View Filing Data

Print Document View Excel Document

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2018	Feb. 25, 2019	Jun. 30, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	BankUnited, Inc.
Entity Central Index Key	0001504008
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q4
Amendment Flag	false
Entity Common Stock Shares Outstanding		98,591,661
Entity Public Float			$ 4,287,268,982
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Cash and due from banks:
Non-interest bearing	$ 9,392	$ 35,246
Interest bearing	372,681	159,336
Cash and cash equivalents	382,073	194,582
Investment securities (including securities recorded at fair value of $8,156,878 and $6,680,832)	8,166,878	6,690,832
Non-marketable equity securities	267,052	265,989
Loans held for sale	36,992	34,097
Loans (including covered loans of $201,376 and $503,118)	21,977,008	21,416,504
Allowance for loan and lease losses	(109,931)	(144,795)
Loans, net	21,867,077	21,271,709
FDIC indemnification asset	0	295,635
Bank owned life insurance	263,340	252,462
Equipment under operating lease, net	702,354	599,502
Goodwill and other intangible assets	77,718	77,796
Other assets	400,842	664,382
Total assets	32,164,326	30,346,986
Demand deposits:
Non-interest bearing	3,621,254	3,071,032
Interest bearing	1,771,465	1,757,581
Savings and money market	11,261,746	10,715,024
Time Deposits	6,819,758	6,334,842
Total deposits	23,474,223	21,878,479
Federal Funds Purchased	175,000	0
Federal Home Loan Bank advances	4,796,000	4,771,000
Notes and other borrowings	402,749	402,830
Other liabilities	392,521	268,615
Total liabilities	29,240,493	27,320,924
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.01 per share, 400,000,000 shares authorized; 99,141,374 and 106,848,185 shares issued and outstanding	991	1,068
Paid-in capital	1,220,147	1,498,227
Retained earnings	1,697,822	1,471,781
Accumulated other comprehensive income	4,873	54,986
Total stockholders' equity	2,923,833	3,026,062
Total liabilities and stockholders' equity	$ 32,164,326	$ 30,346,986

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Investments, Fair Value Disclosure	$ 8,156,878,000	$ 6,680,832,000
ASSETS
Covered loans net of premiums, discounts and deferred fees and costs	$ 201,376,000	$ 503,118,000
Stockholders' equity:
Common stock, par value (in Dollars per Share)	$ 0.01	$ 0.01
Common stock, shares authorized (in Shares)	400,000,000	400,000,000
Common stock, shares issued (in Shares)	99,141,374	106,848,185
Common stock, shares outstanding (in Shares)	99,141,374	106,848,185

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	12 Months Ended
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Interest income:
Loans	$ 1,198,241	$ 1,001,862	$ 896,154
Investment Securities	233,091	188,307	150,859
Other	17,812	14,292	12,204
Total interest income	1,449,144	1,204,461	1,059,217
Interest expense:
Deposits	284,563	170,933	119,773
Borrowings	114,488	83,256	69,059
Total interest expense	399,051	254,189	188,832
Net interest income before provision for loan losses	1,050,093	950,272	870,385
Provision for loan losses	25,925	68,747	50,911
Net interest income after provision for loan losses	1,024,168	881,525	819,474
Non-interest income:
Income from resolution of covered assets, net	11,551	27,450	36,155
Net loss on FDIC indemnification	(4,199)	(22,220)	(17,759)
Deposit service charges and fees	14,040	12,997	12,780
Gain on sale of loans, net	15,864	27,589	(4,406)
Gain on investment securities, net	3,159	33,466	14,461
Lease financing	61,685	53,837	44,738
Other non-interest income	29,922	24,785	20,448
Total non-interest income	132,022	157,904	106,417
Non-interest expense:
Employee compensation and benefits	254,997	237,824	223,011
Occupancy and equipment	55,899	58,100	59,022
Amortization of FDIC indemnification asset	261,763	176,466	160,091
Deposit insurance expense	18,984	22,011	17,806
Professional fees	16,539	23,676	14,249
Technology and telecommunications	35,136	31,252	31,324
Depreciation of equipment under operating lease	40,025	35,015	31,580
Other non-interest expense	57,197	50,624	53,364
Total non-interest expense	740,540	634,968	590,447
Income before income taxes	415,650	404,461	335,444
Provision (benefit) for income taxes	90,784	(209,812)	109,703
Net income	$ 324,866	$ 614,273	$ 225,741
Earnings Per Share, Basic	$ 3.01	$ 5.60	$ 2.11
Earnings Per Share, Diluted	$ 2.99	$ 5.58	$ 2.09

CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Provision for loan losses	$ 12,583	$ 1,200	$ 8,995	$ 3,147	$ 5,174	$ 37,854	$ 13,619	$ 12,100	$ 25,925	$ 68,747	$ 50,911
Non-interest income:
Gain on sale of loans, net									15,864	27,589	(4,406)
Covered [Member]
Provision for loan losses	235				261				752	1,358	(1,681)
Non-interest income:
Gain on sale of loans, net	$ 993				$ 0				$ 5,732	$ 17,406	$ (14,470)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 52,403	$ 97,328	$ 89,900	$ 85,235	$ 417,794	$ 67,779	$ 66,407	$ 62,293	$ 324,866	$ 614,273	$ 225,741
Unrealized gains on investment securities available for sale:
Net unrealized holding gain (loss) arising during the period									(57,041)	29,724	14,271
Reclassification adjustment for net securities gains realized in income									(4,486)	(20,247)	(8,749)
Net change in unrealized gain on securities available for sale									(61,527)	9,477	5,522
Unrealized gains on derivative instruments:
Net unrealized holding gain (loss) arising during the period									3,981	(1,559)	3,766
Reclassification adjustment for net (gains) losses realized in income									(1,469)	5,821	9,777
Net change in unrealized gains on derivative instruments									2,512	4,262	13,543
Other comprehensive income (loss)									(59,015)	13,739	19,065
Comprehensive income									$ 265,851	$ 628,012	$ 244,806

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities:
Net income	$ 324,866	$ 614,273	$ 225,741
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and accretion, net	(86,549)	(95,145)	(113,979)
Provision for loan losses	25,925	68,747	50,911
Income from resolution of covered assets, net	(11,551)	(27,450)	(36,155)
Net loss on FDIC indemnification	4,199	22,220	17,759
(Gain) loss on sale of loans, net	(15,864)	(27,589)	4,406
Gain on investment securities, net	(3,159)	(33,466)	(14,461)
Equity based compensation	23,137	22,692	18,032
Depreciation and amortization	64,268	61,552	56,444
Deferred income taxes	67,778	57,801	30,189
Proceeds from sale of loans held for sale	268,589	158,621	163,088
Loans originated for sale, net of repayments	(155,974)	(142,682)	(148,195)
Other:
(Increase) decrease in other assets	236,461	(319,629)	21,371
Increase (decrease) in other liabilities	82,126	(41,319)	33,359
Net cash provided by operating activities	824,252	318,626	308,510
Net Cash Provided by (Used in) Investing Activities [Abstract]
Purchase of investment securities	(4,138,994)	(3,131,798)	(3,058,106)
Proceeds from repayments and calls of investment securities	1,533,951	1,260,444	724,666
Proceeds from sale of investment securities	1,030,810	1,287,591	1,127,983
Purchase of non-marketable equity securities	(308,126)	(248,405)	(255,100)
Proceeds from redemption of non-marketable equity securities	307,063	266,688	190,825
Purchases of loans	(1,308,772)	(1,300,996)	(1,266,097)
Loan originations, repayments and resolutions, net	404,769	(672,338)	(1,394,916)
Proceeds from sale of loans, net	544,745	196,413	171,367
Proceeds from sale of equipment under operating lease	52,134	4,950	583
Proceeds from Sale of Mortgage Servicing Rights (MSR)	34,573	0	0
Acquisition of equipment under operating lease	(190,500)	(99,553)	(88,559)
Other investing activities	(3,184)	(15,572)	21,123
Net cash used in investing activities	(2,041,531)	(2,452,576)	(3,826,231)
Cash flows from financing activities:
Net increase in deposits	1,595,744	2,387,589	2,552,389
Net increase in federal funds purchased	175,000	0	0
Additions to Federal Home Loan Bank advances	4,647,000	4,916,000	4,025,000
Repayments of Federal Home Loan Bank advances	(4,622,000)	(5,385,000)	(2,795,000)
Dividends paid	(91,305)	(91,628)	(89,824)
Exercise of stock options	7,727	62,095	791
Repurchase of common stock	(299,972)	0	0
Other financing activities	(7,424)	(8,837)	5,178
Net cash provided by financing activities	1,404,770	1,880,219	3,698,534
Net increase (decrease) in cash and cash equivalents	187,491	(253,731)	180,813
Cash and cash equivalents, beginning of period	194,582	448,313	267,500
Cash and cash equivalents, end of period	382,073	194,582	448,313
Supplemental Cash Flow Information [Abstract]
Interest paid	387,801	247,548	186,525
Income taxes (refunded) paid, net	(288,267)	69,231	16,464
Supplemental schedule of non-cash investing and financing activities:
Transfers from loans to other real estate owned and other repossessed assets	9,709	13,313	17,045
Transfers from loans to loans held for sale	108,503	1,973	2,090
Dividends declared, not paid	21,673	23,055	22,510
Obligations incurred in acquisition of affordable housing limited partnerships	$ 4,710	$ 0	$ 12,750

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands	Total	Common Stock	Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income
Common Stock, Dividends, Per Share, Declared	$ 0.84
Balance (in Shares) at Dec. 31, 2015		103,626,255
Balance at Dec. 31, 2015	$ 2,243,898	$ 1,036	$ 1,406,786	$ 813,894	$ 22,182
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income	244,806			225,741	19,065
Dividends ($0.84 per common share)	(89,954)			(89,954)
Equity based compensation (in Shares)		651,760
Equity based compensation	18,033	$ 7	18,026
Forfeiture of unvested shares (in Shares)		(159,049)
Forfeiture of unvested shares and shares surrendered for tax withholding obligations	$ (485)	$ (1)	(484)
Exercise of stock options (in Shares)	47,979	47,979
Exercise of stock options	$ 791	$ 0	791
Adjustments to Additional Paid in Capital, Income Tax Benefit from Share-based Compensation	1,340		1,340
Balance (in Shares) at Dec. 31, 2016		104,166,945
Balance at Dec. 31, 2016	$ 2,418,429	$ 1,042	1,426,459	949,681	41,247
Common Stock, Dividends, Per Share, Declared	$ 0.84
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income	$ 628,012			614,273	13,739
Dividends ($0.84 per common share)	(92,173)			(92,173)
Equity based compensation (in Shares)		621,806
Equity based compensation	16,996	$ 6	16,990
Forfeiture of unvested shares (in Shares)		(271,954)
Forfeiture of unvested shares and shares surrendered for tax withholding obligations	$ (7,297)	$ (3)	(7,294)
Exercise of stock options (in Shares)	2,331,388	2,331,388
Exercise of stock options	$ 62,095	$ 23	62,072
Balance (in Shares) at Dec. 31, 2017		106,848,185
Balance at Dec. 31, 2017	$ 3,026,062	$ 1,068	1,498,227	1,471,781	54,986
Common Stock, Dividends, Per Share, Declared	$ 0.84
Cumulative Effect of New Accounting Principle in Period of Adoption				(8,902)	8,902
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income	$ 265,851			324,866	(59,015)
Dividends ($0.84 per common share)	(89,923)			(89,923)
Equity based compensation (in Shares)		696,729
Equity based compensation	20,647	$ 7	20,640
Forfeiture of unvested shares (in Shares)		(252,091)
Forfeiture of unvested shares and shares surrendered for tax withholding obligations	$ (6,559)	$ (3)	(6,556)
Exercise of stock options (in Shares)	291,689	291,689
Exercise of stock options	$ 7,727	$ 3	7,724
Stock Repurchased During Period, Shares		(8,443,138)
Stock Repurchased During Period, Value	(299,972)	$ (84)	(299,888)
Balance (in Shares) at Dec. 31, 2018		99,141,374
Balance at Dec. 31, 2018	$ 2,923,833	$ 991	$ 1,220,147	$ 1,697,822	$ 4,873

Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation (Notes)

12 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

Note 1 Basis of Presentation and Summary of Significant Accounting Policies

BankUnited, Inc. is a national bank holding company with one wholly-owned subsidiary, BankUnited; collectively, the Company. BankUnited, a national banking association headquartered in Miami Lakes, Florida, provides a full range of banking and related services to individual and corporate customers in it's geographic footprint in Florida and the New York metropolitan area. The Bank also offers certain commercial lending and deposit products through national platforms.

In connection with the FSB Acquisition, BankUnited entered into two loss sharing agreements with the FDIC. The Loss Sharing Agreements consisted of the Single Family Shared-Loss Agreement and the Commercial Shared-Loss Agreement. Assets covered by the Loss Sharing Agreements are referred to as covered assets or, in certain cases, covered loans. The Single Family Shared-Loss Agreement provided for FDIC loss sharing and the Bank’s reimbursement for recoveries to the FDIC through its termination on February 13, 2019 for single family residential loans and OREO. Loss sharing under the Commercial Shared-Loss Agreement terminated on May 21, 2014. The Commercial Shared-Loss Agreement continued to provide for the Bank’s reimbursement of recoveries to the FDIC through June 30, 2017 for all other covered assets, including commercial real estate, commercial and industrial and consumer loans, certain investment securities and commercial OREO. Pursuant to the terms of the Loss Sharing Agreements, the covered assets were subject to a stated loss threshold whereby the FDIC reimbursed BankUnited for 80% of losses related to the covered assets up to $4.0 billion and 95% of losses in excess of this amount, beginning with the first dollar of loss incurred.

The consolidated financial statements have been prepared in accordance with GAAP and prevailing practices in the banking industry.

The Company has a single reportable segment.

Accounting Estimates

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and disclosures of contingent assets and liabilities. Actual results could differ significantly from these estimates.

Significant estimates include the ALLL, the amount and timing of expected cash flows from covered assets and the FDIC indemnification asset, and the fair values of investment securities and other financial instruments.

Principles of Consolidation

The consolidated financial statements include the accounts of BankUnited, Inc. and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. VIEs are consolidated if the Company is the primary beneficiary; i.e., has (i) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company has variable interests in affordable housing limited partnerships that are not required to be consolidated because the Company is not the primary beneficiary.

Fair Value Measurements

Certain of the Company's assets and liabilities are reflected in the consolidated financial statements at fair value on either a recurring or non-recurring basis. Investment securities available for sale, marketable equity securities, servicing rights and derivative instruments are measured at fair value on a recurring basis. Assets measured at fair value or fair value less cost to sell on a non-recurring basis may include collateral dependent impaired loans, OREO and other repossessed assets, loans held for sale, goodwill and impaired long-lived assets. These non-recurring fair value measurements typically involve lower-of-cost-or-market accounting or the measurement of impairment of certain assets.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. GAAP establishes a hierarchy that prioritizes inputs used to determine fair value measurements into three levels based on the observability and transparency of the inputs:


•	Level 1 inputs are unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.


•	Level 2 inputs are observable inputs other than level 1 inputs, including quoted prices for similar assets and liabilities, quoted prices for identical assets and liabilities in less active markets and other inputs that can be corroborated by observable market data.


•	Level 3 inputs are unobservable inputs supported by limited or no market activity or data and inputs requiring significant management judgment or estimation.

The fair value hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs in estimating fair value. Unobservable inputs are utilized in determining fair value measurements only to the extent that observable inputs are unavailable. The need to use unobservable inputs generally results from a lack of market liquidity and diminished observability of actual trades or assumptions that would otherwise be available to value a particular asset or liability.

Cash and Cash Equivalents

Cash and cash equivalents include cash and due from banks, both interest bearing and non-interest bearing, including amounts on deposit at the Federal Reserve Bank, and federal funds sold. Cash equivalents have original maturities of three months or less. For purposes of reporting cash flows, cash receipts and payments pertaining to FHLB advances with original maturities of three months or less are reported net.

Investment Securities

Debt securities that the Company has the positive intent and ability to hold to maturity are classified as held to maturity and reported at amortized cost. Debt securities that the Company may not have the intent to hold to maturity are classified as available for sale at the time of acquisition and carried at fair value with unrealized gains and losses, net of tax, excluded from earnings and reported in AOCI, a separate component of stockholders' equity. Securities classified as available for sale may be used as part of the Company's asset/liability management strategy and may be sold in response to liquidity needs, regulatory changes, changes in interest rates, prepayment risk or other market factors. The Company does not maintain a trading portfolio. Purchase premiums and discounts on debt securities are amortized as adjustments to yield over the expected lives of the securities, using the level yield method. Premiums are amortized to the call date if the call is considered to be clearly and closely related to the host contract. Realized gains and losses from sales of securities are recorded on the trade date and are determined using the specific identification method.

The Company reviews investment securities for OTTI at least quarterly. An investment security is impaired if its fair value is lower than its amortized cost basis. The Company considers many factors in determining whether a decline in fair value below amortized cost represents OTTI, including, but not limited to:


•	the Company's intent to hold the security until maturity or for a period of time sufficient for a recovery in value;


•	whether it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis;


•	the length of time and extent to which fair value has been less than amortized cost;


•	adverse changes in expected cash flows;


•	collateral values and performance;


•	the payment structure of the security including levels of subordination or over-collateralization;


•	changes in the economic or regulatory environment;


•	the general market condition of the geographic area or industry of the issuer;


•	the issuer's financial condition, performance and business prospects; and


•	changes in credit ratings.

The relative importance assigned to each of these factors varies depending on the facts and circumstances pertinent to the individual security being evaluated.

The Company recognizes OTTI of a debt security for which there has been a decline in fair value below amortized cost if (i) management intends to sell the security, (ii) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, or (iii) the Company does not expect to recover the entire amortized cost basis of the security. If the Company intends to sell the security, or if it is more likely than not it will be required to sell the security before recovery, an OTTI write-down is recognized in earnings equal to the entire difference between the amortized cost basis and fair value of the security. Otherwise, the amount by which amortized cost exceeds the fair value of a debt security that is considered to be other-than-temporarily impaired is separated into a component representing the credit loss, which is recognized in earnings, and a component related to all other factors, which is recognized in other comprehensive income. The measurement of the credit loss component is equal to the difference between the debt security's amortized cost basis and the present value of its expected future cash flows discounted at the security's effective yield.

Marketable equity securities with readily determinable fair values are reported at fair value with unrealized gains and losses included in earnings effective January 1, 2018. Equity securities that do not have readily determinable fair values are reported at cost and re-measured at fair value upon occurrence of an observable price change or recognition of impairment.

Non-marketable Equity Securities

The Bank, as a member of the FRB system and the FHLB, is required to maintain investments in the stock of the FRB and FHLB. No market exists for this stock, and the investment can be liquidated only through redemption by the respective institutions, at the discretion of and subject to conditions imposed by those institutions. The stock has no readily determinable fair value and is carried at cost. Historically, stock redemptions have been at par value, which equals the Company's carrying value. The Company monitors its investment in FHLB stock for impairment through review of recent financial results of the FHLB, including capital adequacy and liquidity position, dividend payment history, redemption history and information from credit agencies. The Company has not identified any indicators of impairment of FHLB stock.

Loans Held for Sale

The guaranteed portion of SBA and USDA loans originated with the intent to sell are carried at the lower of cost or fair value, determined in the aggregate. A valuation allowance is established through a charge to earnings if the aggregate fair value of such loans is lower than their cost. Gains or losses recognized upon sale are determined on the specific identification basis.

Loans not originated or otherwise acquired with the intent to sell are transferred into the held for sale classification at the lower of carrying amount or fair value when they are specifically identified for sale and a formal plan exists to sell them. Acquired credit impaired loans accounted for in pools are removed from the pools at their carrying amounts when they are sold.

Loans

The Company's loan portfolio contains 1-4 single family residential first mortgages, government insured residential mortgages, home equity loans and lines of credit, consumer, multi-family, owner and non-owner occupied commercial real estate, construction and land, and commercial and industrial loans, mortgage warehouse lines of credit and direct financing leases. The Company segregates its loan portfolio between covered and non-covered loans. Covered loans are loans acquired from the FDIC in the FSB Acquisition that are covered under the Single Family Shared-Loss Agreement. Covered loans are further segregated between ACI loans and non-ACI loans.

Non-covered Loans

Non-covered loans, other than non-covered ACI loans, are carried at UPB, net of premiums, discounts, unearned income, deferred loan origination fees and costs, and the ALLL

Interest income on these loans is accrued based on the principal amount outstanding. Non-refundable loan origination fees, net of direct costs of originating or acquiring loans, as well as purchase premiums and discounts, are deferred and recognized as adjustments to yield over the contractual lives of the related loans using the level yield method.

Direct Financing Leases

Direct financing leases are carried at the aggregate of lease payments receivable and estimated residual value of the leased property, if applicable, less unearned income. Interest income on direct financing leases is recognized over the term of the leases to achieve a constant periodic rate of return on the outstanding investment. Initial direct costs are deferred and amortized over the lease term as a reduction to interest income using the effective interest method.

ACI Loans

ACI loans, all of which were acquired in the FSB Acquisition and the substantial majority of which are covered under the Single Family Shared-Loss Agreement, are those for which, at acquisition, management determined it probable that the Company would be unable to collect all contractual principal and interest payments due. These loans were recorded at estimated fair value at acquisition, measured as the present value of all cash flows expected to be received, discounted at an appropriately risk-adjusted discount rate. Initial cash flow expectations incorporated significant assumptions regarding prepayment rates, frequency of default and loss severity.

The difference between total contractually required payments on ACI loans and the cash flows expected to be received represents non-accretable difference. The excess of all cash flows expected to be received over the Company's recorded investment in the loans represents accretable yield and is recognized as interest income on a level-yield basis over the expected life of the loans.

The Company aggregated ACI 1-4 single family residential mortgage loans and home equity loans and lines of credit with similar risk characteristics into homogenous pools at acquisition. A composite interest rate and composite expectations of future cash flows are used in accounting for each pool. These loans were aggregated into pools based on the following characteristics:


•	delinquency status;


•	product type, in particular, amortizing as opposed to option ARMs;


•	loan-to-value ratio; and


•	borrower FICO score.

Loans that do not have similar risk characteristics, primarily commercial and commercial real estate loans, are accounted for on an individual loan basis using interest rates and expectations of cash flows for each loan.

The Company is required to develop reasonable expectations about the timing and amount of cash flows to be collected related to ACI loans and to continue to update those estimates over the lives of the loans. Expected cash flows from ACI loans are updated quarterly. If it is probable that the Company will be unable to collect all the cash flows expected from a loan or pool at acquisition plus additional cash flows expected to be collected arising from changes in estimates after acquisition, the loan or pool is considered impaired and a valuation allowance is established by a charge to the provision for loan losses. If there is an increase in expected cash flows from a loan or pool, the Company first reduces any valuation allowance previously established by the amount of the increase in the present value of expected cash flows, and then recalculates the amount of accretable yield for that loan or pool. The adjustment of accretable yield due to an increase in expected cash flows, as well as changes in expected cash flows due to changes in interest rate indices and changes in prepayment assumptions is accounted for prospectively as a change in yield. Additional cash flows expected to be collected are transferred from non-accretable difference to accretable yield and the amount of periodic accretion is adjusted accordingly over the remaining life of the loan or pool.

The Company may resolve an ACI loan either through a sale of the loan, by working with the customer and obtaining partial or full repayment, by short sale of the collateral, or by foreclosure. When a loan accounted for in a pool is resolved, it is removed from the pool at its allocated carrying amount. In the event of a sale of the loan, the Company recognizes a gain or loss on sale based on the difference between the sales proceeds and the carrying amount of the loan. For loans resolved through pre-payment or short sale of the collateral, the Company recognizes the difference between the amount of the payment received and the carrying amount of the loan in the income statement line item "Income from resolution of covered assets, net". For loans resolved through foreclosure, the difference between the fair value of the collateral obtained through foreclosure less estimated cost to sell and the carrying amount of the loan is recognized in the income statement line item "Income from resolution of covered assets, net". Any remaining accretable discount related to loans not accounted for in pools that are resolved by full or partial pre-payment, short sale or foreclosure is recognized in interest income at the time of resolution, to the extent collected.

Payments received earlier than expected or in excess of expected cash flows from sales or other resolutions may result in the carrying value of a pool being reduced to zero even though outstanding contractual balances and expected cash flows remain related to loans in the pool. Once the carrying value of a pool is reduced to zero, any future proceeds, which may include cash or real estate acquired in foreclosure, from the remaining loans, representing further realization of accretable yield, are recognized as interest income upon receipt.

Covered Non-ACI Loans

Loans acquired in the FSB Acquisition without evidence of deterioration in credit quality since origination were initially recorded at estimated fair value on the acquisition date. Non-ACI 1-4 single family residential mortgage loans and home equity loans and lines of credit with similar risk characteristics were aggregated into pools for accounting purposes at acquisition. Non-ACI loans are carried at the principal amount outstanding, adjusted for unamortized acquisition date fair value adjustments and the ALLL. Interest income is accrued based on the UPB and, with the exception of home equity loans and lines of credit, acquisition date fair value adjustments are amortized using the level-yield method over the expected lives of the related loans. For non-ACI 1-4 family residential mortgage loans accounted for in pools, prepayment estimates are used in determining the periodic amortization of acquisition date fair value adjustments. Acquisition date fair value adjustments related to revolving home equity loans and lines of credit are amortized on a straight-line basis.

Non-accrual Loans

Commercial loans, other than ACI loans, are placed on non-accrual status when (i) management has determined that full repayment of all contractual principal and interest is in doubt, or (ii) the loan is past due 90 days or more as to principal or interest unless the loan is well secured and in the process of collection. Residential and consumer loans, other than ACI loans, are generally placed on non-accrual status when 90 days of interest is due and unpaid. When a loan is placed on non-accrual status, uncollected interest accrued is reversed and charged to interest income. Payments received on nonaccrual commercial loans are applied as a reduction of principal. Interest payments are recognized as income on a cash basis on nonaccrual residential loans. Commercial loans are returned to accrual status only after all past due principal and interest has been collected and full repayment of remaining contractual principal and interest is reasonably assured. Residential and consumer loans are returned to accrual status when there is no longer 90 days of interest due and unpaid. Past due status of loans is determined based on the contractual next payment due date. Loans less than 30 days past due are reported as current.

Contractually delinquent ACI loans are not classified as non-accrual as long as discount continues to be accreted on the loans or pools.

Impaired Loans

Loans, other than ACI loans and government insured residential loans, are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due, according to the contractual terms of the loan agreements. Commercial relationships with committed balances greater than or equal to $1.0 million that have internal risk ratings of substandard or doubtful and are on non-accrual status, as well as loans that have been modified in TDRs, are individually evaluated for impairment. Other commercial relationships on non-accrual status with committed balances under $1.0 million may also be evaluated individually for impairment at management's discretion. The likelihood of loss related to loans assigned internal risk ratings of substandard or doubtful is considered elevated due to their identified credit weaknesses. Factors considered by management in evaluating impairment include payment status, financial condition of the borrower, collateral value, and other factors impacting the probability of collecting scheduled principal and interest payments when due.

An ACI pool or loan is considered to be impaired when it is probable that the Company will be unable to collect all the cash flows expected at acquisition, plus additional cash flows expected to be collected arising from changes in estimates after acquisition. 1-4 single family residential and home equity ACI loans accounted for in pools are evaluated collectively for impairment on a pool by pool basis based on expected pool cash flows. Commercial ACI loans are individually evaluated for impairment based on expected cash flows from the individual loans. Discount continues to be accreted on ACI loans or pools as long as there are expected future cash flows in excess of the current carrying amount of the loans or pools.

Troubled Debt Restructurings

In certain situations, due to economic or legal reasons related to a borrower's financial difficulties, the Company may grant a concession to the borrower for other than an insignificant period of time that it would not otherwise consider. At that time, except for ACI loans accounted for in pools, the related loan is classified as a TDR and considered impaired. The concessions granted may include rate reductions, principal forgiveness, payment forbearance, extensions of maturity at rates of interest below that commensurate with the risk profile of the loans, modification of payment terms and other actions intended to minimize economic loss. A TDR is generally placed on non-accrual status at the time of the modification unless the borrower was performing prior to the restructuring. Modified ACI loans accounted for in pools are not accounted for as TDRs, are not separated from the pools and are not classified as impaired loans.

Allowance for Loan and Lease Losses

The ALLL represents the amount considered adequate by management to absorb probable incurred losses inherent in the loan portfolio at the balance sheet date. The ALLL consists of both specific and general components. The ALLL is established as losses are estimated to have occurred through a provision charged to earnings. Individual loans are charged off against the ALLL when management determines them to be uncollectible.

An assessment of collateral value is made at no later than 120 days delinquency for non-covered open- and closed-end loans secured by residential real estate; any outstanding loan balance in excess of fair value less cost to sell is charged off at no later than 180 days delinquency. Additionally, any outstanding balance in excess of fair value of collateral less cost to sell is charged off (i) within 60 days of receipt of notification of filing from the bankruptcy court, (ii) within 60 days of determination of loss if all borrowers are deceased or (iii) within 90 days of discovery of fraudulent activity. Covered non-ACI loans secured by residential real estate are generally charged off at final resolution which is consistent with the terms of the Single Family Shared-Loss Agreement. Consumer loans are typically charged off at 120 days delinquency. Commercial loans are charged off when management deems them to be uncollectible. Subsequent recoveries are credited to the ALLL.

Commercial loans

The allowance is comprised of specific reserves for loans that are individually evaluated and determined to be impaired as well as general reserves for loans that have not been identified as impaired.

Management believes that loans rated special mention, substandard or doubtful that are not individually evaluated for impairment exhibit characteristics indicative of a heightened level of credit risk. A quantitative loss factor is applied to loans rated special mention based on average annual probability of default and implied severity, derived from internal and external data. Loss factors for substandard and doubtful loans that are not individually evaluated are determined by using default frequency and severity information applied at the loan level. Estimated default frequencies and severities are based on available industry and internal data. In addition, a floor is applied to these calculated loss factors, based on the loss factor applied to the special mention portfolio.

To the extent, in management's judgment, commercial portfolio segments have sufficient observable loss history, the quantitative portion of the ALLL is based on the Bank's historical net charge-off rates. These commercial segments include commercial and industrial loans and the Bridge portfolios. For commercial portfolio segments that have not yet exhibited an observable loss trend, the quantitative loss factors are based on peer group average annual historical net charge-off rates by loan class and the Company’s internal credit risk rating system. These commercial segments include multifamily, non-owner occupied commercial real estate and construction and land loans. Quantitative loss factors for SBF loans are based on historical charge-off rates published by the SBA. For Pinnacle, quantitative loss factors are based primarily on historical municipal default data. For most commercial portfolio segments, we use a 20 quarter look-back period in the calculation of historical net charge-off rates.

Where applicable, the peer group used to calculate average annual historical net charge-off rates used in estimating general reserves is made up of 26 banks included in the OCC Midsize Bank Group plus five additional banks not included in the OCC Midsize Bank Group that management believes to be comparable based on size, geography and nature of lending operations. Peer bank data is obtained from the Statistics on Depository Institutions Report published by the FDIC for the most recent quarter available. These banks, as a group, are considered by management to be comparable to BankUnited in size, nature of lending operations and loan portfolio composition. We evaluate the composition of the peer group annually, or more frequently if, in our judgment, a more frequent evaluation is necessary. Our internal risk rating system comprises 13 credit grades; grades 1 through 8 are “pass” grades. The risk ratings are driven largely by debt service coverage. Peer group historical loss rates are adjusted upward for loans assigned a lower “pass” rating.

As noted above, management generally use a 20 quarter look-back period to calculate quantitative loss rates. Management believes this look-back period to be consistent with the range of industry practice and appropriate to capture a sufficient range of observations reflecting the performance of our loans, which were originated in the current economic cycle. With the exception of the Pinnacle municipal finance portfolio, a four quarter loss emergence period is used in the calculation of general reserves. A twelve quarter loss emergence period is used in the calculation of general reserves for the Pinnacle portfolio.

The primary assumptions underlying estimates of expected cash flows for ACI commercial loans are default probability and severity of loss given default. Assessments of default probability and severity are based on net realizable value analyses prepared at the individual loan level.

Residential and other consumer loans

Non-covered Loans

The non-covered loan portfolio has not yet developed an observable loss trend. Therefore, the ALLL for non-covered residential loans is based primarily on relevant proxy historical loss rates. The ALLL for non-covered 1-4 single family residential loans, excluding government insured residential loans, is estimated using average annual loss rates on prime residential mortgage securitizations issued between 2003 and 2008 as a proxy. Based on the comparability of FICO scores and LTV ratios between loans included in those securitizations and loans in the Bank’s portfolio and the geographic diversity in the new purchased residential portfolio, we determined that prime residential mortgage securitizations provide an appropriate proxy for incurred losses in this portfolio class. A peer group 18-quarter average net charge-off rate is used to estimate the ALLL for the non-covered home equity and other consumer loan classes. The non-covered home equity and other consumer loan portfolios are not significant components of the overall loan portfolio. No quantitative ALLL is provided for U.S. Government insured residential loans.

Covered non-ACI Loans

The reserving methodology for the non-ACI 1-4 single family residential mortgages is consistent with the methodology to calculated the ALLL for non-covered residential portfolio segment discussed above.

Qualitative Factors

Qualitative adjustments are made to the ALLL when, based on management’s judgment, there are internal or external factors impacting probable incurred losses not taken into account by the quantitative calculations. Potential qualitative adjustments are categorized as follows:


•	Portfolio performance trends, including trends in and the levels of delinquencies, non-performing loans and classified loans;


•	Changes in the nature of the portfolio and terms of the loans, specifically including the volume and nature of policy and procedural exceptions;


•	Portfolio growth trends;


•	Changes in lending policies and procedures, including credit and underwriting guidelines and portfolio management practices;


•	Economic factors, including unemployment rates and GDP growth rates and other factors considered relevant by management;


•	Changes in the value of underlying collateral;


•	Quality of risk ratings, as evaluated by our independent credit review function;


•	Credit concentrations;


•	Changes in and experience levels of credit administration management and staff; and


•	Other factors identified by management that may impact the level of losses inherent in the portfolio, including but not limited to competition and legal and regulatory considerations.

Covered ACI Loans

For ACI loans, a valuation allowance is established when periodic evaluations of expected cash flows reflect a deterioration resulting from credit related factors from the level of cash flows that were estimated to be collected at acquisition plus any additional expected cash flows arising from revisions in those estimates. A quarterly analysis of expected cash flows is performed for ACI loans.

Expected cash flows are estimated on a pool basis for ACI 1-4 single family residential loans. The analysis of expected cash flows incorporates updated expected prepayment rate, default rate, delinquency level and loss severity given default assumptions.

Reserve for Unfunded Commitments

The reserve for unfunded commitments represents the estimated probable losses related to unfunded lending commitments. The reserve is calculated in a manner similar to the general reserve for non-covered loans, while also considering the timing and likelihood that the available credit will be utilized as well as the exposure upon default. The reserve for unfunded commitments is presented within other liabilities on the consolidated balance sheets, distinct from the ALLL, and adjustments to the reserve for unfunded commitments are included in other non-interest expense in the consolidated statements of income.

FDIC Indemnification Asset

The FDIC indemnification asset was initially recorded at the time of the FSB Acquisition at fair value, measured as the present value of the estimated cash payments expected from the FDIC for probable losses on covered assets. The FDIC indemnification asset is measured separately from the related covered assets. It is not contractually embedded in the covered assets and it is not transferable with the covered assets should the Company choose to dispose of them.

Impairment of expected cash flows from covered assets results in an increase in cash flows expected to be collected from the FDIC. These increased expected cash flows from the FDIC are recognized as increases in the FDIC indemnification asset and as non-interest income in the same period that the impairment of the covered assets is recognized in the provision for loan losses. Increases in expected cash flows from covered assets result in decreases in cash flows expected to be collected from the FDIC. These decreases in expected cash flows from the FDIC are recognized immediately in earnings to the extent that they relate to a reversal of a previously recorded valuation allowance related to the covered assets. Any remaining decreases in cash flows expected to be collected from the FDIC are recognized prospectively through an adjustment of the rate of accretion or amortization on the FDIC indemnification asset, consistent with the approach taken to recognize increases in expected cash flows on the covered assets. Amortization of the FDIC indemnification asset results from circumstances in which, due to improvement in expected cash flows from the covered assets, expected cash flows from the FDIC are less than the carrying value of the FDIC indemnification asset. Accretion or amortization of the FDIC indemnification asset is recognized in earnings using the effective interest method over the period during which cash flows from the FDIC are expected to be collected, which is limited to the lesser of the contractual term of the indemnification agreement and the remaining life of the indemnified assets.

Gains and losses from resolution of ACI loans are included in the income statement line item "Income from resolution of covered assets, net." These gains and losses represent the difference between the expected losses from ACI loans and consideration actually received in satisfaction of such loans that were resolved either by payment in full, foreclosure or short sale. The Company may also realize gains or losses on the sale or impairment of covered loans or covered OREO. When the Company recognizes gains or losses related to the resolution, sale or impairment of covered assets in earnings, corresponding changes in the estimated amount recoverable from the FDIC under the Loss Sharing Agreements are reflected in the consolidated financial statements as increases or decreases in the FDIC indemnification asset and in the consolidated statement of income line item "Net loss on FDIC indemnification."

The FDIC indemnification asset was amortized to zero as of December 31, 2018 as expectations of losses eligible for indemnification with respect to the remaining covered assets prior to final termination of the Single Family Shared-Loss Agreement were insignificant. See Notes 4 and 5 to our consolidated financial statements for further discussion.

Bank Owned Life Insurance

Bank owned life insurance is carried at the amount that could be realized under the contract at the balance sheet date, which is typically cash surrender value. Changes in cash surrender value are recorded in non-interest income.

Equipment Under Operating Lease

Equipment under operating lease is carried at cost less accumulated depreciation and is depreciated to estimated residual value using the straight-line method over the lease term. Estimated residual values are re-evaluated at least annually, based primarily on current residual value appraisals. Rental revenue is recognized on a straight-line basis over the contractual term of the lease.

A review for impairment of equipment under operating lease is performed at least annually or when events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable. Impairment of assets is determined by comparing the carrying amount to future undiscounted net cash flows expected to be generated. If an asset is impaired, the measure of impairment is the amount by which the carrying amount exceeds the fair value of the asset.

Goodwill

Goodwill of $78 million at both December 31, 2018 and 2017 represents the excess of consideration transferred in business combinations over the fair value of net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but is tested for impairment annually or more frequently if events or circumstances indicate that impairment may have occurred. The Company performs its annual goodwill impairment test in the third fiscal quarter. The Company has a single reporting unit. The impairment test compares the estimated fair value of the reporting unit to its carrying amount. If the fair value of the reporting unit exceeds its carrying amount, no impairment is indicated. If the fair value of the reporting unit is less than its carrying amount, impairment of goodwill is measured as the excess of the carrying amount over fair value. The estimated fair value of the reporting unit is based on the market capitalization of the Company's common stock. The estimated fair value of the reporting unit at each impairment testing date substantially exceeded its carrying amount; therefore, no impairment of goodwill was indicated.

Foreclosed Property and Repossessed Assets

Foreclosed property and repossessed assets consists of real estate assets acquired through, or in lieu of, loan foreclosure and personal property acquired through repossession. Such assets are included in other assets in the accompanying consolidated balance sheets. These assets are held for sale and are initially recorded at estimated fair value less costs to sell, establishing a new cost basis. Subsequent to acquisition, periodic valuations are performed and the assets are carried at the lower of the carrying amount at the date of acquisition or estimated fair value less cost to sell. Significant property improvements are capitalized to the extent that the resulting carrying value does not exceed fair value less cost to sell. Legal fees, maintenance, taxes, insurance and other direct costs of holding and maintaining these assets are expensed as incurred.

Premises and Equipment

Premises and equipment are carried at cost less accumulated depreciation and amortization and are included in other assets in the accompanying consolidated balance sheets. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The lives of improvements to existing buildings are based on the lesser of the estimated remaining lives of the buildings or the estimated useful lives of the improvements. Leasehold improvements are amortized over the shorter of the expected terms of the leases at inception, considering options to extend that are reasonably assured, or their useful lives. The estimated useful lives of premises and equipment are as follows:


•	buildings and improvements - 30 years;


•	leasehold improvements - 5 to 20 years;


•	furniture, fixtures and equipment - 5 to 7 years; and


•	computer equipment - 3 to 5 years.

Software and CCA

Software and CCA are carried at cost less accumulated depreciation and amortization and are included in other assets in the accompanying consolidated balance sheets. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Direct costs of materials and services associated with developing or obtaining and implementing internal use computer software incurred during the application and development stage are capitalized and amortized over the estimated useful lives of the software. The estimated useful life of software, software licensing rights and CCA implementation costs range from 3 to 5 years.

Loan Servicing Rights

Loan servicing rights are measured at fair value, with changes in fair value subsequent to acquisition recognized in earnings. Loan servicing rights are included in other assets in the accompanying consolidated balance sheets. Servicing fee income is recorded net of changes in fair value in other non-interest income. Neither the loan servicing rights nor related income have had a material impact on the Company's financial statements to date.

Investments in Affordable Housing Limited Partnerships

The Company has acquired investments in limited partnerships that manage or invest in qualified affordable housing projects and provide the Company with low-income housing tax credits and other tax benefits. These investments are included in other assets in the accompanying consolidated balance sheets. The Company accounts for investments in qualified affordable housing projects using the proportional amortization method if certain criteria are met. Under the proportional amortization method, the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received and the amortization is recognized in the income statement as a component of income tax expense. The investments are evaluated for impairment when events or changes in circumstances indicate that it is more likely than not that the carrying amount of the investment will not be realized.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for periods in which the differences are expected to reverse. The effect of changes in tax rates on deferred tax assets and liabilities are recognized in income in the period that includes the enactment date. A valuation allowance is established for deferred tax assets when management determines that it is more likely than not that some portion or all of a deferred tax asset will not be realized. In making such determinations, the Company considers all available positive and negative evidence that may impact the realization of deferred tax assets. These considerations include the amount of taxable income generated in statutory carryback periods, future reversals of existing taxable temporary differences, projected future taxable income and available tax planning strategies.

The Company recognizes tax benefits from uncertain tax positions when it is more likely than not that the related tax positions will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the tax positions. An uncertain tax position is a position taken in a previously filed tax return or a position expected to be taken in a future tax return that is not based on clear and unambiguous tax law. The Company measures tax benefits related to uncertain tax positions based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. If the initial assessment fails to result in recognition of a tax benefit, the Company subsequently recognizes a tax benefit if (i) there are changes in tax law or case law that raise the likelihood of prevailing on the technical merits of the position to more-likely-than-not, (ii) the statute of limitations expires, or (iii) there is a completion of an examination resulting in a settlement of that tax year or position with the appropriate agency. The Company recognizes interest and penalties related to uncertain tax positions, as well as interest income or expense related to tax settlements, in the provision for income taxes.

Equity Based Compensation

The Company periodically grants unvested or restricted shares of common stock and other share-based awards to key employees. For equity classified awards, compensation cost is measured based on the estimated fair value of the awards at the grant date and is recognized in earnings on a straight-line basis over the requisite service period for each award. Liability-classified awards are remeasured each reporting period at fair value until the award is settled, and compensation cost is recognized in earnings on a straight-line basis over the requisite service period for each award, adjusted for changes in fair value each reporting period. Compensation cost related to awards that embody performance conditions is recognized when it is probable that the performance conditions will be achieved. The number of awards expected to vest is estimated in determining the amount of compensation cost to be recognized related to share-based payment transactions.

The fair value of unvested shares is based on the closing market price of the Company's common stock at the date of grant. Market conditions embedded in awards are reflected in the grant-date fair value of the awards.

Derivative Financial Instruments and Hedging Activities

Interest rate derivative contracts

The Company uses interest rate derivative contracts, such as swaps, caps, floors and collars, in the normal course of business to meet the financial needs of its customers and to manage exposure to changes in interest rates. Interest rate contracts are recorded as assets or liabilities in the consolidated balance sheets at fair value. Interest rate swaps that are used as a risk management tool to hedge the Company's exposure to changes in interest rates have been designated as cash flow hedging instruments. The gain or loss resulting from changes in the fair value of interest rate swaps designated and qualifying as cash flow hedging instruments is initially reported as a component of other comprehensive income and subsequently reclassified into earnings in the same period in which the hedged transaction affects earnings.

The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, the derivative expires or is sold, terminated, or exercised, management determines that the designation of the derivative as a hedging instrument is no longer appropriate or the occurrence of the forecasted transaction is no longer probable. When hedge accounting is discontinued, any subsequent changes in fair value of the derivative are recognized in earnings. The cumulative unrealized gain or loss related to a discontinued cash flow hedge continues to be reported in AOCI and is subsequently reclassified into earnings in the same period in which the hedged transaction affects earnings, unless it is probable that the forecasted transaction will not occur by the end of the originally specified time period, in which case the cumulative unrealized gain or loss reported in AOCI is reclassified into earnings immediately.

Cash flows resulting from derivative financial instruments that are accounted for as hedges are classified in the cash flow statement in the same category as the cash flows from the hedged items.

Changes in the fair value of interest rate contracts not designated as, or not qualifying as, hedging instruments are recognized currently in earnings.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. A gain or loss is recognized in earnings upon completion of the sale based on the difference between the sales proceeds and the carrying value of the assets. Control over the transferred assets is deemed to have been surrendered when: (i) the assets have been legally isolated from the Company, (ii) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (iii) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

Advertising Costs

Advertising costs are expensed as incurred.

Earnings per Common Share

Basic earnings per common share is calculated by dividing income allocated to common stockholders for basic earnings per common share by the weighted average number of common shares outstanding for the period, reduced by average unvested stock awards. Unvested stock awards with non-forfeitable rights to dividends, whether paid or unpaid, and stand-alone dividend participation rights are considered participating securities and are included in the computation of basic earnings per common share using the two class method whereby net income is allocated between common stock and participating securities. In periods of a net loss, no allocation is made to participating securities as they are not contractually required to fund net losses. Diluted earnings per common share is computed by dividing income allocated to common stockholders for basic earnings per common share, adjusted for earnings reallocated from participating securities, by the weighted average number of common shares outstanding for the period increased for the dilutive effect of unexercised stock options, warrants and unvested stock awards using the treasury stock method. Contingently issuable shares are included in the calculation of earnings per common share as if the end of the respective period was the end of the contingency period.

Revenue From Contracts with Customers

Revenue from contracts with customers within the scope of Topic 606 "Revenue from Contracts with Customers", is recognized in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services as the related performance obligations are satisfied. The majority of our revenues, including revenues from loans, leases, investment securities, derivative instruments and letters of credit and from transfers and servicing of financial assets, are excluded from the scope of Topic 606. Deposit service charges and fees is the most significant category of revenue within the scope of the standard. These service charges and fees consist primarily of monthly maintenance fees and other transaction based fees. Revenue is recognized when our performance obligations are complete, generally monthly for account maintenance fees or when a transaction, such as a wire transfer, is completed. Payment is typically received at the time the performance obligation is satisfied. The aggregate amount of revenue that is within the scope of Topic 606 from sources other than deposit service charges and fees is not material.

Reclassifications

Certain amounts presented for prior periods have been reclassified to conform to the current period presentation.

New Accounting Pronouncements Adopted in 2018

ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), superseded the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific revenue recognition guidance throughout the Accounting Standards Codification. The amendments in this update affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other standards. The amendments establish a core principle requiring the recognition of revenue to depict the transfer of goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for such goods or services and require expanded disclosure about revenue from contracts with customers that are within the scope of the standard. Revenue from financial instruments and lease contracts are generally outside the scope of Topic 606 as are revenues that are in the scope of ASC 860 "Transfers and Servicing", ASC 460 "Guarantees" and ASC 815 "Derivatives and Hedging". The Company adopted this standard in the first quarter of 2018 with respect to contracts not completed on the date of adoption using the modified retrospective transition method. Substantially all of the Company's revenues are generated from activities outside the scope of Topic 606; existing revenue recognition policies for contracts with customers that are within the scope of the standard are consistent with the principles in Topic 606. Therefore, there was no impact at adoption to the Company's consolidated financial position, results of operations, or cash flows.

ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in the ASU addressed certain aspects of recognition, measurement, presentation and disclosure of certain financial instruments. The main provisions of this ASU that are applicable to the Company are to (1) eliminate the available for sale classification for equity securities and require investments in equity securities (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, provided that equity investments that do not have readily determinable fair values may be re-measured at fair value upon occurrence of an observable price change or recognition of impairment, (2) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, and (3) require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The amendments also clarified that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity's other deferred tax assets, which is consistent with the Company's previous practice. The Company adopted this ASU in the first quarter of 2018 using the modified retrospective transition method. The cumulative effect adjustment to reclassify unrealized gains on equity securities from AOCI to retained earnings totaled $2.2 million, net of tax, at adoption.

ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This amendment provided guidance on eight specific cash flow classification issues where there had been diversity in practice. The provisions of this ASU that are expected to be applicable to the Company include requirements to: (1) classify cash payments for debt prepayment or extinguishment costs to be classified as cash outflows for financing activities, (2) classify proceeds from settlement of insurance claims on the basis of the nature of the loss and (3) require cash payments from settlement of bank-owned life insurance policies to be classified as cash flows from investing activities. The Company adopted this ASU for the first quarter of 2018; the provisions of the ASU were generally consistent with the Company's existing practice, therefore, adoption did not have an impact on the Company's consolidated cash flows.

ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU allowed a reclassification from AOCI to retained earnings of stranded tax effects in AOCI resulting from enactment of the TCJA that reduced the statutory federal tax rate from 35 percent to 21 percent. The Company’s existing accounting policy was to release stranded tax effects only when the entire portfolio of the type of item that created them is liquidated. This ASU was early adopted effective January 1, 2018 and a cumulative-effect adjustment was recorded to reclassify stranded tax effects totaling $11.1 million from AOCI to retained earnings.

ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU modified the disclosure requirements on fair value measurements by removing certain disclosures not considered cost beneficial, clarifying certain disclosure requirements and adding some additional disclosures. The provisions of the ASU that are applicable to the fair value disclosures of the Company include: (1) adding disclosure of the changes in unrealized gains and losses for the period included in other comprehensive income for recurring level 3 fair value measurements, (2) adding the range and weighted average of significant unobservable inputs used to develop level 3 fair value measurements, (3) removing the requirement to disclose the amount of and reasons for transfers between level 1 and level 2 of the fair value hierarchy, (4) removing the requirement to disclose the policy for timing of transfers between levels of the fair value hierarchy, and (5) removing disclosure of the valuation processes for level 3 fair value measurements. The Company early adopted this ASU for the third quarter of 2018.

ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). The amendments in this ASU require customers in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to capitalize certain implementation costs in the same manner as software developed for internal use. The guidance allows for qualifying costs incurred during the application and development stage to be capitalized, which may include: (1) integration, (2) customization, (3) configuration, (4) installation, (5) architecture and design, (6) coding, and (7) testing. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the applicable component of the hosting arrangement is ready for its intended use. The accounting for the cost of the hosting component of the arrangement is not affected by this ASU. The Company early adopted this ASU in the third quarter of 2018 using the prospective transition approach with no significant impact to the Company's consolidated financial position, results of operations, or cash flows.

Accounting Pronouncements Not Yet Adopted

ASU No. 2016-02, Leases (Topic 842). The amendments in this ASU require a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for leases with terms longer than one year. Accounting applied by lessors is largely unchanged by this ASU. The ASU also will require both qualitative and quantitative disclosures that provide additional information about the amounts recorded in the consolidated financial statements. The amendments in this ASU are effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2018. Early adoption is permitted; however, the Company did not early adopt this ASU. The most significant impact of adoption is expected to be the recognition, as lessee, of new right-of-use assets and lease liabilities on the Consolidated Balance Sheet for real estate leases currently classified as operating leases. Under a package of practical expedients that the Company plans to elect, the Company will not be required to (i) re-assess whether expired or existing contracts contain leases, (ii) re-assess the classification of expired or existing leases, (iii) re-evaluate initial direct costs for existing leases or (iv) separate lease components of certain contracts from non-lease components. The Company also plans to elect the transition method that allows entities the option of applying the provisions of the ASU at the effective date without adjusting the comparative periods presented. Management has finalized its evaluation of the impact of adoption of this ASU on its processes and controls. The Company has completed its review of contractual arrangements for embedded leases. The Company has acquired and implemented software to facilitate calculation and reporting of the lease liability and right-of-use asset. Relevant accounting policy decisions have been made including use of the incremental borrowing rate to determine the discount rate and assumptions around inclusion of renewals in lease terms. Based on the population of lease contracts existing at December 31, 2018 and an incremental borrowing rate determined as of that date, the Company recognized a lease liability and related right-of-use asset of approximately $104 million and $95 million, respectively, on adoption at January 1, 2019. The Company does not expect the impact of adoption to be material to its consolidated results of operations or cash flows.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326); Measurement of Credit Losses on Financial Instruments. The ASU introduces new guidance which makes substantive changes to the accounting for credit losses. The ASU introduces the CECL model which applies to financial assets subject to credit losses and measured at amortized cost, as well as certain off-balance sheet credit exposures. This includes loans, loan commitments, standby letters of credit, net investments in leases recognized by a lessor and HTM debt securities. The CECL model requires an entity to estimate credit losses expected over the life of an exposure, considering information about historical events, current conditions and reasonable and supportable forecasts, and is generally expected to result in earlier recognition of credit losses. The ASU also modifies certain provisions of the current OTTI model for AFS debt securities. Credit losses on AFS debt securities will be limited to the difference between the security's amortized cost basis and its fair value, and be recognized through an allowance for credit losses rather than as a direct reduction in amortized cost basis. The ASU also provides for a simplified accounting model for purchased financial assets with more than insignificant credit deterioration since their origination. The ASU requires expanded disclosures including, but not limited to (i) information about the methods and assumptions used to estimate expected credit losses, including changes in the factors that influenced management's estimate and the reasons for those changes, (ii) for financing receivables and net investment in leases measured at amortized cost, further disaggregation of information about the credit quality of those assets and (iii) a rollforward of the allowance for credit losses for AFS and HTM securities. The amendments in this ASU are effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2019. Early adoption is permitted, however, the Company does not intend to early adopt this ASU. Management is in the process of evaluating the impact of adoption of this ASU on its consolidated financial statements, processes and controls and is not currently able to reasonably estimate the impact of adoption on the Company's consolidated financial position, results of operations or cash flows; however, adoption is likely to lead to significant changes in accounting policies related to, and the methods employed in estimating, the ALLL. It is possible that the impact will be material to the Company's consolidated financial position and results of operations. To date, the Company has completed a gap analysis, adopted a detailed implementation plan, established a formal governance structure for the project, documented accounting policy elections, selected and implemented credit loss models for key portfolio segments and in the process of completing model validations, chosen loss estimation methodologies for key portfolio segments, selected a software solution to serve as its CECL platform. The Company has also established an economic forecast committee, and is in the process of documenting processes and controls.

In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. The ASU adds the Overnight Index Swap (OIS) rate based on Secured Overnight Financing Rate (SOFR) as a benchmark interest rate for hedge accounting purposes. The ASU is effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2018. The Company does not expect the impact of adoption to be material to its consolidated financial position, results of operations, or cash flows.

Earnings Per Common Share

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Earnings Per Common Share

The computation of basic and diluted earnings per common share is presented below for the years ended December 31, 2018, 2017 and 2016 (in thousands, except share and per share data):



c	2018			2017			2016
Basic earnings per common share:
Numerator:
Net income	$	324,866		$	614,273		$	225,741
Distributed and undistributed earnings allocated to participating securities	(13,047		)	(23,250		)	(8,760		)
Income allocated to common stockholders for basic earnings per common share	$	311,819		$	591,023		$	216,981
Denominator:
Weighted average common shares outstanding	104,916,865			106,574,448			104,097,182
Less average unvested stock awards	(1,171,994		)	(1,104,035		)	(1,157,378		)
Weighted average shares for basic earnings per common share	103,744,871			105,470,413			102,939,804
Basic earnings per common share	$	3.01		$	5.60		$	2.11
Diluted earnings per common share:
Numerator:
Income allocated to common stockholders for basic earnings per common share	$	311,819		$	591,023		$	216,981
Adjustment for earnings reallocated from participating securities	(195		)	(263		)	62
Income used in calculating diluted earnings per common share	$	311,624		$	590,760		$	217,043
Denominator:
Weighted average shares for basic earnings per common share	103,744,871			105,470,413			102,939,804
Dilutive effect of stock options	332,505			387,074			716,366
Weighted average shares for diluted earnings per common share	104,077,376			105,857,487			103,656,170
Diluted earnings per common share	$	2.99		$	5.58		$	2.09

Included in participating securities above are unvested shares and 3,023,314 dividend equivalent rights outstanding at December 31, 2018 that were issued in conjunction with the IPO of the Company's common stock. These dividend equivalent rights expire in 2021 and participate in dividends on a one-for-one basis.

The following potentially dilutive securities were outstanding at December 31, 2018, 2017 and 2016 but excluded from the calculation of diluted earnings per common share for the periods indicated because their inclusion would have been anti-dilutive:



	2018	2017	2016
Unvested shares and share units	1,463,607	1,431,761	1,303,208
Stock options and warrants	1,960	1,850,279	1,850,279

Investment Securities

12 Months Ended

Dec. 31, 2018

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment securities include investment securities available for sale, marketable equity securities, and investment securities held to maturity. The investment securities portfolio consisted of the following at December 31, 2018 and 2017 (in thousands):



	2018
	Amortized Cost		Gross Unrealized					Carrying Value ⁽¹⁾
	Amortized Cost		Gains		Losses			Carrying Value ⁽¹⁾
Investment securities available for sale:
U.S. Treasury securities	$	39,885	$	2	$	(14	)	$	39,873
U.S. Government agency and sponsored enterprise residential MBS	1,885,302		16,580		(4,408		)	1,897,474
U.S. Government agency and sponsored enterprise commercial MBS	374,569		1,293		(1,075		)	374,787
Private label residential MBS and CMOs	1,539,058		10,138		(14,998		)	1,534,198
Private label commercial MBS	1,486,835		5,021		(6,140		)	1,485,716
Single family rental real estate-backed securities	406,310		266		(4,118		)	402,458
Collateralized loan obligations	1,239,355		1,060		(5,217		)	1,235,198
Non-mortgage asset-backed securities	204,372		1,031		(1,336		)	204,067
State and municipal obligations	398,810		3,684		(4,065		)	398,429
SBA securities	514,765		6,502		(1,954		)	519,313
Other debt securities	1,393		3,453		—			4,846
	8,090,654		$	49,030	$	(43,325	)	8,096,359
Marketable equity securities	60,519							60,519
Investment securities held to maturity	10,000							10,000
	$	8,161,173						$	8,166,878



	2017
	Amortized Cost		Gross Unrealized					Carrying Value ⁽¹⁾
	Amortized Cost		Gains		Losses			Carrying Value ⁽¹⁾
Investment securities available for sale:
U.S. Treasury securities	$	24,981	$	—	$	(28	)	$	24,953
U.S. Government agency and sponsored enterprise residential MBS	2,043,373		16,094		(1,440		)	2,058,027
U.S. Government agency and sponsored enterprise commercial MBS	233,522		1,330		(344		)	234,508
Private label residential MBS and CMOs	613,732		16,473		(1,958		)	628,247
Private label commercial MBS	1,033,022		13,651		(258		)	1,046,415
Single family rental real estate-backed securities	559,741		3,823		(858		)	562,706
Collateralized loan obligations	720,429		3,252		—			723,681
Non-mortgage asset-backed securities	119,939		1,808		—			121,747
Marketable equity securities	59,912		3,631		—			63,543
State and municipal obligations	640,511		17,606		(914		)	657,203
SBA securities	534,534		16,208		(60		)	550,682
Other debt securities	4,090		5,030		—			9,120
	6,587,786		$	98,906	$	(5,860	)	6,680,832
Investment securities held to maturity	10,000							10,000
	$	6,597,786						$	6,690,832


(1)	At fair value except for securities held to maturity.

Investment securities held to maturity at December 31, 2018 and 2017 consisted of one State of Israel bond with a carrying value of $10 million maturing in 2024.

At December 31, 2018, contractual maturities of investment securities available for sale, adjusted for anticipated prepayments of mortgage-backed and other pass-through securities, were as follows (in thousands):



	Amortized Cost		Fair Value
Due in one year or less	$	939,802	$	942,507
Due after one year through five years	4,097,200		4,097,966
Due after five years through ten years	2,662,298		2,662,649
Due after ten years	391,354		393,237
	$	8,090,654	$	8,096,359

Based on the Company’s assumptions, the estimated weighted average life of the investment portfolio as of December 31, 2018 was 4.5 years. The effective duration of the investment portfolio as of December 31, 2018 was 1.4 years. The model results are based on assumptions that may differ from actual results.

The carrying value of securities pledged as collateral for FHLB advances, public deposits, interest rate swaps and to secure borrowing capacity at the FRB totaled $2.1 billion and $2.6 billion at December 31, 2018 and 2017, respectively.

The following table provides information about gains and losses on investment securities for the years ended December 31, 2018, 2017 and 2016 (in thousands):



	2018			2017			2016
Proceeds from sale of investment securities available for sale	$	1,030,810		$	1,287,591		$	1,127,983

Gross realized gains:
Investment securities available for sale	$	8,616		$	37,530		$	14,924
Gross realized losses:
Investment securities available for sale	(2,514		)	(4,064		)	—
Net realized gain	6,102			33,466			14,924

Net unrealized losses on marketable equity securities recognized in earnings	(2,943		)	—			—

OTTI on investment securities available for sale	—			—			(463		)

Gain on investment securities, net	$	3,159		$	33,466		$	14,461

During the year ended December 31, 2016, OTTI was recognized on two positions in one private label commercial MBS. These positions were sold at a loss before the end of 2016.

The following tables present the aggregate fair value and the aggregate amount by which amortized cost exceeded fair value for investment securities available for sale in unrealized loss positions, aggregated by investment category and length of time that individual securities had been in continuous unrealized loss positions at December 31, 2018 and 2017 (in thousands):



	2018
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities	$	14,921	$	(14	)	$	—	$	—		$	14,921	$	(14	)
U.S. Government agency and sponsored enterprise residential MBS	450,666		(1,828		)	87,311		(2,580		)	537,977		(4,408		)
U.S. Government agency and sponsored enterprise commercial MBS	146,096		(352		)	25,815		(723		)	171,911		(1,075		)
Private label residential MBS and CMOs	759,921		(7,073		)	278,108		(7,925		)	1,038,029		(14,998		)
Private label commercial MBS	742,092		(5,371		)	39,531		(769		)	781,623		(6,140		)
Single family rental real estate-backed securities	234,305		(1,973		)	85,282		(2,145		)	319,587		(4,118		)
Collateralized loan obligations	749,047		(5,217		)	—		—			749,047		(5,217		)
Non-mortgage asset-backed securities	136,100		(1,336		)	—		—			136,100		(1,336		)
State and municipal obligations	208,971		(3,522		)	46,247		(543		)	255,218		(4,065		)
SBA securities	215,975		(1,391		)	31,481		(563		)	247,456		(1,954		)
	$	3,658,094	$	(28,077	)	$	593,775	$	(15,248	)	$	4,251,869	$	(43,325	)



	2017
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities	$	24,953	$	(28	)	$	—	$	—		$	24,953	$	(28	)
U.S. Government agency and sponsored enterprise residential MBS	471,120		(1,141		)	13,028		(299		)	484,148		(1,440		)
U.S. Government agency and sponsored enterprise commercial MBS	26,265		(344		)	—		—			26,265		(344		)
Private label residential MBS and CMOs	330,068		(1,858		)	5,083		(100		)	335,151		(1,958		)
Private label commercial MBS	81,322		(258		)	—		—			81,322		(258		)
Single family rental real estate-backed securities	94,750		(858		)	—		—			94,750		(858		)
State and municipal obligations	30,715		(49		)	60,982		(865		)	91,697		(914		)
SBA securities	21,300		(10		)	15,427		(50		)	36,727		(60		)
	$	1,080,493	$	(4,546	)	$	94,520	$	(1,314	)	$	1,175,013	$	(5,860	)

The Company monitors its investment securities available for sale for OTTI on an individual security basis. No securities were determined to be other-than-temporarily impaired during the years ended December 31, 2018 or 2017. As discussed above, OTTI was recognized on two positions in one private label commercial MBS during the year ended December 31, 2016. The Company does not intend to sell securities that are in significant unrealized loss positions at December 31, 2018 and it is not more likely than not that the Company will be required to sell these securities before recovery of the amortized cost basis, which may be at maturity. At December 31, 2018, 218 securities were in unrealized loss positions. The amount of impairment related to 53 of these securities was considered insignificant both individually and in the aggregate, totaling approximately $596 thousand and no further analysis with respect to these securities was considered necessary. The basis for concluding that impairment of the remaining securities was not other-than-temporary is further described below

U.S. Government agency and sponsored enterprise residential and commercial MBS

At December 31, 2018, thirty-six U.S. Government agency and sponsored enterprise residential MBS and seven U.S. Government agency and sponsored enterprise commercial MBS were in unrealized loss positions. Impairment of these securities was primarily attributable to increases in market interest rates subsequent to the date of acquisition. The timely payment of principal and interest on these securities is explicitly or implicitly guaranteed by the U.S. Government. Given the expectation of timely payment of principal and interest the impairments were considered to be temporary.

Private label residential MBS and CMOs

At December 31, 2018, thirty-eight private label residential MBS and CMOs were in unrealized loss positions, primarily as a result of an increase in medium and long-term market interest rates subsequent to acquisition. These securities were assessed for OTTI using credit and prepayment behavioral models that incorporate CUSIP level constant default rates, voluntary prepayment rates and loss severity and delinquency assumptions. The results of these assessments were not indicative of credit losses related to any of these securities as of December 31, 2018. Given the expectation of timely recovery of outstanding principal the impairments were considered to be temporary.

Private label commercial MBS

At December 31, 2018, twenty-seven private label commercial MBS were in unrealized loss positions, primarily as a result of an increase in market interest rates. These securities were assessed for OTTI using credit and prepayment behavioral models incorporating assumptions consistent with the collateral characteristics of each security. The results of this analysis were not indicative of expected credit losses. Given the expectation of timely recovery of outstanding principal the impairments were considered to be temporary.

Single family rental real estate-backed securities

At December 31, 2018, thirteen single family rental real estate-backed securities were in unrealized loss positions. The unrealized losses were primarily due to increases in market interest rates since the purchase of the securities. Management's analysis of the credit characteristics, including loan-to-value and debt service coverage ratios, and levels of subordination for each of the securities is not indicative of projected credit losses. Given the absence of projected credit losses the impairments were considered to be temporary.

Collateralized loan obligations:

At December 31, 2018, eighteen collateralized loan obligations were in unrealized loss positions, primarily due to widening credit spreads. The amount of impairment of each of the individual securities was 3% or less of amortized cost. These securities were assessed for OTTI using credit and prepayment behavioral models incorporating assumptions consistent with the collateral characteristics of each security. The results of this analysis were not indicative of expected credit losses. Given the limited severity of impairment and the expectation of timely recovery of outstanding principal, the impairments were considered to be temporary.

Non-mortgage asset-backed securities

At December 31, 2018, six non-mortgage asset-backed securities were in unrealized loss positions, due primarily to increases in market interest rates subsequent to the date of acquisition. The amount of impairment each of the individual securities was less than 3% of amortized cost. These securities were assessed for OTTI using credit and prepayment behavioral models incorporating assumptions consistent with the collateral characteristics of each security. The results of this analysis were not indicative of expected credit losses. Given the limited severity of impairment and the expectation of timely recovery of outstanding principal, the impairments were considered to be temporary.

State and municipal obligations

At December 31, 2018, fourteen state and municipal obligations were in unrealized loss positions. The impairments are primarily attributable to increases in market interest rates and changes in statutory tax rates. All of the securities are rated investment grade by nationally recognized statistical ratings organizations. Management's evaluation of these securities for OTTI also encompassed the review of credit scores and analysis provided by a third party firm specializing in the analysis and credit review of municipal securities. Given the absence of expected credit losses, the impairments were considered to be temporary.

SBA Securities

At December 31, 2018, six SBA securities were in unrealized loss positions. The amount of impairment of each of these securities was 3% or less of amortized cost. These securities were purchased at a premium and the impairment was attributable primarily to increased prepayment speeds. The timely payment of principal and interest on these securities is guaranteed by this U.S. Government agency. Given the limited severity of impairment and the expectation of timely payment of principal and interest, the impairments were considered to be temporary.

Loans and Allowance for Loan and Lease Losses

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Loans and Allowance for Loan and Lease Losses

At December 31, 2018 and 2017, loans consisted of the following (dollars in thousands):



	2018
				Covered Loans								Percent of Total
	Non-Covered Loans			ACI		Non-ACI			Total			Percent of Total
Residential and other consumer:
1-4 single family residential	$	4,404,047		$	190,223	$	12,558		$	4,606,828		21.0	%
Government insured residential	265,701			—		—			265,701			1.2	%
Home equity loans and lines of credit	1,393			—		—			1,393			—	%
Other consumer loans	15,976			—		—			15,976			0.1	%
	4,687,117			190,223		12,558			4,889,898			22.3	%
Commercial:
Multi-family	2,583,331			—		—			2,583,331			11.8	%
Non-owner occupied commercial real estate	4,700,188			—		—			4,700,188			21.4	%
Construction and land	227,134			—		—			227,134			1.0	%
Owner occupied commercial real estate	2,122,381			—		—			2,122,381			9.7	%
Commercial and industrial	4,801,226			—		—			4,801,226			21.9	%
Commercial lending subsidiaries	2,608,834			—		—			2,608,834			11.9	%
	17,043,094			—		—			17,043,094			77.7	%
Total loans	21,730,211			190,223		12,558			21,932,992			100.0	%
Premiums, discounts and deferred fees and costs, net	45,421			—		(1,405		)	44,016
Loans including premiums, discounts and deferred fees and costs	21,775,632			190,223		11,153			21,977,008
Allowance for loan and lease losses	(109,901		)	—		(30		)	(109,931		)
Loans, net	$	21,665,731		$	190,223	$	11,123		$	21,867,077



	2017
			Covered Loans						Percent of Total
	Non-Covered Loans		ACI		Non-ACI		Total		Percent of Total
Residential and other consumer:
1-4 single family residential	$	4,089,994	$	479,068	$	27,198	$	4,596,260	21.5	%
Government insured residential	26,820		—		—		26,820		0.1	%
Home equity loans and lines of credit	1,654		—		—		1,654		—	%
Other consumer loans	20,512		—		—		20,512		0.1	%
	4,138,980		479,068		27,198		4,645,246		21.7	%
Commercial:
Multi-family	3,215,697		—		—		3,215,697		15.0	%
Non-owner occupied commercial real estate	4,485,276		—		—		4,485,276		21.0	%
Construction and land	310,999		—		—		310,999		1.5	%
Owner occupied commercial real estate	2,014,908		—		—		2,014,908		9.4	%
Commercial and industrial	4,145,785		—		—		4,145,785		19.4	%
Commercial lending subsidiaries	2,553,576		—		—		2,553,576		12.0	%
	16,726,241		—