Loans Receivable, Net | Loans Receivable, Net Loans receivable, net at September 30, 2018 and December 31, 2017 consisted of the following (in thousands): September 30, 2018 December 31, 2017 Commercial: Commercial and industrial $ 342,555 $ 187,645 Commercial real estate – owner occupied 734,720 569,497 Commercial real estate – investor 2,011,897 1,186,302 Total commercial 3,089,172 1,943,444 Consumer: Residential real estate 2,019,918 1,748,590 Home equity loans and lines 358,728 281,143 Other consumer 74,555 1,225 Total consumer 2,453,201 2,030,958 5,542,373 3,974,402 Purchased credit impaired (“PCI”) loans 9,700 1,712 Total Loans 5,552,073 3,976,114 Deferred origination costs, net 8,707 5,380 Allowance for loan losses (16,821 ) (15,721 ) Total loans, net $ 5,543,959 $ 3,965,773 At September 30, 2018 and December 31, 2017 , loans in the amount of $19.2 million and $20.9 million , respectively, were three or more months delinquent or in the process of foreclosure and the Company was not accruing interest income on these loans. At September 30, 2018 , there were no loans that were ninety days or greater past due and still accruing interest. Non-accrual loans include both smaller balance homogenous loans that are collectively evaluated for impairment and individually classified impaired loans. The recorded investment in mortgage and consumer loans collateralized by residential real estate, which are in the process of foreclosure, amounted to $2.1 million at September 30, 2018 . The amount of foreclosed residential real estate property held by the Company was $447,000 at September 30, 2018 . The Company defines an impaired loan as non-accrual commercial real estate, multi-family, land, construction and commercial loans in excess of $250,000 . Impaired loans also include all loans modified as troubled debt restructurings. At September 30, 2018 , the impaired loan portfolio totaled $33.1 million for which there was no specific allocation in the allowance for loan losses. At December 31, 2017 , the impaired loan portfolio totaled $47.0 million for which there was no specific allocation in the allowance for loan losses. The average balance of impaired loans for the three and nine months ended September 30, 2018 was $32.9 million and $39.2 million , respectively, and for the three and nine months ended September 30, 2017 was $43.1 million and $38.0 million , respectively. An analysis of the allowance for loan losses for the three and nine months ended September 30, 2018 and 2017 is as follows (in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Balance at beginning of period $ 16,691 $ 16,557 $ 15,721 $ 15,183 Provision charged to operations 907 1,165 2,984 3,030 Charge-offs (891 ) (1,357 ) (2,708 ) (2,861 ) Recoveries 114 219 824 1,232 Balance at end of period $ 16,821 $ 16,584 $ 16,821 $ 16,584 The following table presents an analysis of the allowance for loan losses for the three and nine months ended September 30, 2018 and 2017 and the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2018 and December 31, 2017 , excluding PCI loans (in thousands): Commercial and Industrial Commercial Real Estate – Owner Occupied Commercial Real Estate – Investor Residential Real Estate Consumer Unallocated Total For the three months ended September 30, 2018 Allowance for loan losses: Balance at beginning of period $ 2,080 $ 2,340 $ 9,058 $ 2,126 $ 526 $ 561 $ 16,691 Provision (benefit) charged to operations (520 ) 187 661 578 57 (56 ) 907 Charge-offs (146 ) — (138 ) (535 ) (72 ) — (891 ) Recoveries 28 1 9 57 19 — 114 Balance at end of period $ 1,442 $ 2,528 $ 9,590 $ 2,226 $ 530 $ 505 $ 16,821 For the three months ended September 30, 2017 Allowance for loan losses: Balance at beginning of period $ 2,253 $ 3,097 $ 8,367 $ 1,492 $ 930 $ 418 $ 16,557 Provision (benefit) charged to operations (180 ) 119 81 1,465 (122 ) (198 ) 1,165 Charge-offs (6 ) — — (1,284 ) (67 ) — (1,357 ) Recoveries 50 — 24 128 17 — 219 Balance at end of period $ 2,117 $ 3,216 $ 8,472 $ 1,801 $ 758 $ 220 $ 16,584 For the nine months ended September 30, 2018 Allowance for loan losses: Balance at beginning of period $ 1,801 $ 3,175 $ 7,952 $ 1,804 $ 614 $ 375 $ 15,721 Provision (benefit) charged to operations (238 ) (734 ) 2,706 1,079 41 130 2,984 Charge-offs (202 ) (91 ) (1,239 ) (936 ) (240 ) — (2,708 ) Recoveries 81 178 171 279 115 — 824 Balance at end of period $ 1,442 $ 2,528 $ 9,590 $ 2,226 $ 530 $ 505 $ 16,821 For the nine months ended September 30, 2017 Allowance for loan losses: Balance at beginning of period $ 2,037 $ 2,999 $ 6,361 $ 2,245 $ 1,110 $ 431 $ 15,183 Provision (benefit) charged to operations (221 ) 167 2,164 1,477 (346 ) (211 ) 3,030 Charge-offs (94 ) (73 ) (84 ) (2,485 ) (125 ) — (2,861 ) Recoveries 395 123 31 564 119 — 1,232 Balance at end of period $ 2,117 $ 3,216 $ 8,472 $ 1,801 $ 758 $ 220 $ 16,584 September 30, 2018 Allowance for loan losses: Ending allowance balance attributed to loans: Individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Collectively evaluated for impairment 1,442 2,528 9,590 2,226 530 505 16,821 Total ending allowance balance $ 1,442 $ 2,528 $ 9,590 $ 2,226 $ 530 $ 505 $ 16,821 Loans: Loans individually evaluated for impairment $ 1,738 $ 5,446 $ 12,760 $ 10,454 $ 2,690 $ — $ 33,088 Loans collectively evaluated for impairment 340,817 729,274 1,999,137 2,009,464 430,593 — 5,509,285 Total ending loan balance $ 342,555 $ 734,720 $ 2,011,897 $ 2,019,918 $ 433,283 $ — $ 5,542,373 Commercial and Industrial Commercial Real Estate – Owner Occupied Commercial Real Estate – Investor Residential Real Estate Consumer Unallocated Total December 31, 2017 Allowance for loan losses: Ending allowance balance attributed to loans: Individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Collectively evaluated for impairment 1,801 3,175 7,952 1,804 614 375 15,721 Total ending allowance balance $ 1,801 $ 3,175 $ 7,952 $ 1,804 $ 614 $ 375 $ 15,721 Loans: Loans individually evaluated for impairment $ 864 $ 15,132 $ 17,923 $ 10,605 $ 2,464 $ — $ 46,988 Loans collectively evaluated for impairment 186,781 554,365 1,168,379 1,737,985 279,904 — 3,927,414 Total ending loan balance $ 187,645 $ 569,497 $ 1,186,302 $ 1,748,590 $ 282,368 $ — $ 3,974,402 A summary of impaired loans at September 30, 2018 , and December 31, 2017 , is as follows, excluding PCI loans (in thousands): September 30, 2018 December 31, 2017 Impaired loans with no allocated allowance for loan losses $ 33,088 $ 46,988 Impaired loans with allocated allowance for loan losses — — $ 33,088 $ 46,988 Amount of the allowance for loan losses allocated $ — $ — At September 30, 2018 , impaired loans included troubled debt restructured (“TDR”) loans of $27.8 million , of which $24.2 million were performing in accordance with their restructured terms for a minimum of six months and were accruing interest. At December 31, 2017 , impaired loans included TDR loans of $42.1 million , of which $33.3 million were performing in accordance with their restructured terms for a minimum of six months and were accruing interest. The summary of loans individually evaluated for impairment by loan portfolio segment as of September 30, 2018 , and December 31, 2017 and for the three and nine months ended September 30, 2018 and 2017 , is as follows, excluding PCI loans (in thousands): Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated As of September 30, 2018 With no related allowance recorded: Commercial and industrial $ 1,824 $ 1,738 $ — Commercial real estate – owner occupied 5,459 5,446 — Commercial real estate – investor 15,290 12,760 — Residential real estate 10,828 10,454 — Consumer 3,009 2,690 — $ 36,410 $ 33,088 $ — With an allowance recorded: Commercial and industrial $ — $ — $ — Commercial real estate – owner occupied — — — Commercial real estate – investor — — — Residential real estate — — — Consumer — — — $ — $ — $ — As of December 31, 2017 With no related allowance recorded: Commercial and industrial $ 895 $ 864 $ — Commercial real estate – owner occupied 15,832 15,132 — Commercial real estate – investor 19,457 17,923 — Residential real estate 10,951 10,605 — Consumer 2,941 2,464 — $ 50,076 $ 46,988 $ — With an allowance recorded: Commercial and industrial $ — $ — $ — Commercial real estate – owner occupied — — — Commercial real estate – investor — — — Residential real estate — — — Consumer — — — $ — $ — $ — Three Months Ended September 30, 2018 2017 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance recorded: Commercial and industrial $ 982 $ 69 $ 908 $ 26 Commercial real estate – owner occupied 5,484 75 11,217 335 Commercial real estate – investor 12,191 102 11,147 240 Residential real estate 10,741 119 12,791 128 Consumer 2,782 33 2,495 36 $ 32,180 $ 398 $ 38,558 $ 765 With an allowance recorded: Commercial and industrial $ 736 $ — $ — $ — Commercial real estate – owner occupied — — — — Commercial real estate – investor — — 4,551 13 Residential real estate — — — — Consumer — — — — $ 736 $ — $ 4,551 $ 13 Nine Months Ended September 30, 2018 2017 Average Interest Average Interest With no related allowance recorded: Commercial and industrial $ 906 $ 85 $ 588 $ 50 Commercial real estate – owner occupied 8,978 226 11,080 520 Commercial real estate – investor 14,259 304 6,550 487 Residential real estate 10,873 356 11,009 401 Consumer 2,629 116 2,368 106 $ 37,645 $ 1,087 $ 31,595 $ 1,564 With an allowance recorded: Commercial and industrial $ 736 $ — $ — $ — Commercial real estate – owner occupied — — — — Commercial real estate – investor 838 — 4,233 81 Residential real estate — — 1,981 62 Consumer — — 148 6 $ 1,574 $ — $ 6,362 $ 149 The following table presents the recorded investment in non-accrual loans by loan portfolio segment as of September 30, 2018 and December 31, 2017 , excluding PCI loans (in thousands): September 30, 2018 December 31, 2017 Commercial and industrial $ 1,727 $ 503 Commercial real estate – owner occupied 511 5,962 Commercial real estate – investor 8,082 8,281 Residential real estate 6,390 4,190 Consumer 2,529 1,929 $ 19,239 $ 20,865 The following table presents the aging of the recorded investment in past due loans as of September 30, 2018 and December 31, 2017 by loan portfolio segment, excluding PCI loans (in thousands): 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Past Due Total Past Due Loans Not Past Due Total September 30, 2018 Commercial and industrial $ 55 $ 37 $ 28 $ 120 $ 342,435 $ 342,555 Commercial real estate – owner occupied 3,433 876 197 4,506 730,214 734,720 Commercial real estate – investor 2,788 666 7,938 11,392 2,000,505 2,011,897 Residential real estate 11,674 6,462 3,567 21,703 1,998,215 2,019,918 Consumer 1,720 776 2,120 4,616 428,667 433,283 $ 19,670 $ 8,817 $ 13,850 $ 42,337 $ 5,500,036 $ 5,542,373 December 31, 2017 Commercial and industrial $ 2,694 $ 36 $ 503 $ 3,233 $ 184,412 $ 187,645 Commercial real estate – owner occupied 222 — 5,402 5,624 563,873 569,497 Commercial real estate – investor 135 1,426 4,507 6,068 1,180,234 1,186,302 Residential real estate 13,197 2,351 3,372 18,920 1,729,670 1,748,590 Consumer 1,067 310 1,687 3,064 279,304 282,368 $ 17,315 $ 4,123 $ 15,471 $ 36,909 $ 3,937,493 $ 3,974,402 The Company categorizes all commercial and commercial real estate loans, except for small business loans, into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation and current economic trends, among other factors. The Company uses the following definitions for risk ratings: Pass : Loans classified as Pass are well protected by the paying capacity and net worth of the borrower. Special Mention : Loans classified 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 the Bank’s credit position at some future date. Substandard : Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company 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. As of September 30, 2018 and December 31, 2017 , and based on the most recent analysis performed, the risk category of loans by loan portfolio segment follows, excluding PCI loans (in thousands) is as follows: Pass Special Mention Substandard Doubtful Total September 30, 2018 Commercial and industrial $ 330,996 $ 423 $ 11,136 $ — $ 342,555 Commercial real estate – owner occupied 709,902 2,202 22,616 — 734,720 Commercial real estate – investor 1,955,483 23,180 33,234 — 2,011,897 $ 2,996,381 $ 25,805 $ 66,986 $ — $ 3,089,172 December 31, 2017 Commercial and industrial $ 181,438 $ 3,153 $ 3,054 $ — $ 187,645 Commercial real estate – owner occupied 546,569 4,337 18,591 — 569,497 Commercial real estate – investor 1,146,630 14,644 25,028 — 1,186,302 $ 1,874,637 $ 22,134 $ 46,673 $ — $ 1,943,444 For residential and consumer loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in residential and consumer loans based on payment activity as of September 30, 2018 and December 31, 2017 , excluding PCI loans (in thousands): Residential Consumer September 30, 2018 Performing $ 2,013,528 $ 430,754 Non-performing 6,390 2,529 $ 2,019,918 $ 433,283 December 31, 2017 Performing $ 1,744,400 $ 280,439 Non-performing 4,190 1,929 $ 1,748,590 $ 282,368 The Company classifies certain loans as troubled debt restructurings when credit terms to a borrower in financial difficulty are modified. The modifications may include a reduction in rate, an extension in term, the capitalization of past due amounts and/or the restructuring of scheduled principal payments. One-to-four family and consumer loans where the borrower’s debt is discharged in a bankruptcy filing are also considered troubled debt restructurings. For these loans, the Bank retains its security interest in the real estate collateral. Included in the non-accrual loan total at September 30, 2018 , and December 31, 2017 , were $3.6 million and $8.8 million , respectively, of troubled debt restructurings. At September 30, 2018 and December 31, 2017 , the Company had no specific reserves allocated to loans that are classified as troubled debt restructurings. Non-accrual loans which become troubled debt restructurings are generally returned to accrual status after six months of performance. In addition to the troubled debt restructurings included in non-accrual loans, the Company also has loans classified as accruing troubled debt restructurings at September 30, 2018 , and December 31, 2017 , which totaled $24.2 million and $33.3 million , respectively. Troubled debt restructurings are considered in the allowance for loan losses similar to other impaired loans. The following table presents information about troubled debt restructurings which occurred during the three and nine months ended September 30, 2018 and 2017 , and troubled debt restructurings modified within the previous year and which defaulted during the three and nine months ended September 30, 2018 and 2017 (dollars in thousands): Number of Loans Pre-modification Recorded Investment Post-modification Recorded Investment Three months ended September 30, 2018 Troubled Debt Restructurings: Commercial real estate – owner occupied 1 49 50 Commercial real estate – investor 1 171 210 Number of Loans Recorded Investment Troubled Debt Restructurings Which Subsequently Defaulted: Commercial real estate – investor 1 $ 2,820 Consumer 1 30 Number of Loans Pre-modification Post-modification Nine months ended September 30, 2018 Troubled Debt Restructurings: Commercial and industrial 2 $ 496 $ 502 Commercial real estate – owner occupied 1 49 50 Commercial real estate – investor 3 1,395 1,435 Residential real estate 2 257 270 Number of Loans Recorded Investment Troubled Debt Restructurings Which Subsequently Defaulted: Commercial real estate – investor 1 $ 2,820 Consumer 1 30 Number of Loans Pre-modification Recorded Investment Post-modification Recorded Investment Three Months Ended September 30, 2017 Troubled Debt Restructurings: Commercial real estate - owner occupied 1 $ 700 $ 700 Commercial real estate – investor 1 700 700 Residential real estate 2 328 357 Number of Loans Recorded Investment Troubled Debt Restructurings Which Subsequently Defaulted: None None Number of Loans Pre-modification Recorded Investment Post-modification Recorded Investment Nine months ended September 30, 2017 Troubled Debt Restructurings: Commercial and industrial 1 $ 665 $ 665 Commercial real estate - owner occupied 4 3,309 3,309 Commercial real estate – investor 4 6,362 6,484 Residential real estate 6 1,354 1,356 Number of Loans Recorded Investment Troubled Debt Restructurings Which Subsequently Defaulted: None None As part of the Sun acquisition, PCI loans were acquired at a discount primarily due to deteriorated credit quality. PCI loans are accounted for at fair value, based upon the present value of expected future cash flows, with no related allowance for loan losses. The following table presents information regarding the estimates of the contractually required payments, the cash flows expected to be collected and the estimated fair value of the PCI loans acquired from Sun at January 31, 2018 (in thousands): Sun January 31, 2018 Contractually required principal and interest $ 22,556 Contractual cash flows not expected to be collected (non-accretable discount) (6,115 ) Expected cash flows to be collected at acquisition 16,441 Interest component of expected cash flows (accretable yield) (3,535 ) Fair value of acquired loans $ 12,906 The following table summarizes the changes in accretable yield for PCI loans during the three and nine months ended September 30, 2018 and 2017 (in thousands): Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Beginning balance $ 2,300 $ 161 $ 1,465 $ 749 Acquisition — 2,646 — — Accretion (368 ) (1,459 ) (328 ) (642 ) Reclassification from non-accretable difference 470 1,054 13 1,043 Ending balance $ 2,402 $ 2,402 $ 1,150 $ 1,150 |