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Loans Receivable and Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2022
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 outstanding as of March 31, 2022 and December 31, 2021:
($ in thousands)March 31, 2022December 31, 2021
Commercial:
C&I (1)
$14,838,134 $14,150,608 
CRE:
CRE12,636,787 12,155,047 
Multifamily residential3,894,463 3,675,605 
Construction and land443,836 346,486 
Total CRE16,975,086 16,177,138 
Total commercial31,813,220 30,327,746 
Consumer:
Residential mortgage:
Single-family residential9,283,429 9,093,702 
HELOCs2,266,634 2,144,821 
Total residential mortgage11,550,063 11,238,523 
Other consumer127,399 127,512 
Total consumer11,677,462 11,366,035 
Total loans held-for-investment (2)
$43,490,682 $41,693,781 
Allowance for loan losses(545,685)(541,579)
Loans held-for-investment, net (2)
$42,944,997 $41,152,202 
(1)Includes Paycheck Protection Program loans of $318.1 million and $534.2 million as of March 31, 2022 and December 31, 2021, respectively.
(2)Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(42.7) million and $(50.7) million as of March 31, 2022 and December 31, 2021, respectively.

Loans held-for-investment accrued interest receivable was $112.2 million and $107.4 million as of March 31, 2022 and December 31, 2021, respectively, and is included in Other assets on the Consolidated Balance Sheet. Interest income reversed for the three months ended March 31, 2022 and 2021 was insignificant. For the Company’s 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 2021 Form 10-K.

The Company’s FRBSF and FHLB borrowings are primarily secured by loans held-for-investment. Loans held-for-investment totaling $28.36 billion and $27.67 billion, respectively, were pledged to secure borrowings and provide additional borrowing capacity as of March 31, 2022 and December 31, 2021.

Credit Quality Indicators

All loans are subject to the Company’s credit review and monitoring process. For the commercial loan 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 consumer loan portfolio, payment performance or delinquency is typically the driving indicator for risk ratings.

The Company utilizes internal credit risk ratings to assign each individual loan a risk rating of 1 through 10:

•Pass — loans risk rated 1 through 5 are assigned an internal risk rating category of “Pass.” Loans risk rated 1 are typically loans fully secured by cash. Pass loans have sufficient sources of repayment to repay the loan in full, in accordance with all terms and conditions.
•Special mention — loans assigned a risk rating of 6 have potential weaknesses that warrant closer attention by management; these are assigned an internal risk rating category of “Special Mention.”
•Substandard — 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 category of “Substandard.”
•Doubtful — 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 category of “Doubtful.”
•Loss — loans assigned a risk rating of 10 are uncollectible and of such little value that they are no longer considered bankable assets; these are assigned an internal risk rating category of “Loss.”

Loan 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 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 by loan portfolio segments, internal risk ratings and vintage year as of March 31, 2022 and December 31, 2021. The vintage year is the year of origination, renewal or major modification.
($ in thousands)March 31, 2022
Term Loans by Origination YearRevolving LoansRevolving Loans Converted to Term Loans Total
20222021202020192018Prior
Commercial:
C&I:
Pass$737,607 $3,443,409 $983,506 $571,374 $188,189 $303,396 $8,203,700 $28,621 $14,459,802 
Criticized (accrual)51,594 22,381 60,176 49,533 43,741 20,353 78,781 — 326,559 
Criticized (nonaccrual)— 13,403 6,018 — 5,634 12,799 13,919 — 51,773 
Total C&I789,201 3,479,193 1,049,700 620,907 237,564 336,548 8,296,400 28,621 14,838,134 
CRE:
Pass1,029,501 2,646,859 1,993,446 2,108,508 1,737,301 2,628,811 157,525 6,351 12,308,302 
Criticized (accrual)5,049 105,708 4,375 54,675 56,140 93,134 — — 319,081 
Criticized (nonaccrual)— 4,301 — — — 5,103 — — 9,404 
Total CRE1,034,550 2,756,868 1,997,821 2,163,183 1,793,441 2,727,048 157,525 6,351 12,636,787 
Multifamily residential:
Pass354,628 980,895 698,645 683,149 386,920 709,085 19,704 — 3,833,026 
Criticized (accrual)— — — 718 22,306 37,990 — — 61,014 
Criticized (nonaccrual)— — — — — 423 — — 423 
Total multifamily residential354,628 980,895 698,645 683,867 409,226 747,498 19,704 — 3,894,463 
Construction and land:
Pass35,198 192,442 93,792 89,152 3,370 270 — — 414,224 
Criticized (accrual)— 3,311 4,347 — 21,954 — — — 29,612 
Criticized (nonaccrual)— — — — — — — — — 
Total construction and land35,198 195,753 98,139 89,152 25,324 270 — — 443,836 
Total CRE1,424,376 3,933,516 2,794,605 2,936,202 2,227,991 3,474,816 177,229 6,351 16,975,086 
Total commercial2,213,577 7,412,709 3,844,305 3,557,109 2,465,555 3,811,364 8,473,629 34,972 31,813,220 
Consumer:
Residential mortgage:
Single-family residential:
Pass (1)
592,760 2,610,094 2,006,265 1,271,347 996,334 1,780,965 — — 9,257,765 
Criticized (accrual)— 241 706 961 4,281 4,187 — — 10,376 
Criticized (nonaccrual) (1)
— — 397 2,024 3,902 8,965 — — 15,288 
Total single-family residential mortgage592,760 2,610,335 2,007,368 1,274,332 1,004,517 1,794,117 — — 9,283,429 
HELOCs:
Pass— 1,956 3,756 1,590 1,463 11,629 2,061,729 174,742 2,256,865 
Criticized (accrual)— — — 220 — 1 1,464 1,272 2,957 
Criticized (nonaccrual)— 7 — — 186 3,052 — 3,567 6,812 
Total HELOCs— 1,963 3,756 1,810 1,649 14,682 2,063,193 179,581 2,266,634 
Total residential mortgage592,760 2,612,298 2,011,124 1,276,142 1,006,166 1,808,799 2,063,193 179,581 11,550,063 
Other consumer:
Pass538 16,190 5,258 — — 54,062 51,313 — 127,361 
Criticized (accrual)1 — — — — — — — 1 
Criticized (nonaccrual)— — — — — — 37 — 37 
Total other consumer539 16,190 5,258 — — 54,062 51,350 — 127,399 
Total consumer593,299 2,628,488 2,016,382 1,276,142 1,006,166 1,862,861 2,114,543 179,581 11,677,462 
Total$2,806,876 $10,041,197 $5,860,687 $4,833,251 $3,471,721 $5,674,225 $10,588,172 $214,553 $43,490,682 
($ in thousands)December 31, 2021
Term Loans by Origination YearRevolving LoansRevolving Loans Converted to Term LoansTotal
20212020201920182017Prior
Commercial:
C&I:
Pass$3,911,722 $1,133,085 $629,007 $187,195 $132,392 $225,326 $7,383,485 $28,842 $13,631,054 
Criticized (accrual)85,036 117,357 72,277 51,553 15,136 4,005 115,167 — 460,531 
Criticized (nonaccrual)29,456 2,792 513 517 9,301 16,444 — — 59,023 
Total C&I4,026,214 1,253,234 701,797 239,265 156,829 245,775 7,498,652 28,842 14,150,608 
CRE:
Pass2,792,193 2,090,503 2,230,520 1,863,481 1,120,682 1,727,862 128,668 6,389 11,960,298 
Criticized (accrual)71,055 3,200 9,176 21,077 24,851 55,892 — — 185,251 
Criticized (nonaccrual)4,350 — — — 4,752 396 — — 9,498 
Total CRE2,867,598 2,093,703 2,239,696 1,884,558 1,150,285 1,784,150 128,668 6,389 12,155,047 
Multifamily residential:
Pass1,026,295 726,772 688,453 419,319 308,087 424,947 20,524 — 3,614,397 
Criticized (accrual)— — 721 22,344 7,033 30,666 — — 60,764 
Criticized (nonaccrual)— — — — — 444 — — 444 
Total multifamily residential
1,026,295 726,772 689,174 441,663 315,120 456,057 20,524 — 3,675,605 
Construction and land:
Pass122,983 103,743 90,544 3,412 — 391 — — 321,073 
Criticized (accrual)3,355 — — 22,058 — — — — 25,413 
Criticized (nonaccrual)— — — — — — — — — 
Total construction and land
126,338 103,743 90,544 25,470 — 391 — — 346,486 
Total CRE4,020,231 2,924,218 3,019,414 2,351,691 1,465,405 2,240,598 149,192 6,389 16,177,138 
Total commercial
8,046,445 4,177,452 3,721,211 2,590,956 1,622,234 2,486,373 7,647,844 35,231 30,327,746 
Consumer:
Residential mortgage:
Single-family residential:
Pass (1)
2,616,958 2,108,370 1,375,929 1,079,030 763,351 1,127,516 — — 9,071,154 
Criticized (accrual)— — 458 2,813 1,899 3,212 — — 8,382 
Criticized (nonaccrual) (1)
— — 1,751 3,889 4,295 4,231 — — 14,166 
Total single-family residential mortgage
2,616,958 2,108,370 1,378,138 1,085,732 769,545 1,134,959 — — 9,093,702 
HELOCs:
Pass648 3,277 4,644 1,347 3,268 11,215 1,913,478 197,414 2,135,291 
Criticized (accrual)— — — — — 371 7 708 1,086 
Criticized (nonaccrual)— — 52 188 3,543 973 — 3,688 8,444 
Total HELOCs648 3,277 4,696 1,535 6,811 12,559 1,913,485 201,810 2,144,821 
Total residential mortgage
2,617,606 2,111,647 1,382,834 1,087,267 776,356 1,147,518 1,913,485 201,810 11,238,523 
Other consumer:
Pass16,831 5,258 — — 1,741 52,147 51,481 — 127,458 
Criticized (accrual)2 — — — — — — — 2 
Criticized (nonaccrual)— — — — — — 52 — 52 
Total other consumer
16,833 5,258 — — 1,741 52,147 51,533 — 127,512 
Total consumer2,634,439 2,116,905 1,382,834 1,087,267 778,097 1,199,665 1,965,018 201,810 11,366,035 
Total
$10,680,884 $6,294,357 $5,104,045 $3,678,223 $2,400,331 $3,686,038 $9,612,862 $237,041 $41,693,781 
(1)As of March 31, 2022 and December 31, 2021, $1.1 million and $1.6 million, respectively, 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, 2022, there were no conversions of HELOCs or CRE revolving loans to term loans. In comparison, HELOCs of $44.3 million and two CRE revolving loans of $5.0 million were converted to term loans during the three months ended March 31, 2021.
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 tables present the aging analysis of total loans held-for-investment as of March 31, 2022 and December 31, 2021:
($ in thousands)March 31, 2022
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$14,759,847 $23,082 $3,432 $26,514 $51,773 $14,838,134 
CRE:
CRE12,624,346 2,895 142 3,037 9,404 12,636,787 
Multifamily residential3,891,837 804 1,399 2,203 423 3,894,463 
Construction and land443,836 — — — — 443,836 
Total CRE16,960,019 3,699 1,541 5,240 9,827 16,975,086 
Total commercial31,719,866 26,781 4,973 31,754 61,600 31,813,220 
Consumer:
Residential mortgage:
Single-family residential9,240,375 15,998 10,671 26,669 16,385 9,283,429 
HELOCs2,253,750 3,116 2,956 6,072 6,812 2,266,634 
Total residential mortgage11,494,125 19,114 13,627 32,741 23,197 11,550,063 
Other consumer126,568 150 644 794 37 127,399 
Total consumer11,620,693 19,264 14,271 33,535 23,234 11,677,462 
Total$43,340,559 $46,045 $19,244 $65,289 $84,834 $43,490,682 

($ in thousands)December 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$14,080,516 $6,983 $4,086 $11,069 $59,023 $14,150,608 
CRE:
CRE12,141,827 3,722 — 3,722 9,498 12,155,047 
Multifamily residential3,669,819 5,320 22 5,342 444 3,675,605 
Construction and land346,486 — — — — 346,486 
Total CRE16,158,132 9,042 22 9,064 9,942 16,177,138 
Total commercial30,238,648 16,025 4,108 20,133 68,965 30,327,746 
Consumer:
Residential mortgage:
Single-family residential9,059,222 10,191 8,569 18,760 15,720 9,093,702 
HELOCs2,130,523 4,776 1,078 5,854 8,444 2,144,821 
Total residential mortgage
11,189,745 14,967 9,647 24,614 24,164 11,238,523 
Other consumer127,352 99 9 108 52 127,512 
Total consumer11,317,097 15,066 9,656 24,722 24,216 11,366,035 
Total$41,555,745 $31,091 $13,764 $44,855 $93,181 $41,693,781 
(1)As of both March 31, 2022 and December 31, 2021, loans in payment deferral programs offered in response to the Coronavirus Disease 2019 (“COVID-19”) pandemic that are performing according to their modified terms are generally not considered delinquent, and are included in the “Current Accruing Loans” column.
The following table presents the amortized cost of loans on nonaccrual status for which there was no related allowance for loan losses as of both March 31, 2022 and December 31, 2021. Nonaccrual loans may not have an allowance for credit losses because there is no loss expectation when the loan balances are well-secured by the collateral value.
($ in thousands)March 31, 2022December 31, 2021
Commercial:
C&I$24,864 $22,967 
CRE9,053 9,102 
Total commercial33,917 32,069 
Consumer:
Single-family residential7,265 5,785 
HELOCs3,738 5,033 
Total consumer11,003 10,818 
Total nonaccrual loans with no related allowance for loan losses$44,920 $42,887 

Foreclosed Assets

The Company acquires assets from borrowers through loan restructurings, workouts, and foreclosures. Assets acquired may include real properties (e.g., residential real estate, land, and buildings) and commercial and personal properties. The Company recognizes foreclosed assets upon receiving assets in satisfaction of a loan (e.g., taking legal title or physical possession).

Foreclosed assets, consisting of OREO and other nonperforming assets, are included in Other assets on the Consolidated Balance Sheet. The Company had $9.5 million in foreclosed assets as of March 31, 2022, compared with $10.3 million as of December 31, 2021. The Company commences the foreclosure process on consumer mortgage loans after a borrower becomes more than 120 days delinquent in accordance with the Consumer Financial Protection Bureau guidelines. The carrying value of consumer real estate loans that were in the process of active or suspended foreclosure was $6.8 million and $7.3 million as of March 31, 2022 and December 31, 2021, respectively.
As part of our actions to support customers during the COVID-19 pandemic, the Company temporarily suspended certain mortgage foreclosure activities through December 31, 2021. Beginning January 1, 2022, the Company resumed these mortgage foreclosure activities. The Company continues to take proactive measures to prevent avoidable foreclosures
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 difficulties. 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. The Company 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 occurred between March 2020 and January 1, 2022, and were 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 have delayed 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 — Troubled Debt Restructurings to the Consolidated Financial Statements in the Company’s 2021 Form 10-K for additional information.
The following table presents the additions to TDRs for the three months ended March 31, 2022 and 2021:
($ in thousands)Loans Modified as TDRs During the Three Months Ended March 31,
20222021
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$17,179 $9,224 $7,545 1$443 $433 $203 
Total1$17,179 $9,224 $7,545 1$443 $433 $203 
(1)Includes subsequent payments after modification and reflects the balance as of March 31, 2022 and 2021.
(2)Includes charge-offs and specific reserves recorded since the modification date.

The following table presents the TDR post-modification outstanding balances by the primary modification type for the three months ended March 31, 2022 and 2021:
($ in thousands)Modification Type During the Three Months Ended March 31,
20222021
Principal (1)
Total
Principal (1)
Total
Commercial:
C&I$9,224 $9,224 $433 $433 
Total$9,224 $9,224 $433 $433 
(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.

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 that entered into default during the three months ended March 31, 2022 and 2021 that were modified as TDRs during the 12 months preceding payment default:
($ in thousands)Loans Modified as TDRs that Subsequently Defaulted
During the Three Months Ended March 31,
20222021
Number of
Loans		Recorded
Investment		Number of
Loans		Recorded
Investment
Commercial:
C&I1 $3,250 1 $11,538 
Total1 $3,250 1 $11,538 

As of March 31, 2022 and December 31, 2021, the remaining commitments to lend to borrowers whose terms of their outstanding owed balances were modified as TDRs was $2.8 million and $5.0 million, 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 Company’s allowance for credit losses, which includes both the allowance for loan losses and the allowance for unfunded credit commitments, is calculated with the objective of maintaining a reserve sufficient to absorb losses inherent in our credit portfolios. The measurement of the allowance for credit losses is based on management’s best estimate of lifetime expected credit losses, and periodic evaluation of the loan portfolio, lending-related commitments and other relevant factors.

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, deferred fees and costs, and escrow advances. Subsequent changes in expected credit losses are recognized in net income as a provision for, or a reversal of, credit loss expense.
The allowance for credit losses estimation involves procedures to consider the unique risk characteristics of the portfolio segments. The majority of the Company’s credit exposures that share risk characteristics with other similar exposures are collectively evaluated. The collectively evaluated loans include 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. These individually assessed loans include TDR and nonaccrual loans.

Allowance for Collectively Evaluated Loans

The allowance for collectively evaluated loans consists of a quantitative component that assesses the different risk factors 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 Company applies quantitative methods to estimate loan losses by considering a variety of factors such as historical loss experience, the current credit quality of the portfolio, and an economic outlook over the life of the loan. The Company incorporates forward-looking information using macroeconomic scenarios, which 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 or upside scenarios reflecting possible worsening or improving economic conditions. The quantitative models incorporate a probability-weighted calculation of these macroeconomic scenarios over a reasonable and supportable forecast period. If the life of loans extends beyond the reasonable and supportable forecast period, the Company will consider historical experience or long-run macroeconomic trends over the remaining lives of the loans to estimate the allowance for loan losses.

During the third quarter of 2021, the reasonable and supportable forecast period, key credit risk characteristics and macroeconomic variables to estimate the expected credit losses of the C&I segment were modified due to model enhancement. There were no changes to the overall model methodology. For the three months ended March 31, 2022, there were no changes to the reasonable and supportable forecast period and reversion to the 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&I
Age (1), size and spread at origination, and risk rating
Volatility Index (“VIX”) and BBB yield to 10-year U.S. Treasury spread (“BBB Spread”) (1)
CRE, Multifamily residential, and Construction and landDelinquency status, maturity date, collateral value, property type, and geographic locationUnemployment rate, Gross Domestic Product (“GDP”), and U.S. Treasury rates
Single-family residential and HELOCsFICO score, delinquency status, maturity date, collateral value, and geographic locationUnemployment rate, GDP, and home price index
Other consumerHistorical loss experience
Immaterial (2)
(1)Due to model enhancements during the third quarter of 2021, the risk characteristic related to “time-to-maturity” was changed to “age”; while macroeconomic variables related to “unemployment rate and two- and ten-year U.S. Treasury spread” were changed to “VIX and BBB Spread”.
(2)Macroeconomic variables are included in the qualitative estimate.

Allowance for Loan Losses for the Commercial Loan Portfolio

The Company’s C&I 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 11 quarters, thereafter immediately reverting to the historical average loss rate, expressed through the loan-level lifetime loss rate.

For CRE, multifamily residential, and construction and land loans, projected probabilities of default (“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. The forecast of future economic conditions returns to long-run historical economic trends within the reasonable and supportable period.

In order to estimate the life of a loan under both models, the contractual term of the loan is adjusted for estimated prepayments 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. The forecast of future economic conditions returns to long-run historical economic trends after the reasonable and supportable period. In order to estimate the life of a loan for the single-family residential and HELOC portfolios, the contractual term of the loan is adjusted for estimated prepayments based on historical prepayment experience. For other consumer loans, the Company uses a loss rate approach.

•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 financial assets;
–The Company’s lending policies and procedures, including changes in lending strategies, underwriting standards, collection, write-off and recovery practices;
–Knowledge of a borrower’s operations;
–The quality of the Company’s credit review system;
–The experience, ability and depth of the Company’s management, lending associates and other relevant associates;
–The effect of other external factors such as the regulatory and legal environments and changes in technology;
–Actual and expected changes in international, national, regional, and local economic and business conditions in which the Company operates; and
–Risk factors in certain industry sectors not captured by the quantitative models.

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 to which changes in these factors diverge from period to period.

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.

Allowance for Individually Evaluated Loans

When a loan no longer shares similar risk characteristics with other loans, such as in the case of 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 — The allowance of a collateral-dependent loan 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, 2022, collateral-dependent commercial and consumer loans totaled $35.2 million and $14.2 million, respectively. In comparison, collateral-dependent commercial and consumer loans totaled $37.0 million and $14.0 million as of December 31, 2021, respectively. The Company's commercial collateral-dependent loans were secured by real estate, and its consumer collateral-dependent loans were all residential mortgage loans, secured by the underlying real estate. As of both March 31, 2022 and December 31, 2021, the collateral value of the properties securing the collateral-dependent loans, net of selling costs, exceeded the recorded value of the loans.
The following tables summarize the activity in the allowance for loan losses by portfolio segments for the three months ended March 31, 2022 and 2021:
($ in thousands)Three Months Ended March 31, 2022
CommercialConsumerTotal
C&ICREResidential MortgageOther
Consumer
CREMultifamily
Residential		Construction
and Land		Single-
Family
Residential		HELOCs
Allowance for loan losses, beginning of period
$338,252 $150,940 $14,400 $15,468 $17,160 $3,435 $1,924 $541,579 
Provision for (reversal of) credit losses on loans(a)9,262 (3,493)9,657 (4,506)926 299 107 12,252 
Gross charge-offs(11,188)(398)(1)— — — (46)(11,633)
Gross recoveries3,002 55 120 54 124 14 — 3,369 
Total net (charge-offs) recoveries(8,186)(343)119 54 124 14 (46)(8,264)
Foreign currency translation adjustment118 — — — — — — 118 
Allowance for loan losses, end of period
$339,446 $147,104 $24,176 $11,016 $18,210 $3,748 $1,985 $545,685 
($ 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 

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. The following table summarizes the activities in the allowance for unfunded credit commitments for the three months ended March 31, 2022 and 2021:
($ in thousands)Three Months Ended March 31,
20222021
Unfunded credit facilities
Allowance for unfunded credit commitments, beginning of period$27,514 $33,577 
Reversal of credit losses on unfunded credit commitments(b)(4,252)(1,048)
Allowance for unfunded credit commitments, end of period23,262 32,529 
Provision for credit losses(a) + (b)$8,000 $— 
The allowance for credit losses was $568.9 million as of March 31, 2022, a decrease of $146 thousand, compared with $569.1 million as of December 31, 2021. The decrease in the allowance for credit losses was predominantly due to an improving economic outlook, as well as a decrease in net charge-offs, partially offset by an increase in provision for credit losses, primarily reflecting loan growth.
Loans Held-for-Sale

As of March 31, 2022 and December 31, 2021, loans held-for-sale consisted of $631 thousand and $635 thousand 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 in the Company’s 2021 Form 10-K for additional details.

Loan Transfers, Sales and Purchases

The Company’s primary focus is on directly originated loans. The Company also purchases loans and participates in loans with other banks. In the normal course of doing business, the Company also provides other financial institutions with the ability to participate in commercial loans that it originates and sells loans to such institutions. 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 on the carrying value of loans transferred, loans sold and purchased for the held-for-investment portfolio, during the three months ended March 31, 2022 and 2021:
($ in thousands)Three Months Ended March 31, 2022
CommercialConsumerTotal
C&ICREResidential Mortgage
CREMultifamily
Residential		Single-Family
Residential
Loans transferred from held-for-investment to held-for-sale (1)
$111,437 $21,780 $— $— $133,217 
Sales (2)(3)(4)
$107,474 $21,780 $— $451 $129,705 
Purchases (5)
$110,596 $— $— $114,375 $224,971 
($ 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 
(1)Includes write-downs of $59 thousand and $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, 2022 and 2021, respectively.
(2)Includes originated loans sold of $112.3 million and $131.0 million for the three months ended March 31, 2022 and 2021, respectively. Originated loans sold consisted primarily of C&I loans for both periods.
(3)Includes $17.4 million and $22.4 million of purchased loans sold in the secondary market for the three months ended March 31, 2022 and 2021, respectively.
(4)Net gains on sales of loans were $2.9 million and $1.8 million for the three months ended March 31, 2022 and 2021, respectively.
(5)C&I loan purchases were comprised primarily of syndicated C&I term loans.