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LOANS
 9 Months Ended
Sep. 30, 2020
Receivables [Abstract]  
LOANS LOANS
Loans consist of the following:
(Dollars in thousands)September 30,
2020		December 31,
2019
Permanent mortgages on:
Multifamily residential$4,086,059 $3,985,981 
Single family residential1,839,156 2,021,320 
Commercial real estate203,920 203,134 
Construction and land loans19,266 20,442 
Non-Mortgage (‘‘NM’’) loans100 100 
Total6,148,501 6,230,977 
Allowance for loan losses(46,063)(36,001)
Loans held for investment, net$6,102,438 $6,194,976 

Certain loans have been pledged to secure borrowing arrangements (see Note 8).
The following table summarizes activity in and the allocation of the allowance for loan losses by portfolio segment:
(Dollars in thousands)Multifamily ResidentialSingle Family ResidentialCommercial Real EstateLand, Construction and NMTotal
Three months ended September 30, 2020
Allowance for loan losses:
Beginning balance allocated to portfolio segments$30,837 $11,628 $3,305 $215 $45,985 
Provision for (reversal of) loan losses836 (1,014)247 (69)— 
Charge-offs— — — — — 
Recoveries— 3 — 75 78 
Ending balance allocated to portfolio segments$31,673 $10,617 $3,552 $221 $46,063 
Three months ended September 30, 2019
Allowance for loan losses:
Beginning balance allocated to portfolio segments$22,745 $9,439 $2,412 $625 $35,221 
Provision for (reversal of) loan losses408 (415)115 (608)(500)
Charge-offs— — — — — 
Recoveries— 2 — 200 202 
Ending balance allocated to portfolio segments$23,153 $9,026 $2,527 $217 $34,923 
Nine months ended September 30, 2020
Allowance for loan losses:
Beginning balance allocated to portfolio segments$23,372 $10,076 $2,341 $212 $36,001 
Provision for (reversal of) loan losses8,301 1,254 1,211 (216)10,550 
Charge-offs— (722)— — (722)
Recoveries— 9 — 225 234 
Ending balance allocated to portfolio segments$31,673 $10,617 $3,552 $221 $46,063 
Nine months ended September 30, 2019
Allowance for loan losses:
Beginning balance allocated to portfolio segments$21,326 $10,125 $2,441 $422 $34,314 
Provision for (reversal of) loan losses1,827 (1,108)86 (555)250 
Charge-offs— — — — — 
Recoveries— 9 — 350 359 
Ending balance allocated to portfolio segments$23,153 $9,026 $2,527 $217 $34,923 
The following table summarizes the allocation of the allowance for loan losses by impairment methodology:
(Dollars in thousands)Multifamily ResidentialSingle Family ResidentialCommercial Real EstateLand, Construction and NMTotal
As of September 30, 2020:
Ending allowance balance allocated to:
Loans individually evaluated for impairment$— $25 $— $— $25 
Loans collectively evaluated for impairment31,673 10,592 3,552 221 46,038 
Ending balance$31,673 $10,617 $3,552 $221 $46,063 
Loans:
Ending balance: individually evaluated for impairment$528 $5,575 $— $— $6,103 
Ending balance: collectively evaluated for impairment4,085,531 1,833,581 203,920 19,366 6,142,398 
Ending balance$4,086,059 $1,839,156 $203,920 $19,366 $6,148,501 
As of December 31, 2019:
Ending allowance balance allocated to:
Loans individually evaluated for impairment$— $815 $— $— $815 
Loans collectively evaluated for impairment23,372 9,261 2,341 212 35,186 
Ending balance$23,372 $10,076 $2,341 $212 $36,001 
Loans:
Ending balance: individually evaluated for impairment$541 $7,097 $— $— $7,638 
Ending balance: collectively evaluated for impairment3,985,440 2,014,223 203,134 20,542 6,223,339 
Ending balance$3,985,981 $2,021,320 $203,134 $20,542 $6,230,977 

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/or 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 table summarizes the loan portfolio allocated by management’s internal risk ratings at September 30, 2020 and December 31, 2019. The increase in Watch risk rated loans during the nine months ended September 30, 2020 was attributable to the Company's loan modification program in connection with the COVID-19 pandemic. Watch risk rated loans modified as a result of COVID-19 may remain in the Watch category longer than the typical 90 to 120 day period due to the unusual nature of the loan accommodations provided during the pandemic. See Note 2 for further discussion regarding COVID-19.
(Dollars in thousands)Multifamily ResidentialSingle Family ResidentialCommercial Real EstateLand, Construction and NMTotal
As of September 30, 2020:
Grade:
Pass$3,795,037 $1,650,400 $137,824 $19,366 $5,602,627 
Watch263,250 172,167 62,470 — 497,887 
Special mention19,155 11,522 3,626 — 34,303 
Substandard8,617 5,067 — — 13,684 
Doubtful— — — — — 
Total$4,086,059 $1,839,156 $203,920 $19,366 $6,148,501 
As of December 31, 2019:
Grade:
Pass$3,917,264 $1,980,845 $200,371 $20,542 $6,119,022 
Watch47,309 16,432 2,763 — 66,504 
Special mention19,708 13,635 — — 33,343 
Substandard1,700 8,808 — — 10,508 
Doubtful— 1,600 — — 1,600 
Total$3,985,981 $2,021,320 $203,134 $20,542 $6,230,977 
The following table summarizes an aging analysis of the loan portfolio by the time past due at September 30, 2020 and December 31, 2019:
(Dollars in thousands)30 Days60 Days90+ DaysNon-accrualCurrentTotal
As of September 30, 2020:
Loans:
Multifamily residential$— $— $— $528 $4,085,531 $4,086,059 
Single family residential2,473 — — 4,303 1,832,380 1,839,156 
Commercial real estate— — — — 203,920 203,920 
Land, construction and NM— — — — 19,366 19,366 
Total$2,473 $— $— $4,831 $6,141,197 $6,148,501 
As of December 31, 2019:
Loans:
Multifamily residential$1,411 $— $— $541 $3,984,029 $3,985,981 
Single family residential4,037 690 — 5,792 2,010,801 2,021,320 
Commercial real estate— — — — 203,134 203,134 
Land, construction and NM— — — — 20,542 20,542 
Total$5,448 $690 $— $6,333 $6,218,506 $6,230,977 
The following table summarizes information related to impaired loans at September 30, 2020 and December 31, 2019:
As of September 30, 2020As of December 31, 2019
(Dollars in thousands)Recorded InvestmentUnpaid Principal BalanceRelated AllowanceRecorded InvestmentUnpaid Principal BalanceRelated Allowance
With no related allowance recorded:
Multifamily residential$528 $605 $— $541 $618 $— 
Single family residential4,689 5,723 — 4,588 4,915 — 
5,217 6,328 — 5,129 5,533 — 
With an allowance recorded:
Single family residential886 882 25 2,509 2,484 815 
886 882 25 2,509 2,484 815 
Total:
Multifamily residential528 605 — 541 618 — 
Single family residential5,575 6,605 25 7,097 7,399 815 
$6,103 $7,210 $25 $7,638 $8,017 $815 
The following tables summarize information related to impaired loans for the three and nine months ended September 30, 2020 and 2019:
Three Months Ended September 30,
20202019
(Dollars in thousands)Average Recorded InvestmentInterest IncomeCash Basis InterestAverage Recorded InvestmentInterest IncomeCash Basis Interest
With no related allowance recorded:
Multifamily residential$530 $8 $8 $7,121 $9 $9 
Single family residential4,724 18 14 7,397 48 18 
5,254 26 22 14,518 57 27 
With an allowance recorded:
Single family residential890 10 — 919 12 — 
890 10 — 919 12 — 
Total:
Multifamily residential530 8 8 7,121 9 9 
Single family residential5,614 28 14 8,316 60 18 
$6,144 $36 $22 $15,437 $69 $27 
Nine Months Ended September 30,
20202019
(Dollars in thousands)Average Recorded InvestmentInterest IncomeCash Basis Interest Average Recorded InvestmentInterest IncomeCash Basis Interest
With no related allowance recorded:
Multifamily residential$535 $25 $25 $3,182 $21 $21 
Single family residential4,757 62 48 5,408 143 43 
5,292 87 73 8,590 164 64 
With an allowance recorded:
Single family residential1,377 30 — 1,145 36 — 
1,377 30 — 1,145 36 — 
Total:
Multifamily residential535 25 25 3,182 21 21 
Single family residential6,134 92 48 6,553 179 43 
$6,669 $117 $73 $9,735 $200 $64 

The following table summarizes the recorded investment related to TDRs at September 30, 2020 and December 31, 2019:
(Dollars in thousands)September 30,
2020		December 31,
2019
Troubled debt restructurings:
Single family residential$3,937 $1,305 
The Company has allocated $25 thousand of its allowance for loan losses for loans modified in TDRs at both September 30, 2020 and December 31, 2019. The Company does not have commitments to lend additional funds to borrowers with loans whose terms have been modified in TDRs.
During the nine months ended September 30, 2020, the Company modified the terms of two loans that qualified as TDRs. The following table provides a detail of these modifications:
(Dollars in thousands)Number of ContractsPre-Modification Outstanding Recorded InvestmentPost-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Single family residential2$2,672 $2,672 
Terms of the two modifications above included suspension of loan payments for six months with eligibility for an extension of the loan term, should previously existing past due amounts be paid in full. Prior to modification, both loans were classified as non-accrual and impaired. The TDRs above resulted in no increase to the allowance for loan losses and no charge offs, primarily due to collateral support provided by the secondary sources of repayment. There were no new TDRs during the three months ended September 30, 2020, nor during the three or nine months ended September 30, 2019.

The Company had no TDRs with a subsequent payment default within twelve months following the modification during the three or nine months ended September 30, 2020 and 2019. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.