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. Accrued interest receivable totaled $36.1 million and $35.8 million at September 30, 2022 and December 31, 2021, respectively, and was reported in “Interest and dividends receivable” on the Consolidated Statements of Financial Condition. The accrual of income on loans is generally discontinued when certain factors, such as contractual delinquency of 90 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 90 days delinquent. Payments received on non-accrual loans that do not bring the loan to less than 90 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 allowance for credit losses (“ACL”) is an estimate that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial assets. Loans are charged off against that ACL when management believes that a loan balance is uncollectable based on quarterly analysis of credit risk.

The amount of the ACL is based upon a loss rate model that considers multiple factors which reflects management’s assessment of the credit quality of the loan portfolio. Management estimates the allowance balance using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The factors are both quantitative and qualitative in nature including, but not limited to, historical losses, economic conditions, trends in delinquencies, value and adequacy of underlying collateral, volume and portfolio mix, and internal loan processes.

During the three months ended September 30, 2022, the Company recorded a provision for credit losses on loans totaling $2.1 million, compared to a benefit for credit losses on loans totaling $6.9 million for the three months ended September 30, 2021. The Company recorded a provision for credit losses on loans totaling $4.9 million for the nine months ended September 30, 2022 compared to a benefit of $5.6 million for the nine months ended September 30, 2021. The provision recorded during the nine months ended September 30, 2022 was driven by loan growth, increased reserves on two previously identified credits, coupled with the ongoing environmental uncertainty resulting from high and rising inflation including increasing interest rates. During the nine months ended September 30, 2022, the Company made no changes to

the reasonable and supportable forecast period and decreased the reversion period from six quarters to two quarters in order to revert back to our historical losses sooner as the economic forecast in the model is more favorable than the current conditions. The ACL - loans totaled $41.3 million at September 30, 2022 compared to $37.1 million at December 31, 2021. At September 30, 2022, the ACL - loans represented 0.59% of gross loans and 142.3% of non-performing loans. At December 31, 2021, the ACL - loans represented 0.56% of gross loans and 248.7% of non-performing loans.

The Company may restructure loans 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 TDR.

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 individually evaluated, 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. These restructurings have not included a reduction of principal balance.

The allocation of a portion of the ACL 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 loan which is collateral dependent, the fair value of the collateral. At September 30, 2022, there were no 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 ACL.

During the three months ended September 30, 2022 and 2021, there were no TDR loans that defaulted within 12 months of their modification date. During the nine months ended September 30, 2022, there were no TDR loans that defaulted within 12 months of their modification date. During the nine months ended September 30, 2021 there was one commercial business TDR loan totaling $3.0 million that defaulted within 12 months of its modification date.

The following table shows loans classified as TDR at amortized cost that are performing according to their restructured terms at the periods indicated:

(1)

These loans continue to pay as agreed, however the Company records interest received on a cash basis.

The following table shows loans classified as TDR at amortized cost that were not performing according to their restructured terms at the periods indicated:

There were no loans classified as TDR that were not performing according to their modified agreement as of December 31, 2021.

The following table shows our non-accrual loans at amortized cost with no related allowance and interest income recognized for loans ninety days or more past due and still accruing for the period shown below:


	At or for the nine months ended September 30, 2022
(In thousands)		Non-accrual amortized cost beginning of the reporting period		Non-accrual amortized cost end of the reporting period		Non-accrual with no related allowance		Interest income recognized		Loans ninety days or more past due and still accruing
Multi-family residential	$	2,652	$	3,715	$	3,715	$	—	$	—
Commercial real estate		640		1,908		1,908		—		—
One-to-four family - mixed-use property ⁽¹⁾		1,582		1,046		1,046		—		—
One-to-four family - residential		7,482		4,191		4,191		—		—
Small Business Administration		952		950		950		—		—
Commercial business and other ⁽¹⁾		1,945		18,252		4,882		159		2,000
Total	$	15,253	$	30,062	$	16,692	$	159	$	2,000

(1)

Included in the above analysis are non-accrual performing TDR one-to-four family – mixed-use property totaling $0.2 million. Commercial business and other contains a non-accrual performing TDR totaling $2.9 million.


	At or for the year ended December 31, 2021
(In thousands)		Non-accrual amortized cost beginning of the reporting period		Non-accrual amortized cost end of the reporting period		Non-accrual with no related allowance		Interest income recognized		Loans ninety days or more past due and still accruing
Multi-family residential	$	2,576	$	2,652	$	2,652	$	19	$	—
Commercial real estate		1,766		640		640		—		—
One-to-four family - mixed-use property ⁽¹⁾		1,706		1,582		1,582		6		—
One-to-four family - residential		5,313		7,482		7,482		1		—
Small Business Administration		1,168		952		952		—		—
Taxi medallion⁽²⁾		2,758		—		—		—		—
Commercial business and other⁽¹⁾		5,660		1,945		305		78		—
Total	$	20,947	$	15,253	$	13,613	$	104	$	—

(1)

Included in the above analysis are non-accrual performing TDR one-to-four family – mixed-use property totaling $0.3 million. Commercial business and other contains a non-accrual performing TDR totaling less than $0.1 million.

(2)

Taxi medallions were completely charged-off during the year ended December 31, 2021.

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				For the nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
(In thousands)
Interest income that would have been recognized had the loans performed in accordance with their original terms	$	618	$	415	$	1,578	$	1,330
Less: Interest income included in the results of operations		181		156		618		480
Total foregone interest	$	437	$	259	$	960	$	850

The following tables show the aging analysis of the amortized cost basis of loans at the period indicated by class of loans:


	September 30, 2022
					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	$	4,920	$	1,077	$	3,715	$	9,712	$	2,601,630	$	2,611,342
Commercial real estate		—		4,066		3,908		7,974		1,908,038		1,916,012
One-to-four family - mixed-use property		2,311		318		796		3,425		560,359		563,784
One-to-four family - residential		99		229		4,191		4,519		237,121		241,640
Construction		—		—		—		—		63,487		63,487
Small Business Administration		—		—		950		950		26,607		27,557
Commercial business and other		325		9,597		2,343		12,265		1,520,587		1,532,852
Total	$	7,655	$	15,287	$	15,903	$	38,845	$	6,917,829	$	6,956,674


	December 31, 2021
					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	$	3,652	$	4,193	$	2,652	$	10,497	$	2,508,730	$	2,519,227
Commercial real estate		5,743		—		640		6,383		1,770,992		1,777,375
One-to-four family - mixed-use property		2,319		—		1,321		3,640		571,296		574,936
One-to-four family - residential		163		224		7,483		7,870		269,942		277,812
Construction		—		—		—		—		59,473		59,473
Small Business Administration		—		—		952		952		90,884		91,836
Commercial business and other		101		40		1,386		1,527		1,335,919		1,337,446
Total	$	11,978	$	4,457	$	14,434	$	30,869	$	6,607,236	$	6,638,105

The following tables show the activity in the ACL on loans for the three month periods indicated:


	September 30, 2022
					One-to-four
					family -		One-to-four								Commercial
	Multi-family		Commercial		mixed-use		family -		Construction		Small Business		Taxi		business and
(In thousands)	residential		real estate		property		residential		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	9,405	$	8,443	$	1,959	$	866	$	300	$	2,118	$	—	$	16,333	$	39,424
Charge-offs		—		—		—		(2)		—		—		—		(322)		(324)
Recoveries		—		—		—		—		—		12		—		22		34
Provision (benefit)		355		(29)		3		(59)		(44)		(68)		—		1,976		2,134
Ending balance	$	9,760	$	8,414	$	1,962	$	805	$	256	$	2,062	$	—	$	18,009	$	41,268


	September 30, 2021
					One-to-four
					family -		One-to-four								Commercial
	Multi-family		Commercial		mixed-use		family -		Construction		Small Business		Taxi		business and
(In thousands)	residential		real estate		property		residential		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	6,559	$	5,868	$	1,492	$	716	$	185	$	2,302	$	—	$	25,548	$	42,670
Charge-offs		—		—		—		—		—		—		—		(1,019)		(1,019)
Recoveries		—		—		123		147		—		8		1,235		125		1,638
Provision (benefit)		(161)		(112)		(169)		(232)		(17)		(646)		(1,235)		(4,354)		(6,926)
Ending balance	$	6,398	$	5,756	$	1,446	$	631	$	168	$	1,664	$	—	$	20,300	$	36,363

The following tables show the activity in the ACL on loans for the nine month periods indicated:


	September 30, 2022
					One-to-four
					family -		One-to-four								Commercial
	Multi-family		Commercial		mixed-use		family -		Construction		Small Business		Taxi		business and
(In thousands)	residential		real estate		property		residential		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	8,185	$	7,158	$	1,755	$	784	$	186	$	1,209	$	—	$	17,858	$	37,135
Charge-offs		—		—		—		(2)		—		(1,054)		—		(354)		(1,410)
Recoveries		1		—		—		4		—		39		447		195		686
Provision (benefit)		1,574		1,256		207		19		70		1,868		(447)		310		4,857
Ending balance	$	9,760	$	8,414	$	1,962	$	805	$	256	$	2,062	$	—	$	18,009	$	41,268


	September 30, 2021
					One-to-four
					family -		One-to-four								Commercial
	Multi-family		Commercial		mixed-use		family -		Construction		Small Business		Taxi		business and
(In thousands)	residential		real estate		property		residential		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	6,557	$	8,327	$	1,986	$	869	$	497	$	2,251	$	—	$	24,666	$	45,153
Charge-offs		(43)		(64)		(32)		—		—		—		(2,758)		(2,230)		(5,127)
Recoveries		10		—		133		154		—		27		1,457		198		1,979
Provision (Benefit)		(126)		(2,507)		(641)		(392)		(329)		(614)		1,301		(2,334)		(5,642)
Ending balance	$	6,398	$	5,756	$	1,446	$	631	$	168	$	1,664	$	—	$	20,300	$	36,363

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 previously mentioned categories and management believes weakness is evident then we designate the loan as “Watch”; all other loans 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 may jeopardize the orderly liquidation of the debt. We designate a loan as 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 Credit 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 summarizes the risk category of mortgage and non-mortgage loans by loan portfolio segments and class of loans by year of origination at September 30, 2022:


														Revolving Loans		Revolving Loans
														Amortized Cost		converted to
(In thousands)		2022		2021		2020		2019		2018		Prior		Basis		term loans		Total
1-4 Family Residential
Pass	$	14,376	$	8,756	$	18,790	$	42,039	$	29,191	$	99,631	$	7,588	$	13,558	$	233,929
Watch		—		289		—		732		—		1,330		63		841		3,255
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		4,010		—		446		4,456
Total 1-4 Family Residential	$	14,376	$	9,045	$	18,790	$	42,771	$	29,191	$	104,971	$	7,651	$	14,845	$	241,640
1-4 Family Mixed-Use
Pass	$	38,477	$	44,662	$	32,958	$	64,949	$	67,082	$	304,622	$	—	$	—	$	552,750
Watch		—		—		888		741		—		7,207		—		—		8,836
Special Mention		—		—		—		—		—		962		—		—		962
Substandard		—		—		—		—		—		1,236		—		—		1,236
Total 1-4 Family Mixed-Use	$	38,477	$	44,662	$	33,846	$	65,690	$	67,082	$	314,027	$	—	$	—	$	563,784
Commercial Real Estate
Pass	$	302,056	$	182,756	$	153,420	$	234,022	$	245,188	$	763,516	$	—	$	—	$	1,880,958
Watch		—		1,605		—		8,602		6,784		10,081		—		—		27,072
Special Mention		—		—		—		—		—		4,066		—		—		4,066
Substandard		—		—		—		2,000		—		1,916		—		—		3,916
Total Commercial Real Estate	$	302,056	$	184,361	$	153,420	$	244,624	$	251,972	$	779,579	$	—	$	—	$	1,916,012
Construction
Pass	$	1,984	$	15,769	$	13,814	$	—		—	$	—	$	22,870	$	—	$	54,437
Watch		—		—		—		—		6,450		—		—		—		6,450
Special Mention		—		—		—		—		—		2,600		—		—		2,600
Substandard		—		—		—		—		—		—		—		—		—
Total Construction	$	1,984	$	15,769	$	13,814	$	—	$	6,450	$	2,600	$	22,870	$	—	$	63,487
Multi-family
Pass	$	417,745	$	290,993	$	226,506	$	318,909	$	385,967	$	925,965	$	6,175	$	—	$	2,572,260
Watch		—		1,117		1,462		—		14,810		15,927		—		—		33,316
Special Mention		—		—		—		—		725		568		—		—		1,293
Substandard		—		—		—		—		2,882		1,591		—		—		4,473
Total Multi-family	$	417,745	$	292,110	$	227,968	$	318,909	$	404,384	$	944,051	$	6,175	$	—	$	2,611,342
Commercial Business - Secured by RE
Pass	$	167,534	$	141,946	$	89,845	$	34,367	$	56,849	$	96,077	$	—	$	—	$	586,618
Watch		—		—		20,842		49,095		17,976		57,727		—		—		145,640
Special Mention		—		—		—		576		—		—		—		—		576
Substandard		—		—		—		—		—		3,513		—		—		3,513
Total Commercial Business - Secured by RE	$	167,534	$	141,946	$	110,687	$	84,038	$	74,825	$	157,317	$	—	$	—	$	736,347
Commercial Business
Pass	$	142,249	$	97,440	$	44,163	$	42,581	$	46,191	$	61,019	$	265,892	$	—	$	699,535
Watch		2,336		—		488		22,117		16,096		18,538		4,236		—		63,811
Special Mention		—		2,461		4,727		37		1,919		481		59		—		9,684
Substandard		1,454		1,435		72		31		2,862		1,869		14,855		—		22,578
Doubtful		—		—		—		—		—		—		792		—		792
Total Commercial Business	$	146,039	$	101,336	$	49,450	$	64,766	$	67,068	$	81,907	$	285,834	$	—	$	796,400
Small Business Administration
Pass	$	2,709	$	9,533	$	4,727	$	686	$	1,304	$	1,887	$	—	$	—	$	20,846
Watch		—		—		—		53		2,517		2,893		—		—		5,463
Special Mention		—		—		—		—		—		42		—		—		42
Substandard		—		—		—		—		—		1,206		—		—		1,206
Total Small Business Administration	$	2,709	$	9,533	$	4,727	$	739	$	3,821	$	6,028	$	—	$	—	$	27,557
Other
Pass	$	—	$	—	$	—	$	—	$	—	$	22	$	83	$	—	$	105
Total Other	$	—	$	—	$	—	$	—	$	—	$	22	$	83	$	—	$	105
Total by Loan Type
Total Pass	$	1,087,130	$	791,855	$	584,223	$	737,553	$	831,772	$	2,252,739	$	302,608	$	13,558	$	6,601,438
Total Watch		2,336		3,011		23,680		81,340		64,633		113,703		4,299		841		293,843
Total Special Mention		—		2,461		4,727		613		2,644		8,719		59		—		19,223
Total Substandard		1,454		1,435		72		2,031		5,744		15,341		14,855		446		41,378
Total Doubtful		—		—		—		—		—		—		792		—		792
Total Loans	$	1,090,920	$	798,762	$	612,702	$	821,537	$	904,793	$	2,390,502	$	322,613	$	14,845	$	6,956,674

Included within net loans as of September 30, 2022 and December 31, 2021 were $5.3 million and $8.7 million, respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction.

A loan is considered collateral dependent when the borrower is experiencing financial difficulties and repayment is expected to be substantially provided by the operation or sale of the collateral. The following table presents types of collateral-dependent loans by class of loans as of the periods indicated:



	Collateral Type
	September 30, 2022				December 31, 2021
(In thousands)		Real Estate		Business Assets		Real Estate		Business Assets
Multi-family residential	$	3,715	$	—	$	2,652	$	—
Commercial real estate		2,402		—		1,158		—
One-to-four family - mixed-use property		1,046		—		1,582		—
One-to-four family - residential		4,191		—		7,482		—
Small Business Administration		—		950		—		952
Commercial business and other		—		17,758		—		1,427
Total	$	11,354	$	18,708	$	12,874	$	2,379

Off-Balance Sheet Credit Losses

Also included within scope of the CECL standard are off-balance sheet loan commitments, which includes the unfunded portion of committed lines of credit and commitments “in-process”. Commitments “in‐process” reflect loans not in the Company’s books but rather negotiated loan / line of credit terms and rates that the Company has offered to customers and is committed to honoring. In reference to “in‐process” credits, the Company defines an unfunded commitment as a credit that has been offered to and accepted by a borrower, which has not closed and by which the obligation is not unconditionally cancellable.

Commitments to extend credit (principally real estate mortgage loans) and lines of credit (principally home equity lines of credit and business lines of credit) totaled $412.3 million and $472.9 million at September 30, 2022 and December 31, 2021, respectively.

The following table presents the activity in the allowance for off balance sheet credit losses for the three and nine months ended September 30, 2022 and 2021.


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2022		2021		2022		2021

	(In thousands)
Balance at beginning of period	$	1,444	$	1,570	$	1,209	$	1,815
Off-Balance Sheet- Benefit		(631)		(259)		(396)		(504)
Allowance for Off-Balance Sheet - Credit losses ⁽¹⁾	$	813	$	1,311	$	813	$	1,311

(1)

Included in “Other liabilities” on the Consolidated Statements of Financial Condition.

September 30, 2022

(Dollars in thousands)

of contracts

Commercial business and other

Total non-performing