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Allowance for Credit Losses on Loans and Leases
 12 Months Ended
Dec. 31, 2021
Allowance For Credit Losses On Loans And Leases [Abstract]  
Allowance for Credit Losses on Loans and Leases

NOTE 6: ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES

Allowance for Credit Losses on Loans and Leases

The following table summarizes activity in the allowance for loan and lease losses for the periods indicated:

 

 

 

Twelve Months Ended December 31,

 

 

 

2021

 

 

2020

 

(in millions)

 

Mortgage

 

 

Other

 

 

Total

 

 

Mortgage

 

 

Other

 

 

Total

 

Balance, beginning of period

 

$

176

 

 

$

18

 

 

$

194

 

 

$

123

 

 

$

25

 

 

$

148

 

Impact of CECL adoption

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

2

 

Adjusted balance, beginning of period

 

 

176

 

 

 

18

 

 

 

194

 

 

 

123

 

 

 

27

 

 

 

150

 

Charge-offs

 

 

(6

)

 

 

(7

)

 

 

(13

)

 

 

(2

)

 

 

(20

)

 

 

(22

)

Recoveries

 

 

2

 

 

 

13

 

 

 

15

 

 

 

1

 

 

 

2

 

 

 

3

 

Provision for (recovery of) credit
   losses on loans and leases

 

 

6

 

 

 

(3

)

 

 

3

 

 

 

54

 

 

 

9

 

 

 

63

 

Balance, end of period

 

$

178

 

 

$

21

 

 

$

199

 

 

$

176

 

 

$

18

 

 

$

194

 

At December 31, 2021, the allowance for credit losses on loans and leases totaled $199 million, up $5 million compared to December 31, 2020, driven by a provision for credit losses of $3 million coupled with net recoveries of $2 million during the year 2021.

At December 31, 2021 and 2020, the allowance for unfunded commitments totaled $12 million.

For the year ended December 31, 2021 the allowance for credit losses on loans and leases remained relatively flat primarily due to the combination of macroeconomic factors and increased loan activity on the balance sheet. The key contributing forecasted macroeconomic and market level factors included relatively unchanged unemployment rates, slight increase in Gross Domestic Product (“GDP”) and improving Multi Family and Commercial Real Estate Property Prices reflecting the improving economic landscape as the COVID-19 pandemic begins to subside. In addition to these quantitative inputs, several qualitative factors were considered, including the risk that the economic decline proves to be more severe and/or prolonged than our baseline forecast which also increased our allowance for loan and lease losses. The impact of the unprecedented fiscal stimulus and changes to federal and local laws and regulations, including changes to various government sponsored loan programs, was also considered.

The Company charges off loans, or portions of loans, in the period that such loans, or portions thereof, are deemed uncollectible. The collectability of individual loans is determined through an assessment of the financial condition and repayment capacity of the borrower and/or through an estimate of the fair value of any underlying collateral. For non-real estate-related consumer credits, the following past-due time periods determine when charge-offs are typically recorded: (1) closed-end credits are charged off in the quarter that the loan becomes 120 days past due; (2) open-end credits are charged off in the quarter that the loan becomes 180 days past due; and (3) both closed-end and open-end credits are typically charged off in the quarter that the credit is 60 days past the date the Company received notification that the borrower has filed for bankruptcy.

The following table presents additional information about the Company’s nonaccrual loans at December 31, 2021:

 

(in millions)

 

Recorded
Investment

 

 

Related
Allowance

 

 

Interest
Income
Recognized

 

Nonaccrual loans with no related allowance:

 

 

 

 

 

 

 

 

 

Multi-family

 

$

9

 

 

$

—

 

 

$

1

 

Commercial real estate

 

 

14

 

 

 

—

 

 

 

—

 

One-to-four family

 

 

—

 

 

 

—

 

 

 

—

 

Acquisition, development, and construction

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

6

 

 

 

—

 

 

 

—

 

Total nonaccrual loans with no related allowance

 

$

29

 

 

$

—

 

 

$

1

 

Nonaccrual loans with an allowance recorded:

 

 

 

 

 

 

 

 

 

Multi-family

 

$

1

 

 

$

—

 

 

$

—

 

Commercial real estate

 

 

2

 

 

 

—

 

 

 

—

 

One-to-four family

 

 

1

 

 

 

—

 

 

 

—

 

Acquisition, development, and construction

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

Total nonaccrual loans with an allowance recorded

 

$

4

 

 

$

—

 

 

$

—

 

Total nonaccrual loans:

 

 

 

 

 

 

 

 

 

Multi-family

 

$

10

 

 

$

—

 

 

$

1

 

Commercial real estate

 

 

16

 

 

 

—

 

 

 

—

 

One-to-four family

 

 

1

 

 

 

—

 

 

 

—

 

Acquisition, development, and construction

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

6

 

 

 

—

 

 

 

—

 

Total nonaccrual loans

 

$

33

 

 

$

—

 

 

$

1

 

 

The following table presents additional information about the Company’s nonaccrual loans at December 31, 2020

 

(in millions)

 

Recorded
Investment

 

 

Related
Allowance

 

 

Interest
Income
Recognized

 

Nonaccrual loans with no related allowance:

 

 

 

 

 

 

 

 

 

Multi-family

 

$

—

 

 

$

—

 

 

$

—

 

Commercial real estate

 

 

2

 

 

 

—

 

 

 

—

 

One-to-four family

 

 

1

 

 

 

—

 

 

 

—

 

Acquisition, development, and construction

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

20

 

 

 

—

 

 

 

1

 

Total nonaccrual loans with no related allowance

 

$

23

 

 

$

—

 

 

$

1

 

Nonaccrual loans with an allowance recorded:

 

 

 

 

 

 

 

 

 

Multi-family

 

$

4

 

 

$

1

 

 

$

—

 

Commercial real estate

 

 

10

 

 

 

—

 

 

 

—

 

One-to-four family

 

 

1

 

 

 

—

 

 

 

—

 

Acquisition, development, and construction

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

Total nonaccrual loans with an allowance recorded

 

$

15

 

 

$

1

 

 

$

—

 

Total nonaccrual loans:

 

 

 

 

 

 

 

 

 

Multi-family

 

$

4

 

 

$

1

 

 

$

—

 

Commercial real estate

 

 

12

 

 

 

—

 

 

 

—

 

One-to-four family

 

 

2

 

 

 

—

 

 

 

—

 

Acquisition, development, and construction

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

20

 

 

 

—

 

 

 

1

 

Total nonaccrual loans

 

$

38

 

 

$

1

 

 

$

1