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Loans and Leases
 9 Months Ended
Sep. 30, 2023
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 and purchased loans, net of purchase discounts and premiums. Deferred fees and costs and purchase discounts and premiums on acquired 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:
September 30,December 31,
20232022
(In thousands)
Real estate mortgage$14,056,774 $15,762,351 
Real estate construction and land (1)
2,761,643 4,221,853 
Commercial4,756,921 8,297,182 
Consumer394,451 444,630 
Total gross loans and leases held for investment21,969,789 28,726,016 
Deferred fees, net(48,843)(116,887)
Total loans and leases held for investment, net of deferred fees21,920,946 28,609,129 
Allowance for loan and lease losses(222,297)(200,732)
Total loans and leases held for investment, net (2)
$21,698,649 $28,408,397 
____________________
(1)    Includes land and acquisition and development loans of $215.4 million and $153.5 million at September 30, 2023 and December 31, 2022.
(2)    Excludes accrued interest receivable of $95.4 million and $124.3 million at September 30, 2023 and December 31, 2022, respectively, which is recorded in "Other assets" on the condensed consolidated balance sheets.
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:
September 30, 2023
30 - 8990 or More
DaysDaysTotal
Past DuePast DuePast DueCurrentTotal
 (In thousands)
Real estate mortgage:
Commercial$1,224 $17,906 $19,130 $3,507,178 $3,526,308 
Multi-family— — — 5,279,659 5,279,659 
Other residential45,992 58,617 104,609 5,123,915 5,228,524 
Total real estate mortgage47,216 76,523 123,739 13,910,752 14,034,491 
Real estate construction and land:
Commercial— — — 465,266 465,266 
Residential— — — 2,272,271 2,272,271 
Total real estate construction and land— — — 2,737,537 2,737,537 
Commercial:
Asset-based— 363 363 2,287,530 2,287,893 
Venture capital— — — 1,464,160 1,464,160 
Other commercial500 251 751 1,001,626 1,002,377 
Total commercial500 614 1,114 4,753,316 4,754,430 
Consumer2,254 190 2,444 392,044 394,488 
Total$49,970 $77,327 $127,297 $21,793,649 $21,920,946 
December 31, 2022
30 - 8990 or More
DaysDaysTotal
Past DuePast DuePast DueCurrentTotal
 (In thousands)
Real estate mortgage:
Commercial$1,721 $29,269 $30,990 $3,815,841 $3,846,831 
Multi-family— — — 5,607,865 5,607,865 
Other residential101,728 39,875 141,603 6,134,025 6,275,628 
Total real estate mortgage103,449 69,144 172,593 15,557,731 15,730,324 
Real estate construction and land:
Commercial— — — 898,592 898,592 
Residential— — — 3,253,580 3,253,580 
Total real estate construction and land— — — 4,152,172 4,152,172 
Commercial:
Asset-based— 434 434 5,139,775 5,140,209 
Venture capital— — — 2,033,302 2,033,302 
Other commercial461 1,195 1,656 1,106,795 1,108,451 
Total commercial461 1,629 2,090 8,279,872 8,281,962 
Consumer1,935 149 2,084 442,587 444,671 
Total$105,845 $70,922 $176,767 $28,432,362 $28,609,129 
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:  
 September 30, 2023December 31, 2022
NonaccrualPerformingTotalNonaccrualPerformingTotal
 (In thousands)
Real estate mortgage:
Commercial$31,465 $3,494,843 $3,526,308 $42,509 $3,804,322 $3,846,831 
Multi-family— 5,279,659 5,279,659 — 5,607,865 5,607,865 
Other residential88,329 5,140,195 5,228,524 55,893 6,219,735 6,275,628 
Total real estate mortgage119,794 13,914,697 14,034,491 98,402 15,631,922 15,730,324 
Real estate construction and land:
Commercial— 465,266 465,266 — 898,592 898,592 
Residential— 2,272,271 2,272,271 — 3,253,580 3,253,580 
Total real estate construction and land— 2,737,537 2,737,537 — 4,152,172 4,152,172 
Commercial:
Asset-based363 2,287,530 2,287,893 865 5,139,344 5,140,209 
Venture capital2,001 1,462,159 1,464,160 — 2,033,302 2,033,302 
Other commercial3,031 999,346 1,002,377 4,345 1,104,106 1,108,451 
Total commercial5,395 4,749,035 4,754,430 5,210 8,276,752 8,281,962 
Consumer207 394,281 394,488 166 444,505 444,671 
Total$125,396 $21,795,550 $21,920,946 $103,778 $28,505,351 $28,609,129 
At September 30, 2023, nonaccrual loans and leases included $77.3 million of loans and leases 90 or more days past due, $11.9 million of loans and leases 30 to 89 days past due, and $36.1 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. At December 31, 2022, nonaccrual loans and leases included $70.9 million of loans and leases 90 or more days past due, $6.8 million of loans and leases 30 to 89 days past due, and $26.0 million of current loans and leases that were placed on nonaccrual status based on management’s judgment regarding their collectability.
As of September 30, 2023, our three largest loan relationships on nonaccrual status had an aggregate carrying value of $20.5 million and represented 16% 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.
September 30, 2023
ClassifiedSpecial MentionPassTotal
(In thousands)
Real estate mortgage:
Commercial$34,018 $127,716 $3,364,574 $3,526,308 
Multi-family70,809 45,646 5,163,204 5,279,659 
Other residential96,208 46,761 5,085,555 5,228,524 
Total real estate mortgage201,035 220,123 13,613,333 14,034,491 
Real estate construction and land:
Commercial— — 465,266 465,266 
Residential— 2,640 2,269,631 2,272,271 
Total real estate construction and land— 2,640 2,734,897 2,737,537 
Commercial:
Asset-based2,602 12,552 2,272,739 2,287,893 
Venture capital2,001 100,533 1,361,626 1,464,160 
Other commercial5,079 16,036 981,262 1,002,377 
Total commercial9,682 129,121 4,615,627 4,754,430 
Consumer 378 8,247 385,863 394,488 
Total$211,095 $360,131 $21,349,720 $21,920,946 
December 31, 2022
ClassifiedSpecial MentionPassTotal
(In thousands)
Real estate mortgage:
Commercial$43,737 $106,493 $3,696,601 $3,846,831 
Multi-family3,611 60,330 5,543,924 5,607,865 
Other residential60,557 58,063 6,157,008 6,275,628 
Total real estate mortgage107,905 224,886 15,397,533 15,730,324 
Real estate construction and land:
Commercial— 91,334 807,258 898,592 
Residential— 45,155 3,208,425 3,253,580 
Total real estate construction and land— 136,489 4,015,683 4,152,172 
Commercial:
Asset-based865 56,836 5,082,508 5,140,209 
Venture capital2,753 127,907 1,902,642 2,033,302 
Other commercial6,473 13,233 1,088,745 1,108,451 
Total commercial10,091 197,976 8,073,895 8,281,962 
Consumer 275 6,908 437,488 444,671 
Total$118,271 $566,259 $27,924,599 $28,609,129 
The following table presents our nonaccrual loans and leases by loan portfolio segment and class and by with and without an allowance recorded as of the date indicated and interest income recognized on nonaccrual loans and leases for the periods indicated:                 
Three MonthsNine MonthsThree MonthsNine Months
EndedEndedEndedEnded
September 30,September 30,September 30,September 30,September 30,September 30,
 202320232023202220222022
NonaccrualInterestInterestNonaccrualInterestInterest
Recorded Income IncomeRecordedIncomeIncome
InvestmentRecognizedRecognizedInvestmentRecognizedRecognized
 (In thousands)
With An Allowance Recorded:  
Real estate mortgage:
Commercial$55 $— $— $15,546 $— $— 
Multi-family— — — — — — 
Other residential372 — — 5,515 — — 
Real estate construction and land:
Commercial— — — — — — 
Residential— — — — — — 
Commercial:
Asset-based— — — 587 — — 
Venture capital2,001 — — 3,809 — — 
Other commercial672 — — 933 — — 
Consumer207 — — 367 — — 
With No Related Allowance Recorded:
Real estate mortgage:
Commercial$31,410 $24 $80 $27,227 $16 $113 
Multi-family— — — — — — 
Other residential87,957 — — 27,535 — — 
Real estate construction and land:
Commercial— — — — — — 
Residential— — — — — — 
Commercial:
Asset-based363 — — 1,539 — — 
Venture capital— — — — — — 
Other commercial2,359 8 8 6,684 7 368 
Consumer— — — — — — 
Total Loans and Leases With and
Without an Allowance Recorded:
Real estate mortgage$119,794 $24 $80 $75,823 $16 $113 
Real estate construction and land— — — — — — 
Commercial5,395 8 8 13,552 7 368 
Consumer207 — — 367 — — 
Total$125,396 $32 $88 $89,742 $23 $481 
The following tables present our loans held for investment by loan portfolio segment and class, by credit quality indicator (internal risk ratings), and by year of origination (vintage year) as of the dates indicated:
Revolving
Converted
Amortized Cost Basis (1)
Term Loans by Origination YearRevolvingto Term
September 30, 202320232022202120202019PriorLoansLoansTotal
(In thousands)
Real Estate Mortgage:
Commercial
Internal risk rating:
1-2 High pass$— $3,796 $4,205 $12,066 $10,115 $45,592 $1 $— $75,775 
3-4 Pass64,276 529,602 461,834 423,663 246,735 1,469,757 81,930 11,002 3,288,799 
5 Special mention— 9,440 3,582 25,524 17,707 71,463 — — 127,716 
6-8 Classified767 — 529 445 2,320 29,957 — — 34,018 
Total$65,043 $542,838 $470,150 $461,698 $276,877 $1,616,769 $81,931 $11,002 $3,526,308 
Current YTD period:
Gross charge-offs$34 $— $— $— $76 $11,749 $— $— $11,859 
Real Estate Mortgage:
Multi-family
Internal risk rating:
1-2 High pass$— $28,202 $108,713 $32,008 $54,599 $104,919 $— $— $328,441 
3-4 Pass14,620 1,862,698 1,049,254 527,957 541,671 781,555 57,008 — 4,834,763 
5 Special mention— — — 4,684 11,283 29,679 — — 45,646 
6-8 Classified— — 6,000 8,600 25,639 30,570 — — 70,809 
Total$14,620 $1,890,900 $1,163,967 $573,249 $633,192 $946,723 $57,008 $— $5,279,659 
Current YTD period:
Gross charge-offs$— $— $— $— $— $— $— $— $— 
Real Estate Mortgage:
Other residential
Internal risk rating:
1-2 High pass$— $— $— $— $— $— $2,000 $— $2,000 
3-4 Pass197,921 1,883,380 2,820,056 68,000 — 17,838 96,268 92 5,083,555 
5 Special mention560 37,834 8,133 234 — — — — 46,761 
6-8 Classified5,975 49,839 36,464 2,001 — 1,794 — 135 96,208 
Total$204,456 $1,971,053 $2,864,653 $70,235 $— $19,632 $98,268 $227 $5,228,524 
Current YTD period:
Gross charge-offs$2,613 $19,512 $4,831 $648 $— $4 $— $— $27,608 
____________________
(1)    Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.
Revolving
Converted
Amortized Cost Basis (1)
Term Loans by Origination YearRevolvingto Term
September 30, 202320232022202120202019PriorLoansLoansTotal
(In thousands)
Real Estate Construction
and Land: Commercial
Internal risk rating:
1-2 High pass$— $— $— $— $— $— $— $— $— 
3-4 Pass17,882 225,324 126,548 46,398 26,111 5,717 17,286 — 465,266 
5 Special mention— — — — — — — — — 
6-8 Classified— — — — — — — — — 
Total$17,882 $225,324 $126,548 $46,398 $26,111 $5,717 $17,286 $— $465,266 
Current YTD period:
Gross charge-offs$— $— $— $— $— $— $— $— $— 
Real Estate Construction
and Land: Residential
Internal risk rating:
1-2 High pass$— $— $— $— $— $— $— $— $— 
3-4 Pass35,715 989,759 676,122 425,418 — 26,825 115,792 — 2,269,631 
5 Special mention— — 2,640 — — — — — 2,640 
6-8 Classified— — — — — — — — — 
Total$35,715 $989,759 $678,762 $425,418 $— $26,825 $115,792 $— $2,272,271 
Current YTD period:
Gross charge-offs$— $— $— $— $— $— $— $— $— 
Commercial: Asset-Based
Internal risk rating:
1-2 High pass$17,130 $255,800 $215,483 $57,083 $157,873 $294,245 $83,666 $— $1,081,280 
3-4 Pass127,180 250,748 150,262 21,622 11,048 28,488 598,257 3,854 1,191,459 
5 Special mention— 126 — 61 — — 12,348 17 12,552 
6-8 Classified— — — — — 363 2,239 — 2,602 
Total$144,310 $506,674 $365,745 $78,766 $168,921 $323,096 $696,510 $3,871 $2,287,893 
Current YTD period:
Gross charge-offs$— $— $— $— $— $— $— $150 $150 
Commercial: Venture
Capital
Internal risk rating:
1-2 High pass
$(135)$(8)$— $1,998 $— $— $126,514 $(448)$127,921 
3-4 Pass60,919 137,098 127,975 6,558 6,222 1,022 837,749 56,162 1,233,705 
5 Special mention3,501 3,000 28,844 2,828 19,985 — 37,381 4,994 100,533 
6-8 Classified— — 2,001 — — — — — 2,001 
Total$64,285 $140,090 $158,820 $11,384 $26,207 $1,022 $1,001,644 $60,708 $1,464,160 
Current YTD period:
Gross charge-offs$— $— $— $— $— $— $— $— $— 
____________________
(1)    Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.
Revolving
Converted
Amortized Cost Basis (1)
Term Loans by Origination YearRevolvingto Term
September 30, 202320232022202120202019PriorLoansLoansTotal
(In thousands)
Commercial: Other
Commercial
Internal risk rating:
1-2 High pass$685 $2,092 $5,800 $(43)$41 $(10)$21,465 $— $30,030 
3-4 Pass6,739 79,039 268,135 47,241 35,457 114,407 397,182 3,032 951,232 
5 Special mention1,748 2,710 764 643 — 2,322 7,754 95 16,036 
6-8 Classified— — — — 261 1,938 1,650 1,230 5,079 
Total$9,172 $83,841 $274,699 $47,841 $35,759 $118,657 $428,051 $4,357 $1,002,377 
Current YTD period:
Gross charge-offs$— $6,699 $— $— $28 $67 $516 $359 $7,669 
Consumer
Internal risk rating:
1-2 High pass$— $29 $24 $5 $— $— $1,298 $— $1,356 
3-4 Pass66 57,602 202,816 18,240 41,303 57,872 6,608 — 384,507 
5 Special mention— 1,938 4,752 261 1,193 — 103 — 8,247 
6-8 Classified— 80 — 50 93 137 1 17 378 
Total$66 $59,649 $207,592 $18,556 $42,589 $58,009 $8,010 $17 $394,488 
Current YTD period:
Gross charge-offs$— $316 $539 $76 $238 $332 $1 $12 $1,514 
Total Loans and Leases
Internal risk rating:
1-2 High pass$17,680 $289,911 $334,225 $103,117 $222,628 $444,746 $234,944 $(448)$1,646,803 
3-4 Pass525,318 6,015,250 5,883,002 1,585,097 908,547 2,503,481 2,208,080 74,142 19,702,917 
5 Special mention5,809 55,048 48,715 34,235 50,168 103,464 57,586 5,106 360,131 
6-8 Classified6,742 49,919 44,994 11,096 28,313 64,759 3,890 1,382 211,095 
Total$555,549 $6,410,128 $6,310,936 $1,733,545 $1,209,656 $3,116,450 $2,504,500 $80,182 $21,920,946 
Current YTD period:
Gross charge-offs$2,647 $26,527 $5,370 $724 $342 $12,152 $517 $521 $48,800 
______________________
(1)    Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.
Revolving
Converted
Amortized Cost Basis (1)
Term Loans by Origination YearRevolvingto Term
December 31, 202220222021202020192018PriorLoansLoansTotal
(In thousands)
Real Estate Mortgage:
Commercial
Internal risk rating:
1-2 High pass$4,957 $3,791 $7,215 $26,132 $4,690 $35,343 $1,290 $— $83,418 
3-4 Pass537,931 501,576 467,792 322,448 539,701 1,148,386 85,284 10,065 3,613,183 
5 Special mention— — 728 16,394 2,294 87,077 — — 106,493 
6-8 Classified— 559 464 1,310 27,396 14,008 — — 43,737 
Total$542,888 $505,926 $476,199 $366,284 $574,081 $1,284,814 $86,574 $10,065 $3,846,831 
Current YTD period:
Gross charge-offs$— $67 $— $79 $2,258 $326 $— $— $2,730 
Real Estate Mortgage:
Multi-family
Internal risk rating:
1-2 High pass$— $89,251 $19,945 $58,275 $66,219 $69,805 $— $— $303,495 
3-4 Pass1,940,337 1,084,467 523,645 676,169 446,987 511,185 57,639 — 5,240,429 
5 Special mention— — 4,944 16,974 7,003 31,409 — — 60,330 
6-8 Classified— — — — 2,750 861 — — 3,611 
Total$1,940,337 $1,173,718 $548,534 $751,418 $522,959 $613,260 $57,639 $— $5,607,865 
Current YTD period:
Gross charge-offs$— $— $— $— $— $— $— $— $— 
Real Estate Mortgage:
Other residential
Internal risk rating:
1-2 High pass$— $— $— $— $— $— $1,000 $— $1,000 
3-4 Pass2,805,533 3,200,013 83,580 — 237 20,394 46,155 96 6,156,008 
5 Special mention27,272 25,766 4,916 — 109 — — — 58,063 
6-8 Classified19,248 33,218 5,333 — — 2,555 — 203 60,557 
Total$2,852,053 $3,258,997 $93,829 $— $346 $22,949 $47,155 $299 $6,275,628 
Current YTD period:
Gross charge-offs$249 $1,084 $912 $— $— $81 $— $— $2,326 
____________________
(1)    Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.
Revolving
Converted
Amortized Cost Basis (1)
Term Loans by Origination YearRevolvingto Term
December 31, 202220222021202020192018PriorLoansLoansTotal
(In thousands)
Real Estate Construction
and Land: Commercial
Internal risk rating:
1-2 High pass$— $— $— $— $— $— $— $— $— 
3-4 Pass299,538 170,397 74,634 237,294 17,763 7,632 — — 807,258 
5 Special mention— — — — 91,334 — — — 91,334 
6-8 Classified— — — — — — — — — 
Total$299,538 $170,397 $74,634 $237,294 $109,097 $7,632 $— $— $898,592 
Current YTD period:
Gross charge-offs$— $— $— $— $— $— $— $— $— 
Real Estate Construction
and Land: Residential
Internal risk rating:
1-2 High pass$— $— $— $— $— $— $— $— $— 
3-4 Pass605,683 1,302,061 844,041 282,076 125,805 204 48,555 — 3,208,425 
5 Special mention— — — 45,155 — — — — 45,155 
6-8 Classified— — — — — — — — — 
Total$605,683 $1,302,061 $844,041 $327,231 $125,805 $204 $48,555 $— $3,253,580 
Current YTD period:
Gross charge-offs$— $— $— $— $— $— $— $— $— 
Commercial: Asset-Based
Internal risk rating:
1-2 High pass$225,140 $209,272 $57,727 $202,063 $121,600 $208,542 $850,031 $— $1,874,375 
3-4 Pass547,675 188,269 52,711 35,811 33,426 40,714 2,239,785 69,742 3,208,133 
5 Special mention— — — 43,409 — 3,505 9,922 — 56,836 
6-8 Classified— — — — — 434 — 431 865 
Total$772,815 $397,541 $110,438 $281,283 $155,026 $253,195 $3,099,738 $70,173 $5,140,209 
Current YTD period:
Gross charge-offs$— $— $— $— $— $— $750 $— $750 
Commercial: Venture
Capital
Internal risk rating:
1-2 High pass
$(40)$— $2,000 $— $134 $3 $216,535 $503 $219,135 
3-4 Pass92,015 136,296 18,075 3,705 1,833 910 1,365,101 65,572 1,683,507 
5 Special mention13,970 40,924 4,483 23,202 — — 40,335 4,993 127,907 
6-8 Classified— 2,753 — — — — — — 2,753 
Total$105,945 $179,973 $24,558 $26,907 $1,967 $913 $1,621,971 $71,068 $2,033,302 
Current YTD period:
Gross charge-offs$— $— $— $— $— $— $940 $— $940 
____________________
(1)    Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.
Revolving
Converted
Amortized Cost Basis (1)
Term Loans by Origination YearRevolvingto Term
December 31, 202220222021202020192018PriorLoansLoansTotal
(In thousands)
Commercial: Other
Commercial
Internal risk rating:
1-2 High pass$3,591 $10,880 $12 $161 $3 $14 $20,958 $— $35,619 
3-4 Pass84,930 278,208 54,542 41,908 47,771 87,645 454,438 3,684 1,053,126 
5 Special mention7,038 796 184 695 1,526 2,858 47 89 13,233 
6-8 Classified— 806 — 319 (3)2,653 1,600 1,098 6,473 
Total$95,559 $290,690 $54,738 $43,083 $49,297 $93,170 $477,043 $4,871 $1,108,451 
Current YTD period:
Gross charge-offs$— $209 $— $1 $— $2,537 $1,906 $474 $5,127 
Consumer
Internal risk rating:
1-2 High pass$34 $30 $7 $— $1 $— $854 $— $926 
3-4 Pass62,868 226,084 20,798 48,542 31,693 37,838 8,739 — 436,562 
5 Special mention1,252 3,490 464 1,126 278 238 60 — 6,908 
6-8 Classified47 — — 59 79 74 — 16 275 
Total$64,201 $229,604 $21,269 $49,727 $32,051 $38,150 $9,653 $16 $444,671 
Current YTD period:
Gross charge-offs$309 $529 $237 $728 $— $354 $— $7 $2,164 
Total Loans and Leases
Internal risk rating:
1-2 High pass$233,682 $313,224 $86,906 $286,631 $192,647 $313,707 $1,090,668 $503 $2,517,968 
3-4 Pass6,976,510 7,087,371 2,139,818 1,647,953 1,245,216 1,854,908 4,305,696 149,159 25,406,631 
5 Special mention49,532 70,976 15,719 146,955 102,544 125,087 50,364 5,082 566,259 
6-8 Classified19,295 37,336 5,797 1,688 30,222 20,585 1,600 1,748 118,271 
Total$7,279,019 $7,508,907 $2,248,240 $2,083,227 $1,570,629 $2,314,287 $5,448,328 $156,492 $28,609,129 
Current YTD period:
Gross charge-offs$558 $1,889 $1,149 $808 $2,258 $3,298 $3,596 $481 $14,037 
____________________
(1)    Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.
On January 1, 2023, the Company adopted ASU 2022-02, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures" ("ASU 2022-02"), which eliminated the accounting guidance for troubled debt restructurings while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty. This guidance was applied on a prospective basis. The following table presents our loan modifications made to borrowers experiencing financial difficulty by type of modification for the period indicated with related amortized cost balances as of the date indicated:
Three Months Ended September 30, 2023
Loan Modifications
Balances (Amortized Cost Basis) at
September 30, 2023
Combination - Term
Extension and
Interest RateTotal Loan
Term ExtensionPayment DelayReductionModifications
% of% of% of% of
LoanLoanLoanLoan
PortfolioPortfolioPortfolioPortfolio
BalanceClassBalanceClassBalanceClassBalanceClass
(Dollars in thousands)
Real estate mortgage:
Other residential$4,001 0.1 %— — %— — %4,001 0.1 %
Commercial:
Other commercial1,508 0.2 %41 — %6 — %1,555 0.2 %
Total$5,509 $41 $6 $5,556 
Nine Months Ended September 30, 2023
Loan Modifications
Balances (Amortized Cost Basis) at
September 30, 2023
Combination - Term
Extension and
InterestTotal Loan
Term ExtensionPayment DelayReductionModifications
% of% of% of% of
LoanLoanLoanLoan
PortfolioPortfolioPortfolioPortfolio
BalanceClassBalanceClassBalanceClassBalanceClass
(Dollars in thousands)
Real estate mortgage:
Other residential$15,311 0.3 %$— — %$— — %$15,311 0.3 %
Commercial:
Other commercial2,556 0.3 %41 — %6 — %2,603 0.3 %
Consumer15 — %— — %2 — %17 — %
Total$17,882 $41 $8 $17,931 
The following tables present the financial effect of our loan modifications made to borrowers experiencing financial difficulty by type of modification for the period indicated:
Three Months Ended September 30, 2023
Term Extension - Financial Effect
Real estate mortgage:
Other residentialExtended maturity by a weighted average 8 months.
Commercial:
Other commercialExtended maturity by a weighted average 17 months.
Three Months Ended September 30, 2023
Payment Delay - Financial Effect
Commercial:
Other commercialProvided 18 months of reduced payments to borrowers without extending the loan term.
Three Months Ended September 30, 2023
Combination - Term Extension and Interest Rate Reduction - Financial Effect
Commercial:
Other commercialExtended maturity by a weighted average 3.0 years and reduced weighted average contractual interest rate from 11.75% to 7.50%.
Nine Months Ended September 30, 2023
Term Extension - Financial Effect
Real estate mortgage:
Other residentialExtended maturity by a weighted average 10 months.
Commercial:
Other commercialExtended maturity by a weighted average 22 months.
ConsumerExtended maturity by a weighted average 12 months.
Nine Months Ended September 30, 2023
Payment Delay - Financial Effect
Commercial:
Other commercialProvided 18 months of reduced payments to borrowers without extending the loan term.
Nine Months Ended September 30, 2023
Combination - Term Extension and Interest Rate Reduction - Financial Effect
Commercial:
Other commercialExtended maturity by a weighted average 3.0 years and reduced weighted average contractual interest rate from 11.75% to 7.50%.
ConsumerExtended maturity by a weighted average 2.0 years and reduced weighted average contractual interest rate from 9.5% to 2.0%.
The following table presents the payment status of our loan modifications made during the past nine months with related amortized cost balances as of the date indicated:
Payment Status (Amortized Cost Basis) at
September 30, 2023
30-89 Days90 or More Days
CurrentPast DuePast DueTotal
(In thousands)
Real estate mortgage:
Other residential$6,225 $7,662 $1,424 $15,311 
Commercial:
Other commercial2,599 4 — 2,603 
Consumer17 — — 17 
Total$8,841 $7,666 $1,424 $17,931 
At September 30, 2023, there were other residential real estate loans for $8.7 million and other commercial loans for $4,000 that had been modified in the form of a term extension during the preceding three-month period and subsequently defaulted during the three months ended September 30, 2023. There were other residential real estate loans for $9.1 million and other commercial loans for $4,000 that had been modified in the form of a term extension during the preceding nine-month period and subsequently defaulted during the nine months ended September 30, 2023.
Prior to the adoption of ASU 2022-02, the Company accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR. TDRs were a result of rate reductions, term extensions, fee concessions, transfers to foreclosed assets, discounted loan payoffs, and debt forgiveness, or a combination thereof. 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 September 30, 2022Nine Months Ended September 30, 2022
Pre-Post-Pre-Post-
ModificationModificationModificationModification
NumberOutstandingOutstandingNumberOutstandingOutstanding
of RecordedRecordedofRecordedRecorded
Troubled Debt RestructuringsLoansInvestmentInvestmentLoansInvestmentInvestment
 (In thousands)
Real estate mortgage:
Multi-family— $— $— $1 $304 $— 
Other residential10 3,596 1,050 10 3,599 1,053 
Real estate construction and land:
Residential2 422 — 2 422 — 
Commercial:
Venture capital2 1,649 1,649 4 3,330 3,330 
Other commercial2 102 102 21 1,233 1,233 
Consumer— — — 1 18 18 
Total 16 $5,769 $2,801 39 $8,906 $5,634 
During the three and nine months ended September 30, 2022, there was one other residential real estate mortgage loan for $97,000 restructured in the preceding 12-month period that subsequently defaulted.
Leases Receivable
We provide equipment financing to our customers primarily with operating and direct financing leases. For 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 accounting for allowance for loan and lease losses. See Note 8. Leases for information regarding operating leases where we are the lessor.
The following table provides the components of leases receivable income for the periods indicated:
Three Months EndedNine Months Ended
September 30,September 30,
2023202220232022
(In thousands)
Component of leases receivable income:
Interest income on net investments in leases$4,319 $2,815 $12,186 $7,694 
The following table presents the components of leases receivable as of the dates indicated:
September 30, 2023December 31, 2022
(In thousands)
Net Investment in Direct Financing Leases:
Lease payments receivable$256,361 $232,909 
Unguaranteed residual assets27,371 23,561 
Deferred costs and other2,822 1,815 
Aggregate net investment in leases$286,554 $258,285 
The following table presents maturities of leases receivable as of the date indicated:
September 30, 2023
(In thousands)
Period ending December 31,
2023$18,208 
202483,442 
202565,696 
202647,073 
202733,038 
Thereafter41,936 
Total undiscounted cash flows289,393 
Less: Unearned income(33,032)
Present value of lease payments$256,361 
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 September 30, 2023
Real Estate
Real EstateConstruction
Mortgageand LandCommercialConsumerTotal
(In thousands)
Allowance for Loan and Lease Losses:
Balance, beginning of period $132,808 $39,679 $37,221 $9,526 $219,234 
Charge-offs(5,757)— (335)(603)(6,695)
Recoveries535 — 1,199 24 1,758 
Net (charge-offs) recoveries (5,222)— 864 (579)(4,937)
Provision 8,944 686 (1,411)(219)8,000 
Balance, end of period$136,530 $40,365 $36,674 $8,728 $222,297 
Nine Months Ended September 30, 2023
Real Estate
Real EstateConstruction
Mortgageand LandCommercialConsumerTotal
(In thousands)
Allowance for Loan and Lease Losses:
Balance, beginning of period$87,309 $52,320 $52,849 $8,254 $200,732 
Charge-offs(39,467)— (7,819)(1,514)(48,800)
Recoveries797 — 2,916 152 3,865 
Net (charge-offs) recoveries(38,670)— (4,903)(1,362)(44,935)
Provision 87,891 (11,955)(11,272)1,836 66,500 
Balance, end of period$136,530 $40,365 $36,674 $8,728 $222,297 
Ending Allowance by
Evaluation Methodology:
Individually evaluated $— $— $497 $— $497 
Collectively evaluated $136,530 $40,365 $36,177 $8,728 $221,800 
Ending Loans and Leases by
Evaluation Methodology:
Individually evaluated $120,491 $— $4,723 $— $125,214 
Collectively evaluated 13,914,000 2,737,537 4,749,707 394,488 21,795,732 
Ending balance$14,034,491 $2,737,537 $4,754,430 $394,488 $21,920,946 
Three Months Ended September 30, 2022
Real Estate
Real EstateConstruction
Mortgageand LandCommercialConsumerTotal
(In thousands)
Allowance for Loan and Lease Losses:
Balance, beginning of period $85,896 $41,169 $54,031 $7,609 $188,705 
Charge-offs(2,610)— (1,522)(520)(4,652)
Recoveries231 29 1,996 18 2,274 
Net (charge-offs) recoveries (2,379)29 474 (502)(2,378)
Provision (4,065)8,474 (3,284)1,875 3,000 
Balance, end of period$79,452 $49,672 $51,221 $8,982 $189,327 
Nine Months Ended September 30, 2022
Real Estate
Real EstateConstruction
Mortgageand LandCommercialConsumerTotal
(In thousands)
Allowance for Loan and Lease Losses:
Balance, beginning of period $98,624 $44,508 $48,718 $8,714 $200,564 
Charge-offs(4,323)— (5,266)(1,096)(10,685)
Recoveries1,699 178 6,521 50 8,448 
Net (charge-offs) recoveries (2,624)178 1,255 (1,046)(2,237)
Provision (16,548)4,986 1,248 1,314 (9,000)
Balance, end of period$79,452 $49,672 $51,221 $8,982 $189,327 
Ending Allowance by
Evaluation Methodology:
Individually evaluated $3,108 $— $749 $— $3,857 
Collectively evaluated $76,344 $49,672 $50,472 $8,982 $185,470 
Ending Loans and Leases by
Evaluation Methodology:
Individually evaluated $77,503 $1,408 $12,973 $— $91,884 
Collectively evaluated 15,087,262 3,758,092 8,258,209 464,594 27,568,157 
Ending balance$15,164,765 $3,759,500 $8,271,182 $464,594 $27,660,041 
The allowance for loan and lease losses increased by $3.1 million in the third quarter of 2023 to $222.3 million due primarily to an increase in qualitative reserves for loans secured by office properties, offset partially by net charge-offs and lower reserves needed for lower loan balances. For additional information regarding the calculation of the allowance for loan and lease losses using the CECL methodology, including discussion of forecasts used to estimate the allowance, please see Note 1(j). Nature of Operations and Summary of Significant Accounting Policies - Allowance for Credit Losses on Loans and Leases Held for Investment of the Notes to Consolidated Financial Statements contained in "Item 8. Financial Statements and Supplementary Data" of the Form 10-K.
A loan is considered collateral-dependent, and is individually evaluated for reserve purposes, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table summarizes collateral-dependent loans held for investment by collateral type as of the following dates:
September 30, 2023December 31, 2022
RealBusiness RealBusiness
PropertyAssetsTotalPropertyAssetsTotal
(In thousands)
Real estate mortgage$120,735 $— $120,735 $90,485 $— $90,485 
Real estate construction and land— — — 1,402 — 1,402 
Commercial— 363 363 — 434 434 
     Total$120,735 $363 $121,098 $91,887 $434 $92,321 
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
September 30, 2023
Allowance forReserve forTotal
Loan andUnfunded LoanAllowance for
Lease LossesCommitmentsCredit Losses
(In thousands)
Balance, beginning of period$219,234 $37,571 $256,805 
Charge-offs(6,695)— (6,695)
Recoveries1,758 — 1,758 
Net charge-offs (4,937)— (4,937)
Provision8,000 (8,000)— 
Balance, end of period$222,297 $29,571 $251,868 
Nine Months Ended
September 30, 2023
Allowance for Reserve forTotal
Loan and Unfunded LoanAllowance for
Lease LossesCommitmentsCredit Losses
(In thousands)
Balance, beginning of period $200,732 $91,071 $291,803 
Charge-offs(48,800)— (48,800)
Recoveries3,865 — 3,865 
Net charge-offs(44,935)— (44,935)
Provision66,500 (61,500)5,000 
Balance, end of period$222,297 $29,571 $251,868 
Three Months Ended
September 30, 2022
Allowance forReserve forTotal
Loan andUnfunded LoanAllowance for
Lease LossesCommitmentsCredit Losses
(In thousands)
Balance, beginning of period$188,705 $95,071 $283,776 
Charge-offs(4,652)— (4,652)
Recoveries2,274 — 2,274 
Net charge-offs(2,378)— (2,378)
Provision3,000 — 3,000 
Balance, end of period$189,327 $95,071 $284,398 
Nine Months Ended
September 30, 2022
Allowance for Reserve forTotal
Loan and Unfunded LoanAllowance for
Lease LossesCommitmentsCredit Losses
(In thousands)
Balance, beginning of period$200,564 $73,071 $273,635 
Charge-offs(10,685)— (10,685)
Recoveries8,448 — 8,448 
Net charge-offs(2,237)— (2,237)
Provision (9,000)22,000 13,000 
Balance, end of period$189,327 $95,071 $284,398