Loans | Loans The loan portfolio includes originated and purchased loans. Loans are originated by the Company with the intent to hold them for investment and are stated at the principal amount outstanding, net of unearned income. Unearned income includes deferred unamortized nonrefundable loan fees and direct loan origination costs. Net deferred fees or costs are recognized as an adjustment to interest income over the contractual life of the loans using the effective interest method or taken into income when the related loans are paid off or sold. The amortization of loan fees or costs is discontinued when a loan is placed on nonaccrual status. Interest income is recorded on an accrual basis in accordance with the terms of the respective loan and includes prepayment penalties. Purchased loans, which are loans we have acquired through our acquisition of other banks or purchased from other institutions, are stated at the principal amount outstanding, net of unearned discounts or unamortized premiums. All loans acquired in acquisitions are initially measured and recorded at their fair value on the acquisition date. A component of the initial fair value measurement is an estimate of the credit losses over the life of the purchased loans. Purchased loans are also evaluated for impairment as of the acquisition date and are accounted for as "acquired non-impaired" or "purchased credit impaired" loans. Purchased non-impaired loans are those loans for which there was no evidence of credit deterioration at their acquisition date and it was probable that we would be able to collect all contractually required payments. Purchased non-impaired loans, together with originated loans, are referred to as non-purchased credit impaired ("Non-PCI") loans. Purchase discounts or premiums on Non-PCI loans is recognized as an adjustment to interest income over the contractual life of such loans using the effective interest method or taken into income when the related loans are paid off or sold. Purchased credit impaired ("PCI") loans are accounted for in accordance with ASC Subtopic 310-30, " Loans and Debt Securities Acquired with Deteriorated Credit Quality." A purchased loan is deemed to be credit impaired when there is evidence of credit deterioration since its origination and it is probable at the acquisition date that we would be unable to collect all contractually required payments. We apply PCI loan accounting when we acquire loans deemed to be impaired. For PCI loans, at the time of acquisition we (i) calculated the contractual amount and timing of undiscounted principal and interest payments (the "undiscounted contractual cash flows") and (ii) estimated the amount and timing of undiscounted expected principal and interest payments (the "undiscounted expected cash flows"). The difference between the undiscounted contractual cash flows and the undiscounted expected cash flows is the nonaccretable difference. The nonaccretable difference represents an estimate of the loss exposure of principal and interest related to the PCI loan portfolios; such amount is subject to change over time based on the performance of such loans. 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. The excess of expected cash flows at acquisition over the initial fair value of acquired impaired loans is referred to as the "accretable yield" and is recorded as interest income over the estimated life of the loans using the effective yield. If estimated cash flows are indeterminable, the recognition of interest income will cease to be recognized. At acquisition, the Company may aggregate PCI loans into pools having common credit risk characteristics such as product type, geographic location and risk rating. Increases in expected cash flows over those previously estimated increase the accretable yield and are recognized as interest income prospectively. Decreases in the amount and changes in the timing of expected cash flows compared to those previously estimated decrease the accretable yield and usually result in a provision for loan losses and the establishment of an allowance for loan losses. As the accretable yield increases or decreases from changes in cash flow expectations, the offset is a decrease or increase to the nonaccretable difference. The accretable yield is measured at each financial reporting date based on information then currently available and represents the difference between the remaining undiscounted expected cash flows and the current carrying value of the loans. The Board of Directors and management review and approve the Bank’s loan policy and procedures on a regular basis to reflect issues such as regulatory and organizational structure changes, strategic planning revisions, concentrations of credit, loan delinquencies and nonperforming loans, problem loans, and policy adjustments. Real estate loans are loans secured by liens or interest in real estate, to provide purchase, construction, and refinance on real estate properties. Commercial and industrial loans consist of commercial term loans, commercial lines of credit, and Small Business Administration (“SBA”) loans. Consumer loans consist of auto loans, personal loans, and home equity lines of credit. We maintain management loan review and monitoring departments that review and monitor pass graded loans as well as problem loans to prevent further deterioration. The majority of the Bank’s loan portfolio consists of commercial real estate, and commercial and industrial loans. The Bank has been diversifying and monitoring commercial real estate loans based on property types, tightening underwriting standards and portfolio liquidity and management, and has not exceeded certain specified limits set forth in the Bank’s loan policy. Loans receivable consisted of the following as of the dates indicated: September 30, 2015 December 31, 2014 Non-PCI Loans PCI Loans Total Non-PCI Loans PCI Loans Total (in thousands) Real estate loans: Commercial property (1) Retail $ 715,169 $ 7,268 $ 722,437 $ 676,143 $ 10,343 $ 686,486 Hospitality 544,148 5,435 549,583 455,220 12,862 468,082 Gas station 334,518 5,786 340,304 362,815 7,745 370,560 Other 897,512 5,385 902,897 843,462 10,680 854,142 Construction 26,228 — 26,228 9,532 — 9,532 Residential property 197,070 1,035 198,105 121,124 2,499 123,623 Total real estate loans 2,714,645 24,909 2,739,554 2,468,296 44,129 2,512,425 Commercial and industrial loans: Commercial term 121,655 193 121,848 115,734 327 116,061 Commercial lines of credit 126,697 — 126,697 93,586 — 93,586 International loans 32,239 — 32,239 38,815 — 38,815 Total commercial and industrial loans 280,591 193 280,784 248,135 327 248,462 Consumer loans 24,691 43 24,734 27,566 45 27,611 Loans receivable (2) 3,019,927 25,145 3,045,072 2,743,997 44,501 2,788,498 Allowance for loans losses (43,222 ) (3,138 ) (46,360 ) (51,640 ) (1,026 ) (52,666 ) Loans receivable, net $ 2,976,705 $ 22,007 $ 2,998,712 $ 2,692,357 $ 43,475 $ 2,735,832 (1) Includes owner-occupied property loans of $1.12 billion as of both September 30, 2015 and December 31, 2014 , respectively. (2) Includes unamortized costs, net of unamortized fees, of $2.3 million and $3.2 million as of September 30, 2015 and December 31, 2014 , respectively. Accrued interest on loans receivable was $6.0 million and $6.4 million at September 30, 2015 and December 31, 2014 , respectively. At September 30, 2015 and December 31, 2014 , loans receivable totaling $606.4 million and $840.0 million respectively, were pledged to secure advances from the FHLB and the FBR discount window. The following table details the information on the sales and reclassifications of loans receivable to loans held for sale (excluding PCI loans) by portfolio segment for the three months ended September 30, 2015 and 2014 : Real Estate Commercial and Industrial Consumer Total Non-PCI (in thousands) September 30, 2015 Balance at beginning of period $ 2,067 $ 2,091 $ — $ 4,158 Origination of loans held for sale 13,867 7,464 — 21,331 Sales of loans held for sale (12,199 ) (8,408 ) — (20,607 ) Principal payoffs and amortization (3 ) (8 ) — (11 ) Balance at end of period $ 3,732 $ 1,139 $ — $ 4,871 September 30, 2014 Balance at beginning of period $ 2,568 $ 1,274 $ — $ 3,842 Origination of loans held for sale 15,198 3,031 — 18,229 Sales of loans held for sale (12,135 ) (2,133 ) — (14,268 ) Principal payoffs and amortization (20 ) (26 ) — (46 ) Balance at end of period $ 5,611 $ 2,146 $ — $ 7,757 For the three months ended September 30, 2015 , there was no reclassification of Non-PCI loans receivable as loans held for sale and Non-PCI loans held for sale of $20.6 million were sold. In addition, there was no reclassification from Non-PCI loans held for sale to Non-PCI loans receivable for the three months ended September 30, 2015 . For the three months ended September 30, 2014 , there was no reclassification of Non-PCI loans receivable as Non-PCI loans held for sale and Non-PCI loans held for sale of $14.3 million were sold. In addition, there was no reclassification from Non-PCI loans held for sale to Non-PCI loans receivable for the three months ended September 30, 2014 . The following table details the information on the sales and reclassifications of loans receivable to loans held for sale (excluding PCI loans) by portfolio segment for the nine months ended September 30, 2015 and 2014 : Real Estate Commercial and Industrial Consumer Total Non-PCI (in thousands) September 30, 2015 Balance at beginning of period $ 3,323 $ 2,128 $ — $ 5,451 Origination of loans held for sale 37,601 21,672 — 59,273 Reclassification from loans receivable to loans held for sale 360 — — 360 Sales of loans held for sale (37,534 ) (22,616 ) — (60,150 ) Principal payoffs and amortization (18 ) (45 ) — (63 ) Balance at end of period $ 3,732 $ 1,139 $ — $ 4,871 September 30, 2014 Balance at beginning of period $ — $ — $ — $ — Origination of loans held for sale 29,591 5,207 — 34,798 Sales of loans held for sale (23,953 ) (3,033 ) — (26,986 ) Principal payoffs and amortization (27 ) (28 ) — (55 ) Balance at end of period $ 5,611 $ 2,146 $ — $ 7,757 For the nine months ended September 30, 2015 , a Non-PCI loan receivable of $360,000 was reclassified as loans held for sale and Non-PCI loans held for sale of $60.2 million were sold. In addition, there was no reclassification from Non-PCI loans held for sale to Non-PCI loans receivable for the nine months ended September 30, 2015 . For the nine months ended September 30, 2014 , there was no reclassification of Non-PCI loans receivable as Non-PCI loans held for sale, and Non-PCI loans held for sale of $27.0 million were sold. In addition, there was no reclassification from Non-PCI loans held for sale to Non-PCI loans receivable for the nine months ended September 30, 2014 . Activity in the allowance for loan losses and allowance for off-balance sheet items was as follows for the periods indicated: As of and for the Three Months Ended As of and for the Nine Months Ended September 30, 2015 September 30, 2014 (1) September 30, 2015 September 30, 2014 (1) Non-PCI Loans PCI Loans Total Non-PCI Loans PCI Loans Total (in thousands) Allowance for loan losses: Balance at beginning of period $ 49,468 $ 1,352 $ 50,820 $ 51,886 $ 51,640 $ 1,026 $ 52,666 $ 57,555 Charge-offs (1,748 ) — (1,748 ) (1,418 ) (3,004 ) — (3,004 ) (5,569 ) Recoveries on loans previously charged off 992 — 992 663 4,477 — 4,477 6,656 Net loan (charge-offs) recoveries (756 ) — (756 ) (755 ) 1,473 — 1,473 1,087 (Negative provision) provision charged to operating expense (5,490 ) 1,786 (3,704 ) 48 (9,891 ) $ 2,112 (7,779 ) (7,463 ) Balance at end of period $ 43,222 $ 3,138 $ 46,360 $ 51,179 $ 43,222 $ 3,138 $ 46,360 $ 51,179 Allowance for off-balance sheet items: Balance at beginning of period $ 962 $ — $ 962 $ 1,592 $ 1,366 $ — $ 1,366 $ 1,247 (Negative provision) provision charged to operating expense (406 ) — (406 ) (48 ) (810 ) $ — (810 ) 297 Balance at end of period $ 556 $ — $ 556 $ 1,544 $ 556 $ — $ 556 $ 1,544 (1) As of September 30, 2014, there was no allowance for loan losses associated with PCI loans. The allowance for off-balance sheet items is maintained at a level believed to be sufficient to absorb probable losses related to these unfunded credit facilities. The determination of the allowance adequacy is based on periodic evaluations of the unfunded credit facilities including an assessment of the probability of commitment usage, credit risk factors for loans outstanding to these same customers, and the terms and expiration dates of the unfunded credit facilities. As of September 30, 2015 and 2014 , the allowance for off-balance sheet items amounted to $556,000 and $ 1.5 million , respectively. Net adjustments to the allowance for off-balance sheet items are included in the other operating expenses. The Company determined that the net adjustments to the allowance for the off-balance sheet items should have been recorded to other noninterest expense rather than the provision for loan losses. Accordingly, the Company has revised the classification of the net adjustments from the provision for loan losses to other operating expenses in the Consolidated Statements of Income for the three and nine months ended September 30, 2014 as follows: As Previously Reported Effect of Change As Adjusted (in thousands) For the Three Months Ended September 30, 2014 Provision for loan losses $ — $ 48 $ 48 Other operating expenses $ 2,612 $ (48 ) $ 2,564 For the Nine Months Ended September 30, 2014 Provision for loan losses $ (7,166 ) $ (297 ) $ (7,463 ) Other operating expenses $ 6,883 $ 297 $ 7,180 The following table details the information on the allowance for loan losses by portfolio segment for the three months ended September 30, 2015 and 2014 : Real Estate Commercial and Industrial Consumer Unallocated Total (in thousands) September 30, 2015 Allowance for loan losses on Non-PCI loans: Beginning balance $ 39,898 $ 8,245 $ 172 $ 1,153 $ 49,468 Charge-offs (334 ) (1,414 ) — — (1,748 ) Recoveries on loans previously charged off 745 244 3 — 992 (Negative provision) provision (5,867 ) 700 (78 ) (245 ) (5,490 ) Ending balance $ 34,442 $ 7,775 $ 97 $ 908 $ 43,222 Ending balance: individually evaluated for impairment $ 3,500 $ 846 $ — $ — $ 4,346 Ending balance: collectively evaluated for impairment $ 30,942 $ 6,929 $ 97 $ 908 $ 38,876 Non-PCI loans receivable: Ending balance $ 2,714,645 $ 280,591 $ 24,691 $ — $ 3,019,927 Ending balance: individually evaluated for impairment $ 28,372 $ 7,851 $ 1,689 $ — $ 37,912 Ending balance: collectively evaluated for impairment $ 2,686,273 $ 272,740 $ 23,002 $ — $ 2,982,015 Allowance for loan losses on PCI loans: Beginning balance $ 1,289 $ 63 $ — $ — $ 1,352 Provision (negative provision) 1,830 (46 ) 2 — 1,786 Ending balance: acquired with deteriorated credit quality $ 3,119 $ 17 $ 2 $ — $ 3,138 PCI loans receivable: Ending balance: acquired with deteriorated credit quality $ 24,909 $ 193 $ 43 $ — $ 25,145 September 30, 2014 (1) Allowance for loan losses on Non-PCI loans: Beginning balance $ 40,303 $ 9,738 $ 540 $ 1,305 $ 51,886 Charge-offs (884 ) (499 ) (35 ) — (1,418 ) Recoveries on loans previously charged off 293 365 5 — 663 Provision (negative provision) 179 260 (186 ) (205 ) 48 Ending balance $ 39,891 $ 9,864 $ 324 $ 1,100 $ 51,179 Ending balance: individually evaluated for impairment $ 2,027 $ 3,757 $ — $ — $ 5,784 Ending balance: collectively evaluated for impairment $ 37,864 $ 6,107 $ 324 $ 1,100 $ 45,395 Non-PCI loans receivable: Ending balance $ 2,348,366 $ 234,975 $ 28,905 $ — $ 2,612,246 Ending balance: individually evaluated for impairment $ 35,654 $ 11,970 $ 1,758 $ — $ 49,382 Ending balance: collectively evaluated for impairment $ 2,312,712 $ 223,005 $ 27,147 $ — $ 2,562,864 (1) As of September 30, 2014, there was no allowance for loan losses associated with PCI loans. The following table details the information on the allowance for loan losses by portfolio segment for the nine months ended September 30, 2015 and 2014 : Real Estate Commercial and Industrial Consumer Unallocated Total (in thousands) September 30, 2015 Allowance for loan losses on Non-PCI loans: Beginning balance $ 41,194 $ 9,142 $ 220 $ 1,084 $ 51,640 Charge-offs (435 ) (2,569 ) — — (3,004 ) Recoveries on loans previously charged off 2,040 2,434 3 — 4,477 (Negative provision) provision (8,357 ) (1,232 ) (126 ) (176 ) (9,891 ) Ending balance $ 34,442 $ 7,775 $ 97 $ 908 $ 43,222 Ending balance: individually evaluated for impairment $ 3,500 $ 846 $ — $ — $ 4,346 Ending balance: collectively evaluated for impairment $ 30,942 $ 6,929 $ 97 $ 908 $ 38,876 Non-PCI loans receivable: Ending balance $ 2,714,645 $ 280,591 $ 24,691 $ — $ 3,019,927 Ending balance: individually evaluated for impairment $ 28,372 $ 7,851 $ 1,689 $ — $ 37,912 Ending balance: collectively evaluated for impairment $ 2,686,273 $ 272,740 $ 23,002 $ — $ 2,982,015 Allowance for loan losses on PCI loans: Beginning balance $ 895 $ 131 $ — $ — $ 1,026 Provision (negative provision) 2,224 (114 ) 2 — 2,112 Ending balance: acquired with deteriorated credit quality $ 3,119 $ 17 $ 2 $ — $ 3,138 PCI loans receivable: Ending balance: acquired with deteriorated credit quality $ 24,909 $ 193 $ 43 $ — $ 25,145 September 30, 2014 (1) Allowance for loan losses on Non-PCI loans: Beginning balance $ 43,550 $ 11,287 $ 1,427 $ 1,291 $ 57,555 Charge-offs (2,073 ) (3,394 ) (102 ) — (5,569 ) Recoveries on loans previously charged off 3,298 3,338 20 — 6,656 Negative provision (4,884 ) (1,367 ) (1,021 ) (191 ) (7,463 ) Ending balance $ 39,891 $ 9,864 $ 324 $ 1,100 $ 51,179 Ending balance: individually evaluated for impairment $ 2,027 $ 3,757 $ — $ — $ 5,784 Ending balance: collectively evaluated for impairment $ 37,864 $ 6,107 $ 324 $ 1,100 $ 45,395 Non-PCI loans receivable: Ending balance $ 2,348,366 $ 234,975 $ 28,905 $ — $ 2,612,246 Ending balance: individually evaluated for impairment $ 35,654 $ 11,970 $ 1,758 $ — $ 49,382 Ending balance: collectively evaluated for impairment $ 2,312,712 $ 223,005 $ 27,147 $ — $ 2,562,864 (1) As of September 30, 2014, there was no allowance for loan losses associated with PCI loans. Credit Quality Indicators As part of the on-going monitoring of the credit quality of our loan portfolio, we utilize an internal loan grading system to identify credit risk and assign an appropriate grade, from 0 to 8, for each loan in our loan portfolio. Third party loan reviews are performed throughout the year. Additional adjustments are made when determined to be necessary. The loan grade definitions are as follows: Pass and Pass-Watch: Pass and pass-watch loans, grades 0-4, are in compliance in all respects with the Bank’s credit policy and regulatory requirements, and do not exhibit any potential or defined weaknesses as defined under “Special Mention,” “Substandard” or “Doubtful.” This category is the strongest level of the Bank’s loan grading system. It incorporates all performing loans with no credit weaknesses. It includes cash and stock/security secured loans or other investment grade loans. Special Mention: A special mention credit, grade 5, has potential weaknesses that deserve management’s close attention. If not corrected, these potential weaknesses may result in deterioration of the repayment prospects of the debt and result in a Substandard classification. Loans that have significant actual, not potential, weaknesses are considered more severely classified. Substandard: A substandard credit, grade 6, has a well-defined weakness that jeopardizes the liquidation of the debt. A credit graded Substandard is not protected by the sound worth and paying capacity of the borrower, or of the value and type of collateral pledged. With a Substandard loan, there is a distinct possibility that the Bank will sustain some loss if the weaknesses or deficiencies are not corrected. Doubtful: A doubtful credit, grade 7, is one that has critical weaknesses that would make the collection or liquidation of the full amount due improbable. However, there may be pending events which may work to strengthen the credit, and therefore the amount or timing of a possible loss cannot be determined at the current time. Loss: A loan classified as loss, grade 8, is considered uncollectible and of such little value that their continuance as an active bank asset is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be possible in the future. Loans classified as loss are charged off in a timely manner. Under regulatory guidance, loans graded special mention or worse are considered criticized loans and loans graded substandard or worse are considered classified loans. As of September 30, 2015 and December 31, 2014 , pass/pass-watch, special mention and classified loans (excluding PCI loans), disaggregated by loan class, were as follows: Pass/Pass-Watch Special Mention Classified Total (in thousands) September 30, 2015 Real estate loans: Commercial property Retail $ 701,707 $ 10,783 $ 2,679 $ 715,169 Hospitality 497,759 34,961 11,428 544,148 Gas station 321,151 8,721 4,646 334,518 Other 878,561 8,880 10,071 897,512 Construction 26,228 — — 26,228 Residential property 195,313 60 1,697 197,070 Commercial and industrial loans: Commercial term 114,007 1,174 6,474 121,655 Commercial lines of credit 120,675 5,058 964 126,697 International loans 29,854 2,385 — 32,239 Consumer loans 22,482 101 2,108 24,691 Total Non-PCI loans $ 2,907,737 $ 72,123 $ 40,067 $ 3,019,927 December 31, 2014 Real estate loans: Commercial property Retail $ 655,431 $ 18,013 $ 2,699 $ 676,143 Hospitality 398,158 46,365 10,697 455,220 Gas station 346,350 8,899 7,566 362,815 Other 823,373 9,543 10,546 843,462 Construction 9,532 — — 9,532 Residential property 118,880 66 2,178 121,124 Commercial and industrial loans: Commercial term 105,987 1,225 8,522 115,734 Commercial lines of credit 92,038 993 555 93,586 International loans 36,007 252 2,556 38,815 Consumer loans 25,367 131 2,068 27,566 Total Non-PCI loans $ 2,611,123 $ 85,487 $ 47,387 $ 2,743,997 The following is an aging analysis of loans (excluding PCI loans), disaggregated by loan class, as of the dates indicated: 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total Accruing 90 Days or More Past Due (in thousands) September 30, 2015 Real estate loans: Commercial property Retail $ 622 $ — $ 387 $ 1,009 $ 714,160 $ 715,169 $ — Hospitality 50 — 4,488 4,538 539,610 544,148 — Gas station 43 1,242 1,107 2,392 332,126 334,518 — Other 428 736 2,150 3,314 894,198 897,512 — Construction — — — — 26,228 26,228 — Residential property 230 — 108 338 196,732 197,070 — Commercial and industrial loans: Commercial term 89 102 689 880 120,775 121,655 — Commercial lines of credit — — 1,292 1,292 125,405 126,697 — International loans — — — — 32,239 32,239 — Consumer loans — — 236 236 24,455 24,691 — Total Non-PCI loans $ 1,462 $ 2,080 $ 10,457 $ 13,999 $ 3,005,928 $ 3,019,927 $ — December 31, 2014 Real estate loans: Commercial property Retail $ 1,554 $ 281 $ 1,920 $ 3,755 $ 672,388 $ 676,143 $ — Hospitality 1,531 2,340 433 4,304 450,916 455,220 — Gas station 2,991 1,113 353 4,457 358,358 362,815 — Other 1,674 2,156 1,142 4,972 838,490 843,462 — Construction — — — — 9,532 9,532 — Residential property 167 — 687 854 120,270 121,124 — Commercial and industrial loans: Commercial term 1,107 490 2,847 4,444 111,290 115,734 — Commercial lines of credit — — 227 227 93,359 93,586 — International loans 200 — — 200 38,615 38,815 — Consumer loans 489 349 248 1,086 26,480 27,566 — Total Non-PCI loans $ 9,713 $ 6,729 $ 7,857 $ 24,299 $ 2,719,698 $ 2,743,997 $ — Impaired Loans Loans are considered impaired when the Bank will be unable to collect all interest and principal payments per contractual terms of the loan agreement, unless the loan is both well-collateralized and in the process of collection; or they are classified as Troubled Debt Restructurings (“TDRs”) because, due to the financial difficulties of the borrowers, we have granted concessions to the borrowers we would not otherwise consider; or when current information or events make it unlikely to collect in full according to the contractual terms of the loan agreements; or there is a deterioration in the borrower’s financial condition that raises uncertainty as to timely collection of either principal or interest; or full payment of both interest and principal is in doubt according to the original contractual terms. We evaluate loan impairment in accordance with applicable GAAP. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent, less estimated costs to sell. If the measure of the impaired loan is less than the recorded investment in the loan, the deficiency is either charged off against the allowance for loan losses or we establish a specific allocation in the allowance for loan losses. Additionally, loans that are considered impaired are specifically excluded from the quarterly migration analysis when determining the amount of the allowance for loan losses required for the period. The allowance for collateral-dependent loans is determined by calculating the difference between the outstanding loan balance and the value of the collateral as determined by recent appraisals. The allowance for collateral-dependent loans varies from loan to loan based on the collateral coverage of the loan at the time of designation as nonperforming. We continue to monitor the collateral coverage, using recent appraisals, on these loans on a quarterly basis and adjust the allowance accordingly. The following tables provide information on impaired loans (excluding PCI loans), disaggregated by loan class, as of the dates indicated: Recorded Investment Unpaid Principal Balance With No Related Allowance Recorded With an Allowance Recorded Related Allowance (in thousands) September 30, 2015 Real estate loans: Commercial property Retail $ 2,621 $ 2,909 $ 2,068 $ 553 $ 40 Hospitality 6,906 7,576 3,066 3,840 2,950 Gas station 6,315 6,878 5,665 650 185 Other 9,886 11,539 8,607 1,279 325 Residential property 2,644 2,820 2,644 — — Commercial and industrial loans: Commercial term 5,812 6,283 2,770 3,042 329 Commercial lines of credit 894 1,021 394 500 500 International loans 1,145 1,145 585 560 17 Consumer loans 1,689 1,902 1,689 — — Total Non-PCI loans $ 37,912 $ 42,073 $ 27,488 $ 10,424 $ 4,346 December 31, 2014 Real estate loans: Commercial property Retail $ 4,436 $ 4,546 $ 1,938 $ 2,498 $ 220 Hospitality 5,835 6,426 4,581 1,254 1,828 Gas station 8,974 9,594 8,526 448 150 Other 10,125 11,591 8,890 1,235 319 Residential property 3,127 3,268 3,127 — — Commercial and industrial loans: Commercial term 7,614 8,133 2,999 4,615 2,443 Commercial lines of credit 466 575 466 — — International loans 3,546 3,546 2,628 918 286 Consumer loans 1,742 1,907 1,742 — — Total Non-PCI loans $ 45,865 $ 49,586 $ 34,897 $ 10,968 $ 5,246 Average Recorded Investment for the Three Months Ended Interest Income Recognized for the Three Months Ended Average Recorded Investment for the Nine Months Ended Interest Income Recognized for the Nine Months Ended (in thousands) September 30, 2015 Real estate loans: Commercial property Retail $ 2,635 $ 46 $ 4,301 $ 244 Hospitality 6,151 143 6,517 443 Gas station 6,298 117 7,668 399 Other 9,967 202 10,505 606 Residential property 2,655 28 2,815 88 Commercial and industrial loans: Commercial term 5,918 86 7,062 282 Commercial lines of credit 901 4 1,804 40 International loans 1,236 — 1,259 — Consumer loans 1,695 17 1,779 51 Total Non-PCI loans $ 37,456 $ 643 $ 43,710 $ 2,153 September 30, 2014 Real estate loans: Commercial property Retail $ 4,456 $ 36 $ 5,682 $ 215 Hospitality 4,206 102 4,149 232 Gas station 14,181 218 12,023 587 Other 9,898 232 10,716 682 Residential property 3,173 30 2,853 87 Commercial and industrial loans: Commercial term 8,118 126 10,007 443 Commercial lines of credit 2,884 36 1,447 61 International loans 1,146 — 1,136 — Consumer loans 1,765 16 1,619 46 Total Non-PCI loans $ 49,827 $ 796 $ 49,632 $ 2,353 The following is a summary of interest foregone on impaired loans (excluding PCI loans) for the periods indicated: Three Months Ended Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (in thousands) Interest income that would have been recognized had impaired loans performed in accordance with their original terms $ 1,444 $ 1,063 $ 3,361 $ 3,490 Less: Interest income recognized on impaired loans (643 ) (796 ) (2,153 ) (2,353 ) Interest foregone on impaired loans $ 801 $ 267 $ 1,208 $ 1,137 There were no commitments to lend additional funds to borrowers whose loans are included above. Nonaccrual Loans Loans are placed on nonaccrual status when, in the opinion of management, the full timely collection of principal or interest is in doubt. Generally, the accrual of interest is discontinued when principal or interest payments become more than 90 days past due, unless management believes the loan is adequately collateralized and in the process of collection. However, in certain instances, we may place a particular loan on nonaccrual status earlier, depending upon the individual circumstances surrounding the loan’s delinquency. When a loan is placed on nonaccrual status, previously accrued but unpaid interest is reversed against current income. Subsequent collections of cash are applied as principal reductions when received, except when the ultimate collectability of principal is probable, in which case interest payments are credited to income. Nonaccrual loans may be restored to accrual status when principal and interest payments become current and full repayment is expected. The following table details nonaccrual loans (excluding PCI loans), disaggregated by loan class, as of the dates indicated: September 30, 2015 December 31, 2014 (in thousands) Real estate loans: Commercial property Retail $ 996 $ 2,160 Hospitality 5,935 3,835 Gas station 3,296 3,478 Other 5,405 4,961 Residential property 1,120 1,588 Commercial and industrial loans: Commercial term 4,193 7,052 Commercial lines of credit 1,464 466 Consumer loans 1,535 1,742 Total nonaccrual Non-PCI loans $ 23,944 $ 25,282 The following table details nonperforming assets (excluding PCI loans) as of the dates indicated: September 30, 2015 December 31, 2014 (in thousands) Nonaccrual Non-PCI loans $ 23,944 $ 25,282 Loans 90 days or more past due and still accruing — — Total nonperforming Non-PCI loans 23,944 25,282 OREO 13,249 15,790 Total nonperforming assets $ 37,193 $ 41,072 As of September 30, 2015 , OREO consisted of 17 properties with a combined carrying value of $13.2 million . Of the $13.2 million , $10.8 million were OREO acquired in the CBI acquisition or were obtained as a result of PCI loan collateral foreclosures subsequent to the acquisition date. As of December 31, 2014 , OREO consisted of 25 properties with a combined carrying value of $ 15.8 million . Of the $ 15.8 million, $15.3 million were OREO acquired in the CBI acquisition or were obtained as a result of PCI loan collateral foreclosures subsequent to the acquisition date. Troubled Debt Restructurings The following table details TDRs (excluding PCI loans), disaggregated by concession type and loan type, as of September 30, 2015 and December 31, 2014 : Nonaccrual TDRs Accrual TDRs Deferral of Principal Deferral of Principal and Interest Reduction of Principal and Interest Extension of Maturity Total Deferral of Principal Deferral of Principal and Interest Reduction of Principal and Interest Extension of Maturity Total (in thousands) September 30, 2015 Real estate loans: Commercial property Retail $ — $ — $ — $ 357 $ 357 $ — $ — $ 1,228 $ — $ 1,228 Hospitality 1,448 — — — 1,448 — — — — — Gas station 980 — — — 980 345 — — — 345 Other 897 1,665 360 12 2,934 2,638 — 106 1,391 4,135 Residential property 703 — — — 703 — — — 301 301 Commercial and industrial loans: Commercial term 40 — 2,375 1,018 3,433 44 218 238 1,079 1,579 Commercial lines of credit 222 — 104 68 394 — — — — — Consumer loans — — 119 — 119 250 — — — 250 Total Non-PCI loans $ 4,290 $ 1,665 $ 2,958 $ 1,455 $ 10,368 $ 3,277 $ 218 $ 1,572 $ 2,771 $ 7,838 December 31, 2014 Real estate |