Allowance for Losses on Loans

3 Months Ended

Dec. 31, 2020

For a detailed discussion of loans and credit quality, including accounting policies and the CECL methodology used to estimate the allowance for credit losses, see Note A "Summary of Significant Accounting Policies."

The following tables summarize the activity in the allowance for loan losses by loan portfolio segment and class.


Three Months Ended December 31, 2020	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers		Ending Allowance
	(In thousands)
Commercial loans
Multi-family	$	13,853	$	—	$	—	$	510	$	14,363
Commercial real estate	22,516		—		789		191		23,496
Commercial & industrial	38,665		(2)		50		5,604		44,317
Construction	24,156		—		—		2,209		26,365
Land - acquisition & development	10,733		—		35		(102)		10,666
Total commercial loans	109,923		(2)		874		8,412		119,207
Consumer loans
Single-family residential	45,186		—		779		(7,352)		38,613
Construction - custom	3,555		—		—		39		3,594
Land - consumer lot loans	2,729		—		7		222		2,958
HELOC	2,571		—		—		(209)		2,362
Consumer	2,991		(150)		226		388		3,455
Total consumer loans	57,032		(150)		1,012		(6,912)		50,982
Total loans	$	166,955	$	(152)	$	1,886	$	1,500	$	170,189


Three Months Ended December 31, 2019	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers		Ending Allowance
	(In thousands)
Commercial loans
Multi-family	$	10,404	$	—	$	498	$	(396)	$	10,506
Commercial real estate	13,024		(98)		368		(227)		13,067
Commercial & industrial	32,235		(50)		144		1,347		33,676
Construction	22,768		—		54		(903)		21,919
Land - acquisition & development	10,904		(11)		1,460		(1,940)		10,413
Total commercial loans	89,335		(159)		2,524		(2,119)		89,581
Consumer loans
Single-family residential	47,771		(15)		261		(1,661)		46,356
Construction - custom	2,880		—		—		50		2,930
Land - consumer lot loans	2,635		(70)		10		(8)		2,567
HELOC	2,048		—		93		(107)		2,034
Consumer	4,615		(374)		309		(505)		4,045
Total consumer loans	59,949		(459)		673		(2,231)		57,932
Total loans	$	149,284	$	(618)	$	3,197	$	(4,350)	$	147,513

The Company recorded a $3,000,000 provision for credit losses for the three months ended December 31, 2020, compared with a release of allowance for credit losses of $3,750,000 for the three months ended December 31, 2019. The credit loss provision for the three months ended December 31, 2020 is primarily due to reserving for new loan originations and changes in composition of the loan portfolio. Recoveries, net of charge-offs, totaled $1,734,000 for the three months ended December 31, 2020, compared to net recoveries of $2,579,000 during the three months ended December 31, 2019. No allowance was recorded as of December 31, 2020 or as of September 30, 2020 for the $646,887,000 and $762,004,000 of gross PPP loans in the portfolio on each date, respectively, which are included in the commercial & industrial loan category, due to the government guarantee.

Non-performing assets were $66,542,000, or 0.35% of total assets, at December 31, 2020, compared to $37,695,000, or 0.20% of total assets, at September 30, 2020. Non-accrual loans were $58,406,000 at December 31, 2020, compared to $29,056,000 at September 30, 2020. Delinquencies, as a percent of total loans, were 0.52% at December 31, 2020, compared to 0.24% at September 30, 2020.

The Company has an asset quality review function that analyzes its loan portfolio and reports the results of the review to its Board of Directors on a quarterly basis. The single-family residential, HELOC and consumer portfolios are evaluated based on their performance as a pool of loans, since no single loan is individually significant or judged by its risk rating, size or potential risk of loss. The construction, land, multi-family, commercial real estate and commercial and industrial loans are risk rated on a loan by loan basis to determine the relative risk inherent in specific borrowers or loans. Based on that risk rating, the loans are assigned a grade and classified as described in Note D "Loans Receivable."

The following tables provide the amortized cost of loans receivable based on risk rating categories as previously defined.


December 31, 2020	Internally Assigned Grade
	Pass			Special mention			Substandard			Doubtful			Loss			Total
	(In thousands, except ratio data)
Loan type
Commercial loans
Multi-family	$	1,528,970		$	18,844		$	61,986		$	—		$	—		$	1,609,800
Commercial real estate	1,725,500			37,935			179,419			—			—			1,942,854
Commercial & industrial	1,972,217			26,428			244,820			—			—			2,243,465
Construction	1,282,888			32,992			77,227			—			—			1,393,107
Land - acquisition & development	135,926			15,573			1,122			—			—			152,621
Total commercial loans	6,645,501			131,772			564,574			—			—			7,341,847
Consumer loans
Single-family residential	5,018,759			191			29,485			—			—			5,048,435
Construction - custom	299,351			—			—			—			—			299,351
Land - consumer lot loans	109,234			—			611			—			—			109,845
HELOC	139,215			—			1,057			—			—			140,272
Consumer	111,442			—			7			—			—			111,449
Total consumer loans	5,678,001			191			31,160			—			—			5,709,352
Total	$	12,323,502		$	131,963		$	595,734		$	—		$	—		$	13,051,199

Total grade as a % of total loans	94.42		%	1.01		%	4.56		%	—		%	—		%


September 30, 2020	Internally Assigned Grade
	Pass			Special mention			Substandard			Doubtful			Loss			Total Gross Loans
	(In thousands, except ratio data)
Loan type
Commercial loans
Multi-family	$	1,506,692		$	13,721		$	17,827		$	—		$	—		$	1,538,240
Commercial real estate	1,681,230			92,184			111,274			—			—			1,884,688
Commercial & industrial	1,898,709			64,695			152,109			—			—			2,115,513
Construction	1,187,786			61,178			103,450			—			—			1,352,414
Land - acquisition & development	137,998			15,573			—			—			—			153,571
Total commercial loans	6,412,415			247,351			384,660			—			—			7,044,426
Consumer loans
Single-family residential	5,270,666			192			23,104			—			—			5,293,962
Construction - custom	295,953			—			—			—			—			295,953
Land - consumer lot loans	101,151			—			243			—			—			101,394
HELOC	139,646			—			576			—			—			140,222
Consumer	83,304			—			11			—			—			83,315
Total consumer loans	5,890,720			192			23,934			—			—			5,914,846
Total loans	$	12,303,135		$	247,543		$	408,594		$	—		$	—		$	12,959,272

Total grade as a % of total gross loans	94.94		%	1.91		%	3.15		%	—		%	—		%

The following tables provide information on amortized cost of loans receivable based on borrower payment activity.


December 31, 2020	Performing Loans				Non-Performing Loans
	Amount		% of Total Loans		Amount		% of Total Loans
	(In thousands, except ratio data)
Commercial loans
Multi-family	$	1,609,800	100.0	%	$	—	—	%
Commercial real estate	1,911,457		98.4		31,397		1.6
Commercial & industrial	2,242,871		100.0		594		—
Construction	1,391,870		99.9		1,237		0.1
Land - acquisition & development	152,621		100.0		—		—
Total commercial loans	7,308,619		99.5		33,228		0.5
Consumer loans
Single-family residential	5,024,086		99.5		24,349		0.5
Construction - custom	299,351		100.0		—		—
Land - consumer lot loans	109,402		99.6		443		0.4
HELOC	139,938		99.8		334		0.2
Consumer	111,397		100.0		52		0.0
Total consumer loans	5,684,174		99.6		25,178		0.4
Total loans	$	12,992,793	99.6	%	$	58,406	0.4	%


September 30, 2020	Performing Loans				Non-Performing Loans
	Amount		% of Total Loans		Amount		% of Total Loans
	(In thousands, except ratio data)
Commercial loans
Multi-family	$	1,538,240	100.0	%	$	—	—	%
Commercial real estate	1,880,917		99.8		3,771		0.2
Commercial & industrial	2,115,184		100.0		329		—
Construction	1,350,745		99.9		1,669		0.1
Land - acquisition & development	153,571		100.0		—		—
Total commercial loans	7,038,657		99.9		5,769		0.1
Consumer loans
Single-family residential	5,271,531		99.6		22,431		0.4
Construction - custom	295,953		100.0		—		—
Land - consumer lot loans	101,151		99.8		243		0.2
HELOC	139,669		99.6		553		0.4
Consumer	83,255		99.9		60		0.1
Total consumer loans	5,891,559		99.6		23,287		0.4
Total loans	$	12,930,216	99.8	%	$	29,056	0.2	%