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Allowance for Credit Losses on Loans and Leases
 6 Months Ended
Jun. 30, 2024
Credit Loss [Abstract]  
Allowance for Credit Losses on Loans and Leases 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 credit losses for the periods indicated:

Multi- Family
Commercial Real Estate
One-to-Four Family First Mortgage
Acquisition, Development, and Construction
OtherTotal
Three months ended June 30, 2024(in millions)
Balance, beginning of period$469 $434 $42 $48 $222 $1,215 
Charge-offs(76)(237)(1)—(40)(354)
Recoveries————55
Provision for (recovery of) credit losses on loans and leases225131(1)(5)52402
Balance, end of period$618 $328 $40 $43 $239 $1,268 
Three months ended June 30, 2023
Balance, beginning of period$171 $53 $39 $20 $267 $550 
Charge-offs——(1)—(2)(3)
Recoveries————44
Provision for (recovery of) credit losses on loans and leases211673(4)43
Balance, end of period$192 $69 $45 $23 $265 $594 
Six months ended June 30, 2024
Balance, beginning of period$307 $366 $47 $36 $236 $992 
Charge-offs(87)(301)(1)—(56)(445)
Recoveries1———1314
Provision for (recovery of) credit losses on loans and leases397263(6)746707
Balance, end of period$618 $328 $40 $43 $239 $1,268 
Six months ended June 30, 2023
Balance, beginning of period$178 $46 $46 $20 $103 $393 
Adjustment for Purchased PCD Loans————1313
Charge-offs——(2)—(6)(8)
Recoveries————99
Provision for (recovery of) credit losses on loans and leases142313146187
Balance, end of period$192 $69 $45 $23 $265 $594 
At June 30, 2024, the allowance for credit losses on loans and leases was $1.3 billion compared to $1.0 billion at December 31, 2023, up $276 million. Market interest rates remain persistently high which will put pressure on the ability for certain borrowers with interest rates resetting at current levels to cover debt service. When combined with inflationary pressure on operating costs and limits on the ability to increase rental rates, debt service levels may approach or exceed some properties' net operating income, which increases the risk of loss. We believe that higher interest rates for a longer period of time will have a more significant impact on our loans that will reprice during the next 18 months. Therefore, we have incorporated a higher probability of default related to those loans as they approach their scheduled repricing date in the measurement of our allowance for credit losses.

Our allowance for credit losses is determined based on quantitative modeling that incorporates and weighs economic forecast scenarios. The key inputs to our quantitative allowance for credit losses models include borrowers' projected debt service based on the most recent financial information available and underlying collateral property values. Property values are particularly meaningful for our multi-family and commercial real estate portfolios. Our models consider the entire life of the loan, including both the interest only period of the loan, if applicable, and the amortization period, to assess the probability of default and the loss given default. For our multi-family portfolio, we obtain and utilize current and projected geography-specific market information in our forecasts. In estimating the qualitative component of our allowance for credit losses, we have adjusted key inputs used by the model on an average basis for certain loans, most notably net operating income and property values to reflect weaknesses in the underlying data, including the recency of appraisal values, and the lack of significant loss history in available data, particularly for multi-family loans.

As of June 30, 2024 and December 31, 2023, the allowance for unfunded commitments totaled $58 million and $52 million, respectively.

The allowance for credit losses on loans and leases to total loans held for investment ratio increased to 1.70 percent at June 30, 2024, compared to 1.17 percent at December 31, 2023. Excluding loans with government guarantees and warehouse loans, the allowance for credit losses was 1.72 percent at June 30, 2024, compared to 1.26 percent at December 31, 2023.

The following table presents additional information about the Company’s non-accrual loans at June 30, 2024:

(in millions)Recorded InvestmentRelated AllowanceInterest Income Recognized
Non-accrual loans with no related allowance:
Multi-family$757 $— $13 
Commercial real estate618—17
One-to-four family first mortgage88——
Acquisition, development, and construction15—1
Other (includes commercial and industrial)25——
Total non-accrual loans with no related allowance
$1,503 $— $31 
Non-accrual loans with an allowance recorded:
Multi-family$37 $7 $1 
Commercial real estate135355
One-to-four family first mortgage181—
Acquisition, development, and construction31—
Other (includes commercial and industrial)246744
Total non-accrual loans with an allowance recorded
$439 $118 $10 
Total non-accrual loans:
Multi-family$794 $7 $14 
Commercial real estate7533522
One-to-four family first mortgage1061—
Acquisition, development, and construction1811
Other (includes commercial and industrial)271744
Total non-accrual loans
$1,942 $118 $41 
The following table presents additional information about the Company’s non-accrual loans at December 31, 2023:

(in millions)Recorded InvestmentRelated AllowanceInterest Income Recognized
Non-accrual loans with no related allowance:
Multi-family$134 $— $5 
Commercial real estate53—2
One-to-four family first mortgage85——
Other (includes commercial and industrial)22——
Total non-accrual loans with no related allowance
$294 $— $7 
Non-accrual loans with an allowance recorded:
Multi-family$4 $— $— 
Commercial real estate$75 $17 $3 
One-to-four family first mortgage112—
Other (includes commercial and industrial)4428—
Total non-accrual loans with an allowance recorded
$134 $47 $3 
Total non-accrual loans:
Multi-family$138 $— $5 
Commercial real estate128175
One-to-four family first mortgage962—
Other (includes commercial and industrial)6628—
Total non-accrual loans
$428 $47 $10