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Loans Receivable, Net | 9 Months Ended
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Sep. 30, 2019
Receivables [Abstract] |
Loans Receivable, Net | Loans Receivable, Net Loans receivable, net at September 30, 2019 and December 31, 2018 consisted of the following (in thousands):
| September 30, 2019 |  | December 31, 2018
Commercial: |  |  |
Commercial and industrial | $ | 405,970 |  |  | $ | 304,994 |
Commercial real estate – owner occupied | 786,852 |  |  | 740,375 |
Commercial real estate – investor | 2,220,799 |  |  | 2,015,210 |
Total commercial | 3,413,621 |  |  | 3,060,579 |
Consumer: |  |  |
Residential real estate | 2,234,026 |  |  | 2,044,286 |
Home equity loans and lines | 330,370 |  |  | 353,386 |
Other consumer | 98,835 |  |  | 121,561 |
Total consumer | 2,663,231 |  |  | 2,519,233 |
| 6,076,852 |  |  | 5,579,812 |
Purchased credit impaired (“PCI”) loans | 13,281 |  |  | 8,901 |
Total Loans | 6,090,133 |  |  | 5,588,713 |
Deferred origination costs, net | 8,441 |  |  | 7,086 |
Allowance for loan losses | (16,636 | ) |  | (16,577 | )
Total loans, net | $ | 6,081,938 |  |  | $ | 5,579,222 |
An analysis of the allowance for loan losses for the three and nine months ended September 30, 2019 and 2018 is as follows (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Balance at beginning of period | $ | 16,135 |  |  | $ | 16,691 |  |  | $ | 16,577 |  |  | $ | 15,721 |
Provision charged to operations | 305 |  |  | 907 |  |  | 1,281 |  |  | 2,984 |
Charge-offs | (353 | ) |  | (891 | ) |  | (2,359 | ) |  | (2,708 | )
Recoveries | 549 |  |  | 114 |  |  | 1,137 |  |  | 824 |
Balance at end of period | $ | 16,636 |  |  | $ | 16,821 |  |  | $ | 16,636 |  |  | $ | 16,821 |
The following table presents an analysis of the allowance for loan losses for the three and nine months ended September 30, 2019 and 2018 and the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2019 and December 31, 2018, excluding PCI loans (in thousands):
| Commercial and Industrial |  | Commercial Real Estate – Owner Occupied |  | Commercial Real Estate – Investor |  | Residential Real Estate |  | Consumer |  | Unallocated |  | Total
For the three months ended September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period | $ | 1,639 |  |  | $ | 2,868 |  |  | $ | 8,406 |  |  | $ | 1,966 |  |  | $ | 512 |  |  | $ | 744 |  |  | $ | 16,135 |
Provision (benefit) charged to operations | (352 | ) |  | 80 |  |  | 711 |  |  | 193 |  |  | 10 |  |  | (337 | ) |  | 305 |
Charge-offs | — |  |  | (142 | ) |  | (57 | ) |  | (27 | ) |  | (127 | ) |  | — |  |  | (353 | )
Recoveries | 49 |  |  | 114 |  |  | 292 |  |  | 39 |  |  | 55 |  |  | — |  |  | 549 |
Balance at end of period | $ | 1,336 |  |  | $ | 2,920 |  |  | $ | 9,352 |  |  | $ | 2,171 |  |  | $ | 450 |  |  | $ | 407 |  |  | $ | 16,636 |
For the three months ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period | $ | 2,080 |  |  | $ | 2,340 |  |  | $ | 9,058 |  |  | $ | 2,126 |  |  | $ | 526 |  |  | $ | 561 |  |  | $ | 16,691 |
Provision (benefit) charged to operations | (520 | ) |  | 187 |  |  | 661 |  |  | 578 |  |  | 57 |  |  | (56 | ) |  | 907 |
Charge-offs | (146 | ) |  | — |  |  | (138 | ) |  | (535 | ) |  | (72 | ) |  | — |  |  | (891 | )
Recoveries | 28 |  |  | 1 |  |  | 9 |  |  | 57 |  |  | 19 |  |  | — |  |  | 114 |
Balance at end of period | $ | 1,442 |  |  | $ | 2,528 |  |  | $ | 9,590 |  |  | $ | 2,226 |  |  | $ | 530 |  |  | $ | 505 |  |  | $ | 16,821 |
For the nine months ended September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period | $ | 1,609 |  |  | $ | 2,277 |  |  | $ | 8,770 |  |  | $ | 2,413 |  |  | $ | 486 |  |  | $ | 1,022 |  |  | $ | 16,577 |
Provision (benefit) charged to operations | (406 | ) |  | 1,192 |  |  | 26 |  |  | 899 |  |  | 185 |  |  | (615 | ) |  | 1,281 |
Charge-offs | — |  |  | (663 | ) |  | (143 | ) |  | (1,221 | ) |  | (332 | ) |  | — |  |  | (2,359 | )
Recoveries | 133 |  |  | 114 |  |  | 699 |  |  | 80 |  |  | 111 |  |  | — |  |  | 1,137 |
Balance at end of period | $ | 1,336 |  |  | $ | 2,920 |  |  | $ | 9,352 |  |  | $ | 2,171 |  |  | $ | 450 |  |  | $ | 407 |  |  | $ | 16,636 |
For the nine months ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period | $ | 1,801 |  |  | $ | 3,175 |  |  | $ | 7,952 |  |  | $ | 1,804 |  |  | $ | 614 |  |  | $ | 375 |  |  | $ | 15,721 |
Provision (benefit) charged to operations | (238 | ) |  | (734 | ) |  | 2,706 |  |  | 1,079 |  |  | 41 |  |  | 130 |  |  | 2,984 |
Charge-offs | (202 | ) |  | (91 | ) |  | (1,239 | ) |  | (936 | ) |  | (240 | ) |  | — |  |  | (2,708 | )
Recoveries | 81 |  |  | 178 |  |  | 171 |  |  | 279 |  |  | 115 |  |  | — |  |  | 824 |
Balance at end of period | $ | 1,442 |  |  | $ | 2,528 |  |  | $ | 9,590 |  |  | $ | 2,226 |  |  | $ | 530 |  |  | $ | 505 |  |  | $ | 16,821 |
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributed to loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | 547 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 547 |
Collectively evaluated for impairment | 1,336 |  |  | 2,373 |  |  | 9,352 |  |  | 2,171 |  |  | 450 |  |  | 407 |  |  | 16,089 |
Total ending allowance balance | $ | 1,336 |  |  | $ | 2,920 |  |  | $ | 9,352 |  |  | $ | 2,171 |  |  | $ | 450 |  |  | $ | 407 |  |  | $ | 16,636 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment | $ | 246 |  |  | $ | 6,152 |  |  | $ | 7,975 |  |  | $ | 10,093 |  |  | $ | 3,351 |  |  | $ | — |  |  | $ | 27,817 |
Loans collectively evaluated for impairment | 405,724 |  |  | 780,700 |  |  | 2,212,824 |  |  | 2,223,933 |  |  | 425,854 |  |  | — |  |  | 6,049,035 |
Total ending loan balance | $ | 405,970 |  |  | $ | 786,852 |  |  | $ | 2,220,799 |  |  | $ | 2,234,026 |  |  | $ | 429,205 |  |  | $ | — |  |  | $ | 6,076,852 |
| Commercial and Industrial |  | Commercial Real Estate – Owner Occupied |  | Commercial Real Estate – Investor |  | Residential Real Estate |  | Consumer |  | Unallocated |  | Total
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributed to loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Collectively evaluated for impairment | 1,609 |  |  | 2,277 |  |  | 8,770 |  |  | 2,413 |  |  | 486 |  |  | 1,022 |  |  | 16,577 |
Total ending allowance balance | $ | 1,609 |  |  | $ | 2,277 |  |  | $ | 8,770 |  |  | $ | 2,413 |  |  | $ | 486 |  |  | $ | 1,022 |  |  | $ | 16,577 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment | $ | 1,626 |  |  | $ | 5,395 |  |  | $ | 9,738 |  |  | $ | 10,064 |  |  | $ | 2,974 |  |  | $ | — |  |  | $ | 29,797 |
Loans collectively evaluated for impairment | 303,368 |  |  | 734,980 |  |  | 2,005,472 |  |  | 2,034,222 |  |  | 471,973 |  |  | — |  |  | 5,550,015 |
Total ending loan balance | $ | 304,994 |  |  | $ | 740,375 |  |  | $ | 2,015,210 |  |  | $ | 2,044,286 |  |  | $ | 474,947 |  |  | $ | — |  |  | $ | 5,579,812 |
A summary of impaired loans at September 30, 2019, and December 31, 2018, is as follows, excluding PCI loans (in thousands):
| September 30, 2019 |  | December 31, 2018
Impaired loans with no allocated allowance for loan losses | $ | 25,539 |  |  | $ | 29,797 |
Impaired loans with allocated allowance for loan losses | 2,278 |  |  | — |
| $ | 27,817 |  |  | $ | 29,797 |
Amount of the allowance for loan losses allocated | $ | 547 |  |  | $ | — |
The Company defines an impaired loan as non-accrual commercial real estate, multi-family, land, construction and commercial loans in excess of $250,000. Impaired loans also include all loans modified as troubled debt restructurings. At September 30, 2019, the impaired loan portfolio totaled $27.8 million for which there was a specific allocation in the allowance for loan losses of $547,000. At December 31, 2018, the impaired loan portfolio totaled $29.8 million for which there was no specific allocation in the allowance for loan losses. The average balance of impaired loans for the three and nine months ended September 30, 2019 were $28.2 million and $30.2 million, respectively, and for the three and nine months ended September 30, 2018 were $32.9 million and $39.2 million, respectively. At September 30, 2019 and December 31, 2018, impaired loans included troubled debt restructured (“TDR”) loans of $25.1 million and $26.5 million, respectively. The summary of loans individually evaluated for impairment by loan portfolio segment as of September 30, 2019, and December 31, 2018 and for the three and nine months ended September 30, 2019 and 2018, is as follows, excluding PCI loans (in thousands):
| Unpaid Principal Balance |  | Recorded Investment |  | Allowance for Loan Losses Allocated
As of September 30, 2019 |  |  |  |  |
With no related allowance recorded: |  |  |  |  |
Commercial and industrial | $ | 268 |  |  | $ | 246 |  |  | $ | — |
Commercial real estate – owner occupied | 3,908 |  |  | 3,874 |  |  | — |
Commercial real estate – investor | 9,152 |  |  | 7,975 |  |  | — |
Residential real estate | 10,459 |  |  | 10,093 |  |  | — |
Consumer | 3,730 |  |  | 3,351 |  |  | — |
| $ | 27,517 |  |  | $ | 25,539 |  |  | $ | — |
With an allowance recorded: |  |  |  |  |
Commercial and industrial | $ | — |  |  | $ | — |  |  | $ | — |
Commercial real estate – owner occupied | 2,415 |  |  | 2,278 |  |  | 547 |
Commercial real estate – investor | — |  |  | — |  |  | — |
Residential real estate | — |  |  | — |  |  | — |
Consumer | — |  |  | — |  |  | — |
| $ | 2,415 |  |  | $ | 2,278 |  |  | $ | 547 |
As of December 31, 2018 |  |  |  |  |
With no related allowance recorded: |  |  |  |  |
Commercial and industrial | $ | 1,750 |  |  | $ | 1,626 |  |  | $ | — |
Commercial real estate – owner occupied | 5,413 |  |  | 5,395 |  |  | — |
Commercial real estate – investor | 12,633 |  |  | 9,738 |  |  | — |
Residential real estate | 10,441 |  |  | 10,064 |  |  | — |
Consumer | 3,301 |  |  | 2,974 |  |  | — |
| $ | 33,538 |  |  | $ | 29,797 |  |  | $ | — |
With an allowance recorded: |  |  |  |  |
Commercial and industrial | $ | — |  |  | $ | — |  |  | $ | — |
Commercial real estate – owner occupied | — |  |  | — |  |  | — |
Commercial real estate – investor | — |  |  | — |  |  | — |
Residential real estate | — |  |  | — |  |  | — |
Consumer | — |  |  | — |  |  | — |
| $ | — |  |  | $ | — |  |  | $ | — |
| Three Months Ended September 30,
| 2019 |  | 2018
| Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized
With no related allowance recorded: |  |  |  |  |  |  |
Commercial and industrial | $ | 247 |  |  | $ | 1 |  |  | $ | 982 |  |  | $ | 69 |
Commercial real estate – owner occupied | 4,290 |  |  | 6 |  |  | 5,484 |  |  | 75 |
Commercial real estate – investor | 8,072 |  |  | 85 |  |  | 12,191 |  |  | 102 |
Residential real estate | 10,136 |  |  | 128 |  |  | 10,741 |  |  | 119 |
Consumer | 3,362 |  |  | 42 |  |  | 2,782 |  |  | 33 |
| $ | 26,107 |  |  | $ | 262 |  |  | $ | 32,180 |  |  | $ | 398 |
With an allowance recorded: |  |  |  |  |  |  |
Commercial and industrial | $ | — |  |  | $ | — |  |  | $ | 736 |  |  | $ | — |
Commercial real estate – owner occupied | 2,086 |  |  | 70 |  |  | — |  |  | — |
Commercial real estate – investor | — |  |  | — |  |  | — |  |  | — |
Residential real estate | — |  |  | — |  |  | — |  |  | — |
Consumer | — |  |  | — |  |  | — |  |  | — |
| $ | 2,086 |  |  | $ | 70 |  |  | $ | 736 |  |  | $ | — |
| Nine Months Ended September 30,
| 2019 |  | 2018
| Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized
With no related allowance recorded: |  |  |  |  |  |  |
Commercial and industrial | $ | 593 |  |  | $ | 5 |  |  | $ | 906 |  |  | $ | 85 |
Commercial real estate – owner occupied | 4,221 |  |  | 128 |  |  | 8,978 |  |  | 226 |
Commercial real estate – investor | 9,869 |  |  | 243 |  |  | 14,259 |  |  | 304 |
Residential real estate | 10,091 |  |  | 399 |  |  | 10,873 |  |  | 356 |
Consumer | 3,216 |  |  | 136 |  |  | 2,629 |  |  | 116 |
| $ | 27,990 |  |  | $ | 911 |  |  | $ | 37,645 |  |  | $ | 1,087 |
With an allowance recorded: |  |  |  |  |  |  |
Commercial and industrial | $ | — |  |  | $ | — |  |  | $ | 736 |  |  | $ | — |
Commercial real estate – owner occupied | 2,168 |  |  | 106 |  |  | — |  |  | — |
Commercial real estate – investor | — |  |  | — |  |  | 838 |  |  | — |
Residential real estate | — |  |  | — |  |  | — |  |  | — |
Consumer | — |  |  | — |  |  | — |  |  | — |
| $ | 2,168 |  |  | $ | 106 |  |  | $ | 1,574 |  |  | $ | — |
The following table presents the recorded investment in non-accrual loans by loan portfolio segment as of September 30, 2019 and December 31, 2018, excluding PCI loans (in thousands):
| September 30, 2019 |  | December 31, 2018
Commercial and industrial | $ | 207 |  |  | $ | 1,587 |
Commercial real estate – owner occupied | 4,537 |  |  | 501 |
Commercial real estate – investor | 4,073 |  |  | 5,024 |
Residential real estate | 5,953 |  |  | 7,389 |
Consumer | 2,683 |  |  | 2,914 |
| $ | 17,453 |  |  | $ | 17,415 |
At September 30, 2019, there were no commitments to lend additional funds to borrowers whose loans are in non-accrual status. The following table presents the aging of the recorded investment in past due loans as of September 30, 2019 and December 31, 2018 by loan portfolio segment, excluding PCI loans (in thousands):
| 30-59 Days Past Due |  | 60-89 Days Past Due |  | Greater than 90 Days Past Due |  | Total Past Due |  | Loans Not Past Due |  | Total
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 483 |  |  | $ | — |  |  | $ | 207 |  |  | $ | 690 |  |  | $ | 405,280 |  |  | $ | 405,970 |
Commercial real estate – owner occupied | 2,107 |  |  | 2,732 |  |  | 984 |  |  | 5,823 |  |  | 781,029 |  |  | 786,852 |
Commercial real estate – investor | 1,489 |  |  | 2,005 |  |  | 3,939 |  |  | 7,433 |  |  | 2,213,366 |  |  | 2,220,799 |
Residential real estate | 9,619 |  |  | 2,775 |  |  | 2,409 |  |  | 14,803 |  |  | 2,219,223 |  |  | 2,234,026 |
Consumer | 926 |  |  | 429 |  |  | 2,297 |  |  | 3,652 |  |  | 425,553 |  |  | 429,205 |
| $ | 14,624 |  |  | $ | 7,941 |  |  | $ | 9,836 |  |  | $ | 32,401 |  |  | $ | 6,044,451 |  |  | $ | 6,076,852 |
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 304,994 |  |  | $ | 304,994 |
Commercial real estate – owner occupied | 5,104 |  |  | 236 |  |  | 197 |  |  | 5,537 |  |  | 734,838 |  |  | 740,375 |
Commercial real estate – investor | 3,979 |  |  | 2,503 |  |  | 2,461 |  |  | 8,943 |  |  | 2,006,267 |  |  | 2,015,210 |
Residential real estate | 10,199 |  |  | 4,979 |  |  | 4,451 |  |  | 19,629 |  |  | 2,024,657 |  |  | 2,044,286 |
Consumer | 2,200 |  |  | 955 |  |  | 2,464 |  |  | 5,619 |  |  | 469,328 |  |  | 474,947 |
| $ | 21,482 |  |  | $ | 8,673 |  |  | $ | 9,573 |  |  | $ | 39,728 |  |  | $ | 5,540,084 |  |  | $ | 5,579,812 |
At September 30, 2019 and December 31, 2018, loans in the amount of $17.5 million and $17.4 million, respectively, were three or more months delinquent or in the process of foreclosure and the Company was not accruing interest income on these loans. At September 30, 2019, there were no loans that were ninety days or greater past due and still accruing interest. Non-accrual loans include both smaller balance homogenous loans that are collectively evaluated for impairment and individually classified impaired loans. The Company categorizes all commercial and commercial real estate loans, except for small business 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 and current economic trends, among other factors. The Company uses the following definitions for risk ratings: Pass: Loans classified as Pass are well protected by the paying capacity and net worth of the borrower. Special Mention: Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank’s credit position at some future date. Substandard: Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful: Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. As of September 30, 2019 and December 31, 2018, and based on the most recent analysis performed, the risk category of loans by loan portfolio segment follows, excluding PCI loans (in thousands) is as follows:
| Pass |  | Special Mention |  | Substandard |  | Doubtful |  | Total
September 30, 2019 |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 391,823 |  |  | $ | 1,785 |  |  | $ | 12,362 |  |  | $ | — |  |  | $ | 405,970 |
Commercial real estate – owner occupied | 759,858 |  |  | 3,590 |  |  | 23,404 |  |  | — |  |  | 786,852 |
Commercial real estate – investor | 2,152,925 |  |  | 52,405 |  |  | 15,469 |  |  | — |  |  | 2,220,799 |
| $ | 3,304,606 |  |  | $ | 57,780 |  |  | $ | 51,235 |  |  | $ | — |  |  | $ | 3,413,621 |
December 31, 2018 |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 291,265 |  |  | $ | 2,777 |  |  | $ | 10,952 |  |  | $ | — |  |  | $ | 304,994 |
Commercial real estate – owner occupied | 706,825 |  |  | 3,000 |  |  | 30,550 |  |  | — |  |  | 740,375 |
Commercial real estate – investor | 1,966,495 |  |  | 23,727 |  |  | 24,988 |  |  | — |  |  | 2,015,210 |
| $ | 2,964,585 |  |  | $ | 29,504 |  |  | $ | 66,490 |  |  | $ | — |  |  | $ | 3,060,579 |
For residential and consumer loans, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in residential and consumer loans based on payment activity as of September 30, 2019 and December 31, 2018, excluding PCI loans (in thousands):
| Residential |  | Consumer
September 30, 2019 |  |  |
Performing | $ | 2,228,073 |  |  | $ | 426,522 |
Non-performing | 5,953 |  |  | 2,683 |
| $ | 2,234,026 |  |  | $ | 429,205 |
December 31, 2018 |  |  |
Performing | $ | 2,036,897 |  |  | $ | 472,033 |
Non-performing | 7,389 |  |  | 2,914 |
| $ | 2,044,286 |  |  | $ | 474,947 |
The recorded investment in residential and consumer loans collateralized by residential real estate, which are in the process of foreclosure, amounted to $2.1 million at September 30, 2019. The amount of foreclosed residential real estate property held by the Company was $81,000 at September 30, 2019. The Company classifies certain loans as troubled debt restructurings when credit terms to a borrower in financial difficulty are modified. The modifications may include a reduction in rate, an extension in term, the capitalization of past due amounts and/or the restructuring of scheduled principal payments. One-to-four family and consumer loans where the borrower’s debt is discharged in a bankruptcy filing are also considered troubled debt restructurings. For these loans, the Bank retains its security interest in the real estate collateral. Included in the non-accrual loan total at September 30, 2019, and December 31, 2018, were $6.2 million and $3.6 million, respectively, of troubled debt restructurings. At September 30, 2019, and December 31, 2018, the Company had $547,000 and $0, respectively, of specific reserves allocated to loans that are classified as troubled debt restructurings. Non-accrual loans which become troubled debt restructurings are generally returned to accrual status after nine months of performance. In addition to the troubled debt restructurings included in non-accrual loans, the Company also has loans classified as accruing troubled debt restructurings at September 30, 2019 and December 31, 2018, which totaled $19.0 million and $22.9 million, respectively. Troubled debt restructurings are considered in the allowance for loan losses similar to other impaired loans. The following table presents information about troubled debt restructurings which occurred during the three and nine months ended September 30, 2019 and 2018, and troubled debt restructurings modified within the previous year and which defaulted during the three and nine months ended September 30, 2019 and 2018 (dollars in thousands):
| Number of Loans |  | Pre-modification Recorded Investment |  | Post-modification Recorded Investment
Three months ended September 30, 2019 |  |  |  |  |
Troubled Debt Restructurings: |  |  |  |  |
Consumer | 1 |  |  | $ | 54 |  |  | $ | 54 |
| Number of Loans |  | Recorded Investment
Troubled Debt Restructurings |  |  |
Which Subsequently Defaulted: | None |  |  | None |
| Number of Loans |  | Pre-modification Recorded Investment |  | Post-modification Recorded Investment
Nine months ended September 30, 2019 |  |  |  |  |
Troubled Debt Restructurings: |  |  |  |  |
Consumer | 5 |  |  | $ | 496 |  |  | $ | 516 |
Residential real estate | 5 |  |  | 921 |  |  | 972 |
| Number of Loans |  | Recorded Investment
Troubled Debt Restructurings |  |  |
Which Subsequently Defaulted: | None |  |  | None |
| Number of Loans |  | Pre-modification Recorded Investment |  | Post-modification Recorded Investment
Three Months Ended September 30, 2018 |  |  |  |  |
Troubled Debt Restructurings: |  |  |  |  |
Commercial real estate - owner occupied | 1 |  |  | $ | 49 |  |  | $ | 50 |
Commercial real estate – investor | 1 |  |  | 171 |  |  | 210 |
| Number of Loans |  | Recorded Investment
Troubled Debt Restructurings |  |  |
Which Subsequently Defaulted: |  |  |
Commercial real estate – investor | 1 |  |  | $ | 2,820 |
Consumer | 1 |  |  | 30 |
| Number of Loans |  | Pre-modification Recorded Investment |  | Post-modification Recorded Investment
Nine months ended September 30, 2018 |  |  |  |  |
Troubled Debt Restructurings: |  |  |  |  |
Commercial and industrial | 2 |  |  | $ | 496 |  |  | $ | 502 |
Commercial real estate - owner occupied | 1 |  |  | 49 |  |  | 50 |
Commercial real estate – investor | 3 |  |  | 1,395 |  |  | 1,435 |
Residential real estate | 2 |  |  | 257 |  |  | 270 |
| Number of Loans |  | Recorded Investment
Troubled Debt Restructurings |  |  |
Which Subsequently Defaulted: |  |  |
Commercial real estate – investor | 1 |  |  | $ | 2,820 |
Consumer | 1 |  |  | 30 |
As part of the Capital Bank acquisition, PCI loans were acquired at a discount primarily due to deteriorated credit quality. PCI loans are accounted for at fair value, based upon the present value of expected future cash flows, with no related allowance for loan losses. The following table presents information regarding the estimates of the contractually required payments, the cash flows expected to be collected and the estimated fair value of the PCI loans acquired from Capital Bank at January 31, 2019 (in thousands):
| Capital January 31, 2019
Contractually required principal and interest | $ | 6,877 |
Contractual cash flows not expected to be collected (non-accretable discount) | (769 | )
Expected cash flows to be collected at acquisition | 6,108 |
Interest component of expected cash flows (accretable yield) | (691 | )
Fair value of acquired loans | $ | 5,417 |
The following table summarizes the changes in accretable yield for PCI loans during the three and nine months ended September 30, 2019 and 2018 (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Beginning balance | $ | 3,183 |  |  | $ | 2,300 |  |  | $ | 3,630 |  |  | $ | 161 |
Acquisition | — |  |  | — |  |  | 691 |  |  | 2,646 |
Accretion | (599 | ) |  | (368 | ) |  | (1,783 | ) |  | (1,459 | )
Reclassification from non-accretable difference | 69 |  |  | 470 |  |  | 115 |  |  | 1,054 |
Ending balance | $ | 2,653 |  |  | $ | 2,402 |  |  | $ | 2,653 |  |  | $ | 2,402 |

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 + Details
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