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LOANS AND ALLOWANCE FOR CREDIT LOSSES
 9 Months Ended
Sep. 30, 2020
Receivables [Abstract]  
LOANS AND ALLOWANCE FOR CREDIT LOSSES LOANS AND ALLOWANCE FOR CREDIT LOSSES
The following table presents the balances in our loan portfolio as of the dates indicated:
($ in thousands)September 30,
2020		December 31,
2019
Commercial:
Commercial and industrial$1,586,824 $1,691,270 
Commercial real estate826,683 818,817 
Multifamily1,476,803 1,494,528 
SBA(1)
320,573 70,981 
Construction197,629 231,350 
Consumer:
Single family residential mortgage1,234,479 1,590,774 
Other consumer35,011 54,165 
Total loans(2)
$5,678,002 $5,951,885 
Allowance for loan losses(90,927)(57,649)
Loans receivable, net$5,587,075 $5,894,236 
(1)Includes 1,128 PPP loans totaling $255.8 million, net of unamortized loan fees totaling $4.1 million at September 30, 2020.
(2)Includes net deferred loan origination costs/(fees) and premiums/(discounts) of $6.2 million and $14.3 million at September 30, 2020 and December 31, 2019.
Credit Quality Indicators
We categorize loans into risk categories based on relevant information about the ability of borrowers to repay their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. We perform a historical loss analysis that is combined with a comprehensive loan to value analysis to analyze the associated risks in the current loan portfolio. We analyze loans individually and grade each loan for credit risk. This analysis includes all loans delinquent over 60 days and non-homogeneous loans such as commercial and commercial real estate loans. We use the following definitions for credit risk ratings:
Pass: Loans risk rated as pass are in compliance in all respects with the Bank’s credit policy and regulatory requirements, and do not exhibit any potential or defined weakness as defined under “Special Mention”, “Substandard” or “Doubtful”.
Special Mention: Loans risk rated as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of our credit position at some future date.
Substandard: Loans risk rated as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so risk rated have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.
Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
The following table presents the risk categories for total loans by class of loans and origination year as of September 30, 2020:
Term Loans Amortized Cost Basis by Origination Year
($ in thousands)20202019201820172016PriorRevolving Loans Amortized Cost BasisRevolving Loans Amortized Cost Basis
Converted to Term		Total
September 30, 2020
Commercial:
Commercial and industrial
Pass$78,237 $103,445 $65,134 $62,783 $47,497 $98,676 $1,053,219 $10,546 $1,519,537 
Special mention— 473 4,605 — — 1,367 — — 6,445 
Substandard1,332 13,946 1,204 4,650 11,224 9,420 13,803 4,669 60,248 
Doubtful— — — — — — 594 — 594 
Commercial and industrial79,569 117,864 70,943 67,433 58,721 109,463 1,067,616 15,215 1,586,824 
Commercial real estate
Pass30,740 152,605 214,445 68,904 100,223 193,518 5,791 31,191 797,417 
Special mention— 1,857 9,512 — — 5,943 — — 17,312 
Substandard— — — — — 11,954 — — 11,954 
Doubtful— — — — — — — — — 
Commercial real estate30,740 154,462 223,957 68,904 100,223 211,415 5,791 31,191 826,683 
Multifamily
Pass216,104 420,664 318,417 233,685 108,405 176,740 — — 1,474,015 
Special mention— — — — — 803 — — 803 
Substandard— — — — — 1,985 — — 1,985 
Doubtful— — — — — — — — — 
Multifamily216,104 420,664 318,417 233,685 108,405 179,528 — — 1,476,803 
SBA
Pass256,444 15,949 1,327 4,258 11,855 19,136 3,021 445 312,435 
Special mention— — — 219 417 914 — 6 1,556 
Substandard— — — 1,722 701 1,260 304 1,185 5,172 
Doubtful— — 391 — — 632 — 387 1,410 
SBA256,444 15,949 1,718 6,199 12,973 21,942 3,325 2,023 320,573 
Construction
Pass31,662 30,008 45,230 70,171 — — — — 177,071 
Special mention— — 13,733 667 6,158 — — — 20,558 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Construction31,662 30,008 58,963 70,838 6,158 — — — 197,629 
Consumer:
Single family residential mortgage
Pass29,067 155,695 294,764 178,386 264,039 254,219 17,548 — 1,193,718 
Special mention— — 1,842 668 4,589 5,249 — — 12,348 
Substandard— 1,040 493 1,018 5,394 20,468 — — 28,413 
Doubtful— — — — — — — — — 
Single family residential mortgage29,067 156,735 297,099 180,072 274,022 279,936 17,548 — 1,234,479 
Other consumer
Pass43 — 60 — — 1,929 29,453 2,326 33,811 
Special mention— — 20 — — 31 314 — 365 
Substandard— — — — — 480 279 76 835 
Doubtful— — — — — — — — — 
Other consumer43 — 80 — — 2,440 30,046 2,402 35,011 
Total loans$643,629 $895,682 $971,177 $627,131 $560,502 $804,724 $1,124,326 $50,831 $5,678,002 

The following table presents the risk categories for total loans by class of loans as of December 31, 2019:
($ in thousands)PassSpecial MentionSubstandardDoubtfulTotal
December 31, 2019
Commercial:
Commercial and industrial$1,580,269 $45,323 $65,678 $— $1,691,270 
Commercial real estate813,846 2,532 2,439 — 818,817 
Multifamily1,484,931 4,256 5,341 — 1,494,528 
SBA60,982 2,760 5,621 1,618 70,981 
Construction229,771 1,579 — — 231,350 
Consumer:
Single family residential mortgage1,559,253 10,735 20,269 517 1,590,774 
Other consumer53,331 346 488 — 54,165 
Total$5,782,383 $67,531 $99,836 $2,135 $5,951,885 
Past Due Loans
The following table presents the aging of the recorded investment in past due loans, excluding accrued interest receivable (which is not considered to be material), by class of loans as of the dates indicated:
($ in thousands)30 - 59 Days Past Due60 - 89 Days Past DueGreater than 89 Days Past dueTotal Past DueCurrentTotal
September 30, 2020
Non-Traditional Mortgage (NTM) loans:
Single family residential mortgage$8,344 $1,080 $19,004 $28,428 $438,460 $466,888 
Other consumer— — — — 1,608 1,608 
Total NTM loans8,344 1,080 19,004 28,428 440,068 468,496 
Traditional loans:
Commercial:
Commercial and industrial142 18 5,641 5,801 1,581,023 1,586,824 
Commercial real estate— — — — 826,683 826,683 
Multifamily— 803 — 803 1,476,000 1,476,803 
SBA845 910 2,535 4,290 316,283 320,573 
Construction— — — — 197,629 197,629 
Consumer:
Single family residential mortgage33,387 4,628 4,629 42,644 724,947 767,591 
Other consumer846 226 — 1,072 32,331 33,403 
Total traditional loans35,220 6,585 12,805 54,610 5,154,896 5,209,506 
Total$43,564 $7,665 $31,809 $83,038 $5,594,964 $5,678,002 
December 31, 2019
NTM loans:
Single family residential mortgage$3,973 $3,535 $13,019 $20,527 $577,830 $598,357 
Other consumer— — — — 2,299 2,299 
Total NTM loans3,973 3,535 13,019 20,527 580,129 600,656 
Traditional loans:
Commercial:
Commercial and industrial780 5,670 3,862 10,312 1,680,958 1,691,270 
Commercial real estate— — — — 818,817 818,817 
Multifamily— — — — 1,494,528 1,494,528 
SBA586 842 2,152 3,580 67,401 70,981 
Construction— — — — 231,350 231,350 
Consumer:
Single family residential mortgage13,752 3,496 5,606 22,854 969,563 992,417 
Other consumer199 40 95 334 51,532 51,866 
Total traditional loans15,317 10,048 11,715 37,080 5,314,149 5,351,229 
Total$19,290 $13,583 $24,734 $57,607 $5,894,278 $5,951,885 
In accordance with regulatory guidance, borrowers that received forbearance or deferment, which were current prior to becoming affected by the global pandemic should not be reported as past due.
Nonaccrual Loans
The following table presents nonaccrual loans as of the dates indicated:
September 30, 2020December 31, 2019
($ in thousands)NTM LoansTraditional LoansTotal
Nonaccrual Loans		Nonaccrual Loans with no ACLNTM LoansTraditional LoansTotal
Nonaccrual Loans		Nonaccrual Loans with no ACL
Nonaccrual loans
Commercial:
Commercial and industrial$— $28,042 $28,042 $11,027 $— $19,114 $19,114 $337 
Commercial real estate— 6,471 6,471 6,471 — — — — 
SBA— 4,919 4,919 1,621 — 5,230 5,230 1,474 
Construction— — — — — — — — 
Consumer:
Single family residential mortgage20,619 5,648 26,267 24,385 13,019 5,606 18,625 14,373 
Other consumer— 638 638 638 — 385 385 380 
Total nonaccrual loans$20,619 $45,718 $66,337 $44,142 $13,019 $30,335 $43,354 $16,564 

At September 30, 2020 and December 31, 2019, there were $547 thousand of loans that were past due 90 days or more and still accruing.
The non-traditional mortgage (“NTM”) loans on nonaccrual status included $4.5 million of Green Loans and $16.1 million of interest-only loans at September 30, 2020 compared to $1.5 million of Green Loans and $11.5 million of interest-only loans at December 31, 2019.

Loans in Process of Foreclosure
At September 30, 2020 and December 31, 2019, consumer mortgage loans of $3.7 million and $15.7 million, respectively, were secured by residential real estate properties for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction.
Allowance for Credit Losses
Our ACL methodology and resulting provision continues to be impacted by the current economic uncertainty and volatility caused by the COVID-19 pandemic. Our ACL methodology uses a nationally recognized, third-party model that includes many assumptions based on historical and peer loss data, current loan portfolio risk profile including risk ratings, and economic forecasts including macroeconomic variables ("MEVs") released by our model provider during September 2020. In contrast to the June 2020 forecasts, these September forecasts reflect a more favorable view of the economy (i.e. higher GDP growth rates and lower unemployment rates). Despite this, the Company-specific economic view recognizes that the foreseeable future is uncertain with respect to the search for a vaccine and effective treatments for COVID-19; the lack of clarity regarding the timing and amount of a potential government stimulus; the unknown impact of the COVID-19 pandemic on the economy and industry segments; and the unknown benefit from Federal Reserve and other government actions. Accordingly, the ACL level and resulting provision reflect these uncertainties. The ACL also incorporated qualitative factors to account for certain loan portfolio characteristics that are not taken into consideration by the third-party model including underlying strengths and weaknesses in the loan portfolio. As is the case with all estimates, the ACL is expected to be impacted in future periods by economic volatility, changing economic forecasts, underlying model assumptions, and asset quality metrics, all of which may be better than or worse than current estimates.
The ACL process involves subjective and complex judgments as well as adjustments for numerous factors including those described in the federal banking agencies' joint interagency policy statement on ALL, which include underwriting experience and collateral value changes, among others. We evaluate all impaired loans individually using guidance from ASC 310 primarily through the evaluation of cash flows or collateral values.
We have established credit risk management processes that include regular management review of the loan portfolio to identify problem loans. During the ordinary course of business, management may become aware of borrowers who may not be able to fulfill their contractual payment requirements within the loan agreements. Such loans are subject to increased monitoring. Consideration is given to placing these loans on nonaccrual status, assessing the need for additional allowance for loan loss, and partially or fully charging off the principal balance. We maintain the allowance for loan losses at a level that is considered adequate to cover the expected credit losses in the loan portfolio.
The reserve for unfunded loan commitments is established to cover the expected credit losses for the estimated level of funding of these loan commitments, except for unconditionally cancellable commitments for which no reserve is required under ASC 326. At September 30, 2020 and December 31, 2019, the reserve for unfunded loan commitments was $3.2 million and $4.1 million, respectively, and was included in accrued expenses and other liabilities on the consolidated statements of financial condition.
The credit risk monitoring system is designed to identify impaired and potential problem loans, perform periodic evaluation of impairment, and determine the adequacy of the allowance for credit losses in a timely manner. In addition, management has adopted a credit policy that includes a credit review and control system that it believes should be effective in ensuring that we maintain an adequate allowance for credit losses. Further, the Board of Directors provides oversight and guidance for management’s allowance evaluation process.
The following table presents a summary of activity in the ACL for the periods indicated:
Three Months Ended September 30,
($ in thousands)20202019
Allowance
for
Loan Losses		Reserve for Unfunded Loan CommitmentsAllowance
for
Credit Losses		Allowance
for
Loan Losses		Reserve for Unfunded Loan CommitmentsAllowance
for
Credit Losses
Balance at beginning of period$90,370 $4,195 $94,565 $59,523 $4,295 $63,818 
Loans charged off(1,821)— (1,821)(35,546)— (35,546)
Recoveries of loans previously charged off248 — 248 410 — 410 
Net charge-offs(1,573)— (1,573)(35,136)— (35,136)
Provision for (reversal of) credit losses2,130 (989)1,141 38,540 67 38,607 
Balance at end of period$90,927 $3,206 $94,133 $62,927 $4,362 $67,289 

Nine Months Ended September 30,
($ in thousands)20202019
Allowance
for
Loan Losses		Reserve for Unfunded Loan CommitmentsAllowance
for
Credit Losses		Allowance
for
Loan Losses		Reserve for Unfunded Loan CommitmentsAllowance
for
Credit Losses
Balance at beginning of period$57,649 $4,064 $61,713 $62,192 $4,622 $66,814 
Impact of adopting ASU 2016-137,609 (1,226)6,383 — — — 
Loans charged off(3,897)— (3,897)(39,060)— (39,060)
Recoveries of loans previously charged off1,206 — 1,206 730 — 730 
Net charge-offs(2,691)— (2,691)(38,330)— (38,330)
Provision for (reversal of) credit losses28,360 368 28,728 39,065 (260)38,805 
Balance at end of period$90,927 $3,206 $94,133 $62,927 $4,362 $67,289 

During the three months ended September 30, 2019, the Company recorded a $35.1 million charge-off of a line of credit originated in November 2017 to a borrower purportedly the subject of a fraudulent scheme. Included in the 2019 loan loss provision was $3.0 million due to this charge-off increasing the loss factor for commercial and industrial loans used in our allowance for loan loss calculation.
On October 22, 2019, in connection with this matter, the Bank filed a complaint in the U.S. District Court for the Southern District of California (Case CV '19 02031 GPC KSC) seeking to recover its losses and other monetary damages against Chicago
Title Insurance Company and Chicago Title Company, asserting claims under RICO, 18 U.S.C § 1962 and for RICO Conspiracy, Fraud, Aiding and Abetting Fraud, Negligent Misrepresentation, Breach of Fiduciary Duty and Negligence. On October 1, 2020, the case was re-filed in the Superior Court of the State of California, Count of San Diego (Case No. 37-2020-00034947), asserting claims for Fraud, Aiding and Abetting Fraud, Conspiracy to Defraud, Negligent Misrepresentation, Breach of Fiduciary Duty, Negligence, Money Had And Received, and Conversion. We are actively considering and pursuing available sources of recovery and other potential means of mitigating the loss; however, no assurance can be given that we will be successful in that regard.
During the third quarter of 2019, we undertook an extensive collateral review of all commercial lending relationships $5.0 million and above not secured by real estate, consisting of 53 loans representing $536.0 million in commitments. The collateral review focused on security and collateral documentation and confirmation of the Bank's collateral interest. The review was performed within the Bank's Internal Audit division and the work was validated by an independent third party. Our review and outside validation did not identify any other instances of apparent fraud for the credits reviewed or concerns over the existence of collateral held by the Bank or on our behalf at third parties; however, there are no assurances that our internal review and third party validation will be sufficient to identify all such issues.
Accrued interest receivable on loans receivable, net totaled $25.8 million and $18.9 million at September 30, 2020 and December 31, 2019, and is included within other assets in the accompanying consolidated statements of financial condition. Accrued interest receivable is excluded from the estimate of expected credit losses.
The following table presents the activity and balance in the ALL and the recorded investment, excluding accrued interest, in loans based on the impairment methodology as of or for the three and nine months ended September 30, 2020:
($ in thousands)Commercial and IndustrialCommercial Real EstateMultifamilySBAConstructionSingle Family Residential MortgageOther ConsumerTotal
ALL:
Balance at June 30, 2020$26,618 $17,372 $25,105 $4,184 $6,675 $9,665 $751 $90,370 
Charge-offs
(1,597)— — (224)— — — (1,821)
Recoveries
116 — — 132 — — — 248 
Net charge-offs(1,481)— — (92)— — — (1,573)
Provision for (reversal of) credit losses1,454 2,001 454 (535)(470)(689)(85)2,130 
Balance at September 30, 2020$26,591 $19,373 $25,559 $3,557 $6,205 $8,976 $666 $90,927 
Balance at December 31, 2019$22,353 $5,941 $11,405 $3,120 $3,906 $10,486 $438 $57,649 
Impact of adopting ASC 326662 4,847 1,809 388 103 (420)220 7,609 
Charge-offs
(2,761)— — (580)— (552)(4)(3,897)
Recoveries
265 — — 253 — 639 49 1,206 
Net (charge-offs) recoveries
(2,496)— — (327)— 87 45 (2,691)
Provision for (reversal of) credit losses6,072 8,585 12,345 376 2,196 (1,177)(37)28,360 
Balance at September 30, 2020$26,591 $19,373 $25,559 $3,557 $6,205 $8,976 $666 $90,927 
Individually evaluated for impairment
$11,162 $— $— $2,409 $— $191 $— $13,762 
Collectively evaluated for impairment
15,429 19,373 25,559 1,148 6,205 8,785 666 77,165 
Total ending ALL balance
$26,591 $19,373 $25,559 $3,557 $6,205 $8,976 $666 $90,927 
Loans:
Individually evaluated for impairment
$28,475 $6,471 $— $4,865 $— $31,055 $638 $71,504 
Collectively evaluated for impairment
1,558,349 820,212 1,476,803 315,708 197,629 1,203,424 34,373 5,606,498 
Total ending loan balances
$1,586,824 $826,683 $1,476,803 $320,573 $197,629 $1,234,479 $35,011 $5,678,002 
The following table presents the activity and balance in the ALL and the recorded investment, excluding accrued interest, in loans based on the impairment methodology as of or for the three and nine months ended September 30, 2019:
($ in thousands)Commercial and IndustrialCommercial Real EstateMultifamilySBAConstructionLease FinancingSingle Family Residential MortgageOther ConsumerTotal
ALL:
Balance at June 30, 2019$21,529 $6,877 $12,625 $3,120 $3,715 $— $11,072 $585 $59,523 
Charge-offs
(34,673)— — (738)— — (135)— (35,546)
Recoveries
59 — — 50 — 3 — 298 410 
Net (charge-offs) recoveries
(34,614)— — (688)— 3 (135)298 (35,136)
Provision (reversal)
37,660 (298)(660)1,686 165 (3)342 (352)38,540 
Balance at September 30, 2019$24,575 $6,579 $11,965 $4,118 $3,880 $— $11,279 $531 $62,927 
Balance at December 31, 2018$18,191 $6,674 $17,970 $1,827 $3,461 $— $13,128 $941 $62,192 
Charge-offs
(36,788)— (6)(1,086)— — (1,086)(94)(39,060)
Recoveries
103 — — 151 — 9 150 317 730 
Net (charge-offs) recoveries
(36,685)— (6)(935)— 9 (936)223 (38,330)
Provision (reversal)
43,069 (95)(5,999)3,226 419 (9)(913)(633)39,065 
Balance at September 30, 2019$24,575 $6,579 $11,965 $4,118 $3,880 $— $11,279 $531 $62,927 
Individually evaluated for impairment
$4,614 $— $— $2,858 $— $— $— $21 $7,493 
Collectively evaluated for impairment
19,961 6,579 11,965 1,260 3,880 — 11,279 510 55,434 
Total ending ALL balance
$24,575 $6,579 $11,965 $4,118 $3,880 $— $11,279 $531 $62,927 
Loans:
Individually evaluated for impairment
$22,042 $— $— $5,696 $2,519 $— $20,641 $822 $51,720 
Collectively evaluated for impairment
1,767,436 891,029 1,563,757 69,663 226,042 — 1,755,312 58,300 6,331,539 
Total ending loan balances
$1,789,478 $891,029 $1,563,757 $75,359 $228,561 $— $1,775,953 $59,122 $6,383,259 
The following table presents loans individually evaluated for impairment by class of loans as of the dates indicated. The recorded investment, excluding accrued interest, presents customer balances net of any partial charge-offs recognized on the loans and net of any deferred fees and costs and any purchase premium or discount.
September 30, 2020December 31, 2019
($ in thousands)Unpaid Principal BalanceRecorded InvestmentAllowance for Loan LossesUnpaid Principal BalanceRecorded InvestmentAllowance for Loan Losses
With no related ALL recorded:
Commercial:
Commercial and industrial$11,533 $11,460 $— $1,471 $1,460 $— 
Commercial real estate6,741 6,471 — — — — 
SBA1,622 1,566 — 1,439 1,379 — 
Consumer:
Single family residential mortgage29,048 29,174 — 19,319 19,405 — 
Other consumer1,093 638 — 671 675 — 
With an ALL recorded:
Commercial:
Commercial and industrial17,020 17,015 11,162 18,776 18,776 3,367 
SBA3,482 3,299 2,409 3,921 3,757 2,045 
Consumer:
Single family residential mortgage1,869 1,881 191 4,213 4,252 574 
Other consumer— — — 4 4 4 
Total$72,408 $71,504 $13,762 $49,814 $49,708 $5,990 

The following table presents information on impaired loans, disaggregated by class, for the periods indicated:
Three Months EndedNine Months Ended
($ in thousands)Average Recorded InvestmentInterest Income RecognizedCash Basis Interest RecognizedAverage Recorded InvestmentInterest Income RecognizedCash Basis Interest Recognized
September 30, 2020
Commercial:
Commercial and industrial$22,016 $10 $11 $24,973 $47 $50 
Commercial real estate6,593 — — 4,859 — — 
SBA5,235 3 3 5,274 9 10 
Consumer:
Single family residential mortgage31,457 72 20 31,432 182 99 
Other consumer1,775 — — 1,492 3 3 
Total$67,076 $85 $34 $68,030 $241 $162 
September 30, 2019
Commercial:
Commercial and industrial$22,619 $40 $32 $16,154 $295 $286 
Commercial real estate— — — 193 — — 
SBA5,843 4 4 4,328 12 12 
Construction2,519 — — 2,519 — — 
Consumer:
Single family residential mortgage20,706 59 53 20,374 175 150 
Other consumer827 3 4 950 10 10 
Total$52,514 $106 $93 $44,518 $492 $458 
Troubled Debt Restructurings
TDR loans consisted of the following as of the dates indicated:
September 30, 2020December 31, 2019
($ in thousands)NTM
Loans		Traditional LoansTotalNTM
Loans		Traditional LoansTotal
Commercial:
Commercial and industrial$— $20,355 $20,355 $— $16,245 $16,245 
SBA— 266 266 — 266 266 
Consumer:
Single family residential mortgage2,620 2,169 4,789 2,638 2,394 5,032 
Other consumer— — — 294 — 294 
Total$2,620 $22,790 $25,410 $2,932 $18,905 $21,837 

We had commitments to lend to customers with outstanding loans that were classified as TDRs of $157 thousand and $135 thousand as of September 30, 2020 and December 31, 2019. Accruing TDRs were $5.4 million and nonaccrual TDRs were $20.0 million at September 30, 2020, compared to accruing TDRs of $6.6 million and nonaccrual TDRs of $15.2 million at December 31, 2019. The increase in TDRs during the nine months ended September 30, 2020 was primarily due to one commercial and industrial relationship.
The following table summarizes the pre-modification and post-modification balances of the new TDRs for the periods indicated:
Three Months EndedNine Months Ended
($ in thousands)Number of LoansPre-Modification Outstanding Recorded InvestmentPost-Modification Outstanding Recorded InvestmentNumber of LoansPre-Modification Outstanding Recorded InvestmentPost-Modification Outstanding Recorded Investment
September 30, 2020
Commercial:
Commercial and industrial— $— $— 1 $5,000 $5,000 
Total— — — 1 $5,000 $5,000 
September 30, 2019
Commercial:
Commercial and industrial— $— $— 10 $17,339 $17,020 
SBA— $— $— 2 $3,214 $869 
Total— $— $— 12 $20,553 $17,889 

We consider a TDR to be in payment default once it becomes 30 days or more past due following a modification. During each of the three and nine months ended September 30, 2020, there was zero and one loan that was modified as a TDR during the past 12 months that had subsequent payment defaults. During each of the three and nine months ended September 30, 2019, there were no loans that were modified as TDRs during the past 12 months that had subsequent payment defaults.
The following table summarizes TDRs by modification type for the periods indicated:
Three Months Ended
Modification Type
Change in Principal Payments and Interest RatesChange in Principal PaymentsTotal
($ in thousands)CountAmountCountAmountCountAmount
September 30, 2020
Total— $— — $— — $— 
September 30, 2019
Total— $— — $— — $— 

Nine Months Ended
Modification Type
Change in Principal Payments and Interest RatesChange in Principal PaymentsTotal
($ in thousands)CountAmountCountAmountCountAmount
September 30, 2020
Commercial:
Commercial and industrial
1 $5,000 — $— 1 $5,000 
Total1 $5,000 — $— 1 $5,000 
September 30, 2019
Commercial:
Commercial and industrial
10 $17,020 — $— 10 $17,020 
SBA2 869 — — 2 869 
Total12 $17,889 — $— 12 $17,889 
Purchases, Sales, and Transfers
From time to time, we purchase and sell loans in the secondary market. Certain loans are transferred from held-for-investment to held-for-sale at the lower of cost or fair value and any reductions in value on transfer are reflected as write-downs to allowance for credit losses. During the three and nine months ended September 30, 2020 we purchased loans aggregating $129.0 million and $154.9 million. There were no purchases of loans during the three and nine months ended September 30, 2019.
The following table presents loans transferred from (to) loans held-for-sale by portfolio segment for the periods indicated:
Three Months EndedNine Months Ended
($ in thousands)Transfers from Held-For-SaleTransfers (to) Held-For-SaleTransfers from Held-For-SaleTransfers (to) Held-For-Sale
September 30, 2020
Total$— $— $— $— 
September 30, 2019
Commercial:
Commercial real estate$— $— $— $(573)
Multifamily— — — (752,087)
SBA— (559)— (559)
Consumer:
Single family residential mortgage— — — (374,679)
Total$— $(559)$— $(1,127,898)

During the three and nine months ended September 30, 2020, we sold $17.6 million in single family residential mortgage loans resulting in a gain of $297 thousand.

Included in transfers to loans held for sale for the nine months ended September 30, 2019 is $573.9 million in multifamily loans from loans held-for-investment related to our completed Freddie Mac multifamily securitization which closed during the third quarter of 2019.

During the three and nine months ended September 30, 2019, we sold $573.5 million and $751.6 million, respectively, in multifamily residential loans, resulting in a gross gain of $8.9 million and $11.7 million.

During the three and nine months ended September 30, 2019, we sold $144 thousand and $374.8 million in single family residential mortgage loans, resulting in gains of $8 thousand and $1.8 million.
Non-Traditional Mortgage Loans (“NTM”)
Our NTM portfolio is comprised of three interest only products: Green Loans, Interest Only loans and a small number of loans with the potential for negative amortization. The initial credit guidelines for the NTM portfolio were established based on the borrower's Fair Isaac Corporation (“FICO”) score, LTV ratio, property type, occupancy type, loan amount, and geography. Additionally, from an ongoing credit risk management perspective, we have determined that the most significant performance indicators for NTMs are LTV ratios and FICO scores. We review the NTM loan portfolio periodically by refreshing FICO scores on the Green Loans and HELOCs and ordering third party automated valuation models (AVMs) to confirm collateral values. We no longer originate NTM loans.
The following table presents the composition of the NTM portfolio, which are included in the single family residential mortgage portfolio, as of the dates indicated:
September 30, 2020December 31, 2019
($ in thousands)CountAmountPercentCountAmountPercent
Consumer:
Single family residential mortgage:
Green Loans (HELOC) - first liens57 $39,180 8.4 %69 $49,959 8.3 %
Interest-only - first liens295 425,406 90.8 %376 545,371 90.8 %
Negative amortization8 2,302 0.5 %9 3,027 0.5 %
Total NTM - first liens360 466,888 99.7 %454 598,357 99.6 %
Other consumer:
Green Loans (HELOC) - second liens5 1,608 0.3 %7 2,299 0.4 %
Total NTM - second liens5 1,608 0.3 %7 2,299 0.4 %
Total NTM loans365 $468,496 100.0 %461 $600,656 100.0 %
Total loans receivable$5,678,002 $5,951,885 
% of total NTM loans to total loans receivable8.3 %10.1 %