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LOANS & ALLOWANCE FOR CREDIT LOSSES
 12 Months Ended
Jun. 30, 2024
Receivables [Abstract]  
LOANS & ALLOWANCE FOR CREDIT LOSSES LOANS & ALLOWANCE FOR CREDIT LOSSES
The Company categorizes the loan portfolio into five segments: Single Family - Mortgage & Warehouse, Multifamily and Commercial Mortgage, Commercial Real Estate, Commercial & Industrial - Non-Real Estate, Auto & Consumer. For further detail of the segments of the Company’s loan portfolio, refer to Note 1—“Organizations and Summary of Significant Accounting Policies.”
The following table sets forth the composition of the loan portfolio:
(Dollars in thousands)
June 30, 2024
June 30, 2023
Single Family - Mortgage & Warehouse$4,178,832 $4,173,833 
Multifamily and Commercial Mortgage1
3,861,931 3,082,225 
Commercial Real Estate1
6,088,622 6,199,818 
Commercial & Industrial - Non-RE5,241,766 2,639,650 
Auto & Consumer
431,660 556,500 
Total gross loans19,802,811 16,652,026 
Allowance for credit losses - loans(260,542)(166,680)
Unaccreted premiums (discounts) and loan fees(310,884)(28,618)
Total net loans$19,231,385 $16,456,728 
1 Includes PCD loans of $284 million in Multifamily and Commercial Mortgage and $44.5 million in Commercial Real Estate as of June 30, 2024. For further detail on PCD loans refer to Note 1—“Organizations and Summary of Significant Accounting Policies.”
Accrued interest receivable on loans held for investment totaled $119.8 million and $77.9 million as of June 30, 2024 and 2023, respectively.
At June 30, 2024 and 2023, the Company pledged certain loans totaling $4,942.8 million and $5,128.4 million, respectively, to the FHLB and $8,197.2 million and $3,689.5 million, respectively, to the Federal Reserve Bank of San Francisco (“FRBSF”).
The following table presents the components of the provision for credit losses:
For the Fiscal Year Ended June 30,
(Dollars in thousands)
202420232022
Provision for credit losses - loans
$32,750 $24,750 $18,500 
Provision for credit losses - unfunded lending commitments
(250)(500)5,250 
    Total provision for credit losses
$32,500 $24,250 $23,750 
The following tables summarize activity in the allowance for credit losses - loans by portfolio segment:
June 30, 2024
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerTotal
Balance at July 1, 2023
$17,503 $16,848 $72,755 $46,347 $13,227 $166,680 
Allowance for credit losses at acquisition of PCD loans
— 58,997 11,125 — — 70,122 
Provision (benefit) for credit losses - loans(489)(4,434)3,900 29,769 4,004 32,750 
Charge-offs(172)(640)— (84)(11,013)(11,909)
Recoveries101 — — — 2,798 2,899 
Balance at June 30, 2024
$16,943 $70,771 $87,780 $76,032 $9,016 $260,542 
June 30, 2023
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerTotal
Balance at July 1, 2022
$19,670 $14,655 $69,339 $30,808 $14,145 $148,617 
Provision (benefit) for credit losses - loans(2,302)2,193 3,416 15,521 5,922 24,750 
Charge-offs(314)— — — (9,142)(9,456)
Recoveries449 — — 18 2,302 2,769 
Balance at June 30, 2023
$17,503 $16,848 $72,755 $46,347 $13,227 $166,680 
June 30, 2022
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerTotal
Balance at July 1, 2021$26,604 $13,146 $57,928 $28,460 $6,820 $132,958 
Provision (benefit) for credit losses - loans(7,009)1,332 11,411 2,544 10,222 18,500 
Charge-offs(82)— — (322)(4,024)(4,428)
Recoveries157 177 — 126 1,127 1,587 
Balance at June 30, 2022
$19,670 $14,655 $69,339 $30,808 $14,145 $148,617 
The allowance for credit losses increased primarily due to loan growth in the Commercial & Industrial-Non-RE, reflecting higher balances in capital call facilities, and due to the Multifamily and Commercial Mortgage and Commercial Real Estate loans acquired in the FDIC Loan Purchase. While charge-offs in the Auto & Consumer portfolio increased in the fiscal year ended June 30, 2024, compared to the fiscal year ended June 30, 2023, auto originations were lower in the current year and the portfolio balance is declining.
Loan products within each portfolio contain varying collateral types which impact the estimate of the loss given default utilized in the calculation of the allowance. For further discussion of the model method of estimating expected lifetime credit losses see Note 1—“Organizations and Summary of Significant Accounting Policies.”
The following tables present a summary of the activity in the unfunded loan commitment liabilities for the periods indicated:
For the Fiscal Year Ended June 30,
(Dollars in thousands)202420232022
BALANCE—beginning of year$10,473 $10,973 $5,723 
Provision (Benefit)(250)(500)5,250 
BALANCE—end of year$10,223 $10,473 $10,973 
The following table presents LTVs for the Company’s real estate loans outstanding as of June 30, 2024:
Total Real Estate LoansSingle Family - Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real Estate
Weighted-Average LTV48.9 %56.7 %55.5 %40.5 %
Median LTV54.0 %56.0 %50.0 %43.0 %
The Company’s effective weighted-average LTV was 49.7% for loans within its real estate portfolio originated during the fiscal year ended June 30, 2024.
Credit Quality Disclosure. The following tables provide the composition of loans that are performing and nonaccrual by portfolio segment:
June 30, 2024
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerTotal
Performing$4,133,121 $3,826,877 $6,062,520 $5,237,746 $429,188 $19,689,452 
Nonaccrual45,711 35,054 26,102 4,020 2,472 113,359 
Total$4,178,832 $3,861,931 $6,088,622 $5,241,766 $431,660 $19,802,811 
Nonaccrual loans to total loans0.57 %
June 30, 2023
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerTotal
Performing$4,143,119 $3,047,122 $6,184,966 $2,636,661 $552,998 $16,564,866 
Nonaccrual30,714 35,103 14,852 2,989 $3,502 87,160 
Total$4,173,833 $3,082,225 $6,199,818 $2,639,650 $556,500 $16,652,026 
Nonaccrual loans to total loans0.52 %
There were no nonaccrual loans without an allowance for credit losses as of June 30, 2024 and 2023. There was no interest income recognized on nonaccrual loans in the fiscal year ended June 30, 2024 and 2023.
Credit Quality Indicators. The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends. The Company analyzes loans individually by classifying the loans based on credit risk. The Company uses the following definitions for risk ratings.
Pass. Loans classified as pass are well protected by the current net worth and paying capacity of the obligor or by the fair value of any underlying collateral, less cost to acquire and sell in a timely manner.
Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date after considering the obligor’s current net worth and paying capacity and the underlying collateral value less cost to acquire and sell in a timely manner.
Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
The Company reviews and grades loans following a continuous review process, featuring coverage of all loan types and business lines at least quarterly. Continuous reviewing provides more effective risk monitoring because it immediately tests for potential impacts caused by changes in personnel, policy, products or underwriting standards.
The following tables present the composition of loans by portfolio segment, fiscal year of origination and credit quality indicator, and the amount of gross charge-offs:
June 30, 2024
Loans Held for Investment by Fiscal Year of Origination
Revolving Loans Total
(Dollars in thousands)20242023202220212020Prior
Single Family-Mortgage & Warehouse
Pass$491,822 $590,060 $1,200,230 $487,132 $291,047 $720,049 $256,778 $4,037,118 
Special Mention31,000 — 24,489 665 6,591 26,873 — 89,618 
Substandard— 283 6,728 — 14,720 30,365 — 52,096 
Doubtful— — — — — — — — 
Total522,822 590,343 1,231,447 487,797 312,358 777,287 256,778 4,178,832 
Gross charge-offs— — — — — 172 — 172 
Multifamily and Commercial Mortgage
Pass36,058 700,163 994,004 595,299 510,341 811,184 — 3,647,049 
Special Mention— 29,325 46,194 17,478 9,011 10,277 — 112,285 
Substandard— 13,489 12,509 15,507 41,013 20,079 — 102,597 
Doubtful— — — — — — — — 
Total36,058 742,977 1,052,707 628,284 560,365 841,540 — 3,861,931 
Gross charge-offs
— — — — 640 — — 640 
Commercial Real Estate
Pass1,952,001 1,419,399 1,456,643 221,061 7,741 53,000 866,686 5,976,531 
Special Mention— — 27,452 — — — — 27,452 
Substandard— 5,600 43,700 5,000 — 30,339 — 84,639 
Doubtful— — — — — — — — 
Total1,952,001 1,424,999 1,527,795 226,061 7,741 83,339 866,686 6,088,622 
Gross charge-offs— — — — — — — — 
Commercial & Industrial - Non-RE
Pass991,497 458,454 238,397 44,923 10,422 12,867 3,295,425 5,051,985 
Special Mention— 1,613 731 1,818 — — 5,349 9,511 
Substandard— 34,433 122,729 1,031 — 2,988 19,089 180,270 
Doubtful— — — — — — — — 
Total991,497 494,500 361,857 47,772 10,422 15,855 3,319,863 5,241,766 
Gross charge-offs— — — — — 84 — 84 
Auto & Consumer
Pass65,766 114,615 177,043 43,287 13,402 14,056 — 428,169 
Special Mention33 213 422 176 — 61 — 905 
Substandard142 547 1,264 410 114 109 — 2,586 
Doubtful— — — — — — — — 
Total65,941 115,375 178,729 43,873 13,516 14,226 — 431,660 
Gross charge-offs202 3,471 5,212 1,556 303 269 — 11,013 
Total
Pass3,537,144 3,282,691 4,066,317 1,391,702 832,953 1,611,156 4,418,889 19,140,852 
Special Mention31,033 31,151 99,288 20,137 15,602 37,211 5,349 239,771 
Substandard142 54,352 186,930 21,948 55,847 83,880 19,089 422,188 
Doubtful— — — — — — — — 
Total$3,568,319 $3,368,194 $4,352,535 $1,433,787 $904,402 $1,732,247 $4,443,327 $19,802,811 
As a % of total gross loans18.0%17.0%22.0%7.2%4.6%8.8%22.4%100.0%
Total gross charge-offs
$202 $3,471 $5,212 $1,556 $943 $525 $— $11,909 
June 30, 2023
Loans Held for Investment by Fiscal Year of Origination
Revolving Loans Total
(Dollars in thousands)20232022202120202019Prior
Single Family-Mortgage & Warehouse
Pass$730,498 $1,346,804 $522,873 $324,458 $255,547 $639,401 $243,175 $4,062,756 
Special Mention— 7,280 7,026 8,303 12,942 18,244 6,614 60,409 
Substandard— 5,188 4,686 14,384 2,024 24,386 — 50,668 
Doubtful— — — — — — — — 
Total730,498 1,359,272 534,585 347,145 270,513 682,031 249,789 4,173,833 
Multifamily and Commercial Mortgage
Pass558,787 975,186 498,744 314,383 224,592 404,222 — 2,975,914 
Special Mention— 9,691 4,636 1,360 7,705 — — 23,392 
Substandard— 3,145 5,686 38,857 6,181 29,050 — 82,919 
Doubtful— — — — — — — — 
Total558,787 988,022 509,066 354,600 238,478 433,272 — 3,082,225 
Commercial Real Estate
Pass1,867,476 2,323,095 631,500 87,059 117,928 — 960,024 5,987,082 
Special Mention29,000 43,427 — 8,457 800 15,062 — 96,746 
Substandard— 29,200 37,951 18,500 15,487 14,852 — 115,990 
Doubtful— — — — — — — — 
Total1,896,476 2,395,722 669,451 114,016 134,215 29,914 960,024 6,199,818 
Commercial & Industrial - Non-RE
Pass488,120 358,214 29,777 14,794 2,098 — 1,707,619 2,600,622 
Special Mention— 8,221 — 11,413 — — 600 20,234 
Substandard— 17,762 1,032 — — — — 18,794 
Doubtful— — — — — — — — 
Total488,120 384,197 30,809 26,207 2,098 — 1,708,219 2,639,650 
Auto & Consumer
Pass167,552 256,154 71,529 24,906 19,897 11,093 — 551,131 
Special Mention423 632 453 60 14 6 — 1,588 
Substandard350 2,785 278 133 162 73 — 3,781 
Doubtful— — — — — — — — 
Total168,325 259,571 72,260 25,099 20,073 11,172 — 556,500 
Total
Pass3,812,433 5,259,453 1,754,423 765,600 620,062 1,054,716 2,910,818 16,177,505 
Special Mention29,423 69,251 12,115 29,593 21,461 33,312 7,214 202,369 
Substandard350 58,080 49,633 71,874 23,854 68,361 — 272,152 
Doubtful— — — — — — — — 
Total$3,842,206 $5,386,784 $1,816,171 $867,067 $665,377 $1,156,389 $2,918,032 $16,652,026 
As a % of total gross loans23.1%32.4%10.9%5.2%4.0%6.9%17.5%100.0%
The following tables provide the aging of loans by portfolio segment:
June 30, 2024
(Dollars in thousands)Current30-59 Days60-89 Days90+ DaysTotal
Single Family-Mortgage & Warehouse$4,070,186 $46,387 $18,401 $43,858 $4,178,832 
Multifamily and Commercial Mortgage3,795,387 13,074 8,554 44,916 3,861,931 
Commercial Real Estate6,024,470 — 25,950 38,202 6,088,622 
Commercial & Industrial - Non-RE5,240,734 — — 1,032 5,241,766 
Auto & Consumer
424,555 4,644 996 1,465 431,660 
Total$19,555,332 $64,105 $53,901 $129,473 $19,802,811 
As a % of total gross loans98.75 %0.33 %0.27 %0.65 %100.00 %
June 30, 2023
(Dollars in thousands)Current30-59 Days60-89 Days90+ DaysTotal
Single Family-Mortgage & Warehouse$4,102,150 $20,832 $7,971 $42,880 $4,173,833 
Multifamily and Commercial Mortgage3,048,217 2,705 1,124 30,179 3,082,225 
Commercial Real Estate6,173,716 11,250 — 14,852 6,199,818 
Commercial & Industrial - Non-RE
2,639,650 — — — 2,639,650 
Auto & Consumer545,205 6,597 1,708 2,990 556,500 
Total$16,508,938 $41,384 $10,803 $90,901 $16,652,026 
As a % of total gross loans99.14 %0.25 %0.06 %0.55 %100.00 %
Loans reaching 90+ days past due are generally placed on nonaccrual. As of June 30, 2024 and 2023, there were loans of $20.2 million and $14.1 million, respectively, over 90 days past due and still accruing interest as the Company expects to collect the principal and interest amounts due and such amounts are in the process of collection.
Single family mortgage loans in process of foreclosure were $20.1 million and $17.7 million as of June 30, 2024 and 2023, respectively.
Credit Risk Concentration
Concentrations of credit risk arise when a number of borrowers are engaged in similar business activities in the same geographic region, or when they have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions.
Concentrations of 10% or more existed in the Single Family, Multifamily and Commercial Real Estate loan categories at June 30, 2024 and June 30, 2023.
At June 30, 2024, California accounted for 69.3% and New York accounted for 11.7% of loans in the Single Family loan category. California accounted for 49.6% and New York accounted for 38.9% of loans in the Multifamily loan category. New York accounted for 34.2% and Florida accounted for 10.4% of loans in the Commercial Real Estate loan category.
At June 30, 2023, California accounted for 71.4% and New York accounted for 11.0% of loans in the Single Family loan category. California accounted for 69.1% and New York accounted for 19.7% of loans in the Multifamily loan category. New York accounted for 37.5% and Florida accounted for 10.5% of loans in the Commercial Real Estate loan category.
Related Party Loans
In the ordinary course of business, the Company has granted related party loans collateralized by real property to certain executive officers, directors and their affiliates, which is summarized in the following table:
At or for the Fiscal Year Ended June 30,
(Dollars in thousands)20242023
Outstanding loan balance$29,673 $29,181 
Loans originated and funded$1,044 $5,052 
Principal repayments$552 $1,444 
Loan Modifications to Borrowers Experiencing Financial Difficulty. The Company may grant certain modifications of loans to borrowers experiencing financial difficulty, which effective following the adoption of ASU 2022-02, are reported as financial difficulty modifications (“FDMs”). The Company’s modification programs provide various modifications to borrowers experiencing financial difficulty, which may include interest rate reductions, term extensions, payment delays and/or principal forgiveness. FDMs during the fiscal year ended June 30, 2024 were not significant.
Prior to adoption of ASU 2022-02, the Company accounted for certain modifications as troubled debt restructurings (“TDRs”). Approximately 1.77% of our nonaccrual loans were considered TDRs at June 30, 2023. Borrowers that made timely payments after TDRs were considered non-performing for at least six months. Generally, after six months of timely payments, those TDRs were reclassified from the nonaccrual loan category to the performing loan category and any previously deferred interest income was recognized. The Company had no TDRs classified as performing loans at June 30, 2023.