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ALLOWANCE FOR CREDIT LOSSES
 9 Months Ended
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 not 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