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Loans | 9 Months Ended
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Sep. 30, 2015
Loans Receivable, Net [Abstract] |
Loans | Loans The Company’s loan portfolio includes originated and purchased loans. Originated loans and purchased 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 are referred to collectively as loans, excluding purchased credit impaired loans. Purchased loans for which there was, at acquisition date, evidence of credit deterioration since their origination and it was probable that we would be unable to collect all contractually required payments are referred to as purchased credit impaired loans, or “PCI loans.” The following is an analysis of the loan portfolio by major types of loans (net of unearned income):
|  | September 30, 2015 |  | December 31, 2014
|  | Loans, excluding PCI loans |  | PCI Loans |  | Total |  | Loans, excluding PCI loans |  | PCI Loans |  | Total
|  | (in thousands)
Commercial business |  | $ | 2,354,731 |  |  | $ | 39,919 |  |  | $ | 2,394,650 |  |  | $ | 2,119,565 |  |  | $ | 44,505 |  |  | $ | 2,164,070 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential |  | 177,108 |  |  | 25,122 |  |  | 202,230 |  |  | 175,571 |  |  | 26,993 |  |  | 202,564 |
Commercial and multifamily residential |  | 2,449,847 |  |  | 101,382 |  |  | 2,551,229 |  |  | 2,363,541 |  |  | 128,769 |  |  | 2,492,310 |
Total real estate |  | 2,626,955 |  |  | 126,504 |  |  | 2,753,459 |  |  | 2,539,112 |  |  | 155,762 |  |  | 2,694,874 |
Real estate construction: |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential |  | 136,783 |  |  | 2,401 |  |  | 139,184 |  |  | 116,866 |  |  | 4,021 |  |  | 120,887 |
Commercial and multifamily residential |  | 134,097 |  |  | 2,007 |  |  | 136,104 |  |  | 134,443 |  |  | 2,321 |  |  | 136,764 |
Total real estate construction |  | 270,880 |  |  | 4,408 |  |  | 275,288 |  |  | 251,309 |  |  | 6,342 |  |  | 257,651 |
Consumer |  | 348,315 |  |  | 20,235 |  |  | 368,550 |  |  | 364,182 |  |  | 23,975 |  |  | 388,157 |
Less: Net unearned income |  | (45,436 | ) |  | — |  |  | (45,436 | ) |  | (59,374 | ) |  | — |  |  | (59,374 | )
Total loans, net of unearned income |  | 5,555,445 |  |  | 191,066 |  |  | 5,746,511 |  |  | 5,214,794 |  |  | 230,584 |  |  | 5,445,378 |
Less: Allowance for loan and lease losses |  | (55,059 | ) |  | (13,990 | ) |  | (69,049 | ) |  | (53,233 | ) |  | (16,336 | ) |  | (69,569 | )
Total loans, net |  | $ | 5,500,386 |  |  | $ | 177,076 |  |  | $ | 5,677,462 |  |  | $ | 5,161,561 |  |  | $ | 214,248 |  |  | $ | 5,375,809 |
Loans held for sale |  | $ | 6,637 |  |  | $ | — |  |  | $ | 6,637 |  |  | $ | 1,116 |  |  | $ | — |  |  | $ | 1,116 |
At September 30, 2015 and December 31, 2014, the Company had no material foreign activities. Substantially all of the Company’s loans and unfunded commitments are geographically concentrated in its service areas within the states of Washington, Oregon and Idaho. The Company has made loans to executive officers and directors of the Company and related interests. These loans are made on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and do not involve more than the normal risk of collectability. The aggregate dollar amount of these loans was $10.1 million at September 30, 2015 and $13.2 million at December 31, 2014. During the first nine months of 2015, there were $6 thousand in advances and $3.1 million in repayments. At September 30, 2015 and December 31, 2014, $2.17 billion and $1.08 billion of commercial and residential real estate loans were pledged as collateral on Federal Home Loan Bank of Des Moines (“FHLB”) borrowings and additional borrowing capacity. The Company has also pledged $52.1 million and $46.0 million of commercial loans to the Federal Reserve Bank for additional borrowing capacity at September 30, 2015 and December 31, 2014, respectively. The following is an analysis of nonaccrual loans as of September 30, 2015 and December 31, 2014:
|  | September 30, 2015 |  | December 31, 2014
|  | Recorded Investment Nonaccrual Loans |  | Unpaid Principal Balance Nonaccrual Loans |  | Recorded Investment Nonaccrual Loans |  | Unpaid Principal Balance Nonaccrual Loans
|  | (in thousands)
Commercial business: |  |  |  |  |  |  |  |
Secured |  | $ | 9,512 |  |  | $ | 15,560 |  |  | $ | 16,552 |  |  | $ | 21,453 |
Unsecured |  | 638 |  |  | 732 |  |  | 247 |  |  | 269 |
Real estate: |  |  |  |  |  |  |  |
One-to-four family residential |  | 2,012 |  |  | 3,430 |  |  | 2,822 |  |  | 5,680 |
Commercial & multifamily residential: |  |  |  |  |  |  |  |
Commercial land |  | 700 |  |  | 786 |  |  | 821 |  |  | 1,113 |
Income property |  | 1,923 |  |  | 1,997 |  |  | 3,200 |  |  | 5,521 |
Owner occupied |  | 1,694 |  |  | 1,840 |  |  | 3,826 |  |  | 5,837 |
Real estate construction: |  |  |  |  |  |  |  |
One-to-four family residential: |  |  |  |  |  |  |  |
Land and acquisition |  | 575 |  |  | 591 |  |  | 95 |  |  | 112 |
Residential construction |  | 897 |  |  | 1,040 |  |  | 370 |  |  | 370 |
Commercial & multifamily residential: |  |  |  |  |  |  |  |
Owner occupied |  | 470 |  |  | 489 |  |  | 480 |  |  | 489 |
Consumer |  | 659 |  |  | 902 |  |  | 2,939 |  |  | 3,930 |
Total |  | $ | 19,080 |  |  | $ | 27,367 |  |  | $ | 31,352 |  |  | $ | 44,774 |
Loans, excluding purchased credit impaired loans The following is an aging of the recorded investment of the loan portfolio as of September 30, 2015 and December 31, 2014:
|  | Current Loans |  | 30 - 59 Days Past Due |  | 60 - 89 Days Past Due |  | Greater than 90 Days Past Due |  | Total Past Due |  | Nonaccrual Loans |  | Total Loans
September 30, 2015 |  | (in thousands)
Commercial business: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | $ | 2,251,545 |  |  | $ | 3,734 |  |  | $ | 1,177 |  |  | $ | — |  |  | $ | 4,911 |  |  | $ | 9,512 |  |  | $ | 2,265,968 |
Unsecured |  | 82,826 |  |  | 247 |  |  | 28 |  |  | — |  |  | 275 |  |  | 638 |  |  | 83,739 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential |  | 170,390 |  |  | 1,053 |  |  | 662 |  |  | — |  |  | 1,715 |  |  | 2,012 |  |  | 174,117 |
Commercial & multifamily residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial land |  | 206,597 |  |  | 735 |  |  | 380 |  |  | — |  |  | 1,115 |  |  | 700 |  |  | 208,412 |
Income property |  | 1,318,021 |  |  | 1,492 |  |  | 1,028 |  |  | — |  |  | 2,520 |  |  | 1,923 |  |  | 1,322,464 |
Owner occupied |  | 894,172 |  |  | 204 |  |  | 244 |  |  | — |  |  | 448 |  |  | 1,694 |  |  | 896,314 |
Real estate construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Land and acquisition |  | 13,960 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 575 |  |  | 14,535 |
Residential construction |  | 120,410 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 897 |  |  | 121,307 |
Commercial & multifamily residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income property |  | 63,182 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 63,182 |
Owner occupied |  | 67,793 |  |  | 980 |  |  | — |  |  | — |  |  | 980 |  |  | 470 |  |  | 69,243 |
Consumer |  | 333,275 |  |  | 2,167 |  |  | 63 |  |  | — |  |  | 2,230 |  |  | 659 |  |  | 336,164 |
Total |  | $ | 5,522,171 |  |  | $ | 10,612 |  |  | $ | 3,582 |  |  | $ | — |  |  | $ | 14,194 |  |  | $ | 19,080 |  |  | $ | 5,555,445 |
|  | Current Loans |  | 30 - 59 Days Past Due |  | 60 - 89 Days Past Due |  | Greater than 90 Days Past Due |  | Total Past Due |  | Nonaccrual Loans |  | Total Loans
December 31, 2014 |  | (in thousands)
Commercial business: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | $ | 2,004,418 |  |  | $ | 5,137 |  |  | $ | 6,149 |  |  | $ | 1,372 |  |  | $ | 12,658 |  |  | $ | 16,552 |  |  | $ | 2,033,628 |
Unsecured |  | 79,661 |  |  | 185 |  |  | — |  |  | — |  |  | 185 |  |  | 247 |  |  | 80,093 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential |  | 167,197 |  |  | 1,700 |  |  | 45 |  |  | — |  |  | 1,745 |  |  | 2,822 |  |  | 171,764 |
Commercial & multifamily residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial land |  | 187,470 |  |  | 1,454 |  |  | 34 |  |  | — |  |  | 1,488 |  |  | 821 |  |  | 189,779 |
Income property |  | 1,294,982 |  |  | 3,031 |  |  | 786 |  |  | — |  |  | 3,817 |  |  | 3,200 |  |  | 1,301,999 |
Owner occupied |  | 839,689 |  |  | 937 |  |  | 289 |  |  | — |  |  | 1,226 |  |  | 3,826 |  |  | 844,741 |
Real estate construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Land and acquisition |  | 15,462 |  |  | 953 |  |  | — |  |  | — |  |  | 953 |  |  | 95 |  |  | 16,510 |
Residential construction |  | 97,821 |  |  | 326 |  |  | — |  |  | 4 |  |  | 330 |  |  | 370 |  |  | 98,521 |
Commercial & multifamily residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income property |  | 73,783 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 73,783 |
Owner occupied |  | 57,470 |  |  | — |  |  | 994 |  |  | — |  |  | 994 |  |  | 480 |  |  | 58,944 |
Consumer |  | 341,032 |  |  | 933 |  |  | 118 |  |  | 10 |  |  | 1,061 |  |  | 2,939 |  |  | 345,032 |
Total |  | $ | 5,158,985 |  |  | $ | 14,656 |  |  | $ | 8,415 |  |  | $ | 1,386 |  |  | $ | 24,457 |  |  | $ | 31,352 |  |  | $ | 5,214,794 |
The following is an analysis of impaired loans as of September 30, 2015 and December 31, 2014:
|  | Recorded Investment of Loans Collectively Measured for Contingency Provision |  | Recorded Investment of Loans Individually Measured for Specific Impairment |  | Impaired Loans With Recorded Allowance |  | Impaired Loans Without Recorded Allowance
|  | Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Recorded Investment |  | Unpaid Principal Balance
September 30, 2015 |  | (in thousands)
Commercial business: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | $ | 2,260,544 |  |  | $ | 5,424 |  |  | $ | 1,402 |  |  | $ | 1,412 |  |  | $ | 1,020 |  |  | $ | 4,022 |  |  | $ | 5,312 |
Unsecured |  | 83,739 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential |  | 171,669 |  |  | 2,448 |  |  | 317 |  |  | 341 |  |  | 84 |  |  | 2,131 |  |  | 2,903 |
Commercial & multifamily residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial land |  | 208,412 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Income property |  | 1,320,287 |  |  | 2,177 |  |  | — |  |  | — |  |  | — |  |  | 2,177 |  |  | 2,336 |
Owner occupied |  | 889,085 |  |  | 7,229 |  |  | 571 |  |  | 571 |  |  | 17 |  |  | 6,658 |  |  | 9,137 |
Real estate construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Land and acquisition |  | 13,854 |  |  | 681 |  |  | 106 |  |  | 106 |  |  | 64 |  |  | 575 |  |  | 591 |
Residential construction |  | 120,414 |  |  | 893 |  |  | — |  |  | — |  |  | — |  |  | 893 |  |  | 893 |
Commercial & multifamily residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income property |  | 63,182 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Owner occupied |  | 69,243 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer |  | 336,136 |  |  | 28 |  |  | 14 |  |  | 15 |  |  | 14 |  |  | 14 |  |  | 85 |
Total |  | $ | 5,536,565 |  |  | $ | 18,880 |  |  | $ | 2,410 |  |  | $ | 2,445 |  |  | $ | 1,199 |  |  | $ | 16,470 |  |  | $ | 21,257 |
|  | Recorded Investment of Loans Collectively Measured for Contingency Provision |  | Recorded Investment of Loans Individually Measured for Specific Impairment |  | Impaired Loans With Recorded Allowance |  | Impaired Loans Without Recorded Allowance
|  |  |  | Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Recorded Investment |  | Unpaid Principal Balance
December 31, 2014 |  | (in thousands)
Commercial business: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | $ | 2,023,104 |  |  | $ | 10,524 |  |  | $ | 99 |  |  | $ | 99 |  |  | $ | 25 |  |  | $ | 10,425 |  |  | $ | 12,410 |
Unsecured |  | 80,091 |  |  | 2 |  |  | 2 |  |  | 2 |  |  | 2 |  |  | — |  |  | — |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential |  | 169,619 |  |  | 2,145 |  |  | 424 |  |  | 465 |  |  | 120 |  |  | 1,721 |  |  | 2,370 |
Commercial & multifamily residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial land |  | 189,779 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Income property |  | 1,295,650 |  |  | 6,349 |  |  | — |  |  | — |  |  | — |  |  | 6,349 |  |  | 10,720 |
Owner occupied |  | 835,895 |  |  | 8,846 |  |  | 582 |  |  | 582 |  |  | 27 |  |  | 8,264 |  |  | 12,732 |
Real estate construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Land and acquisition |  | 16,401 |  |  | 109 |  |  | 109 |  |  | 109 |  |  | 67 |  |  | — |  |  | — |
Residential construction |  | 98,521 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial & multifamily residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income property |  | 73,783 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Owner occupied |  | 58,944 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer |  | 344,908 |  |  | 124 |  |  | — |  |  | — |  |  | — |  |  | 124 |  |  | 201 |
Total |  | $ | 5,186,695 |  |  | $ | 28,099 |  |  | $ | 1,216 |  |  | $ | 1,257 |  |  | $ | 241 |  |  | $ | 26,883 |  |  | $ | 38,433 |
The following table provides additional information on impaired loans for the three and nine month periods indicated:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2015 |  | 2014 |  | 2015 |  | 2014
|  | Average Recorded Investment Impaired Loans |  | Interest Recognized on Impaired Loans |  | Average Recorded Investment Impaired Loans |  | Interest Recognized on Impaired Loans |  | Average Recorded Investment Impaired Loans |  | Interest Recognized on Impaired Loans |  | Average Recorded Investment Impaired Loans |  | Interest Recognized on Impaired Loans
|  | (in thousands)
Commercial business: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | $ | 6,507 |  |  | $ | 3 |  |  | $ | 6,869 |  |  | $ | 17 |  |  | $ | 8,602 |  |  | $ | 10 |  |  | $ | 6,550 |  |  | $ | 50 |
Unsecured |  | — |  |  | — |  |  | 15 |  |  | — |  |  | 1 |  |  | — |  |  | 23 |  |  | 1 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential |  | 3,315 |  |  | 11 |  |  | 2,307 |  |  | 14 |  |  | 3,238 |  |  | 35 |  |  | 2,082 |  |  | 37 |
Commercial & multifamily residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial land |  | — |  |  | — |  |  | 94 |  |  | — |  |  | 118 |  |  | — |  |  | 102 |  |  | — |
Income property |  | 2,061 |  |  | 10 |  |  | 7,345 |  |  | 69 |  |  | 3,114 |  |  | 27 |  |  | 6,891 |  |  | 205 |
Owner occupied |  | 6,665 |  |  | 65 |  |  | 9,117 |  |  | 239 |  |  | 7,302 |  |  | 533 |  |  | 9,629 |  |  | 715 |
Real estate construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Land and acquisition |  | 825 |  |  | 1 |  |  | 111 |  |  | 1 |  |  | 685 |  |  | 4 |  |  | 840 |  |  | 4 |
Residential construction |  | 893 |  |  | — |  |  | — |  |  | — |  |  | 670 |  |  | — |  |  | — |  |  | — |
Consumer |  | 27 |  |  | 1 |  |  | 142 |  |  | 2 |  |  | 216 |  |  | 3 |  |  | 152 |  |  | 7 |
Total |  | $ | 20,293 |  |  | $ | 91 |  |  | $ | 26,000 |  |  | $ | 342 |  |  | $ | 23,946 |  |  | $ | 612 |  |  | $ | 26,269 |  |  | $ | 1,019 |
The following is an analysis of loans classified as troubled debt restructurings (“TDR”) during the three and nine months ended September 30, 2015 and 2014:
|  | Three months ended September 30, 2015 |  | Three months ended September 30, 2014
|  | Number of TDR Modifications |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Number of TDR Modifications |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment
|  | (dollars in thousands)
Commercial business: |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | 4 |  |  | $ | 2,903 |  |  | $ | 2,903 |  |  | — |  |  | $ | — |  |  | $ | — |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial and multifamily residential: |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 1,496 |  |  | 1,496 |
Total |  | 4 |  |  | $ | 2,903 |  |  | $ | 2,903 |  |  | 1 |  |  | $ | 1,496 |  |  | $ | 1,496 |
|  | Nine months ended September 30, 2015 |  | Nine months ended September 30, 2014
|  | Number of TDR Modifications |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Number of TDR Modifications |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment
|  | (dollars in thousands)
Commercial business: |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | 4 |  |  | $ | 2,903 |  |  | $ | 2,903 |  |  | 4 |  |  | $ | 759 |  |  | $ | 759 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential |  | 1 |  |  | 30 |  |  | 30 |  |  | 2 |  |  | 494 |  |  | 494 |
Commercial and multifamily residential: |  |  |  |  |  |  |  |  |  |  |  |
Income property |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 143 |  |  | 126 |
Owner occupied |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 1,496 |  |  | 1,496 |
Total |  | 5 |  |  | $ | 2,933 |  |  | $ | 2,933 |  |  | 8 |  |  | $ | 2,892 |  |  | $ | 2,875 |
The Company’s loans classified as TDR are loans that have been modified or the borrower has been granted special concessions due to financial difficulties that, if not for the challenges of the borrower, the Company would not otherwise consider. The TDR modifications or concessions are made to increase the likelihood that these borrowers with financial difficulties will be able to satisfy their debt obligations as amended. The concessions granted in the restructurings completed in the three and nine month periods ending September 30, 2015 and 2014 largely consisted of maturity extensions, interest rate modifications or a combination of both. In limited circumstances, a reduction in the principal balance of the loan could also be made as a concession. Credit losses for loans classified as TDR are measured on the same basis as impaired loans. For impaired loans, an allowance is established when the collateral value less selling costs (or discounted cash flows or observable market price) of the impaired loan is lower than the recorded investment of that loan. The Company had no commitments to lend additional funds on loans classified as TDR as of September 30, 2015 and December 31, 2014. The Company did not have any loans modified as TDR that defaulted within twelve months of being modified as TDR during the three and nine month periods ended September 30, 2015 and 2014. Purchased Credit Impaired Loans (“PCI Loans”) PCI loans are accounted for under ASC 310-30 and initially measured at fair value based on expected future cash flows over the life of the loans. Loans that have common risk characteristics are aggregated into pools. The Company remeasures contractual and expected cash flows, at the pool-level, on a quarterly basis. Contractual cash flows are calculated based upon the loan pool terms after applying a prepayment factor. Calculation of the applied prepayment factor for contractual cash flows is the same as described below for expected cash flows. Inputs to the determination of expected cash flows include cumulative default and prepayment data as well as loss severity and recovery lag information. Cumulative default and prepayment data are calculated via a transition matrix. The transition matrix is a matrix of probability values that specifies the probability of a loan pool transitioning into a particular delinquency state (e.g. 0-30 days past due, 31 to 60 days, etc.) given its delinquency state at the remeasurement date. Loss severity factors are based upon either actual charge-off data within the loan pools or industry averages and recovery lags are based upon the collateral within the loan pools. The excess of cash flows expected to be collected over the initial fair value of purchased credit impaired loans is referred to as the accretable yield and is accreted into interest income over the estimated life of the acquired loans using the effective yield method. Other adjustments to the accretable yield include changes in the estimated remaining life of the acquired loans, changes in expected cash flows and changes of indices for acquired loans with variable interest rates. The following is an analysis of our PCI loans, net of related allowance for losses and remaining valuation discounts as of September 30, 2015 and December 31, 2014:
|  | September 30, 2015 |  | December 31, 2014
|  | (in thousands)
Commercial business |  | $ | 44,234 |  |  | $ | 50,334 |
Real estate: |  |  |  |
One-to-four family residential |  | 28,575 |  |  | 31,981 |
Commercial and multifamily residential |  | 108,895 |  |  | 140,398 |
Total real estate |  | 137,470 |  |  | 172,379 |
Real estate construction: |  |  |  |
One-to-four family residential |  | 2,447 |  |  | 4,353 |
Commercial and multifamily residential |  | 2,225 |  |  | 2,588 |
Total real estate construction |  | 4,672 |  |  | 6,941 |
Consumer |  | 22,477 |  |  | 26,814 |
Subtotal of PCI loans |  | 208,853 |  |  | 256,468 |
Less: |  |  |  |
Valuation discount resulting from acquisition accounting |  | 17,787 |  |  | 25,884 |
Allowance for loan losses |  | 13,990 |  |  | 16,336 |
PCI loans, net of allowance for loan losses |  | $ | 177,076 |  |  | $ | 214,248 |
The following table shows the changes in accretable yield for PCI loans for the three and nine months ended September 30, 2015 and 2014:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2015 |  | 2014 |  | 2015 |  | 2014
|  | (in thousands)
Balance at beginning of period |  | $ | 67,283 |  |  | $ | 92,511 |  |  | $ | 73,849 |  |  | $ | 103,907 |
Accretion |  | (5,049 | ) |  | (8,034 | ) |  | (17,105 | ) |  | (28,658 | )
Disposals |  | 256 |  |  | (357 | ) |  | (1,796 | ) |  | (3,183 | )
Reclassifications from nonaccretable difference |  | 350 |  |  | (3,589 | ) |  | 7,892 |  |  | 8,465 |
Balance at end of period |  | $ | 62,840 |  |  | $ | 80,531 |  |  | $ | 62,840 |  |  | $ | 80,531 |

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- Definition The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 55 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=32702940&loc=SL6953791-111525 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=49124121&loc=d3e4975-111524 + Details
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