Loans Receivable and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Schedule of Summarized Loans Receivable

Loans receivable at September 30, 2020 and December 31, 2019 are summarized as follows (in thousands):

	September 30, 2020		December 31, 2019
Mortgage loans:
Residential	$	1,320,222	1,077,689
Commercial	3,750,639		2,578,393
Multi-family	1,544,924		1,225,551
Construction	462,161		429,812
Total mortgage loans	7,077,946		5,311,445
Commercial loans
Commercial owner occupied	934,104		853,269
Commercial non-owner occupied	906,355		732,277
Other commercial loans	449,737		49,213
Total commercial loans	2,290,196		1,634,759
Consumer loans	406,451		391,360
Total gross loans	9,774,593		7,337,564
PCI loans prior to CECL	—		746
Premiums on purchased loans	1,514		2,474
Unearned discounts	(26)		(26)
Net deferred fees	(19,272)		(7,873)
Total loans	$	9,756,809	7,332,885

Summary of Aging Loans Receivable by Portfolio Segment and Class

The following tables summarize the aging of loans receivable by portfolio segment and class of loans (in thousands). The September 30, 2020 balances include PCD loans, while the December 31, 2019 balances exclude PCI loans (in accordance with ASC 310, prior to the adoption of ASU 2016-13 on January 1, 2020):

	September 30, 2020
	30-59 Days		60-89 Days	Non-accrual	Recorded Investment > 90 days accruing	Total Past Due	Current	Total Loans Receivable	Non-accrual loans with no related allowance
Mortgage loans:
Residential	$	8,719	7,215	9,424	—	25,358	1,294,864	1,320,222	1,491
Commercial	3,914		4,629	16,568	—	25,111	3,725,528	3,750,639	4,134
Multi-family	—		488	—	—	488	1,544,436	1,544,924	—
Construction	7,396		918	151	—	8,465	453,696	462,161	—
Total mortgage loans	20,029		13,250	26,143	—	59,422	7,018,524	7,077,946	5,625
Commercial loans	5,575		949	21,269	—	27,793	2,262,403	2,290,196	6,060
Consumer loans	745		862	1,541	—	3,148	403,303	406,451	9
Total gross loans	$	26,349	15,061	48,953	—	90,363	9,684,230	9,774,593	11,694

	December 31, 2019
	30-59 Days		60-89 Days	Non-accrual	Recorded Investment > 90 days accruing	Total Past Due	Current	Total Loans Receivable	Non-accrual loans with no related allowance
Mortgage loans:
Residential	$	5,905	2,579	8,543	—	17,027	1,060,662	1,077,689	2,989
Commercial	—		—	5,270	—	5,270	2,573,123	2,578,393	—
Multi-family	—		—	—	—	—	1,225,551	1,225,551	—
Construction	—		—	—	—	—	429,812	429,812	—
Total mortgage loans	5,905		2,579	13,813	—	22,297	5,289,148	5,311,445	2,989
Commercial loans	2,383		95	25,160	—	27,638	1,607,121	1,634,759	3,238
Consumer loans	1,276		337	1,221	—	2,834	388,526	391,360	569
Total gross loans	$	9,564	3,011	40,194	—	52,769	7,284,795	7,337,564	6,796

Summary of Allowance for Loan Losses by Portfolio Segment and Impairment Classification

The activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2020 and 2019 was as follows (in thousands):

Three months ended September 30,	Mortgage loans		Commercial loans	Consumer loans	Total
2020
Balance at beginning of period	$	54,871	25,284	6,104	86,259
Provision charged to operations	2,922		2,767	722	6,411
Initial allowance on credit loans related to PCD loans	11,984		1,582	20	13,586
Recoveries of loans previously charged-off	35		679	144	858
Loans charged-off	(22)		(727)	(51)	(800)
Balance at end of period	$	69,790	29,585	6,939	106,314
2019
Balance at beginning of period	$	27,280	33,549	1,981	62,810
Provision charged to operations	(2,092)		2,880	(288)	500
Recoveries of loans previously charged-off	24		126	343	493
Loans charged-off	(131)		(6,212)	(116)	(6,459)
Balance at end of period	$	25,081	30,343	1,920	57,344

Nine months ended September 30,	Mortgage loans		Commercial loans	Consumer loans	Total
2020
Balance at beginning of period	$	25,511	28,263	1,751	55,525
Increase (decrease) due to the initial adoption of CECL - Retained earnings	14,188		(9,974)	3,706	7,920
Initial allowance on credit loans related to PCD loans	11,984		1,582	20	13,586
Provision charged to operations	17,987		12,672	1,352	32,011
Recoveries of loans previously charged-off	143		1,597	370	2,110
Loans charged-off	(23)		(4,555)	(260)	(4,838)
Balance at end of period	$	69,790	29,585	6,939	106,314
2019
Balance at beginning of period	$	27,678	25,693	2,191	55,562
Provision (credited) charged to operations	(2,814)		13,337	(323)	10,200
Recoveries of loans previously charged-off	361		291	596	1,248
Loans charged-off	(144)		(8,978)	(544)	(9,666)
Balance at end of period	$	25,081	30,343	1,920	57,344

The allowance for credit losses is summarized by portfolio segment and impairment classification as follows (in thousands):

	September 30, 2020
	Mortgage loans		Commercial loans	Consumer loans	Total
Individually evaluated for impairment	$	1,391	1,876	33	3,300
Collectively evaluated for impairment	68,399		27,709	6,906	103,014
Total gross loans	$	69,790	29,585	6,939	106,314

	December 31, 2019
	Mortgage loans		Commercial loans	Consumer loans	Total
Individually evaluated for impairment	$	1,580	3,462	25	5,067
Collectively evaluated for impairment	23,931		24,801	1,726	50,458
Total gross loans	$	25,511	28,263	1,751	55,525

Schedule of Impact of ASC 326

The following table illustrates the impact of the January 1, 2020 adoption of CECL on held to maturity debt securities (in thousands):

	January 1, 2020
	As reported under CECL		Prior to CECL	Impact of CECL adoption
Held to Maturity Debt Securities
Allowance for credit losses on corporate securities	$	6	—	6
Allowance for credit losses on municipal securities	64		—	64
Allowance for credit losses on held to maturity debt securities	$	70	—	70

The following table illustrates the impact of the January 1, 2020 adoption of CECL on the allowance for credits for the loan portfolio (in thousands):

	January 1, 2020
	As reported under CECL		Prior to CECL	Impact of CECL adoption
Loans
Residential	$	8,950	3,411	5,539
Commercial	17,118		12,885	4,233
Multi-family	9,519		3,370	6,149
Construction	4,152		5,885	(1,733)
Total mortgage loans	39,739		25,551	14,188
Commercial loans	18,254		28,228	(9,974)
Consumer loans	5,452		1,746	3,706
Allowance for credit losses on loans	$	63,445	55,525	7,920

The following table illustrates the impact of the January 1, 2020 adoption of CECL on off-balance sheet credit exposures:

	January 1, 2020
	As reported under CECL		Prior to CECL	Impact of CECL adoption
Liabilities
Allowance for credit losses on off-balance sheet credit exposure	$	3,206	—	3,206

Summary of Loans Receivable by Portfolio Segment and Impairment Method

The following tables summarize loans receivable by portfolio segment and impairment method (in thousands):

	September 30, 2020
	Mortgage loans		Commercial loans	Consumer loans	Total Portfolio Segments
Individually evaluated for impairment	$	43,397	20,963	1,449	65,809
Collectively evaluated for impairment	7,034,549		2,269,233	405,002	9,708,784
Total gross loans	$	7,077,946	2,290,196	406,451	9,774,593

	December 31, 2019
	Mortgage loans		Commercial loans	Consumer loans	Total Portfolio Segments
Individually evaluated for impairment	$	39,910	28,357	2,374	70,641
Collectively evaluated for impairment	5,271,535		1,606,402	388,986	7,266,923
Total gross loans	$	5,311,445	1,634,759	391,360	7,337,564

Schedule of Troubled Debt Restructuring

The following tables present the number of loans modified as TDRs during the three and nine months ended September 30, 2020 and 2019, along with their balances immediately prior to the modification date and post-modification as of September 30, 2020 and 2019 (in thousands):

	For the three months ended
	September 30, 2020					September 30, 2019
Troubled Debt Restructurings	Number of Loans	Pre-Modification Outstanding Recorded  Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded  Investment		Post-Modification Outstanding Recorded  Investment
	($ in thousands)
Mortgage loans:
Residential	1	$	91	$	79	—	$	—	$	—
Total mortgage loans	1	91		79		—	—		—
Commercial loans	1	1,399		1,399		—	—		—
Consumer loans	—	—		—		1	20		16
Total restructured loans	2	$	1,490	$	1,478	1	$	20	$	16

	For the nine months ended
	September 30, 2020					September 30, 2019
Troubled Debt Restructurings	Number of Loans	Pre-Modification Outstanding Recorded  Investment		Post-Modification Outstanding Recorded  Investment		Number of Loans	Pre-Modification Outstanding Recorded  Investment		Post-Modification Outstanding Recorded  Investment
	($ in thousands)
Mortgage loans:
Residential	2	$	434	$	360	2	$	749	$	716
Commercial	—	—		—		1	14,010		14,010
Total mortgage loans	2	434		360		3	14,759		14,726
Commercial loans	5	2,882		2,791		7	2,707		1,878
Consumer loans	—	—		—		1	20		16
Total restructured loans	7	$	3,316	$	3,151	11	$	17,486	$	16,620

Schedule of Troubled Debt Restructurings Subsequently Defaulted

The following table presents loans modified as TDRs within the previous 12 months from September 30, 2020 and 2019, and for which there was a payment default (90 days or more past due) at the quarter ended September 30, 2020 and 2019.

	September 30, 2020			September 30, 2019
Troubled Debt Restructurings Subsequently Defaulted	Number of Loans	Outstanding Recorded Investment		Number of Loans	Outstanding Recorded  Investment
	($ in thousands)
Mortgage loans:
Residential	—	$	—	1	$	578
Total mortgage loans	—	—		1	578
Total restructured loans	—	$	—	1	$	578

Schedule of Fair Value of Loans Acquired in Acquisition

The table below illustrates the fair value adjustments made to the amortized cost basis in order to present a fair value of the loans acquired (in thousands):

Gross amortized cost basis at July 31, 2020	$	1,784,945
Interest rate fair value adjustment on all loans	2,567
Credit fair value adjustment on non-PCD loans	(21,397)
Allowance for credit losses on PCD loans	(13,586)
Fair value of acquired loans at July 31, 2020	$	1,752,529

The table below is a summary of the PCD loans accounted for in accordance with ASC 310-26 that were acquired in the SB One acquisition as of the closing date (in thousands):

Gross amortized cost basis at July 31, 2020	$	315,784
Interest component of expected cash flows (accretable difference)	(7,988)
Allowance for credit losses on PCD loans	(13,586)
Net PCD loans	$	294,210

The table below is a summary of the PCD loans accounted for in accordance with ASC 310-26 that were acquired in the SB One acquisition as of the July 31, 2020 closing date (in thousands):

Gross amortized cost basis at July 31, 2020	$	315,784
Interest component of expected cash flows (accretable difference)	(7,988)
Allowance for credit losses on PCD loans	(13,586)
Net PCD loans	$	294,210

Summary of Impaired Loans Receivable by Class

The following table presents loans individually evaluated for impairment by class and loan category, excluding PCD loans (in thousands):

	September 30, 2020						December 31, 2019
	Unpaid Principal Balance		Recorded Investment	Related Allowance	Average Recorded Investment	Interest Income Recognized	Unpaid Principal Balance	Recorded Investment	Related Allowance	Average Recorded Investment	Interest Income Recognized
Loans with no related allowance
Mortgage loans:
Residential	$	14,144	11,541	—	11,694	386	13,478	10,739	—	10,910	533
Commercial	19,543		19,543	—	19,548	431	—	—	—	—	—
Total	33,687		31,084	—	31,242	817	13,478	10,739	—	10,910	533
Commercial loans	7,959		5,713	—	7,300	29	3,927	3,696	—	4,015	17
Consumer loans	1,396		895	—	921	39	2,086	1,517	—	1,491	86
Total impaired loans	$	43,042	37,692	—	39,463	885	19,491	15,952	—	16,416	636
Loans with an allowance recorded
Mortgage loans:
Residential	$	7,922	7,503	728	7,440	235	10,860	10,326	829	10,454	428
Commercial	4,810		4,810	663	4,822	41	18,845	18,845	751	18,862	569
Total	12,732		12,313	1,391	12,262	276	29,705	29,171	1,580	29,316	997
Commercial loans	17,050		15,250	1,876	18,280	293	27,762	24,661	3,462	27,527	444
Consumer loans	569		554	33	560	13	868	857	25	878	46
Total impaired loans	$	30,351	28,117	3,300	31,102	582	58,335	54,689	5,067	57,721	1,487
Total impaired loans
Mortgage loans:
Residential	$	22,066	19,044	728	19,134	621	24,338	21,065	829	21,364	961
Commercial	24,353		24,353	663	24,370	472	18,845	18,845	751	18,862	569
Total	46,419		43,397	1,391	43,504	1,093	43,183	39,910	1,580	40,226	1,530
Commercial loans	25,009		20,963	1,876	25,580	322	31,689	28,357	3,462	31,542	461
Consumer loans	1,965		1,449	33	1,481	52	2,954	2,374	25	2,369	132
Total impaired loans	$	73,393	65,809	3,300	70,565	1,467	77,826	70,641	5,067	74,137	2,123

Summary of Loans Receivable by Credit Quality Risk Rating Indicator

The following table summarizes the Company's gross loans held for investment by year of origination and internally assigned credit grades (in thousands):

	At September 30, 2020
Total portfolio	Residential		Commercial mortgage	Multi-family	Construction	Total mortgages	Commercial	Consumer	Total Loans (1)
Special mention	$	4,483	54,368	101	872	59,824	168,833	362	229,019
Substandard	41,255		52,847	124	—	94,226	103,132	3,680	201,038
Doubtful	—		—	—	—	—	76	—	76
Loss	—		—	—	—	—	—	—	—
Total criticized and classified	45,738		107,215	225	872	154,050	272,041	4,042	430,133
Pass/Watch	1,274,484		3,643,424	1,544,699	461,289	6,923,896	2,018,155	402,409	9,344,460
Total	$	1,320,222	3,750,639	1,544,924	462,161	7,077,946	2,290,196	406,451	9,774,593
2020
Special mention	$	—	—	—	872	872	657	—	1,529
Substandard	2,079		—	—	—	2,079	—	25	2,104
Doubtful	—		—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—
Total criticized and classified	2,079		—	—	872	2,951	657	25	3,633
Pass/Watch	198,722		375,324	230,034	28,187	832,267	586,510	27,605	1,446,382
Total gross loans	$	200,801	375,324	230,034	29,059	835,218	587,167	27,630	1,450,015

2019
Special mention	$	1,753	$	12,434	$	—	$	—	$	14,187	$	6,755	$	—	$	20,942
Substandard	6,321		—		—		—		6,321		2,742		343		9,406
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total criticized and classified	8,074		12,434		—		—		20,508		9,497		343		30,348
Pass/Watch	139,391		547,969		139,633		164,333		991,326		225,447		46,745		1,263,518
Total gross loans	$	147,465	560,403		139,633		164,333		1,011,834		234,944		47,088		1,293,866
2018
Special mention	$	318	6,630		—		—		6,948		10,908		—		17,856
Substandard	2,152		—		—		—		2,152		4,948		356		7,456
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total criticized and classified	2,470		6,630		—		—		9,100		15,856		356		25,312
Pass/Watch	79,552		361,309		171,555		119,980		732,396		169,974		40,927		943,297
Total gross loans	$	82,022	367,939		171,555		119,980		741,496		185,830		41,283		968,609
2017
Special mention	$	—	—		—		—		—		31,465		—		31,465
Substandard	3,233		17,529		—		—		20,762		8,040		15		28,817
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total criticized and classified	3,233		17,529		—		—		20,762		39,505		15		60,282
Pass/Watch	80,813		387,846		134,166		37,564		640,389		148,737		33,340		822,466
Total gross loans	$	84,046	405,375		134,166		37,564		661,151		188,242		33,355		882,748
2016 and prior
Special mention	$	2,412	35,304		101		—		37,817		119,048		362		157,227
Substandard	27,470		35,318		124		—		62,912		87,402		2,941		153,255
Doubtful	—		—		—		—		—		76		—		76
Loss	—		—		—		—		—		—		—		—
Total criticized and classified	29,882		70,622		225		—		100,729		206,526		3,303		310,558
Pass/Watch	805,888		2,041,598		869,536		111,225		3,828,247		1,094,013		257,095		5,179,355
Total gross loans	$	835,770	2,112,220		869,761		111,225		3,928,976		1,300,539		260,398		5,489,913
	At December 31, 2019
	Residential		Commercial mortgage		Multi-family		Construction		Total mortgages		Commercial		Consumer		Total loans
Special mention	$	2,402	46,758		—		—		49,160		79,248		286		128,694
Substandard	10,204		13,458		—		6,181		29,843		57,015		1,668		88,526
Doubtful	—		—		—		—		—		836		—		836
Loss	—		—		—		—		—		—		—		—
Total criticized and classified	12,606		60,216		—		6,181		79,003		137,099		1,954		218,056
Pass/Watch	1,065,083		2,518,177		1,225,551		423,631		5,232,442		1,497,660		389,406		7,119,508
Total	$	1,077,689	2,578,393		1,225,551		429,812		5,311,445		1,634,759		391,360		7,337,564

(1) Contained within criticized and classified loans at September 30, 2020 are loans that were granted payment deferrals related to COVID-19 totaling $310.8 million