Loans Receivable and Allowance for Credit Losses | Loans Receivable and Allowance for Credit Losses The Company’s held-for-investment loan portfolio includes originated and purchased loans. Originated and purchased loans with no evidence of credit deterioration at their acquisition date are referred to collectively as non-PCI loans. PCI loans are loans acquired with evidence of credit deterioration since their origination and for which it is probable at the acquisition date that the Company would be unable to collect all contractually required payments. PCI loans are accounted for under ASC Subtopic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality . The Company has elected to account for PCI loans on a pool level basis under ASC 310-30 at the time of acquisition. The following table presents the composition of the Company’s non-PCI and PCI loans as of December 31, 2018 and 2017 : ($ in thousands) December 31, 2018 December 31, 2017 Non-PCI (1) PCI Loans (2) Total (1)(2) Non-PCI Loans (1) PCI (2) Total (1)(2) Commercial: C&I $ 12,054,818 $ 2,152 $ 12,056,970 $ 10,685,436 $ 11,795 $ 10,697,231 CRE 9,284,583 165,252 9,449,835 8,659,209 277,688 8,936,897 Multifamily residential 2,246,506 34,526 2,281,032 1,855,128 61,048 1,916,176 Construction and land 538,752 42 538,794 659,326 371 659,697 Total commercial 24,124,659 201,972 24,326,631 21,859,099 350,902 22,210,001 Consumer: Single-family residential 5,939,258 97,196 6,036,454 4,528,911 117,378 4,646,289 HELOCs 1,681,979 8,855 1,690,834 1,768,917 14,007 1,782,924 Other consumer 331,270 — 331,270 336,504 — 336,504 Total consumer 7,952,507 106,051 8,058,558 6,634,332 131,385 6,765,717 Total loans held-for-investment $ 32,077,166 $ 308,023 $ 32,385,189 $ 28,493,431 $ 482,287 $ 28,975,718 Allowance for loan losses (311,300 ) (22 ) (311,322 ) (287,070 ) (58 ) (287,128 ) Loans held-for-investment, net $ 31,765,866 $ 308,001 $ 32,073,867 $ 28,206,361 $ 482,229 $ 28,688,590 (1) Includes net deferred loan fees, unearned fees, unamortized premiums and unaccreted discounts of $(48.9) million and $(34.0) million as of December 31, 2018 and 2017 , respectively. (2) Includes ASC 310-30 discount of $22.2 million and $35.3 million as of December 31, 2018 and 2017 , respectively. The commercial portfolio includes C&I, CRE, multifamily residential, and construction and land loans. The consumer portfolio includes single-family residential, HELOC and other consumer loans. The C&I loan portfolio, which is comprised of commercial business and trade finance loans, provides financing to businesses in a wide spectrum of industries. The CRE loan portfolio includes income producing real estate loans that are either owner occupied, or non-owner occupied where 50% or more of the debt service for the loan is primarily provided by unaffiliated rental income from a third party. The multifamily residential loan portfolio is largely comprised of loans secured by smaller multifamily properties ranging from 5 to 15 units in the Bank’s primary lending areas. Construction loans mainly provide construction financing for multifamily and residential condominiums, hotels, offices, industrial, as well as mixed use (residential and retail) structures. In the consumer portfolio, the Company offers residential loans through a variety of mortgage loan programs. The consumer residential loan portfolio is largely comprised of single-family residential loans and HELOCs that were originated through a reduced documentation loan program, where a substantial down payment is required, resulting in a low loan-to-value ratio at origination, typically 60% or less. The Company is in a first lien position for many of these reduced documentation single-family residential loans and HELOCs. These loans have historically experienced low delinquency and default rates. Other consumer loans are mainly comprised of insurance premium financing loans. As of December 31, 2018 and 2017 , loans of $20.59 billion and $18.88 billion , respectively, were pledged to secure borrowings and to provide additional borrowing capacity from the Federal Reserve Bank and the FHLB. Credit Quality Indicators All loans are subject to the Company’s internal and external credit review and monitoring. For the commercial portfolio, loans are risk rated based on an analysis of the current state of the borrower’s credit quality. The analysis of credit quality includes a review of all repayment sources, the borrower’s current payment performance/delinquency, current financial and liquidity status and all other relevant information. For the majority of the consumer portfolio, payment performance/delinquency is the driving indicator for the risk ratings. Risk ratings are the overall credit quality indicator for the Company and the credit quality indicator utilized for estimating the appropriate allowance for loan losses. The Company utilizes a risk rating system, which classifies loans within the following categories: Pass, Watch, Special Mention, Substandard, Doubtful and Loss. The risk ratings reflect the relative strength of the repayment sources. Pass and Watch loans are loans that have sufficient sources of repayment in order to repay the loan in full in accordance with all terms and conditions. Special Mention loans are loans that have potential weaknesses that warrant closer attention by management. Special Mention is a transitory grade. If potential weaknesses are resolved, the loan is upgraded to a Pass or Watch grade. If negative trends in the borrower’s financial status or other information indicate that the repayment sources may become inadequate, the loan is downgraded to a Substandard grade. Substandard loans are loans that have well-defined weaknesses that may jeopardize the full and timely repayment of the loan. Substandard loans have a distinct possibility of loss, if the deficiencies are not corrected. When management has assessed a potential for loss but a distinct possibility of loss is not recognizable, the loan remains classified as Substandard grade. Doubtful loans have insufficient sources of repayment and a high probability of loss. Loss loans are loans that are uncollectible and of such little value that they are no longer considered bankable assets. These internal risk ratings are reviewed routinely and adjusted based on changes in the borrowers’ financial status and the loans’ collectability. The following tables present the credit risk ratings for non-PCI loans by portfolio segment as of December 31, 2018 and 2017 : ($ in thousands) December 31, 2018 Pass/Watch Special Mention Substandard Doubtful Total Non- PCI Loans Commercial: C&I $ 11,644,470 $ 260,089 $ 139,844 $ 10,415 $ 12,054,818 CRE 9,144,646 49,705 90,232 — 9,284,583 Multifamily residential 2,215,573 20,551 10,382 — 2,246,506 Construction and land 485,217 19,838 33,697 — 538,752 Total commercial 23,489,906 350,183 274,155 10,415 24,124,659 Consumer: Single-family residential 5,925,584 6,376 7,298 — 5,939,258 HELOCs 1,669,300 1,576 11,103 — 1,681,979 Other consumer 328,767 1 2,502 — 331,270 Total consumer 7,923,651 7,953 20,903 — 7,952,507 Total $ 31,413,557 $ 358,136 $ 295,058 $ 10,415 $ 32,077,166 ($ in thousands) December 31, 2017 Pass/Watch Special Mention Substandard Doubtful Total Non- Commercial: C&I $ 10,369,516 $ 114,769 $ 180,269 $ 20,882 $ 10,685,436 CRE 8,484,635 65,616 108,958 — 8,659,209 Multifamily residential 1,839,958 — 15,170 — 1,855,128 Construction and land 614,441 4,590 40,295 — 659,326 Total commercial 21,308,550 184,975 344,692 20,882 21,859,099 Consumer: Single-family residential 4,490,672 16,504 21,735 — 4,528,911 HELOCs 1,744,903 11,900 12,114 — 1,768,917 Other consumer 333,895 111 2,498 — 336,504 Total consumer 6,569,470 28,515 36,347 — 6,634,332 Total $ 27,878,020 $ 213,490 $ 381,039 $ 20,882 $ 28,493,431 The following tables present the credit risk ratings for PCI loans by portfolio segment as of December 31, 2018 and 2017 : ($ in thousands) December 31, 2018 Pass/Watch Special Mention Substandard Doubtful Total PCI Loans Commercial: C&I $ 1,996 $ — $ 156 $ — $ 2,152 CRE 146,057 — 19,195 — 165,252 Multifamily residential 33,003 — 1,523 — 34,526 Construction and land 42 — — — 42 Total commercial 181,098 — 20,874 — 201,972 Consumer: Single-family residential 95,789 1,021 386 — 97,196 HELOCs 8,314 256 285 — 8,855 Total consumer 104,103 1,277 671 — 106,051 Total (1) $ 285,201 $ 1,277 $ 21,545 $ — $ 308,023 ($ in thousands) December 31, 2017 Pass/Watch Special Mention Substandard Doubtful Total PCI Commercial: C&I $ 10,712 $ 57 $ 1,026 $ — $ 11,795 CRE 238,605 531 38,552 — 277,688 Multifamily residential 56,720 — 4,328 — 61,048 Construction and land 44 — 327 — 371 Total commercial 306,081 588 44,233 — 350,902 Consumer: Single-family residential 113,905 1,543 1,930 — 117,378 HELOCs 12,642 — 1,365 — 14,007 Total consumer 126,547 1,543 3,295 — 131,385 Total (1) $ 432,628 $ 2,131 $ 47,528 $ — $ 482,287 (1) Loans net of ASC 310-30 discount. Nonaccrual and Past Due Loans Non-PCI loans that are 90 or more days past due are generally placed on nonaccrual status, unless the loan is well-collateralized or guaranteed by government agencies, and in the process of collection. Non-PCI 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 on non-PCI loans as of December 31, 2018 and 2017 : ($ in thousands) December 31, 2018 Accruing Loans 30-59 Days Past Due Accruing Loans 60-89 Days Past Due Total Accruing Past Due Loans Nonaccrual Loans Less Than 90 Days Past Due Nonaccrual Loans 90 or More Days Past Due Total Nonaccrual Loans Current Accruing Loans Total Non- PCI Loans Commercial: C&I $ 21,032 $ 19,170 $ 40,202 $ 17,097 $ 26,743 $ 43,840 $ 11,970,776 $ 12,054,818 CRE 7,740 — 7,740 3,704 20,514 24,218 9,252,625 9,284,583 Multifamily residential 4,174 — 4,174 1,067 193 1,260 2,241,072 2,246,506 Construction and land 207 — 207 — — — 538,545 538,752 Total commercial 33,153 19,170 52,323 21,868 47,450 69,318 24,003,018 24,124,659 Consumer: Single-family residential 14,645 7,850 22,495 509 4,750 5,259 5,911,504 5,939,258 HELOCs 2,573 1,816 4,389 1,423 7,191 8,614 1,668,976 1,681,979 Other consumer 11 12 23 — 2,502 2,502 328,745 331,270 Total consumer 17,229 9,678 26,907 1,932 14,443 16,375 7,909,225 7,952,507 Total $ 50,382 $ 28,848 $ 79,230 $ 23,800 $ 61,893 $ 85,693 $ 31,912,243 $ 32,077,166 ($ in thousands) December 31, 2017 Accruing Loans 30-59 Days Past Due Accruing Loans 60-89 Days Past Due Total Accruing Past Due Loans Nonaccrual Loans Less Than 90 Days Past Due Nonaccrual Loans 90 or More Days Past Due Total Nonaccrual Loans Current Accruing Loans Total Non- Commercial: C&I $ 30,964 $ 82 $ 31,046 $ 27,408 $ 41,805 $ 69,213 $ 10,585,177 $ 10,685,436 CRE 3,414 466 3,880 5,430 21,556 26,986 8,628,343 8,659,209 Multifamily residential 4,846 14 4,860 1,418 299 1,717 1,848,551 1,855,128 Construction and land 758 — 758 — 3,973 3,973 654,595 659,326 Total commercial 39,982 562 40,544 34,256 67,633 101,889 21,716,666 21,859,099 Consumer: Single-family residential 13,269 5,355 18,624 6 5,917 5,923 4,504,364 4,528,911 HELOCs 4,286 4,186 8,472 89 3,917 4,006 1,756,439 1,768,917 Other consumer 14 23 37 — 2,491 2,491 333,976 336,504 Total consumer 17,569 9,564 27,133 95 12,325 12,420 6,594,779 6,634,332 Total $ 57,551 $ 10,126 $ 67,677 $ 34,351 $ 79,958 $ 114,309 $ 28,311,445 $ 28,493,431 For information on the policy for recording payments received and resuming accrual of interest on non-PCI loans that are placed on nonaccrual status, see Note 1 — Summary of Significant Accounting Policies to the Consolidated Financial Statements. PCI loans are excluded from the above aging analysis tables as the Company has elected to account for these loans on a pool level basis under ASC 310-30 at the time of acquisition. Refer to the discussion on PCI loans within this note for additional details on interest income recognition. As of December 31, 2018 and 2017 , PCI loans on nonaccrual status totaled $4.0 million and $5.3 million , respectively. Loans in Process of Foreclosure The Company commences the foreclosure process on consumer mortgage loans when a borrower becomes 120 days delinquent in accordance with Consumer Finance Protection Bureau Guidelines. As of December 31, 2018 and 2017 , consumer mortgage loans of $3.0 million and $6.6 million , respectively, were secured by residential real estate properties, for which formal foreclosure proceedings were in process in accordance with local requirements of the applicable jurisdictions. As of December 31, 2018 , no foreclosed residential real estate property was included in total net OREO of $133 thousand . In comparison, a foreclosed residential real estate property with a carrying amount of $188 thousand was included in total net OREO of $830 thousand as of December 31, 2017 . Troubled Debt Restructurings Potential TDRs are individually evaluated and the type of restructuring is selected based on the loan type and the circumstances of the borrower’s financial difficulty. A TDR is a modification of the terms of a loan when the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not have otherwise considered. The following tables present the additions to non-PCI TDRs for the years ended December 31, 2018 , 2017 and 2016 : ($ in thousands) Loans Modified as TDRs During the Year Ended December 31, 2018 Number Pre-Modification Post-Modification (1) Financial (2) Commercial: C&I 8 $ 11,366 $ 9,520 $ 699 CRE 1 $ 750 $ 752 $ — Consumer: Single-family residential 2 $ 405 $ 391 $ (28 ) HELOCs 2 $ 1,546 $ 1,418 $ — ($ in thousands) Loans Modified as TDRs During the Year Ended December 31, 2017 Number Pre-Modification Post-Modification (1) Financial (2) Commercial: C&I 16 $ 43,884 $ 37,900 $ 11,520 CRE 4 $ 2,675 $ 2,627 $ 157 Multifamily residential 1 $ 3,655 $ 2,969 $ — Consumer: HELOCs 1 $ 152 $ 155 $ — ($ in thousands) Loans Modified as TDRs During the Year Ended December 31, 2016 Number Pre-Modification Post-Modification (1) Financial (2) Commercial: C&I 18 $ 65,991 $ 40,405 $ 20,574 CRE 6 $ 19,275 $ 18,824 $ 701 Construction and land 1 $ 5,522 $ 4,883 $ — Consumer: Single-family residential 3 $ 1,291 $ 1,268 $ — HELOCs 3 $ 491 $ 382 $ 1 (1) Includes subsequent payments after modification and reflects the balance as of December 31, 2018 , 2017 and 2016 . (2) The financial impact includes increases (decreases) in charge-offs and specific reserves recorded at the modification date. The following tables present the non-PCI TDR modifications for the years ended December 31, 2018 , 2017 and 2016 by modification type: ($ in thousands) Modification Type During the Year Ended December 31, 2018 Principal (1) Principal and Interest (2) Interest Rate Reduction Interest Other Total Commercial: C&I $ 5,472 $ — $ — $ — $ 4,048 $ 9,520 CRE — — 752 — — 752 Total commercial 5,472 — 752 — 4,048 10,272 Consumer: Single-family residential 66 — — — 325 391 HELOCs 1,353 — — — 65 1,418 Total consumer 1,419 — — — 390 1,809 Total $ 6,891 $ — $ 752 $ — $ 4,438 $ 12,081 ($ in thousands) Modification Type During the Year Ended December 31, 2017 Principal (1) Principal and Interest (2) Interest Rate Reduction Interest Deferments Other Total Commercial: C&I $ 13,568 $ 7,848 $ — $ — $ 16,484 $ 37,900 CRE 2,627 — — — — 2,627 Multifamily residential 2,969 — — — — 2,969 Total commercial 19,164 7,848 — — 16,484 43,496 Consumer: HELOCs — 155 — — — 155 Total consumer — 155 — — — 155 Total $ 19,164 $ 8,003 $ — $ — $ 16,484 $ 43,651 ($ in thousands) Modification Type During the Year Ended December 31, 2016 Principal (1) Principal (2) Interest Interest Other Total Commercial: C&I $ 34,499 $ — $ 5,876 $ 30 $ — $ 40,405 CRE 17,750 — — — 1,074 18,824 Construction and land 4,883 — — — — 4,883 Total commercial 57,132 — 5,876 30 1,074 64,112 Consumer: Single-family residential 264 — 797 207 — 1,268 HELOCs 333 — 49 — — 382 Total consumer 597 — 846 207 — 1,650 Total $ 57,729 $ — $ 6,722 $ 237 $ 1,074 $ 65,762 (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. (2) Includes principal and interest deferments or reductions. Subsequent to restructuring, a TDR that becomes delinquent, generally beyond 90 days, is considered to be in default. As TDRs are individually evaluated for impairment under the specific reserve methodology, subsequent defaults do not generally have a significant additional impact on the allowance for loan losses. The following table presents information on loans modified as TDRs within the previous 12 months that have subsequently defaulted during the years ended December 31, 2018 , 2017 and 2016 , and were still in default at the respective period end: ($ in thousands) Loans Modified as TDRs that Subsequently Defaulted 2018 2017 2016 Number of Recorded Number of Recorded Number of Recorded Commercial: C&I 4 $ 1,890 3 $ 8,659 — $ — CRE 1 $ 186 — $ — 2 $ 3,150 Construction and land — $ — — $ — 1 $ 4,883 Consumer: HELOCs 1 $ 150 — $ — — $ — The amount of additional funds committed to lend to borrowers whose terms have been modified was $3.9 million and $5.1 million as of December 31, 2018 and 2017 , respectively. Impaired Loans The following tables present information on non-PCI impaired loans as of December 31, 2018 and 2017 : ($ in thousands) December 31, 2018 Unpaid Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Total Recorded Investment Related Allowance Commercial: C&I $ 82,963 $ 48,479 $ 8,609 $ 57,088 $ 1,219 CRE 36,426 28,285 2,067 30,352 208 Multifamily residential 6,031 2,949 2,611 5,560 75 Total commercial 125,420 79,713 13,287 93,000 1,502 Consumer: Single-family residential 14,670 2,552 10,908 13,460 34 HELOCs 10,035 5,547 4,409 9,956 5 Other consumer 2,502 — 2,502 2,502 2,491 Total consumer 27,207 8,099 17,819 25,918 2,530 Total non-PCI impaired loans $ 152,627 $ 87,812 $ 31,106 $ 118,918 $ 4,032 ($ in thousands) December 31, 2017 Unpaid Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Total Recorded Investment Related Allowance Commercial: C&I $ 130,773 $ 36,086 $ 62,599 $ 98,685 $ 16,094 CRE 41,248 28,699 6,857 35,556 684 Multifamily residential 11,164 8,019 2,617 10,636 88 Construction and land 4,781 3,973 — 3,973 — Total commercial 187,966 76,777 72,073 148,850 16,866 Consumer: Single-family residential 15,501 — 14,338 14,338 534 HELOCs 5,484 2,287 2,921 5,208 4 Other consumer 2,491 — 2,491 2,491 2,491 Total consumer 23,476 2,287 19,750 22,037 3,029 Total non-PCI impaired loans $ 211,442 $ 79,064 $ 91,823 $ 170,887 $ 19,895 The following table presents the average recorded investment and interest income recognized on non-PCI impaired loans for the years ended December 31, 2018 , 2017 and 2016 : ($ in thousands) Year Ended December 31, 2018 2017 2016 Average Recorded Investment Recognized Interest Income (1) Average Recognized (1) Average Recognized Interest Income (1) Commercial: C&I $ 143,430 $ 1,046 $ 110,662 $ 1,517 $ 148,986 $ 2,612 CRE 35,049 491 36,003 578 47,064 1,253 Multifamily residential 11,742 249 11,455 422 15,763 302 Construction and land 3,973 — 4,382 — 6,388 34 Total commercial 194,194 1,786 162,502 2,517 218,201 4,201 Consumer: Single-family residential 22,350 474 14,994 417 14,323 447 HELOCs 14,134 70 5,494 55 3,703 63 Other consumer 2,502 — 2,142 — — — Total consumer 38,986 544 22,630 472 18,026 510 Total non-PCI impaired loans $ 233,180 $ 2,330 $ 185,132 $ 2,989 $ 236,227 $ 4,711 (1) Includes interest recognized on accruing non-PCI TDRs. Interest payments received on nonaccrual non-PCI loans are reflected as a reduction to principal, not as interest income. Allowance for Credit Losses The following table presents a summary of activities in the allowance for loan losses by portfolio segment for the years ended December 31, 2018 , 2017 and 2016 : ($ in thousands) Year Ended December 31, 2018 2017 2016 Non-PCI Loans Allowance for non-PCI loans, beginning of period $ 287,070 $ 260,402 $ 264,600 Provision for loan losses on non-PCI loans 65,043 49,129 31,959 Gross charge-offs: Commercial: C&I (59,244 ) (38,118 ) (47,739 ) CRE — — (464 ) Multifamily residential — (635 ) (29 ) Construction and land — (149 ) (117 ) Consumer: Single-family residential (1 ) (1 ) (137 ) HELOCs — (55 ) (9 ) Other consumer (188 ) (17 ) (13 ) Total gross charge-offs (59,433 ) (38,975 ) (48,508 ) Gross recoveries: Commercial: C&I 10,417 11,371 9,003 CRE 5,194 2,111 1,488 Multifamily residential 1,757 1,357 1,476 Construction and land 740 259 203 Consumer: Single-family residential 1,214 546 401 HELOCs 38 24 7 Other consumer 3 152 323 Total gross recoveries 19,363 15,820 12,901 Net charge-offs (40,070 ) (23,155 ) (35,607 ) Foreign currency translation adjustments (743 ) 694 (550 ) Allowance for non-PCI loans, end of period 311,300 287,070 260,402 PCI Loans Allowance for PCI loans, beginning of period 58 118 359 Reversal of loan losses on PCI loans (36 ) (60 ) (241 ) Allowance for PCI loans, end of period 22 58 118 Allowance for loan losses $ 311,322 $ 287,128 $ 260,520 For further information on accounting policies and the methodologies used to estimate the allowance for credit losses and loan charge-offs, see Note 1 — Summary of Significant Accounting Policies to the Consolidated Financial Statements. The following table presents a summary of activities in the allowance for unfunded credit reserves for the years ended December 31, 2018 , 2017 and 2016 : ($ in thousands) Year Ended December 31, 2018 2017 2016 Allowance for unfunded credit reserves, beginning of period $ 13,318 $ 16,121 $ 20,360 Reversal of unfunded credit reserves (752 ) (2,803 ) (4,239 ) Allowance for unfunded credit reserves, end of period $ 12,566 $ 13,318 $ 16,121 The allowance for unfunded credit reserves is maintained at a level management believes to be sufficient to absorb estimated probable losses related to unfunded credit facilities. The allowance for unfunded credit reserves is included in Accrued expenses and other liabilities on the Consolidated Balance Sheet. See Note 14 — Commitments, Contingencies and Related Party Transactions to the Consolidated Financial Statements for additional information related to unfunded credit reserves. The following tables present the Company’s allowance for loan losses and recorded investments by portfolio segment and impairment methodology as of December 31, 2018 and 2017 : ($ in thousands) December 31, 2018 Commercial Consumer Total C&I CRE Multifamily Construction Single-Family HELOCs Other Allowance for loan losses Individually evaluated for impairment $ 1,219 $ 208 $ 75 $ — $ 34 $ 5 $ 2,491 $ 4,032 Collectively evaluated for impairment 190,121 38,823 19,208 20,282 31,306 5,769 1,759 307,268 Acquired with deteriorated credit quality — 22 — — — — — 22 Total $ 191,340 $ 39,053 $ 19,283 $ 20,282 $ 31,340 $ 5,774 $ 4,250 $ 311,322 Recorded investment in loans Individually evaluated for impairment $ 57,088 $ 30,352 $ 5,560 $ — $ 13,460 $ 9,956 $ 2,502 $ 118,918 Collectively evaluated for impairment 11,997,730 9,254,231 2,240,946 538,752 5,925,798 1,672,023 328,768 31,958,248 Acquired with deteriorated credit quality (1) 2,152 165,252 34,526 42 97,196 8,855 — 308,023 Total (1) $ 12,056,970 $ 9,449,835 $ 2,281,032 $ 538,794 $ 6,036,454 $ 1,690,834 $ 331,270 $ 32,385,189 ($ in thousands) December 31, 2017 Commercial Consumer Total C&I CRE Multifamily Construction Single-Family HELOCs Other Allowance for loan losses Individually evaluated for impairment $ 16,094 $ 684 $ 88 $ — $ 534 $ 4 $ 2,491 $ 19,895 Collectively evaluated for impairment 146,964 40,495 19,021 26,881 25,828 7,350 636 267,175 Acquired with deteriorated credit quality — 58 — — — — — 58 Total $ 163,058 $ 41,237 $ 19,109 $ 26,881 $ 26,362 $ 7,354 $ 3,127 $ 287,128 Recorded investment in loans Individually evaluated for impairment $ 98,685 $ 35,556 $ 10,636 $ 3,973 $ 14,338 $ 5,208 $ 2,491 $ 170,887 Collectively evaluated for impairment 10,586,751 8,623,653 1,844,492 655,353 4,514,573 1,763,709 334,013 28,322,544 Acquired with deteriorated credit quality (1) 11,795 277,688 61,048 371 117,378 14,007 — 482,287 Total (1) $ 10,697,231 $ 8,936,897 $ 1,916,176 $ 659,697 $ 4,646,289 $ 1,782,924 $ 336,504 $ 28,975,718 (1) Loans net of ASC 310-30 discount. Purchased Credit-Impaired Loans At the date of acquisition, PCI loans are pooled and accounted for at fair value, which represents the discounted value of the expected cash flows of the loan portfolio. A pool is accounted for as a single asset with a single interest rate, cumulative loss rate and cash flows expectation. The cash flows expected over the life of the pools are estimated by an internal cash flows model that projects cash flows and calculates the carrying values of the pools, book yields, effective interest income and impairment, if any, based on pool level events. Assumptions as to cumulative loss rates, loss curves and prepayment speeds are utilized to calculate the expected cash flows. The amount of expected cash flows over the initial investment in the loan represents the “accretable yield,” which is recognized as interest income on a level yield basis over the life of the loan. Projected loss rates and prepayment speeds affect the estimated life of PCI loans, which may change the amount of interest income, and possibly principal, expected to be collected. The excess of total contractual cash flows over the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the “nonaccretable difference.” The following table presents the changes in accretable yield on PCI loans for the years ended December 31, 2018 , 2017 and 2016 : ($ in thousands) Year Ended December 31, 2018 2017 2016 Accretable yield for PCI loans, beginning of period $ 101,977 $ 136,247 $ 214,907 Accretion (34,662 ) (42,487 ) (68,708 ) Changes in expected cash flows 7,555 8,217 (9,952 ) Accretable yield for PCI loans, end of period $ 74,870 $ 101,977 $ 136,247 Loans Held-for-Sale At the time of commitment to originate or purchase a loan, the loan is determined to be held for investment if it is the Company’s intent to hold the loan to maturity or for the “foreseeable future,” subject to periodic reviews under the Company’s evaluation processes, including asset/liability and credit risk management. When the Company subsequently changes its intent to hold certain loans, the loans are transferred from held-for-investment to held-for-sale at the lower of cost or fair value. As of December 31, 2018 , loans held-for-sale of $275 thousand consisted of single-family residential loans. In comparison, as of December 31, 2017 , loans held-for-sale amounted to $78.2 million , which was comprised primarily of loans related to the then pending sale of the DCB branches of $78.1 million included in Branch assets held-for-sale on the Consolidated Balance Sheet. The sale was completed in March 2018. For additional information on this pending sale, see Note 2 — Dispositions and Held-for-Sale to the Consolidated Financial Statements. The remaining loans held-for-sale, which amounted to $85 thousand , were comprised of single-family residential loans. Loan Purchases, Transfers and Sales From time to time, the Company purchases and sells loans in the secondary market. Certain purchased loans are transferred from held-for-investment to held-for-sale, and write-downs to allowance for loan losses are recorded, when appropriate. The following tables present information on loan securitization, loan purchases into held-for-investment portfolio, reclassification of loans held-for-investment to/from held-for-sale, and sales during the years ended December 31, 2018 , 2017 and 2016 : ($ in thousands) Year Ended December 31, 2018 Commercial Consumer C&I CRE Multifamily Residential Construction and Land Single-Family HELOCs Other Consumer Total Loans transferred from held-for-investment to held-for-sale (1) $ 404,321 $ 62,291 $ — $ — $ 14,981 $ — $ — $ 481,593 Loans transferred from held-for-sale to held-for-investment $ 2,306 $ — $ — $ — $ — $ — $ — $ 2,306 Sales (2)(3)(4) $ 413,844 $ 62,291 $ — $ — $ 34,966 $ — $ — $ 511,101 Purchases (6) $ 525,767 $ — $ 7,389 $ — $ 63,781 $ — $ — $ 596,937 ($ in thousands) Year Ended December 31, 2017 Commercial Consumer C&I CRE Multifamily Construction Single-Family HELOCs Other Total Loans transferred from held-for-investment to held-for-sale (1) $ 476,644 $ 52,217 $ 531 $ 1,609 $ 249 $ — $ 3,706 $ 534,956 Loans of DCB branches transferred from held-for-investment to held-for-sale (included in Branch assets held-for-sale ) (1) $ 17,590 $ 36,783 $ 12,448 $ 241 $ 6,416 $ 4,309 $ 345 $ 78,132 Sales (2)(3)(4) $ 476,644 $ 52,217 $ 531 $ 1,609 $ 21,058 $ — $ 25,905 $ 577,964 Purchases (6) $ 503,359 $ — $ 2,311 $ — $ 29,060 $ — $ — $ 534,730 ($ in thousands) Year Ended December 31, 2016 Commercial Consumer C&I CRE Multifamily Construction Single-Family HELOCs Other Total Loans transferred from held-for-investment to held-for-sale (1) $ 434,137 $ 110,927 $ 269,791 $ 4,245 $ — $ — $ — $ 819,100 Loans transferred from held-for-sale to held-for-investment $ — $ — $ 4,943 $ — $ — $ — $ — $ 4,943 Sales (2)(3)(4) $ 434,137 $ 110,927 $ 61,268 $ 4,245 $ 18,092 $ — $ — $ 628,669 Securitization of loans held-for-investment (5) $ — $ — $ 201,675 $ — $ — $ — $ — $ 201,675 Purchases (6)(7) $ 646,793 $ — $ 5,658 $ — $ 488,577 $ — $ — $ 1,141,028 (1) The Company recorded $14.6 million , $473 thousand and $1.9 million in write-downs to the allowance for loan losses related to loans transferred from held-for-investment to held-for-sale for the years ended December 31, 2018 , 2017 and 2016 , respectively. (2) Includes originated loans sold of $309.7 million , $ 178.2 million and $369.6 million for the years ended December 31, 2018 , 2017 and 2016 , respectively. Originated loans sold were primarily comprised of C&I loans for the year ended December 31, 2018 ; C&I, CRE and single-family residential loans for the year ended December 31, 2017 ; and C&I, CRE and multifamily residential loans for the year ended December 31, 2016 . (3) Includes purchased loans sold in the secondary market of $201.4 million , $399.8 million and $259.1 million for the years ended December 31, 2018 , 2017 and 2016 , respectively. (4) Net gains on sales of loans, excluding the lower of cost or fair value adjustments, were $6.6 million , $8.9 million and $10.6 million for the years ended December 31, 2018 , 2017 and 2016 , respectively. No lower of cost or fair value adjustments were recorded for the year ended December 31, 2018 . In comparison, lower of cost or fair value adjustments of $61 thousand and $5.6 million for the years ended December 31, 2017 and 2016 , respectively, were recorded in Net gains on sales of loans on the Consolidated Statement of Income. (5) Represents multifamily residential loans securitized during the first quarter of 2016 that resulted in net gains of $1.1 million , mortgage servicing rights of $641 thousand and held-to-maturity investment security of $160.1 million . (6) C&I loan purchases for each of the year ended December 31, 2018 , 2017 and 2016 were mainly comprised of C&I syndicated loans. (7) The higher loan purchases for the year ended December 31, 2016 was mainly due to $488.3 million of single-family residential loans purchased for CRA purposes. |