Allowance for Credit Losses on Loans and Leases

12 Months Ended

Dec. 31, 2020

Allowance For Credit Losses On Loans And Leases [Abstract]

Allowance for Credit Losses on Loans and Leases

NOTE 6: ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES

Allowance for Credit Losses on Loans and Leases

The following table summarizes activity in the allowance for loan and lease losses for the periods indicated:

		Twelve Months Ended December 31,
		2020											2019
(in thousands)		Mortgage				Other				Total			Mortgage			Other			Total
Balance, beginning of period	$		122,694		$		24,944		$		147,638		$	130,983		$	28,837		$	159,820
Impact of CECL adoption			99				1,812				1,911			—			—			—
Adjusted balance, beginning of period			122,793				26,756				149,549			130,983			28,837			159,820
Charge-offs			(1,872	)			(20,306	)			(22,178	)		(1,613	)		(18,694	)		(20,307	)
Recoveries			1,172				2,221				3,393			61			959			1,020
Provision for (recovery of) credit losses on loans and leases			54,445				8,834				63,279			(6,737	)		13,842			7,105
Balance, end of period	$		176,538		$		17,505		$		194,043		$	122,694		$	24,944		$	147,638

At December 31, 2020, the allowance for credit losses on loans and leases totaled $194.0 million, up $46.4 million compared to December 31, 2019, driven by a provision for credit losses of $63.3 million that exceeded net charge-offs by $44.5 million during the year 2020.

Separately, at December 31, 2019, the Company had an allowance for unfunded commitments of $461,000. With the adoption of CECL on January 1, 2020, The Company recognized a “Day 1” transition adjustment of $12.5 million. At December 31, 2020, the allowance for unfunded commitments totaled $11.9 million.

For the year ended December 31, 2020 the allowance for credit losses on loans and leases increased primarily due to negative changes in the macroeconomic factors surrounding the COVID-19 pandemic, specifically the resultant estimated decreases in property values. The forecast scenario includes low single digit growth of Gross Domestic Product (“GDP”), while unemployment remains elevated into the forecasted time horizon. In addition to these quantitative inputs, several qualitative factors were considered, including the risk that the economic decline proves to be more severe and/or prolonged than our baseline forecast which also increased our allowance for loan and lease losses. The impact of the unprecedented fiscal stimulus and changes to federal and local laws and regulations, including changes to various government sponsored loan programs, was also considered.

The Company charges off loans, or portions of loans, in the period that such loans, or portions thereof, are deemed uncollectible. The collectability of individual loans is determined through an assessment of the financial condition and repayment capacity of the borrower and/or through an estimate of the fair value of any underlying collateral. For non-real estate-related consumer credits, the following past-due time periods determine when charge-offs are typically recorded: (1) closed-end credits are charged off in the quarter that the loan becomes 120 days past due; (2) open-end credits are charged off in the quarter that the loan becomes 180 days past due; and (3) both closed-end and open-end credits are typically charged off in the quarter that the credit is 60 days past the date the Company received notification that the borrower has filed for bankruptcy.

The following table presents additional information about the Company’s nonaccrual loans at December 31, 2020:

(in thousands)	Recorded Investment		Related Allowance		Interest Income Recognized
Nonaccrual loans with no related allowance:
Multi-family	$	—	$	—	$	—
Commercial real estate		2,256		—		—
One-to-four family		557		—		21
Acquisition, development, and construction		—		—		—
Other		19,821		—		820
Total nonaccrual loans with no related allowance	$	22,634	$	—	$	841
Nonaccrual loans with an allowance recorded:
Multi-family	$	4,068	$	589	$	28
Commercial real estate		9,886		133		52
One-to-four family		1,139		370		14
Acquisition, development, and construction		—		—		—
Other		58		18		5
Total nonaccrual loans with an allowance recorded	$	15,151	$	1,110	$	99
Total nonaccrual loans:
Multi-family	$	4,068	$	589	$	28
Commercial real estate		12,142		133		52
One-to-four family		1,696		370		35
Acquisition, development, and construction		—		—		—
Other		19,879		18		825
Total nonaccrual loans	$	37,785	$	1,110	$	940

The following table presents additional information about the Company’s impaired loans at December 31, 2019:

(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Multi-family	$	3,577	$	6,790	$	—	$	4,336	$	266
Commercial real estate		14,717		19,832		—		6,140		371
One-to-four family		584		602		—		811		21
Acquisition, development, and construction		389		1,289		—		3,508		364
Other		37,669		114,636		—		39,598		2,494
Total impaired loans with no related allowance	$	56,936	$	143,149	$	—	$	54,393	$	3,516
Impaired loans with an allowance recorded:
Multi-family	$	—	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—		—
One-to-four family		—		—		—		—		—
Acquisition, development, and construction		—		—		—		—		—
Other		1,445		4,173		116		4,111		13
Total impaired loans with an allowance recorded	$	1,445	$	4,173	$	116	$	4,111	$	13
Total impaired loans:
Multi-family	$	3,577	$	6,790	$	—	$	4,336	$	266
Commercial real estate		14,717		19,832		—		6,140		371
One-to-four family		584		602		—		811		21
Acquisition, development, and construction		389		1,289		—		3,508		364
Other		39,114		118,809		116		43,709		2,507
Total impaired loans	$	58,381	$	147,322	$	116	$	58,504	$	3,529