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Note 4 - Loans

12 Months Ended

Dec. 31, 2021

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

4. Loans

Most of the Company’s business activities are with customers located in the high-density Asian-populated areas of Southern and Northern California; New York City, New York; Houston and Dallas, Texas; Seattle, Washington; Boston, Massachusetts; Chicago, Illinois; Edison, New Jersey; Rockville, Maryland; and Las Vegas, Nevada. The Company also has loan customers in Hong Kong. The Company has no specific industry concentration, and generally its loans, when secured, are secured by real property or other collateral of the borrowers. The Company generally expects loans to be paid off from the operating profits of the borrowers, from refinancing by another lender, or through sale by the borrowers of the secured collateral.

The types of loans in the Company’s Consolidated Balance Sheets as of December 31, 2021, and 2020, were as follows:

	As of December 31,
	2021			2020
	(In thousands)
Type of Loans:
Commercial loans	$	2,982,399		$	2,836,833
Real estate construction loans		611,031			679,492
Commercial mortgage loans		8,143,272			7,555,027
Residential mortgage loans		4,182,006			4,145,389
Equity lines		419,487			424,555
Installment and other loans		4,284			3,100
Gross loans		16,342,479			15,644,396
Less:
Allowance for loan losses		(136,157	)		(166,538	)
Unamortized deferred loan fees		(4,321	)		(2,494	)
Total loans, net	$	16,202,001		$	15,475,364

The Company pledged real estate loans of $11.5 billion at December 31, 2021, and $11.2 billion at December 31, 2020, to the Federal Home Loan Bank of San Francisco under its blanket lien pledging program. In addition, the Company pledged $773 thousand at December 31, 2021, and $7.5 million at December 31, 2020, of its commercial loans to the Federal Reserve Bank’s Discount Window under the Borrower-in-Custody program.

Loans serviced for others as of December 31, 2021, totaled $141.2 million and were comprised of $92.1 million of residential mortgages, $17.0 million of commercial real estate loans, $30.1 million of construction loans, and $2.3 million of commercial loans.

The Company has entered into transactions with its directors, executive officers, or principal holders of its equity securities, or the associates of such persons (“Related Parties”). All loans to Related Parties were current as of December 31, 2021. An analysis of the activity with respect to loans to Related Parties for the years indicated is as follows:

	December 31,
	2021			2020
	(In thousands)
Balance at beginning of year	$	51,288		$	43,952
Additional loans made		29,182			23,102
Payment received		(41,938	)		(15,766	)
Balance at end of year	$	38,532		$	51,288

At December 31, 2021, recorded investment in non-accrual loans totaled $65.8 million. At December 31, 2020, recorded investment in impaired loans totaled $95.4 million and were comprised of nonaccrual loans of $67.7 million and accruing TDR’s of $27.7 million. The average balance of non-accrual loans was $72.7 million in 2021 and average balance of impaired loans was $91.4 million in 2020. Interest recognized on non-accrual loans totaled $1.1 million in 2021 and on impaired loans totaled $2.4 million in 2020. For non-accrual loans, the amounts previously charged off represent 10.7% of the contractual balances for non-accrual loans as of December 31, 2021. For impaired loans, the amounts previously charged off represent 7.1% of the contractual balances for impaired loans at December 31, 2020.

The following table presents the average balance and interest income recognized on non-accrual loans for the periods indicated:

	For the year ended December 31, 2021
	Average Recorded Investment		Interest Income Recognized
	(In thousands)
Commercial loans	$	21,453	$	—
Real estate construction loans		3,805		—
Commercial mortgage loans		38,047		1,044
Residential mortgage and equity lines		9,435		30
Total	$	72,740	$	1,074

In connection with the adoption of ASU 2016-13, the Company no longer provides information on impaired loans. The following table presents the average recorded investment and interest income recognized on individually evaluated loans for the period indicated:

	For the year ended December 31, 2020
	Average Recorded Investment		Interest Income Recognized
	(In thousands)
Commercial loans	$	31,009	$	246
Real estate construction loans		4,408		294
Commercial mortgage loans		41,649		1,602
Residential mortgage and equity lines		14,287		252
Total	$	91,353	$	2,394

The following table presents non-accrual loans and the related allowance as of December 31, 2021:

	As of December 31, 2021
	Unpaid Principal Balance		Recorded Investment		Allowance
	(In thousands)
With no allocated allowance:
Commercial loans	$	15,879	$	11,342	$	—
Commercial mortgage loans		24,437		21,209		—
Residential mortgage and equity lines		6,020		5,850		—
Subtotal	$	46,336	$	38,401	$	—
With allocated allowance:
Commercial loans	$	14,294	$	5,217	$	894
Commercial mortgage loans		17,930		16,964		3,631
Residential mortgage and equity lines		6,048		5,264		22
Subtotal	$	38,272	$	27,445	$	4,547
Total non-accrual loans	$	84,608	$	65,846	$	4,547

In connection with the adoption of ASU 2016-13, the Company no longer provides information on impaired loans. The following table presents impaired loans and the related allowance as of December 31, 2020:

	Impaired Loans
	As of December 31, 2020
	Unpaid Principal Balance		Recorded Investment		Allowance
	(In thousands)
With no allocated allowance:
Commercial loans	$	23,784	$	20,698	$	—
Real estate construction loans		5,776		4,286		—
Commercial mortgage loans		22,877		22,287		—
Residential mortgage and equity lines		6,379		6,307		—
Subtotal	$	58,816	$	53,578	$	—
With allocated allowance:
Commercial loans	$	13,703	$	6,372	$	1,030
Commercial mortgage loans		31,134		31,003		5,254
Residential mortgage and equity lines		5,005		4,452		145
Subtotal	$	49,842	$	41,827	$	6,429
Total impaired loans	$	108,658	$	95,405	$	6,429

The following table is a summary of non-accrual loans as of December 31, 2021, 2020, and 2019 and the related net interest foregone for the years then ended:

	As of December 31,
	2021		2020		2019
	(In thousands)
Non-accrual portfolio loans	$	65,846	$	67,684	$	40,523
Contractual interest due		4,032		3,093		1,775
Interest recognized		1,074		1,008		85
Net interest foregone	$	2,958	$	2,085	$	1,690

The following tables present the aging of the loan portfolio by type as of December 31, 2021, and December 31, 2020:

	As of December 31, 2021
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Non-accrual Loans		Total Past Due		Loans Not Past Due		Total
Type of Loans:	(In thousands)
Commercial loans	$	4,294	$	9,877	$	1,439	$	16,558	$	32,168	$	2,950,231	$	2,982,399
Real estate construction loans		—		—		—		—		—		611,031		611,031
Commercial mortgage loans		8,389		—		—		38,173		46,562		8,096,710		8,143,272
Residential mortgage loans		20,129		3,138		—		11,115		34,382		4,567,111		4,601,493
Installment and other loans		—		—		—		—		—		4,284		4,284
Total loans	$	32,812	$	13,015	$	1,439	$	65,846	$	113,112	$	16,229,367	$	16,342,479

	As of December 31, 2020
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Non-accrual Loans		Total Past Due		Loans Not Past Due		Total
Type of Loans:	(In thousands)
Commercial loans	$	52,601	$	3,182	$	2,947	$	23,087	$	81,817	$	2,755,016	$	2,836,833
Real estate construction loans		6,257		—		—		4,286		10,543		668,949		679,492
Commercial mortgage loans		45,186		18,069		2,035		33,715		99,005		7,456,022		7,555,027
Residential mortgage loans		14,315		4,223		—		6,596		25,134		4,544,810		4,569,944
Installment and other loans		43		—		—		—		43		3,057		3,100
Total loans	$	118,402	$	25,474	$	4,982	$	67,684	$	216,542	$	15,427,854	$	15,644,396

A TDR is a formal modification of the terms of a loan when the lender, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower. The concessions may be granted in various forms, including a change in the stated interest rate, a reduction in the loan balance or accrued interest, or an extension of the maturity date. Although these loan modifications are considered TDRs, TDR loans that have, pursuant to the Bank’s policy, performed under the restructured terms and have demonstrated sustained performance under the modified terms for six months are returned to accrual status. The sustained performance considered by management pursuant to its policy includes the periods prior to the modification if the prior performance met or exceeded the modified terms. This would include cash paid by the borrower prior to the restructure to set up interest reserves. Loans classified as TDRs are reported as individually evaluated loans.

The allowance for credit loss on a TDR is measured using the same method as all other loans held for investment, except when the value of a concession cannot be measured using a method other than the discounted cash flow method. When the value of a concession is measured using the discounted cash flow method, the allowance for credit loss is determined by discounting the expected future cash flows at the original interest rate of the loan.

The Company establishes a specific reserve for individually evaluated loans that do not share similar risk characteristics with the loans included in the quantitative baseline. These individually evaluated loans are removed from the pooling approach discussed in the “Basis of Presentation and Summary of Significant Accounting Policies” above, for the quantitative baseline, and include non-accrual loans, TDRs, and other loans as deemed appropriate by management. In addition, the Company individually evaluates “reasonably expected” TDRs, which are identified by the Company as a commercial loan expected to be classified as a TDR. Individually evaluated loans also includes “reasonably expected” TDRs, identified by the Company as a consumer loan for which a borrower’s application of loan modification due to hardship has been received by the Company. Management judgment is utilized to make this determination.

Although the Company took steps to incorporate the impact of the COVID-19 pandemic on the economic conditions and other factors utilized to determine the expected loan losses, if the economic conditions or other factors worsen relative to the assumptions the Company utilized, the expected loan losses will increase accordingly in future periods.

At December 31, 2021, accruing TDRs were $12.8 million and non-accrual TDRs were $8.2 million compared to accruing TDRs of $27.7 million and non-accrual TDRs of $9.0 million at December 31, 2020. The Company allocated seven thousand in reserves to accruing TDRs and three thousand to non-accrual TDRs at December 31, 2021, compared to $122 thousand to accruing TDRs and $24 thousand to non-accrual TDRs at December 31, 2020. The following table presents TDRs that were modified during 2021, their specific reserve at December 31, 2021, and charge-offs during 2021:

	Loans Modified as TDRs During the Year Ended December 31, 2021
	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve		Charge-offs
	(Dollars in thousands)

Commercial loans		3	$	2,150	$	2,150	$	—	$	—
Residential mortgage and equity lines		2		3		3		—		—
Total		5	$	2,153	$	2,153	$	—	$	—

The following table presents TDRs that were modified during 2020, their specific reserve at December 31, 2020, and charge-offs during 2020:

	Loans Modified as TDRs During the Year Ended December 31, 2020
	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve		Charge-offs
	(Dollars in thousands)

Commercial loans		5	$	5,417	$	5,417	$	—	$	—
Total		5	$	5,417	$	5,417	$	—	$	—

The following table presents TDRs that were modified during 2019, their specific reserve at December 31, 2019, and charge-offs during 2019:

	Loans Modified as TDRs During the Year Ended December 31, 2019
	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve		Charge-off
	(Dollars in thousands)

Commercial loans		23	$	25,937	$	21,874	$	2,190	$	4,063
Residential mortgage and equity lines		1		42		42		—		—
Total		24	$	25,979	$	21,916	$	2,190	$	4,063

A summary of TDRs by type of concession and by type of loans as of December 31, 2021, and December 31, 2020, are shown below:

	December 31, 2021
Accruing TDRs	Payment Deferral		Rate Reduction		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	3,368	$	—	$	—	$	3,368
Commercial mortgage loans		438		5,522		168		6,128
Residential mortgage loans		1,464		249		1,628		3,341
Total accruing TDRs	$	5,270	$	5,771	$	1,796	$	12,837

	December 31, 2021
Non-accrual TDRs	Payment Deferral		Rate Reduction		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	7,717	$	—	$	—	$	7,717
Residential mortgage loans		458		—		—		458
Total non-accrual TDRs	$	8,175	$	—	$	—	$	8,175

	December 31, 2020
Accruing TDRs	Payment Deferral		Rate Reduction		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	3,983	$	—	$	—	$	3,983
Commercial mortgage loans		515		5,635		13,425		19,575
Residential mortgage loans		1,724		275		2,164		4,163
Total accruing TDRs	$	6,222	$	5,910	$	15,589	$	27,721

	December 31, 2020
Non-accrual TDRs	Payment Deferral		Rate Reduction		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	8,462	$	—	$	—	$	8,462
Residential mortgage loans		523		—		—		523
Total non-accrual TDRs	$	8,985	$	—	$	—	$	8,985

Modifications of the loan terms in the twelve months ended December 31, 2021, were in the form of extensions of maturity dates, which ranged generally from three to twelve months from the modification date.

We expect that the TDRs on accruing status as of December 31, 2021, which were all performing in accordance with their restructured terms, will continue to comply with the restructured terms because of the reduced principal or interest payments on these loans. The ongoing impact of the COVID pandemic, however, could increase the risk of such TDRs becoming non-accrual due to the borrowers’ inability to continue to comply with their restructured terms.

The Company considers a loan to be in payment default once it is 60 to 90 days contractually past due under the modified terms. The Company did not have any loans that were modified as a TDR during the previous twelve months and which had subsequently defaulted as of December 31, 2021.

Under the Company’s internal underwriting policy, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification in order to determine whether a borrower is experiencing financial difficulty.

As of December 31, 2021, there were no commitments to lend additional funds to those borrowers whose loans have been restructured, were considered individually evaluated, or were on non-accrual status.

The CARES Act, signed into law on March 27, 2020, and as extended by the CAA, 2021, permits financial institutions to suspend requirements under GAAP for loan modifications to borrowers affected by COVID-19 that would otherwise be characterized as TDRs and suspend any determination related thereto if (i) the loan modification is made between March 1, 2020 and the earlier of December 31, 2021 or 60 days after the end of the coronavirus emergency declaration and (ii) the applicable loan was not more than 30 days past due as of December 31, 2019. In addition, federal bank regulatory authorities have issued guidance to encourage financial institutions to make loan modifications for borrowers affected by COVID-19 and have assured financial institutions that they will neither receive supervisory criticism for such prudent loan modifications, nor be required by examiners to automatically categorize COVID-19-related loan modifications as TDRs. The Company is applying this guidance to qualifying loan modifications.

As part of the on-going monitoring of the credit quality of our loan portfolio, the Company utilizes a risk grading matrix to assign a risk rating to each loan. Loans are risk rated based on analysis of the current state of the borrower’s credit quality. The analysis of credit quality includes a review of sources of repayment, the borrower’s current financial and liquidity status and other relevant information. The risk rating categories can be generally described by the following grouping for non-homogeneous loans:

	●	Pass/Watch – These loans range from minimal credit risk to lower than average, but still acceptable, credit risk.

	●	Special Mention – Borrower is deemed fundamentally sound, and the loan is currently protected but adverse trends are apparent that, if not corrected, may affect ability to repay. Primary source of loan repayment remains viable but there is increasing reliance on collateral or guarantor support.

●

Substandard – These loans are deemed inadequately protected by current sound worth, paying capacity or pledged collateral. Well-defined weaknesses exist that could jeopardize repayment of debt. Loss may not be imminent, but if weaknesses are not corrected, there is a good possibility of some loss.

●

Doubtful – The possibility of loss is deemed extremely high, but due to identifiable and important pending events (which may strengthen the loan) a loss classification is deferred until the situation is better defined.

●

Loss – These loans are deemed uncollectible and of such little value that to continue to carry the loans as an active asset is no longer warranted.

In connection with the adoption of ASU 2016-13, the Company no longer provides information on impaired loans. The following tables present loan portfolio by risk rating as of December 31, 2020:

	As of December 31, 2020
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
	(In thousands)
Commercial loans	$	2,581,128	$	141,344	$	108,788	$	5,573	$	2,836,833
Real estate construction loans		593,196		82,010		4,286		—		679,492
Commercial mortgage loans		7,202,568		186,283		166,176		—		7,555,027
Residential mortgage and equity lines		4,547,052		11,647		11,245		—		4,569,944
Installment and other loans		3,100		—		—		—		3,100
Total gross loans	$	14,927,044	$	421,284	$	290,495	$	5,573	$	15,644,396

The following table summarizes the Company’s loan held for investment by loan portfolio segments, risk ratings and vintage year. The vintage year is the year of origination, renewal or major modification:

	Loans Amortized Cost Basis by Origination Year
December 31, 2021	2021		2020			2019			2018			2017		Prior			Revolving Loans			Revolving Converted to Term Loans			Total
	(In thousands)
Commercial loans
Pass/Watch	$	606,770	$	268,756		$	183,468		$	142,419		$	80,701	$	100,496		$	1,437,463		$	7,433		$	2,827,506
Special Mention		395		780			1,138			1,645			3,157		—			40,761			49			47,925
Substandard		450		5,879			22,513			16,423			14,309		5,221			34,713			5,716			105,224
Doubtful		—		—			—			—			—		—			900			—			900
Total	$	607,615	$	275,415		$	207,119		$	160,487		$	98,167	$	105,717		$	1,513,837		$	13,198		$	2,981,555

YTD period charge-offs	$	—	$	1,478		$	507		$	366				$	50		$	17,650		$	—		$	20,051
YTD period recoveries		—		(1	)		(29	)		(124	)				(191	)		(1,361	)		—			(1,706	)
Net	$	—	$	1,477		$	478		$	242		$	—	$	(141	)	$	16,289		$	—		$	18,345

Real estate construction loans
Pass/Watch	$	199,188	$	188,782		$	125,316		$	24,548		$	—	$	—		$	—		$	—		$	537,834
Special Mention		—		23,107			27,672			17,374			—		—			—			—			68,153
Substandard		—		—			1,919			—			—		—			—			—			1,919
Total	$	199,188	$	211,889		$	154,907		$	41,922		$	—	$	—		$	—		$	—		$	607,906

YTD period charge-offs	$	—	$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—
YTD period recoveries		—		—			—			—			—		(76	)		—			—			(76	)
Net	$	—	$	—		$	—		$	—		$	—	$	(76	)	$	—		$	—		$	(76	)

Commercial mortgage loans
Pass/Watch	$	1,893,807	$	1,201,825		$	1,253,548		$	1,031,191		$	727,916	$	1,313,882		$	198,869		$	—		$	7,621,038
Special Mention		45,719		59,182			49,796			103,101			61,105		60,448			750			—			380,101
Substandard		1,110		—			13,483			42,803			1,580		76,906			3,297			—			139,179
Total	$	1,940,636	$	1,261,007		$	1,316,827		$	1,177,095		$	790,601	$	1,451,236		$	202,916		$	—		$	8,140,318

YTD period charge-offs	$	—	$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—
YTD period recoveries		—		—			(240	)		—			—		(28	)		(111	)		—			(379	)
Net	$	—	$	—		$	(240	)	$	—		$	—	$	(28	)	$	(111	)	$	—		$	(379	)
Residential mortgage loans
Pass/Watch	$	978,375	$	622,999		$	678,775		$	502,325		$	453,992	$	929,846		$	—		$	—		$	4,166,312
Special Mention		—		46			1,576			1,064			836		438			—			—			3,960
Substandard		1,684		147			2,698			2,574			862		5,255			—			—			13,220
Total	$	980,059	$	623,192		$	683,049		$	505,963		$	455,690	$	935,539		$	—		$	—		$	4,183,492

YTD period charge-offs	$	—	$	—		$	—		$	—		$	3	$	—		$	—					$	3
YTD period recoveries		—		—			—			—			—		(208	)		—						(208	)
Net	$	—	$	—		$	—		$	—		$	3	$	(208	)	$	—		$	—		$	(205	)

Equity lines
Pass/Watch	$	—	$	—		$	—		$	—		$	—	$	5		$	389,069		$	30,025		$	419,099
Substandard		—		—			—			—			—		—			1,230			273			1,503
Total	$	—	$	—		$	—		$	—		$	—	$	5		$	390,299		$	30,298		$	420,602

YTD period charge-offs	$	—	$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—
YTD period recoveries		—		—			—			—			—		—			(10	)		(64	)		(74	)
Net	$	—	$	—		$	—		$	—		$	—	$	—		$	(10	)	$	(64	)	$	(74	)

Installment and other loans
Pass/Watch	$	4,117	$	168		$	—		$	—		$	—	$	—		$	—		$	—		$	4,285
Total	$	4,117	$	168		$	—		$	—		$	—	$	—		$	—		$	—		$	4,285

YTD period charge-offs	$	—	$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—
YTD period recoveries		—		—			—			—			—		—			—			—			—
Net	$	—	$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—
Total loans	$	3,731,615	$	2,371,671		$	2,361,902		$	1,885,467		$	1,344,458	$	2,492,497		$	2,107,052		$	43,496		$	16,338,158
Net charge-offs/(recoveries)	$	—	$	1,477		$	238		$	242		$	3	$	(453	)	$	16,168		$	(64	)	$	17,611

Revolving loans that are converted to term loans presented in the table above are excluded from the term loans by vintage year columns.

The following table presents the balance in the allowance for loan losses by portfolio segment and based on impairment method as of December 31, 2020. This table is no longer presented after December 31, 2020, given the adoption of ASU 2016-13, which has a single impairment methodology.

			Real Estate		Commercial		Residential
	*Commercial*		*Construction*		*Mortgage*		*Mortgage*		*Consumer*
	*Loans*		*Loans*		*Loans*		*and Equity Lines*		*and Other*		*Total*
	(In thousands)
December 31, 2020
Loans individually evaluated for impairment
Allowance	$	1,030	$	—	$	5,254	$	145	$	—	$	6,429
Balance	$	27,070	$	4,286	$	53,289	$	10,760	$	—	$	95,405

Loans collectively evaluated for impairment
Allowance	$	67,712	$	30,854	$	43,951	$	17,592	$	—	$	160,109
Balance	$	2,809,763	$	675,206	$	7,501,738	$	4,559,184	$	3,100	$	15,548,991

Total allowance	$	68,742	$	30,854	$	49,205	$	17,737	$	—	$	166,538
Total balance	$	2,836,833	$	679,492	$	7,555,027	$	4,569,944	$	3,100	$	15,644,396

The following table details activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2021, and 2020. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

				Real Estate			Commercial			Residential			Installment
	*Commercial*			*Construction*			*Mortgage*			*Mortgage*			*and Other*
	*Loans*			*Loans*			*Loans*			*and Equity Lines*			*Loans*			*Total*
	(In thousands)
2020 Beginning Balance	$	57,021		$	19,474		$	33,602		$	13,108		$	19		$	123,224
Provision/(reversal) for loan losses		26,450			11,380			15,164			4,525			(19	)		57,500

Charge-offs		(21,996	)		—			—			—			—			(21,996	)
Recoveries		7,267			—			439			104			—			7,810
Net (Charge-offs)/Recoveries		(14,729	)		—			439			104			—			(14,186	)

2020 Ending Balance	$	68,742		$	30,854		$	49,205		$	17,737		$	—		$	166,538
Reserve for impaired loans	$	1,030		$	—		$	5,254		$	145		$	—		$	6,429
Reserve for non-impaired loans	$	67,712		$	30,854		$	43,951		$	17,592		$	—		$	160,109
Reserve for off-balance sheet credit commitments	$	4,802		$	690		$	101		$	284		$	3		$	5,880

2021 Beginning Balance	$	68,742		$	30,854		$	49,205		$	17,737		$	—		$	166,538
Impact of ASU 2016-13 adoption	$	(31,466	)	$	(24,307	)	$	34,993		$	19,211		$	9		$	(1,560	)
Allowance for loan losses, January 1, 2020	$	37,276		$	6,547		$	84,198		$	36,948		$	9		$	164,978
Provision/(reversal) for loan losses		24,463			(321	)		(23,401	)		(11,943	)		(8	)		(11,210	)

Charge-offs		(20,051	)		—			—			(3	)		—			(20,054	)
Recoveries		1,706			76			284			377			—			2,443
Net (Charge-offs)/Recoveries	$	(18,345	)	$	76		$	284		$	374		$	—		$	(17,611	)

2021 Ending Balance	$	43,394		$	6,302		$	61,081		$	25,379		$	1		$	136,157

Allowance for unfunded credit commitments 2020 Ending Balance	$	4,802		$	690		$	101		$	284		$	3		$	5,880
Impact of ASU 2016-13 adoption		3,236			3,135			(66	)		(284	)		(3	)		6,018
Allowance for loan losses, January 1, 2021	$	8,038		$	3,825		$	35		$	—		$	—		$	11,898
Provision/(reversal) for possible credit losses		(4,313	)		(450	)		(35	)		—			—			(4,798	)
Allowance for unfunded credit commitments 2021 Ending Balance	$	3,725		$	3,375		$	—		$	—		$	—		$	7,100

An analysis of the activity in the allowance for credit losses for the years ended December 31, 2021, 2020, and 2019 is as follows:

	For the year ended December 31,
	2021			2020			2019
Allowance for Loan Losses:	(In thousands)
Balance at beginning of year	$	166,538		$	123,224		$	122,391
Impact of ASU 2016-13 adoption		(1,560	)		—			—
Provision/(reversal) for credit losses		(11,210	)		57,500			(7,000	)
Loans charged off		(20,054	)		(21,996	)		(6,997	)
Recoveries of charged off loans		2,443			7,810			14,830
Balance at end of year	$	136,157		$	166,538		$	123,224

Reserve for Off-balance Sheet Credit Commitments:
Balance at beginning of year	$	5,880		$	3,855		$	2,250
Impact of ASU 2016-13 adoption		6,018			—			—
Provision/(reversal) for credit losses and transfers		(4,798	)		2,025			1,605
Balance at end of year	$	7,100		$	5,880		$	3,855

Residential mortgage loans in process of formal foreclosure proceedings were $2.0 million at December 31, 2021, compared to $808 thousand at December 31, 2020.

The U. S. economy has gradually recovered from the COVID-19 pandemic with improving gross national product and a declining unemployment rate in the 2021. This contributed to a positive economic outlook and forecasts that resulted in a decrease to the allowance for credit losses.

Despite the recovery in 2021, the ongoing COVID-19 pandemic has caused significant disruption in the United States and international economies and financial markets. Although banks have generally been permitted to continue operating, the COVID-19 pandemic has caused disruptions to our business and could cause material disruptions to our business and operations in the future. The Company has continued its efforts to support its customers affected by the pandemic and to maintain asset quality and balance sheet strength, including the following:

•

The Company has provided loans through the SBA's Paycheck Protection Program, (or “PPP”). As of December 31, 2021, 671 PPP loans with a current balance of $90.5 million were outstanding and additional $337.0 million have been forgiven by the U.S. Government or repaid by the borrowers. These loans do not carry an allowance for loan losses.

•

The Company has outstanding COVID-19 modifications on approximately 7 commercial real estate loans, totaling $49.4 million as of December 31, 2021, which represented 0.6% of the Bank’s CRE loans and 4 commercial loans, totaling $20.5 million, which represented 0.7% of the total commercial loans.