ 47,514 $ 15,300,016 $ 15,347,530 It is our policy to discontinue accruing interest when principal or interest payments are past due 90 days or more unless the loan is both well secured and in the process of collection or when, in the opinion of management, there is a reasonable doubt as to the collectability of a loan or lease in the normal course of business. Interest income on nonaccrual loans is recognized only to the extent cash is received and the principal balance of the loan is deemed collectable. The amount of interest income that would have been recorded on nonaccrual loans and leases at December 31, 2017 and 2016 had such loans and leases been current in accordance with their original terms was $10.8 million and $8.0 million for 2017 and 2016 . The following table presents our nonaccrual and performing Non‑PCI loans and leases held for investment, net of deferred fees, by portfolio segment and class as of the dates indicated: December 31, 2017 (1) December 31, 2016 Nonaccrual Performing Total Nonaccrual Performing Total (In thousands) Real estate mortgage: Commercial $ 65,563 $ 5,295,924 $ 5,361,487 $ 62,454 $ 4,291,179 $ 4,353,633 Residential 3,350 2,434,154 2,437,504 6,881 1,257,442 1,264,323 Total real estate mortgage 68,913 7,730,078 7,798,991 69,335 5,548,621 5,617,956 Real estate construction and land: Commercial — 769,075 769,075 — 578,838 578,838 Residential — 822,154 822,154 364 383,637 384,001 Total real estate construction and land — 1,591,229 1,591,229 364 962,475 962,839 Commercial: Asset-based 3,174 3,008,526 3,011,700 2,118 2,606,927 2,609,045 Venture capital 29,424 2,093,287 2,122,711 11,687 1,971,469 1,983,156 Cash flow 23,315 1,300,199 1,323,514 53,908 3,053,484 3,107,392 Equipment finance 30,938 626,057 656,995 32,848 659,119 691,967 Total commercial 86,851 7,028,069 7,114,920 100,561 8,290,999 8,391,560 Consumer 20 409,547 409,567 339 374,836 375,175 Total $ 155,784 $ 16,758,923 $ 16,914,707 $ 170,599 $ 15,176,931 $ 15,347,530 ________________________ (1) Excludes loans held for sale carried at lower of cost or fair value. At December 31, 2017 , nonaccrual loans and leases totaled $155.8 million . Nonaccrual loans and leases included $14.2 million of loans and leases 90 or more days past due, $3.2 million of loans 30 to 89 days past due and $138.4 million of current loans that were placed on nonaccrual status based on management’s judgment regarding their collectability. Nonaccrual loans and leases totaled $170.6 million at December 31, 2016 , including $15.9 million of loans and leases 90 or more days past due, $3.0 million of loans 30 to 89 days past due and $151.7 million of current loans that were placed on nonaccrual status based on management’s judgment regarding their collectability. As of December 31, 2017 , our ten largest Non-PCI loan relationships on nonaccrual status had an aggregate carrying value of $120.0 million and represented 77.0% of total Non-PCI nonaccrual loans and leases. The following table presents the credit risk rating categories for Non‑PCI loans and leases held for investment by portfolio segment and class as of the dates indicated. Nonclassified loans and leases are those with a credit risk rating of either pass or special mention, while classified loans and leases are those with a credit risk rating of either substandard or doubtful. December 31, 2017 (1) December 31, 2016 Classified Nonclassified Total Classified Nonclassified Total (In thousands) Real estate mortgage: Commercial $ 93,795 $ 5,267,692 $ 5,361,487 $ 99,641 $ 4,253,992 $ 4,353,633 Residential 8,425 2,429,079 2,437,504 17,540 1,246,783 1,264,323 Total real estate mortgage 102,220 7,696,771 7,798,991 117,181 5,500,775 5,617,956 Real estate construction and land: Commercial — 769,075 769,075 409 578,429 578,838 Residential — 822,154 822,154 364 383,637 384,001 Total real estate construction and land — 1,591,229 1,591,229 773 962,066 962,839 Commercial: Asset-based 35,305 2,976,395 3,011,700 28,112 2,580,933 2,609,045 Venture capital 49,671 2,073,040 2,122,711 52,646 1,930,510 1,983,156 Cash flow 60,008 1,263,506 1,323,514 177,661 2,929,731 3,107,392 Equipment finance 30,938 626,057 656,995 32,848 659,119 691,967 Total commercial 175,922 6,938,998 7,114,920 291,267 8,100,293 8,391,560 Consumer 263 409,304 409,567 424 374,751 375,175 Total $ 278,405 $ 16,636,302 $ 16,914,707 $ 409,645 $ 14,937,885 $ 15,347,530 ________________________ (1) Excludes loans held for sale carried at lower of cost or fair value. In addition to our internal risk rating process, our federal and state banking regulators, as an integral part of their examination process, periodically review the Company’s loan risk rating classifications. Our regulators may require the Company to recognize rating downgrades based on their judgments related to information available to them at the time of their examinations. Risk rating downgrades generally result in increases in the provisions for credit losses and the allowance for credit losses. Non‑PCI nonaccrual loans and leases and performing troubled debt restructured loans are considered impaired for reporting purposes. Troubled debt restructurings are a result of rate reductions, term extensions, fee concessions and debt forgiveness or a combination thereof. At December 31, 2017 and 2016 , we had unfunded commitments related to Non-PCI troubled debt restructured loans of $4.5 million and $4.6 million . The following table presents the composition of our impaired loans and leases held for investment, net of deferred fees, by portfolio segment as of the dates indicated: December 31, 2017 (1) December 31, 2016 Performing Total Performing Total Nonaccrual Troubled Impaired Nonaccrual Troubled Impaired Loans Debt Loans Loans Debt Loans and Restructured and and Restructured and Leases Loans Leases Leases Loans Leases (In thousands) Real estate mortgage $ 68,913 $ 47,560 $ 116,473 $ 69,335 $ 54,750 $ 124,085 Real estate construction and land — 5,690 5,690 364 6,893 7,257 Commercial 86,851 3,488 90,339 100,561 3,157 103,718 Consumer 20 100 120 339 152 491 Total $ 155,784 $ 56,838 $ 212,622 $ 170,599 $ 64,952 $ 235,551 ________________________ (1) Excludes loans held for sale carried at lower of cost or fair value. The following tables present information regarding our Non‑PCI impaired loans and leases held for investment, net of deferred fees, by portfolio segment and class as of and for the years indicated: December 31, 2017 (1) December 31, 2016 Unpaid Unpaid Recorded Principal Related Recorded Principal Related Impaired Loans and Leases Investment Balance Allowance Investment Balance Allowance (In thousands) With An Allowance Recorded: Real estate mortgage: Commercial $ 15,750 $ 16,548 $ 628 $ 63,325 $ 65,031 $ 6,266 Residential 2,787 2,957 342 8,424 8,612 585 Real estate construction and land: Residential — — — 213 213 — Commercial: Asset-based 1,311 1,337 51 4,395 4,861 2,144 Venture capital 16,565 17,203 4,267 5,821 5,880 3,294 Cash flow 19,093 28,614 8,317 51,272 52,910 12,474 Equipment finance — — — 1,524 4,636 — Consumer 100 100 16 270 280 170 With No Related Allowance Recorded: Real estate mortgage: Commercial $ 93,827 $ 105,923 $ — $ 44,557 $ 51,402 $ — Residential 4,109 4,481 — 7,779 8,940 — Real estate construction and land: Commercial 5,690 5,689 — 6,680 6,680 — Residential — — — 364 366 — Commercial: Asset-based 3,519 5,559 — 664 1,652 — Venture capital 14,534 40,029 — 5,866 8,939 — Cash flow 4,378 8,270 — 2,852 5,939 — Equipment finance 30,939 50,433 — 31,324 53,319 — Consumer 20 93 — 221 292 — Total Non-PCI Loans and Leases With and Without an Allowance Recorded: Real estate mortgage $ 116,473 $ 129,909 $ 970 $ 124,085 $ 133,985 $ 6,851 Real estate construction and land 5,690 5,689 — 7,257 7,259 — Commercial 90,339 151,445 12,635 103,718 138,136 17,912 Consumer 120 193 16 491 572 170 Total $ 212,622 $ 287,236 $ 13,621 $ 235,551 $ 279,952 $ 24,933 ________________________ (1) Excludes loans held for sale carried at lower of cost or fair value. Year Ended December 31, 2017 (1) 2016 2015 Weighted Interest Weighted Interest Weighted Interest Average Income Average Income Average Income Impaired Loans and Leases Balance (1) Recognized Balance (1) Recognized Balance (1) Recognized (In thousands) With An Allowance Recorded: Real estate mortgage: Commercial $ 15,538 $ 881 $ 26,870 $ 898 $ 17,833 $ 1,130 Residential 2,787 55 6,521 255 2,143 33 Real estate construction and land: Residential — — 213 14 747 15 Commercial: Asset-based 1,236 53 3,842 134 3,204 56 Venture capital 10,228 — 1,227 — — — Cash flow 19,093 7 22,736 10 12,590 32 Equipment finance — — 508 — 8,475 — Consumer 100 8 233 — 355 15 With No Related Allowance Recorded: Real estate mortgage: Commercial $ 89,554 $ 2,648 $ 41,917 $ 1,506 $ 28,366 $ 345 Residential 3,842 59 7,254 144 4,643 41 Real estate construction and land: Commercial 5,690 306 6,680 224 7,053 240 Residential — — 364 — — — Commercial: Asset-based 1,640 49 528 18 1,746 130 Venture capital 2,860 — 2,446 — 124 — Cash flow 2,499 35 2,455 4 2,752 89 Equipment finance 30,653 — 30,767 — 30,363 — Consumer 20 — 166 9 1,363 — Total Non-PCI Loans and Leases With and Without an Allowance Recorded: Real estate mortgage $ 111,721 $ 3,643 $ 82,562 $ 2,803 $ 52,985 $ 1,549 Real estate construction and land 5,690 306 7,257 238 7,800 255 Commercial 68,209 144 64,509 166 59,254 307 Consumer 120 8 399 9 1,718 15 Total $ 185,740 $ 4,101 $ 154,727 $ 3,216 $ 121,757 $ 2,126 _________________________ (1) For the loans and leases (excluding PCI loans) reported as impaired at December 31, 2017 , 2016 and 2015 , amounts were calculated based on the period of time such loans and leases were impaired during the reported period. (2) Excludes loans held for sale carried at lower of cost or fair value. The following table presents our troubled debt restructurings of Non-PCI loans held for investment and defaulted troubled debt restructurings of Non-PCI loans held for investment by portfolio segment and class for the years indicated: Troubled Debt Restructurings Troubled Debt Restructurings That Subsequently Defaulted (1) Pre-Modification Post-Modification Outstanding Outstanding Number Recorded Recorded Number Recorded of Loans Investment Investment of Loans Investment (1) (Dollars In thousands) Year Ended December 31, 2017 Real estate mortgage: Commercial 5 $ 2,527 $ 2,463 — $ — Residential 8 1,328 489 — — Real estate construction and land: Residential 1 362 — — — Commercial: Asset-based 10 7,987 7,987 — — Venture capital 11 29,733 29,733 — — Cash flow 14 27,703 18,468 1 1 Consumer 1 97 97 — — Total 50 $ 69,737 $ 59,237 1 $ 1 (2) Year Ended December 31, 2016 Real estate mortgage: Commercial 12 $ 13,833 $ 6,099 — $ — Residential 10 7,091 6,439 2 5,000 Real estate construction and land: Commercial 1 1,245 1,245 — — Commercial: Asset-based 5 2,158 2,158 2 1,502 Cash flow 14 30,788 30,788 — — Equipment finance 7 44,196 42,572 — — Consumer 5 850 142 — — Total 54 $ 100,161 $ 89,443 4 $ 6,502 (3) Year Ended December 31, 2015 Real estate mortgage: Commercial 21 $ 43,536 $ 43,012 2 $ 2,670 Residential 18 3,128 2,961 1 155 Real estate construction and land: Commercial 8 23,881 23,881 — — Commercial: Asset-based 13 8,400 8,400 — — Cash flow 25 2,718 2,539 — — Equipment finance 10 93,868 93,868 — — Consumer 2 197 197 — — Total 97 $ 175,728 $ 174,858 3 $ 2,825 (4) _________________________ (1) The population of defaulted restructured loans for the period indicated includes only those loans restructured during the preceding 12-month period. For example, for the year ended December 31, 2017 , the population of defaulted restructured loans includes only those loans restructured after December 31, 2016 . The table excludes defaulted troubled restructurings in those classes for which the recorded investment was zero at the end of the period. (2) Represents the balance at December 31, 2017 , and is net of charge-offs of $68,000 . (3) Represents the balance at December 31, 2016 , and there were no charge-offs. (4) Represents the balance at December 31, 2015 , and is net of charge-offs of $96,900 . Allowance for Loan and Lease Losses The following tables present a summary of the activity in the allowance for loan and lease losses on Non‑PCI loans and leases held for investment by portfolio segment and PCI loans held for investment for the years indicated: Year Ended December 31, 2017 Real Estate Real Estate Construction Total Total Mortgage and Land Commercial Consumer Non-PCI PCI Total (In thousands) Allowance for Loan and Lease Losses: Balance, beginning of year $ 37,765 $ 10,045 $ 93,853 $ 2,092 $ 143,755 $ 13,483 $ 157,238 Charge-offs (2,410 ) — (70,709 ) (1,023 ) (74,142 ) (6,154 ) (80,296 ) Recoveries 1,209 429 9,415 132 11,185 363 11,548 Provision (negative provision) (1,583 ) 2,581 50,167 1,049 52,214 (1,248 ) 50,966 Balance, end of year $ 34,981 $ 13,055 $ 82,726 $ 2,250 $ 133,012 $ 6,444 $ 139,456 Ending Allowance by Impairment Methodology: Individually evaluated for impairment $ 970 $ — $ 12,635 $ 16 $ 13,621 Collectively evaluated for impairment $ 34,011 $ 13,055 $ 70,091 $ 2,234 $ 119,391 Acquired loans with deteriorated credit quality $ 6,444 Ending Loans and Leases by Impairment Methodology: Individually evaluated for impairment $ 115,319 $ 5,690 $ 89,626 $ 100 $ 210,735 Collectively evaluated for impairment $ 7,683,672 $ 1,585,539 $ 7,025,294 $ 409,467 $ 16,703,972 Acquired loans with deteriorated credit quality $ 58,036 Ending balance $ 7,798,991 $ 1,591,229 $ 7,114,920 $ 409,567 $ 16,914,707 $ 58,036 $ 16,972,743 Year Ended December 31, 2016 Real Estate Real Estate Construction Total Total Mortgage and Land Commercial Consumer Non-PCI PCI Total (In thousands) Allowance for Loan and Lease Losses: Balance, beginning of year $ 36,654 $ 7,137 $ 61,082 $ 661 $ 105,534 $ 9,577 $ 115,111 Charge-offs (2,059 ) — (32,210 ) (823 ) (35,092 ) (862 ) (35,954 ) Recoveries 4,519 673 7,794 116 13,102 39 13,141 Provision (negative provision) (1,349 ) 2,235 57,187 2,138 60,211 4,729 64,940 Balance, end of year $ 37,765 $ 10,045 $ 93,853 $ 2,092 $ 143,755 $ 13,483 $ 157,238 Ending Allowance by Impairment Methodology: Individually evaluated for impairment $ 6,851 $ — $ 17,912 $ 170 $ 24,933 Collectively evaluated for impairment $ 30,914 $ 10,045 $ 75,941 $ 1,922 $ 118,822 Acquired loans with deteriorated credit quality $ 13,483 Ending Loans and Leases by Impairment Methodology: Individually evaluated for impairment $ 123,348 $ 7,257 $ 103,431 $ 394 $ 234,430 Collectively evaluated for impairment $ 5,494,608 $ 955,582 $ 8,288,129 $ 374,781 $ 15,113,100 Acquired loans with deteriorated credit quality $ 108,424 Ending balance $ 5,617,956 $ 962,839 $ 8,391,560 $ 375,175 $ 15,347,530 $ 108,424 $ 15,455,954 Allowance for Credit Losses The Non-PCI allowance for credit losses is the combination of the Non-PCI allowance for loan and lease losses and the Non-PCI reserve for unfunded loan commitments. The Non-PCI reserve for unfunded loan commitments is included within "Accrued interest payable and other liabilities" on the consolidated balance sheets. The following tables present a summary of the activity in the Non-PCI allowance for loan and lease losses, Non-PCI reserve for unfunded loan commitments, and PCI allowance for loan losses for the years indicated: Year Ended December 31, 2017 Non-PCI Allowance for Reserve for PCI Total Loan and Unfunded Loan Allowance for Allowance for Allowance for Lease Losses Commitments Credit Losses Loan Losses Credit Losses (In thousands) Balance, beginning of period $ 143,755 $ 17,523 $ 161,278 $ 13,483 $ 174,761 Charge-offs (74,142 ) — (74,142 ) (6,154 ) (80,296 ) Recoveries 11,185 — 11,185 363 11,548 Net charge-offs (62,957 ) — (62,957 ) (5,791 ) (68,748 ) Provision (negative provision) 52,214 6,786 59,000 (1,248 ) 57,752 Fair value of acquired reserve for unfunded loan commitments — 4,326 4,326 — 4,326 Balance, end of period $ 133,012 $ 28,635 $ 161,647 $ 6,444 $ 168,091 Year Ended December 31, 2016 Non-PCI Allowance for Reserve for PCI Total Loan and Unfunded Loan Allowance for Allowance for Allowance for Lease Losses Commitments Credit Losses Loan Losses Credit Losses (In thousands) Balance, beginning of period $ 105,534 $ 16,734 $ 122,268 $ 9,577 $ 131,845 Charge-offs (35,092 ) — (35,092 ) (862 ) (35,954 ) Recoveries 13,102 — 13,102 39 13,141 Net charge-offs (21,990 ) — (21,990 ) (823 ) (22,813 ) Provision 60,211 789 61,000 4,729 65,729 Balance, end of period $ 143,755 $ 17,523 $ 161,278 $ 13,483 $ 174,761 PCI Loans Held for Investment The following table reflects the PCI loans held for investment by portfolio segment as of the dates indicated: December 31, 2017 2016 (In thousands) Real estate mortgage $ 72,399 $ 112,982 Real estate construction and land — 1,901 Commercial 7,568 19,109 Consumer 262 281 Total gross PCI loans held for investment 80,229 134,273 Discount (22,193 ) (25,849 ) Total PCI loans held for investment, net of discount 58,036 108,424 Allowance for loan losses (6,444 ) (13,483 ) Total PCI loans held for investment, net $ 51,592 $ 94,941 The following table summarizes the changes in the carrying amount of PCI loans held for investment and accretable yield on those loans for the years indicated: Carrying Accretable Amount Yield (In thousands) Balance, December 31, 2014 $ 276,792 $ (106,856 ) Addition from the Square 1 acquisition 16,455 (2,852 ) Accretion 31,857 31,857 Payments received (148,436 ) — Increase in expected cash flows, net — (7,785 ) Negative provision for credit losses 2,800 — Balance, December 31, 2015 179,468 (85,636 ) Accretion 51,907 51,907 Payments received (131,705 ) — Increase in expected cash flows, net — (22,215 ) Provision for credit losses (4,729 ) — Balance, December 31, 2016 94,941 (55,944 ) Accretion 14,739 14,739 Payments received (59,336 ) — Increase in expected cash flows, net — (4,375 ) Negative provision for credit losses 1,248 — Balance, December 31, 2017 $ 51,592 $ (45,580 ) The following table presents the credit risk rating categories for PCI loans held for investment, net of discount, by portfolio segment as of the dates indicated. Nonclassified loans are those with a credit risk rating of either pass or special mention, while classified loans are those with a credit risk rating of either substandard or doubtful. December 31, 2017 December 31, 2016 Classified Nonclassified Total Classified Nonclassified Total (In thousands) Real estate mortgage $ 11,063 $ 42,581 $ 53,644 $ 19,445 $ 73,330 $ 92,775 Real estate construction and land — — — 1,023 1,385 2,408 Commercial 4,158 — 4,158 10,943 2,049 12,992 Consumer 234 — 234 249 — 249 Total PCI loans held for investment, net of discount $ 15,455 $ 42,581 $ 58,036 $ 31,660 $ 76,764 $ 108,424 In addition to our internal risk rating process, our federal and state banking regulators, as an integral part of their examination process, periodically review the Company’s loan risk rating classifications. Our regulators may require the Company to recognize rating downgrades based on their judgments related to information available to them at the time of their examinations. |