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LOANS AND ALLOWANCE FOR CREDIT LOSSES (Tables)

9 Months Ended

Sep. 30, 2020

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 estate	826,683		818,817
Multifamily	1,476,803		1,494,528
SBA(1)	320,573		70,981
Construction	197,629		231,350

Consumer:
Single family residential mortgage	1,234,479		1,590,774


Other consumer	35,011		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.

Risk Categories for Loans and Leases

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)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving 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
Substandard	1,332		13,946		1,204		4,650		11,224		9,420		13,803		4,669		60,248
Doubtful	—		—		—		—		—		—		594		—		594
Commercial and industrial	79,569		117,864		70,943		67,433		58,721		109,463		1,067,616		15,215		1,586,824
Commercial real estate
Pass	30,740		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 estate	30,740		154,462		223,957		68,904		100,223		211,415		5,791		31,191		826,683
Multifamily
Pass	216,104		420,664		318,417		233,685		108,405		176,740		—		—		1,474,015
Special mention	—		—		—		—		—		803		—		—		803
Substandard	—		—		—		—		—		1,985		—		—		1,985
Doubtful	—		—		—		—		—		—		—		—		—
Multifamily	216,104		420,664		318,417		233,685		108,405		179,528		—		—		1,476,803
SBA
Pass	256,444		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
SBA	256,444		15,949		1,718		6,199		12,973		21,942		3,325		2,023		320,573
Construction
Pass	31,662		30,008		45,230		70,171		—		—		—		—		177,071
Special mention	—		—		13,733		667		6,158		—		—		—		20,558
Substandard	—		—		—		—		—		—		—		—		—


Doubtful	—		—		—		—		—		—		—		—		—
Construction	31,662		30,008		58,963		70,838		6,158		—		—		—		197,629
Consumer:
Single family residential mortgage
Pass	29,067		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 mortgage	29,067		156,735		297,099		180,072		274,022		279,936		17,548		—		1,234,479
Other consumer
Pass	43		—		60		—		—		1,929		29,453		2,326		33,811
Special mention	—		—		20		—		—		31		314		—		365
Substandard	—		—		—		—		—		480		279		76		835
Doubtful	—		—		—		—		—		—		—		—		—
Other consumer	43		—		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)	Pass		Special Mention		Substandard		Doubtful		Total






























December 31, 2019







Commercial:
Commercial and industrial	$	1,580,269	$	45,323	$	65,678	$	—	$	1,691,270
Commercial real estate	813,846		2,532		2,439		—		818,817
Multifamily	1,484,931		4,256		5,341		—		1,494,528
SBA	60,982		2,760		5,621		1,618		70,981
Construction	229,771		1,579		—		—		231,350

Consumer:
Single family residential mortgage	1,559,253		10,735		20,269		517		1,590,774
Other consumer	53,331		346		488		—		54,165










Total	$	5,782,383	$	67,531	$	99,836	$	2,135	$	5,951,885

Aging of Recorded Investment in Past Due Loans and Leases

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 Due		60 - 89 Days Past Due		Greater than 89 Days Past due		Total Past Due		Current		Total
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 loans	8,344		1,080		19,004		28,428		440,068		468,496
Traditional loans:
Commercial:
Commercial and industrial	142		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
SBA	845		910		2,535		4,290		316,283		320,573
Construction	—		—		—		—		197,629		197,629

Consumer:
Single family residential mortgage	33,387		4,628		4,629		42,644		724,947		767,591
Other consumer	846		226		—		1,072		32,331		33,403
Total traditional loans	35,220		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 loans	3,973		3,535		13,019		20,527		580,129		600,656
Traditional loans:
Commercial:
Commercial and industrial	780		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
SBA	586		842		2,152		3,580		67,401		70,981
Construction	—		—		—		—		231,350		231,350

Consumer:
Single family residential mortgage	13,752		3,496		5,606		22,854		969,563		992,417
Other consumer	199		40		95		334		51,532		51,866
Total traditional loans	15,317		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

Composition of Nonaccrual Loans and Leases

The following table presents nonaccrual loans as of the dates indicated:


	September 30, 2020								December 31, 2019
($ in thousands)	NTM Loans		Traditional Loans		Total Nonaccrual Loans		Nonaccrual Loans with no ACL		NTM Loans		Traditional Loans		Total 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 mortgage	20,619		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

Allowance for Loan and Lease Losses and Recorded Investment, Excluding Accrued Interest, in Loans

The following table presents a summary of activity in the ACL for the periods indicated:


	Three Months Ended September 30,
($ in thousands)	2020						2019
	Allowance for Loan Losses		Reserve for Unfunded Loan Commitments		Allowance for Credit Losses		Allowance for Loan Losses		Reserve for Unfunded Loan Commitments		Allowance 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 off	248		—		248		410		—		410
Net charge-offs	(1,573)		—		(1,573)		(35,136)		—		(35,136)

Provision for (reversal of) credit losses	2,130		(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)	2020						2019
	Allowance for Loan Losses		Reserve for Unfunded Loan Commitments		Allowance for Credit Losses		Allowance for Loan Losses		Reserve for Unfunded Loan Commitments		Allowance for Credit Losses
Balance at beginning of period	$	57,649	$	4,064	$	61,713	$	62,192	$	4,622	$	66,814
Impact of adopting ASU 2016-13	7,609		(1,226)		6,383		—		—		—
Loans charged off	(3,897)		—		(3,897)		(39,060)		—		(39,060)
Recoveries of loans previously charged off	1,206		—		1,206		730		—		730
Net charge-offs	(2,691)		—		(2,691)		(38,330)		—		(38,330)

Provision for (reversal of) credit losses	28,360		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

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 Industrial		Commercial Real Estate		Multifamily		SBA		Construction		Single Family Residential Mortgage		Other Consumer		Total
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 losses	1,454		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 326	662		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 losses	6,072		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


($ in thousands)	Commercial and Industrial		Commercial Real Estate		Multifamily		SBA		Construction		Lease Financing		Single Family Residential Mortgage		Other Consumer		Total
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

Loans and Leases Individually Evaluated for Impairment by Class of Loans and Leases

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, 2020						December 31, 2019
($ in thousands)	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses
With no related ALL recorded:
Commercial:
Commercial and industrial	$	11,533	$	11,460	$	—	$	1,471	$	1,460	$	—
Commercial real estate	6,741		6,471		—		—		—		—

SBA	1,622		1,566		—		1,439		1,379		—


Consumer:
Single family residential mortgage	29,048		29,174		—		19,319		19,405		—
Other consumer	1,093		638		—		671		675		—
With an ALL recorded:
Commercial:
Commercial and industrial	17,020		17,015		11,162		18,776		18,776		3,367


SBA	3,482		3,299		2,409		3,921		3,757		2,045

Consumer:
Single family residential mortgage	1,869		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 Ended						Nine Months Ended
($ in thousands)	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
September 30, 2020
Commercial:
Commercial and industrial	$	22,016	$	10	$	11	$	24,973	$	47	$	50
Commercial real estate	6,593		—		—		4,859		—		—

SBA	5,235		3		3		5,274		9		10


Consumer:
Single family residential mortgage	31,457		72		20		31,432		182		99
Other consumer	1,775		—		—		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		—		—

SBA	5,843		4		4		4,328		12		12
Construction	2,519		—		—		2,519		—		—

Consumer:
Single family residential mortgage	20,706		59		53		20,374		175		150
Other consumer	827		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, 2020						December 31, 2019
($ in thousands)	NTM Loans		Traditional Loans		Total		NTM Loans		Traditional Loans		Total
Commercial:
Commercial and industrial	$	—	$	20,355	$	20,355	$	—	$	16,245	$	16,245
SBA	—		266		266		—		266		266
Consumer:
Single family residential mortgage	2,620		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

The following table summarizes the pre-modification and post-modification balances of the new TDRs for the periods indicated:



	Three Months Ended					Nine Months Ended
($ in thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-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

The following table summarizes TDRs by modification type for the periods indicated:

Three Months Ended

Modification Type

Change in Principal Payments and Interest Rates

Change in Principal Payments

Total

($ in thousands)

Count

Amount

Count

Amount

Count

Amount

September 30, 2020

Total

—

September 30, 2019

Total

—


	Nine Months Ended
	Modification Type
	Change in Principal Payments and Interest Rates			Change in Principal Payments			Total
($ in thousands)	Count	Amount		Count	Amount			Count	Amount
September 30, 2020
Commercial:
Commercial and industrial	1	$	5,000	—	$	—		1	$	5,000



Total	1	$	5,000	—	$	—		1	$	5,000

September 30, 2019
Commercial:
Commercial and industrial	10	$	17,020	—	$	—		10	$	17,020
SBA	2	869		—	—			2	869


Total	12	$	17,889	—	$	—		12	$	17,889

Summary of Significant Activities

The following table presents loans transferred from (to) loans held-for-sale by portfolio segment for the periods indicated:


	Three Months Ended				Nine Months Ended
($ in thousands)	Transfers from Held-For-Sale		Transfers (to) Held-For-Sale		Transfers from Held-For-Sale		Transfers (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)

Non Traditional Mortgages Portfolio

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, 2020						December 31, 2019
($ in thousands)	Count	Amount			Percent		Count	Amount			Percent
Consumer:
Single family residential mortgage:
Green Loans (HELOC) - first liens	57	$	39,180		8.4	%	69	$	49,959		8.3	%
Interest-only - first liens	295	425,406			90.8	%	376	545,371			90.8	%
Negative amortization	8	2,302			0.5	%	9	3,027			0.5	%
Total NTM - first liens	360	466,888			99.7	%	454	598,357			99.6	%
Other consumer:
Green Loans (HELOC) - second liens	5	1,608			0.3	%	7	2,299			0.4	%

Total NTM - second liens	5	1,608			0.3	%	7	2,299			0.4	%
Total NTM loans	365	$	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 receivable		8.3		%				10.1		%