LOANS AND LEASES AND ALLOWANCE FOR LOAN AND LEASE LOSSES

3 Months Ended

Mar. 31, 2016

LOANS AND LEASES AND ALLOWANCE FOR LOAN AND LEASE LOSSES

The following table presents the balances in the Company’s loans and leases portfolio as of the dates indicated:



	Non-Traditional Mortgages (NTM)			Traditional Loans			Total NTM and Traditional Loans			Purchased Credit Impaired (PCI) Loans			Total Loans and Leases Receivable
	($ in thousands)
March 31, 2016
Commercial:
Commercial and industrial	$	—		$	983,142		$	983,142		$	819		$	983,961
Commercial real estate	—			705,475			705,475			8,218			713,693
Multi-family	—			1,021,097			1,021,097			—			1,021,097
SBA	—			68,700			68,700			2,940			71,640
Construction	—			68,241			68,241			—			68,241
Lease financing	—			212,836			212,836			—			212,836
Consumer:
Single family residential mortgage	693,190			815,126			1,508,316			671,999			2,180,315
Green Loans (HELOC) - first liens	102,130			—			102,130			—			102,130
Green Loans (HELOC) - second liens	4,368			—			4,368			—			4,368
Other consumer	113			104,674			104,787			—			104,787
Total loans and leases	$	799,801		$	3,979,291		$	4,779,092		$	683,976		$	5,463,068
Percentage to total loans and leases	14.6		%	72.8		%	87.4		%	12.6		%	100.0		%
Allowance for loan and lease losses													(35,845		)
Loans and leases receivable, net													$	5,427,223
December 31, 2015
Commercial:
Commercial and industrial	$	—		$	876,146		$	876,146		$	853		$	876,999
Commercial real estate	—			718,108			718,108			9,599			727,707
Multi-family	—			904,300			904,300			—			904,300
SBA	—			54,657			54,657			3,049			57,706
Construction	—			55,289			55,289			—			55,289
Lease financing	—			192,424			192,424			—			192,424
Consumer:
Single family residential mortgage	675,960			775,263			1,451,223			699,230			2,150,453
Green Loans (HELOC) - first liens	105,131			—			105,131			—			105,131
Green Loans (HELOC) - second liens	4,704			—			4,704			—			4,704
Other consumer	113			109,568			109,681			—			109,681
Total loans and leases	$	785,908		$	3,685,755		$	4,471,663		$	712,731		$	5,184,394
Percentage to total loans and leases	15.2		%	71.1		%	86.3		%	13.7		%	100.0		%
Allowance for loan and lease losses													(35,533		)
Loans and leases receivable, net													$	5,148,861

Non Traditional Mortgage Loans

The Company’s NTM portfolio is comprised of three interest only products: Green Account Loans (Green Loans), fixed or adjustable rate hybrid interest only mortgage (Interest Only) loans and a small number of additional loans with the potential for negative amortization. As of March 31, 2016 and December 31, 2015, the NTM loans totaled $799.8 million, or 14.6 percent of total loans and leases, and $785.9 million, or 15.2 percent of total loans and leases, respectively. The total NTM portfolio increased by $13.9 million, or 1.8 percent, during the three months ended March 31, 2016.

The following table presents the composition of the NTM portfolio as of the dates indicated:



	March 31, 2016						December 31, 2015
	Count	Amount			Percent		Count	Amount			Percent
	($ in thousands)
Green Loans (HELOC) - first liens	119	$	102,130		12.8	%	121	$	105,131		13.4	%
Interest-only - first liens	526	681,870			85.2	%	521	664,358			84.4	%
Negative amortization	29	11,320			1.4	%	30	11,602			1.5	%
Total NTM - first liens	674	795,320			99.4	%	672	781,091			99.3	%
Green Loans (HELOC) - second liens	15	4,368			0.5	%	16	4,704			0.6	%
Interest-only - second liens	1	113			0.1	%	1	113			0.1	%
Total NTM - second liens	16	4,481			0.6	%	17	4,817			0.7	%
Total NTM loans	690	$	799,801		100.0	%	689	$	785,908		100.0	%
Total loans and leases		$	5,463,068					$	5,184,394
% of NTM to total loans and leases		14.6		%				15.2		%

Green Loans

Green Loans are SFR first and second mortgage lines of credit with a linked checking account that allows all types of deposits and withdrawals to be performed. The loans are generally interest only with a 15 year-balloon payment due at maturity. At March 31, 2016 and December 31, 2015, Green Loans totaled $106.5 million and $109.8 million, respectively. At March 31, 2016 and December 31, 2015, $10.0 million and $10.1 million, respectively, of the Company’s Green Loans were non-performing. As a result of their unique payment feature, Green Loans possess higher credit risk due to the potential for negative amortization; however, management believes the risk is mitigated through the Company’s loan terms and underwriting standards, including its policies on loan-to-value (LTV) ratios and the Company’s contractual ability to curtail loans when the value of the underlying collateral declines. The Company discontinued origination of the Green Loan products in 2011.

Interest Only Loans

Interest only loans are primarily SFR first mortgage loans with payment features that allow interest only payments in initial periods before converting to a fully amortizing loan. As of March 31, 2016 and December 31, 2015, interest only loans totaled $682.0 million and $664.5 million, respectively. As of March 31, 2016 and December 31, 2015, $3.4 million and $4.6 million of the interest only loans were non-performing, respectively.

Loans with the Potential for Negative Amortization

Negative amortization loans other than Green Loans totaled $11.3 million and $11.6 million at March 31, 2016 and December 31, 2015, respectively. The Company discontinued origination of negative amortization loans in 2007. At March 31, 2016 and December 31, 2015, none of the loans that had the potential for negative amortization were non-performing. These loans pose a potentially higher credit risk because of the lack of principal amortization and potential for negative amortization; however, management believes the risk is mitigated through the loan terms and underwriting standards, including the Company’s policies on LTV ratios.

Risk Management of Non-Traditional Mortgages

The Company has determined that significant performance indicators for NTMs are LTV ratios and Fair Isaac Corporation (FICO) scores. Accordingly, the Company manages credit risk in the NTM portfolio through periodic review of the loan portfolio that includes refreshing FICO scores on the Green Loans and other home equity lines of credit (HELOCs), as needed in conjunction with portfolio management, and ordering third party automated valuation models (AVMs). The loan review is designed to provide a method of identifying borrowers who may be experiencing financial difficulty before they actually fail to make a loan payment. Upon receipt of the updated FICO scores, an exception report is run to identify loans with a decrease in FICO score of 10 percent or more and/or a resulting FICO score of 620 or less. The loans are then further analyzed to determine if the risk rating should be downgraded, which will increase the reserves the Company will establish for potential losses. A report of the periodic loan review is published and regularly monitored.

As these loans are revolving lines of credit, the Company, based on the loan agreement and loan covenants of the particular loan, as well as applicable rules and regulations, could suspend the borrowing privileges or reduce the credit limit at any time the Company reasonably believes that the borrower will be unable to fulfill their repayment obligations under the agreement or certain other conditions are met. In many cases, the decrease in FICO score is the first indication that the borrower may have difficulty in making their future payment obligations.

The Company proactively manages the NTM portfolio by performing detailed analyses on the portfolio. The Company’s Internal Asset Review Committee (IARC) conducts meetings on at least a quarterly basis to review the loans classified as special mention, substandard, or doubtful and determines whether a suspension or reduction in credit limit is warranted. If a line has been suspended and the borrower would like to have their credit privileges reinstated, they would need to provide updated financials showing their ability to meet their payment obligations.

On the interest only loans, the Company projects future payment changes to determine if there will be a material increase in the required payment and then monitors the loans for possible delinquency. The individual loans are monitored for possible downgrading of risk rating.

NTM Performance Indicators

The following table presents the Company’s NTM Green Loans first lien portfolio at March 31, 2016 by FICO scores that were obtained during the quarter ended March 31, 2016, comparing to the FICO scores for those same loans that were obtained during the quarter ended December 31, 2015:



	March 31, 2016
	By FICO Scores Obtained During the Quarter Ended March 31, 2016					By FICO Scores Obtained During the Quarter Ended December 31, 2015					Change
	Count	Amount		Percent		Count	Amount		Percent		Count		Amount			Percent
	($ in thousands)
FICO Score
800+	23	$	15,465	15.1	%	22	$	14,438	13.7	%	1		$	1,027		1.4	%
700-799	56	41,702		40.8	%	60	48,775		46.5	%	(4	)	(7,073		)	(5.7	)%
600-699	23	24,901		24.4	%	23	23,600		22.4	%	—		1,301			2.0	%
<600	5	4,860		4.8	%	5	4,030		3.8	%	—		830			1.0	%
No FICO	12	15,202		14.9	%	11	14,288		13.6	%	1		914			1.3	%
Totals	119	$	102,130	100.0	%	121	$	105,131	100.0	%	(2	)	$	(3,001	)	—	%

Loan-to-Value Ratio

LTV ratio represents estimated current loan to value ratio, determined by dividing current unpaid principal balance by latest estimated property value received per the Company policy. The table below presents the Company’s SFR NTM first lien portfolio by LTV ratios as of the dates indicated:



	Green					Interest Only					Negative Amortization					Total
	Count	Amount		Percent		Count	Amount		Percent		Count	Amount		Percent		Count	Amount		Percent
	($ in thousands)
March 31, 2016
< 61%	66	$	47,383	46.4	%	142	$	216,466	31.7	%	13	$	2,845	25.1	%	221	$	266,694	33.5	%
61-80%	37	44,214		43.3	%	322	441,770		64.8	%	15	8,252		72.9	%	374	494,236		62.1	%
81-100%	11	6,220		6.1	%	26	10,793		1.6	%	1	223		2.0	%	38	17,236		2.2	%
> 100%	5	4,313		4.2	%	36	12,841		1.9	%	—	—		—	%	41	17,154		2.2	%
Total	119	$	102,130	100.0	%	526	$	681,870	100.0	%	29	$	11,320	100.0	%	674	$	795,320	100.0	%
December 31, 2015
< 61%	70	$	51,221	48.7	%	141	$	208,120	31.3	%	17	$	5,271	45.4	%	228	$	264,612	33.9	%
61-80%	33	42,075		40.0	%	291	408,662		61.6	%	12	6,106		52.7	%	336	456,843		58.4	%
81-100%	12	6,836		6.5	%	37	30,167		4.5	%	1	225		1.9	%	50	37,228		4.8	%
> 100%	6	4,999		4.8	%	52	17,409		2.6	%	—	—		—	%	58	22,408		2.9	%
Total	121	$	105,131	100.0	%	521	$	664,358	100.0	%	30	$	11,602	100.0	%	672	$	781,091	100.0	%

Allowance for Loan and Lease Losses

The Company has an established credit risk management process that includes regular management review of the loan and lease portfolio to identify problem loans and leases. During the ordinary course of business, management becomes aware of borrowers and lessees that may not be able to meet the contractual requirements of the loan and lease agreements. Such loans and leases are subject to increased monitoring. Consideration is given to placing the loan or lease on non-accrual status, assessing the need for additional ALLL, and partial or full charge-off. The Company maintains the ALLL at a level that is considered adequate to cover the estimated and known inherent risks in the loan and lease portfolio.

The Company also maintains a reserve for unfunded loan commitments at a level that is considered adequate to cover the estimated and known inherent risks. The probability of usage of the unfunded loan commitments and credit risk factors determined based on the outstanding loan balance of the same customer or outstanding loans that share similar credit risk exposure are used to determine the adequacy of the reserve. At March 31, 2016 and December 31, 2015, the reserve for unfunded loan commitments was $1.3 million and $2.1 million, respectively.

The credit risk monitoring system is designed to identify impaired and potential problem loans, and to permit periodic evaluation of impairment and the adequacy of the allowance for credit losses in a timely manner. In addition, the Board of Directors of the Bank has adopted a credit policy that includes a credit review and control system which it believes should be effective in ensuring that the Company maintains an adequate allowance for credit losses. The Board of Directors provides oversight and guidance for management’s allowance evaluation process, including quarterly valuations, and consideration of management’s determination of whether the allowance is adequate to absorb losses in the loan and lease portfolio. The determination of the amount of the ALLL and the provision for loan and lease losses is based on management’s current judgment about the credit quality of the loan and lease portfolio and considers known relevant internal and external factors that affect collectability when determining the appropriate level for the ALLL. Additions to the ALLL are made by charges to the provision for loan and lease losses. Identified credit exposures that are determined to be uncollectible are charged against the ALLL. Recoveries of previously charged off amounts, if any, are credited to the ALLL.

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



	Three Months Ended
	March 31,
	2016			2015
	(In thousands)
Balance at beginning of period	$	35,533		$	29,480
Loans and leases charged off	(102		)	(357		)
Recoveries of loans and leases previously charged off	93			222
Provision for loan and lease losses	321			—
Balance at end of period	$	35,845		$	29,345

The following table presents the activity and balance in the ALLL and the recorded investment, excluding accrued interest, in loans and leases by portfolio segment and is based on the impairment method as of or for the three months ended March 31, 2016:



	Commercial and Industrial		Commercial Real Estate			Multi- family		SBA		Construction			Lease Financing			Single Family Residential Mortgage			Other Consumer			Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at December 31, 2015	$	5,850	$	4,252		$	6,012	$	683	$	1,530		$	2,195		$	13,854		$	1,157		$	—	$	35,533
Charge-offs	—		—			—		—		—			(102		)	—			—			—		(102		)
Recoveries	—		—			—		31		—			61			—			1			—		93
Provision	196		(283		)	472		192		(10		)	456			(584		)	(118		)	—		321
Balance at March 31, 2016	$	6,046	$	3,969		$	6,484	$	906	$	1,520		$	2,610		$	13,270		$	1,040		$	—	$	35,845
Individually evaluated for impairment	$	29	$	—		$	—	$	—	$	—		$	—		$	1,347		$	—		$	—	$	1,376
Collectively evaluated for impairment	5,959		3,857			6,484		887		1,520			2,610			11,906			1,040			—		34,263
Acquired with deteriorated credit quality	58		112			—		19		—			—			17			—			—		206
Total ending allowance balance	$	6,046	$	3,969		$	6,484	$	906	$	1,520		$	2,610		$	13,270		$	1,040		$	—	$	35,845
Loans:
Individually evaluated for impairment	$	4,493	$	299		$	—	$	—	$	—		$	—		$	34,296		$	294		$	—	$	39,382
Collectively evaluated for impairment	978,649		705,176			1,021,097		68,700		68,241			212,836			1,576,150			108,861			—		4,739,710
Acquired with deteriorated credit quality	819		8,218			—		2,940		—			—			671,999			—			—		683,976
Total ending loan balances	$	983,961	$	713,693		$	1,021,097	$	71,640	$	68,241		$	212,836		$	2,282,445		$	109,155		$	—	$	5,463,068



	Commercial and Industrial			Commercial Real Estate			Multi- family			SBA		Construction			Lease Financing			Single Family Residential Mortgage			Other Consumer			Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at December 31, 2014	$	6,910		$	3,840		$	7,179		$	335	$	846		$	873		$	7,192		$	2,305		$	—	$	29,480
Charge-offs	(11		)	(259		)	—			—		—			(87		)	—			—			—		(357		)
Recoveries	3			132			3			72		—			—			—			12			—		222
Provision	(418		)	191			(18		)	159		(151		)	409			(232		)	(304		)	364		—
Balance at March 31, 2015	$	6,484		$	3,904		$	7,164		$	566	$	695		$	1,195		$	6,960		$	2,013		$	364	$	29,345
Individually evaluated for impairment	$	749		$	—		$	—		$	—	$	—		$	—		$	450		$	—		$	—	$	1,199
Collectively evaluated for impairment	5,677			3,792			7,164			547		695			1,195			6,493			2,013			364		27,940
Acquired with deteriorated credit quality	58			112			—			19		—			—			17			—			—		206
Total ending allowance balance	$	6,484		$	3,904		$	7,164		$	566	$	695		$	1,195		$	6,960		$	2,013		$	364	$	29,345
Loans:
Individually evaluated for impairment	$	8,087		$	373		$	1,566		$	9	$	—		$	—		$	21,790		$	294		$	—	$	32,119
Collectively evaluated for impairment	480,063			964,929			938,487			45,109		38,081			102,012			920,193			170,924			—		3,659,798
Acquired with deteriorated credit quality	1,079			10,432			—			3,136		—			—			227,151			—			—		241,798
Total ending loan balances	$	489,229		$	975,734		$	940,053		$	48,254	$	38,081		$	102,012		$	1,169,134		$	171,218		$	—	$	3,933,715

The following table presents loans and leases individually evaluated for impairment by class of loans and leases as of the dates indicated. The recorded investment, excluding accrued interest, presents customer balances net of any partial charge-offs recognized on the loans and leases and net of any deferred fees and costs.



	March 31, 2016						December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan and Lease Losses		Unpaid Principal Balance		Recorded Investment		Allowance for Loan and Lease Losses
	(In thousands)
With no related allowance recorded:
Commercial:
Commercial and industrial	$	3,643	$	3,530	$	—	$	6,244	$	6,086	$	—
Commercial real estate	1,196		299		—		1,200		312		—
SBA	—		—		—		22		3		—
Consumer:
Single family residential mortgage	25,988		24,131		—		24,224		22,671		—
Other consumer	294		294		—		553		553		—
With an allowance recorded:
Commercial:
Commercial and industrial	962		963		29		1,072		1,073		38
Consumer:
Single family residential mortgage	10,650		10,165		1,347		3,575		3,585		331
Total	$	42,733	$	39,382	$	1,376	$	36,890	$	34,283	$	369

The following table presents information on impaired loans and leases, disaggregated by class, for the periods indicated:



	Three Months Ended
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
	(In thousands)
March 31, 2016
Commercial:
Commercial and industrial	$	4,596	$	63	$	88
Commercial real estate	305		10		10
Consumer:
Single family residential mortgage	34,324		286		265
Other consumer	294		2		2
Total	$	39,519	$	361	$	365
March 31, 2015
Commercial:
Commercial and industrial	$	8,199	$	119	$	130
Commercial real estate	383		10		10
Multi-family	1,580		13		15
SBA	7		—		—
Consumer:
Single family residential mortgage	21,866		179		176
Other consumer	294		2		3
Total	$	32,329	$	323	$	334

Non-accrual Loans and Leases

The following table presents nonaccrual loans and leases, and loans past due 90 days or more and still accruing as of the dates indicated:



	March 31, 2016						December 31, 2015
	NTM Loans		Traditional Loans and Leases		Total		NTM Loans		Traditional Loans and Leases		Total
	(In thousands)
Loans past due 90 days or more and still accruing	$	—	$	—	$	—	$	—	$	—	$	—
Nonaccrual loans and leases:
The Company maintains specific allowances for these loans of $11 at March 31, 2016 and $0 at December 31, 2015	13,456		30,760		44,216		14,703		30,426		45,129

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



	March 31, 2016						December 31, 2015
	NTM Loans		Traditional Loans and Leases		Total		NTM Loans		Traditional Loans and Leases		Total
	(In thousands)
Commercial:
Commercial and industrial	$	—	$	4,370	$	4,370	$	—	$	4,383	$	4,383
Commercial real estate	—		1,165		1,165		—		1,552		1,552
Multi-family	—		618		618		—		642		642
SBA	—		353		353		—		422		422
Lease financing	—		1,590		1,590		—		598		598
Consumer:
Single family residential mortgage	3,449		22,494		25,943		4,615		22,615		27,230
Green Loans (HELOC) - first liens	10,007		—		10,007		10,088		—		10,088
Other consumer	—		170		170		—		214		214
Total nonaccrual loans and leases	$	13,456	$	30,760	$	44,216	$	14,703	$	30,426	$	45,129

Past Due Loans and Leases

The following table presents the aging of the recorded investment in past due loans and leases as of March 31, 2016, excluding accrued interest receivable (which is not considered to be material), by class of loans and leases:



	March 31, 2016
	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 89 Days Past due		Total Past Due		Current		Total
	(In thousands)
NTM loans:
Single family residential mortgage	$	5,534	$	—	$	2,858	$	8,392	$	684,798	$	693,190
Green Loans (HELOC) - first liens	7,832		1,004		2,175		11,011		91,119		102,130
Green Loans (HELOC) - second liens	—		—		—		—		4,368		4,368
Other consumer	—		—		—		—		113		113
Total NTM loans	13,366		1,004		5,033		19,403		780,398		799,801
Traditional loans and leases:
Commercial:
Commercial and industrial	109		2,521		499		3,129		980,013		983,142
Commercial real estate	299		262		283		844		704,631		705,475
Multi-family	416		—		—		416		1,020,681		1,021,097
SBA	—		142		140		282		68,418		68,700
Construction	—		—		—		—		68,241		68,241
Lease financing	2,454		697		1,412		4,563		208,273		212,836
Consumer:
Single family residential mortgage	14,634		118		20,040		34,792		780,334		815,126
Other consumer	—		—		62		62		104,612		104,674
Total traditional loans and leases	17,912		3,740		22,436		44,088		3,935,203		3,979,291
PCI loans:
Commercial:
Commercial and industrial	—		—		175		175		644		819
Commercial real estate	—		—		1,425		1,425		6,793		8,218
SBA	372		—		498		870		2,070		2,940
Consumer:
Single family residential mortgage	43,447		372		7,708		51,527		620,472		671,999
Total PCI loans	43,819		372		9,806		53,997		629,979		683,976
Total	$	75,097	$	5,116	$	37,275	$	117,488	$	5,345,580	$	5,463,068

The following table presents the aging of the recorded investment in past due loans and leases as of December 31, 2015, excluding accrued interest receivable (which is not considered to be material), by class of loans and leases:



	December 31, 2015
	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 89 Days Past due		Total Past Due		Current		Total
	(In thousands)
NTM loans:
Single family residential mortgage	$	3,935	$	—	$	3,447	$	7,382	$	668,578	$	675,960
Green Loans (HELOC) - first liens	7,913		—		—		7,913		97,218		105,131
Green Loans (HELOC) - second liens	—		—		—		—		4,704		4,704
Other consumer	—		—		—		—		113		113
Total NTM loans	11,848		—		3,447		15,295		770,613		785,908
Traditional loans and leases:
Commercial:
Commercial and industrial	23		4,984		544		5,551		870,595		876,146
Commercial real estate	—		—		911		911		717,197		718,108
Multi-family	223		—		432		655		903,645		904,300
SBA	—		162		173		335		54,322		54,657
Construction	—		—		—		—		55,289		55,289
Lease financing	2,005		1,041		394		3,440		188,984		192,424
Consumer:
Single family residential mortgage	15,762		3,887		17,226		36,875		738,388		775,263
Other consumer	—		11		211		222		109,346		109,568
Total traditional loans and leases	18,013		10,085		19,891		47,989		3,637,766		3,685,755
PCI loans:
Commercial:
Commercial and industrial	—		—		176		176		677		853
Commercial real estate	—		—		1,425		1,425		8,174		9,599
SBA	386		163		621		1,170		1,879		3,049
Consumer:
Single family residential mortgage	33,507		6,235		4,672		44,414		654,816		699,230
Total PCI loans	33,893		6,398		6,894		47,185		665,546		712,731
Total	$	63,754	$	16,483	$	30,232	$	110,469	$	5,073,925	$	5,184,394

Troubled Debt Restructurings

Troubled Debt Restructurings (TDRs) of loans are defined by ASC 310-40, “Troubled Debt Restructurings by Creditors” and ASC 470-60, “Troubled Debt Restructurings by Debtors” and evaluated for impairment in accordance with ASC 310-10-35. The concessions may be granted in various forms, including reduction in the stated interest rate, reduction in the amount of principal amortization, forgiveness of a portion of a loan balance or accrued interest, or extension of the maturity date. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

For the Company’s new TDRs, there were 17 modifications through interest rate changes, extension of maturities, and deferrals of principal payments for loans with an aggregate principal of $4.3 million, 15 modifications through interest rate changes and extension of maturities for loans with an aggregate principal of $3.9 million, 4 modifications through extension of maturities for loans with an aggregate principal of $368 thousand, 1 modification through extension of maturity and deferral of principal payments for a loan with a principal of $507 thousand, and 1 modification through interest rate change for a loan with a principal of $78 thousand. There were 2 modifications through bankruptcy discharges for the three months ended March 31, 2015. The following table summarizes the pre-modification and post-modification balances of the new TDRs for the three months ended March 31, 2016:



	Three Months Ended
	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	($ in thousands)
March 31, 2016
Consumer:
Single family residential mortgage	38	$	9,173	$	9,173
Total	38	$	9,173	$	9,173
March 31, 2015
Consumer:
Single family residential mortgage	2	$	1,430	$	1,430
Total	2	$	1,430	$	1,430

For the three months ended March 31, 2016, there were two loans with an aggregate principal of $407 thousand that were modified as TDRs during the past 12 months that had payment defaults during the period. For the three months ended March 31, 2015, there were no loans that were modified as TDRs during the past 12 months that had payment defaults during the period.

TDR loans and leases consist of the following as of the dates indicated:



	March 31, 2016						December 31, 2015
	NTM Loans		Traditional Loans		Total		NTM Loans		Traditional Loans		Total
	(In thousands)
Commercial:
SBA	$	—	$	—	$	—	$	—	$	3	$	3
Consumer:
Single family residential mortgage	1,003		13,979		14,982		1,015		5,841		6,856
Green Loans (HELOC) - first liens	2,397		—		2,397		2,400		—		2,400
Green Loans (HELOC) - second liens	294		—		294		553		—		553
Total	$	3,694	$	13,979	$	17,673	$	3,968	$	5,844	$	9,812

The Company did not have any commitments to lend to customers with outstanding loans or leases that were classified as TDRs as of March 31, 2016 and December 31, 2015.

Credit Quality Indicators

The Company categorizes loans and leases 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, public information, and current economic trends, among other factors. The Company performs historical loss analysis that is combined with a comprehensive loan or lease to value analysis to analyze the associated risks in the current loan and lease portfolio. The Company analyzes loans and leases individually by classifying the loans and leases as to credit risk. This analysis includes all loans and leases delinquent over 60 days and non-homogeneous loans and leases such as commercial and commercial real estate loans and leases. The Company uses the following definitions for risk ratings:

Pass: Loans and leases classified as pass are in compliance in all respects with the Bank’s credit policy and regulatory requirements, and do not exhibit any potential or defined weakness as defined under “Special Mention”, “Substandard” or “Doubtful/Loss”.

Special Mention: Loans and leases 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 lease or of the Company’s credit position at some future date.

Substandard: Loans and leases classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans and leases 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 institution will sustain some loss if the deficiencies are not corrected.

Doubtful/Loss: Loans and leases classified as doubtful/loss 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.

Not-Rated: When accrual of income on a pool of PCI loans with common risk characteristics is appropriate in accordance with ASC 310-30, individual loans in those pools are not risk-rated. The credit criteria evaluated are FICO scores, LTV ratios, delinquency, and actual cash flows versus expected cash flows of the loan pools.

Loans and leases not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans and leases.

The following table presents the risk categories for loans and leases as of March 31, 2016:



	March 31, 2016
	Pass		Special Mention		Substandard		Doubtful		Not-Rated		Total
	(In thousands)
NTM loans:
Single family residential mortgage	$	678,755	$	10,986	$	3,449	$	—	$	—	$	693,190
Green Loans (HELOC) - first liens	87,914		1,401		12,815		—		—		102,130
Green Loans (HELOC) - second liens	4,368		—		—		—		—		4,368
Other consumer	113		—		—		—		—		113
Total NTM loans	771,150		12,387		16,264		—		—		799,801
Traditional loans and leases:
Commercial:
Commercial and industrial	970,765		875		11,502		—		—		983,142
Commercial real estate	695,719		2,175		7,581		—		—		705,475
Multi-family	1,018,418		387		2,292		—		—		1,021,097
SBA	67,172		1,116		412		—		—		68,700
Construction	68,241		—		—		—		—		68,241
Lease financing	211,003		120		1,713		—		—		212,836
Consumer:
Single family residential mortgage	779,145		9,473		26,508		—		—		815,126
Other consumer	104,365		139		170		—		—		104,674
Total traditional loans and leases	3,914,828		14,285		50,178		—		—		3,979,291
PCI loans:
Commercial:
Commercial and industrial	41		—		778		—		—		819
Commercial real estate	4,287		518		3,413		—		—		8,218
SBA	977		—		1,963		—		—		2,940
Consumer:
Single family residential mortgage	—		—		135		—		671,864		671,999
Total PCI loans	5,305		518		6,289		—		671,864		683,976
Total	$	4,691,283	$	27,190	$	72,731	$	—	$	671,864	$	5,463,068

The following table presents the risk categories for loans and leases as of December 31, 2015:



	December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Not-Rated		Total
	(In thousands)
NTM loans:
Single family residential mortgage	$	660,683	$	11,731	$	3,546	$	—	$	—	$	675,960
Green Loans (HELOC) - first liens	87,967		2,329		14,835		—		—		105,131
Green Loans (HELOC) - second liens	4,704		—		—		—		—		4,704
Other consumer	113		—		—		—		—		113
Total NTM loans	753,467		14,060		18,381		—		—		785,908
Traditional loans and leases:
Commercial:
Commercial and industrial	860,993		3,175		11,978		—		—		876,146
Commercial real estate	707,238		4,788		6,082		—		—		718,108
Multi-family	901,578		403		2,319		—		—		904,300
SBA	53,078		1,132		447		—		—		54,657
Construction	55,289		—		—		—		—		55,289
Lease financing	190,976		—		1,448		—		—		192,424
Consumer:
Single family residential mortgage	738,196		12,301		24,766		—		—		775,263
Other consumer	109,206		148		214		—		—		109,568
Total traditional loans and leases	3,616,554		21,947		47,254		—		—		3,685,755
PCI loans:
Commercial:
Commercial and industrial	54		—		799		—		—		853
Commercial real estate	5,621		523		3,455		—		—		9,599
SBA	988		—		2,061		—		—		3,049
Consumer:
Single family residential mortgage	—		—		139		—		699,091		699,230
Total PCI loans	6,663		523		6,454		—		699,091		712,731
Total	$	4,376,684	$	36,530	$	72,089	$	—	$	699,091	$	5,184,394

Purchased Credit Impaired Loans

The Company has acquired loans and leases through business combinations and purchases of loan pools for which there was, at acquisition, evidence of deterioration of credit quality subsequent to origination and it was probable, at acquisition, that all contractually required payments would not be collected. The following table presents the outstanding balance and carrying amount of those loans and leases, which are sometimes collectively referred to as “PCI loans,” as of the dates indicated:



	March 31, 2016				December 31, 2015
	Outstanding Balance		Carrying Amount		Outstanding Balance		Carrying Amount
	(In thousands)
Commercial:
Commercial and industrial	$	971	$	819	$	1,001	$	853
Commercial real estate	9,850		8,218		11,255		9,599
SBA	3,961		2,940		4,033		3,049
Consumer:
Single family residential mortgage	735,768		671,999		764,814		699,230
Total	$	750,550	$	683,976	$	781,103	$	712,731

The following table presents a summary of accretable yield, or income expected to be collected for the periods indicated:



	Three Months Ended
	March 31,
	2016			2015
	(In thousands)
Balance at beginning of period	$	205,549		$	92,301
Accretion of income	(9,708		)	(5,048		)
Changes in expected cash flows	(18,663		)	(25		)
Disposals	(1,289		)	(1,933		)
Balance at end of period	$	175,889		$	85,295

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

+ References + Details