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LOANS AND LEASES | 9 Months Ended
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Sep. 30, 2020
Receivables [Abstract] |
LOANS AND LEASES | 3. LOANS AND LEASES Loans outstanding, excluding those held for sale, by general ledger classification, as of September 30, 2020 and December 31, 2019, consisted of the following:
|  |  |  |  |  | % of |  |  |  |  |  |  | % of |
|  | September 30, |  |  | Totals |  |  | December 31, |  |  | Total |
(Dollars in thousands) |  | 2020 |  |  | Loans |  |  | 2019 |  |  | Loans |
Residential mortgage |  | $ | 518,335 |  |  |  | 11.70 | % |  | $ | 549,138 |  |  |  | 12.50 | %
Multifamily mortgage |  |  | 1,168,796 |  |  |  | 26.38 |  |  |  | 1,210,003 |  |  |  | 27.54 |
Commercial mortgage |  |  | 722,678 |  |  |  | 16.31 |  |  |  | 761,244 |  |  |  | 17.32 |
Commercial loans (including equipment financing) (A) |  |  | 1,909,724 |  |  |  | 43.10 |  |  |  | 1,756,477 |  |  |  | 39.97 |
Commercial construction |  |  | 6,805 |  |  |  | 0.15 |  |  |  | 5,306 |  |  |  | 0.12 |
Home equity lines of credit |  |  | 52,194 |  |  |  | 1.18 |  |  |  | 57,248 |  |  |  | 1.30 |
Consumer loans, including fixed rate home equity loans |  |  | 51,859 |  |  |  | 1.17 |  |  |  | 54,372 |  |  |  | 1.24 |
Other loans |  |  | 260 |  |  |  | 0.01 |  |  |  | 349 |  |  |  | 0.01 |
Total loans |  | $ | 4,430,651 |  |  |  | 100.00 | % |  | $ | 4,394,137 |  |  |  | 100.00 | %
| (A) | The September 30, 2020 balance includes PPP loans of $202.0 million
In determining an appropriate amount for the allowance, the Bank segments and evaluates the loan portfolio based on federal Call R eport codes. The following portfolio classes have been identified as of September 30, 2020 and December 31, 201 9:
|  |  |  |  |  | % of |  |  |  |  |  |  | % of |
|  | September 30, |  |  | Totals |  |  | December 31, |  |  | Total |
(Dollars in thousands) |  | 2020 |  |  | Loans |  |  | 2019 |  |  | Loans |
Primary residential mortgage |  | $ | 530,374 |  |  |  | 11.98 | % |  | $ | 578,306 |  |  |  | 13.17 | %
Home equity lines of credit |  |  | 52,193 |  |  |  | 1.18 |  |  |  | 57,248 |  |  |  | 1.30 |
Junior lien loan on residence |  |  | 5,401 |  |  |  | 0.12 |  |  |  | 7,011 |  |  |  | 0.16 |
Multifamily property |  |  | 1,168,796 |  |  |  | 26.40 |  |  |  | 1,210,003 |  |  |  | 27.56 |
Owner-occupied commercial real estate |  |  | 252,069 |  |  |  | 5.69 |  |  |  | 249,419 |  |  |  | 5.68 |
Investment commercial real estate |  |  | 1,047,614 |  |  |  | 23.66 |  |  |  | 1,095,182 |  |  |  | 24.95 |
Commercial and industrial (A) |  |  | 1,050,775 |  |  |  | 23.74 |  |  |  | 867,295 |  |  |  | 19.76 |
Lease financing |  |  | 254,142 |  |  |  | 5.74 |  |  |  | 258,401 |  |  |  | 5.89 |
Farmland/agricultural production |  |  | 1,081 |  |  |  | 0.02 |  |  |  | 3,043 |  |  |  | 0.07 |
Commercial construction loans |  |  | 6,989 |  |  |  | 0.16 |  |  |  | 5,520 |  |  |  | 0.13 |
Consumer and other loans |  |  | 57,711 |  |  |  | 1.31 |  |  |  | 58,213 |  |  |  | 1.33 |
Total loans |  | $ | 4,427,145 |  |  |  | 100.00 | % |  | $ | 4,389,641 |  |  |  | 100.00 | %
Net deferred costs |  |  | 3,506 |  |  |  |  |  |  |  | 4,496 |  |  |  |  |
Total loans including net deferred costs |  | $ | 4,430,651 |  |  |  |  |  |  | $ | 4,394,137 |  |  |  |  |
| (A) | The September 30, 2020 balance includes PPP loans of $202.0 million
The following tables present the loan balances by portfolio class, based on impairment method, and the corresponding balances in the allowance for loan and lease losses (ALLL) as of September 30, 2020 and December 31, 2019:
|  | September 30, 2020 |
|  | Total |  |  | Ending ALLL |  |  | Total |  |  | Ending ALLL |  |  |  |  |  |  |  |  |
|  | Loans |  |  | Attributable |  |  | Loans |  |  | Attributable |  |  |  |  |  |  |  |  |
|  | Individually |  |  | To Loans |  |  | Collectively |  |  | To Loans |  |  |  |  |  |  |  |  |
|  | Evaluated |  |  | Individually |  |  | Evaluated |  |  | Collectively |  |  |  |  |  |  | Total |
|  | For |  |  | Evaluated for |  |  | For |  |  | Evaluated for |  |  | Total |  |  | Ending |
(In thousands) |  | Impairment |  |  | Impairment |  |  | Impairment |  |  | Impairment |  |  | Loans |  |  | ALLL |
Primary residential mortgage |  | $ | 6,231 |  |  | $ | 46 |  |  | $ | 524,143 |  |  | $ | 2,921 |  |  | $ | 530,374 |  |  | $ | 2,967 |
Home equity lines of credit |  |  | 2 |  |  |  | — |  |  |  | 52,191 |  |  |  | 220 |  |  |  | 52,193 |  |  |  | 220 |
Junior lien loan on residence |  |  | — |  |  |  | — |  |  |  | 5,401 |  |  |  | 18 |  |  |  | 5,401 |  |  |  | 18 |
Multifamily property |  |  | — |  |  |  | — |  |  |  | 1,168,796 |  |  |  | 10,664 |  |  |  | 1,168,796 |  |  |  | 10,664 |
Owner-occupied commercial real estate |  |  | 667 |  |  |  | — |  |  |  | 251,402 |  |  |  | 3,011 |  |  |  | 252,069 |  |  |  | 3,011 |
Investment commercial real estate |  |  | 4,625 |  |  |  | — |  |  |  | 1,042,989 |  |  |  | 29,166 |  |  |  | 1,047,614 |  |  |  | 29,166 |
Commercial and industrial (A) |  |  | 3,990 |  |  |  | 41 |  |  |  | 1,046,785 |  |  |  | 16,131 |  |  |  | 1,050,775 |  |  |  | 16,172 |
Lease financing |  |  | — |  |  |  | — |  |  |  | 254,142 |  |  |  | 3,473 |  |  |  | 254,142 |  |  |  | 3,473 |
Farmland/agricultural production |  |  | — |  |  |  | — |  |  |  | 1,081 |  |  |  | 15 |  |  |  | 1,081 |  |  |  | 15 |
Commercial construction loans |  |  | — |  |  |  | — |  |  |  | 6,989 |  |  |  | 77 |  |  |  | 6,989 |  |  |  | 77 |
Consumer and other loans |  |  | — |  |  |  | — |  |  |  | 57,711 |  |  |  | 362 |  |  |  | 57,711 |  |  |  | 362 |
Total ALLL |  | $ | 15,515 |  |  | $ | 87 |  |  | $ | 4,411,630 |  |  | $ | 66,058 |  |  | $ | 4,427,145 |  |  | $ | 66,145 |
| (A) | The balance includes PPP loans of $202.0 million which have no reserve as these loans are guaranteed by the SBA.
|  | December 31, 2019 |
|  | Total |  |  | Ending ALLL |  |  | Total |  |  | Ending ALLL |  |  |  |  |  |  |  |  |
|  | Loans |  |  | Attributable |  |  | Loans |  |  | Attributable |  |  |  |  |  |  |  |  |
|  | Individually |  |  | To Loans |  |  | Collectively |  |  | To Loans |  |  |  |  |  |  |  |  |
|  | Evaluated |  |  | Individually |  |  | Evaluated |  |  | Collectively |  |  |  |  |  |  | Total |
|  | For |  |  | Evaluated for |  |  | For |  |  | Evaluated for |  |  | Total |  |  | Ending |
(In thousands) |  | Impairment |  |  | Impairment |  |  | Impairment |  |  | Impairment |  |  | Loans |  |  | ALLL |
Primary residential mortgage |  | $ | 6,890 |  |  | $ | 215 |  |  | $ | 571,416 |  |  | $ | 1,875 |  |  | $ | 578,306 |  |  | $ | 2,090 |
Home equity lines of credit |  |  | 3 |  |  |  | — |  |  |  | 57,245 |  |  |  | 128 |  |  |  | 57,248 |  |  |  | 128 |
Junior lien loan on residence |  |  | 19 |  |  |  | — |  |  |  | 6,992 |  |  |  | 13 |  |  |  | 7,011 |  |  |  | 13 |
Multifamily property |  |  | — |  |  |  | — |  |  |  | 1,210,003 |  |  |  | 6,037 |  |  |  | 1,210,003 |  |  |  | 6,037 |
Owner-occupied commercial real estate |  |  | 379 |  |  |  | — |  |  |  | 249,040 |  |  |  | 2,064 |  |  |  | 249,419 |  |  |  | 2,064 |
Investment commercial real estate |  |  | 22,605 |  |  |  | 1,000 |  |  |  | 1,072,577 |  |  |  | 14,988 |  |  |  | 1,095,182 |  |  |  | 15,988 |
Commercial and industrial |  |  | 6,028 |  |  |  | 1,585 |  |  |  | 861,267 |  |  |  | 12,768 |  |  |  | 867,295 |  |  |  | 14,353 |
Lease financing |  |  | — |  |  |  | — |  |  |  | 258,401 |  |  |  | 2,642 |  |  |  | 258,401 |  |  |  | 2,642 |
Farmland/agricultural production |  |  | — |  |  |  | — |  |  |  | 3,043 |  |  |  | 38 |  |  |  | 3,043 |  |  |  | 38 |
Commercial construction loans |  |  | — |  |  |  | — |  |  |  | 5,520 |  |  |  | 27 |  |  |  | 5,520 |  |  |  | 27 |
Consumer and other loans |  |  | — |  |  |  | — |  |  |  | 58,213 |  |  |  | 296 |  |  |  | 58,213 |  |  |  | 296 |
Total ALLL |  | $ | 35,924 |  |  | $ | 2,800 |  |  | $ | 4,353,717 |  |  | $ | 40,876 |  |  | $ | 4,389,641 |  |  | $ | 43,676 |
Impaired loans include nonaccrual loans of $8.6 million at September 30, 2020 and $28.9 million at December 31, 2019. The decrease in impaired loans was due to the transfer of one commercial loan with a balance of $10.0 million to held for sale at September 30, 2020. Impaired loans also include performing TDR loans of $2.3 million at September 30, 2020 and $2.4 million at December 31, 2019. At September 30, 2020, the allowance allocated to TDR loans totaled $87,000, of which $41,000 was allocated to nonaccrual loans. At December 31, 2019, the allowance allocated to TDR loans totaled $2.8 million, of which $2.7 million was allocated to nonaccrual loans. All accruing TDR loans were paying in accordance with restructured terms as of September 30, 2020. The Company has not committed to lend additional amounts as of September 30, 2020 to customers with outstanding loans that are classified as TDR loans. The following tables present loans individually evaluated for impairment by class of loans as of September 30, 2020 and December 31, 2019 (The average impaired loans on the following tables represent year to date impaired loans.):
|  | September 30, 2020 |
|  | Unpaid |  |  |  |  |  |  |  |  |  |  | Average |
|  | Principal |  |  | Recorded |  |  | Specific |  |  | Impaired |
(In thousands) |  | Balance |  |  | Investment |  |  | Reserves |  |  | Loans |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Primary residential mortgage |  | $ | 6,514 |  |  | $ | 5,655 |  |  | $ | — |  |  | $ | 6,020 |
Owner-occupied commercial real estate |  |  | 752 |  |  |  | 667 |  |  |  | — |  |  |  | 397 |
Investment commercial real estate |  |  | 4,625 |  |  |  | 4,625 |  |  |  | — |  |  |  | 7,242 |
Home equity lines of credit |  |  | 4 |  |  |  | 2 |  |  |  | — |  |  |  | 2 |
Commercial and industrial |  |  | 374 |  |  |  | 361 |  |  |  | — |  |  |  | 302 |
Total loans with no related allowance |  | $ | 12,269 |  |  | $ | 11,310 |  |  | $ | — |  |  | $ | 13,963 |
With related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Primary residential mortgage |  | $ | 576 |  |  | $ | 576 |  |  | $ | 46 |  |  | $ | 582 |
Commercial and industrial |  |  | 6,129 |  |  |  | 3,629 |  |  |  | 41 |  |  |  | 4,965 |
Total loans with related allowance |  | $ | 6,705 |  |  | $ | 4,205 |  |  | $ | 87 |  |  | $ | 5,547 |
Total loans individually evaluated for impairment |  | $ | 18,974 |  |  | $ | 15,515 |  |  | $ | 87 |  |  | $ | 19,510 |
|  | December 31, 2019 |
|  | Unpaid |  |  |  |  |  |  |  |  |  |  | Average |
|  | Principal |  |  | Recorded |  |  | Specific |  |  | Impaired |
(In thousands) |  | Balance |  |  | Investment |  |  | Reserves |  |  | Loans |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Primary residential mortgage |  | $ | 7,310 |  |  | $ | 6,071 |  |  | $ | — |  |  | $ | 7,186 |
Owner-occupied commercial real estate |  |  | 450 |  |  |  | 379 |  |  |  | — |  |  |  | 1,099 |
Investment commercial real estate |  |  | 9,663 |  |  |  | 8,138 |  |  |  | — |  |  |  | 14,115 |
Home equity lines of credit |  |  | 5 |  |  |  | 3 |  |  |  | — |  |  |  | 77 |
Junior lien loan on residence |  |  | 92 |  |  |  | 19 |  |  |  | — |  |  |  | 29 |
Total loans with no related allowance |  | $ | 17,520 |  |  | $ | 14,610 |  |  | $ | — |  |  | $ | 22,506 |
With related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Primary residential mortgage |  | $ | 819 |  |  | $ | 819 |  |  | $ | 215 |  |  | $ | 1,011 |
Investment commercial real estate |  |  | 15,064 |  |  |  | 14,467 |  |  |  | 1,000 |  |  |  | 4,832 |
Commercial and industrial |  |  | 6,229 |  |  |  | 6,028 |  |  |  | 1,585 |  |  |  | 3,685 |
Total loans with related allowance |  | $ | 22,112 |  |  | $ | 21,314 |  |  | $ | 2,800 |  |  | $ | 9,528 |
Total loans individually evaluated for impairment |  | $ | 39,632 |  |  | $ | 35,924 |  |  | $ | 2,800 |  |  | $ | 32,034 |
Interest income recognized on impaired loans for the quarters ended September 30, 2020 and 2019 was not material. The Company did not recognize any income on non-accruing impaired loans for the three and nine months ended September 30, 2020 and 2019. The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2020 and December 31, 2019:
|  | September 30, 2020 |
|  |  |  |  |  | Loans Past Due |
|  |  |  |  |  | Over 90 Days |
|  |  |  |  |  | And Still |
(In thousands) |  | Nonaccrual |  |  | Accruing Interest |
Primary residential mortgage |  | $ | 3,992 |  |  | $ | — |
Home equity lines of credit |  |  | 1 |  |  |  | — |
Owner-occupied commercial real estate |  |  | 667 |  |  |  | — |
Commercial and industrial |  |  | 3,951 |  |  |  | — |
Total |  | $ | 8,611 |  |  | $ | — |
|  | December 31, 2019 |
|  |  |  |  |  | Loans Past Due |
|  |  |  |  |  | Over 90 Days |
|  |  |  |  |  | And Still |
(In thousands) |  | Nonaccrual |  |  | Accruing Interest |
Primary residential mortgage |  | $ | 4,533 |  |  | $ | — |
Home equity lines of credit |  |  | 3 |  |  |  | — |
Junior lien loan on residence |  |  | 19 |  |  |  | — |
Owner-occupied commercial real estate |  |  | 379 |  |  |  | — |
Investment commercial real estate |  |  | 17,919 |  |  |  | — |
Commercial and industrial |  |  | 6,028 |  |  |  | — |
Total |  | $ | 28,881 |  |  | $ | — |
The following tables present the aging of the recorded investment in past due loans as of September 30, 2020 and December 31, 2019 by class of loans, excluding nonaccrual loans:
|  | September 30, 2020 |
|  | 30-59 |  |  | 60-89 |  |  | Greater Than |  |  |  |  |
|  | Days |  |  | Days |  |  | 90 Days |  |  | Total |
(In thousands) |  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Past Due |
Primary residential mortgage |  | $ | 651 |  |  | $ | — |  |  | $ | — |  |  | $ | 651 |
Home equity lines of credit |  |  | 129 |  |  |  | — |  |  | $ | — |  |  |  | 129 |
Multifamily property |  |  | 873 |  |  |  | — |  |  |  | — |  |  |  | 873 |
Commercial and industrial |  |  | 675 |  |  |  | 1,739 |  |  |  | — |  |  |  | 2,414 |
Lease financing |  |  | 546 |  |  |  | 1,996 |  |  |  | — |  |  |  | 2,542 |
Total |  | $ | 2,874 |  |  | $ | 3,735 |  |  | $ | — |  |  | $ | 6,609 |
|  | December 31, 2019 |
|  | 30-59 |  |  | 60-89 |  |  | Greater Than |  |  |  |  |
|  | Days |  |  | Days |  |  | 90 Days |  |  | Total |
(In thousands) |  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Past Due |
Primary residential mortgage |  | $ | 1,264 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,264 |
Home equity lines of credit |  |  | 80 |  |  |  | — |  |  |  | — |  |  |  | 80 |
Consumer and other loans |  |  | 566 |  |  |  | — |  |  |  | — |  |  |  | 566 |
Total |  | $ | 1,910 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,910 |
Credit Quality Indicators: The Company places all commercial loans into various credit risk rating categories based on an assessment of the expected ability of the borrowers to properly service their debt. The assessment considers numerous factors including, but not limited to, current financial information on the borrower, historical payment experience, strength of any guarantor, nature of and value of any collateral, acceptability of the loan structure and documentation, relevant public information and current economic trends. This credit risk rating analysis is performed when the loan is initially underwritten and then annually based on set criteria in the loan policy. In addition, the Bank has engaged an independent loan review firm to validate risk ratings and to ensure compliance with our policies and procedures. This review of the following types of loans is performed quarterly:
| • | A large sample of relationships or new lending to existing relationships greater than $1,000,000 booked since the prior review;
| • | All criticized and classified rated borrowers with relationship exposure of more than $500,000;
| • | A large sample of Pass-rated (including Pass Watch) borrowers with total relationships in excess of $1,000,000 and a small sample of Pass related relationships less than $1,000,000;
| • | All leveraged loans of $1,000,000 or greater;
| • | At least two borrowing relationships managed by each commercial banker;
| • | Any new Regulation “O” loan commitments over $1,000,000;
| • | Exclude borrowers with commitments of less than $500,000;
| • | Any other credits requested by Bank senior management or a member of the Board of Directors and any borrower for which the reviewer determines a review is warranted based upon knowledge of the portfolio, local events, industry stresses, etc.
The Company uses the following regulatory definitions for criticized and classified risk ratings: Special Mention: These loans have a potential weakness that deserves Management’s close attention. If left uncorrected, the potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date. Substandard: These loans are inadequately protected by the current net worth and paying capacity of the obligor 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 institution will sustain some loss if the deficiencies are not corrected. Doubtful: These loans have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, based on currently existing facts, conditions and values. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans. Loans that are considered to be impaired are individually evaluated for potential loss and allowance adequacy. Loans not deemed impaired are collectively evaluated for potential loss and allowance adequacy. As of September 30, 2020, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:
|  |  |  |  |  | Special |  |  |  |  |  |  |  |  |
(In thousands) |  | Pass |  |  | Mention |  |  | Substandard |  |  | Doubtful |
Primary residential mortgage |  | $ | 523,415 |  |  | $ | 521 |  |  | $ | 6,438 |  |  | $ | — |
Home equity lines of credit |  |  | 52,191 |  |  |  | — |  |  |  | 2 |  |  |  | — |
Junior lien loan on residence |  |  | 5,401 |  |  |  | — |  |  |  | — |  |  |  | — |
Multifamily property |  |  | 1,162,650 |  |  |  | 5,466 |  |  |  | 680 |  |  |  | — |
Owner-occupied commercial real estate |  |  | 246,989 |  |  |  | 2,388 |  |  |  | 2,692 |  |  |  | — |
Investment commercial real estate |  |  | 966,193 |  |  |  | 67,057 |  |  |  | 14,364 |  |  |  | — |
Commercial and industrial |  |  | 979,502 |  |  |  | 54,186 |  |  |  | 17,087 |  |  |  | — |
Lease financing |  |  | 254,142 |  |  |  | — |  |  |  | — |  |  |  | — |
Farmland/agricultural production |  |  | 1,081 |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial construction loans |  |  | 6,907 |  |  |  | 82 |  |  |  | — |  |  |  | — |
Consumer and other loans |  |  | 57,711 |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 4,256,182 |  |  | $ | 129,700 |  |  | $ | 41,263 |  |  | $ | — |
As of December 31, 2019, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:
|  |  |  |  |  | Special |  |  |  |  |  |  |  |  |
(In thousands) |  | Pass |  |  | Mention |  |  | Substandard |  |  | Doubtful |
Primary residential mortgage |  | $ | 570,353 |  |  | $ | 853 |  |  | $ | 7,100 |  |  | $ | — |
Home equity lines of credit |  |  | 57,245 |  |  |  | — |  |  |  | 3 |  |  |  | — |
Junior lien loan on residence |  |  | 6,992 |  |  |  | — |  |  |  | 19 |  |  |  | — |
Multifamily property |  |  | 1,209,288 |  |  |  | — |  |  |  | 715 |  |  |  | — |
Owner-occupied commercial real estate |  |  | 247,388 |  |  |  | — |  |  |  | 2,031 |  |  |  | — |
Investment commercial real estate |  |  | 1,053,445 |  |  |  | 6,325 |  |  |  | 35,412 |  |  |  | — |
Commercial and industrial |  |  | 847,285 |  |  |  | 6,382 |  |  |  | 13,628 |  |  |  | — |
Lease financing |  |  | 258,401 |  |  |  | — |  |  |  | — |  |  |  | — |
Farmland/agricultural production |  |  | 3,043 |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial construction loans |  |  | 5,437 |  |  |  | 83 |  |  |  | — |  |  |  | — |
Consumer and other loans |  |  | 58,213 |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 4,317,090 |  |  | $ | 13,643 |  |  | $ | 58,908 |  |  | $ | — |
At September 30, 2020, $15.5 million of substandard loans were also considered impaired, compared to December 31, 2019, when $35.9 million of substandard loans were also impaired. The increase in special mention investment and owner-occupied commercial real estate classified loans was a result of the Bank’s credit analysis of sectors with COVID elevated residual risk (Hospitality and Food Services and Retail – Non-Grocery Anchored) and the downgrade of several loans within these categories during the third quarter of 2020. The activity in the allowance for loan and lease losses for the three months ended September 30, 2020 is summarized below:
|  | July 1, |  |  |  |  |  |  |  |  |  |  |  |  |  |  | September 30, |
|  | 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2020 |
|  | Beginning |  |  |  |  |  |  |  |  |  |  | Provision |  |  | Ending |
(In thousands) |  | ALLL |  |  | Charge-offs |  |  | Recoveries |  |  | (Credit) |  |  | ALLL |
Primary residential mortgage |  | $ | 3,074 |  |  | $ | — |  |  | $ | 217 |  |  | $ | (324 | ) |  | $ | 2,967 |
Home equity lines of credit |  |  | 244 |  |  |  | — |  |  |  | 3 |  |  |  | (27 | ) |  |  | 220 |
Junior lien loan on residence |  |  | 20 |  |  |  | — |  |  |  | — |  |  |  | (2 | ) |  |  | 18 |
Multifamily property |  |  | 9,662 |  |  |  | — |  |  |  | — |  |  |  | 1,002 |  |  |  | 10,664 |
Owner-occupied commercial real estate |  |  | 3,177 |  |  |  | — |  |  |  | — |  |  |  | (166 | ) |  |  | 3,011 |
Investment commercial real estate |  |  | 29,866 |  |  |  | (5,132 | ) |  |  | — |  |  |  | 4,432 |  |  |  | 29,166 |
Commercial and industrial |  |  | 16,218 |  |  |  | (164 | ) |  |  | 6 |  |  |  | 112 |  |  |  | 16,172 |
Lease financing |  |  | 3,349 |  |  |  | — |  |  |  | — |  |  |  | 124 |  |  |  | 3,473 |
Farmland/agricultural production |  |  | 38 |  |  |  | — |  |  |  | — |  |  |  | (23 | ) |  |  | 15 |
Commercial construction loans |  |  | 49 |  |  |  | — |  |  |  | — |  |  |  | 28 |  |  |  | 77 |
Consumer and other loans |  |  | 368 |  |  |  | (2 | ) |  |  | 2 |  |  |  | (6 | ) |  |  | 362 |
Total ALLL |  | $ | 66,065 |  |  | $ | (5,298 | ) |  | $ | 228 |  |  | $ | 5,150 |  |  | $ | 66,145 |
The activity in the allowance for loan and lease losses for the three months ended September 30, 2019 is summarized below:
|  | July 1, |  |  |  |  |  |  |  |  |  |  |  |  |  |  | September 30, |
|  | 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2019 |
|  | Beginning |  |  |  |  |  |  |  |  |  |  | Provision |  |  | Ending |
(In thousands) |  | ALLL |  |  | Charge-offs |  |  | Recoveries |  |  | (Credit) |  |  | ALLL |
Primary residential mortgage |  | $ | 3,057 |  |  | $ | — |  |  | $ | — |  |  | $ | (568 | ) |  | $ | 2,489 |
Home equity lines of credit |  |  | 155 |  |  |  | — |  |  |  | 3 |  |  |  | (13 | ) |  |  | 145 |
Junior lien loan on residence |  |  | 15 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 15 |
Multifamily property |  |  | 5,744 |  |  |  | — |  |  |  | — |  |  |  | 491 |  |  |  | 6,235 |
Owner-occupied commercial real estate |  |  | 2,497 |  |  |  | — |  |  |  | 996 |  |  |  | (1,221 | ) |  |  | 2,272 |
Investment commercial real estate |  |  | 14,650 |  |  |  | — |  |  |  | — |  |  |  | 1,095 |  |  |  | 15,745 |
Commercial and industrial |  |  | 11,463 |  |  |  | — |  |  |  | 4 |  |  |  | 438 |  |  |  | 11,905 |
Lease financing |  |  | 1,888 |  |  |  | — |  |  |  | — |  |  |  | 508 |  |  |  | 2,396 |
Farmland/agricultural production |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | 37 |  |  |  | 39 |
Commercial construction loans |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | 23 |  |  |  | 24 |
Consumer and other loans |  |  | 319 |  |  |  | (15 | ) |  |  | 1 |  |  |  | 10 |  |  |  | 315 |
Total ALLL |  | $ | 39,791 |  |  | $ | (15 | ) |  | $ | 1,004 |  |  | $ | 800 |  |  | $ | 41,580 |
The activity in the allowance for loan and lease losses for the nine months ended September 30, 2020 is summarized below:
|  | January 1, |  |  |  |  |  |  |  |  |  |  |  |  |  |  | September 30, |
|  | 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2020 |
|  | Beginning |  |  |  |  |  |  |  |  |  |  | Provision |  |  | Ending |
(In thousands) |  | ALLL |  |  | Charge-offs |  |  | Recoveries |  |  | (Credit) |  |  | ALLL |
Primary residential mortgage |  | $ | 2,090 |  |  | $ | — |  |  | $ | 330 |  |  | $ | 547 |  |  | $ | 2,967 |
Home equity lines of credit |  |  | 128 |  |  |  | — |  |  |  | 8 |  |  |  | 84 |  |  |  | 220 |
Junior lien loan on residence |  |  | 13 |  |  |  | — |  |  |  | — |  |  |  | 5 |  |  |  | 18 |
Multifamily property |  |  | 6,037 |  |  |  | — |  |  |  | — |  |  |  | 4,627 |  |  |  | 10,664 |
Owner-occupied commercial real estate |  |  | 2,064 |  |  |  | — |  |  |  | — |  |  |  | 947 |  |  |  | 3,011 |
Investment commercial real estate |  |  | 15,988 |  |  |  | (5,532 | ) |  |  | 31 |  |  |  | 18,679 |  |  |  | 29,166 |
Commercial and industrial |  |  | 14,353 |  |  |  | (2,418 | ) |  |  | 11 |  |  |  | 4,226 |  |  |  | 16,172 |
Lease financing |  |  | 2,642 |  |  |  | — |  |  |  | — |  |  |  | 831 |  |  |  | 3,473 |
Farmland/agricultural production |  |  | 38 |  |  |  | — |  |  |  | — |  |  |  | (23 | ) |  |  | 15 |
Commercial construction loans |  |  | 27 |  |  |  | — |  |  |  | — |  |  |  | 50 |  |  |  | 77 |
Consumer and other loans |  |  | 296 |  |  |  | (15 | ) |  |  | 4 |  |  |  | 77 |  |  |  | 362 |
Total ALLL |  | $ | 43,676 |  |  | $ | (7,965 | ) |  | $ | 384 |  |  | $ | 30,050 |  |  | $ | 66,145 |
The activity in the allowance for loan and lease losses for the nine months ended September 30, 2019 is summarized below:
|  | January 1, |  |  |  |  |  |  |  |  |  |  |  |  |  |  | September 30, |
|  | 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2019 |
|  | Beginning |  |  |  |  |  |  |  |  |  |  | Provision |  |  | Ending |
(In thousands) |  | ALLL |  |  | Charge-offs |  |  | Recoveries |  |  | (Credit) |  |  | ALLL |
Primary residential mortgage |  | $ | 3,506 |  |  | $ | (80 | ) |  | $ | 51 |  |  | $ | (988 | ) |  | $ | 2,489 |
Home equity lines of credit |  |  | 164 |  |  |  | — |  |  |  | 8 |  |  |  | (27 | ) |  |  | 145 |
Junior lien loan on residence |  |  | 15 |  |  |  | — |  |  |  | 11 |  |  |  | (11 | ) |  |  | 15 |
Multifamily property |  |  | 5,959 |  |  |  | — |  |  |  | — |  |  |  | 276 |  |  |  | 6,235 |
Owner-occupied commercial real estate |  |  | 2,614 |  |  |  | — |  |  |  | 1,060 |  |  |  | (1,402 | ) |  |  | 2,272 |
Investment commercial real estate |  |  | 14,248 |  |  |  | — |  |  |  | — |  |  |  | 1,497 |  |  |  | 15,745 |
Commercial and industrial |  |  | 9,839 |  |  |  | — |  |  |  | 13 |  |  |  | 2,053 |  |  |  | 11,905 |
Lease financing |  |  | 1,772 |  |  |  | — |  |  |  | — |  |  |  | 624 |  |  |  | 2,396 |
Farmland/agricultural production |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | 37 |  |  |  | 39 |
Commercial construction loans |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | 23 |  |  |  | 24 |
Consumer and other loans |  |  | 384 |  |  |  | (40 | ) |  |  | 3 |  |  |  | (32 | ) |  |  | 315 |
Total ALLL |  | $ | 38,504 |  |  | $ | (120 | ) |  | $ | 1,146 |  |  | $ | 2,050 |  |  | $ | 41,580 |
Loan Modifications: The CARES Act allows financial institutions to suspend application of certain current TDR accounting guidance under ASC 310-40 for loan modifications related to the COVID-19 pandemic made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the COVID-19 national emergency, provided certain criteria are met. This relief can be applied to loan modifications for borrowers that were not more than 30 days past due as of December 31, 2019 and to loan modifications that defer or delay the payment of principal or interest or change the interest rate on the loan. In April 2020, federal and state banking regulators issued the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus to provide further interpretation of when a borrower is experiencing financial difficulty, specifically indicating that if the modification is either short-term (e.g., six months) or mandated by a federal or state government in response to the COVID-19 pandemic, the borrower is not experiencing financial difficulty under ASC 310-40. As of September 30, 2020, the Bank has modified 515 loans with a balance of $940.2 million resulting in the deferral of principal and/or interest for periods ranging from 90 to 180 days. The table below summarizes the deferrals as of September 30, 2020. All of these loans were performing in accordance with their terms prior to modification, and are in conformance with the CARES Act. Included in the table below are 27 loans totaling $283.6 million of loan level swaps. Details with respect to loan modifications are as follows:
|  |  |  |  |  | Post-Modification |
|  |  |  |  |  | Outstanding |
|  | Number of |  |  | Recorded |
(Dollars in thousands) |  | Loans |  |  | Investment |
Primary residential mortgage |  |  | 170 |  |  | $ | 69,941 |
Home equity lines of credit |  |  | 16 |  |  |  | 4,094 |
Junior lien loan on residence |  |  | 4 |  |  |  | 248 |
Multifamily property |  |  | 70 |  |  |  | 263,877 |
Owner-occupied commercial real estate |  |  | 33 |  |  |  | 30,058 |
Investment commercial real estate |  |  | 71 |  |  |  | 400,425 |
Commercial and industrial |  |  | 28 |  |  |  | 28,370 |
Lease financing |  |  | 7 |  |  |  | 26,360 |
Farmland/agricultural production |  |  | 1 |  |  |  | 133 |
Commercial construction loans |  |  | 3 |  |  |  | 4,311 |
Total |  |  | 403 |  |  | $ | 827,817 |
The future performance of these loans, specifically beyond the term of the deferral, is uncertain. To recognize a credit allowance commensurate with the existing risk, the Company assigned qualitative factors for each of the above portfolio classes for allowance purposes. Troubled Debt Restructurings: The Company has allocated $87,000 and $2.8 million of specific reserves on TDRs to customers whose loan terms have been modified in TDRs as of September 30, 2020 and December 31, 2019, respectively. There were no unfunded commitments to lend additional amounts to customers with outstanding loans that are classified as TDRs. There were no loans modified as TDRs during the three-month period ended September 30, 2020. The following table presents loans by class modified as TDRs during the nine-month period ended September 30, 2020:
|  |  |  |  |  | Pre-Modification |  |  | Post-Modification |
|  |  |  |  |  | Outstanding |  |  | Outstanding |
|  | Number of |  |  | Recorded |  |  | Recorded |
(Dollars in thousands) |  | Loans |  |  | Investment |  |  | Investment |
Primary residential mortgage |  |  | 2 |  |  | $ | 388 |  |  | $ | 388 |
Commercial and industrial |  |  | 1 |  |  |  | 39 |  |  |  | 39 |
Total |  |  | 3 |  |  | $ | 427 |  |  | $ | 427 |
The following table presents loans by class modified as TDRs during both the three and nine-month periods ended September 30, 2019:
|  |  |  |  |  | Pre-Modification |  |  | Post-Modification |
|  |  |  |  |  | Outstanding |  |  | Outstanding |
|  | Number of |  |  | Recorded |  |  | Recorded |
(Dollars in thousands) |  | Loans |  |  | Investment |  |  | Investment |
Primary residential mortgage |  |  | 1 |  |  | $ | 341 |  |  | $ | 341 |
Total |  |  | 1 |  |  | $ | 341 |  |  | $ | 341 |
The identification of the TDRs did not have a significant impact on the allowance for loan and lease losses. The following table presents loans by class modified as TDRs that failed to comply with the modified terms in the twelve months following modification and resulted in a payment default at September 30, 2020:
|  | Number of |  |  | Recorded |
(Dollars in thousands) |  | Loans |  |  | Investment |
Primary residential mortgage |  |  | 1 |  |  | $ | 193 |
Commercial and industrial |  |  | 1 |  |  |  | 39 |
Total |  |  | 2 |  |  | $ | 232 |
There were no loans that were modified as TDRs for which there was a payment default within twelve months of modification at September 30, 2019. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. The modification of the terms of such loans may include one or more of the following: (1) a reduction of the stated interest rate of the loan to a rate that is lower than the current market rate for new debt with similar risk; (2) an extension of an interest only period for a predetermined period of time; (3) an extension of the maturity date; or (4) an extension of the amortization period over which future payments will be computed. At the time a loan is restructured, the Bank performs a full re-underwriting analysis, which includes, at a minimum, obtaining current financial statements and tax returns, copies of all leases, and an updated independent appraisal of the property. A loan will continue to accrue interest if it can be reasonably determined that the borrower should be able to perform under the modified terms, that the loan has not been chronically delinquent (both to debt service and real estate taxes) or in nonaccrual status since its inception, and that there have been no charge-offs on the loan. Restructured loans with previous charge-offs would not accrue interest at the time of the TDR. At a minimum, six consecutive months of contractual payments would need to be made on a restructured loan before returning it to accrual status. Once a loan is classified as a TDR, the loan is reported as a TDR until the loan is paid in full, sold or charged-off. In rare circumstances, a loan may be removed from TDR status if it meets the requirements of ASC 310-40-50-2.

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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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