We maintain an allowance for loan losses, or ALL, at a level determined to be adequate to absorb estimated probable credit losses inherent in the loan portfolio as of the balance sheet date. We develop and document a systematic ALL methodology based on the following portfolio segments: 1) CRE, 2) C&I, 3) Commercial Construction, 4) Consumer Real Estate and 5) Other Consumer.

The following are key risks within each portfolio segment:

CRE—Loans secured by commercial purpose real estate, including both owner occupied properties and investment properties, for various purposes such as hotels, strip malls and apartments. Operations of the individual projects as well as global cash flows of the debtors are the primary sources of repayment for these loans. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the collateral type as well as the business prospects of the lessee, if the project is not owner occupied.

C&I—Loans made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. Cash flow from the operations of the company is the primary source of repayment for these loans. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the industry of the company. Collateral for these types of loans often does not have sufficient value in a distressed or liquidation scenario to satisfy the outstanding debt.

Commercial Construction—Loans made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. While the risk of these loans is generally confined to the construction period, if there are problems, the project may not be complete, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer.

Consumer Real Estate—Loans secured by first and second liens such as home equity loans, home equity lines of credit and 1-4 family residential mortgages, including purchase money mortgages. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the local housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.

Other Consumer—Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. This segment includes auto loans, unsecured loans and lines and credit cards. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

We further assess risk within each portfolio segment by pooling loans with similar risk characteristics. For the commercial loan classes, the most important indicator of risk is the internally assigned risk rating, including pass, special mention and substandard. Consumer loans are pooled by type of collateral, lien position and loan to value, or LTV, ratio for Consumer Real Estate loans. Historical loss rates are applied to these loan pools to determine the reserve for loans collectively evaluated for impairment.

The ALL methodology for groups of loans collectively evaluated for impairment is comprised of both a quantitative and qualitative analysis. A key assumption in the quantitative component of the reserve is the loss emergence period, or LEP. The LEP is an estimate of the average amount of time from the point at which a loss is incurred on a loan to the point at which the loss is confirmed. Another key assumption is the look-back period, or LBP, which represents the historical data period utilized to calculate loss rates.

Management monitors various credit quality indicators for both the commercial and consumer loan portfolios, including delinquency, nonperforming status and changes in risk ratings on a monthly basis.

The following tables present the age analysis of past due loans segregated by class of loans as of the dates presented:



	June 30, 2016
(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Nonaccrual		Total Past Due		Total Loans
Commercial real estate	$	2,367,849	$	7,384	$	2,666	$	10,887	$	20,937	$	2,388,786
Commercial and industrial	1,366,728		7,276		400		11,342		19,018		1,385,746
Commercial construction	382,985		5,644		1,311		8,182		15,137		398,122
Residential mortgage	657,352		1,191		3,839		9,283		14,313		671,665
Home equity	472,085		4,223		728		3,168		8,119		480,204
Installment and other consumer	57,916		153		27		43		223		58,139
Consumer construction	5,602		—		—		—		—		5,602
Loans held for sale	11,999		—		—		—		—		11,999
Total	$	5,322,516	$	25,871	$	8,971	$	42,905	$	77,747	$	5,400,263



	December 31, 2015
(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Nonaccrual		Total Past Due		Total Loans
Commercial real estate	$	2,145,655	$	11,602	$	627	$	8,719	$	20,948	$	2,166,603
Commercial and industrial	1,244,802		2,453		296		9,279		12,028		1,256,830
Commercial construction	401,084		3,517		90		8,753		12,360		413,444
Residential mortgage	631,085		1,728		930		5,629		8,287		639,372
Home equity	465,055		2,365		523		2,902		5,790		470,845
Installment and other consumer	73,486		242		111		100		453		73,939
Consumer construction	6,579		—		—		—		—		6,579
Loans held for sale	35,179		94		48		—		142		35,321
Total	$	5,002,925	$	22,001	$	2,625	$	35,382	$	60,008	$	5,062,933

We continually monitor the commercial loan portfolio through an internal risk rating system. Loan risk ratings are assigned based upon the creditworthiness of the borrower and are reviewed on an ongoing basis according to our internal policies. Loans within the pass rating generally have a lower risk of loss than loans risk rated as special mention or substandard.

Our risk ratings are consistent with regulatory guidance and are as follows:

Pass—The loan is currently performing and is of high quality.

Special Mention—A special mention loan has potential weaknesses that warrant management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects or in the strength of our credit position at some future date. Economic and market conditions, beyond the borrower’s control, may in the future necessitate this classification.

Substandard—A substandard loan is not adequately protected by the net worth and/or paying capacity of the borrower or by the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. These loans are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.

The following tables present the recorded investment in commercial loan classes by internally assigned risk ratings as of the dates presented:



	June 30, 2016
(dollars in thousands)	Commercial Real Estate		% of Total		Commercial and Industrial		% of Total		Commercial Construction		% of Total		Total		% of Total
Pass	$	2,314,317	96.9	%	$	1,302,427	94.0	%	$	361,494	90.8	%	$	3,978,238	95.3	%
Special mention	22,277		0.9	%	31,865		2.3	%	20,228		5.1	%	74,370		1.8	%
Substandard	52,192		2.2	%	51,454		3.7	%	16,400		4.1	%	120,046		2.9	%
Total	$	2,388,786	100.0	%	$	1,385,746	100.0	%	$	398,122	100.0	%	$	4,172,654	100.0	%

	December 31, 2015
(dollars in thousands)	Commercial Real Estate		% of Total		Commercial and Industrial		% of Total		Commercial Construction		% of Total		Total		% of Total
Pass	$	2,094,851	96.7	%	$	1,182,685	94.1	%	$	375,808	90.9	%	$	3,653,344	95.2	%
Special mention	19,938		0.9	%	43,896		3.5	%	19,846		4.8	%	83,680		2.2	%
Substandard	51,814		2.4	%	30,249		2.4	%	17,790		4.3	%	99,853		2.6	%
Total	$	2,166,603	100.0	%	$	1,256,830	100.0	%	$	413,444	100.0	%	$	3,836,877	100.0	%

We monitor the delinquent status of the consumer portfolio on a monthly basis. Loans are considered nonperforming when interest and principal are 90 days or more past due or management has determined that a material deterioration in the borrower’s financial condition exists. The risk of loss is generally highest for nonperforming loans.

The following tables present the recorded investment in consumer loan classes by performing and nonperforming status as of the dates presented:



	June 30, 2016
(dollars in thousands)	Residential Mortgage		% of Total		Home Equity		% of Total		Installment and other consumer		% of Total		Consumer Construction		% of Total		Total		% of Total
Performing	$	662,382	98.6	%	$	477,036	99.3	%	$	58,096	99.9	%	$	5,602	100.0	%	$	1,203,116	99.0	%
Nonperforming	9,283		1.4	%	3,168		0.7	%	43		0.1	%	—		—	%	12,494		1.0	%
Total	$	671,665	100.0	%	$	480,204	100.0	%	$	58,139	100.0	%	$	5,602	100.0	%	$	1,215,610	100.0	%

	December 31, 2015
(dollars in thousands)	Residential Mortgage		% of Total		Home Equity		% of Total		Installment and other consumer		% of Total		Consumer Construction		% of Total		Total		% of Total
Performing	$	633,743	99.1	%	$	467,943	99.4	%	$	73,839	99.8	%	$	6,579	100.0	%	$	1,182,104	99.3	%
Nonperforming	5,629		0.9	%	2,902		0.6	%	100		0.2	%	—		—	%	8,631		0.7	%
Total	$	639,372	100.0	%	$	470,845	100.0	%	$	73,939	100.0	%	$	6,579	100.0	%	$	1,190,735	100.0	%

We individually evaluate all substandard and nonaccrual commercial loans greater than $0.5 million for impairment. Loans are considered to be impaired when based upon current information and events it is probable that we will be unable to collect all principal and interest payments due according to the original contractual terms of the loan agreement. All TDRs will be reported as an impaired loan for the remaining life of the loan, unless the restructuring agreement specifies an interest rate equal to or greater than the rate that would be accepted at the time of the restructuring for a new loan with comparable risk and it is expected that the remaining principal and interest will be fully collected according to the restructured agreement. For all TDRs, regardless of size, as well as all other impaired loans, we conduct further analysis to determine the probable loss and assign a specific reserve to the loan if deemed appropriate.

The following tables summarize investments in loans considered to be impaired and related information on those impaired loans as of the dates presented:



	June 30, 2016						December 31, 2015
(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Without a related allowance recorded:
Commercial real estate	$	12,326	$	22,765	$	—	$	12,661	$	13,157	$	—
Commercial and industrial	11,313		12,174		—		14,417		15,220		—
Commercial construction	9,918		13,494		—		10,998		14,200		—
Consumer real estate	10,983		11,646		—		6,845		7,521		—
Other consumer	34		41		—		111		188		—
Total without a Related Allowance Recorded	44,574		60,120		—		45,032		50,286		—
With a related allowance recorded:
Commercial real estate	—		—		—		—		—		—
Commercial and industrial	4,499		4,984		1,991		—		—		—
Commercial construction	1,064		1,635		141		500		1,350		3
Consumer real estate	29		29		29		116		116		32
Other consumer	1		1		1		2		2		2
Total with a Related Allowance Recorded	5,593		6,649		2,162		618		1,468		37
Total:
Commercial real estate	12,326		22,765		—		12,661		13,157		—
Commercial and industrial	15,812		17,158		1,991		14,417		15,220		—
Commercial construction	10,982		15,129		141		11,498		15,550		3
Consumer real estate	11,012		11,675		29		6,961		7,637		32
Other consumer	35		42		1		113		190		2
Total	$	50,167	$	66,769	$	2,162	$	45,650	$	51,754	$	37

As of June 30, 2016, we had $50.2 million of impaired loans which included $18.0 million of acquired loans from the Merger that experienced credit deterioration since the acquisition date.

The following tables summarize investments in loans considered to be impaired and related information on those impaired loans for the periods presented:



	For the Three Months Ended
	June 30, 2016				June 30, 2015
(dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Without a related allowance recorded:
Commercial real estate	$	14,619	$	64	$	19,733	$	158
Commercial and industrial	10,959		98		10,782		84
Commercial construction	10,625		48		8,119		81
Consumer real estate	11,028		107		6,891		91
Other consumer	38		—		126		4
Total without a Related Allowance Recorded	47,269		317		45,651		418
With a related allowance recorded:
Commercial real estate	—		—		420		—
Commercial and industrial	4,617		31		—		—
Commercial construction	1,232		6		—		—
Consumer real estate	29		1		121		2
Other consumer	1		—		4		—
Total with a Related Allowance Recorded	5,879		38		545		2
Total:
Commercial real estate	14,619		64		20,153		158
Commercial and industrial	15,576		129		10,782		84
Commercial construction	11,857		54		8,119		81
Consumer real estate	11,057		108		7,012		93
Other consumer	39		—		130		4
Total	$	53,148	$	355	$	46,196	$	420



	For the Six Months Ended
	June 30, 2016				June 30, 2015
(dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Without a related allowance recorded:
Commercial real estate	$	14,798	$	132	$	20,455	$	322
Commercial and industrial	11,253		189		11,162		146
Commercial construction	10,669		108		6,628		134
Consumer real estate	11,089		243		6,943		186
Other consumer	40		1		86		4
Total without a Related Allowance Recorded	47,849		673		45,274		792
With a related allowance recorded:
Commercial real estate	—		—		211		—
Commercial and industrial	4,999		63		—		—
Commercial construction	1,244		12		—		—
Consumer real estate	30		1		122		3
Other consumer	2		—		4		—
Total with a Related Allowance Recorded	6,275		76		337		3
Total:
Commercial real estate	14,798		132		20,666		322
Commercial and industrial	16,252		252		11,162		146
Commercial construction	11,913		120		6,628		134
Consumer real estate	11,119		244		7,065		189
Other consumer	42		1		90		4
Total	$	54,124	$	749	$	45,611	$	795

The following tables detail activity in the ALL for the periods presented:



	Three Months Ended June 30, 2016
(dollars in thousands)	Commercial Real Estate			Commercial and Industrial			Commercial Construction			Consumer Real Estate			Other Consumer			Total Loans
Balance at beginning of period	$	15,266		$	14,740		$	10,825		$	8,261		$	1,255		$	50,347
Charge-offs	(1,662		)	(136		)	(945		)	(290		)	(463		)	(3,496		)
Recoveries	38			217			2			134			123			514
Net (Charge-offs)/ Recoveries	(1,624		)	81			(943		)	(156		)	(340		)	(2,982		)
Provision for loan losses	2,336			(50		)	1,819			313			430			4,848
Balance at End of Period	$	15,978		$	14,771		$	11,701		$	8,418		$	1,345		$	52,213


	Three Months Ended June 30, 2015
(dollars in thousands)	Commercial Real Estate			Commercial and Industrial			Commercial Construction			Consumer Real Estate			Other Consumer			Total Loans
Balance at beginning of period	$	19,071		$	13,711		$	6,869		$	6,723		$	1,732		$	48,106
Charge-offs	(310		)	(992		)	—			(177		)	(276		)	(1,755		)
Recoveries	73			89			1			112			129			404
Net (Charge-offs)/ Recoveries	(237		)	(903		)	1			(65		)	(147		)	(1,351		)
Provision for loan losses	184			500			801			369			205			2,059
Balance at End of Period	$	19,018		$	13,308		$	7,671		$	7,027		$	1,790		$	48,814


	Six Months Ended June 30, 2016
(dollars in thousands)	Commercial Real Estate			Commercial and Industrial			Commercial Construction			Consumer Real Estate			Other Consumer			Total Loans
Balance at beginning of period	$	15,043		$	10,853		$	12,625		$	8,400		$	1,226		$	48,147
Charge-offs	(1,715		)	(2,830		)	(945		)	(522		)	(1,111		)	(7,123		)
Recoveries	398			420			3			298			207			1,326
Net (Charge-offs)/Recoveries	(1,317		)	(2,410		)	(942		)	(224		)	(904		)	(5,797		)
Provision for loan losses	2,252			6,328			18			242			1,023			9,863
Balance at End of Period	$	15,978		$	14,771		$	11,701		$	8,418		$	1,345		$	52,213


	Six Months Ended June 30, 2015
(dollars in thousands)	Commercial Real Estate			Commercial and Industrial			Commercial Construction			Consumer Real Estate			Other Consumer			Total Loans
Balance at beginning of period	$	20,164		$	13,668		$	6,093		$	6,333		$	1,653		$	47,911
Charge-offs	(376		)	(1,698		)	—			(552		)	(579		)	(3,205		)
Recoveries	176			203			2			248			213			842
Net (Charge-offs)/Recoveries	(200		)	(1,495		)	2			(304		)	(366		)	(2,363		)
Provision for loan losses	(946		)	1,135			1,576			998			503			3,266
Balance at End of Period	$	19,018		$	13,308		$	7,671		$	7,027		$	1,790		$	48,814

The following tables present the ALL and recorded investments in loans by category as of the periods presented:



	June 30, 2016
	Allowance for Loan Losses						Portfolio Loans
(dollars in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial real estate	$	—	$	15,978	$	15,978	$	12,326	$	2,376,460	$	2,388,786
Commercial and industrial	1,991		12,780		14,771		15,812		1,369,934		1,385,746
Commercial construction	141		11,560		11,701		10,982		387,140		398,122
Consumer real estate	29		8,389		8,418		11,012		1,146,459		1,157,471
Other consumer	1		1,344		1,345		35		58,104		58,139
Total	$	2,162	$	50,051	$	52,213	$	50,167	$	5,338,097	$	5,388,264

	December 31, 2015
	Allowance for Loan Losses						Portfolio Loans
(dollars in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial real estate	$	—	$	15,043	$	15,043	$	12,661	$	2,153,942	$	2,166,603
Commercial and industrial	—		10,853		10,853		14,417		1,242,413		1,256,830
Commercial construction	3		12,622		12,625		11,498		401,946		413,444
Consumer real estate	32		8,368		8,400		6,961		1,109,835		1,116,796
Other consumer	2		1,224		1,226		113		73,826		73,939
Total	$	37	$	48,110	$	48,147	$	45,650	$	4,981,962	$	5,027,612