XML 21 R12.htm IDEA: XBRL DOCUMENT v3.22.1
ALLOWANCE FOR CREDIT LOSSES
 3 Months Ended
Mar. 31, 2022
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 $20.8 million at March 31, 2022 and $19.1 million at December 31, 2021.

 

The following table presents the loan balances by segment, and the corresponding balances in the allowance as of March 31, 2022. For the period ended March 31, 2022, the allowance is based on the CECL methodology.  

 

 

 

March 31, 2022

 

 

 

 

 

 

 

Ending ACL

 

 

 

 

 

 

Ending ACL

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

Attributable

 

 

Total

 

 

Attributable

 

 

 

 

 

 

 

 

 

 

 

Individually

 

 

To Individually

 

 

Loans

 

 

To Loans

 

 

 

 

 

 

Total

 

 

 

Evaluated

 

 

Evaluated

 

 

Collectively

 

 

Collectively

 

 

Total

 

 

Ending

 

(In thousands)

 

Loans

 

 

Loans

 

 

Evaluated

 

 

Evaluated

 

 

Loans

 

 

ACL

 

Primary residential mortgage

 

$

385

 

 

$

—

 

 

$

515,965

 

 

$

3,545

 

 

$

516,350

 

 

$

3,545

 

Junior lien loan on residence

 

 

—

 

 

 

—

 

 

 

41,747

 

 

 

242

 

 

 

41,747

 

 

 

242

 

Multifamily property

 

 

—

 

 

 

—

 

 

 

1,850,097

 

 

 

15,480

 

 

 

1,850,097

 

 

 

15,480

 

Owner-occupied commercial real estate

 

 

328

 

 

 

—

 

 

 

256,017

 

 

 

4,903

 

 

 

256,345

 

 

 

4,903

 

Investment commercial real estate

 

 

12,500

 

 

 

2,500

 

 

 

1,044,255

 

 

 

8,469

 

 

 

1,056,755

 

 

 

10,969

 

Commercial and industrial

 

 

266

 

 

 

—

 

 

 

1,019,235

 

 

 

18,653

 

 

 

1,019,501

 

 

 

18,653

 

Lease financing

 

 

—

 

 

 

—

 

 

 

312,133

 

 

 

3,354

 

 

 

312,133

 

 

 

3,354

 

Construction loans

 

 

—

 

 

 

—

 

 

 

22,826

 

 

 

532

 

 

 

22,826

 

 

 

532

 

Consumer and other loans

 

 

—

 

 

 

—

 

 

 

41,853

 

 

 

708

 

 

 

41,853

 

 

 

708

 

Total ACL

 

$

13,479

 

 

$

2,500

 

 

$

5,104,128

 

 

$

55,886

 

 

$

5,117,607

 

 

$

58,386

 

 

The following table presents the loan balances by portfolio class, based on impairment method, and the corresponding balances in the allowance as of December 31, 2021. For the year ended December 31, 2021, the allowance was calculated based on the incurred loss methodology:

 

 

 

December 31, 2021

 

 

 

Total

 

 

Ending ALLL

 

 

Total

 

 

Ending ALLL

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

Attributable

 

 

Loans

 

 

Attributable

 

 

 

 

 

 

 

 

 

 

 

Individually

 

 

To Loans

 

 

Collectively

 

 

To Loans

 

 

 

 

 

 

 

 

 

 

 

Evaluated

 

 

Individually

 

 

Evaluated

 

 

Collectively

 

 

 

 

 

 

Total

 

 

 

For

 

 

Evaluated for

 

 

For

 

 

Evaluated for

 

 

Total

 

 

Ending

 

(In thousands)

 

Impairment

 

 

Impairment

 

 

Impairment

 

 

Impairment

 

 

Loans

 

 

ALLL

 

Primary residential mortgage

 

$

2,242

 

 

$

—

 

 

$

498,001

 

 

$

1,432

 

 

$

500,243

 

 

$

1,432

 

Home equity lines of credit

 

 

—

 

 

 

—

 

 

 

40,803

 

 

 

83

 

 

 

40,803

 

 

 

83

 

Junior lien loan on residence

 

 

18

 

 

 

—

 

 

 

3,173

 

 

 

5

 

 

 

3,191

 

 

 

5

 

Multifamily property

 

 

—

 

 

 

—

 

 

 

1,595,866

 

 

 

9,806

 

 

 

1,595,866

 

 

 

9,806

 

Owner-occupied commercial real estate

 

 

458

 

 

 

—

 

 

 

252,145

 

 

 

1,998

 

 

 

252,603

 

 

 

1,998

 

Investment commercial real estate

 

 

12,750

 

 

 

4,234

 

 

 

991,229

 

 

 

22,849

 

 

 

1,003,979

 

 

 

27,083

 

Commercial and industrial

 

 

2,584

 

 

 

—

 

 

 

989,748

 

 

 

17,509

 

 

 

992,332

 

 

 

17,509

 

Lease financing

 

 

—

 

 

 

—

 

 

 

345,868

 

 

 

3,440

 

 

 

345,868

 

 

 

3,440

 

Farmland/agricultural production

 

 

—

 

 

 

—

 

 

 

6,871

 

 

 

84

 

 

 

6,871

 

 

 

84

 

Commercial construction loans

 

 

—

 

 

 

—

 

 

 

20,174

 

 

 

42

 

 

 

20,174

 

 

 

42

 

Consumer and other loans

 

 

—

 

 

 

—

 

 

 

40,828

 

 

 

215

 

 

 

40,828

 

 

 

215

 

Total ALLL

 

$

18,052

 

 

$

4,234

 

 

$

4,784,706

 

 

$

57,463

 

 

$

4,802,758

 

 

$

61,697

 

 

 

Individually evaluated loans include nonaccrual loans of $15.9 million at March 31, 2022 and $15.6 million at December 31, 2021.  This includes one $12.5 million commercial real estate loan that was placed on nonaccrual status in 2021. The Company recorded a charge-off of $7.4 million related to this loan during the fourth quarter of 2021.  Individually evaluated loans also included performing TDR loans of $2.4 million at March 31, 2022 and $2.5 million at December 31, 2021.  The allowance

allocated to TDR loans totaled $2.5 million at March 31, 2022, of which all was allocated to one nonaccrual loan.  At December 31, 2021, there was no allowance allocated to TDR loans.  All accruing TDR loans were paying in accordance with restructured terms as of March 31, 2022.  The Company has not committed to lend additional amounts as of March 31, 2022 to customers with outstanding loans that are classified as TDR loans.  

 

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 March 31, 2022:

 

 

 

March 31, 2022

 

 

 

Unpaid

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

Principal

 

 

Recorded

 

 

Related

 

 

Individually Evaluated

 

(In thousands)

 

Balance

 

 

Investment

 

 

Allowance

 

 

Loans

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Primary residential mortgage

 

$

445

 

 

$

385

 

 

$

—

 

 

$

343

 

Owner-occupied commercial real estate

 

 

357

 

 

 

328

 

 

 

—

 

 

 

342

 

Commercial and industrial

 

 

282

 

 

 

266

 

 

 

—

 

 

 

282

 

Total loans with no related allowance

 

$

1,084

 

 

$

979

 

 

$

—

 

 

$

967

 

With related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment commercial real estate

 

$

12,500

 

 

$

12,500

 

 

$

2,500

 

 

$

12,667

 

Total loans with related allowance

 

$

12,500

 

 

$

12,500

 

 

$

2,500

 

 

$

12,667

 

Total loans individually evaluated

 

$

13,584

 

 

$

13,479

 

 

$

2,500

 

 

$

13,634

 

 

The following table presents, under previously applicable GAAP, loans individually evaluated for impairment as of December 31, 2021 (the average impaired loans on the following tables represent year to date impaired loans):

 

 

 

December 31, 2021

 

 

 

Unpaid

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

Principal

 

 

Recorded

 

 

Specific

 

 

Impaired

 

(In thousands)

 

Balance

 

 

Investment

 

 

Reserves

 

 

Loans

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Primary residential mortgage

 

$

2,453

 

 

$

2,242

 

 

$

—

 

 

$

1,818

 

Owner-occupied commercial real estate

 

 

492

 

 

 

458

 

 

 

—

 

 

 

540

 

Junior lien loan on residence

 

 

18

 

 

 

18

 

 

 

—

 

 

 

3

 

Commercial and industrial

 

 

4,549

 

 

 

2,584

 

 

 

—

 

 

 

3,153

 

Total loans with no related allowance

 

$

7,512

 

 

$

5,302

 

 

$

—

 

 

$

5,514

 

With related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment commercial real estate

 

$

19,887

 

 

$

12,750

 

 

$

4,234

 

 

$

6,034

 

Total loans with related allowance

 

$

19,887

 

 

$

12,750

 

 

$

4,234

 

 

$

6,034

 

Total loans individually evaluated for impairment

 

$

27,399

 

 

$

18,052

 

 

$

4,234

 

 

$

11,548

 

 

Interest income recognized on individually evaluated loans for the quarter ended March 31, 2022 and 2021 was not material.  The Company did not recognize any income on non-accruing impaired loans for the three months ended March 31, 2022 and 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The activity in the allowance for credit losses for the three months ended March 31, 2022 is summarized below:

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

Prior to adoption

 

 

Impact of

 

 

 

 

 

 

 

 

 

 

Provision

 

 

Ending

 

(In thousands)

 

of Topic 326

 

 

adopting Topic 326

 

 

Charge-offs

 

 

Recoveries

 

 

(Credit)

 

 

ACL

 

Primary residential mortgage

 

$

1,510

 

 

$

1,604

 

 

$

—

 

 

$

—

 

 

$

431

 

 

$

3,545

 

Junior lien loan on residence

 

 

88

 

 

 

174

 

 

 

—

 

 

 

—

 

 

 

(20

)

 

 

242

 

Multifamily property

 

 

9,806

 

 

 

3,763

 

 

 

—

 

 

 

—

 

 

 

1,911

 

 

 

15,480

 

Owner-occupied commercial real estate

 

 

1,998

 

 

 

2,934

 

 

 

—

 

 

 

—

 

 

 

(29

)

 

 

4,903

 

Investment commercial real estate

 

 

27,083

 

 

 

(13,450

)

 

 

(250

)

 

 

—

 

 

 

(2,414

)

 

 

10,969

 

Commercial and industrial

 

 

17,509

 

 

 

(1,646

)

 

 

—

 

 

 

4

 

 

 

2,786

 

 

 

18,653

 

Lease financing

 

 

3,440

 

 

 

156

 

 

 

—

 

 

 

—

 

 

 

(242

)

 

 

3,354

 

Construction loans

 

 

48

 

 

 

418

 

 

 

—

 

 

 

—

 

 

 

66

 

 

 

532

 

Consumer and other loans

 

 

215

 

 

 

511

 

 

 

(20

)

 

 

2

 

 

 

—

 

 

 

708

 

Total ACL

 

$

61,697

 

 

$

(5,536

)

 

$

(270

)

 

$

6

 

 

$

2,489

 

 

$

58,386

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 three months ended March 31, 2021 is summarized below:

 

 

 

January 1,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

Beginning

 

 

 

 

 

 

 

 

 

 

Provision

 

 

Ending

 

(In thousands)

 

ALLL

 

 

Charge-offs

 

 

Recoveries

 

 

(Credit)

 

 

ALLL

 

Primary residential mortgage

 

$

2,905

 

 

$

—

 

 

$

—

 

 

$

(129

)

 

$

2,776

 

Home equity lines of credit

 

 

218

 

 

 

—

 

 

 

9

 

 

 

(29

)

 

 

198

 

Junior lien loan on residence

 

 

15

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

16

 

Multifamily property

 

 

9,945

 

 

 

—

 

 

 

—

 

 

 

482

 

 

 

10,427

 

Owner-occupied commercial real estate

 

 

3,050

 

 

 

—

 

 

 

—

 

 

 

(186

)

 

 

2,864

 

Investment commercial real estate

 

 

27,713

 

 

 

—

 

 

 

—

 

 

 

(1,020

)

 

 

26,693

 

Commercial and industrial

 

 

19,047

 

 

 

—

 

 

 

7

 

 

 

1,071

 

 

 

20,125

 

Lease financing

 

 

3,936

 

 

 

—

 

 

 

—

 

 

 

31

 

 

 

3,967

 

Farmland/agricultural production

 

 

43

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

47

 

Commercial construction loans

 

 

158

 

 

 

—

 

 

 

—

 

 

 

3

 

 

 

161

 

Consumer and other loans

 

 

279

 

 

 

(15

)

 

 

1

 

 

 

(3

)

 

 

262

 

Total ALLL

 

$

67,309

 

 

$

(15

)

 

$

17

 

 

$

225

 

 

$

67,536

 

 

Allowance for Credit Losses on Off Balance Sheet Commitments

 

The following table presets the activity in the ACL for off balance sheet commitments for the three months ended March 31, 2022:

 

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior to adoption

 

 

Impact of

 

 

Provision

 

 

March 31, 2022

 

(In thousands)

 

of Topic 326

 

 

adopting Topic 326

 

 

(Credit)

 

 

Ending ACL

 

Off balance sheet commitments

 

$

—

 

 

$

302

 

 

$

(114

)

 

$

188

 

Total ACL

 

$

—

 

 

$

302

 

 

$

(114

)

 

$

188