Loans Receivable, Net | Loans Receivable, Net Loans receivable, net at March 31, 2019 and December 31, 2018 consisted of the following (in thousands): March 31, 2019 December 31, 2018 Commercial: Commercial and industrial $ 380,347 $ 304,994 Commercial real estate – owner occupied 801,290 740,375 Commercial real estate – investor 2,149,891 2,015,210 Total commercial 3,331,528 3,060,579 Consumer: Residential real estate 2,162,322 2,044,286 Home equity loans and lines 351,181 353,386 Other consumer 116,838 121,561 Total consumer 2,630,341 2,519,233 5,961,869 5,579,812 Purchased credit impaired (“PCI”) loans 16,306 8,901 Total Loans 5,978,175 5,588,713 Deferred origination costs, net 7,360 7,086 Allowance for loan losses (16,705 ) (16,577 ) Total loans, net $ 5,968,830 $ 5,579,222 An analysis of the allowance for loan losses for the three months ended March 31, 2019 and 2018 is as follows (in thousands): Three Months Ended 2019 2018 Balance at beginning of period $ 16,577 $ 15,721 Provision charged to operations 620 1,371 Charge-offs (868 ) (533 ) Recoveries 376 258 Balance at end of period $ 16,705 $ 16,817 The following table presents an analysis of the allowance for loan losses for the three months ended March 31, 2019 and 2018 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 March 31, 2019 and December 31, 2018 , 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 March 31, 2019 Allowance for loan losses: Balance at beginning of period $ 1,609 $ 2,277 $ 8,770 $ 2,413 $ 486 $ 1,022 $ 16,577 Provision (benefit) charged to operations (19 ) 1,550 (802 ) (23 ) (110 ) 24 620 Charge-offs — (389 ) (21 ) (427 ) (31 ) — (868 ) Recoveries 57 — 295 2 22 — 376 Balance at end of period $ 1,647 $ 3,438 $ 8,242 $ 1,965 $ 367 $ 1,046 $ 16,705 For the three months ended March 31, 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 470 (307 ) 879 493 (1 ) (163 ) 1,371 Charge-offs (44 ) — (123 ) (244 ) (122 ) — (533 ) Recoveries 24 3 130 85 16 — 258 Balance at end of period $ 2,251 $ 2,871 $ 8,838 $ 2,138 $ 507 $ 212 $ 16,817 March 31, 2019 Allowance for loan losses: Ending allowance balance attributed to loans: Individually evaluated for impairment $ — $ 604 $ — $ — $ — $ — $ 604 Collectively evaluated for impairment 1,647 2,834 8,242 1,965 367 1,046 16,101 Total ending allowance balance $ 1,647 $ 3,438 $ 8,242 $ 1,965 $ 367 $ 1,046 $ 16,705 Loans: Loans individually evaluated for impairment $ 250 $ 7,411 $ 13,595 $ 10,028 $ 3,167 $ — $ 34,451 Loans collectively evaluated for impairment 380,097 793,879 2,136,296 2,152,294 464,852 — 5,927,418 Total ending loan balance $ 380,347 $ 801,290 $ 2,149,891 $ 2,162,322 $ 468,019 $ — $ 5,961,869 December 31, 2018 Allowance for loan losses: Ending allowance balance attributed to loans: Individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Collectively evaluated for impairment 1,609 2,277 8,770 2,413 486 1,022 16,577 Total ending allowance balance $ 1,609 $ 2,277 $ 8,770 $ 2,413 $ 486 $ 1,022 $ 16,577 Loans: Loans individually evaluated for impairment $ 1,626 $ 5,395 $ 9,738 $ 10,064 $ 2,974 $ — $ 29,797 Loans collectively evaluated for impairment 303,368 734,980 2,005,472 2,034,222 471,973 — 5,550,015 Total ending loan balance $ 304,994 $ 740,375 $ 2,015,210 $ 2,044,286 $ 474,947 $ — $ 5,579,812 A summary of impaired loans at March 31, 2019 , and December 31, 2018 , is as follows, excluding PCI loans (in thousands): March 31, 2019 December 31, 2018 Impaired loans with no allocated allowance for loan losses $ 29,951 $ 29,797 Impaired loans with allocated allowance for loan losses 4,500 — $ 34,451 $ 29,797 Amount of the allowance for loan losses allocated $ 604 $ — 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 March 31, 2019 , the impaired loan portfolio totaled $34.5 million for which there was a specific allocation in the allowance for loan losses of $604,000 . At December 31, 2018 , the impaired loan portfolio totaled $29.8 million for which there was no specific allocation in the allowance for loan losses. The average balance of impaired loans for the quarter ended March 31, 2019 and 2018 was $32.1 million and $45.5 million , respectively. At March 31, 2019 and December 31, 2018 , impaired loans included troubled debt restructured (“TDR”) loans of $26.2 million and $26.5 million , respectively. The summary of loans individually evaluated for impairment by loan portfolio segment as of March 31, 2019 , and December 31, 2018 and for the three months ended March 31, 2019 and 2018 , is as follows, excluding PCI loans (in thousands): Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated As of March 31, 2019 With no related allowance recorded: Commercial and industrial $ 272 $ 250 $ — Commercial real estate – owner occupied 2,951 2,911 — Commercial real estate – investor 15,680 13,595 — Residential real estate 10,411 10,028 — Consumer 3,500 3,167 — $ 32,814 $ 29,951 $ — With an allowance recorded: Commercial and industrial $ — $ — $ — Commercial real estate – owner occupied 4,500 4,500 604 Commercial real estate – investor — — — Residential real estate — — — Consumer — — — $ 4,500 $ 4,500 $ 604 As of December 31, 2018 With no related allowance recorded: Commercial and industrial $ 1,750 $ 1,626 $ — Commercial real estate – owner occupied 5,413 5,395 — Commercial real estate – investor 12,633 9,738 — Residential real estate 10,441 10,064 — Consumer 3,301 2,974 — $ 33,538 $ 29,797 $ — With an allowance recorded: Commercial and industrial $ — $ — $ — Commercial real estate – owner occupied — — — Commercial real estate – investor — — — Residential real estate — — — Consumer — — — $ — $ — $ — Three Months Ended March 31, 2019 2018 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance recorded: Commercial and industrial $ 938 $ 3 $ 830 $ 16 Commercial real estate – owner occupied 4,153 42 12,471 115 Commercial real estate – investor 11,667 136 16,328 154 Residential real estate 10,046 131 11,006 125 Consumer 3,071 46 2,477 37 $ 29,875 $ 358 $ 43,112 $ 447 With an allowance recorded: Commercial and industrial $ — $ — $ 736 $ — Commercial real estate – owner occupied 2,250 36 — — Commercial real estate – investor — — 1,677 — Residential real estate — — — — Consumer — — — — $ 2,250 $ 36 $ 2,413 $ — The following table presents the recorded investment in non-accrual loans by loan portfolio segment as of March 31, 2019 and December 31, 2018 , excluding PCI loans (in thousands): March 31, 2019 December 31, 2018 Commercial and industrial $ 240 $ 1,587 Commercial real estate – owner occupied 4,565 501 Commercial real estate – investor 4,115 5,024 Residential real estate 8,611 7,389 Consumer 3,364 2,914 $ 20,895 $ 17,415 At March 31, 2019 , there were no commitments to lend additional funds to borrowers whose loans are in non-accrual status. The following table presents the aging of the recorded investment in past due loans as of March 31, 2019 and December 31, 2018 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 March 31, 2019 Commercial and industrial $ 1,231 $ — $ 34 $ 1,265 $ 379,082 $ 380,347 Commercial real estate – owner occupied 3,275 1,785 1,215 6,275 795,015 801,290 Commercial real estate – investor 624 2,553 4,085 7,262 2,142,629 2,149,891 Residential real estate 9,631 3,268 5,213 18,112 2,144,210 2,162,322 Consumer 1,272 514 2,932 4,718 463,301 468,019 $ 16,033 $ 8,120 $ 13,479 $ 37,632 $ 5,924,237 $ 5,961,869 December 31, 2018 Commercial and industrial $ — $ — $ — $ — $ 304,994 $ 304,994 Commercial real estate – owner occupied 5,104 236 197 5,537 734,838 740,375 Commercial real estate – investor 3,979 2,503 2,461 8,943 2,006,267 2,015,210 Residential real estate 10,199 4,979 4,451 19,629 2,024,657 2,044,286 Consumer 2,200 955 2,464 5,619 469,328 474,947 $ 21,482 $ 8,673 $ 9,573 $ 39,728 $ 5,540,084 $ 5,579,812 At March 31, 2019 and December 31, 2018 , loans in the amount of $20.9 million and $17.4 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 March 31, 2019 , 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 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 March 31, 2019 and December 31, 2018 , 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 March 31, 2019 Commercial and industrial $ 369,701 $ 4,589 $ 6,057 $ — $ 380,347 Commercial real estate – owner occupied 775,723 6,514 19,053 — 801,290 Commercial real estate – investor 2,103,459 22,542 23,890 — 2,149,891 $ 3,248,883 $ 33,645 $ 49,000 $ — $ 3,331,528 December 31, 2018 Commercial and industrial $ 291,265 $ 2,777 $ 10,952 $ — $ 304,994 Commercial real estate – owner occupied 706,825 3,000 30,550 — 740,375 Commercial real estate – investor 1,966,495 23,727 24,988 — 2,015,210 $ 2,964,585 $ 29,504 $ 66,490 $ — $ 3,060,579 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 March 31, 2019 and December 31, 2018 , excluding PCI loans (in thousands): Residential Consumer March 31, 2019 Performing $ 2,153,711 $ 464,655 Non-performing 8,611 3,364 $ 2,162,322 $ 468,019 December 31, 2018 Performing $ 2,036,897 $ 472,033 Non-performing 7,389 2,914 $ 2,044,286 $ 474,947 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 March 31, 2019 . The amount of foreclosed residential real estate property held by the Company was $841,000 at March 31, 2019 . 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 March 31, 2019 , and December 31, 2018 , were $6.5 million and $3.6 million , respectively, of troubled debt restructurings. At March 31, 2019 , and December 31, 2018 , the Company had $487,000 and $0 , respectively, of 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 March 31, 2019 and December 31, 2018 , which totaled $19.7 million and $22.9 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 months ended March 31, 2019 and 2018 , and troubled debt restructurings modified within the previous year and which defaulted during the three months ended March 31, 2019 and 2018 (dollars in thousands): Number of Loans Pre-modification Recorded Investment Post-modification Recorded Investment Three months ended March 31, 2019 Troubled Debt Restructurings: Residential real estate 3 589 621 Number of Loans Recorded Investment Troubled Debt Restructurings Which Subsequently Defaulted: None None Number of Loans Pre-modification Recorded Investment Post-modification Recorded Investment Three Months Ended March 31, 2018 Troubled Debt Restructurings: Commercial and industrial 1 $ 237 $ 243 Commercial real estate – investor 1 179 180 Residential real estate 2 257 270 Number of Loans Recorded Investment Troubled Debt Restructurings Which Subsequently Defaulted: None None As part of the Capital Bank 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 Capital Bank at January 31, 2019 (in thousands): Capital January 31, 2019 Contractually required principal and interest $ 10,468 Contractual cash flows not expected to be collected (non-accretable discount) (1,940 ) Expected cash flows to be collected at acquisition 8,528 Interest component of expected cash flows (accretable yield) (1,171 ) Fair value of acquired loans $ 7,357 The following table summarizes the changes in accretable yield for PCI loans during the three months ended March 31, 2019 and 2018 (in thousands): Three Months Ended March 31, 2019 2018 Beginning balance $ 3,630 $ 161 Acquisition 1,171 3,535 Accretion (653 ) (222 ) Reclassification from non-accretable difference 45 18 Ending balance $ 4,193 $ 3,492 |