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Loans Receivable and Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2020
Loans and Leases Receivable Disclosure [Abstract]  
Loans Receivable and Allowance for Credit Losses Loans Receivable and Allowance for Credit Losses
The following table presents the composition of the Company’s loans held-for-investment as of December 31, 2020 and 2019:
($ in thousands)December 31, 2020December 31, 2019
Amortized Cost (1)
Non-PCI Loans (1)
PCI Loans
Total (1)
Commercial:
C&I (2)
$13,631,726 $12,149,121 $1,810 $12,150,931 
CRE:
CRE11,174,611 10,165,247 113,201 10,278,448 
Multifamily residential3,033,998 2,834,212 22,162 2,856,374 
Construction and land599,692 628,459 40 628,499 
Total CRE14,808,301 13,627,918 135,403 13,763,321 
Total commercial28,440,027 25,777,039 137,213 25,914,252 
Consumer:
Residential mortgage:
Single-family residential8,185,953 7,028,979 79,611 7,108,590 
HELOCs1,601,716 1,466,736 6,047 1,472,783 
Total residential mortgage9,787,669 8,495,715 85,658 8,581,373 
Other consumer163,259 282,914 — 282,914 
Total consumer9,950,928 8,778,629 85,658 8,864,287 
Total loans held-for-investment$38,390,955 $34,555,668 $222,871 $34,778,539 
Allowance for loan losses(619,983)(358,287)— (358,287)
Loans held-for-investment, net$37,770,972 $34,197,381 $222,871 $34,420,252 
(1)Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(58.8) million and $(43.2) million as of December 31, 2020 and 2019, respectively.
(2)Includes PPP loans of $1.57 billion as of December 31, 2020.

Loans held-for-investments’ accrued interest receivable was $107.5 million and $121.8 million as of December 31, 2020 and 2019, respectively. Reversal of interest income related to nonaccrual loans was approximately $2.5 million during the year ended December 31, 2020. Interest income recognized on nonaccrual loans was approximately $44 thousand for the year ended December 31, 2020. For the accounting policy on accrued interest receivable related to loans held-for-investment, see Note 1 — Summary of Significant Accounting Policies — Loans Held-for-Investment to the Consolidated Financial Statements in this Form 10-K.

Loans totaling $23.26 billion and $22.43 billion as of December 31, 2020 and 2019, respectively, were pledged to secure borrowings and provide additional borrowing capacity from the FRBSF and the FHLB.

Credit Quality Indicators

All loans are subject to the Company’s credit review and monitoring. For the commercial portfolio, loans are risk rated based on an analysis of the borrower’s current payment performance or delinquency, repayment sources, financial and liquidity factors, including industry and geographic considerations. For the majority of the consumer portfolio, payment performance or delinquency is the driving indicator for the risk ratings.

For the Company’s internal credit risk ratings, each individual loan is given a risk rating of 1 through 10. Loans risk rated 1 through 5 are assigned an internal risk rating of “Pass,” with loans risk rated 1 being fully secured by cash or U.S. government and its agencies. Pass loans have sufficient sources of repayment to repay the loan in full, in accordance with all terms and conditions. Loans assigned a risk rating of 6 have potential weaknesses that warrant closer attention by management; these are assigned an internal risk rating of “Special Mention.” Loans assigned a risk rating of 7 or 8 have well-defined weaknesses that may jeopardize the full and timely repayment of the loan; these are assigned an internal risk rating of “Substandard.” Loans assigned a risk rating of 9 have insufficient sources of repayment and a high probability of loss; these are assigned an internal risk rating of “Doubtful.” Loans assigned a risk rating of 10 are uncollectable and of such little value that they are no longer considered bankable assets; these are assigned an internal risk rating of “Loss.” Exposures categorized as criticized consist of special mention, substandard, doubtful and loss categories. The Company reviews the internal risk ratings of its loan portfolio on a regular and ongoing basis, and adjusts the ratings based on changes in the borrowers’ financial status and the collectability of the loans.
The following table summarizes the Company’s loans held-for-investment as of December 31, 2020, presented by loan portfolio segments, internal risk ratings and vintage year. The vintage year is the year of origination, renewal or major modification.
($ in thousands)December 31, 2020
Term LoansRevolving Loans
Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost BasisTotal
Amortized Cost Basis by Origination Year
20202019201820172016Prior
Commercial:
C&I:
Pass$3,912,147 $1,477,740 $483,725 $245,594 $69,482 $245,615 $6,431,003 $29,487 $12,894,793 
Criticized (accrual) 120,183 74,601 56,785 19,426 1,487 5,872 324,640 — 602,994 
Criticized (nonaccrual)2,125 25,267 22,240 18,787 4,964 1,592 58,964 — 133,939 
Total C&I4,034,455 1,577,608 562,750 283,807 75,933 253,079 6,814,607 29,487 13,631,726 
CRE:
Pass2,296,649 2,402,136 2,310,748 1,328,251 732,694 1,529,681 173,267 19,064 10,792,490 
Criticized (accrual)47,459 63,654 43,447 98,259 2,094 80,662 — — 335,575 
Criticized (nonaccrual)— — 42,067 1,115 — 3,364 — — 46,546 
Total CRE2,344,108 2,465,790 2,396,262 1,427,625 734,788 1,613,707 173,267 19,064 11,174,611 
Multifamily residential:
Pass783,671 783,589 479,959 411,945 181,213 348,751 5,895 — 2,995,023 
Criticized (accrual)— 735 22,330 6,101 264 5,877 — — 35,307 
Criticized (nonaccrual)— — 1,475 — — 2,193 — — 3,668 
Total multifamily residential
783,671 784,324 503,764 418,046 181,477 356,821 5,895 — 3,033,998 
Construction and land:
Pass224,924 172,707 156,712 — 20,897 1,028 — — 576,268 
Criticized (accrual)3,524 — — — — 19,900 — — 23,424 
Criticized (nonaccrual)— — — — — — — — — 
Total construction and land
228,448 172,707 156,712 — 20,897 20,928 — — 599,692 
Total CRE3,356,227 3,422,821 3,056,738 1,845,671 937,162 1,991,456 179,162 19,064 14,808,301 
Total commercial
7,390,682 5,000,429 3,619,488 2,129,478 1,013,095 2,244,535 6,993,769 48,551 28,440,027 
Consumer:
Single-family residential:
Pass (1)
2,385,853 1,813,200 1,501,660 1,021,707 523,170 921,714 — — 8,167,304 
Criticized (accrual)— 1,429 — — 119 1,034 — — 2,582 
Criticized (Nonaccrual) (1)
— 226 812 1,789 1,994 11,246 — — 16,067 
Total single-family residential mortgage
2,385,853 1,814,855 1,502,472 1,023,496 525,283 933,994 — — 8,185,953 
HELOCs:
Pass1,131 880 2,879 5,363 8,433 13,475 1,328,919 225,810 1,586,890 
Criticized (accrual)— — 200 — 996 — 1,328 606 3,130 
Criticized (nonaccrual)— 151 285 4,617 164 1,962 — 4,517 11,696 
Total HELOCs1,131 1,031 3,364 9,980 9,593 15,437 1,330,247 230,933 1,601,716 
Total residential mortgage2,386,984 1,815,886 1,505,836 1,033,476 534,876 949,431 1,330,247 230,933 9,787,669 
Other consumer:
Pass9,531 — — 1,830 — 83,255 66,136 — 160,752 
Criticized (accrual)16 — — — — — — — 16 
Criticized (nonaccrual)— — — 2,491 — — — — 2,491 
Total other consumer
9,547 — — 4,321 — 83,255 66,136 — 163,259 
Total consumer2,396,531 1,815,886 1,505,836 1,037,797 534,876 1,032,686 1,396,383 230,933 9,950,928 
Total
$9,787,213 $6,816,315 $5,125,324 $3,167,275 $1,547,971 $3,277,221 $8,390,152 $279,484 $38,390,955 
(1)As of December 31, 2020, $747 thousand of nonaccrual loans whose payments are guaranteed by the Federal Housing Administration were classified with a pass rating.

Revolving loans that are converted to term loans presented in the table above are excluded from the term loans by vintage year columns. During the year ended December 31, 2020, HELOCs totaling $145.0 million were converted to term loans. Four C&I revolving loans of $23.9 million were converted to a term loan during the year ended December 31, 2020.
The following tables present the credit risk ratings for non-PCI and PCI loans by portfolio segments as of December 31, 2019:
($ in thousands)December 31, 2019
PassCriticizedTotal
Non-PCI Loans
AccrualNonaccrual
Commercial:
C&I$11,423,094 $651,192 $74,835 $12,149,121 
CRE:
CRE10,003,749 145,057 16,441 10,165,247 
Multifamily residential2,806,475 26,918 819 2,834,212 
Construction and land603,447 25,012 — 628,459 
Total CRE13,413,671 196,987 17,260 13,627,918 
Total commercial 24,836,765 848,179 92,095 25,777,039 
Consumer:
Residential mortgage:
Single-family residential (1)
7,012,522 2,278 14,179 7,028,979 
HELOCs1,453,207 2,787 10,742 1,466,736 
Total residential mortgage8,465,729 5,065 24,921 8,495,715 
Other consumer280,392 5 2,517 282,914 
Total consumer8,746,121 5,070 27,438 8,778,629 
Total$33,582,886 $853,249 $119,533 $34,555,668 
($ in thousands)December 31, 2019
PassCriticized Total
PCI Loans
AccrualNonaccrual
Commercial:
C&I$1,810 $— $— $1,810 
CRE:
CRE102,257 10,939 5 113,201 
Multifamily residential22,162 — — 22,162 
Construction and land40 — — 40 
Total CRE124,459 10,939 5 135,403 
Total commercial 126,269 10,939 5 137,213 
Consumer:
Residential mortgage:
Single-family residential79,517 — 94 79,611 
HELOCs5,849 — 198 6,047 
Total residential mortgage85,366 — 292 85,658 
Total consumer85,366 — 292 85,658 
Total (2)
$211,635 $10,939 $297 $222,871 
(1)As of December 31, 2019, $686 thousand of nonaccrual loans whose payments are guaranteed by the Federal Housing Administration were classified with a pass rating.
(2)Loans net of ASC 310-30 discount.
Nonaccrual and Past Due Loans

Loans that are 90 or more days past due are generally placed on nonaccrual status, unless the loan is well-collateralized and in the process of collection. 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 table presents the aging analysis of total loans held-for-investment as of December 31, 2020:
($ in thousands)December 31, 2020
Current
Accruing
Loans		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		Total
Loans
Commercial:
C&I$13,488,070 $8,993 $724 $9,717 $100,602 $33,337 $133,939 $13,631,726 
CRE:
CRE11,127,690 375 — 375 448 46,098 46,546 11,174,611 
Multifamily residential3,028,512 1,818 — 1,818 2,375 1,293 3,668 3,033,998 
Construction and land579,792 19,900 — 19,900 — — — 599,692 
Total CRE14,735,994 22,093 — 22,093 2,823 47,391 50,214 14,808,301 
Total commercial28,224,064 31,086 724 31,810 103,425 80,728 184,153 28,440,027 
Consumer:
Residential mortgage:
Single-family residential8,156,645 9,911 2,583 12,494 2,385 14,429 16,814 8,185,953 
HELOCs1,583,968 2,922 3,130 6,052 577 11,119 11,696 1,601,716 
Total residential mortgage9,740,613 12,833 5,713 18,546 2,962 25,548 28,510 9,787,669 
Other consumer160,534 217 17 234 — 2,491 2,491 163,259 
Total consumer9,901,147 13,050 5,730 18,780 2,962 28,039 31,001 9,950,928 
Total$38,125,211 $44,136 $6,454 $50,590 $106,387 $108,767 $215,154 $38,390,955 

The following table presents amortized cost of loans on nonaccrual status for which there was no related allowance for loan losses as of December 31, 2020:
($ in thousands)December 31, 2020
Commercial:
C&I$62,040 
CRE:
CRE45,537 
Multifamily residential2,519 
Total CRE48,056 
Total commercial110,096 
Consumer:
Residential mortgage:
Single-family residential6,013 
HELOCs8,076 
Total residential mortgage14,089 
Other consumer2,491 
Total consumer16,580 
Total nonaccrual loans with no related allowance for loan losses$126,676 
The following table presents the aging analysis of non-PCI loans as of December 31, 2019:
($ in thousands)December 31, 2019
Current
Accruing
Loans		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		Total
Non-PCI
Loans
Commercial:
C&I
$12,026,131 $31,121 $17,034 $48,155 $31,084 $43,751 $74,835 $12,149,121 
CRE:
CRE10,123,999 22,830 1,977 24,807 540 15,901 16,441 10,165,247 
Multifamily residential
2,832,664 198 531 729 534 285 819 2,834,212 
Construction and land
628,459 — — — — — — 628,459 
Total CRE
13,585,122 23,028 2,508 25,536 1,074 16,186 17,260 13,627,918 
Total commercial
25,611,253 54,149 19,542 73,691 32,158 59,937 92,095 25,777,039 
Consumer:
Residential mortgage:
Single-family residential
6,993,597 15,443 5,074 20,517 1,964 12,901 14,865 7,028,979 
HELOCs
1,448,930 4,273 2,791 7,064 1,448 9,294 10,742 1,466,736 
Total residential mortgage
8,442,527 19,716 7,865 27,581 3,412 22,195 25,607 8,495,715 
Other consumer280,386 6 5 11 — 2,517 2,517 282,914 
Total consumer
8,722,913 19,722 7,870 27,592 3,412 24,712 28,124 8,778,629 
Total
$34,334,166 $73,871 $27,412 $101,283 $35,570 $84,649 $120,219 $34,555,668 

PCI loans were excluded from the above aging analysis table as of December 31, 2019, as the Company elected to account for these loans on a pool level basis under ASC 310-30 at the time of acquisition. As of December 31, 2019, PCI loans on nonaccrual status totaled $297 thousand.

Foreclosed Assets

Foreclosed assets, consisting of OREO and other nonperforming assets, are included in Other assets on the Consolidated Balance Sheet. The Company had $19.7 million in foreclosed assets as of December 31, 2020, compared with $1.3 million as of December 31, 2019. The Company commences the foreclosure process on consumer mortgage loans when a borrower becomes 120 days delinquent in accordance with the Consumer Finance Protection Bureau guidelines. The carrying values of consumer real estate loans that were in the process of active or suspended foreclosure were $4.1 million and $7.2 million as of December 31, 2020 and 2019, respectively. The Company has suspended certain mortgage foreclosure activities in connection with our actions to support our customers during the COVID-19 pandemic.
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. Beginning in March 2020, the Company has implemented various commercial and consumer loan modification programs to provide its borrowers relief from the economic impacts of the COVID-19 pandemic. These COVID-related modifications are generally not classified as TDRs due to the relief under the CARES Act, as amended by the CAA, and the Interagency Statement, and therefore are not included in the discussion below. Assistance provided in response to the COVID-19 pandemic could delay the recognition of delinquencies, nonaccrual status, and net charge-offs for those borrowers who would have otherwise moved into past due or nonaccrual status. See Note 1 — Summary of Significant Accounting Policies — Troubled Debt Restructurings to the Consolidated Financial Statements in this Form 10-K for additional information related to TDR.
The following tables present the additions to TDRs for the years ended December 31, 2020, 2019 and 2018:
($ in thousands)Loans Modified as TDRs During the Year Ended December 31, 2020
Number
of
Loans		Pre-Modification
Outstanding
Recorded
Investment
Post-Modification
Outstanding
Recorded
Investment (1)
Financial
Impact (2)
Commercial:
C&I14 $152,249 $134,467 $19,555 
CRE:
CRE2 21,429 21,221 18 
Multifamily residential1 1,220 1,226 — 
Total CRE3 22,649 22,447 18 
Total commercial17 174,898 156,914 19,573 
Consumer:
Total consumer— — — — 
Total17 $174,898 $156,914 $19,573 
($ in thousands)Loans Modified as TDRs During the Year Ended December 31, 2019
Number
of
Loans		Pre-Modification
Outstanding
Recorded
Investment
Post-Modification
Outstanding
Recorded
Investment (1)
Financial
Impact (2)
Commercial:
C&I8 $95,742 $71,332 $8,004 
CRE:
Construction and land1 19,696 19,691 — 
Total CRE1 19,696 19,691 — 
Total commercial9 115,438 91,023 8,004 
Consumer:
Residential mortgage:
Single-family residential2 1,123 1,098 2 
HELOCs2 539 528 — 
Total residential mortgage4 1,662 1,626 2 
Total consumer4 1,662 1,626 2 
Total13 $117,100 $92,649 $8,006 
($ in thousands)Loans Modified as TDRs During the Year Ended December 31, 2018
Number
of
Loans		Pre-Modification
Outstanding
Recorded
Investment
Post-Modification
Outstanding
Recorded
Investment (1)
Financial
Impact (2)
Commercial:
C&I8 $11,366 $9,520 $699 
CRE:
CRE1 750 752 — 
Total CRE1 750 752 — 
Total commercial9 12,116 10,272 699 
Consumer:
Residential mortgage:
Single-family residential2 405 391 (28)
HELOCs2 1,546 1,418 — 
Total residential mortgage4 1,951 1,809 (28)
Total consumer4 1,951 1,809 (28)
Total13 $14,067 $12,081 $671 
(1)Includes subsequent payments after modification and reflects the balance as of December 31, 2020, 2019 and 2018.
(2)Includes charge-offs and specific reserves recorded since the modification date.

The following tables present the TDR post-modifications outstanding balances for the years ended December 31, 2020, 2019 and 2018 by modification type:
($ in thousands)Modification Type During the Year Ended December 31, 2020
Principal (1)
Principal
and
Interest (2)
Interest
Rate
Reduction		Interest
Deferments
Other (3)
Total
Commercial:
C&I$59,134 $10,863 $31,913 $32,557 $— $134,467 
CRE:
CRE21,221 — — — — 21,221 
Multifamily residential1,226 — — — — 1,226 
Total CRE22,447 — — — — 22,447 
Total commercial81,581 10,863 31,913 32,557 — 156,914 
Consumer:
Total consumer— — — — — — 
Total$81,581 $10,863 $31,913 $32,557 $— $156,914 
($ in thousands)Modification Type During the Year Ended December 31, 2019
Principal (1)
Principal
and
Interest (2)
Interest
Rate
Reduction		Interest
Deferments
Other (3)
Total
Commercial:
C&I$31,611 $— $— $— $39,721 $71,332 
CRE:
Construction and land— — 19,691 — — 19,691 
Total CRE— — 19,691 — — 19,691 
Total commercial31,611 — 19,691 — 39,721 91,023 
Consumer:
Residential mortgage:
Single-family residential— 1,098 — — — 1,098 
HELOCs— 397 — — 131 528 
Total residential mortgage— 1,495 — — 131 1,626 
Total consumer— 1,495 — — 131 1,626 
Total$31,611 $1,495 $19,691 $— $39,852 $92,649 
($ in thousands)Modification Type During the Year Ended December 31, 2018
Principal (1)
Principal
and
Interest (2)
Interest
Rate
Reduction		Interest
Deferments
Other (3)
Total
Commercial:
C&I$5,472 $— $— $— $4,048 $9,520 
CRE:
CRE— — 752 — — 752 
Total CRE— — 752 — — 752 
Total commercial5,472 — 752 — 4,048 10,272 
Consumer:
Residential mortgage:
Single-family residential66 — — — 325 391 
HELOCs1,353 — — — 65 1,418 
Total residential mortgage1,419 — — — 390 1,809 
Total consumer1,419 — — — 390 1,809 
Total$6,891 $— $752 $— $4,438 $12,081 
(1)Includes forbearance payments, term extensions and principal deferments that modify the terms of the loan from principal and interest payments to interest payments only.
(2)Includes principal and interest deferments or reductions.
(3)Includes primarily funding to secure additional collateral and provides liquidity to collateral-dependent C&I loans.
After a loan is modified as TDR, the Company continues to monitor its performance under its most recent restructured terms. A TDR may become delinquent and result in payment default (generally 90 days past due) subsequent to restructuring. The following table presents information on loans for which a subsequent payment default occurred during the years ended December 31, 2020, 2019 and 2018, respectively, which had been modified as TDR within the previous 12 months of its default, and were still in default as of the respective periods end:
($ in thousands)Loans Modified as TDRs that Subsequently Defaulted
During the Year Ended December 31,
202020192018
Number of
Loans		Recorded
Investment		Number of
Loans		Recorded
Investment		Number of
Loans		Recorded
Investment
Commercial:
C&I1 $15,852 3 $13,112 4 $1,890 
CRE:
CRE— — — — 1 186 
Total CRE— — — — 1 186 
Total commercial1 15,852 3 13,112 5 2,076 
Consumer:
Residential mortgage:
HELOCs— — — — 1 150 
Total residential mortgage— — — — 1 150 
Total consumer— — — — 1 150 
Total1 $15,852 3 $13,112 6 $2,226 

As of December 31, 2020 and 2019, the remaining commitments to lend additional funds to borrowers whose terms have been modified as TDRs were $3.0 million and $2.2 million, respectively.
In connection with the adoption of ASU 2016-13 on January 1, 2020, the Company no longer provides information on impaired loans. Information on non-PCI impaired loans as of December 31, 2019 is presented as follows:
($ in thousands)December 31, 2019
Unpaid
Principal
Balance		Recorded
Investment
With No
Allowance		Recorded
Investment
With
Allowance		Total
Recorded
Investment		Related
Allowance
Commercial:
C&I$174,656 $73,956 $40,086 $114,042 $2,881 
CRE:
CRE27,601 20,098 1,520 21,618 97 
Multifamily residential4,965 1,371 3,093 4,464 55 
Construction and land19,696 19,691 — 19,691 — 
Total CRE52,262 41,160 4,613 45,773 152 
Total commercial226,918 115,116 44,699 159,815 3,033 
Consumer:
Residential mortgage:
Single-family residential23,626 8,507 13,704 22,211 35 
HELOCs13,711 6,125 7,449 13,574 8 
Total residential mortgage37,337 14,632 21,153 35,785 43 
Other consumer2,517 — 2,517 2,517 2,517 
Total consumer39,854 14,632 23,670 38,302 2,560 
Total non-PCI impaired loans$266,772 $129,748 $68,369 $198,117 $5,593 
The following table presents the average recorded investment and interest income recognized on non-PCI impaired loans for the years ended December 31, 2019 and 2018:
($ in thousands)Year Ended December 31,
20192018
Average
Recorded
Investment
Recognized
Interest
Income (1)
Average
Recorded
Investment
Recognized
Interest
   Income (1)
Commercial:
C&I$248,619 $2,932 $143,430 $1,046 
CRE:
CRE33,046 464 35,049 491 
Multifamily residential6,116 228 11,742 249 
Construction and land19,691 68 3,973 — 
Total CRE58,853 760 50,764 740 
Total commercial307,472 3,692 194,194 1,786 
Consumer:
Residential mortgage:
Single-family residential37,315 496 22,350 474 
HELOCs22,851 130 14,134 70 
Total residential mortgage60,166 626 36,484 544 
Other consumer2,552 — 2,502 — 
Total consumer62,718 626 38,986 544 
Total non-PCI impaired loans$370,190 $4,318 $233,180 $2,330 
(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

On January 1, 2020, the Company adopted ASU 2016-13 that establishes a single allowance framework for all financial assets measured at amortized cost and certain off-balance sheet credit exposures. It requires the measurement of the allowance for credit losses to be based on management’s best estimate of lifetime expected credit losses inherent in the Company’s relevant financial assets. Balance sheet information and results of operations for reporting periods beginning with January 1, 2020 are presented under ASC 326, while prior period comparisons continue to be presented under legacy GAAP.

The allowance for credit losses is deducted from the amortized cost basis of a financial asset or a group of financial assets so that the balance sheet reflects the net amount the Company expects to collect. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, and deferred fees and costs. Subsequent changes in expected credit losses are recognized in net income as a provision for credit loss expense or a reversal of credit loss expense.

The process of the allowance for credit losses involves procedures to consider the unique risk characteristics of the portfolio segments. The majority of the Company’s credit exposures share risk characteristics with other similar exposures, and as a result are collectively evaluated. The collectively evaluated loans cover performing risk-rated loans and unfunded credit commitments. If an exposure does not share risk characteristics with other exposures, the Company generally estimates expected credit losses on an individual basis. The individually assessed loans cover loans modified or reasonably expected to be modified in a TDR, collateral-dependent loans, as well as, risk-rated loans that have been placed on nonaccrual status.

Allowance for Collectively Evaluated Loans

The allowance for collectively evaluated loans consists of a quantitative component that assesses many different risk factors which are considered in our models and a qualitative component that considers risk factors external to the models. Each of these components are described below.
Quantitative Component — The allowance for loan losses is estimated using quantitative methods that consider a variety of factors such as historical loss experience, the current credit quality of the portfolio, as well as an economic outlook over the life of the loan. The Company incorporates forward-looking information using macroeconomic scenarios applied over the forecasted life of the loans. The forward-looking information is limited to the reasonable and supportable period. These macroeconomic scenarios include variables that are considered key drivers of increases and decreases in credit losses. The Company utilizes a probability-weighted multiple scenario forecast approach. These scenarios may consist of a base forecast representing management's view of the most likely outcome, combined with downside and upside scenarios reflecting possible worsening or improving economic conditions. A probability-weighted average of these macroeconomic scenarios over a reasonable and supportable forecast period is incorporated into the quantitative models. If the loans’ life extends beyond the reasonable and supportable forecast period, then historical experience, or long-run macroeconomic trends is considered over the remaining life of the loans in estimation of the allowance for loan losses.

Qualitative Component — The Company also considers the following qualitative factors in the determination of the collectively evaluated allowance, if these factors have not already been captured by the quantitative model. Such qualitative factors may include, but not limited to:
•Loan growth trends;
•The volume and severity of past due financial assets, and the volume and severity of adversely classified or rated financial assets;
•The Company’s lending policies and procedures, including changes in lending strategies, underwriting standards, collection, write-off and recovery practices,
•Knowledge of the borrower’s operations;
•The quality of the Company’s credit review system;
•The experience, ability and depth of the Company’s management, lending staff and other relevant staff;
•The effect of other external factors such as the regulatory, legal and technological environments; and
•Actual and expected changes in international, national, regional, and local economic and business conditions in which the Company operates, including the actual and expected conditions of various market segments.

The magnitude of the impact of these factors on the Company’s qualitative assessment of the allowance for credit losses changes from period to period according to changes made by management in its assessment of these factors. The extent to which these factors change may be dependent on whether they are already reflected in quantitative loss estimates during the current period and the extent changes in these factors diverge from period to period. For the year ended December 31, 2020, there were no changes to the reasonable and supportable forecast period, and reversion to historical loss experience method.

The following table provides key credit risk characteristics and macroeconomic variables that the Company uses to estimate the expected credit losses by portfolio segment:
Portfolio SegmentRisk CharacteristicsMacroeconomic Variables
C&IInternal risk rating; size and credit spread at origination, and time to maturityUnemployment rate, and two and ten year treasury spread
CRE, Multifamily residential, and Construction and landDelinquency status; maturity date; collateral value; property type, and geographic locationUnemployment rate; GDP, and U.S. Treasury rates
Single-family residential and HELOCsFICO; delinquency status; maturity date; collateral value, and geographic locationUnemployment rate; GDP, and home price index
Other consumerHistorical loss experience
Immaterial (1)
(1)Macroeconomic variables are included in the qualitative estimate.

Allowance for Loan Losses for the Commercial Loan Portfolio — The Company’s C&I loan lifetime loss rate model estimates credit losses by estimating a loss rate expected over the life of a loan. This loss rate is applied to the amortized cost basis, excluding accrued interest receivable, to determine expected credit losses. The lifetime loss rate model’s reasonable and supportable period spans eight quarters, thereafter immediately reverting to the historical average loss rate, expressed through the loan-level lifetime loss rate.

For CRE loans, projected probability of defaults (“PDs”) and loss given defaults (“LGDs”) are applied to the estimated exposure at default, considering the term and payment structure of the loan, to generate estimates of expected loss at the loan level. Within the reasonable and supportable period, the forecast of future economic conditions returns to long-run historical economic trends.
In order to estimate the life of a loan under both models, the contractual term of the loan is adjusted for estimated prepayments, which are based on historical prepayment experience.

Allowance for Loan Losses for the Consumer Loan Portfolio — For single-family residential and HELOC loans, projected PDs and LGDs are applied to the estimated exposure at default, considering the term and payment structure of the loan, to generate estimates of expected loss at the loan level. Within the reasonable and supportable period, the forecast of future economic conditions returns to long-run historical economic trends.

For other consumer loans, the Company uses a loss rate approach. In order to estimate the life of a loan, the contractual term of the loan is adjusted for estimated prepayments, which are based on historical prepayment experience.

Qualitative Allowance for Collectively Evaluated Loans — While the Company’s allowance methodologies strive to reflect all relevant credit risk factors, there continues to be uncertainty associated with, but not limited to, potential imprecision in the estimation process due to the inherent time lag of obtaining information and normal variations between expected and actual outcomes. The Company may hold additional qualitative reserves that are designed to provide coverage for losses attributable to such risk. The allowance for loan losses as of December 31, 2020 also included qualitative adjustments for certain industry sectors, such as oil & gas, included as part of the C&I loan portfolio.

Allowance for Individually Evaluated Loans

When a loan no longer shares similar risk characteristics with other loans, such as in the case for certain nonaccrual or TDR loans, the Company estimates the allowance for loan losses on an individual loan basis. The allowance for loan losses for individually evaluated loans is measured as the difference between the recorded value of the loans and their fair value. For loans evaluated individually, the Company uses one of three different asset valuation measurement methods: (1) the fair value of collateral less costs to sell; (2) the present value of expected future cash flows; and (3) the loan's observable market price. If an individually evaluated loan is determined to be collateral dependent, the Company applies the fair value of the collateral less costs to sell method. If an individually evaluated loan is determined not to be collateral dependent, the Company uses the present value of future cash flows or the observable market value of the loan.

Collateral-Dependent Loans — When a loan is collateral dependent, the allowance is measured on an individual loan basis and is limited to the difference between the recorded value and fair value of the collateral less cost of disposal or sale. As of December 31, 2020, collateral-dependent commercial and consumer loans totaled $97.2 million and $17.3 million, respectively. The Company's commercial collateral-dependent loans were secured by real estates or other collateral. The Company's consumer collateral-dependent loans were all residential mortgage loans, secured by their underlying real estates. As of December 31, 2020, the collateral value of the properties securing each of these collateral dependent loans, net of selling costs, exceeded the recorded value of the individual loans.

The following tables summarize the activity in the allowance for loan losses by portfolio segments for the years ended December 31, 2020, 2019 and 2018:
($ in thousands)Year Ended December 31, 2020
CommercialConsumerTotal
C&ICREResidential MortgageOther
Consumer
CREMultifamily
Residential		Construction
and Land		Single-
Family
Residential		HELOCs
Allowance for loan losses, beginning of period$238,376 $40,509 $22,826 $19,404 $28,527 $5,265 $3,380 $358,287 
Impact of ASU 2016-13 adoption74,237 72,169 (8,112)(9,889)(3,670)(1,798)2,221 125,158 
Provision for (reversal of) credit losses on loans(a)145,212 55,864 10,879 644 (9,922)(605)(3,381)198,691 
Gross charge-offs(66,225)(15,206)— — — (221)(185)(81,837)
Gross recoveries5,428 10,455 1,980 80 585 49 95 18,672 
Total net (charge-offs) recoveries(60,797)(4,751)1,980 80 585 (172)(90)(63,165)
Foreign currency translation adjustment1,012 — — — — — — 1,012 
Allowance for loan losses, end of period$398,040 $163,791 $27,573 $10,239 $15,520 $2,690 $2,130 $619,983 
($ in thousands)Year Ended December 31, 2019
CommercialConsumerTotal
C&ICREResidential MortgageOther
Consumer
CREMultifamily
Residential		Construction
and Land		Single-
Family
Residential		HELOCs
Allowance for loan losses, beginning of period
$189,117 $40,666 $19,885 $20,290 $31,340 $5,774 $4,250 $311,322 
Provision for (reversal of) credit losses on loans
(a)109,068 (4,345)1,085 (1,422)(2,938)(516)(839)100,093 
Gross charge-offs
(73,985)(1,021)— — (11)— (50)(75,067)
Gross recoveries
14,501 5,209 1,856 536 136 7 19 22,264 
Total net (charge-offs) recoveries
(59,484)4,188 1,856 536 125 7 (31)(52,803)
Foreign currency translation adjustment(325)— — — — — — (325)
Allowance for loan losses, end of period$238,376 $40,509 $22,826 $19,404 $28,527 $5,265 $3,380 $358,287 
($ in thousands)Year Ended December 31, 2018
CommercialConsumerTotal
C&ICREResidential MortgageOther
Consumer
CREMultifamily
Residential		Construction
and Land		Single-
Family
Residential		HELOCs
Allowance for loan losses, beginning of period$163,058 $40,809 $19,537 $26,881 $26,362 $7,354 $3,127 $287,128 
Provision for (reversal of) credit losses on loans(a)75,629 (5,337)(1,409)(7,331)3,765 (1,618)1,308 65,007 
Gross charge-offs(59,244)— — — (1)— (188)(59,433)
Gross recoveries10,417 5,194 1,757 740 1,214 38 3 19,363 
Total net (charge-offs) recoveries(48,827)5,194 1,757 740 1,213 38 (185)(40,070)
Foreign currency translation adjustment(743)— — — — — — (743)
Allowance for loan losses, end of period$189,117 $40,666 $19,885 $20,290 $31,340 $5,774 $4,250 $311,322 

The following table summarizes the activities in the allowance for unfunded credit commitments for the years ended December 31, 2020, 2019 and 2018:
($ in thousands)Year Ended December 31,
202020192018
Unfunded credit facilities
Allowance for unfunded credit commitments, beginning of period$11,158 $12,566 $13,318 
Impact of ASU 2016-13 adoption10,457 — — 
Provision for (reversal of ) credit losses on unfunded credit commitments(b)11,962 (1,408)(752)
Allowance for unfunded credit commitments, end of period33,577 11,158 12,566 
Provision for credit losses(a) + (b)$210,653 $98,685 $64,255 

The allowance for loan losses as of December 31, 2020 was $620.0 million, an increase of $261.7 million compared with $358.3 million as of December 31, 2019. The adoption of ASU 2016-13 increased the allowance for loan losses by $125.2 million on January 1, 2020. In addition, the overall increases in allowance for loan losses and the provision for credit losses of $210.7 million for the year ended December 31, 2020 were primarily driven by the deteriorating macroeconomic conditions and outlook as a result of the COVID-19 pandemic. During the year ended December 31, 2020, the macroeconomic environment declined in the first half of the year, and then improved slightly for the second half of 2020. The Company uses a multi-scenario approach in calculating the allowance for loan losses and applies management judgment to add qualitative factors for the impact of COVID-19 pandemic on industry and CRE sectors that are affected by the pandemic.
The allowance for unfunded credit commitments is maintained at a level that management believes to be sufficient to absorb estimated expected credit losses related to unfunded credit facilities. See Note 12 — Commitments, Contingencies and Related Party Transactions to the Consolidated Financial Statements in this Form 10-K for additional information related to unfunded credit reserves.

The following table presents the Company’s allowance for loan losses and recorded investments by portfolio segments and impairment methodology as of December 31, 2019. This table is no longer presented after December 31, 2019, given the adoption of ASU 2016-13 on January 1, 2020, which has a single impairment methodology.
($ in thousands)December 31, 2019
CommercialConsumerTotal
CREResidential Mortgage
C&ICREMultifamily
Residential		Construction
and Land		Single-Family
Residential		HELOCsOther
Consumer
Allowance for loan losses
Individually evaluated for impairment
$2,881 $97 $55 $— $35 $8 $2,517 $5,593 
Collectively evaluated for impairment
235,495 40,412 22,771 19,404 28,492 5,257 863 352,694 
Total
$238,376 $40,509 $22,826 $19,404 $28,527 $5,265 $3,380 $358,287 
Recorded investment in loans
Individually evaluated for impairment
$114,042 $21,618 $4,464 $19,691 $22,211 $13,574 $2,517 $198,117 
Collectively evaluated for impairment
12,035,079 10,143,629 2,829,748 608,768 7,006,768 1,453,162 280,397 34,357,551 
Acquired with deteriorated credit quality (1)
1,810 113,201 22,162 40 79,611 6,047 — 222,871 
Total (1)
$12,150,931 $10,278,448 $2,856,374 $628,499 $7,108,590 $1,472,783 $282,914 $34,778,539 
(1)Loans net of ASC 310-30 discount.

Purchased Credit-Impaired Loans

On January 1, 2020, the amortized cost basis of PCD loans was adjusted to reflect the $1.2 million of allowance for loan losses. For the year ended December 31, 2020, the Company did not acquire any PCD loans. For information on PCD loans, see Note 1 — Summary of Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-K.

The following table presents the changes in the accretable yield on PCI loans for the years ended December 31, 2019 and 2018:
($ in thousands)Year Ended December 31,
20192018
Accretable yield for PCI loans, beginning of period$74,870 $101,977 
Accretion(24,220)(34,662)
Changes in expected cash flows(140)7,555 
Accretable yield for PCI loans, end of period$50,510 $74,870