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Loans Receivable and Allowance for Credit Losses | 9 Months Ended
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Sep. 30, 2017
Loans and Leases Receivable Disclosure [Abstract] |
Loans Receivable and Allowance for Credit Losses | Note 8 — 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 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 September 30, 2017 and December 31, 2016:
($ in thousands) |  | September 30, 2017 |  | December 31, 2016
| Non-PCI Loans (1) |  | PCI Loans (2) |  | Total (1)(2) |  | Non-PCI Loans (1) |  | PCI Loans (2) |  | Total (1)(2)
CRE: |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 8,530,519 |  |  | $ | 313,257 |  |  | $ | 8,843,776 |  |  | $ | 7,667,661 |  |  | $ | 348,448 |  |  | $ | 8,016,109 |
Construction |  | 572,027 |  |  | — |  |  | 572,027 |  |  | 551,560 |  |  | — |  |  | 551,560 |
Land |  | 111,006 |  |  | 371 |  |  | 111,377 |  |  | 121,276 |  |  | 1,918 |  |  | 123,194 |
Total CRE |  | 9,213,552 |  |  | 313,628 |  |  | 9,527,180 |  |  | 8,340,497 |  |  | 350,366 |  |  | 8,690,863 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 9,763,688 |  |  | 12,566 |  |  | 9,776,254 |  |  | 8,921,246 |  |  | 38,387 |  |  | 8,959,633 |
Trade finance |  | 868,902 |  |  | — |  |  | 868,902 |  |  | 680,930 |  |  | — |  |  | 680,930 |
Total C&I |  | 10,632,590 |  |  | 12,566 |  |  | 10,645,156 |  |  | 9,602,176 |  |  | 38,387 |  |  | 9,640,563 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 4,234,017 |  |  | 121,992 |  |  | 4,356,009 |  |  | 3,370,669 |  |  | 139,110 |  |  | 3,509,779 |
Multifamily |  | 1,808,311 |  |  | 68,645 |  |  | 1,876,956 |  |  | 1,490,285 |  |  | 95,654 |  |  | 1,585,939 |
Total residential |  | 6,042,328 |  |  | 190,637 |  |  | 6,232,965 |  |  | 4,860,954 |  |  | 234,764 |  |  | 5,095,718 |
Consumer |  | 2,104,614 |  |  | 15,442 |  |  | 2,120,056 |  |  | 2,057,067 |  |  | 18,928 |  |  | 2,075,995 |
Total loans held-for-investment |  | $ | 27,993,084 |  |  | $ | 532,273 |  |  | $ | 28,525,357 |  |  | $ | 24,860,694 |  |  | $ | 642,445 |  |  | $ | 25,503,139 |
Allowance for loan losses |  | (285,858 | ) |  | (68 | ) |  | (285,926 | ) |  | (260,402 | ) |  | (118 | ) |  | (260,520 | )
Loans held-for-investment, net |  | $ | 27,707,226 |  |  | $ | 532,205 |  |  | $ | 28,239,431 |  |  | $ | 24,600,292 |  |  | $ | 642,327 |  |  | $ | 25,242,619 |
(1) | Includes $(29.2) million and $1.2 million as of September 30, 2017 and December 31, 2016, respectively, of net deferred loan fees, unearned income, unamortized premiums and unaccreted discounts.
(2) | Loans net of ASC 310-30 discount.
CRE loans include income producing real estate, construction and land loans where the interest rates may be fixed, variable or hybrid. Included in CRE loans are owner occupied and non-owner occupied loans where the borrowers rely on income from tenants to service the loan. Commercial business and trade finance in the C&I segment provide financing to businesses in a wide spectrum of industries. Residential loans are comprised of single-family and multifamily loans. The Company offers first lien mortgage loans secured by one-to-four unit residential properties located in its primary lending areas. The Company offers a variety of first lien mortgage loan programs, including fixed rate conforming loans and adjustable rate mortgage loans with initial fixed periods of one to seven years, which adjust annually thereafter. Consumer loans are comprised of home equity lines of credit (“HELOCs”), insurance premium financing loans, credit card and auto loans. As of September 30, 2017 and December 31, 2016, the Company’s HELOCs were the largest component of the consumer loan portfolio, and were secured by one-to-four unit residential properties located in its primary lending areas. The HELOCs loan portfolio is largely comprised of loans originated through a reduced documentation loan program, where a substantial down payment is required, resulting in a low loan-to-value ratio, typically 60% or less at origination. The Company is in a first lien position for many of these reduced documentation HELOCs. These loans have historically experienced low delinquency and default rates. All loans originated are subject to the Company’s underwriting guidelines and loan origination standards. Management believes that the Company’s underwriting criteria and procedures adequately consider the unique risks associated with these products. The Company conducts a variety of quality control procedures and periodic audits, including the review of lending and legal requirements to ensure that it is in compliance with these requirements. As of September 30, 2017 and December 31, 2016, loans totaling $18.18 billion and $16.44 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. 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 single-family residential loans, 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 can be classified 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 generally considered to have sufficient sources of repayment in order to repay the loan in full in accordance with all terms and conditions. Special Mention loans are considered to have potential weaknesses that warrant closer attention by management. Special Mention is considered 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 considered to have well-defined weaknesses that jeopardize the full and timely repayment of the loan. Substandard loans have a distinct possibility of loss, if the deficiencies are not corrected. Additionally, when management has assessed a potential for loss but a distinct possibility of loss is not recognizable, the loan is still classified as Substandard. Doubtful loans have insufficient sources of repayment and a high probability of loss. Loss loans are considered to be 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 September 30, 2017 and December 31, 2016:
($ in thousands) |  | September 30, 2017
| Pass/Watch |  | Special Mention |  | Substandard |  | Doubtful |  | Loss |  | Total Non-PCI Loans
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 8,341,970 |  |  | $ | 74,028 |  |  | $ | 114,521 |  |  | $ | — |  |  | $ | — |  |  | $ | 8,530,519 |
Construction |  | 540,851 |  |  | 22,176 |  |  | 9,000 |  |  | — |  |  | — |  |  | 572,027 |
Land |  | 96,160 |  |  | — |  |  | 14,846 |  |  | — |  |  | — |  |  | 111,006 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 9,447,163 |  |  | 142,531 |  |  | 152,975 |  |  | 21,019 |  |  | — |  |  | 9,763,688 |
Trade finance |  | 830,268 |  |  | 18,631 |  |  | 20,003 |  |  | — |  |  | — |  |  | 868,902 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 4,199,554 |  |  | 11,501 |  |  | 22,962 |  |  | — |  |  | — |  |  | 4,234,017 |
Multifamily |  | 1,789,351 |  |  | — |  |  | 18,960 |  |  | — |  |  | — |  |  | 1,808,311 |
Consumer |  | 2,080,056 |  |  | 9,683 |  |  | 14,875 |  |  | — |  |  | — |  |  | 2,104,614 |
Total |  | $ | 27,325,373 |  |  | $ | 278,550 |  |  | $ | 368,142 |  |  | $ | 21,019 |  |  | $ | — |  |  | $ | 27,993,084 |
($ in thousands) |  | December 31, 2016
| Pass/Watch |  | Special Mention |  | Substandard |  | Doubtful |  | Loss |  | Total Non-PCI Loans
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 7,476,804 |  |  | $ | 29,005 |  |  | $ | 161,852 |  |  | $ | — |  |  | $ | — |  |  | $ | 7,667,661 |
Construction |  | 551,560 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 551,560 |
Land |  | 107,976 |  |  | — |  |  | 13,290 |  |  | 10 |  |  | — |  |  | 121,276 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 8,559,674 |  |  | 155,276 |  |  | 201,139 |  |  | 5,157 |  |  | — |  |  | 8,921,246 |
Trade finance |  | 635,027 |  |  | 9,435 |  |  | 36,460 |  |  | — |  |  | 8 |  |  | 680,930 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 3,341,015 |  |  | 10,179 |  |  | 19,475 |  |  | — |  |  | — |  |  | 3,370,669 |
Multifamily |  | 1,462,522 |  |  | 2,268 |  |  | 25,495 |  |  | — |  |  | — |  |  | 1,490,285 |
Consumer |  | 2,043,405 |  |  | 6,764 |  |  | 6,898 |  |  | — |  |  | — |  |  | 2,057,067 |
Total |  | $ | 24,177,983 |  |  | $ | 212,927 |  |  | $ | 464,609 |  |  | $ | 5,167 |  |  | $ | 8 |  |  | $ | 24,860,694 |
The following tables present the credit risk ratings for PCI loans by portfolio segment as of September 30, 2017 and December 31, 2016:
($ in thousands) |  | September 30, 2017
| Pass/Watch |  | Special Mention |  | Substandard |  | Doubtful |  | Loss |  | Total PCI Loans
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 261,907 |  |  | $ | — |  |  | $ | 51,350 |  |  | $ | — |  |  | $ | — |  |  | $ | 313,257 |
Land |  | 44 |  |  | — |  |  | 327 |  |  | — |  |  | — |  |  | 371 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 11,205 |  |  | 90 |  |  | 1,271 |  |  | — |  |  | — |  |  | 12,566 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 118,281 |  |  | 1,769 |  |  | 1,942 |  |  | — |  |  | — |  |  | 121,992 |
Multifamily |  | 64,455 |  |  | — |  |  | 4,190 |  |  | — |  |  | — |  |  | 68,645 |
Consumer |  | 13,962 |  |  | 364 |  |  | 1,116 |  |  | — |  |  | — |  |  | 15,442 |
Total (1) |  | $ | 469,854 |  |  | $ | 2,223 |  |  | $ | 60,196 |  |  | $ | — |  |  | $ | — |  |  | $ | 532,273 |
($ in thousands) |  | December 31, 2016
| Pass/Watch |  | Special Mention |  | Substandard |  | Doubtful |  | Loss |  | Total PCI Loans
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 293,529 |  |  | $ | 3,239 |  |  | $ | 51,680 |  |  | $ | — |  |  | $ | — |  |  | $ | 348,448 |
Land |  | 1,562 |  |  | — |  |  | 356 |  |  | — |  |  | — |  |  | 1,918 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 33,885 |  |  | 772 |  |  | 3,730 |  |  | — |  |  | — |  |  | 38,387 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 136,245 |  |  | 1,239 |  |  | 1,626 |  |  | — |  |  | — |  |  | 139,110 |
Multifamily |  | 86,190 |  |  | — |  |  | 9,464 |  |  | — |  |  | — |  |  | 95,654 |
Consumer |  | 17,433 |  |  | 316 |  |  | 1,179 |  |  | — |  |  | — |  |  | 18,928 |
Total (1) |  | $ | 568,844 |  |  | $ | 5,566 |  |  | $ | 68,035 |  |  | $ | — |  |  | $ | — |  |  | $ | 642,445 |
(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. Additionally, 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 September 30, 2017 and December 31, 2016:
($ in thousands) |  | September 30, 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-PCI Loans
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 5,211 |  |  | $ | 1,924 |  |  | $ | 7,135 |  |  | $ | 4,853 |  |  | $ | 19,949 |  |  | $ | 24,802 |  |  | $ | 8,498,582 |  |  | $ | 8,530,519 |
Construction |  | 9,000 |  |  | — |  |  | 9,000 |  |  | — |  |  | — |  |  | — |  |  | 563,027 |  |  | 572,027 |
Land |  | — |  |  | — |  |  | — |  |  | 10 |  |  | 4,173 |  |  | 4,183 |  |  | 106,823 |  |  | 111,006 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 16,315 |  |  | 108 |  |  | 16,423 |  |  | 34,844 |  |  | 38,540 |  |  | 73,384 |  |  | 9,673,881 |  |  | 9,763,688 |
Trade finance |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 868,902 |  |  | 868,902 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 16,765 |  |  | 1,560 |  |  | 18,325 |  |  | — |  |  | 6,639 |  |  | 6,639 |  |  | 4,209,053 |  |  | 4,234,017 |
Multifamily |  | 7,476 |  |  | 664 |  |  | 8,140 |  |  | 1,456 |  |  | 1,164 |  |  | 2,620 |  |  | 1,797,551 |  |  | 1,808,311 |
Consumer |  | 8,837 |  |  | 5,346 |  |  | 14,183 |  |  | 93 |  |  | 3,004 |  |  | 3,097 |  |  | 2,087,334 |  |  | 2,104,614 |
Total |  | $ | 63,604 |  |  | $ | 9,602 |  |  | $ | 73,206 |  |  | $ | 41,256 |  |  | $ | 73,469 |  |  | $ | 114,725 |  |  | $ | 27,805,153 |  |  | $ | 27,993,084 |
($ in thousands) |  | December 31, 2016
| 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
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 6,233 |  |  | $ | 14,080 |  |  | $ | 20,313 |  |  | $ | 14,872 |  |  | $ | 12,035 |  |  | $ | 26,907 |  |  | $ | 7,620,441 |  |  | $ | 7,667,661 |
Construction |  | 4,994 |  |  | — |  |  | 4,994 |  |  | — |  |  | — |  |  | — |  |  | 546,566 |  |  | 551,560 |
Land |  | — |  |  | — |  |  | — |  |  | 433 |  |  | 4,893 |  |  | 5,326 |  |  | 115,950 |  |  | 121,276 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 45,052 |  |  | 2,279 |  |  | 47,331 |  |  | 60,511 |  |  | 20,737 |  |  | 81,248 |  |  | 8,792,667 |  |  | 8,921,246 |
Trade finance |  | — |  |  | — |  |  | — |  |  | 8 |  |  | — |  |  | 8 |  |  | 680,922 |  |  | 680,930 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 9,595 |  |  | 8,076 |  |  | 17,671 |  |  | — |  |  | 4,214 |  |  | 4,214 |  |  | 3,348,784 |  |  | 3,370,669 |
Multifamily |  | 3,951 |  |  | 374 |  |  | 4,325 |  |  | 2,790 |  |  | 194 |  |  | 2,984 |  |  | 1,482,976 |  |  | 1,490,285 |
Consumer |  | 3,327 |  |  | 3,228 |  |  | 6,555 |  |  | 165 |  |  | 1,965 |  |  | 2,130 |  |  | 2,048,382 |  |  | 2,057,067 |
Total |  | $ | 73,152 |  |  | $ | 28,037 |  |  | $ | 101,189 |  |  | $ | 78,779 |  |  | $ | 44,038 |  |  | $ | 122,817 |  |  | $ | 24,636,688 |  |  | $ | 24,860,694 |
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 of the Company’s 2016 Form 10-K. 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 September 30, 2017 and December 31, 2016, PCI loans on nonaccrual status totaled $5.7 million and $11.7 million, respectively. Loans in Process of Foreclosure As of September 30, 2017 and December 31, 2016, the Company had $6.3 million and $3.1 million, respectively, of recorded investments in residential and consumer mortgage loans secured by residential real estate properties, for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdictions, which were not included in OREO. A foreclosed residential real estate property with a carrying amount of $391 thousand was included in total net OREO of $2.3 million as of September 30, 2017. In comparison, foreclosed residential real estate properties with a carrying amount of $401 thousand were included in total net OREO of $6.7 million as of December 31, 2016. Troubled Debt Restructurings Potential troubled debt restructurings (“TDRs”) are individually evaluated and the type of restructuring is selected based on the loan type and the circumstances of the borrower’s financial difficulty in order to maximize the Company’s recovery. A TDR is a modification of the terms of a loan when the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not have otherwise considered. The following tables present the additions to non-PCI TDRs for the three and nine months ended September 30, 2017 and 2016:
|  | Loans Modified as TDRs During the Three Months Ended September 30,
($ in thousands) |  | 2017 |  | 2016
| Number of Loans |  | Pre- Modification Outstanding Recorded Investment |  | Post- Modification Outstanding Recorded Investment (1) |  | Financial Impact (2) |  | Number of Loans |  | Pre- Modification Outstanding Recorded Investment |  | Post- Modification Outstanding Recorded Investment (1) |  | Financial Impact (2)
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | 1 |  | $ | 172 |  |  | $ | 172 |  |  | $ | 8 |  |  | — |  | $ | — |  |  | $ | — |  |  | $ | — |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 10 |  | $ | 15,143 |  |  | $ | 14,927 |  |  | $ | 65 |  |  | 3 |  | $ | 493 |  |  | $ | 475 |  |  | $ | 93 |
|  | Loans Modified as TDRs During the Nine Months Ended September 30,
($ in thousands) |  | 2017 |  | 2016
| Number of Loans |  | Pre- Modification Outstanding Recorded Investment |  | Post- Modification Outstanding Recorded Investment (1) |  | Financial Impact (2) |  | Number of Loans |  | Pre- Modification Outstanding Recorded Investment |  | Post- Modification Outstanding Recorded Investment (1) |  | Financial Impact (2)
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | 2 |  | $ | 1,699 |  |  | $ | 1,648 |  |  | $ | 8 |  |  | 3 |  | $ | 15,899 |  |  | $ | 15,730 |  |  | $ | 43 |
Land |  | — |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | 1 |  | $ | 5,522 |  |  | $ | 5,233 |  |  | $ | — |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 15 |  | $ | 29,541 |  |  | $ | 28,796 |  |  | $ | 10,365 |  |  | 8 |  | $ | 22,182 |  |  | $ | 9,113 |  |  | $ | 2,711 |
Trade finance |  | — |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | 2 |  | $ | 7,901 |  |  | $ | 3,025 |  |  | $ | — |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | — |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | 2 |  | $ | 1,071 |  |  | $ | 1,065 |  |  | $ | — |
Multifamily |  | 1 |  | $ | 3,655 |  |  | $ | 3,620 |  |  | $ | 112 |  |  | — |  | $ | — |  |  | $ | — |  |  | $ | — |
Consumer |  | — |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | 1 |  | $ | 344 |  |  | $ | 337 |  |  | $ | 1 |
(1) | Includes subsequent payments after modification and reflects the balance as of September 30, 2017 and 2016.
(2) | The financial impact includes charge-offs and specific reserves recorded at the modification date.
The following tables present the non-PCI TDR modifications for the three and nine months ended September 30, 2017 and 2016 by modification type:
($ in thousands) |  | Modification Type During the Three Months Ended September 30, 2017
| Principal (1) |  | Principal and Interest (2) |  | Interest Rate Reduction |  | Interest Deferments |  | Other |  | Total
CRE |  | $ | 172 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 172 |
C&I |  | 14,903 |  |  | 24 |  |  | — |  |  | — |  |  | — |  |  | 14,927 |
Total |  | $ | 15,075 |  |  | $ | 24 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 15,099 |
($ in thousands) |  | Modification Type During the Three Months Ended September 30, 2016
| Principal (1) |  | Principal and Interest (2) |  | Interest Rate Reduction |  | Interest Deferments |  | Other |  | Total
C&I |  | $ | 444 |  |  | $ | — |  |  | $ | — |  |  | $ | 31 |  |  | $ | — |  |  | $ | 475 |
Total |  | $ | 444 |  |  | $ | — |  |  | $ | — |  |  | $ | 31 |  |  | $ | — |  |  | $ | 475 |
($ in thousands) |  | Modification Type During the Nine Months Ended September 30, 2017
| Principal (1) |  | Principal and Interest (2) |  | Interest Rate Reduction |  | Interest Deferments |  | Other |  | Total
CRE |  | $ | 1,648 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,648 |
C&I |  | 18,289 |  |  | 10,507 |  |  | — |  |  | — |  |  | — |  |  | 28,796 |
Residential |  | 3,620 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,620 |
Total |  | $ | 23,557 |  |  | $ | 10,507 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 34,064 |
($ in thousands) |  | Modification Type During the Nine Months Ended September 30, 2016
| Principal (1) |  | Principal and Interest (2) |  | Interest Rate Reduction |  | Interest Deferments |  | Other |  | Total
CRE |  | $ | 19,812 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,151 |  |  | $ | 20,963 |
C&I |  | 10,218 |  |  | — |  |  | 1,288 |  |  | 32 |  |  | 600 |  |  | 12,138 |
Residential |  | 266 |  |  | — |  |  | 799 |  |  | — |  |  | — |  |  | 1,065 |
Consumer |  | 337 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 337 |
Total |  | $ | 30,633 |  |  | $ | — |  |  | $ | 2,087 |  |  | $ | 32 |  |  | $ | 1,751 |  |  | $ | 34,503 |
(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 have defaulted. 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 tables present information for loans modified as TDRs within the previous 12 months that have subsequently defaulted during the three and nine months ended September 30, 2017 and 2016, and were still in default at the respective period end:
($ in thousands) |  | Loans Modified as TDRs that Subsequently Defaulted During the Three Months Ended September 30,
| 2017 |  | 2016
| Number of Loans |  | Recorded Investment |  | Number of Loans |  | Recorded Investment
CRE: |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | — |  |  | $ | — |  |  | 1 |  |  | $ | 1,000 |
C&I: |  |  |  |  |  |  |  |
Commercial business |  | 1 |  |  | $ | 9,386 |  |  | — |  |  | $ | — |
($ in thousands) |  | Loans Modified as TDRs that Subsequently Defaulted During the Nine Months Ended September 30,
| 2017 |  | 2016
| Number of Loans |  | Recorded Investment |  | Number of Loans |  | Recorded Investment
CRE: |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | — |  |  | $ | — |  |  | 1 |  |  | $ | 1,000 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 1 |  |  | $ | 9,386 |  |  | 2 |  |  | $ | 119 |
Consumer |  | 1 |  |  | $ | 48 |  |  | — |  |  | $ | — |
The amount of additional funds committed to lend to borrowers whose terms have been modified was $612 thousand and $9.9 million as of September 30, 2017 and December 31, 2016, respectively. Impaired Loans The Company’s loans are grouped into heterogeneous and homogeneous (mostly consumer loans) categories. Classified loans in the heterogeneous category are identified and evaluated for impairment on an individual basis. A loan is considered impaired when, based on current information and events, it is probable that the Company will not be able to collect all scheduled payments of principal or interest due in accordance with the original contractual terms. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as expedient, at the loan’s observable market price or the fair value of the collateral, if the loan is collateral dependent, less costs to sell. When the value of an impaired loan is less than the recorded investment and the loan is classified as nonperforming and uncollectible, the deficiency is charged-off against the allowance for loan losses. Impaired loans exclude the homogeneous consumer loan portfolio, which is evaluated collectively for impairment. The Company’s impaired loans include predominantly non-PCI loans held-for-investment on nonaccrual status and any non-PCI loans modified in a TDR, which may be on accrual or nonaccrual status. The following tables present information on the non-PCI impaired loans as of September 30, 2017 and December 31, 2016:
($ in thousands) |  | September 30, 2017
| Unpaid Principal Balance |  | Recorded Investment With No Allowance |  | Recorded Investment With Allowance |  | Total Recorded Investment |  | Related Allowance
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 35,133 |  |  | $ | 28,908 |  |  | $ | 6,241 |  |  | $ | 35,149 |  |  | $ | 1,011 |
Land |  | 4,183 |  |  | 4,173 |  |  | 10 |  |  | 4,183 |  |  | 1 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 89,233 |  |  | 50,700 |  |  | 38,392 |  |  | 89,092 |  |  | 18,183 |
Trade finance |  | 4,786 |  |  | — |  |  | 4,708 |  |  | 4,708 |  |  | 786 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 15,868 |  |  | 1,867 |  |  | 14,032 |  |  | 15,899 |  |  | 572 |
Multifamily |  | 12,224 |  |  | 6,062 |  |  | 6,170 |  |  | 12,232 |  |  | 194 |
Consumer |  | 4,298 |  |  | 1,303 |  |  | 2,998 |  |  | 4,301 |  |  | 4 |
Total |  | $ | 165,725 |  |  | $ | 93,013 |  |  | $ | 72,551 |  |  | $ | 165,564 |  |  | $ | 20,751 |
($ in thousands) |  | December 31, 2016
| Unpaid Principal Balance |  | Recorded Investment With No Allowance |  | Recorded Investment With Allowance |  | Total Recorded Investment |  | Related Allowance
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 50,718 |  |  | $ | 32,507 |  |  | $ | 14,001 |  |  | $ | 46,508 |  |  | $ | 1,263 |
Land |  | 6,457 |  |  | 5,427 |  |  | 443 |  |  | 5,870 |  |  | 63 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 162,239 |  |  | 78,316 |  |  | 42,137 |  |  | 120,453 |  |  | 10,443 |
Trade finance |  | 5,227 |  |  | — |  |  | 5,166 |  |  | 5,166 |  |  | 34 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 15,435 |  |  | — |  |  | 14,335 |  |  | 14,335 |  |  | 687 |
Multifamily |  | 11,181 |  |  | 5,684 |  |  | 4,357 |  |  | 10,041 |  |  | 180 |
Consumer |  | 4,016 |  |  | — |  |  | 3,682 |  |  | 3,682 |  |  | 31 |
Total |  | $ | 255,273 |  |  | $ | 121,934 |  |  | $ | 84,121 |  |  | $ | 206,055 |  |  | $ | 12,701 |
The following table presents the average recorded investment and interest income recognized on non-PCI impaired loans for the three and nine months ended September 30, 2017 and 2016:
($ in thousands) |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
| Average Recorded Investment |  | Recognized Interest Income (1) |  | Average Recorded Investment |  | Recognized Interest Income (1) |  | Average Recorded Investment |  | Recognized Interest Income (1) |  | Average Recorded Investment |  | Recognized Interest Income (1)
CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income producing |  | $ | 37,489 |  |  | $ | 179 |  |  | $ | 52,116 |  |  | $ | 464 |  |  | $ | 37,238 |  |  | $ | 535 |  |  | $ | 52,221 |  |  | $ | 1,368 |
Land |  | 4,337 |  |  | — |  |  | 6,622 |  |  | 9 |  |  | 4,484 |  |  | — |  |  | 6,777 |  |  | 26 |
C&I: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 93,278 |  |  | 242 |  |  | 91,290 |  |  | 258 |  |  | 94,709 |  |  | 799 |  |  | 92,805 |  |  | 648 |
Trade finance |  | 4,216 |  |  | 53 |  |  | 9,005 |  |  | 33 |  |  | 4,444 |  |  | 122 |  |  | 10,028 |  |  | 166 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family |  | 16,124 |  |  | 111 |  |  | 13,438 |  |  | 72 |  |  | 16,141 |  |  | 325 |  |  | 13,517 |  |  | 220 |
Multifamily |  | 12,532 |  |  | 108 |  |  | 20,585 |  |  | 77 |  |  | 12,540 |  |  | 324 |  |  | 20,646 |  |  | 231 |
Consumer |  | 4,492 |  |  | 14 |  |  | 1,571 |  |  | 16 |  |  | 4,455 |  |  | 41 |  |  | 1,575 |  |  | 48 |
Total non-PCI impaired loans |  | $ | 172,468 |  |  | $ | 707 |  |  | $ | 194,627 |  |  | $ | 929 |  |  | $ | 174,011 |  |  | $ | 2,146 |  |  | $ | 197,569 |  |  | $ | 2,707 |
(1) | Includes interest recognized on accruing non-PCI TDRs. Interest payments received on nonaccrual non-PCI loans are reflected as a reduction to principal and not as interest income.
Allowance for Credit Losses The following tables present a summary of activities in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2017 and 2016:
($ in thousands) |  | Three Months Ended September 30, 2017
| Non-PCI Loans |  | PCI Loans |  | Total
| CRE |  | C&I |  | Residential |  | Consumer |  | Total |  |
Beginning balance |  | $ | 73,985 |  |  | $ | 150,136 |  |  | $ | 43,679 |  |  | $ | 8,438 |  |  | $ | 276,238 |  |  | $ | 78 |  |  | $ | 276,316 |
(Reversal of) provision for loan losses |  | (346 | ) |  | 15,656 |  |  | (583 | ) |  | (1,269 | ) |  | 13,458 |  |  | (10 | ) |  | 13,448 |
Charge-offs |  | — |  |  | (7,359 | ) |  | — |  |  | (65 | ) |  | (7,424 | ) |  | — |  |  | (7,424 | )
Recoveries |  | 610 |  |  | 2,165 |  |  | 809 |  |  | 2 |  |  | 3,586 |  |  | — |  |  | 3,586 |
Net recoveries (charge-offs) |  | 610 |  |  | (5,194 | ) |  | 809 |  |  | (63 | ) |  | (3,838 | ) |  | — |  |  | (3,838 | )
Ending balance |  | $ | 74,249 |  |  | $ | 160,598 |  |  | $ | 43,905 |  |  | $ | 7,106 |  |  | $ | 285,858 |  |  | $ | 68 |  |  | $ | 285,926 |
($ in thousands) |  | Three Months Ended September 30, 2016
| Non-PCI Loans |  | PCI Loans |  | Total
| CRE |  | C&I |  | Residential |  | Consumer |  | Total |  |
Beginning balance |  | $ | 78,102 |  |  | $ | 148,427 |  |  | $ | 31,561 |  |  | $ | 8,421 |  |  | $ | 266,511 |  |  | $ | 257 |  |  | $ | 266,768 |
(Reversal of) provision for loan losses |  | (6,598 | ) |  | 18,548 |  |  | 309 |  |  | (644 | ) |  | 11,615 |  |  | (101 | ) |  | 11,514 |
Charge-offs |  | (309 | ) |  | (23,696 | ) |  | (29 | ) |  | (13 | ) |  | (24,047 | ) |  | — |  |  | (24,047 | )
Recoveries |  | 634 |  |  | 165 |  |  | 654 |  |  | 124 |  |  | 1,577 |  |  | — |  |  | 1,577 |
Net recoveries (charge-offs) |  | 325 |  |  | (23,531 | ) |  | 625 |  |  | 111 |  |  | (22,470 | ) |  | — |  |  | (22,470 | )
Ending balance |  | $ | 71,829 |  |  | $ | 143,444 |  |  | $ | 32,495 |  |  | $ | 7,888 |  |  | $ | 255,656 |  |  | $ | 156 |  |  | $ | 255,812 |
($ in thousands) |  | Nine Months Ended September 30, 2017
| Non-PCI Loans |  | PCI Loans |  | Total
| CRE |  | C&I |  | Residential |  | Consumer |  | Total |  |
Beginning balance |  | $ | 72,804 |  |  | $ | 142,166 |  |  | $ | 37,333 |  |  | $ | 8,099 |  |  | $ | 260,402 |  |  | $ | 118 |  |  | $ | 260,520 |
(Reversal of) provision for loan losses |  | (120 | ) |  | 28,576 |  |  | 4,815 |  |  | (1,087 | ) |  | 32,184 |  |  | (50 | ) |  | 32,134 |
Charge-offs |  | (149 | ) |  | (19,802 | ) |  | (1 | ) |  | (72 | ) |  | (20,024 | ) |  | — |  |  | (20,024 | )
Recoveries |  | 1,714 |  |  | 9,658 |  |  | 1,758 |  |  | 166 |  |  | 13,296 |  |  | — |  |  | 13,296 |
Net recoveries (charge-offs) |  | 1,565 |  |  | (10,144 | ) |  | 1,757 |  |  | 94 |  |  | (6,728 | ) |  | — |  |  | (6,728 | )
Ending balance |  | $ | 74,249 |  |  | $ | 160,598 |  |  | $ | 43,905 |  |  | $ | 7,106 |  |  | $ | 285,858 |  |  | $ | 68 |  |  | $ | 285,926 |
($ in thousands) |  | Nine Months Ended September 30, 2016
| Non-PCI Loans |  | PCI Loans |  | Total
| CRE |  | C&I |  | Residential |  | Consumer |  | Total |  |
Beginning balance |  | $ | 81,191 |  |  | $ | 134,597 |  |  | $ | 39,292 |  |  | $ | 9,520 |  |  | $ | 264,600 |  |  | $ | 359 |  |  | $ | 264,959 |
(Reversal of) provision for loan losses |  | (9,731 | ) |  | 38,549 |  |  | (7,679 | ) |  | (1,887 | ) |  | 19,252 |  |  | (203 | ) |  | 19,049 |
Charge-offs |  | (504 | ) |  | (31,770 | ) |  | (166 | ) |  | (17 | ) |  | (32,457 | ) |  | — |  |  | (32,457 | )
Recoveries |  | 873 |  |  | 2,068 |  |  | 1,048 |  |  | 272 |  |  | 4,261 |  |  | — |  |  | 4,261 |
Net recoveries (charge-offs) |  | 369 |  |  | (29,702 | ) |  | 882 |  |  | 255 |  |  | (28,196 | ) |  | — |  |  | (28,196 | )
Ending balance |  | $ | 71,829 |  |  | $ | 143,444 |  |  | $ | 32,495 |  |  | $ | 7,888 |  |  | $ | 255,656 |  |  | $ | 156 |  |  | $ | 255,812 |
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 of the Company’s 2016 Form 10-K. The following table presents a summary of activities in the allowance for unfunded credit reserves for the three and nine months ended September 30, 2017 and 2016:
($ in thousands) |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
Beginning balance |  | $ | 15,188 |  |  | $ | 20,318 |  |  | $ | 16,121 |  |  | $ | 20,360 |
Reversal of unfunded credit reserves |  | (452 | ) |  | (1,989 | ) |  | (1,385 | ) |  | (2,031 | )
Ending balance |  | $ | 14,736 |  |  | $ | 18,329 |  |  | $ | 14,736 |  |  | $ | 18,329 |
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 expense and other liabilities on the Consolidated Balance Sheets. See Note 11 — Commitments and Contingencies 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 September 30, 2017 and December 31, 2016:
($ in thousands) |  | September 30, 2017
| CRE |  | C&I |  | Residential |  | Consumer |  | Total
Allowance for loan losses |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 1,012 |  |  | $ | 18,969 |  |  | $ | 766 |  |  | $ | 4 |  |  | $ | 20,751 |
Collectively evaluated for impairment |  | 73,237 |  |  | 141,629 |  |  | 43,139 |  |  | 7,102 |  |  | 265,107 |
Acquired with deteriorated credit quality |  | 68 |  |  | — |  |  | — |  |  | — |  |  | 68 |
Ending balance |  | $ | 74,317 |  |  | $ | 160,598 |  |  | $ | 43,905 |  |  | $ | 7,106 |  |  | $ | 285,926 |
Recorded investment in loans |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 39,332 |  |  | $ | 93,800 |  |  | $ | 28,131 |  |  | $ | 4,301 |  |  | $ | 165,564 |
Collectively evaluated for impairment |  | 9,174,220 |  |  | 10,538,790 |  |  | 6,014,197 |  |  | 2,100,313 |  |  | 27,827,520 |
Acquired with deteriorated credit quality (1) |  | 313,628 |  |  | 12,566 |  |  | 190,637 |  |  | 15,442 |  |  | 532,273 |
Ending balance (1) |  | $ | 9,527,180 |  |  | $ | 10,645,156 |  |  | $ | 6,232,965 |  |  | $ | 2,120,056 |  |  | $ | 28,525,357 |
($ in thousands) |  | December 31, 2016
| CRE |  | C&I |  | Residential |  | Consumer |  | Total
Allowance for loan losses |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 1,326 |  |  | $ | 10,477 |  |  | $ | 867 |  |  | $ | 31 |  |  | $ | 12,701 |
Collectively evaluated for impairment |  | 71,478 |  |  | 131,689 |  |  | 36,466 |  |  | 8,068 |  |  | 247,701 |
Acquired with deteriorated credit quality |  | 112 |  |  | 1 |  |  | 5 |  |  | — |  |  | 118 |
Ending balance |  | $ | 72,916 |  |  | $ | 142,167 |  |  | $ | 37,338 |  |  | $ | 8,099 |  |  | $ | 260,520 |
Recorded investment in loans |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 52,378 |  |  | $ | 125,619 |  |  | $ | 24,376 |  |  | $ | 3,682 |  |  | $ | 206,055 |
Collectively evaluated for impairment |  | 8,288,119 |  |  | 9,476,557 |  |  | 4,836,578 |  |  | 2,053,385 |  |  | 24,654,639 |
Acquired with deteriorated credit quality (1) |  | 350,366 |  |  | 38,387 |  |  | 234,764 |  |  | 18,928 |  |  | 642,445 |
Ending balance (1) |  | $ | 8,690,863 |  |  | $ | 9,640,563 |  |  | $ | 5,095,718 |  |  | $ | 2,075,995 |  |  | $ | 25,503,139 |
(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 flow expectation. The cash flows expected over the life of the pools are estimated by an internal cash flow 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. Prepayments 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 received at origination is deemed to be the “nonaccretable difference.” The following table presents the changes in accretable yield for PCI loans for the three and nine months ended September 30, 2017 and 2016:
($ in thousands) |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
Beginning balance |  | $ | 118,625 |  |  | $ | 166,777 |  |  | $ | 136,247 |  |  | $ | 214,907 |
Accretion |  | (10,747 | ) |  | (14,827 | ) |  | (32,108 | ) |  | (53,510 | )
Changes in expected cash flows |  | 2,078 |  |  | 311 |  |  | 5,817 |  |  | (9,136 | )
Ending balance |  | $ | 109,956 |  |  | $ | 152,261 |  |  | $ | 109,956 |  |  | $ | 152,261 |
Loans Held-for-Sale Loans held-for-sale are carried at the lower of cost or fair value. When a determination is made at the time of commitment to originate or purchase loans as held-for-investment, it is the Company’s intent to hold these loans to maturity or for the “foreseeable future,” subject to periodic reviews under the Company’s management evaluation processes, including asset/liability 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 September 30, 2017, loans held-for-sale amounted to $178 thousand, which were comprised of single-family residential loans. In comparison, as of December 31, 2016, loans held-for-sale amounted to $23.1 million, which were primarily comprised of consumer loans. Loans transferred from held-for-investment to held-for-sale were $74.5 million and $418.5 million during the three and nine months ended September 30, 2017, respectively. These loan transfers were primarily comprised of C&I loans for both periods. In comparison, $144.9 million and $720.7 million of loans were transferred from held-for-investment to held-for-sale during the three and nine months ended September 30, 2016, respectively. These loan transfers were primarily comprised of C&I, multifamily residential and CRE loans for both periods. The Company recorded $232 thousand and $441 thousand in write-downs to the allowance for loan losses related to loans transferred from held-for-investment to held-for-sale for the three and nine months ended September 30, 2017, respectively. In comparison, there were no write-downs and $1.9 million of write-downs recorded to the allowance for loan losses related to loans transferred from held-for-investment to held-for-sale for the three and nine months ended September 30, 2016, respectively. During the three and nine months ended September 30, 2017, the Company sold $33.8 million and $101.4 million, respectively, in originated loans, resulting in net gains of $2.3 million and $5.5 million, respectively. Originated loans sold during these periods were primarily comprised of C&I and CRE loans. In comparison, the Company sold $107.3 million in originated loans during the three months ended September 30, 2016, resulting in net gains of $2.2 million. Originated loans sold during this period were primarily comprised of C&I and CRE loans. During the nine months ended September 30, 2016, the Company sold or securitized $529.5 million in originated loans, resulting in net gains of $9.3 million. Included in these amounts were $201.7 million of multifamily residential loans securitized during the first quarter of 2016, which resulted in net gains of $1.1 million, $641 thousand in mortgage servicing rights and $160.1 million of held-to-maturity investment security that were recorded. The remaining $327.8 million of originated loans sold during the nine months ended September 30, 2016, primarily comprising of CRE and C&I loans, resulted in net gains of $8.2 million. During the three and nine months ended September 30, 2017, the Company purchased $72.4 million and $441.1 million loans, respectively, compared to $256.2 million and $1.04 billion during the three and nine months ended September 30, 2016, respectively. Purchased loans for each of the three and nine months ended September 30, 2017 were primarily comprised of C&I syndication loans. Purchased loans for each of the three and nine months ended September 30, 2016 were primarily comprised of C&I syndication loans and single-family residential loans. The higher loans purchased for the three and nine months ended September 30, 2016, primarily included $165.8 million and $488.3 million, respectively, of single-family residential loans purchased for Community Reinvestment Act (“CRA”) purposes. 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. During the three and nine months ended September 30, 2017, the Company sold loans of $57.4 million and $354.5 million, respectively, in the secondary market at net gains of $19 thousand and $1.2 million, respectively. In comparison, the Company sold loans of $45.8 million and $179.4 million for the three and nine months ended September 30, 2016, respectively, in the secondary market. Loan sales in the secondary market resulted in no gains or losses and $69 thousand in net gains recorded for the three and nine months ended September 30, 2016, respectively. The Company records valuation adjustments in Net gains on sales of loans on the Consolidated Statements of Income to carry the loans held-for-sale portfolio at the lower of cost or fair value. For each of the three months ended September 30, 2017 and 2016, no valuation adjustments were recorded. For the nine months ended September 30, 2017 and 2016, the Company recorded $61 thousand and $2.4 million, respectively, in valuation adjustments.

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