Loans

Loans are reported at their outstanding principal balance net of any unearned income, charge-offs, deferred loan fees and costs on originated loans and unamortized premiums or discounts on purchased loans. Loan fees and certain loan origination costs are deferred. Net loan origination costs and premiums or discounts on loans purchased are amortized into interest income over the contractual life of the loans using the level-yield method. Prepayment penalties received on loans which pay in full prior to their scheduled maturity are included in interest income in the period they are collected.

Interest on loans is recognized on the accrual basis. The accrual of income on loans is generally discontinued when certain factors, such as contractual delinquency of

days or more, indicate reasonable doubt as to the timely collectability of such income. Uncollected interest previously recognized on non-accrual loans is reversed from interest income at the time the loan is placed on non-accrual status. A non-accrual loan can be returned to accrual status when contractual delinquency returns to less than

days delinquent. Payments received on non-accrual loans that do

not

bring the loan to less than

days delinquent are recorded on a cash basis. Payments can also be applied

first

as a reduction of principal until all principal is recovered and then subsequently to interest, if in management’s opinion, it is evident that recovery of all principal due is likely to occur.

The Company recognizes a loan as non-performing when the borrower has demonstrated the inability to bring the loan current, or due to other circumstances which, in management’s opinion, indicate the borrower will be unable to bring the loan current within a reasonable time. All loans classified as non-performing, which includes all loans past due

days or more, are classified as non-accrual unless there is, in our opinion, compelling evidence the borrower will bring the loan current in the immediate future. Prior to a loan becoming

days delinquent, an updated appraisal is ordered and/or an internal evaluation is prepared.

A loan is considered impaired when, based upon current information, the Company believes it is probable that it will be unable to collect all amounts due, both principal and interest, in accordance with the original terms of the loan. Impaired loans are measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate or at the loan’s observable market price or, as a practical expedient, the fair value of the collateral if the loan is collateral dependent. All non-accrual loans are considered impaired.

The Company maintains an allowance for loan losses at an amount, which, in management’s judgment, is adequate to absorb probable estimated losses inherent in the loan portfolio. Management’s judgment in determining the adequacy of the allowance is based on evaluations of the collectability of loans. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revisions as more information becomes available. An unallocated component

may

at times be maintained to cover uncertainties that could affect management's estimate of probable losses. When necessary an unallocated component of the allowance will reflect the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. The allowance is established through charges to earnings in the form of a provision for loan losses based on management’s evaluation of the risk inherent in the various components of the loan portfolio and other factors, including historical loan loss experience (which is updated quarterly), current economic conditions, delinquency and non-accrual trends, classified loan levels, risk in the portfolio and volumes and trends in loan types, recent trends in charge-offs, changes in underwriting standards, experience, ability and depth of the Company’s lenders, collection policies and experience, internal loan review function and other external factors. Increases and decreases in the allowance other than charge-offs and recoveries are included in the provision for loan losses. When a loan or a portion of a loan is determined to be uncollectible, the portion deemed uncollectible is charged against the allowance, and subsequent recoveries, if any, are credited to the allowance.

The determination of the amount of the allowance for loan losses includes estimates that are susceptible to significant changes due to changes in appraisal values of collateral, national and local economic conditions and other factors. We review our loan portfolio by separate categories with similar risk and collateral characteristics. Impaired loans are segregated and reviewed separately.

The Company reviews each impaired loan on an individual basis to determine if either a charge-off or a valuation allowance needs to be allocated to the loan. The Company does

not

charge-off or allocate a valuation allowance to loans for which management has concluded the current value of the underlying collateral will allow for recovery of the loan balance through the sale of the loan or by foreclosure and sale of the property.

The Company considers fair value of collateral dependent loans to be

85%

of the appraised or internally estimated value of the property. The

85%

is based on the actual net proceeds the Bank has received from the sale of other real estate owned (“OREO”) as a percentage of OREO’s appraised value. For collateral dependent taxi medallion loans, the Company considers fair value to be the value of the underlying medallion based upon the most recently reported arm’s length sales transaction. When there is

recent sale activity, the fair value is calculated using capitalization rates. For both collateral dependent mortgage loans and taxi medallion loans, the amount by which the loan’s book value exceeds fair value is charged-off.

The Company segregated its loans into

two

portfolios based on year of origination. One portfolio was reviewed for loans originated after

December 31, 2009

and a

second

portfolio for loans originated prior to

January 1, 2010.

Our decision to segregate the portfolio based upon origination dates was based on changes made in our underwriting standards during

2009.

By the end of

2009,

all loans were being underwritten based on revised and tightened underwriting standards. Loans originated prior to

2010

have a higher delinquency rate and loss history. Each of the years in the portfolio for loans originated prior to

2010

has a similar delinquency rate. For the

three

months ended

March 31, 2018,

the Company used a loss emergence period of

1.33

years. The Company’s Board of Directors reviews and approves management’s evaluation of the adequacy of the allowance for loan losses on a quarterly basis.

The Company evaluates the underlying collateral through a

third

party appraisal, or when a

third

party appraisal is

not

available, the Company will use an internal evaluation. The internal evaluations are prepared using an income approach or a sales approach. The income approach is used for income producing properties and uses current revenues less operating expenses to determine the net cash flow of the property. Once the net cash flow is determined, the value of the property is calculated using an appropriate capitalization rate for the property. The sales approach uses comparable sales prices in the market. When an internal evaluation is used, we place greater reliance on the income approach to value the collateral.

The Company

may

restructure a loan to enable a borrower experiencing financial difficulties to continue making payments when it is deemed to be in the Company’s best long-term interest. This restructure

may

include reducing the interest rate or amount of the monthly payment for a specified period of time, after which the interest rate and repayment terms revert to the original terms of the loan. We classify these loans as Troubled Debt Restructured (“TDR”).

These restructurings have

not

included a reduction of principal balance. The Company believes that restructuring these loans in this manner will allow certain borrowers to become and remain current on their loans. All loans classified as TDR are considered impaired, however TDR loans which have been current for

six

consecutive months at the time they are restructured as TDR remain on accrual status and are

not

included as part of non-performing loans. Loans which were delinquent at the time they are restructured as a TDR are placed on non-accrual status and reported as non-accrual performing TDR loans until they have made timely payments for

six

consecutive months.

The allocation of a portion of the allowance for loan losses for a performing TDR loan is based upon the present value of the future expected cash flows discounted at the loan’s original effective rate, or for a non-performing TDR which is collateral dependent, the fair value of the collateral. At

March 31, 2018,

there were

commitments to lend additional funds to borrowers whose loans were modified to a TDR. The modification of loans to a TDR did

not

have a significant effect on our operating results, nor did it require a significant allocation of the allowance for loan losses.

The Company did

not

modify any loans as TDR during the

three

months ended

March 31, 2018

and

March 31, 2017.

The following table shows our recorded investment for loans classified as TDR that are performing according to their restructured terms at the periods indicated:

	March 31, 2018				December 31, 2017
	Number		Recorded		Number		Recorded
(Dollars in thousands)	of contracts		investment		of contracts		investment

Multi-family residential		9	$	2,503		9	$	2,518
Commercial real estate		-		-		2		1,986
One-to-four family - mixed-use property		5		1,740		5		1,753
One-to-four family - residential		3		567		3		572
Taxi medallion		19		5,712		20		5,916
Commercial business and other		2		407		2		462
Total performing troubled debt restructured		38	$	10,929		41	$	13,207

During the

three

months ended

March 31, 2018,

we sold

one

commercial real estate TDR totaling

$1.8

million, for a loss of

$0.3

million and foreclosed on

one

taxi medallion TDR of

$0.1

million, which is included in “Other Assets”. There were

TDRs that defaulted during the period, which were within

months of their modification date.

The following table shows our recorded investment for loans classified as TDR that are

not

performing according to their restructured terms at the periods indicated:

	March 31, 2018				December 31, 2017
	Number		Recorded		Number		Recorded
(Dollars in thousands)	of contracts		investment		of contracts		investment

Multi-family residential		1	$	383		1	$	383

Total troubled debt restructurings that subsequently defaulted		1	$	383		1	$	383

During the

three

months ended

March 31, 2018,

one

taxi medallion TDR was foreclosed upon and transferred to non-performing status. There were

TDR loans transferred to non-performing status during the

three

months ended

March 31, 2017.

The following table shows our non-performing loans at the periods indicated:

	March 31,		December 31,
(In thousands)	2018		2017

Loans ninety days or more past due and still accruing:
Commercial real estate	$	1,668	$	2,424
Total		1,668		2,424

Non-accrual mortgage loans:
Multi-family residential		2,193		3,598
Commercial real estate		1,894		1,473
One-to-four family - mixed-use property		2,396		1,867
One-to-four family - residential		7,542		7,808
Total		14,025		14,746

Non-accrual non-mortgage loans:
Small Business Administration		41		46
Taxi medallion		906		918
Total		947		964
Total non-accrual loans		14,972		15,710
Total non-performing loans	$	16,640	$	18,134

The following is a summary of interest foregone on non-accrual loans and loans classified as TDR for the periods indicated:

	For the three months ended March 31,
	2018		2017
	(In thousands)
Interest income that would have been recognized had the loans performed in accordance with their original terms	$	406	$	414
Less: Interest income included in the results of operations		158		127
Total foregone interest	$	248	$	287

The following tables show an age analysis of our recorded investment in loans, including loans past maturity, at the periods indicated:

	March 31, 2018
					Greater
	30 - 59 Days		60 - 89 Days		than		Total Past
(In thousands)	Past Due		Past Due		90 Days		Due		Current		Total Loans

Multi-family residential	$	2,748	$	-	$	2,193	$	4,941	$	2,281,862	$	2,286,803
Commercial real estate		-		-		3,563		3,563		1,423,284		1,426,847
One-to-four family - mixed-use property		2,659		-		2,396		5,055		561,875		566,930
One-to-four family - residential		1,449		151		7,542		9,142		180,973		190,115
Co-operative apartments		-		-		-		-		6,826		6,826
Construction loans		-		730		-		730		23,157		23,887
Small Business Administration		-		-		-		-		20,004		20,004
Taxi medallion		-		-		-		-		6,617		6,617
Commercial business and other		200		5		-		205		768,235		768,440
Total	$	7,056	$	886	$	15,694	$	23,636	$	5,272,833	$	5,296,469

	December 31, 2017
					Greater
	30 - 59 Days		60 - 89 Days		than		Total Past
(In thousands)	Past Due		Past Due		90 Days		Due		Current		Total Loans

Multi-family residential	$	2,533	$	279	$	3,598	$	6,410	$	2,267,185	$	2,273,595
Commercial real estate		1,680		2,197		3,897		7,774		1,360,338		1,368,112
One-to-four family - mixed-use property		1,570		860		1,867		4,297		559,909		564,206
One-to-four family - residential		1,921		680		7,623		10,224		170,439		180,663
Co-operative apartments		-		-		-		-		6,895		6,895
Construction loans		-		-		-		-		8,479		8,479
Small Business Administration		-		-		-		-		18,479		18,479
Taxi medallion		-		108		-		108		6,726		6,834
Commercial business and other		2		-		-		2		732,971		732,973
Total	$	7,706	$	4,124	$	16,985	$	28,815	$	5,131,421	$	5,160,236

The following tables show the activity in the allowance for loan losses for the

three

month periods indicated:

March 31, 2018
(In thousands)	Multi-family residential			Commercial real estate			One-to-four family - mixed-use property			One-to-four family - residential			Construction loans		Small Business Administration			Taxi medallion		Commercial business and other			Total

Allowance for credit losses:
Beginning balance	$	5,823		$	4,643		$	2,545		$	1,082		$	68	$	669		$	-	$	5,521		$	20,351
Charge-off's		(53	)		-			-			(1	)		-		(25	)		-		(6	)		(85	)
Recoveries		2			-			-			108			-		6			-		7			123
Provision (benefit)		(22	)		(41	)		(75	)		(148	)		123		25			-		291			153
Ending balance	$	5,750		$	4,602		$	2,470		$	1,041		$	191	$	675		$	-	$	5,813		$	20,542

March 31, 2017
(In thousands)	Multi-family residential			Commercial real estate			One-to-four family - mixed-use property			One-to-four family - residential			Construction loans		Small Business Administration			Taxi medallion			Commercial business and other			Unallocated		Total

Allowance for credit losses:
Beginning balance	$	5,923		$	4,487		$	2,903		$	1,015		$	92	$	481		$	2,243		$	4,492		$	593	$	22,229
Charge-off's		(14	)		-			(34	)		-			-		(65	)		(54	)		(12	)		-		(179	)
Recoveries		30			68			-			-			-		41			-			22			-		161
Provision (benefit)		(32	)		(70	)		(178	)		(36	)		2		(140	)		24			208			222		-
Ending balance	$	5,907		$	4,485		$	2,691		$	979		$	94	$	317		$	2,213		$	4,710		$	815	$	22,211

The following tables show the manner in which loans were evaluated for impairment at the periods indicated:

March 31, 2018
(In thousands)	Multi-family residential		Commercial real estate		One-to-four family - mixed- use property		One-to-four family- residential		Co-operative apartments		Construction loans		Small Business Administration		Taxi medallion		Commercial business and other		Total
Financing Receivables:
Ending Balance	$	2,286,803	$	1,426,847	$	566,930	$	190,115	$	6,826	$	23,887	$	20,004	$	6,617	$	768,440	$	5,296,469
Ending balance: individually evaluated for impairment	$	6,785	$	6,727	$	5,592	$	8,848	$	-	$	-	$	99	$	6,617	$	407	$	35,075
Ending balance: collectively evaluated for impairment	$	2,280,018	$	1,420,120	$	561,338	$	181,267	$	6,826	$	23,887	$	19,905	$	-	$	768,033	$	5,261,394

Allowance for credit losses:
Ending balance: individually evaluated for impairment	$	158	$	-	$	167	$	55	$	-	$	-	$	-	$	-	$	5	$	385
Ending balance: collectively evaluated for impairment	$	5,592	$	4,602	$	2,303	$	986	$	-	$	191	$	675	$	-	$	5,808	$	20,157

December 31, 2017
(In thousands)	Multi-family residential		Commercial real estate		One-to-four family - mixed- use property		One-to-four family- residential		Co-operative apartments		Construction loans		Small Business Administration		Taxi medallion		Commercial business and other		Total
Financing Receivables:
Ending Balance	$	2,273,595	$	1,368,112	$	564,206	$	180,663	$	6,895	$	8,479	$	18,479	$	6,834	$	732,973	$	5,160,236
Ending balance: individually evaluated for impairment	$	7,311	$	9,089	$	5,445	$	9,686	$	-	$	-	$	137	$	6,834	$	661	$	39,163
Ending balance: collectively evaluated for impairment	$	2,266,284	$	1,359,023	$	558,761	$	170,977	$	6,895	$	8,479	$	18,342	$	-	$	732,312	$	5,121,073

Allowance for credit losses:
Ending balance: individually evaluated for impairment	$	205	$	177	$	198	$	56	$	-	$	-	$	-	$	-	$	6	$	642
Ending balance: collectively evaluated for impairment	$	5,618	$	4,466	$	2,347	$	1,026	$	-	$	68	$	669	$	-	$	5,515	$	19,709

The following table shows our recorded investment, unpaid principal balance and allocated allowance for loan losses for impaired loans at the periods indicated:

	March 31, 2018						December 31, 2017
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
	(In thousands)
With no related allowance recorded:
Mortgage loans:
Multi-family residential	$	4,577	$	5,078	$	-	$	5,091	$	5,539	$	-
Commercial real estate		6,727		6,727		-		7,103		7,103		-
One-to-four family mixed-use property		4,375		4,711		-		4,218		4,556		-
One-to-four family residential		8,437		9,442		-		9,272		10,489		-
Non-mortgage loans:
Small Business Administration		99		135		-		137		151		-
Taxi medallion		6,617		17,561		-		6,834		18,063		-
Commercial business and other		79		449		-		313		682		-
Total loans with no related allowance recorded		30,911		44,103		-		32,968		46,583		-

With an allowance recorded:
Mortgage loans:
Multi-family residential		2,208		2,208		158		2,220		2,220		205
Commercial real estate		-		-		-		1,986		1,986		177
One-to-four family mixed-use property		1,217		1,217		167		1,227		1,227		198
One-to-four family residential		411		411		55		414		414		56
Non-mortgage loans:
Commercial business and other		328		328		5		348		348		6
Total loans with an allowance recorded		4,164		4,164		385		6,195		6,195		642

Total Impaired Loans:
Total mortgage loans	$	27,952	$	29,794	$	380	$	31,531	$	33,534	$	636
Total non-mortgage loans	$	7,123	$	18,473	$	5	$	7,632	$	19,244	$	6

The following table shows our average recorded investment and interest income recognized for impaired loans for the

three

months ended

March 31, 2018

and

2017:

	March 31, 2018				March 31, 2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
	(In thousands)
With no related allowance recorded:
Mortgage loans:
Multi-family residential	$	4,834	$	20	$	3,354	$	23
Commercial real estate		6,915		74		5,925		95
One-to-four family mixed-use property		4,297		41		6,048		37
One-to-four family residential		8,855		15		9,851		26
Construction		-		-		301		7
Non-mortgage loans:
Small Business Administration		118		1		293		2
Taxi medallion		6,726		82		3,646		30
Commercial business and other		196		2		2,159		44
Total loans with no related allowance recorded		31,941		235		31,577		264

With an allowance recorded:
Mortgage loans:
Multi-family residential		2,214		29		2,257		29
Commercial real estate		993		-		2,056		24
One-to-four family mixed-use property		1,222		9		2,013		18
One-to-four family residential		413		4		427		4
Non-mortgage loans:
Small Business Administration		-		-		761		-
Taxi medallion		-		-		13,911		43
Commercial business and other		338		5		411		6
Total loans with an allowance recorded		5,180		47		21,836		124

Total Impaired Loans:
Total mortgage loans	$	29,743	$	192	$	32,232	$	263
Total non-mortgage loans	$	7,378	$	90	$	21,181	$	125

In accordance with our policy and the current regulatory guidelines, we designate loans as “Special Mention,” which are considered “Criticized Loans,” and “Substandard,” “Doubtful,” or “Loss,” which are considered “Classified Loans”. If a loan does

not

fall within

one

of the previous mentioned categories then the loan would be considered “Pass.” Loans that are non-accrual are designated as Substandard, Doubtful or Loss. These loan designations are updated quarterly. We designate a loan as Substandard when a well-defined weakness is identified that jeopardizes the orderly liquidation of the debt. We designate a loan Doubtful when it displays the inherent weakness of a Substandard loan with the added provision that collection of the debt in full, on the basis of existing facts, is highly improbable. We designate a loan as Loss if it is deemed the debtor is incapable of repayment. The Company does

not

hold any loans designated as Loss, as loans that are designated as Loss are charged to the Allowance for Loan Losses. We designate a loan as Special Mention if the asset does

not

warrant classification within

one

of the other classifications, but does contain a potential weakness that deserves closer attention.

The following table sets forth the recorded investment in loans designated as criticized or Classified at the periods indicated:

	March 31, 2018
(In thousands)	Special Mention		Substandard		Doubtful		Loss		Total

Multi-family residential	$	4,124	$	4,282	$	-	$	-	$	8,406
Commercial real estate		1,892		6,727		-		-		8,619
One-to-four family - mixed-use property		1,277		3,852		-		-		5,129
One-to-four family - residential		1,018		8,282		-		-		9,300
Construction loans		730		-		-		-		730
Small Business Administration		525		73		-		-		598
Taxi medallion		-		6,617		-		-		6,617
Commercial business and other		21,142		328		-		-		21,470
Total loans	$	30,708	$	30,161	$	-	$	-	$	60,869

	December 31, 2017
(In thousands)	Special Mention		Substandard		Doubtful		Loss		Total

Multi-family residential	$	6,389	$	4,793	$	-	$	-	$	11,182
Commercial real estate		2,020		8,871		-		-		10,891
One-to-four family - mixed-use property		2,835		3,691		-		-		6,526
One-to-four family - residential		2,076		9,115		-		-		11,191
Small Business Administration		548		108		-		-		656
Taxi medallion		-		6,834		-		-		6,834
Commercial business and other		14,859		545		-		-		15,404
Total loans	$	28,727	$	33,957	$	-	$	-	$	62,684

Commitments to extend credit (principally real estate mortgage loans) and lines of credit (principally home equity lines of credit and business lines of credit) amounted to

$79.6

million and

$254.8

million, respectively, at

March 31, 2018.