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Allowance for Losses on Loans

6 Months Ended

Mar. 31, 2022

Receivables [Abstract]

Allowance for Losses on Loans

Allowance for Losses on Loans

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 March 31, 2022			Beginning Allowance						Charge-offs						Recoveries						Provision & Transfers (1)						Ending Allowance
			(In thousands)
Commercial loans
Multi-family			$	15,993					$	—					$	—					$	(1,530)					$	14,463
Commercial real estate			25,722						—						753						(1,793)						24,682
Commercial & industrial			47,231						(873)						2						7,543						53,903
Construction			24,766						—						179						(2,238)						22,707
Land - acquisition & development			14,125						—						20						(460)						13,685
Total commercial loans			127,837						(873)						954						1,522						129,440
Consumer loans
Single-family residential			30,106						—						147						(1,261)						28,992
Construction - custom			3,719						—						—						(590)						3,129
Land - consumer lot loans			4,984						—						40						81						5,105
HELOC			2,365						—						100						10						2,475
Consumer			2,400						(39)						144						(262)						2,243
Total consumer loans			43,574						(39)						431						(2,022)						41,944
Total loans			$	171,411					$	(912)					$	1,385					$	(500)					$	171,384

(1) Provision & transfer amounts within the table do not include the provision for unfunded commitments of $0.

Three Months Ended March 31, 2021			Beginning Allowance						Charge-offs						Recoveries						Provision & Transfers (1)						Ending Allowance
			(In thousands)
Commercial loans
Multi-family			$	14,363					$	—					$	—					$	3,413					$	17,776
Commercial real estate			23,496						—						1,457						1,869						26,822
Commercial & industrial			44,317						(18)						11						3,484						47,794
Construction			26,365						—						—						(3,816)						22,549
Land - acquisition & development			10,666						—						410						(573)						10,503
Total commercial loans			119,207						(18)						1,878						4,377						125,444
Consumer loans
Single-family residential			38,613						(106)						497						(3,896)						35,108
Construction - custom			3,594						—						—						(346)						3,248
Land - consumer lot loans			2,958						—						7						327						3,292
HELOC			2,362						—						—						(136)						2,226
Consumer			3,455						(84)						290						(326)						3,335
Total consumer loans			50,982						(190)						794						(4,377)						47,209
Total loans			$	170,189					$	(208)					$	2,672					$	—					$	172,653

(1) Provision & transfer amounts within the table do not include the provision for unfunded commitments of $0.

Six Months Ended March 31, 2022			Beginning Allowance						Charge-offs						Recoveries						Provision & Transfers (1)						Ending Allowance
			(In thousands)
Commercial loans
Multi-family			$	16,949					$	—					$	—					$	(2,486)					$	14,463
Commercial real estate			23,437						(529)						797						977						24,682
Commercial & industrial			45,957						(916)						64						8,798						53,903
Construction			25,585						—						2,179						(5,057)						22,707
Land - acquisition & development			13,447						(2)						40						200						13,685
Total commercial loans			125,375						(1,447)						3,080						2,432						129,440
Consumer loans
Single-family residential			30,978						—						552						(2,538)						28,992
Construction - custom			4,907						—						—						(1,778)						3,129
Land - consumer lot loans			4,939						(27)						45						148						5,105
HELOC			2,390						—						101						(16)						2,475
Consumer			2,711						(115)						395						(748)						2,243
Total consumer loans			45,925						(142)						1,093						(4,932)						41,944
Total loans			$	171,300					$	(1,589)					$	4,173					$	(2,500)					$	171,384

(1) Provision & transfer amounts within the table do not include the provision for unfunded commitments of $2.5 million.

Six Months Ended March 31, 2021			Beginning Allowance						Charge-offs						Recoveries						Provision & Transfers (1)						Ending Allowance
			(In thousands)
Commercial loans
Multi-family			$	13,853					$	—					$	—					$	3,923					$	17,776
Commercial real estate			22,516						—						2,246						2,060						26,822
Commercial & industrial			38,665						(20)						61						9,088						47,794
Construction			24,156						—						—						(1,607)						22,549
Land - acquisition & development			10,733						—						445						(675)						10,503
Total commercial loans			109,923						(20)						2,752						12,789						125,444
Consumer loans
Single-family residential			45,186						(106)						1,276						(11,248)						35,108
Construction - custom			3,555						—						—						(307)						3,248
Land - consumer lot loans			2,729						—						14						549						3,292
HELOC			2,571						—						—						(345)						2,226
Consumer			2,991						(234)						516						62						3,335
Total consumer loans			57,032						(340)						1,806						(11,289)						47,209
Total loans			$	166,955					$	(360)					$	4,558					$	1,500					$	172,653

(1) Provision & transfer amounts within the table do not include the provision for unfunded commitments of $1.5 million.

The Company recorded a $500,000 release of allowance for credit losses for the three months ended March 31, 2022, compared with no provision or release for the three months ended March 31, 2021. The release in the three months ended March 31, 2022 was primarily due to improvements in the credit quality of certain loan portfolios related to strong real estate markets and collateral conditions, mostly offset by growth in loans receivable. These same factors mostly offset and led to no provision or release being recorded for the three months ended March 31, 2021. The Company recorded no provision or release of allowance for credit losses for the six months ended March 31, 2022, compared with a $3,000,000 provision for credit losses for the six

months ended March 31, 2021. Recoveries, net of charge-offs, totaled $473,000 for the three months ended March 31, 2022, compared to net recoveries of $2,464,000 during the three months ended March 31, 2021. Recoveries, net of charge-offs, totaled $2,584,000 for the six months ended March 31, 2022, compared to net recoveries of $4,198,000 during the six months ended March 31, 2021. No allowance was recorded as of March 31, 2022 or as of September 30, 2021 for the $109,746,000 and $305,162,000 of 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 $47,243,000, or 0.23% of total assets, at March 31, 2022, compared to $43,625,000, or 0.22% of total assets, at September 30, 2021. Non-accrual loans were $33,639,000 at March 31, 2022, compared to $31,749,000 at September 30, 2021. Delinquencies, as a percent of total loans, were 0.30% at March 31, 2022, compared to 0.19% at September 30, 2021.

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.

March 31, 2022			Internally Assigned Grade
			Pass						Special mention						Substandard						Doubtful						Loss						Total
			(In thousands, except ratio data)
Loan type
Commercial loans
Multi-family			$	2,373,674					$	1,745					$	2,238					$	—					$	—					$	2,377,657
Commercial real estate			2,643,011						68,888						96,729						—						—						2,808,628
Commercial & industrial			2,347,313						47,138						102,557						—						—						2,497,008
Construction			1,209,575						2,185						343						—						—						1,212,103
Land - acquisition & development			208,721						—						2,340						—						—						211,061
Total commercial loans			8,782,294						119,956						204,207						—						—						9,106,457
Consumer loans
Single-family residential			5,396,628						—						22,017						—						—						5,418,645
Construction - custom			343,648						—						465						—						—						344,113
Land - consumer lot loans			153,240						—						309						—						—						153,549
HELOC			175,600						—						329						—						—						175,929
Consumer			67,601						—						16						—						—						67,617
Total consumer loans			6,136,717						—						23,136						—						—						6,159,853
Total			$	14,919,011					$	119,956					$	227,343					$	—					$	—					$	15,266,310
Total grade as a % of total loans			97.72		%				0.79		%				1.49		%				—		%				—		%

September 30, 2021			Internally Assigned Grade
			Pass						Special mention						Substandard						Doubtful						Loss						Total
			(In thousands, except ratio data)
Loan type
Commercial loans
Multi-family			$	2,252,395					$	4,874					$	16,420					$	—					$	—					$	2,273,689
Commercial real estate			2,174,386						57,625						197,321						—						—						2,429,332
Commercial & industrial			2,108,152						48,124						147,651						—						—						2,303,927
Construction			1,115,791						931						505						—						—						1,117,227
Land - acquisition & development			190,076						—						2,340						—						—						192,416
Total commercial loans			7,840,800						111,554						364,237						—						—						8,316,591
Consumer loans
Single-family residential			4,915,106						—						21,958						—						—						4,937,064
Construction - custom			347,752						—						—						—						—						347,752
Land - consumer lot loans			148,010						—						524						—						—						148,534
HELOC			166,652						—						288						—						—						166,940
Consumer			87,962						—						27						—						—						87,989
Total consumer loans			5,665,482						—						22,797						—						—						5,688,279
Total loans			$	13,506,282					$	111,554					$	387,034					$	—					$	—					$	14,004,870
Total grade as a % of total loans			96.44		%				0.80		%				2.76		%				—		%				—		%

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

March 31, 2022			Performing Loans												Non-Performing Loans
			Amount						% of Total Loans						Amount						% of Total Loans
			(In thousands, except ratio data)
Commercial loans
Multi-family			$	2,377,657					100.0		%				$	—					—		%
Commercial real estate			2,802,216						99.8						6,412						0.2
Commercial & industrial			2,492,219						99.8						4,789						0.2
Construction			1,211,760						100.0						343						0.0
Land - acquisition & development			208,721						98.9						2,340						1.1
Total commercial loans			9,092,573						99.8						13,884						0.2
Consumer loans
Single-family residential			5,400,033						99.7						18,612						0.3
Construction - custom			343,648						99.9						465						0.1
Land - consumer lot loans			153,239						99.8						310						0.2
HELOC			175,600						99.8						329						0.2
Consumer			67,578						99.9						39						0.1
Total consumer loans			6,140,098						99.7						19,755						0.3
Total loans			$	15,232,671					99.8		%				$	33,639					0.2		%

September 30, 2021			Performing Loans												Non-Performing Loans
			Amount						% of Total Loans						Amount						% of Total Loans
			(In thousands, except ratio data)
Commercial loans
Multi-family			$	2,273,214					100.0		%				$	475					—		%
Commercial real estate			2,421,294						99.7						8,038						0.3
Commercial & industrial			2,303,562						100.0						365						—
Construction			1,116,722						100.0						505						—
Land - acquisition & development			190,076						98.8						2,340						1.2
Total commercial loans			8,304,868						99.9						11,723						0.1
Consumer loans
Single-family residential			4,917,744						99.6						19,320						0.4
Construction - custom			347,752						100.0						—						—
Land - consumer lot loans			148,175						99.8						359						0.2
HELOC			166,653						99.8						287						0.2
Consumer			87,929						99.9						60						0.1
Total consumer loans			5,668,253						99.6						20,026						0.4
Total loans			$	13,973,121					99.8		%				$	31,749					0.2		%

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- Definition

The entire disclosure for allowance for credit losses.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-URI http://asc.fasb.org/topic&trid=2196771

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No definition available.

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