| Loans | Loans Loans consist of the following at (in thousands): March 31, December 31, Commercial loans $ 3,509,604 $ 3,616,286 Commercial loans collateralized by assignment of lease payments 1,774,104 1,779,072 Commercial real estate 2,831,814 2,695,676 Residential real estate 677,791 628,169 Construction real estate 310,278 252,060 Indirect vehicle 432,915 384,095 Home equity 207,079 216,573 Other consumer loans 77,318 80,661 Total loans, excluding purchased credit-impaired loans 9,820,903 9,652,592 Purchased credit-impaired loans 140,445 141,406 Total loans $ 9,961,348 $ 9,793,998 Loans are made to individuals as well as commercial and tax exempt entities. Specific loan terms vary as to interest rate, repayment, and collateral requirements based on the type of loan requested and the credit worthiness of the prospective borrower. Except for commercial loans collateralized by assignment of lease payments and asset-based loans, credit risk tends to be geographically concentrated in that a majority of the loan customers are located in the markets serviced by MB Financial Bank. The Company's extension of credit is governed by its Credit Risk Policy, which was established to control the quality of the Company's loans. This policy is reviewed and approved by the Enterprise Risk Committee of the Company's Board of Directors on a regular basis. Commercial Loans. Commercial credit is extended primarily to middle market customers. Such credits are typically comprised of working capital loans, loans for physical asset expansion, asset acquisition loans and other business loans. Loans to closely held businesses will generally be guaranteed in full or for a significant amount by the businesses' principal owners. Commercial loans are made based primarily on the historical and projected cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not behave as forecasted and collateral securing loans may fluctuate in value due to economic or individual performance factors. Minimum standards and underwriting guidelines have been established for all commercial loan types. Asset-based loans, also included in commercial loans, are made to businesses with the primary source of repayment derived from payments on the related assets securing the loan. Collateral for these loans may include accounts receivable, inventory and equipment, and is monitored regularly to ensure ongoing sufficiency of collateral coverage and quality. The primary risk for these loans is a significant decline in collateral values due to general market conditions. Loan terms that mitigate these risks include typical industry amortization schedules, percentage of collateral advances, maintenance of cash collateral accounts and regular asset monitoring. Because of the national scope of our asset-based lending, the risk of these loans is also diversified by geography. Commercial Loans Collateralized by Assignment of Lease Payments ("Lease Loans"). The Company makes lease loans to lessors where the underlying leases are with both investment grade and non-investment grade companies. Investment grade lessees are companies rated in one of the four highest categories by Moody's Investor Services or Standard & Poor's Rating Services or, in the event the related lessee has not received any such rating, where the related lessee would be viewed under the underwriting policies of the Company as an investment grade company. Whether or not companies fall into this category, each lease loan is considered on its individual merit based on the financial wherewithal of the lessee using financial information available at the time of underwriting. Commercial Real Estate Loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans. These loans are viewed primarily as cash flow loans and the repayment of these loans is largely dependent on the successful operation of the property. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market such as geographic location and/or property type. Construction Real Estate Loans. The Company defines construction loans as loans where the loan proceeds are controlled by the Company and used exclusively for the improvement of real estate in which the Company holds a mortgage. Due to the inherent risk in this type of loan, they are subject to other industry specific policy guidelines outlined in the Company's Credit Risk Policy. Consumer Related Loans. The Company originates direct and indirect consumer loans, including primarily residential real estate, home equity lines and loans, credit cards, and indirect vehicle loans (motorcycle, powersports, recreational and marine vehicles). Each loan type is underwritten based upon several factors including debt to income, type of collateral and loan to collateral value, credit history and the Company's relationship with the borrower. Indirect loan and credit card underwriting involves the use of risk-based pricing in the underwriting process. Purchased credit-impaired loans. Purchased credit-impaired loans are loans accounted for under ASC 310-30, which include purchased credit-impaired loans acquired through a business combination, FDIC-assisted transactions and re-purchase transactions with the Government National Mortgage Association ("GNMA"). The loans re-purchased from GNMA were originally sold by the Company with servicing retained and subsequently became delinquent. These loans are also insured by the Federal Housing Administration (commonly referred to as "FHA") or the U.S. Department of Veterans Affairs (commonly referred to as "VA") where the Company would be able to recover the principal balance of these loans. All re-purchases from GNMA are at the Company's discretion. A collateral pledge agreement exists whereby at all times, the Company must keep on hand, free of all other pledges, liens, and encumbrances, first mortgage loans and home equity loans with unpaid principal balances aggregating no less than 133% for first mortgage loans and 250% for home equity loans of the outstanding advances from the Federal Home Loan Bank. As of March 31, 2016 and December 31, 2015 , the Company had $3.3 billion and $3.2 billion , respectively, of loans pledged as collateral for long-term Federal Home Loan Bank advances and third party letters of credit, while only $2.3 billion and $2.2 billion were required to be pledged at March 31, 2016 and December 31, 2015 , respectively. The following table presents the contractual aging of the recorded investment in past due loans by class of loans as of March 31, 2016 and December 31, 2015 (in thousands): Current 30-59 Days 60-89 Days Loans Past Due Total Total March 31, 2016 Commercial $ 3,485,156 $ 7,931 $ 10,033 $ 6,484 $ 24,448 $ 3,509,604 Commercial collateralized by assignment of lease payments 1,756,427 10,405 2,377 4,895 17,677 1,774,104 Commercial real estate: Healthcare 543,296 — — — — 543,296 Industrial 449,746 453 — 757 1,210 450,956 Multifamily 411,571 367 193 914 1,474 413,045 Retail 470,682 691 3,466 13,947 18,104 488,786 Office 238,758 238 168 4,041 4,447 243,205 Other 689,799 1,295 76 1,356 2,727 692,526 Residential real estate 662,752 6,529 488 8,022 15,039 677,791 Construction real estate 310,278 — — — — 310,278 Indirect vehicle 430,388 1,677 391 459 2,527 432,915 Home equity 198,892 2,234 964 4,989 8,187 207,079 Other consumer 77,000 121 125 72 318 77,318 Total loans, excluding purchased credit-impaired loans 9,724,745 31,941 18,281 45,936 96,158 9,820,903 Purchased credit-impaired loans 88,308 6,221 9 45,907 52,137 140,445 Total loans $ 9,813,053 $ 38,162 $ 18,290 $ 91,843 $ 148,295 $ 9,961,348 Non-performing loan aging $ 33,990 $ 8,516 $ 6,431 $ 45,777 $ 60,724 $ 94,714 December 31, 2015 Commercial $ 3,586,372 $ 22,956 $ 97 $ 6,861 $ 29,914 $ 3,616,286 Commercial collateralized by assignment of lease payments 1,758,839 3,399 5,902 10,932 20,233 1,779,072 Commercial real estate: Healthcare 476,939 — — — — 476,939 Industrial 400,182 — — 757 757 400,939 Multifamily 399,333 622 88 934 1,644 400,977 Retail 410,958 6,189 7,411 180 13,780 424,738 Office 223,935 58 — 5,189 5,247 229,182 Other 760,530 622 82 1,667 2,371 762,901 Residential real estate 612,573 5,193 1,729 8,674 15,596 628,169 Construction real estate 252,060 — — — — 252,060 Indirect vehicle 380,899 2,085 698 413 3,196 384,095 Home equity 207,818 1,774 1,398 5,583 8,755 216,573 Other consumer 80,225 254 84 98 436 80,661 Total loans, excluding purchased credit-impaired loans 9,550,663 43,152 17,489 41,288 101,929 9,652,592 Purchased credit-impaired loans 81,250 3,311 4,439 52,406 60,156 141,406 Total loans $ 9,631,913 $ 46,463 $ 21,928 $ 93,694 $ 162,085 $ 9,793,998 Non-performing loan aging $ 44,290 $ 9,827 $ 9,367 $ 41,177 $ 60,371 $ 104,661 The following table presents the recorded investment in non-accrual loans and loans past due ninety days or more and still accruing by class of loans, excluding purchased credit-impaired loans, as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Loans past due Loans past due Non-accrual 90 days or more and still accruing Non-accrual 90 days or more and still accruing Commercial $ 21,458 $ 531 $ 24,689 $ 42 Commercial collateralized by assignment of lease payments 6,445 156 7,027 5,318 Commercial real estate: Healthcare — — — — Industrial 1,106 — 1,136 — Multifamily 3,240 — 3,415 — Office 4,464 57 4,496 693 Retail 17,584 — 17,594 — Other 1,300 35 1,544 195 Residential real estate 18,170 264 17,951 253 Construction real estate — — — — Indirect vehicle 2,024 — 2,046 — Home equity 17,801 — 18,156 — Other consumer 10 69 11 95 Total $ 93,602 $ 1,112 $ 98,065 $ 6,596 The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company's risk rating system, the Company classifies potential problem and problem loans as “Special Mention,” “Substandard,” and “Doubtful.” Substandard loans include those characterized by the distinct possibility that the Company 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, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses that deserve management's close attention are deemed to be Special Mention. Risk ratings are updated any time the situation warrants and at least annually. Loans listed as not rated are included in groups of homogeneous loans with similar risk and loss characteristics. The following tables present the risk category of loans by class of loans based on the most recent analysis performed, excluding purchased credit-impaired loans, as of March 31, 2016 and December 31, 2015 (in thousands): Pass Special Substandard Doubtful Total March 31, 2016 Commercial $ 3,278,544 $ 133,873 $ 97,187 $ — $ 3,509,604 Commercial collateralized by assignment of lease payments 1,751,658 9,398 13,048 — 1,774,104 Commercial real estate: Healthcare 538,702 4,594 — — 543,296 Industrial 430,553 18,731 1,672 — 450,956 Multifamily 408,412 552 4,081 — 413,045 Retail 459,492 11,422 17,872 — 488,786 Office 230,732 3,771 8,702 — 243,205 Other 663,011 6,133 23,382 — 692,526 Construction real estate 309,724 554 — — 310,278 Total $ 8,070,828 $ 189,028 $ 165,944 $ — $ 8,425,800 December 31, 2015 Commercial $ 3,373,943 $ 115,548 $ 126,795 $ — $ 3,616,286 Commercial collateralized by assignment of lease payments 1,760,674 4,367 14,031 — 1,779,072 Commercial real estate: Healthcare 472,599 4,340 — — 476,939 Industrial 380,200 19,011 1,728 — 400,939 Multifamily 396,117 595 4,265 — 400,977 Retail 393,543 13,310 17,885 — 424,738 Office 216,584 3,797 8,801 — 229,182 Other 730,713 6,193 25,995 — 762,901 Construction real estate 252,060 — — — 252,060 Total $ 7,976,433 $ 167,161 $ 199,500 $ — $ 8,343,094 Approximately $55.8 million and $59.6 million of the substandard and doubtful loans were non-performing as of March 31, 2016 and December 31, 2015 , respectively. For residential real estate, home equity, indirect vehicle and other consumer loan classes, which are not rated, the Company 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, excluding purchased credit-impaired loans, as of March 31, 2016 and December 31, 2015 (in thousands): Performing Non-performing Total March 31, 2016 Residential real estate $ 659,357 $ 18,434 $ 677,791 Indirect vehicle 430,891 2,024 432,915 Home equity 189,278 17,801 207,079 Other consumer 77,239 79 77,318 Total $ 1,356,765 $ 38,338 $ 1,395,103 December 31, 2015 Residential real estate $ 609,965 $ 18,204 $ 628,169 Indirect vehicle 382,049 2,046 384,095 Home equity 198,417 18,156 216,573 Other consumer 80,555 106 80,661 Total $ 1,270,986 $ 38,512 $ 1,309,498 The recorded investment in residential mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process totaled $18.4 million and $20.8 million at March 31, 2016 and December 31, 2015 , respectively. The following tables present loans individually evaluated for impairment by class of loans, excluding purchased credit-impaired loans, as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 Three Months Ended Unpaid Recorded Partial Allowance for Average Interest With no related allowance recorded: Commercial $ — $ — $ — $ — $ — $ — Commercial collateralized by assignment of lease payments 2,512 1,433 1,079 — 1,935 — Commercial real estate: Healthcare — — — — — — Industrial 820 757 63 — 776 — Multifamily 2,098 2,098 — — 2,391 — Retail 7,395 5,654 1,741 — 5,838 — Office 1,608 1,031 577 — 1,031 — Other 240 240 — — 240 — Residential real estate — — — — — — Construction real estate — — — — — — Indirect vehicle — — — — — — Home equity 577 577 — — 577 — Other consumer — — — — — — With an allowance recorded: Commercial 31,869 31,869 — 12,174 28,927 — Commercial collateralized by assignment of lease payments 4,121 4,121 — 2,299 3,340 9 Commercial real estate: Healthcare — — — — — — Industrial — — — — — — Multifamily — — — — — — Retail 16,059 16,059 — 4,767 16,542 — Office 2,909 2,909 — 1,705 2,995 — Other 352 352 — 50 352 — Residential real estate 13,047 13,047 — 2,642 13,045 — Construction real estate — — — — — — Indirect vehicle 122 122 — — 285 — Home equity 28,683 28,683 — 3,044 28,788 — Other consumer — — — — — — Total $ 112,412 $ 108,952 $ 3,460 $ 26,681 $ 107,062 $ 9 December 31, 2015 Year Ended Unpaid Recorded Partial Allowance for Average Interest With no related allowance recorded: Commercial $ 11,253 $ 11,253 $ — $ — $ 6,628 $ — Commercial collateralized by assignment of lease payments 3,453 2,949 504 — 1,035 54 Commercial real estate: Healthcare — — — — — — Industrial 820 757 63 — 3,467 — Multifamily 575 575 — — 1,540 17 Retail 7,872 6,131 1,741 — 2,768 — Office 1,608 1,031 577 — 1,663 — Other — — — — 965 — Residential real estate 970 970 — — 717 — Construction real estate — — — — — — Indirect vehicle — — — — — — Home equity 927 927 — — 1,000 — Other consumer — — — — — — With an allowance recorded: Commercial 23,394 23,394 — 7,523 18,820 — Commercial collateralized by assignment of lease payments 3,297 3,297 — 1,790 4,013 104 Commercial real estate: Healthcare — — — — — — Industrial — — — — 228 — Multifamily 2,155 2,155 — 17 3,307 27 Retail 16,034 16,034 — 4,926 8,885 — Office 2,929 2,929 — 1,717 2,457 — Other 592 592 — 199 9,629 — Residential real estate 12,950 12,769 181 2,634 13,484 — Construction real estate — — — — 214 — Indirect vehicle 119 119 — — 287 — Home equity 28,696 28,583 113 3,131 27,747 — Other consumer — — — — — — Total $ 117,644 $ 114,465 $ 3,179 $ 21,937 $ 108,854 $ 202 Impaired loans included accruing restructured loans of $27.3 million and $27.0 million that have been modified and are performing in accordance with those modified terms as of March 31, 2016 and December 31, 2015 , respectively. In addition, impaired loans included $24.0 million and $23.6 million of non-performing restructured loans as of March 31, 2016 and December 31, 2015 , respectively. Loans may be restructured in an effort to maximize collections from financially distressed borrowers. We use various restructuring techniques, including, but not limited to, deferring past due interest or principal, implementing an A/B note structure, redeeming past due taxes, reducing interest rates, extending maturities and modifying amortization schedules. Residential real estate loans are restructured in an effort to minimize losses while allowing borrowers to remain in their primary residences when possible. Programs that we offer to residential real estate borrowers include the Home Affordable Refinance Program (“HARP”), a restructuring program similar to the Home Affordable Modification Program (“HAMP”) for first mortgage borrowers, the Second Lien Modification Program (“2MP”) and similar programs for home equity borrowers in keeping with the restructuring techniques discussed above. Periodically, the Company will restructure a note into two separate notes (A/B structure), charging off the entire B portion of the note. The A note is structured with appropriate loan-to-value and cash flow coverage ratios that provide for a high likelihood of repayment. The A note is classified as a non-performing note until the borrower has displayed a historical payment performance for a reasonable time prior to and subsequent to the restructuring. A period of sustained repayment for at least six months generally is required to return the note to accrual status provided that management has determined that the performance is reasonably expected to continue. The A note will be classified as a restructured note (either performing or non-performing) through the calendar year of the restructuring that the historical payment performance has been established. As of March 31, 2016 and December 31, 2015 , there was one A/B structure with a recorded investment of $971 thousand and $1.0 million , respectively, which is included above as an accruing restructured loan. A loan classified as a troubled debt restructuring will no longer be included in the troubled debt restructuring disclosures in the years after the restructuring if the loan performs in accordance with the terms specified by the restructuring agreement and the interest rate specified in the restructuring agreement represents a market rate at the time of modification. The specified interest rate is considered a market rate when the interest rate is equal to or greater than the rate the Company is willing to accept at the time of restructuring for a new loan with comparable risk. If there are concerns that the borrower will not be able to meet the modified terms of the loan, the loan will continue to be included in the troubled debt restructuring disclosures. Impairment analyses on commercial-related loans classified as troubled debt restructurings are performed in conjunction with the normal allowance for loan and lease losses process. Consumer loans classified as troubled debt restructurings are aggregated in two pools that share common risk characteristics, home equity and residential real estate loans, with impairment measured on a quarterly basis based on the present value of expected future cash flows discounted at the loan's effective interest rate. The following table presents loans that were restructured during the three months ended March 31, 2016 (dollars in thousands): March 31, 2016 Number of Pre-Modification Recorded Post-Modification Recorded Charge-offs and Performing: Home equity 2 $ 410 $ 410 $ — Total 2 $ 410 $ 410 $ — Non-Performing: Residential real estate 1 $ 72 $ 72 $ — Indirect vehicle 10 80 80 22 Home equity 9 1,081 1,081 51 Total 20 $ 1,233 $ 1,233 $ 73 The following table presents loans that were restructured during the three months ended March 31, 2015 (dollars in thousands): March 31, 2015 Number of Pre-Modification Recorded Post-Modification Recorded Charge-offs and Performing: Home equity 6 $ 2,346 $ 2,346 $ — Total 6 $ 2,346 $ 2,346 $ — Non-Performing: Indirect vehicle 3 $ 9 $ 9 $ — Home equity 5 798 798 122 Total 8 $ 807 $ 807 $ 122 Of the troubled debt restructurings entered into during the past twelve months, none subsequently defaulted during the three months ended March 31, 2016 . Performing troubled debt restructurings are considered to have defaulted when they become 90 days or more past due post-restructuring or are placed on non-accrual status. The following table presents the troubled debt restructurings activity during the three months ended March 31, 2016 (in thousands): Performing Non-performing Beginning balance $ 26,991 $ 23,619 Additions 410 1,233 Charge-offs — (46 ) Principal payments, net (103 ) (226 ) Removals (379 ) (155 ) Transfer to other real estate owned — (108 ) Transfers in 411 61 Transfers out (61 ) (411 ) Ending balance $ 27,269 $ 23,967 Loans removed from troubled debt restructuring status are those that were restructured in a previous calendar year at a market rate of interest and have performed in compliance with the modified terms. The following table presents the type of modification for loans that have been restructured during the three months ended March 31, 2016 (in thousands): March 31, 2016 Extended Maturity, Amortization Extended and Reduction Maturity and/or Extended of Interest Rate Amortization Maturity Total Residential real estate — 72 — 72 Indirect vehicle — — 80 80 Home equity 1,392 99 — 1,491 Total $ 1,392 $ 171 $ 80 $ 1,643 The following table presents the activity in the allowance for credit losses, balance in allowance for credit losses and recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2016 and 2015 (in thousands): Commercial Commercial collateralized by assignment of lease payments Commercial real estate Residential real estate Construction real estate Indirect vehicle Home equity Other consumer Unfunded commitments Total March 31, 2016 Allowance for credit losses: Three Months Ended Beginning balance $ 39,316 $ 10,434 $ 45,475 $ 5,734 $ 15,113 $ 2,418 $ 7,374 $ 2,276 $ 3,368 $ 131,508 Charge-offs 713 574 352 368 — 931 238 412 — 3,588 Recoveries 380 50 594 24 27 463 318 393 — 2,249 Provision 7,979 595 1,068 206 (526 ) 782 (2,432 ) 20 (129 ) 7,563 Ending balance $ 46,962 $ 10,505 $ 46,785 $ 5,596 $ 14,614 $ 2,732 $ 5,022 $ 2,277 $ 3,239 $ 137,732 Ending allowance balance attributable to loans: Individually evaluated for impairment $ 12,174 $ 2,299 $ 6,522 $ 2,642 $ — $ — $ 3,044 $ — $ 1,205 $ 27,886 Collectively evaluated for impairment 34,282 8,206 39,273 2,954 14,520 2,732 1,978 2,277 2,034 108,256 Acquired and accounted for under ASC 310-30 (1) 506 — 990 — 94 — — — — 1,590 Total ending allowance balance $ 46,962 $ 10,505 $ 46,785 $ 5,596 $ 14,614 $ 2,732 $ 5,022 $ 2,277 $ 3,239 $ 137,732 Loans: Individually evaluated for impairment $ 31,869 $ 5,554 $ 29,100 $ 13,047 $ — $ 122 $ 29,260 $ — $ — $ 108,952 Collectively evaluated for impairment 3,477,735 1,768,550 2,802,714 664,744 310,278 432,793 177,819 77,318 — 9,711,951 Acquired and accounted for under ASC 310-30 (1) 25,924 — 29,325 55,397 13,859 — 13,353 2,587 — 140,445 Total ending loans balance $ 3,535,528 $ 1,774,104 $ 2,861,139 $ 733,188 $ 324,137 $ 432,915 $ 220,432 $ 79,905 $ — $ 9,961,348 March 31, 2015 Allowance for credit losses: Three Months Ended Beginning balance $ 29,571 $ 9,962 $ 41,826 $ 6,646 $ 8,918 $ 1,687 $ 9,456 $ 1,960 $ 4,031 $ 114,057 Charge-offs 569 — 2,034 579 3 874 444 424 — 4,927 Recoveries 242 749 1,375 72 2 475 101 69 — 3,085 Provision 3,583 (886 ) 791 621 556 427 (333 ) 469 (254 ) 4,974 Ending balance $ 32,827 $ 9,825 $ 41,958 $ 6,760 $ 9,473 $ 1,715 $ 8,780 $ 2,074 $ 3,777 $ 117,189 Ending allowance balance attributable to loans: Individually evaluated for impairment $ 2,051 $ 1,534 $ 1,911 $ 3,045 $ 162 $ 14 $ 2,348 $ — $ 1,333 $ 12,398 Collectively evaluated for impairment 30,320 8,291 39,435 3,715 9,305 1,701 6,432 2,074 2,444 103,717 Acquired and accounted for under ASC 310-30 (1) 456 — 612 — 6 — — — — 1,074 Total ending allowance balance $ 32,827 $ 9,825 $ 41,958 $ 6,760 $ 9,473 $ 1,715 $ 8,780 $ 2,074 $ 3,777 $ 117,189 Loans: Individually evaluated for impairment $ 15,389 $ 3,653 $ 36,152 $ 15,123 $ 337 $ 164 $ 27,979 $ — $ — $ 98,797 Collectively evaluated for impairment 3,243,263 1,624,378 2,489,488 490,435 183,768 272,941 213,099 77,645 — 8,595,017 Acquired and accounted for under ASC 310-30 (1) 84,564 — 75,008 19,265 28,801 — 75 19,801 — 227,514 Total ending loans balance $ 3,343,216 $ 1,628,031 $ 2,600,648 $ 524,823 $ 212,906 $ 273,105 $ 241,153 $ 97,446 $ — $ 8,921,328 (1) Loans acquired in business combinations and accounted for under ASC Subtopic 310-30 “Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality.” Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date without a carryover of the related allowance for loan and lease losses. These acquired loans are segregated into three types: pass rated loans with no discount attributable to credit quality, non-impaired loans with a discount attributable at least in part to credit quality and impaired loans with evidence of significant credit deterioration. • Pass rated loans (typically performing loans) are accounted for in accordance with ASC 310-20 "Nonrefundable Fees and Other Costs" as these loans do not have evidence of credit deterioration since origination. • Non-impaired loans (typically performing substandard loans) are accounted for in accordance with ASC 310-30 if they display at least some level of credit deterioration since origination. • Impaired loans (typically substandard loans on non-accrual status) are accounted for in accordance with ASC 310-30 as they display significant credit deterioration since origination. For pass rated loans (non-purchased credit-impaired loans), the difference between the estimated fair value of the loans and the principal outstanding is accreted over the remaining life of the loans. In accordance with ASC 310-30, for both purchased non-impaired loans and purchased credit-impaired loans, the loans are pooled by loan type and the difference between contractually required payments at acquisition and the cash flows expected to be collected is referred to as the non-accretable difference. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan pools when there is a reasonable expectation about the amount and timing of such cash flows. Substantially all of the loans acquired in transactions with the FDIC displayed at least some level of credit deterioration and as such are included as non-impaired and impaired loans as described immediately above. During the three months ended March 31, 2016 , there was a negative provision for credit losses of $753 thousand and net recoveries of $266 thousand in relation to purchased loans. There was $1.6 million and $2.1 million in allowance for loan and lease losses related to these purchased loans at March 31, 2016 and December 31, 2015 , respectively. The provision for credit losses and accompanying charge-offs are included in the table above. Changes in the accretable yield for loans acquired and accounted for under ASC 310-30 were as follows for the three months ended March 31, 2016 and 2015 (in thousands): Three Months Ended March 31, 2016 2015 Balance at beginning of period $ 12,596 $ 7,434 Accretion (2,210 ) (1,930 ) Other (1) 3,584 863 Balance at end of period $ 13,970 $ 6,367 (1) Primarily includes discount transfers from non-accretable discount to accretable discount due to better than expected performance of loan pools acquired and accounted for under ASC 310-30. In our FDIC-assisted transactions, the fair value of purchased credit-impaired loans, on the acquisition date, was determined based on assigned risk ratings, expected cash flows and the fair value of loan collateral. The fair value of loans that were non-impaired was determined based on estimates of losses on defaults and other market factors. Due to the loss-share agreements with the FDIC, we recorded a receivable (FDIC indemnification asset) from the FDIC equal to the present value of the corresponding reimbursement percentages on the estimated losses embedded in the loan portfolio. When cash flow estimates are adjusted downward for a particular loan pool, the FDIC indemnification asset is increased. An allowance for loan and lease losses is established for the impairment of the loans. A provision for credit losses is recognized for the difference between the increase in the FDIC indemnification asset and the decrease in cash flows. When cash flow estimates are adjusted upward for a particular loan pool, the FDIC indemnification asset is decreased. The difference between the decrease in the FDIC indemnification asset and the increase in cash flows is accreted over the estimated life of the loan pool. When cash flow estimates are adjusted downward for covered foreclosed real estate, the FDIC indemnification asset is increased. A charge is recognized for the difference between the increase in the FDIC indemnification asset and the decrease in cash flows. When cash flow estimates are adjusted upward for covered foreclosed real estate, the FDIC indemnification asset is decreased. Any write-down after the transfer to covered foreclosed real estate is reversed. In both scenarios, the clawback liability (the amount the FDIC requires the Company to pay back if certain thresholds are met) will increase or decrease accordingly. For other loans acquired through business combinations, the fair value of purchased credit-impaired loans, on the acquisition date, was determined based on assigned risk ratings, expected cash flows and the fair value of loan collateral. The fair value of loans that were non-impaired was determined based on estimates of losses on defaults and other market factors. The carrying amount of loans acquired through a business combination by loan pool type are as follows (in thousands): March 31, 2016 Purchased Purchased Non-Credit-Impaired Total Covered loans: Consumer related $ 18,826 $ — $ 18,826 Non-covered loans: Commercial loans 25,924 529,600 555,524 Commercial loans collateralized by assignment of lease payments — 84,903 84,903 Commercial real estate 29,325 597,186 626,511 Construction real estate 13,859 9,174 23,033 Consumer related 52,511 170,490 223,001 Total non-covered loans 121,619 1,391,353 1,512,972 Total acquired $ 140,445 $ 1,391,353 $ 1,531,798 Effective April 1, 2014, the losses on commercial related loans (commercial, commercial real estate and construction real estate) acquired in connection with the Heritage Community Bank ("Heritage") FDIC-assisted transaction ceased being covered under the loss-share agreement for that transaction. The carrying amount of those loans was $2.2 million as of March 31, 2016 . Any recoveries, net of expenses, received on commercial related loans on which losses were incurred prior to April 1, 2014 will continue to be covered (and any such net recoveries must be shared with the FDIC in accordance with the loss-share agreement) through March 31, 2017. The losses on consumer related loans acquired in connection with the Heritage FDIC-assisted transaction will continue to be covered under the loss-share agreement through March 31, 2019. The losses on commercial related loans acquired in connection with the Benchmark Bank ("Benchmark") FDIC-assisted transaction ceased to be covered under the loss-share agreement for that transaction effective January 1, 2015. The carrying amount of those loans was $1.8 million as of March 31, 2016 . Any recoveries, net of expenses, received on commercial related loans on which losses were incurred prior to January 1, 2015 will continue to be covered (and any such net recoveries must be shared with the FDIC in accordance with the loss-share agreements) through December 31, 2017. The losses on consumer relat |
