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ALLOWANCE FOR CREDIT LOSSES
 9 Months Ended
Sep. 30, 2025
Credit Loss [Abstract]  
ALLOWANCE FOR CREDIT LOSSES

4. ALLOWANCE FOR CREDIT LOSSES

 

The ACL on loans held for investment is the combination of the allowance for credit losses on loans and the reserve for unfunded loan commitments. The ACL is reported as a reduction of the amortized cost basis of loans, while the reserve for unfunded loan commitments is included within "other liabilities" on the Consolidated Statements of Condition. The estimate of credit loss for unfunded commitments incorporates assumptions for both the likelihood and amount of funding over the estimated life of the commitments, including adjustments for current conditions and reasonable and supportable economic forecasts. Management periodically reviews and updates its assumptions for estimated funding rates. The "Provision for credit losses" on the Consolidated Statements of Income is a combination of the provision for credit losses and the provision for unfunded loan commitments.

 

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 $30.9 million at September 30, 2025 and $26.2 million at December 31, 2024.

 

The following tables present the loan balances by segment, and the corresponding balances in the allowance as of September 30, 2025 and December 31, 2024. The allowance was based on the CECL methodology.

 

 

 

September 30, 2025

 

 

 

 

 

 

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

 

$

3,916

 

 

$

—

 

 

$

630,064

 

 

$

5,318

 

 

$

633,980

 

 

$

5,318

 

Junior lien loan on residence

 

 

108

 

 

 

—

 

 

 

59,483

 

 

 

233

 

 

 

59,591

 

 

 

233

 

Multifamily property

 

 

43,997

 

 

 

8,822

 

 

 

1,752,536

 

 

 

8,789

 

 

 

1,796,533

 

 

 

17,611

 

Owner-occupied commercial real estate

 

 

—

 

 

 

—

 

 

 

277,652

 

 

 

3,383

 

 

 

277,652

 

 

 

3,383

 

Investment commercial real estate

 

 

11,589

 

 

 

995

 

 

 

1,024,148

 

 

 

11,787

 

 

 

1,035,737

 

 

 

12,782

 

Commercial and industrial

 

 

23,582

 

 

 

1,525

 

 

 

1,724,433

 

 

 

21,722

 

 

 

1,748,015

 

 

 

23,247

 

Lease financing

 

 

950

 

 

 

121

 

 

 

264,746

 

 

 

2,750

 

 

 

265,696

 

 

 

2,871

 

Construction

 

 

—

 

 

 

—

 

 

 

25,322

 

 

 

320

 

 

 

25,322

 

 

 

320

 

Consumer and other loans

 

 

—

 

 

 

—

 

 

 

174,294

 

 

 

2,877

 

 

 

174,294

 

 

 

2,877

 

Total ACL

 

$

84,142

 

 

$

11,463

 

 

$

5,932,678

 

 

$

57,179

 

 

$

6,016,820

 

 

$

68,642

 

 

 

 

December 31, 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

 

$

2,779

 

 

$

—

 

 

$

606,259

 

 

$

4,398

 

 

$

609,038

 

 

$

4,398

 

Junior lien loan on residence

 

 

92

 

 

 

—

 

 

 

45,215

 

 

 

180

 

 

 

45,307

 

 

 

180

 

Multifamily property

 

 

53,105

 

 

 

5,149

 

 

 

1,746,649

 

 

 

12,504

 

 

 

1,799,754

 

 

 

17,653

 

Owner-occupied commercial real estate

 

 

—

 

 

 

—

 

 

 

275,089

 

 

 

3,208

 

 

 

275,089

 

 

 

3,208

 

Investment commercial real estate

 

 

11,684

 

 

 

735

 

 

 

966,752

 

 

 

10,950

 

 

 

978,436

 

 

 

11,685

 

Commercial and industrial

 

 

30,881

 

 

 

6,678

 

 

 

1,458,585

 

 

 

26,397

 

 

 

1,489,466

 

 

 

33,075

 

Lease financing

 

 

1,234

 

 

 

121

 

 

 

221,263

 

 

 

1,367

 

 

 

222,497

 

 

 

1,488

 

Construction

 

 

—

 

 

 

—

 

 

 

11,204

 

 

 

121

 

 

 

11,204

 

 

 

121

 

Consumer and other loans

 

 

—

 

 

 

—

 

 

 

80,165

 

 

 

1,184

 

 

 

80,165

 

 

 

1,184

 

Total ACL

 

$

99,775

 

 

$

12,683

 

 

$

5,411,181

 

 

$

60,309

 

 

$

5,510,956

 

 

$

72,992

 

 

Individually evaluated loans included nonaccrual loans of $84.1 million at September 30, 2025 and $99.8 million at December 31, 2024. Individually evaluated loans did not include any performing modified loans at September 30, 2025. An allowance of $333,000 was allocated to modified loans at September 30, 2025.

 

The allowance for credit losses was $68.6 million as of September 30, 2025, compared to $73.0 million at December 31, 2024. The decrease in the ACL was primarily driven by charge-offs of $20.4 million during the nine months ended September 30, 2025. Charge-offs of $13.6 million were related to three equipment financing relationships and charge-offs of $6.7 million were associated with three multifamily loans that were liquidated during the nine months ended September 30, 2025. Each of the charge-offs in the

current period were tied to specific provisions that were recorded in previous periods. The decrease was partially offset by a provision for credit losses of $15.8 million driven by an increase in specific reserves totaling $4.3 million related to two multifamily loans and loan growth of $506.3 million during the nine months ended September 30, 2025. The ACL as a percentage of loans was 1.14 percent at September 30, 2025, compared to 1.32 percent at December 31, 2024. The decrease in the ratio for the nine months ended September 30, 2025 was primarily due to a decrease the ACL combined with growth in the loan portfolio. Additionally, the Company completed our annual model recalibration of the ACL model that reflected lower historical loss rates resulting in lower required general ACL coverage during the quarter ended September 30, 2025.

 

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, 2025 and December 31, 2024:

 

 

 

September 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

Unpaid

 

 

 

 

 

 

 

 

Individually

 

 

 

Principal

 

 

Recorded

 

 

Related

 

 

Evaluated

 

(In thousands)

 

Balance

 

 

Investment

 

 

Allowance

 

 

Loans

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

Primary residential mortgage (A)

 

$

4,127

 

 

$

3,916

 

 

$

—

 

 

$

3,056

 

Junior lien loan on residence (A)

 

 

118

 

 

 

108

 

 

 

—

 

 

 

109

 

Multifamily property (B)

 

 

19,169

 

 

 

14,767

 

 

 

—

 

 

 

26,164

 

Investment commercial real estate (C)

 

 

12,500

 

 

 

9,660

 

 

 

—

 

 

 

9,698

 

Commercial and industrial (A)(C)(D)

 

 

18,381

 

 

 

18,287

 

 

 

—

 

 

 

27,551

 

Lease financing (E)

 

 

251

 

 

 

149

 

 

 

—

 

 

 

272

 

Total loans with no related allowance

 

$

54,546

 

 

$

46,887

 

 

$

—

 

 

$

66,850

 

With related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

Multifamily property (B)

 

$

29,378

 

 

$

29,230

 

 

$

8,822

 

 

$

26,618

 

Investment commercial real estate (C)

 

 

1,930

 

 

 

1,929

 

 

 

995

 

 

 

1,930

 

Commercial and industrial (A)(C)(D)(E)

 

 

6,312

 

 

 

5,295

 

 

 

1,525

 

 

 

4,430

 

Lease financing (E)

 

 

849

 

 

 

801

 

 

 

121

 

 

 

801

 

Total loans with related allowance

 

$

38,469

 

 

$

37,255

 

 

$

11,463

 

 

$

33,779

 

Total loans individually evaluated

 

$

93,015

 

 

$

84,142

 

 

$

11,463

 

 

$

100,629

 

 

(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, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

Unpaid

 

 

 

 

 

 

 

 

Individually

 

 

 

Principal

 

 

Recorded

 

 

Related

 

 

Evaluated

 

(In thousands)

 

Balance

 

 

Investment

 

 

Allowance

 

 

Loans

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

Primary residential mortgage (A)

 

$

2,935

 

 

$

2,779

 

 

$

—

 

 

$

1,851

 

Junior lien loan on residence (A)

 

 

97

 

 

 

92

 

 

 

—

 

 

 

101

 

Multifamily property (B)

 

 

15,320

 

 

 

15,295

 

 

 

—

 

 

 

16,968

 

Investment commercial real estate (C)

 

 

12,500

 

 

 

9,754

 

 

 

—

 

 

 

9,810

 

Commercial and industrial (A)(C)(D)

 

 

3,885

 

 

 

2,738

 

 

 

—

 

 

 

3,558

 

Lease financing (E)

 

 

542

 

 

 

434

 

 

 

—

 

 

 

1,363

 

Total loans with no related allowance

 

$

35,279

 

 

$

31,092

 

 

$

—

 

 

$

33,651

 

With related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

Multifamily property (B)

 

$

37,874

 

 

$

37,810

 

 

$

5,149

 

 

$

17,020

 

Investment commercial real estate (C)

 

 

1,930

 

 

 

1,930

 

 

 

735

 

 

 

1,126

 

Commercial and industrial (C)(D)(E)

 

 

31,145

 

 

 

28,143

 

 

 

6,678

 

 

 

27,962

 

Lease financing (E)

 

 

845

 

 

 

800

 

 

 

121

 

 

 

867

 

Total loans with related allowance

 

$

71,794

 

 

$

68,683

 

 

$

12,683

 

 

$

46,975

 

Total loans individually evaluated for impairment

 

$

107,073

 

 

$

99,775

 

 

$

12,683

 

 

$

80,626

 

 

(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, 2025 and 2024 was not material. The Company did not recognize any income on non-accruing loans for the three and nine months ended September 30, 2025 and 2024.

 

The activity in the allowance for credit losses for the three months ended September 30, 2025 and September 30, 2024 is summarized below:

 

 

 

July 1,

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

 

2025

 

 

 

 

 

 

 

 

 

 

 

2025

 

 

 

Beginning

 

 

 

 

 

 

 

 

Provision

 

 

Ending

 

(In thousands)

 

ACL

 

 

Charge-offs

 

 

Recoveries

 

 

(Credit) (A)

 

 

ACL

 

Primary residential mortgage

 

$

4,828

 

 

$

—

 

 

$

—

 

 

$

490

 

 

$

5,318

 

Junior lien loan on residence

 

 

209

 

 

 

—

 

 

 

—

 

 

 

24

 

 

 

233

 

Multifamily property

 

 

18,526

 

 

 

(6,725

)

 

 

—

 

 

 

5,810

 

 

 

17,611

 

Owner-occupied commercial real estate

 

 

3,254

 

 

 

—

 

 

 

—

 

 

 

129

 

 

 

3,383

 

Investment commercial real estate

 

 

12,526

 

 

 

—

 

 

 

—

 

 

 

256

 

 

 

12,782

 

Commercial and industrial

 

 

37,545

 

 

 

(11,299

)

 

 

24

 

 

 

(3,023

)

 

 

23,247

 

Lease financing

 

 

2,204

 

 

 

—

 

 

 

—

 

 

 

667

 

 

 

2,871

 

Construction

 

 

190

 

 

 

—

 

 

 

—

 

 

 

130

 

 

 

320

 

Consumer and other loans

 

 

2,488

 

 

 

(3

)

 

 

4

 

 

 

388

 

 

 

2,877

 

Total ACL

 

$

81,770

 

 

$

(18,027

)

 

$

28

 

 

$

4,871

 

 

$

68,642

 

 

(A) Provision to roll forward the ACL excludes a credit of $81,000 for off-balance sheet commitments.

 

 

 

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.

 

The activity in the allowance for the nine months ended September 30, 2025 and September 30, 2024 is summarized below:

 

 

 

January 1,

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

 

2025

 

 

 

 

 

 

 

 

 

 

 

2025

 

 

 

Beginning

 

 

 

 

 

 

 

 

Provision

 

 

Ending

 

(In thousands)

 

ACL

 

 

Charge-offs

 

 

Recoveries

 

 

(Credit) (A)

 

 

ACL

 

Primary residential mortgage

 

$

4,398

 

 

$

—

 

 

$

—

 

 

$

920

 

 

$

5,318

 

Junior lien loan on residence

 

 

180

 

 

 

—

 

 

 

—

 

 

 

53

 

 

 

233

 

Multifamily property

 

 

17,653

 

 

 

(6,725

)

 

 

—

 

 

 

6,683

 

 

 

17,611

 

Owner-occupied commercial real estate

 

 

3,208

 

 

 

—

 

 

 

—

 

 

 

175

 

 

 

3,383

 

Investment commercial real estate

 

 

11,685

 

 

 

—

 

 

 

—

 

 

 

1,097

 

 

 

12,782

 

Commercial and industrial

 

 

33,075

 

 

 

(13,648

)

 

 

72

 

 

 

3,748

 

 

 

23,247

 

Lease financing

 

 

1,488

 

 

 

—

 

 

 

—

 

 

 

1,383

 

 

 

2,871

 

Construction

 

 

121

 

 

 

—

 

 

 

—

 

 

 

199

 

 

 

320

 

Consumer and other loans

 

 

1,184

 

 

 

(34

)

 

 

43

 

 

 

1,684

 

 

 

2,877

 

Total ACL

 

$

72,992

 

 

$

(20,407

)

 

$

115

 

 

$

15,942

 

 

$

68,642

 

 

(A) Provision to roll forward the ACL excludes a credit of $95,000 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.

 

 

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, 2025 and 2024:

 

 

 

January 1,

 

 

 

 

 

 

 

 

 

2025

 

 

 

 

 

September 30,

 

 

 

Beginning

 

 

Provision

 

 

2025

 

(In thousands)

 

ACL

 

 

(Credit)

 

 

Ending ACL

 

Off balance sheet commitments

 

$

691

 

 

$

(95

)

 

$

596

 

Total ACL

 

$

691

 

 

$

(95

)

 

$

596

 

 

 

 

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