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ALLOWANCE FOR CREDIT LOSSES | 3 Months Ended
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Mar. 31, 2022
Credit Loss [Abstract] |
ALLOWANCE FOR CREDIT LOSSES | 4. ALLOWANCE FOR CREDIT LOSSES On January 1, 2022, the Company adopted ASU 2016-13, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology. See Note 1, Summary of Significant Accounting Policies for additional information on Topic 326. The Company does not estimate expected credit losses on accrued interest receivable (“AIR”) on loans, as AIR is reversed or written off when the full collection of the AIR related to a loan becomes doubtful. AIR on loans totaled $20.8 million at March 31, 2022 and $19.1 million at December 31, 2021. The following table presents the loan balances by segment, and the corresponding balances in the allowance as of March 31, 2022. For the period ended March 31, 2022, the allowance is based on the CECL methodology.
|  | March 31, 2022 |
|  |  |  |  |  | Ending ACL |  |  |  |  |  |  | Ending ACL |  |  |  |  |  |  |  |  |
|  | Total |  |  | Attributable |  |  | Total |  |  | Attributable |  |  |  |  |  |  |  |  |
|  | Individually |  |  | To Individually |  |  | Loans |  |  | To Loans |  |  |  |  |  |  | Total |
|  | Evaluated |  |  | Evaluated |  |  | Collectively |  |  | Collectively |  |  | Total |  |  | Ending |
(In thousands) |  | Loans |  |  | Loans |  |  | Evaluated |  |  | Evaluated |  |  | Loans |  |  | ACL |
Primary residential mortgage |  | $ | 385 |  |  | $ | — |  |  | $ | 515,965 |  |  | $ | 3,545 |  |  | $ | 516,350 |  |  | $ | 3,545 |
Junior lien loan on residence |  |  | — |  |  |  | — |  |  |  | 41,747 |  |  |  | 242 |  |  |  | 41,747 |  |  |  | 242 |
Multifamily property |  |  | — |  |  |  | — |  |  |  | 1,850,097 |  |  |  | 15,480 |  |  |  | 1,850,097 |  |  |  | 15,480 |
Owner-occupied commercial real estate |  |  | 328 |  |  |  | — |  |  |  | 256,017 |  |  |  | 4,903 |  |  |  | 256,345 |  |  |  | 4,903 |
Investment commercial real estate |  |  | 12,500 |  |  |  | 2,500 |  |  |  | 1,044,255 |  |  |  | 8,469 |  |  |  | 1,056,755 |  |  |  | 10,969 |
Commercial and industrial |  |  | 266 |  |  |  | — |  |  |  | 1,019,235 |  |  |  | 18,653 |  |  |  | 1,019,501 |  |  |  | 18,653 |
Lease financing |  |  | — |  |  |  | — |  |  |  | 312,133 |  |  |  | 3,354 |  |  |  | 312,133 |  |  |  | 3,354 |
Construction loans |  |  | — |  |  |  | — |  |  |  | 22,826 |  |  |  | 532 |  |  |  | 22,826 |  |  |  | 532 |
Consumer and other loans |  |  | — |  |  |  | — |  |  |  | 41,853 |  |  |  | 708 |  |  |  | 41,853 |  |  |  | 708 |
Total ACL |  | $ | 13,479 |  |  | $ | 2,500 |  |  | $ | 5,104,128 |  |  | $ | 55,886 |  |  | $ | 5,117,607 |  |  | $ | 58,386 |
The following table presents the loan balances by portfolio class, based on impairment method, and the corresponding balances in the allowance as of December 31, 2021. For the year ended December 31, 2021, the allowance was calculated based on the incurred loss methodology:
|  | December 31, 2021 |
|  | Total |  |  | Ending ALLL |  |  | Total |  |  | Ending ALLL |  |  |  |  |  |  |  |  |
|  | Loans |  |  | Attributable |  |  | Loans |  |  | Attributable |  |  |  |  |  |  |  |  |
|  | Individually |  |  | To Loans |  |  | Collectively |  |  | To Loans |  |  |  |  |  |  |  |  |
|  | Evaluated |  |  | Individually |  |  | Evaluated |  |  | Collectively |  |  |  |  |  |  | Total |
|  | For |  |  | Evaluated for |  |  | For |  |  | Evaluated for |  |  | Total |  |  | Ending |
(In thousands) |  | Impairment |  |  | Impairment |  |  | Impairment |  |  | Impairment |  |  | Loans |  |  | ALLL |
Primary residential mortgage |  | $ | 2,242 |  |  | $ | — |  |  | $ | 498,001 |  |  | $ | 1,432 |  |  | $ | 500,243 |  |  | $ | 1,432 |
Home equity lines of credit |  |  | — |  |  |  | — |  |  |  | 40,803 |  |  |  | 83 |  |  |  | 40,803 |  |  |  | 83 |
Junior lien loan on residence |  |  | 18 |  |  |  | — |  |  |  | 3,173 |  |  |  | 5 |  |  |  | 3,191 |  |  |  | 5 |
Multifamily property |  |  | — |  |  |  | — |  |  |  | 1,595,866 |  |  |  | 9,806 |  |  |  | 1,595,866 |  |  |  | 9,806 |
Owner-occupied commercial real estate |  |  | 458 |  |  |  | — |  |  |  | 252,145 |  |  |  | 1,998 |  |  |  | 252,603 |  |  |  | 1,998 |
Investment commercial real estate |  |  | 12,750 |  |  |  | 4,234 |  |  |  | 991,229 |  |  |  | 22,849 |  |  |  | 1,003,979 |  |  |  | 27,083 |
Commercial and industrial |  |  | 2,584 |  |  |  | — |  |  |  | 989,748 |  |  |  | 17,509 |  |  |  | 992,332 |  |  |  | 17,509 |
Lease financing |  |  | — |  |  |  | — |  |  |  | 345,868 |  |  |  | 3,440 |  |  |  | 345,868 |  |  |  | 3,440 |
Farmland/agricultural production |  |  | — |  |  |  | — |  |  |  | 6,871 |  |  |  | 84 |  |  |  | 6,871 |  |  |  | 84 |
Commercial construction loans |  |  | — |  |  |  | — |  |  |  | 20,174 |  |  |  | 42 |  |  |  | 20,174 |  |  |  | 42 |
Consumer and other loans |  |  | — |  |  |  | — |  |  |  | 40,828 |  |  |  | 215 |  |  |  | 40,828 |  |  |  | 215 |
Total ALLL |  | $ | 18,052 |  |  | $ | 4,234 |  |  | $ | 4,784,706 |  |  | $ | 57,463 |  |  | $ | 4,802,758 |  |  | $ | 61,697 |
Individually evaluated loans include nonaccrual loans of $15.9 million at March 31, 2022 and $15.6 million at December 31, 2021. This includes one $12.5 million commercial real estate loan that was placed on nonaccrual status in 2021. The Company recorded a charge-off of $7.4 million related to this loan during the fourth quarter of 2021. Individually evaluated loans also included performing TDR loans of $2.4 million at March 31, 2022 and $2.5 million at December 31, 2021. The allowance allocated to TDR loans totaled $2.5 million at March 31, 2022, of which all was allocated to one nonaccrual loan. At December 31, 2021, there was no allowance allocated to TDR loans. All accruing TDR loans were paying in accordance with restructured terms as of March 31, 2022. The Company has not committed to lend additional amounts as of March 31, 2022 to customers with outstanding loans that are classified as TDR loans. Under Topic 326, the Company's methodology for determining the ACL on loans is based upon key assumptions, including historic net charge-off factors, economic forecasts, reversion periods, prepayments and qualitative adjustments. The allowance is measured on a collective, or pool, basis when similar risk characteristics exist. Loans that do not share common risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation. The following tables present collateral dependent loans individually evaluated by segment as of March 31, 2022:
|  | March 31, 2022 |
|  | Unpaid |  |  |  |  |  |  |  |  |  |  | Average |
|  | Principal |  |  | Recorded |  |  | Related |  |  | Individually Evaluated |
(In thousands) |  | Balance |  |  | Investment |  |  | Allowance |  |  | Loans |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Primary residential mortgage |  | $ | 445 |  |  | $ | 385 |  |  | $ | — |  |  | $ | 343 |
Owner-occupied commercial real estate |  |  | 357 |  |  |  | 328 |  |  |  | — |  |  |  | 342 |
Commercial and industrial |  |  | 282 |  |  |  | 266 |  |  |  | — |  |  |  | 282 |
Total loans with no related allowance |  | $ | 1,084 |  |  | $ | 979 |  |  | $ | — |  |  | $ | 967 |
With related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment commercial real estate |  | $ | 12,500 |  |  | $ | 12,500 |  |  | $ | 2,500 |  |  | $ | 12,667 |
Total loans with related allowance |  | $ | 12,500 |  |  | $ | 12,500 |  |  | $ | 2,500 |  |  | $ | 12,667 |
Total loans individually evaluated |  | $ | 13,584 |  |  | $ | 13,479 |  |  | $ | 2,500 |  |  | $ | 13,634 |
The following table presents, under previously applicable GAAP, loans individually evaluated for impairment as of December 31, 2021 (the average impaired loans on the following tables represent year to date impaired loans):
|  | December 31, 2021 |
|  | Unpaid |  |  |  |  |  |  |  |  |  |  | Average |
|  | Principal |  |  | Recorded |  |  | Specific |  |  | Impaired |
(In thousands) |  | Balance |  |  | Investment |  |  | Reserves |  |  | Loans |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Primary residential mortgage |  | $ | 2,453 |  |  | $ | 2,242 |  |  | $ | — |  |  | $ | 1,818 |
Owner-occupied commercial real estate |  |  | 492 |  |  |  | 458 |  |  |  | — |  |  |  | 540 |
Junior lien loan on residence |  |  | 18 |  |  |  | 18 |  |  |  | — |  |  |  | 3 |
Commercial and industrial |  |  | 4,549 |  |  |  | 2,584 |  |  |  | — |  |  |  | 3,153 |
Total loans with no related allowance |  | $ | 7,512 |  |  | $ | 5,302 |  |  | $ | — |  |  | $ | 5,514 |
With related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment commercial real estate |  | $ | 19,887 |  |  | $ | 12,750 |  |  | $ | 4,234 |  |  | $ | 6,034 |
Total loans with related allowance |  | $ | 19,887 |  |  | $ | 12,750 |  |  | $ | 4,234 |  |  | $ | 6,034 |
Total loans individually evaluated for impairment |  | $ | 27,399 |  |  | $ | 18,052 |  |  | $ | 4,234 |  |  | $ | 11,548 |
Interest income recognized on individually evaluated loans for the quarter ended March 31, 2022 and 2021 was not material. The Company did not recognize any income on non-accruing impaired loans for the three months ended March 31, 2022 and 2021. The activity in the allowance for credit losses for the three months ended March 31, 2022 is summarized below:
|  | December 31, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | March 31, |
|  | 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2022 |
|  | Prior to adoption |  |  | Impact of |  |  |  |  |  |  |  |  |  |  | Provision |  |  | Ending |
(In thousands) |  | of Topic 326 |  |  | adopting Topic 326 |  |  | Charge-offs |  |  | Recoveries |  |  | (Credit) |  |  | ACL |
Primary residential mortgage |  | $ | 1,510 |  |  | $ | 1,604 |  |  | $ | — |  |  | $ | — |  |  | $ | 431 |  |  | $ | 3,545 |
Junior lien loan on residence |  |  | 88 |  |  |  | 174 |  |  |  | — |  |  |  | — |  |  |  | (20 | ) |  |  | 242 |
Multifamily property |  |  | 9,806 |  |  |  | 3,763 |  |  |  | — |  |  |  | — |  |  |  | 1,911 |  |  |  | 15,480 |
Owner-occupied commercial real estate |  |  | 1,998 |  |  |  | 2,934 |  |  |  | — |  |  |  | — |  |  |  | (29 | ) |  |  | 4,903 |
Investment commercial real estate |  |  | 27,083 |  |  |  | (13,450 | ) |  |  | (250 | ) |  |  | — |  |  |  | (2,414 | ) |  |  | 10,969 |
Commercial and industrial |  |  | 17,509 |  |  |  | (1,646 | ) |  |  | — |  |  |  | 4 |  |  |  | 2,786 |  |  |  | 18,653 |
Lease financing |  |  | 3,440 |  |  |  | 156 |  |  |  | — |  |  |  | — |  |  |  | (242 | ) |  |  | 3,354 |
Construction loans |  |  | 48 |  |  |  | 418 |  |  |  | — |  |  |  | — |  |  |  | 66 |  |  |  | 532 |
Consumer and other loans |  |  | 215 |  |  |  | 511 |  |  |  | (20 | ) |  |  | 2 |  |  |  | — |  |  |  | 708 |
Total ACL |  | $ | 61,697 |  |  | $ | (5,536 | ) |  | $ | (270 | ) |  | $ | 6 |  |  | $ | 2,489 |  |  | $ | 58,386 |
For the accounting policy on the allowance for loan losses that was in effect prior to the adoption of Topic 326, refer to Note 1, Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year-ended December 31, 2021. The activity in the allowance for loan and lease losses for the three months ended March 31, 2021 is summarized below:
|  | January 1, |  |  |  |  |  |  |  |  |  |  |  |  |  |  | March 31, |
|  | 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2021 |
|  | Beginning |  |  |  |  |  |  |  |  |  |  | Provision |  |  | Ending |
(In thousands) |  | ALLL |  |  | Charge-offs |  |  | Recoveries |  |  | (Credit) |  |  | ALLL |
Primary residential mortgage |  | $ | 2,905 |  |  | $ | — |  |  | $ | — |  |  | $ | (129 | ) |  | $ | 2,776 |
Home equity lines of credit |  |  | 218 |  |  |  | — |  |  |  | 9 |  |  |  | (29 | ) |  |  | 198 |
Junior lien loan on residence |  |  | 15 |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 16 |
Multifamily property |  |  | 9,945 |  |  |  | — |  |  |  | — |  |  |  | 482 |  |  |  | 10,427 |
Owner-occupied commercial real estate |  |  | 3,050 |  |  |  | — |  |  |  | — |  |  |  | (186 | ) |  |  | 2,864 |
Investment commercial real estate |  |  | 27,713 |  |  |  | — |  |  |  | — |  |  |  | (1,020 | ) |  |  | 26,693 |
Commercial and industrial |  |  | 19,047 |  |  |  | — |  |  |  | 7 |  |  |  | 1,071 |  |  |  | 20,125 |
Lease financing |  |  | 3,936 |  |  |  | — |  |  |  | — |  |  |  | 31 |  |  |  | 3,967 |
Farmland/agricultural production |  |  | 43 |  |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 47 |
Commercial construction loans |  |  | 158 |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | 161 |
Consumer and other loans |  |  | 279 |  |  |  | (15 | ) |  |  | 1 |  |  |  | (3 | ) |  |  | 262 |
Total ALLL |  | $ | 67,309 |  |  | $ | (15 | ) |  | $ | 17 |  |  | $ | 225 |  |  | $ | 67,536 |
Allowance for Credit Losses on Off Balance Sheet Commitments The following table presets the activity in the ACL for off balance sheet commitments for the three months ended March 31, 2022:
|  | December 31, |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2021 |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Prior to adoption |  |  | Impact of |  |  | Provision |  |  | March 31, 2022 |
(In thousands) |  | of Topic 326 |  |  | adopting Topic 326 |  |  | (Credit) |  |  | Ending ACL |
Off balance sheet commitments |  | $ | — |  |  | $ | 302 |  |  | $ | (114 | ) |  | $ | 188 |
Total ACL |  | $ | — |  |  | $ | 302 |  |  | $ | (114 | ) |  | $ | 188 |

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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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