XML 24 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
Loans Receivable, Net
 3 Months Ended
Mar. 31, 2018
Receivables [Abstract]  
Loans Receivable, Net
Loans Receivable, Net
Loans receivable, net at March 31, 2018 and December 31, 2017 consisted of the following (in thousands):
 
March 31, 2018
 
December 31, 2017
Commercial:
 
 
 
Commercial and industrial
$
369,840

 
$
187,645

Commercial real estate – owner occupied
762,641

 
569,497

Commercial real estate – investor
2,025,551

 
1,186,302

Total commercial
3,158,032

 
1,943,444

Consumer:
 
 
 
Residential mortgage
1,880,287

 
1,748,590

Home equity loans and lines
371,340

 
281,143

Other consumer
834

 
1,225

Total consumer
2,252,461

 
2,030,958

 
5,410,493

 
3,974,402

Purchased credit impaired (“PCI”) loans
14,352

 
1,712

Total Loans
5,424,845

 
3,976,114

Deferred origination costs, net
5,752

 
5,380

Allowance for loan losses
(16,817
)
 
(15,721
)
Total loans, net
$
5,413,780

 
$
3,965,773


 
At March 31, 2018 and December 31, 2017, loans in the amount of $18.3 million and $20.9 million, respectively, were three or more months delinquent or in the process of foreclosure and the Company was not accruing interest income on these loans. At March 31, 2018, there were no loans that were ninety days or greater past due and still accruing interest. Non-accrual loans include both smaller balance homogenous loans that are collectively evaluated for impairment and individually classified impaired loans.
The recorded investment in mortgage and consumer loans collateralized by residential real estate, which are in the process of foreclosure, amounted to $1.2 million at March 31, 2018. The amount of foreclosed residential real estate property held by the Company was $941,000 at March 31, 2018.
The Company defines an impaired loan as non-accrual commercial real estate, multi-family, land, construction and commercial loans in excess of $250,000. Impaired loans also include all loans modified as troubled debt restructurings. At March 31, 2018, the impaired loan portfolio totaled $44.1 million for which there was a specific allocation in the allowance for loan losses of $1.6 million. At December 31, 2017, the impaired loan portfolio totaled $47.0 million for which there was no specific allocation in the allowance for loan losses. The average balance of impaired loans for the three months ended March 31, 2018 and 2017 was $45.5 million and $33.2 million, respectively.
An analysis of the allowance for loan losses for the three months ended March 31, 2018 and 2017 is as follows (in thousands):
 
Three Months Ended
March 31,
 
2018
 
2017
Balance at beginning of period
$
15,721

 
$
15,183

Provision charged to operations
1,371

 
700

Charge-offs
(533
)
 
(205
)
Recoveries
258

 
473

Balance at end of period
$
16,817

 
$
16,151



The following table presents an analysis of the allowance for loan losses for the three months ended March 31, 2018 and 2017 and the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2018 and December 31, 2017, excluding PCI loans (in thousands):

 
Residential
Real Estate
 
Commercial
Real Estate –
Owner
Occupied
 
Commercial
Real Estate –
Investor
 
Consumer
 
Commercial
and 
Industrial
 
Unallocated
 
Total
For the three months ended March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$
1,804

 
$
3,175

 
$
7,952

 
$
614

 
$
1,801

 
$
375

 
$
15,721

Provision (benefit) charged to operations
493

 
(307
)
 
879

 
(1
)
 
470

 
(163
)
 
1,371

Charge-offs
(244
)
 
—

 
(123
)
 
(122
)
 
(44
)
 
—

 
(533
)
Recoveries
85

 
3

 
130

 
16

 
24

 
—

 
258

Balance at end of period
$
2,138

 
$
2,871

 
$
8,838

 
$
507

 
$
2,251

 
$
212

 
$
16,817

For the three months ended March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$
2,245

 
$
2,999

 
$
6,361

 
$
1,110

 
$
2,037

 
$
431

 
$
15,183

Provision (benefit) charged to operations
(627
)
 
390

 
993

 
20

 
(201
)
 
125

 
700

Charge-offs
(49
)
 
(50
)
 
—

 
(18
)
 
(88
)
 
—

 
(205
)
Recoveries
—

 
110

 
7

 
24

 
332

 
—

 
473

Balance at end of period
$
1,569

 
$
3,449

 
$
7,361

 
$
1,136

 
$
2,080

 
$
556

 
$
16,151

March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending allowance balance attributed to loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
—

 
$
—

 
$
930

 
$
—

 
$
675

 
$
—

 
$
1,605

Collectively evaluated for impairment
2,138

 
2,871

 
7,908

 
507

 
1,576

 
212

 
15,212

Total ending allowance balance
$
2,138

 
$
2,871

 
$
8,838

 
$
507

 
$
2,251

 
$
212

 
$
16,817

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans individually evaluated for impairment
$
11,406

 
$
9,811

 
$
18,085

 
$
2,489

 
$
2,269

 
$
—

 
$
44,060

Loans collectively evaluated for impairment
1,868,881

 
752,830

 
2,007,466

 
369,685

 
367,571

 
—

 
5,366,433

Total ending loan balance
$
1,880,287

 
$
762,641

 
$
2,025,551

 
$
372,174

 
$
369,840

 
$
—

 
$
5,410,493

December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending allowance balance attributed to loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Collectively evaluated for impairment
1,804

 
3,175

 
7,952

 
614

 
1,801

 
375

 
15,721

Total ending allowance balance
$
1,804

 
$
3,175

 
$
7,952

 
$
614

 
$
1,801

 
$
375

 
$
15,721

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans individually evaluated for impairment
$
10,605

 
$
15,132

 
$
17,923

 
$
2,464

 
$
864

 
$
—

 
$
46,988

Loans collectively evaluated for impairment
1,737,985

 
554,365

 
1,168,379

 
279,904

 
186,781

 
—

 
3,927,414

Total ending loan balance
$
1,748,590

 
$
569,497

 
$
1,186,302

 
$
282,368

 
$
187,645

 
$
—

 
$
3,974,402


A summary of impaired loans at March 31, 2018, and December 31, 2017, is as follows, excluding PCI loans (in thousands):
 
 
March 31, 2018
 
December 31, 2017
Impaired loans with no allocated allowance for loan losses
$
39,235

 
$
46,988

Impaired loans with allocated allowance for loan losses
4,825

 
—

 
$
44,060

 
$
46,988

Amount of the allowance for loan losses allocated
$
1,605

 
$
—


At March 31, 2018, impaired loans included troubled debt restructured (“TDR”) loans of $38.1 million, of which $33.8 million were performing in accordance with their restructured terms for a minimum of six months and were accruing interest. At December 31, 2017, impaired loans included TDR loans of $42.1 million, of which $33.3 million were performing in accordance with their restructured terms for a minimum of six months and were accruing interest.
The summary of loans individually evaluated for impairment by loan portfolio segment as of March 31, 2018, and December 31, 2017 and for the three months ended March 31, 2018 and 2017, is as follows, excluding PCI loans (in thousands):
 
 
Unpaid
Principal
Balance
 
Recorded
Investment
 
Allowance
for Loan
Losses
Allocated
As of March 31, 2018
 
 
 
 
 
With no related allowance recorded:
 
 
 
 
 
Residential real estate
$
11,820

 
$
11,406

 
$
—

Commercial real estate – owner occupied
9,920

 
9,811

 
—

Commercial real estate – investor
15,669

 
14,732

 
—

Consumer
2,970

 
2,489

 
—

Commercial and industrial
807

 
797

 
—

 
$
41,186

 
$
39,235

 
$
—

With an allowance recorded:
 
 
 
 
 
Residential real estate
$
—

 
$
—

 
$
—

Commercial real estate – owner occupied
—

 
—

 
—

Commercial real estate – investor
3,857

 
3,353

 
930

Consumer
—

 
—

 
—

Commercial and industrial
1,472

 
1,472

 
675

 
$
5,329

 
$
4,825

 
$
1,605

As of December 31, 2017
 
 
 
 
 
With no related allowance recorded:
 
 
 
 
 
Residential real estate
$
10,951

 
$
10,605

 
$
—

Commercial real estate – owner occupied
15,832

 
15,132

 
—

Commercial real estate – investor
19,457

 
17,923

 
—

Consumer
2,941

 
2,464

 
—

Commercial and industrial
895

 
864

 
—

 
$
50,076

 
$
46,988

 
$
—

With an allowance recorded:
 
 
 
 
 
Residential real estate
$
—

 
$
—

 
$
—

Commercial real estate – owner occupied
—

 
—

 
—

Commercial real estate – investor
—

 
—

 
—

Consumer
—

 
—

 
—

Commercial and industrial
—

 
—

 
—

 
$
—

 
$
—

 
$
—

 
Three Months Ended March 31,
 
2018
 
2017
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With no related allowance recorded:
 
 
 
 
 
 
 
Residential real estate
$
11,006

 
$
125

 
$
9,227

 
$
86

Commercial real estate – owner occupied
12,471

 
115

 
10,943

 
161

Commercial real estate – investor
16,328

 
154

 
2,340

 
26

Consumer
2,477

 
37

 
2,242

 
28

Commercial and industrial
830

 
16

 
268

 
5

 
$
43,112

 
$
447

 
$
25,020

 
$
306

With an allowance recorded:
 
 
 
 
 
 
 
Residential real estate
$
—

 
$
—

 
$
3,962

 
$
62

Commercial real estate – owner occupied
—

 
—

 
—

 
—

Commercial real estate – investor
1,677

 
—

 
3,914

 
55

Consumer
—

 
—

 
297

 
6

Commercial and industrial
736

 
—

 
—

 
—

 
$
2,413

 
$
—

 
$
8,173

 
$
123

 
The following table presents the recorded investment in non-accrual loans by loan portfolio segment as of March 31, 2018 and December 31, 2017, excluding PCI loans (in thousands):
 
March 31, 2018
 
December 31, 2017
Residential real estate
$
5,686

 
$
4,190

Commercial real estate – owner occupied
862

 
5,962

Commercial real estate – investor
7,994

 
8,281

Consumer
1,992

 
1,929

Commercial and industrial
1,717

 
503

 
$
18,251

 
$
20,865


 
The following table presents the aging of the recorded investment in past due loans as of March 31, 2018 and December 31, 2017 by loan portfolio segment, excluding PCI loans (in thousands):
 
30-59
Days
Past Due
 
60-89
Days
Past Due
 
Greater
than
90 Days
Past Due
 
Total
Past Due
 
Loans Not
Past Due
 
Total
March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
Residential real estate
$
11,766

 
$
3,142

 
$
1,863

 
$
16,771

 
$
1,863,516

 
$
1,880,287

Commercial real estate – owner occupied
17,634

 
—

 
292

 
17,926

 
744,715

 
762,641

Commercial real estate – investor
4,503

 
403

 
4,352

 
9,258

 
2,016,293

 
2,025,551

Consumer
1,794

 
570

 
1,678

 
4,042

 
368,132

 
372,174

Commercial and industrial
214

 
—

 
1,485

 
1,699

 
368,141

 
369,840

 
$
35,911

 
$
4,115

 
$
9,670

 
$
49,696

 
$
5,360,797

 
$
5,410,493

December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Residential real estate
$
13,197

 
$
2,351

 
$
3,372

 
$
18,920

 
$
1,729,670

 
$
1,748,590

Commercial real estate – owner occupied
222

 
—

 
5,402

 
5,624

 
563,873

 
569,497

Commercial real estate – investor
135

 
1,426

 
4,507

 
6,068

 
1,180,234

 
1,186,302

Consumer
1,067

 
310

 
1,687

 
3,064

 
279,304

 
282,368

Commercial and industrial
2,694

 
36

 
503

 
3,233

 
184,412

 
187,645

 
$
17,315

 
$
4,123

 
$
15,471

 
$
36,909

 
$
3,937,493

 
$
3,974,402


The Company categorizes all commercial and commercial real estate loans, except for small business loans, into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation and current economic trends, among other factors. The Company uses the following definitions for risk ratings:
Pass: Loans classified as Pass are well protected by the paying capacity and net worth of the borrower.
Special Mention: Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank’s credit position at some future date.
Substandard: Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
Doubtful: Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.
As of March 31, 2018 and December 31, 2017, and based on the most recent analysis performed, the risk category of loans by loan portfolio segment follows, excluding PCI loans (in thousands) is as follows: 
 
Pass
 
Special
Mention
 
Substandard
 
Doubtful
 
Total
March 31, 2018
 
 
 
 
 
 
 
 
 
Commercial real estate – owner occupied
$
744,157

 
$
3,150

 
$
15,334

 
$
—

 
$
762,641

Commercial real estate – investor
1,984,332

 
17,216

 
23,073

 
930

 
2,025,551

Commercial and industrial
363,257

 
3,849

 
2,059

 
675

 
369,840

 
$
3,091,746

 
$
24,215

 
$
40,466

 
$
1,605

 
$
3,158,032

December 31, 2017
 
 
 
 
 
 
 
 
 
Commercial real estate – owner occupied
$
546,569

 
$
4,337

 
$
18,591

 
$
—

 
$
569,497

Commercial real estate – investor
1,146,630

 
14,644

 
25,028

 
—

 
1,186,302

Commercial and industrial
181,438

 
3,153

 
3,054

 
—

 
187,645

 
$
1,874,637

 
$
22,134

 
$
46,673

 
$
—

 
$
1,943,444


For residential and consumer loan classes, 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 residential and consumer loans based on payment activity as of March 31, 2018 and December 31, 2017, excluding PCI loans (in thousands):
 
Residential
 
Consumer
March 31, 2018
 
 
 
Performing
$
1,874,601

 
$
370,182

Non-performing
5,686

 
1,992

 
$
1,880,287

 
$
372,174

December 31, 2017
 
 
 
Performing
$
1,744,400

 
$
280,439

Non-performing
4,190

 
1,929

 
$
1,748,590

 
$
282,368


The Company classifies certain loans as troubled debt restructurings when credit terms to a borrower in financial difficulty are modified. The modifications may include a reduction in rate, an extension in term, the capitalization of past due amounts and/or the restructuring of scheduled principal payments. One-to-four family and consumer loans where the borrower’s debt is discharged in a bankruptcy filing are also considered troubled debt restructurings. For these loans, the Bank retains its security interest in the real estate collateral. Included in the non-accrual loan total at March 31, 2018, and December 31, 2017, were $4.3 million and $8.8 million, respectively, of troubled debt restructurings. At March 31, 2018 and December 31, 2017, the Company had no specific reserves allocated to loans that are classified as troubled debt restructurings. Non-accrual loans which become troubled debt restructurings are generally returned to accrual status after six months of performance. In addition to the troubled debt restructurings included in non-accrual loans, the Company also has loans classified as accruing troubled debt restructurings at March 31, 2018, and December 31, 2017, which totaled $33.8 million and $33.3 million, respectively. Troubled debt restructurings are considered in the allowance for loan losses similar to other impaired loans.
 
The following table presents information about troubled debt restructurings which occurred during the three months ended March 31, 2018 and 2017, and troubled debt restructurings modified within the previous year and which defaulted during the three months ended March 31, 2018 and 2017, (dollars in thousands):
 
Number of Loans
 
Pre-modification
Recorded Investment
 
Post-modification
Recorded Investment
Three months ended March 31, 2018
 
 
 
 
 
Troubled Debt Restructurings:
 
 
 
 
 
Residential real estate
2

 
$
257

 
$
270

Commercial real estate – investor
1

 
179

 
180

Commercial and industrial
1

 
237

 
243

 
Number of Loans
  
Recorded Investment
Troubled Debt Restructurings
 
 
 
Which Subsequently Defaulted:
None

 
None

 
 

 
Number of Loans
 
Pre-modification
Recorded Investment
 
Post-modification
Recorded Investment
Three months ended March 31, 2017
 
 
 
 
 
Troubled Debt Restructurings:
 
 
 
 
 
Residential real estate
2

 
$
368

 
$
341

Commercial real estate - owner occupied
2

 
1,643

 
1,643

Commercial real estate – investor
1

 
626

 
773

 
Number of Loans
  
Recorded Investment
Troubled Debt Restructurings
 
  
 
Which Subsequently Defaulted:
1

  
$
188

 
 


As part of the Sun acquisition, PCI loans were acquired at a discount primarily due to deteriorated credit quality. PCI loans are accounted for at fair value, based upon the present value of expected future cash flows, with no related allowance for loan losses.
 
The following table presents information regarding the estimates of the contractually required payments, the cash flows expected to be collected and the estimated fair value of the PCI loans acquired from Sun at January 31, 2018 (in thousands):
 
 
Contractually required principal and interest
$
22,556

Contractual cash flows not expected to be collected (non-accretable discount)
(6,115
)
Expected cash flows to be collected at acquisition
16,441

Interest component of expected cash flows (accretable yield)
(3,535
)
Fair value of acquired loans
$
12,906

The following table summarizes the changes in accretable yield for PCI loans during the three months ended March 31, 2018 and 2017 (in thousands):
 
Three Months Ended March 31, 2018
 
Three Months Ended March 31, 2017
Beginning balance
$
161

 
$
749

Acquisition
3,535

 
—

Accretion
(222
)
 
(162
)
Reclassification from non-accretable difference
18

 
106

Ending balance
$
3,492

 
$
693