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Loans and Leases
3 Months Ended
Mar. 31, 2019
Receivables [Abstract]  
Loans and Leases
LOANS AND LEASES
Our loans are carried at the principal amount outstanding, net of deferred fees and costs, and in the case of acquired loans, net of purchase discounts and premiums. Deferred fees and costs and purchase discounts and premiums on acquired non-impaired loans are recognized as an adjustment to interest income over the contractual life of the loans primarily using the effective interest method or taken into income when the related loans are paid off or included in the carrying amount of loans that are sold.
Loans and Leases Held for Investment
The following table summarizes the composition of our loans and leases held for investment as of the dates indicated:
 
March 31,
 
December 31,
 
2019
 
2018
 
(In thousands)
Real estate mortgage
$
8,172,992

 
$
7,933,859

Real estate construction and land
2,379,560

 
2,262,710

Commercial
7,446,612

 
7,428,500

Consumer
372,131

 
401,296

Total gross loans and leases held for investment
18,371,295

 
18,026,365

Deferred fees, net
(63,598
)
 
(68,652
)
Total loans and leases held for investment,
 
 
 
net of deferred fees
18,307,697

 
17,957,713

Allowance for loan and lease losses
(136,281
)
 
(132,472
)
Total loans and leases held for investment, net
$
18,171,416

 
$
17,825,241


The following tables present an aging analysis of our loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of the dates indicated:
 
March 31, 2019
 
30 - 89
 
90 or More
 
 
 
 
 
 
 
Days
 
Days
 
Total
 
 
 
 
 
Past Due
 
Past Due
 
Past Due
 
Current
 
Total
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
Commercial
$
7,266

 
$
6,464

 
$
13,730

 
$
4,626,780

 
$
4,640,510

Income producing and other residential
1,853

 
309

 
2,162

 
3,516,786

 
3,518,948

Total real estate mortgage
9,119

 
6,773

 
15,892

 
8,143,566

 
8,159,458

Real estate construction and land:
 
 
 
 
 
 
 
 
 
Commercial

 
430

 
430

 
943,166

 
943,596

Residential
8,949

 

 
8,949

 
1,399,179

 
1,408,128

Total real estate construction and land
8,949

 
430

 
9,379

 
2,342,345

 
2,351,724

Commercial:
 
 
 
 
 
 
 
 
 
Asset-based
3,750

 

 
3,750

 
3,418,452

 
3,422,202

Venture capital
4,500

 
1,194

 
5,694

 
2,021,756

 
2,027,450

Other commercial
3,655

 
3,339

 
6,994

 
1,967,708

 
1,974,702

Total commercial
11,905

 
4,533

 
16,438

 
7,407,916

 
7,424,354

Consumer
614

 
208

 
822

 
371,339

 
372,161

Total
$
30,587

 
$
11,944

 
$
42,531

 
$
18,265,166

 
$
18,307,697



 
December 31, 2018
 
30 - 89
 
90 or More
 
 
 
 
 
 
 
Days
 
Days
 
Total
 
 
 
 
 
Past Due
 
Past Due
 
Past Due
 
Current
 
Total
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
Commercial
$
3,487

 
$
7,541

 
$
11,028

 
$
4,813,270

 
$
4,824,298

Income producing and other residential
1,557

 
476

 
2,033

 
3,091,810

 
3,093,843

Total real estate mortgage
5,044

 
8,017

 
13,061

 
7,905,080

 
7,918,141

Real estate construction and land:
 
 
 
 
 
 
 
 
 
Commercial

 
442

 
442

 
912,141

 
912,583

Residential
1,527

 

 
1,527

 
1,319,546

 
1,321,073

Total real estate construction and land
1,527

 
442

 
1,969

 
2,231,687

 
2,233,656

Commercial:
 
 
 
 
 
 
 
 
 
Asset-based
47

 
646

 
693

 
3,304,728

 
3,305,421

Venture capital
4,705

 

 
4,705

 
2,034,043

 
2,038,748

Other commercial
5,181

 
1,285

 
6,466

 
2,053,960

 
2,060,426

Total commercial
9,933

 
1,931

 
11,864

 
7,392,731

 
7,404,595

Consumer
581

 
333

 
914

 
400,407

 
401,321

Total
$
17,085

 
$
10,723

 
$
27,808

 
$
17,929,905

 
$
17,957,713


It is our policy to discontinue accruing interest when principal or interest payments are past due 90 days or more (unless the loan is both well secured and in the process of collection) or when, in the opinion of management, there is a reasonable doubt as to the collectability of a loan or lease in the normal course of business. Interest income on nonaccrual loans is recognized only to the extent cash is received and the principal balance of the loan is deemed collectable.
The following table presents our nonaccrual and performing loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of the dates indicated:  
 
March 31, 2019
 
December 31, 2018
 
Nonaccrual
 
Performing
 
Total
 
Nonaccrual
 
Performing
 
Total
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
12,750

 
$
4,627,760

 
$
4,640,510

 
$
15,321

 
$
4,808,977

 
$
4,824,298

Income producing and other residential
2,444

 
3,516,504

 
3,518,948

 
2,524

 
3,091,319

 
3,093,843

Total real estate mortgage
15,194

 
8,144,264

 
8,159,458

 
17,845

 
7,900,296

 
7,918,141

Real estate construction and land:
 
 
 
 
 
 
 
 
 
 
 
Commercial
430

 
943,166

 
943,596

 
442

 
912,141

 
912,583

Residential

 
1,408,128

 
1,408,128

 

 
1,321,073

 
1,321,073

Total real estate construction and land
430

 
2,351,294

 
2,351,724

 
442

 
2,233,214

 
2,233,656

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Asset-based
43,406

 
3,378,796

 
3,422,202

 
32,324

 
3,273,097

 
3,305,421

Venture capital
20,437

 
2,007,013

 
2,027,450

 
20,299

 
2,018,449

 
2,038,748

Other commercial
8,633

 
1,966,069

 
1,974,702

 
7,380

 
2,053,046

 
2,060,426

Total commercial
72,476

 
7,351,878

 
7,424,354

 
60,003

 
7,344,592

 
7,404,595

Consumer
427

 
371,734

 
372,161

 
1,043

 
400,278

 
401,321

Total
$
88,527

 
$
18,219,170

 
$
18,307,697

 
$
79,333

 
$
17,878,380

 
$
17,957,713


At March 31, 2019, nonaccrual loans and leases totaled $88.5 million and included $11.9 million of loans and leases 90 or more days past due, $2.4 million of loans and leases 30 to 89 days past due, and $74.2 million of loans and leases current with respect to contractual payments that were placed on nonaccrual status based on management’s judgment regarding their collectability. Nonaccrual loans and leases totaled $79.3 million at December 31, 2018, including $10.7 million of loans and leases 90 or more days past due, $6.6 million of loans and leases 30 to 89 days past due, and $62.0 million of current loans and leases that were placed on nonaccrual status based on management’s judgment regarding their collectability.
As of March 31, 2019, our three largest loan relationships on nonaccrual status had an aggregate carrying value of $52.4 million and represented 59% of total nonaccrual loans and leases.
The following tables present the credit risk rating categories for loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of the dates indicated. Classified loans and leases are those with a credit risk rating of either substandard or doubtful.
 
March 31, 2019
 
Classified
 
Special Mention
 
Pass
 
Total
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
Commercial
$
24,542

 
$
67,115

 
$
4,548,853

 
$
4,640,510

Income producing and other residential
9,131

 
452

 
3,509,365

 
3,518,948

Total real estate mortgage
33,673

 
67,567

 
8,058,218

 
8,159,458

Real estate construction and land:
 
 
 
 
 
 
 
Commercial
430

 

 
943,166

 
943,596

Residential

 
2,485

 
1,405,643

 
1,408,128

Total real estate construction and land
430

 
2,485

 
2,348,809

 
2,351,724

Commercial:
 
 
 
 
 
 
 
Asset-based
52,586

 
85,060

 
3,284,556

 
3,422,202

Venture capital
43,128

 
62,514

 
1,921,808

 
2,027,450

Other commercial
59,690

 
74,517

 
1,840,495

 
1,974,702

Total commercial
155,404

 
222,091

 
7,046,859

 
7,424,354

Consumer
798

 
637

 
370,726

 
372,161

Total
$
190,305

 
$
292,780

 
$
17,824,612

 
$
18,307,697





 
December 31, 2018
 
Classified
 
Special Mention
 
Pass
 
Total
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
Commercial
$
57,734

 
$
74,785

 
$
4,691,779

 
$
4,824,298

Income producing and other residential
10,521

 
968

 
3,082,354

 
3,093,843

Total real estate mortgage
68,255

 
75,753

 
7,774,133

 
7,918,141

Real estate construction and land:
 
 
 
 
 
 
 
Commercial
442

 
7,041

 
905,100

 
912,583

Residential

 
1,527

 
1,319,546

 
1,321,073

Total real estate construction and land
442

 
8,568

 
2,224,646

 
2,233,656

Commercial:
 
 
 
 
 
 
 
Asset-based
45,957

 
48,338

 
3,211,126

 
3,305,421

Venture capital
28,731

 
77,588

 
1,932,429

 
2,038,748

Other commercial
92,526

 
50,136

 
1,917,764

 
2,060,426

Total commercial
167,214

 
176,062

 
7,061,319

 
7,404,595

Consumer
1,199

 
1,015

 
399,107

 
401,321

Total
$
237,110

 
$
261,398

 
$
17,459,205

 
$
17,957,713



Nonaccrual loans and leases and performing TDRs are considered impaired for reporting purposes. TDRs are a result of rate reductions, term extensions, fee concessions, and debt forgiveness, or a combination thereof.
The following table presents the composition of our impaired loans and leases held for investment, net of deferred fees, by loan portfolio segment as of the dates indicated:
 
March 31, 2019
 
December 31, 2018
 
 
 
 
 
Total
 
 
 
 
 
Total
 
Nonaccrual
 
 
 
Impaired
 
Nonaccrual
 
 
 
Impaired
 
Loans
 
 
 
Loans
 
Loans
 
 
 
Loans
 
and
 
Performing
 
and
 
and
 
Performing
 
and
 
Leases
 
TDRs
 
Leases
 
Leases
 
TDRs
 
Leases
 
(In thousands)
Real estate mortgage
$
15,194

 
$
11,355

 
$
26,549

 
$
17,845

 
$
11,484

 
$
29,329

Real estate construction and land
430

 
5,002

 
5,432

 
442

 
5,420

 
5,862

Commercial
72,476

 
573

 
73,049

 
60,003

 
692

 
60,695

Consumer
427

 
97

 
524

 
1,043

 
105

 
1,148

Total
$
88,527

 
$
17,027

 
$
105,554

 
$
79,333

 
$
17,701

 
$
97,034




The following tables present information regarding our impaired loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of and for the dates indicated:
 
March 31, 2019
 
December 31, 2018
 
 
 
Unpaid
 
 
 
 
 
Unpaid
 
 
 
Recorded
 
Principal
 
Related
 
Recorded
 
Principal
 
Related
Impaired Loans and Leases
Investment
 
Balance
 
Allowance
 
Investment
 
Balance
 
Allowance
 
(In thousands)
With An Allowance Recorded:
 

 
 

 
 

 
 

 
 

 
 

Real estate mortgage:
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
1,139

 
$
1,139

 
$
68

 
$
1,736

 
$
1,648

 
$
170

Income producing and other residential
2,090

 
2,084

 
202

 
2,569

 
2,563

 
247

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Asset based
10,335

 
10,335

 
2,735

 

 

 

Venture capital
19,243

 
21,029

 
3,196

 
11,621

 
13,255

 
3,141

Other commercial

 

 

 
473

 
482

 
473

With No Related Allowance Recorded:
 
 
 
 
 
 
 
 
 
 
 
Real estate mortgage:
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
15,727

 
$
29,962

 
 
 
$
17,783

 
$
32,035

 
 
Income producing and other residential
7,593

 
9,775

 
 
 
7,241

 
9,425

 
 
Real estate construction and land:
 
 
 
 
 
 
 
 
 
 
 
Commercial
5,432

 
5,449

 
 
 
5,862

 
5,870

 
 
Commercial:
 
 
 
 
 
 
 
 
 
 
 
Asset-based
33,071

 
38,401

 
 
 
32,324

 
38,100

 
 
Venture capital
1,194

 
31,632

 
 
 
8,678

 
41,335

 
 
Other commercial
9,206

 
27,642

 
 
 
7,599

 
25,740

 
 
Consumer
524

 
693

 
 
 
1,148

 
1,470

 
 
Total Loans and Leases With and
 
 
 
 
 
 
 
 
 
 
 
Without an Allowance Recorded:
 
 
 
 
 
 
 
 
 
 
 
Real estate mortgage
$
26,549

 
$
42,960

 
$
270

 
$
29,329

 
$
45,671

 
$
417

Real estate construction and land
5,432

 
5,449

 

 
5,862

 
5,870

 

Commercial
73,049

 
129,039

 
5,931

 
60,695

 
118,912

 
3,614

Consumer
524

 
693

 

 
1,148

 
1,470

 

Total
$
105,554

 
$
178,141

 
$
6,201

 
$
97,034

 
$
171,923

 
$
4,031












 
Three Months Ended March 31,
 
2019
 
2018
 
Weighted
 
Interest
 
Weighted
 
Interest
 
Average
 
Income
 
Average
 
Income
Impaired Loans and Leases
Balance(1)
 
Recognized
 
Balance(1)
 
Recognized
 
(In thousands)
With An Allowance Recorded:
 

 
 

 
 

 
 

Real estate mortgage:
 
 
 
 
 
 
 
Commercial
$
1,139

 
$
17

 
$
13,884

 
$
201

Income producing and other residential
2,090

 
16

 
4,295

 
23

Commercial:
 
 
 
 
 
 
 
Asset-based
3,560

 

 

 

Venture capital
12,906

 

 
14,598

 

Other commercial

 

 
16,851

 
15

Consumer

 

 
295

 
2

With No Related Allowance Recorded:
 
 
 
 
 
 
 
Real estate mortgage:
 
 
 
 
 
 
 
Commercial
$
15,538

 
$
53

 
$
46,782

 
$
765

Income producing and other residential
7,516

 
53

 
8,464

 
45

Real estate construction and land:
 
 
 
 
 
 
 
Commercial
5,432

 
101

 
5,670

 
89

Commercial:
 
 
 
 
 
 
 
Asset-based
31,979

 

 
32,838

 

Venture capital
1,194

 

 
4,474

 

Other commercial
7,767

 
17

 
7,859

 
1,147

Consumer
524

 
2

 
79

 

Total Loans and Leases With and
 
 
 
 
 
 
 
Without an Allowance Recorded:
 
 
 
 
 
 
 
Real estate mortgage
$
26,283

 
$
139

 
$
73,425

 
$
1,034

Real estate construction and land
5,432

 
101

 
5,670

 
89

Commercial
57,406

 
17

 
76,620

 
1,162

Consumer
524

 
2

 
374

 
2

Total
$
89,645

 
$
259

 
$
156,089

 
$
2,287


_________________________
(1)
For loans and leases reported as impaired at March 31, 2019 and 2018, amounts were calculated based on the period of time such loans and leases were impaired during the reported period.







The following table presents our troubled debt restructurings of loans held for investment by loan portfolio segment and class for the periods indicated:
 
Three Months Ended March 31,
 
2019
 
2018
 
 
 
Pre-
 
Post-
 
 
 
Pre-
 
Post-
 
 
 
Modification
 
Modification
 
 
 
Modification
 
Modification
 
Number
 
Outstanding
 
Outstanding
 
Number
 
Outstanding
 
Outstanding
 
of
 
Recorded
 
Recorded
 
of
 
Recorded
 
Recorded
Troubled Debt Restructurings
Loans
 
Investment
 
Investment
 
Loans
 
Investment
 
Investment
 
(Dollars in thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
 
 
Commercial
1

 
$
37

 
$

 

 
$

 
$

Income producing and other residential
3

 
789

 
789

 

 

 

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Venture capital
6

 
2,105

 
1,242

 

 

 

Other commercial
8

 
585

 
585

 
2

 
11,783

 
11,783

Total
18

 
$
3,516

 
$
2,616

 
2

 
$
11,783

 
$
11,783



During the three months ended March 31, 2019, two other commercial loans totaling $64,000 were restructured in the preceding 12-month period and subsequently defaulted after being restructured. During the three months ended March 31, 2018, one other commercial loan of $2.3 million was restructured in the preceding 12-month period and subsequently defaulted after being restructured.
Leases Receivable
We provide equipment financing to our customers primarily with direct financing leases. Lease receivables are recorded on the balance sheet but the leased equipment is not, although we generally retain legal title to the leased equipment until the end of each lease. Direct financing leases are stated at the net amount of minimum lease payments receivable, plus any unguaranteed residual value, less the amount of unearned income and net acquisition discount at the reporting date. Direct lease origination costs are amortized using the effective interest method over the life of the leases. Direct financing leases are subject to our allowance for loans and leases.
The following table provides the components of leases receivable income for the period indicated:
 
Three Months Ended
 
March 31, 2019
 
(In thousands)
Component of leases receivable income:
 
Interest income on net investments in leases
$
3,140

The following table presents the components of leases receivable as of the date indicated:
 
March 31, 2019
 
(Dollars in thousands)
Net investment in sales type and direct financing leases:
 
Lease payments receivable
$
195,018

Unguaranteed residual assets
25,895

Deferred fees and other
962

Aggregate net investment in leases
$
221,875

The following table presents maturities of leases receivable as of the date indicated:
 
March 31, 2019
 
(In thousands)
Twelve Months Ending March 31,
 
2020
$
77,413

2021
63,321

2022
42,112

2023
15,386

2024
8,998

Thereafter
7,348

Total undiscounted cash flows
214,578

Less: Unearned income
(19,560
)
Present value of lease payments
$
195,018

Allowance for Loan and Lease Losses
The following tables present a summary of the activity in the allowance for loan and lease losses on loans and leases held for investment by loan portfolio segment for the periods indicated:
 
Three Months Ended March 31, 2019
 
 
 
Real Estate
 
 
 
 
 
 
 
Real Estate
 
Construction
 
 
 
 
 
 
 
Mortgage
 
and Land
 
Commercial
 
Consumer
 
Total
 
(In thousands)
Allowance for Loan and Lease Losses:
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
46,021

 
$
28,209

 
$
56,360

 
$
1,882

 
$
132,472

Charge-offs
(196
)
 

 
(3,003
)
 
(266
)
 
(3,465
)
Recoveries
143

 

 
3,106

 
25

 
3,274

Net (charge-offs) recoveries
(53
)
 

 
103

 
(241
)
 
(191
)
Provision (negative provision)
(214
)
 
(1,001
)
 
5,033

 
182

 
4,000

Balance, end of period
$
45,754

 
$
27,208

 
$
61,496

 
$
1,823

 
$
136,281

 
 
 
 
 
 
 
 
 
 
Ending Allowance by
 
 
 
 
 
 
 
 
 
Impairment Methodology:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
270

 
$

 
$
5,931

 
$

 
$
6,201

Collectively evaluated for impairment
$
45,484

 
$
27,208

 
$
55,565

 
$
1,823

 
$
130,080

 
 
 
 
 
 
 
 
 
 
Ending Loans and Leases by
 
 
 
 
 
 
 
 
 
Impairment Methodology:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
23,908

 
$
5,432

 
$
71,660

 
$

 
$
101,000

Collectively evaluated for impairment
8,135,550

 
2,346,292

 
7,352,694

 
372,161

 
18,206,697

Ending balance
$
8,159,458

 
$
2,351,724

 
$
7,424,354

 
$
372,161

 
$
18,307,697





 
Three Months Ended March 31, 2018
 
 
 
Real Estate
 
 
 
 
 
 
 
Real Estate
 
Construction
 
 
 
 
 
 
 
Mortgage
 
and Land
 
Commercial
 
Consumer
 
Total
 
(In thousands)
Allowance for Loan and Lease Losses:
 
 
 
 
 
 
 
 
 
Balance, beginning of period (1)
$
40,051

 
$
13,055

 
$
84,022

 
$
2,328

 
$
139,456

Charge-offs
(2,598
)
 

 
(9,524
)
 
(31
)
 
(12,153
)
Recoveries
1,657

 
9

 
5,487

 
45

 
7,198

Net (charge-offs) recoveries
(941
)
 
9

 
(4,037
)
 
14

 
(4,955
)
Provision (negative provision)
1,048

 
5,126

 
(6,205
)
 
(195
)
 
(226
)
Balance, end of period
$
40,158

 
$
18,190

 
$
73,780

 
$
2,147

 
$
134,275

 
 
 
 
 
 
 
 
 
 
Ending Allowance by
 
 
 
 
 
 
 
 
 
Impairment Methodology:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
1,088

 
$

 
$
13,141

 
$
16

 
$
14,245

Collectively evaluated for impairment
$
39,070

 
$
18,190

 
$
60,639

 
$
2,131

 
$
120,030

 
 
 
 
 
 
 
 
 
 
Ending Loans and Leases by
 
 
 
 
 
 
 
 
 
Impairment Methodology:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
74,390

 
$
5,670

 
$
82,434

 
$
324

 
$
162,818

Collectively evaluated for impairment
7,479,853

 
1,671,332

 
6,743,689

 
397,593

 
16,292,467

Ending balance
$
7,554,243

 
$
1,677,002

 
$
6,826,123

 
$
397,917

 
$
16,455,285


_______________________________________ 
(1)
The allowance for loan losses related to PCI loans of $6.4 million as of December 31, 2017 is reflected in the beginning balance of the allowance for loan and lease losses for the three months ended March 31, 2018.
Allowance for Credit Losses
The allowance for credit losses is the combination of the allowance for loan and lease losses and the reserve for unfunded loan commitments. The reserve for unfunded loan commitments is included within "Accrued interest payable and other liabilities" on the condensed consolidated balance sheets. The following tables present a summary of the activity in the allowance for loan and lease losses and reserve for unfunded loan commitments for the periods indicated:
 
Three Months Ended March 31, 2019
 
Allowance for
 
Reserve for
 
Total
 
Loan and
 
Unfunded Loan
 
Allowance for
 
Lease Losses
 
Commitments
 
Credit Losses
 
(In thousands)
Balance, beginning of period
$
132,472

 
$
36,861

 
$
169,333

Charge-offs
(3,465
)
 

 
(3,465
)
Recoveries
3,274

 

 
3,274

Net charge-offs
(191
)
 

 
(191
)
Provision
4,000

 

 
4,000

Balance, end of period
$
136,281

 
$
36,861

 
$
173,142


 
Three Months Ended March 31, 2018
 
Allowance for
 
Reserve for
 
Total
 
Loan and
 
Unfunded Loan
 
Allowance for
 
Lease Losses
 
Commitments
 
Credit Losses
 
(In thousands)
Balance, beginning of period (1)
$
139,456

 
$
28,635

 
$
168,091

Charge-offs
(12,153
)
 

 
(12,153
)
Recoveries
7,198

 

 
7,198

Net charge-offs
(4,955
)
 

 
(4,955
)
Provision (negative provision)
(226
)
 
4,226

 
4,000

Balance, end of period
$
134,275

 
$
32,861

 
$
167,136


_______________________________________ 
(1)
The allowance for loan losses related to PCI loans of $6.4 million as of December 31, 2017 is reflected in the beginning balance of the allowance for loan and lease losses for the three months ended March 31, 2018.