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Loans and Leases Receivable and Allowance for Loan and Lease Losses

3 Months Ended

Mar. 31, 2019

Loans and Leases Receivable and Allowance for Loan and Lease Losses

LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR LOAN AND LEASE LOSSES

The following table presents loans and leases receivable as of March 31, 2019 and December 31, 2018.



(amounts in thousands)	March 31, 2019			December 31, 2018
Loans receivable, mortgage warehouse, at fair value	$	1,480,195		$	1,405,420
Loans receivable:
Commercial:
Multi-family	3,212,312			3,285,297
Commercial and industrial (including owner occupied commercial real estate) ⁽¹⁾	2,038,229			1,951,277
Commercial real estate non-owner occupied	1,107,336			1,125,106
Construction	53,372			56,491
Total commercial loans and leases receivable	6,411,249			6,418,171
Consumer:
Residential real estate	625,066			566,561
Manufactured housing	77,778			79,731
Other	153,153			74,035
Total consumer loans receivable	855,997			720,327
Loans and leases receivable	7,267,246			7,138,498
Deferred (fees) costs and unamortized (discounts) premiums, net	(3,197		)	(424		)
Allowance for loan and lease losses	(43,679		)	(39,972		)
Total loans and leases receivable, net of allowance for loan and lease losses	$	8,700,565		$	8,503,522


(1)	Includes direct finance equipment leases of $56.4 million and $54.5 million at March 31, 2019 and December 31, 2018, respectively.

Customers' total loans and leases receivable portfolio includes loans receivable which are reported at fair value based on an election made to account for these loans at fair value and loans and leases receivable which are predominately reported at their outstanding unpaid principal balance, net of charge-offs and deferred costs and fees and unamortized premiums and discounts and are evaluated for impairment.

Loans receivable, mortgage warehouse, at fair value:

Mortgage warehouse loans consist of commercial loans to mortgage companies. These mortgage warehouse lending transactions are subject to master repurchase agreements. As a result of the contractual provisions, for accounting purposes control of the underlying mortgage loan has not transferred and the rewards and risks of the mortgage loans are not assumed by Customers. The mortgage warehouse loans receivable are designated as loans held for investment and reported at fair value based on an election made to account for the loans at fair value. Pursuant to the agreements, Customers funds the pipelines for these mortgage lenders by sending payments directly to the closing agents for funded mortgage loans and receives proceeds directly from third party investors when the underlying mortgage loans are sold into the secondary market. The fair value of the mortgage warehouse loans is estimated as the amount of cash initially advanced to fund the mortgage, plus accrued interest and fees, as specified in the respective agreements. The interest rates on these loans are variable, and the lending transactions are short-term, with an average life of 20 days from purchase to sale. The primary goal of these lending transactions is to provide liquidity to mortgage companies.

At March 31, 2019 and December 31, 2018, all of Customers' commercial mortgage warehouse loans were current in terms of payment. As these loans are reported at their fair value, they do not have an allowance for loan and lease loss and are therefore excluded from ALLL related disclosures.

Loans and leases receivable:

The following tables summarize loans receivable by loan type and performance status as of March 31, 2019 and December 31, 2018:



	March 31, 2019
(amounts in thousands)	30-89 Days Past Due ⁽¹⁾		90 Days or More Past Due ⁽¹⁾		Total Past Due ⁽¹⁾		Non-Accrual		Current ⁽²⁾		Purchased-Credit-Impaired Loans ⁽³⁾		Total Loans and Leases ⁽⁴⁾
Multi-family	$	3,794	$	—	$	3,794	$	1,997	$	3,204,879	$	1,642	$	3,212,312
Commercial and industrial	1,271		—		1,271		12,225		1,441,679		417		1,455,592
Commercial real estate owner occupied	3,566		—		3,566		839		570,380		7,852		582,637
Commercial real estate non-owner occupied	1,976		—		1,976		102		1,101,129		4,129		1,107,336
Construction	—		—		—		—		53,372		—		53,372
Residential real estate	5,612		—		5,612		5,574		609,874		4,006		625,066
Manufactured housing ⁽⁵⁾	3,686		1,936		5,622		1,924		68,362		1,870		77,778
Other consumer	491		—		491		108		152,348		206		153,153
Total	$	20,396	$	1,936	$	22,332	$	22,769	$	7,202,023	$	20,122	$	7,267,246

	December 31, 2018
(amounts in thousands)	30-89 Days Past Due ⁽¹⁾		90 Days or More Past Due ⁽¹⁾		Total Past Due ⁽¹⁾		Non-Accrual		Current ⁽²⁾		Purchased-Credit-Impaired Loans ⁽³⁾		Total Loans and Leases ⁽⁴⁾
Multi-family	$	—	$	—	$	—	$	1,155	$	3,282,452	$	1,690	$	3,285,297
Commercial and industrial	1,914		—		1,914		17,764		1,353,586		536		1,373,800
Commercial real estate owner occupied	193		—		193		1,037		567,809		8,438		577,477
Commercial real estate non-owner occupied	1,190		—		1,190		129		1,119,443		4,344		1,125,106
Construction	—		—		—		—		56,491		—		56,491
Residential real estate	5,940		—		5,940		5,605		550,679		4,337		566,561
Manufactured housing ⁽⁵⁾	3,926		2,188		6,114		1,693		69,916		2,008		79,731
Other consumer	200		—		200		111		73,503		221		74,035
Total	$	13,363	$	2,188	$	15,551	$	27,494	$	7,073,879	$	21,574	$	7,138,498


(1)	Includes past due loans and leases that are accruing interest because collection is considered probable.


(2)	Loans and leases where next payment due is less than 30 days from the report date.

(3)

Purchased-credit-impaired loans aggregated into a pool are accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, and the past due status of the pools, or that of the individual loans within the pools, is not meaningful. Due to the credit impaired nature of the loans, the loans are recorded at a discount reflecting estimated future cash flows and the Bank recognizes interest income on each pool of loans reflecting the estimated yield and passage of time. Such loans are considered to be performing. Purchased-credit-impaired loans that are not in pools accrete interest when the timing and amount of their expected cash flows are reasonably estimable, and are reported as performing loans.


(4)	Amounts exclude deferred costs and fees, unamortized premiums and discounts, and the ALLL.


(5)	Manufactured housing loans purchased in 2010 are supported by cash reserves held at the Bank that are used to fund past-due payments when the loan becomes 90 days or more delinquent.

As of March 31, 2019 and December 31, 2018, the Bank had $0.4 million and $0.2 million, respectively, of residential real estate held in OREO. As of March 31, 2019 and December 31, 2018, the Bank had initiated foreclosure proceedings on $1.4 million and $2.1 million, respectively, in loans secured by residential real estate.

Allowance for loan and lease losses

The changes in the ALLL for the three months ended March 31, 2019 and 2018, and the loans and ALLL by loan type based on impairment-evaluation method as of March 31, 2019 and December 31, 2018 are presented in the tables below.



Three Months Ended March 31, 2019	Multi-family			Commercial and Industrial		Commercial Real Estate Owner Occupied			Commercial Real Estate Non-Owner Occupied			Construction			Residential Real Estate			Manufactured Housing			Other Consumer			Total
(amounts in thousands)
Ending Balance, December 31, 2018	$	11,462		$	12,145	$	3,320		$	6,093		$	624		$	3,654		$	145		$	2,529		$	39,972
Charge-offs	(541		)	—		(8		)	—			—			(40		)	—			(755		)	(1,344		)
Recoveries	—			119		128			—			6			7			—			24			284
Provision for loan and lease losses	(291		)	383		(15		)	(78		)	(46		)	2,951			(28		)	1,891			4,767
Ending Balance, March 31, 2019	$	10,630		$	12,647	$	3,425		$	6,015		$	584		$	6,572		$	117		$	3,689		$	43,679

As of March 31, 2019
Loans and leases receivable:
Individually evaluated for impairment	$	1,997		$	17,411	$	867		$	102		$	—		$	8,567		$	10,307		$	108		$	39,359
Collectively evaluated for impairment	3,208,673			1,437,764		573,918			1,103,105			53,372			612,493			65,601			152,839			7,207,765
Loans acquired with credit deterioration	1,642			417		7,852			4,129			—			4,006			1,870			206			20,122
Total loans and leases receivable	$	3,212,312		$	1,455,592	$	582,637		$	1,107,336		$	53,372		$	625,066		$	77,778		$	153,153		$	7,267,246
Allowance for loan and lease losses:
Individually evaluated for impairment	$	—		$	263	$	36		$	—		$	—		$	78		$	3		$	—		$	380
Collectively evaluated for impairment	10,630			12,116		3,389			4,019			584			6,105			89			3,537			40,469
Loans acquired with credit deterioration	—			268		—			1,996			—			389			25			152			2,830
Total allowance for loan and lease losses	$	10,630		$	12,647	$	3,425		$	6,015		$	584		$	6,572		$	117		$	3,689		$	43,679



Three Months Ended March 31, 2018	Multi-family		Commercial and Industrial			Commercial Real Estate Owner Occupied			Commercial Real Estate Non-Owner Occupied			Construction			Residential Real Estate			Manufactured Housing			Other Consumer			Total
(amounts in thousands)
Ending Balance, December 31, 2017	$	12,168	$	10,918		$	3,232		$	7,437		$	979		$	2,929		$	180		$	172		$	38,015
Charge-offs	—		(50		)	(18		)	—			—			(365		)	—			(256		)	(689		)
Recoveries	—		35			—			—			11			7			—			3			56
Provision for loan and lease losses	377		834			311			(204		)	(69		)	608			(4		)	264			2,117
Ending Balance, March 31, 2018	$	12,545	$	11,737		$	3,525		$	7,233		$	921		$	3,179		$	176		$	183		$	39,499
As of December 31, 2018
Loans and leases receivable:
Individually evaluated for impairment	$	1,155	$	17,828		$	1,069		$	129		$	—		$	8,631		$	10,195		$	111		$	39,118
Collectively evaluated for impairment	3,282,452		1,355,436			567,970			1,120,633			56,491			553,593			67,528			73,703			7,077,806
Loans acquired with credit deterioration	1,690		536			8,438			4,344			—			4,337			2,008			221			21,574
Total loans and leases receivable	$	3,285,297	$	1,373,800		$	577,477		$	1,125,106		$	56,491		$	566,561		$	79,731		$	74,035		$	7,138,498
Allowance for loan and lease losses:
Individually evaluated for impairment	$	539	$	261		$	1		$	—		$	—		$	41		$	3		$	—		$	845
Collectively evaluated for impairment	10,923		11,516			3,319			4,161			624			3,227			89			2,390			36,249
Loans acquired with credit deterioration	—		368			—			1,932			—			386			53			139			2,878
Total allowance for loan and lease losses	$	11,462	$	12,145		$	3,320		$	6,093		$	624		$	3,654		$	145		$	2,529		$	39,972

Certain manufactured housing loans were purchased in August 2010. A portion of the purchase price may be used to reimburse the Bank under the specified terms in the purchase agreement for defaults of the underlying borrower and other specified items. At both March 31, 2019 and December 31, 2018, funds available for reimbursement, if necessary, were $0.5 million. Each quarter, these funds are evaluated to determine if they would be sufficient to absorb the probable incurred losses within the manufactured housing portfolio.

Impaired Loans - Individually Evaluated for Impairment

The following tables present the recorded investment (net of charge-offs), unpaid principal balance, and related allowance by loan type for impaired loans that were individually evaluated for impairment as of March 31, 2019 and December 31, 2018 and the average recorded investment and interest income recognized for the three months ended March 31, 2019 and 2018. Customers did not have any impaired lease receivables as of March 31, 2019 and December 31, 2018, respectively. Purchased-credit-impaired loans are considered to be performing and are not included in the tables below.



	March 31, 2019						Three Months Ended March 31, 2019
(amounts in thousands)	Recorded Investment Net of Charge-Offs		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Multi-family	$	1,997	$	2,538	$	—	$	998	$	—
Commercial and industrial	11,185		12,749		—		12,422		2
Commercial real estate owner occupied	556		1,103		—		796		21
Commercial real estate non-owner occupied	102		214		—		115		—
Residential real estate	4,722		5,044		—		4,782		—
Manufactured housing	10,140		10,140		—		10,084		115
Other consumer	108		108		—		110		—
With an allowance recorded:
Multi-family	—		—		—		578		—
Commercial and industrial	6,226		6,409		263		5,197		39
Commercial real estate owner occupied	311		498		36		172		1
Residential real estate	3,845		3,845		78		3,817		26
Manufactured housing	167		167		3		168		2
Total	$	39,359	$	42,815	$	380	$	39,239	$	206



	December 31, 2018						Three Months Ended March 31, 2018
(amounts in thousands)	Recorded Investment Net of Charge-Offs		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial	$	13,660	$	15,263	$	—	$	7,484	$	—
Commercial real estate owner occupied	1,037		1,766		—		710		—
Commercial real estate non-owner occupied	129		241		—		201		—
Residential real estate	4,842		5,128		—		3,623		—
Manufactured housing	10,027		10,027		—		9,876		131
Other consumer	111		111		—		63		—
With an allowance recorded:
Multi-family	1,155		1,155		539		—		—
Commercial and industrial	4,168		4,351		261		8,390		1
Commercial real estate owner occupied	32		32		1		756		1
Residential real estate	3,789		3,789		41		5,122		25
Manufactured housing	168		168		3		223		—
Total	$	39,118	$	42,031	$	845	$	36,448	$	158

Troubled Debt Restructurings

At March 31, 2019 and December 31, 2018, there were $19.6 million and $19.2 million, respectively, in loans reported as TDRs. TDRs are reported as impaired loans in the calendar year of their restructuring and are evaluated to determine whether they should be placed on non-accrual status. In subsequent years, a TDR may be returned to accrual status if it satisfies a minimum performance requirement of six months, however, it will remain classified as impaired. Generally, the Bank requires sustained performance for nine months before returning a TDR to accrual status. Modifications of PCI loans that are accounted for within loan pools in accordance with the accounting standards for PCI loans do not result in the removal of these loans from the pool even if the modifications would otherwise be considered a TDR. Accordingly, as each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, modifications of loans within such pools are not considered TDRs. Customers did not have any TDR lease receivables as of March 31, 2019 and December 31, 2018, respectively.

The following table presents total TDRs based on loan type and accrual status at March 31, 2019 and December 31, 2018. Nonaccrual TDRs are included in the reported amount of total non-accrual loans.



	March 31, 2019						December 31, 2018
(amounts in thousands)	Accruing TDRs		Nonaccrual TDRs		Total		Accruing TDRs		Nonaccrual TDRs		Total
Commercial and industrial	$	5,186	$	471	$	5,657	$	64	$	5,273	$	5,337
Commercial real estate owner occupied	28		—		28		32		—		32
Residential real estate	2,993		723		3,716		3,026		667		3,693
Manufactured housing	8,383		1,850		10,233		8,502		1,620		10,122
Other consumer	—		11		11		—		12		12
Total TDRs	$	16,590	$	3,055	$	19,645	$	11,624	$	7,572	$	19,196

The following table presents loans modified in a TDR by type of concession for the three months ended March 31, 2019 and 2018. There were no modifications that involved forgiveness of debt for the three months ended March 31, 2019 and 2018.



	Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
(dollars in thousands)	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
Extensions of maturity	2	$	514	—	$	—
Interest-rate reductions	10	385		9	322
Total	12	$	899	9	$	322

The following table provides, by loan type, the number of loans modified in TDRs and the related recorded investment for the three months ended March 31, 2019 and 2018.



	Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
(dollars in thousands)	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
Commercial and industrial	1	$	431	—	$	—
Manufactured housing	10	385		9	322
Residential real estate	1	83		—	—
Total loans	12	$	899	9	$	322

As of both March 31, 2019 and December 31, 2018, except for one commercial and industrial loan with an outstanding commitment of $1.5 million, there were no other commitments to lend additional funds to debtors whose loans have been modified in TDRs.

The following table presents, by loan type, the number of loans modified in TDRs and the related recorded investment, for which there was a payment default within twelve months following the modification:



	March 31, 2019				March 31, 2018
(dollars in thousands)	Number of Loans		Recorded Investment		Number of Loans	Recorded Investment
Manufactured housing	5		$	137	1	$	29
Commercial and industrial	1		431		—	—
Total loans	$	6	$	568	1	$	29

Loans modified in TDRs are evaluated for impairment. The nature and extent of impairment of TDRs, including those which have experienced a subsequent default, is considered in the determination of an appropriate level of ALLL. There were no allowances recorded as a result of TDR modifications during the three months ended March 31, 2019 and 2018.

Purchased-Credit-Impaired Loans

The changes in accretable yield related to PCI loans for the three months ended March 31, 2019 and 2018 were as follows:



	Three Months Ended March 31,
(amounts in thousands)	2019			2018
Accretable yield balance, beginning of period	$	6,178		$	7,825
Accretion to interest income	(277		)	(338		)
Reclassification from nonaccretable difference and disposals, net	293			176
Accretable yield balance, end of period	$	6,194		$	7,663

Credit Quality Indicators

The ALLL represents management's estimate of probable losses in Customers' loans and leases receivable portfolio, excluding commercial mortgage warehouse loans reported at fair value pursuant to a fair value option election. Multi-family, commercial and industrial, owner occupied commercial real estate, non-owner occupied commercial real estate, and construction loans are rated based on an internally assigned risk rating system which is assigned at the time of loan origination and reviewed on a periodic, or on an “as needed” basis. Residential real estate loans, manufactured housing and other consumer loans are evaluated based on the payment activity of the loan.

To facilitate the monitoring of credit quality within the multi-family, commercial and industrial, owner occupied commercial real estate, non-owner occupied commercial real estate, and construction loan portfolios, and for purposes of analyzing historical loss rates used in the determination of the ALLL for the respective loan portfolios, the Bank utilizes the following categories of risk ratings: pass/satisfactory (includes risk rating 1 through 6), special mention, substandard, doubtful, and loss. The risk rating categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. Pass/satisfactory ratings, which are assigned to those borrowers who do not have identified potential or well-defined weaknesses and for whom there is a high likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other categories are updated on a quarterly basis during the month preceding the end of the calendar quarter. While assigning risk ratings involves judgment, the risk-rating process allows management to identify riskier credits in a timely manner and allocate the appropriate resources to manage those loans and leases.

The risk rating grades are defined as follows:

“1” – Pass/Excellent

Loans and leases rated 1 represent a credit extension of the highest quality. The borrower’s historic (at least five years) cash flows manifest extremely large and stable margins of coverage. Balance sheets are conservative, well capitalized, and liquid. After considering debt service for proposed and existing debt, projected cash flows continue to be strong and provide ample coverage. The borrower typically reflects broad geographic and product diversification and has access to alternative financial markets.

“2” – Pass/Superior

Loans and leases rated 2 are those for which the borrower has a strong financial condition, balance sheet, operations, cash flow, debt capacity and coverage with ratios better than industry norms. The borrowers of these loans and leases exhibit a limited leverage position,

are virtually immune to local economies, and are in stable growing industries. The management team is well respected and the company has ready access to public markets.

“3” – Pass/Strong

Loans and leases rated 3 are those loans and leases for which the borrowers have above average financial condition and flexibility; more than satisfactory debt service coverage; balance sheet and operating ratios are consistent with or better than industry peers; operate in industries with little risk; move in diversified markets; and are experienced and competent in their industry. These borrowers’ access to capital markets is limited mostly to private sources, often secured, but the borrower typically has access to a wide range of refinancing alternatives.

“4” – Pass/Good

Loans and leases rated 4 have a sound primary and secondary source of repayment. The borrower may have access to alternative sources of financing, but sources are not as widely available as they are to a higher grade borrower. These loans and leases carry a normal level of risk, with very low loss exposure. The borrower has the ability to perform according to the terms of the credit facility. The margins of cash flow coverage are satisfactory but vulnerable to more rapid deterioration than the higher quality loans and leases.

“5” – Satisfactory

Loans and leases rated 5 are extended to borrowers who are considered to be a reasonable credit risk and demonstrate the ability to repay the debt from normal business operations. Risk factors may include reliability of margins and cash flows, liquidity, dependence on a single product or industry, cyclical trends, depth of management, or limited access to alternative financing sources. The borrower’s historical financial information may indicate erratic performance, but current trends are positive and the quality of financial information is adequate, but is not as detailed and sophisticated as information found on higher grade loans. If adverse circumstances arise, the impact on the borrower may be significant.

“6” – Satisfactory/Bankable with Care

Loans and leases rated 6 are those for which the borrower has higher than normal credit risk; however, cash flow and asset values are generally intact. These borrowers may exhibit declining financial characteristics, with increasing leverage and decreasing liquidity and may have limited resources and access to financial alternatives. Signs of weakness in these borrowers may include delinquent taxes, trade slowness and eroding profit margins.

“7” – Special Mention

Loans and leases rated 7 are credit facilities that may have potential developing weaknesses and deserve extra attention from the account manager and other management personnel. In the event potential weaknesses are not corrected or mitigated, deterioration in the ability of the borrower to repay the debt in the future may occur. This grade is not assigned to loans and leases that bear certain peculiar risks normally associated with the type of financing involved, unless circumstances have caused the risk to increase to a level higher than would have been acceptable when the credit was originally approved. Loans and leases where significant actual, not potential, weaknesses or problems are clearly evident are graded in the category below.

“8” – Substandard

Loans and leases are rated 8 when the loans and leases are inadequately protected by the current sound worth and payment capacity of the obligor or of the collateral pledged, if any. Loans and leases so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the company will sustain some loss if the weaknesses are not corrected.

“9” – Doubtful

The Bank assigns a doubtful rating to loans and leases that have all the attributes of a substandard rating 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. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans.

“10” – Loss

The Bank assigns a loss rating to loans and leases considered uncollectible and of such little value that their continuance as an active asset is not warranted. Amounts classified as loss are immediately charged off.

Risk ratings are not established for certain consumer loans, including residential real estate, home equity, manufactured housing, and installment loans, mainly because these portfolios consist of a larger number of homogeneous loans with smaller balances. Instead, these portfolios are evaluated for risk mainly based upon aggregate payment history through the monitoring of delinquency levels and trends and are classified as performing and non-performing. The following tables present the credit ratings of loans and leases receivable as of March 31, 2019 and December 31, 2018.



	March 31, 2019
(amounts in thousands)	Multi-family		Commercial and Industrial		Commercial Real Estate Owner Occupied		Commercial Real Estate Non-Owner Occupied		Construction		Residential Real Estate		Manufactured Housing		Other Consumer		Total ⁽³⁾
Pass/Satisfactory	$	3,164,722	$	1,395,034	$	565,631	$	1,036,957	$	53,372	$	—	$	—	$	—	$	6,215,716
Special Mention	40,441		30,575		12,300		30,258		—		—		—		—		113,574
Substandard	7,149		29,983		4,706		40,121		—		—		—		—		81,959
Performing ⁽¹⁾	—		—		—		—		—		613,880		70,232		152,554		836,666
Non-performing ⁽²⁾	—		—		—		—		—		11,186		7,546		599		19,331
Total	$	3,212,312	$	1,455,592	$	582,637	$	1,107,336	$	53,372	$	625,066	$	77,778	$	153,153	$	7,267,246



	December 31, 2018
(amounts in thousands)	Multi-family		Commercial and Industrial		Commercial Real Estate Owner Occupied		Commercial Real Estate Non-Owner Occupied		Construction		Residential Real Estate		Manufactured Housing		Other Consumer		Total ⁽³⁾
Pass/Satisfactory	$	3,201,822	$	1,306,466	$	562,639	$	1,054,493	$	56,491	$	—	$	—	$	—	$	6,181,911
Special Mention	55,696		30,551		9,730		30,203		—		—		—		—		126,180
Substandard	27,779		36,783		5,108		40,410		—		—		—		—		110,080
Performing ⁽¹⁾	—		—		—		—		—		555,016		71,924		73,724		700,664
Non-performing ⁽²⁾	—		—		—		—		—		11,545		7,807		311		19,663
Total	$	3,285,297	$	1,373,800	$	577,477	$	1,125,106	$	56,491	$	566,561	$	79,731	$	74,035	$	7,138,498


(1)	Includes residential real estate, manufactured housing, and other consumer loans not subject to risk ratings.


(2)	Includes residential real estate, manufactured housing, and other consumer loans that are past due and still accruing interest or on nonaccrual status.


(3)	Excludes commercial mortgage warehouse loans reported at fair value.

Loan Purchases and Sales

Purchases and sales of loans were as follows for the three months ended March 31, 2019 and 2018:



	Three Months Ended March 31,
(amounts in thousands)	2019		2018
Purchases ⁽¹⁾
Residential real estate	$	66,384	$	—
Other consumer	66,136		—
Total	$	132,520	$	—
Sales ⁽²⁾
Commercial and industrial ⁽³⁾	—		(6,842		)
Commercial real estate owner occupied ⁽³⁾	—		(8,151		)
Total	$	—	$	(14,993	)


(1)	The purchase price was 97.6% of loans outstanding for the three months ended March 31, 2019. There were no loan purchases during the three months ended March 31, 2018.


(2)	There were no loan sales for the three months ended March 31, 2019. For the three months ended March 31, 2018, loan sales resulted in a net gain of $1.4 million.


(3)	Primarily sales of SBA loans.

Loans Pledged as Collateral

Customers has pledged eligible real estate loans as collateral for potential borrowings from the FHLB and FRB in the amount of $5.4 billion at both March 31, 2019 and December 31, 2018.