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Loans
 6 Months Ended
Jun. 30, 2022
Receivables [Abstract]  
Loans Loans
 
The following table summarizes the Company’s loans held-for-investment (in thousands):

 June 30,December 31,
 20222021
Real estate loans: 
Multifamily$2,771,002 $2,518,065 
Commercial mortgage850,186 808,597 
One-to-four family residential mortgage185,376 183,665 
Home equity and lines of credit137,868 109,956 
Construction and land18,555 27,495 
Total real estate loans3,962,987 3,647,778 
Commercial and industrial loans (1)
133,422 141,005 
Other loans2,312 2,015 
Total commercial and industrial and other loans135,734 143,020 
Loans held-for-investment, net (excluding PCD)4,098,721 3,790,798 
PCD loans13,136 15,819 
Total loans held-for-investment, net4,111,857 3,806,617 
Allowance for credit losses(39,031)(38,973)
Net loans held-for-investment$4,072,826 $3,767,644 
(1) Included in commercial and industrial loans at June 30, 2022 and December 31, 2021 are Payment Protection Program ("PPP") loans totaling $11.9 million and $40.5 million, respectively.

The Company had $2.3 million of loans held-for-sale at June 30, 2022 and no loans held-for-sale at December 31, 2021.
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. 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 $13.1 million at June 30, 2022, as compared to $15.8 million at December 31, 2021. The majority of the PCD loan balance is attributable to loans acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. At June 30, 2022, PCD loans consisted of approximately 13% construction and land and home equity loans, 25% commercial real estate loans, 51% commercial and industrial loans, and 11% in one-to-four family residential loans. At December 31, 2021, PCD loans consisted of approximately 16% one-to-four family residential loans, 25% commercial real estate loans, 48% commercial and industrial loans, and 11% 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 June 30, 2022 (in thousands):

 June 30, 2022
 20222021202020192018PriorRevolving LoansTotal
Real Estate:   
Multifamily   
Pass$441,001 $704,409 $510,471 $291,503 $226,586 $584,813 $1,893 $2,760,676 
Substandard— — — — 3,806 6,520 — 10,326 
Total multifamily441,001 704,409 510,471 291,503 230,392 591,333 1,893 2,771,002 
Commercial   
Pass137,267 149,545 69,189 93,232 75,649 295,115 2,567 822,564 
Special mention— — — — — 5,241 — 5,241 
Substandard— 10,728 — — — 11,653 — 22,381 
Total commercial137,267 160,273 69,189 93,232 75,649 312,009 2,567 850,186 
One-to-four family residential   
Pass22,973 12,473 8,710 10,465 9,188 117,450 1,022 182,281 
Special mention— — — — — 1,928 — 1,928 
Substandard— — — — — 1,167 — 1,167 
Total one-to-four family residential22,973 12,473 8,710 10,465 9,188 120,545 1,022 185,376 
Home equity and lines of credit
Pass23,488 16,703 9,195 6,476 5,009 12,393 64,010 137,274 
Special mention— — — — — 41 — 41 
Substandard— 60 — 95 49 349 — 553 
Total home equity and lines of credit23,488 16,763 9,195 6,571 5,058 12,783 64,010 137,868 
Construction and land
Pass3,973 956 4,558 1,317 1,451 4,050 180 16,485 
Substandard— — — — 2,070 — — 2,070 
Total construction and land3,973 956 4,558 1,317 3,521 4,050 180 18,555 
Total real estate loans628,702 894,874 602,123 403,088 323,808 1,040,720 69,672 3,962,987 
Commercial and industrial
Pass3,814 18,613 8,178 3,961 1,841 9,122 85,861 131,390 
Special mention— — — — — 141 150 291 
Substandard— — 135 50 200 293 1,063 1,741 
Total commercial and industrial3,814 18,613 8,313 4,011 2,041 9,556 87,074 133,422 
Other
Pass2,063 — 130 10 16 34 59 2,312 
Total other2,063 — 130 10 16 34 59 2,312 
Total loans held-for-investment, net$634,579 $913,487 $610,566 $407,109 $325,865 $1,050,310 $156,805 $4,098,721 
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 
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 $10.3 million and $7.6 million at June 30, 2022, and December 31, 2021, 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 $5.4 million and $4.2 million at June 30, 2022, and December 31, 2021, 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 $4.9 million at June 30, 2022, and $3.4 million at December 31, 2021. Loans past due 90 days or more and still accruing interest were $211,000 and $384,000 at June 30, 2022 and December 31, 2021, respectively, and consisted of loans that are well secured and in the process of collection.
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 June 30, 2022, and December 31, 2021, excluding PCD loans (in thousands):

 June 30, 2022
 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$276 $— $3,746 $4,022 $— $4,022 
Total multifamily276 — 3,746 4,022 — 4,022 
Commercial
Substandard3,279 70 1,981 5,330 27 5,357 
Total commercial3,279 70 1,981 5,330 27 5,357 
One-to-four family residential      
Substandard— — 304 304 160 464 
Total one-to-four family residential— — 304 304 160 464 
Home equity and lines of credit      
Substandard188 6 138 332 — 332 
Total home equity and lines of credit188 6 138 332 — 332 
Total real estate 3,743 76 6,169 9,988 187 10,175 
Commercial and industrial loans      
Substandard28 — 247 275 17 292 
Total commercial and industrial loans28 — 247 275 17 292 
Other loans      
Pass— — — — 7 7 
Total other — — — — 7 7 
Total non-performing loans $3,771 $76 $6,416 $10,263 $211 $10,474 
 December 31, 2021
 Total Non-Performing Loans
 Non-Accruing Loans  
 Current30-89 Days Past Due90 Days or More Past DueTotal90 Days or More Past Due and AccruingTotal Non-Performing Loans
Loans held-for-investment:      
Real estate loans:      
Multifamily      
Substandard$— $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 estate2,944 280 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 
The following tables set forth the detail and delinquency status of loans held-for-investment, excluding PCD loans, net of deferred fees and costs, at June 30, 2022, and December 31, 2021 (in thousands):

 June 30, 2022
 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$— $— $— $— $2,760,676 $2,760,676 
Substandard— 3,746 — 3,746 6,580 10,326 
Total multifamily— 3,746 — 3,746 2,767,256 2,771,002 
Commercial  
Pass173 — — 173 822,391 822,564 
Special mention308 — — 308 4,933 5,241 
Substandard247 1,981 27 2,255 20,126 22,381 
Total commercial728 1,981 27 2,736 847,450 850,186 
One-to-four family residential  
Pass569 — — 569 181,712 182,281 
Special mention71 — — 71 1,857 1,928 
Substandard165 304 160 629 538 1,167 
Total one-to-four family residential805 304 160 1,269 184,107 185,376 
Home equity and lines of credit
Pass11 — — 11 137,263 137,274 
Special mention— — — — 41 41 
Substandard142 138 — 280 273 553 
Total home equity and lines of credit153 138 — 291 137,577 137,868 
Construction and land  
Pass— — — — 16,485 16,485 
Substandard— — — — 2,070 2,070 
Total construction and land— — — — 18,555 18,555 
Total real estate1,686 6,169 187 8,042 3,954,945 3,962,987 
Commercial and industrial   
Pass846 — — 846 130,544 131,390 
Special mention100 — — 100 191 291 
Substandard150 247 17 414 1,327 1,741 
Total commercial and industrial 1,096 247 17 1,360 132,062 133,422 
Other loans  
Pass— — 7 7 2,305 2,312 
Total other loans— — 7 7 2,305 2,312 
Total loans held-for-investment$2,782 $6,416 $211 $9,409 $4,089,312 $4,098,721 
 December 31, 2021
 Past Due Loans 
 30-89 Days Past Due90 Days or More Past Due90 Days or More Past Due and AccruingTotal Past DueCurrentTotal Loans Receivable, net
Loans held-for-investment:
Real estate loans:
Multifamily
Pass$— $— $— $— $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 industrial2 — 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 
The following tables summarize information on non-accrual loans, excluding PCD loans, as of June 30, 2022 and December 31, 2021 (in thousands):
June 30, 2022
Recorded InvestmentUnpaid Principal BalanceWith No Related Allowance
Real estate loans:
Multifamily$4,022 $4,031 $2,201 
Commercial5,330 5,786 3,182 
One-to-four family residential304 335 — 
Home equity and lines of credit332 581 — 
Commercial and industrial275 590 — 
Total non-accrual loans$10,263 $11,323 $5,383 

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

The following table summarizes interest income on non-accrual loans, excluding PCD loans, during the three and six months ended June 30, 2022 and June 30, 2021.

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Real estate loans:
Multifamily$24 $19 $48 $33 
Commercial70 25 82 50 
One-to-four family residential7 — 10 6 
Home equity and lines of credit11 — 11 2 
Commercial and industrial7 2 8 4 
Total interest income on non-accrual loans$119 $46 $159 $95 
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 June 30, 2022 and December 31, 2021, the Company had $7.9 million and $7.4 million of collateral-dependent impaired loans, respectively. The collateral-dependent loans at June 30, 2022 consisted of $5.2 million of commercial real estate loans, $2.3 million of multifamily loans, and $351,000 of one-to-four family residential loans. For the six months ended June 30, 2022, there was no significant deterioration or changes in the collateral securing these loans.

Troubled Debt Restructured Loan
    There were no loans modified as a TDR during the three or six months ended June 30, 2022 or 2021.
In response to the novel Coronavirus Disease 2019 ("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 June 30, 2022, substantially all of the borrowers who had requested relief have returned to contractual payments.
At June 30, 2022 and December 31, 2021, the Company had TDRs of $7.3 million and $9.0 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.

At June 30, 2022 and June 30, 2021, there were no restructured TDRs during the preceding twelve months that subsequently defaulted.