Loans outstanding, excluding those held for sale, by general ledger classification, as of September 30, 2021 and December 31, 2020, consisted of the following:

			% of					% of
	September 30,		Totals			December 31,		Total
(Dollars in thousands)	2021		Loans			2020		Loans
Residential mortgage	$	507,865		11.10	%	$	502,829		11.50	%
Multifamily mortgage		1,497,683		32.73			1,126,946		25.77
Commercial mortgage		680,107		14.87			691,294		15.81
Commercial loans (including equipment financing) (A)		1,790,579		39.13			1,950,981		44.62
Commercial construction		25,718		0.56			12,600		0.29
Home equity lines of credit		42,512		0.93			50,545		1.15
Consumer loans, including fixed rate home equity loans		30,689		0.67			37,016		0.85
Other loans		245		0.01			226		0.01
Total loans	$	4,575,398		100.00	%	$	4,372,437		100.00	%

In determining an appropriate amount for the allowance, the Bank segments and evaluates the loan portfolio based on federal Call Report codes. The following portfolio classes have been identified as of September 30, 2021 and December 31, 2020:

			% of					% of
	September 30,		Totals			December 31,		Total
(Dollars in thousands)	2021		Loans			2020		Loans
Primary residential mortgage	$	514,271		11.25	%	$	512,841		11.74	%
Home equity lines of credit		42,512		0.93			50,545		1.16
Junior lien loan on residence		3,218		0.07			4,527		0.10
Multifamily property		1,497,683		32.76			1,126,946		25.79
Owner-occupied commercial real estate		239,674		5.24			253,447		5.80
Investment commercial real estate		981,490		21.47			995,613		22.79
Commercial and industrial (A)		916,192		20.04			1,059,399		24.24
Lease financing		308,351		6.74			305,931		7.00
Farmland/agricultural production		4,461		0.10			3,068		0.07
Commercial construction loans		25,862		0.57			12,773		0.29
Consumer and other loans		38,032		0.83			44,483		1.02
Total loans		4,571,746		100.00	%		4,369,573		100.00	%
Net deferred costs		3,652					2,864
Total loans including net deferred costs	$	4,575,398				$	4,372,437

The following tables present the loan balances by portfolio class, based on impairment method, and the corresponding balances in the allowance for loan and lease losses (ALLL) as of September 30, 2021 and December 31, 2020:

	September 30, 2021
	Total		Ending ALLL		Total		Ending ALLL
	Loans		Attributable		Loans		Attributable
	Individually		To Loans		Collectively		To Loans
	Evaluated		Individually		Evaluated		Collectively				Total
	For		Evaluated for		For		Evaluated for		Total		Ending
(In thousands)	Impairment		Impairment		Impairment		Impairment		Loans		ALLL
Primary residential mortgage	$	2,886	$	80	$	511,385	$	1,995	$	514,271	$	2,075
Home equity lines of credit		—		—		42,512		119		42,512		119
Junior lien loan on residence		—		—		3,218		7		3,218		7
Multifamily property		—		—		1,497,683		10,568		1,497,683		10,568
Owner-occupied commercial real estate		494		—		239,180		2,293		239,674		2,293
Investment commercial real estate		19,887		7,137		961,603		22,847		981,490		29,984
Commercial and industrial (A)		3,074		—		913,118		16,266		916,192		16,266
Lease financing		—		—		308,351		3,369		308,351		3,369
Farmland/agricultural production		—		—		4,461		58		4,461		58
Commercial construction loans		—		—		25,862		165		25,862		165
Consumer and other loans		—		—		38,032		229		38,032		229
Total ALLL	$	26,341	$	7,217	$	4,545,405	$	57,916	$	4,571,746	$	65,133

	December 31, 2020
	Total		Ending ALLL		Total		Ending ALLL
	Loans		Attributable		Loans		Attributable
	Individually		To Loans		Collectively		To Loans
	Evaluated		Individually		Evaluated		Collectively				Total
	For		Evaluated for		For		Evaluated for		Total		Ending
(In thousands)	Impairment		Impairment		Impairment		Impairment		Loans		ALLL
Primary residential mortgage	$	1,490	$	3	$	511,351	$	2,902	$	512,841	$	2,905
Home equity lines of credit		—		—		50,545		218		50,545		218
Junior lien loan on residence		—		—		4,527		15		4,527		15
Multifamily property		—		—		1,126,946		9,945		1,126,946		9,945
Owner-occupied commercial real estate		807		—		252,640		3,050		253,447		3,050
Investment commercial real estate		4,593		—		991,020		27,713		995,613		27,713
Commercial and industrial (A)		9,314		2,700		1,050,085		16,347		1,059,399		19,047
Lease financing		—		—		305,931		3,936		305,931		3,936
Farmland/agricultural production		—		—		3,068		43		3,068		43
Commercial construction loans		—		—		12,773		158		12,773		158
Consumer and other loans		—		—		44,483		279		44,483		279
Total ALLL	$	16,204	$	2,703	$	4,353,369	$	64,606	$	4,369,573	$	67,309

(A)The balance includes PPP loans of $196 million, which had no related reserve as these loans are guaranteed by the SBA.

Impaired loans include nonaccrual loans of $25.9 million at September 30, 2021 and $11.4 million at December 31, 2020. Included in impaired loans is a commercial real estate loan with a balance of $19.9 million and specific reserves of $7.1 million at September 30, 2021. Impaired loans also include performing TDR loans of $416,000 at September 30, 2021 and $201,000 at December 31, 2020. The allowance allocated to TDR loans totaled $57,000 and $3,000 at September 30, 2021 and December 31, 2020, respectively, of which none was allocated to nonaccrual loans. All accruing TDR loans were paying in accordance with restructured terms as of September 30, 2021. The Company has not committed to lend additional amounts as of September 30, 2021 to customers with outstanding loans that are classified as TDR loans.

The following tables present loans individually evaluated for impairment by class of loans as of September 30, 2021 and December 31, 2020 (The average impaired loans on the following tables represent year to date impaired loans):

	September 30, 2021
	Unpaid						Average
	Principal		Recorded		Specific		Impaired
(In thousands)	Balance		Investment		Reserves		Loans
With no related allowance recorded:
Primary residential mortgage	$	1,947	$	1,750	$	—	$	1,789
Owner-occupied commercial real estate		521		494		—		564
Commercial and industrial		4,986		3,074		—		3,289
Total loans with no related allowance	$	7,454	$	5,318	$	—	$	5,642
With related allowance recorded:
Primary residential mortgage	$	1,136	$	1,136	$	80	$	489
Investment commercial real estate		19,887		19,887		7,137		2,210
Total loans with related allowance	$	21,023	$	21,023	$	7,217	$	2,699
Total loans individually evaluated for impairment	$	28,477	$	26,341	$	7,217	$	8,341

	December 31, 2020
	Unpaid						Average
	Principal		Recorded		Specific		Impaired
(In thousands)	Balance		Investment		Reserves		Loans
With no related allowance recorded:
Primary residential mortgage	$	1,601	$	1,328	$	—	$	5,544
Owner-occupied commercial real estate		817		807		—		516
Investment commercial real estate		4,593		4,593		—		6,582
Commercial and industrial		7,137		4,314		—		1,677
Total loans with no related allowance	$	14,148	$	11,042	$	—	$	14,319
With related allowance recorded:
Primary residential mortgage	$	162	$	162	$	3	$	526
Commercial and industrial		5,000		5,000		2,700		4,140
Total loans with related allowance	$	5,162	$	5,162	$	2,703	$	4,666
Total loans individually evaluated for impairment	$	19,310	$	16,204	$	2,703	$	18,985

Interest income recognized on impaired loans for the quarters ended September 30, 2021 and 2020 was not material. The Company did not recognize any income on non-accruing impaired loans for the three months and nine months ended September 30, 2021 and 2020.

The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2021 and December 31, 2020:

The following tables present the aging of the recorded investment in past due loans as of September 30, 2021 and December 31, 2020 by class of loans, excluding nonaccrual loans:

	September 30, 2021
	30-59		60-89		90 Days or
	Days		Days		Greater		Total
(In thousands)	Past Due		Past Due		Past Due		Past Due
Primary residential mortgage	$	997	$	—	$	—	$	997
Home equity lines of credit		114		—		—		114
Commercial and industrial		17		65		—		82
Total	$	1,128	$	65	$	—	$	1,193

	December 31, 2020
	30-59		60-89		90 Days or
	Days		Days		Greater		Total
(In thousands)	Past Due		Past Due		Past Due		Past Due
Primary residential mortgage	$	2,900	$	141	$	—	$	3,041
Home equity lines of credit		181		—		—		181
Junior lien loan on residence		—		25		—		25
Multifamily property		—		269		—		269
Owner-occupied commercial real estate		268		—		—		268
Commercial and industrial		497		772		—		1,269
Total	$	3,846	$	1,207	$	—	$	5,053

The Company places all commercial loans into various credit risk rating categories based on an assessment of the expected ability of the borrowers to properly service their debt. The assessment considers numerous factors including, but not limited to, current financial information on the borrower, historical payment experience, strength of any guarantor, nature of and value of any collateral, acceptability of the loan structure and documentation, relevant public information and current economic trends. This credit risk rating analysis is performed when the loan is initially underwritten and then annually based on set criteria in the loan policy.

In addition, the Bank has engaged an independent loan review firm to validate risk ratings and to ensure compliance with our policies and procedures. This review of the following types of loans is performed quarterly:

The Company uses the following regulatory definitions for criticized and classified risk ratings:

Special Mention: These loans have a potential weakness that deserves Management’s close attention. If left uncorrected, the potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date.

Substandard: These loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: These loans have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, based on currently existing facts, conditions and values.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

Loans that are considered to be impaired are individually evaluated for potential loss and allowance adequacy. Loans not deemed impaired are collectively evaluated for potential loss and allowance adequacy.

As of September 30, 2021, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

			Special
(In thousands)	Pass		Mention		Substandard		Doubtful
Primary residential mortgage	$	507,378	$	325	$	6,568	$	—
Home equity lines of credit		42,047		—		465		—
Junior lien loan on residence		3,200		—		18		—
Multifamily property		1,484,408		12,933		342		—
Owner-occupied commercial real estate		229,482		9,441		751		—
Investment commercial real estate		882,526		79,077		19,887		—
Commercial and industrial		878,203		14,083		23,906		—
Lease financing		308,351		—		—		—
Farmland/agricultural production		4,461		—		—		—
Commercial construction loans		25,786		76		—		—
Consumer and other loans		38,032		—		—		—
Total	$	4,403,874	$	115,935	$	51,937	$	—

As of December 31, 2020, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

			Special
(In thousands)	Pass		Mention		Substandard		Doubtful
Primary residential mortgage	$	504,795	$	1,398	$	6,648	$	—
Home equity lines of credit		50,068		—		477		—
Junior lien loan on residence		4,483		—		44		—
Multifamily property		1,121,145		5,441		360		—
Owner-occupied commercial real estate		240,638		10,417		2,392		—
Investment commercial real estate		893,115		91,162		11,336		—
Commercial and industrial		989,281		53,604		16,514		—
Lease financing		305,931		—		—		—
Farmland/agricultural production		3,068		—		—		—
Commercial construction loans		12,692		81		—		—
Consumer and other loans		44,483		—		—		—
Total	$	4,169,699	$	162,103	$	37,771	$	—

At September 30, 2021, $26.3 million of substandard loans were also considered impaired, compared to $16.2 million at December 31, 2020. The increase in substandard loans was primarily due to the downgrade of one commercial real estate loan with a balance of $19.9 million at September 30, 2021.

The activity in the allowance for loan and lease losses for the three months ended September 30, 2021 is summarized below:

	July 1,										September 30,
	2021										2021
	Beginning							Provision			Ending
(In thousands)	ALLL		Charge-offs			Recoveries		(Credit)			ALLL
Primary residential mortgage	$	2,167	$	—		$	—	$	(92	)	$	2,075
Home equity lines of credit		123		—			—		(4	)		119
Junior lien loan on residence		8		—			—		(1	)		7
Multifamily property		10,615		—			—		(47	)		10,568
Owner-occupied commercial real estate		2,447		—			—		(154	)		2,293
Investment commercial real estate		27,886		—			—		2,098			29,984
Commercial and industrial		16,565		(19	)		50		(330	)		16,266
Lease financing		3,275		—			—		94			3,369
Farmland/agricultural production		43		—			—		15			58
Commercial construction loans		159		—			—		6			165
Consumer and other loans		217		(4	)		1		15			229
Total ALLL	$	63,505	$	(23	)	$	51	$	1,600		$	65,133

The activity in the allowance for loan and lease losses for the three months ended September 30, 2020 is summarized below:

	July 1,										September 30,
	2020										2020
	Beginning							Provision			Ending
(In thousands)	ALLL		Charge-offs			Recoveries		(Credit)			ALLL
Primary residential mortgage	$	3,074	$	—		$	217	$	(324	)	$	2,967
Home equity lines of credit		244		—			3		(27	)		220
Junior lien loan on residence		20		—			—		(2	)		18
Multifamily property		9,662		—			—		1,002			10,664
Owner-occupied commercial real estate		3,177		—			—		(166	)		3,011
Investment commercial real estate		29,866		(5,132	)		—		4,432			29,166
Commercial and industrial		16,218		(164	)		6		112			16,172
Lease financing		3,349		—			—		124			3,473
Farmland/agricultural production		38		—			—		(23	)		15
Commercial construction loans		49		—			—		28			77
Consumer and other loans		368		(2	)		2		(6	)		362
Total ALLL	$	66,065	$	(5,298	)	$	228	$	5,150		$	66,145

The activity in the allowance for loan and lease losses for the nine months ended September 30, 2021 is summarized below:

	January 1,										September 30,
	2021										2021
	Beginning							Provision			Ending
(In thousands)	ALLL		Charge-offs			Recoveries		(Credit)			ALLL
Primary residential mortgage	$	2,905	$	(12	)	$	—	$	(818	)	$	2,075
Home equity lines of credit		218		—			85		(184	)		119
Junior lien loan on residence		15		—			—		(8	)		7
Multifamily property		9,945		—			—		623			10,568
Owner-occupied commercial real estate		3,050		—			—		(757	)		2,293
Investment commercial real estate		27,713		—			—		2,271			29,984
Commercial and industrial		19,047		(5,019	)		60		2,178			16,266
Lease financing		3,936		—			—		(567	)		3,369
Farmland/agricultural production		43		—			—		15			58
Commercial construction loans		158		—			—		7			165
Consumer and other loans		279		(24	)		9		(35	)		229
Total ALLL	$	67,309	$	(5,055	)	$	154	$	2,725		$	65,133

The activity in the allowance for loan and lease losses for the nine months ended September 30, 2020 is summarized below:

	January 1,										September 30,
	2020										2020
	Beginning							Provision			Ending
(In thousands)	ALLL		Charge-offs			Recoveries		(Credit)			ALLL
Primary residential mortgage	$	2,090	$	—		$	330	$	547		$	2,967
Home equity lines of credit		128		—			8		84			220
Junior lien loan on residence		13		—			—		5			18
Multifamily property		6,037		—			—		4,627			10,664
Owner-occupied commercial real estate		2,064		—			—		947			3,011
Investment commercial real estate		15,988		(5,532	)		31		18,679			29,166
Commercial and industrial		14,353		(2,418	)		11		4,226			16,172
Lease financing		2,642		—			—		831			3,473
Farmland/agricultural production		38		—			—		(23	)		15
Commercial construction loans		27		—			—		50			77
Consumer and other loans		296		(15	)		4		77			362
Total ALLL	$	43,676	$	(7,965	)	$	384	$	30,050		$	66,145

The CARES Act allows financial institutions to suspend application of certain current TDR accounting guidance under ASC 310-40 for loan modifications related to the COVID-19 pandemic made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the COVID-19 national emergency, provided certain criteria are met. The revised CARES Act extended TDR relief to loan modifications through January 1, 2022. This relief can be applied to loan modifications for borrowers that were not more than 30 days past due as of December 31, 2019 and to loan modifications that defer or delay the payment of principal or interest or change the interest rate on the loan. In April 2020, federal and state banking regulators issued the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus to provide further interpretation of when a borrower is experiencing financial difficulty, specifically indicating that if the modification is either short-term (e.g., six months) or mandated by a federal or state government in response to the COVID-19 pandemic, the borrower is not experiencing financial difficulty under ASC 310-40.

As of September 30, 2021, the Bank had modified 542 loans with a balance of $947.0 million resulting in the deferral of principal and/or interest. The table below summarizes the deferrals as of September 30, 2021. All of these loans were performing in accordance with their terms prior to modification and are in conformance with the CARES Act. Included in the table below is one investment commercial real estate loan related to our back-to-back swap program totaling $19.9 million. Details with respect to loan modifications are as follows:

The future performance of these loans, specifically beyond the term of the deferral, is uncertain, with the exception of one investment commercial real estate loan of $19.9 million for which the Company individually evaluated for impairment and recorded a specific reserve at September 30, 2021.

The Company has allocated $57,000 and $3,000 of specific reserves on TDRs as of September 30, 2021 and December 31, 2020, respectively. There were no unfunded commitments to lend additional amounts to customers with outstanding loans that are classified as TDRs.

The following table presents loans by class modified as TDRs during the three-month period ended September 30, 2021:

There were no loans modified as TDRs during the three-month period ended September 30, 2020.

The following table presents loans by class modified as TDRs during the nine-month period ended September 30, 2021:

The following table presents loans by class modified as TDRs during the nine-month period ended September 30, 2020:

The identification of the TDRs did not have a significant impact on the allowance for loan and lease losses.

The following table presents loans by class modified as TDRs that failed to comply with the modified terms in the twelve months following modification and resulted in a payment default at September 30, 2021:

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. The modification of the terms of such loans may include one or more of the following: (1) a reduction of the stated interest rate of the loan to a rate that is lower than the current market rate for new debt with similar risk; (2) an extension of an interest only period for a predetermined period of time; (3) an extension of the maturity date; or (4) an extension of the amortization period over which future payments will be computed. At the time a loan is restructured, the Bank performs a full re-underwriting analysis, which includes, at a minimum, obtaining current financial statements and tax returns, copies of all leases, and an updated independent appraisal of the property. A loan will continue to

accrue interest if it can be reasonably determined that the borrower should be able to perform under the modified terms, that the loan has not been chronically delinquent (both to debt service and real estate taxes) or in nonaccrual status since its inception, and that there have been no charge-offs on the loan. Restructured loans with previous charge-offs would not accrue interest at the time of the TDR. At a minimum, six consecutive months of contractual payments would need to be made on a restructured loan before returning it to accrual status. Once a loan is classified as a TDR, the loan is reported as a TDR until the loan is paid in full, sold or charged-off. In rare circumstances, a loan may be removed from TDR status if it meets the requirements of ASC 310-40-50-2.