XML 25 R14.htm IDEA: XBRL DOCUMENT v3.22.0.1
Loans
 12 Months Ended
Dec. 31, 2021
Receivables [Abstract]  
Loans Loans 
On January 1, 2021, the Company adopted the CECL standard for measuring credit losses, which replaced the incurred loss methodology. As a result of adopting CECL, the Company combined its originated loan portfolio and the acquired loan portfolio into the respective portfolio segments. Other than to combine the originated and non-PCD acquired loan portfolios, the Company's portfolio segments and loan classes remain unchanged following the adoption of the CECL standard. Prior period disclosures have been revised to conform to current period presentation (by combining originated and acquired portfolio segments), however, the Company did not recast comparative financial information and that is still presented in accordance with previous applicable provisions of U.S. GAAP.
 
The following table summarizes the Company's loans held-for-investment, net, (in thousands): 
 December 31,
 20212020
Real estate loans: 
Multifamily$2,518,065 $2,509,310 
Commercial mortgage808,597 716,973 
One-to-four family residential mortgage183,665 210,817 
Home equity and lines of credit109,956 91,126 
Construction and land27,495 74,318 
Total real estate loans3,647,778 3,602,544 
Commercial and industrial loans (1)
141,005 194,352 
Other loans2,015 3,029 
Total commercial and industrial and other loans143,020 197,381 
Deferred origination loan fees, net (2)
— 4,795 
Loans held-for-investment, net (excluding PCD/PCI)3,790,798 3,804,720 
PCD/PCI Loans15,819 18,518 
Total loans held-for-investment, net3,806,617 3,823,238 
Allowance for credit losses(38,973)(37,607)
Net loans held-for-investment$3,767,644 $3,785,631 
(1) Included in commercial and industrial loans at December 31, 2021 and 2020 are PPP loans totaling $40.5 million and $126.5 million, respectively.
(2) Under CECL, origination deferred fees, deferred fees on acquired loans, and purchase accounting adjustments in connection with loans acquired are included in loans by respective portfolio.
 
The Company had no loans held-for-sale at December 31, 2021. At December 31, 2020, loans held-for-sale totaled $19.9 million.
In addition to originating loans, the Company may acquire loans through portfolio purchases or acquisitions of other companies. Purchased loans that have evidence of more than insignificant credit deterioration since origination are deemed PCD loans. In accordance with ASU 2016-13, with its adoption of the CECL standard, the Company did not reassess whether previously recognized PCI loans accounted for under prior accounting guidance met the criteria of a PCD loan as of the date of adoption. All loans considered to be PCI prior to the adoption of CECL were converted to PCD upon adoption. For PCD loans, each loan pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. PCD loans totaled $15.8 million at December 31, 2021, as compared to $18.5 million at December 31, 2020. The majority of the PCD loan balance was attributable to those loans acquired as part of a FDIC-assisted transaction. At December 31, 2021, PCD loans consisted of approximately 16% one-to-four family residential loans, 25% commercial real estate loans, and 48% commercial and industrial loans, with the remaining balance in construction and land and home equity loans. At December 31, 2020, PCD loans consisted of approximately 22% one-to-four family residential loans, 23% commercial real estate loans, and 40% commercial and industrial loans, with the remaining balance in construction and land and home equity loans.

Credit Quality Indicators

The Company monitors the credit quality of its loan portfolio on a regular basis. Credit quality is monitored by reviewing certain credit quality indicators. Management has determined that loan-to-value ratios (at period end) and internally assigned credit risk ratings by loan type are the key credit quality indicators that best measure the credit quality of the Company’s loan receivables. Loan-to-value (“LTV”) ratios used by management in monitoring credit quality are based on current period loan balances and original appraised values at the time of origination (unless a current appraisal has been obtained as a result of the loan being deemed impaired). 
 
The Company maintains a credit risk rating system as part of the risk assessment of its loan portfolio. The Company’s lending officers are required to assign a credit risk rating to each loan in their portfolio at origination. This risk rating is reviewed periodically and adjusted if necessary. Monthly, management presents monitored assets to the loan committee. In addition, the Company engages a third-party independent loan reviewer that performs semi-annual reviews of a sample of loans, validating the credit risk ratings assigned to such loans. The credit risk ratings play an important role in the establishment of the provision for credit losses on loans and the allowance for credit losses for loans held-for-investment. After determining the loss factor for each portfolio segment held-for-investment, the collectively evaluated for impairment balance of the held-for-investment portfolio is multiplied by the collectively evaluated for impairment loss factor for the respective portfolio segment in order to determine the allowance for loans collectively evaluated for impairment.

When assigning a credit risk rating to a loan, management utilizes the Bank’s internal nine-point credit risk rating system.

1.Strong
2.Good
3.Acceptable
4.Adequate
5.Watch
6.Special Mention
7.Substandard
8.Doubtful
9.Loss
 
Loans rated 1 to 5 are considered pass ratings. An asset is classified substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets have well defined weaknesses based on objective evidence, and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable based on current circumstances. Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted. Assets which do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses, are required to be designated special mention.
The following table presents the Company’s loans held-for-investment, excluding PCD loans, by loan class, credit risk ratings and year of origination, at December 31, 2021 (in thousands):

 December 31, 2021
 20212020201920182017PriorRevolving LoansTotal
Real Estate:   
Multifamily   
Pass$723,029 $525,078 $322,067 $238,692 $231,647 $461,834 $184 $2,502,531 
Special mention— — — — — 425 — 425 
Substandard— — 1,724 5,401 — 7,984 — 15,109 
Total multifamily723,029 525,078 323,791 244,093 231,647 470,243 184 2,518,065 
Commercial   
Pass153,803 72,718 97,228 99,165 65,750 274,195 2,589 765,448 
Special mention— — 505 — 1,095 8,559 — 10,159 
Substandard10,881 — 7,866 — 2,854 11,389 — 32,990 
Total commercial164,684 72,718 105,599 99,165 69,699 294,143 2,589 808,597 
One-to-four family residential   
Pass12,095 9,040 11,244 13,299 10,232 120,693 1,004 177,607 
Special mention— — 467 — — 2,336 — 2,803 
Substandard— — 517 — — 2,738 — 3,255 
Total one-to-four family residential12,095 9,040 12,228 13,299 10,232 125,767 1,004 183,665 
Home equity and lines of credit
Pass18,449 12,244 7,347 6,031 2,592 11,162 51,494 109,319 
Special mention— — — — — 103 — 103 
Substandard— — 96 50 — 388 — 534 
Total home equity and lines of credit18,449 12,244 7,443 6,081 2,592 11,653 51,494 109,956 
Construction and land
Pass9,883 5,755 2,039 4,062 1,809 3,467 480 27,495 
Total construction and land9,883 5,755 2,039 4,062 1,809 3,467 480 27,495 
Total real estate loans928,140 624,835 451,100 366,700 315,979 905,273 55,751 3,647,778 
Commercial and industrial
Pass45,426 10,087 4,378 2,316 640 9,298 61,728 133,873 
Special mention— — 166 — 132 224 50 572 
Substandard— 361 154 595 — 726 4,724 6,560 
Total commercial and industrial45,426 10,448 4,698 2,911 772 10,248 66,502 141,005 
Other
Pass1,715 156 19 26 — 49 50 2,015 
Total other1,715 156 19 26 — 49 50 2,015 
Total loans held-for-investment, net$975,281 $635,439 $455,817 $369,637 $316,751 $915,570 $122,303 $3,790,798 
The following table details the recorded investment of loans held-for-investment, excluding PCI loans, net of deferred fees and costs, by loan type and credit quality indicator at December 31, 2020 (in thousands):

 December 31, 2020
 Real Estate   
 MultifamilyCommercialOne-to-Four FamilyHome Equity and Lines of CreditConstruction and LandCommercial and IndustrialOtherTotal
Internal Risk Rating        
Pass$2,497,556 $667,568 $207,633 $92,385 $74,351 $189,372 $3,026 $3,731,891 
Special Mention458 20,422 2,456 311 — 498 — 24,145 
Substandard14,920 29,576 2,133 441 — 1,611 3 48,684 
Total loans held-for-investment, net$2,512,934 $717,566 $212,222 $93,137 $74,351 $191,481 $3,029 $3,804,720 
Past Due and Non-Accrual Loans

Included in loans receivable held-for-investment are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The recorded investment of these non-accrual loans was $7.6 million and $8.5 million at December 31, 2021, and December 31, 2020, respectively. Generally, originated loans are placed on non-accrual status when they become 90 days or more delinquent, or sooner if considered appropriate by management, and remain on non-accrual status until they are brought current, have six consecutive months of performance under the loan terms, and factors indicating reasonable doubt about the timely collection of payments no longer exist. Therefore, loans may be current in accordance with their loan terms, or may be less than 90 days delinquent and still be on a non-accruing status.
 
When an individual loan no longer demonstrates the similar credit risk characteristics as other loans within its current segment, the Company evaluates each for expected credit losses on an individual basis. All non-accrual loans $500,000 and above and all loans designated as TDRs are individually evaluated. The non-accrual amounts included in loans individually evaluated for impairment were $4.2 million and $5.5 million at December 31, 2021, and December 31, 2020, respectively. Loans on non-accrual status with principal balances less than $500,000, and therefore not meeting the Company’s definition of an impaired loan, amounted to $3.4 million at December 31, 2021, and $3.0 million at December 31, 2020. Loans past due 90 days or more and still accruing interest were $384,000 and $1.1 million at December 31, 2021, and December 31, 2020, respectively, and consisted of loans that are well secured and in the process of collection. 

The Company had no loans held-for-sale at December 31, 2021. At December 31, 2020, the Company had $19.9 million in loans held-for-sale. At December 31, 2020, the loans held-for-sale were comprised of high risk commercial real estate and multifamily loans, primarily accommodation (hotel or motel) loans that were modified in the form of interest and/or principal payment deferrals due to COVID-19 related hardships, and have not returned to contractual payments after 180 days of relief. The sale of these loans was completed in the first quarter of 2021.
The following tables set forth the detail, and delinquency status, of non-performing loans (non-accrual loans and loans past due 90 days or more and still accruing), net of deferred fees and costs, at December 31, 2021, and December 31, 2020, excluding PCD/PCI loans (in thousands):

 December 31, 2021
 Total Non-Performing Loans
 Non-Accruing Loans  
 Current30-89 Days Past Due90 Days or More Past DueTotal90 Days or More Past Due and AccruingTotal Non-Performing Loans
Loans held-for-investment:      
Real estate loans:      
Multifamily
Substandard$— $280 $1,602 $1,882 $— $1,882 
Total multifamily— 280 1,602 1,882 — 1,882 
Commercial      
Special Mention— — 280 280 — 280 
Substandard2,944 — 1,893 4,837 147 4,984 
Total commercial2,944 — 2,173 5,117 147 5,264 
One-to-four family residential      
Substandard— — 314 314 165 479 
Total one-to-four family residential— — 314 314 165 479 
Home equity and lines of credit      
Substandard— — 281 281 — 281 
Total home equity and lines of credit— — 281 281 — 281 
Total real estate 2,944 280 4,370 7,594 312 7,906 
Commercial and industrial loans      
Pass— — — — 72 72 
Substandard28 — — 28 — 28 
Total commercial and industrial loans28 — — 28 72 100 
Total non-performing loans $2,972 $280 $4,370 $7,622 $384 $8,006 
 December 31, 2020
 Total Non-Performing Loans
 Non-Accruing Loans  
 Current30-89 Days Past Due90 Days or More Past DueTotal90 Days or More Past Due and AccruingTotal Non-Performing Loans
Loans held-for-investment:      
Real estate loans:      
Multifamily
Substandard$— $— $1,153 $1,153 $— $1,153 
Total multifamily— — 1,153 1,153 — 1,153 
Commercial
Pass— — — — 500 500 
Substandard2,829 537 2,863 6,229 — 6,229 
Total commercial2,829 537 2,863 6,229 500 6,729 
One-to-four family residential
Substandard413 — 493 906 174 1,080 
Total one-to-four family residential413 — 493 906 174 1,080 
Home equity and lines of credit
Substandard60 — 131 191 — 191 
Total home equity and lines of credit60 — 131 191 — 191 
Total real estate3,302 537 4,640 8,479 674 9,153 
Commercial and industrial loans
Pass— — — — 101 101 
Special mention— — — — 85 85 
Substandard— — 37 37 250 287 
Total commercial and industrial loans— — 37 37 436 473 
Other loans
Pass— — — — 3 3 
Total other— — — — 3 3 
Total non-performing loans$3,302 $537 $4,677 $8,516 $1,113 $9,629 
The following tables set forth the detail and delinquency status of loans held-for-investment, excluding PCD/PCI loans, net of deferred fees and costs, at December 31, 2021 and December 31, 2020 (in thousands):

 December 31, 2021
 Past Due Loans 
 30-89 Days Past Due90 Days or More Past Due90 Days or More Past Due and AccruingTotal Past DueCurrentTotal Loans Receivable, net
Loans held-for-investment:  
Real estate loans:  
Multifamily
Pass$— $— $— $— $2,502,531 $2,502,531 
Special mention— — — — 425 425 
Substandard280 1,602 — 1,882 13,227 15,109 
Total multifamily280 1,602 — 1,882 2,516,183 2,518,065 
Commercial  
Pass77 — — 77 765,371 765,448 
Special mention67 280 — 347 9,812 10,159 
Substandard— 1,893 147 2,040 30,950 32,990 
Total commercial144 2,173 147 2,464 806,133 808,597 
One-to-four family residential
Pass206 — — 206 177,401 177,607 
Special mention387 — — 387 2,416 2,803 
Substandard— 314 165 479 2,776 3,255 
Total one-to-four family residential593 314 165 1,072 182,593 183,665 
Home equity and lines of credit
Pass316 — — 316 109,003 109,319 
Special mention— — — — 103 103 
Substandard96 281 — 377 157 534 
Total home equity and lines of credit412 281 — 693 109,263 109,956 
Construction and land
Pass— — — — 27,495 27,495 
Total construction and land— — — — 27,495 27,495 
Total real estate1,429 4,370 312 6,111 3,641,667 3,647,778 
Commercial and industrial
Pass2 — 72 74 133,799 133,873 
Special mention— — — — 572 572 
Substandard— — — — 6,560 6,560 
Total commercial and industrial 2 — 72 74 140,931 141,005 
Other loans
Pass15 — — 15 2,000 2,015 
Total other loans15 — — 15 2,000 2,015 
Total loans held-for-investment$1,446 $4,370 $384 $6,200 $3,784,598 $3,790,798 
 December 31, 2020
 Past Due Loans 
 30-89 Days Past Due90 Days or More Past Due90 Days or More Past Due and AccruingTotal Past DueCurrentTotal Loans Receivable, net
Loans held-for-investment:
Real estate loans:
Multifamily
Pass$1,283 $— $— $1,283 $2,496,273 $2,497,556 
Special mention— — — — 458 458 
Substandard610 1,153 — 1,763 13,157 14,920 
Total multifamily1,893 1,153 — 3,046 2,509,888 2,512,934 
Commercial
Pass6,072 — 500 6,572 660,996 667,568 
Special mention72 — — 72 20,350 20,422 
Substandard3,185 2,863 — 6,048 23,528 29,576 
Total commercial9,329 2,863 500 12,692 704,874 717,566 
One-to-four family residential
Pass282 — — 282 207,351 207,633 
Special mention870 — — 870 1,586 2,456 
Substandard— 493 174 667 1,466 2,133 
Total one-to-four family residential1,152 493 174 1,819 210,403 212,222 
Home equity and lines of credit
Pass80 — — 80 92,305 92,385 
Special mention200 — — 200 111 311 
Substandard100 131 — 231 210 441 
Total home equity and lines of credit380 131 — 511 92,626 93,137 
Construction and land
Pass994 — — 994 73,357 74,351 
Total construction and land994 — — 994 73,357 74,351 
Total real estate13,748 4,640 674 19,062 3,591,148 3,610,210 
Commercial and industrial
Pass632 — 101 733 188,639 189,372 
Special mention61 — 85 146 352 498 
Substandard67 37 250 354 1,257 1,611 
Total commercial and industrial760 37 436 1,233 190,248 191,481 
Other loans
Pass11 — 3 14 3,012 3,026 
Substandard— — — — 3 3 
Total other loans11 — 3 14 3,015 3,029 
Total loans held-for-investment$14,519 $4,677 $1,113 $20,309 $3,784,411 $3,804,720 

        
The following tables summarize information on non-accrual loans, excluding PCD loans, at December 31, 2021 (in thousands):

For the Year Ended December 31, 2021
December 31, 2021
Recorded InvestmentUnpaid Principal BalanceWith No Related AllowanceInterest Income
Real estate loans:
Multifamily$1,882 $1,891 $512 $70 
Commercial5,117 5,627 3,729 85 
One-to-four family residential314 346 — 10 
Home equity and lines of credit281 530 — 2 
Commercial and industrial28 349 — 8 
Total non-accrual loans$7,622 $8,743 $4,241 $175 

The following table summarizes impaired loans, excluding PCI loans, at December 31, 2020 (in thousands):

 December 31, 2020
 Recorded InvestmentUnpaid Principal BalanceRelated Allowance
With No Allowance Recorded:
Real estate loans:
Multifamily$626 $1,097 $— 
Commercial8,838 10,076 — 
One-to-four family residential1,903 2,032 — 
Home equity and lines of credit15 15 — 
Total real estate11,382 13,220 — 
With a Related Allowance Recorded:
Real estate loans:
Commercial1,812 2,244 (66)
Home equity and lines of credit32 32 (3)
Total real estate1,844 2,276 (69)
Commercial and industrial loans16 16 (4)
Total:
Real estate loans
Multifamily626 1,097 — 
Commercial10,650 12,320 (66)
One-to-four family residential1,903 2,032 — 
Home equity and lines of credit47 47 (3)
Commercial and industrial loans16 16 (4)
$13,242 $15,512 $(73)

Included in the table above at December 31, 2020, are impaired loans with carrying balances of $7.8 million that were not written down by charge-offs or for which there are no specific reserves in our allowance for credit losses. Loans not written down by charge-offs or specific reserves at December 31, 2020, are considered to have sufficient collateral values, less costs to sell, to support the carrying balances of the loans.
The following table summarizes the average recorded investment in impaired loans, excluding PCI loans, and interest income recognized as of, and for, the year ended December 31, 2020 (in thousands):

For the Year Ended
 December 31, 2020
 Average Recorded InvestmentInterest Income
With No Allowance Recorded:
Real estate loans:
Multifamily$808 $50 
Commercial13,299 400 
One-to-four family residential2,134 94 
Home equity and lines of credit19 1 
Commercial and industrial loans30 — 
With a Related Allowance Recorded:
Real estate loans:
Commercial2,374 107 
One-to-four family residential104 — 
Home equity and lines of credit32 1 
Commercial and industrial loans17 1 
Total:
Real estate loans
Multifamily808 50 
Commercial15,673 507 
One-to-four family residential2,238 94 
Home equity and lines of credit51 2 
Commercial and industrial loans47 1 
 $18,817 $654 

Collateral-Dependent Loans

Loans for which the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral are considered to be collateral-dependent loans. Collateral can have a significant financial effect in mitigating exposure to credit risk and, where there is sufficient collateral, an allowance for credit losses is not recognized or is minimal. For collateral-dependent loans, the allowance for credit losses is individually assessed based on the fair value of the collateral less estimated costs of sale. The Company's collateral-dependent loans are secured by real estate. Collateral values are generally based on appraisals which are adjusted for changes in market indices. As of December 31, 2021, and December 31, 2020, the Company had $7.4 million and $10.2 million of collateral-dependent impaired loans, respectively. The collateral-dependent loans at December 31, 2021 consisted of $5.9 million of commercial real estate loans, $1.1 million of multifamily loans, and $365,000 of one-to-four family residential loans. For the year ended December 31, 2021, there was no significant deterioration or changes in the collateral securing these loans.
Troubled Debt Restructured Loans

The following tables summarize loans that were modified in a TDR during the years ended December 31, 2021 and 2020:
Year Ended December 31, 2021
 Number of RelationshipsPre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment(1)
 (Dollars in thousands)
Troubled Debt Restructurings   
Commercial and industrial2$96 $96 
Total Troubled Debt Restructurings2$96 $96 
(1) Amounts are at time of modification.
Year Ended December 31, 2020
Number of RelationshipsPre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment(1)
(Dollars in thousands)
Troubled Debt Restructurings
Residential1$187 $187 
Commercial Real Estate2544 544 
Total Troubled Debt Restructurings3$731 $731 
(1) Amounts are at time of modification.
There were four commercial and industrial loans to two borrowers modified as TDRs during the year ended December 31, 2021, which were modified to reduce the interest rate, extend the maturity date, and restructure payment terms of the loans. There were four loans (to three borrowers) in the second table above, that requested COVID-19 relief and were modified as TDRs during the year ended December 31, 2020, all of which were modified to restructure payment terms. All four of the loans were delinquent and on non-accrual status prior to the implementation of our COVID-19 customer relief program (discussed further below) and were therefore considered to be TDRs.
In response to the COVID-19 pandemic and its economic impact to customers, a short-term modification program that complied with Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus was implemented to provide temporary payment relief to those borrowers directly impacted by COVID-19. The program allows for deferral of payments for 90 days, which may extend for an additional 90 day period, with modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment. As of December 31, 2021, substantially all of the borrowers who had requested relief have returned to contractual payments. Two borrowers, with loans totaling $774,000, did not return to their contractual status; however, they are making partial payments. Loans in deferment status (“COVID-19 Modified Loans”) have continued to accrue interest during the deferment period unless otherwise classified as non-performing. COVID-19 Modified Loans are required to make escrow payments for real estate taxes and insurance, if applicable. The COVID-19 Modified Loan agreements also require loans to be brought back to their fully contractual terms within 12 to 18 months and include covenants that prohibit distributions, bonuses, or payments of management fees to related entities until all deferred payments are made. Consistent with industry regulatory guidance, borrowers who were otherwise current on loan payments and were granted COVID-19 related financial hardship payment deferrals will continue to be reported as current loans throughout the agreed upon deferral period. Borrowers who were delinquent in their payments to the Bank prior to requesting a COVID-19 related financial hardship payment deferral are reviewed on a case by case basis for TDR classification and non-performing loan status.
At December 31, 2021 and 2020, the Company had TDRs of $9.0 million and $12.1 million, respectively.
Management classifies all TDRs as loans individually evaluated for impairment. Loans individually evaluated for impairment are assessed to determine that the loan’s carrying value is not in excess of the estimated fair value of the collateral less cost to sell, if the loan is collateral-dependent, or the present value of the expected future cash flows, if the loan is not collateral-dependent. Management performs an evaluation of each impaired loan and generally obtains updated appraisals as part of the evaluation. In addition, management adjusts estimated fair values down to appropriately consider recent market conditions, our willingness to accept a lower sales price to effect a quick sale, and costs to dispose of any supporting collateral. Determining the estimated fair value of underlying collateral (and related costs to sell) can be difficult in illiquid real estate markets and is subject to significant assumptions and estimates. Management employs an independent third-party management firm that specializes in appraisal preparation and review to ascertain the reasonableness of updated appraisals. Projecting the expected cash flows under TDRs which are not collateral-dependent is inherently subjective and requires, among other things, an evaluation of the borrower’s current and projected financial condition. Actual results may be significantly different than our projections and our established allowance for credit losses on these loans, which could have a material effect on our financial results.

There were no loans modified in the year December 31, 2021 that subsequently defaulted. Two commercial real estate loans modified during the year ended December 31, 2020, totaling $462,500 subsequently defaulted and were 90 days or more past due at December 31, 2020.