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Loans and Leases Receivable and Allowance for Credit Losses
12 Months Ended
Dec. 31, 2020
Receivables [Abstract]  
Loans and Leases Receivable and Allowance for Loan and Lease Losses LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES
The following table presents loans and leases receivable as of December 31, 2020 and 2019:
December 31,
(amounts in thousands)20202019
Loans receivable, mortgage warehouse, at fair value$3,616,432 $2,245,758 
Loans receivable, PPP4,561,365 — 
Loans receivable:
Commercial:
Multi-family1,761,301 1,907,331 
Commercial and industrial (1)
2,289,441 1,891,152 
Commercial real estate owner occupied572,338 551,948 
Commercial real estate non-owner occupied1,196,564 1,222,772 
Construction140,905 117,617 
Total commercial loans and leases receivable5,960,549 5,690,820 
Consumer:
Residential real estate317,170 382,634 
Manufactured housing62,243 71,359 
Installment1,235,406 1,174,175 
Total consumer loans receivable1,614,819 1,628,168 
Loans and leases receivable (2)
7,575,368 7,318,988 
Allowance for credit losses on loans and leases(144,176)(56,379)
Total loans and leases receivable, net of allowance for credit losses on loans and leases$15,608,989 $9,508,367 
(1)Includes direct finance equipment leases of $108.0 million and $89.2 million at December 31, 2020 and 2019, respectively.
(2)Includes deferred (fees) costs and unamortized (discounts) premiums, net of $(54.6) million and $2.1 million at December 31, 2020 and 2019, respectively.
Customers' total loans and leases receivable portfolio includes loans receivable which are reported at fair value based on an election made to account for these loans at fair value and loans and leases receivable which are predominately reported at their outstanding unpaid principal balance, net of charge-offs and deferred costs and fees and unamortized premiums and discounts and are evaluated for impairment. The total amount of accrued interest recorded for total loans was $76.6 million and $34.8 million at December 31, 2020 and 2019, respectively, and is presented in accrued interest receivable in the consolidated balance sheet. At December 31, 2020, there were $59.5 million of individually evaluated loans that were collateral-dependent. Substantially all individually evaluated loans are collateral-dependent and consisted primarily of commercial and industrial, commercial real estate, and residential real estate loans. Collateral-dependent commercial and industrial loans were secured by accounts receivable, inventory and equipment; collateral-dependent commercial real estate loans were secured by commercial real estate assets; and residential real estate loans were secured by residential real estate assets.
On January 13, 2021, Customers sold a commercial real estate loan collateralized by a hotel property in Massachusetts. At December 31, 2020, this collateral dependent loan has been charged down to its estimated fair value, net of costs to sell, of $17.3 million.
Loans receivable, mortgage warehouse, at fair value:
Mortgage warehouse loans consist of commercial loans to mortgage companies. These mortgage warehouse lending transactions are subject to master repurchase agreements. As a result of the contractual provisions, for accounting purposes control of the underlying mortgage loan has not transferred and the rewards and risks of the mortgage loans are not assumed by Customers. The mortgage warehouse loans are designated as loans held for investment and reported at fair value based on an election made to account for the loans at fair value. Pursuant to the agreements, Customers funds the pipelines for these mortgage lenders by sending payments directly to the closing agents for funded mortgage loans and receives proceeds directly from third party investors when the underlying mortgage loans are sold into the secondary market. The fair value of the mortgage warehouse loans is estimated as the amount of cash initially advanced to fund the mortgage, plus accrued interest and fees, as specified in the respective agreements. The interest rates on these loans are variable, and the lending transactions are short-term, with an average life under 30 days from purchase to sale. The primary goal of these lending transactions is to provide liquidity to mortgage companies.
At December 31, 2020 and 2019, all of Customers' commercial mortgage warehouse loans were current in terms of payment. As these loans are reported at their fair value, they do not have an ACL and are therefore excluded from ACL-related disclosures.
Loans receivable, PPP:
On March 27, 2020, the CARES Act was signed into law and created funding for a new product called the PPP. The PPP is administered by the SBA and is intended to assist organizations with payroll related expenses. Customers had $4.6 billion of PPP loans outstanding as of December 31, 2020, which are fully guaranteed by the SBA and earn a fixed interest rate of 1.00%. Customers recognized interest income, including net origination fees, of $65.5 million for the year ended December 31, 2020.
PPP loans include an embedded credit enhancement guarantee from the SBA, which guarantees 100% of the principal and interest owed by the borrower. As a result, the PPP loans do not have an ACL and are therefore excluded from ACL-related disclosures.
Loans and leases receivable:
The following tables summarize loans and leases receivable by loan and lease type and performance status as of December 31, 2020 and 2019:
December 31, 2020
(amounts in thousands)
30-59 Days past due (1)
60-89 Days past due (1)
90 Days or more past due (1)
Total past due (1)
Loans and leases not past due (2)
Total loans and leases (3)
Multi-family$4,193 $5,224 $14,907 $24,324 $1,736,977 $1,761,301 
Commercial and industrial2,257 1,274 3,079 6,610 2,282,831 2,289,441 
Commercial real estate owner occupied864 1,324 2,370 4,558 567,780 572,338 
Commercial real estate non-owner occupied— 60 2,356 2,416 1,194,148 1,196,564 
Construction— — — — 140,905 140,905 
Residential real estate6,640 1,827 1,856 10,323 306,847 317,170 
Manufactured housing1,518 673 1,951 4,142 58,101 62,243 
Installment6,161 3,430 81 9,672 1,225,734 1,235,406 
Total$21,633 $13,812 $26,600 $62,045 $7,513,323 $7,575,368 

December 31, 2019
(amounts in thousands)
30-89 Days past due (1)
90 Days past due (1)
Total past due (1)
Non- accrual
Current (2)
Purchased-credit-impaired loans (4)
Total loans and leases (5)
Multi-family$2,133 $— $2,133 $4,117 $1,901,336 $1,688 $1,909,274
Commercial and industrial2,395 — 2,395 4,531 1,882,700 354 1,889,980 
Commercial real estate owner occupied5,388 — 5,388 1,963 537,992 6,664 552,007 
Commercial real estate non-owner occupied8,034 — 8,034 76 1,211,892 3,527 1,223,529 
Construction— — — — 118,418 — 118,418 
Residential real estate5,924 — 5,924 6,128 359,491 3,471 375,014 
Manufactured housing3,699 1,794 5,493 1,655 61,649 1,601 70,398 
Installment5,756 — 5,756 1,551 1,170,793 183 1,178,283 
Total$33,329 $1,794 $35,123 $20,021 $7,244,271 $17,488 $7,316,903 
(1)Includes past due loans and leases that are accruing interest because collection is considered probable.
(2)Loans and leases where next payment due is less than 30 days from the report date. The December 31, 2020 table excludes PPP loans of $4.6 billion which are all current as of December 31, 2020.
(3)Includes PCD loans of $13.4 million at December 31, 2020.
(4)PCI loans aggregated into a pool are accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, and the past due status of the pools, or that of the individual loans within the pools, is not meaningful. Due to the credit impaired nature of the loans, the loans are recorded at a discount reflecting estimated future cash flows and the Bank recognizes interest income on each pool of loans reflecting the estimated yield and passage of time. Such loans are considered to be performing. PCI loans that are not in pools accrete interest when the timing and amount of their expected cash flows are reasonably estimable, and are reported as performing loans.
(5)Amounts exclude deferred costs and fees and unamortized premiums and discounts.
As of December 31, 2020 and 2019, the Bank had $0.1 million and $0.2 million respectively, of residential real estate held in other real estate owned ("OREO"). As of December 31, 2020 and 2019, the Bank had initiated foreclosure proceedings on $0.8 million and $0.9 million, respectively, in loans secured by residential real estate.
Nonaccrual Loans and Leases
The following table presents the amortized cost of loans and leases held for investment on nonaccrual status.
 
December 31, 2020 (1)
December 31, 2019 (2)
(amounts in thousands)Nonaccrual loans with no related allowanceNonaccrual loans with related allowanceTotal nonaccrual loansNonaccrual loans with no related allowanceNonaccrual loans with related allowanceTotal nonaccrual loans
Multi-family$18,800 $2,928 $21,728 $4,117 $— $4,117 
Commercial and industrial6,384 2,069 8,453 3,083 1,448 4,531 
Commercial real estate owner occupied3,411 — 3,411 1,109 854 1,963 
Commercial real estate non-owner occupied2,356 — 2,356 76 — 76 
Residential real estate9,911 — 9,911 4,559 1,569 6,128 
Manufactured housing— 2,969 2,969 — 1,655 1,655 
Installment— 3,211 3,211 140 1,411 1,551 
Total$40,862 $11,177 $52,039 $13,084 $6,937 $20,021 
(1) Presented at amortized cost basis.
(2) Amounts exclude deferred costs and fees and unamortized premiums and discounts.
Interest income recognized on nonaccrual loans was insignificant during the year ended December 31, 2020. Accrued interest of $1.3 million was reversed when the loans went to nonaccrual status during the year ended December 31, 2020.
Allowance for credit losses on loans and leases:
The changes in the ACL for the years ended December 31, 2020 and 2019, and the loans and leases and ACL by loan and lease type are presented in the tables below. ACL as of December 31, 2020 is calculated in accordance with the CECL methodology as described in Note 2 - SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION while ACL as of December 31, 2019 was calculated in accordance with the prior incurred loss methodology described in our 2019 Form 10-K.
Twelve months ended December 31, 2020Multi-familyCommercial and industrialCommercial real estate owner occupiedCommercial real estate non-owner occupiedConstructionResidential real estateManufactured housingInstallmentTotal
(amounts in thousands)
Ending Balance,
December 31, 2019
$6,157 $15,556 $2,235 $6,243 $1,262 $3,218 $1,060 $20,648 $56,379 
Cumulative effect of change in accounting principle2,171 759 5,773 7,918 (98)1,518 3,802 57,986 79,829 
Charge-offs— (3,158)(78)(25,779)— (60)— (32,661)(61,736)
Recoveries— 3,019 28 1,293 128 86 — 2,376 6,930 
Provision for credit losses on loans and leases4,292 (3,937)1,554 29,777 4,579 (785)328 26,966 62,774 
Ending Balance,
December 31, 2020
$12,620 $12,239 $9,512 $19,452 $5,871 $3,977 $5,190 $75,315 $144,176 

Twelve months ended December 31, 2019Multi-familyCommercial and industrialCommercial real estate owner occupiedCommercial real estate non-owner occupiedConstructionResidential real estateManufactured housingInstallmentTotal
(amounts in thousands)
Ending Balance,
December 31, 2018
$11,462 $12,145 $3,320 $6,093 $624 $3,654 $145 $2,529 $39,972 
Charge-offs(541)(532)(119)— — (297)— (8,101)(9,590)
Recoveries1,050 236 — 136 27 — 314 1,770 
Provision for credit losses on loans and leases(4,771)2,893 (1,202)150 502 (166)915 25,906 24,227 
Ending Balance,
December 31, 2019
$6,157 $15,556 $2,235 $6,243 $1,262 $3,218 $1,060 $20,648 $56,379 
At December 31, 2020, the ACL was $144.2 million, an increase of $8.0 million from the January 1, 2020 balance of $136.2 million. The increase resulted primarily from the impact of reserve build for the COVID-19 pandemic including the change in macroeconomic forecasts and portfolio growth mainly in the installment portfolio, partially offset by an increase in net charge-offs, mostly attributed to the commercial real estate non-owner occupied and installment loan portfolios. Commercial real estate non-owner occupied charge-offs are attributable to two collateral dependent loans, which have subsequently been sold. Installment charge-offs are attributable to delinquencies and defaults of originated and purchased unsecured consumer installment loans through arrangements with fintech companies and other market place lenders.
Troubled Debt Restructurings
At December 31, 2020, 2019 and 2018, there were $16.1 million, $13.3 million and $19.2 million, respectively, in loans reported as TDRs. TDRs are reported as impaired loans in the calendar year of their restructuring and are evaluated to determine whether they should be placed on non-accrual status. In subsequent years, a TDR may be returned to accrual status if it satisfies a minimum performance requirement of six months, however, it will remain classified as impaired. Generally, the Bank requires sustained performance for nine months before returning a TDR to accrual status. Customers had no lease receivables that had been restructured as a TDR as of December 31, 2020 and 2019, respectively.
The CARES Act, as amended by the CAA, and certain regulatory agencies issued guidance stating certain loan modifications to borrowers experiencing financial distress as a result of the economic impacts created by COVID-19 may not be required to be treated as TDRs under U.S. GAAP. For COVID-19 related loan modifications which met the loan modification criteria under either the CARES Act or the criteria specified by the regulatory agencies, Customers elected to suspend TDR accounting for such loan modifications. At December 31, 2020, commercial and consumer deferments related to COVID-19 were $202.1 million and $16.4 million, respectively.
The following table presents loans modified in a TDR by type of concession for the years ended December 31, 2020, 2019 and 2018. There were no modifications that involved forgiveness of debt for the years ended December 31, 2020, 2019 and 2018.
 For the Years Ended December 31,
202020192018
(dollars in thousands)Number of loansRecorded investmentNumber of loansRecorded investmentNumber of loansRecorded investment
Extensions of maturity$385 $514 $60 
Interest-rate reductions35 1,479 26 923 39 1,615 
Other (1)
80 $1,813 — $— — $— 
Total121 $3,677 28 $1,437 41 $1,675 
(1) Other includes covenant modifications, forbearance, loans discharged under Chapter 7 bankruptcy, or other concessions.
As of December 31, 2020 and 2019, there were no commitments to lend additional funds to borrowers whose loans have been modified in TDRs. As of December 31, 2018, except for one commercial and industrial loan with an outstanding commitment of $1.5 million, there were no other commitments to lend additional funds to debtors whose loans have been modified in TDRs.
The following table presents, by loan type, the number of loans modified in TDRs and the related recorded investment, for which there was a payment default within twelve months following the modification:
December 31, 2020December 31, 2019December 31, 2018
(dollars in thousands)Number of loansRecorded investmentNumber of loansRecorded investmentNumber of loansRecorded investment
Installment15 $226 — $— — $— 
Residential real estate152 81 — — 
Manufactured housing236 73 92 
Total loans24 $614 $154 $92 
Loans modified in TDRs are evaluated for impairment. The nature and extent of impairment of TDRs, including those which have experienced a subsequent default, is considered in the determination of an appropriate level of ACL.
Purchased Credit-Deteriorated Loans
Customers adopted ASC 326 using the prospective transition approach for financial assets purchased with credit deterioration that were previously classified as PCI and accounted for under ASC 310-30. In accordance with the standard, Customers did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. On January 1, 2020, the amortized cost basis of the PCD assets were adjusted to reflect the addition of $0.2 million of the allowance for credit losses on PCD loans and leases. The remaining noncredit discount of $0.3 million, based on the adjusted amortized cost basis, will be accreted into interest income at the effective interest rate as of January 1, 2020. As of December 31, 2020, the amortized cost basis of PCD assets amounted to $13.4 million.
Credit Quality Indicators
The ACL represents management's estimate of probable losses in Customers' loans and leases receivable portfolio, excluding commercial mortgage warehouse loans reported at fair value pursuant to a fair value option election and PPP loans fully guaranteed by the SBA. Multi-family, commercial and industrial, owner occupied commercial real estate, non-owner occupied commercial real estate, and construction loans are rated based on an internally assigned risk rating system which is assigned at the time of loan origination and reviewed on a periodic, or on an “as needed” basis. Residential real estate loans, manufactured housing and installment loans are evaluated based on the payment activity of the loan.
To facilitate the monitoring of credit quality within the multi-family, commercial and industrial, owner occupied commercial real estate, non-owner occupied commercial real estate, and construction loan portfolios, and as an input in the ACL lifetime loss rate model for the commercial and industrial portfolio, the Bank utilizes the following categories of risk ratings: pass/satisfactory (includes risk rating 1 through 6), special mention, substandard, doubtful and loss. The risk rating categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. Pass/satisfactory ratings, which are assigned to those borrowers who do not have identified potential or well-defined weaknesses and for whom there is a high likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other categories are updated on a quarterly basis during the month preceding the end of the calendar quarter.  While assigning risk ratings involves judgment, the risk-rating process allows management to identify riskier credits in a timely manner and allocate the appropriate resources to manage those loans and leases.
The risk rating grades are defined as follows:
“1” – Pass/Excellent
Loans and leases rated 1 represent a credit extension of the highest quality. The borrower’s historic (at least five years) cash flows manifest extremely large and stable margins of coverage. Balance sheets are conservative, well capitalized, and liquid. After considering debt service for proposed and existing debt, projected cash flows continue to be strong and provide ample coverage. The borrower typically reflects broad geographic and product diversification and has access to alternative financial markets.
“2” – Pass/Superior
Loans and leases rated 2 are those for which the borrower has a strong financial condition, balance sheet, operations, cash flow, debt capacity and coverage with ratios better than industry norms. The borrowers of these loans and leases exhibit a limited leverage position, are virtually immune to local economies, and are in stable growing industries. The management team is well respected, and the company has ready access to public markets.
“3” – Pass/Strong
Loans and leases rated 3 are those loans and leases for which the borrowers have above average financial condition and flexibility; more than satisfactory debt service coverage; balance sheet and operating ratios are consistent with or better than industry peers; operate in industries with little risk; move in diversified markets; and are experienced and competent in their industry. These borrowers’ access to capital markets is limited mostly to private sources, often secured, but the borrower typically has access to a wide range of refinancing alternatives.
“4” – Pass/Good
Loans and leases rated 4 have a sound primary and secondary source of repayment. The borrower may have access to alternative sources of financing, but sources are not as widely available as they are to a higher-grade borrower. These loans and leases carry a normal level of risk with very low loss exposure. The borrower has the ability to perform according to the terms of the credit facility. The margins of cash flow coverage are satisfactory but vulnerable to more rapid deterioration than the higher-quality loans and leases.
“5” – Satisfactory
Loans and leases rated 5 are extended to borrowers who are considered to be a reasonable credit risk and demonstrate the ability to repay the debt from normal business operations. Risk factors may include reliability of margins and cash flows, liquidity, dependence on a single product or industry, cyclical trends, depth of management, or limited access to alternative financing sources. The borrower’s historical financial information may indicate erratic performance, but current trends are positive and the quality of financial information is adequate, but is not as detailed and sophisticated as information found on higher grade loans. If adverse circumstances arise, the impact on the borrower may be significant.
“6” – Satisfactory/Bankable with Care
Loans and leases rated 6 are those for which the borrower has higher than normal credit risk; however, cash flow and asset values are generally intact. These borrowers may exhibit declining financial characteristics, with increasing leverage and decreasing liquidity and may have limited resources and access to financial alternatives. Signs of weakness in these borrowers may include delinquent taxes, trade slowness and eroding profit margins.
“7” – Special Mention
Loans and leases rated 7 are credit facilities that may have potential developing weaknesses and deserve extra attention from the account manager and other management personnel. In the event potential weaknesses are not corrected or mitigated, deterioration in the ability of the borrower to repay the debt in the future may occur. This grade is not assigned to loans and leases that bear certain peculiar risks normally associated with the type of financing involved, unless circumstances have caused the risk to increase to a level higher than would have been acceptable when the credit was originally approved. Loans and leases where significant actual, not potential, weaknesses or problems are clearly evident are graded in the category below.
“8” – Substandard
Loans and leases are rated 8 when the loans and leases are inadequately protected by the current sound worth and payment capacity of the obligor or of the collateral pledged, if any. Loans and leases so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the company will sustain some loss if the weaknesses are not corrected.
“9” – Doubtful
The Bank assigns a doubtful rating to loans and leases that have all the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans.
“10” – Loss
The Bank assigns a loss rating to loans and leases considered uncollectible and of such little value that their continuance as an active asset is not warranted. Amounts classified as loss are immediately charged off.
PPP loans are excluded in the tables below as these loans are fully guaranteed by the SBA. Risk ratings are not established for certain consumer loans, including residential real estate, home equity, manufactured housing, and installment loans, mainly because these portfolios consist of a larger number of homogeneous loans with smaller balances. Instead, these portfolios are evaluated for risk mainly based upon aggregate payment history through the monitoring of delinquency levels and trends and are classified as performing and non-performing. The following tables present the credit ratings of loans and leases receivable as of December 31, 2020 and 2019.
Term Loans Amortized Cost Basis by Origination Year
(amounts in thousands)20202019201820172016PriorRevolving loans amortized cost basisRevolving loans converted to termTotal
Multi-family loans:
Pass$150,835 $23,716 $299,319 $535,510 $227,296 $420,809 $— $— $1,657,485 
Special mention— — — 20,901 10,394 26,708 — — 58,003 
Substandard— — — 34,197 8,256 3,360 — — 45,813 
Doubtful— — — — — — — — — 
Total multi-family loans$150,835 $23,716 $299,319 $590,608 $245,946 $450,877 $— $— $1,761,301 
Commercial and industrial loans and leases:
Pass$729,270 $373,050 $141,943 $116,793 $45,367 $71,502 $717,007 $— $2,194,932 
Special mention13,200 1,117 436 113 516 21 17,524 — 32,927 
Substandard9,968 6,890 19,065 5,901 8,318 2,722 8,718 — 61,582 
Doubtful— — — — — — — — — 
Total commercial and industrial loans and leases$752,438 $381,057 $161,444 $122,807 $54,201 $74,245 $743,249 $— $2,289,441 
Commercial real estate owner occupied loans:
Pass$82,343 $168,977 $72,615 $70,642 $46,510 $91,798 $741 $— $533,626 
Special mention— 4,464 — 9,056 — 555 — — 14,075 
Substandard— 2,848 9,499 342 2,231 9,717 — — 24,637 
Doubtful— — — — — — — — — 
Total commercial real estate owner occupied loans$82,343 $176,289 $82,114 $80,040 $48,741 $102,070 $741 $— $572,338 
Commercial real estate non-owner occupied:
Pass$143,231 $105,430 $97,882 $157,835 $155,168 $313,559 $— $— $973,105 
Special mention39,994 — — 66,745 24,218 14,613 — — 145,570 
Substandard— — 17,741 20,611 366 39,171 — — 77,889 
Doubtful— — — — — — — — 
Total commercial real estate non-owner occupied loans$183,225 $105,430 $115,623 $245,191 $179,752 $367,343 $— $— $1,196,564 
Construction:
Pass$19,932 $105,466 $4,954 $— $9,700 $— $853 $— $140,905 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Total construction loans$19,932 $105,466 $4,954 $— $9,700 $— $853 $— $140,905 
Total commercial loans and leases receivable$1,188,773 $791,958 $663,454 $1,038,646 $538,340 $994,535 $744,843 $— $5,960,549 
Residential real estate loans:
Performing$6,708 $13,617 $6,810 $10,850 $38,143 $69,496 $161,576 $— $307,200 
Non-performing— — 160 785 1,350 4,395 3,280 — 9,970 
Total residential real estate loans$6,708 $13,617 $6,970 $11,635 $39,493 $73,891 $164,856 $— $317,170 
Manufactured housing loans:
Performing$— $295 $609 $76 $41 $56,837 $— $— $57,858 
Non-performing— — — — — 4,385 — — 4,385 
Total manufactured housing loans$— $295 $609 $76 $41 $61,222 $— $— $62,243 
Installment loans:
Performing$319,453 $791,235 $114,988 $4,736 $514 $1,204 $— $— $1,232,130 
Non-performing305 2,326 485 41 117 — — 3,276 
Total installment loans$319,758 $793,561 $115,473 $4,777 $516 $1,321 $— $— $1,235,406 
Total consumer loans$326,466 $807,473 $123,052 $16,488 $40,050 $136,434 $164,856 $— $1,614,819 
Loans and leases receivable$1,515,239 $1,599,431 $786,506 $1,055,134 $578,390 $1,130,969 $909,699 $— $7,575,368 
December 31, 2019
(amounts in thousands)Multi-familyCommercial and industrialCommercial real estate owner occupiedCommercial real estate non-owner occupiedConstructionResidential real estateManufactured housingInstallment
Total (3)
Pass/Satisfactory$1,816,200 $1,841,074 $536,777 $1,129,838 $118,418 $— $— $— $5,442,307 
Special Mention69,637 26,285 8,286 6,949 — — — — 111,157 
Substandard23,437 22,621 6,944 86,742 — — — — 139,744 
Performing (1)
— — — — — 362,962 63,250 1,170,976 1,597,188 
Non-performing (2)
— — — — — 12,052 7,148 7,307 26,507 
Total$1,909,274 $1,889,980 $552,007 $1,223,529 $118,418 $375,014 $70,398 $1,178,283 $7,316,903 
(1)Includes residential real estate, manufactured housing, and installment loans not assigned internal ratings.
(2)Includes residential real estate, manufactured housing, and installment loans that are past due and still accruing interest or on nonaccrual status.
(3)Excludes commercial mortgage warehouse loans reported at fair value.
Loan Purchases and Sales
Purchases and sales of loans were as follows for the years ended December 31, 2020, 2019 and 2018:
For the Years Ended December 31,
(amounts in thousands)202020192018
Purchases (1)
Residential real estate$495 $105,858 $368,402 
Installment (2)
269,684 1,058,261 30,066 
Total$270,179 $1,164,119 $398,468 
Sales (3)
Multi-family$— $— $54,638 
Commercial and industrial (4)
6,940 22,267 32,263 
Commercial real estate owner occupied (4)
— 16,320 20,218 
Commercial real estate non-owner occupied17,600 — — 
Residential real estate— 230,285 — 
Installment1,822 — — 
Total$26,362 $268,872 $107,119 
(1)Amounts reported represent the unpaid principal balance at time of purchase. The purchase price was 100.3%, 100.3% and 99.9% of loans outstanding for the years ended December 31, 2020, 2019 and 2018, respectively.
(2)Installment loan purchases for the year ended December 31, 2020, 2019 and 2018 consist of third-party originated unsecured consumer loans. None of the loans are considered sub-prime at the time of origination. Customers considers sub-prime borrowers to be those with FICO scores below 660.
(3)Amounts reported in the above table are the unpaid principal balance at time of sale. For the years ended December 31, 2020, 2019 and 2018, loan sales resulted in net gains of $2.0 million, $2.8 million and $3.3 million, respectively.
Loans Pledged as Collateral
Customers has pledged eligible real estate and commercial and industrial loans as collateral for borrowings from the FHLB and FRB in the amount of $8.5 billion and $4.6 billion at December 31, 2020 and 2019, respectively. The increase in loans pledged as collateral relates to $4.6 billion of PPP loans that were pledged to the Federal Reserve Bank of Philadelphia ("FRB") in accordance with borrowing from the PPP Liquidity Facility ("PPPLF").