The following table presents the balances in the Company’s loan portfolios as of the dates indicated:



($ in thousands)	June 30, 2019			December 31, 2018
Commercial:
Commercial and industrial	$	1,951,707		$	1,944,142
Commercial real estate	856,497			867,013
Multifamily	1,598,978			2,241,246
SBA	80,929			68,741
Construction	209,029			203,976
Consumer:
Single family residential mortgage	1,961,065			2,305,490
Other consumer	61,365			70,265
Total loans⁽¹⁾	$	6,719,570		$	7,700,873
Percentage to total loans	100.0		%	100.0		%
Allowance for loan losses	(59,523		)	(62,192		)
Loans receivable, net	$	6,660,047		$	7,638,681

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



	June 30, 2019						December 31, 2018
($ in thousands)	Count	Amount			Percent		Count	Amount			Percent
Consumer:
Single family residential mortgage:
Green Loans (HELOC) - first liens⁽¹⁾	78	$	61,439		8.2	%	88	$	67,729		8.2	%
Interest-only - first liens⁽²⁾	444	680,361			91.0	%	519	753,061			91.1	%
Negative amortization⁽³⁾	10	3,219			0.4	%	11	3,528			0.4	%
Total NTM - first liens	532	745,019			99.7	%	618	824,318			99.7	%
Other consumer:
Green Loans (HELOC) - second liens⁽¹⁾	7	2,247			0.3	%	10	2,413			0.3	%
Total NTM - second liens	7	2,247			0.3	%	10	2,413			0.3	%
Total NTM loans	539	$	747,266		100.0	%	628	$	826,731		100.0	%
Total loans receivable		$	6,719,570					$	7,700,873
% of total NTM loans to total loans receivable		11.1		%				10.7		%

Green Loans are single family residential first and second mortgage lines of credit with a linked checking account that allows all types of deposits and withdrawals to be performed. These loans are generally interest only for a 15-year term with a balloon payment due at maturity. At June 30, 2019 and December 31, 2018, $286 thousand and $0, respectively, of the Company's Green Loans were non-performing. As a result of their unique payment feature, Green Loans possess higher credit risk; however, management believes the risk is mitigated through the Company’s loan terms and underwriting standards, including its policies on LTV ratios and the Company’s contractual ability to curtail loans when the value of the underlying collateral declines. The Company discontinued origination of Green Loans in 2011.

Interest only loans are primarily single family residential first mortgage loans with payment features that allow interest only payments in initial periods before converting to a fully amortizing loan. At June 30, 2019 and December 31, 2018, interest only loans totaled $680.4 million and $753.1 million, respectively. At June 30, 2019 and December 31, 2018, $827 thousand and $0, respectively, of the interest only loans were non-performing.

Negative amortization loans totaled $3.2 million and $3.5 million at June 30, 2019 and December 31, 2018, respectively. The Company discontinued origination of negative amortization loans in 2007. At June 30, 2019 and December 31, 2018, none of the loans with 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 credit risk associated with these loans is mitigated through the loan terms and underwriting standards, including the Company’s policies on LTV ratios.

The Company has established credit risk management processes that include regular management review of the loan portfolio to identify problem loans. During the ordinary course of business, management may become aware of borrowers and lessees who may not be able to fulfill the contractual payment requirements of the loan agreements. Such loans 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 principal balance. The Company maintains the ALLL at a level that is considered adequate to cover the estimated incurred losses in the loan portfolio.

The Company also maintains a separate reserve for unfunded loan commitments at a level that is considered adequate to cover the estimated incurred loss. The estimated funding of the loan commitments and credit risk factors are determined based on outstanding loans that share similar credit risk exposure are used to determine the adequacy of the reserve. At June 30, 2019 and December 31, 2018, the reserve for unfunded loan commitments was $4.3 million and $4.6 million, respectively, which are included in Accrued Expenses and Other Liabilities on the Consolidated Statements of Financial Condition.

The credit risk monitoring system is designed to identify impaired and potential problem loans, and to perform 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 that it believes should be effective in ensuring that the Company maintains an adequate allowance for loan losses. The Board of Directors also provides oversight and guidance for management’s allowance evaluation process.

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



	Three Months Ended June 30,						Six Months Ended June 30,
($ in thousands)	2019			2018			2019			2018
Balance at beginning of period	$	63,885		$	54,763		$	62,192		$	49,333
Loans charged off	(2,451		)	(950		)	(3,514		)	(15,589		)
Recoveries of loans previously charged off	76			212			320			782
Net charge-offs	(2,375		)	(738		)	(3,194		)	(14,807		)
(Reversal of) provision for loan losses	(1,987		)	2,653			525			22,152
Balance at end of period	$	59,523		$	56,678		$	59,523		$	56,678

During the three months ended March 31, 2018, the Company recorded a charge-off of $13.9 million, which reflected the outstanding balance under a $15.0 million line of credit that was originated during the three months ended March 31, 2018. Subsequent to the granting of the line of credit, representations from the borrower in applying for the line of credit were determined by the Bank to be false, and third party bank account statements provided by the borrower to secure the line of credit were found to be fraudulent. The line of credit was granted after the borrower appeared to have satisfied a pre-condition that the line of credit be fully cash collateralized and secured by a bank account at a third party financial institution pledged to the Bank. As part of the Bank’s credit review and portfolio management process, the line of credit and disbursements were reviewed subsequent to closing and compliance with the borrower’s covenants was monitored. As part of this process, on March 9, 2018, the Bank received information that caused it to believe the existence of the pledged bank account had been misrepresented by the borrower and that the account had previously been closed. The Bank filed an action in Federal court pursuing the borrower and other parties. That action was voluntarily dismissed by the Bank without prejudice, and a substantially similar action was filed in Los Angeles County Superior Court. The Bank is also considering other available sources of collection and other potential means of mitigating the loss; however, no assurance can be given that it will be successful in this regard. Upon extensive review of the underwriting process for this loan, the Bank determined that this loan was the result of an isolated event of external fraud.

The following table presents the activity and balance in the ALLL and the recorded investment, excluding accrued interest, in loans based on the impairment methodology as of or for the three and six months ended June 30, 2019:



($ in thousands)	Commercial and Industrial			Commercial Real Estate		Multifamily			SBA			Construction		Lease Financing			Single Family Residential Mortgage			Other Consumer			Total
ALLL:
Balance at March 31, 2019	$	18,893		$	6,838	$	18,898		$	3,057		$	3,453	$	—		$	12,142		$	604		$	63,885
Charge-offs	(2,022		)	—		(6		)	8			—		—			(425		)	(6		)	(2,451		)
Recoveries	11			—		—			60			—		3			—			2			76
Net charge-offs	(2,011		)	—		(6		)	68			—		3			(425		)	(4		)	(2,375		)
Provision (reversal)	4,647			39		(6,267		)	(5		)	262		(3		)	(645		)	(15		)	(1,987		)
Balance at June 30, 2019	$	21,529		$	6,877	$	12,625		$	3,120		$	3,715	$	—		$	11,072		$	585		$	59,523

Balance at December 31, 2018	$	18,191		$	6,674	$	17,970		$	1,827		$	3,461	$	—		$	13,128		$	941		$	62,192
Charge-offs	(2,115		)	—		(6		)	(348		)	—		—			(951		)	(94		)	(3,514		)
Recoveries	44			—		—			101			—		6			150			19			320
Net charge-offs	(2,071		)	—		(6		)	(247		)	—		6			(801		)	(75		)	(3,194		)
Provision	5,409			203		(5,339		)	1,540			254		(6		)	(1,255		)	(281		)	525
Balance at June 30, 2019	$	21,529		$	6,877	$	12,625		$	3,120		$	3,715	$	—		$	11,072		$	585		$	59,523

Individually evaluated for impairment	$	1,239		$	—	$	—		$	1,563		$	—	$	—		$	—		$	22		$	2,824
Collectively evaluated for impairment	20,290			6,877		12,625			1,557			3,715		—			11,072			563			56,699
Total ending ALLL balance	$	21,529		$	6,877	$	12,625		$	3,120		$	3,715	$	—		$	11,072		$	585		$	59,523
Loans:
Individually evaluated for impairment	$	20,429		$	—	$	—		$	3,262		$	2,519	$	—		$	21,021		$	1,169		$	48,400
Collectively evaluated for impairment	1,931,278			856,497		1,598,978			77,667			206,510		—			1,940,044			60,196			6,671,170
Total ending loan balances	$	1,951,707		$	856,497	$	1,598,978		$	80,929		$	209,029	$	—		$	1,961,065		$	61,365		$	6,719,570



($ in thousands)	Commercial and Industrial			Commercial Real Estate		Multifamily			SBA			Construction		Lease Financing			Single Family Residential Mortgage			Other Consumer			Total
ALLL:
Balance at March 31, 2018	$	17,571		$	5,417	$	14,219		$	1,577		$	3,220	$	—		$	11,969		$	790		$	54,763
Charge-offs	(276		)	—		(8		)	(302		)	—		—			(364		)	—			(950		)
Recoveries	36			—		—			167			—		5			—			4			212
Net charge-offs	(240		)	—		(8		)	(135		)	—		5			(364		)	4			(738		)
Provision (reversal)	(467		)	315		419			398			199		(5		)	1,631			163			2,653
Balance at June 30, 2018	$	16,864		$	5,732	$	14,630		$	1,840		$	3,419	$	—		$	13,236		$	957		$	56,678

Balance at December 31, 2017	$	14,280		$	4,971	$	13,265		$	1,701		$	3,318	$	—		$	10,996		$	802		$	49,333
Charge-offs	(347		)	—		(8		)	(683		)	—		—			(479		)	(14,072		)	(15,589		)
Recoveries	97			—		—			232			—		9			436			8			782
Net charge-offs	(250		)	—		(8		)	(451		)	—		9			(43		)	(14,064		)	(14,807		)
Provision	2,834			761		1,373			590			101		(9		)	2,283			14,219			22,152
Balance at June 30, 2018	$	16,864		$	5,732	$	14,630		$	1,840		$	3,419	$	—		$	13,236		$	957		$	56,678

Individually evaluated for impairment	$	595		$	—	$	—		$	124		$	—	$	—		$	461		$	8		$	1,188
Collectively evaluated for impairment	16,269			5,732		14,630			1,716			3,419		—			12,775			949			55,490
Total ending ALLL balance	$	16,864		$	5,732	$	14,630		$	1,840		$	3,419	$	—		$	13,236		$	957		$	56,678
Loans:
Individually evaluated for impairment	$	5,829		$	—	$	—		$	646		$	—	$	—		$	20,140		$	750		$	27,365
Collectively evaluated for impairment	1,736,730			793,855		1,959,965			77,446			211,110		—			2,154,043			75,490			7,008,639
Total ending loan balances	$	1,742,559		$	793,855	$	1,959,965		$	78,092		$	211,110	$	—		$	2,174,183		$	76,240		$	7,036,004

The following table presents loans individually evaluated for impairment by class of loans 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 net of any deferred fees and costs and any purchase premium or discount.



	June 30, 2019						December 31, 2018
($ in thousands)	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses
With no related ALLL recorded:
Commercial:
Commercial and industrial	$	18,434	$	18,404	$	—	$	5,491	$	5,455	$	—
Commercial real estate	—		—		—		—		—		—
SBA	1,320		1,251		—		1,668		1,588		—
Construction	2,519		2,519		—		—		—		—
Consumer:
Single family residential mortgage	20,938		21,021		—		12,115		12,161		—
Other consumer	1,167		1,147		—		469		469		—
With an ALLL recorded:
Commercial:
Commercial and industrial	2,025		2,025		1,239		—		—		—
SBA	2,107		2,011		1,563		823		788		562
Consumer:
Single family residential mortgage	—		—		—		5,993		6,032		161
Other consumer	22		22		22		468		452		106
Total	$	48,532	$	48,400	$	2,824	$	27,027	$	26,945	$	829

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




	Three Months Ended						Six Months Ended
($ in thousands)	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
June 30, 2019
Commercial:
Commercial and industrial	$	20,794	$	255	$	254	$	12,921	$	255	$	254
Commercial real estate	—		—		—		289		—		—
SBA	3,297		4		4		3,571		8		8
Construction	2,519		—		—		2,519		—		—
Consumer:
Single family residential mortgage	21,092		58		48		20,208		116		97
Other consumer	1,177		4		3		1,011		7		6
Total	$	48,879	$	321	$	309	$	40,519	$	386	$	365
June 30, 2018
Commercial:
Commercial and industrial	$	5,900	$	1	$	1	$	5,616	$	4	$	4
SBA	654		—		—		514		—		—
Consumer:
Single family residential mortgage	20,274		58		47		19,994		115		96
Other consumer	760		3		3		755		6		5
Total	$	27,588	$	62	$	51	$	26,879	$	125	$	105



($ in thousands)	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 89 Days Past due		Total Past Due		Current		Total
June 30, 2019
NTM loans:
Single family residential mortgage	$	19,960	$	—	$	827	$	20,787	$	724,232	$	745,019
Other consumer	—		—		—		—		2,247		2,247
Total NTM loans	19,960		—		827		20,787		726,479		747,266
Traditional loans:
Commercial:
Commercial and industrial	1,063		997		4,017		6,077		1,945,630		1,951,707
Commercial real estate	—		—		—		—		856,497		856,497
Multifamily	—		—		—		—		1,598,978		1,598,978
SBA	944		73		2,672		3,689		77,240		80,929
Construction	—		—		2,519		2,519		206,510		209,029
Consumer:
Single family residential mortgage	7,447		3,645		6,683		17,775		1,198,271		1,216,046
Other consumer	514		295		554		1,363		57,755		59,118
Total traditional loans	9,968		5,010		16,445		31,423		5,940,881		5,972,304
Total	$	29,928	$	5,010	$	17,272	$	52,210	$	6,667,360	$	6,719,570
December 31, 2018
NTM loans:
Single family residential mortgage	$	7,430	$	617	$	—	$	8,047	$	816,271	$	824,318
Other consumer	—		—		—		—		2,413		2,413
Total NTM loans	7,430		617		—		8,047		818,684		826,731
Traditional loans:
Commercial:
Commercial and industrial	350		1,596		3,340		5,286		1,938,856		1,944,142
Commercial real estate	—		582		—		582		866,431		867,013
Multifamily	356		—		—		356		2,240,890		2,241,246
SBA	551		77		862		1,490		67,251		68,741
Construction	—		939		—		939		203,037		203,976
Consumer:
Single family residential mortgage	7,321		3,160		9,198		19,679		1,461,493		1,481,172
Other consumer	3,132		573		446		4,151		63,701		67,852
Total traditional loans	11,710		6,927		13,846		32,483		6,841,659		6,874,142
Total	$	19,140	$	7,544	$	13,846	$	40,530	$	7,660,343	$	7,700,873

The following table presents non-accrual loans as of the dates indicated:



	June 30, 2019						December 31, 2018
($ in thousands)	NTM Loans		Traditional Loans		Total		NTM Loans		Traditional Loans		Total
Non-accrual loans
Commercial:
Commercial and industrial	$	—	$	5,716	$	5,716	$	—	$	5,455	$	5,455
Commercial real estate	—		—		—		—		—		—
SBA	—		3,440		3,440		—		2,574		2,574
Construction	—		2,519		2,519		—		—		—
Consumer:
Single family residential mortgage	1,113		14,836		15,949		—		12,929		12,929
Other consumer	—		875		875		—		627		627
Total non-accrual loans	$	1,113	$	27,386	$	28,499	$	—	$	21,585	$	21,585

A modification of a loan constitutes a troubled debt restructuring (TDR) when the Company, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. 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 the 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.

Troubled debt restructured loans consisted of the following as of the dates indicated:



	June 30, 2019						December 31, 2018
($ in thousands)	NTM Loans		Traditional Loans		Total		NTM Loans		Traditional Loans		Total
Commercial:
Commercial and industrial	$	—	$	16,250	$	16,250	$	—	$	2,276	$	2,276
SBA	—		1,057		1,057		—		187		187
Consumer:
Single family residential mortgage	2,653		2,419		5,072		2,668		2,596		5,264
Other consumer	294		—		294		294		—		294
Total	$	2,947	$	19,726	$	22,673	$	2,962	$	5,059	$	8,021

The following table summarizes the pre-modification and post-modification balances of the new TDRs for the periods indicated:



	Three Months Ended					Six Months Ended
($ in thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
June 30, 2019
Commercial:
Commercial and industrial	10	$	17,339	$	17,020	10	$	17,339	$	17,020
SBA	2	3,214		869		2	3,214		869
Consumer:
Single family residential mortgage	—	—		—		—	—		—
Other consumer	—	$	—	$	—	—	$	—	$	—
Total	12	20,553		17,889		12	$	20,553	$	17,889
June 30, 2018
Commercial:
Commercial and industrial	—	$	—	$	—	2	$	171	$	163
Total	—	$	—	$	—	2	$	171	$	163



	Three Months Ended
	Modification Type
	Change in Principal Payments and Interest Rates			Change in Principal Payments			Total
($ in thousands)	Count	Amount		Count	Amount		Count	Amount
June 30, 2019
Commercial:
Commercial and industrial	10	$	17,020	—	$	—	10	$	17,020
SBA	2	$	869	—	$	—	2	$	869
Total	12	$	17,889	—	$	—	12	$	17,889

June 30, 2018
Total	—	$	—	—	$	—	—	$	—



	Six Months Ended
	Modification Type
	Change in Principal Payments and Interest Rates			Change in Principal Payments			Total
($ in thousands)	Count	Amount		Count	Amount		Count	Amount
June 30, 2019
Commercial:
Commercial and industrial	10	$	17,020	—	$	—	10	$	17,020
SBA	2	$	869	—	$	—	2	$	869
Total	12	$	17,889	—	$	—	12	$	17,889

June 30, 2018
Commercial:
Commercial and industrial	—	$	—	2	$	163	2	$	163
Total	—	$	—	2	$	163	2	$	163

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, 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 individually by classifying the loans as to credit risk. This analysis includes all loans delinquent over 60 days and non-homogeneous loans such as commercial and commercial real estate loans. The Company uses the following definitions for risk ratings:

The following table presents the risk categories for total loans as of the dates indicated:



($ in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
June 30, 2019
NTM loans:
Single family residential mortgage	$	729,845	$	12,751	$	2,423	$	—	$	745,019
Other consumer	2,247		—		—		—		2,247
Total NTM loans	732,092		12,751		2,423		—		747,266
Traditional loans:
Commercial:
Commercial and industrial	1,844,472		50,702		56,533		—		1,951,707
Commercial real estate	832,173		14,519		9,805		—		856,497
Multifamily	1,581,629		11,488		5,861		—		1,598,978
SBA	66,448		4,074		9,605		802		80,929
Construction	194,842		9,172		5,015		—		209,029
Consumer:
Single family residential mortgage	1,193,532		6,017		15,980		517		1,216,046
Other consumer	57,177		471		1,470		—		59,118
Total traditional loans	5,770,273		96,443		104,269		1,319		5,972,304
Total	$	6,502,365	$	109,194	$	106,692	$	1,319	$	6,719,570

December 31, 2018
NTM loans:
Single family residential mortgage	$	811,056	$	10,966	$	2,296	$	—	$	824,318
Other consumer	2,413		—		—		—		2,413
Total NTM loans	813,469		10,966		2,296		—		826,731
Traditional loans:
Commercial:
Commercial and industrial	1,859,569		41,302		43,271		—		1,944,142
Commercial real estate	851,604		11,376		4,033		—		867,013
Multifamily	2,239,301		—		1,945		—		2,241,246
SBA	53,433		6,114		8,340		854		68,741
Construction	197,851		3,606		2,519		—		203,976
Consumer:
Single family residential mortgage	1,461,721		2,602		16,849		—		1,481,172
Other consumer	66,228		979		645		—		67,852
Total traditional loans	6,729,707		65,979		77,602		854		6,874,142
Total	$	7,543,176	$	76,945	$	79,898	$	854	$	7,700,873

From time to time, the Company purchases and sells loans in the secondary market. Certain loans are transferred from held-for-investment to held-for-sale at the lower of cost or fair value and any reductions in value on transfer are reflected as write-downs to allowance for loan losses. The Company had no purchases of loans, excluding loans held-for-sale, for the three and six months ended June 30, 2019 and 2018. The following table presents loans transferred from (to) loans held-for-sale by portfolio segment for the periods indicated:



	Three Months Ended					Six Months Ended
($ in thousands)	Transfers from Held-For-Sale		Transfers (to) Held-For-Sale			Transfers from Held-For-Sale		Transfers (to) Held-For-Sale
June 30, 2019
Commercial:
Commercial real estate	$	—	$	(573	)	$	—	$	(573	)
Multifamily	—		(752,087		)	—		(752,087		)
Consumer:
Single family residential mortgage	$	—	$	(131,315	)	$	—	$	(374,679	)
Total	$	—	$	(883,975	)	$	—	$	(1,127,339	)
June 30, 2018
Commercial:
Multifamily	$	—	$	(71,449	)	$	—	$	(71,449	)
Consumer:
Single family residential mortgage	—		(133,829		)	—		(136,013		)
Other consumer	—		—			—		(4,362		)
Total	$	—	$	(205,278	)	$	—	$	(211,824	)

Included in transfers to loans held for sale is $573.9 million in multifamily loans from loans held-for-investment related to our pending Freddie Mac multifamily securitization which is expected to close during the third quarter of 2019. The loans included in the securitization have a weighted average coupon of 3.79% and a weighted average term to initial reset of 3.5 years. The related mortgage servicing rights will also be sold.

In connection with the anticipated securitization, during the second quarter of 2019, the Company entered into interest rate swap agreements with a combined notional value of $543.4 million to offset variability in fair value of the related loans as a result of changes in market interest rates. During the three months ended June 30, 2019, the Company recognized a $9.6 million unrealized loss. The $9.6 million unrealized loss on these interest rate swaps was due to a decline in interest rates since their execution and is expected to be primarily offset by the anticipated gain in fair value of the loans sold into the securitization in the third quarter. Subsequent to June 30, 2019, this securitization was completed (refer to Note 20 — Subsequent Events for more information).