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Allowance for Credit Losses on Loans | 12 Months Ended
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Dec. 31, 2021
Receivables [Abstract] |
Allowance for Credit Losses on Loans | Allowance for Credit Losses on Loans Effective January 1, 2020, the Bank adopted ASU 2016-13. CECL Adoption replaced the allowance for loan losses with the ACL on loans and replaced the related provision for loan losses with the provision for credit losses on loans. The baseline loss rates used to calculate the ACL on loans at December 31, 2021 utilized the Bank's average quarterly historical loss information from December 31, 2012 through the balance sheet date. There were no changes to this assumption during the year ended December 31, 2021. The Bank believes the historic loss rates are viable inputs to the current CECL model as the Bank's lending practice and business has remained relatively stable throughout the periods. While the Bank's assets have grown, the credit culture has stayed relatively consistent. Prepayments included in the CECL model at December 31, 2021 were based on the 48-month rolling historical averages for each segment, which management believes is an accurate representation of future prepayment activity. There were no changes to this assumption during the year ended December 31, 2021. The reasonable and supportable period and subsequent reversion period used in the CECL model was five quarters and two quarters at December 31, 2021. There were no changes to these assumptions during the year ended December 31, 2021. Management believes forecasts beyond this seven quarter time period tend to diverge in economic assumptions and may be less comparable to actual future events. As the length of the reasonable and supportable period increases, the degree of judgment involved in estimating the allowance increases. During the year ended December 31, 2021, the ACL on loans decreased $27.8 million, or 39.6%, due primarily to a reversal of provision for credit losses on loans of $27.3 million. The reversal of provision for credit losses was primarily driven by improvements in the economic forecast used in the CECL model at December 31, 2021 as compared to the forecast used in the CECL model at December 31, 2020. The ACL on loans at December 31, 2021 and December 31, 2020 did not include a reserve for SBA PPP loans as these loans are fully guaranteed by the SBA. A summary of the changes in the ACL on loans during the years ended December 31, 2021, December 31, 2020 and December 31, 2019 is as follows:
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
| (In thousands)
Balance at the beginning of the year | $ | 70,185 |  |  | $ | 36,171 |  |  | $ | 35,042 |
Impact of CECL Adoption | — |  |  | 1,822 |  |  | — |
Balance at the beginning of the year, as adjusted | 70,185 |  |  | 37,993 |  |  | 35,042 |
Charge-offs | (1,946) |  |  | (5,622) |  |  | (4,989) |
Recoveries of loans previously charged-off | 1,420 |  |  | 2,381 |  |  | 1,807 |
(Reversal of) provision for credit losses on loans | (27,298) |  |  | 35,433 |  |  | 4,311 |
Balance at the end of the year | $ | 42,361 |  |  | $ | 70,185 |  |  | $ | 36,171 |
The following tables detail the activity in the ACL on loans by segment and class for the periods indicated:
| Year Ended December 31, 2021
| Beginning Balance |  |  |  |  |  | Charge-offs |  | Recoveries |  | Reversal of Provision for Credit Losses |  | Ending Balance
| (In thousands)
Commercial business: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 30,010 |  |  |  |  |  |  | $ | (917) |  |  | $ | 791 |  |  | $ | (12,107) |  |  | $ | 17,777 |
Owner-occupied CRE | 9,486 |  |  |  |  |  |  | (359) |  |  | 25 |  |  | (2,741) |  |  | 6,411 |
Non-owner occupied CRE | 10,112 |  |  |  |  |  |  | — |  |  | — |  |  | (1,251) |  |  | 8,861 |
Total commercial business | 49,608 |  |  |  |  |  |  | (1,276) |  |  | 816 |  |  | (16,099) |  |  | 33,049 |
Residential real estate | 1,591 |  |  |  |  |  |  | — |  |  | — |  |  | (182) |  |  | 1,409 |
Real estate construction and land development:
Residential | 1,951 |  |  |  |  |  |  | — |  |  | 32 |  |  | (679) |  |  | 1,304 |
Commercial and multifamily | 11,141 |  |  |  |  |  |  | (1) |  |  | — |  |  | (7,168) |  |  | 3,972 |
Total real estate construction and land development | 13,092 |  |  |  |  |  |  | (1) |  |  | 32 |  |  | (7,847) |  |  | 5,276 |
Consumer | 5,894 |  |  |  |  |  |  | (669) |  |  | 572 |  |  | (3,170) |  |  | 2,627 |
Total | $ | 70,185 |  |  |  |  |  |  | $ | (1,946) |  |  | $ | 1,420 |  |  | $ | (27,298) |  |  | $ | 42,361 |
| Year Ended December 31, 2020
| Beginning Balance |  | Impact of CECL Adoption |  | Beginning Balance, as Adjusted |  | Charge-offs |  | Recoveries |  | Provision (Reversal of Provision) for Credit Losses |  | Ending Balance
| (In thousands)
Commercial business: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 11,739 |  |  | $ | (1,348) |  |  | $ | 10,391 |  |  | $ | (3,616) |  |  | $ | 1,513 |  |  | $ | 21,722 |  |  | $ | 30,010 |
Owner-occupied CRE | 4,512 |  |  | 452 |  |  | 4,964 |  |  | (135) |  |  | 17 |  |  | 4,640 |  |  | 9,486 |
Non-owner occupied CRE | 7,682 |  |  | (2,039) |  |  | 5,643 |  |  | — |  |  | — |  |  | 4,469 |  |  | 10,112 |
Total commercial business | 23,933 |  |  | (2,935) |  |  | 20,998 |  |  | (3,751) |  |  | 1,530 |  |  | 30,831 |  |  | 49,608 |
Residential real estate | 1,458 |  |  | 1,471 |  |  | 2,929 |  |  | — |  |  | 3 |  |  | (1,341) |  |  | 1,591 |
Real estate construction and land development:
Residential | 1,455 |  |  | (571) |  |  | 884 |  |  | — |  |  | 278 |  |  | 789 |  |  | 1,951 |
Commercial and multifamily | 1,605 |  |  | 7,240 |  |  | 8,845 |  |  | (417) |  |  | — |  |  | 2,713 |  |  | 11,141 |
Total real estate construction and land development | 3,060 |  |  | 6,669 |  |  | 9,729 |  |  | (417) |  |  | 278 |  |  | 3,502 |  |  | 13,092 |
Consumer | 6,821 |  |  | (2,484) |  |  | 4,337 |  |  | (1,454) |  |  | 570 |  |  | 2,441 |  |  | 5,894 |
Unallocated | 899 |  |  | (899) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | 36,171 |  |  | $ | 1,822 |  |  | $ | 37,993 |  |  | $ | (5,622) |  |  | $ | 2,381 |  |  | $ | 35,433 |  |  | $ | 70,185 |
The following table details activity in the allowance for loan losses by segment and class for the period indicated:
| Year Ended December 31, 2019
| Beginning Balance |  | Charge-offs |  | Recoveries |  | Provision for Loan Losses |  | Ending Balance
| (In thousands)
Commercial business: |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 11,343 |  |  | $ | (2,692) |  |  | $ | 166 |  |  | $ | 2,922 |  |  | $ | 11,739 |
Owner-occupied CRE | 4,898 |  |  | — |  |  | 50 |  |  | (436) |  |  | 4,512 |
Non-owner occupied CRE | 7,470 |  |  | — |  |  | 441 |  |  | (229) |  |  | 7,682 |
Total commercial business | 23,711 |  |  | (2,692) |  |  | 657 |  |  | 2,257 |  |  | 23,933 |
Residential real estate | 1,203 |  |  | (60) |  |  | — |  |  | 315 |  |  | 1,458 |
| Year Ended December 31, 2019
| Beginning Balance |  | Charge-offs |  | Recoveries |  | Provision for Loan Losses |  | Ending Balance
Real estate construction and land development:
Residential | 1,240 |  |  | (133) |  |  | 637 |  |  | (289) |  |  | 1,455 |
Commercial and multifamily | 954 |  |  | — |  |  | — |  |  | 651 |  |  | 1,605 |
Total real estate construction and land development | 2,194 |  |  | (133) |  |  | 637 |  |  | 362 |  |  | 3,060 |
Consumer | 6,581 |  |  | (2,104) |  |  | 513 |  |  | 1,831 |  |  | 6,821 |
Unallocated | 1,353 |  |  | — |  |  | — |  |  | (454) |  |  | 899 |
Total | $ | 35,042 |  |  | $ | (4,989) |  |  | $ | 1,807 |  |  | $ | 4,311 |  |  | $ | 36,171 |

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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 + Details
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- References No definition available. + Details
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