Loans | Loans Loans consist of the following at (in thousands): March 31, December 31, Commercial loans $ 4,364,122 $ 4,346,506 Commercial loans collateralized by assignment of lease payments 2,008,601 2,002,976 Commercial real estate 3,734,171 3,788,016 Residential real estate 1,227,218 1,060,828 Construction real estate 554,942 518,562 Indirect vehicle 573,792 541,680 Home equity 246,805 266,377 Other consumer loans 80,016 80,781 Total loans, excluding purchased credit-impaired loans 12,789,667 12,605,726 Purchased credit-impaired loans 168,814 163,077 Total loans $ 12,958,481 $ 12,768,803 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, asset-based loans, residential real estate loans and indirect vehicle loans, credit risk tends to be geographically concentrated in that a majority of the loan customers are located in Illinois. 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 an annual basis. Commercial Loans. Commercial credit is extended primarily to emerging middle market and 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. In addition, leases that transfer substantially all of the benefits and risk related to the equipment ownership are classified as direct finance leases and are included in lease loans. 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, these loans 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, marine, recreational and powersports 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 accounted for under ASC Topic 310-30, which include purchased credit-impaired loans acquired through business combinations, 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, 2017 and December 31, 2016 , the Company had $4.3 billion and $5.5 billion , respectively, of loans pledged as collateral for long-term Federal Home Loan Bank advances and third party letters of credit, while only $3.4 billion and $3.2 billion were required to be pledged at March 31, 2017 and December 31, 2016 , respectively. The following table presents the contractual aging of the recorded investment in past due loans by class of loans as of March 31, 2017 and December 31, 2016 (in thousands): Current 30-59 Days 60-89 Days Loans Past Due Total Total March 31, 2017 Commercial $ 4,356,793 $ 2,197 $ 70 $ 5,062 $ 7,329 $ 4,364,122 Commercial collateralized by assignment of lease payments 1,992,906 12,664 1,267 1,764 15,695 2,008,601 Commercial real estate: Healthcare 594,225 — — — — 594,225 Industrial 834,842 907 — 2,264 3,171 838,013 Multifamily 515,137 808 181 315 1,304 516,441 Retail 498,262 90 180 — 270 498,532 Office 402,893 2,173 1,280 348 3,801 406,694 Other 877,080 2,505 127 554 3,186 880,266 Residential real estate 1,210,411 8,586 1,408 6,813 16,807 1,227,218 Construction real estate 554,645 297 — — 297 554,942 Indirect vehicle 570,575 2,161 708 348 3,217 573,792 Home equity 241,346 2,458 47 2,954 5,459 246,805 Other consumer 79,726 176 88 26 290 80,016 Total loans, excluding purchased credit-impaired loans 12,728,841 35,022 5,356 20,448 60,826 12,789,667 Purchased credit-impaired loans 87,050 13,383 4,984 63,397 81,764 168,814 Total loans $ 12,815,891 $ 48,405 $ 10,340 $ 83,845 $ 142,590 $ 12,958,481 Non-performing loan aging $ 21,864 $ 5,765 $ 1,461 $ 20,111 $ 27,337 $ 49,201 December 31, 2016 Commercial $ 4,337,348 $ 2,515 $ 156 $ 6,487 $ 9,158 $ 4,346,506 Commercial collateralized by assignment of lease payments 1,989,934 9,229 1,869 1,944 13,042 2,002,976 Commercial real estate: Healthcare 582,450 — — — — 582,450 Industrial 825,715 3,045 3,293 1,340 7,678 833,393 Multifamily 547,107 458 53 379 890 547,997 Retail 506,789 568 — — 568 507,357 Office 405,992 350 475 6,381 7,206 413,198 Other 899,950 2,385 1,155 131 3,671 903,621 Residential real estate 1,041,189 8,248 3,409 7,982 19,639 1,060,828 Construction real estate 518,171 — 391 — 391 518,562 Indirect vehicle 537,221 2,836 1,062 561 4,459 541,680 Home equity 261,765 1,219 815 2,578 4,612 266,377 Other consumer 80,443 152 120 66 338 80,781 Total loans, excluding purchased credit-impaired loans 12,534,074 31,005 12,798 27,849 71,652 12,605,726 Purchased credit-impaired loans 86,169 6,546 6,600 63,762 76,908 163,077 Total loans $ 12,620,243 $ 37,551 $ 19,398 $ 91,611 $ 148,560 $ 12,768,803 Non-performing loan aging $ 28,364 $ 2,308 $ 978 $ 27,702 $ 30,988 $ 59,352 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, 2017 and December 31, 2016 (in thousands): March 31, 2017 December 31, 2016 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 $ 6,575 $ — $ 11,222 $ 1,406 Commercial collateralized by assignment of lease payments 1,129 1,035 1,364 1,197 Commercial real estate: Healthcare — — — — Industrial 2,185 562 276 1,064 Multifamily 3,160 19 2,662 — Office 2,095 — 896 6,381 Retail 369 — 384 — Other 80 249 83 21 Residential real estate 17,206 270 16,538 235 Construction real estate — — — — Indirect vehicle 2,113 — 2,355 10 Home equity 12,124 — 13,187 — Other consumer 6 24 7 64 Total $ 47,042 $ 2,159 $ 48,974 $ 10,378 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. Loans rated but not adversely classified are deemed to be Pass. Risk ratings are updated any time the situation warrants and at least annually. Loans not rated are included in groups of homogeneous loans with similar risk and loss characteristics and are not included in the table below. 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, 2017 and December 31, 2016 (in thousands): Pass Special Substandard Doubtful Total March 31, 2017 Commercial $ 4,128,984 $ 138,056 $ 97,082 $ — $ 4,364,122 Commercial collateralized by assignment of lease payments 1,994,532 6,191 7,878 — 2,008,601 Commercial real estate: Healthcare 563,680 21,631 8,914 — 594,225 Industrial 805,925 26,657 5,431 — 838,013 Multifamily 511,625 449 4,367 — 516,441 Retail 490,494 5,455 2,583 — 498,532 Office 397,054 4,827 4,813 — 406,694 Other 801,650 40,282 38,334 — 880,266 Construction real estate 554,942 — — — 554,942 Total $ 10,248,886 $ 243,548 $ 169,402 $ — $ 10,661,836 December 31, 2016 Commercial $ 4,127,397 $ 113,838 $ 105,271 $ — $ 4,346,506 Commercial collateralized by assignment of lease payments 1,981,689 16,010 5,277 — 2,002,976 Commercial real estate: Healthcare 545,663 32,251 4,536 — 582,450 Industrial 814,668 17,962 763 — 833,393 Multifamily 544,071 312 3,614 — 547,997 Retail 498,458 8,350 549 — 507,357 Office 404,811 5,299 3,088 — 413,198 Other 820,229 44,629 38,763 — 903,621 Construction real estate 518,562 — — — 518,562 Total $ 10,255,548 $ 238,651 $ 161,861 $ — $ 10,656,060 Approximately $15.6 million and $17.3 million of the substandard loans were non-performing as of March 31, 2017 and December 31, 2016 , respectively. For residential real estate, home equity, indirect vehicle and other consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in those loan classes based on payment activity, excluding purchased credit-impaired loans, as of March 31, 2017 and December 31, 2016 (in thousands): Performing Non-performing Total March 31, 2017 Residential real estate $ 1,209,742 $ 17,476 $ 1,227,218 Indirect vehicle 571,679 2,113 573,792 Home equity 234,681 12,124 246,805 Other consumer 79,986 30 80,016 Total $ 2,096,088 $ 31,743 $ 2,127,831 December 31, 2016 Residential real estate $ 1,044,055 $ 16,773 $ 1,060,828 Indirect vehicle 539,315 2,365 541,680 Home equity 253,190 13,187 266,377 Other consumer 80,710 71 80,781 Total $ 1,917,270 $ 32,396 $ 1,949,666 The recorded investment in residential mortgage loans secured by residential real estate properties (including purchased credit-impaired loans) for which foreclosure proceedings are in process totaled $26.6 million and $29.1 million at March 31, 2017 and December 31, 2016 , respectively. The following tables present loans individually evaluated for impairment by class of loans, excluding purchased credit-impaired loans, as of March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 Three Months Ended Unpaid Recorded Partial Allowance for Average Interest With no related allowance recorded: Commercial $ 6,785 $ 6,785 $ — $ — $ 7,561 $ 15 Commercial collateralized by assignment of lease payments 1,111 729 382 — 1,085 — Commercial real estate: Healthcare — — — — — — Industrial 1,909 1,909 — — 1,906 — Multifamily 2,438 2,438 — — 2,842 29 Retail 2,646 906 1,740 — 918 — Office 1,335 1,335 — — 1,325 — Other — — — — — — Residential real estate — — — — — — Construction real estate — — — — — — Indirect vehicle 207 108 99 — 258 5 Home equity 592 592 — — 592 — Other consumer — — — — — — With an allowance recorded: Commercial 8,429 8,429 — 986 8,612 147 Commercial collateralized by assignment of lease payments — — — — — — Commercial real estate: Healthcare — — — — — — Industrial — — — — — — Multifamily — — — — — — Retail 3,572 3,572 — 286 3,581 — Office — — — — — — Other — — — — — — Residential real estate 17,725 15,803 1,922 2,192 15,801 1 Construction real estate — — — — — — Indirect vehicle — — — — — — Home equity 30,192 27,845 2,347 2,634 27,847 11 Other consumer — — — — — — Total $ 76,941 $ 70,451 $ 6,490 $ 6,098 $ 72,328 $ 208 December 31, 2016 Year Ended Unpaid Recorded Partial Allowance for Average Interest With no related allowance recorded: Commercial $ 9,056 $ 9,056 $ — $ — $ 5,944 $ — Commercial collateralized by assignment of lease payments 1,129 747 382 — 1,045 34 Commercial real estate: Healthcare — — — — — — Industrial — — — — 402 — Multifamily 1,922 1,922 — — 2,348 — Retail 2,670 929 1,741 — 2,165 — Office — — — — 256 — Other — — — — 60 — Residential real estate — — — — — — Construction real estate — — — — — — Indirect vehicle 223 122 101 — 252 — Home equity — — — — 143 — Other consumer — — — — — — With an allowance recorded: Commercial 14,403 14,403 — 2,889 22,737 — Commercial collateralized by assignment of lease payments — — — — 2,397 18 Commercial real estate: Healthcare — — — — — — Industrial — — — — — — Multifamily — — — — — — Retail 3,592 3,592 — 354 6,827 — Office — — — — 745 — Other — — — — 235 — Residential real estate 16,257 14,353 1,904 2,163 13,412 — Construction real estate — — — — — — Indirect vehicle — — — — — — Home equity 31,104 28,790 2,314 2,930 28,677 — Other consumer — — — — — — Total $ 80,356 $ 73,914 $ 6,442 $ 8,336 $ 87,645 $ 52 Impaired loans included accruing restructured loans of $31.1 million and $32.7 million that have been modified and are performing in accordance with those modified terms as of March 31, 2017 and December 31, 2016 , respectively. In addition, impaired loans included $20.7 million and $27.1 million of non-performing restructured loans as of March 31, 2017 and December 31, 2016 , 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, 2017 and December 31, 2016 , there was one A/B structure with a recorded investment of $906 thousand and $929 thousand , 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, 2017 (dollars in thousands): March 31, 2017 Number of Pre-Modification Recorded Post-Modification Recorded Charge-offs and Performing: Residential real estate 3 $ 409 $ 409 $ 49 Home equity 1 33 33 3 Total 4 $ 442 $ 442 $ 52 Non-Performing: Residential real estate 9 $ 1,257 $ 1,257 $ 154 Indirect vehicle 3 20 20 4 Total 12 $ 1,277 $ 1,277 $ 158 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 Of the troubled debt restructurings entered into during the past twelve months, none subsequently defaulted during the three months ended March 31, 2017 . 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, 2017 (in thousands): Performing Non-performing Beginning balance $ 32,687 $ 27,068 Additions 442 1,277 Charge-offs — (238 ) Principal payments, net (386 ) (4,734 ) Removals (2,334 ) (1,987 ) Transfers in 713 21 Transfers out (21 ) (713 ) Ending balance $ 31,101 $ 20,694 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, 2017 (in thousands): March 31, 2017 Extended Maturity, Delay in Amortization Extended Payments or and Reduction Maturity and/or Reduction of of Interest Rate Amortization Interest Rate Total Residential real estate $ 455 $ 822 $ 389 $ 1,666 Indirect vehicle — — 20 20 Home equity — — 33 33 Total $ 455 $ 822 $ 442 $ 1,719 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, 2017 and 2016 (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, 2017 Allowance for credit losses: Three Months Ended Beginning balance $ 44,661 $ 12,238 $ 51,807 $ 5,971 $ 14,758 $ 3,421 $ 5,469 $ 1,041 $ 2,476 $ 141,842 Charge-offs 168 — 1,085 90 — 1,411 173 446 — 3,373 Recoveries 1,510 463 518 528 112 652 283 229 — 4,295 Provision (5,313 ) (558 ) 6,980 1,722 (11 ) 962 (267 ) 367 (148 ) 3,734 Ending balance $ 40,690 $ 12,143 $ 58,220 $ 8,131 $ 14,859 $ 3,624 $ 5,312 $ 1,191 $ 2,328 $ 146,498 Ending allowance balance attributable to loans: Individually evaluated for impairment $ 986 $ — $ 286 $ 2,192 $ — $ — $ 2,634 $ — $ 541 $ 6,639 Collectively evaluated for impairment 39,545 12,143 57,799 5,939 14,824 3,624 2,678 1,191 1,787 139,530 Acquired and accounted for under ASC 310-30 (1) 159 — 135 — 35 — — — — 329 Total ending allowance balance $ 40,690 $ 12,143 $ 58,220 $ 8,131 $ 14,859 $ 3,624 $ 5,312 $ 1,191 $ 2,328 $ 146,498 Loans: Individually evaluated for impairment $ 15,214 $ 729 $ 10,160 $ 15,803 $ — $ 108 $ 28,437 $ — $ — $ 70,451 Collectively evaluated for impairment 4,348,908 2,007,872 3,724,011 1,211,415 554,942 573,684 218,368 80,016 — 12,719,216 Acquired and accounted for under ASC 310-30 (1) 24,768 — 46,683 77,332 5,624 — 12,382 2,025 — 168,814 Total ending loans balance $ 4,388,890 $ 2,008,601 $ 3,780,854 $ 1,304,550 $ 560,566 $ 573,792 $ 259,187 $ 82,041 $ — $ 12,958,481 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 (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 Topic 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 Topic 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 Topic 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, 2017 , there was a negative provision for credit losses of $182 thousand and net charge-offs of $355 thousand in relation to purchased loans. There was $329 thousand and $866 thousand in allowance for loan and lease losses related to these purchased loans at March 31, 2017 and December 31, 2016 , 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, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Balance at beginning of period $ 16,050 $ 12,596 Purchases 43 — Accretion (2,188 ) (2,210 ) Other (1) 1,006 3,584 Balance at end of period $ 14,911 $ 13,970 (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. 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, 2017 Purchased Purchased Non-Credit-Impaired Total Covered loans: Consumer related $ 16,840 $ — $ 16,840 Non-covered loans: Commercial loans 24,768 664,658 689,426 Commercial loans collateralized by assignment of lease payments — 68,405 68,405 Commercial real estate 46,683 1,174,593 1,221,276 Construction real estate 5,624 15,782 21,406 Consumer related 6,141 340,642 346,783 Total non-covered loans 83,216 2,264,080 2,347,296 Total acquired $ 100,056 $ 2,264,080 $ 2,364,136 Consumer related purchased credit-impaired loans includes re-purchase transactions with GNMA of $68.8 million as of March 31, 2017 in addition to loans acquired through a business combination noted in the table above. 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 $1.6 million as of March 31, 2017 . Any recoveries, net of expenses, received on commercial related loans on which losses were incurred prior to April 1, 2014 were 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 $1.6 million as of March 31, 2017 . 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 related loans acquired in connection with the Benchmark FDIC-assisted transaction will continue to be covered under the loss-share agreements through December 31, 2019. Effective July 1, 2015, the losses on commercial related loans acquired in connection with Broadway Bank ("Broadway") and New Century Bank ("New Century") FDIC-assisted transactions ceased to be covered under the loss-share agreements for those transactions. The carrying amount of those loans was $5.6 million as of March 31, 2017 . Any recoveries, net of expenses, received on commercial related loans on which losses were incurred prior to July 1, 2015 will continue to be covered (and any such net recoveries must be shared with the F |