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Loans and Leases Receivable and Allowance for Loan and Lease Losses

9 Months Ended

Sep. 30, 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 September 30, 2019 and December 31, 2018.


(amounts in thousands)	September 30, 2019		December 31, 2018
Loans receivable, mortgage warehouse, at fair value	$	2,438,530	$	1,405,420
Loans receivable:
Commercial:
Multi-family	2,300,244		3,285,297
Commercial and industrial (including owner occupied commercial real estate) ⁽¹⁾	2,363,599		1,951,277
Commercial real estate non-owner occupied	1,268,557		1,125,106
Construction	61,200		56,491
Total commercial loans and leases receivable	5,993,600		6,418,171
Consumer:
Residential real estate	628,786		566,561
Manufactured housing	72,616		79,731
Other consumer	643,553		74,035
Total consumer loans receivable	1,344,955		720,327
Loans and leases receivable	7,338,555		7,138,498
Deferred (fees) costs and unamortized (discounts) premiums, net	(2,318)		(424)
Allowance for loan and lease losses	(51,053)		(39,972)
Total loans and leases receivable, net of allowance for loan and lease losses	$	9,723,714	$	8,503,522

(1)Includes direct finance equipment leases of $75.2 million and $54.5 million at September 30, 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 under 30 days from purchase to sale. The primary goal of these lending transactions is to provide liquidity to mortgage companies.

At September 30, 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 and leases receivable by loan and lease type and performance status as of September 30, 2019 and December 31, 2018:


	September 30, 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	$	3,662	$	—	$	3,662	$	—	$	2,294,926	$	1,656	$	2,300,244
Commercial and industrial	860		—		860		5,314		1,881,586		374		1,888,134
Commercial real estate owner occupied	686		—		686		2,068		465,934		6,777		475,465
Commercial real estate non-owner occupied	—		—		—		83		1,264,361		4,113		1,268,557
Construction	—		—		—		—		61,200		—		61,200
Residential real estate	2,485		—		2,485		6,093		616,533		3,675		628,786
Manufactured housing ⁽⁵⁾	3,153		1,943		5,096		1,567		64,362		1,591		72,616
Other consumer	3,810		—		3,810		1,140		638,400		203		643,553
Total	$	14,656	$	1,943	$	16,599	$	16,265	$	7,287,302	$	18,389	$	7,338,555

	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)Certain manufactured housing loans purchased in 2010 are supported by cash reserves held at the Bank of $24 thousand and $0.5 million at September 30, 2019 and December 31, 2018, respectively, which are used to fund past-due payments when the loan becomes 90 days or more delinquent. Each quarter, these funds are evaluated to determine if they would be sufficient to absorb the probable incurred losses within the manufactured housing portfolio.

As of both September 30, 2019 and December 31, 2018, the Bank had $0.2 million, respectively, of residential real estate held in OREO. As of September 30, 2019 and December 31, 2018, the Bank had initiated foreclosure proceedings on $0.8 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 and nine months ended September 30, 2019 and 2018, and the loans and leases and ALLL by loan and lease type based on impairment-evaluation method as of September 30, 2019 and December 31, 2018 are presented in the tables below.


Three Months Ended September 30, 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, June 30, 2019	$	9,926	$	13,736	$	3,360	$	6,159	$	649	$	4,168	$	123	$	10,267	$	48,388
Charge-offs	—		(349)		(45)		—		—		—		—		(1,806)		(2,200)

Recoveries	—		369		10		—		8		5		—		47		439

Provision for loan and lease losses	(2,428)		2,119		(435)		281		1		(90)		904		4,074		4,426
Ending Balance, September 30, 2019	$	7,498	$	15,875	$	2,890	$	6,440	$	658	$	4,083	$	1,027	$	12,582	$	51,053
Nine Months Ended September 30, 2019
Ending Balance, December 31, 2018	$	11,462	$	12,145	$	3,320	$	6,093	$	624	$	3,654	$	145	$	2,529	$	39,972
Charge-offs	(541)		(532)		(119)		—		—		(109)		—		(3,493)		(4,794)

Recoveries	7		826		235		—		128		20		—		120		1,336

Provision for loan and lease losses	(3,430)		3,436		(546)		347		(94)		518		882		13,426		14,539
Ending Balance, September 30, 2019	$	7,498	$	15,875	$	2,890	$	6,440	$	658	$	4,083	$	1,027	$	12,582	$	51,053

As of September 30, 2019
(amounts in thousands)
Loans and leases receivable:
Individually evaluated for impairment	$	—	$	5,375	$	2,084	$	83	$	—	$	9,057	$	9,929	$	1,140	$	27,668
Collectively evaluated for impairment	2,298,588		1,882,385		466,604		1,264,361		61,200		616,054		61,096		642,210		7,292,498
Loans acquired with credit deterioration	1,656		374		6,777		4,113		—		3,675		1,591		203		18,389
Total loans and leases receivable	$	2,300,244	$	1,888,134	$	475,465	$	1,268,557	$	61,200	$	628,786	$	72,616	$	643,553	$	7,338,555
Allowance for loan and lease losses:
Individually evaluated for impairment	$	—	$	167	$	—	$	—	$	—	$	40	$	123	$	65	$	395
Collectively evaluated for impairment	7,498		15,448		2,882		4,555		658		3,727		904		12,362		48,034
Loans acquired with credit deterioration	—		260		8		1,885		—		316		—		155		2,624
Total allowance for loan and lease losses	$	7,498	$	15,875	$	2,890	$	6,440	$	658	$	4,083	$	1,027	$	12,582	$	51,053


Three Months Ended September 30, 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, June 30, 2018	$	12,069	$	12,258	$	2,988	$	6,698	$	992	$	2,908	$	149	$	226	$	38,288
Charge-offs	—		(90)		—		—		—		—		—		(437)		(527)

Recoveries	—		30		—		5		11		6		—		4		56
Provision for loan and lease losses	(240)		516		164		(254)		59		987		(55)		1,747		2,924
Ending Balance, September 30, 2018	$	11,829	$	12,714	$	3,152	$	6,449	$	1,062	$	3,901	$	94	$	1,540	$	40,741
Nine Months Ended September 30, 2018
Ending Balance, December 31, 2017	$	12,168	$	10,918	$	3,232	$	7,437	$	979	$	2,929	$	180	$	172	$	38,015
Charge-offs	—		(314)		(501)		—		—		(407)		—		(1,155)		(2,377)

Recoveries	—		205		326		5		231		69		—		10		846
Provision for loan and lease losses	(339)		1,905		95		(993)		(148)		1,310		(86)		2,513		4,257
Ending Balance, September 30, 2018	$	11,829	$	12,714	$	3,152	$	6,449	$	1,062	$	3,901	$	94	$	1,540	$	40,741

As of December 31, 2018
(amounts in thousands)
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

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 September 30, 2019 and December 31, 2018 and the average recorded investment and interest income recognized for the three and nine months ended September 30, 2019 and 2018. Customers had no impaired lease receivables as of September 30, 2019 and December 31, 2018, respectively. Purchased-credit-impaired loans are considered to be performing and are not included in the tables below.


	September 30, 2019										Three Months Ended September 30, 2019				Nine Months Ended September 30, 2019
(amounts in thousands)	Recorded investment net of charge-offs		Unpaid principal balance		Related allowance		Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
With no related allowance recorded:
Multi-family	$	—	$	—	$	—	$	—	$	149	$	499	$	149
Commercial and industrial	4,602		6,245		—		4,631		991		8,528		1,009
Commercial real estate owner occupied	2,068		2,849		—		1,425		74		1,111		95
Commercial real estate non-owner occupied	83		194		—		89		7		102		7
Residential real estate	4,686		5,007		—		4,526		21		4,654		82
Manufactured housing	4,496		4,496		—		7,229		97		8,656		335
Other consumer	195		195		—		164		76		137		84
With an allowance recorded:
Multi-family	—		—		—		—		—		289		—
Commercial and industrial	773		773		167		3,358		—		4,277		97
Commercial real estate owner occupied	16		16		—		91		—		131		1

Residential real estate	4,371		4,371		40		4,057		47		3,937		101
Manufactured housing	5,433		5,433		123		2,799		45		1,483		49
Other consumer	945		945		65		586		—		293		—
Total	$	27,668	$	30,524	$	395	$	28,955	$	1,507	$	34,097	$	2,009


	December 31, 2018										Three Months Ended September 30, 2018				Nine Months Ended September 30, 2018
(amounts in thousands)	Recorded investment net of charge-offs		Unpaid principal balance		Related allowance		Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
With no related allowance recorded:
Multi-family	$	—	$	—	$	—	$	1,343	$	—	$	672	$	8
Commercial and industrial	13,660		15,263		—		7,765		166		7,623		168
Commercial real estate owner occupied	1,037		1,766		—		711		—		711		—
Commercial real estate non-owner occupied	129		241		—		1,347		—		774		8

Residential real estate	4,842		5,128		—		4,281		23		3,952		25
Manufactured housing	10,027		10,027		—		10,147		144		10,011		421
Other consumer	111		111		—		103		1		83		1
With an allowance recorded:
Multi-family	1,155		1,155		539		—		—		—		—
Commercial and industrial	4,168		4,351		261		5,787		27		7,089		39
Commercial real estate owner occupied	32		32		1		336		9		546		11

Residential real estate	3,789		3,789		41		4,398		61		4,760		124
Manufactured housing	168		168		3		227		4		225		10

Total	$	39,118	$	42,031	$	845	$	36,445	$	435	$	36,446	$	815

Troubled Debt Restructurings

At September 30, 2019 and December 31, 2018, there were $13.5 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 had no lease receivables that had been restructured as a TDR as of September 30, 2019 and December 31, 2018, respectively.

The following table presents total TDRs based on loan type and accrual status at September 30, 2019 and December 31, 2018. Nonaccrual TDRs are included in the reported amount of total non-accrual loans.


	September 30, 2019										December 31, 2018
(amounts in thousands)	Accruing TDRs		Nonaccrual TDRs		Total		Accruing TDRs		Nonaccrual TDRs		Total
Commercial and industrial	$	61	$	29	$	90	$	64	$	5,273	$	5,337
Commercial real estate owner occupied	16		—		16		32		—		32

Residential real estate	2,964		639		3,603		3,026		667		3,693
Manufactured housing	8,362		1,424		9,786		8,502		1,620		10,122
Other consumer	—		11		11		—		12		12
Total TDRs	$	11,403	$	2,103	$	13,506	$	11,624	$	7,572	$	19,196

The following table presents loans modified in a TDR by type of concession for the three and nine months ended September 30, 2019 and 2018. There were no modifications that involved forgiveness of debt for the three and nine months ended September 30, 2019 and 2018.


	Three Months Ended September 30,										Nine Months Ended September 30,
	2019				2018					2019			2018
(dollars in thousands)	Number of loans	Recorded investment		Number of loans	Recorded investment		Number of loans	Recorded investment		Number of loans	Recorded investment
Extensions of maturity	—	$	—	—	$	—	2	$	514	1	$	56
Interest-rate reductions	7	196		8	473		19	628		32	1,402
Total	7	$	196	8	$	473	21	$	1,142	33	$	1,458

The following table provides, by loan type, the number of loans modified in TDRs and the related recorded investment for the three and nine months ended September 30, 2019 and 2018.


	Three Months Ended September 30,										Nine Months Ended September 30,
	2019				2018					2019			2018
(dollars in thousands)	Number of loans	Recorded investment		Number of loans	Recorded investment		Number of loans	Recorded investment		Number of loans	Recorded investment
Commercial and industrial	—	$	—	—	$	—	1	$	431	—	$	—
Manufactured housing	7	196		7	321		19	628		30	1,093
Residential real estate	—	—		1	152		1	83		2	352
Other consumer	—	—		—	—		—	—		1	13
Total loans	7	$	196	8	$	473	21	$	1,142	33	$	1,458

As of September 30, 2019, there were no commitments to lend additional funds to debtors whose loans have been modified in TDRs. As of 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:


	September 30, 2019				September 30, 2018
(dollars in thousands)	Number of loans	Recorded investment		Number of loans	Recorded investment
Manufactured housing	3	$	76	—	$	—
Residential real estate	1	82		—	—
Total loans	4	$	158	—	$	—

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. During the three and nine months ended September 30, 2019, allowances totaling $3 thousand and $6 thousand, respectively, were recorded on four and nine loans, respectively, that had been modified in TDRs. There were no allowances recorded as a result of TDR modifications during the three and nine months ended September 30, 2018.

Purchased-Credit-Impaired Loans

The changes in accretable yield related to PCI loans for the three and nine months ended September 30, 2019 and 2018 were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
(amounts in thousands)	2019		2018		2019		2018
Accretable yield balance, beginning of period	$	5,807	$	7,403	$	6,178	$	7,825
Accretion to interest income	(256)		(310)		(911)		(1,164)
Reclassification from nonaccretable difference and disposals, net	(67)		(4)		217		428
Accretable yield balance, end of period	$	5,484	$	7,089	$	5,484	$	7,089

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 2018 Form 10-K describes Customers Bancorp’s risk rating grades.

Risk ratings are not established for certain consumer loans, including residential real estate, other consumer loans, 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 and 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 September 30, 2019 and December 31, 2018.


	September 30, 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	$	2,259,366	$	1,836,857	$	459,549	$	1,200,664	$	61,200	$	—	$	—	$	—	$	5,817,636
Special Mention	21,449		27,454		8,342		11,633		—		—		—		—		68,878
Substandard	19,429		23,823		7,574		56,260		—		—		—		—		107,086
Performing ⁽¹⁾	—		—		—		—		—		620,208		65,953		638,603		1,324,764
Non-performing ⁽²⁾	—		—		—		—		—		8,578		6,663		4,950		20,191
Total	$	2,300,244	$	1,888,134	$	475,465	$	1,268,557	$	61,200	$	628,786	$	72,616	$	643,553	$	7,338,555


	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 assigned internal 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 and nine months ended September 30, 2019 and 2018:


	Three Months Ended September 30,						Nine Months Ended September 30,
(amounts in thousands)	2019		2018		2019		2018
Purchases ⁽¹⁾





Residential real estate	$	—	$	25,807	$	105,858	$	303,181

Other consumer ⁽²⁾	83,898		46,843		534,150		46,843
Total	$	83,898	$	72,650	$	640,008	$	350,024
Sales ⁽³⁾

Commercial and industrial ⁽⁴⁾	$	—	$	(6,691)	$	—	$	(23,840)
Commercial real estate owner occupied ⁽⁴⁾	—		(5,387)		—		(14,968)





Total	$	—	$	(12,078)	$	—	$	(38,808)

(1)Amounts reported in the above table are the unpaid principal balance at time of purchase. The purchase price was 96.3% and 95.3% of loans outstanding for the three months ended September 30, 2019 and 2018, respectively. The purchase price was 99.4% and 99.3% of loans outstanding for the nine months ended September 30, 2019 and 2018, respectively.

(2)Other consumer loan purchases for the three and nine months ended September 30, 2019 consist of third-party originated unsecured consumer loans. None of the loans are considered sub-prime at the time of origination or purchase. Customers considers sub-prime borrowers to be those with FICO scores below 660.

(3)Amounts reported in the above table are the unpaid principal balance at time of sale. There were no loan sales for the three and nine months ended September 30, 2019. For the three and nine months ended September 30, 2018, loan sales resulted in gains of $1.1 million and $3.4 million, respectively.

(4)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 $5.2 billion and $5.4 billion at September 30, 2019 and December 31, 2018, respectively.