Allowance for Credit Losses on Loans and Leases

3 Months Ended

Mar. 31, 2025

Allowance for Credit Losses on Loans and Leases

The following table summarizes activity in the allowance for credit losses on loans and leases for the periods indicated:


	Multi- Family		Commercial Real Estate(1)		One-to-Four Family First Mortgage		Commercial and Industrial		Other		Total
Three Months Ended March 31, 2025
Balance, beginning of period	$	639	$	304	$	39	$	151	$	68	$	1,201

Charge-offs	(80)		(2)		(1)		(34)		(7)		(124)
Recoveries	—		—		—		6		3		9
Provision for (recovery of) credit losses on loans and leases	50		(13)		(1)		44		2		82
Balance, end of period	$	609	$	289	$	37	$	167	$	66	$	1,168
Three Months Ended March 31, 2024
Balance, beginning of period	$	307	$	402	$	47	$	131	$	105	$	992

Charge-offs	(11)		(64)		—		(11)		(5)		(91)
Recoveries	1		—		—		7		2		10
Provision for (recovery of) credit losses on loans and leases	172		144		(5)		26		(33)		304
Balance, end of period	$	469	$	482	$	42	$	153	$	69	$	1,215

(1)Includes Acquisition, Development, and Construction loans.

Interest rates remain high as compared to the interest rates in our existing portfolio, which continues to put pressure on the ability of certain borrowers with interest rates resetting 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.

The allowance for credit losses to total loans and leases held for investment ratio at March 31, 2025 and December 31, 2024 was 1.75 percent and 1.76 percent, respectively. Excluding loans with government guarantees, the allowance for credit losses was 1.76 percent at March 31, 2025, compared to 1.77 percent at December 31, 2024. 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 reasonable and supportable forecast period. Therefore, we have continued to incorporate 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 office and multi-family loans and, most notably, rent-regulated multi-family loans.

As of March 31, 2025 and December 31, 2024, the allowance for unfunded commitments totaled $47 million and $50 million, respectively.

The Company charges-off loans, or portions of loans, when they 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 non-accrual loans at March 31, 2025:


	Recorded Investment		Related Allowance
Non-accrual loans with no related allowance:
Multi-family	$	1,563	$	—
Commercial real estate(1)	446		—
One-to-four family first mortgage	67		—
Commercial and Industrial	46		—
Other	1		—
Total non-accrual loans with no related allowance	$	2,123	$	—
Non-accrual loans with an allowance recorded:
Multi-family	$	798	$	100
Commercial real estate(1)	143		35
One-to-four family first mortgage	10		1
Commercial and Industrial	185		53
Other	21		20
Total non-accrual loans with an allowance recorded	$	1,157	$	209
Total non-accrual loans:
Multi-family	$	2,361	$	100
Commercial real estate(1)	589		35
One-to-four family first mortgage	77		1
Commercial and Industrial	231		53
Other	22		20
Total non-accrual loans	$	3,280	$	209

(1)Includes Acquisition, Development, and Construction loans.

The following table presents additional information about the Company’s non-accrual loans at December 31, 2024:


	Recorded Investment		Related Allowance
Non-accrual loans with no related allowance:
Multi-family	$	1,092	$	—
Commercial real estate(1)	429		—
One-to-four family first mortgage	61		—
Commercial and Industrial	51		—
Other	3		—
Total non-accrual loans with no related allowance	$	1,636	$	—
Non-accrual loans with an allowance recorded:
Multi-family	$	663	$	77
Commercial real estate(1)	135		31
One-to-four family first mortgage	9		1
Commercial and Industrial	151
Other	21		55
Total non-accrual loans with an allowance recorded	$	979	$	164
Total non-accrual loans:
Multi-family	$	1,755	$	77
Commercial real estate(1)	564		31
One-to-four family first mortgage	70		1
Commercial and Industrial	202		—
Other	24		55
Total non-accrual loans	$	2,615	$	164

(1)Includes Acquisition, Development, and Construction loans.