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Allowance for Losses on Loans

9 Months Ended

Jun. 30, 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 June 30, 2022			Beginning Allowance						Charge-offs						Recoveries						Provision & Transfers (1)						Ending Allowance
			(In thousands)
Commercial loans
Multi-family			$	14,463					$	—					$	—					$	(1,889)					$	12,574
Commercial real estate			24,682						—						23						595						25,300
Commercial & industrial			53,903						(27)						8						1,040						54,924
Construction			22,707						—						—						3,127						25,834
Land - acquisition & development			13,685						(1)						11						(1,468)						12,227
Total commercial loans			129,440						(28)						42						1,405						130,859
Consumer loans
Single-family residential			28,992						—						252						(3,027)						26,217
Construction - custom			3,129						—						—						225						3,354
Land - consumer lot loans			5,105						—						2						113						5,220
HELOC			2,475						—						249						(92)						2,632
Consumer			2,243						(253)						331						376						2,697
Total consumer loans			41,944						(253)						834						(2,405)						40,120
Total loans			$	171,384					$	(281)					$	876					$	(1,000)					$	170,979

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

Three Months Ended June 30, 2021			Beginning Allowance						Charge-offs						Recoveries						Provision & Transfers (1)						Ending Allowance
			(In thousands)
Commercial loans
Multi-family			$	17,776					$	—					$	—					$	(108)					$	17,668
Commercial real estate			26,822						—						485						(3,422)						23,885
Commercial & industrial			47,794						(11)						13						(2,258)						45,538
Construction			22,549						—						—						2,274						24,823
Land - acquisition & development			10,503						—						9						1,093						11,605
Total commercial loans			125,444						(11)						507						(2,421)						123,519
Consumer loans
Single-family residential			35,108						—						324						(1,242)						34,190
Construction - custom			3,248						—						—						274						3,522
Land - consumer lot loans			3,292						—						7						412						3,711
HELOC			2,226						—						51						(64)						2,213
Consumer			3,335						(36)						289						41						3,629
Total consumer loans			47,209						(36)						671						(579)						47,265
Total loans			$	172,653					$	(47)					$	1,178					$	(3,000)					$	170,784

(1) Provision & transfer amounts within the table do not include the provision for unfunded commitments of $1.0 million.

Nine Months Ended June 30, 2022			Beginning Allowance						Charge-offs						Recoveries						Provision & Transfers (1)						Ending Allowance
			(In thousands)
Commercial loans
Multi-family			$	16,949					$	—					$	—					$	(4,375)					$	12,574
Commercial real estate			23,437						(529)						820						1,572						25,300
Commercial & industrial			45,957						(943)						72						9,838						54,924
Construction			25,585						—						2,179						(1,930)						25,834
Land - acquisition & development			13,447						(3)						51						(1,268)						12,227
Total commercial loans			125,375						(1,475)						3,122						3,837						130,859
Consumer loans
Single-family residential			30,978						—						804						(5,565)						26,217
Construction - custom			4,907						—						—						(1,553)						3,354
Land - consumer lot loans			4,939						(27)						47						261						5,220
HELOC			2,390						—						350						(108)						2,632
Consumer			2,711						(368)						726						(372)						2,697
Total consumer loans			45,925						(395)						1,927						(7,337)						40,120
Total loans			$	171,300					$	(1,870)					$	5,049					$	(3,500)					$	170,979

(1) Provision & transfer amounts within the table do not include the provision for unfunded commitments of $5.0 million.

Nine Months Ended June 30, 2021			Beginning Allowance						Charge-offs						Recoveries						Provision & Transfers (1)						Ending Allowance
			(In thousands)
Commercial loans
Multi-family			$	13,853					$	—					$	—					$	3,815					$	17,668
Commercial real estate			22,516						—						2,731						(1,362)						23,885
Commercial & industrial			38,665						(31)						74						6,830						45,538
Construction			24,156						—						—						667						24,823
Land - acquisition & development			10,733						—						454						418						11,605
Total commercial loans			109,923						(31)						3,259						10,368						123,519
Consumer loans
Single-family residential			45,186						(106)						1,600						(12,490)						34,190
Construction - custom			3,555						—						—						(33)						3,522
Land - consumer lot loans			2,729						—						21						961						3,711
HELOC			2,571						—						51						(409)						2,213
Consumer			2,991						(270)						805						103						3,629
Total consumer loans			57,032						(376)						2,477						(11,868)						47,265
Total loans			$	166,955					$	(407)					$	5,736					$	(1,500)					$	170,784

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

The Company recorded a $1,500,000 provision for credit losses for the three months ended June 30, 2022, compared to a $2,000,000 release of allowance for credit losses for the three months ended June 30, 2021. The provision in the three months ended June 30, 2022 was primarily due to growth in loans receivable and unfunded commitments partially offset by improvements in the credit quality of certain loan portfolios related to strong real estate markets and collateral conditions. The release for the three months ended June 30, 2021 was primarily due to improvements in the credit quality of certain loan portfolios related to strong real estate markets and collateral conditions partially offset by growth in loans receivable. The

Company recorded a $1,500,000 provision for credit losses for the nine months ended June 30, 2022, compared with a $1,000,000 provision for credit losses for the nine months ended June 30, 2021. Recoveries, net of charge-offs, totaled $595,000 for the three months ended June 30, 2022, compared to net recoveries of $1,131,000 during the three months ended June 30, 2021. Recoveries, net of charge-offs, totaled $3,179,000 for the nine months ended June 30, 2022, compared to net recoveries of $5,329,000 during the nine months ended June 30, 2021. No allowance was recorded as of June 30, 2022 or as of September 30, 2021 for the $54,185,000 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 $50,430,000, or 0.25% of total assets, at June 30, 2022, compared to $43,625,000, or 0.22% of total assets, at September 30, 2021. Non-accrual loans were $36,679,000 at June 30, 2022, compared to $31,749,000 at September 30, 2021. Delinquencies, as a percent of total loans, were 0.26% at June 30, 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.

June 30, 2022			Internally Assigned Grade
			Pass						Special mention						Substandard						Doubtful						Loss						Total
			(In thousands, except ratio data)
Loan type
Commercial loans
Multi-family			$	2,469,022					$	—					$	9,910					$	—					$	—					$	2,478,932
Commercial real estate			2,785,250						—						91,745						—						—						2,876,995
Commercial & industrial			2,197,826						32,789						113,431						—						—						2,344,046
Construction			1,404,955						—						2,256						—						—						1,407,211
Land - acquisition & development			222,974						—						—						—						—						222,974
Total commercial loans			9,080,027						32,789						217,342						—						—						9,330,158
Consumer loans
Single-family residential			5,595,898						—						23,550						—						—						5,619,448
Construction - custom			367,939						—						900						—						—						368,839
Land - consumer lot loans			156,864						—						212						—						—						157,076
HELOC			187,378						—						91						—						—						187,469
Consumer			73,142						—						12						—						—						73,154
Total consumer loans			6,381,221						—						24,765						—						—						6,405,986
Total			$	15,461,248					$	32,789					$	242,107					$	—					$	—					$	15,736,144
Total grade as a % of total loans			98.25		%				0.21		%				1.54		%				—		%				—		%

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.

June 30, 2022			Performing Loans												Non-Performing Loans
			Amount						% of Total Loans						Amount						% of Total Loans
			(In thousands, except ratio data)
Commercial loans
Multi-family			$	2,472,988					99.8		%				$	5,944					0.2		%
Commercial real estate			2,871,971						99.8						5,024						0.2
Commercial & industrial			2,339,758						99.8						4,288						0.2
Construction			1,407,211						100.0						—						0.0
Land - acquisition & development			222,974						100.0						—						—
Total commercial loans			9,314,902						99.8						15,256						0.2
Consumer loans
Single-family residential			5,599,264						99.6						20,184						0.4
Construction - custom			367,939						99.8						900						0.2
Land - consumer lot loans			156,863						99.9						213						0.1
HELOC			187,378						100.0						91						—
Consumer			73,119						100.0						35						0.0
Total consumer loans			6,384,563						99.7						21,423						0.3
Total loans			$	15,699,465					99.8		%				$	36,679					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 https://asc.fasb.org/topic&trid=2196771

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- References

No definition available.

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