LOANS RECEIVABLE | LOANS RECEIVABLE Loans receivable consist of the following (dollars in thousands): June 30, December 31, Permanent mortgages on: Multifamily residential $ 3,335,958 $ 2,887,438 Single family residential 2,167,341 1,957,546 Commercial real estate 151,610 112,492 Construction and land loans on single family residential 31,569 41,165 Non-Mortgage (‘‘NM’’) loans 100 50 Total 5,686,578 4,998,691 Deferred loan costs, net 48,339 42,856 Allowance for loan losses (33,358 ) (30,312 ) Loans receivable held for investment, net $ 5,701,559 $ 5,011,235 Certain loans have been pledged to secure borrowing arrangements (see Note 7). The following table summarizes activity in and the allocation of the allowance for loan losses by portfolio segment (dollars in thousands): Multifamily Residential Single Family Residential Commercial Real Estate Land, NM, and Construction Total Three months ended June 30, 2018 Allowance for loan losses: Beginning balance allocated to portfolio segments $ 19,833 $ 9,214 $ 1,887 $ 1,046 $ 31,980 Provision for (reversal of) loan losses 727 881 (46 ) (262 ) 1,300 Charge-offs — — — — — Recoveries — 3 — 75 78 Ending balance allocated to portfolio segments $ 20,560 $ 10,098 $ 1,841 $ 859 $ 33,358 Three months ended June 30, 2017 Allowance for loan losses: Beginning balance allocated to portfolio segments $ 19,873 $ 10,097 $ 1,950 $ 1,779 $ 33,699 Reversal of provision for loan losses (4,300 ) (1,270 ) (38 ) (873 ) (6,481 ) Charge-offs — (5 ) — — (5 ) Recoveries — 3 — 140 143 Ending balance allocated to portfolio segments $ 15,573 $ 8,825 $ 1,912 $ 1,046 $ 27,356 Six months ended June 30, 2018 Allowance for loan losses: Beginning balance allocated to portfolio segments $ 18,588 $ 9,044 $ 1,734 $ 946 $ 30,312 Provision for (reversal of) loan losses 1,972 1,048 17 (237 ) 2,800 Charge-offs — — — — — Recoveries — 6 90 150 246 Ending balance allocated to portfolio segments $ 20,560 $ 10,098 $ 1,841 $ 859 $ 33,358 Six months ended June 30, 2017 Allowance for loan losses: Beginning balance allocated to portfolio segments $ 18,478 $ 11,559 $ 1,823 $ 1,438 $ 33,298 (Reversal of) provision for loan losses (2,905 ) (2,735 ) 89 (621 ) (6,172 ) Charge-offs — (5 ) — — (5 ) Recoveries — 6 — 229 235 Ending balance allocated to portfolio segments $ 15,573 $ 8,825 $ 1,912 $ 1,046 $ 27,356 The following tables summarize the allocation of the allowance for loan losses by impairment methodology (dollars in thousands): Multifamily Residential Single Family Residential Commercial Real Estate Land, NM, and Construction Total As of June 30, 2018: Ending allowance balance allocated to: Loans individually evaluated for impairment $ — $ 25 $ — $ — $ 25 Loans collectively evaluated for impairment 20,560 10,073 1,841 859 33,333 Ending balance $ 20,560 $ 10,098 $ 1,841 $ 859 $ 33,358 Loans: Ending balance: individually evaluated for impairment $ 1,543 $ 7,143 $ 871 $ — $ 9,557 Ending balance: collectively evaluated for impairment 3,334,415 2,160,198 150,739 31,669 5,677,021 Ending balance $ 3,335,958 $ 2,167,341 $ 151,610 $ 31,669 $ 5,686,578 As of December 31, 2017: Ending allowance balance allocated to: Loans individually evaluated for impairment $ — $ 25 $ — $ — $ 25 Loans collectively evaluated for impairment 18,588 9,019 1,734 946 30,287 Ending balance $ 18,588 $ 9,044 $ 1,734 $ 946 $ 30,312 Loans: Ending balance: individually evaluated for impairment $ 2,246 $ 8,991 $ 656 $ — $ 11,893 Ending balance: collectively evaluated for impairment 2,885,192 1,948,555 111,836 41,215 4,986,798 Ending balance $ 2,887,438 $ 1,957,546 $ 112,492 $ 41,215 $ 4,998,691 The Company assigns a risk rating to all loans and periodically performs detailed reviews of all such loans to identify credit risks and to assess the overall collectability of the portfolio. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, as well as the financial performance and other characteristics of loan collateral. These credit quality indicators are used to assign a risk rating to each individual loan. The risk ratings can be grouped into six major categories, defined as follows: Pass assets are those which are performing according to contract and have no existing or known weaknesses deserving of management’s close attention. The basic underwriting criteria used to approve the loans are still valid, and all payments have essentially been made as planned. Watch assets are expected to have an event occurring in the next 90 to 120 days that will lead to a change in risk rating with the change being either favorable or unfavorable. These assets require heightened monitoring of the event by management. Special mention assets have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Substandard assets are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged. These assets have well-defined weaknesses: the primary source of repayment is gone or severely impaired (i.e., bankruptcy or loss of employment) and/or there has been a deterioration in collateral value. In addition, there is the distinct possibility that the Company will sustain some loss, either directly or indirectly (i.e., the cost of monitoring), if the deficiencies are not corrected. A deterioration in collateral value alone does not mandate that an asset be adversely classified if such factor does not indicate that the primary source of repayment is in jeopardy. Doubtful assets have the weaknesses of those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable based on current facts, conditions and values. Loss assets are considered uncollectible and of such little value that their continuance as assets, without establishment of a specific valuation allowance or charge-off, is not warranted. This classification does not necessarily mean that an asset has absolutely no recovery or salvage value; but rather, it is not practical or desirable to defer writing off a basically worthless asset (or portion thereof) even though partial recovery may be affected in the future. The following tables summarize the loan portfolio allocated by management’s internal risk ratings at June 30, 2018 and December 31, 2017 (dollars in thousands): Multifamily Residential Single Family Residential Commercial Real Estate Land, NM and Construction Total As of June 30, 2018: Grade: Pass $ 3,246,277 $ 2,140,414 $ 149,012 $ 29,654 $ 5,565,357 Watch 78,221 17,357 1,727 — 97,305 Special mention 4,941 5,675 — 2,015 12,631 Substandard 6,519 3,895 871 — 11,285 Total $ 3,335,958 $ 2,167,341 $ 151,610 $ 31,669 $ 5,686,578 As of December 31, 2017: Grade: Pass $ 2,847,720 $ 1,923,960 $ 106,539 $ 41,215 $ 4,919,434 Watch 25,354 20,178 4,315 — 49,847 Special mention 6,569 9,025 — — 15,594 Substandard 7,795 4,383 1,638 — 13,816 Total $ 2,887,438 $ 1,957,546 $ 112,492 $ 41,215 $ 4,998,691 The following tables summarize an aging analysis of the loan portfolio by the time past due at June 30, 2018 and December 31, 2017 (dollars in thousands): 30 Days 60 Days 90+ Days Non-accrual Current Total As of June 30, 2018: Loans: Multifamily residential $ 660 $ — $ — $ 1,543 $ 3,333,755 $ 3,335,958 Single family residential 1,711 2,230 — 2,372 2,161,028 2,167,341 Commercial real estate — — — 871 150,739 151,610 Land, NM, and construction — — — — 31,669 31,669 Total $ 2,371 $ 2,230 $ — $ 4,786 $ 5,677,191 $ 5,686,578 As of December 31, 2017: Loans: Multifamily residential $ 2,751 $ — $ — $ 2,246 $ 2,882,441 $ 2,887,438 Single family residential 4,870 3,364 — 4,135 1,945,177 1,957,546 Commercial real estate — — — 656 111,836 112,492 Land, NM, and construction — — — — 41,215 41,215 Total $ 7,621 $ 3,364 $ — $ 7,037 $ 4,980,669 $ 4,998,691 The following table summarizes information related to impaired loans at June 30, 2018 and December 31, 2017 (dollars in thousands): As of June 30, 2018 As of December 31, 2017 Recorded Investment Unpaid Principal Balance Related Allowance Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance recorded: Multifamily residential $ 1,543 $ 1,680 $ — $ 2,246 $ 2,545 $ — Single family residential 6,196 6,443 — 8,029 8,237 — Commercial real estate 871 871 — 656 798 — 8,610 8,994 — 10,931 11,580 — With an allowance recorded: Single family residential 947 947 25 962 962 25 947 947 25 962 962 25 Total: Multifamily residential 1,543 1,680 — 2,246 2,545 — Single family residential 7,143 7,390 25 8,991 9,199 25 Commercial real estate 871 871 — 656 798 — $ 9,557 $ 9,941 $ 25 $ 11,893 $ 12,542 $ 25 The following table summarizes information related to impaired loans for the three and six months ended June 30, 2018 and 2017 (dollars in thousands): Three Months Ended June 30, 2018 2017 Average Recorded Investment Interest Income Cash Basis Interest Average Recorded Investment Interest Income Cash Basis Interest With no related allowance recorded: Multifamily residential $ 1,553 $ — $ — $ 2,211 $ — $ — Single family residential 7,728 38 — 7,275 47 — Commercial real estate 218 — — 702 — — 9,499 38 — 10,188 47 — With an allowance recorded: Single family residential 951 10 — 982 8 — 951 10 — 982 8 — Total: Multifamily residential 1,553 — — 2,211 — — Single family residential 8,679 48 — 8,257 55 — Commercial real estate 218 — — 702 — — $ 10,450 $ 48 $ — $ 11,170 $ 55 $ — Six months ended June 30, 2018 2017 Average Recorded Investment Interest Income Cash Basis Interest Average Recorded Investment Interest Income Cash Basis Interest With no related allowance recorded: Multifamily residential $ 1,847 $ — $ — $ 1,894 $ — $ — Single family residential 7,759 75 — 6,751 95 — Commercial real estate 403 — — 775 — — 10,009 75 — 9,420 95 — With an allowance recorded: Single family residential 1,389 27 — 986 17 — 1,389 27 — 986 17 — Total: Multifamily residential 1,847 — — 1,894 — — Single family residential 9,148 102 — 7,737 112 — Commercial real estate 403 — — 775 — — $ 11,398 $ 102 $ — $ 10,406 $ 112 $ — The following table summarizes the recorded investment related to troubled debt restructurings at June 30, 2018 and December 31, 2017 (dollars in thousands): June 30, December 31, Troubled Debt Restructurings: Multifamily residential $ — $ 667 Single family residential 5,503 5,653 Total recorded investment in troubled debt restructurings $ 5,503 $ 6,320 The Company has allocated $25 thousand of allowances for loans modified in troubled debt restructurings at June 30, 2018 and December 31, 2017 . The Company does not have commitments to lend additional funds to borrowers with loans whose terms have been modified in troubled debt restructurings. There were no troubled debt restructurings during the three and six months ended June 30, 2018 and 2017 . The Company had no troubled debt restructurings with a subsequent payment default within twelve months following the modification during the three and six months ended June 30, 2018 and 2017 . A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. The terms of certain other loans were modified during the six months ended June 30, 2018 and 2017 that did not meet the definition of a troubled debt restructuring. These loans have a total recorded investment of $9.8 million and $17.5 million as of June 30, 2018 and June 30, 2017 , respectively. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant such as delays in payment of up to 4 months. |