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v3.24.3

ALLOWANCE FOR CREDIT LOSSES | 9 Months Ended
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Sep. 30, 2024
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 $28.9 million at September 30, 2024 and $27.8 million at December 31, 2023. The following tables present the loan balances by segment, and the corresponding balances in the allowance as of September 30, 2024 and December 31, 2023. The allowance was based on the CECL methodology.
|  | September 30, 2024 |
|  |  |  |  | Ending ACL |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  | Attributable |  |  |  |  |  | Ending 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 |  | $ | 1,658 |  |  | $ | — |  |  | $ | 589,023 |  |  | $ | 4,411 |  |  | $ | 590,681 |  |  | $ | 4,411 |
Junior lien loan on residence |  |  | 96 |  |  |  | — |  |  |  | 42,063 |  |  |  | 200 |  |  |  | 42,159 |  |  |  | 200 |
Multifamily property |  |  | 33,337 |  |  |  | 2,242 |  |  |  | 1,751,524 |  |  |  | 10,539 |  |  |  | 1,784,861 |  |  |  | 12,781 |
Owner-occupied commercial real estate |  |  | — |  |  |  | — |  |  |  | 269,743 |  |  |  | 4,909 |  |  |  | 269,743 |  |  |  | 4,909 |
Investment commercial real estate |  |  | 11,715 |  |  |  | 745 |  |  |  | 967,473 |  |  |  | 13,411 |  |  |  | 979,188 |  |  |  | 14,156 |
Commercial and industrial |  |  | 29,810 |  |  |  | 6,501 |  |  |  | 1,276,360 |  |  |  | 24,808 |  |  |  | 1,306,170 |  |  |  | 31,309 |
Lease financing |  |  | 3,356 |  |  |  | 197 |  |  |  | 227,928 |  |  |  | 1,524 |  |  |  | 231,284 |  |  |  | 1,721 |
Construction |  |  | — |  |  |  | — |  |  |  | 28,578 |  |  |  | 770 |  |  |  | 28,578 |  |  |  | 770 |
Consumer and other loans |  |  | — |  |  |  | — |  |  |  | 80,795 |  |  |  | 1,026 |  |  |  | 80,795 |  |  |  | 1,026 |
Total ACL |  | $ | 79,972 |  |  | $ | 9,685 |  |  | $ | 5,233,487 |  |  | $ | 61,598 |  |  | $ | 5,313,459 |  |  | $ | 71,283 |
|  | December 31, 2023 |
|  |  |  |  | Ending ACL |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  | Attributable |  |  |  |  |  | Ending 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 loans |  |  | — |  |  |  | — |  |  |  | 63,906 |  |  |  | 869 |  |  |  | 63,906 |  |  |  | 869 |
Total ACL |  | $ | 60,710 |  |  | $ | 4,538 |  |  | $ | 5,365,413 |  |  | $ | 61,350 |  |  | $ | 5,426,123 |  |  | $ | 65,888 |
Individually evaluated loans include nonaccrual loans of $80.0 million at September 30, 2024 and $60.6 million at December 31, 2023. Individually evaluated loans did no t include any performing modified loans at September 30, 2024. An allowance of $229,000 was allocated to modified loans at September 30, 2024. The allowance for credit losses was $71.3 million as of September 30, 2024, compared to $65.9 million at December 31, 2023. The increase in the allowance for credit losses (“ACL”) was primarily related to an increase in the ACL related to multifamily loans, which was driven by the increase in individually evaluated loans of $16.7 million to $33.3 million and certain qualitative adjustments made during the first nine months of 2024. The allowance for credit losses as a percentage of loans was 1.34 percent at September 30, 2024, compared to 1.21 percent at December 31, 2023. Under Topic 326, the Company's methodology for determining the ACL on loans is based upon key assumptions, including historic net charge-offs, 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 September 30, 2024 and December 31, 2023:
|  | September 30, 2024 |
|  |  |  |  |  |  |  |  |  |  | Average |
|  | Unpaid |  |  |  |  |  |  |  |  | Individually |
|  | Principal |  |  | Recorded |  |  | Related |  |  | Evaluated |
(In thousands) |  | Balance |  |  | Investment (A) |  |  | Allowance |  |  | Loans |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Primary residential mortgage (A) |  | $ | 1,754 |  |  | $ | 1,658 |  |  | $ | — |  |  | $ | 1,539 |
Junior lien loan on residence (A) |  |  | 99 |  |  |  | 96 |  |  |  | — |  |  |  | 103 |
Multifamily property (B) |  |  | 15,320 |  |  |  | 15,295 |  |  |  | — |  |  |  | 17,526 |
Commercial and industrial (A)(C)(D) |  |  | 3,902 |  |  |  | 2,733 |  |  |  | — |  |  |  | 3,798 |
Lease financing (E) |  |  | 2,671 |  |  |  | 2,555 |  |  |  | — |  |  |  | 1,662 |
Total loans with no related allowance |  | $ | 23,746 |  |  | $ | 22,337 |  |  | $ | — |  |  | $ | 24,628 |
With related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Multifamily property (B) |  | $ | 18,138 |  |  | $ | 18,042 |  |  | $ | 2,242 |  |  | $ | 10,090 |
Investment commercial real estate (D) |  |  | 14,430 |  |  |  | 11,715 |  |  |  | 745 |  |  |  | 10,684 |
Commercial and industrial (A)(C)(D)(E) |  |  | 29,513 |  |  |  | 27,077 |  |  |  | 6,501 |  |  |  | 22,184 |
Lease financing (E) |  |  | 841 |  |  |  | 801 |  |  |  | 197 |  |  |  | 889 |
Total loans with related allowance |  | $ | 62,922 |  |  | $ | 57,635 |  |  | $ | 9,685 |  |  | $ | 43,847 |
Total loans individually evaluated |  | $ | 86,668 |  |  | $ | 79,972 |  |  | $ | 9,685 |  |  | $ | 68,475 |
(A) Secured by residential real estate. (B) Secured by multifamily residential properties. (C) Secured by commercial real estate. (D) Secured by all business assets. (E) Secured by machinery and equipment.
|  | December 31, 2023 |
|  |  |  |  |  |  |  |  |  |  | Average |
|  | Unpaid |  |  |  |  |  |  |  |  | Individually |
|  | Principal |  |  | Recorded |  |  | Related |  |  | Evaluated |
(In thousands) |  | Balance |  |  | Investment |  |  | Allowance |  |  | Loans |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Primary residential mortgage (A) |  | $ | 712 |  |  | $ | 652 |  |  | $ | — |  |  | $ | 428 |
Junior lien loan on residence (A) |  |  | 100 |  |  |  | 100 |  |  |  | — |  |  |  | 8 |
Multifamily property (B) |  |  | 18,868 |  |  |  | 16,645 |  |  |  | — |  |  |  | 5,964 |
Investment commercial real estate (C) |  |  | 12,500 |  |  |  | 9,881 |  |  |  | — |  |  |  | 5,781 |
Commercial and industrial (A)(C)(D) |  |  | 6,275 |  |  |  | 3,965 |  |  |  | — |  |  |  | 2,146 |
Lease financing (E) |  |  | 1,035 |  |  |  | 946 |  |  |  | — |  |  |  | 2,067 |
Total loans with no related allowance |  | $ | 39,490 |  |  | $ | 32,189 |  |  | $ | — |  |  | $ | 16,394 |
With related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial (C)(D)(E) |  | $ | 28,359 |  |  | $ | 27,465 |  |  | $ | 4,518 |  |  | $ | 9,814 |
Lease financing (E) |  |  | 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 |
(A) Secured by residential real estate. (B) Secured by multifamily residential properties. (C) Secured by commercial real estate. (D) Secured by all business assets. (E) Secured by machinery and equipment. Interest income recognized on individually evaluated loans for the three and nine months ended September 30, 2024 and 2023 was not material. The Company did not recognize any income on non-accruing loans for the three and nine months ended September 30, 2024 and 2023. The activity in the allowance for credit losses for the three months ended September 30, 2024 and September 30, 2023 is summarized below:
|  | July 1, |  |  |  |  |  |  |  |  |  |  |  | September 30, |
|  | 2024 |  |  |  |  |  |  |  |  |  |  |  | 2024 |
|  | Beginning |  |  |  |  |  |  |  |  | Provision |  |  | Ending |
(In thousands) |  | ACL |  |  | Charge-offs |  |  | Recoveries |  |  | (Credit) (A) |  |  | ACL |
Primary residential mortgage |  | $ | 4,191 |  |  | $ | (43 | ) |  | $ | — |  |  | $ | 263 |  |  | $ | 4,411 |
Junior lien loan on residence |  |  | 187 |  |  |  | — |  |  |  | — |  |  |  | 13 |  |  |  | 200 |
Multifamily property |  |  | 12,601 |  |  |  | — |  |  |  | — |  |  |  | 180 |  |  |  | 12,781 |
Owner-occupied commercial real estate |  |  | 4,712 |  |  |  | — |  |  |  | — |  |  |  | 197 |  |  |  | 4,909 |
Investment commercial real estate |  |  | 14,452 |  |  |  | — |  |  |  | — |  |  |  | (296 | ) |  |  | 14,156 |
Commercial and industrial |  |  | 28,568 |  |  |  | — |  |  |  | 2,115 |  |  |  | 626 |  |  |  | 31,309 |
Lease financing |  |  | 1,690 |  |  |  | — |  |  |  | 4 |  |  |  | 27 |  |  |  | 1,721 |
Construction |  |  | 655 |  |  |  | — |  |  |  | — |  |  |  | 115 |  |  |  | 770 |
Consumer and other loans |  |  | 928 |  |  |  | (4 | ) |  |  | — |  |  |  | 102 |  |  |  | 1,026 |
Total ACL |  | $ | 67,984 |  |  | $ | (47 | ) |  | $ | 2,119 |  |  | $ | 1,227 |  |  | $ | 71,283 |
(A) Provision to roll forward the ACL excludes a credit of $3,000 for off-balance sheet commitments.
|  | July 1, |  |  |  |  |  |  |  |  |  |  |  | September 30, |
|  | 2023 |  |  |  |  |  |  |  |  |  |  |  | 2023 |
|  | Beginning |  |  |  |  |  |  |  |  | Provision |  |  | Ending |
(In thousands) |  | ACL |  |  | Charge-offs |  |  | Recoveries |  |  | (Credit) (A) |  |  | ACL |
Primary residential mortgage |  | $ | 3,148 |  |  | $ | — |  |  | $ | — |  |  | $ | 115 |  |  | $ | 3,263 |
Junior lien loan on residence |  |  | 151 |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | 154 |
Multifamily property |  |  | 10,537 |  |  |  | — |  |  |  | — |  |  |  | 45 |  |  |  | 10,582 |
Owner-occupied commercial real estate |  |  | 4,708 |  |  |  | — |  |  |  | — |  |  |  | (46 | ) |  |  | 4,662 |
Investment commercial real estate |  |  | 13,548 |  |  |  | — |  |  |  | — |  |  |  | (23 | ) |  |  | 13,525 |
Commercial and industrial |  |  | 27,433 |  |  |  | — |  |  |  | — |  |  |  | 4,701 |  |  |  | 32,134 |
Lease financing |  |  | 2,063 |  |  |  | — |  |  |  | — |  |  |  | 904 |  |  |  | 2,967 |
Construction |  |  | 421 |  |  |  | — |  |  |  | — |  |  |  | 131 |  |  |  | 552 |
Consumer and other loans |  |  | 695 |  |  |  | (57 | ) |  |  | 1 |  |  |  | 114 |  |  |  | 753 |
Total ACL |  | $ | 62,704 |  |  | $ | (57 | ) |  | $ | 1 |  |  | $ | 5,944 |  |  | $ | 68,592 |
(A) Provision to roll forward the ACL excludes a provision of $88,000 for off-balance sheet commitments.
|  | January 1, |  |  |  |  |  |  |  |  |  |  |  | September 30, |
|  | 2024 |  |  |  |  |  |  |  |  |  |  |  | 2024 |
|  | Beginning |  |  |  |  |  |  |  |  | Provision |  |  | Ending |
(In thousands) |  | ACL |  |  | Charge-offs |  |  | Recoveries |  |  | (Credit) (A) |  |  | ACL |
Primary residential mortgage |  | $ | 3,931 |  |  | $ | (43 | ) |  | $ | — |  |  | $ | 523 |  |  | $ | 4,411 |
Junior lien loan on residence |  |  | 177 |  |  |  | — |  |  |  | — |  |  |  | 23 |  |  |  | 200 |
Multifamily property |  |  | 8,782 |  |  |  | (5,379 | ) |  |  | — |  |  |  | 9,378 |  |  |  | 12,781 |
Owner-occupied commercial real estate |  |  | 4,840 |  |  |  | — |  |  |  | — |  |  |  | 69 |  |  |  | 4,909 |
Investment commercial real estate |  |  | 15,403 |  |  |  | — |  |  |  | — |  |  |  | (1,247 | ) |  |  | 14,156 |
Commercial and industrial |  |  | 29,707 |  |  |  | (241 | ) |  |  | 2,120 |  |  |  | (277 | ) |  |  | 31,309 |
Lease financing |  |  | 1,663 |  |  |  | — |  |  |  | 3,214 |  |  |  | (3,156 | ) |  |  | 1,721 |
Construction |  |  | 516 |  |  |  | — |  |  |  | — |  |  |  | 254 |  |  |  | 770 |
Consumer and other loans |  |  | 869 |  |  |  | (21 | ) |  |  | 2 |  |  |  | 176 |  |  |  | 1,026 |
Total ACL |  | $ | 65,888 |  |  | $ | (5,684 | ) |  | $ | 5,336 |  |  | $ | 5,743 |  |  | $ | 71,283 |
(A) Provision to roll forward the ACL excludes a provision of $19,000 for off-balance sheet commitments.
|  | January 1, |  |  |  |  |  |  |  |  |  |  |  | September 30, |
|  | 2023 |  |  |  |  |  |  |  |  |  |  |  | 2023 |
|  | Beginning |  |  |  |  |  |  |  |  | Provision |  |  | Ending |
(In thousands) |  | ACL |  |  | Charge-offs |  |  | Recoveries |  |  | (Credit) (A) |  |  | ACL |
Primary residential mortgage |  | $ | 2,894 |  |  | $ | — |  |  | $ | — |  |  | $ | 369 |  |  | $ | 3,263 |
Junior lien loan on residence |  |  | 154 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 154 |
Multifamily property |  |  | 8,849 |  |  |  | — |  |  |  | — |  |  |  | 1,733 |  |  |  | 10,582 |
Owner-occupied commercial real estate |  |  | 4,835 |  |  |  | — |  |  |  | — |  |  |  | (173 | ) |  |  | 4,662 |
Investment commercial real estate |  |  | 15,480 |  |  |  | (1,199 | ) |  |  | — |  |  |  | (756 | ) |  |  | 13,525 |
Commercial and industrial |  |  | 25,530 |  |  |  | — |  |  |  | — |  |  |  | 6,604 |  |  |  | 32,134 |
Lease financing |  |  | 2,314 |  |  |  | — |  |  |  | — |  |  |  | 653 |  |  |  | 2,967 |
Construction |  |  | 236 |  |  |  | — |  |  |  | — |  |  |  | 316 |  |  |  | 552 |
Consumer and other loans |  |  | 537 |  |  |  | (118 | ) |  |  | 6 |  |  |  | 328 |  |  |  | 753 |
Total ACL |  | $ | 60,829 |  |  | $ | (1,317 | ) |  | $ | 6 |  |  | $ | 9,074 |  |  | $ | 68,592 |
(A) Provision to roll forward the ACL excludes a credit of $9,000 for off-balance sheet commitments. 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 nine months ended September 30, 2024 and 2023:
|  | January 1, |  |  |  |  |  |  |
|  | 2024 |  |  |  |  |  | September 30, |
|  | Beginning |  |  | Provision |  |  | 2024 |
(In thousands) |  | ACL |  |  | (Credit) |  |  | Ending ACL |
Off balance sheet commitments |  | $ | 687 |  |  | $ | 19 |  |  | $ | 706 |
Total ACL |  | $ | 687 |  |  | $ | 19 |  |  | $ | 706 |
|  | January 1, |  |  |  |  |  |  |
|  | 2023 |  |  |  |  |  | September 30, |
|  | Beginning |  |  | Provision |  |  | 2023 |
(In thousands) |  | ACL |  |  | (Credit) |  |  | Ending ACL |
Off balance sheet commitments |  | $ | 752 |  |  | $ | (9 | ) |  | $ | 743 |
Total ACL |  | $ | 752 |  |  | $ | (9 | ) |  | $ | 743 |

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