The Company’s held-for-investment loan portfolio includes originated and purchased loans. Originated and purchased loans with no evidence of credit deterioration at their acquisition date are referred to collectively as non-PCI loans. PCI loans are loans acquired with evidence of credit deterioration since their origination and for which it is probable at the acquisition date that the Company would be unable to collect all contractually required payments. PCI loans are accounted for under ASC Subtopic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. The Company has elected to account for PCI loans on a pool level basis under ASC 310-30 at the time of acquisition.




($ in thousands)	September 30, 2019								December 31, 2018
($ in thousands)	Non-PCI Loans ⁽¹⁾			PCI Loans ⁽²⁾		Total ⁽¹⁾⁽²⁾			Non-PCI Loans ⁽¹⁾			PCI Loans ⁽²⁾			Total ⁽¹⁾⁽²⁾
Commercial:
C&I	$	12,299,163		$	1,839	$	12,301,002		$	12,054,818		$	2,152		$	12,056,970
CRE	9,627,330			122,253		9,749,583			9,097,165			163,034			9,260,199
Multifamily residential	2,564,758			24,445		2,589,203			2,433,924			36,744			2,470,668
Construction and land	719,859			41		719,900			538,752			42			538,794
Total commercial	25,211,110			148,578		25,359,688			24,124,659			201,972			24,326,631
Consumer:
Single-family residential	6,725,574			85,440		6,811,014			5,939,258			97,196			6,036,454
HELOCs	1,533,433			6,688		1,540,121			1,681,979			8,855			1,690,834
Other consumer	314,153			—		314,153			331,270			—			331,270
Total consumer	8,573,160			92,128		8,665,288			7,952,507			106,051			8,058,558
Total loans held-for-investment	$	33,784,270		$	240,706	$	34,024,976		$	32,077,166		$	308,023		$	32,385,189
Allowance for loan losses	(345,576		)	—		(345,576		)	(311,300		)	(22		)	(311,322		)
Loans held-for-investment, net	$	33,438,694		$	240,706	$	33,679,400		$	31,765,866		$	308,001		$	32,073,867

The C&I loan portfolio, which is comprised of commercial business and trade finance loans, provides financing to businesses in a wide spectrum of industries. The CRE loan portfolio consists of income producing real estate loans that are either owner occupied, or non-owner occupied where 50% or more of the debt service for the loan is primarily provided by unaffiliated rental income from a third party. The multifamily residential loan portfolio is largely comprised of loans secured by residential properties with five or more units in the Bank’s primary lending areas. Construction loans mainly provide construction financing for hotels, offices and industrial projects.

In the consumer portfolio, the Company offers single-family residential loans and HELOCs through a variety of mortgage loan programs. A substantial number of these loans are originated through a reduced documentation loan program, in which a substantial down payment is required, resulting in a low loan-to-value ratio at origination, typically 60% or less. The Company is in a first lien position for many of these reduced documentation single-family residential loans and HELOCs. These loans have historically experienced low delinquency and default rates. Other consumer loans are mainly comprised of insurance premium financing loans.

All loans are subject to the Company’s credit review and monitoring. For the commercial portfolio, loans are risk rated based on an analysis of the current state of the borrower’s credit quality. The analysis of credit quality includes a review of all repayment sources, the borrower’s current payment performance or delinquency, current financial and liquidity status, and all other relevant information. For the majority of the consumer portfolio, payment performance or delinquency is the driving indicator for the risk ratings. Risk ratings are the overall credit quality indicator for the Company and the credit quality indicator is utilized for estimating the appropriate allowance for loan losses. The risk rating system classifies loans within the following categories: Pass, Watch, Special Mention, Substandard, Doubtful and Loss. The risk ratings reflect the relative strength of the repayment sources.

Pass and Watch loans are loans that have sufficient sources of repayment in order to repay the loan in full in accordance with all terms and conditions. Special Mention loans are loans that have potential weaknesses that warrant closer attention by management. Special Mention is a transitory grade. If the potential weaknesses are resolved, a loan is upgraded to a Pass or Watch grade. If negative trends in the borrower’s financial status or other information indicate that the sources of repayment may become inadequate, a loan is downgraded to a Substandard grade. Substandard loans have well-defined weaknesses that may jeopardize the full and timely repayment of the loan. Substandard loans have the distinct possibility of loss, if the deficiencies are not corrected. When management has assessed that there is potential for loss, but a distinct possibility of loss is not yet recognizable, the loan remains classified as Substandard grade. Doubtful loans are loans that have insufficient sources of repayment and a high probability of loss. Loss loans are loans that are uncollectible and of such little value that they are no longer considered bankable assets. These internal risk ratings are reviewed routinely and adjusted based on changes in the borrowers’ financial status and the loans’ collectability.




($ in thousands)	September 30, 2019
($ in thousands)	Pass/Watch		Special Mention		Substandard		Doubtful		Total Non-PCI Loans
Commercial:
C&I	$	11,632,851	$	390,052	$	262,387	$	13,873	$	12,299,163
CRE	9,454,709		90,583		82,038		—		9,627,330
Multifamily residential	2,535,702		20,393		8,663		—		2,564,758
Construction and land	666,597		—		53,262		—		719,859
Total commercial	24,289,859		501,028		406,350		13,873		25,211,110
Consumer:
Single-family residential	6,708,317		7,773		9,484		—		6,725,574
HELOCs	1,518,542		4,966		9,925		—		1,533,433
Other consumer	299,659		11,999		2,495		—		314,153
Total consumer	8,526,518		24,738		21,904		—		8,573,160
Total	$	32,816,377	$	525,766	$	428,254	$	13,873	$	33,784,270




($ in thousands)	December 31, 2018
($ in thousands)	Pass/Watch		Special Mention		Substandard		Doubtful		Total Non-PCI Loans
Commercial:
C&I	$	11,644,470	$	260,089	$	139,844	$	10,415	$	12,054,818
CRE	8,957,228		49,705		90,232		—		9,097,165
Multifamily residential	2,402,991		20,551		10,382		—		2,433,924
Construction and land	485,217		19,838		33,697		—		538,752
Total commercial	23,489,906		350,183		274,155		10,415		24,124,659
Consumer:
Single-family residential	5,925,584		6,376		7,298		—		5,939,258
HELOCs	1,669,300		1,576		11,103		—		1,681,979
Other consumer	328,767		1		2,502		—		331,270
Total consumer	7,923,651		7,953		20,903		—		7,952,507
Total	$	31,413,557	$	358,136	$	295,058	$	10,415	$	32,077,166




($ in thousands)	September 30, 2019
($ in thousands)	Pass/Watch		Special Mention		Substandard		Doubtful		Total PCI Loans
Commercial:
C&I	$	1,839	$	—	$	—	$	—	$	1,839
CRE	106,164		—		16,089		—		122,253
Multifamily residential	23,870		—		575		—		24,445
Construction and land	41		—		—		—		41
Total commercial	131,914		—		16,664		—		148,578
Consumer:
Single-family residential	85,338		—		102		—		85,440
HELOCs	6,265		—		423		—		6,688
Total consumer	91,603		—		525		—		92,128
Total ⁽¹⁾	$	223,517	$	—	$	17,189	$	—	$	240,706




($ in thousands)	December 31, 2018
($ in thousands)	Pass/Watch		Special Mention		Substandard		Doubtful		Total PCI Loans
Commercial:
C&I	$	1,996	$	—	$	156	$	—	$	2,152
CRE	143,839		—		19,195		—		163,034
Multifamily residential	35,221		—		1,523		—		36,744
Construction and land	42		—		—		—		42
Total commercial	181,098		—		20,874		—		201,972
Consumer:
Single-family residential	95,789		1,021		386		—		97,196
HELOCs	8,314		256		285		—		8,855
Total consumer	104,103		1,277		671		—		106,051
Total ⁽¹⁾	$	285,201	$	1,277	$	21,545	$	—	$	308,023

Non-PCI loans that are 90 or more days past due are generally placed on nonaccrual status, unless the loan is well-collateralized or guaranteed by government agencies, and in the process of collection. Non-PCI loans that are less than 90 days past due but have identified deficiencies, such as when the full collection of principal or interest becomes uncertain, are also placed on nonaccrual status. The following tables present the aging analysis on non-PCI loans as of September 30, 2019 and December 31, 2018:




($ in thousands)	September 30, 2019
($ in thousands)	Accruing Loans 30-59 Days Past Due		Accruing Loans 60-89 Days Past Due		Total Accruing Past Due Loans		Nonaccrual Loans Less Than 90 Days Past Due		Nonaccrual Loans 90 or More Days Past Due		Total Nonaccrual Loans		Current Accruing Loans		Total Non-PCI Loans
Commercial:
C&I	$	4,105	$	6,889	$	10,994	$	38,049	$	52,781	$	90,830	$	12,197,339	$	12,299,163
CRE	2,828		—		2,828		1,879		17,063		18,942		9,605,560		9,627,330
Multifamily residential	689		289		978		551		—		551		2,563,229		2,564,758
Construction and land	19,687		—		19,687		—		—		—		700,172		719,859
Total commercial	27,309		7,178		34,487		40,479		69,844		110,323		25,066,300		25,211,110
Consumer:
Single-family residential	13,503		8,374		21,877		1,122		8,362		9,484		6,694,213		6,725,574
HELOCs	8,372		4,967		13,339		195		9,729		9,924		1,510,170		1,533,433
Other consumer	49		21		70		—		2,495		2,495		311,588		314,153
Total consumer	21,924		13,362		35,286		1,317		20,586		21,903		8,515,971		8,573,160
Total	$	49,233	$	20,540	$	69,773	$	41,796	$	90,430	$	132,226	$	33,582,271	$	33,784,270




($ in thousands)	December 31, 2018
($ in thousands)	Accruing Loans 30-59 Days Past Due		Accruing Loans 60-89 Days Past Due		Total Accruing Past Due Loans		Nonaccrual Loans Less Than 90 Days Past Due		Nonaccrual Loans 90 or More Days Past Due		Total Nonaccrual Loans		Current Accruing Loans		Total Non-PCI Loans
Commercial:
C&I	$	21,032	$	19,170	$	40,202	$	17,097	$	26,743	$	43,840	$	11,970,776	$	12,054,818
CRE	7,740		—		7,740		3,704		20,514		24,218		9,065,207		9,097,165
Multifamily residential	4,174		—		4,174		1,067		193		1,260		2,428,490		2,433,924
Construction and land	207		—		207		—		—		—		538,545		538,752
Total commercial	33,153		19,170		52,323		21,868		47,450		69,318		24,003,018		24,124,659
Consumer:
Single-family residential	14,645		7,850		22,495		509		4,750		5,259		5,911,504		5,939,258
HELOCs	2,573		1,816		4,389		1,423		7,191		8,614		1,668,976		1,681,979
Other consumer	11		12		23		—		2,502		2,502		328,745		331,270
Total consumer	17,229		9,678		26,907		1,932		14,443		16,375		7,909,225		7,952,507
Total	$	50,382	$	28,848	$	79,230	$	23,800	$	61,893	$	85,693	$	31,912,243	$	32,077,166

For information on the policy for recording payments received and resuming accrual of interest on non-PCI loans that are placed on nonaccrual status, see Note 1 — Summary of Significant Accounting Policies — Loans Held-for-Investment to the Consolidated Financial Statements of the Company’s 2018 Form 10-K.

PCI loans are excluded from the above aging analysis tables as the Company has elected to account for these loans on a pool level basis under ASC 310-30 at the time of acquisition. Refer to the discussion on PCI loans within this Note for additional details on interest income recognition. As of September 30, 2019 and December 31, 2018, PCI loans on nonaccrual status totaled $531 thousand and $4.0 million, respectively.

The Company commences the foreclosure process on consumer mortgage loans when a borrower becomes 120 days delinquent in accordance with Consumer Finance Protection Bureau guidelines. As of September 30, 2019 and December 31, 2018, consumer mortgage loans of $6.7 million and $3.0 million, respectively, were secured by residential real estate properties, for which formal foreclosure proceedings were in process in accordance with local requirements of the applicable jurisdictions. As of both September 30, 2019 and December 31, 2018, no foreclosed residential real estate property was included in total net OREO of $1.1 million and $133 thousand, respectively.

Potential troubled debt restructurings (“TDRs”) are individually evaluated and the type of restructuring is selected based on the loan type and the circumstances of the borrower’s financial difficulty. A TDR is a modification of the terms of a loan when the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not have otherwise considered.




($ in thousands)	Loans Modified as TDRs During the Three Months Ended September 30,
	2019							2018
	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment ⁽¹⁾		Financial Impact ⁽²⁾		Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment ⁽¹⁾		Financial Impact ⁽²⁾
Commercial:
C&I	1	$	7,933	$	6,000	$	2,396	4	$	7,992	$	8,006	$	3,619
CRE	—	$	—	$	—	$	—	—	$	—	$	—	$	—
Consumer:
Single-family residential	1	$	903	$	893	$	—	—	$	—	$	—	$	—
HELOCs	1	$	139	$	136	$	—	—	$	—	$	—	$	—




($ in thousands)	Loans Modified as TDRs During the Nine Months Ended September 30,
	2019							2018
	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment ⁽¹⁾		Financial Impact ⁽²⁾		Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment ⁽¹⁾		Financial Impact ⁽²⁾
Commercial:
C&I	9	$	85,073	$	81,038	$	9,231	4	$	7,992	$	8,006	$	3,727
CRE	—	$	—	$	—	$	—	1	$	750	$	798	$	—
Consumer:
Single-family residential	2	$	1,123	$	1,109	$	2	2	$	404	$	395	$	(28	)
HELOCs	1	$	139	$	136	$	—	2	$	1,546	$	1,467	$	—




($ in thousands)	Modification Type During the Three Months Ended September 30,
	2019										2018
	Principal ⁽¹⁾		Interest Rate Reduction		Interest Deferments		Other		Total		Principal ⁽¹⁾		Interest Rate Reduction		Interest Deferments		Other		Total
Commercial:
C&I	$	6,000	$	—	$	—	$	—	$	6,000	$	8,006	$	—	$	—	$	—	$	8,006
Total commercial	6,000		—		—		—		6,000		8,006		—		—		—		8,006
Consumer:
Single-family residential	—		—		893		—		893		—		—		—		—		—
HELOCs	—		—		—		136		136		—		—		—		—		—
Total consumer	—		—		893		136		1,029		—		—		—		—		—
Total	$	6,000	$	—	$	893	$	136	$	7,029	$	8,006	$	—	$	—	$	—	$	8,006




($ in thousands)	Modification Type During the Nine Months Ended September 30,
	2019										2018
	Principal ⁽¹⁾		Interest Rate Reduction		Interest Deferments		Other ⁽²⁾		Total		Principal ⁽¹⁾		Interest Rate Reduction		Interest Deferments		Other		Total
Commercial:
C&I	$	44,271	$	—	$	—	$	36,767	$	81,038	$	8,006	$	—	$	—	$	—	$	8,006
CRE	—		—		—		—		—		—		798		—		—		798
Total commercial	44,271		—		—		36,767		81,038		8,006		798		—		—		8,804
Consumer:
Single-family residential	—		—		1,109		—		1,109		64		—		—		331		395
HELOCs	—		—		—		136		136		1,400		—		—		67		1,467
Total consumer	—		—		1,109		136		1,245		1,464		—		—		398		1,862
Total	$	44,271	$	—	$	1,109	$	36,903	$	82,283	$	9,470	$	798	$	—	$	398	$	10,666

Subsequent to restructuring, if a TDR that becomes delinquent, generally beyond 90 days past due, it is considered to be in default. TDRs are individually evaluated for impairment under the specific reserve methodology, subsequent defaults do not generally have a significant additional impact on the allowance for loan losses. The following tables present information on loans for which a subsequent default occurred during the three and nine months ended September 30, 2019 and 2018 that had been modified as a TDR within 12 months or less of its default, and were still in default at the respective period end:




($ in thousands)	September 30, 2019
($ in thousands)	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial:
C&I	$	154,618	$	82,798	$	38,305	$	121,103	$	13,783
CRE	30,573		23,653		1,223		24,876		98
Multifamily residential	5,190		1,891		2,848		4,739		44
Total commercial	190,381		108,342		42,376		150,718		13,925
Consumer:
Single-family residential	18,299		4,311		12,689		17,000		34
HELOCs	12,569		7,992		4,506		12,498		4
Other consumer	2,495		—		2,495		2,495		2,491
Total consumer	33,363		12,303		19,690		31,993		2,529
Total non-PCI impaired loans	$	223,744	$	120,645	$	62,066	$	182,711	$	16,454




($ in thousands)	December 31, 2018
($ in thousands)	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial:
C&I	$	82,963	$	48,479	$	8,609	$	57,088	$	1,219
CRE	36,426		28,285		2,067		30,352		208
Multifamily residential	6,031		2,949		2,611		5,560		75
Total commercial	125,420		79,713		13,287		93,000		1,502
Consumer:
Single-family residential	14,670		2,552		10,908		13,460		34
HELOCs	10,035		5,547		4,409		9,956		5
Other consumer	2,502		—		2,502		2,502		2,491
Total consumer	27,207		8,099		17,819		25,918		2,530
Total non-PCI impaired loans	$	152,627	$	87,812	$	31,106	$	118,918	$	4,032




($ in thousands)	Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018
	Average Recorded Investment		Recognized Interest Income ⁽¹⁾		Average Recorded Investment		Recognized Interest Income ⁽¹⁾		Average Recorded Investment		Recognized Interest Income ⁽¹⁾		Average Recorded Investment		Recognized Interest Income ⁽¹⁾
Commercial:
C&I	$	150,063	$	340	$	94,095	$	328	$	198,024	$	2,156	$	142,259	$	685
CRE	28,846		114		31,891		116		33,329		363		35,311		375
Multifamily residential	5,226		58		6,740		56		5,856		179		11,776		190
Construction and land	—		—		—		—		—		—		3,973		—
Total commercial	184,135		512		132,726		500		237,209		2,698		193,319		1,250
Consumer:
Single-family residential	23,779		124		18,423		119		27,758		382		21,208		347
HELOCs	15,382		37		10,474		18		19,529		93		11,897		51
Other consumer	2,504		—		2,491		—		2,526		—		2,491		—
Total consumer	41,665		161		31,388		137		49,813		475		35,596		398
Total non-PCI impaired loans	$	225,800	$	673	$	164,114	$	637	$	287,022	$	3,173	$	228,915	$	1,648




($ in thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Non-PCI Loans
Allowance for non-PCI loans, beginning of period	$	330,620		$	301,511		$	311,300		$	287,070
Provision for loan losses on non-PCI loans	37,884			12,650			79,272			47,722
Gross charge-offs:
Commercial:
C&I	(25,098		)	(4,462		)	(54,087		)	(36,441		)
CRE	(1,021		)	—			(1,021		)	—
Consumer:
Single-family residential	(11		)	—			(11		)	(1		)
Other consumer	(12		)	(6		)	(40		)	(185		)
Total gross charge-offs	(26,142		)	(4,468		)	(55,159		)	(36,627		)
Gross recoveries:
Commercial:
C&I	1,648			411			5,612			8,841
CRE	1,896			2			3,955			431
Multifamily residential	42			77			376			1,471
Construction and land	21			23			523			716
Consumer:
Single-family residential	60			295			134			1,108
HELOCs	5			—			7			—
Other consumer	7			1			14			2
Total gross recoveries	3,679			809			10,621			12,569
Net charge-offs	(22,463		)	(3,659		)	(44,538		)	(24,058		)
Foreign currency translation adjustments	(465		)	(492		)	(458		)	(724		)
Allowance for non-PCI loans, end of period	345,576			310,010			345,576			310,010
PCI Loans
Allowance for PCI loans, beginning of period	5			39			22			58
Reversal of loan losses on PCI loans	(5		)	(8		)	(22		)	(27		)
Allowance for PCI loans, end of period	—			31			—			31
Allowance for loan losses	$	345,576		$	310,041		$	345,576		$	310,041

For further information on accounting policies and the methodologies used to estimate the allowance for credit losses and loan charge-offs, see Note 1 — Summary of Significant Accounting Policies — Allowance for Credit Losses to the Consolidated Financial Statements of the Company’s 2018 Form 10-K.




($ in thousands)	Three Months Ended September 30,					Nine Months Ended September 30,
($ in thousands)	2019		2018			2019		2018
Allowance for unfunded credit reserves, beginning of period	$	13,019	$	14,019		$	12,566	$	13,318
Provision for (reversal of) unfunded credit reserves	405		(2,100		)	858		(1,399		)
Allowance for unfunded credit reserves, end of period	$	13,424	$	11,919		$	13,424	$	11,919

The allowance for unfunded credit reserves is maintained at a level, which management believes to be sufficient to absorb estimated probable losses related to unfunded credit facilities. The allowance for unfunded credit reserves is included in Accrued expenses and other liabilities on the Consolidated Balance Sheet. See Note 12 — Commitments and Contingencies to the Consolidated Financial Statements in this Form 10-Q for additional information related to unfunded credit reserves.




($ in thousands)	September 30, 2019
	Commercial								Consumer						Total
	C&I		CRE		Multifamily Residential		Construction and Land		Single- Family Residential		HELOCs		Other Consumer		Total
Allowance for loan losses
Individually evaluated for impairment	$	13,783	$	98	$	44	$	—	$	34	$	4	$	2,491	$	16,454
Collectively evaluated for impairment	205,086		37,375		20,263		29,171		29,901		5,852		1,474		329,122
Acquired with deteriorated credit quality	—		—		—		—		—		—		—		—
Total	$	218,869	$	37,473	$	20,307	$	29,171	$	29,935	$	5,856	$	3,965	$	345,576

Recorded investment in loans
Individually evaluated for impairment	$	121,103	$	24,876	$	4,739	$	—	$	17,000	$	12,498	$	2,495	$	182,711
Collectively evaluated for impairment	12,178,060		9,602,454		2,560,019		719,859		6,708,574		1,520,935		311,658		33,601,559
Acquired with deteriorated credit quality ⁽¹⁾	1,839		122,253		24,445		41		85,440		6,688		—		240,706
Total ⁽¹⁾	$	12,301,002	$	9,749,583	$	2,589,203	$	719,900	$	6,811,014	$	1,540,121	$	314,153	$	34,024,976




($ in thousands)	December 31, 2018
	Commercial								Consumer						Total
	C&I		CRE		Multifamily Residential		Construction and Land		Single- Family Residential		HELOCs		Other Consumer		Total
Allowance for loan losses
Individually evaluated for impairment	$	1,219	$	208	$	75	$	—	$	34	$	5	$	2,491	$	4,032
Collectively evaluated for impairment	187,898		40,436		19,810		20,290		31,306		5,769		1,759		307,268
Acquired with deteriorated credit quality	—		22		—		—		—		—		—		22
Total	$	189,117	$	40,666	$	19,885	$	20,290	$	31,340	$	5,774	$	4,250	$	311,322

Recorded investment in loans
Individually evaluated for impairment	$	57,088	$	30,352	$	5,560	$	—	$	13,460	$	9,956	$	2,502	$	118,918
Collectively evaluated for impairment	11,997,730		9,066,813		2,428,364		538,752		5,925,798		1,672,023		328,768		31,958,248
Acquired with deteriorated credit quality ⁽¹⁾	2,152		163,034		36,744		42		97,196		8,855		—		308,023
Total ⁽¹⁾	$	12,056,970	$	9,260,199	$	2,470,668	$	538,794	$	6,036,454	$	1,690,834	$	331,270	$	32,385,189

At the date of acquisition, PCI loans are pooled and accounted for at fair value, which represents the discounted value of the expected cash flows of the loan portfolio. A pool is accounted for as a single asset with a single interest rate, cumulative loss rate and cash flows expectation. The cash flows expected over the life of the pools are estimated by an internal cash flows model that projects cash flows and calculates the carrying values of the pools, book yields, effective interest income and impairment, if any, based on pool level events. Assumptions as to cumulative loss rates, loss curves and prepayment speeds are utilized to calculate the expected cash flows. The amount of expected cash flows over the initial investment in the loan represents the “accretable yield,” which is recognized as interest income on a level yield basis over the life of the loan. Projected loss rates and prepayment speeds affect the estimated life of PCI loans, which may change the amount of interest income, and possibly principal, expected to be collected. The excess of total contractual cash flows over the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the “nonaccretable difference.”




($ in thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
($ in thousands)	2019			2018			2019			2018
Accretable yield for PCI loans, beginning of period	$	64,053		$	85,052		$	74,870		$	101,977
Accretion	(6,198		)	(7,357		)	(18,205		)	(27,575		)
Changes in expected cash flows	(934		)	1,638			256			4,931
Accretable yield for PCI loans, end of period	$	56,921		$	79,333		$	56,921		$	79,333

At the time of commitment to originate or purchase a loan, the loan is determined to be held for investment if it is the Company’s intent to hold the loan to maturity or for the “foreseeable future,” subject to periodic reviews under the Company’s evaluation processes, including asset/liability and credit risk management. When the Company subsequently changes its intent to hold certain loans, the loans are transferred from held-for-investment to held-for-sale at the lower of cost or fair value. As of September 30, 2019 and December 31, 2018, loans held-for-sale of $294 thousand and $275 thousand consisted of single-family residential loans.

The Company purchases and sells loans in the secondary market in the ordinary course of business. From time to time, purchased loans may be transferred from held-for-investment to held-for-sale, and write-downs to allowance for loan losses are recorded, when appropriate. The following tables provide information about the carrying value of loans purchased for the held-for-investment portfolio, loans sold and loans transferred from held-for-investment to held-for-sale at lower of cost or fair value during the three and nine months ended September 30, 2019 and 2018:




($ in thousands)	Three Months Ended September 30, 2019
	Commercial								Consumer		Total
	C&I		CRE		Multifamily Residential		Construction and Land		Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale ⁽¹⁾	$	34,071	$	14,969	$	—	$	—	$	—	$	49,040
Sales ^(2)(3)(4)	$	37,986	$	14,969	$	—	$	—	$	2,708	$	55,663
Purchases ⁽⁵⁾	$	38,047	$	—	$	1,350	$	—	$	29,568	$	68,965




($ in thousands)	Three Months Ended September 30, 2018
	Commercial								Consumer		Total
	C&I		CRE		Multifamily Residential		Construction and Land		Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale ⁽¹⁾	$	53,149	$	9,830	$	—	$	—	$	14,981	$	77,960
Loans transferred from held-for-sale to held-for-investment	$	2,306	$	—	$	—	$	—	$	—	$	2,306
Sales ^(2)(3)(4)	$	62,744	$	9,830	$	—	$	—	$	20,844	$	93,418
Purchases ⁽⁵⁾	$	47,809	$	—	$	2,518	$	—	$	10,759	$	61,086




($ in thousands)	Nine Months Ended September 30, 2019
	Commercial								Consumer		Total
	C&I		CRE		Multifamily Residential		Construction and Land		Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale ⁽¹⁾	$	189,237	$	31,624	$	—	$	1,573	$	—	$	222,434
Sales ^(2)(3)(4)	$	189,663	$	31,624	$	—	$	1,573	$	6,322	$	229,182
Purchases ⁽⁵⁾	$	304,341	$	—	$	7,302	$	—	$	83,607	$	395,250




($ in thousands)	Nine Months Ended September 30, 2018
	Commercial								Consumer		Total
	C&I		CRE		Multifamily Residential		Construction and Land		Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale ⁽¹⁾	$	298,989	$	49,621	$	—	$	—	$	14,981	$	363,591
Loans transferred from held-for-sale to held-for-investment	$	2,306	$	—	$	—	$	—	$	—	$	2,306
Sales ^(2)(3)(4)	$	305,435	$	49,621	$	—	$	—	$	31,565	$	386,621
Purchases ⁽⁵⁾	$	398,171	$	—	$	5,953	$	—	$	46,784	$	450,908