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ALLOWANCE FOR CREDIT LOSSES | 12 Months Ended
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Dec. 31, 2023
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 $27.8 million at December 31, 2023 and $22.8 million at December 31, 2022. The following tables present the loan balances by segment, and the corresponding balances in the allowance as of December 31, 2023 and 2022.
December 31, 2023 |
|  |  |  |  | Ending |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  | ACL |  |  |  |  |  | Ending |  |  |  |  |  |  |
|  |  |  |  | Attributable |  |  |  |  |  | ACL |  |  |  |  |  |  |
|  | Total |  |  | To |  |  | Total |  |  | Attributable |  |  |  |  |  |  |
|  | Individually |  |  | Individually |  |  | Loans |  |  | To Loans |  |  |  |  |  | Total |
|  | Evaluated |  |  | Evaluated |  |  | Collectively |  |  | Collectively |  |  | Total |  |  | Ending |
(In thousands) |  | Loans |  |  | Loans |  |  | Evaluated |  |  | Evaluated |  |  | Loans |  |  | ACL |
Primary residential mortgage |  | $ | 652 |  |  | $ | — |  |  | $ | 584,474 |  |  | $ | 3,931 |  |  | $ | 585,126 |  |  | $ | 3,931 |
Junior lien loan on residence |  |  | 100 |  |  |  | — |  |  |  | 40,103 |  |  |  | 177 |  |  |  | 40,203 |  |  |  | 177 |
Multifamily property |  |  | 16,645 |  |  |  | — |  |  |  | 1,819,745 |  |  |  | 8,782 |  |  |  | 1,836,390 |  |  |  | 8,782 |
Owner-occupied commercial real estate |  |  | — |  |  |  | — |  |  |  | 255,110 |  |  |  | 4,840 |  |  |  | 255,110 |  |  |  | 4,840 |
Investment commercial real estate |  |  | 9,881 |  |  |  | — |  |  |  | 1,051,316 |  |  |  | 15,403 |  |  |  | 1,061,197 |  |  |  | 15,403 |
Commercial and industrial |  |  | 31,430 |  |  |  | 4,518 |  |  |  | 1,283,351 |  |  |  | 25,189 |  |  |  | 1,314,781 |  |  |  | 29,707 |
Lease financing |  |  | 2,002 |  |  |  | 20 |  |  |  | 249,421 |  |  |  | 1,643 |  |  |  | 251,423 |  |  |  | 1,663 |
Construction |  |  | — |  |  |  | — |  |  |  | 17,987 |  |  |  | 516 |  |  |  | 17,987 |  |  |  | 516 |
Consumer and other |  |  | — |  |  |  | — |  |  |  | 63,906 |  |  |  | 869 |  |  |  | 63,906 |  |  |  | 869 |
Total ACL |  | $ | 60,710 |  |  | $ | 4,538 |  |  | $ | 5,365,413 |  |  | $ | 61,350 |  |  | $ | 5,426,123 |  |  | $ | 65,888 |
December 31, 2022 |
|  |  |  |  | Ending |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  | ACL |  |  |  |  |  | Ending |  |  |  |  |  |  |
|  |  |  |  | Attributable |  |  |  |  |  | ACL |  |  |  |  |  |  |
|  | Total |  |  | To |  |  | Total |  |  | Attributable |  |  |  |  |  |  |
|  | Individually |  |  | Individually |  |  | Loans |  |  | To Loans |  |  |  |  |  | Total |
|  | Evaluated |  |  | Evaluated |  |  | Collectively |  |  | Collectively |  |  | Total |  |  | Ending |
(In thousands) |  | Loans |  |  | Loans |  |  | Evaluated |  |  | Evaluated |  |  | Loans |  |  | ACL |
Primary residential mortgage |  | $ | 374 |  |  | $ | — |  |  | $ | 527,410 |  |  | $ | 2,894 |  |  | $ | 527,784 |  |  | $ | 2,894 |
Junior lien loan on residence |  |  | — |  |  |  | — |  |  |  | 38,265 |  |  |  | 154 |  |  |  | 38,265 |  |  |  | 154 |
Multifamily property |  |  | — |  |  |  | — |  |  |  | 1,863,915 |  |  |  | 8,849 |  |  |  | 1,863,915 |  |  |  | 8,849 |
Owner-occupied commercial real estate |  |  | — |  |  |  | — |  |  |  | 272,009 |  |  |  | 4,835 |  |  |  | 272,009 |  |  |  | 4,835 |
Investment commercial real estate |  |  | 11,208 |  |  |  | 1,208 |  |  |  | 1,032,917 |  |  |  | 14,272 |  |  |  | 1,044,125 |  |  |  | 15,480 |
Commercial and industrial |  |  | 3,385 |  |  |  | 299 |  |  |  | 1,191,277 |  |  |  | 25,231 |  |  |  | 1,194,662 |  |  |  | 25,530 |
Lease financing |  |  | 1,765 |  |  |  | — |  |  |  | 286,801 |  |  |  | 2,314 |  |  |  | 288,566 |  |  |  | 2,314 |
Construction |  |  | — |  |  |  | — |  |  |  | 9,936 |  |  |  | 236 |  |  |  | 9,936 |  |  |  | 236 |
Consumer and other |  |  | — |  |  |  | — |  |  |  | 42,319 |  |  |  | 537 |  |  |  | 42,319 |  |  |  | 537 |
Total ACL |  | $ | 16,732 |  |  | $ | 1,507 |  |  | $ | 5,264,849 |  |  | $ | 59,322 |  |  | $ | 5,281,581 |  |  | $ | 60,829 |
Individually evaluated loans include nonaccrual loans of $60.6 million at December 31, 2023 and $15.8 million at December 31, 2022. Individually evaluated loans did not include any performing modified loans at December 31, 2023. An allowance of $185,000 was allocated to modified loans at December 31, 2023, of which all was allocated to one nonaccrual loan. All accruing modified loans were paying in accordance with their modified terms as of December 31, 2023. The allowance for credit losses was $65.9 million as of December 31, 2023, compared to $60.8 million at December 31, 2022. The increase in the allowance for credit losses ("ACL") was primarily due to the provision for credit losses due to charge-offs of $5.6 million and $2.2 million related to one freight related credit and one multifamily property, respectively. These charge-offs were partially offset by the release of specific reserves of $3.2 million related to these credits. Additionally, there was a specific reserve of $4.2 million for one freight related credit totaling $23.5 million recorded during the year ended December 31, 2023. The allowance for credit losses as a percentage of loans was 1.21 percent and 1.15 percent at December 31, 2023 and 2022, respectively. 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 December 31, 2023 and 2022:
|  | December 31, 2023 |
|  |  |  |  |  |  |  |  |  |  | Average |
|  | Unpaid |  |  |  |  |  |  |  |  | Individually |
|  | Principal |  |  | Recorded |  |  | Related |  |  | Evaluated |
(In thousands) |  | Balance |  |  | Investment |  |  | Allowance |  |  | Loans |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Primary residential mortgage (1) |  | $ | 712 |  |  | $ | 652 |  |  | $ | — |  |  | $ | 428 |
Junior lien loan on residence (1) |  |  | 100 |  |  |  | 100 |  |  |  | — |  |  |  | 8 |
Multifamily property (2) |  |  | 18,868 |  |  |  | 16,645 |  |  |  | — |  |  |  | 5,964 |
Investment commercial real estate (3) |  |  | 12,500 |  |  |  | 9,881 |  |  |  | — |  |  |  | 5,781 |
Commercial and industrial (1)(3)(4) |  |  | 6,275 |  |  |  | 3,965 |  |  |  | — |  |  |  | 2,146 |
Lease financing (5) |  |  | 1,035 |  |  |  | 946 |  |  |  | — |  |  |  | 2,067 |
Total loans with no related allowance |  | $ | 39,490 |  |  | $ | 32,189 |  |  | $ | — |  |  | $ | 16,394 |
With related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial (3)(4)(5) |  | $ | 28,359 |  |  | $ | 27,465 |  |  | $ | 4,518 |  |  | $ | 9,814 |
Lease financing (5) |  |  | 1,079 |  |  |  | 1,056 |  |  |  | 20 |  |  |  | 1,611 |
Total loans with related allowance |  | $ | 29,438 |  |  | $ | 28,521 |  |  | $ | 4,538 |  |  | $ | 11,425 |
Total loans individually evaluated for impairment |  | $ | 68,928 |  |  | $ | 60,710 |  |  | $ | 4,538 |  |  | $ | 27,819 |
(1) Secured by residential real estate. (2) Secured by multifamily residential properties. (3) Secured by commercial real estate. (4) Secured by all business assets. (5) Secured by machinery and equipment.
|  | December 31, 2022 |
|  | Unpaid |  |  |  |  |  |  |  |  | Average |
|  | Principal |  |  | Recorded |  |  | Specific |  |  | Impaired |
(In thousands) |  | Balance |  |  | Investment |  |  | Reserves |  |  | Loans |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Primary residential mortgage |  | $ | 415 |  |  | $ | 374 |  |  | $ | — |  |  | $ | 249 |
Commercial and industrial |  |  | 3,868 |  |  |  | 1,836 |  |  |  | — |  |  |  | 539 |
Lease financing |  |  | 1,792 |  |  |  | 1,765 |  |  |  | — |  |  |  | 444 |
Total loans with no related allowance |  | $ | 6,075 |  |  | $ | 3,975 |  |  | $ | — |  |  | $ | 1,232 |
With related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Investment commercial real estate |  | $ | 12,500 |  |  | $ | 11,208 |  |  | $ | 1,208 |  |  | $ | 12,402 |
Commercial and industrial |  |  | 1,555 |  |  |  | 1,549 |  |  |  | 299 |  |  |  | 174 |
Total loans with related allowance |  | $ | 14,055 |  |  | $ | 12,757 |  |  | $ | 1,507 |  |  | $ | 12,576 |
Total loans individually evaluated for impairment |  | $ | 20,130 |  |  | $ | 16,732 |  |  | $ | 1,507 |  |  | $ | 13,808 |
Interest income recognized on individually evaluated loans for the years ended December 31, 2023 and 2022 was not material. The Company did not recognize any income on non-accruing impaired loans for the years ended December 31, 2023 and 2022. The activity in the allowance for credit losses for the years ended December 31, 2023 and 2022 are summarized below:
|  | January 1, |  |  |  |  |  |  |  |  |  |  |  | December 31, |
|  | 2023 |  |  |  |  |  |  |  |  |  |  |  | 2023 |
|  | Beginning |  |  | Charge- |  |  |  |  |  | Provision/ |  |  | Ending |
(In thousands) |  | ACL |  |  | Offs |  |  | Recoveries |  |  | (Credit)(1) |  |  | ACL |
Primary residential mortgage |  | $ | 2,894 |  |  | $ | — |  |  | $ | 52 |  |  | $ | 985 |  |  | $ | 3,931 |
Junior lien loan on residence |  |  | 154 |  |  |  | — |  |  |  | — |  |  |  | 23 |  |  |  | 177 |
Multifamily property |  |  | 8,849 |  |  |  | (2,223 | ) |  |  | — |  |  |  | 2,156 |  |  |  | 8,782 |
Owner-occupied commercial real estate |  |  | 4,835 |  |  |  | — |  |  |  | — |  |  |  | 5 |  |  |  | 4,840 |
Investment commercial real estate |  |  | 15,480 |  |  |  | (1,199 | ) |  |  | — |  |  |  | 1,122 |  |  |  | 15,403 |
Commercial and industrial |  |  | 25,530 |  |  |  | — |  |  |  | — |  |  |  | 4,177 |  |  |  | 29,707 |
Lease financing |  |  | 2,314 |  |  |  | (5,594 | ) |  |  | — |  |  |  | 4,943 |  |  |  | 1,663 |
Construction |  |  | 236 |  |  |  | — |  |  |  | — |  |  |  | 280 |  |  |  | 516 |
Consumer and other |  |  | 537 |  |  |  | (139 | ) |  |  | 6 |  |  |  | 465 |  |  |  | 869 |
Total ACL |  | $ | 60,829 |  |  | $ | (9,155 | ) |  | $ | 58 |  |  | $ | 14,156 |  |  | $ | 65,888 |
(1) Provision to roll forward the ACL excludes a credit of $65,000 for off-balance sheet commitments.
|  | December 31, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Prior to |  |  |  |  |  |  |  |  |  |  |  |  |  |  | December 31, |
|  | Adoption |  |  | Impact of |  |  |  |  |  |  |  |  |  |  |  | 2022 |
|  | of |  |  | Adopting |  |  |  |  |  |  |  |  | Provision/ |  |  | Ending |
(In thousands) |  | Topic 326 |  |  | Topic 326 |  |  | Charge-Offs |  |  | Recoveries |  |  | (Credit)(1) |  |  | ACL |
Primary residential mortgage |  | $ | 1,510 |  |  | $ | 717 |  |  | $ | — |  |  | $ | 15 |  |  | $ | 652 |  |  | $ | 2,894 |
Junior lien loan on residence |  |  | 88 |  |  |  | 83 |  |  |  | (3 | ) |  |  | — |  |  |  | (14 | ) |  |  | 154 |
Multifamily property |  |  | 9,806 |  |  |  | 4,072 |  |  |  | — |  |  |  | — |  |  |  | (5,029 | ) |  |  | 8,849 |
Owner-occupied commercial real estate |  |  | 1,998 |  |  |  | 2,902 |  |  |  | — |  |  |  | — |  |  |  | (65 | ) |  |  | 4,835 |
Investment commercial real estate |  |  | 27,083 |  |  |  | (13,589 | ) |  |  | (1,450 | ) |  |  | — |  |  |  | 3,436 |  |  |  | 15,480 |
Commercial and industrial |  |  | 17,509 |  |  |  | (657 | ) |  |  | — |  |  |  | 254 |  |  |  | 8,424 |  |  |  | 25,530 |
Lease financing |  |  | 3,440 |  |  |  | 156 |  |  |  | — |  |  |  | — |  |  |  | (1,282 | ) |  |  | 2,314 |
Construction |  |  | 48 |  |  |  | 361 |  |  |  | — |  |  |  | — |  |  |  | (173 | ) |  |  | 236 |
Consumer and other |  |  | 215 |  |  |  | 419 |  |  |  | (53 | ) |  |  | 2 |  |  |  | (46 | ) |  |  | 537 |
Total ACL |  | $ | 61,697 |  |  | $ | (5,536 | ) |  | $ | (1,506 | ) |  | $ | 271 |  |  | $ | 5,903 |  |  | $ | 60,829 |
(1) Provision to roll forward the ACL excludes a provision of $450,000 for off-balance sheet commitments. 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 year ended December 31, 2021 is summarized below:
|  | January 1, |  |  |  |  |  |  |  |  |  |  |  | December 31, |
|  | 2021 |  |  |  |  |  |  |  |  |  |  |  | 2021 |
|  | Beginning |  |  |  |  |  |  |  |  | Provision/ |  |  | Ending |
(In thousands) |  | ALLL |  |  | Charge-Offs |  |  | Recoveries |  |  | (Credit) |  |  | ALLL |
Primary residential mortgage |  | $ | 2,905 |  |  | $ | (12 | ) |  | $ | — |  |  | $ | (1,461 | ) |  | $ | 1,432 |
Home equity lines of credit |  |  | 218 |  |  |  | — |  |  |  | 85 |  |  |  | (220 | ) |  |  | 83 |
Junior lien loan on residence |  |  | 15 |  |  |  | — |  |  |  | — |  |  |  | (10 | ) |  |  | 5 |
Multifamily property |  |  | 9,945 |  |  |  | — |  |  |  | — |  |  |  | (139 | ) |  |  | 9,806 |
Owner-occupied commercial real estate |  |  | 3,050 |  |  |  | — |  |  |  | — |  |  |  | (1,052 | ) |  |  | 1,998 |
Investment commercial real estate |  |  | 27,713 |  |  |  | (7,137 | ) |  |  | — |  |  |  | 6,507 |  |  |  | 27,083 |
Commercial and industrial |  |  | 19,047 |  |  |  | (5,019 | ) |  |  | 66 |  |  |  | 3,415 |  |  |  | 17,509 |
Lease financing |  |  | 3,936 |  |  |  | — |  |  |  | — |  |  |  | (496 | ) |  |  | 3,440 |
Secured by farmland and agricultural |  |  | 43 |  |  |  | — |  |  |  | — |  |  |  | 41 |  |  |  | 84 |
Commercial construction |  |  | 158 |  |  |  | — |  |  |  | — |  |  |  | (116 | ) |  |  | 42 |
Consumer and other |  |  | 279 |  |  |  | (80 | ) |  |  | 10 |  |  |  | 6 |  |  |  | 215 |
Total ALLL |  | $ | 67,309 |  |  | $ | (12,248 | ) |  | $ | 161 |  |  | $ | 6,475 |  |  | $ | 61,697 |
Allowance for Credit Losses on Off Balance Sheet Commitments The following tables present the activity in the ACL for off balance sheet commitments for the years ended December 31, 2023 and 2022:
|  | January 1, |  |  |  |  |  | December 31, |
|  | 2023 |  |  | Provision |  |  | 2023 |
(In thousands) |  | ACL |  |  | (Credit) |  |  | Ending ACL |
Off balance sheet commitments |  | $ | 752 |  |  | $ | (65 | ) |  | $ | 687 |
Total ACL |  | $ | 752 |  |  | $ | (65 | ) |  | $ | 687 |
|  | December 31, |  |  |  |  |  |  |  |  |  |
|  | 2021 |  |  |  |  |  |  |  |  | December 31, |
|  | Prior to Adoption |  |  | Impact of |  |  | Provision |  |  | 2022 |
(In thousands) |  | of Topic 326 |  |  | Adopting Topic 326 |  |  | (Credit) |  |  | Ending ACL |
Off balance sheet commitments |  | $ | — |  |  | $ | 302 |  |  | $ | 450 |  |  | $ | 752 |
Total ACL |  | $ | — |  |  | $ | 302 |  |  | $ | 450 |  |  | $ | 752 |

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