For a detailed discussion of loans and credit quality, including accounting policies and the CECL methodology used to estimate the allowance for credit losses, see Note A "Summary of Significant Accounting Policies."

The following tables summarize the activity in the allowance for loan losses by loan portfolio segment and class.


Three Months Ended June 30, 2024	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers1		Ending Allowance
	(In thousands)
Commercial loans
Multi-family	$	21,979	$	—	$	—	$	3,220	$	25,199
Commercial real estate	32,991		(203)		2		6,966		39,756
Commercial & industrial	59,261		(2,346)		1,003		(85)		57,833
Construction	27,317		—		—		(4,610)		22,707
Land - acquisition & development	7,865		—		17		(182)		7,700
Total commercial loans	149,413		(2,549)		1,022		5,309		153,195
Consumer loans
Single-family residential	41,054		(13)		118		(843)		40,316
Construction - custom	1,918		—		—		(424)		1,494
Land - consumer lot loans	3,214		—		2		(568)		2,648
HELOC	2,974		—		1		(51)		2,924
Consumer	3,004		(151)		317		77		3,247
Total consumer loans	52,164		(164)		438		(1,809)		50,629
Total ACL - loans	$	201,577	$	(2,713)	$	1,460	$	3,500	$	203,824


Three Months Ended June 30, 2023	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers1		Ending Allowance
	(In thousands)
Commercial loans
Multi-family	$	13,038	$	—	$	—	$	(62)	$	12,976
Commercial real estate	27,803		—		—		329		28,132
Commercial & industrial	63,301		(10,469)		10		9,073		61,915
Construction	26,027		—		—		1,889		27,916
Land - acquisition & development	7,496		—		24		(274)		7,246
Total commercial loans	137,665		(10,469)		34		10,955		138,185
Consumer loans
Single-family residential	26,916		—		18		149		27,083
Construction - custom	3,456		—		—		(235)		3,221
Land - consumer lot loans	3,945		—		9		(184)		3,770
HELOC	2,662		—		—		81		2,743
Consumer	2,776		(74)		131		234		3,067
Total consumer loans	39,755		(74)		158		45		39,884
Total loans	$	177,420	$	(10,543)	$	192	$	11,000	$	178,069


Nine Months Ended June 30, 2024	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers1		Ending Allowance
	(In thousands)
Commercial loans
Multi-family	$	13,155	$	—	$	—	$	12,044	$	25,199
Commercial real estate	28,842		(203)		4		11,113		39,756
Commercial & industrial	58,773		(2,473)		1,067		466		57,833
Construction	29,408		—		—		(6,701)		22,707
Land - acquisition & development	7,016		(18)		88		614		7,700
Total commercial loans	137,194		(2,694)		1,159		17,536		153,195
Consumer loans
Single-family residential	28,029		(144)		293		12,138		40,316
Construction - custom	2,781		—		—		(1,287)		1,494
Land - consumer lot loans	3,512		—		57		(921)		2,648
HELOC	2,859		—		3		62		2,924
Consumer	2,832		(513)		553		375		3,247
Total consumer loans	40,013		(657)		906		10,367		50,629
Total ACL - loans	$	177,207	$	(3,351)	$	2,065	$	27,903	$	203,824

1Provision & transfer amounts within the table include the $16,000,000 initial provision related to non-PCD loans acquired during the quarter and the $7,403,000 PCD ACL amount included in the Merger purchase price allocation but do not reflect a provision recapture from unfunded commitments of $3,000,000.


Nine Months Ended June 30, 2023	Beginning Allowance		Charge-offs		Recoveries		Provision & Transfers1		Ending Allowance
	(In thousands)
Commercial loans
Multi-family	$	12,013	$	—	$	—	$	963	$	12,976
Commercial real estate	25,814		—		5		2,313		28,132
Commercial & industrial	57,210		(16,605)		84		21,226		61,915
Construction	26,161		—		—		1,755		27,916
Land - acquisition & development	12,278		—		54		(5,086)		7,246
Total commercial loans	133,476		(16,605)		143		21,171		138,185
Consumer loans
Single-family residential	25,518		(34)		552		1,047		27,083
Construction - custom	3,410		—		—		(189)		3,221
Land - consumer lot loans	5,047		—		14		(1,291)		3,770
HELOC	2,482		—		1		260		2,743
Consumer	2,875		(258)		448		2		3,067
Total consumer loans	39,332		(292)		1,015		(171)		39,884
Total loans	$	172,808	$	(16,897)	$	1,158	$	21,000	$	178,069

The Company recorded a $1,500,000 provision for credit losses for the three months ended June 30, 2024, compared with a provision for credit losses of $9,000,000 for the three months ended June 30, 2023. The provision in the three months ended June 30, 2024 was primarily due to prolonged and increased borrower sensitivity to high interest rates and operating costs resulting from inflationary pressures in the commercial portfolio. This was offset by a reduction in balance resulting from

reclassifying a portion of the LBC single-family loans as Held for Sale. The provision for the three months ended June 30, 2023 was primarily due to growth in net loans receivable combined with the changing economic outlook amid concerns around a looming recession and recent macro-economic events. The Company recorded a $17,500,000 provision for credit losses for the nine months ended June 30, 2024, compared with a provision for credit losses of $15,000,000 for the nine months ended June 30, 2023. The June 30, 2024 year-to-date provision included the initial reserve needed for the acquired LBC non-PCD loans. The increase in the overall ACL was a combination of the provision recorded and the reserve for LBC PCD loans booked in purchase accounting.

Charge-offs, net of recoveries, totaled $1,253,000 for the three months ended June 30, 2024, compared to $10,351,000 during the three months ended June 30, 2023. Charge-offs, net of recoveries, totaled $1,286,000 for the nine months ended June 30, 2024, compared to $15,739,000 during the nine months ended June 30, 2023.

Non-performing assets were $68,787,000, or 0.24% of total assets, at June 30, 2024, compared to $57,924,000, or 0.26% of total assets, at September 30, 2023. Non-accrual loans were $61,268,000 at June 30, 2024, compared to $50,422,000 at September 30, 2023. Delinquencies, as a percent of total loans, were 0.22% at June 30, 2024, compared to 0.36% at September 30, 2023.

The Company has an asset quality review function that analyzes its loan portfolio and reports the results of the review to its Board of Directors on a quarterly basis. The single-family residential, HELOC and consumer portfolios are evaluated based on their performance as a pool of loans, since no single loan is individually significant or judged by its risk rating, size or potential risk of loss. The construction, land, multi-family, commercial real estate and commercial and industrial loans are risk rated on a loan-by-loan basis to determine the relative risk inherent in specific borrowers or loans. Based on that risk rating, the loans are assigned a grade and classified as described in Note D "Loans Receivable."


June 30, 2024	Internally Assigned Grade
	Pass			Special mention			Substandard			Doubtful			Loss			Total
	(In thousands, except ratio data)
Loan type
Commercial loans
Multi-family	$	4,357,741		$	99,779		$	55,803		$	—		$	—		$	4,513,323
Commercial real estate	3,597,165			42,206			107,574			—			—			3,746,945
Commercial & industrial	2,116,078			90,382			182,776			—			—			2,389,236
Construction	1,412,102			11,189			16,861			—			—			1,440,152
Land - acquisition & development	156,011			339			74			—			—			156,424
Total commercial loans	11,639,097			243,895			363,088			—			—			12,246,080
Consumer loans
Single-family residential	8,165,936			—			20,425			—			—			8,186,361
Construction - custom	190,345			—			88			—			—			190,433
Land - consumer lot loans	111,125			—			449			—			—			111,574
HELOC	258,075			—			758			—			—			258,833
Consumer	84,441			—			21			—			—			84,462
Total consumer loans	8,809,922			—			21,741			—			—			8,831,663
Total	$	20,449,019		$	243,895		$	384,829		$	—		$	—		$	21,077,743

Total grade as a % of total loans	97.02		%	1.16		%	1.84		%	—		%	—		%


September 30, 2023	Internally Assigned Grade
	Pass			Special mention			Substandard			Doubtful			Loss			Total Gross Loans
	(In thousands, except ratio data)
Loan type
Commercial loans
Multi-family	$	2,772,538		$	90,428		$	23,628		$	—		$	—		$	2,886,594
Commercial real estate	3,207,596			4,847			97,658			—			—			3,310,101
Commercial & industrial	2,164,876			6,647			143,795			—			—			2,315,318
Construction	1,818,266			—			20,670			—			—			1,838,936
Land - acquisition & development	156,390			—			271			—			—			156,661
Total commercial loans	10,119,666			101,922			286,022			—			—			10,507,610
Consumer loans
Single-family residential	6,370,936			—			18,054			—			—			6,388,990
Construction - custom	324,363			—			88			—			—			324,451
Land - consumer lot loans	124,588			—			254			—			—			124,842
HELOC	237,018			—			736			—			—			237,754
Consumer	70,098			—			12			—			—			70,110
Total consumer loans	7,127,003			—			19,144			—			—			7,146,147
Total loans	$	17,246,669		$	101,922		$	305,166		$	—		$	—		$	17,653,757

Total grade as a % of total gross loans	97.69		%	0.58		%	1.73		%	—		%	—		%


June 30, 2024	Performing Loans				Non-Performing Loans
	Amount		% of Total Loans		Amount		% of Total Loans
	(In thousands, except ratio data)
Commercial loans
Multi-family	$	4,503,339	99.8	%	$	9,984	0.2	%
Commercial real estate	3,720,537		99.3		26,408		0.7
Commercial & industrial	2,387,098		99.9		2,138		0.1
Construction	1,439,032		99.9		1,120		0.1
Land - acquisition & development	156,350		100.0		74		—
Total commercial loans	12,206,356		99.7		39,724		0.3
Consumer loans
Single-family residential	8,165,939		99.8		20,422		0.2
Construction - custom	190,345		100.0		88		—
Land - consumer lot loans	111,338		99.8		236		0.2
HELOC	258,075		99.7		758		0.3
Consumer	84,422		100.0		40		0.0
Total consumer loans	8,810,119		99.8		21,544		0.2
Total loans	$	21,016,475	99.7	%	$	61,268	0.3	%


September 30, 2023	Performing Loans				Non-Performing Loans
	Amount		% of Total Loans		Amount		% of Total Loans
	(In thousands, except ratio data)
Commercial loans
Multi-family	$	2,881,467	99.8	%	$	5,127	0.2	%
Commercial real estate	3,286,666		99.3		23,435		0.7
Commercial & industrial	2,309,236		99.7		6,082		0.3
Construction	1,838,936		100.0		—		—
Land - acquisition & development	156,661		100.0		—		—
Total commercial loans	10,472,966		99.7		34,644		0.3
Consumer loans
Single-family residential	6,374,072		99.8		14,918		0.2
Construction - custom	324,363		100.0		88		—
Land - consumer lot loans	124,833		100.0		9		—
HELOC	237,018		99.7		736		0.3
Consumer	70,083		100.0		27		0.0
Total consumer loans	7,130,369		99.8		15,778		0.2
Total loans	$	17,603,335	99.7	%	$	50,422	0.3	%