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LOANS AND ALLOWANCE FOR CREDIT LOSSES
 3 Months Ended
Mar. 31, 2021
Receivables [Abstract]  
LOANS AND ALLOWANCE FOR CREDIT LOSSES LOANS AND ALLOWANCE FOR CREDIT LOSSES
The following table presents the balances in our loan portfolio as of the dates indicated:
($ in thousands)March 31,
2021		December 31,
2020
Commercial:
Commercial and industrial$1,878,325 $2,088,308 
Commercial real estate839,965 807,195 
Multifamily1,258,278 1,289,820 
SBA(1)
338,903 273,444 
Construction169,122 176,016 
Consumer:
Single family residential mortgage1,253,251 1,230,236 
Other consumer26,557 33,386 
Total loans(2)
$5,764,401 $5,898,405 
Allowance for loan losses(79,353)(81,030)
Loans receivable, net$5,685,048 $5,817,375 
(1)Includes 1,228 PPP loans totaling $276.0 million, net of unamortized loan fees totaling $5.1 million at March 31, 2021 and 949 PPP loans totaling $210.0 million, net of unamortized loan fees totaling $1.6 million at December 31, 2020.
(2)Includes net deferred loan origination costs/(fees) and premiums/(discounts) of $4.6 million and $6.2 million at March 31, 2021 and December 31, 2020.
Credit Quality Indicators
We categorize loans into risk categories based on relevant information about the ability of borrowers to repay their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. We perform a historical loss analysis that is combined with a comprehensive loan to value analysis to analyze the associated risks in the current loan portfolio. We analyze loans individually and grade each loan for credit risk. This analysis includes all loans delinquent over 60 days and non-homogeneous loans such as commercial and commercial real estate loans. We use the following definitions for credit risk ratings:
Pass: Loans risk rated as pass are in compliance in all respects with the Bank’s credit policy and regulatory requirements, and do not exhibit any potential or defined weakness as defined under “Special Mention”, “Substandard” or “Doubtful”.
Special Mention: Loans risk rated 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 our credit position at some future date.
Substandard: Loans risk rated 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 risk rated have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that we 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 following table presents the risk categories for total loans by class of loans and origination year as of March 31, 2021:
Term Loans Amortized Cost Basis by Origination Year
($ in thousands)20212020201920182017PriorRevolving Loans Amortized Cost BasisRevolving Loans Amortized Cost Basis
Converted to Term		Total
March 31, 2021
Commercial:
Commercial and industrial
Pass$42,010 $81,257 $74,627 $67,474 $51,189 $118,729 $1,342,027 $13,507 $1,790,820 
Special mention— 3,501 3,984 2,702 12,399 6,007 1,500 7,506 37,599 
Substandard— — 17,057 6,076 — 9,010 13,792 3,971 49,906 
Doubtful— — — — — — — — — 
Commercial and industrial42,010 84,758 95,668 76,252 63,588 133,746 1,357,319 24,984 1,878,325 
Commercial real estate
Pass111,377 66,607 147,993 171,212 62,798 229,419 2,682 1,580 793,668 
Special mention— — — 9,390 — 16,964 3,761 — 30,115 
Substandard— — 512 — — 14,451 — — 14,963 
Doubtful— — — — — 1,219 — — 1,219 
Commercial real estate111,377 66,607 148,505 180,602 62,798 262,053 6,443 1,580 839,965 
Multifamily
Pass16,566 235,977 383,314 268,034 109,761 221,183 40 — 1,234,875 
Special mention— — 3,050 — — 801 — — 3,851 
Substandard— — — — — 19,552 — — 19,552 
Doubtful— — — — — — — — — 
Multifamily16,566 235,977 386,364 268,034 109,761 241,536 40 — 1,258,278 
SBA
Pass130,594 151,088 13,995 1,224 3,648 27,863 953 384 329,749 
Special mention— — 1,755 — 206 1,265 — 5 3,231 
Substandard— — — — 1,272 2,595 269 1,306 5,442 
Doubtful— — — 391 — — — 90 481 
SBA130,594 151,088 15,750 1,615 5,126 31,723 1,222 1,785 338,903 
Construction
Pass1,177 45,148 29,576 32,931 48,817 — — — 157,649 
Special mention— — — 4,037 — 7,436 — — 11,473 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Construction1,177 45,148 29,576 36,968 48,817 7,436 — — 169,122 
Consumer:
Single family residential mortgage
Pass116,087 165,321 120,880 225,492 147,342 415,134 14,442 — 1,204,698 
Special mention— — 901 3,144 685 9,456 — — 14,186 
Substandard— — — 9,181 3,083 21,846 257 — 34,367 
Doubtful— — — — — — — — — 
Single family residential mortgage116,087 165,321 121,781 237,817 151,110 446,436 14,699 — 1,253,251 
Other consumer
Pass— — — 34 — 1,865 22,256 2,137 26,292 
Special mention— — — — — 30 64 — 94 
Substandard— — — — — — 99 72 171 
Doubtful— — — — — — — — — 
Other consumer— — — 34 — 1,895 22,419 2,209 26,557 
Total loans$417,811 $748,899 $797,644 $801,322 $441,200 $1,124,825 $1,402,142 $30,558 $5,764,401 
The following table presents the risk categories for total loans by class of loans and origination year as of December 31, 2020:
Term Loans Amortized Cost Basis by Origination Year
($ in thousands)20202019201820172016PriorRevolving Loans Amortized Cost BasisRevolving Loans Amortized Cost Basis
Converted to Term		Total
December 31, 2020
Commercial:
Commercial and industrial
Pass$99,015 $78,783 $70,248 $52,786 $44,536 $92,129 $1,572,259 $9,945 $2,019,701 
Special mention— 928 2,748 7,986 1,574 2,271 1,500 225 17,232 
Substandard— 13,937 6,262 4,618 — 9,264 12,598 4,696 51,375 
Doubtful— — — — — — — — — 
Commercial and industrial99,015 93,648 79,258 65,390 46,110 103,664 1,586,357 14,866 2,088,308 
Commercial real estate
Pass75,432 150,731 192,831 63,144 91,454 182,756 2,682 1,582 760,612 
Special mention— — 9,452 — 2,518 14,754 3,761 — 30,485 
Substandard— — — — — 16,098 — — 16,098 
Doubtful— — — — — — — — — 
Commercial real estate75,432 150,731 202,283 63,144 93,972 213,608 6,443 1,582 807,195 
Multifamily
Pass239,449 407,532 275,881 110,105 97,160 154,841 27 — 1,284,995 
Special mention— 2,050 — — — 803 — — 2,853 
Substandard— — — — — 1,972 — — 1,972 
Doubtful— — — — — — — — — 
Multifamily239,449 409,582 275,881 110,105 97,160 157,616 27 — 1,289,820 
SBA
Pass211,962 14,082 1,260 3,746 11,087 18,589 3,111 1,014 264,851 
Special mention— 1,768 — 212 415 874 — 6 3,275 
Substandard— — — 1,319 682 1,855 226 755 4,837 
Doubtful— — 390 — — — — 91 481 
SBA211,962 15,850 1,650 5,277 12,184 21,318 3,337 1,866 273,444 
Construction
Pass41,677 30,387 45,397 50,024 — — — — 167,485 
Special mention— — 1,537 — 6,994 — — — 8,531 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Construction41,677 30,387 46,934 50,024 6,994 — — — 176,016 
Consumer:
Single family residential mortgage
Pass149,382 140,129 271,667 161,332 237,285 227,711 15,252 — 1,202,758 
Special mention— — 1,837 688 4,868 4,460 — — 11,853 
Substandard— 157 491 1,079 4,978 8,920 — — 15,625 
Doubtful— — — — — — — — — 
Single family residential mortgage149,382 140,286 273,995 163,099 247,131 241,091 15,252 — 1,230,236 
Other consumer
Pass38 — 47 — — 1,876 27,644 2,218 31,823 
Special mention— — — — — 30 1,185 — 1,215 
Substandard— — — — — — 274 74 348 
Doubtful— — — — — — — — — 
Other consumer38 — 47 — — 1,906 29,103 2,292 33,386 
Total loans$816,955 $840,484 $880,048 $457,039 $503,551 $739,203 $1,640,519 $20,606 $5,898,405 
Past Due Loans
The following table presents the aging of the recorded investment in past due loans, excluding accrued interest receivable (which is not considered to be material), by class of loans as of the dates indicated:
($ in thousands)30 - 59 Days Past Due60 - 89 Days Past DueGreater than 89 Days Past dueTotal Past DueCurrentTotal
March 31, 2021
Non-Traditional Mortgage (NTM) loans:
Single family residential mortgage$6,799 $2,441 $6,997 $16,237 $394,293 $410,530 
Other consumer— — — — 1,606 1,606 
Total NTM loans6,799 2,441 6,997 16,237 395,899 412,136 
Traditional loans:
Commercial:
Commercial and industrial14 517 3,517 4,048 1,874,277 1,878,325 
Commercial real estate2,644 923 — 3,567 836,398 839,965 
Multifamily801 — — 801 1,257,477 1,258,278 
SBA1,520 997 2,457 4,974 333,929 338,903 
Construction— — — — 169,122 169,122 
Consumer:
Single family residential mortgage11,729 2,536 17,321 31,586 811,135 842,721 
Other consumer84 — — 84 24,867 24,951 
Total traditional loans16,792 4,973 23,295 45,060 5,307,205 5,352,265 
Total$23,591 $7,414 $30,292 $61,297 $5,703,104 $5,764,401 
December 31, 2020
NTM loans:
Single family residential mortgage$4,200 $641 $6,548 $11,389 $424,126 $435,515 
Other consumer— — — — 1,598 1,598 
Total NTM loans4,200 641 6,548 11,389 425,724 437,113 
Traditional loans:
Commercial:
Commercial and industrial67 — 4,284 4,351 2,083,957 2,088,308 
Commercial real estate— — — — 807,195 807,195 
Multifamily— — — — 1,289,820 1,289,820 
SBA354 626 3,062 4,042 269,402 273,444 
Construction— — — — 176,016 176,016 
Consumer:
Single family residential mortgage6,836 980 3,742 11,558 783,163 794,721 
Other consumer216 61 — 277 31,511 31,788 
Total traditional loans7,473 1,667 11,088 20,228 5,441,064 5,461,292 
Total$11,673 $2,308 $17,636 $31,617 $5,866,788 $5,898,405 
In accordance with regulatory guidance, borrowers that are on forbearance or deferment, which were current prior to becoming affected by the global pandemic are not be reported as past due.
Nonaccrual Loans
The following table presents nonaccrual loans as of the dates indicated:
March 31, 2021December 31, 2020
($ in thousands)NTM LoansTraditional LoansTotal
Nonaccrual Loans		Nonaccrual Loans with no ACLNTM LoansTraditional LoansTotal
Nonaccrual Loans		Nonaccrual Loans with no ACL
Nonaccrual loans
Commercial:
Commercial and industrial$— $13,475 $13,475 $13,324 $— $13,821 $13,821 $13,088 
Commercial real estate— 5,834 5,834 5,834 — 4,654 4,654 4,654 
SBA— 4,179 4,179 796 — 3,749 3,749 648 
Construction— — — — — — — — 
Consumer:
Single family residential mortgage11,652 20,780 32,432 32,431 8,697 4,822 13,519 13,519 
Other consumer— — — — — 157 157 157 
Total nonaccrual loans$11,652 $44,268 $55,920 $52,385 $8,697 $27,203 $35,900 $32,066 

At March 31, 2021 and December 31, 2020, there were zero and $728 thousand of loans that were past due 90 days or more and still accruing.
The non-traditional mortgage (“NTM”) loans on nonaccrual status included $4.5 million of Green Loans and $7.1 million of Interest Only loans at March 31, 2021 compared to $4.0 million of Green Loans and $4.7 million of Interest Only loans at December 31, 2020.

Loans in Process of Foreclosure
At March 31, 2021, there was one consumer mortgage loan secured by residential real estate properties totaling $3.3 million for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction. At December 31, 2020, there were none.
Allowance for Credit Losses
Our ACL methodology and resulting provision continues to be impacted by the current economic uncertainty and volatility caused by the COVID-19 pandemic. The ACL methodology uses a nationally recognized, third-party model that includes many assumptions based on historical and peer loss data, current loan portfolio risk profile including risk ratings, and economic forecasts including macroeconomic variables (MEVs) released by our model provider during March 2021. In contrast to the December 2020 forecasts, the March forecasts reflect a more favorable view of the economy (i.e. higher GDP growth rates and lower unemployment rates). While the forecasts are improving and the economy is showing signs of recovery with the rollout of the vaccine and additional government stimulus, there remains uncertainty regarding the ultimate impact of the pandemic and the pace of the recovery. Accordingly, our economic assumptions and the resulting ACL level and provision reflect these uncertainties. The ACL also incorporated qualitative factors to account for certain loan portfolio characteristics that are not taken into consideration by the third-party model including underlying strengths and weaknesses in the loan portfolio. As is the case with all estimates, the ACL is expected to be impacted in future periods by economic volatility, changing economic forecasts, underlying model assumptions, and asset quality metrics, all of which may be better than or worse than current estimates.
The ACL process involves subjective and complex judgments as well as adjustments for numerous factors including those described in the federal banking agencies' joint interagency policy statement on ALL, which include underwriting experience and collateral value changes, among others. .
We have established credit risk management processes that include regular management review of the loan portfolio to identify problem loans. During the ordinary course of business, management may become aware of borrowers who may not be able to fulfill their contractual payment requirements within the loan agreements. Such loans are subject to increased monitoring. Consideration is given to placing these loans on nonaccrual status, assessing the need for additional allowance for loan loss, and
partially or fully charging off the principal balance. We maintain the allowance for loan losses at a level that is considered adequate to cover the current expected credit losses in the loan portfolio.
The reserve for unfunded loan commitments is established to cover the current expected credit losses for the estimated level of funding of these loan commitments, except for unconditionally cancellable commitments for which no reserve is required under ASC 326. At March 31, 2021 and December 31, 2020, the reserve for unfunded loan commitments was $3.4 million and $3.2 million, respectively, and was included in accrued expenses and other liabilities on the consolidated statements of financial condition.
The credit risk monitoring system is designed to identify impaired and potential problem loans, perform periodic evaluation of impairment, and determine the adequacy of the allowance for credit losses in a timely manner. In addition, management has adopted a credit policy that includes a credit review and control system that it believes should be effective in ensuring that we maintain an adequate allowance for credit losses. Further, the Board of Directors provides oversight and guidance for management’s allowance evaluation process.
The following table presents a summary of activity in the ACL for the periods indicated:
Three Months Ended March 31,
($ in thousands)20212020
Allowance
for
Loan Losses		Reserve for Unfunded Loan CommitmentsAllowance
for
Credit Losses		Allowance
for
Loan Losses		Reserve for Unfunded Loan CommitmentsAllowance
for
Credit Losses
Balance at beginning of period$81,030 $3,183 $84,213 $57,649 $4,064 $61,713 
Impact of adopting ASU 2016-13— — — 7,609 (1,226)6,383 
Loans charged off(565)— (565)(2,076)— (2,076)
Recoveries of loans previously charged off172 — 172 350 — 350 
Net charge-offs(393)— (393)(1,726)— (1,726)
Provision for (reversal of) credit losses(1,284)177 (1,107)14,711 1,050 15,761 
Balance at end of period$79,353 $3,360 $82,713 $78,243 $3,888 $82,131 
Accrued interest receivable on loans receivable, net totaled $23.7 million and $24.7 million at March 31, 2021 and December 31, 2020, and is included within other assets in the accompanying consolidated statements of financial condition. Accrued interest receivable is excluded from the estimate of expected credit losses.
The following table presents the activity and balance in the ALL and the recorded investment, excluding accrued interest, in loans based on the impairment methodology as of or for the three months ended March 31, 2021:
($ in thousands)Commercial and IndustrialCommercial Real EstateMultifamilySBAConstructionSingle Family Residential MortgageOther ConsumerTotal
ALL:
Balance at December 31, 2020$20,608 $19,074 $22,512 $3,145 $5,849 $9,191 $651 $81,030 
Charge-offs
(565)— — — — — — (565)
Recoveries
45 — — 126 — — 1 172 
Net (charge-offs) recoveries(520)— — 126 — — 1 (393)
(Reversal of) provision for credit losses(385)(1,974)1,372 180 (297)(30)(150)(1,284)
Balance at March 31, 2021$19,703 $17,100 $23,884 $3,451 $5,552 $9,161 $502 $79,353 

The following table presents the activity and balance in the ALL and the recorded investment, excluding accrued interest, in loans based on the impairment methodology as of or for the three months ended March 31, 2020:
($ in thousands)Commercial and IndustrialCommercial Real EstateMultifamilySBAConstructionSingle Family Residential MortgageOther ConsumerTotal
ALL:
Balance at December 31, 2019$22,353 $5,941 $11,405 $3,120 $3,906 $10,486 $438 $57,649 
Adoption of ASU N. 2016-13662 4,847 1,809 388 103 (420)220 7,609 
Charge-offs(1,164)— — (356)— (552)(4)(2,076)
Recoveries30 — — 121 — 151 48 350 
Net (charge-offs) recoveries
(1,134)— — (235)— (401)44 (1,726)
Provision for (reversal of ) credit losses1,692 2,832 6,858 379 3,043 (72)(21)14,711 
Balance at March 31, 2020$23,573 $13,620 $20,072 $3,652 $7,052 $9,593 $681 $78,243 
Collateral Dependent Loans
A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the operation or sale of the collateral. Collateral dependent loans are evaluated individually and the ACL is determined based on the amount by which amortized costs exceed the estimated fair value of the collateral, adjusted for estimated selling costs.
Collateral dependent loans consisted of the following as of March 31, 2021 and December 31, 2020:
March 31, 2021
Real Estate
($ in thousands)CommercialResidentialBusiness AssetsTotal
Commercial:
Commercial and industrial5,368 — 4,924 10,292 
Commercial real estate3,864 1,971 — 5,835 
SBA74 1,208 2,682 3,964 
Consumer:
Single family residential mortgage— 38,544 — 38,544 
Total loans$9,306 $41,723 $7,606 $58,635 
December 31, 2020
Real Estate
($ in thousands)CommercialResidentialBusiness AssetsTotal
Commercial:
Commercial and industrial5,492 — 4,965 10,457 
Commercial real estate2,644 2,010 — 4,654 
SBA349 497 2,750 3,596 
Consumer:
Single family residential mortgage— 17,820 — 17,820 
Other consumer— 157 — 157 
Total loans$8,485 $20,484 $7,715 $36,684 
Troubled Debt Restructurings
TDR loans consisted of the following as of the dates indicated:
March 31, 2021December 31, 2020
($ in thousands)NTM
Loans		Traditional LoansTotalNTM
Loans		Traditional LoansTotal
Commercial:
Commercial and industrial$— $3,565 $3,565 $— $3,884 $3,884 
SBA— 265 265 — 265 265 
Consumer:
Single family residential mortgage4,409 2,238 6,647 2,631 2,217 4,848 
Other consumer— — — — — — 
Total$4,409 $6,068 $10,477 $2,631 $6,366 $8,997 

We had commitments to lend to customers with outstanding loans that were classified as TDRs of $63 thousand at both March 31, 2021 and December 31, 2020. Accruing TDRs were $6.3 million and nonaccrual TDRs were $4.1 million at March 31, 2021, compared to accruing TDRs of $4.7 million and nonaccrual TDRs of $4.3 million at December 31, 2020. The
increase in TDRs during the three months ended March 31, 2021 was primarily due to one commercial and industrial relationship.
The following table summarizes the pre-modification and post-modification balances of the new TDRs for the periods indicated:
Three Months Ended
($ in thousands)Number of LoansPre-Modification Outstanding Recorded InvestmentPost-Modification Outstanding Recorded Investment
March 31, 2021
Consumer:
Single family residential mortgage1 $1,800 $1,800 
Total1 1,800 1,800 
March 31, 2020
Commercial:
Commercial and industrial1 $5,000 $5,000 
Total1 $5,000 $5,000 

We consider a TDR to be in payment default once it becomes 30 days or more past due following a modification. During the three months ended March 31, 2021 and 2020, there were no loans that were modified as a TDR during the past 12 months that had subsequent payment defaults.
The following table summarizes TDRs by modification type for the periods indicated:
Three Months Ended
Modification Type
Extension of MaturityTotal
($ in thousands)CountAmountCountAmount
March 31, 2021
Consumer:
Single family residential mortgage
1 1,800 1 1,800 
Total1 1,800 1 $1,800 
March 31, 2020
Commercial:
Commercial and industrial
1 5,000 1 $5,000 
Total1 5,000 1 $5,000 
Purchases, Sales, and Transfers
From time to time, we purchase and sell loans in the secondary market. Certain loans are transferred from held-for-investment to held-for-sale at the lower of cost or fair value and any reductions in value on transfer are reflected as write-downs to allowance for credit losses. During the three months ended March 31, 2021 we purchased loans aggregating $132.9 million. There were no purchases of loans during the three months ended March 31, 2020.
There were no loans transferred from (to) loans held-for-sale and there were no sales of loans for the three months ended March 31, 2021 and 2020.
Non-Traditional Mortgage Loans (“NTM”)
Our NTM portfolio is comprised of three interest-only products: Green Loans, Interest Only loans and a small number of loans with the potential for negative amortization. The initial credit guidelines for the NTM portfolio were established based on the borrower's Fair Isaac Corporation (“FICO”) score, LTV ratio, property type, occupancy type, loan amount, and geography. Additionally, from an ongoing credit risk management perspective, we have determined that the most significant performance
indicators for NTMs are LTV ratios and FICO scores. We review the NTM loan portfolio periodically by refreshing FICO scores on the Green Loans and HELOCs and ordering third party automated valuation models ("AVMs") to confirm collateral values. We no longer originate NTM loans.
The following table presents the composition of the NTM portfolio, which are included in the single family residential mortgage portfolio, as of the dates indicated:
March 31, 2021December 31, 2020
($ in thousands)CountAmountPercentCountAmountPercent
Consumer:
Single family residential mortgage:
Green Loans (HELOC) - first liens46 $30,293 7.4 %48 $31,587 7.2 %
Interest Only - first liens263 378,088 91.7 %283 401,640 91.9 %
Negative amortization6 2,149 0.5 %8 2,288 0.5 %
Total NTM - first liens315 410,530 99.6 %339 435,515 99.6 %
Other consumer:
Green Loans (HELOC) - second liens5 1,606 0.4 %5 1,598 0.4 %
Total NTM - second liens5 1,606 0.4 %5 1,598 0.4 %
Total NTM loans320 $412,136 100.0 %344 $437,113 100.0 %
Total loans receivable$5,764,401 $5,898,405 
% of total NTM loans to total loans receivable7.1 %7.4 %