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Loans Receivable and Allowance for Loan Losses | 9 Months Ended
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Sep. 30, 2017
Receivables [Abstract] |
Loans Receivable and Allowance for Loan Losses | Loans Receivable and Allowance for Loan Losses Loans receivable at September 30, 2017 and December 31, 2016 are summarized as follows (in thousands):
|  | September 30, 2017 |  | December 31, 2016
Mortgage loans: |  |  |  |
Residential |  | $ | 1,157,311 |  |  | 1,211,672 |
Commercial |  | 2,022,576 |  |  | 1,978,569 |
Multi-family |  | 1,334,984 |  |  | 1,402,054 |
Construction |  | 324,692 |  |  | 264,814 |
Total mortgage loans |  | 4,839,563 |  |  | 4,857,109 |
Commercial loans |  | 1,708,842 |  |  | 1,630,444 |
Consumer loans |  | 481,262 |  |  | 516,755 |
Total gross loans |  | 7,029,667 |  |  | 7,004,308 |
Purchased credit-impaired ("PCI") loans |  | 991 |  |  | 1,272 |
Premiums on purchased loans |  | 4,229 |  |  | 4,968 |
Unearned discounts |  | (36 | ) |  | (39 | )
Net deferred fees |  | (6,799 | ) |  | (7,023 | )
Total loans |  | $ | 7,028,052 |  |  | 7,003,486 |
The following tables summarize the aging of loans receivable by portfolio segment and class of loans, excluding PCI loans (in thousands):
|  | September 30, 2017
|  | 30-59 Days |  | 60-89 Days |  | Non-accrual |  | Recorded Investment > 90 days accruing |  | Total Past Due |  | Current |  | Total Loans Receivable
Mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 5,973 |  |  | 3,525 |  |  | 8,820 |  |  | — |  |  | 18,318 |  |  | 1,138,993 |  |  | 1,157,311 |
Commercial |  | 608 |  |  | 292 |  |  | 8,070 |  |  | — |  |  | 8,970 |  |  | 2,013,606 |  |  | 2,022,576 |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,334,984 |  |  | 1,334,984 |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 324,692 |  |  | 324,692 |
Total mortgage loans |  | 6,581 |  |  | 3,817 |  |  | 16,890 |  |  | — |  |  | 27,288 |  |  | 4,812,275 |  |  | 4,839,563 |
Commercial loans |  | 1,870 |  |  | 244 |  |  | 17,523 |  |  | — |  |  | 19,637 |  |  | 1,689,205 |  |  | 1,708,842 |
Consumer loans |  | 2,307 |  |  | 1,080 |  |  | 2,035 |  |  | — |  |  | 5,422 |  |  | 475,840 |  |  | 481,262 |
Total gross loans |  | $ | 10,758 |  |  | 5,141 |  |  | 36,448 |  |  | — |  |  | 52,347 |  |  | 6,977,320 |  |  | 7,029,667 |
|  | December 31, 2016
|  | 30-59 Days |  | 60-89 Days |  | Non-accrual |  | Recorded Investment > 90 days accruing |  | Total Past Due |  | Current |  | Total Loans Receivable
Mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 5,891 |  |  | 6,563 |  |  | 12,021 |  |  | — |  |  | 24,475 |  |  | 1,187,197 |  |  | 1,211,672 |
Commercial |  | — |  |  | 80 |  |  | 7,493 |  |  | — |  |  | 7,573 |  |  | 1,970,996 |  |  | 1,978,569 |
Multi-family |  | — |  |  | — |  |  | 553 |  |  | — |  |  | 553 |  |  | 1,401,501 |  |  | 1,402,054 |
Construction |  | — |  |  | — |  |  | 2,517 |  |  | — |  |  | 2,517 |  |  | 262,297 |  |  | 264,814 |
Total mortgage loans |  | 5,891 |  |  | 6,643 |  |  | 22,584 |  |  | — |  |  | 35,118 |  |  | 4,821,991 |  |  | 4,857,109 |
Commercial loans |  | 1,656 |  |  | 357 |  |  | 16,787 |  |  | — |  |  | 18,800 |  |  | 1,611,644 |  |  | 1,630,444 |
Consumer loans |  | 2,561 |  |  | 1,199 |  |  | 3,030 |  |  | — |  |  | 6,790 |  |  | 509,965 |  |  | 516,755 |
Total gross loans |  | $ | 10,108 |  |  | 8,199 |  |  | 42,401 |  |  | — |  |  | 60,708 |  |  | 6,943,600 |  |  | 7,004,308 |
Included in loans receivable are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The principal amounts of these non-accrual loans were $36.4 million and $42.4 million at September 30, 2017 and December 31, 2016, respectively. Included in non-accrual loans were $9.1 million and $7.3 million of loans which were less than 90 days past due at September 30, 2017 and December 31, 2016, respectively. There were no loans 90 days or greater past due and still accruing interest at September 30, 2017 or December 31, 2016. The Company defines an impaired loan as a non-homogeneous loan greater than $1.0 million for which it is probable, based on current information, all amounts due under the contractual terms of the loan agreement will not be collected. Impaired loans also include all loans modified as troubled debt restructurings (“TDRs”). A loan is deemed to be a TDR when a loan modification resulting in a concession is made in an effort to mitigate potential loss arising from a borrower’s financial difficulty. Smaller balance homogeneous loans, including residential mortgages and other consumer loans, are evaluated collectively for impairment and are excluded from the definition of impaired loans, unless modified as TDRs. The Company separately calculates the reserve for loan losses on impaired loans. The Company may recognize impairment of a loan based upon: (1) the present value of expected cash flows discounted at the effective interest rate; (2) if a loan is collateral dependent, the fair value of collateral; or (3) the fair value of the loan. Additionally, if impaired loans have risk characteristics in common, those loans may be aggregated and historical statistics may be used as a means of measuring those impaired loans. The Company uses third-party appraisals to determine the fair value of the underlying collateral in its analysis of collateral dependent impaired loans. A third-party appraisal is generally ordered as soon as a loan is designated as a collateral dependent impaired loan and is updated annually or more frequently, if required. A specific allocation of the allowance for loan losses is established for each collateral dependent impaired loan with a carrying balance greater than the collateral’s fair value, less estimated costs to sell. Charge-offs are generally taken for the amount of the specific allocation when operations associated with the respective property cease and it is determined that collection of amounts due will be derived primarily from the disposition of the collateral. At each quarter end, if a loan is designated as a collateral dependent impaired loan and the third-party appraisal has not yet been received, an evaluation of all available collateral is made using the best information available at the time, including rent rolls, borrower financial statements and tax returns, prior appraisals, management’s knowledge of the market and collateral, and internally prepared collateral valuations based upon market assumptions regarding vacancy and capitalization rates, each as and where applicable. Once the appraisal is received and reviewed, the specific reserves are adjusted to reflect the appraised value. The Company believes there have been no significant time lapses in the recognition of changes in collateral values as a result of this process. At September 30, 2017, there were 145 impaired loans totaling $50.2 million. Included in this total were 126 TDRs related to 122 borrowers totaling $31.7 million that were performing in accordance with their restructured terms and which continued to accrue interest at September 30, 2017. At December 31, 2016, there were 141 impaired loans totaling $52.0 million. Included in this total were 114 TDRs to 110 borrowers totaling $29.9 million that were performing in accordance with their restructured terms and which continued to accrue interest at December 31, 2016. The following table summarizes loans receivable by portfolio segment and impairment method, excluding PCI loans (in thousands):
|  | September 30, 2017
|  | Mortgage loans |  | Commercial loans |  | Consumer loans |  | Total Portfolio Segments
Individually evaluated for impairment |  | $ | 28,578 |  |  | 19,393 |  |  | 2,210 |  |  | 50,181 |
Collectively evaluated for impairment |  | 4,810,985 |  |  | 1,689,449 |  |  | 479,052 |  |  | 6,979,486 |
Total gross loans |  | $ | 4,839,563 |  |  | 1,708,842 |  |  | 481,262 |  |  | 7,029,667 |
|  | December 31, 2016
|  | Mortgage loans |  | Commercial loans |  | Consumer loans |  | Total Portfolio Segments
Individually evaluated for impairment |  | $ | 29,551 |  |  | 20,255 |  |  | 2,213 |  |  | 52,019 |
Collectively evaluated for impairment |  | 4,827,558 |  |  | 1,610,189 |  |  | 514,542 |  |  | 6,952,289 |
Total gross loans |  | $ | 4,857,109 |  |  | 1,630,444 |  |  | 516,755 |  |  | 7,004,308 |
The allowance for loan losses is summarized by portfolio segment and impairment classification as follows (in thousands):
|  | September 30, 2017
|  | Mortgage loans |  | Commercial loans |  | Consumer loans |  | Total
Individually evaluated for impairment |  | $ | 1,773 |  |  | 1,028 |  |  | 71 |  |  | 2,872 |
Collectively evaluated for impairment |  | 24,724 |  |  | 30,423 |  |  | 2,257 |  |  | 57,404 |
Total gross loans |  | $ | 26,497 |  |  | 31,451 |  |  | 2,328 |  |  | 60,276 |
|  | December 31, 2016
|  | Mortgage loans |  | Commercial loans |  | Consumer loans |  | Total
Individually evaluated for impairment |  | $ | 1,986 |  |  | 268 |  |  | 80 |  |  | 2,334 |
Collectively evaluated for impairment |  | 27,640 |  |  | 28,875 |  |  | 3,034 |  |  | 59,549 |
Total gross loans |  | $ | 29,626 |  |  | 29,143 |  |  | 3,114 |  |  | 61,883 |
Loan modifications to borrowers experiencing financial difficulties that are considered TDRs primarily involve lowering the monthly payments on such loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods. These modifications generally do not result in the forgiveness of principal or accrued interest. In addition, the Company attempts to obtain additional collateral or guarantor support when modifying such loans. If the borrower has demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible. The following tables present the number of loans modified as TDRs during the three and nine months ended September 30, 2017 and 2016, along with their balances immediately prior to the modification date and post-modification as of September 30, 2017 and 2016. There were no loans modified as TDRs during the three and nine months ended September 30, 2016.
|  | For the three months ended
|  | September 30, 2017 |  | September 30, 2016
Troubled Debt Restructurings |  | 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
|  | ($ in thousands)
Mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | 2 |  |  | $ | 632 |  |  | $ | 470 |  |  | — |  |  | $ | — |  |  | $ | — |
Total mortgage loans |  | 2 |  |  | 632 |  |  | 470 |  |  | — |  |  | — |  |  | — |
Total restructured loans |  | 2 |  |  | $ | 632 |  |  | $ | 470 |  |  | — |  |  | $ | — |  |  | $ | — |
|  | For the nine months ended
|  | September 30, 2017 |  | September 30, 2016
Troubled Debt Restructurings |  | 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
|  | ($ in thousands)
Mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | 7 |  |  | $ | 3,436 |  |  | $ | 3,202 |  |  | — |  |  | $ | — |  |  | $ | — |
Total mortgage loans |  | 7 |  |  | 3,436 |  |  | 3,202 |  |  | — |  |  | — |  |  | — |
Commercial loans |  | 1 |  |  | 1,300 |  |  | 1,210 |  |  | — |  |  | — |  |  | — |
Consumer loans |  | 1 |  |  | 70 |  |  | 68 |  |  | — |  |  | — |  |  | — |
Total restructured loans |  | 9 |  |  | $ | 4,806 |  |  | $ | 4,480 |  |  | — |  |  | $ | — |  |  | $ | — |
All TDRs are impaired loans, which are individually evaluated for impairment, as previously discussed. During the three and nine months ended September 30, 2017, $3.2 million and $4.4 million of charge-offs were recorded on collateral dependent impaired loans. There were no charge-offs recorded on collateral dependent impaired loans for the same periods last year. For the three and nine months ended September 30, 2017, the allowance for loan losses associated with the TDRs presented in the preceding tables totaled $0 and $120,000, respectively, and were included in the allowance for loan losses for loans individually evaluated for impairment. For the three and nine months ended September 30, 2017, the TDRs presented in the preceding tables had a weighted average modified interest rate of approximately 4.36% and 4.02%, respectively, compared to a weighted average rate of 4.33% and 3.93% prior to modification, respectively.
There were no payment defaults (90 days or more past due) for loans modified as TDRs within the 12 month periods ending September 30, 2017 and 2016. TDRs that subsequently default are considered collateral dependent impaired loans and are evaluated for impairment based on the estimated fair value of the underlying collateral less expected selling costs. PCI loans are loans acquired at a discount primarily due to deteriorated credit quality. As part of the May 30, 2014 acquisition of Team Capital, $5.2 million of the loans acquired were determined to be PCI loans. At the date of acquisition, PCI loans were accounted for at fair value, based upon the then present value of expected future cash flows, with no related allowance for loan losses. PCI loans totaled $1.0 million at September 30, 2017 and $1.3 million at December 31, 2016. The following table summarizes the changes in the accretable yield for PCI loans during 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 | $ | 158 |  |  | 328 |  |  | 200 |  |  | 676 |
Accretion | (154 | ) |  | (225 | ) |  | (299 | ) |  | (1,065 | )
Reclassification from non-accretable discount | 99 |  |  | 209 |  |  | 202 |  |  | 701 |
Ending balance | $ | 103 |  |  | 312 |  |  | 103 |  |  | 312 |
The activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2017 and 2016 was as follows (in thousands):
Three months ended September 30, |  | Mortgage loans |  | Commercial loans |  | Consumer loans |  | Total Portfolio Segments |  | Unallocated |  | Total
2017 |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | 28,826 |  |  | 31,085 |  |  | 2,951 |  |  | 62,862 |  |  | — |  |  | 62,862 |
Provision charged (credited) to operations |  | (2,301 | ) |  | 3,446 |  |  | (645 | ) |  | 500 |  |  | — |  |  | 500 |
Recoveries of loans previously charged-off |  | 4 |  |  | 140 |  |  | 291 |  |  | 435 |  |  | — |  |  | 435 |
Loans charged-off |  | (32 | ) |  | (3,220 | ) |  | (269 | ) |  | (3,521 | ) |  | — |  |  | (3,521 | )
Balance at end of period |  | $ | 26,497 |  |  | 31,451 |  |  | 2,328 |  |  | 60,276 |  |  | — |  |  | 60,276 |
2016 |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | 31,634 |  |  | 26,299 |  |  | 3,000 |  |  | 60,933 |  |  | — |  |  | 60,933 |
Provision charged (credited) to operations |  | (1,599 | ) |  | 2,378 |  |  | 221 |  |  | 1,000 |  |  | — |  |  | 1,000 |
Recoveries of loans previously charged-off |  | 2 |  |  | 68 |  |  | 160 |  |  | 230 |  |  | — |  |  | 230 |
Loans charged-off |  | (383 | ) |  | (506 | ) |  | (186 | ) |  | (1,075 | ) |  | — |  |  | (1,075 | )
Balance at end of period |  | $ | 29,654 |  |  | 28,239 |  |  | 3,195 |  |  | 61,088 |  |  | — |  |  | 61,088 |
Nine months ended September 30, |  | Mortgage loans |  | Commercial loans |  | Consumer loans |  | Total Portfolio Segments |  | Unallocated |  | Total
2017 |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | 29,626 |  |  | 29,143 |  |  | 3,114 |  |  | 61,883 |  |  | — |  |  | 61,883 |
Provision charged (credited) to operations |  | (2,724 | ) |  | 6,840 |  |  | (416 | ) |  | 3,700 |  |  | — |  |  | 3,700 |
Recoveries of loans previously charged-off |  | 65 |  |  | 671 |  |  | 692 |  |  | 1,428 |  |  | — |  |  | 1,428 |
Loans charged-off |  | (470 | ) |  | (5,203 | ) |  | (1,062 | ) |  | (6,735 | ) |  | — |  |  | (6,735 | )
Balance at end of period |  | $ | 26,497 |  |  | 31,451 |  |  | 2,328 |  |  | 60,276 |  |  | — |  |  | 60,276 |
2016 |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | 32,094 |  |  | 25,829 |  |  | 3,501 |  |  | 61,424 |  |  | — |  |  | 61,424 |
Provision charged (credited) to operations |  | (2,294 | ) |  | 6,647 |  |  | (153 | ) |  | 4,200 |  |  | — |  |  | 4,200 |
Recoveries of loans previously charged-off |  | 575 |  |  | 351 |  |  | 697 |  |  | 1,623 |  |  | — |  |  | 1,623 |
Loans charged-off |  | (721 | ) |  | (4,588 | ) |  | (850 | ) |  | (6,159 | ) |  | — |  |  | (6,159 | )
Balance at end of period |  | $ | 29,654 |  |  | 28,239 |  |  | 3,195 |  |  | 61,088 |  |  | — |  |  | 61,088 |
The following table presents loans individually evaluated for impairment by class and loan category, excluding PCI loans (in thousands):
|  | September 30, 2017 |  | December 31, 2016
|  | Unpaid Principal Balance |  | Recorded Investment |  | Related Allowance |  | Average Recorded Investment |  | Interest Income Recognized |  | Unpaid Principal Balance |  | Recorded Investment |  | Related Allowance |  | Average Recorded Investment |  | Interest Income Recognized
Loans with no related allowance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 13,035 |  |  | 10,277 |  |  | — |  |  | 10,391 |  |  | 340 |  |  | 10,691 |  |  | 7,881 |  |  | — |  |  | 8,027 |  |  | 484 |
Commercial |  | 4,600 |  |  | 4,472 |  |  | — |  |  | 4,496 |  |  | — |  |  | 1,556 |  |  | 1,556 |  |  | — |  |  | 1,586 |  |  | 40 |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,553 |  |  | 2,517 |  |  | — |  |  | 2,514 |  |  | — |
Total |  | 17,635 |  |  | 14,749 |  |  | — |  |  | 14,887 |  |  | 340 |  |  | 14,800 |  |  | 11,954 |  |  | — |  |  | 12,127 |  |  | 524 |
Commercial loans |  | 17,505 |  |  | 13,884 |  |  | — |  |  | 13,954 |  |  | 280 |  |  | 21,830 |  |  | 18,874 |  |  | — |  |  | 13,818 |  |  | 259 |
Consumer loans |  | 1,606 |  |  | 1,067 |  |  | — |  |  | 1,186 |  |  | 51 |  |  | 1,493 |  |  | 981 |  |  | — |  |  | 1,026 |  |  | 59 |
Total impaired loans |  | $ | 36,746 |  |  | 29,700 |  |  | — |  |  | 30,027 |  |  | 671 |  |  | 38,123 |  |  | 31,809 |  |  | — |  |  | 26,971 |  |  | 842 |
Loans with an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 13,803 |  |  | 12,759 |  |  | 1,633 |  |  | 12,873 |  |  | 374 |  |  | 14,169 |  |  | 13,520 |  |  | 1,716 |  |  | 13,705 |  |  | 519 |
Commercial |  | 1,071 |  |  | 1,070 |  |  | 140 |  |  | 1,083 |  |  | 40 |  |  | 4,138 |  |  | 4,077 |  |  | 270 |  |  | 4,111 |  |  | 55 |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | 14,874 |  |  | 13,829 |  |  | 1,773 |  |  | 13,956 |  |  | 414 |  |  | 18,307 |  |  | 17,597 |  |  | 1,986 |  |  | 17,816 |  |  | 574 |
Commercial loans |  | 6,158 |  |  | 5,509 |  |  | 1,028 |  |  | 6,045 |  |  | 52 |  |  | 1,381 |  |  | 1,381 |  |  | 268 |  |  | 5,956 |  |  | 4 |
Consumer loans |  | 1,154 |  |  | 1,143 |  |  | 71 |  |  | 1,170 |  |  | 47 |  |  | 1,242 |  |  | 1,232 |  |  | 80 |  |  | 1,259 |  |  | 66 |
Total impaired loans |  | $ | 22,186 |  |  | 20,481 |  |  | 2,872 |  |  | 21,171 |  |  | 513 |  |  | 20,930 |  |  | 20,210 |  |  | 2,334 |  |  | 25,031 |  |  | 644 |
Total impaired loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 26,838 |  |  | 23,036 |  |  | 1,633 |  |  | 23,264 |  |  | 714 |  |  | 24,860 |  |  | 21,401 |  |  | 1,716 |  |  | 21,732 |  |  | 1,003 |
Commercial |  | 5,671 |  |  | 5,542 |  |  | 140 |  |  | 5,579 |  |  | 40 |  |  | 5,694 |  |  | 5,633 |  |  | 270 |  |  | 5,697 |  |  | 95 |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,553 |  |  | 2,517 |  |  | — |  |  | 2,514 |  |  | — |
Total |  | 32,509 |  |  | 28,578 |  |  | 1,773 |  |  | 28,843 |  |  | 754 |  |  | 33,107 |  |  | 29,551 |  |  | 1,986 |  |  | 29,943 |  |  | 1,098 |
Commercial loans |  | 23,663 |  |  | 19,393 |  |  | 1,028 |  |  | 19,999 |  |  | 332 |  |  | 23,211 |  |  | 20,255 |  |  | 268 |  |  | 19,774 |  |  | 263 |
Consumer loans |  | 2,760 |  |  | 2,210 |  |  | 71 |  |  | 2,356 |  |  | 98 |  |  | 2,735 |  |  | 2,213 |  |  | 80 |  |  | 2,285 |  |  | 125 |
Total impaired loans |  | $ | 58,932 |  |  | 50,181 |  |  | 2,872 |  |  | 51,198 |  |  | 1,184 |  |  | 59,053 |  |  | 52,019 |  |  | 2,334 |  |  | 52,002 |  |  | 1,486 |
Specific allocations of the allowance for loan losses attributable to impaired loans totaled $2.9 million at September 30, 2017 and $2.3 million at December 31, 2016. At September 30, 2017 and December 31, 2016, impaired loans for which there was no related allowance for loan losses totaled $29.7 million and $31.8 million, respectively. The average balance of impaired loans for the nine months ended September 30, 2017 was $51.2 million. The Company utilizes an internal nine-point risk rating system to summarize its loan portfolio into categories with similar risk characteristics. Loans deemed to be “acceptable quality” are rated 1 through 4, with a rating of 1 established for loans with minimal risk. Loans that are deemed to be of “questionable quality” are rated 5 (watch) or 6 (special mention). Loans with adverse classifications (substandard, doubtful or loss) are rated 7, 8 or 9, respectively. Commercial mortgage, commercial, multi-family and construction loans are rated individually, and each lending officer is responsible for risk rating loans in their portfolio. These risk ratings are then reviewed by the department manager and/or the Chief Lending Officer and by the Credit Department. The risk ratings are also confirmed through periodic loan review examinations, which are currently performed by an independent third-party. Reports by the independent third-party are presented directly to the Audit Committee of the Board of Directors. Loans receivable by credit quality risk rating indicator, excluding PCI loans, are as follows (in thousands):
|  | At September 30, 2017
|  | Residential |  | Commercial mortgage |  | Multi- family |  | Construction |  | Total mortgages |  | Commercial |  | Consumer |  | Total loans
Special mention |  | $ | 3,525 |  |  | 19,437 |  |  | 16 |  |  | — |  |  | 22,978 |  |  | 26,156 |  |  | 1,080 |  |  | 50,214 |
Substandard |  | 8,820 |  |  | 25,633 |  |  | — |  |  | — |  |  | 34,453 |  |  | 30,361 |  |  | 2,034 |  |  | 66,848 |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 771 |  |  | — |  |  | 771 |
Loss |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total classified and criticized |  | 12,345 |  |  | 45,070 |  |  | 16 |  |  | — |  |  | 57,431 |  |  | 57,288 |  |  | 3,114 |  |  | 117,833 |
Pass/Watch |  | 1,144,966 |  |  | 1,977,506 |  |  | 1,334,968 |  |  | 324,692 |  |  | 4,782,132 |  |  | 1,651,554 |  |  | 478,148 |  |  | 6,911,834 |
Total |  | $ | 1,157,311 |  |  | 2,022,576 |  |  | 1,334,984 |  |  | 324,692 |  |  | 4,839,563 |  |  | 1,708,842 |  |  | 481,262 |  |  | 7,029,667 |
|  | At December 31, 2016
|  | Residential |  | Commercial mortgage |  | Multi- family |  | Construction |  | Total mortgages |  | Commercial |  | Consumer |  | Total loans
Special mention |  | $ | 6,563 |  |  | 25,329 |  |  | 563 |  |  | — |  |  | 32,455 |  |  | 14,840 |  |  | 1,242 |  |  | 48,537 |
Substandard |  | 12,021 |  |  | 23,011 |  |  | 553 |  |  | 2,517 |  |  | 38,102 |  |  | 47,255 |  |  | 2,940 |  |  | 88,297 |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Loss |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total classified and criticized |  | 18,584 |  |  | 48,340 |  |  | 1,116 |  |  | 2,517 |  |  | 70,557 |  |  | 62,095 |  |  | 4,182 |  |  | 136,834 |
Pass/Watch |  | 1,193,088 |  |  | 1,930,229 |  |  | 1,400,938 |  |  | 262,297 |  |  | 4,786,552 |  |  | 1,568,349 |  |  | 512,573 |  |  | 6,867,474 |
Total |  | $ | 1,211,672 |  |  | 1,978,569 |  |  | 1,402,054 |  |  | 264,814 |  |  | 4,857,109 |  |  | 1,630,444 |  |  | 516,755 |  |  | 7,004,308 |

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