ALLOWANCE FOR CREDIT LOSSES

9 Months Ended

Sep. 30, 2021

NOTE 5: ALLOWANCE FOR CREDIT LOSSES

The following is a roll forward of the Bank’s allowance for credit losses related to loans for the following periods:


	Beginning		Adoption of		Provision (benefit) for						Ending
(dollars in thousands)	Balance		ASC 326		Credit Losses		Charge-offs		Recoveries		Balance
Three Months Ended September 30, 2021:
Real estate loans:
Residential properties	$	7,236	$	—	$	(1,507)	$	—	$	—	$	5,729
Commercial properties		5,485		—		(148)		—		—		5,337
Land and construction		1,984		—		(258)		—		—		1,726
Commercial and industrial loans		7,458		—		492		(219)		355		8,086
Consumer loans		109		—		(2)		—		—		107
Total	$	22,272	$	—	$	(1,423)	$	(219)	$	355	$	20,985

Nine Months Ended September 30, 2021:
Real estate loans:
Residential properties	$	5,115	$	—	$	614	$	—	$	—	$	5,729
Commercial properties		8,711		—		(3,374)		—		—		5,337
Land and construction		892		—		834		—		—		1,726
Commercial and industrial loans		9,249		—		(1,400)		(627)		864		8,086
Consumer loans		233		—		(126)		—		—		107
Total	$	24,200	$	—	$	(3,452)	$	(627)	$	864	$	20,985

Year Ended December 31, 2020:
Real estate loans:
Residential properties	$	8,423	$	363	$	(3,671)	$	—	$	—	$	5,115
Commercial properties		4,166		3,760		785		—		—		8,711
Land and construction		573		92		227		—		—		892
Commercial and industrial loans		7,448		—		2,642		(1,844)		1,003		9,249
Consumer loans		190		—		43		—		—		233
Total	$	20,800	$	4,215	$	26	$	(1,844)	$	1,003	$	24,200

The following table presents the balance in the allowance for credit losses and the recorded investment in loans by impairment method as of:


	Allowance for Credit Losses
	Loans Evaluated
(dollars in thousands)	Individually		Collectively		Total
September 30, 2021:
Allowance for credit losses:
Real estate loans:
Residential properties	$	1,174	$	4,555	$	5,729
Commercial properties		411		4,926		5,337
Land and construction		—		1,726		1,726
Commercial and industrial loans		590		7,496		8,086
Consumer loans		—		107		107
Total	$	2,175	$	18,810	$	20,985
Loans:
Real estate loans:
Residential properties	$	16,417	$	3,332,782	$	3,349,199
Commercial properties		13,931		656,395		670,326
Land and construction		—		63,701		63,701
Commercial and industrial loans		7,611		1,208,630		1,216,241
Consumer loans		—		9,492		9,492
Total	$	37,959	$	5,271,000	$	5,308,959

December 31, 2020:
Allowance for credit losses:
Real estate loans:
Residential properties	$	1,059	$	4,056	$	5,115
Commercial properties		374		8,337		8,711
Land and construction		—		892		892
Commercial and industrial loans		956		8,293		9,249
Consumer loans		—		233		233
Total	$	2,389	$	21,811	$	24,200
Loans:
Real estate loans:
Residential properties	$	12,414	$	3,041,142	$	3,053,556
Commercial properties		17,304		730,503		747,807
Land and construction		—		55,832		55,832
Commercial and industrial loans		6,472		912,204		918,676
Consumer loans		—		18,888		18,888
Total	$	36,190	$	4,758,569	$	4,794,759

The following tables present risk categories of loans based on year of origination, as of:


													Revolving
(dollars in thousands)	2021		2020		2019		2018		2017		Prior		Loans		Total
September 30, 2021:
Loans secured by Real Estate:
Residential
Multifamily
Pass	$	552,257	$	887,859	$	492,189	$	305,631	$	174,156	$	114,690	$	—	$	2,526,782
Special Mention		—		—		1,182		—		—		—		—		1,182
Substandard		—		—		—		—		—		—		—		—
Total	$	552,257	$	887,859	$	493,371	$	305,631	$	174,156	$	114,690	$	—	$	2,527,964

Single Family
Pass	$	222,918	$	132,447	$	57,672	$	71,626	$	59,101	$	239,357	$	21,671	$	804,792
Special Mention		—		—		—		—		—		—		26		26
Substandard		—		—		—		—		1,887		11,269		3,261		16,417
Total	$	222,918	$	132,447	$	57,672	$	71,626	$	60,988	$	250,626	$	24,958	$	821,235

Commercial Real Estate
Pass	$	55,894	$	39,467	$	76,225	$	93,801	$	120,021	$	242,375	$	—	$	627,783
Special Mention		—		—		10,595		10,674		—		5,895		—		27,164
Substandard		—		—		5,861		—		2,252		7,266		—		15,379
Total	$	55,894	$	39,467	$	92,681	$	104,475	$	122,273	$	255,536	$	—	$	670,326

Land and construction
Pass	$	4,360	$	(13)	$	17,208	$	31,060	$	10,505	$	581	$	—	$	63,701
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	4,360	$	(13)	$	17,208	$	31,060	$	10,505	$	581	$	—	$	63,701

Commercial
Pass	$	357,032	$	206,077	$	99,384	$	24,709	$	7,014	$	22,685	$	483,029	$	1,199,930
Special Mention		—		1,383		904		824		—		51		1,241		4,403
Substandard		—		1,969		1,847		1,007		214		2,564		4,307		11,908
Total	$	357,032	$	209,429	$	102,135	$	26,540	$	7,228	$	25,300	$	488,577	$	1,216,241

Consumer
Pass	$	39	$	1,142	$	—	$	1,249	$	—	$	81	$	6,981	$	9,492
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	39	$	1,142	$	—	$	1,249	$	—	$	81	$	6,981	$	9,492

Total loans
Pass	$	1,192,500	$	1,266,979	$	742,678	$	528,076	$	370,797	$	619,769	$	511,681	$	5,232,480
Special Mention		—		1,383		12,681		11,498		—		5,946		1,267		32,775
Substandard		—		1,969		7,708		1,007		4,353		21,099		7,568		43,704
Total	$	1,192,500	$	1,270,331	$	763,067	$	540,581	$	375,150	$	646,814	$	520,516	$	5,308,959


													Revolving
(dollars in thousands)	2020		2019		2018		2017		2016		Prior		Loans		Total
December 31, 2020:
Loans secured by Real Estate:
Residential
Multifamily
Pass	$	774,701	$	638,237	$	469,866	$	218,470	$	82,941	$	63,328	$	—	$	2,247,543
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	774,701	$	638,237	$	469,866	$	218,470	$	82,941	$	63,328	$	—	$	2,247,543

Single Family
Pass	$	173,563	$	83,311	$	110,560	$	95,888	$	107,568	$	196,692	$	25,014	$	792,596
Special Mention		—		—		—		986		—		—		—		986
Substandard		—		—		—		1,946		—		7,134		3,351		12,431
Total	$	173,563	$	83,311	$	110,560	$	98,820	$	107,568	$	203,826	$	28,365	$	806,013

Commercial Real Estate
Pass	$	46,260	$	100,432	$	120,230	$	129,120	$	119,719	$	194,533	$	—	$	710,294
Special Mention		—		743		16,278		—		2,333		157		—		19,511
Substandard		—		5,929		—		2,336		2,515		7,222		—		18,002
Total	$	46,260	$	107,104	$	136,508	$	131,456	$	124,567	$	201,912	$	—	$	747,807

Land and construction
Pass	$	257	$	15,923	$	27,792	$	10,532	$	706	$	622	$	—	$	55,832
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	257	$	15,923	$	27,792	$	10,532	$	706	$	622	$	—	$	55,832

Commercial
Pass	$	377,500	$	146,279	$	54,910	$	15,868	$	13,180	$	16,823	$	270,604	$	895,164
Special Mention		2,058		3,922		1,868		579		297		448		6,107		15,279
Substandard		1,226		316		1,188		259		2,459		281		2,504		8,233
Total	$	380,784	$	150,517	$	57,966	$	16,706	$	15,936	$	17,552	$	279,215	$	918,676

Consumer
Pass	$	2,557	$	—	$	1,321	$	3	$	6,784	$	100	$	8,123	$	18,888
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	2,557	$	—	$	1,321	$	3	$	6,784	$	100	$	8,123	$	18,888

Total loans
Pass	$	1,374,838	$	984,182	$	784,679	$	469,881	$	330,898	$	472,098	$	303,741	$	4,720,317
Special Mention		2,058		4,665		18,146		1,565		2,630		605		6,107		35,776
Substandard		1,226		6,245		1,188		4,541		4,974		14,637		5,855		38,666
Total	$	1,378,122	$	995,092	$	804,013	$	475,987	$	338,502	$	487,340	$	315,703	$	4,794,759

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses and the related allowance for credit losses (“ACL”) allocated to these loans:


					Equipment/					ACL
(dollars in thousands)	Real Estate		Cash		Receivables		Total			Allocation
September 30, 2021:
Loans secured by Real Estate:
Residential properties
Single family	$	9,918	$	—	$	—	$	9,918	$	1,157
Commercial loans		—		250		—		250		—
Total	$	9,918	$	250	$	—	$	10,168	$	1,157

December 31, 2020:
Loans secured by Real Estate:
Residential properties
Single family	$	10,144	$	—	$	—	$	10,144	$	1,051
Commercial loans		—		250		122		372		44
Total	$	10,144	$	250	$	122	$	10,516	$	1,095