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Loans Receivable and Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2021
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 March 31, 2021 and December 31, 2020:
($ in thousands)March 31, 2021December 31, 2020
Commercial:
C&I (1)
$14,081,110 $13,631,726 
CRE:
CRE11,563,034 11,174,611 
Multifamily residential3,066,515 3,033,998 
Construction and land459,254 599,692 
Total CRE15,088,803 14,808,301 
Total commercial29,169,913 28,440,027 
Consumer:
Residential mortgage:
Single-family residential8,524,287 8,185,953 
HELOCs1,749,172 1,601,716 
Total residential mortgage10,273,459 9,787,669 
Other consumer145,376 163,259 
Total consumer10,418,835 9,950,928 
Total loans held-for-investment (2)
$39,588,748 $38,390,955 
Allowance for loan losses(607,506)(619,983)
Loans held-for-investment, net (2)
$38,981,242 $37,770,972 
(1)Includes Paycheck Protection Program (“PPP”) loans of $2.07 billion and $1.57 billion as of March 31, 2021 and December 31, 2020, respectively.
(2)Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(76.9) million and $(58.8) million as of March 31, 2021 and December 31, 2020, respectively. Net origination fees related to PPP loans were $(34.3) million and $(12.7) million as of March 31, 2021 and December 31, 2020, respectively.

Loans held-for-investment accrued interest receivable was $106.6 million and $107.5 million as of March 31, 2021 and December 31, 2020, respectively, and is presented in Other assets on the Consolidated Balance Sheets. For the accounting policy on accrued interest receivable related to loans held-for-investment, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies to the Consolidated Financial Statements of the Company’s 2020 Form 10-K.

Loans totaling $23.59 billion and $23.26 billion as of March 31, 2021 and December 31, 2020, 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 tables summarize the Company’s loans held-for-investment as of March 31, 2021 and 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)March 31, 2021
Term LoansRevolving Loans
Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost BasisTotal
Amortized Cost Basis by Origination Year
20212020201920182017Prior
Commercial:
C&I:
Pass$1,661,034 $3,043,315 $1,220,618 $385,813 $228,364 $280,748 $6,492,230 $29,327 $13,341,449 
Criticized (accrual)55,239 145,506 83,989 29,315 18,541 6,809 274,726 — 614,125 
Criticized (nonaccrual)288 1,540 17,422 21,368 14,858 2,797 67,263 — 125,536 
Total C&I1,716,561 3,190,361 1,322,029 436,496 261,763 290,354 6,834,219 29,327 14,081,110 
CRE:
CRE:
Pass664,626 2,303,031 2,354,998 2,253,230 1,284,384 2,128,975 193,541 24,104 11,206,889 
Criticized (accrual)28,915 34,902 63,620 25,343 61,238 91,993 — — 306,011 
Criticized (nonaccrual)— — — 42,067 5,868 2,199 — — 50,134 
Total CRE693,541 2,337,933 2,418,618 2,320,640 1,351,490 2,223,167 193,541 24,104 11,563,034 
Multifamily residential:
Pass160,470 764,482 762,001 470,223 352,094 488,260 5,889 — 3,003,419 
Criticized (accrual)— — 731 22,309 6,067 29,296 — — 58,403 
Criticized (nonaccrual)— — — 1,447 1,125 2,121 — — 4,693 
Total multifamily residential
160,470 764,482 762,732 493,979 359,286 519,677 5,889 — 3,066,515 
Construction and land:
Pass5,642 141,475 146,701 121,364 — 20,691 — — 435,873 
Criticized (accrual)3,481 — — — — — — — 3,481 
Criticized (nonaccrual)— — — — — 19,900 — — 19,900 
Total construction and land
9,123 141,475 146,701 121,364 — 40,591 — — 459,254 
Total CRE863,134 3,243,890 3,328,051 2,935,983 1,710,776 2,783,435 199,430 24,104 15,088,803 
Total commercial
2,579,695 6,434,251 4,650,080 3,372,479 1,972,539 3,073,789 7,033,649 53,431 29,169,913 
Consumer:
Residential mortgage:
Single-family residential:
Pass (1)
669,660 2,427,430 1,704,855 1,385,623 956,307 1,360,015 — — 8,503,890 
Criticized (accrual)— — — 194 347 2,207 — — 2,748 
Criticized (nonaccrual) (1)
— — 1,205 1,038 2,246 13,160 — — 17,649 
Total single-family residential mortgage
669,660 2,427,430 1,706,060 1,386,855 958,900 1,375,382 — — 8,524,287 
HELOCs:
Pass— 690 548 3,235 4,319 14,931 1,458,199 255,538 1,737,460 
Criticized (accrual)— — — — — 1 287 547 835 
Criticized (nonaccrual)— — 151 188 4,019 1,838 449 4,232 10,877 
Total HELOCs— 690 699 3,423 8,338 16,770 1,458,935 260,317 1,749,172 
Total residential mortgage
669,660 2,428,120 1,706,759 1,390,278 967,238 1,392,152 1,458,935 260,317 10,273,459 
Other consumer:
Pass849 8,168 — — 1,830 83,547 48,455 — 142,849 
Criticized (nonaccrual)— — — — 2,492 — 35 — 2,527 
Total other consumer
849 8,168 — — 4,322 83,547 48,490 — 145,376 
Total consumer670,509 2,436,288 1,706,759 1,390,278 971,560 1,475,699 1,507,425 260,317 10,418,835 
Total
$3,250,204 $8,870,539 $6,356,839 $4,762,757 $2,944,099 $4,549,488 $8,541,074 $313,748 $39,588,748 
($ 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:
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:
Residential mortgage:
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 mortgage
2,386,984 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 March 31, 2021 and December 31, 2020, $647 thousand and $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 three months ended March 31, 2021 and 2020, HELOCs totaling $44.3 million and $31.3 million, respectively, were converted to term loans. During the three months ended March 31, 2021 and 2020, there were no conversions of C&I revolving loans to term loans. Two CRE revolving loans of $5.0 million were converted to term loans during the three months ended March 31, 2021. There were no conversions of CRE revolving loans to term loans during the three months ended March 31, 2020.

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. Payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who otherwise would have moved into nonaccrual status. The following table presents the aging analysis of total loans held-for-investment as of March 31, 2021 and December 31, 2020:
($ in thousands)March 31, 2021
Current
Accruing
Loans (1)
Accruing
Loans
30-59  Days
Past Due		Accruing
Loans
60-89  Days
Past Due		Total
Accruing
Past Due
Loans		Total
Nonaccrual
Loans		Total
Loans
Commercial:
C&I$13,923,524 $26,417 $5,633 $32,050 $125,536 $14,081,110 
CRE:
CRE11,473,405 5,688 33,807 39,495 50,134 11,563,034 
Multifamily residential3,061,822 — — — 4,693 3,066,515 
Construction and land439,354 — — — 19,900 459,254 
Total CRE14,974,581 5,688 33,807 39,495 74,727 15,088,803 
Total commercial28,898,105 32,105 39,440 71,545 200,263 29,169,913 
Consumer:
Residential mortgage:
Single-family residential8,493,416 9,827 2,748 12,575 18,296 8,524,287 
HELOCs1,735,692 1,769 834 2,603 10,877 1,749,172 
Total residential mortgage10,229,108 11,596 3,582 15,178 29,173 10,273,459 
Other consumer142,604 242 4 246 2,526 145,376 
Total consumer10,371,712 11,838 3,586 15,424 31,699 10,418,835 
Total$39,269,817 $43,943 $43,026 $86,969 $231,962 $39,588,748 
($ in thousands)December 31, 2020
Current
Accruing
Loans (1)
Accruing
Loans
30-59 Days
Past Due		Accruing
Loans
60-89 Days
Past Due		Total
Accruing
Past Due
Loans		Total
Nonaccrual
Loans		Total
Loans
Commercial:
C&I$13,488,070 $8,993 $724 $9,717 $133,939 $13,631,726 
CRE:
CRE11,127,690 375 — 375 46,546 11,174,611 
Multifamily residential3,028,512 1,818 — 1,818 3,668 3,033,998 
Construction and land579,792 19,900 — 19,900 — 599,692 
Total CRE14,735,994 22,093 — 22,093 50,214 14,808,301 
Total commercial28,224,064 31,086 724 31,810 184,153 28,440,027 
Consumer:
Residential mortgage:
Single-family residential8,156,645 9,911 2,583 12,494 16,814 8,185,953 
HELOCs1,583,968 2,922 3,130 6,052 11,696 1,601,716 
Total residential mortgage
9,740,613 12,833 5,713 18,546 28,510 9,787,669 
Other consumer160,534 217 17 234 2,491 163,259 
Total consumer9,901,147 13,050 5,730 18,780 31,001 9,950,928 
Total$38,125,211 $44,136 $6,454 $50,590 $215,154 $38,390,955 
(1)As of March 31, 2021 and December 31, 2020, the “Current Accruing Loans” balance of loans in payment deferral programs offered in response to the COVID-19 pandemic which are performing according to their modified terms are generally not considered delinquent.

The following table presents the amortized cost of loans on nonaccrual status for which there was no related allowance for loan losses as of March 31, 2021 and December 31, 2020. Nonaccrual loans may not have an allowance for credit losses if the loss expectation is zero as the loan balances are supported by the collateral value.
($ in thousands)March 31, 2021December 31, 2020
Commercial:
C&I$63,312 $62,040 
CRE:
CRE49,137 45,537 
Multifamily residential3,578 2,519 
Construction and land19,900 — 
Total CRE72,615 48,056 
Total commercial135,927 110,096 
Consumer:
Residential mortgage:
Single-family residential6,014 6,013 
HELOCs7,353 8,076 
Total residential mortgage13,367 14,089 
Other consumer2,491 2,491 
Total consumer15,858 16,580 
Total nonaccrual loans with no related allowance for loan losses$151,785 $126,676 
Foreclosed Assets

Foreclosed assets, consisting of OREO and other nonperforming assets, are included in Other assets on the Consolidated Balance Sheet. The Company had $26.2 million in foreclosed assets as of March 31, 2021 compared with $19.7 million as of December 31, 2020. The Company commences the foreclosure process on consumer mortgage loans when a borrower becomes more than 120 days delinquent in accordance with Consumer Finance Protection Bureau guidelines. The carrying value of consumer real estate loans that were in the process of active or suspended foreclosure was $5.8 million and $4.1 million as of March 31, 2021 and December 31, 2020, 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

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. Since 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 Coronavirus Aid, Relief, and Economic Security Act, as amended by the Consolidated Appropriations Act, 2021, and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised), 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 — Significant Accounting Policies to the Consolidated Financial Statements of the Company’s 2020 Form 10-K.

The following table presents the additions to TDRs for the three months ended March 31, 2021 and 2020:
($ in thousands)Loans Modified as TDRs During the Three Months Ended March 31,
20212020
Number
of
Loans		Pre-
Modification
Outstanding
Recorded
Investment
Post-
Modification
Outstanding
Recorded
   Investment (1)
Financial
   Impact (2)
Number
of
Loans		Pre-
Modification
Outstanding
Recorded
Investment
Post-
Modification
Outstanding
Recorded
   Investment (1)
Financial
   Impact (2)
Commercial:
C&I1$443 $433 $203 3$16,604 $15,735 $98 
Total1$443 $433 $203 3$16,604 $15,735 $98 
(1)Includes subsequent payments after modification and reflects the balance as of March 31, 2021 and 2020.
(2)Includes charge-offs and specific reserves recorded since the modification date.

The following table presents the TDR post-modification outstanding balances for the three months ended March 31, 2021 and 2020 by modification type:
($ in thousands)Modification Type During the Three Months Ended March 31,
20212020
Principal (1)
Principal
  and Interest (2)
Total
Principal (1)
Principal
  and Interest (2)
Total
Commercial:
C&I$433 $— $433 $4,564 $11,171 $15,735 
Total$433 $— $433 $4,564 $11,171 $15,735 
(1)Includes forbearance payments, term extensions and principal deferments that modify the terms of the loan from principal and interest payments to interest payments only.
(2)Includes principal and interest deferments or reductions.
After a loan is modified as TDR, the Company continues to monitor its performance under its most recent restructured terms. A TDR may become delinquent and result in payment default (generally 90 days past due) subsequent to restructuring. The following table presents information on loans for which a subsequent payment default occurred during the three months ended March 31, 2021, which had been modified as TDR within the previous 12 months of its default, and were still in default as of March 31, 2021. In comparison, there were no TDRs that experienced payment default after modifications within the previous 12 months during the three months ended March 31, 2020.
($ in thousands)Loans Modified as TDRs that Subsequently Defaulted
During the Three Months Ended March 31,
2021
Number of
Loans		Recorded
Investment
Commercial:
C&I1 $11,538 
Total1 $11,538 

The amount of additional funds committed to lend to borrowers whose terms have been modified as TDRs was $2.2 million and $3.0 million as of March 31, 2021 and December 31, 2020, respectively.
Allowance for Credit Losses

The Company has an allowance framework under ASU 2016-13 for all financial assets measured at amortized cost and certain off-balance sheet credit exposures. The measurement of the allowance for credit losses is based on management’s best estimate of lifetime expected credit losses inherent in the Company’s relevant financial assets.

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 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 that we consider 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 are 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 three months ended March 31, 2021 and 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 March 31, 2021 and 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 March 31, 2021, collateral-dependent commercial and consumer loans totaled $99.9 million and $16.6 million, respectively. In comparison, collateral-dependent commercial and consumer loans totaled $97.2 million and $17.3 million as of December 31, 2020, respectively. The Company's commercial collateral-dependent loans were secured by real estate or other collateral. The Company's consumer collateral-dependent loans were all residential mortgage loans, secured by the underlying real estate. As of both March 31, 2021 and December 31, 2020, the collateral value of the properties securing each of these collateral-dependent loans, net of selling costs, exceeded the recorded value of the individual loans.
The following tables summarize the activity in the allowance for loan losses by portfolio segments for the three months ended March 31, 2021 and 2020:
($ in thousands)Three Months Ended March 31, 2021
CommercialConsumerTotal
C&ICREResidential MortgageOther
Consumer
CREMultifamily
Residential		Construction
and Land		Single-
Family
Residential		HELOCs
Allowance for loan losses, beginning of period
$398,040 $163,791 $27,573 $10,239 $15,520 $2,690 $2,130 $619,983 
Provision for (reversal of) credit losses on loans
(a)3,839 (10,277)(1,391)8,592 376 22 (113)1,048 
Gross charge-offs(8,436)(7,195)(17)(71)(134)(45)(1)(15,899)
Gross recoveries760 80 1,242 329 77 3 2 2,493 
Total net (charge-offs) recoveries
(7,676)(7,115)1,225 258 (57)(42)1 (13,406)
Foreign currency translation adjustment(119)— — — — — — (119)
Allowance for loan losses, end of period
$394,084 $146,399 $27,407 $19,089 $15,839 $2,670 $2,018 $607,506 
($ in thousands)Three Months Ended March 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 adoption
74,237 72,169 (8,112)(9,889)(3,670)(1,798)2,221 125,158 
Provision for (reversal of) credit losses on loans
(a)60,618 11,435 1,281 1,482 1,700 412 (2,272)74,656 
Gross charge-offs(11,977)(954)— — — — (26)(12,957)
Gross recoveries1,575 9,660 535 21 265 2 1 12,059 
Total net (charge-offs) recoveries
(10,402)8,706 535 21 265 2 (25)(898)
Foreign currency translation adjustment(200)— — — — — — (200)
Allowance for loan losses, end of period
$362,629 $132,819 $16,530 $11,018 $26,822 $3,881 $3,304 $557,003 

The following table summarizes the activities in the allowance for unfunded credit commitments for the three months ended March 31, 2021 and 2020:
($ in thousands)Three Months Ended March 31,
20212020
Unfunded credit facilities
Allowance for unfunded credit commitments, beginning of period$33,577 $11,158 
Impact of ASU 2016-13 adoption— 10,457 
Reversal of credit losses on unfunded credit commitments(b)(1,048)(786)
Allowance for unfunded credit commitments, end of period32,529 20,829 
Provision for credit losses(a) + (b)$— $73,870 
The allowance for credit losses as of March 31, 2021 was $640.0 million, a decrease of $13.6 million compared with $653.6 million as of December 31, 2020. The decrease in the allowance for credit losses was comprised of a net decrease of $12.5 million in the allowance for loan losses and a $1.1 million decrease in the allowance for unfunded credit commitments. The improved macroeconomic outlook resulted in an overall decrease in the required allowance for credit losses as of March 31, 2021, and no provision for credit losses was recorded for the three months ended March 31, 2021. 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 the 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 10 — Commitments and Contingencies to the Consolidated Financial Statements in this Form 10-Q for additional information related to unfunded credit commitments.
Loans Held-for-Sale

As of March 31, 2021, the Company had no loans held-for-sale. As of December 31, 2020, loans held-for-sale of $1.8 million consisted of single-family residential loans. Refer to Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Loans Held-for-Sale to the Consolidated Financial Statements of the Company’s 2020 Form 10-K for additional details related to the Company’s loans held-for-sale.
Loan Transfers, Sales and Purchases

The Company purchases and sells loans in the secondary market in the ordinary course of business. Purchased loans may be transferred from held-for-investment to held-for-sale, and write-downs to allowance for loan losses are recorded, when appropriate. The following tables provide information about the carrying value of loans purchased for the held-for-investment portfolio, loans sold and loans transferred during the three months ended March 31, 2021 and 2020:
($ in thousands)Three Months Ended March 31, 2021
CommercialConsumerTotal
C&ICREResidential Mortgage
CREMultifamily
Residential		Single-Family
Residential
Loans transferred from held-for-investment to held-for-sale (1)
$125,840 $20,032 $— $— $145,872 
Sales (2)(3)(4)
$125,879 $20,032 $— $7,506 $153,417 
Purchases (5)
$178,678 $— $370 $131,800 $310,848 
($ in thousands)Three Months Ended March 31, 2020
CommercialConsumerTotal
C&ICREResidential Mortgage
CREMultifamily
Residential		Single-Family
Residential
Loans transferred from held-for-investment to held-for-sale (1)
$102,973 $7,250 $— $— $110,223 
Sales (2)(3)(4)
$102,973 $7,250 $— $4,642 $114,865 
Purchases (5)
$130,583 $— $1,513 $1,084 $133,180 
(1)Includes write-downs of $39 thousand 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, 2021. There were no write-downs for the three months ended March 31, 2020.
(2)Includes originated loans sold of $131.0 million and $114.9 million for the three months ended March 31, 2021 and 2020, respectively. Originated loans sold consisted primarily of C&I loans for both periods.
(3)Includes $22.4 million of purchased loans sold in the secondary market for the three months ended March 31, 2021. There were no purchased loans sold in the secondary market for the three months ended March 31, 2020.
(4)Net gains on sales of loans were $1.8 million and $950 thousand for the three months ended March 31, 2021 and 2020, respectively.
(5)C&I loan purchases were comprised primarily of syndicated C&I term loans.