Loans Receivable and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2019

Loans and Leases Receivable Disclosure [Abstract]

Loans Receivable and Allowance for Credit Losses

The Company’s held-for-investment loan portfolio includes originated and purchased loans. Originated and purchased loans with no evidence of credit deterioration at their acquisition date are referred to collectively as non-PCI loans. PCI loans are loans acquired with evidence of credit deterioration since their origination and for which it is probable at the acquisition date that the Company would be unable to collect all contractually required payments. PCI loans are accounted for under ASC Subtopic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. The Company has elected to account for PCI loans on a pool level basis under ASC 310-30 at the time of acquisition.

The following table presents the composition of the Company’s non-PCI and PCI loans as of March 31, 2019 and December 31, 2018:




($ in thousands)	March 31, 2019									December 31, 2018
($ in thousands)	Non-PCI Loans ⁽¹⁾			PCI Loans ⁽²⁾			Total ⁽¹⁾⁽²⁾			Non-PCI Loans ⁽¹⁾			PCI Loans ⁽²⁾			Total ⁽¹⁾⁽²⁾
Commercial:
C&I	$	12,038,864		$	1,942		$	12,040,806		$	12,054,818		$	2,152		$	12,056,970
CRE	9,478,979			157,359			9,636,338			9,284,583			165,252			9,449,835
Multifamily residential	2,242,327			28,263			2,270,590			2,246,506			34,526			2,281,032
Construction and land	647,338			42			647,380			538,752			42			538,794
Total commercial	24,407,508			187,606			24,595,114			24,124,659			201,972			24,326,631
Consumer:
Single-family residential	6,214,386			94,945			6,309,331			5,939,258			97,196			6,036,454
HELOCs	1,618,445			7,777			1,626,222			1,681,979			8,855			1,690,834
Other consumer	332,619			—			332,619			331,270			—			331,270
Total consumer	8,165,450			102,722			8,268,172			7,952,507			106,051			8,058,558
Total loans held-for-investment	$	32,572,958		$	290,328		$	32,863,286		$	32,077,166		$	308,023		$	32,385,189
Allowance for loan losses	(317,880		)	(14		)	(317,894		)	(311,300		)	(22		)	(311,322		)
Loans held-for-investment, net	$	32,255,078		$	290,314		$	32,545,392		$	31,765,866		$	308,001		$	32,073,867


(1)	Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(46.0) million and $(48.9) million as of March 31, 2019 and December 31, 2018, respectively.


(2)	Includes ASC 310-30 discount of $20.4 million and $22.2 million as of March 31, 2019 and December 31, 2018, respectively.

The commercial portfolio includes C&I, CRE, multifamily residential, and construction and land loans. The consumer portfolio includes single-family residential, HELOC and other consumer loans.

The C&I loan portfolio, which is comprised of commercial business and trade finance loans, provides financing to businesses in a wide spectrum of industries. The CRE loan portfolio includes income producing real estate loans that are either owner occupied, or non-owner occupied where 50% or more of the debt service for the loan is primarily provided by unaffiliated rental income from a third party. The multifamily residential loan portfolio is largely comprised of loans secured by smaller multifamily properties ranging from five to 15 units in the Bank’s primary lending areas. Construction loans mainly provide construction financing for multifamily and residential condominiums, hotels, offices, industrial, as well as mixed use (residential and retail) structures.

In the consumer portfolio, the Company offers residential loans through a variety of mortgage loan programs. The consumer residential loan portfolio is largely comprised of single-family residential loans and HELOCs that are originated through a reduced documentation loan program, where a substantial down payment is required, resulting in a low loan-to-value ratio at origination, typically 60% or less. The Company is in a first lien position for many of these reduced documentation single-family residential loans and HELOCs. These loans have historically experienced low delinquency and default rates. Other consumer loans are mainly comprised of insurance premium financing loans.

As of March 31, 2019 and December 31, 2018, loans of $20.95 billion and $20.59 billion, respectively, were pledged to secure borrowings and provide additional borrowing capacity from the FRB and FHLB.

Credit Quality Indicators

All loans are subject to the Company’s internal and external credit review and monitoring. For the commercial portfolio, loans are risk rated based on an analysis of the current state of the borrower’s credit quality. The analysis of credit quality includes a review of all repayment sources, the borrower’s current payment performance/delinquency, current financial and liquidity status, and all other relevant information. For the majority of the consumer portfolio, payment performance/delinquency is the driving indicator for the risk ratings. Risk ratings are the overall credit quality indicator for the Company and the credit quality indicator is utilized for estimating the appropriate allowance for loan losses. The Company utilizes a risk rating system, which classifies loans within the following categories: Pass, Watch, Special Mention, Substandard, Doubtful and Loss. The risk ratings reflect the relative strength of the repayment sources.

Pass and Watch loans are loans that have sufficient sources of repayment in order to repay the loan in full in accordance with all terms and conditions. Special Mention loans are loans that have potential weaknesses that warrant closer attention by management. Special Mention is a transitory grade. If the potential weaknesses are resolved, the loan is upgraded to a Pass or Watch grade. If negative trends in the borrower’s financial status or other information indicate that the repayment sources may become inadequate, the loan is downgraded to a Substandard grade. Substandard loans are loans that have well-defined weaknesses that may jeopardize the full and timely repayment of the loan. Substandard loans have a distinct possibility of loss, if the deficiencies are not corrected. When management has assessed a potential for loss but a distinct possibility of loss is not recognizable, the loan remains classified as Substandard grade. Doubtful loans are loans that have insufficient sources of repayment and a high probability of loss. Loss loans are loans that are uncollectible and of such little value that they are no longer considered bankable assets. These internal risk ratings are reviewed routinely and adjusted based on changes in the borrowers’ financial status and the loans’ collectability.

The following tables present the credit risk ratings for non-PCI loans by portfolio segment as of March 31, 2019 and December 31, 2018:




($ in thousands)	March 31, 2019
($ in thousands)	Pass/Watch		Special Mention		Substandard		Doubtful		Total Non-PCI Loans
Commercial:
C&I	$	11,513,029	$	283,651	$	219,619	$	22,565	$	12,038,864
CRE	9,337,492		50,171		91,316		—		9,478,979
Multifamily residential	2,210,481		20,900		10,946		—		2,242,327
Construction and land	593,632		20,046		33,660		—		647,338
Total commercial	23,654,634		374,768		355,541		22,565		24,407,508
Consumer:
Single-family residential	6,192,411		7,688		14,287		—		6,214,386
HELOCs	1,601,555		2,492		14,398		—		1,618,445
Other consumer	316,113		14,000		2,506		—		332,619
Total consumer	8,110,079		24,180		31,191		—		8,165,450
Total	$	31,764,713	$	398,948	$	386,732	$	22,565	$	32,572,958




($ in thousands)	December 31, 2018
($ in thousands)	Pass/Watch		Special Mention		Substandard		Doubtful		Total Non-PCI Loans
Commercial:
C&I	$	11,644,470	$	260,089	$	139,844	$	10,415	$	12,054,818
CRE	9,144,646		49,705		90,232		—		9,284,583
Multifamily residential	2,215,573		20,551		10,382		—		2,246,506
Construction and land	485,217		19,838		33,697		—		538,752
Total commercial	23,489,906		350,183		274,155		10,415		24,124,659
Consumer:
Single-family residential	5,925,584		6,376		7,298		—		5,939,258
HELOCs	1,669,300		1,576		11,103		—		1,681,979
Other consumer	328,767		1		2,502		—		331,270
Total consumer	7,923,651		7,953		20,903		—		7,952,507
Total	$	31,413,557	$	358,136	$	295,058	$	10,415	$	32,077,166

The following tables present the credit risk ratings for PCI loans by portfolio segment as of March 31, 2019 and December 31, 2018:




($ in thousands)	March 31, 2019
($ in thousands)	Pass/Watch		Special Mention		Substandard		Doubtful		Total PCI Loans
Commercial:
C&I	$	1,942	$	—	$	—	$	—	$	1,942
CRE	137,259		719		19,381		—		157,359
Multifamily residential	26,770		—		1,493		—		28,263
Construction and land	42		—		—		—		42
Total commercial	166,013		719		20,874		—		187,606
Consumer:
Single-family residential	93,375		772		798		—		94,945
HELOCs	7,042		456		279		—		7,777
Total consumer	100,417		1,228		1,077		—		102,722
Total ⁽¹⁾	$	266,430	$	1,947	$	21,951	$	—	$	290,328




($ in thousands)	December 31, 2018
($ in thousands)	Pass/Watch		Special Mention		Substandard		Doubtful		Total PCI Loans
Commercial:
C&I	$	1,996	$	—	$	156	$	—	$	2,152
CRE	146,057		—		19,195		—		165,252
Multifamily residential	33,003		—		1,523		—		34,526
Construction and land	42		—		—		—		42
Total commercial	181,098		—		20,874		—		201,972
Consumer:
Single-family residential	95,789		1,021		386		—		97,196
HELOCs	8,314		256		285		—		8,855
Total consumer	104,103		1,277		671		—		106,051
Total ⁽¹⁾	$	285,201	$	1,277	$	21,545	$	—	$	308,023


(1)	Loans net of ASC 310-30 discount.

Nonaccrual and Past Due Loans

Non-PCI loans that are 90 or more days past due are generally placed on nonaccrual status, unless the loan is well-collateralized or guaranteed by government agencies, and in the process of collection. Non-PCI loans that are less than 90 days past due but have identified deficiencies, such as when the full collection of principal or interest becomes uncertain, are also placed on nonaccrual status. The following tables present the aging analysis on non-PCI loans as of March 31, 2019 and December 31, 2018:




($ in thousands)	March 31, 2019
($ in thousands)	Accruing Loans 30-59 Days Past Due		Accruing Loans 60-89 Days Past Due		Total Accruing Past Due Loans		Nonaccrual Loans Less Than 90 Days Past Due		Nonaccrual Loans 90 or More Days Past Due		Total Nonaccrual Loans		Current Accruing Loans		Total Non-PCI Loans
Commercial:
C&I	$	10,098	$	18,884	$	28,982	$	59,140	$	27,326	$	86,466	$	11,923,416	$	12,038,864
CRE	18,192		4,042		22,234		3,666		21,543		25,209		9,431,536		9,478,979
Multifamily residential	2,600		383		2,983		1,040		580		1,620		2,237,724		2,242,327
Construction and land	—		—		—		—		—		—		647,338		647,338
Total commercial	30,890		23,309		54,199		63,846		49,449		113,295		24,240,014		24,407,508
Consumer:
Single-family residential	14,653		9,382		24,035		499		9,968		10,467		6,179,884		6,214,386
HELOCs	6,065		1,660		7,725		1,381		9,092		10,473		1,600,247		1,618,445
Other consumer	17		3		20		—		2,506		2,506		330,093		332,619
Total consumer	20,735		11,045		31,780		1,880		21,566		23,446		8,110,224		8,165,450
Total	$	51,625	$	34,354	$	85,979	$	65,726	$	71,015	$	136,741	$	32,350,238	$	32,572,958




($ in thousands)	December 31, 2018
($ in thousands)	Accruing Loans 30-59 Days Past Due		Accruing Loans 60-89 Days Past Due		Total Accruing Past Due Loans		Nonaccrual Loans Less Than 90 Days Past Due		Nonaccrual Loans 90 or More Days Past Due		Total Nonaccrual Loans		Current Accruing Loans		Total Non-PCI Loans
Commercial:
C&I	$	21,032	$	19,170	$	40,202	$	17,097	$	26,743	$	43,840	$	11,970,776	$	12,054,818
CRE	7,740		—		7,740		3,704		20,514		24,218		9,252,625		9,284,583
Multifamily residential	4,174		—		4,174		1,067		193		1,260		2,241,072		2,246,506
Construction and land	207		—		207		—		—		—		538,545		538,752
Total commercial	33,153		19,170		52,323		21,868		47,450		69,318		24,003,018		24,124,659
Consumer:
Single-family residential	14,645		7,850		22,495		509		4,750		5,259		5,911,504		5,939,258
HELOCs	2,573		1,816		4,389		1,423		7,191		8,614		1,668,976		1,681,979
Other consumer	11		12		23		—		2,502		2,502		328,745		331,270
Total consumer	17,229		9,678		26,907		1,932		14,443		16,375		7,909,225		7,952,507
Total	$	50,382	$	28,848	$	79,230	$	23,800	$	61,893	$	85,693	$	31,912,243	$	32,077,166

For information on the policy for recording payments received and resuming accrual of interest on non-PCI loans that are placed on nonaccrual status, see Note 1 — Summary of Significant Accounting Policies — Loans Held-for-Investment to the Consolidated Financial Statements of the Company’s 2018 Form 10-K.

PCI loans are excluded from the above aging analysis tables as the Company has elected to account for these loans on a pool level basis under ASC 310-30 at the time of acquisition. Refer to the discussion on PCI loans within this Note for additional details on interest income recognition. As of March 31, 2019 and December 31, 2018, PCI loans on nonaccrual status totaled $4.1 million and $4.0 million, respectively.

Loans in Process of Foreclosure

The Company commences the foreclosure process on consumer mortgage loans when a borrower becomes 120 days delinquent in accordance with Consumer Finance Protection Bureau guidelines. As of March 31, 2019 and December 31, 2018, consumer mortgage loans of $5.3 million and $3.0 million, respectively, were secured by residential real estate properties, for which formal foreclosure proceedings were in process in accordance with local requirements of the applicable jurisdictions. As of both March 31, 2019 and December 31, 2018, no foreclosed residential real estate property was included in total net OREO of $133 thousand.

Troubled Debt Restructurings

Potential troubled debt restructurings (“TDRs”) are individually evaluated and the type of restructuring is selected based on the loan type and the circumstances of the borrower’s financial difficulty. A TDR is a modification of the terms of a loan when the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not have otherwise considered.

There were no non-PCI TDR additions during the three months ended March 31, 2018. The following table presents the additions to non-PCI TDRs for the three months ended March 31, 2019:




($ in thousands)	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment ⁽¹⁾		Financial Impact ⁽²⁾
Commercial:
C&I	3	$	29,152	$	29,176	$	60


(1)	Includes subsequent payments after modification and reflects the balance as of March 31, 2019.


(2)	The financial impact includes increases in charge-offs and specific reserves recorded at the modification date.

Modifications made to the TDRs presented in the table above include forbearance payments, term extensions and principal deferments that modify the terms of the loan from principal and interest payments to interest payments only.

Subsequent to restructuring, a TDR that becomes delinquent, generally beyond 90 days, is considered to be in default. As TDRs are individually evaluated for impairment under the specific reserve methodology, subsequent defaults do not generally have a significant additional impact on the allowance for loan losses. The following table presents information on loans modified as TDRs within the previous 12 months that have subsequently defaulted during the three months ended March 31, 2019 and 2018, and were still in default at the respective period end:




($ in thousands)	Loans Modified as TDRs that Subsequently Defaulted During the Three Months Ended March 31,
	2019			2018
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
Commercial:
C&I	3	$	4,618	—	$	—
Consumer:
HELOCs	—	$	—	1	$	155

The amount of additional funds committed to lend to borrowers whose terms have been modified was $860 thousand and $3.9 million as of March 31, 2019 and December 31, 2018, respectively.

Impaired Loans

The following tables present information on non-PCI impaired loans as of March 31, 2019 and December 31, 2018:




($ in thousands)	March 31, 2019
($ in thousands)	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial:
C&I	$	159,172	$	117,905	$	11,791	$	129,696	$	1,537
CRE	37,461		29,288		2,012		31,300		197
Multifamily residential	6,373		2,925		2,958		5,883		92
Total commercial	203,006		150,118		16,761		166,879		1,826
Consumer:
Single-family residential	19,593		3,970		14,366		18,336		43
HELOCs	11,794		5,356		6,308		11,664		84
Other consumer	2,506		—		2,506		2,506		2,502
Total consumer	33,893		9,326		23,180		32,506		2,629
Total non-PCI impaired loans	$	236,899	$	159,444	$	39,941	$	199,385	$	4,455




($ in thousands)	December 31, 2018
($ in thousands)	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial:
C&I	$	82,963	$	48,479	$	8,609	$	57,088	$	1,219
CRE	36,426		28,285		2,067		30,352		208
Multifamily residential	6,031		2,949		2,611		5,560		75
Total commercial	125,420		79,713		13,287		93,000		1,502
Consumer:
Single-family residential	14,670		2,552		10,908		13,460		34
HELOCs	10,035		5,547		4,409		9,956		5
Other consumer	2,502		—		2,502		2,502		2,491
Total consumer	27,207		8,099		17,819		25,918		2,530
Total non-PCI impaired loans	$	152,627	$	87,812	$	31,106	$	118,918	$	4,032

The following table presents the average recorded investment and interest income recognized on non-PCI impaired loans for the three months ended March 31, 2019 and 2018:




($ in thousands)	Three Months Ended March 31,
	2019				2018
	Average Recorded Investment		Recognized Interest Income ⁽¹⁾		Average Recorded Investment		Recognized Interest Income ⁽¹⁾
Commercial:
C&I	$	93,391	$	735	$	98,833	$	262
CRE	30,827		114		35,236		143
Multifamily residential	5,721		61		10,027		82
Construction and land	—		—		3,973		—
Total commercial	129,939		910		148,069		487
Consumer:
Single-family residential	15,898		128		15,079		113
HELOCs	10,811		18		6,671		15
Other consumer	2,504		—		2,491		—
Total consumer	29,213		146		24,241		128
Total non-PCI impaired loans	$	159,152	$	1,056	$	172,310	$	615


(1)	Includes interest income recognized on accruing non-PCI TDRs. Interest payments received on nonaccrual non-PCI loans are reflected as a reduction to principal, not as interest income.

Allowance for Credit Losses

The following table presents a summary of activities in the allowance for loan losses by portfolio segment for the three months ended March 31, 2019 and 2018:




($ in thousands)	Three Months Ended March 31,
($ in thousands)	2019			2018
Non-PCI Loans
Allowance for non-PCI loans, beginning of period	$	311,300		$	287,070
Provision for loan losses on non-PCI loans	20,648			19,933
Gross charge-offs:
Commercial:
C&I	(17,244		)	(18,445		)
Consumer:
Single-family residential	—			(1		)
Other consumer	(14		)	(17		)
Total gross charge-offs	(17,258		)	(18,463		)
Gross recoveries:
Commercial:
C&I	2,251			7,279
CRE	222			427
Multifamily residential	281			333
Construction and land	63			435
Consumer:
Single-family residential	2			184
HELOCs	2			—
Other consumer	—			1
Total gross recoveries	2,821			8,659
Net charge-offs	(14,437		)	(9,804		)
Foreign currency translation adjustments	369			408
Allowance for non-PCI loans, end of period	317,880			297,607
PCI Loans
Allowance for PCI loans, beginning of period	22			58
Reversal of loan losses on PCI loans	(8		)	(11		)
Allowance for PCI loans, end of period	14			47
Allowance for loan losses	$	317,894		$	297,654

For further information on accounting policies and the methodologies used to estimate the allowance for credit losses and loan charge-offs, see Note 1 — Summary of Significant Accounting Policies — Allowance for Credit Losses to the Consolidated Financial Statements of the Company’s 2018 Form 10-K.

The following table presents a summary of activities in the allowance for unfunded credit reserves for the three months ended March 31, 2019 and 2018:




($ in thousands)	Three Months Ended March 31,
($ in thousands)	2019		2018
Allowance for unfunded credit reserves, beginning of period	$	12,566	$	13,318
Provision for unfunded credit reserves	1,939		296
Allowance for unfunded credit reserves, end of period	$	14,505	$	13,614

The allowance for unfunded credit reserves is maintained at a level management believes to be sufficient to absorb estimated probable losses related to unfunded credit facilities. The allowance for unfunded credit reserves is included in Accrued expenses and other liabilities on the Consolidated Balance Sheet. See Note 12 — Commitments and Contingencies to the Consolidated Financial Statements in this Form 10-Q for additional information related to unfunded credit reserves.

The following tables present the Company’s allowance for loan losses and recorded investments by portfolio segment and impairment methodology as of March 31, 2019 and December 31, 2018:




($ in thousands)	March 31, 2019
	Commercial								Consumer						Total
	C&I		CRE		Multifamily Residential		Construction and Land		Single- Family Residential		HELOCs		Other Consumer		Total
Allowance for loan losses
Individually evaluated for impairment	$	1,537	$	197	$	92	$	—	$	43	$	84	$	2,502	$	4,455
Collectively evaluated for impairment	188,220		39,668		18,422		22,349		35,716		7,317		1,733		313,425
Acquired with deteriorated credit quality	—		14		—		—		—		—		—		14
Total	$	189,757	$	39,879	$	18,514	$	22,349	$	35,759	$	7,401	$	4,235	$	317,894

Recorded investment in loans
Individually evaluated for impairment	$	129,696	$	31,300	$	5,883	$	—	$	18,336	$	11,664	$	2,506	$	199,385
Collectively evaluated for impairment	11,909,168		9,447,679		2,236,444		647,338		6,196,050		1,606,781		330,113		32,373,573
Acquired with deteriorated credit quality ⁽¹⁾	1,942		157,359		28,263		42		94,945		7,777		—		290,328
Total ⁽¹⁾	$	12,040,806	$	9,636,338	$	2,270,590	$	647,380	$	6,309,331	$	1,626,222	$	332,619	$	32,863,286




($ in thousands)	December 31, 2018
	Commercial								Consumer						Total
	C&I		CRE		Multifamily Residential		Construction and Land		Single- Family Residential		HELOCs		Other Consumer		Total
Allowance for loan losses
Individually evaluated for impairment	$	1,219	$	208	$	75	$	—	$	34	$	5	$	2,491	$	4,032
Collectively evaluated for impairment	190,121		38,823		19,208		20,282		31,306		5,769		1,759		307,268
Acquired with deteriorated credit quality	—		22		—		—		—		—		—		22
Total	$	191,340	$	39,053	$	19,283	$	20,282	$	31,340	$	5,774	$	4,250	$	311,322

Recorded investment in loans
Individually evaluated for impairment	$	57,088	$	30,352	$	5,560	$	—	$	13,460	$	9,956	$	2,502	$	118,918
Collectively evaluated for impairment	11,997,730		9,254,231		2,240,946		538,752		5,925,798		1,672,023		328,768		31,958,248
Acquired with deteriorated credit quality ⁽¹⁾	2,152		165,252		34,526		42		97,196		8,855		—		308,023
Total ⁽¹⁾	$	12,056,970	$	9,449,835	$	2,281,032	$	538,794	$	6,036,454	$	1,690,834	$	331,270	$	32,385,189


(1)	Loans net of ASC 310-30 discount.

Purchased Credit-Impaired Loans

At the date of acquisition, PCI loans are pooled and accounted for at fair value, which represents the discounted value of the expected cash flows of the loan portfolio. A pool is accounted for as a single asset with a single interest rate, cumulative loss rate and cash flows expectation. The cash flows expected over the life of the pools are estimated by an internal cash flows model that projects cash flows and calculates the carrying values of the pools, book yields, effective interest income and impairment, if any, based on pool level events. Assumptions as to cumulative loss rates, loss curves and prepayment speeds are utilized to calculate the expected cash flows. The amount of expected cash flows over the initial investment in the loan represents the “accretable yield,” which is recognized as interest income on a level yield basis over the life of the loan. Projected loss rates and prepayment speeds affect the estimated life of PCI loans, which may change the amount of interest income, and possibly principal, expected to be collected. The excess of total contractual cash flows over the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the “nonaccretable difference.”

The following table presents the changes in accretable yield for PCI loans for the three months ended March 31, 2019 and 2018:




($ in thousands)	Three Months Ended March 31,
($ in thousands)	2019			2018
Accretable yield for PCI loans, beginning of period	$	74,870		$	101,977
Accretion	(6,201		)	(9,134		)
Changes in expected cash flows	192			3,021
Accretable yield for PCI loans, end of period	$	68,861		$	95,864

Loans Held-for-Sale

At the time of commitment to originate or purchase a loan, the loan is determined to be held for investment if it is the Company’s intent to hold the loan to maturity or for the “foreseeable future,” subject to periodic reviews under the Company’s evaluation processes, including asset/liability and credit risk management. When the Company subsequently changes its intent to hold certain loans, the loans are transferred from held-for-investment to held-for-sale at the lower of cost or fair value. As of March 31, 2019, there were no loans held-for-sale. In comparison, as of December 31, 2018, loans held-for-sale of $275 thousand consisted of single-family residential loans.

Loan Purchases, Transfers and Sales

From time to time, the Company purchases and sells loans in the secondary market. Certain purchased loans are transferred from held-for-investment to held-for-sale, and write-downs to allowance for loan losses are recorded, when appropriate. The following tables present information on loan purchases into held-for-investment portfolio, reclassification of loans held-for-investment to held-for-sale and sales during the three months ended March 31, 2019 and 2018:




($ in thousands)	Three Months Ended March 31, 2019
	Commercial						Consumer		Total
	C&I		CRE		Multifamily Residential		Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale ⁽¹⁾	$	75,573	$	16,655	$	—	$	—	$	92,228
Sales ^(2)(3)(4)	$	75,646	$	16,655	$	—	$	2,442	$	94,743
Purchases ⁽⁵⁾	$	107,194	$	—	$	4,218	$	36,402	$	147,814




($ in thousands)	Three Months Ended March 31, 2018
	Commercial						Consumer
	C&I		CRE		Multifamily Residential		Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale ⁽¹⁾	$	146,391	$	9,376	$	—	$	—	$	155,767
Sales ^(2)(3)(4)	$	102,365	$	9,376	$	—	$	2,546	$	114,287
Purchases ⁽⁵⁾	$	64,747	$	—	$	186	$	15,113	$	80,046


(1)	The Company recorded $73 thousand and $85 thousand in write-downs to the allowance for loan losses related to loans transferred from held-for-investment to held-for-sale for the three months ended March 31, 2019 and 2018, respectively.


(2)	Includes originated loans sold of $76.5 million and $89.7 million for the three months ended March 31, 2019 and 2018, respectively. Originated loans sold during each of the three months ended March 31, 2019 and 2018 were primarily C&I and CRE loans.


(3)	Includes purchased loans sold in the secondary market of $18.2 million and $24.6 million for the three months ended March 31, 2019 and 2018, respectively.


(4)	Net gains on sales of loans, excluding the lower of cost or fair value adjustments, were $915 thousand and $1.6 million for the three months ended March 31, 2019 and 2018, respectively. No lower of cost or fair value adjustments were recorded for each of the three months ended March 31, 2019 and 2018.


(5)	C&I loan purchases for each of the three months ended March 31, 2019 and 2018 were comprised of C&I syndicated loans.

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

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