hafc-10q_20200331.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging Growth Company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From ___________ To _____________

Commission File Number: 000-30421

HANMI FINANCIAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware		95-4788120
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

3660 Wilshire Boulevard, Penthouse Suite A		90010
Los Angeles, California
(Address of Principal Executive Offices)		(Zip Code)

(213) 382-2200

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

HAFC

Nasdaq Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of May 1, 2020, there were 30,617,066 outstanding shares of the Registrant’s Common Stock.

Hanmi Financial Corporation and Subsidiaries Quarterly Report on Form 10-Q

Three Months Ended March 31, 2020

Table of Contents


	Part I – Financial Information

Item 1.	Financial Statements	3

	Consolidated Balance Sheets at March 31, 2020 (unaudited) and December 31, 2019	3

	Consolidated Statements of Income (Unaudited)	4

	Consolidated Statements of Comprehensive Income (Unaudited)	5

	Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	6

	Consolidated Statements of Cash Flows (Unaudited)	7

	Notes to Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55

Item 4.	Controls and Procedures	56

	Part II – Other Information

Item 1.	Legal Proceedings	57

Item 1A.	Risk Factors	57

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58

Item 3.	Defaults Upon Senior Securities	58

Item 4.	Mine Safety Disclosures	58

Item 5.	Other Information	58

Item 6.	Exhibits	59

Signatures		60

Part I — Financial Information

Item 1. Financial Statements

Hanmi Financial Corporation and Subsidiaries

Consolidated Balance Sheets (Unaudited)

(in thousands, except share data)

	March 31,			December 31,
	2020			2019

Assets
Cash and due from banks	$	290,546		$	121,678
Securities available for sale, at fair value (amortized cost of $605,530, as of March 31, 2020 and $629,725 as of December 31, 2019)		622,206			634,477
Loans held for sale, at the lower of cost or fair value		—			6,020
Loans receivable, net of allowance for credit losses of $66,500 as of March 31, 2020 and $61,408 as of December 31, 2019		4,477,136			4,548,739
Accrued interest receivable		11,536			11,742
Premises and equipment, net		26,374			26,070
Customers' liability on acceptances		102			66
Servicing assets		6,727			6,956
Goodwill and other intangible assets, net		11,808			11,873
Federal Home Loan Bank ("FHLB") stock, at cost		16,385			16,385
Income tax assets		39,445			36,787
Bank-owned life insurance		53,058			52,782
Prepaid expenses and other assets		62,367			64,609
Total assets	$	5,617,690		$	5,538,184

Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing	$	1,366,270		$	1,391,624
Interest-bearing		3,215,797			3,307,338
Total deposits		4,582,068			4,698,962
Accrued interest payable		9,693			11,215
Bank's liability on acceptances		102			66
FHLB borrowings		300,000			90,000
Subordinated debentures ($126,800 face amount less unamortized discount and debt issuance costs of $8,277)		118,523			118,377
Accrued expenses and other liabilities		54,347			56,297
Total liabilities		5,064,732			4,974,917
Stockholders' equity:
Preferred Stock, $0.001 par value; authorized 10,000,000 shares; no shares issued as of March 31, 2020 and December 31, 2019		—			—
Common stock, $0.001 par value; authorized 62,500,000 shares; issued 33,448,214 shares (30,622,741 shares outstanding) as of March 31, 2020 and issued 33,475,402 shares (30,799,624 shares outstanding) as of December 31, 2019		33			33
Additional paid-in capital		576,585			575,816
Accumulated other comprehensive income, net of tax expense of $4,809 as of March 31, 2020 and $1,370 as of December 31, 2019		11,867			3,382
Retained earnings		83,355			100,551
Less treasury stock; 2,825,473 shares as of March 31, 2020 and 2,675,778 shares as of December 31, 2019		(118,882	)		(116,515	)
Total stockholders' equity		552,958			563,267
Total liabilities and stockholders' equity	$	5,617,690		$	5,538,184

See Accompanying Notes to Consolidated Financial Statements (Unaudited)

Hanmi Financial Corporation and Subsidiaries

Consolidated Statements of Income (Unaudited)

(in thousands, except share and per share data)

	Three Months Ended March 31,
	2020		2019
Interest and dividend income:
Interest and fees on loans receivable	$	54,648	$	58,334
Interest on securities		3,655		3,456
Dividends on FHLB stock		289		289
Interest on deposits in other banks		333		335
Total interest and dividend income		58,925		62,414
Interest expense:
Interest on deposits		12,742		15,683
Interest on borrowings		496		71
Interest on subordinated debentures		1,712		1,772
Total interest expense		14,950		17,526
Net interest income before credit loss expense		43,975		44,888
Credit loss expense		15,739		1,117
Net interest income after credit loss expense		28,236		43,771
Noninterest income:
Service charges on deposit accounts		2,400		2,358
Trade finance and other service charges and fees		986		1,124
Gain on sale of Small Business Administration ("SBA") loans		1,154		926
Net gain on sales of securities		—		725
Other operating income		1,683		1,121
Total noninterest income		6,223		6,254
Noninterest expense:
Salaries and employee benefits		17,749		15,738
Occupancy and equipment		4,475		4,521
Data processing		2,669		2,083
Professional fees		1,915		1,649
Supplies and communications		781		844
Advertising and promotion		734		760
Other operating expenses		2,745		3,470
Total noninterest expense		31,068		29,065
Income before tax		3,391		20,960
Income tax expense		1,041		6,288
Net income	$	2,350	$	14,672
Basic earnings per share	$	0.08	$	0.48
Diluted earnings per share	$	0.08	$	0.48
Weighted-average shares outstanding:
Basic		30,469,022		30,667,378
Diluted		30,472,899		30,720,772

See Accompanying Notes to Consolidated Financial Statements (Unaudited)

Hanmi Financial Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)

(in thousands)

	Three Months Ended March 31,
	2020			2019
Net income	$	2,350		$	14,672
Other comprehensive income, net of tax:
Unrealized gain on securities:
Unrealized holding gain arising during period		11,924			6,619
Less: reclassification adjustment for net gain included in net income		—			(725	)
Income tax expense related to items of other comprehensive income		(3,439	)		(1,697	)
Other comprehensive income, net of tax		8,485			4,197
Comprehensive income	$	10,835		$	18,869

See Accompanying Notes to Consolidated Financial Statements (Unaudited)

Hanmi Financial Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(in thousands, except share data)

	Common Stock - Number of Shares									Stockholders' Equity
														Accumulated
												Additional		Other						Treasury			Total
	Shares			Treasury			Shares			Common		Paid-in		Comprehensive			Retained			Stock,			Stockholders'
	Issued			Shares			Outstanding			Stock		Capital		Income (Loss)			Earnings			at Cost			Equity
Balance at January 1, 2019		33,202,369			(2,273,932	)		30,928,437		$	33	$	569,712	$	(6,079	)	$	97,539		$	(108,637	)	$	552,568
Stock options exercised		650			—			650			—		8		—			—			—			8
Restricted stock awards, net of forfeitures		(49,131	)		—			(49,131	)		—		—		—			—			—			—
Share-based compensation expense		—			—			—			—		712		—			—			—			712
Restricted stock surrendered due to employee tax liability		—			(19,423	)		(19,423	)		—		—		—			—			(425	)		(425	)
Cash dividends declared (common stock, $0.24/share)		—			—			—			—		—		—			(7,440	)		—			(7,440	)
Net income		—			—			—			—		—		—			14,672			—			14,672
Change in unrealized gain (loss) on securities available for sale, net of income taxes		—			—			—			—		—		4,197			—			—			4,197
Balance at March 31, 2019		33,153,888			(2,293,355	)		30,860,533		$	33	$	570,432	$	(1,882	)	$	104,771		$	(109,062	)	$	564,292

Balance at January 1, 2020		33,475,402			(2,675,778	)		30,799,624		$	33	$	575,816	$	3,382		$	100,551		$	(116,515	)	$	563,267
Adjustment related to adopting of new accounting standards
ASU 2016-13 (See Notes 1 and 3)		—			—			—			—		—		—			(12,167	)		—			(12,167	)
Adjusted balance at January 1, 2020		33,475,402			(2,675,778	)		30,799,624			33		575,816		3,382			88,385			(116,515	)		551,101
Restricted stock awards, net of forfeitures		(27,188	)		—			(27,188	)		—		—		—			—			—			—
Share-based compensation expense		—			—			—			—		769		—			—			—			769
Restricted stock surrendered due to employee tax liability		—			(14,295	)		(14,295	)		—		—		—			—			(171	)		(171	)
Repurchase of common stock		—			(135,400	)		(135,400	)		—		—		—			—			(2,196	)		(2,196	)
Cash dividends declared (common stock, $0.24/share)		—			—			—			—		—		—			(7,380	)		—			(7,380	)
Net income		—			—			—			—		—		—			2,350			—			2,350
Change in unrealized gain (loss) on securities available for sale, net of income taxes		—			—			—			—		—		8,485			—			—			8,485
Balance at March 31, 2020		33,448,214			(2,825,473	)		30,622,741		$	33	$	576,585	$	11,867		$	83,355		$	(118,882	)	$	552,958

See Accompanying Notes to Consolidated Financial Statements (Unaudited)

Hanmi Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net income	$	2,350		$	14,672
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,317			2,622
Share-based compensation expense		769			712
Credit loss expense		15,739			1,117
Gain on sales of securities		—			(725	)
Gain on sales of SBA loans		(1,154	)		(926	)
Origination of SBA loans held for sale		(12,197	)		(13,223	)
Proceeds from sales of SBA loans		19,366			16,608
Change in bank-owned life insurance		(276	)		(280	)
Change in prepaid expenses and other assets		(4,905	)		1,671
Change in income tax assets		4,098			—
Change in accrued expenses and other liabilities		(1,846	)		185
Net cash provided by operating activities		24,262			22,433
Cash flows from investing activities:
Purchases of securities available for sale		(26,423	)		(130,550	)
Proceeds from matured, called and repayment of securities		49,987			20,544
Proceeds from sales of securities available for sale		—			69,187
Purchases of premises and equipment		(1,244	)		(1,444	)
Proceeds from disposition of premises and equipment		44			—
Change in loans receivable, excluding purchases		38,884			24,201
Net cash provided by (used in) investing activities		61,248			(18,062	)
Cash flows from financing activities:
Change in deposits		(116,894	)		72,940
Change in overnight borrowings		135,000			(55,000	)
Proceeds from borrowings		75,000			—
Proceeds from exercise of stock options		—			8
Cash paid for surrender of vested shares due to employee tax liability		(171	)		(425	)
Repurchase of common stock		(2,196	)		—
Cash dividends paid		(7,380	)		(7,440	)
Net cash provided by financing activities		83,359			10,083
Net increase in cash and due from banks		168,869			14,454
Cash and due from banks at beginning of year		121,678			155,376
Cash and due from banks at end of period	$	290,546		$	169,830

Supplemental disclosures of cash flow information:
Interest expense paid	$	16,472		$	14,304
Income taxes paid	$	93		$	88
Non-cash activities:
Income tax (expense) benefit related to items of other comprehensive income	$	(3,439	)	$	(1,697	)
Change in unrealized (gain) loss in accumulated other comprehensive income	$	(11,924	)	$	(5,894	)
Change in right-of-use asset obtained in exchange for lease liability	$	1,287		$	40,909

See Accompanying Notes to Consolidated Financial Statements (Unaudited)

Hanmi Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2020 and 2019

Note 1 — Organization and Basis of Presentation

Hanmi Financial Corporation (“Hanmi Financial,” the “Company,” “we,” “us” or “our”) is a bank holding company whose primary subsidiary is Hanmi Bank (the “Bank”). Our primary operations are related to traditional banking activities, including the acceptance of deposits and the lending and investing of money through the operation of the Bank.

In management’s opinion, the accompanying unaudited consolidated financial statements of Hanmi Financial and its subsidiaries reflect all adjustments of a normal and recurring nature that are necessary for a fair presentation of the results for the interim period ended March 31, 2020, but are not necessarily indicative of the results that will be reported for the entire year or any other interim period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. The unaudited consolidated financial statements are prepared in conformity with GAAP and in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The interim information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report on Form 10-K”).

The preparation of interim unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions affect the amounts reported in the unaudited financial statements and disclosures provided, and actual results could differ.

Descriptions of our significant accounting policies are included in Note 1 - Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in the 2019 Annual Report on Form 10-K.

FASB ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, On January 1, 2020, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. In addition, ASU 2016-13 made changes to the accounting for available-for sale debt securities.

The Company adopted ASU 2016-13 using the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to January 1, 2020. However, the Company had no securities with other-than-temporary impairment as of December 31, 2019, and as a result there was no effect on the balance sheet related to securities from the adoption of ASU 2016-13. As a result, the amortized cost basis remains the same before and after the effective date of ASU 2016-13. The Company also reviewed the credit quality of its available-for-sale debt securities as of March 31, 2020 and recognizing that all securities were either U.S. Treasury, U.S. government agency, or U.S. government sponsored agencies obligations did not identify any impairment within the portfolio which would require an allowance for credit losses to be established during the three-month period ended March 31, 2020.

The Company adopted CECL as of January 1, 2020 using the modified retrospective approach and by leveraging three loss rate methodologies across the Bank’s four major loan segments (real estate loans, commercial and industrial loans, leases receivable, and consumer loans). Risk documentation, policies and procedures associated with CECL to support the ongoing estimation activities and the continuous assessment of risks related to the model, its methodologies, and data governance was also devised.

The adoption resulted in a $17.4 million increase to the beginning balance of the allowance for credit losses, a $0.3 million decrease to the beginning balance of the allowance for off-balance sheet items, and an after-tax charge of $12.2 million to the beginning balance of retained earnings.

According to ASU 2016-13, the Bank is required to measure its expected credit losses of financial assets on a collective (pool) basis when similar risk characteristic(s) exist. The Bank segments the loans primarily by loan types, considering that the same type of loans share considerable similar risk characteristics, including the collateral type, loan purpose, contract term, amortization and payment structure.

The Company measures expected credit losses of financial assets on a collective (pool) basis, when the financial assets share similar risk characteristics. Depending on the nature of the pool of financial assets with similar risk characteristics, the Company uses a discounted cash flow (“DCF”) method, Probability of Default / Loss Given Default method (“PD/LGD”), or a Weighted Average Remaining Maturity (“WARM”) method to estimate expected credit losses.

The Company’s methodologies for estimating the allowance for credit losses consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodologies apply historical loss information, adjusted for asset-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions expected to exist through the contractual lives of the financial assets that are reasonable and supportable, to the identified pools of financial assets with similar risk characteristics for which the historical loss experience was observed. The Company’s methodologies revert back to historical loss information on a straight-line basis over twelve quarters when it can no longer develop reasonable and supportable forecasts.

The Company has disaggregated the portfolios of financial assets into the following material segments of like-kind loans or leases with similar risk characteristics using the following methodologies:

The Company used the discounted cash flow (DCF) method to estimate allowances for credit losses for the commercial property, construction, and residential real estate loan portfolios, the commercial and industrial loan portfolio, and the consumer loan portfolio. For all loan pools utilizing the DCF method, the Company utilizes and forecasts the national unemployment rate as the primary loss driver. The Company also utilizes and forecasts either the annualized average return rate from the National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index for commercial real estate loans or the one-year percentage change in the S&P/Case-Shiller U.S National Home Price Index (NHPI) for residential real estate loans as a second loss driver depending on the nature of the underlying loan pool and how well that loss driver correlates to expected future losses.

For all DCF models at March 31, 2020, the Company determined that four-quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over twelve quarters on a straight-line basis. As of and for the quarter ended March 31, 2020, the Company leverages economic projections from the quarterly Federal Open Market Committee (FOMC) and the Federal Reserve Economic Database (FRED) to inform its loss driver forecasts over the four-quarter forecast period. For each of these loan segments, the Company applies an expected loss ratio based on the discounted cash flows adjusted as appropriate for qualitative factors. Qualitative loss factors are based on the Company's judgment of company, market, industry or business specific data, changes the in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, nonperforming and adversely rated loans, and reasonable and supportable forecasts of economic conditions.

The Company used the Probability of Default/Loss Given Default (PD/LGD) method for the SBA portfolio to accommodate the unique nature of these loans. Although the PD/LGD methodology is an element of the DCF model, the stand-alone PD/LGD methodology minimizes complications related to the characteristics of SBA loans. A uniqueness of the SBA portfolio is that the U.S. Small Business Administration policy requires servicers to undertake all reasonable collection efforts before charging-off the loan. As a result, the recovery rate for SBA loans tend to be more volatile and not intuitively correlated to economic factors.

The Company used a Weighted Average Remaining Maturity (WARM) method to estimate expected credit losses for equipment financing agreements or the equipment lease receivables portfolio. The Company applied an expected loss ratio based on internal historical losses adjusted as appropriate for qualitative factors. The Company's evaluation of market, industry or business specific data, changes in the underlying portfolio composition, trends relating to credit quality, delinquency, nonperforming and adversely rated leases, and reasonable and supportable forecasts of economic conditions inform the estimate of qualitative factors.

As allowed by ASU 2016-13, the Company elected to maintain pools of loans accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether modifications to individual acquired financial assets accounted for in pools were troubled debt restructurings as of the date of adoption.

The Company estimates the allowance for credit losses on loans based on the underlying assets’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, and net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Therefore, the Company has made a policy election to exclude accrued interest from the measurement of allowance for credit losses.

Expected credit losses are reflected in the allowance for credit losses through a charge to credit loss expense. When the Company deems all or a portion of a financial asset to be uncollectible, the appropriate amount is written off and the allowance for credit losses is reduced by the same amount. The Company applies judgment to determine when a financial asset is deemed uncollectible; however, generally speaking, an asset will be considered uncollectible no later than when all efforts at collection have been exhausted. Subsequent recoveries, if any, are credited to the allowance for credit losses when received.

The following table illustrates the allowance for credit losses and the related impact under ASU 2016-13 to the Company as of January 1, 2020.

	As Reported Under ASU 2016-13		Pre-ASU 2016-13 Adoption		Impact of ASU 2016-13 Adoption
Real estate loans:
Commercial property
Retail	$	6,785	$	4,911	$	1,873
Hospitality		12,387		6,686		5,702
Other		13,415		8,060		5,355
Total commercial property loans		32,587		19,657		12,930
Construction loans		15,590		15,003		587
Residential property loans		2,150		1,695		455
Total real estate loans		50,327		36,355		13,972
Commercial and industrial loans:
Commercial term loans		12,175		14,077		(1,903	)
Commercial lines of credit		1,358		1,887		(529	)
International loans		176		242		(65	)
Total commercial loans		13,709		16,206		(2,497	)
Leases receivable		14,669		8,767		5,902
Consumer loans		135		80		55
Allowance for credit losses on loans receivable	$	78,841	$	61,408	$	17,433

Allowance for credit losses on off-balance sheet items	$	2,062	$	2,398	$	(336	)

FASB ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, Effective January 1, 2020, the Company adopted this standard, which simplifies the subsequent measurement of goodwill impairment by eliminating the requirement to calculate the implied fair value of goodwill (i.e., the current Step 2 of the goodwill impairment test) to measure a goodwill impairment charge. Under this ASU, the impairment test is simply the comparison of the fair value of a reporting unit with its carrying amount (the current Step 1), with the impairment charge being the deficit in fair value but not exceeding the total amount of goodwill allocated to that reporting unit. The simplified one-step impairment test applies to all reporting units (including those with zero or negative carrying amounts). An entity was to apply the amendments in this ASU on a prospective basis and was required to disclose the nature of and reason for the change in accounting principle upon transition. The Company’s goodwill arose from the purchase of an equipment leasing portfolio in 2017. The equipment leasing portfolio has grown since acquisition, and the Company has concluded no impairment has occurred.

Note 2 — Securities

The following is a summary of securities available for sale as of the dates indicated:

			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gain		Loss			Value
	(in thousands)
March 31, 2020
U.S. Treasury securities	$	24,988	$	420	$	—		$	25,408
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities		413,350		12,023		(17	)	$	425,356
Collateralized mortgage obligations		150,950		3,890		(15	)		154,825
Debt securities		16,242		375		—			16,617
Total U.S. government agency and sponsored agency obligations		580,542		16,288		(32	)		596,798
Total securities available for sale	$	605,530	$	16,708	$	(32	)	$	622,206

December 31, 2019
U.S. Treasury securities	$	34,947	$	259	$	—			35,206
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities		406,813		4,334		(347	)	$	410,800
Collateralized mortgage obligations		164,232		792		(432	)		164,592
Debt securities		23,733		168		(22	)		23,879
Total U.S. government agency and sponsored agency obligations		594,778		5,294		(801	)		599,271
Total securities available for sale	$	629,725	$	5,553	$	(801	)	$	634,477

The amortized cost and estimated fair value of securities as of March 31, 2020, by contractual or expected maturity, are shown below. Collateralized mortgage obligations are included in the table shown below based on their expected maturities. All other securities are included based on their contractual maturities.

	Available for Sale
	Amortized		Estimated
	Cost		Fair Value
	(in thousands)
Within one year	$	25,583	$	25,700
Over one year through five years		160,801		164,775
Over five years through ten years		172,537		178,879
Over ten years		246,610		252,851
Total	$	605,530	$	622,206

CECL (ASU 2016-13) requires the Company to assess its available-for-sales securities portfolio for impairment on an at least quarterly basis. The Company performed an impairment assessment of the Bank’s investment in debt securities in accordance with this standard. This assessment took into account the credit quality of these debt securities and determined that since all were U.S. Treasury obligations, U.S. government agency securities, and U.S. government sponsored agency securities, they all have the backing of the U.S. government, and thus no credit impairment is expected.

Gross unrealized losses on securities available for sale, the estimated fair value of the related securities and the number of securities aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows as of March 31, 2020 and December 31, 2019:

	Holding Period
	Less than 12 Months							12 Months or More							Total
	Gross			Estimated		Number		Gross			Estimated		Number		Gross			Estimated		Number
	Unrealized			Fair		of		Unrealized			Fair		of		Unrealized			Fair		of
	Loss			Value		Securities		Loss			Value		Securities		Loss			Value		Securities
	(in thousands, except number of securities)
March 31, 2020
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities	$	(16	)	$	11,626		3	$	(1	)	$	1		1		(17	)		11,627		4
Collateralized mortgage obligations		(14	)		1,250		1		(1	)		350		1		(15	)		1,600		2
Total U.S. government agency and sponsored agency obligations		(30	)		12,876		4		(2	)		351		2		(32	)		13,227		6
Total	$	(30	)	$	12,876		4	$	(2	)	$	351		2	$	(32	)	$	13,227		6

December 31, 2019
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities	$	(186	)	$	51,261		17	$	(161	)	$	18,757		14	$	(347	)	$	70,018		31
Collateralized mortgage obligations		(112	)		41,419		14		(320	)		39,936		36		(432	)		81,355		50
Debt securities		(20	)		8,235		2		(3	)		2,997		1		(22	)		11,233		3
Total U.S. government agency and sponsored agency obligations		(318	)		100,916		33		(483	)		61,690		51		(801	)		162,606		84
Total	$	(318	)	$	100,916		33	$	(483	)	$	61,690		51	$	(801	)	$	162,606		84

The unrealized losses in the U.S. government agency and sponsored agency obligations, as it relates to mortgage-backed securities and in the collateralized mortgage obligation securities were caused by fluctuations in interest rates. These securities are not deemed to have credit risk due to their long history with no credit losses, and the explicit guarantee of the U.S. government of timely payment of principal and interest to investors. The Company does not intend to sell the securities and it is not more likely than not that it will be required to sell them before recovery of their amortized cost.

Realized gains and losses on sales of securities and proceeds from sales of securities were as follows for the periods indicated:

	Three Months Ended March 31,
	2020		2019
	(in thousands)
Gross realized gains on sales of securities	$	—	$	725
Gross realized losses on sales of securities		—		—
Net realized gains on sales of securities	$	—	$	725
Proceeds from sales of securities	$	—		69,187

During the three months ended March 31, 2020, there were no securities sales transactions. During the three months ended March 31, 2019, there was $725,000 in net gains in earnings resulting from the sale of securities. A net unrealized loss of $206,000 related to these securities had previously been recorded in accumulated other comprehensive income as of the beginning of the period in 2019.

Securities available for sale with market values of $52.7 million and $30.0 million as of March 31, 2020 and 2019, respectively, were pledged to secure public deposits and for other purposes as required or permitted by law.

Note 3 — Loans

Loans Receivable

Loans consisted of the following as of the dates indicated:

	March 31, 2020			December 31, 2019
	(in thousands)
Real estate loans:
Commercial property
Retail	$	818,045			869,302
Hospitality		884,511			922,288
Other ⁽¹⁾		1,420,824			1,358,432
Total commercial property loans		3,123,380			3,150,022
Construction		63,809			76,455
Residential property		379,116			402,028
Total real estate loans		3,566,305			3,628,505
Commercial and industrial loans		472,714			484,093
Leases receivable		492,527			483,879
Consumer loans ⁽²⁾		12,090			13,670
Loans receivable		4,543,636			4,610,147
Allowance for credit losses		(66,500	)		(61,408	)
Loans receivable, net	$	4,477,136		$	4,548,739

⁽¹⁾	Includes, among other types, mixed-use, apartment, office, industrial, gas stations, faith-based facilities and warehouse; all other property types represent less than one percent of total loans receivable.

⁽²⁾	Consumer loans include home equity lines of credit of $7.5 million and $8.2 million as of March 31, 2020 and December 31, 2019, respectively.

Accrued interest on loans was $10.0 million at March 31, 2020 and December 31, 2019. At March 31, 2020 and December 31, 2019, loans of $2.4 billion and $1.4 billion, respectively, were pledged to secure advances from the FHLB.

Loans Held for Sale

The following is the activity for SBA loans held for sale for the three months ended March 31, 2020 and 2019:

	Real Estate			Commercial and Industrial			Total
	(in thousands)
March 31, 2020
Balance at beginning of period	$	2,943		$	3,077		$	6,020
Originations		6,494			5,703			12,197
Sales		(9,432	)		(8,780	)		(18,212	)
Principal paydowns and amortization		(5	)		—			(5	)
Balance at end of period	$	—		$	—		$	—

March 31, 2019
Balance at beginning of period	$	5,194		$	4,196		$	9,390
Originations		9,064			4,159			13,223
Sales		(7,756	)		(7,703	)		(15,459	)
Principal paydowns and amortization		(2	)		(12	)		(14	)
Balance at end of period	$	6,500		$	640		$	7,140

Allowance for Credit Losses

The Company’s estimate of the allowance for credit losses reflects losses expected over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications unless the Company has identified an expected troubled debt restructuring.

The allowance for credit losses as of March 31, 2020 was estimated using the current expected credit loss model. The primary reason for the increase in the allowance for credit losses is significant projected deterioration of the loss drivers that the Company forecasts to calculate expected losses and, to a much lesser extent, increases in qualitative loss factors.

Management believes the allowance for credit losses is appropriate to provide for estimated losses inherent in the loans receivable portfolio. However, the allowance is an estimate that is inherently uncertain and depends on the outcome of future events. Management’s methodologies for determining such estimates consists of measuring expected credit losses of financial assets on a collective (pool) basis when similar risk characteristic(s) exist. The Bank segments the loans primarily by loan types, considering that the same type of loans share considerable similar risk characteristics, including the collateral type, loan purpose, contract term, amortization and payment structure. Our lending is concentrated generally in real estate loans, commercial loans and leases and SBA loans to small and middle market businesses primarily in California, Texas, Illinois and New York. Further, our regulators, in reviewing our loans receivable portfolio may require us to increase our allowance for credit losses.

The following table details the information on the allowance for credit losses by portfolio segment as of and for the three months ended March 31, 2020 and 2019:

	Real Estate			Commercial and Industrial			Leases Receivable			Consumer			Unallocated		Total
	(in thousands)
March 31, 2020
Balance at beginning of period	$	36,355		$	16,206		$	8,767		$	80		$	—	$	61,408
Adjustment related to adoption of ASU 2016-13		13,972			(2,497	)		5,902			55			—		17,433
Adjusted balance as of January 1, 2020		50,327			13,709			14,669			135			—		78,841
Less loans charged off		14,142			12,150			1,181			—			—		27,473
Recoveries on loans receivable previously charged off		(58	)		(84	)		(74	)		—			—		(216	)
Provision for credit losses		2,740			9,945			2,218			14			—		14,916
Ending balance	$	38,983		$	11,588		$	15,780		$	149		$	—	$	66,500
Individually evaluated for impairment	$	78		$	147		$	1,671		$	3		$	—	$	1,899
Collectively evaluated for impairment	$	38,905		$	11,441		$	14,109		$	146		$	—	$	64,601

Loans receivable	$	3,566,305		$	472,714		$	492,527		$	12,090		$	—	$	4,543,636
Individually evaluated for impairment	$	34,161		$	5,444		$	6,393		$	1,298		$	—	$	47,296
Collectively evaluated for impairment	$	3,532,144		$	467,270		$	486,134		$	10,792		$	—	$	4,496,340

March 31, 2019
Balance at beginning of period	$	18,384		$	7,162		$	6,303		$	98		$	27	$	31,974
Less loans charged off		122			133			852			—			—		1,107
Recoveries on loans receivable previously charged off		(440	)		(382	)		(90	)		—			—		(912	)
Provision for credit losses		(396	)		1,300			39			(9	)		183		1,117
Ending balance	$	18,306		$	8,711		$	5,580		$	89		$	210	$	32,896
Individually evaluated for impairment	$	—		$	3,269		$	1,099		$	—		$	—	$	4,368
Collectively evaluated for impairment	$	18,306		$	5,442		$	4,481		$	89		$	210	$	28,528

Loans receivable	$	3,714,356		$	422,502		$	425,530		$	13,232		$	—	$	4,575,620
Individually evaluated for impairment	$	14,015		$	23,114		$	4,783		$	1,370		$	—	$	43,282
Collectively evaluated for impairment	$	3,700,341		$	399,388		$	420,747		$	11,862		$	—	$	4,532,338

The table below illustrates the allowance for credit losses by portfolio segment as a percentage of the recorded total allowance for credit losses and as a percentage of the aggregate recorded investment of loans receivable.

	March 31, 2020										December 31, 2019
	Allowance					Total					Allowance					Total
	Amount		Percentage			Loans		Percentage			Amount		Percentage			Loans		Percentage
	(in thousands)
Real estate loans:
Commercial property
Retail	$	6,651		10.0	%	$	818,045		18.0	%	$	4,911		8.0	%	$	869,302		18.9	%
Hospitality		12,499		18.8	%		884,511		19.5	%		6,686		10.9	%		922,288		20.0	%
Other		15,664		23.6	%		1,420,824		31.3	%		8,060		13.1	%		1,358,432		29.4	%
Total commercial property loans		34,814		52.4	%		3,123,380		68.7	%		19,657		32.0	%		3,150,022		68.3	%
Construction		2,207		3.3	%		63,809		1.4	%		15,003		24.4	%		76,455		1.7	%
Residential property		1,962		3.0	%		379,116		8.3	%		1,695		2.8	%		402,028		8.7	%
Total real estate loans		38,983		58.7	%		3,566,305		78.5	%		36,355		59.2	%		3,628,505		78.7	%
Commercial and industrial loans		11,588		17.4	%		472,714		10.4	%		16,206		26.4	%		484,093		10.5	%
Leases receivable		15,780		23.7	%		492,527		10.8	%		8,767		14.3	%		483,879		10.5	%
Consumer loans		149		0.2	%		12,090		0.3	%		80		0.1	%		13,670		0.3	%
Total	$	66,500		100.0	%	$	4,543,636		100.0	%	$	61,408		100.0	%	$	4,610,147		100.0	%

The following table represents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2020, for which repayment is expected to be obtained through the sale of the underlying collateral and any collateral dependent loans that are still accruing but are considered impaired.

	Amortized Cost
March 31, 2020	(in thousands)
Real estate loans:
Commercial property	$	17,600
Construction		13,228
Residential property		2,677
Total real estate loans		33,505
Commercial and industrial loans		596
Consumer loans		1,196
Total ⁽¹⁾	$	35,297

⁽¹⁾	All loans are secured by real estate, except for one commercial term loan secured by $525,000 in cash.

Loan Quality Indicators

As part of the on-going monitoring of the quality of our loans portfolio, we utilize an internal loan grading system to identify credit risk and assign an appropriate grade (from 0 to 8) for each loan in our portfolio. A third-party loan review is performed at least on an annual basis. Additional adjustments are made when determined to be necessary. The loan grade definitions are as follows:

Pass and Pass-Watch: Pass and Pass-Watch loans, grades (0-4), are in compliance with the Bank’s credit policy and regulatory requirements, and do not exhibit any potential or defined weaknesses as defined under “Special Mention,” “Substandard” or “Doubtful.” This category is the strongest level of the Bank’s loan grading system. It consists of all performing loans with no identified credit weaknesses. It includes cash and stock/security secured loans or other investment grade loans.

Special Mention: A Special Mention loan, grade (5), has potential weaknesses that deserve management’s close attention. If not corrected, these potential weaknesses may result in deterioration of the repayment of the debt and result in a Substandard classification. Loans that have significant actual, not potential, weaknesses are considered more severely classified.

Substandard: A Substandard loan, grade (6), has a well-defined weakness that jeopardizes the liquidation of the debt. A loan graded Substandard is not protected by the sound worth and paying capacity of the borrower, or of the value and type of collateral pledged. With a Substandard loan, there is a distinct possibility that the Bank will sustain some loss if the weaknesses or deficiencies are not corrected.

Doubtful: A Doubtful loan, grade (7), is one that has critical weaknesses that would make the collection or liquidation of the full amount due improbable. However, there may be pending events which may work to strengthen the loan, and therefore the amount or timing of a possible loss cannot be determined at the current time.

Loss: A loan classified as Loss, grade (8), is considered uncollectible and of such little value that their continuance as active bank assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be possible in the future. Loans classified as Loss will be charged off in a timely manner.

Under regulatory guidance, loans graded special mention or worse are considered criticized loans, and loans graded substandard or worse are considered classified loans.

The tables below provide a comparison as of March 31, 2020 and December 31, 2019 of the pass/pass-watch, special mention and classified loans, disaggregated by loan segment:

	Pass/Pass- Watch		Special Mention		Classified		Total
	(in thousands)
March 31, 2020
Real estate loans:
Commercial property
Retail	$	812,841	$	—	$	5,204	$	818,045
Hospitality		880,567		—		3,944		884,511
Other		1,385,625		6,436		28,763		1,420,824
Total commercial property		3,079,033		6,436		37,911		3,123,380
Construction		38,617		—		25,192		63,809
Residential property		375,655		1,323		2,138		379,116
Total real estate loans		3,493,305		7,759		65,241		3,566,305
Commercial and industrial loans		444,331		12,496		15,887		472,714
Leases receivable		486,134		—		6,393		492,527
Consumer loans		10,696		690		704		12,090
Total loans receivable	$	4,434,466	$	20,945	$	88,225	$	4,543,636

December 31, 2019
Real estate loans:
Commercial property
Retail	$	859,739	$	2,835	$	6,728	$	869,302
Hospitality		915,834		939		5,515		922,288
Other		1,329,817		7,807		20,809		1,358,432
Total commercial property		3,105,390		11,580		33,052		3,150,022
Construction		36,956		1,613		37,886		76,455
Residential property		398,737		2,512		779		402,028
Total real estate loans		3,541,082		15,705		71,718		3,628,505
Commercial and industrial loans		458,184		10,222		15,687		484,093
Leases receivable		477,977		—		5,902		483,879
Consumer loans		12,247		705		718		13,670
Total loans receivable	$	4,489,491	$	26,632	$	94,025	$	4,610,147

Loans by Vintage Year and Risk Rating

	Term Loans
	Amortized Cost Basis by Origination Year ⁽¹⁾
	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Total
	(in thousands)
March 31, 2020
Commercial property
Risk Rating
Pass / Pass Watch	$	182,595	$	542,426	$	566,021	$	441,982	$	537,348	$	774,381	$	34,280	$	3,079,033
Special Mention		—		3,120		465		2,350		89		412		—		6,436
Classified		14,668		—		3,009		712		4,185		15,337		—		37,911
Total commercial property		197,263		545,546		569,495		445,044		541,621		790,129		34,280		3,123,380

Construction
Risk Rating
Pass / Pass Watch		8,207		7,936		1,640		—		20,835		—		—		38,617
Special Mention		—		—		—		—		—		—		—		—
Classified		—		11,964		13,228		—		—		—		—		25,192
Total construction		8,207		19,900		14,867		—		20,835		—		—		63,809

Residential property
Risk Rating
Pass / Pass Watch		—		956		42,842		159,941		108,940		62,976		—		375,655
Special Mention		—		—		—		540		—		784		—		1,323
Classified		—		—		—		869		1,149		120		—		2,138
Total residential property		—		956		42,842		161,350		110,090		63,879		—		379,116

Total real estate loans
Risk Rating
Pass / Pass Watch		190,802		551,318		610,502		601,924		667,124		837,356		34,280		3,493,305
Special Mention		—		3,120		465		2,890		89		1,196		—		7,759
Classified		14,668		11,964		16,237		1,581		5,334		15,456		—		65,241
Total real estate loans		205,470		566,402		627,203		606,394		672,546		854,008		34,280		3,566,305

Commercial and industrial loans:
Risk Rating
Pass / Pass Watch		40,333		151,462		64,266		25,200		5,942		18,286		138,840		444,331
Special Mention		4,036		820		540		80		1,735		1,651		3,634		12,496
Classified		8,672		4,195		851		188		176		1,807		—		15,887
Total commercial and industrial loans		53,041		156,476		65,658		25,468		7,853		21,743		142,475		472,714

Leases receivable:
Risk Rating
Pass / Pass Watch		56,055		219,118		133,700		52,086		23,055		2,119		—		486,134
Special Mention		—		—		—		—		—		—		—		—
Classified		—		2,094		2,001		617		1,257		424		—		6,393
Total leases receivable		56,055		221,212		135,701		52,704		24,313		2,542		—		492,527

Consumer loans:
Risk Rating
Pass / Pass Watch		—		27		19		102		10		2,802		7,737		10,696
Special Mention		—		—		—		—		—		690		—		690
Classified		—		—		675		28		—		—		—		704
Total commercial term loans		—		27		695		130		10		3,492		7,737		12,090

Total loans receivable:
Risk Rating
Pass / Pass Watch		287,190		921,925		808,488		679,312		696,132		860,562		180,857		4,434,466
Special Mention		4,036		3,940		1,005		2,970		1,824		3,536		3,634		20,945
Classified		23,340		18,253		19,764		2,415		6,766		17,687		—		88,225
Total loans receivable	$	314,566	$	944,118	$	829,256	$	684,697	$	704,722	$	881,785	$	184,492	$	4,543,636

⁽¹⁾	Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision.

Loans by Vintage Year and Payment Performance

	Term Loans
	Amortized Cost Basis by Origination Year ⁽¹⁾
	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Total
	(in thousands)
March 31, 2020
Real estate loans:
Commercial property
Payment performance
Performing	$	183,271	$	545,546	$	569,312	$	445,044	$	541,345	$	786,514	$	34,280	$	3,105,314
Nonperforming		13,992		—		183		—		277		3,615		—		18,066
Total commercial property		197,263		545,546		569,495		445,044		541,621		790,129		34,280		3,123,380

Construction
Payment performance
Performing		8,207		19,900		1,640		—		20,835		—		—	$	50,582
Nonperforming		—		—		13,228		—		—		—		—		13,228
Total construction		8,207		19,900		14,867		—		20,835		—		—		63,809

Residential property
Payment performance
Performing		—		956		42,842		159,941		108,940		63,725		—		376,404
Nonperforming		—		—		—		1,409		1,149		154		—		2,711
Total residential property		—		956		42,842		161,350		110,090		63,879		—		379,116

Total real estate loans
Payment performance
Performing		191,478		566,402		613,793		604,986		671,121		850,239		34,280		3,532,299
Nonperforming		13,992		—		13,410		1,409		1,426		3,769		—		34,005
Total real estate loans		205,470		566,402		627,203		606,394		672,546		854,008		34,280		3,566,305

Commercial and industrial loans:
Payment performance
Performing		53,040		146,762		64,944		25,280		7,853		21,559		142,475		461,912
Nonperforming		0		9,714		714		188		—		185		—		10,802
Total commercial and industrial loans		53,041		156,476		65,658		25,468		7,853		21,743		142,475		472,714

Leases receivable:
Payment performance
Performing		56,055		219,021		133,566		52,074		23,032		2,062		—		485,811
Nonperforming		—		2,191		2,135		629		1,280		480		—		6,716
Total leases receivable		56,055		221,212		135,701		52,704		24,313		2,542		—		492,527

Consumer loans:
Payment performance
Performing		—		27		19		102		10		3,492		7,737		11,386
Nonperforming		—		—		675		28		—		—		—		704
Total commercial term loans		—		27		695		130		10		3,492		7,737		12,090

Total loans receivable:
Payment performance
Performing		300,573		932,212		812,322		682,442		702,016		877,351		184,492		4,491,410
Nonperforming		13,992		11,906		16,934		2,255		2,706		4,434		—		52,226
Total loans receivable	$	314,566	$	944,118	$	829,256	$	684,697	$	704,722	$	881,785	$	184,492	$	4,543,636

⁽¹⁾	Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision.

The following is an aging analysis of loans, disaggregated by loan class, as of the dates indicated:

	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total		Accruing 90 Days or More Past Due
	(in thousands)
March 31, 2020
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	—	$	818,045	$	818,045	$	—
Hospitality		—		—		—		—		884,511		884,511		—
Other		708		1,418		1,101		3,227		1,417,597		1,420,824		—
Total commercial property loans		708		1,418		1,101		3,227		3,120,153		3,123,380		—
Construction		—		—		—		—		63,809		63,809		—
Residential property		531		593		2,164		3,288		375,828		379,116		—
Total real estate loans		1,239		2,011		3,265		6,515		3,559,790		3,566,306		—
Commercial and industrial loans		349		318		9,484		10,151		462,563		472,714		5,520
Leases receivable		7,311		1,789		3,748		12,848		479,679		492,527		323
Consumer loans		—		28		—		28		12,062		12,090		—
Total loans receivable	$	8,899	$	4,146	$	16,497	$	29,542	$	4,514,094	$	4,543,636	$	5,843

December 31, 2019
Real estate loans:
Commercial property
Retail	$	6	$	132	$	111	$	249	$	869,053	$	869,302	$	—
Hospitality		907		—		—		907		921,381		922,288		—
Other		51		—		38		89		1,358,344		1,358,432		—
Total commercial property loans		964		132		149		1,245		3,148,778		3,150,022		—
Construction		—		—		—		—		76,455		76,455		—
Residential property		540		1,627		309		2,477		399,551		402,028		—
Total real estate loans		1,504		1,759		458		3,721		3,624,784		3,628,505		—
Commercial and industrial loans		635		133		143		911		483,183		484,093		—
Leases receivable		5,358		2,138		3,493		10,990		472,889		483,879		—
Consumer loans		—		30		—		30		13,639		13,670		—
Total loans receivable	$	7,497	$	4,060	$	4,094	$	15,652	$	4,594,496	$	4,610,147	$	—

As of March 31, 2020, there were $5.8 million of loans that were 90 days or more past due and accruing interest. There were no such loans at December 31, 2019.

Individually Evaluated Loans

Prior to the adoption of ASU 2016-13, impaired loans were measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan was collateral dependent, less estimated costs to sell. If the estimated value of the impaired loan was less than the recorded investment in the loan, we charged-off the deficiency against the allowance for credit losses or we established a specific allowance in the allowance for credit losses. Additionally, we excluded from the quarterly migration analysis impaired loans when determining the amount of the allowance for credit losses required for the period.

We review, under ASU 2016-13, all loans on an individual basis when they do not share similar risk characteristics with loan pools.

The following tables provide information on individually evaluated loans receivable as of March 31, 2020 and impaired loans receivable as of December 31, 2019 disaggregated by loan class, as of the dates indicated:

	Recorded Investment		Unpaid Principal Balance		With No Related Allowance Recorded		With an Allowance Recorded		Related Allowance
	(in thousands)
March 31, 2020
Real estate loans:
Commercial property
Retail	$	156	$	149	$	—	$	156	$	1
Other		18,066		19,371		16,788		1,278		77
Total commercial property loans		18,222		19,520		16,788		1,434		78
Construction		13,228		28,000		13,228		—		—
Residential property		2,711		2,713		2,677		34		—
Total real estate loans		34,161		50,233		32,693		1,468		78
Commercial and industrial loans		5,445		17,853		4,483		962		147
Leases receivable		6,393		6,472		855		5,538		1,671
Consumer loans		1,298		1,606		1,196		102		2
Total	$	47,297	$	76,164	$	39,227	$	8,070	$	1,898

December 31, 2019
Real estate loans:
Commercial property
Retail	$	434	$	459	$	111	$	323	$	19
Hospitality		244		400		22		223		24
Other		14,864		15,151		14,696		167		12
Total commercial property loans		15,542		16,010		14,829		713		55
Construction		27,201		28,000		—		27,201		13,973
Residential property		1,124		1,163		1,089		35		—
Total real estate loans		43,867		45,173		15,918		27,949		14,028
Commercial and industrial loans		13,700		14,090		143		13,557		8,885
Leases receivable		5,902		5,909		1,112		4,790		2,863
Consumer loans		1,297		1,588		1,220		77		1
Total	$	64,766	$	66,760	$	18,393	$	46,373	$	25,778

Nonaccrual Loans and Nonperforming Assets

The following table represents the amortized cost basis of loans on nonaccrual status and loans past due 90 days and still accruing as of March 31, 2020.

	March 31, 2020
	Nonaccrual Loans Receivable With No Allowance for Credit Losses		Nonaccrual Loans Receivable With Allowance for Credit Losses		Loans Receivable Past Due 90 Days Still Accruing		Total Nonperforming Loans Receivable
	(in thousands)
Real estate loans:
Commercial property loans		16,788		1,278		—		18,066
Construction loans		13,228		—		—		13,228
Residential property loans		2,677		34		—		2,711
Total real estate loans		32,693		1,313		—		34,005
Commercial and industrial loans		4,484		798		5,520		10,802
Leases receivable		855		5,538		323		6,716
Consumer loans		675		28		—		703
Total nonperforming loans	$	38,707	$	7,676	$	5,843	$	52,226

The following is a summary of interest foregone on non-accrual loans for the periods indicated:

	Three Months Ended March 31,
	2020			2019
	(in thousands)
Interest income that would have been recognized had impaired loans performed in accordance with their original terms	$	1,595		$	888
Less: Interest income recognized on impaired loans		(122	)		(682	)
Interest foregone on impaired loans	$	1,473		$	206

There were no commitments to lend additional funds to borrowers whose loans are included above.

The following table details nonaccrual loans, disaggregated by loan class, as of the dates indicated:

	March 31, 2020		December 31, 2019
	(in thousands)
Real estate loans:
Commercial property
Retail	$	—	$	277
Hospitality		—		225
Other		18,066		14,864
Total commercial property loans		18,066		15,366
Construction		13,228		27,201
Residential property		2,711		1,124
Total real estate loans		34,005